[Federal Register Volume 71, Number 155 (Friday, August 11, 2006)]
[Rules and Regulations]
[Pages 46079-46101]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 06-6862]



[[Page 46079]]

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DEPARTMENT OF JUSTICE

Bureau of Alcohol, Tobacco, Firearms, and Explosives

27 CFR Part 555

[Docket No. ATF 6F; AG Order No. 2829-2006]
RIN 1140-AA25


Commerce in Explosives--Hobby Rocket Motors (2004R-7P)

AGENCY: Bureau of Alcohol, Tobacco, Firearms, and Explosives (ATF), 
Justice.

ACTION: Final rule.

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SUMMARY: The Department of Justice is amending the regulations of the 
Bureau of Alcohol, Tobacco, Firearms, and Explosives (ATF) to clarify 
that the requirements of part 555 do not apply to model rocket motors 
consisting of ammonium perchlorate composite propellant, black powder, 
or other similar low explosives, containing no more than 62.5 grams of 
total propellant weight, and designed as single-use motors or as reload 
kits capable of reloading no more than 62.5 grams of propellant into a 
reusable motor casing. This final rule is intended to provide rocketry 
hobbyists with guidance to enable them to enjoy their hobby in 
compliance with the safety and security requirements of the law and 
regulations.
    The remaining proposals made in ATF's notice of proposed rulemaking 
(Notice No. 968) will be addressed separately in a forthcoming 
rulemaking document or documents.

DATES: This rule is effective October 10, 2006.

FOR FURTHER INFORMATION CONTACT: James P. Ficaretta; Enforcement 
Programs and Services; Bureau of Alcohol, Tobacco, Firearms, and 
Explosives; U.S. Department of Justice; 650 Massachusetts Avenue, NW., 
Washington, DC 20226, telephone (202) 927-8203.

SUPPLEMENTARY INFORMATION: 

I. Background

    ATF is responsible for implementing Title XI, Regulation of 
Explosives (18 United States Code (U.S.C.) chapter 40), of the 
Organized Crime Control Act of 1970. One of the stated purposes of the 
Act is to reduce the hazards to persons and property arising from 
misuse and unsafe or insecure storage of explosive materials. Organized 
Crime Control Act of 1970, Public Law 91-452, Sec.  1101, 84 Stat. 952 
(1970). Under section 847 of title 18, U.S.C., the Attorney General 
``may prescribe such rules and regulations as he deems reasonably 
necessary to carry out the provisions of this chapter.'' Regulations 
that implement the provisions of chapter 40 are contained in title 27, 
Code of Federal Regulations (CFR), part 555 (``Commerce in 
Explosives'').
    Under the law, the term ``explosives'' is defined as ``any chemical 
compound[,] mixture, or device, the primary or common purpose of which 
is to function by explosion.'' The definition states that the term 
``includes, but is not limited to, dynamite and other high explosives, 
black powder, pellet powder, initiating explosives, detonators, safety 
fuses, squibs, detonating cord, igniter cord, and igniters.'' See 18 
U.S.C. 841(d).
    ATF is required under the law to publish an annual list of items 
that fall within the coverage of the definition of explosives. Since 
publication of the first ``Explosives List'' in 1971, ammonium 
perchlorate composite propellant (APCP) has been classified by ATF as 
an explosive. This classification is based upon the statutory 
definition of ``explosives,'' which contemplates that items can 
``function by explosion'' either by detonating (dynamite and other high 
explosives detonate) or by deflagrating (low explosives, such as black 
powder, pellet powder, and rocket propellants, deflagrate, or burn very 
quickly). Because APCP deflagrates when confined, it has been 
classified by ATF as an explosive.
    Under the law and its implementing regulations, persons engaging in 
the business of manufacturing, importing, or dealing in explosive 
materials are required to be licensed. Other persons who acquire or 
receive explosive materials are required to obtain a permit. Licensees 
and permittees must comply with the provisions of part 555, including 
those relating to storage and other safety requirements, as well as 
recordkeeping and theft reporting requirements. However, certain 
activities and items have been given exempt status under the law (see 
exemptions at 18 U.S.C. 845(a)) and its implementing regulations at 27 
CFR 555.141.
    Although APCP is an explosive material, ATF currently exempts from 
regulation rocket motors containing 62.5 grams or less of this and 
other explosive propellants for reasons set forth below. Rocket motors 
that contain more than 62.5 grams of APCP are subject to all applicable 
Federal explosives controls pursuant to 18 U.S.C. 841 et seq. and the 
regulations in part 555.

II. Regulatory History

    In 1981, ATF exempted from regulation Class C explosives, including 
``common fireworks,'' and certain other explosives designated by United 
States Department of Transportation (DOT) regulations. Included among 
the items in the DOT regulations that were exempted by ATF were ``toy 
propellant devices and toy smoke devices'' that were defined by DOT as 
items ``consist[ing] of small paper or composition tubes or containers 
containing a small charge of slow burning propellant powder or smoke 
producing powder.'' ATF determined that 62.5 grams was the maximum 
amount of propellant that could be deemed a ``small charge'' for toy 
propellant devices as described in 49 CFR 173.100(u). Subsequently, DOT 
regulations were revised and the term ``model rocket motor'' was used 
to apply to items previously described as ``toy propellant devices.''
    Between 1996 and 1998, ATF updated its regulations (27 CFR 
555.141(a)(7)) to reflect various DOT revisions. In doing so, however, 
ATF inadvertently removed from the subsection all language under which 
``toy'' sport rocket motors had previously been exempted and failed to 
add language documenting the continued exemption of motors containing 
62.5 grams or less of propellant. See 61 FR 53688 (Notice No. 841, 
October 15, 1996); 63 FR 44999 (T.D. ATF-400, August 24, 1998). Despite 
this administrative error, ATF has continued to exempt sport rocket 
motors containing 62.5 grams or less of propellant from the provisions 
of the Federal explosives laws and regulations.
    The Safe Explosives Act (SEA), enacted in 2002 as Title XI of the 
Homeland Security Act, substantially amended the Organized Crime 
Control Act of 1970. In drafting the SEA, Congress took into 
consideration existing Federal explosives law and regulation, but did 
not do away with ATF's regulation of rocket motors containing more than 
62.5 grams of propellant, nor did it decide that motors containing no 
more than 62.5 grams of propellant should be regulated. Thus, it can be 
argued that Congress acquiesced in continuance of the exemption. 
Cammarano v. United States, 358 U.S. 498, 79 S.Ct. 524, 3 L.Ed.2d 462 
(1959); Ward v. Commissioner of the Internal Revenue Service, 784 F.2d 
1424 (9th Cir. 1986). This final rule clarifies in the regulations 
ATF's long-standing policy and reflects that, after careful 
consideration, ATF has determined that the 62.5-gram threshold is an 
appropriate exemption level.

[[Page 46080]]

III. Litigation--Tripoli Rocketry Association and National Association 
of Rocketry v. ATF

    In February 2000, the Tripoli Rocketry Association (Tripoli) and 
the National Association of Rocketry (NAR) brought a cause of action 
against ATF in United States District Court for the District of 
Columbia, alleging that:
    1. APCP does not ``function by explosion'' and, therefore, APCP is 
not an explosive material subject to control by ATF;
    2. ATF violated the Administrative Procedure Act (APA) by including 
APCP on the ``List of Explosive Materials'' without subjecting the List 
to ``notice-and-comment'' rulemaking;
    3. Even if APCP is an explosive, sport rocket motors are propellant 
actuated devices (PADs) and are, therefore, exempt from regulation 
pursuant to section 555.141(a)(8); and
    4. ATF violated the APA and acted arbitrarily and capriciously in 
setting the maximum-propellant-weight threshold for exempting sport 
rocket motors at 62.5 grams.
    In a subsequent amendment to the complaint, the plaintiffs alleged 
that certain kits are designed to enable rocket hobbyists to construct 
rocket motors containing more than 62.5 grams of propellant by placing 
multiple propellant grains (each weighing 62.5 grams or less) in a 
reusable motor casing, and that ATF had determined that these kits pose 
the same dangers and require the same controls as single-use rocket 
motors containing more than 62.5 grams of propellant and had classified 
them accordingly. According to plaintiffs, this classification is 
invalid because ATF did not engage in ``notice-and-comment'' rulemaking 
before making this determination.
    On March 19, 2004, the district court granted partial summary 
judgment to ATF on the issue of whether APCP is an explosive. In 
addition, the court concluded that ATF's determination that sport 
rocket motors containing not more than 62.5 grams of propellant are not 
PADs, which was confirmed by ATF in a letter dated December 22, 2000, 
was invalid because it was made without compliance with the APA. The 
court based its decision on its review of two letters issued by ATF in 
1994 that appeared to take a different position from the 2000 letter 
with respect to the applicability of the PAD exemption to hobby rockets 
containing not more than 62.5 grams of propellant. Finally, the court 
held in abeyance a ruling on the remaining counts of the lawsuit 
pending the completion of ATF's rulemaking that, among other things, as 
reflected in this document, will establish by regulation ATF's 
exemption for rocket motors containing no more than 62.5 grams of APCP, 
black powder or other similar low explosives (Notice No. 968, 68 FR 
4406, January 29, 2003).
    On February 10, 2006, the United States Court of Appeals for the 
District of Columbia Circuit determined that ATF's classification of 
APCP as an explosive could not ``be sustained on the basis of the 
administrative record,'' 437 F.3d at 81, and therefore remanded the 
case to the district court in order to allow ATF to ``reconsider'' the 
classification of APCP and offer a coherent explanation for whatever 
conclusion it ultimately reaches. Tripoli Rocketry Ass'n v. Bureau of 
Alcohol, Tobacco, Firearms and Explosives, 437 F.3d 75, 84 (D.C. Cir. 
2006). The court explained that ATF had not ``provided a clear and 
coherent explanation for its classification of APCP'' and did not 
``articulate the standards that guided its analysis.'' Id. at 81. The 
court did not vacate ATF's designation of APCP as an explosive, because 
it ``was in place long before the present litigation.'' Id. at 84. 
Therefore, APCP remains classified as an explosive material and 
continues to be regulated accordingly by ATF.
    On remand, the district court held a status conference with the 
parties on April 20, 2006, in which the court stated that ATF could 
pursue its testing and reconsideration efforts and work to provide a 
more thorough basis for the classification of APCP pursuant to the D.C. 
Circuit opinion. Presently, ATF is engaged in the reconsideration 
process and the matter is pending in district court.

IV. Miscellaneous

    The carefully-framed exemption embodied in this rule is maintained 
with a view to maximizing ATF's performance of its statutory 
responsibilities within the limits of available resources, without 
compromising public safety. If all hobbyists and retailers who receive 
or distribute rocket motors containing no more than 62.5 grams of 
explosive were required to obtain permits and licenses, ATF resources 
would be stretched beyond their limits to ensure compliance with 
regulatory requirements and effective administration of the existing 
Federal explosives laws.
    Specifically, the legal requirements placed upon hobbyists and 
retailers would, in turn, impose an unmanageable administrative burden 
on ATF. Industry statistics garnered from proprietary manufacturing 
information reflect that in 2004, there were more than 1.5 million 
purchasers of small rocket motors. Without the proposed exemption, 
hobbyists seeking permits to purchase the motors would undergo 
background checks, submit applications, and be subject to inspection by 
ATF. Additionally, based upon U.S. Census Bureau and industry 
information, it is conservatively estimated that there are 
approximately 10,000 retailers, including nationwide chain retail 
stores, as well as hobby, game, and toy stores that sell small rocket 
motors. These retailers sell the vast majority of their smaller motors 
to children and other hobbyists who use these smaller rocket motors 
exclusively. If required to obtain licenses, these retailers would be 
subject to requirements similar to those enumerated above and would 
need to maintain proper records of receipt and distribution of rocket 
motors.
    In view of the large universe of hobbyists who use small rocket 
motors and currently are not required to obtain permits--and also in 
view of the large number of currently-unlicensed retailers selling 
small rocket motors, it is apparent that to discontinue ATF's long-
standing practice of exempting motors containing no more than 62.5 
grams of explosive material would be to place upon ATF an 
administrative burden that would greatly outstrip the agency's 
licensing, inspection, and enforcement resources. An increase from the 
current 4,000 Federal explosives licensees to a potential 14,000 
licensees and an increase from 8,000 permittees to a potential 1.5 
million permittees would result in an unmanageable workload for ATF's 
administrative personnel and would hamper the agency's ability to 
effectively manage the overall regulation program with respect to both 
explosives and firearms. For instance, a massive increase in license 
and permit applications would undercut ATF's ability to promptly 
process firearms license applications if it became necessary to draw 
upon the firearms licensing staff already working at capacity. 
Furthermore, regulating motors with no more than 62.5 grams would 
consume these resources even though the hobby rockets that use these 
smaller motors have been found to pose a relatively small public safety 
hazard.

V. Notice of Proposed Rulemaking

    On January 29, 2003, ATF published in the Federal Register a notice 
of proposed rulemaking (NPRM) soliciting comments from the public and 
industry on a number of proposals to amend the regulations in part 555 
(Notice No. 968, 68 FR 4406). ATF issued the NPRM, in part, pursuant to 
the Regulatory

[[Page 46081]]

Flexibility Act (RFA), which requires an agency to review--within ten 
years of publication--rules for which an agency prepared a final 
regulatory flexibility analysis addressing the impact of the rule on 
small businesses or other small entities.
    Notice No. 968 proposed amendments to the regulations that were 
initiated by ATF and amendments proposed by members of the explosives 
industry. One proposal initiated by ATF concerned an amendment of the 
regulations to clarify the items that are exempt from the requirements 
of part 555. In particular, ATF proposed to amend 27 CFR 555.141 to 
provide that the regulations in part 555 do not apply to the 
importation and distribution of model rocket motors consisting of APCP, 
black powder, or other similar low explosives; containing no more than 
62.5 grams of total propellant weight; and designed as single-use 
motors or as reload kits capable of reloading no more than 62.5 grams 
of propellant into a reusable motor casing. This proposal mirrored 
ATF's long-standing policy, which had initially been adopted by the 
agency to give effect to the ``toy propellant device'' exemption that 
had existed in the regulations until 1998. Discontinuance of the 62.5 
gram or less exemption would render it infeasible for ATF effectively 
to administer the Federal explosives controls with respect to rocket 
motors, including those that pose the most threat to public safety and 
homeland security. Without the exemption, all requirements of the 
Federal explosives controls would apply to all persons who acquire and 
store hobby rockets, regardless of the amount of propellant contained 
in the motors, thereby spreading ATF resources so thin that ATF could 
not ensure compliance with regulatory requirements and effective 
administration of the Federal explosives law.
    The comment period for Notice No. 968, initially scheduled to close 
on April 29, 2003, was extended until July 7, 2003, pursuant to ATF 
Notice No. 2 (68 FR 37109, June 23, 2003). ATF received approximately 
1,640 comments in response to Notice No. 968. This final rule addresses 
only the proposal made in Notice No. 968 with respect to model rocket 
motors. The remaining proposals made in Notice No. 968 will be 
addressed separately in a forthcoming rulemaking document or documents.

VI. Analysis of Comments and Decisions With Respect to Model Rocket 
Motors

    Approximately 620 comments addressed ATF's proposal to exempt from 
regulation model rocket motors containing up to 62.5 grams of 
propellant. Comments were submitted by sport rocketry hobbyists, 
businesses that manufacture or sell hobby rocket motors and related 
products, one sport rocketry organization (the National Association of 
Rocketry (NAR)), and others.
    In its comments (Comment Nos. 974 and 1570), NAR stated that it is 
a ``non-profit scientific organization dedicated to safety, education, 
and the advancement of technology in the sport rocket hobby in the 
United States.'' The commenter further stated that, founded in 1957, it 
is the oldest and largest sport rocketry organization in the world, 
with over 4,800 members and 110 affiliated clubs. According to the 
commenter, it is the recognized national testing authority for safety 
certification of rocket motors in the United States and it is the 
author of safety codes for the hobby that are recognized and accepted 
by manufacturers and public safety officials nationwide. Thirty-seven 
(37) comments expressed specific support for NAR's position as set 
forth in its comments in response to Notice No. 968.
    Most commenters addressing the proposal argued that ATF should not 
regulate model rocket motors or model rocket propellant for reasons 
discussed below. Other commenters expressed specific concerns regarding 
the proposed regulation and those concerns are also addressed below.

A. Commenters' Reasons for Objecting to ATF's Regulation of Model 
Rocket Motors and Model Rocket Propellant

1. Rocket Motors and Rocket Propellants Are Not Explosives
    Under the law, the term ``explosives'' is defined as ``any chemical 
compound[,] mixture, or device, the primary or common purpose of which 
is to function by explosion.'' The definition states that the term 
``includes, but is not limited to, dynamite and other high explosives, 
black powder, pellet powder, initiating explosives, detonators, safety 
fuses, squibs, detonating cord, igniter cord, and igniters.'' See 18 
U.S.C. 841(d).
    As previously explained, ATF is required under the law to publish 
an annual list of items that fall within the coverage of the definition 
of explosives. Since publication of the first ``Explosives List'' in 
1971, ammonium perchlorate composite propellant (APCP), the propellant 
used in many high-powered rocket motors, has been classified by ATF as 
an explosive. This classification is based upon the statutory 
definition of ``explosives,'' which contemplates that items can 
``function by explosion'' either by detonating (dynamite and other high 
explosives detonate) or by deflagrating (low explosives, such as black 
powder, pellet powder, and rocket propellants, deflagrate, or burn very 
quickly). Because APCP deflagrates when confined, it has been 
classified by ATF as an explosive.
    Approximately 500 commenters contended that rocket motors and 
rocket propellants (including APCP) are not explosives because they do 
not ``function by explosion.'' In general, the commenters argued that 
rocket motors and rocket propellants neither detonate nor deflagrate. 
NAR argued that ATF's authority to regulate, in any manner, any form of 
propellant or rocket motor under the Federal explosives law first 
requires a determination that such items have as their primary or 
common purpose to function by explosion. NAR contended that ATF failed 
to make the required statutory determination for rocket motors or APCP 
in the notice of proposed rulemaking. As such, NAR concluded that ATF 
cannot regulate rocket motors consisting of APCP as an explosive. NAR 
also argued that ATF has failed to recognize that rocket motors 
containing APCP as a fuel source do not have as their primary or common 
purpose to function by explosion. According to the commenter--

    The leading manufacturer of APCP for rockets (Aerotech, Inc.) 
has recently explained that the formulation of APCP utilized in such 
rockets consists of between 40 and 77 percent ammonium perchlorate 
as the oxidizer, with the remainder consisting of various 
supplemental metals such as aluminum or magnesium for fuel, various 
other chemicals that serve as burn rate catalysts and antioxidants, 
and a synthetic rubber binder. The rubber binder effectively 
passivates the ammonium perchlorate rendering the resultant 
composite non-explosive.

