[Federal Register Volume 76, Number 149 (Wednesday, August 3, 2011)]
[Proposed Rules]
[Pages 46908-46957]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-19313]
[[Page 46907]]
Vol. 76
Wednesday,
No. 149
August 3, 2011
Part II
Department of Homeland Security
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6 CFR Part 31
Ammonium Nitrate Security Program; Proposed Rule
Federal Register / Vol. 76, No. 149 / Wednesday, August 3, 2011 /
Proposed Rules
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DEPARTMENT OF HOMELAND SECURITY
Office of the Secretary
6 CFR Part 31
[Docket ID 2008-0076]
RIN 1601-AA52
Ammonium Nitrate Security Program
AGENCY: National Protection and Programs Directorate, DHS
ACTION: Proposed rule; request for comments.
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SUMMARY: This proposed rule would implement anti-terrorism measures to
better secure the homeland. The Department of Homeland Security would
regulate the sale and transfer of ammonium nitrate pursuant to section
563 of the Fiscal Year 2008 Department of Homeland Security
Appropriations Act with the purpose of preventing the use of ammonium
nitrate in an act of terrorism. This proposed rule seeks comment on
both proposed text for such a regulation and on several practical and
legal issues integral to the development of an Ammonium Nitrate
Security Program.
DATES: Comments and related material must either be submitted to our
online docket via http://www.regulations.gov on or before December 1,
2011 or reach the Docket Management Facility by that date. Comments
sent to DHS or the Office of Management and Budget (OMB) on collection
of information must reach DHS or OMB on or before October 3, 2011.
ADDRESSES: You may submit comments, identified by docket number 2008-
0076, by one of the following methods:
Federal eRulemaking Portal: Follow the instructions at
http://www.regulations.gov for submitting comments.
Mail: U.S. Department of Homeland Security, National
Protection and Programs Directorate, Infrastructure Security Compliance
Division (NPPD/ISCD), 245 Murray Lane, SW., Mail Stop 0610, Arlington,
VA 20598-0610.
To avoid duplication, please use only one of these methods. For
instructions on submitting comments, see the ``Public Participation''
portion of the SUPPLEMENTARY INFORMATION section below.
Collection of Information Comments: If you have comments on the
collection of information discussed in section IV.F (``Paperwork
Reduction Act'') of this Notice of Proposed Rulemaking (NPRM), you may
submit comments to the DHS as indicated above, and you may also send
comments to the Office of Information and Regulatory Affairs (OIRA),
OMB. Comments on the collection of information must reach DHS or OIRA
on or before October 3, 2011. To ensure that your comments to OIRA are
received on time, the preferred methods are by e-mail to [email protected] (include the docket number and ``Attention: Desk
Officer for Department of Homeland Security/NPPD'' in the subject line
of the e-mail) or fax at 202-395-6566. An alternate, though slower,
method is by U.S. mail to the Office of Information and Regulatory
Affairs, Office of Management and Budget, 725 17th Street NW.,
Washington, DC 20503, Attention: Desk Officer for Department of
Homeland Security/NPPD.
FOR FURTHER INFORMATION CONTACT: Ammonium Nitrate Security Program
Manager, U.S. Department of Homeland Security, National Protection and
Programs Directorate, Infrastructure Security Compliance Division
(NPPD/ISCD), 245 Murray Lane, SW., Mail Stop 0610, Arlington, VA 20598-
0610, telephone number (703) 235-5263.
