[Federal Register Volume 70, Number 9 (Thursday, January 13, 2005)]
[Rules and Regulations]
[Pages 2542-2560]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 05-773]



[[Page 2541]]

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Part IV





Department of Homeland Security





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Transportation Security Administration



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49 CFR Part 1572



Hazmat Fee Rule: Fees for Security Threat Assessments for Hazmat 
Drivers; Final Rule

  Federal Register / Vol. 70, No. 9 / Thursday, January 13, 2005 / 
Rules and Regulations  

[[Page 2542]]


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DEPARTMENT OF HOMELAND SECURITY

Transportation Security Administration

49 CFR Part 1572

[Docket No. TSA-2004-19605; Amendment No. 1572-5]
RIN 1652-AA33


Hazmat Fee Rule: Fees for Security Threat Assessments for Hazmat 
Drivers

AGENCY: Transportation Security Administration (TSA), Department of 
Homeland Security (DHS).

ACTION: Final rule.

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SUMMARY: In response to recent statutory requirements, the 
Transportation Security Administration (TSA) is establishing a fee for 
security threat assessments that TSA is required to perform on 
individuals who apply for or renew a hazardous materials endorsement 
for a commercial driver's license. TSA also is establishing a fee for 
collection and transmission of fingerprints and biographical 
information, which is necessary to perform the security threat 
assessments. TSA intends to use fees collected under this rule to pay 
for the costs of the security threat assessments and the costs of 
collection and transmission of fingerprints and biographical 
information.

DATES: This rule is effective January 31, 2005.

ADDRESSES: You may obtain an electronic copy of this final rule 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 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.
    You may also review the public docket in person in the Docket 
Office between 9 a.m. and 5 p.m., Monday through Friday, except Federal 
holidays. The Docket Office is on the plaza level of the Department of 
Transportation.

FOR FURTHER INFORMATION CONTACT: For payment eligibility questions, 
such as who is required to pay the fees: George J. Petersen, Hazmat 
Program Office, TSA-19, Transportation Security Administration 
Headquarters, 601 South 12th Street, Arlington, VA 22202; telephone: 
(571) 227-2215; e-mail [email protected].
    For billing questions: Randall Fiertz, Office of Revenue, TSA-14, 
Transportation Security Administration Headquarters, 601 South 12th 
Street, Arlington, VA 22202; telephone: (571) 227-2323; e-mail: [email protected].
    For legal questions: Dion Casey, Office of Chief Counsel, TSA-2, 
Transportation Security Administration Headquarters, 601 South 12th 
Street, Arlington, VA 22202; telephone: (571) 227-2663; e-mail: 
[email protected].

SUPPLEMENTARY INFORMATION:

Abbreviations and Terms Used in This Document

ATF--Bureau of Alcohol, Tobacco, Firearms, and Explosives
AAMVA--Association of American Motor Vehicle Administrators
ATSA--Aviation and Transportation Security Act
BLS--Bureau of Labor Statistics
BTS--Bureau of Transportation Statistics
CDL--commercial driver's license
CDLIS--Commercial Drivers License Information System
CFR--Code of Federal Regulations
CHRC--criminal history records check
DHS--Department of Homeland Security
DMV--Department of Motor Vehicles
DOT--Department of Transportation
FBI--Federal Bureau of Investigation
FMCSA--Federal Motor Carrier Safety Administration
HME--hazardous materials endorsement
ICE--Bureau of Immigration and Customs Enforcement
IFR--interim final rule
NPRM--notice of proposed rulemaking
PRA--Paperwork Reduction Act
SEA--Safe Explosives Act
TSA--Transportation Security Administration

I. Background

    On September 11, 2001, several terrorist attacks were perpetrated 
against the United States. Those attacks resulted in catastrophic human 
casualties and property damage. In response to those attacks, Congress 
passed the Aviation and Transportation Security Act (ATSA), which 
established the Transportation Security Administration (TSA).\1\ TSA 
was created as an agency within the Department of Transportation (DOT), 
operating under the direction of the Under Secretary of Transportation 
for Security. As of March 1, 2003, pursuant to the Homeland Security 
Act of 2002, TSA became an agency of the Department of Homeland 
Security (DHS), and the functions of the Under Secretary were 
ultimately assigned to the Assistant Secretary of Homeland Security for 
TSA.\2\ TSA continues to possess the statutory authority that ATSA 
established. ATSA granted to the Assistant Secretary responsibility for 
security in all modes of transportation.\3\
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    \1\ Pub. L. 107-71, November 19, 2001, 115 Stat. 597.
    \2\ Section 403 of Pub. L. 107-296, November 25, 2002, 116 Stat. 
2135, codified at 6 U.S.C. 203.
    \3\ 49 U.S.C. 114(d).
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    ATSA authorizes TSA to identify individuals who pose a threat to 
transportation security.\4\ This authority includes conducting 
background checks on individuals in the transportation industries. The 
background checks may include collecting fingerprints to determine if 
an individual has a criminal conviction or the use of a name and other 
identifying characteristics to determine whether an individual has 
committed international criminal offenses or immigration offenses.
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    \4\ 4 49 U.S.C. 114(f)(2).
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    Based on his functions, duties, and powers, the Assistant Secretary 
is situated to determine whether sufficient cause exists to believe 
that an individual poses a threat to transportation security.

A. USA PATRIOT Act

    The Uniting and Strengthening America by Providing Appropriate 
Tools Required to Intercept and Obstruct Terrorism (USA PATRIOT) Act 
was enacted on October 25, 2001.\5\ Section 1012 of the USA PATRIOT Act 
amended 49 U.S.C. Chapter 51 by adding a new section 5103a titled, 
``Limitation on issuance of hazmat licenses.''
    Section 5103a(a)(1) provides:
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    \5\ Pub. L. 107-56, October 25, 2001, 115 Stat. 272.

    A State may not issue to any individual a license to operate a 
motor vehicle transporting in commerce a hazardous material unless 
the Secretary of Transportation has first determined, upon receipt 
of a notification under subsection (c)(1)(B), that the individual 
does not pose a security risk warranting denial of the license.
    Section 5103a(a)(2) subjects license renewals to the same 
requirements.

    Section 5103a(c) requires the Attorney General, upon the request of 
a State in connection with issuance of a hazardous materials 
endorsement (HME) for a commercial driver's license (CDL), to carry out 
a background records check of the individual applying for the

[[Page 2543]]

endorsement and, upon completing the check, to notify the Secretary of 
Transportation of the results. The Secretary of Transportation then 
determines whether the individual poses a security threat warranting 
denial of the endorsement. The Secretary of Transportation delegated 
the responsibilities of Section 5103a to the Under Secretary of 
Transportation for Security.\6\ Pursuant to section 403 of the Homeland 
Security Act of 2002, these responsibilities transferred to the 
Secretary of Homeland Security.\7\ The Secretary then delegated these 
responsibilities to the Assistant Secretary of Homeland Security for 
TSA.
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    \6\ 68 FR 10988 (March 7, 2003).
    \7\ Pub. L. 107-296, November 25, 2002.
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    The background records check must consist of: (1) A check of the 
relevant criminal history databases; (2) in the case of an alien, a 
check of the relevant databases to determine the status of the alien 
under U.S. immigration laws; and (3) as appropriate, a check of the 
relevant international databases through Interpol-U.S. National Central 
Bureau or other appropriate means.\8\ As explained in further detail 
below, TSA is performing a more comprehensive check than required by 
Section 5103a, including a review of pertinent databases to determine 
whether an individual poses a security threat. TSA has the authority to 
perform such comprehensive checks under ATSA.\9\
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    \8\ The National Crime Prevention and Privacy Compact (Compact), 
codified at 42 U.S.C. 14616, establishes the Compact Council, which 
is authorized to establish legal criteria governing criminal history 
record checks for non-criminal justice purposes. The Compact Council 
is composed of 15 members, appointed by the Attorney General. As a 
general rule, the Compact requires the submission of fingerprints 
for purposes of gaining access to criminal history databases for 
non-criminal justice purposes.
    \9\ See 49 U.S.C. 114(f).
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B. Safe Explosives Act

    Congress enacted the Safe Explosives Act (SEA) on November 25, 
2002.\10\ Sections 1121-1123 of the SEA amended section 842(i) of title 
18, United States Code, by adding several categories to the list of 
persons who may not lawfully ``ship or transport any explosive in or 
affecting interstate or foreign commerce'' or ``receive or possess any 
explosive which has been shipped or transported in or affecting 
interstate or foreign commerce.'' Prior to the amendment, 18 U.S.C. 
842(i) prohibited the transportation of explosives by any person under 
indictment for or convicted of a felony, a fugitive from justice, an 
unlawful user or addict of any controlled substance, and any person who 
had been adjudicated as a mental defective or committed to a mental 
institution. The amendment added three new categories to the list of 
prohibited persons: aliens (with certain limited exceptions), persons 
dishonorably discharged from the armed forces, and former U.S. citizens 
who have renounced their citizenship. Individuals who violate 18 U.S.C. 
842(i) are subject to criminal prosecution.\11\ These incidents are 
investigated by the Bureau of Alcohol, Tobacco, Firearms, and 
Explosives (ATF) of the Department of Justice and referred, as 
appropriate, to the United States Attorneys.
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    \10\ Pub. L. 107-296, November 25, 2002, 116 Stat. 2280, 
codified at 18 U.S.C. 842.
    \11\ The penalty for violation of 18 U.S.C. 842(i) is up to ten 
years imprisonment and a fine of up to $250,000.
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    However, 18 U.S.C. 845(a)(1) provides an exception to section 
842(i) for ``any aspect of the transportation of explosive materials 
via railroad, water, highway, or air which are regulated by the United 
States Department of Transportation and agencies thereof, and which 
pertains to safety.'' Under this exception, if DOT regulations address 
the transportation security issues of persons engaged in a particular 
aspect of the safe transportation of explosive materials, then those 
persons are not subject to prosecution under 18 U.S.C. 842(i) while 
they are engaged in the transportation of explosives in commerce.\12\
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    \12\ Explosives are among the categories of substances that are 
defined as hazardous materials under DOT regulations. See 49 CFR 
383.5 and 173.50.
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    This exception was triggered when TSA issued an interim final rule 
on May 5, 2003 (May 5 IFR), discussed below, in coordination with the 
Federal Motor Carrier Safety Administration (FMCSA) and Research and 
Special Programs Administration (RSPA), agencies within the DOT.