    NAR disagreed with ATF's determination that rocket motors 
containing APCP function by explosion because they deflagrate when 
ignited. As stated in its comment:

    It is widely acknowledged, and accepted by ATFE, that the speed 
of the burn front in materials that deflagrate is on the order of 
meters per second (in a detonation reaction the velocity is 
typically more than one kilometer per second), whereas the speed of 
the burn front in materials that burn is on the order of millimeters 
per second * * * the data relied upon by ATFE to date clearly 
reveals that when APCP is lit the burn front propagates on the order 
of `millimeters per second,' which under ATFE's own concept is 
indicative that APCP `burns' and does not `deflagrate.'


[[Page 46082]]


    NAR provided information to support its position that APCP burns 
and does not deflagrate. Based on that information, NAR concluded that 
``when ignited APCP in rocket motors typically burns at a rate of less 
than 25 millimeters per second. Accordingly, APCP in rocket motors does 
not deflagrate when ignited, and thus ATFE cannot classify APCP in 
rocket motors as an explosive.''
    Most commenters expressed views similar to that of NAR. The 
following excerpts reflect the commenters' position:

    If the ATF's interpretation were correct every rocket ever lit 
would explode on the pad every time without fail. Obviously it 
doesn't do that. Solid Rocket Propellant (APCP) is a tried and true, 
safe technology and that is why most of the worlds [sic] 
professional and hobby rockets use it as the fuel of choice. 
(Comment No. 88)
    APCP does not `function by explosion.' It functions by 
combustion * * * It is and has been obvious to the professionals in 
the field for several decades that APCP does not function by 
explosion. It does not belong, and never has belonged, on the 
BATFE's list of explosives. (Comment No. 834)
    `Explosion' entails either `deflagration' or `detonation'. The 
generally accepted definition for detonation is the propagation of 
the burn front at greater than 1 kilometer per second. Deflagration 
is defined by a burn front propagating on the order of meters per 
second. Ammonium Perchlorate Composite Propellant (APCP), the most 
common hobby rocketry propellant, generally burns at less than 25 
millimeters per second, putting it well below the definition of both 
deflagration and detonation. Thus, APCP burns; it does not explode. 
(Comment No. 854)
    Their [solid rocket motors] sole purpose is to propel a rocket 
by the ejection of hot, high pressure gases produced by the 
controlled combustion of one of more solid monolithic propellant 
grains in a high-pressure combustion chamber through an expansion 
controlling orifice device called a nozzle. The solid rocket motor/
propellant system is specifically designed not to explode, and 
therefore is not an explosive, nor is it an explosive device, and 
therefore should not be regulated by the BATFE. (Comment No. 895)
    Deflagration is characterized by a subsonic burn rate measured 
in meters per second; * * * APCP merely burns at the rate of 
millimeters per second. When confined, and should the casing rupture 
due to over-pressure, the remaining unburnt APCP typically self-
extinguishes. An individual could safely ignite one end of APCP, and 
it would burn much like a road flare! The inclusion of APCP on the 
list of regulated explosives has no logical basis * * * (Comment No. 
1071)
    [H]obby rocketry fuel, particularly APCP, is not an explosive, 
either by nature or by design. APCP neither detonates nor 
deflagrates. Detonation is characterized by a supersonic burn rate, 
measured in kilometers per second. The APCP used in hobby rockets 
cannot be made to detonate by use of a blasting cap. (Comment No. 
1164)
    ATF has never produced any technical studies, tests, or 
scientific papers to support the contention that APCP functions by 
explosion, or even that APCP does detonate or deflagrate. (Comment 
No. 1547)

Department Response
    Beginning in 2000, the issue of classifying APCP as an explosive 
material has been litigated in the United States District Court for the 
District of Columbia. See Tripoli Rocketry Ass'n v. Bureau of Alcohol, 
Tobacco, Firearms and Explosives, 337 F. Supp. 2d 1 (2004). After 
assessing technical and legal arguments presented by the Government and 
opposing rocketry associations, the district court held that ATF's 
decision that APCP is a deflagrating explosive was permissible. Tripoli 
Rocketry Association v. ATF Civil Action No. 00-273 (Mar. 19, 2004).
    As previously stated, in February 2006, the D.C. Circuit disagreed 
with the district court on this issue because in its view ATF had 
failed to provide a sufficiently thorough justification to support its 
classification with a specific, articulated standard for deflagration. 
Tripoli Rocketry Assoc., Inc. v. Bureau of Alcohol, Tobacco, Firearms 
and Explosives, 437 F. 3d 75 (D.C. Cir. 2006). However, the court 
declined to set aside the classification, and APCP thus remains on the 
``List of Explosive Materials'' that ATF is obligated to maintain. See 
Tripoli Rocketry Assoc., 437 F. 3d at 84. The case was remanded to the 
district court so that ATF may reconsider the matter and offer a 
coherent explanation for whatever conclusion it ultimately reaches. Id. 
Furthermore, the Court of Appeals offered clear guideposts as to the 
characteristics of a classification decision that would pass judicial 
review. See, e.g., id. at 81. Accordingly, ATF will utilize those 
guideposts in conducting testing of APCP as part of the reconsideration 
process. ATF will test and analyze APCP throughout the summer and fall 
of 2006 and submit reconsideration results upon completion.
2. Model Rockets/Rocket Motors Containing APCP Are ``Propellant 
Actuated Devices'' and, as Such, Are Exempt From ATF Regulation
    Propellant actuated devices (PADs) imported or distributed for 
their intended purposes are exempt from regulation pursuant to 27 CFR 
555.141(a)(8). The term ``propellant actuated device'' is defined in 
section 555.11 as ``[a]ny tool or special mechanized device or gas 
generator system which is actuated by a propellant or which releases 
and directs work through a propellant charge.'' In applying the 
regulatory definition, ATF has classified certain types of products as 
propellant actuated devices: Aircraft slide inflation cartridges, 
inflatable automobile occupant restraint systems, nail guns and diesel 
and jet engine starter cartridges.
    Approximately 300 commenters contended that model rocket motors 
meet the definition of a PAD and, as such, are exempt from ATF 
regulation. Some of the arguments raised by the commenters include:

    A rocket motor, fuel grains and rockets are comparable to 
exempted tools such as a nail gun with it's [sic] cartridges and 
nails. Like a nailgun, a rocket motor directs the gases generated by 
a propellant. Just as the nailgun and cartridge are used to propel a 
nail, the rocket motor and fuel grains are used to propel a rocket 
vehicle. (Comment No. 331)
    APCP burning inside a rocket motor casing produces hot, 
pressurized gasses which are directed out of the nozzle end of the 
motor. These rapidly exiting gasses cause the rocket to move in the 
opposite direction. No explosion occurs. Thus an APCP rocket motor 
is essentially a `propellant actuated device', a category of devices 
that is already explicitly exempted from regulation. (Comment No. 
734)
    Until the mid 1990s, the BATFE had exempted all APCP rocket 
motors, regardless of propellant weight, because APCP motors were 
considered to be propellant actuated devices, which were exempt from 
BATFE permits. APCP rocket motors have not changed since then, and 
Congress has not changed its definition of an explosive; therefore, 
the BATFE should never have started regulating APCP as an explosive 
in the first place, and should not start regulating APCP in the 
future. (Comment No. 982)

    NAR commented that although the Federal explosives law does not 
specifically include an exemption for PADs, the legislative history of 
the law clearly intended that such devices should be exempt by noting 
that the term ``explosives'' is not ``intended to include propellant 
actuated devices or propellant actuated industrial tools used for their 
intended purpose.'' According to the commenter:
    Congress must have intended that propellant actuated devices be 
exempted because their `primary or common purpose' is not to 
function by explosion but rather is to perform useful non-
destructive work. Rocket motors fit this concept precisely--their 
purpose is not destructive, but to perform useful work by propelling 
a rocket.

    NAR stated that a rocket motor serves but one function, i.e., to 
expel gases through its nozzle from a burning propellant for the 
purpose of generating the thrust necessary to launch the rocket. 
Based on its nature and function, the commenter contended that a 
rocket motor is a propellant actuated device that is exempt from 
regulation because ``it qualifies as either a `special mechanized

[[Page 46083]]

device,' or a `gas generator system,' if not both, and because a 
rocket motor is both `actuated by a propellant' and `releases and 
directs work' (i.e., thrust) `through a propellant charge' * * *''
Department Response
    ATF's position is that the term ``propellant actuated device'' does 
not include hobby rocket motors or rocket-motor reload kits containing 
APCP, black powder, or other similar low explosives. The definition of 
``propellant actuated device'' in 27 CFR 555.11 is ``[a]ny tool or 
special mechanized device or gas generator system which is actuated by 
a propellant or which releases and directs work through a propellant 
charge.'' To determine the common meanings of ``tool,'' ``special 
mechanized device,'' and ``gas generator system,'' it is useful to look 
to Merriam-Webster's Collegiate Dictionary (Tenth Edition, 1997) 
(Webster's). Webster's defines ``tool'' in pertinent part as: ``a 
handheld device that aids in accomplishing a task; the cutting or 
shaping part in a machine or machine tool; a machine for shaping 
metal.'' Webster's defines the word ``device'' as ``a piece of 
equipment or a mechanism designed to perform a special function.'' For 
a particular device to be a ``special mechanized device,'' Webster's 
appears to suggest, it would be necessary that it be both unique and of 
a mechanical nature. Webster's defines ``generator'' as ``an apparatus 
in which vapor or gas is formed'' and as ``a machine by which 
mechanical energy is changed into electrical energy.'' Further, 
Webster's defines ``system'' as ``a regularly interacting or 
interdependent group of items forming a unified whole.'' Thus, 
Webster's may be read to suggest that a ``gas generator system'' is 
properly defined as a group of interacting or interdependent mechanical 
and/or electrical components that generates gas.
    Based on the above definitions and conclusions, the Department 
believes that rocket motors, regardless of the amount of propellant 
contained therein, cannot be brought within the regulatory definition 
of propellant actuated device. Rocket motors are not ``tools,'' because 
they are neither handheld nor a complete device. Nor are they a metal-
shaping machine or a part thereof. Further, they cannot be considered 
to be a ``special mechanized device'' because, although clearly 
designed to serve a special purpose, they lack the necessary indicia of 
a mechanized device. Clearly, rocket motors are in no way reminiscent 
of a mechanism since they consist essentially only of propellant 
encased by a cardboard, plastic, or metallic cylinder. Though such 
motors may include a nozzle, retaining cap, delay grain and ejection 
charge, the rocket motor is little more than a propellant in a casing, 
incapable of performing its intended function until fully installed, 
along with an ignition system, within a rocket. Finally, because rocket 
motors have no interacting mechanical or electrical components, rocket 
motors cannot be deemed to be a gas generator system.
    For the reasons set forth above, the Department does not believe 
that rocket motors of any size should be classified as propellant 
actuated devices.
    On March 19, 2004, the United States District Court for the 
District of Columbia issued a memorandum opinion in Tripoli Rocketry 
Ass'n. 337 F. Supp. 2d 1. In its opinion, the court specifically 
addressed two letters issued by ATF, one dated April 20, 1994, and the 
other dated December 22, 2000, in which ATF had discussed the 
applicability of the propellant actuated device (``PAD'') exemption to 
rocket motors. See id. at 10-13. The 1994 letter gave the impression 
that ATF had exempted sport rocket motors containing 62.5 grams or less 
of propellant as propellant actuated devices (PADs) under 27 CFR 
555.141(a)(8). The 2000 letter more accurately and clearly stated that 
rocket motors did not meet the regulatory definition of a PAD, but that 
rocket motors with 62.5 grams or less of propellant were exempt from 
regulation, in light of the pre-existing ``small charge'' threshold 
that has historically been in place to exempt ``toy'' devices.
    The court unambiguously determined that ATF's 2000 letter was at 
variance with its 1994 letter. The court then concluded:

    Thus, before the ATF could [have] altered its earlier 
interpretation of the applicability of the PAD exemption, it was 
required to undertake notice-and-comment rulemaking as required by 
the [Administrative Procedure Act] and the [Organized Crime Control 
Act of 1970]. Because the ATF failed to do so, the Court concludes 
that its December 22, 2000 pronouncement regarding the applicability 
of the PAD exemption to sport model rockets was not in compliance 
with the OCCA and the APA.

    The court also explicitly set out the controlling 1994 ATF 
statement on the applicability of the PAD exemption in its Opinion:

    Of particular significance to the plaintiffs, is the statement 
in the April 20 Letter that

    [t]he exemption at 27 CFR Part 55, section 141(a)(8) includes 
propellant-actuated `devices.' The term `device' is interpreted to 
mean a contrivance manufactured for a specific purpose. Under this 
definition, a fully assembled rocket motor would be exempt. However, 
the propellant, prior to assembly, would not be exempt.

    Id. (emphasis added). The ATF went on to state that

[t]he AeroTech products which have been classified by the Department 
of Transportation as a flammable solid 4.1 or as explosives 1.4c, 
which are within the 62.5 grams limit contained in NFPA 1122 and 
conform to the requirements of model rocket motors set forth in 16 
CFR section 1500.85(a)(8)(ii), would meet ATF requirements for 
exemption under 27 CFR Part 55, section 141(a)(8).

    Id. Opinion at 15.
    ATF is currently regulating rocket motors in conformity with this 
ruling, exempting from regulation fully assembled rocket motors 
containing no more than 62.5 grams of propellant, and producing less 
than 80 newton-seconds (17.92 pound seconds) of total impulse with 
thrust duration not less than 0.050 seconds. This final rule does not 
materially change this state of affairs inasmuch as rocket motors 
containing 62.5 grams or less of propellant will continue to be exempt 
from regulation. However, the final rule does alter ATF's position in 
that a fully assembled rocket motor containing 62.5 grams or less of 
propellant, while still exempt from regulation, will not be classified 
as a propellant actuated device under this final rule.
3. The Proposed 62.5-Gram Exemption Threshold Is Arbitrary and Lacks a 
Reasoned Basis, Is Unreasonable and Unnecessarily Restrictive, and Is 
Inconsistent With Existing Weight Limits for Other Explosives
a. The Proposed 62.5-Gram Limit Is Arbitrary and Lacks a Reasoned Basis
    Approximately 120 comments objected to ATF's proposal to exempt 
from regulation rocket motors containing 62.5 grams or less of 
propellant, arguing that the proposed limit is arbitrary and that ATF 
did not explain the basis for the proposed limit. In its comment, NAR 
stated that the agency failed to present any scientific basis to 
support the proposed 62.5-gram limit, presented no factual data that 
demonstrates why the proposed amount represents a reasonable limit on 
possession of APCP, and offered no data or test results as to the 
relative properties of this quantity of APCP. To the extent that ATF 
based its 62.5-gram weight limitation on regulations enacted by the 
United States Department of Transportation (DOT) or the Consumer 
Product Safety Commission (CPSC), the commenter argued that ATF failed 
to explain in the NPRM why a weight limit

[[Page 46084]]

created by another Federal agency should be applied to ATF's explosives 
regulations. As stated by the commenter:

    What possible bearing does a DOT regulation imposing a weight 
limit on rocket motors in order to avoid hazardous synergistic 
effects with other hazardous materials, or a CPSC regulation 
protecting children from using rocket motors above a specific weight 
limit have on adults that possess and store rockets?