SUPPLEMENTARY INFORMATION:
Table of Contents
I. Public Participation
II. Background: Overview of Subtitle J and Associated Regulatory
Development Activities
A. Subtitle J
B. October 2008 Report to Congress
C. Advance Notice of Proposed Rulemaking
D. Research Efforts and Findings
1. Security Hazards Presented by Use of Ammonium Nitrate
2. Detonability of Ammonium Nitrate
3. Federal Regulations Addressing Ammonium Nitrate
a. Chemical Facility Anti-Terrorism Standards
b. U.S. Coast Guard Maritime Security Regulations
c. Transportation Security Administration
d. Bureau of Alcohol, Tobacco, Firearms and Explosives
e. Department of Transportation Hazardous Materials Regulations
f. Department of Commerce
4. State Regulations Addressing Ammonium Nitrate
5. Voluntary Programs Addressing Ammonium Nitrate
III. Discussion of Proposed Rule: Implementing Subtitle J
A. Ammonium Nitrate Subject to Subtitle J Requirements
1. Mixture Requirement
2. Threshold Weight and Individual Products Exemptions
3. Explosives Exemption
B. Requirements for the Registration of AN Sellers and AN
Purchasers
1. Overview
2. Who Must Register
3. Registering AN Sellers
4. Registering AN Facility Representatives
5. Registering a Designated AN Facility POC
6. Summary of AN Facility Personnel Registration Proposals
7. Registering AN Purchasers
8. Federal/State/Tribal/Local Government-Owned Entities That Are
AN Facilities or AN Purchasers
9. Registration Process
10. Initial Applications
11. Applicant Vetting Process
12. Notification of Approval or Denial
13. Revocation of Registration Numbers
14. Appealing Registration Denials and Registration Revocations
15. Registration Updates and Expiration
16. Initial Six-Month Registration Period
C. Purchaser Verification Activities
1. Overview
2. Manner of Sale or Transfer of Ammonium Nitrate
3. Required Verification Activities
4. Verification of the Currency and Authenticity of a
Prospective AN Purchaser's AN Registered User Number
5. Verification of a Prospective AN Purchaser's Identity When
the AN Purchaser Opts Not To Use An Agent
6. Verification of a Prospective AN Purchaser's Identity When
the AN Purchaser Opts To Use An Agent
7. For Sales Involving Agents, Verification That the Agent Is
Acting on Behalf of the AN Purchaser
8. Verification of the Agent's Identity Based on the Visual
Check of the Agent's Photo Identification
9. Timing of Verification Activities
10. Departmental Role in Verification Process
11. Purchaser Verification Portal
12. Purchaser Verification Call Center
13. Purchaser Verification Portal and Call Center
14. Suspicious Purchases and Attempted Purchases of Ammonium
Nitrate
D. Recordkeeping
1. Overview
2. Entities Responsible for Keeping Records
3. Records To Be Kept
4. Length of Retention of Records
5. Format and Storage of Records
E. Reporting of Theft or Loss of Ammonium Nitrate
1. Overview
2. Who Must Report Theft or Loss
3. Level of Theft or Loss Warranting Reporting
4. Process for Reporting Theft or Loss
F. Inspections and Audits
G. Guidance Materials and Posters
H. Civil Penalties, Civil Penalty Adjudications, and Civil
Penalty Appeals
I. Consultation Requirements
J. Delegation of Authority
IV. Regulatory Analyses
A. Executive Order 12866 and Executive Order 13563: Regulatory
Planning and Review
1. Cost Impacts
2. Benefits of the Ammonium Nitrate Security Program
B. Regulatory Flexibility Act
[[Page 46909]]
1. Reasons for and Objectives of the Proposed Rule
2. Affected Small Business Population and Estimated Impact of
Compliance
3. Number of Small Entities That Purchase Ammonium Nitrate
4. Number of Small Entities That Sell Ammonium Nitrate
5. Alternatives Considered
6. Average Costs per AN Facility
7. Identification of Duplication, Overlap and Conflict With
Other Federal Rules
C. Executive Order 13132: Federalism
D. Unfunded Mandates Reform Act
E. National Environmental Policy Act
F. Paperwork Reduction Act
G. International Trade Impact Assessment
Abbreviations and Terms Used in This Document
AN Ammonium Nitrate
ANFO Ammonium Nitrate/Fuel Oil
ANPRM Advance Notice of Proposed Rulemaking
ATF Bureau of Alcohol, Tobacco, Firearms, and Explosives
ATSA Aviation and Transportation Security Act
CFATS Chemical Facility Anti-Terrorism Standards
CFR Code of Federal Regulations
COI Chemical of Interest
CVI Chemical-terrorism Vulnerability Information
DHS Department of Homeland Security
DOT Department of Transportation
EAR Export Administration Regulations
FBI Federal Bureau of Investigation
FR Federal Register
HMR Hazardous Materials Regulations
HMT Hazardous Materials Table
IED Improvised Explosive Device
IRFA Initial Regulatory Flexibility Analysis
MTSA Maritime Transportation Security Act
NAICS North American Industrial Classification System
NPRM Notice of Proposed Rulemaking
PCII Protected Critical Infrastructure Information
PHMSA Pipeline and Hazardous Materials Safety Administration
POC Point of Contact
QATT Qualified Anti-Terrorism Technology
RFA Regulatory Flexibility Act
SAFETY Support Anti-Terrorism By Fostering Effective Technologies
SBA Small Business Administration
SORN System of Records Notice
SSI Sensitive Security Information
TSA Transportation Security Administration
TSDB Terrorist Screening Database
TWIC Transportation Worker Identification Credential
UMRA Unfunded Mandates Reform Act
USC United States Code
USCG United States Coast Guard
USDA United States Department of Agriculture
VSL Value per Statistical Life
I. Public Participation
Interested persons are invited to participate in this rulemaking by
submitting written data, views, or arguments on all aspects of this
NPRM. The Department of Homeland Security (DHS or the Department) also
invites comments that relate to the economic, environmental, or
federalism effects that may result from this NPRM. Comments that will
provide the most assistance to the Department in developing this
proposed rule will refer to a specific provision of the NPRM or the
Secure Handling of Ammonium Nitrate provisions in the Homeland Security
Act, as amended, explain the reason for any comments, and include other
information or authority that supports such comments.