C. The May 5, 2003 Interim Final Rule

    To comply with the mandates of the USA PATRIOT Act, and to trigger 
the exception in 18 U.S.C. 845(a)(1) for the transportation of 
explosives, TSA issued an interim final rule in coordination with FMCSA 
and RSPA on May 5, 2003.\13\ The May 5 IFR established security threat 
assessment standards for determining whether an individual poses a 
security threat warranting denial of an HME. Under the May 5 IFR, TSA 
determined that an individual poses a security threat if he or she: (1) 
Is an alien (unless he or she is a lawful permanent resident) or a U.S. 
citizen who has renounced his or her U.S. citizenship; (2) is wanted or 
under indictment for certain felonies; (3) was convicted or found not 
guilty by reason of insanity of any of certain felonies in military or 
civilian court within the past 7 years or was released from 
incarceration for committing any of the specified felonies within the 
past 5 years; (4) has been adjudicated as a mental defective or 
involuntarily committed to a mental institution; or (5) is considered 
to pose a security threat based on a review of pertinent databases.
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    \13\ 68 FR 23852. The rule was codified at 49 CFR parts 1570 and 
1572. On the same date, FMCSA issued a companion rule prohibiting 
States from issuing, renewing, transferring, or upgrading a CDL with 
an HME unless TSA has first determined that the individual applying 
for the HME does not pose a security threat warranting denial of the 
HME. 68 FR 23844. Because FMCSA is a part of DOT, and because the 
FMCSA and TSA rules regulate the transport of hazardous materials, 
including explosives, with regard to safety, the exception in 18 
U.S.C. 845(a)(1) was triggered.
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    The May 5 IFR also established conditions under which an individual 
who has been determined to be a security threat may appeal the 
determination, and the procedures that TSA follows when considering an

[[Page 2544]]

appeal.\14\ In addition, the May 5 IFR provided a waiver process for 
those individuals who otherwise could not obtain an HME due to a 
disqualifying felony conviction or mental defect.\15\ Finally, the May 
5 IFR prohibited an individual from holding, and a State from issuing, 
renewing, or transferring an HME for a driver unless the individual has 
met the TSA security threat assessment standards or has been granted a 
waiver.\16\ The May 5 IFR was to take effect in November 2003.\17\
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    \14\ Under the May 5 IFR, an individual could appeal a 
determination if the individual believes that he or she does not 
meet the criteria warranting revocation. For example, an individual 
could appeal because he or she believes the criminal record to be 
incorrect, or if the individual's conviction for a disqualifying 
criminal offense was pardoned, expunged, or overturned on appeal.
    \15\ Such individuals were permitted to apply for a waiver if 
they could demonstrate that they are rehabilitated or are no longer 
a danger to themselves or others.
    \16\ In the interim final rule issued on November 24, 2004 
(Hazmat Program Rule), discussed herein, TSA amended the May 5 IFR 
to permit a driver who successfully completes the TSA security 
threat assessment and receives an HME in one State to transfer the 
HME to another State without undergoing another TSA security threat 
assessment until the date the HME would expire in the issuing State. 
For instance, if the renewal period in Virginia is once every 4 
years, a driver who obtains his HME in Virginia in 2005 and moves to 
West Virginia in 2006, where the renewal period is once every 5 
years, is required to undergo a new security threat assessment in 
2009 in West Virginia, rather than within 30 days of moving into 
West Virginia or in 2010. FMCSA's regulations require renewing the 
HME at least once every five years, so drivers across the country 
have nearly identical renewal periods. (49 CFR 383.141(d)). Thus, 
there is no risk that any driver will go more that five years 
without a security threat assessment.
    \17\ An exception to this effective date was a provision in the 
May 5 IFR that required any holder of an HME who had committed a 
disqualifying offense to surrender the HME to the State by September 
2003.
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    In the May 5 IFR, TSA requested and received comments from the 
States, labor organizations, and representatives of the trucking 
industry. In addition, TSA held working group sessions with the States 
to discuss potential fingerprinting systems that would achieve the 
statutory requirements, but would not adversely impact the States. 
Based on the comments received and the working sessions with the 
States, TSA issued a technical amendment in November 2003 to extend the 
date on which fingerprints and applicant information must be 
submitted.\18\ A majority of the States could not implement the program 
by November, and TSA was not able to set the fee levels through 
rulemaking to cover TSA's implementation costs.\19\ This technical 
amendment required the States either to submit fingerprints and 
applicant information by April 1, 2004, or request an extension of time 
and produce a fingerprint collection plan by April 1, 2004. All States 
were required to have the fingerprint collection program in place as of 
December 1, 2004.
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    \18\ 68 FR 63033 (November 7, 2003).
    \19\ Congress did not grant TSA the statutory authority required 
for rulemaking to set and collect fees for costs related to 
background checks and credentialing until October 1, 2003, per 
section 520 of the 2004 Homeland Security Appropriations Act (Pub. 
L. 108-90, October 1, 2003, 117 Stat. 1137).
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    In response to the November 2003 technical amendment, a majority of 
the States asked for an extension of time, because they were not ready 
to begin collecting applicant information or fingerprints by April 1, 
2004. Therefore, on April 6, 2004, TSA published a final rule removing 
the April 1 date and establishing January 31, 2005, as the date on 
which States must begin complying with the requirements.\20\
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    \20\ 69 FR 17969 (April 6, 2004).
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D. Hazmat Program Rule

    On November 24, 2004, TSA issued an interim final rule, titled 
``Security Threat Assessment for Individuals Applying for a Hazardous 
Materials Endorsement for a Commercial Driver's License'' RIN 1652-AA17 
(the Hazmat Program Rule).\21\ In the Hazmat Program Rule, TSA made 
several amendments to the May 5 IFR. TSA also required States to choose 
between the following two fingerprint and applicant information 
collection options: (1) The State collects and transmits the 
fingerprints and applicant information of individuals who apply for or 
renew an HME; or (2) the State allows an entity approved by TSA (TSA 
agent) to collect and transmit the fingerprints and applicant 
information of such individuals. TSA required States to notify TSA in 
writing of their choice by December 27, 2004. TSA noted that if a State 
did not notify TSA in writing of its choice by that date, TSA would 
assume that the State had chosen the second option and would work with 
the State to establish a system for a TSA agent to collect fingerprints 
and applicant information in the State. The Hazmat Program Rule 
requires a State to operate under the option it chooses until at least 
February 1, 2008.
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    \21\ 69 FR 68720 (November 24, 2004).
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    Seventeen States opted to collect and transmit fingerprints and 
applicant information. The remaining 34 States opted to allow a TSA 
agent to perform those services.\22\ Information on which States have 
chosen which option is available on the TSA Web site at http://www.tsa.gov/public/interapp/editorial/editorial_1735.xml.
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    \22\ TSA notes that as defined in the Hazmat Program Rule, the 
term ``State'' includes the District of Columbia. Thus, for purposes 
of the hazmat program there are 51 States.
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E. Fee Authority

    On October 1, 2003, Congress enacted legislation directing TSA to 
collect reasonable fees to cover the costs of providing credentialing 
and background investigations in the transportation field, including 
implementation of the USA PATRIOT Act requirements.\23\ Section 520 of 
the Department of Homeland Security Appropriations Act, 2004 (2004 
Appropriations Act) authorizes TSA to collect fees to pay for the 
following costs: Conducting or obtaining a criminal history records 
check (CHRC); reviewing available law enforcement databases, commercial 
databases, and records of other governmental and international 
agencies; reviewing and adjudicating requests for waivers and appeals 
of TSA decisions; and any other costs related to performing the 
background records check or providing the credential.
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    \23\ Department of Homeland Security Appropriations Act, 2004, 
Section 520, Pub. L. 108-90, October 1, 2003, 117 Stat. 1156 (6 
U.S.C. 469) (2004 Appropriations Act).
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    Section 520 of the 2004 Appropriations Act mandates that any fee 
collected be available for expenditure only to pay for the costs 
incurred in providing services in connection with performing the 
background check or providing the credential. The fee must remain 
available until expended.

F. Fee NPRM

    On November 10, 2004, TSA issued a notice of proposed rulemaking 
(Fee NPRM) to propose a fee for the security threat assessments that 
TSA is required to perform on individuals who apply for or renew an HME 
for a CDL (Threat Assessment Fee).\24\ The Fee NPRM also proposed a fee 
for the collection and transmission of fingerprints and other HME 
applicant information necessary to perform the security threat 
assessments (Information Collection Fee). The Fee NPRM also proposed 
that HME applicants remit the fee required by the Federal Bureau of 
Investigation (FBI) for performing the CHRC on behalf of government 
agencies for non-government applicants. In addition, the Fee NPRM 
proposed procedures for States and entities approved by TSA to collect, 
handle, and remit to TSA those fees. TSA requested public comment on 
all aspects of the Fee NPRM.
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    \24\ 69 FR 65332, November 10, 2004.

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[[Page 2545]]

II. Response to Public Comments

    TSA received approximately 25 comments on the Fee NPRM from 
individual commercial drivers, labor organizations, trucking industry 
associations, State Departments of Motor Vehicles, associations 
representing the agricultural, chemical, explosives, and petroleum 
industries, and associations representing State governments. The 
discussion below groups the comments by issue.

A. Responsibility for the Fees

    Labor organizations and individual drivers commented that drivers 
should not bear the full cost of the threat assessments conducted under 
the Hazmat Program Rule. They noted that the statute authorizing TSA to 
collect fees for threat assessments (Section 520 of the 2004 
Appropriations Act) does not require TSA to collect the fees from the 
driver. They argued that the fees should be divided among all of the 
affected parties, including employers and the Federal Government.
    TSA notes that the May 5 IFR specified that the driver or the 
driver's employer was responsible for paying the fee charged by the 
entity that collected the driver's fingerprints and generated the 
driver's criminal history.\25\ The Hazmat Program Rule contains a 
similar provision specifying that the HME applicant or the applicant's 
employer is responsible for the TSA and FBI fees.\26\ The Hazmat 
Program Rule provides that the driver or the driver's employer is 
responsible for paying the required fees. Some commenters noted that a 
commercial driver's employer typically pays the commercial driver's 
licensing fees. Whether the driver or the driver's employer pays the 
fees is a matter that must be resolved between drivers and their 
employers.
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    \25\ 49 CFR 1572.5(b)(2)(iii). See also the discussion in the 
preamble of the May 5 IFR. 68 FR at 23859 (May 5, 2003).
    \26\ 49 CFR 1572.11(d)(3). See also the discussion in the 
preamble of the Hazmat Program Rule. 69 FR at 68732 (November 24, 
2004).
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    As for the Federal Government subsidizing the fees, when Congress 
enacted Sec. 520 of the 2004 Appropriations Act it expressed its intent 
that TSA seek user fee funding to cover the costs of providing 
credentialing and background investigations in the transportation 
field. The hazmat program is an example of a credentialing and 
background investigation program that was intended to be supported by 
user fees. That said, TSA has subsidized the program to some extent by 
bearing the costs of the name-based threat assessments for hazmat 
drivers that TSA performed prior to full implementation of the hazmat 
program. Moreover, TSA notes that certain overhead costs that directly 
support the program, such as those for human resources, financial 
reporting and accounting, and TSA executive management support, have 
not been included in the user fees.

B. Amount of the Fees

    Several commenters stated that the estimated total fee range of 
$83-$103 is unreasonable. They noted that the proposed fees are 
significantly higher than fees for security threat assessments in other 
transportation-related programs, such as the security threat 
assessments TSA proposed for individuals requiring unescorted access to 
air cargo (air cargo handlers) ($39) \27\ and drivers seeking 
certification under the Free and Secure Trade (FAST) program ($50). 
They questioned why TSA is requiring the trucking industry to absorb 
higher fees.
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    \27\ 69 FR 65258 (November 10, 2004).
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    TSA notes that while there are some similarities to other Federal 
Government background check programs, each program is unique. 
Differences in cost arise due to the legal requirements associated with 
certain background checks as well as the differences in how the agency 
requiring the background check is able to collect fingerprints and 
other information needed from the population being checked. There are 
also differences in the legislative authorities and appropriations 
allocated to agencies for supporting the programs. These differences 
determine whether the programs are totally funded through appropriated 
funding, partially funded through user fees, or fully funded through 
user fees.
    As noted in the Fee NPRM, the total proposed fee range of $83 to 
$103 per applicant for the hazmat driver threat assessment included 
three parts. Part one was for the collection and transmission of 
fingerprints and other applicant information (Information Collection 
Fee). This service will either be provided directly by individual 
States or by a TSA agent who will be located at various sites within 
each State. If a TSA agent provided this service, the proposed 
Information Collection Fee was estimated at $25-$45. The Fee NPRM 
explained that if a State provides this service, the fee for this 
service could be higher or lower than the proposed $25-$45 range. The 
Fee NPRM explained that the final fee level for information collection 
and transmission would depend primarily on the volume of applicants 
that the TSA agent serves.
    Part two of the proposed fee range was $36 for the threat 
assessment (Threat Assessment Fee). In accordance with the mandates of 
the USA PATRIOT Act and the SEA, the threat assessment consists of TSA 
reviewing the information collected and determining whether the 
individual poses a security threat. The Threat Assessment Fee also 
included costs associated with appeals and waivers.
    Part three of the proposed fee range was the FBI fee for conducting 
a fingerprint-based criminal history records check (FBI Fee). This fee 
is set by the FBI and is currently at $22, or $24 if a State submits 
the fingerprints to the FBI.
    As noted earlier, other background check programs have different 
Congressionally-mandated requirements and thus have different costs. 
For example, the proposed air cargo program would require air cargo 
handlers to undergo one of the following: A name-based security threat 
assessment; or, if otherwise required, a fingerprint-based CHRC or 
another TSA-approved security threat assessment.\28\ The hazmat program 
requires drivers to undergo both a fingerprint-based CHRC and a name-
based security threat assessment, as well as checks of their mental 
capacity and citizenship or immigration status (emphasis added).\29\ 
These additional checks were required under the USA PATRIOT Act and the 
SEA. In addition, the proposed air cargo program does not contain 
waiver provisions, while the hazmat program does. TSA believes that the 
waiver procedures are an important part of the hazmat program; these 
procedures recognize that individuals who have committed a 
disqualifying crime may be rehabilitated to the point that they may be 
trusted to transport hazmat. The costs associated with adjudicating 
waiver requests are a large part of the costs of the hazmat program. 
For these reasons, the costs associated with the hazmat program are 
significantly higher than the costs associated with the proposed 
security threat assessments for air cargo handlers.
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    \28\ See 49 CFR 1544.228(a), 1546.213(a), and 1548.15(a). Under 
the proposed air cargo program an air cargo handler would have to 
undergo the name-based threat assessment, and pay the proposed $39 
fee, only if he or she was not required to undergo a fingerprint-
based CHRC or another security threat assessment approved by TSA. 
The proposed $39 fee would cover only the cost of the name-based 
security threat assessment.
    \29\ See 49 CFR 1572.5(c).
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    One commenter suggested that TSA charge separate fees to HME 
applicants