    Several commenters argued that the proposed 62.5-gram exemption is 
not based on Federal explosives law, noting that the law ``makes no 
exemptions of explosives based on weight except for black powder used 
in antique firearms and devices.'' (Comment No. 88)
    Other commenters raised concerns similar to those mentioned above:

    I'd also like to know from whence the threshold weight of 62.5 
grams was derived. This seems to be an arbitrary number since the 
behavior of 62.5 grams of APCP is not much different than that of 80 
grams. Does the Bureau have any scientific basis for this figure? 
(Comment No. 33)
    The 62.5 gram limit * * * has no scientific basis. The BATF has 
no tests or justification to show that this 62.5-gram limit (which 
is inherited from old shipping regulations) has any rational meaning 
in this situation. (Comment No. 325)
    The 62.5 gram limit is arbitrary * * * It has no technical basis 
as to what may or may not constitute a hazard to the public. 
(Comment No. 327)
    ATFE has focused on a 62.5 gram limit without showing the 
reasoning behind this number. ATFE has quoted (in the past) other 
agencies' use of a 62.5 gram unregulated limit, such as DOT and 
CPSC, for ATFE's unregulated limit. However, the absence of 
technical data does not support ATFE's reasoning. (Comment No. 864)
    ATFE has failed to present any scientific basis to support the 
62.5 gram limit. ATFE presents no factual data that demonstrates why 
this amount represents a reasonable limit on possession of this non-
explosive material. (Comment No. 974)
    The proposed change in exemptions for model rocket motors 
introduces an arbitrary limit of 62.5 grams per motor or reload kit. 
This limit has no basis in scientific data. The proposed rule 
implies that a single rocket motor of 62.5 grams of propellant is 
safe, but one with 62.6 grams is unsafe. Two motors with 62.5 grams 
of propellant are safe, but one with 62.6 grams is unsafe. One 
thousand motors with 62.5 grams of propellant is safe, but a single 
motor with 62.6 grams is unsafe. ATFE is obviously not concerned 
with safety issues related to the total amount of APCP stored since 
there is no limit on the total number of motors or reloads stored, 
as long as no single motor exceeds 62.5 grams. (Comment No. 1033)
    [A] total weight limit of APCP such as 40-50 pounds would 
address the individual who, without a permit, would be able to 
obtain as many motors containing 62.5 g or less as he wants. For 
example, the proposed arbitrary 62.5g limit would not stop somebody 
from having 1000 motors each containing 62.5 g for a total of 62.5 
kg (137.5 pounds!) of APCP. (Comment No. 1170) The ATFE gives no 
explanation or justification why 62.5 gram is an appropriate limit. 
I notice that my state (New Jersey) regulations do not require a 
permit for owning and storing up to 220 pounds (100,000 grams!) of 
rocket propellant; likewise no permit is required for owning and 
storing up to 50 pounds of black powder * * * ATF is basing the 62.5 
gram limit on the Consumer Product Safety Commission limit, which 
was set as a limit for children handling rocket motors. This limit 
for requiring permits is arbitrary and excessive and has not been 
demonstrated by the ATFE as being appropriate. (Comment No. 1230)
    The proposed limit of 62.5 grams is without substantiation. Why 
not higher? Why not lower? What is the technical reason that a 
higher limit would be problematical? * * * Rocket motors containing 
less than 62.5 grams of propellant comprise only a small part of the 
hobbyist rocket spectrum. (Comment No. 1626)
Department Response
    The Department has considered the comments and disagrees with the 
arguments suggesting the exemption from regulation should be higher 
than 62.5 grams.
    The origin of the 62.5-gram limit is found in regulations covering 
devices that are in the nature of toys. In 1981, ATF exempted from 
regulation, under 27 CFR 55.141(a)(7), ``[t]he importation and 
distribution of fireworks classified as Class C explosives and 
generally known as `common fireworks,' and other Class C explosives, as 
described by U.S. Department of Transportation regulations in 49 CFR 
173.100(p), (r), (t), (u) and (x).'' One of these DOT subsections, 49 
CFR 173.100(u), listed ``toy propellant devices and toy smoke devices'' 
as Class C explosives and described them as ``consist[ing] of small 
paper or composition tubes or containers containing a small charge of 
slow burning propellant powder or smoke producing powder.'' It also 
provided that ``these devices must be so designed that they will 
neither burst nor produce external flame on functioning * * *.'' In 
construing its regulation, ATF determined that 62.5 grams was an 
appropriate ceiling for what could be considered a ``small charge'' of 
propellant for these ``toy'' devices, a determination that was in 
keeping with guidelines published by the National Fire Protection 
Association and with regulations promulgated by the Consumer Product 
Safety Commission's (CPSC's) predecessor organization at the request of 
both the National Association of Rocketry and Estes Industries. CPSC 
applies its 62.5-gram exemption in such a manner as to prohibit the 
sale of some rocket motors to children, by regulating propellant weight 
and energy output. The Department believes it is appropriate, whenever 
possible, for Federal agencies to regulate commodities in a consistent 
manner.
    ATF is charged with safeguarding the public from dangers associated 
with explosives that are misused, criminally diverted or improperly 
stored. Public safety would no doubt be increased were ATF to apply 
regulatory controls to all sport rocket motors. However, ATF has 
rationally crafted an exemption from its explosives controls for sport 
rocket motors containing small amounts of explosive material and for 
other devices that are in the nature of toys (e.g., toy plastic or 
paper caps for toy pistols, trick matches, and trick noise makers). ATF 
has drawn the line for exemption at 62.5 grams of propellant because 
this amount represents a reasonable balance between ATF's goal of 
allocating its resources in the most efficient and effective manner and 
its goals of maintaining public safety. ATF believes that rockets 
utilizing motors containing 62.5 grams of propellant or less have a 
shorter range that is less likely to allow use as a weapon against a 
particular target without detection. In addition, rockets powered by 
motors containing no more than 62.5 grams of propellant have less power 
to cause significant damage when used against a target. As discussed in 
more detail below, the Department believes that rocket motors 
containing more than 62.5 grams of propellant pose a significant threat 
to public safety because they can be modified for use as weapons.
    ATF has conducted testing of the performance characteristics 
associated with rockets powered by motors containing 62.5 grams or less 
of APCP and of the performance characteristics associated with rockets 
powered by motors containing more than 62.5 grams of APCP. Although 
many of the results of this testing are classified, the testing showed 
clearly that to raise the exemption threshold beyond 62.5 grams would 
pose an increased threat to public safety and homeland security.
    In conclusion, the exemption of rocket motors containing 62.5 grams 
or less of propellant is consistent with ATF's congressional mandate to 
reduce the hazard arising from misuse and unsafe storage of explosive 
materials while not unduly or unnecessarily restricting or burdening 
law-abiding citizens in their lawful use of explosives.

[[Page 46085]]

b. The Proposed 62.5-Gram Limit Is Unreasonable and Unnecessarily 
Restrictive
    Approximately 190 comments maintained that the proposed exemption 
threshold is unreasonable and too restrictive for adult sport rocketry 
hobbyists and the commenters recommended that the threshold be 
increased. Several commenters proposed various upper limits for APCP in 
rocket motors, with one commenter suggesting that the exemption 
threshold be increased to 1,000 pounds. Following are excerpts from 
some of the comments:

    The 62.5 gram limit proposed by the ATF is based on the 
regulations of the consumer product safety commission * * * These 
regulations allow any motor less than 62.5 grams to be sold to the 
general public and to be used by unsupervised minors to fly toy 
rockets. However, large rocket motors cannot be purchased by the 
general public * * * It should be possible to allow responsible 
certified adults to buy and use the larger hobby rocket motors that 
are controlled by the certification process of the TRA and NAR 
without adding ATF regulation. (Comment No. 69)
    This proposal to exempt only rocket motors with no more than 
62.5 grams propellant is too strict. Rocket motors currently 
conforming to this requirement are only suitable for model (low-
power) rockets, which are considered by many adults to be 
essentially toys or entry level projects. Adults are interested in 
certifying in and taking on the many challenges of high-power 
rocketry, requiring higher total impulses, and thus, rocket motors 
with more propellant. (Comment No. 128)
    I urge you to reconsider the 62.5 gram hobby/amateur rocketry 
exemption limit as unreasonable and at the very least increase the 
limit for APCP to 7800 grams [17.2 pounds] with a motor diameter 
not-to-exceed 98mm, the size and amount of APCP necessary to make an 
'N' -class motor which is the highest used with any frequency by 
hobby and amateur rocketeers. (Comment No. 326)
    Within the Tripoli Rocketry Association, there are currently 
3072 individuals who are on record as being certified to use motors 
containing more than 62.5 grams of APCP * * * Increase the exemption 
to include motors containing up to 40 pounds of propellant. This is 
equivalent to the largest rocket motor that can be flown under NFPA, 
Tripoli Rocketry Association and National Association of Rocketry 
rules. (Comment No. 819)
    [T]he selection of 62.5 grams of APCP as the upper limit of what 
is permitted for unrestricted access * * * does not even come close 
to satisfying the needs of rocket hobbyists * * * the large majority 
of high-power rocket flyers would have their needs served if an 
exemption were granted to allow them to acquire and use rocket 
motors that contained up to 2,800 grams [6.17 pounds] of APCP 
without the need for a permit. (Comment No. 924)
Department Response
    APCP is an explosive material. By nature, explosive materials 
present unique safety hazards. Accordingly, they are regulated by law 
and very few categories of explosive materials are expressly exempted 
in any way from the law's requirements. Therefore, it cannot be said 
that ATF's regulatory stance with respect to rocket motors containing 
APCP or other explosive materials is unreasonable or unnecessary. 
Indeed, ATF's long-standing policy to exempt from regulation motors 
containing 62.5 grams or less of propellant reflects the agency's 
desire to accommodate the interests of rocketry hobbyists and to 
balance those interests with important public safety and homeland 
security concerns. As noted previously, in view of their inherent 
dangers, very few types of explosive materials are exempted in any way 
from the Federal explosives controls administered by ATF.
    Some commenters suggested that the exemption be extended to 40 
pounds, 17.2 pounds or 6.17 pounds. However, unrestricted commerce in 
motors containing APCP in these amounts would present a significant 
risk to public safety and homeland security. By regulating motors with 
more than 62.5 grams of propellant, terrorists, felons, and other 
prohibited persons will be prevented from gaining access to large 
motors that could pose an increased threat and that could be more 
readily adapted for terrorist or other criminal purposes. APCP can be 
used to make a very effective pipe bomb or other improvised explosive 
device that could be used for criminal or terrorist purposes. 
Furthermore, motors containing more than 62.5 grams of propellant can 
be used to power rockets capable of carrying large warheads containing 
either explosives or other noxious substances. Rockets powered by 
motors containing more than 62.5 grams of propellant can be directed at 
targets from a great distance, avoiding detection and apprehension of 
persons who would use them for criminal or terrorist purposes. 
Likewise, the proposed exemption is reasonable because it is comparable 
to other regulations and exemptions from other agencies addressing low 
explosives.
    A commenter points out that ``responsible certified adults'' should 
have access to larger hobby rocket motors for lawful purposes. Such 
certification refers to procedures required by rocketry associations, 
which are not imposed upon hobbyists who are not members of the 
specific associations and which have no application whatsoever to 
terrorists or criminals who might seek to gain access to large rocket 
motors for nefarious purposes. ATF does not believe that voluntary 
procedures are sufficient to safeguard public safety and homeland 
security. In order to responsibly implement the Federal explosives 
laws, the exemption established by this final rule will impose 
mandatory controls on all persons seeking to acquire rocket motors 
containing more than 62.5 grams of propellant and, in this regard, will 
among other things require that persons acquiring such large motors 
undergo a background check and obtain a Federal permit.
c. The Proposed 62.5-Gram Limit Is Inconsistent With Existing Weight 
Limits for Other Explosives
    In general, the regulations at 27 CFR 555.141(b) specify that the 
requirements of part 555 do not apply to commercially manufactured 
black powder in quantities not to exceed 50 pounds if the black powder 
is intended to be used solely for sporting, recreational, or cultural 
purposes in antique firearms.
    Approximately 30 commenters maintained that a similar exemption 
should be established for rocket motors containing APCP. In its 
comment, NAR stated the following:

    [N]otwithstanding ATFE's proposal to limit the exemption for 
rocket motors containing 62.5 grams or less of APCP * * * elsewhere 
in its explosives regulations ATFE establishes higher weight limits 
for arguably similar materials * * * ATFE permits an individual that 
possesses an antique firearm to purchase up to 50 pounds of black 
powder for use in that firearm without obtaining an ATFE-issued 
permit or storing the material in an ATFE-approved magazine * * * 
Those ATFE exemptions are not conditioned upon whether the bullet to 
be used in the antique firearm contains a specific quantity of black 
powder or whether, by design or intent, the individual will use one 
or more bullets at the same time in the antique firearm.

    Other commenters argued that APCP is less of a public safety hazard 
than black powder, due to its significantly lower burn rate and non-
explosive nature and, as such, should also be exempt from regulation. 
Some of their arguments are set forth below:

    [T]he best solution to regulating hobby rocket motors * * * 
would be a parallel to the exemption for black powder * * * while I 
would feel vastly safer having 50 pounds of APCP around the house 
than I would having 50 pounds of black powder (because APCP is 
inherently much safer to handle and store, compared to black 
powder), I think most educational and hobby and rocketeers don't 
need 50 pounds of propellant on hand * * * an exemption for a total 
weight limit of 20 pounds * * * of propellant would be equitable and 
reasonable. (Comment No. 325)

[[Page 46086]]

    My understanding is that gun enthusiasts are allowed to own and 
transport as much as 50 pounds of black powder. A similar rule for 
rocketry makes better sense. In fact, it is easy to argue that 
rocket users should be allowed to have more total mass than gun 
owners because the black powder used in guns is in powder form which 
is much more flammable than the pellet form used for rockets. 
(Comment No. 142)
    APCP is far less dangerous than Black Powder for which there 
exists an exemption of 50 lbs for antique firearms collectors. For 
rocketry, I believe an exemption on the order or [sic] 100-200 lbs 
would be very reasonable. This amount * * * would allow small 
business in the industry and the majority of the consumers to 
function unburdened and within very safe limits. (Comment No. 806)
    I understand that antique gun owners do not need a LEUP [low 
explosives user permit] to purchase, or are required to use a 
explosives magazine to store, up to 50 pounds of Black Powder 
propellant (which unlike APCP is very explosive). I have a hard time 
understanding why I can store 50 pounds of very explosive Black 
Powder in my closet if I'm an antique gun hobbyist but I can't store 
3 ounces of APCP non-explosive rocket propellant if I'm a rocketry 
hobbyist. I propose that rocket hobbyist[s] be given the same 50 
pound exemption * * * (Comment No. 1444)
    BATFE's proposal to impose a weight limit of 62.5 grams of APCP 
in rocket motors in order for the exemption of 27 CFR 
55.141(a)(7)(v) to apply is wholly inconsistent with existing weight 
limits for other explosives. It is well-established that loose black 
powder poses a significantly greater hazard than chunks of APCP, in 
its easier ignitability, rapid burn rate even when unconfined, and 
its sensitivity to static electricity. Yet, the regulations permit 
up to 50 pounds of black powder to be stored without restriction. 
(Comment No. 1537)
Department Response
    Congress determined that any person may purchase commercially 
manufactured black powder in quantities of 50 pounds or less, solely 
for sporting, recreational, or cultural purposes for use in antique 
firearms or antique devices without complying with the Federal 
explosives laws. Congress enacted this exemption as part of the 
original 1970 Act, although the exemption initially allowed the 
acquisition of only five pounds of black powder. In 1975 the exemption 
was increased to 50 pounds, again by the Congress. Accordingly, the 
commenters who refer to the black powder exemption as one created by 
ATF are in error.
    The comparison between the black powder exemption and the exemption 
for certain model rocket motors is a poor one. The Department's 
regulatory authority lies within the sound discretion of the Attorney 
General, consistent with the scope of his authority under 18 U.S.C. 
chapter 40 and the Administrative Procedure Act. It is being exercised 
in this final rule in the Attorney General's best efforts to give voice 
to Congress's intention that the Federal explosives controls be 
administered in such a way as to balance the need to prevent the misuse 
of explosives with the need for persons to have access to explosives 
for lawful purposes without undue regulation. It is significant that 
the exemption for black powder was increased in 1975 through 
legislation, rather than by regulation. Accordingly, the commenters' 
comparison of the proposed regulatory exemption to the statutory 
exemption for black powder is not persuasive and will not result in a 
change in the final rule.
4. Model Rocket Motors, Propellants, and Model Rockets Are Not a Threat 
to Homeland Security
    Approximately 45 commenters argued that model rocket motors and 
propellants, as well as model rockets, do not pose a threat to homeland 
security and should not be regulated by ATF. Other commenters 
(approximately 50) contended that the proposed regulation, if adopted, 
might actually jeopardize homeland security. The commenters argued that 
requiring sport rocketry hobbyists to obtain a Federal permit would 
result in an increase in the number of people with access to 
explosives. Following are excerpts from some of the comments:

    ATFE's concern with hobby rocket propellants such as Ammonium 
Perchlorate Composite Propellant is misplaced. It is simply not 
effective as an explosive for destructive purposes * * * Neither is 
it a credible terrorist threat as a missile against aircraft. Hobby 
rockets do not have guidance systems. The subtleties of the physics 
of dynamic stability, the vagaries of the wind, and available launch 
systems simply do not allow an unguided rocket to be aimed 
accurately against any target as small as an aircraft. Since 
terrorists can presumably acquire guided military rockets on the 
black market, the weaponization of hobby rocket motors is not 
credible. (Comment No. 91)
    Simple analysis of the attributes of sport rockets would make it 
abundantly clear that they are wholly unsuited to the tasks sought 
by terrorists:
     Sport rockets are unguided.
     Sport rockets have very limited range (only a few can 
reach 10,000 feet; most go no higher than 2,000 to 3,000 feet) and 
are highly susceptible to adverse weather conditions * * *
     Payloads are minimal at best * * *
     Rockets are not easy to setup and launch unobtrusively 
* * *
     Substantial modifications would be necessary to turn a 
sport rocket, even a large one, into a weapons delivery system * * * 
(Comment No. 269)
    Requiring rocket hobbyists to obtain an explosives permit is 
counterproductive to security, as it means that thousands of 
hobbyists who normally would never have a need for real explosives 
would now be permitted to obtain them. (Comment No. 301)
    Possession of an LEUP may encourage otherwise disinterested 
persons to obtain real explosives. I believe that an increased 
number of people having access to true explosives will have an 
adverse and significant impact on public safety. (Comment No. 740)
    A terrorist or other illicit user has many explosives available 
to them and wouldn't logically use amateur rocket propellants 
because they are relatively expensive (as compared to fertilizer and 
fuel oil, gasoline, gunpowder, lpg [liquefied petroleum gas], 
propane, etc.). (Comment No. 849)
    Given all of the readily available unregulated materials that 
are available to a terrorist, the BATFE's approach to the regulation 
of APCP is by this analysis a waste of taxpayer's time and money. If 
large numbers of APCP-based IEDs [improvised explosive devices] were 
being encountered by law enforcement, there might be a cause of 
action * * * IEDs are typically constructed of far more commonly 
available, less expensive, and unregulated materials * * * (Comment 
No. 1622)
Department Response
    The Department has considered the comments regarding the threat 
posed by sport rocket motors. For the following reasons, motors with 
more than 62.5 grams of propellant present very real security and 
public safety risks. Rocket motors containing large amounts of APCP can 
power rockets more than 30,000 feet into the air, frequently requiring 
high-power rocketry hobbyists to obtain waivers from the Federal 
Aviation Administration prior to a launch. These large rocket motors 
could also be used to power rockets carrying explosive or noxious 
warheads miles downrange into a fixed target. Commenters state that 
sport rockets are unguided, not easy to set up, and have a limited 
range. These are, in fact, some of the reasons ATF has maintained an 
exemption for small sport rockets with 62.5 grams or less of 
propellant. However, rockets using more than 62.5 grams of propellant 
are capable of stable flight over a fairly long range (one mile or 
greater). A willing, determined criminal or terrorist could assemble a 
weapon that utilizes a large rocket motor and launch such a device at a 
populated area, stadium, or transportation center in a matter of 
minutes from a distance sufficient to avoid detection. In addition, 
commercially available software can calculate launch parameters to fire 
a rocket horizontally or at an angled