Submission of Sensitive Information: Do not submit comments that
include trade secrets, confidential commercial or financial
information, Chemical-terrorism Vulnerability Information (CVI),
Protected Critical Infrastructure Information (PCII), or Sensitive
Security Information (SSI) to the public regulatory docket. Please
submit such comments separately from other comments on the proposed
rule. Comments containing this type of information should be
appropriately marked as containing such information and submitted by
mail to the following address: U.S. Department of Homeland Security,
National Protection and Programs Directorate, Infrastructure Security
Compliance Division (NPPD/ISCD), 245 Murray Lane, SW., Mail Stop 0610,
Arlington, VA 20598-0610.
Upon receipt of such comments, DHS will not place the comments in
the public docket and will handle them in accordance with applicable
safeguards and restrictions on access. DHS will hold them in a separate
file to which the public does not have access, and place a note in the
public docket that DHS has received such materials from the commenter.
If DHS receives a request to examine or copy this information, DHS will
treat it as any other request under the Freedom of Information Act
(FOIA), 5 U.S.C. 552, and the Department's FOIA regulation found in
Part 5 of Title 6 of the Code of Federal Regulations (CFR).
Instructions: All submissions must include the agency name and
docket number for this rulemaking. All comments received will be posted
without change to http://www.regulations.gov, including any personal
information provided.
Docket: For access to the docket to read background documents or
comments received, go to http://www.regulations.gov.
II. Background: Overview of Subtitle J and Associated Regulatory
Development Activities
A. Subtitle J
Section 563 of the Fiscal Year 2008 Department of Homeland Security
Appropriations Act amends the Homeland Security Act of 2002 and directs
DHS to ``regulate the sale and transfer of ammonium nitrate by an
ammonium nitrate facility * * * to prevent the misappropriation or use
of ammonium nitrate in an act of terrorism.'' See Public Law 110-161,
Division E (2007). Section 563 amends the Homeland Security Act of 2002
(6 U.S.C. 361 et seq.) by adding in a new Subtitle J--Secure Handling
of Ammonium Nitrate, sections 899A-899J (to be codified from 6 U.S.C.
488 to 6 U.S.C. 488i). All references to 6 U.S.C. 488-488i throughout
this document refer to the corresponding sections in the Homeland
Security Act of 2002, as amended by section 563 of the Fiscal Year 2008
Department of Homeland Security Appropriations Act. All references to
``Subtitle J'' throughout this document refer to Subtitle J of the
Homeland Security Act of 2002, as created by the Fiscal Year 2008
Department of Homeland Security Appropriations Act.
Pursuant to Subtitle J, the Department must develop regulations
that require, at a minimum, the following activities:
Registration Applications: Certain ammonium nitrate
sellers and prospective ammonium nitrate purchasers must apply for
ammonium nitrate (AN) registration numbers from DHS in order to sell,
transfer, and/or purchase ammonium nitrate. See 6 U.S.C. 488a(c) and 6
U.S.C. 488a(d).
Terrorist Screening Database Checks: The Department must
use identifying information of each prospective applicant to conduct a
check against identifying information that appears in the Terrorist
Screening Database (TSDB). See 6 U.S.C. 488a(i)(2)(A).