[[Page 2546]]

who use the appeal or waiver procedures. Making this change would 
require creating a new process. TSA is not establishing a separate fee 
collection process for appeals and waivers at this time. TSA may do so 
in the future, if experience with the hazmat program suggests that 
separating these fees would be appropriate.
    Another example is the FAST program, which involves efforts by the 
United States, Canada, and Mexico to improve the efficiency of 
screening and clearing commercial traffic at the shared borders. The 
FAST program is a voluntary initiative operated by U.S. Customs and 
Border Protection (CBP) that provides an expedited customs and 
immigration process at the borders for approved truck drivers. To be 
approved for the FAST program, a driver must be admissible to the U.S. 
and must not have been convicted of a criminal offense or been found in 
violation of customs or immigration law. The driver must submit 
fingerprints and other information, such as proof of citizenship and 
work history. Drivers who are not approved for the FAST program are 
required to follow normal CBP procedures at the borders.
    The $50 fee for the FAST program is an application fee, rather than 
a threat assessment fee. Drivers must also pay the FAST fee each time 
any information on the FAST card must be changed, or if the driver 
loses the card and requires a replacement. In addition, CBP uses 
appropriated funding to subsidize the costs of conducting the required 
background checks. As noted above, in section 520 of the 2004 
Appropriations Act, Congress directed TSA to fund credentialing and 
background investigation programs, such as the hazmat program, with 
user fees.

C. Infrastructure Costs

    Labor organization and trucking industry associations objected to 
the inclusion of infrastructure costs in the fee structure. They noted 
that the Threat Assessment Fee structure includes the costs of creating 
and maintaining databases, disaster recovery, and other start-up costs. 
They argued that these costs should not be passed along to drivers 
because they are not part of performing the security threat assessment 
or providing the HME. They suggested that the Federal Government should 
absorb these costs. Finally, some commenters objected to paying for 
infrastructure that TSA has stated may be used for other programs.
    Section 520 of the 2004 Homeland Security Appropriations Act grants 
TSA the authority to recover infrastructure and other start-up costs 
necessary to perform background checks and provide credentialing-
related services. Section 520 further directs that fees must be 
``reasonably related to the costs of providing services in connection 
with the activity or item for which the fee is charged.'' \30\ 
Recoverable costs via user fees costs may include both the costs of 
accessing various law enforcement, governmental and commercial 
databases, adjudication costs and ``any other costs related to 
providing the credential or performing the background record check.'' 
\31\ Thus, TSA's user fee may include infrastructure and other start-up 
costs required to implement TSA's hazmat driver security threat 
assessment program. TSA has chosen not to include certain general 
overhead costs that could be applied to calculate the agency's full 
costs of implementing the program. As previously stated, these costs 
include costs associated with human resources, financial reporting and 
accounting, and TSA executive management support.
---------------------------------------------------------------------------

    \30\ Department of Homeland Security Appropriations Act, 2004, 
section 520, Pub. L. 108-90, October 1, 2003, 117 Stat. 1156 (6 
U.S.C. 469) (2004 Appropriations Act).
    \31\ Id.
---------------------------------------------------------------------------

    With respect to the possible future use of the hazmat driver 
program infrastructure for other programs, if TSA implements other 
background check programs that leverage the infrastructure that was 
created for the hazmat program, TSA will re-evaluate its hazmat user 
fees and adjust them accordingly.

D. Cost Estimates

    Several commenters stated that TSA likely underestimated the threat 
assessment costs because the agency did not include costs associated 
with appeals and waivers. They also noted that allowing a private 
entity to collect fingerprints and applicant information on behalf of 
TSA (TSA agent) or the States (an entity that contracts with a State 
that chooses to collect fingerprints and applicant information) 
necessarily implies that the agent will make a profit. They argued that 
Section 520 of the 2004 Appropriations Act does not permit TSA to 
include private profit costs as part of the costs recoverable by fees.
    TSA notes that the threat assessment costs estimated in the Fee 
NPRM did include the estimated costs to TSA associated with handling 
appeals and requests for a waiver. Moreover, in the Regulatory 
Evaluation for the Hazmat Program Rule, TSA estimated the likely cost 
to drivers in terms of time for both the HME threat assessment process 
and the appeal/waiver process for those drivers who receive 
notification of disqualification. Thus, the threat assessment costs 
estimated in the Fee NPRM were not understated.
    With regard to the legality and appropriateness of including 
contractor profits as part of TSA's costs for fee recovery, TSA notes 
that Sec.  15.404-4 of title 48 of the Federal Acquisition Regulation 
(FAR) specifically allows profit for contractors providing goods and 
services to the Government, subject to Federal cost accounting 
standards. As such, contractor cost proposals usually contain a profit 
component in the rates or a fee, and the Government contracting officer 
must determine that all the cost elements, including fee, in the 
proposal are fair and reasonable before awarding a contract. In TSA's 
contract award process to the TSA agent for the Information Collection 
Fee, TSA has determined the contractor's charges to be fair and 
reasonable. Costs are determined to be fair and reasonable by 
evaluating several factors such as the Government's Independent Cost 
Estimate (ICE) developed for evaluating this activity, the costs for 
similar services, including historical costs, and the comparison of 
costs in various proposals under a competitive procurement award 
process. Thus, it is appropriate that TSA's costs to provide background 
check related services under Sec. 520 of the 2004 Homeland Security 
Appropriations Act (Pub. L. 108-90), include contractor profit/fee as 
provided under both the FAR and the Transportation Security 
Administration's Acquisition Management System.

E. Missing Criminal Prosecution Disposition Information

    States and State associations commented that States will have to 
play a role in providing to TSA information regarding the disposition 
of criminal prosecutions that may be missing from FBI records. They 
noted that FBI records of State criminal offenders are often 
incomplete, particularly with regards to disposition information. They 
stated that as a result, TSA will need to call upon State courts and 
criminal justice agencies to provide that information, which could 
impose considerable burdens on States. They argued that TSA should 
compensate States for providing this information.
    The Hazmat Program Rule provides HME applicants an opportunity to 
submit evidence of the final disposition of a criminal case in those 
instances where disposition information is missing or unresolved. Thus, 
the burden of demonstrating that an open offense or warrant is not 
disqualifying is placed on

[[Page 2547]]

the HME applicant rather than State authorities. TSA recognizes there 
may be instances in which an applicant may seek information on an open 
disposition by turning to State agencies for assistance, and that this 
may result in costs to State agencies in looking up old records for 
missing dispositions. Nothing in the Hazmat Program Rule or this final 
rule prevents States from recovering those costs from HME applicants, 
if they are authorized to do so under their own State law.

F. Impact of Fees on Drivers and Small Businesses

    Several commenters stated that the total amount of the fees would 
have a substantial negative impact on the availability of drivers 
qualified to transport hazardous materials. They argued that the 
trucking industry is already experiencing a shortage of qualified 
drivers, and that the proposed fees would exacerbate that problem. They 
also argued that any substantial reduction in the number of qualified 
drivers will have a detrimental impact on the trucking industry as a 
whole, and an even more pronounced impact on small businesses 
(especially small rural businesses) because small businesses are less 
able to reimburse drivers for the cost of obtaining an HME. They 
believe that TSA has failed to meet its obligation under the Regulatory 
Flexibility Act (RFA) to ensure that small businesses are not 
substantially burdened by Federal regulations.
    TSA considered all of the requirements of the RFA in this 
rulemaking. TSA responds to comments on compliance with the RFA in the 
Regulatory Flexibility Determination section below and in the separate 
Regulatory Analysis document provided to the docket. With respect to 
this specific comment, TSA notes that the expected reduction in HME 
holders is not likely to have a significant impact on businesses that 
depend on qualified hazmat drivers. It is anticipated that most of the 
drivers who will allow their HME to lapse as a result of this final 
rule rarely transport hazmat. See Section V. ``Hazmat Driver 
Population'' of the final rule for more discussion of the anticipated 
reduction in HME holders.

G. Allowing States To Collect Fingerprints and Applicant Information

    Industry associations requested that TSA reconsider its decision to 
allow States to collect fingerprints and applicant information, and to 
charge a fee for those services. They noted that States, under State 
fee authority, could charge higher fees for those services than the 
Information Collection Fee proposed in the Fee NPRM. They argued that 
there is no security reason to allow for such State participation in a 
Federal program. They also claimed that a nationwide Federal 
fingerprint and applicant information collection system would be less 
expensive than the proposed joint Federal-State collection system 
because a higher volume of applicants would reduce costs. They 
suggested that TSA establish only one fee for fingerprint and 
information collection nationwide.
    TSA notes that although the hazmat program is mandated by Federal 
law, the State is the licensing body for drivers who are State 
residents, and the State has both authority and a clear interest in 
licensing standards. Regulation of commercial drivers has traditionally 
been a combined State-Federal effort. While the Federal Government sets 
minimum standards, including through Federal Motor Carrier Safety 
Administration (FMCSA) and TSA rules, States are responsible for most 
activities in determining that applicants qualify, and for issuing 
licenses.
    TSA considers States to be essential partners in the hazmat 
program, and some States have infrastructure in place that can help 
implement the hazmat program and a desire to do so. Because States want 
to perform this function, and to preserve strong State-Federal 
relationships in this area, TSA will not prevent States from choosing 
to collect fingerprints and applicant information in accordance with 
the Hazmat Program Rule.

H. Performance Standards for TSA Agents

    Industry associations commented that an HME applicant's costs of 
providing information and fingerprints to a TSA agent could vary 
depending on the proximity of the agent to the applicants, the agent's 
hours of operation, and the tolerance allowed for agent error. They 
argued that this could cause delays in the HME application approval 
process, which would negatively impact the trucking industry as well as 
industries that rely on the trucking industry to supply their 
customers. They suggested that TSA establish performance standards for 
TSA agents collecting fingerprints and applicant information.
    TSA is mindful of the need to ensure adequate performance standards 
and oversight in selecting appropriate locations to provide, to the 
extent possible, a consistent application of service in rural and urban 
areas. In order to establish the number and type of sites, TSA will 
take into consideration the overall population, density of the HME 
applicant population, geographic dispersion throughout the State, and 
the urban-rural mix in the State. TSA has developed performance 
standards for the TSA agent that will collect fingerprints and 
applicant information in those States that opt for a TSA agent to 
provide those services, and those performance standards are 
incorporated into the contract between TSA and the agent. TSA will 
monitor the program throughout the duration of the contract and 
determine the need for additional or varied collection sites should the 
need for service improvement be identified.