[[Page 46087]]

trajectory. Rockets can be utilized to hit fixed targets, such as 
buildings, or be shot into populated areas with a reasonable degree of 
accuracy. Likewise, a rocket being used as a weapon could be launched 
from the bed of a truck, thereby making the launch site and any 
evidence of the launch mobile. The longer the range of the rocket, the 
greater the likelihood that the persons using them for criminal 
purposes would succeed in their attack and evade detection and 
apprehension. Finally, APCP could be used as an explosive filler in a 
pipe bomb or other improvised explosive device. For purposes of 
homeland security and the global fight against terrorism, all of these 
factors must be taken into account.
    The potential for terrorist or criminal misuse of rocket motors 
containing APCP or other propellant explosive is, of course, only one 
side of the equation when balancing homeland-security needs against the 
ability of law-abiding citizens to participate in hobby rocketry 
activities. The Department is fully aware that hobbyists have a 
legitimate and lawful desire to acquire explosive materials in pursuit 
of their recreational activities. In keeping with Congress's intention, 
ATF has maintained a long-standing exemption from the Federal 
explosives controls for hobby rocket motors containing 62.5 grams or 
less of low explosive materials. This exemption covers more than 90 
percent of all rocket motors that are sold to hobby rocketry 
enthusiasts and encompasses all rocket motors that can lawfully be 
possessed without a license or permit or complying with the other 
requirements of Federal law. Under this final rule, a Federal permit 
will be required for persons purchasing motors containing more than 
62.5 grams of propellant and reload kits designed to enable the 
assembly of motors containing more than 62.5 grams of propellant per 
motor. Again, establishing the exemption level at no more than 62.5 
grams of propellant mitigates the burden on rocketry enthusiasts while 
addressing the threat to public and homeland security presented by 
larger motors.
    Even if this rule results in more permits being issued to rocketry 
hobbyists, the Department does not believe that this requirement will 
result in such permittees using the permit to acquire other types of 
low explosives. There is no evidence to indicate that rocketry 
enthusiasts are interested in acquiring explosives other than those 
contained in rocket motors, and associated components. Even if rocketry 
enthusiasts choose to use their Federal explosives permit to acquire 
other types of explosives, only persons with no criminal record or 
other prohibiting factors will be issued a permit. In addition, all 
permittees must demonstrate their ability to store the explosives they 
acquire in accordance with the regulations in 27 CFR part 555. 
Accordingly, even if the commenters are correct, the acquisition of 
other types of explosive materials by rocketry enthusiasts will not 
pose a threat to public safety. For this reason, the Department does 
not believe these comments warrant a change in the proposed rule.
5. ATF Does Not Need To Regulate Model/Sport Rocketry
    Approximately 100 commenters maintained that there is no need for 
ATF to regulate the model/sport rocketry hobby. Some commenters argued 
that the hobby is already subject to the requirements of many other 
governmental authorities at the Federal, State, and local levels. Other 
commenters stated that the hobby is also subject to the rules and 
regulations of non-governmental organizations, including the National 
Fire Protection Association (NFPA), NAR, and the Tripoli Rocketry 
Association. In its comment, NAR stated the following:
    [R]ocket motors themselves as well as their operation are 
specifically regulated by a variety of other government authorities. 
Specifically, the U.S. Department of Transportation (`DOT') 
regulates the storage, transport, containerization, and sale of 
rocket motors used by the hobbyists * * * the U.S. Federal Aviation 
Administration (`FAA') regulates launches, flight locations, 
airframe composition, rocket weight, and requires various 
governmental notifications * * * the U.S. Consumer Product Safety 
Commission (`CPSC') regulates the hobby by prohibiting minors from 
purchasing motors and propellants used in high-powered sport rockets 
* * * Local and county ordinances as well as state regulations 
address fire protection issues and launch locale restrictions. The 
hobby is also extensively monitored for compliance with codes 
promulgated by the National Fire Protection Association, which are 
incorporated by reference into many state laws.

    Other commenters expressed similar views:

    Sport rocketry is subject to many, many regulatory agency rules 
and regulations including those of the Department of Transportation, 
Federal Aviation Administration, Consumer Product Safety Commission, 
and local and national Fire Marshalls [sic]. Government regulations 
notwithstanding, sport rocketry is also directed by self regulation 
from national organizations concerned with the safety and promotion 
of sport rocketry. (Comment No. 15)
    The existing National Fire Protection Association rules on 
rocketry provide adequate rules for safety in the use of hobby 
rocket propellant, and no further rules are necessary by the Federal 
government. (Comment No. 852)
    Regulation of rocket motors is unnecessary. The high power 
rocket motor industry and the National Association of Rocketry and 
the Tripoli Rocketry Association already do a good job regulating 
access to high power rocket motors. (Comment No. 1439)
Department Response
    Government agencies tailor their regulations to facilitate their 
specific mission. For instance, DOT regulations are primarily designed 
to ensure the safe transportation of explosive materials. ATF's 
regulations, on the other hand, are designed to prevent the diversion 
and criminal misuse of explosives and also to ensure that explosives 
are safely and securely stored. Therefore, although there are numerous 
agencies and organizations involved in the regulation of explosives, 
ATF's regulations are necessary to accomplish its specific mission.
    In addition to Government agencies, ATF is aware of the self-
regulation efforts of rocketry clubs and organizations. This self-
regulation is laudable. However, it does not, nor can it, provide a 
mechanism to ensure that persons prohibited under Federal law from 
acquiring explosives are denied access to large rocket motors. 
Voluntary club regulation and certification provide some oversight of 
club members, but this final rule will govern all persons, including 
potential terrorists, felons, or illegal aliens. Moreover, it will 
apply to all sellers of rocket motors containing more than 62.5-grams 
of explosive material as well as to sellers of reload kits designed to 
enable the assembly of motors containing more than 62.5 grams of 
explosive material.
6. The Proposed Regulation Is Not Necessary or Justified for Correction 
of a Demonstrated Public Safety Issue
    Several commenters objected to the proposed rule, contending that 
ATF does not need to regulate model rocket motors or propellant because 
model rocketry is a safe hobby, both in terms of personal injury and 
homeland security. Following are excerpts taken from some of the 
comments:

    [I]n the well over 250 million flights in the many decades that 
the hobby has existed, there have been a grand total of zero 
fatalities (yes, zero) due to rocketry. * * * Given the exemplary 
safety record of rocketry as a hobby, what possible reason can there 
be for regulating the motors we use? (Comment No. 30)
    I have flown over 5000 rockets in my years in the hobby and 
watched over 25,000 others fly, including many large rockets that 
this regulation would cover. I have never seen anyone seriously 
injured by a rocket, nor

[[Page 46088]]

have I ever seen one that was used as a weapon or explosive device 
or that could have been used as an effective weapon* * * Several 
million adults and young people build and fly model rockets each 
year without danger to public safety; the hobby is safer than any 
outdoor sport. (Comment No. 49)
    The ATFE has no need to regulate rocket motors, since they pose 
little risk to the public. According to the most recent data 
published on the ATFE web site referencing the comprehensive list of 
materials used in explosive and incendiary devices since 1991, APCP 
is not listed in the construction of even one device. (Comment No. 
797)
    The consumers who use APCP rocket motors have done so for 
decades with an unprecedented safety record, a record that is far 
better than that of (for example) any high-school sporting activity. 
Those consumers have pursued their activities under the watchful eye 
of the Department of Transportation * * * and the Federal Aviation 
Administration * * * Commercial consumer rocket motors are certified 
via rigorous test by one or more organizations * * * Additional 
regulations to an already-highly-regulated activity will not provide 
additional safety, when that safety has already been realized. 
(Comment No. 834)
    Sport Rocketry * * * has one of the best safety records of all 
hobbies during the past 50 years. There have been no major injuries 
or property damage when conducted according to the rules established 
by the National Association of Rocketry and the Tripoli Rocketry 
Association. (Comment No. 1008)
Department Response
    The Department acknowledges the efforts of many within the rocket 
hobbyist community to promote safety; however, this final rule is 
designed not simply to promote safety among rocket hobbyists but rather 
to promote the safety of all persons, including persons who potentially 
could be targets of terrorist or other attacks involving rockets 
powered by large APCP rocket motors.
    Access to large unregulated amounts of APCP poses a threat to 
homeland security and U.S. transportation systems because the explosive 
material could be used against U.S. buildings, transportation centers, 
or metropolitan areas. The rocket motors themselves are essentially 
packets of explosives that can be modified or used in such a manner as 
to create an effective weapon or explosive device. APCP would make an 
effective filler for a pipe bomb or other improvised explosive device. 
Permitting, licensing, and recordkeeping requirements make the 
explosive less attractive and less available to prohibited persons. All 
explosive materials present some safety hazard and this regulation 
serves to limit the hazards presented by unregulated use, possession, 
and storage of APCP.
    In a post-September 11 environment, the Department believes it 
would be irresponsible to allow unregulated access to large quantities 
of explosive materials, particularly in configurations that can power 
the flight of large rockets capable of being outfitted with large 
warheads. Despite the safety efforts of NAR and Tripoli, the Department 
believes the potential acquisition and criminal and terrorist use of 
rocket motors containing more than 62.5 grams of propellant poses an 
unacceptable risk. Accordingly, the Department believes this rule is 
essential to protect the public and safeguard homeland security.
7. The Proposed Amendment Violates the Federal Explosives Law
    Section 1101 of the Organized Crime Control Act of 1970 (Pub. L. 
91-452, Title XI, October 15, 1970) states, in part:

    It is not the purpose of this title to place any undue or 
unnecessary Federal restrictions or burdens on law-abiding citizens 
with respect to the acquisition, possession, storage, or use of 
explosive materials for industrial, mining, agricultural, or other 
lawful purposes, or to provide for the imposition by Federal 
regulations of any procedures or requirements other than those 
reasonably necessary to implement and effectuate the provisions of 
this title.

    Three commenters argued that the proposed amendment relating to 
model rocket motors violates the Federal explosives law because it 
imposes undue and unnecessary restrictions and burdens on the public. 
Following are excerpts from some of the comments:

    [The proposed rule] is in fact in direct violation of this 
Section* * * [it] appears to be designed specifically to impose 
undue and unnecessary Federal restrictions and burdens on law-
abiding citizens who have been enjoying an exciting yet safe and 
educational hobby. When one considers that those citizens * * * have 
over the last forty years the most extraordinary safety record that 
might be imagined, and have not only presented no danger to the 
public, but in fact have provided significant public benefit both 
economic and educational, it is clear that any attempt to impose 
additional restraints and regulations is not in the best interests 
of the public. (Comment No. 834)
    BATFE regulation of hobby rocketry violates the direction of 
Congress by placing unnecessary federal restrictions and burdens on 
law-abiding citizens with respect to the acquisition, possession, 
storage, and use of APCP and other materials necessary to pursue the 
lawful hobby of rocketry. Most hobbyists will be unable to meet the 
storage requirements for a LEUP [low explosives user permit], and 
will be unable to acquire motors containing greater than 62.5 grams 
of propellant. (Comment No. 934)
    [T]here is no way to argue that the proposed changes regarding 
rocket motors would be in keeping with the spirit of section SEC. 
1101 of the law. Requiring an LEUP to purchase and store hobby 
rocket motors will end the sport for many who currently enjoy flying 
rockets. Especially with the requirements imposed not only by the 
application, but the need to have a storage magazine for a non-
explosive material is burdensome at best, and prohibitory for the 
majority fliers. The cost of the permit and magazine represent a 
substantial outlay and will certainly cause many to abandon the 
hobby. (Comment No. 1521)
Department Response
    These comments appear to be based on the misconception that the 
final rule would ``impose'' the requirements of 27 CFR part 555 on 
rocket motors containing more than 62.5 grams of propellant. The 
Department's view is that this characterization of the rule is 
incorrect. The Department's position is that APCP is properly 
classified as an explosive and, in the absence of an exemption, the 
requirements of 27 CFR part 555 apply to all rocket motors, regardless 
of the quantity of propellant. As stated above, the final rule formally 
implements ATF's long-standing policy of exempting from part 555 rocket 
motors containing 62.5 grams or less of propellant. If this exemption 
did not exist, the consequences outlined in the comments, if accurate, 
would be more pronounced because there would be no exemption whatsoever 
for hobby rocket motors of any size.
    The primary purpose of the Federal explosives law, as expressed by 
Congress, is to protect interstate and foreign commerce and to reduce 
the hazards associated with the misuse of explosive materials. 
Therefore, this goal is the basis for all regulatory action undertaken 
by the Department. The Department regulates only to the extent that it 
is ``reasonably necessary to implement and effectuate the provisions of 
this title.'' The Department has considered the submitted comments. 
However, it does not believe that the proposed amendment exceeds the 
scope of the law.
    As previously discussed, APCP does not generally function by 
detonation, but by deflagration. Therefore it has been classified as a 
low explosive pursuant to ATF's implementing regulations. The 
Department must strike a balance between its obligation to regulate 
APCP and Congress's intent to avoid unnecessarily burdening industry, 
mining, agriculture or other lawful users of explosives. The proposed 
amendment comports with the congressional intent in that the exemption 
allows for the unregulated, lawful use of an explosive in an amount 
that is unlikely to endanger interstate or foreign commerce

[[Page 46089]]

or the public at large. Therefore, the limitation within the exemption 
is reasonable.
    The legislative history for Title XI references items that are not 
intended to be regulated by the Federal explosives laws and provides 
guidance to the agency with regard to how to implement exemptions. 
Specifically, the Judiciary Committee of the United States House of 
Representatives stated in its report that ``the term `explosives' does 
not include fertilizer and gasoline, nor is the definition intended to 
include propellant actuated devices or propellant actuated industrial 
tools used for their intended purposes.'' (See H.R. Rep. No. 91-1549, 
at 35 (1970), reprinted in 1970 U.S.C.C.A.N. 4007, 4041.) Therefore, it 
appears that Congress considered the impact of the law on industry and 
other lawful users, yet did not limit ATF's mandate to regulate APCP, 
even when used by law-abiding hobbyists. Since 1970, Title XI has been 
amended a number of times. However, Congress has never added to the 
laws any additional exemptions related to hobbyists or APCP. (See Pub. 
L. 93-639, section 101, 88 Stat. 2217 (1975); Pub. L. 104-132, Title 
VI, section 605, 100 Stat. 1289 (1996); Pub. L. 107-296, Title XI, 
Subtitle B, section 1112(e)(3), Subtitle C, section 1126, 116 Stat. 
2276, 2285 (2002).) The Department notes that very few explosives are 
given any sort of exemption from the Federal explosives controls and 
that, in exempting motors containing 62.5 grams or less of propellant, 
ATF is, indeed, following Congress's mandate to balance the rights of 
law-abiding citizens to have access to explosives with the important 
safety and security concerns at issue.
    Most recently, Congress addressed the ongoing serious threat posed 
by terrorists who seek to attack America on its own soil. In enacting 
the Safe Explosives Act, Congress took into consideration the fact that 
terrorists have used explosives to attack the World Trade Center in 
1993, destroyed the Murrah Federal Building in Oklahoma City in 1995, 
attempted to detonate a ``shoe bomb'' on an aircraft in 2002, and 
planned to detonate a ``dirty bomb''--a mixture of common explosives 
and radioactive materials, in a United States metropolitan area in 
2002. (House Report No. 107-658; 107th Cong. 2d Session Sept. 17, 
2002). Congress took steps to prevent further attacks against Americans 
and enacted legislation that requires all persons acquiring explosives 
to obtain a permit from ATF.
    The legislative history for the Safe Explosives Act indicates 
Congress's concern with terrorist use of explosives and indicates that 
the Department should implement the provisions of the Federal 
explosives laws with homeland security as a paramount concern. The 
regulatory amendment embodied by this final rule, establishing a 
limited exemption for rocket motors containing 62.5 grams or less of 
explosive material, is consistent with the purposes of Title XI and the 
Safe Explosives Act. It balances the needs of legitimate law-abiding 
rocketry enthusiasts against the need to prevent acts of terrorism 
using explosives and it represents one of the very few instances in 
which an exemption from the Federal explosives controls has been deemed 
appropriate, either by Congress, the Department of the Treasury, or the 
Department of Justice.
8. The Proposed Regulation Fails To Recognize the Economic Effects on 
Small Businesses as Required Under the Regulatory Flexibility Act
    The Regulatory Flexibility Act (5 U.S.C. 605(b)) requires an agency 
to give particular attention to the potential impact of regulation on 
small businesses and other small entities. Approximately 200 commenters 
contended that the proposed rule, if adopted, would result in reduced 
participation by sport rocket hobbyists which, in turn, would have a 
negative effect on small businesses.
    AeroTech, Inc. is a manufacturer and supplier of composite 
propellant rocket motors, as well as a supplier of mid-power rocket 
kits and related products. In its comment (Comment No. 799), the 
manufacturer contended that the proposed rule would have a significant 
impact on small businesses--

    AeroTech is a small business with 10 employees, and derives 
approximately 50-60% of its revenue from rocket motors that would be 
regulated under the proposed rule. It is expected that revenues from 
the sale of these motors will be drastically reduced as a result of 
hobbyists unwilling or unable to comply with the licensing and/or 
storage requirements mandated by the proposed rule. This would have 
a devastating effect on the ability of AeroTech to remain in 
business. AeroTech is aware of dozens of other small businesses that 
will be adversely affected by the proposed rule to a greater or 
lesser extent.