Registration Numbers: The Department generally must issue
an ammonium nitrate registration number or deny the registration of an
applicant within 72 hours of receipt of each ammonium nitrate seller's
or ammonium nitrate purchaser's complete registration application. See
6 U.S.C. 488a(i)(3)(A).
Purchaser Verification Activities: At the point of sale,
ammonium nitrate sellers must verify each potential ammonium nitrate
purchaser's identity and registration to purchase ammonium nitrate
pursuant to procedures
[[Page 46910]]
established by the Department. See 6 U.S.C. 488a(e)(2)(D).
Recordkeeping: All ammonium nitrate facilities must keep
records of sales or transfers of ammonium nitrate for at least two
years after each transaction. See 6 U.S.C. 488a(e)(1) and 6 U.S.C.
488a(e)(2).
Reporting Theft or Loss of Ammonium Nitrate: Certain
ammonium nitrate sellers must report the theft or loss of ammonium
nitrate to Federal authorities within one calendar day of discovery of
theft or loss. See 6 U.S.C. 488d.
Inspections and Audits: The Department must conduct or
oversee regulatory compliance inspections and audits of ammonium
nitrate facilities' records, monitor compliance with the requirements
of Subtitle J, and deter or prevent misappropriation of ammonium
nitrate for use in terrorist acts. See 6 U.S.C. 488b.
Guidance Materials and Posters: The Department must
develop guidance materials that set forth procedures for appealing
denial of an application for an ammonium nitrate registration number,
guidance materials that help ammonium nitrate facilities identify
suspicious ammonium nitrate purchases or attempted purchases or
transfers, and posters providing information on sellers' record-keeping
responsibilities and on the penalties for violating requirements under
the Department's ammonium nitrate program. See 6 U.S.C. 488a(i)(4)(c)
and 6 U.S.C. 488c(c).
Establishing Threshold Percentage of Ammonium Nitrate in a
Mixture: The Department must establish a threshold percentage of
ammonium nitrate in a mixture for that mixture to be regulated under
the Department's ammonium nitrate program. See 6 U.S.C. 488a(b).
Appeals and Penalties: The Department must establish an
expedited appeals process for applicants denied ammonium nitrate
registration numbers, as well as an appeals process for individuals
assessed civil penalties for violating the rules promulgated under
Subtitle J. See 6 U.S.C. 488a(i)(4) and 6 U.S.C. 488e(d).
B. October 2008 Report to Congress
In an Explanatory Statement accompanying section 563 of the Fiscal
Year 2008 Department of Homeland Security Appropriations Act the
Chairman of the House Committee on Appropriations indicated a desire
for the Department's National Protection and Programs Directorate to
``provide a plan to implement [Subtitle J], including analysis of the
resources required to do so, and a proposal for reallocating funding
within the National Protection and Programs Directorate for doing so.''
See Explanatory Statement Submitted by Mr. Obey, Chairman of the House
Committee on Appropriations, Regarding the Consolidated Appropriations
Amendment of the House of Representatives to the Senate Amendment to
H.R. 2764, 153 Cong. Rec. H15741, H16092 (2007), available at http://www.gpo.gov/fdsys/pkg/CREC-2007-12-17/pdf/CREC-2007-12-17-bk2.pdf. In
October 2008, the Department submitted to Congress a report in response
to this Explanatory Statement, outlining possible approaches to
implementing Subtitle J and the potential costs associated with each
approach. The Department's report to Congress has aided in evaluating
many of the approaches contained in this NPRM. The Department's report
can be found in the docket for this NPRM, which is available at http://www.regulations.gov.