I. Hazmat Program Rule

    Many of the comments to the Fee NPRM discussed aspects of the 
Hazmat Program Rule. For example, trucking industry associations 
encouraged TSA to ensure that hazmat drivers not be required to undergo 
multiple threat assessments for different programs, such as the 
Transportation Worker Identification Credential (TWIC). Labor 
organizations commented that TSA should require Mexican and Canadian 
drivers to undergo the same security threat assessments as U.S. 
drivers. State associations recommended that the security threat 
assessment include a check of State criminal history records.
    Although these comments are directed at aspects of the Hazmat 
Program Rule, TSA is providing preliminary responses in this final 
rule. TSA may reexamine these issues when promulgating the final Hazmat 
Program Rule.
    With respect to the concern that hazmat drivers may be subjected to 
multiple threat assessments, TSA recognizes that there may be 
overlapping security threat assessment and identification verification 
requirements for certain transportation workers and is making every 
effort to minimize duplication. TSA noted this in the preamble of the 
Hazmat Program Rule, particularly concerning drivers who transport 
hazardous material for the defense and nuclear industries. TSA invited 
comment on the issue in the Hazmat Program Rule, and stated that the 
agency plans to implement an acceptance process for comparable threat 
assessments that are completed by other agencies or for other purposes. 
TSA notes that the TWIC program is intended to implement the threat 
assessment process for workers in all modes of transportation who need 
unescorted access to secure areas of transportation facilities. TSA 
plans that once a driver has successfully completed the TSA security 
threat assessment for an HME, and holds a

[[Page 2548]]

current HME, the driver will not be required to undergo a new security 
threat assessment if TSA requires drivers to obtain a TWIC. TSA will, 
as appropriate, coordinate with other programs that may affect hazmat 
drivers to minimize the duplication of threat assessments.
    With respect to the suggestion that TSA require foreign drivers to 
undergo the same security threat assessments as U.S. drivers, TSA 
regulations at 49 CFR 1572.201 require Canadian drivers who transport 
explosives from Canada to the U.S. to submit certain information to 
Transport Canada, which conducts a background check and determines 
whether the drivers are properly licensed. Drivers who are not listed 
by Transport Canada as completing these steps are not authorized to 
enter the U.S. with explosives shipments. Also, TSA checks these names 
against certain watch lists to determine whether they may pose a threat 
to security.
    TSA will address threat assessments for hazmat drivers from Canada 
and Mexico in the future. Consultations are ongoing between U.S. and 
Canadian officials, and DHS intends to begin discussions on this issue 
with the appropriate agencies in Mexico.
    With respect to the suggestion that the TSA threat assessment 
include a check of State criminal history records, TSA notes that it 
would be difficult and costly for TSA to conduct an effective search of 
State criminal history records. Commercial drivers often travel from 
State to State, making it difficult for TSA to know which State 
criminal history records to search. TSA also notes that searching State 
records would add significantly to the cost of the program, which would 
necessitate an increase in the Threat Assessment Fee. However, TSA 
notes that the Hazmat Program Rule does not prevent a State from 
searching its own criminal history records. If a State checks its 
criminal history records and forward any pertinent information to TSA 
during an applicant's security threat assessment, TSA will use the 
information. TSA encourages States to provide such information.

J. Relationship to the TWIC Program

    Industry associations and labor organizations suggested that TSA 
conduct only name-based security threat assessments without 
fingerprint-based CHRCs, or defer CHRCs until the TWIC requirements are 
implemented.
    TSA considered conducting only name-based threat assessments. 
However, the USA PATRIOT Act mandates that TSA conduct a check of 
relevant criminal history databases, and TSA believes that a CHRC adds 
value to a security threat assessment. Thus, TSA believes that it is 
important to conduct CHRCs as part of the hazmat program security 
threat assessment.
    TSA must require drivers to submit their fingerprints, because, as 
noted above, the Compact generally requires fingerprints for the 
purpose of gaining access to criminal history databases for non-
criminal justice purposes. However, as the security programs 
administered by TSA mature, TSA intends to leverage resources and take 
other steps in an effort to ease the costs and burdens of the programs 
while maintaining a high level of security.
    Commenters were concerned that the TWIC requirements would be 
duplicative, that is, that drivers who were approved under the hazmat 
program would need to undergo another threat assessment under the TWIC 
program. TSA has determined that drivers who are approved under the 
hazmat program will not have to submit to another threat assessment 
under the TWIC program. TSA is also considering other alternatives to 
reduce the time and/or cost of the hazmat threat assessment.

III. Summary of the Final Rule

    To comply with the mandates of Section 520 of the 2004 
Appropriations Act, as well as the mandates of the USA PATRIOT Act and 
the SEA, in this final rule (final rule or Hazmat Fee Rule) TSA is 
establishing user fees for individuals who apply for or renew an HME, 
and thus are required to undergo a security threat assessment in 
accordance with 49 CFR part 1572. TSA is establishing the following two 
new user fees, in addition to the FBI Fee \32\ for performing the CHRC 
on behalf of government agencies for non-governmental applicants: (1) A 
fee to cover TSA's costs of performing and adjudicating security threat 
assessments, appeals, and waivers (Threat Assessment Fee); and (2) a 
fee to cover the costs of collecting and transmitting fingerprints and 
applicant information (Information Collection Fee).
---------------------------------------------------------------------------

    \32\ The FBI is authorized to establish and collect fees to 
process fingerprint identification records and name checks for non-
criminal justice, non-law enforcement employment and licensing 
purposes that may be used for salaries and other expenses incurred 
in providing these services. See title II of Pub. L. 101-515, 
November 5, 1990, 104 Stat. 2112, codified in a note to 28 U.S.C. 
534.
---------------------------------------------------------------------------

    Under the final rule, a State that opts to collect fingerprints and 
applicant information itself in accordance with the Hazmat Program Rule 
is required to: (1) Collect and remit to TSA the Threat Assessment Fee 
in accordance with the requirements of the final rule; and (2) collect 
and remit to the FBI its user fee (FBI Fee) to perform a CHRC in 
accordance with established FBI procedures. Nothing in the final rule 
prohibits the State, under its own fee authority, from collecting a fee 
determined by the State to cover its costs of collecting and 
transmitting fingerprints and applicant information. TSA notes that a 
State may not collect a fee for its own costs under TSA's fee 
authority.
    A State that opts to permit a TSA agent to collect and transmit 
fingerprints and applicant information is not required to collect and 
remit to TSA any fees under this final rule (emphasis added). Rather, a 
TSA agent will: (1) Collect and remit to TSA the Threat Assessment Fee; 
(2) collect and keep the Information Collection Fee; and (3) collect 
and remit to TSA the FBI Fee for forwarding to the FBI. After 
discussions with the FBI, TSA decided to add a requirement that the TSA 
agent remit the FBI fee to TSA for forwarding to the FBI, as the FBI 
intends to bill TSA for the CHRCs the FBI will perform for TSA.
    The fees are as follows: Information Collection Fee $38 (in States 
where a TSA agent collects fingerprints and applicant information), 
Threat Assessment Fee $34, and FBI Fee $22 (if TSA agent collects) or 
$24 (if State collects).
    Pursuant to the Chief Financial Officers Act of 1990, DHS/TSA is 
required to review these fees no less than every two years.\33\ Upon 
review, if it is found that the fees are either too high (that is, 
total fees exceed the total cost to provide the services) or too low 
(that is, total fees do not cover the total costs to provide the 
services), TSA may propose changes to the fees. In addition, as DHS and 
TSA identify and implement additional efficiencies across numerous 
threat assessment and credentialing programs, any resulting cost 
savings will be incorporated into the fee levels accordingly.
---------------------------------------------------------------------------

    \33\ 31 U.S.C. 3512.
---------------------------------------------------------------------------

    In this final rule, TSA is making the following changes to the Fee 
NPRM:
     TSA is placing the fee procedures and requirements in 49 
CFR part 1572, rather than 49 CFR part 1522. TSA initially intended to 
have a separate part for fee rules, but has since determined that 
placing fee rules in the same part as the rules governing the programs 
that the fees support is easier for stakeholders to locate. Thus, TSA 
decided to place the Hazmat Fee Rule in the same part as the Hazmat 
Program Rule.

[[Page 2549]]

     As noted above in the response to comments, TSA is 
specifying in the final rule that the driver or the driver's employer 
is responsible for paying the required fees.
     TSA is changing the name of the main infrastructure 
support system from the Hazardous Materials Endorsement Screening 
Gateway (HMESG) to the Screening Gateway. The Screening Gateway is the 
information system platform that will allow TSA to submit, receive, and 
integrate security threat assessment information from a variety of 
Federal, State, and other sources in order to help make security threat 
assessment determinations. The new name better reflects the mission of 
this information system platform, which TSA expects may include 
security threat assessment processing for a variety of threat 
assessment and credentialing programs in the future, including TWIC, 
Air Cargo, and Registered Traveler.
     TSA is reducing the estimated number of applicants 
expected to be processed in the first year by 70,000 to compensate for 
the effect the of program's phased-in approach. As a result of a 
population reduction, and without any other changes to the costs, the 
fee generally would have increased because the costs would have been 
shared among a smaller population. However, TSA has reduced other 
expected program costs, and thus various components of the fee, and as 
a result is able to reduce the total Threat Assessment fee from $36 to 
$34 (despite the decrease in estimated population).
     TSA is removing the costs associated with the use of 
commercial data sources for terrorist threat analysis. At present, TSA 
has decided not to employ commercial data sources in the terrorist 
threat analysis because TSA has not yet concluded that these data 
sources would significantly augment the threat analysis process. If 
TSA's experience with the hazmat program indicates that the use of 
commercial data sources would enhance the security threat assessment, 
TSA will review the cost implications of adding such data sources. In 
the Fee NPRM, TSA estimated the cost of using commercial data sources 
to be $1.7 million per year (depending on annual applicant volume) for 
a five-year program lifecycle cost total of $8.6 million.
     TSA is adding $1.35 million in start-up costs and 
approximately $3 million in costs for years 1 through 5 for system and 
infrastructure costs and system programming costs. These increased 
costs include programming modifications to the Screening Gateway that 
add significant enhancements in adjudication, appeal, and waiver 
processing, reduce processing time, and increase flexibility in the 
workflow. Thus, the total five-year lifecycle program costs for the 
information systems cost component category has risen from total five-
year cost estimates of $10.8 million to $15.1 million (see Figure 2 for 
a complete listing of cost estimates). Some of these cost adjustments 
include the following:

--$400,000 was invested to provide the Screening Gateway the capability 
to ``translate'' or read certain State criminal history records. 
Additionally, $75,000 in recurring costs will be required to maintain 
and support this capability. This will allow the Screening Gateway to 
more efficiently interpret the results of certain criminal history 
records and complete a cursory automated screening of information on 
the applicant. This is a cost-effective solution to translating 
criminal history records into a format that can be more expeditiously 
read and processed by the Screening Gateway.
--$5.9 million was added over the five-year program lifecycle for 
applicant help desk support services. This will ensure that drivers 
applying for the TSA threat assessment will be able to check the status 
of their application, as well as provide information and support during 
the waiver and/or appeals process.
--Other information system cost estimates have decreased since the Fee 
NPRM was published. For example, cost estimates have decreased from 
$3.1 million to $1.6 million over five years for the disaster recovery 
system. TSA has identified existing resources since publishing the Fee 
NPRM and intends to leverage this advantage to reduce the costs of the 
disaster recovery system.