    In its comment, NAR stated that it maintains a database of 
manufacturer contact information for the sport rocketry hobby and from 
that database it estimates that, at any given time, there are 200 
commercial entities providing support to model rocketeers nationwide in 
the form of materials, parts, motors, and launch accessories. According 
to the commenter, assuming that each such manufacturer realizes annual 
sales of $50,000 to the hobby, those commercial entities provide an 
annual economic benefit to the U.S. economy of approximately $10 
million. Based on its information, NAR stated that AeroTech estimates a 
loss of 30 to 40 percent of its market as a result of the proposed 
regulations. NAR went on to state that ``[a]ssuming a similar drop in 
sales will occur for all other manufacturers supplying the rocketry 
hobby, NAR estimates that the annual small business economic impact 
resulting from the NPRM is approximately $4 million.''
    Following are excerpts from other commenters who also argued that 
the proposed regulation would have a significant impact on small 
entities:

    To the extent that new regulations are imposed, making the 
purchase of such motors [motors exceeding 62.5 grams of propellant] 
more difficult, the vast majority of these adults currently enjoying 
the hobby will stop. The dollars spent on high-power rocketry 
products will mostly stop * * * the small-business distributors and 
hobby shops that rely upon these products will also quickly give up 
and close, as such small businesses focus their efforts and receive 
most of their sales from high-power rocketry. (Comment No. 1417)
    [O]ur * * * hobby evolved into Total Impulse Rocketry. It's just 
a very small business that makes recovery harnesses and harness 
protectors for the high power rocketry market. If the proposed rules 
concerning the 62.5 gram limit on motors go into effect, many of our 
fellow rocketeers will be unable to meet the storage requirements 
and will drop out of the hobby * * * Our business and many others 
just like us will be severely impacted or forced to close our doors 
due to the resulting decrease in sales. (Comment No. 1436)
    [T]he [proposed] exemption for model rocket motors will have a 
significant impact on my business. I design and manufacture model 
rocket kits. The rockets made from these kits use these [greater 
than 62.5 grams propellant] motors. A[t] least half my customers 
will be required to obtain a license in order to continue using the 
kits they have already purchased. It is unlikely that they will buy 
any more kits in the future. Many of them will find the licensing 
process more trouble than it is worth and * * * in some cases [will] 
get out of the model rocket hobby entirely. This will lead to a 
significant drop in sales. (Comment No. 1449)
    There is an entire industry built up around the manufacture and 
distribution of APCP motors--and also larger hobby rocket kits, 
parachutes, and electronic devices to fly as payloads and flight 
instrumentation. I maintain that not only the rocket motor 
manufacturers would be hurt by this [proposed] regulation, but also 
the distibutors [sic] and small businesses that depend on selling 
the larger rocket kits and other materials that we buy to fly our 
rockets* * * The people that manufacture and sell these other parts 
(mostly small businesses) would also feel a huge financial impact. 
(Comment No. 1613)

[[Page 46090]]

Department Response
    The commenters' contention that the proposed rule, if adopted, will 
have a negative effect on small businesses is based on their assumption 
that there will be reduced participation in the hobby by sport rocket 
hobbyists. Many commenters argued that the permitting, storage, and 
other requirements for rocket motors containing more than 62.5 grams of 
propellant are overly burdensome for the average sport rocket hobbyist 
and, as such, many will choose to leave the sport. In that regard, NAR 
stated the following:

    It has been estimated that approximately 3000 individuals 
currently participating in the rocket hobby will stop doing so, and 
hundreds more potential new participants will decline to get 
involved, as a direct result of ATFE's positions reflected in the 
NPRM* * * . NAR estimates membership in its various sections across 
the country will decline anywhere between 10 and 80 percent (and the 
Tripoli Rocketry Association estimates a 40 percent decline in 
membership).

    These comments appear to be based on the misconception that the 
final rule would ``impose'' the requirements of 27 CFR part 555 on 
rocket motors containing more than 62.5 grams of propellant. The 
Department's view is that this characterization of the rule is 
incorrect. The Department's position is that APCP is properly 
classified as an explosive and, in the absence of an exemption, the 
requirements of 27 CFR part 555 would apply to all rocket motors, 
regardless of the quantity of propellant. As stated above, the final 
rule formally implements ATF's long-standing policy of exempting from 
part 555 rocket motors containing not more than 62.5 grams of 
propellant. If this exemption did not exist, the consequences outlined 
in the comments, if accurate, would be more pronounced because there 
would be no exemption whatsoever for hobby rocket motors of any size.
    The Department disagrees with the commenters' assertion that the 
proposed rule, if adopted, will result in significant reduction in 
participation by sport rocket hobbyists which, in turn, will have a 
negative effect on small businesses. By contrast, the result of the 
exemption would be to lessen the burden of complying with requirements 
of the Federal explosives laws and to encourage participation in sport 
rocketry. Without the exemption, all rocket motors and all persons who 
acquire them would be required to comply with the permit, storage, and 
other requirements of Federal law. Likewise, without the exemption, all 
retailers, hobby, game and toy stores that distribute and store rocket 
motors containing not more than 62.5 grams of explosive would be 
obligated to obtain Federal explosives licenses and comply with all 
regulatory, recordkeeping and inspection requirements. As stated 
previously, APCP has been regulated under the Federal explosives 
controls since 1971. Thus, requirements to comply with the law when 
acquiring, transporting, selling or storing non-exempt rocket motors is 
nothing new, and many persons who have acquired non-exempt motors 
without obtaining a Federal permit and who fail to store them properly 
have committed a crime. Moreover, a number of commenters indicates they 
have acquired large rocket motors and transported them across State 
lines for rocket shoots without obtaining a Federal license or permit. 
Such transportation violates Federal law now and violated the law prior 
to enactment of the Safe Explosives Act. Again, the exemption embodied 
by this final rule is intended to provide some relief to rocketry 
enthusiasts while taking into account the clear mandate of Congress 
that explosives be effectively regulated.
    Moreover, the burden of complying with the law and regulations for 
non-exempt rocket motors can be minimized through participation in 
rocketry clubs. Comments indicate that a significant number of rocket 
hobbyists belong to such organizations. ATF has recently advised rocket 
clubs that, if they hold a valid Federal explosives user permit, they 
may sponsor rocket launches and provide rocket motors to club members. 
A club ``member,'' as defined under the club's bylaws establishing club 
membership, may participate in the rocket launch without having an 
individual permit so long as the member is not prohibited under Federal 
law from possessing explosives. With respect to storage, ATF has 
advised rocketry clubs that any unused rocket motors must be stored in 
either a club magazine or that the club must arrange for storage with 
another licensee or permittee (contingency storage).
    Under this procedure, sport rocketry hobbyists may continue to 
participate in rocket launches using rocket motors containing more than 
62.5 grams of explosive propellant without having to obtain an 
individual Federal permit or explosives magazine to store their rocket 
motors. All members of the club can share in the cost of a single 
permit and storage magazine, reducing the cost to an insignificant 
amount. Additionally, this final rule will allow retailers such as toy 
and game stores and hobby shops to continue to sell smaller rocket 
motors without obtaining a license, maintaining records applicable to 
distribution of explosives, or being subject to ATF inspection. 
Accordingly, the Department does not anticipate that the rule will 
cause a significant reduction in participation by rocket hobbyists or 
have a significant impact on small businesses.
9. The Proposed Regulation Is a ``Significant Regulatory Action'' Under 
Executive Order 12866
    Under Executive Order 12866, a Federal agency must determine 
whether a regulatory action, which includes notices of proposed 
rulemaking, is ``significant'' and therefore subject to review by the 
Office of Management and Budget and the analytical requirements of the 
executive order. The executive order defines ``significant regulatory 
action,'' in part, as one that is likely to result in a rule that may 
have an annual effect on the economy of $100 million or more or 
adversely affect in a material way the economy, a sector of the 
economy, productivity, competition, jobs, the environment, public 
health or safety, or state, local or tribal governments or communities. 
In Notice No. 968, ATF stated that the proposed rule was not a 
significant regulatory action and, therefore, a Regulatory Assessment 
was not required.
    Thirty commenters did not agree with ATF's assessment and contended 
that the proposed regulation, with respect to hobby rocket motors, is a 
significant regulatory action. NAR stated that the proposed exemption 
would ``significantly reduce the market for rocket motors containing 
APCP because rocketeers will be unwilling or unable to purchase such 
items.'' According to the commenter, it has been estimated that 
approximately 3,000 individuals currently participating in the sport 
rocketry hobby will stop doing so and many more potential new 
participants will decline to participate in the hobby. The commenter 
went on to state the following:

    NAR estimates membership in its various sections across the 
country will decline anywhere between 10 and 80 percent (and the 
Tripoli Rocketry Association estimates a 40 percent decline in 
membership)* * * In addition, manufacturers, distributors and 
retailers of rocket motors containing APCP will not only suffer the 
financial impact associated with less purchases by rocketeers, but 
in addition they will be unable or unwilling to economically comply 
with ATFE's regulations and remain in business.

    In its comment, NAR provided information relating to local 
economics, small businesses, and magazine cost requirements. Based on 
that information, the commenter estimated

[[Page 46091]]

that the total impact of the proposed regulation on those participating 
in the sport rocketry hobby, as well as those benefiting from the 
hobbyists' participation, exceeds $23 million.
    Other commenters also argued that the proposed regulation is a 
significant regulatory action:

    [T]he NPRM will adversely impact the entire hobby rocketry 
industry because of network effects. By diminishing the high power 
sector of the hobby, overall cash flows to vendors of mid-power and 
low-power rockets will be reduced. This will cause a contraction in 
the entire industry as high power vendors go out of business and can 
no longer serve other sectors of the hobby. Mid-power and low-power 
flyers will thus have less choice and product availability. (Comment 
No. 882)
    Sport rocketry is unique in that your proposed rules will apply 
not only to the vendors that provide motor reloads and supplies to 
the hobby but also to most of their customers. A majority of the 
members of both national sanctioning bodies of sport rocketry * * * 
fly motors containing APCP grains over 62.5g. More than half of all 
motors currently available will become regulated* * * All of the 
companies that manufacture and sell APCP motors and supplies * * * 
are relatively small businesses and any further impact will put most 
of these companies out of business. (Comment No. 1321)
    I normally fly rockets in a three state area * * * so I would 
need to purchase the more expensive LEUP at $100. In addition[,] the 
meets where I fly my rockets do not typically have vendors on the 
site, so I would have to purchase a type 4 magazine ($200) so that I 
could purchase them ahead of time and to store them. I would not be 
able to store the magazine in my garage since it is less the [sic] 
75 feet from the living quarters of my neighbor, so I would have to 
build a storage shed at a cost of at least $1500. This would bring 
my total cost to comply with the new proposed regulation to $1800. I 
typically only fly two or three high power models per year at a cost 
of less than $100. The effect of the new [proposed] regulation would 
force me to spend 18 times what I normally spend on these motors. 
(Comment No. 1424)
    Based on the costs to comply with proposed storage requirements, 
user permits and local launch impacts, I estimated the total impact 
of the [proposed] regulation on the rocketry community would exceed 
$20 million annually. (Comment No. 1527)
    The impact on individual hobbyist[s] and to the hobby industry 
could be devastating economically, if the proposed rule's go into 
effect* * * it would force many of the current participants to drop 
out due to the excessive requirements forced on the hobby. Many of 
the small businesses would not be able to stay in business also due 
to the added requirements. Hundreds of hobbyist[s] and their 
family's travel * * * each year * * * to regional or national 
launches. National launches bring thousands of dollars into the 
local economy around the launch. This [proposed] regulatory action 
will have significant economic impact on both sport rocketry 
enthusiasts and APCP motor manufacturers and vendors. (Comment No. 
1653)
Department Response
    As stated previously, the result of this final rule will be to 
mitigate the impact of the Federal explosives law on sport rocketry. A 
strict reading of the statute without the establishment of a regulatory 
exemption would result in a far greater economic impact on rocketry 
hobbyists. Moreover, the Department maintains that the proposed rule 
with respect to model rocket motors is not a significant regulatory 
action and will not have a significant economic impact. The commenters' 
assertion that the proposal will have a significant impact on the 
economy is based on their assumption that there will be a reduction in 
participation by rocketry hobbyists.
    NAR estimated that the total impact of the proposed regulation on 
those participating in the sport rocketry hobby, as well as those 
benefiting from the hobbyists' participation, exceeds $23 million. The 
Department believes that this figure is excessive and unrealistic. 
NAR's estimate is based, in part, on its contention that 3000 
individuals currently participating in the rocketry hobby will stop 
doing so. However, as explained in the preceding section, the 
Department believes that most rocket hobbyists will continue to 
participate in the sport, whether through rocketry clubs or otherwise. 
Additionally in this regard, it bears noting that this final rule 
merely formalizes ATF's existing (and long-standing) policy of 
exempting rocket motors containing no more than 62.5 grams of explosive 
material.
    NAR's estimate is also based on its contention that ``a minimum of 
6,000 rocketeers will be forced to obtain a permit from the ATFE 
[approximately $200] and to purchase a storage magazine for his/her 
rocket motors [approximately $300] in order to comply with the proposed 
regulations contained in the NPRM.'' The Department also finds this 
figure to be excessive. As explained earlier, the comments indicate 
that many rocketeers belong to a rocket club. ATF has advised rocket 
clubs that if they obtain a Federal permit and provide storage for the 
rocket motors, the individual club members would not have to obtain a 
permit or purchase an explosives magazine to store their rocket motors. 
Accordingly, the Department believes that only a small percentage of 
rocketeers will be purchasing explosives magazines, relying instead on 
shared storage facilities of rocketry clubs.
    NAR also argued that the 6,000 rocketeers would need to purchase 
two \1/2\-inch diameter locks for their explosives storage magazine, at 
a cost of $2,500. Based on NAR's estimate, the total cost of the locks 
for 6,000 magazines would be $15,000,000. However, \1/2\-inch diameter 
locks are not required under the current regulations. The cost of a \3/
8\-inch diameter lock, which is the type of lock currently required by 
regulation, is approximately $28.
    NAR further estimated that the total impact of the proposed 
regulation on local economics and small businesses to be approximately 
$8.8 million annually. Again, this figure is based on NAR's contention 
that the proposed rule, if adopted, will result in a significant 
reduction in participation by model rocket hobbyists. As explained 
above, the Department believes that adoption of the proposed rule will 
result in only a small number of rocket hobbyists leaving the sport.

B. Commenters' Concerns Regarding ATF's Proposal Relating to Model 
Rocket Motors and Model Rocket Propellant

1. Adoption of the Proposed Rule Will Result in Overly Burdensome 
Federal Requirements for Sport Rocketry Hobbyists
    If the proposed amendment is adopted, model rocket motors 
containing more than 62.5 grams of propellant and reload kits that can 
be used in the assembly of a rocket motor containing more than 62.5 
grams of propellant will be subject to the permitting, storage, and 
other requirements of Federal explosives law and the regulations in 
part 555. Approximately 150 commenters argued that the compliance 
requirements for rocket motors containing more than 62.5 grams of 
propellant are overly burdensome for the average sport rocket hobbyist 
and, as such, many will choose to leave the sport. The following is a 
representative sample of the commenters' views:

    The cost of a storage magazine is very prohibitive to the 
average rocket hobbyist and is way out of proportion to the cost of 
the motor being stored. For example, an H128W motor from Aerotech 
Inc. * * * has a retail cost of $12.50. * * * this motor would be 
regulated and the hobbyist must store it in a type 4 low explosives 
magazine. The least expensive type 4 magazine that I have been able 
to find is one offered * * * for $194.95 plus a shipping cost of 
$25.00. This is a total cost of at least $219.95 to store a $12.50 
motor. (Comment No. 69)
    Subjecting rocket motors containing more than 62.5 grams of 
propellant to BATFE

[[Page 46092]]

explosives regulations would be onerous and burdensome. In addition 
to the cost of the permit, fingerprinting and background checks, 
there is also the problem of storage. BATFE would require APCP and 
other hobby rocketry materials to be stored in an explosives 
magazine far from any building or road. For most people this is a 
physical impossibility * * * (Comment No. 331)
    The BATF requirements for permitting & storage cannot be met by 
a majority of these hobbyists, since they do not have access to a 
BATF-approved magazine, nor can they meet the BATF requirements for 
having such a magazine on their premises. (Comment No. 812)
    Most model rocket hobbyists are not going to be willing to go 
through the process of obtaining a Low Explosives User Permit (LEUP) 
to be able to continue to use the APCP rocket motors * * * The 
paperwork effort and intrusive nature of the permitting process 
(background check including photographs, fingerprints, and 
interviews) and recordkeeping requirements * * * will cause most 
amateurs to drop out of the hobby. (Comment No. 954)
    Under the new proposed regulations * * * model rocketry 
hobbyists, educators, and students will have to obtain an BATFE 
permit to buy a consumer rocket motor. Even the simplest permit 
under the law will require the hobbyist to be subjected to a 
background check by the BATFE, which includes fingerprints, 
photographs and interviews. The law also requires permit holders to 
keep records that can be inspected by BATFE agents. Since these 
records will most likely be kept in the permit holder's home, it 
will open their home to a visit by the BATFE. The response by many 
Americans to these new restrictions will be to drop out of rocketry 
* * * (Comment No. 1544)
    A significant, and debilitating for the hobby, side effect of 
the proposed rule * * * is that storage will be required for all but 
very small APCP motors. Storage requirements will cause this hobby 
to wither over the next few years as older rocketeers leave the 
hobby and new enthusiasts find the regulatory hurdles far too steep 
to clear. Many, likely most, hobbyists will not be able to secure 
storage for their motors * * * (Comment No. 1614)
Department Response
    These comments appear to be based on the misconception that the 
final rule would ``impose'' the requirements of 27 CFR part 555 on 
rocket motors containing more than 62.5 grams of propellant. The 
Department's view is that this characterization of the rule is 
incorrect. The Department's position is that APCP is properly 
classified as an explosive and, in the absence of an exemption, the 
requirements of 27 CFR part 555 would apply to all rocket motors, 
regardless of the quantity of propellant. As stated above, the final 
rule formally implements ATF's long-standing policy of exempting from 
part 555 rocket motors containing 62.5 grams or less of propellant. If 
this exemption did not exist, the consequences outlined in the 
comments, if accurate, would be more pronounced because there would be 
no relief at all for hobby rockets.
    The Department recognizes that some individuals wishing to obtain a 
Federal explosives license or permit may not be able to do so based 
solely upon the individual's inability to meet the storage requirements 
stipulated under 27 CFR part 555, subpart K. The Department also 
recognizes that some individuals may feel that the Federal licensing 
and permitting requirements are too intrusive and may decide to 
discontinue their participation in rocketry rather than obtain a 
Federal explosives license or permit. The exemption recognized in this 
final rule should make it easier for hobbyists to comply with the law, 
and the Department notes there are a number of resources and 
alternatives available to rocket motor enthusiasts which will likely 
prevent any drastic drop in participation.
    Off-Site Storage: The Department believes that many individuals 
will continue to participate in the sport because ATF has approved, in 
certain circumstances, the storage of explosive materials at a location 
other than the premises address recorded on the permit or license. Off-
site storage of explosive materials is permitted so long as the 
applicant, licensee, or permittee notifies ATF of the storage location. 
This location must be in compliance with the tables of distances 
requirements in the regulations, and the magazine must be in a location 
that can be visually inspected once every seven days.
    Contingency Storage: Participation may not depreciate as 
dramatically as projected by rocket hobbyists because ATF will allow 
industry members to have contingency storage. Upon approval from ATF, 
contingency storage allows an individual to arrange to have his 
explosive materials stored at the premises of another Federal 
explosives licensee or permittee. Approval is generally granted to an 
applicant so long as the magazine is located so it is readily 
accessible to all individuals utilizing the magazine and the applicant 
has written approval from the owner of the magazine.
    Contingency storage could allow several hobbyists to pool their 
resources to obtain a single magazine in which to store explosives and 
to obtain an acceptable location to place their magazine. In addition, 
some licensees and permittees have already rented out space in their 
magazines to provide a location for an applicant's contingency storage. 
Each of these options is a viable way in which contingency storage 
might be utilized for those who cannot obtain a location to store 
explosive materials.
    Storage by Variance: Along with off-site and contingency storage, 
hobbyists can apply for a variance from the storage regulations. 
Variances may be available to applicants who are able to support a 
means of storing the explosive materials in a manner substantially 
equivalent to the requirements outlined in the regulations. For 
instance, ATF may approve a variance for the storage of rocket motors 
inside attached garages. Those individuals meeting certain conditions 
outlined in the variance, such as a requirement to provide proof of 
approval from State or local officials, may continue to store rocket 
motors at their licensed premises.
    Clubs: Membership in a ``rocketry club'' will also limit the need 
for individual permits thereby reducing the regulatory obligations 
imposed on individual hobbyists. ATF has informed rocketry clubs that 
club members can participate in club shoots without having to obtain 
their own Federal explosives license or permit. The club is the entity 
responsible for obtaining the Federal explosives license or permit, for 
obtaining the approved storage locations and magazines, and for 
ensuring that club members do not fall into any of the prohibited 
persons categories. The individual club member may then receive 
explosive materials on behalf of the club while participating at 
launches under the appropriate club supervision.
    Students/Educators: Finally, the sport will not see a dramatic loss 
in the participation of students and educators at public schools and 
public universities as they will continue to be exempt from the 
requirements of obtaining a Federal explosives license or permit 
pursuant to 18 U.S.C. 845(a)(3) and 27 CFR 555.141(a)(3). The law and 
its implementing regulation exempt the transportation, shipment, 
receipt, or importation of explosive materials for delivery to any 
agency of the United States or to any State or political subdivision 
thereof. This exemption allows public schools or public universities to 
obtain rocket motors of any size without a license or permit. These 
institutions must, however, continue to comply with all storage 
requirements for explosive materials and cannot knowingly allow a 
prohibited person to receive or possess explosive materials.
2. The Wording of the Proposed Regulation Effectively Bans All Reload 
Kits
    The proposed regulation limits the exemption for motor reload kits 
to those