C. Advance Notice of Proposed Rulemaking
DHS published an Advance Notice of Proposed Rulemaking (ANPRM)
titled ``Secure Handling of Ammonium Nitrate Program'' on October 29,
2008. See 73 FR 64280. The ANPRM solicited public comment on the
following specific issues:
Comments regarding submission of registration applications
(e.g., whether applications should be submitted electronically or in
paper form; whether applications should be available only through DHS
or through Local Cooperative Extension offices or at United States Post
Offices);
Comments regarding the technical capabilities (e.g.,
access to computers; access to the Internet; average level of computing
skills; frequency of use of integrated Information Technology systems)
of ammonium nitrate manufacturers, distributors, sellers, and end-
users;
Comments regarding DHS distribution of ammonium nitrate
registration letters or certificates (e.g., whether DHS should use e-
mail or regular mail);
Comments regarding a verification process for
registrations and ammonium nitrate purchases, including methods for
verifying the identity of any ammonium nitrate purchaser, as well as
the identity of designated agents purchasing ammonium nitrate on behalf
of registered ammonium nitrate purchasers;
Comments on the detonability of ammonium nitrate at
certain concentrations, including research being conducted concerning
the detonability of ammonium nitrate;
Comments on how likely ammonium nitrate fertilizer users
would be to use an alternative fertilizer that is potentially less
detonable, such as Sulf-N[supreg] 26 Fertilizer Process and Product
(ammonium sulfate nitrate fertilizer) which DHS recently Designated as
a Qualified Anti-Terrorism Technology (QATT) pursuant to 6 U.S.C. 441-
444 (the Support Anti-terrorism by Fostering Effective Technologies Act
of 2002, or SAFETY Act). See http://www.safetyact.gov;
Comments on how best to conduct or oversee regulatory
compliance inspections and audits of ammonium nitrate facilities'
records to ensure that regulated ammonium nitrate facilities are
properly maintaining records, to monitor compliance with the
requirements of Subtitle J, and to deter or prevent misappropriation of
ammonium nitrate for use in terrorist acts;
Comments on the economic impacts (both long-term and
short-term, quantifiable and qualitative) of the implementation of
Subtitle J, including potential impacts on State, local, and tribal
governments of the United States; potential impacts on agri-business,
including ammonium nitrate manufacturers, importers, packagers,
distributors, retailers, and end-users including farmers (e.g., whether
current ammonium nitrate purchasers would likely reduce their ammonium
nitrate purchases as a result of a new regulatory regime); and
potential impacts on small businesses;
Comments on the monetary and other costs anticipated to be
incurred by U.S. citizens and others as a result of the new compliance
requirements, such as the costs in time and money that an individual
may incur to obtain an ammonium nitrate registration number. These
costs may or may not be quantifiable and may include actual monetary
outlays, transitional costs incurred to obtain alternative documents,
and the costs that will be incurred in connection with potential delays
at the point of sale;
Comments on a possible fee structure to address some or
all of the costs of this new program, such as registration, TSDB
checks, and issuance of ammonium nitrate registration numbers;
Comments on the benefits of this rulemaking;
Comments on any alternative methods of complying with
Subtitle J; and
Comments on the best methods or processes for interacting
with state and local governments regarding ammonium nitrate security.
[[Page 46911]]
See 73 FR 64280, 64281, section IV--Questions for Commenters.
DHS received comments from 33 organizations and individuals. The
majority of the submissions, 20, were from private companies and trade
associations, including associations affiliated with the farming,
explosives, and mining industries. Three universities provided
comments, as did three government agencies. Six individuals, including
one farmer, also submitted comments.
The topics addressed by the commenters covered a wide range of
issues. The two issues that received the most attention were the
registration process and the feasibility of using substances other than
ammonium nitrate in agricultural operations. DHS received 15 comments
concerning the registration process; all 15 commenters wanted the
registration process to be as simple and straightforward as possible.
Some commenters stated that if a registration process were to be
implemented, then a registrant should receive his/her approval from DHS
within 72 hours. The commenters expressed differing views on the
technological capabilities of the regulated community. Some argued that
computer use was sufficiently common for the entire process to be
automated through an Internet-based portal. As articulated by these
comments, an online process would be fast, inexpensive, and could be
structured to allow individuals to apply from their homes or places of
business. Others argued that computers are not common enough among
ammonium nitrate users, who would either be forced to travel to
different locations to register or to invest in computers. This second
group of commenters believed that registration through an Internet-
based portal would constitute an unjustified burden.
Many commenters believed that regulating ammonium nitrate and not
other types of fertilizer will cause a decrease in ammonium nitrate
usage because of an expected rise in its cost. There was no agreement
on the degree to which the cost of ammonium nitrate use would change,
but multiple commenters indicated that cost would be passed along the
supply chain until it ultimately reaches end-users. If the cost of
ammonium nitrate were to go up, commenters hypothesized that ammonium
nitrate alternatives may become preferable. Some comments suggested
that continued ammonium nitrate use is based on historical ammonium
nitrate use and that using an alternative would have no noticeable
effect on operations. Others argued the opposite, stating that
alternative fertilizers would not serve the needs of certain crops
equally well. Commenters from certain States where ammonium nitrate is
regularly used in agricultural operations indicated that ammonium
nitrate is the best choice for nitrogen application for certain crops.