     TSA is increasing office-related costs by $3.9 million 
over the five-year program. Costs were driven up primarily by a $3.2 
million increase for off-site mail and digitized processing after 
receiving updated cost estimates, adjusting for a significant increase 
in anticipated appeals, and a new requirement to notify drivers of a 
Determination of No Security Threat. In the Fee NPRM, TSA proposed to 
notify drivers only of negative adjudication results (i.e., 
determination of threat warranting disqualification). However, in 
response to States' comments, TSA has decided to notify drivers of all 
threat determinations (see Figure 2 for a complete listing of cost 
estimates).
     TSA is decreasing Federal and contractor labor costs by 
$6.2 million over the five-year program lifecycle after receiving more 
current cost estimates for manpower and off-site processing, additional 
notifications, and related threat assessment applicant support 
services. Increases in adjudication costs for increased labor costs of 
contract and Federal adjudicators and Federal legal support were offset 
by decreases in Federal and contracting program support (please see 
Figure 2 for a complete listing of cost estimates). Some of these cost 
adjustments include the following:

--TSA is adding $750,000 in costs to pay for interim data entry and 
communication of adjudication results for those States that did not 
choose the TSA Agent for the period of February 2005 through July 2005. 
To allow sufficient time for States to implement system upgrades, TSA 
will provide these temporary alternative methods for data transfer to 
help ensure the volume of applicants can be processed quickly and 
efficiently.
--TSA is also removing the costs for an Interpol connection and an 
Interpol Liaison Officer. TSA intends to use Interpol information when 
appropriate, but at present, TSA has decided to not seek a direct 
connection to Interpol. If TSA's experience with the hazmat program 
indicates that a direct Interpol connection with liaison support would 
enhance the security threat assessment, TSA will review the cost 
implications of adding such services.

    In sum, TSA has reduced the total estimated five-year program 
lifecycle costs from $72.42 million to $65.76 million, a decrease of 
$6.66 million. As a result, based on the total estimated costs divided 
by the total estimated five-year population of HME new applicants, 
renewals, and transfers, TSA has reduced the Threat Assessment Fee from 
$36 to $34 ($65.76 million divided by 1,952,000 = $34).

IV. Hazmat Driver Population

    TSA estimates that there are currently 2.7 million HME holders 
throughout the United States. This estimate is based on the results of 
the initial name-based terrorist threat assessment recently performed 
by TSA on the entire current population of HME holders.\34\ Each State 
and the District of Columbia submitted to TSA the names of all current 
(not expired) holders of HMEs.

[[Page 2550]]

This estimate was based on an actual head count, rather than a 
statistical sampling or other estimate. However, the DOT's Bureau of 
Transportation Statistics (BTS) and the U.S. Department of Commerce's 
U.S. Census Bureau have historically estimated the number of drivers 
carrying hazardous materials (those drivers either carrying primarily 
hazardous materials or carrying such on a regular basis) to be in the 
range of 500,000-800,000.\35\ TSA believes this disparity between the 
total current number of HME holders and estimated ``active'' or 
``dedicated'' drivers of hazardous materials suggests that a 
significant portion of the HME holder population rarely, if ever, 
transports hazardous materials.
---------------------------------------------------------------------------

    \34\ In July 2004, TSA used HME applicant names and biographical 
data to conduct threat assessments on all current HME holders. The 
threat assessment included entering names and biographical data in 
the National Crime Information Center (NCIC) database and other 
databases, such as terrorism watch lists. TSA noted its intent to 
conduct these threat assessments in the May 5 IFR.
    \35\ ``Transportation Statistics Annual Reports, 2001'', p. 120; 
``Transportation Statistics Annual Reports, 2003'', p. 106; 
``Commodity Flow Survey: Hazardous Materials'', U.S. Department of 
Transportation, Bureau of Transportation Statistics, U.S. Census 
Bureau, Economic Census, 1997, p. 9; ``Vehicle Inventory and Use 
Survey'', U.S. Department of Commerce, U.S. Census Bureau, 1997. In 
reaching this estimate, TSA extrapolated 1997-2003 data and applied 
it to current hazardous materials volume, driver, and truck 
estimates.
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    Due to the additional cost, effort, and the prospect of 
disqualification for certain felony offenses resulting from this 
security threat assessment, TSA expects that a certain number of 
current HME holders who do not regularly transport hazardous materials 
will choose not to renew their HME over the course of the five-year 
renewal period. TSA bases this assumption on recent discussions with 
various trucking industry representatives that will be affected by 
TSA's security threat assessment requirement, including trucking 
associations, union leaders, and individual trucking companies.\36\ 
Industry representatives that TSA contacted predict at least some 
decrease in the HME population as a result of TSA's security threat 
assessment regulation. The same industry representatives further concur 
that current CDL driver shortages across the commercial trucking 
industry, coupled with the fact that drivers are not typically paid any 
wage premium specifically for carrying hazardous materials, further 
support TSA's prediction that there will be some reduction of total HME 
holders due to TSA's security threat assessment process.
---------------------------------------------------------------------------

    \36\ To estimate the volume of HME holders expected to submit to 
the TSA security threat assessment processes, TSA conducted phone 
interviews during the months of June and July 2004 with 
representatives from the following organizations: American Trucking 
Association; Estes Express Lines; International Brotherhood of 
Teamsters; Motor Freight Carriers' Associations; National Private 
Truck Council; National Tank Truck Carriers, Inc.; and the Truckload 
Carriers Association.
---------------------------------------------------------------------------

    Empirical data suggest that there has been a decline in total HME 
holders since early 2003. A recent TSA survey of certain State motor 
vehicle administrators, representing approximately 20 percent of the 
2.7 million total HME records from the States, revealed a one-year 
weighted average decline of 17 percent from early 2003 to early 
2004.\37\ TSA believes this decline is due, at least in part, to the 
prospect of TSA's security threat assessment regulation (announced 
publicly in the May 5 IFR). With the imposition of the new fees 
requirement, TSA estimates that there will be a further 20 percent 
decline in the HME holder population resulting from the first year of 
operations after the Hazmat Program Rule takes effect on January 31, 
2005. This is the date when new HME applicants will be required to 
submit fingerprints, biographical information, and fees. Applicants 
seeking to renew expiring HMEs will be subject to the fingerprint, 
biographical information, and fee submission requirements beginning May 
31, 2005.
---------------------------------------------------------------------------

    \37\ This sample survey decline in total HME holders from 2003 
to 2004 is also supported by the decrease in total HME records in 
the Federal Motor Carrier Safety Administration's (FMCSA) Commercial 
Drivers License Information System (CDLIS) database. In early 2003, 
FMCSA reported to TSA that the CDLIS contained approximately 3.5 
million total HME holders. TSA published this earlier estimate of 
3.5 million total HME holders in the May 5 IFR. In May 2004, FMCSA 
reported approximately 2.7 million HME holders in the CDLIS.
---------------------------------------------------------------------------

    TSA expects to receive a prorated total of 360,000 new and renewal 
applications in the first year after January 31, 2005.\38\ In the 
second and third years, TSA estimates a 5 percent annual HME population 
decline each year, for a total of approximately 410,000 and 390,000 
total new and renewal applicants, respectively. After the third year, 
TSA estimates that the regulatory-induced adjustment on the HME holder 
population will have been fully realized. Thus, in the fourth and fifth 
years, TSA estimates a modest annual growth in renewals and new 
applications, in line with that of overall estimated domestic non-farm 
employment growth, at 1 percent annually. Thus, TSA expects 
approximately 394,000 and 398,000 total new applicants and renewals, 
respectively, in the fourth and fifth years. The total five-year new 
and renewal applicants for whom TSA expects to perform security threat 
assessments will thus be approximately 1.952 million.
---------------------------------------------------------------------------

    \38\ Due to the Hazmat Program Rule's May 31, 2005, compliance 
date for renewals and transfers, 360,000 is the prorated portion of 
TSA's annual estimation of 432,000 applicants in the first program 
year. The 432,000-applicant estimate is calculated by reducing 2.7 
million HMEs by 20 percent, for a total of 2,160,000, and then 
dividing by 5 to calculate an even distribution of TSA's five-year 
renewal cycle requirement. HME estimates for subsequent recurring 
years are calculated accordingly.

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[[Page 2551]]

[GRAPHIC] [TIFF OMITTED] TR13JA05.013

V. Fee Program Overview

    The fee program for the security threat assessment consists of 
three parts, discussed below: (A) The Information Collection Fee for 
the collection and transmission of fingerprints and applicant 
information; (B) the Threat Assessment Fee for the security threat 
assessment and associated notification, adjudication, appeal, and 
waiver processes; and (C) the FBI Fee for checking applicants' 
fingerprints against the FBI's CHRC database to identify past criminal 
offenses as reported to FBI. Each of these fees is structured to 
recover the Federal Government's cost of performing these functions.
    TSA notes that some States have opted to collect and transmit 
fingerprints and applicant information, and charge a user fee for those 
services under their own user fee authority. In those States, HME 
applicants will be required under the final rule to remit to the State, 
for transmission to the Federal Government, only the Threat Assessment 
Fee and FBI Fee. Nothing in this final rule prohibits the State from 
collecting a fee determined by the State under the State's own fee 
authority to cover its costs of collecting and transmitting 
fingerprints and applicant information. TSA notes that a State may not 
collect a fee pursuant to TSA's fee authority to reimburse the State's 
own costs.
    A discussion of the three fees follows.

A. Information Collection Fee

    As set forth in the Hazmat Program Rule, the security threat 
assessment process requires all drivers who apply for or renew an HME 
to submit fingerprints and other biographical information. The Hazmat 
Program Rule required States to choose one of the following two options 
for collection and transmission of fingerprints and applicant 
information:
    (1) Collect and transmit fingerprints and applicant information 
itself, either through a State agency, such as the State DMV or State 
law enforcement agencies, or by contracting with a third party; or
    (2) Allow a TSA agent to collect and transmit fingerprints and 
applicant information.
1. Cost of Information Collection
    As noted above, in those States that have chosen to allow a TSA 
agent to collect and transmit fingerprints and applicant information, 
TSA will hire a contractor agent to provide those services. Based on 
TSA's research of both commercial and Government fingerprint and 
information collection services, as well as a competitive bidding and 
acquisition process, TSA has concluded that the per applicant cost to 
collect and transmit fingerprints and other required applicant data 
electronically is $38. This also includes the costs for required 
administrative support, quality control, and chain of custody 
assurance.
2. Information Collection Fee
    Based on the above costs, TSA concludes that the per applicant fee 
for information collection and transmission will be $38. This fee will 
only apply to those HME applicants in States that have chosen to have a 
TSA agent perform information collection and transmission, as well as 
related administrative support. States that choose to perform the 
information collection and transmission functions themselves, and 
charge a fee to recover the costs of performing these services, are 
responsible for establishing their own State fee, in accordance with 
their State user fee authority and requirements. TSA's Information 
Collection Fee may not be the same as the fees States may establish for 
performing these services. The Information Collection Fee will not 
include the fee charged by FBI to process fingerprint identification 
records.