[[Page 46093]]

``capable of reloading no more than 62.5 grams of propellant into a 
reusable motor casing.'' Several commenters argued that the proposed 
wording effectively bans all reload kits for reusable motor casings, 
even those using 62.5 grams or less of propellant. The following 
excerpts were taken from the comments:

    After all, it is physically possible to take several reload 
kits, each intended to be used in a motor containing 62.5 grams or 
less of propellant, and to combine them into a larger motor. Thus, 
by the wording of this proposed `exemption', you are effectively 
banning all reload kits. (Comment No. 30)
    [T]he term `capable of reloading more than 62.5 grams into a 
single casing' could be interpreted to eliminate all reloadable 
rocket motors. If a reloadable rocket motor was designed to use one 
and only one 10 gram APCP slug, with this wording, this reload kit 
could still be considered subject to regulation as the BATFE could 
determine that someone could create a motor casing to accommodate 7 
of this fictional slug, making a motor with 70 grams total 
propellant weight. In addition, many commercial rocket motors that 
are used safely at high power rocket launches are composed of 
multiple 62.5 gram or less slugs. This wording would regulate all of 
those motors. (Comment No. 286)
    It will always be theoretically possible for someone to take the 
propellant grains from several reload kits intended for use in a 
motor casing containing 62.5 grams or less of propellant, and place 
all of them into a larger motor casing. Because there is no 
practical way to prevent this possibility, all reload kits are 
`capable' of reloading more than 62.5 grams of propellant into a 
reusable motor casing. (Comment No. 749)
    The way the proposed change is worded, it would regulate all 
reloadable motors, regardless of size, since someone could always 
produce a case capable of holding say 13 chunks of 5 grams each. 
Most of my 29mm reload kits are under 62.5g, but they could be 
loaded into a very long 29mm casing that they are not designed to be 
used in. Even a case of 13mm reload slugs could be crammed into a 
54mm casing. It wouldn't work, but would be over 62.5g and thus 
regulated by this rule. (Comment No. 889)
    You only need to look at this hypothetically to see the problem 
of this rule: If a consumer had 63 kits, each weighing only 1 gram, 
they could possibly be assembled in a reload casing. So even 1 gram 
of ammonium perchlorate composite propellant would not be exempt. 
(Comment No. 1195)
Department Response
    The Department has reviewed the comments that claim that the 
regulation effectively bans all reload kits. The Department does not 
believe that this concern is warranted or valid. First, the rule does 
not ``ban'' rocket motors or reload kits. Rather, the rule allows 
persons to acquire without regulation rocket motors containing 62.5 
grams or less of propellant and reload kits designed to enable the 
assembly of motors containing 62.5 grams or less of propellant. Rocket 
motors and reload kits exceeding these parameters may still be lawfully 
acquired by obtaining a Federal permit and complying with the storage, 
recordkeeping, and other provisions of the law and regulations. Thus, 
using the term ``ban'' to refer to this final rule is inappropriate and 
misleading.
    Presently, ATF is aware of only a small number of commercially 
available reload kits that contain propellant modules designed to be 
combined to exceed the 62.5-gram total propellant weight within a 
single sport rocket casing. In these kits, the individual propellant 
modules each contain 62.5 grams of propellant or less; however, the 
kits are subject to the permitting/licensing and storage requirements 
of the Federal explosives law because they are designed to be stacked 
together within a re-usable casing designed to hold more than 62.5 
grams of propellant. There are other reload kits on the market that are 
designed solely to be used in the assembly of rocket motors that 
contain no more than 62.5 grams of propellant per assembled motor. 
These reload kits will remain exempt under this final rule.
    Many of the scenarios offered by commenters refer to hypothetical 
possibilities as opposed to actual products used or available to rocket 
hobbyists. For instance, ATF is unaware of any rocket casing that 
accepts seven 10-gram slugs of APCP, resulting in 70 grams of total 
propellant weight. However, if such a kit were to be designed it would 
be subject to regulation.
    ATF recognizes that reload kits can provide rocketry enthusiasts 
with a cost-effective means to enjoy their hobby. Accordingly, ATF has 
included within the scope of the 62.5-gram exemption reload kits that 
are designed to enable the assembly of motors containing 62.5-grams or 
less explosive material. Hobbyists and manufacturers of rocket motors 
should, however, be aware that this final rule does not provide a 
``loophole'' affording exempt treatment for reload kits (e.g., the 
AeroTech ``Easy Access'' kit) that, although containing propellant 
modules no larger than 62.5 grams, are designed to allow more than one 
of these propellant modules to be combined in a fully assembled motor 
containing a total of more than 62.5 grams of propellant. Logic 
dictates that if single-use motors containing more than 62.5 grams are 
not exempt under this final rule, reload kits designed to enable the 
assembly of such motors must also be subject to regulation.
3. The Proposed Regulation Limits the Scope of the Exemption to 
``Importation and Distribution''
    The wording of the proposed regulation limits the exemption to 
``importation and distribution.'' Several commenters contended that the 
proposal is too restrictive and that rocket motors containing 62.5 
grams or less of propellant should be exempt from all of the 
requirements in part 555. One commenter, NAR, pointed out that the 
current language in 27 CFR 555.141(a)(7) includes importation, 
distribution, and storage. The commenter went on to state the 
following:

    [T]he NPRM has dropped the reference to `storage' from the 
introductory text for exemptions in Section 55.141(a)(7). To the 
degree that the deletion was purposeful, ATFE has severely limited 
its exemptions by requiring compliance with storage requirements 
even where compliance with importation and distribution requirements 
is not necessary. Clearly such a result represents an unnecessary 
and undue burden on many retail establishments distributing and 
selling these items. To the degree the deletion was inadvertent, the 
reference to `storage' should be re-inserted when the final rule is 
issued.

    Other commenters raised similar concerns:

    The exempted materials should be considered non-explosive for 
all legal purposes, not just importation and distribution * * * 
rocket hobbyists need to be free to buy, sell, ship, store, 
transport, and use rocket propellants, and the manufacturers and 
dealers need to be free to make, buy, ship, store, transport and 
sell them. (Comment No. 30)
    The current language of 27 CFR 555.141(a)(7) explicitly exempts 
storage as well. Requiring storage for these items [rocket motors 
containing up to 62.5 grams of propellant] will impose a significant 
burden on the entire supply chain and make thousands (millions?) who 
currently possess these items criminals. (Comment No. 1330)
Department Response
    The Department has reviewed the comments that question the 
exclusion of storage from the exemption language. It was not the 
intention of the proposed rule to impose storage requirements on hobby 
rocket motors containing 62.5 grams or less of propellant. 
Historically, ATF's policy has been to exempt the smaller rocket motors 
from all regulations applicable to other explosives. This final rule 
was intended to clarify that long-standing policy. Therefore, in this 
final rule, the language has been revised to clarify that the 
designated rocket motors are exempt from all the requirements of 27 CFR 
part 555.

[[Page 46094]]

4. Increased Regulation of Model Rocket Engines Will Limit the 
Availability and Drive Up the Already High Price of Rocket Motors
    Several commenters contended that many hobby rocketry enthusiasts 
will leave the hobby if the proposed regulation is adopted, resulting 
in limited availability of rocket motors and higher prices for them. 
Excerpts from some of the comments follow:

    As a result of members leaving the hobby, these [proposed] 
regulations will have a very significant negative economic impact on 
the companies that manufacture, distribute, and sell hobby rocket 
motors. Prices will rise for these motors since demand and volume 
will be significantly reduced. Higher prices will hurt the average 
hobbyist * * * (Comment No. 69)
    By imposing limits that only allow less than 62.5 grams of 
`total' propellant, rocketeers, who are not currently permitted, 
will be unable to purchase and fly the vast majority of mid to high 
power rockets * * * This will in turn lower the demand for these 
types of motors and will in turn drive the prices up for those of us 
that have the ability to purchase, store and use * * * those 
manufactures [sic] and businesses that provide these products * * * 
will have to lower their inventory levels, manufacturing component 
commitments, and raise their prices overall just to stay in business 
at a reduced revenue level. (Comment No. 896)
    A majority of hobbyists can not * * * and many will not * * * 
qualify for a LEUP; those hobbyists have stopped purchasing rocket 
motors * * * Almost overnight the few small dealers and 
manufacturers have seen their small profit margins disappear. As 
demand drops, prices will rise to the point where the typical 
hobbyist will not be able to afford it. (Comment No. 1536)
    A reduction * * * in participation would also negatively impact 
those who keep going with the hobby. As with any other consumer 
product, as rocket motor production increases, prices decrease. 
Unfortunately, the opposite is also true and the remaining consumers 
of APCP rocket motors would be forced to bear the added cost. This 
will also result in decreased participation. (Comment No. 1607)
Department Response
    The Department has considered the commenters' concerns about 
potentially inflated costs associated with high power rocket motors. 
These comments appear to be based on the misconception that the final 
rule would ``impose'' the requirements of 27 CFR part 555 on rocket 
motors containing more than 62.5 grams of propellant. The Department's 
view is that this characterization of the rule is incorrect. The 
Department's position is that APCP is properly classified as an 
explosive and, in the absence of an exemption, the requirements of 27 
CFR part 555 apply to all rocket motors, regardless of the quantity of 
propellant. As stated above, the final rule formally implements ATF's 
long-standing policy of exemption from part 555 rocket motors 
containing not more than 62.5 grams of propellant. If this exemption 
did not exist, the consequences outlined in the comments, if accurate, 
would be more pronounced because there would be no relief for hobby 
rockets at all.
    Moreover, the Department does not believe the concerns outweigh the 
safety and homeland security threats that would be posed by the 
unregulated sale of large rocket motors. Additionally, the concern is 
not supported by facts.
    Federal controls applicable to rocket motors containing more than 
62.5 grams of propellant and on reload kits enabling persons to 
construct motors containing more than 62.5-grams of propellant are 
reasonable in scope. The controls were applicable to motors containing 
more than 62.5 grams of propellant prior to the proposed rule. 
Therefore, any perceived shift in market prices associated with this 
proposal is simply a result of hobbyists coming into compliance with 
ATF's long-standing policy and with the expanded permitting 
requirements imposed by Congress under the Safe Explosives Act. 
Likewise, ATF has not been provided with any information to support the 
contention that affected hobbyists are quitting their hobby due to the 
cost of compliance.
    In fact, the Department has identified a number of resources and 
alternatives that will reduce the regulatory obligations of individual 
hobbyists. These alternatives should limit any projected decrease in 
the number of hobby participants thereby lessening the overall impact 
on the commercial market.
5. Subjecting Rocket Motors Containing More Than 62.5 Grams of 
Propellant to Permitting and Storage Requirements Would Be Onerous and 
Burdensome
    Approximately 80 commenters argued that subjecting rocket motors 
containing more than 62.5 grams of propellant to the permitting and 
storage requirements of Federal explosives and regulations would be 
unduly burdensome. The commenters expressed concern regarding the costs 
associated with obtaining a Federal permit, e.g., fingerprinting and 
background check, and the problems involved in providing proper storage 
for the rocket motors. The following excerpts represent the views of 
most commenters:

    The regulations you proposed in this NPRM will eliminate my 
ability to participate in high power hobby rocketry. All of the 
rocket motors I have used in the past few years and those I prefer 
to use would be regulated under this proposed regulation. In order 
to continue to use them, I would be required to obtain a * * * low 
explosives user permit * * * Since I currently live in a multiple 
family dwelling, I would not be eligible to have a magazine for 
motor storage, a requirement to obtain a low explosives user permit, 
and thus would not be able to fly motors above your proposed 62.5 
gram limit. (Comment No. 286)
    [M]ost of us do not have the required storage facilities for our 
motors. Current storage requirements are an outbuilding 100 feet 
from any other building. And if we can't store our motors * * * I 
don't know how we are going to fly. (Comment No. 732)
    All High Power flyers will have to obtain a permit to continue 
their sport under the proposed regulations. The lower cost 
intrastate [limited] permit is useless in many states where there 
are no High Power Motor retailers. The full LEUP is the only viable 
option under the proposed regulations and the economic impact can be 
severe. The increase in the permit fee is a very small part of the 
increase. The requirement for storage is where virtually all of the 
expenses are. (Comment No. 895)
    Storage is the most burdensome part of the regulatory 
requirements for individuals to meet. Many people who engage in 
model rocketry live in homes which are not able to meet the storage 
requirements (such as Townhouse[s], Apartments and areas of cities 
where homes are located close together). (Comment No. 969)
    Subjecting rocket motors containing more than 62.5 grams of 
propellant to BATFE explosives regulations would be onerous and 
burdensome. In addition to the cost of the permit, fingerprinting 
and background checks, there is also the problem of storage. BATFE 
would require APCP and other hobby rocketry materials to be stored 
in an explosives magazine far from any building or road. For most 
people this is a physical impossibility * * * `Contingent storage' 
via a second party is not a solution either, as it is often 
unavailable. (Comment No. 1034)
Department Response
    The Department objects to characterization of this rule as 
``subjecting'' rocketry hobbyists to requirements of the law. As stated 
previously, this rule merely clarifies ATF's long-standing policy 
exempting certain rocket motors containing 62.5 grams or less of 
propellant from the requirements of part 555. Without this exemption, 
rocketry hobbyists would be required to obtain a Federal permit and 
abide by all the requirements of the law and regulations for all 
rockets and reload kits.
    In addition, the Department contends that the time and costs of 
obtaining a ``user permit'' (UP) or a ``limited permit'' for users of 
rocket motors or reload kits containing more than 62.5 grams of APCP, 
as well as the cost of obtaining an approved storage

[[Page 46095]]

magazine, do not impose an excessive burden on individuals.
    In amending regulations to implement provisions of the Safe 
Explosives Act (Federal Register, March 20, 2003, 68 FR 13777), ATF 
estimated the time and cost for 20,000 unlicensed individuals to obtain 
a ``limited permit.'' ATF estimated that the total amount of time it 
would take an individual to complete a Federal explosives license or 
permit application is approximately 1.5 hours. The time spent on 
inspecting the qualification documents, business premises, and storage 
magazines is approximately 2 hours.
    ATF also estimated the total cost imposed on an individual applying 
for a ``user permit'' or a ``limited permit.'' First, there would be 
the cost of each permit, which is $25 per year for a ``limited permit'' 
and $100 for 3 years for a LEUP. The cost of photographs for an 
individual was estimated at $1.50; fingerprints for individuals were 
estimated at $10.00. ATF estimated the cost for the time it would take 
to complete the application as $19.50, based upon a mean hourly wage of 
$13. Finally, ATF estimated the total cost for the time spent by the 
individual during an ATF application inspection at $34, based upon a 
mean hourly wage of $17.
    Based on these figures, ATF was able to conclude that the total 
cost and amount of time spent on applying for a Federal explosives 
permit would be an estimated $90.00 to $164.50 and 3.5 hours per 
applicant. The Department contends that this amount of time and cost is 
not disproportionately burdensome, especially when considering the 
benefits to public safety and security.
    The Department does recognize that the cost of a storage magazine 
is significant when compared to the cost of a single rocket motor. 
However, most rocket motor enthusiasts store more than a single rocket 
motor in a magazine. In addition, there are alternative means of 
storing rocket motors. Contrary to the views expressed by some 
commenters, contingency storage is a viable option for hobbyists. 
Contingency storage would allow several hobbyists to pool their 
resources together to obtain a single magazine to store explosives and 
to obtain an acceptable location to place their magazine. It also 
allows individuals who might otherwise be prohibited from storing at 
their licensed location, possibly due to State or local requirements, 
to store in a magazine at a location provided by another licensee or 
permittee.
    Furthermore, rocketry enthusiasts may join or form rocketry clubs. 
These clubs are responsible for obtaining all appropriate licenses or 
permits, as well as storage. The club members may incur the cost of 
membership dues, but as members they may participate in their hobby 
without having to individually comply with storage, licensing, or 
permitting requirements. Sharing the cost of compliance will 
dramatically reduce the cost and burden to any individual club member.
6. The Proposed Regulation Places an Undue Burden on Adult Sport 
Rocketry Hobbyists
    Approximately 110 commenters expressed a concern that the proposed 
regulation places an undue burden on adult rocketry hobbyists because 
most adults in the hobby use motors that contain more than 62.5 grams 
of propellant. Following are excerpts from some of the comments:

    The point I am trying to make here is it [is] the adults that 
drive the hobby. Approximately 56% of all consumer hobby rocket 
motors sold are above the 62.5 gram propellant weight exemption 
proposed by the ATFE. If this rule is enforced most adults 
participating in the hobby will drop out. Few parents will want to 
be subjected to paying for an explosive permit fee, background 
checks, fingerprinting, and possible ATF inspections. (Comment No. 
769)
    The proposed 62.5-gram propellant weight limit in the NPRM will 
have detrimental effects on the hobby. It will subject about 5000 
high power rocket flyer hobbyists in the United States to a series 
of regulations that will stifle the growth and adult participation 
in this hobby. Many current adult flyers that were involved with 
this hobby as middle and high school students have returned to this 
hobby because of the high power aspects. (Comment No. 801)
    [M]ore than 90 percent of the rockets that I currently fly 
contain between 125 and 1000 grams of APCP * * * Most of the 
individuals involved in high-power rocketry devote the greater part 
of their efforts to flying rockets that use more than 62.5 grams of 
propellant. There are currently approximately 5,000 such individuals 
certified by NAR and/or TRA who routinely fly rockets that fall into 
this category. (Comment No. 924)
    While most minors fly these types of motors [under 62.5 grams 
propellant weight] the majority of adult hobbyists do not * * * The 
62.5g rule was made by CSPC to protect minors from injury. I agree 
that this threshold is a good limit for minor[s], but for minors 
only. (Comment No. 999)
    Although most of the rocket motors burnt are not affected by 
this [proposed] regulation, it is often the adults who are burning 
the larger motors that coordinate the launches for the younger 
generation. Placing this unnecessary burden on them will drive them 
out of the hobby * * * (Comment No. 1008)
Department Response
    These comments appear to be based on the misconception that the 
final rule would ``impose'' the requirements of 27 CFR part 555 on 
rocket motors containing more than 62.5 grams of propellant. This 
characterization of the rule is incorrect. The Department's position is 
that APCP is properly classified as an explosive and that, in the 
absence of an exemption, the requirements of 27 CFR part 555 apply to 
all rocket motors, regardless of the quantity of propellant. As stated 
above, the final rule formally implements ATF's long-standing policy of 
exempting from part 555 rocket motors containing not more than 62.5 
grams of propellant. If this exemption did not exist, the consequences 
outlined in the comments, if accurate, would be more pronounced because 
there would be no relief for hobby rockets at all.
    ATF as well as other Federal agencies, including the Consumer 
Product Safety Commission and the Department of Transportation, have 
long considered rocket motors containing no more than 62.5 grams of 
propellant to be exempt from Federal regulations. For years, many 
rocketry enthusiasts had also accepted this threshold, obtaining user 
permits for interstate transfers of rocket motors containing more than 
62.5 grams of propellant. It was only after the SEA was enacted in 
2002, with its requirement for licenses or permits on intrastate 
purchases, that the rocketry groups began to contend that the 62.5-gram 
threshold was too burdensome.
    The 62.5-gram threshold was based on the historical acceptance of 
this amount of explosive material as suitable for ``toys.'' Anything 
above this amount cannot reasonably be classified as a toy. As 
explained previously, a result of this exemption is the mitigation of 
the burden of complying with the law for rocket motors that do not pose 
a significant threat to public safety and homeland security. The fact 
that most of the rockets containing propellant in excess of 62.5 grams 
are acquired by adults is irrelevant. The Department believes that 
limiting the exemption to motors at or under the 62.5-gram threshold is 
reasonable and necessary to prevent unregulated access to dangerous 
quantities of explosives by criminals and terrorists-most of whom are 
adults.
7. The Limited Permit Is Not Practical for Sport Rocketry Hobbyists
    The Federal explosives law requires that all persons receiving 
explosives on and after May 24, 2003, obtain a Federal permit. A ``user 
permit'' is necessary only if the holder transports, ships, or receives 
explosive materials in interstate or foreign commerce. The fee for a 
user permit is $100 for a three-year period and $50 for each three-year 
renewal.

[[Page 46096]]

The ``limited permit'' authorizes the holder to receive explosive 
materials only within his State of residence on no more than 6 separate 
occasions during the one-year period of the permit. The fee for an 
original limited permit is $25 for a one-year period and $12 for each 
one-year renewal.
    Fifty-five commenters argued that the limited permit is not a 
viable option for sport rocketry hobbyists, citing various reasons:

    `Limited' permits cannot be used by most hobby racketeers [sic], 
as dealers are out of state and the `Limited' permit is restricted 
to resident in-state purchases. Rocketeers must get a LEUP [limited 
explosives user permit] costing $100. (Comment No. 323)
    The use of the ATF's new limited [permit] * * * while a step in 
the right direction will not serve most users largely because most 
of us currently need to order supplies out of state, as there are a 
limited number of vendors nationwide and very few of us have the 
luxury of an in state vendor. (Comment No. 737)
    The `limited' permit proposed by ATFE is useless or of limited 
usefulness for the vast majority of rocket flyers, as it only allows 
a maximum of 6 purchases per year, and only allows in-state purchase 
and use. Most rocket clubs hold launches at least monthly (some much 
more often), and there simply are no dealers of high power rocket 
motors in most states. Most high power rocket motor sales are done 
through dealers in other states, either by mail order, or from 
dealers who travel to launch events held in other states. Also, 
rocket flyers frequently travel to launch events held in other 
states. (Comment No. 749)
    The limited permit has very limited usefulness because it does 
not allow fliers to fly out of state, it unrealistically limits 
motor purchases, and it causes problems for transportation and 
storage. (Comment No. 778)
    The new six purchases per year intrastate limited permit is of 
little use, since most hobbyists do not have both a launch site and 
dealer in their home state. (Comment No. 840)
Department Response
    Commenters pointing out the limitations of the Limited Permit fail 
to recognize the benefits of this rule to sport rocketry. This rule 
clarifies ATF's long-standing policy exempting certain rocket motors 
containing 62.5 grams or less of propellant from the requirements of 
part 555. Without the exemption, all persons acquiring rocket motors 
would be required to obtain a permit and comply with all other 
requirements of Federal law.
    An alternative to the limited permit is the user permit (UP), which 
allows for unlimited interstate purchases of explosive materials for a 
period of up to three years. The UP also permits those individuals 
attending out-of-state launches to purchase rocket motors interstate, 
or to transport explosive materials from state to state. The UP is 
useful in instances in which there are no model rocket motor dealers in 
the hobbyist's state, since it allows the hobbyist to purchase non-
exempt rocket motors outside of his state of residence and receive the 
motors in his own state as long as the purchase complies with other 
Federal, State, or local laws. The cost of the UP is only slightly 
higher than the cost of a limited permit. The limited permit 
application fee is $25 per year with a renewal feel of $12 per year. 
The full price of a UP for 3 years is $100 for the initial three-year 
permit (averaging out to $33.33 per year), with a renewal fee of $50 
every three years thereafter (average of $16.67 per year).
8. Sport Rocketry Hobbyists May Not Be Able To Comply With State and 
Local Requirements
    Approximately 40 comments contended that under the proposed 
regulation rocketry hobbyists would need to obtain permission from 
State and local authorities to store rocket motors containing more than 
62.5 grams of propellant. The commenters argued that obtaining such 
permission is often difficult or impossible in many areas. The 
following excerpts are representative of the commenters' concerns:

    BATFE regulation of hobby rocket materials would also require 
users to get the permission of state and local authorities for 
storage of `explosives'--something that is often difficult or 
impossible in many areas. In some cases, users would be required to 
undergo training in the use and storage of high explosives. (Comment 
No. 333)
    Many, likely most, hobbyists will not be able to secure storage 
for their motors because APCP has been misclassified as an explosive 
and, quite naturally, most cities are reluctant to allow storage of 
explosives in a residence. (Comment No. 824)
    Most of the hobbyists I know cannot meet storage requirements 
because they live in an apartment or condominium or live in a city 
that won't allow `explosives' to be stored in a residential area, 
and therefore most of them cannot get a permit. (Comment No. 1065)
Department Response
    The statutory criteria for issuance of a Federal explosives license 
or permit do not require applicants to comply with or certify 
compliance with requirements of State or local law. The only aspect of 
Federal regulation that is conditioned upon compliance with State and 
local law is ATF's granting of storage variances. As stated in ATF 
Ruling 2002-3, Indoor Storage of Explosives in a Residence or Dwelling 
(approved August 23, 2002), ATF will approve variances to store 
explosives in a residence or dwelling upon certain conditions 
including, but not limited to, receipt of a certification of compliance 
with State and local law, and documentation that local fire safety 
officials have received a copy of the certification. ATF has issued 
numerous variances permitting storage of explosive materials, 
particularly APCP, in a residence or dwelling.
9. ATF's Definitions and Classifications of Explosives Are Not 
Consistent With Those of Other Federal Agencies and International 
Agreements
    Several comments argued that there should be some consistency among 
Federal agencies with respect to the definitions and classifications of 
explosives. Following are some of the arguments raised by the 
commenters:

    [T]he definitions and classifications [of explosives] should 
agree with other federal agencies and international agreements such 
as the United States Department of Transportation, the Bureau of 
Explosives, and UN standards. Ammonium perchlorate, and rocket 
motors definitions and classifications should be regulated by * * * 
[ATF] as it has been by the United States Department of 
Transportation, the Bureau of Explosives, and UN standards in the 
BOE-600 Hazardous Materials Regulations of the Department of 
Transportation since around WW 1. (Comment No. 907)
    The APCP formulations in the geometric configurations available 
to the hobby rocketry community do not meet the U.S. Government 
specified characteristics of low explosive materials when evaluated 
by approved U.S. Government explosive testing laboratories and by 
the Department of Defense (DOD). (Comment No. 1044)
    The Department of Transportation has labeled APCP as a flammable 
solid and has granted an emergency revision to DOT exemption DOT-E 
10996 that allows the shipment of articles covered by the exemption 
(certain rocket motors and reload kits normally classified as 
division 1.3C explosives). (Comment No. 1052)
    It seems odd to me that two different branches of government 
choose to have such differing opinions on the same substance. I 
believe that the definition of `toy propellant devices' use[d] by 
DOT [is] more accurate when talking about hobby rocket motors. 
(Comment No. 1362)
    [I]t appears that BATFE is backing off from its early laudable 
efforts to coordinate its regulations with those of other 
governmental and quasi-governmental regulatory bodies. For example, 
BATFE specifically declines to recognize or adopt even portions of 
NFPA codes * * * BATFE has in the current NPRM eliminated several 
helpful references to UN codes, and * * * BATFE is proposing to 
adopt definitions of terms and regulatory limits that are different 
from, and will inevitably interfere or even conflict with, those 
used by FAA and DOT. (Comment No. 1622)

[[Page 46097]]

Department Response
    The Department has considered the comments regarding differing 
classifications and definitions used by other Government agencies. 
However, it does not believe the proposed amendment would result in 
inconsistency among Government agencies because different Federal 
statutes serve different purposes.
    APCP, being a deflagrating propellant, is considered an explosive 
and classified under ATF regulation as a ``low explosive.''
    The National Fire Protection Association (NFPA) has adopted a 
definition of ``explosives'' that is the same as the statutory 
definition set forth in 18 U.S.C. 841(d). ``Explosives'' as classified 
in 18 U.S.C. 841(d) are ``* * * any chemical compound[,] mixture, or 
device, the primary or common purpose of which is to function by 
explosion; the term includes, but is not limited to, dynamite and other 
high explosives, black powder, pellet powder, initiating explosives, 
detonators, safety fuses, squibs, detonating cord, igniter cord, and 
igniters.'' Moreover, the NFPA's classification of ``low explosives'' 
is consistent with that in 27 CFR 555.202(b). In its ``Fire Protection 
Handbook,'' NFPA has included propellants in its listing of ``types of 
explosive,'' and states that black powder, smokeless powder, and solid 
rocket fuels fall into the category of ``low explosives/propellant.'' 
Furthermore, in its ``Code of High Power Rocketry,'' NFPA uses the same 
criteria for the storage of rocket motors that mirror the requirements 
of the table of distances for low explosives that are addressed in 27 
CFR part 555.
    DOT classifications sometimes differ from ATF because the two 
agencies use different standards to make their explosives 
classifications. DOT uses standards that are based primarily on the 
controls for the transportation, storage, packaging, and shipping 
safety. For example, when packaging will reduce the likelihood of mass 
explosion, DOT will assign a ``lower'' hazard classification 
(triggering less stringent transportation requirements). DOT's 
standards are such that the same explosive material can be classified 
differently in different circumstances, based solely upon its 
packaging. ATF's classifications are static and are based upon the 
material itself, not the safety of its packaging. Likewise, the United 
Nations (UN) uses classifications for explosives that are designed to 
ensure the harmonization of transportation of hazardous materials in 
global commerce. These classifications serve to facilitate commerce 
while maintaining safety standards that can be adhered to throughout 
the world. This goal differs significantly from that of ATF. ATF's 
classifications are designed to maximize public safety and protect 
interstate and foreign commerce against interference and interruption 
from the misuse of explosive materials. Therefore, although there are 
some distinctions in classification among Federal agencies, they should 
not be viewed as inconsistencies.
10. The Proposed Exemption Would Not Apply to Rocket Motors Containing 
Multiple Segments up to 62.5 Grams of Propellant Each, but Whose Total 
Combined Weight Is More Than 62.5 Grams
    One commenter (Comment No. 18) expressed concern that the proposed 
regulation would not exempt rocket motors containing multiple segments 
having no more than 62.5 grams of propellant each, but whose total 
combined weight in the motor is more than 62.5 grams. The commenter 
contended that the proposed exemption should apply to all model rocket 
motors whose segment weight is less than 62.5 grams, regardless of the 
number of segments, citing various reasons including: The proposed rule 
does not make sense--there is no difference between purchasing or 
selling three separate motors each containing 62.5 grams of propellant 
and one motor reload with three segments, each weighing 62.5 grams; a 
62.5 gram per segment exemption is self-limiting, i.e., it becomes 
impracticable from a physics point of view for rocket motors to have 
more than a certain number of segments that are limited to 62.5 grams, 
and; the proposed exemption will encourage clustering of smaller motors 
to achieve the effect of a larger motor-this is not a good practice 
because it relies on simultaneous ignition of the motors.
Department Response
    All reload kits and propellant modules that can be used only in the 
assembly of rocket motors that contain a total of no more than 62.5 
grams of propellant per assembled motor are exempt from regulation 
under this final rule. This exemption applies to single-use motors 
containing 62.5 grams or less of explosive material and to reload kits 
that are designed solely to create motors containing 62.5 grams or less 
of APCP per assembled motor. The range and power of rockets powered by 
the smaller rocket motors would not be as useful to terrorists or other 
criminals in constructing weapons designed to serve as delivery systems 
for explosive, chemical, or biological weapons. An individual 
purchasing larger rocket motors may assemble a large rocket motor that 
is capable of carrying explosive warheads or other dangerous payloads 
long distances.
    The Department believes that the regulation of single-use motors 
containing more than 62.5 grams of propellant and reload kits and 
propellant modules designed to enable the assembly of such large motors 
can protect public safety by preventing the misuse of these motors. 
Also, the Department has determined that this threshold affords a 
reasonable balance between the need to prevent terrorists and other 
criminals from acquiring explosives and the legitimate desire of 
hobbyists to have access to explosives for lawful use.
11. The Proposed Exemption Does Not Appear to Include Bulk Packs of 
Rocket Motors
    One commenter (Comment No. 59) inquired whether the proposed 
exemption applied to bulk packs of rocket motors where each motor 
contains no more than 62.5 grams of propellant. The commenter stated 
that he purchases bulk packs of rocket motors for his students who are 
in a model rocket club. He explained that the bulk packs usually 
contain 24 motors and that each individual motor contains 5.6 grams of 
propellant, resulting in a total propellant weight of 134 grams (5.6 x 
24). Because the total weight of the bulk pack exceeds 62.5 grams, the 
commenter is concerned that bulk packs of rocket motors would not be 
included in the proposed exemption.
Department Response
    As stated previously, any person purchasing explosives, including 
non-exempt rocket motors, for use at a public educational institution, 
is exempt from the permit provisions of the Federal explosives laws. 
State and local institutions would be required to store rocket motors 
in compliance with the law and regulations and could not knowingly 
allow prohibited persons to receive or possess explosive materials.
    Persons purchasing rocket motors for a private school would not be 
exempt from the permit requirements of the law. However, if the ``bulk 
packs'' referred to by Comment No. 59 are non-stackable, fully-
assembled single-use motors, each of which contains no more than 62.5 
grams of propellant, then such ``bulk packs'' would fall within the 
exemption of the regulations, no matter how many motors are contained 
in the package. Accordingly, the commenter's concerns are misplaced.