Other commenters, however, asserted that viable alternatives exist with
respect to the majority of crops for which ammonium nitrate currently
is used as a fertilizer.
There was a general consensus among commenters regarding the need
to avoid duplication of other Federal licensing, regulatory, and
inspection programs. Commenters stated that to be registered under the
ammonium nitrate program could be unnecessary for individuals already
registered under related regulatory programs covering ammonium nitrate
use, such as DHS's Chemical Facility Anti-Terrorism Standards (CFATS),
Department of Transportation (DOT) hazardous materials regulations, and
Bureau of Alcohol, Tobacco, Firearms, and Explosives (ATF) regulations.
These commenters noted that ATF's inspection process also could be used
for ammonium nitrate inspections under this program to minimize
inconvenience to ammonium nitrate users.
A number of commenters indicated that some ammonium nitrate is
normally lost as bulk ammonium nitrate moves through the supply chain.
Commenters noted, for example, that equipment used for transporting
bulk ammonium nitrate, such as hoppers, bins, and railcars are not
shift-proof, resulting in incidental spillage of ammonium nitrate
prills, which are the small, bead-like pellets of ammonium nitrate
typically used in the manufacturing, transportation, and bulk use of
ammonium nitrate. Additionally, commenters noted that there is normally
loss during movement throughout the supply chain due to melting or
solidification of ammonium nitrate prills based on nothing more than
ambient temperature and humidity. For instance, commenters noted that
in a 90-ton railcar shipment, it is not unusual for these phenomena to
result in loss of 200-500 pounds of ammonium nitrate. This may result
because ammonium nitrate is hygroscopic in nature (i.e., it readily
absorbs moisture). When ammonium nitrate prills come into contact with
ambient moisture in the air, the prills may cake or meld together,
which can simultaneously increase the overall mass of bulk ammonium
nitrate while reducing its overall volume. These properties cause
significant difficulty in accounting for ammonium nitrate on a fine
scale. Consequently, these commenters stated that DHS should not
require ammonium nitrate users to report losses of magnitudes normally
encountered during ammonium nitrate use and transport.
Several commenters addressed the threshold quantity or percentage
composition of ammonium nitrate triggering regulation under this
program. The universities that commented on the ANPRM addressed the use
of ammonium nitrate in scientific research, while other commenters
addressed the use of ammonium nitrate as a component of cold packs.
These commenters stated that the quantities of ammonium nitrate used in
scientific research and in cold pack manufacturing are so small that
persons conducting scientific research or purchasing and selling cold
packs should not be subjected to a rigorous regulatory scheme. Several
commenters also recommended that DHS should exempt mixtures containing
ammonium nitrate that ATF classified ``explosives.''
In developing this NPRM, DHS carefully considered all public
comments submitted in response to the ANPRM. DHS will respond to the
issues raised therein when responding to the comments received on this
NPRM.
D. Research Efforts and Findings
In support of the effort to develop regulations to implement
Subtitle J, the Department has examined and considered research into a
variety of topics including the security hazards presented by the use
of ammonium nitrate; its detonability; existing Federal and State
ammonium nitrate programs; and voluntary security programs. In the
course of conducting this research, the Department reviewed numerous
materials, including, but not limited to, the following:
A. Bauer, R.D. Heater & J.H. Paterson, Queen's Univ.
Mining Eng'g Dep't, The Sensitivity of Ammonium Nitrate Melts and
Solutions to Projectile Impact (1981).
A. King & A. Bauer, Queen's Univ. Mining Eng'g Dep't,
Shock Initiation Characteristics of Ammonium Nitrate (1980).
R.W. Van Dolah, F.C. Gibson & J.N. Murphy, U.S. Dep't of
Interior, Bureau of Mines, Further Studies on Sympathetic Detonation,
Report of Investigations 6903 (1966).
R.W. Van Dolah, F.C. Gibson & J.N. Murphy, U.S. Dep't of
Interior, Bureau of Mines, Sympathetic Detonation of Ammonium Nitrate
and Ammonium Nitrate-Fuel Oil, Report of Investigations 6746 (1966).