B. Threat Assessment Fee

    For the TSA security threat assessment process, each applicant's 
information will be checked against multiple databases and other 
information sources so TSA can determine whether the applicant poses a 
security threat that warrants denial of the HME. This check searches 
for potential security threats, immigration status, past criminal 
activity and mental incompetence. TSA will perform all of the threat 
assessment functions. The threat assessment includes an appeal process 
for individuals who believe the records on which TSA bases its 
determination are incorrect. In addition, TSA will administer a waiver 
process for applicants who seek a waiver of disqualification. 
Individuals whom TSA has determined pose a security threat based on 
reviews of pertinent databases, or who are not in the U.S. lawfully, 
are not eligible for a waiver.\39\
---------------------------------------------------------------------------

    \39\ These threat assessment standards are contained at 49 CFR 
part 1572.
---------------------------------------------------------------------------

1. Start-Up Costs
    TSA's effort to conduct security threat assessments on drivers with 
an HME will require ``start-up'' costs and annual ``recurring'' costs 
for checks conducted in years after January 31, 2005. The

[[Page 2552]]

start-up costs will consist of all the costs associated with start-up 
activities necessary to implement the program. The start-up costs 
include the systems, personnel, and resources TSA will be required to 
bring on-line to conduct security threat assessments on applicants 
renewing or newly applying for a CDL with an HME.
    Regardless of whether a State or a TSA agent collects and transmits 
fingerprints and applicant information, TSA must implement and maintain 
the appropriate systems, resources, and personnel to ensure that 
fingerprints and applicant information are ``linked,'' and that TSA can 
receive and act on the results of the security threat assessment. TSA 
will be required to have the necessary resources to perform the 
security threat assessments and process appeals, requests for waivers, 
and notification (to the driver and the appropriate State) of all 
results. In addition, TSA must be capable of archiving the results of 
these actions for the purpose of drivers newly applying or renewing 
their HME application in future years (in the case of drivers who 
successfully appealed a TSA background check or were granted a waiver).
    TSA estimates that the total start-up cost for the hazmat program 
will be $4.44 million. This estimate includes: (i) $4.02 million for 
all information systems costs, including the development and deployment 
of TSA's Screening Gateway--an information system platform that will 
allow TSA to submit, receive, and integrate security threat assessment 
information from a variety of Federal, State, and other sources in 
order to help make security threat assessment determinations--as well 
as related network and communication support costs, including access to 
information systems from AAMVA, an adjudication helpdesk system, and 
support capability to keep applicants informed on the status of their 
threat assessments; (ii) $360,000 for contract personnel to perform 
various program management functions in support of program operations; 
and (iii) $60,000 for office costs, including program travel. TSA notes 
that certain start-up overhead costs that directly support the program, 
such as those for human resources, most financial systems, accounting 
and budgeting support costs and TSA executive management time, have not 
been included in the user fees. See Figure 2 below for additional 
details.
2. Recurring Costs
    This section summarizes TSA's estimated costs of completing 
security threat assessments on individuals who apply for or renew an 
HME for each year after January 31, 2005. Recurring costs represent the 
resources necessary for TSA to perform ongoing security threat 
assessments on drivers applying for or renewing an HME as well as to 
maintain program infrastructure (e.g., technical systems). As 
previously stated, TSA estimates that the population of drivers who 
apply for or renew an HME will be 360,000 drivers for the prorated 
first year (due to the phased in approach whereby HME renewal and 
transfer applicants must comply with TSA's program requirements 
beginning May 31, 2005). Pursuant to the Hazmat Program Rule, State 
Departments of Motor Vehicles (DMVs) will be prohibited from issuing or 
renewing an HME until TSA has notified the State that the driver (based 
on a security threat assessment) does not pose a security threat.
    TSA estimates that the total annual recurring costs for performing 
threat assessments will be $14.35 million for the first year (i.e., 
from January 31, 2005 to January 30, 2006) and between $11.62 million 
and $11.86 million per year for the second through fifth years.\40\ 
Recurring costs will include the costs of: continued development and 
lifecycle maintenance of information systems; disaster recovery 
infrastructure, digitization of applicant biographical data; the use of 
databases containing citizenship, international criminal history, and 
other data necessary to perform a security threat assessment; Federal 
and contractor personnel to perform all program office functions, 
including support of State's activities in the program along with 
compliance assurance; Federal and contractor support to perform 
security threat assessments, and to administer and document 
adjudications, appeals, and waivers; \41\ and office costs, including 
office space, notification mailing costs, and required program travel. 
See Figure 2 for additional cost details.
---------------------------------------------------------------------------

    \40\ All cost and fee estimates in recurring years are not 
adjusted for inflation.
    \41\ As the Hazmat Program matures, and TSA gains experience 
with the appeals and waiver processes, the agency may need to adjust 
these processes. If TSA adjusts the appeals or waiver process, the 
agency's costs may increase or decrease, which would necessitate an 
adjustment in the Threat Assessment Fee.
---------------------------------------------------------------------------

3. Threat Assessment Total Costs
    Based on its population and cost estimates assumptions, TSA 
concludes that the total of start-up and the first five years' 
recurring costs will be $65.76 million. Recurring costs are not 
adjusted for inflation. All figures are rounded to the nearest 
thousand.

BILLING CODE 4910-62-P

[[Page 2553]]

[GRAPHIC] [TIFF OMITTED] TR13JA05.016

BILLING CODE 4910-62-C

[[Page 2554]]

4. Threat Assessment Fee Calculation
    TSA will charge a fee to recover most of its security threat 
assessment start-up costs as well as all recurring costs. The start-up 
costs include non-recurring costs required to perform the security 
threat assessments that include fingerprint submission. Because these 
costs cannot be recovered prior to the full implementation of the 
Hazmat Program, and because all HME recipients benefit from the 
services provided as a result of the infrastructure and capabilities 
that TSA must develop to implement the Hazmat Program, TSA proposes to 
amortize the start-up costs over a five-year period to recover these 
one-time costs equitably.
    This amortization period coincides with the requirement in the 
FMCSA companion rule \42\ to the May 5 IFR \43\ that States mandate a 
five-year maximum renewal period for the HMEs. Thus, a five-year 
amortization period means the start-up costs will be borne by all 
individuals who either currently hold an HME or who apply for an HME in 
that five-year period. TSA notes that the amortization is done by 
totaling all start-up costs and the five-year annual recurring costs 
and dividing by 1.952 million requests for a new or renewed HME--the 
total number expected in the first five years. (See Figure 1).
---------------------------------------------------------------------------

    \42\ 68 FR 23843 (May 5, 2003).
    \43\ 68 FR 23852 (May 5, 2003).
---------------------------------------------------------------------------

    Based on the estimated costs in Figure 2, TSA has calculated the 
per applicant Threat Assessment Fee as follows: TSA's estimated start-
up costs of $4.44 million, added to the estimated sum of the first five 
years' annual recurring costs of $61.32 million, equal a total of 
$65.76 million. These total costs are then divided by the 1.952 million 
total estimated number of applicants for a new or renewed HME over the 
first five years after January 31, 2005. This calculation results in an 
estimated cost to each applicant of $33.69, which is rounded up to $34 
per applicant.
    As noted above, States that have chosen to collect and transmit 
fingerprints and applicant information under the Hazmat Program Rule 
are still required to collect the Threat Assessment Fee on behalf of 
TSA and remit it to TSA in accordance with the final rule. In States 
that have chosen to allow a TSA agent to collect and transmit 
fingerprints and applicant information under the Hazmat Program Rule, 
the TSA agent is required to collect this fee on behalf of TSA and 
remit it to TSA in accordance with the final rule.

C. FBI Fee

    As part of the security threat assessment, TSA will use FBI's CHRC 
process. The FBI is authorized to establish and collect fees to process 
fingerprint identification records and name checks for non-criminal 
justice, non-law enforcement employment and licensing purposes that may 
be used for salaries and other expenses incurred in providing these 
services.\44\ Pursuant to Criminal Justice Information Services (CJIS) 
Information Letter 93-3 (October 8, 1993), this fee is currently set at 
$24. CJIS Information Letter 93-3 provides that ``State Identification 
Bureaus and other agencies that channel user-fee fingerprint cards to 
the FBI and account for the fees on a monthly basis will continue to 
retain $2 of the payment to help offset handling costs.'' Thus, in 
those States that have opted to allow a TSA agent to collect and 
transmit fingerprints and applicant information, the FBI fingerprint 
processing charge (FBI Fee) will be $22. States that have chosen to 
collect and transmit fingerprints and applicant information on their 
own may charge $24 (the $22 FBI Fee plus the $2 handling costs), as 
long as it is consistent with CJIS Information Letter 93-3. The 
fingerprint processing user fee is set by the FBI, and the amount is 
subject to change.
---------------------------------------------------------------------------

    \44\ See Title II of Pub. L. 101-515, November 5, 1990, 104 
Stat. 2112, codified in a note to 28 U.S.C. 534.
---------------------------------------------------------------------------

VI. Total Fees

    In this final rule, TSA establishes the following fees for HME 
applicants who submit fingerprints and applicant information to a TSA 
agent:
    (1) Information Collection and Transmission Fee: $38.
    (2) Threat Assessment Fee: $34.
    (3) FBI Fee: $22.
    Thus, the total fees for such applicants are $94.
    Under the final rule, in States that have opted to collect and 
transmit fingerprints and applicant information on their own, HME 
applicants will be required to pay the $34 Threat Assessment Fee and an 
FBI Fee of $22 or $24, depending on the amount charged by the State. 
TSA assumes that such applicants also will be required under State user 
fee authority to pay to the State a fee to cover the State's costs of 
collecting and transmitting fingerprints and applicant information. 
That fee may vary from State to State. Thus, TSA cannot estimate the 
total fees for such applicants.

VII. Section by Section Analysis

    TSA did not receive any substantive public comments on the fee 
collection procedures proposed in the Fee NPRM, and so has made very 
few revisions to those procedures in the final rule.
    Section 1572.301 establishes the applicability of this part and 
definitions of terms used in this part. This part applies to States 
that issue an HME, individuals who apply for a new or renewed HME, and 
entities that collect fees from such individuals on behalf of TSA.
    The terms ``commercial driver's license,'' ``endorsement,'' and 
``hazardous materials'' are used as defined in FMCSA regulations.
    The term ``day'' is defined as a calendar day.
    The term ``FBI Fee'' is defined as the fee required for the cost of 
the FBI to process fingerprint identification records and name checks.
    The term ``hazardous materials endorsement'' is defined as the 
authorization for an individual to transport hazardous materials in 
commerce, which must be issued on the individual's commercial driver's 
license.
    The term ``Information Collection Fee'' is defined as the fee 
required for the cost of collecting and transmitting fingerprints and 
other applicant information under 49 CFR part 1572.
    The term ``State'' is defined as a U.S. State or the District of 
Columbia.
    The term ``Threat Assessment Fee'' is defined as the fee required 
for the cost of TSA adjudicating security threat assessments, appeals, 
and waivers under 49 CFR part 1572.
    The term ``TSA agent'' is defined as an entity approved by TSA to 
collect fingerprints in accordance with 49 CFR part 1572 and fees in 
accordance with this subpart.
    Sections 1572.303 through 1572.399 are reserved.
    Section 1572.401 requires a State that collects fingerprints and 
applicant information under 49 CFR part 1572 to collect, handle, and 
remit to TSA the Threat Assessment Fee in accordance with the 
procedures in Sec.  1572.403. The State also is required to collect and 
remit to the FBI the FBI Fee in accordance with established FBI 
procedures. After discussions with the FBI, TSA added this requirement 
to the final rule because the FBI intends to bill States for CHRCs it 
will perform in accordance with procedures already established by FBI 
and the States.
    Section 1572.401 also requires a TSA agent that collects 
fingerprints and applicant information under 49 CFR

[[Page 2555]]

part 1572 to collect the Information Collection Fee, Threat Assessment 
Fee, and FBI Fee in accordance with procedures approved by TSA. A TSA 
agent also is required to remit to TSA the Threat Assessment Fee and 
the FBI Fee in accordance with procedures approved by TSA.
    Section 1572.403 describes the procedures a State is required to 
follow if the State chooses to collect and transmit fingerprints under 
the Hazmat Program Rule. Section 1572.403 pertains only to the 
collection of the Threat Assessment Fee to cover TSA's costs and the 
FBI Fee to cover the costs of the CHRC.\45\ Nothing in this regulation 
prohibits a State from collecting additional fees, under its own user 
fee authority, to cover its costs of collecting and transmitting 
fingerprints and applicant information at the time the State collects 
the TSA Threat Assessment Fee and the FBI Fee from HME applicants.
---------------------------------------------------------------------------

    \45\ As noted above, the FBI currently allows States to charge 
$24 for the FBI CHRC.
---------------------------------------------------------------------------