[[Page 46098]]

12. The Proposed Regulation Should Be Amended To Include Other 
Explosives
    As indicated, many commenters argued that the proposed regulation 
is too restrictive and would have a negative effect on hobby rocketry. 
Approximately 175 comments recommended specific changes to the proposed 
regulation. For example, many commenters stated that the proposed 
regulation should be revised to exempt from regulation model rocket 
motors consisting of ammonium perchlorate composite propellant, black 
powder, or non-detonable rocket propellant and designed as single-use 
motors or as reload kits, as well as commercially manufactured black 
powder in quantities not to exceed two pounds, safety and pyrotechnic 
fuses, quick and slow matches, electric matches and igniters when used 
in model rocket motors. This suggestion is similar to the proposals 
contained in Senate Bill 724, introduced during the 108th Congress by 
Senator Michael Enzi.
    Other commenters argued that there should be an exemption for black 
powder in small quantities, e.g., two pounds, for use in model rocket 
ejection systems, i.e., to deploy the parachute. Two commenters 
recommended that the proposed regulation be revised to exempt model 
rocket motors designed as single use and reload kits consisting of 
APCP, black powder, or other similar propellant purchased for hobby and 
educational use by persons (and organizations) who have successfully 
completed the certification processes offered by the National 
Association of Rocketry, Tripoli Rocketry Association, or similar 
organizations.
    Two other commenters suggested that the proposed regulation should 
be revised to exempt any size rocket motor or propellant reload, except 
those materials which present such a hazard of accidental explosion as 
to be suitable for classification as ``UN Class 1 Division 1.1 or 1.2 
Hazardous materials,'' or any material used as a propulsive or 
explosive charge in a rocket that qualifies as a ``destructive device'' 
as defined in 18 U.S.C. 44.92(a)(4)(iii). One commenter recommended 
that the proposed regulation be revised to exempt model rocket motors 
classified by the Department of Transportation as Class 1.4 explosives, 
since United Nations hazard Class 1.4 replaces the former Class C 
explosive designation. Another commenter stated that the proposed 
regulation needed to be revised to clarify the phrase ``or other 
similar low explosives.'' The commenter stated that it was not clear 
whether the word ``similar'' means similar in chemical composition, 
method of operation, or similar in ability to lift large payloads.
Department Response
    The Department has considered the comments that request the 
proposal be amended. Based upon the present language of Federal 
explosives law, the Department does not believe that the proposed 
regulation should be amended in the manner suggested by the commenters.
    ATF is familiar with the commenters' proposed language that seeks 
to establish additional exemptions: Model rocket motors consisting of 
ammonium perchlorate composite propellant, black powder, or non-
detonable rocket propellant and designed as single-use motors or as 
reload kits, as well as commercially manufactured black powder in 
quantities not to exceed two pounds, safety and pyrotechnic fuses, 
quick and slow matches, electric matches and igniters when used in 
model rocket motors. This suggestion mirrors language in Senate Bill 
724, introduced by Senator Michael Enzi in March 2003. The bill was not 
enacted and will have to be reintroduced before Congress may consider 
it. The Department believes that expanding the current exemption, even 
for the sole purpose of hobby rocketry, will harm homeland security by 
providing terrorists and other criminals with unrestricted access to 
rocket motors containing large amounts of explosive material. The 
Department believes this to be an unnecessary and unacceptable risk in 
the current security environment. Moreover, allowing exemptions only 
for fuses and igniters, as opposed to non-exempt rocket motors, would 
be impossible to implement, as the same types of fuses and igniters are 
used for both large and small rocket motors, as well as commercial 
explosives and blasting operations. Additionally, there would be no 
mechanism to ensure that only rocketry hobbyists or others with lawful 
intentions will be able to avail themselves of the exemption. If the 
exemption were to be expanded as suggested by the commenters, it would 
become very easy for terrorists or other criminals to acquire large 
rocket motors, fuses, igniters, and other materials for use in bombs 
and/or for use in rockets.
    The proposal to include an exemption for up to two pounds of black 
powder for use in model rocket ejections is not being adopted in this 
final rule. As explained previously, the exemption for black powder was 
enacted by Congress and not as a regulatory exemption. The Department 
declines to add this exemption to the final rule. Accordingly, the 
Department recommends that commenters on this issue seek legislation.
    The Department also believes it is unnecessary to revise the 
language in the regulation to clarify the meaning of ``or other similar 
low explosives.'' In the context of this regulation, this language 
refers to rocket propellants classified as low explosives that perform 
in a similar manner to those specifically listed as low explosives, 
i.e., ammonium perchlorate composite propellant and black powder. To 
the extent the commenter is suggesting that the Department list each 
and every low explosive propellant that could conceivably be used in 
rockets, the Department believes this would create an unnecessarily 
lengthy regulatory exemption that would not improve its clarity. It is 
not the purpose of the regulations to address each and every chemical 
compound that might be used in a rocket motor and that performs in a 
manner similar to those explosives listed in the regulation. The 
propellants that are specifically listed are those currently used in 
commercially available rocket motors. It is unnecessary to list each 
and every possible low explosive that may be used now or in the future 
as rocket propellants. Any person wishing a determination on a 
particular rocket propellant and whether it fits within the exemption 
may submit a written request for a letter ruling to ATF's Arson and 
Explosives Programs Division.
    The purpose of the Federal explosives controls, as expressed by 
Congress, is to ``protect interstate and foreign commerce against 
interference and interruption by reducing the hazard to persons and 
property arising from misuse and unsafe or insecure storage of 
explosive materials.'' In 2002, with the enactment of the Safe 
Explosives Act, Congress also extended ATF's permitting authority to 
require all persons wishing to obtain explosives to obtain permits 
thereby allowing ATF to perform background checks on all applicants. 
The legislation sought to ensure proper handling and storage procedures 
and prevent mishandling and misuse of explosives. House Report No. 107-
658 107th Cong. 2d Sess. Sept. 17, 2002. The Department believes the 
controls imposed by this final rule are reasonable and consistent with 
the purposes of the 1970 Act and the congressional intent expressed 
with passage of the SEA.

VII. Request for Hearings

    Fifteen (15) comments requested that ATF hold public hearings on 
the proposed regulations set forth in Notice

[[Page 46099]]

No. 968. Most commenters contended that holding public hearings would 
provide the explosive and model rocketry industries an opportunity to 
present additional information regarding the complex proposals made in 
the proposed rule. They further stated that such hearings would provide 
other interested parties, including model rocket hobbyists, an 
opportunity to present their views ``and allow time for BATFE to 
respond to our questions.''
    Generally, ATF's public hearings are conducted to permit the public 
to participate in rulemaking by affording interested parties the chance 
to present oral presentation of data, views, or arguments. After 
careful consideration, the Director has determined that the holding of 
public hearings with respect to the model rocket proposal is 
unnecessary and unwarranted. First, while the Director acknowledges 
that the proposals made in Notice No. 968 were numerous and complex, 
this final rule addresses only the proposal relating to model rocket 
motors. In addition, most commenters who addressed the model rocket 
motor proposal expressed similar views and raised similar objections 
and concerns. As such, the Director believes that the holding of public 
hearings would not produce any new information on this issue. Finally, 
contrary to the views expressed by the commenters, the purpose of a 
public hearing is to afford the public the opportunity to participate 
in rulemaking by presenting data, opinions, etc. It is not the proper 
forum for responding to interested parties' questions.
    A determination as to whether hearings will be held on the 
remaining proposals in Notice No. 968 will be made by the Director at a 
later date.

How This Document Complies With the Federal Administrative Requirements 
for Rulemaking

A. Executive Order 12866

    This rule has been drafted and reviewed in accordance with 
Executive Order 12866, ``Regulatory Planning and Review,'' section 
1(b), Principles of Regulation. The Department of Justice has 
determined that this rule is a ``significant regulatory action'' under 
Executive Order 12866, section 3(f), Regulatory Planning and Review, 
and accordingly this rule has been reviewed by the Office of Management 
and Budget. However, this rule will not have an annual effect on the 
economy of $100 million, nor will it adversely affect in a material way 
the economy, a sector of the economy, productivity, competition, jobs, 
the environment, public health, or safety, or State, local or tribal 
governments or communities. Accordingly, this rule is not an 
``economically significant'' rulemaking as defined by Executive Order 
12866.
    This final rule is deregulating in nature. It merely clarifies 
ATF's long-standing position that hobby rocket motors containing 62.5 
grams or less of explosive propellant are exempt from regulation. The 
exemption is intended to mitigate the impact of compliance with Federal 
law by allowing persons who acquire and store motors containing 62.5 
grams or less of propellant to continue to enjoy their hobby on an 
exempt basis. The 62.5-gram exemption threshold covers the vast 
majority (more than 90 percent) of all rocket motors acquired and used 
by hobbyists in the United States. Thus, persons dealing in or 
acquiring motors containing no more than 62.5 grams of propellant will 
not be subject to the cost of obtaining a Federal license (e.g., an 
initial fee of $200 for obtaining a dealer's license for a 3-year 
period; $100 renewal fee for a 3-year period) or permit (an initial fee 
of $100 for obtaining a user permit for a 3-year period; $50 renewal 
fee for a 3-year period). Moreover, because of the exemption for rocket 
motors containing 62.5 grams or less of propellant, such persons are 
not subject to the storage requirements of Federal explosives law and 
regulations for their rocket motors. Without the 62.5 gram exemption, a 
typical rocket motor otherwise would be required to be stored in a type 
4 magazine (costing approximately $300) because of the explosives 
contained in the motor. The cost for two \3/8\-inch diameter shackle 
locks for the storage magazine is approximately $56.
    Retailers who distribute the rockets will also avoid certain 
obligations that apply to the regulated explosives industry, such as 
storage standards, recordkeeping requirements, licensing and inspection 
by ATF.
    Rocket motors containing more than 62.5 grams of propellant will 
continue to be regulated by ATF. ATF estimates that approximately 300 
individuals currently participating in the rocketry hobby will stop 
doing so as a result of the final rule. ATF further estimates that 
approximately 60 rocketry hobbyists who use rocket motors containing 
more than 62.5 grams of explosive propellant will obtain a Federal 
permit and purchase a type 4 explosives magazine, while an additional 
100 rocketry clubs will obtain a Federal permit and obtain an 
explosives magazine. ATF estimates that the total impact of the final 
rule is approximately $606,000. This figure is based on an examination 
of local economics, small businesses, and magazine and permitting 
requirements, as discussed below.
Local Economic Analysis
    Based on historical data, NAR estimates that there are 1,000 model 
rocket launches annually, typically for a period of two days per 
launch, with each launch attracting 30 flyers. The commenter stated 
that an additional 60 participants would attend each launch as 
supporters, family members, or spectators. As a result of the proposed 
regulation, ATF estimates that there would be 10 percent fewer people 
attending each launch. Therefore, based on an average cost for meals 
and lodging, ATF estimates that the local economic impact associated 
with the proposed rule would be approximately $480,000 annually.
Small Business Analysis
    In its comment, NAR stated that it maintains a database of 
manufacturer contact information for the rocketry hobby. From that 
database, the commenter estimates that, at any given time, there are 
200 commercial entities providing support to model rocketeers 
nationwide in the form of parts, materials, motors, and launch 
accessories. Assuming each such manufacturer realizes annual sales of 
$50,000, NAR stated that those commercial entities provide an annual 
economic benefit to the U.S. economy of approximately $10 million. ATF 
does not anticipate the significant drop in participation that NAR 
assumes. As previously explained, the permitting and storage 
requirements are not so burdensome or expensive as to drive a large 
number of participants out of the hobby.
    ATF estimates that the final rule will result in a drop in rocket 
motor and other rocketry-related sales of .5 percent, resulting in an 
annual small business economic impact of approximately $50,000.
Magazine and Permitting Cost Requirements
    ATF estimates that 60 additional rocketry hobbyists and 100 
rocketry clubs will obtain a permit from ATF and purchase a storage 
magazine for their high-power rocket motors. ATF estimates the 
permitting costs for the hobbyists and the rocketry clubs to be 
approximately $19,200, including the fee and photo and fingerprinting 
services. The cost of 160 type 4 explosives magazines is approximately 
$48,000 and the cost of two \3/8\-inch diameter locks ($56) for the 160 
magazines is $8,960. Collectively, for the 160 affected individuals/
rocketry

[[Page 46100]]

clubs, the economic cost to comply with the permitting and storage 
requirements is approximately $76,160.

B. Executive Order 13132

    This regulation will not 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. Therefore, in accordance with section 6 
of Executive Order 13132, the Attorney General has determined that this 
regulation does not have sufficient federalism implications to warrant 
the preparation of a federalism summary impact statement.

C. Executive Order 12988

    This regulation meets the applicable standards set forth in 
sections 3(a) and 3(b)(2) of Executive Order 12988.

D. Regulatory Flexibility Act

    The Regulatory Flexibility Act (5 U.S.C. 605(b)) requires an agency 
to conduct a regulatory flexibility analysis of any rule subject to 
notice and comment rulemaking requirements unless the agency certifies 
that the rule will not have a significant economic impact on a 
substantial number of small entities. Small entities include small 
businesses, small not-for-profit enterprises, and small governmental 
jurisdictions. The Attorney General has reviewed this regulation and, 
by approving it, certifies that this rule will not have a significant 
economic impact on a substantial number of small entities. This rule 
clarifies ATF's long-standing policy exempting certain model rocket 
motors from the requirements of part 555. The rule provides an 
exemption from the requirements of part 555 for model rocket motors 
consisting of ammonium perchlorate composite propellant, black powder, 
or other similar low explosives; containing no more than 62.5 grams of 
total propellant weight; and designed as single-use motors or as reload 
kits capable of reloading no more than 62.5 grams of propellant into a 
reusable motor casing.
    Without the exemption, all retailers, hobby, game and toy stores 
that distribute and store rocket motors containing not more than 62.5 
grams of explosive would be obligated to obtain Federal explosives 
licenses and comply with all regulatory, recordkeeping and inspection 
requirements.
    The Department believes that the final rule will not have a 
significant impact on small businesses. The 62.5-gram exemption 
threshold covers the vast majority (more than 90 percent) of all rocket 
motors acquired and used by hobbyists in the United States. Thus, 
persons dealing in or acquiring motors containing no more than 62.5 
grams of propellant will not be subject to the cost of obtaining a 
Federal license (e.g., an initial fee of $200 for obtaining a dealer's 
license for a 3-year period; $100 renewal fee for a 3-year period) or 
permit (an initial fee of $100 for obtaining a user permit for a 3-year 
period; $50 renewal fee for a 3-year period). Moreover, because of the 
exemption for rocket motors containing 62.5 grams or less of 
propellant, such persons are not subject to the storage requirements of 
Federal explosives law and regulations for their rocket motors. Without 
the 62.5 gram exemption, all rocket motors containing explosive 
material would be required to be stored in a type 4 magazine (costing 
approximately $300) with adequate locks (costing approximately $56). 
With the exemption, only motors with more than 62.5 grams of propellant 
must be stored in compliant magazines and appropriately secured.
    The Department estimates that approximately 300 high-power rocketry 
hobbyists currently participating in the sport will stop doing so as a 
result of the final rule. Based on the comments, this figure represents 
approximately three percent of the total number of rocketry hobbyists 
who use rocket motors containing more than 62.5 grams of explosive 
propellant.
    The Department believes that the impact on small businesses as a 
result of reduced participation in the rocketry hobby will be minimal. 
In its comment, NAR estimated that at any given time there are 200 
commercial entities providing support to model rocketeers nationwide in 
the form of parts, materials, motors, and launch accessories. Assuming 
each such manufacturer realizes annual sales of $50,000, NAR stated 
that those commercial entities provide an annual economic benefit to 
the U.S. economy of approximately $10 million. As a result of the final 
rule, the Department estimates a drop in sales of .5 percent for small 
manufacturers supplying the rocketry hobby. Accordingly, the Department 
estimates the annual small business economic impact resulting from the 
final rule to be approximately $50,000.

E. Small Business Regulatory Enforcement Fairness Act of 1996

    This rule is not a major rule as defined by section 251 of the 
Small Business Regulatory Enforcement Fairness Act of 1996, 5 U.S.C. 
804. This rule will not result in an annual effect on the economy of 
$100 million or more; a major increase in costs or prices; or 
significant adverse effects on competition, employment, investment, 
productivity, innovation, or on the ability of United States-based 
companies to compete with foreign-based companies in domestic and 
export markets.

F. Unfunded Mandates Reform Act of 1995

    This rule will not result in the expenditure by State, local, and 
tribal governments, in the aggregate, or by the private sector of $100 
million or more in any one year, and it will not significantly or 
uniquely affect small governments. Therefore, no actions were deemed 
necessary under the provisions of the Unfunded Mandates Reform Act of 
1995.

G. Paperwork Reduction Act

    This final rule does not impose any new reporting or recordkeeping 
requirements under the Paperwork Reduction Act.

Disclosure

    Copies of the notice of proposed rulemaking (NPRM), all comments 
received in response to the NPRM, and this final rule will be available 
for public inspection by appointment during normal business hours at: 
ATF Reference Library, Room 6480, 650 Massachusetts Avenue, NW., 
Washington, DC 20226, telephone (202) 927-7890.

Drafting Information

    The author of this document is James P. Ficaretta; Enforcement 
Programs and Services; Bureau of Alcohol, Tobacco, Firearms, and 
Explosives.

List of Subjects in 27 CFR Part 555

    Administrative practice and procedure, Authority delegations, 
Customs duties and inspection, Explosives, Hazardous materials, 
Imports, Penalties, Reporting and recordkeeping requirements, Safety, 
Security measures, Seizures and forfeitures, Transportation, and 
Warehouses.

Authority and Issuance

0
Accordingly, for the reasons discussed in the preamble, 27 CFR part 555 
is amended as follows:

PART 555-COMMERCE IN EXPLOSIVES

0
1. The authority citation for 27 CFR part 555 continues to read as 
follows:

    Authority: 18 U.S.C. 847.


[[Page 46101]]



0
2. Section 555.141 is amended by adding new paragraph (a)(10) to read 
as follows:


Sec.  555.141  Exemptions.

    (a) * * *
    (10) Model rocket motors that meet all of the following criteria--
    (i) Consist of ammonium perchlorate composite propellant, black 
powder, or other similar low explosives;
    (ii) Contain no more than 62.5 grams of total propellant weight; 
and
    (iii) Are designed as single-use motors or as reload kits capable 
of reloading no more than 62.5 grams of propellant into a reusable 
motor casing.
* * * * *

    Dated: August 7, 2006.
Paul J. McNulty,
Acting Attorney General.
[FR Doc. 06-6862 Filed 8-10-06; 8:45 am]
BILLING CODE 4410-FY-P