    Paragraph 1572.403(a) requires States to impose the Threat 
Assessment Fee and the FBI Fee when an individual submits an 
application to the State for a new or renewed HME in compliance with 49 
CFR part 1572. It also establishes the TSA Threat Assessment Fee at 
$34. Finally, it requires the individual applying for the HME, or that 
individual's employer, to remit the Threat Assessment Fee and the FBI 
Fee to the State in which the individual is applying for the HME, in a 
form and manner approved by TSA and the State.
    Paragraph 1572.403(b) requires each State to collect the Threat 
Assessment Fee and the FBI Fee from an individual at the time the 
individual submits an application for a new or renewed HME. TSA expects 
that as States become fully operational for purposes of this part, TSA 
will be receiving names frequently and far in advance of the States 
remitting the Threat Assessment Fee. Therefore, it is vital that the 
States collect the Threat Assessment Fee under this part from the 
applicant as the application is submitted. In addition, paragraph 
1572.403(d)(8) provides that TSA does not envision issuing any refunds. 
Once the application is received by TSA, analysis of the application 
will commence immediately. Therefore, TSA incurs the costs of 
performing the analysis immediately. Paragraph 1572.403(b)(2) clarifies 
that once TSA receives an application from a State for a security 
threat assessment in accordance with 49 CFR part 1572, the State is 
liable for the Threat Assessment Fee.
    Paragraph 1572.403(c) establishes requirements for the handling of 
Threat Assessment Fees collected by the States prior to remittance to 
TSA. Because the States are collecting the Threat Assessment Fees on 
behalf of TSA, the fees are considered to be held in trust for the 
beneficial interest of the United States. Thus, States are required to 
safeguard all Threat Assessment Fees collected until they are remitted 
to TSA. In addition, States are required to account for Threat 
Assessment Fees separately. However, States are permitted to commingle 
such fees with other sources of revenue.
    Paragraph 1572.403(d) establishes procedures for the remittance of 
Threat Assessment Fees to TSA. States are required to remit all Threat 
Assessment Fees collected under this part to TSA on a monthly basis. 
Every month, TSA will issue an invoice to each State based on the 
number of HME applications the State has sent to TSA. For example, if a 
State sends TSA 100 HME applications during the month of February, TSA 
will bill the State $3400 (100 x $34). The State is required to pay the 
invoice in full within 30 days of the date that TSA sends the invoice 
to the State.
    The payments must be remitted to TSA by check, money order, wire, 
or any other payment method acceptable to TSA in the future. Payments 
must be made in U.S. currency and made payable to the ``Transportation 
Security Administration.'' States are allowed to retain any interest 
that accrues on the principal amounts of the Threat Assessment Fees 
between the date of collection and the date the fees are remitted to 
TSA, which shall not be more than 30 days after the date on which TSA 
sends the invoice to the State.
    Paragraph (d) also specifies that TSA accept fees only from a 
State, not from an individual HME applicant. TSA will not issue any fee 
refunds, and, if a State does not remit the Threat Assessment Fees, TSA 
may decline to process any HME applications from that State. TSA 
reserves the right to take any other appropriate action against 
delinquent States, as necessary.
    Section 1572.405 describes the procedures that an HME applicant is 
required to follow if a TSA agent collects fingerprints and applicant 
information under the Hazmat Program Rule. Paragraph 1572.405(a) 
requires an individual applying for an HME, or that individual's 
employer, to remit the Threat Assessment Fee, FBI Fee, and Information 
Collection Fee to the TSA agent, in a form and manner approved by TSA, 
when the individual submits an application pursuant to part 1572 to the 
TSA agent. It also establishes the Threat Assessment Fee at $34, the 
FBI Fee at $22, and the Information Collection Fee at $38.
    Paragraph 1572.405(b) states that a TSA agent will collect the fees 
required under this section when an individual submits an application 
pursuant to 49 CFR part 1572. A TSA agent will: (1) Collect and remit 
to TSA the Threat Assessment Fee; (2) collect and keep the Information 
Collection Fee; and (3) collect and remit to TSA the FBI Fee for 
forwarding to the FBI.
    Paragraph 1572.405(c) requires that fees remitted under this 
section be remitted to TSA by check, money order, wire or any payment 
method acceptable to TSA in the future. Payments must be made in U.S. 
currency and made payable to the ``Transportation Security 
Administration.'' It also specifies that TSA will not issue any refunds 
of fees submitted under this section. Finally, it specifies that 
applications submitted under 49 CFR part 1572 are processed only upon 
receipt of all applicable fees.

Paperwork Reduction Act

    The Paperwork Reduction Act of 1995 (PRA) (44 U.S.C. 3501-3520), as 
amended, requires consideration of the impact of paperwork and other 
information collection burdens imposed on the public. As provided by 
the PRA, an agency may not conduct or sponsor, and a person is not 
required to respond to, a collection of information unless it displays 
a currently valid Office of Management and Budget (OMB) control number. 
TSA has determined that there are no new information collection 
requirements associated with this final rule.
    TSA notes that the Hazmat Program Rule requires drivers to submit 
their fingerprints and other biographical information. Those 
requirements may be considered an information collection burden under 
the PRA. Since they are imposed under the Hazmat Program Rule, they are 
discussed in that rulemaking.

Regulatory Analyses

    Changes to Federal regulations must undergo several economic 
analyses. First, Executive Order 12866 directs each Federal agency to 
adopt a regulation only if the agency makes a reasoned determination 
that the benefits of the intended regulation justify its costs. Second, 
the Regulatory Flexibility Act of 1980 (5 U.S.C. 605(b)) requires 
agencies to analyze the economic impact of regulatory changes on small 
entities. Third, the Trade Agreements Act (19 U.S.C. 2531-2533) 
prohibits

[[Page 2556]]

agencies from setting standards that create unnecessary obstacles to 
the foreign commerce of the United States. In developing U.S. 
standards, the Trade Agreement Act requires agencies to consider 
international standards, where appropriate, as the basis of U.S. 
standards. Fourth, the Unfunded Mandates Reform Act of 1995 (Public Law 
104-4) requires agencies to prepare a written assessment of the costs, 
benefits, and other effects of 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).
    In conducting these analyses, TSA has determined:
    1. This rule is not economically significant, as neither the costs 
nor benefits exceed $100 million annually.
    2. This rule is a ``significant regulatory action'' as defined in 
the Executive Order because there is significant public interest in 
security issues since September 11, 2001.
    3. Both threshold tests and a Final Regulatory Flexibility Analysis 
show the rule will not have a significant direct impact on a 
substantial number of small entities.
    4. The rule will impose no significant barriers to international 
trade.
    5. The rule will not impose an unfunded mandate on State, local, or 
tribal governments, or on the private sector in excess of $100 million 
annually.

Executive Order 12866 Assessment

    Executive Order 12866, ``Regulatory Planning and Review'' (58 FR 
51735, October 4, 1993), provides for making determinations whether a 
regulatory action is ``significant'' and therefore subject to OMB 
review and to the requirements of the Executive Order. TSA has 
determined that this action is a significant regulatory action within 
the meaning of Executive Order 12866 because there is significant 
public interest in security issues since September 11, 2001, as well as 
the background check requirements in the Hazmat Program Rule.
    This final rule responds to the requirements of section 520 of the 
2004 Appropriations Act by establishing fees for the background checks 
TSA is required to perform by section 1012 of the USA PATRIOT Act and 
sections 1121-1123 of the SEA. The final rule establishes two fees: A 
user fee to cover the HME security threat assessment program and 
associated costs (Threat Assessment Fee) and a user fee to cover the 
costs of collecting and transmitting fingerprints and applicant 
information (Information Collection Fee). The amount of the fees are 
$34 (Threat Assessment Fee) and $38 (Information Collection and 
Transmission Fee) per HME applicant. There will also be a $22 fee to 
cover FBI's CHRC.
    TSA has prepared a full regulatory evaluation for this final rule, 
which is available for review in the docket of this matter. The 
regulatory evaluation examines the costs and benefits of the final rule 
establishing fees for security threat assessments that TSA is required 
to perform on individuals who apply for or renew an HME for a CDL. The 
results of the evaluation are summarized below.

Costs

    The costs that result from the implementation of the Hazmat Fee 
Rule are the administrative and labor costs related to determining an 
equitable level for the Transportation Security Administration's threat 
assessment fee; remitting and processing that fee; and remitting and 
processing the Federal Bureau of Investigation's criminal history 
record check fee. The costs identified in this regulatory evaluation 
are not the costs of completing threat assessments or criminal history 
record checks. Because those identity vetting procedures are mandated 
by a companion interim final rule, titled ``Security Threat Assessment 
for Individuals Applying for a Hazardous Materials Endorsement for a 
Commercial Driver's License'' RIN 1652-AA17 (Hazmat Program Rule), the 
costs of those procedures were catalogued in that rule's attendant 
regulatory evaluation.
    The total administrative and labor costs of the Hazmat Fee Rule, 
however, are a function of how each State decides to fulfill the 
requirements of the Hazmat Program Rule. In complying with the Hazmat 
Program Rule, each State must either collect and forward all 
fingerprints, applicant information, and fees to TSA and the FBI, or 
allow an entity approved by TSA to complete these tasks. States were 
required to notify TSA in writing of their choice by December 27, 2004.
    The Hazmat Program Rule was published on November 24, 2004, and 17 
States notified TSA that they will opt to collect all requisite fees 
and applicant information and then pass that information along to TSA 
and the FBI. In constant 2004 U.S. dollars, the total ten year cost for 
this aspect of the program is estimated to be approximately $900,000.
    The remaining 34 States will allow a TSA-approved agent to perform 
all required fingerprint, fee and information collection duties. For 
this aspect of the program, the ten-year cost of the Fee Rule is 
estimated to be $1.3 million. The total ten-year cost for this final 
rule, therefore, is estimated to be $2.2 million in constant 2004 U.S. 
dollars. Discounted, the rule is estimated to cost $1.6 million over 
the ten-year horizon.
    Two summary tables provide an overview of the cost estimates. See 
Figures 2 and 3. A detailed discussion of the cost estimates can be 
found in the Cost of Compliance Section of this evaluation.

[[Page 2557]]

[GRAPHIC] [TIFF OMITTED] TR13JA05.014

[GRAPHIC] [TIFF OMITTED] TR13JA05.015

Benefits

    There are several qualitative benefits realized from the 
implementation of the Hazmat Fee Rule. Primarily, the Hazmat Fee Rule 
provides a funding mechanism for the Hazmat Program Rule, which 
regulates the population of drivers with hazardous materials 
endorsements. By creating a set of fees, TSA ensures that the cost of 
regulation is not the sole responsibility of the Federal Government. 
TSA determined that creating a fee rule was the most efficient and cost 
effective way to fund the aforementioned Hazmat Program Rule.

Final Regulatory Flexibility Assessment

    The Regulatory Flexibility Act of 1980 (RFA), as amended, was 
enacted by Congress to ensure that small entities (small businesses, 
small not-for-profit organizations, and small governmental 
jurisdictions) are not unnecessarily or disproportionately burdened by 
Federal regulations. The RFA requires agencies to review rules to 
determine if they have ``a significant economic impact on a substantial 
number of small entities.'' TSA has determined that this final rule 
will not have a significant economic impact on a substantial number of 
small entities.
    An analysis of the rule's impact on small entities, as well as 
responses to comments on the analysis that TSA prepared for the Fee 
NPRM, is contained in the Final Regulatory Evaluation, which is 
available in the docket of this rulemaking. Based on that analysis, TSA 
has determined that the rule will have an impact on a substantial 
number of small entities. However, TSA has determined that the impact 
on entities affected by the rule will not be significant. Accordingly, 
TSA hereby certifies that this rule will not have a significant 
economic impact

[[Page 2558]]

on a substantial number of small entities.

Unfunded Mandates Assessment

    Section 202 of the Unfunded Mandates Reform Act of 1995 (UMRA) 
requires Federal 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 more 
than $100 million in any one year (adjusted for inflation with base 
year of 1995). Before promulgating a rule for which a written 
assessment is needed, section 205 of UMRA generally requires TSA to 
identify and consider a reasonable number of regulatory alternatives 
and adopt the least costly, most cost-effective, or least burdensome 
alternative that achieves the objective of the rule. The provisions of 
section 205 do not apply when they are inconsistent with applicable 
law. Moreover, section 205 allows TSA to adopt an alternative other 
than the least costly, most cost-effective, or least burdensome 
alternative if the agency publishes with the final rule an explanation 
of the reasons that alternative was not adopted.
    TSA has determined that this rule will not result in the 
expenditure by State, local, or tribal governments, in the aggregate, 
or by the private sector, of more than $100 million annually.

International Trade Impact Assessment

    The Trade Agreement Act of 1979 prohibits Federal agencies from 
establishing any standards or engaging in related activities that 
create unnecessary obstacles to the foreign commerce of the United 
States. Legitimate domestic objectives, such as safety, 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.
    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. This final rule will impact 
only individuals applying for a State-issued HME, not individuals with 
an HME issued by Canada or Mexico. As noted above, TSA has implemented 
a program for Canadian drivers who transport explosives into the U.S. 
TSA is also consulting with Canada and Mexico on requiring threat 
assessments for Canadian and Mexican drivers who transport hazmat into 
the U.S., and will continue to do so. TSA will also continue to consult 
with Canada and Mexico to ensure that any adverse impacts on trade are 
minimized.

Executive Order 13132 (Federalism)

    Executive Order 13132 requires TSA to develop an accountable 
process to ensure ``meaningful and timely input by State and local 
officials in the development of regulatory policies that have 
federalism implications.'' ``Policies that have federalism 
implications'' is defined in the Executive Order to include regulations 
that have ``substantial direct effects 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.''
    TSA has analyzed this final rule under the principles and criteria 
of Executive Order 13132. TSA notes that various statutes mandate the 
requirements of this final rule, including the USA PATRIOT Act, SEA, 
and section 520 of the Homeland Security Appropriations Act of 2004. 
Moreover, the Federal Government, primarily through the Federal Motor 
Carrier Safety Administration, is already substantially involved in 
establishing conditions for the issuance of an HME. Accordingly, TSA 
has determined that this action will not have 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, and therefore 
will not have federalism implications. However, TSA determined that the 
Hazmat Program Rule has federalism implications.\46\ In the preamble of 
the Hazmat Program Rule, TSA noted that both TSA and FMCSA coordinated 
with the States in the development of the rule.
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    \46\ See 69 FR 68741 (November 24, 2004).
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Environmental Analysis

    TSA has reviewed this proposal 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. The final rule will only implement a fee structure 
for commercial drivers who transport hazardous materials, and thus will 
have no environmental consequences.

Energy Impact

    TSA has assessed the energy impact of this proposal in accordance 
with the Energy Policy and Conservation Act (EPCA) Public Law 94-163, 
as amended (42 U.S.C. 6362). TSA has determined that this rulemaking is 
not a major regulatory action under the provisions of the EPCA.

List of Subjects in 49 CFR Part 1572

    Fees, Commercial driver's license, Criminal history background 
checks, Explosives, Hazardous materials, Motor carriers, Motor vehicle 
carriers, Security measures, Security threat assessment.

The Amendments

0
For the reasons set forth in the preamble, the Transportation Security 
Administration amends chapter XII of title 49, Code of Federal 
Regulations, as follows:

Subchapter D--Maritime and Land Transportation Security

PART 1572--CREDENTIALING AND BACKGROUND CHECKS FOR LAND 
TRANSPORTATION SECURITY

0
1. The authority citation for part 1572 is revised to read as follows:

    Authority: 49 U.S.C. 114, 5103a, 40113, and 46105; 18 U.S.C. 
842, 845; Sec. 520, Pub. L. 108-90, 117 Stat. 1156 (6 U.S.C. 469).


0
2. Add new subparts D and E to part 1572 as follows:
Subpart D--Fees for Security Threat Assessments for Individuals
Sec.
1572.301 Scope and definitions.
1572.303-1572.399 [Reserved]
Subpart E--Fees for Security Threat Assessments for Hazmat Drivers
1572.401 Fee collection options.
1572.403 Fee procedures for collection by States.
1572.405 Fee procedures for collection by TSA agents.

Subpart D--Fees for Security Threat Assessments for Individuals


Sec.  1572.301  Scope and definitions.

    (a) Scope. This part applies to:
    (1) States that issue a hazardous materials endorsement for a 
commercial driver's license;
    (2) Individuals who apply for or renew a hazardous materials 
endorsement for a commercial driver's license and must undergo a 
security threat assessment under 49 CFR part 1572; and
    (3) Entities who collect fees from such individuals on behalf of 
TSA.
    (b) Terms. As used in this part:
    Commercial driver's license (CDL) is used as defined in 49 CFR 
383.5.
    Day means calendar day.
    Endorsement is used as defined in 49 CFR 383.5.
    FBI Fee means the fee required for the cost of the Federal Bureau 
of

[[Page 2559]]

Investigation to process fingerprint identification records and name 
checks.
    Hazardous materials means any material that has been designated as 
hazardous under 49 U.S.C. 5103 and is required to be placarded under 
subpart F of 49 CFR part 172 or any quantity of a material listed as a 
select agent or toxin in 42 CFR part 73.
    Hazardous materials endorsement (HME) means the authorization for 
an individual to transport hazardous materials in commerce, which must 
be issued on the individual's commercial driver's license.
    Information Collection Fee means the fee required in this part for 
the cost of collecting and transmitting fingerprints and other 
applicant information under 49 CFR part 1572.
    State means a State of the United States or the District of 
Columbia.
    Threat Assessment Fee means the fee required in this part for the 
cost of TSA adjudicating security threat assessments, appeals, and 
waivers under 49 CFR part 1572.
    TSA agent means an entity approved by TSA to collect and transmit 
fingerprints and applicant information in accordance with 49 CFR part 
1572 and fees in accordance with this part.


Sec. Sec.  1572.303-1572.399  [Reserved]

Subpart E--Fees for Security Threat Assessments for Hazmat Drivers


Sec.  1572.401  Fee collection options.

    (a) State collection and transmission. If a State collects 
fingerprints and applicant information under 49 CFR part 1572, the 
State must collect and transmit to TSA the Threat Assessment Fee in 
accordance with the requirements of Sec.  1572.403. The State also must 
collect and remit the FBI Fee in accordance with established 
procedures.
    (b) TSA agent collection and transmission. If a TSA agent collects 
fingerprints and applicant information under 49 CFR part 1572, the 
agent must--
    (1) Collect the Information Collection Fee, Threat Assessment Fee, 
and FBI Fee in accordance with procedures approved by TSA;
    (2) Transmit to TSA the Threat Assessment Fee in accordance with 
procedures approved by TSA; and
    (3) Transmit to TSA the FBI Fee in accordance with procedures 
approved by TSA and the Federal Bureau of Investigation.


Sec.  1572.403  Fee procedures for collection by States.

    This section describes the procedures that a State that collects 
fingerprints and applicant information under 49 CFR part 1572, and the 
procedures an individual who applies for a new HME or renewal of an 
existing HME for a CDL in that State, must follow for collection and 
transmission of the Threat Assessment Fee and the FBI Fee.
    (a) Imposition of fees. (1) The following Threat Assessment Fee is 
required for TSA to conduct a security threat assessment under 49 CFR 
part 1572 for an individual who applies for a new HME or renewal of an 
existing HME: $34.
    (2) The following FBI Fee is required for the FBI to process 
fingerprint identification records and name checks required under 49 
CFR part 1572: the fee collected by the FBI under 28 U.S.C. 534.
    (3) An individual who applies for a new or renewed HME, or the 
individual's employer, must remit to the State the Threat Assessment 
Fee and the FBI Fee, in a form and manner approved by TSA and the 
State, when the individual submits the application for the HME to the 
State.
    (b) Collection of fees. (1) A State must collect the Threat 
Assessment Fee and FBI Fee when an individual submits an application to 
the State for a new HME or renewal of an existing HME.
    (2) Once TSA receives an application from a State for a security 
threat assessment under 49 CFR part 1572, the State is liable for the 
Threat Assessment Fee.
    (3) Nothing in this subpart prevents a State from collecting any 
other fees that a State may impose on an individual who applies for a 
new HME or renewal of an existing HME.
    (c) Handling of fees. (1) A State must safeguard all Threat 
Assessment Fees from the time of collection until remittance to TSA.
    (2) All Threat Assessment Fees are held in trust by a State for the 
beneficial interest of the United States in paying for the costs of 
conducting the security threat assessment required by 49 U.S.C. 5103a 
and 49 CFR part 1572. A State holds neither legal nor equitable 
interest in the Threat Assessment Fees except for the right to retain 
any accrued interest on the principal amounts collected pursuant to 
this section.
    (3) A State must account for Threat Assessment Fees separately, but 
may commingle such fees with other sources of revenue.
    (d) Remittance of fees. (1) TSA will generate and provide an 
invoice to a State on a monthly basis. The invoice will indicate the 
total fee dollars (number of applicants times the Threat Assessment 
Fee) that are due for the month.
    (2) A State must remit to TSA full payment for the invoice within 
30 days after TSA sends the invoice.
    (3) TSA accepts Threat Assessment Fees only from a State, not from 
an individual applicant for an HME.
    (4) A State may retain any interest that accrues on the principal 
amounts collected between the date of collection and the date the 
Threat Assessment Fee is remitted to TSA in accordance with paragraph 
(d)(2) of this section.
    (5) A State may not retain any portion of the Threat Assessment Fee 
to offset the costs of collecting, handling, or remitting Threat 
Assessment Fees.
    (6) Threat Assessment Fees remitted to TSA by a State must be in 
U.S. currency and made payable to the ``Transportation Security 
Administration.''
    (7) Threat Assessment Fees must be remitted by check, money order, 
wire or any other payment method acceptable to TSA.
    (8) TSA will not issue any refunds of Threat Assessment Fees.
    (9) If a State does not remit the Threat Assessment Fees for any 
month, TSA may decline to process any HME applications from that State.


Sec.  1572.405  Fee procedures for collection by TSA agents.

    This section describes the procedures that an individual who 
applies for a new HME or renewal of an existing HME for a CDL must 
follow if a TSA agent collects and transmits the Information Collection 
Fee, Threat Assessment Fee, and FBI Fee.
    (a) Imposition of fees. (1) The following Information Collection 
Fee is required for a TSA agent to collect and transmit fingerprints 
and applicant information in accordance with 49 CFR part 1572: $38.
    (2) The following Threat Assessment Fee is required for TSA to 
conduct a security threat assessment under 49 CFR part 1572 for an 
individual who applies for a new HME or renewal of an existing HME: 
$34.
    (3) The following FBI Fee is required for the FBI to process 
fingerprint identification records and name checks required under 49 
CFR part 1572: The fee collected by the FBI under 28 U.S.C. 534.
    (4) An individual who applies for a new or renewed HME, or the 
individual's employer, must remit to the TSA agent the Information 
Collection Fee, Threat Assessment Fee, and FBI Fee, in a form and 
manner approved by TSA, when the individual submits the application 
required under 49 CFR part 1572.
    (b) Collection of fees. A TSA agent will collect the fees required 
under this

[[Page 2560]]

section when an individual submits an application to the TSA agent in 
accordance with 49 CFR part 1572.
    (c) Remittance of fees. (1) Fees required under this section that 
are remitted to a TSA agent must be made in U.S. currency and made 
payable to the ``Transportation Security Administration.''
    (2) Fees required under this section must be remitted by check, 
money order, wire or any other payment method acceptable to TSA.
    (3) TSA will not issue any refunds of fees required under this 
section.
    (4) Applications submitted in accordance with 49 CFR part 1572 will 
be processed only upon receipt of all applicable fees under this 
section.

    Issued in Arlington, Virginia, on January 10, 2005.
Carol DiBattiste,
Acting Assistant Secretary of Homeland Security for TSA.
[FR Doc. 05-773 Filed 1-11-05; 9:50 am]
BILLING CODE 4910-62-P