[[Page 46912]]
J.J. Burns, G.S. Scott, G.W. Jones & Bernard Lewis, U.S.
Dep't of Interior, Bureau of Mines, Investigations on the Explosibility
of Ammonium Nitrate, Report of Investigations 4994 (1953).
Information about these materials can be found in the docket for
this NPRM. The Department seeks public comment on whether or not there
are additional studies or other research materials the Department
should consider in support of the development of the final regulations
as well as any copies of such studies or research materials.
1. Security Hazards Presented by Use of Ammonium Nitrate
Ammonium nitrate is a chemical that exists in multiple
concentrations and physical forms, and different concentrations and
forms have different security implications. In the United States, the
principal uses for ammonium nitrate are as a fertilizer or as part of
an explosive mixture. Ammonium nitrate can be sensitized (made more
sensitive to shocks, and thus easier to detonate) with the addition of
organic material. One common example is when fertilizer-grade ammonium
nitrate is mixed with fuel oil and creates an explosive mixture known
as Ammonium Nitrate/Fuel Oil (ANFO). The fuel oil acts as an energy
source. Both ammonium nitrate fertilizers and ANFO have been misused in
acts of terrorism to cause catastrophic damage to human health, safety,
national security, the economy, and critical infrastructure.
Nationwide, fertilizer-grade ammonium nitrate is commonly used in
agricultural operations and the chemical and explosives industries. See
A. King & A. Bauer, 4. Due to its availability in small-scale packaging
(e.g., 50-pound bags), ammonium nitrate is susceptible to theft and
misuse in making improvised explosive devices (IEDs).
Over the years, ammonium nitrate has been used as an explosives
component in terrorist attacks, both domestically and internationally.
The 1995 Murrah Federal Building attack in Oklahoma City claimed the
lives of 168 individuals and demonstrated how ammonium nitrate could be
misused to perpetrate deadly terrorist attacks. See Oklahoma City
National Memorial, A Look at the Numbers, http://www.oklahomacitynationalmemorial.org/secondary.php?section=5&catid=145&id=83 (last visited Aug. 11, 2010).
The Provisional Irish Republican Army also used ammonium nitrate as
part of its London bombing campaign in the early 1980s. See Boyce
Rensberger, Ammonium Nitrate Explosives Are Simple, Easily Made, Widely
Used in Industry, Wash. Post, Apr. 21, 1995, at A28. More recently,
ammonium nitrate was used in the 1998 East African embassy truck
bombings, killing hundreds and injuring thousands at the U.S. embassies
in Dar es Salaam, Tanzania, and Nairobi, Kenya. See Corky Siemaszko,
Wtc Chemicals In Kenya Blast (Aug. 14, 1998), http://www.nydailynews.com/archives/news/1998/08/14/1998-08-14_wtc_chemicals_in_kenya_blast.html (last visited May 11, 2011). Ammonium
nitrate was also used in a November 2003 series of truck bombings in
Turkey, killing over 50 individuals and injuring an additional 700
individuals at multiple locations across Istanbul. See Lauren Johnston,
CBSNews.com, Fertilizer Used in Terror Bombs (Apr. 14, 2004), http://www.cbsnews.com/stories/2004/04/14/world/main611898.shtml (last visited
Aug. 11, 2010). Additionally, since the events of 9/11, stores of
ammonium nitrate have been confiscated during raids on terrorist sites
around the world, including raids on sites in Canada (see Steve
Schippert, Threats Watch, Canada Raid Breaks Cell: 3 Tons of Explosives
Found (June 3, 2006), http://threatswatch.org/inbrief/2006/06/canada-raid-breaks-cell-3-tons/ (last visited Aug. 11, 2010)), England (see
BBC News, Ammonium Nitrate `Easy to Find' (Mar. 30, 2004), http://news.bbc.co.uk/2/hi/uk_news/3582921.stm (last visited Aug. 11, 2010)),
and the Philippines (see U.S. Dep't of State, Office of the Coordinator
for Counterterrorism, Country Reports on Terrorism 2005, p. 78).
2. Detonability of Ammonium Nitrate
It is understood that under proper conditions pure (unblended)
ammonium nitrate is detonable. Making reliable explosives from ammonium
nitrate is simplified through the addition of a fuel component with
which it can react. In addition, though rare, accidental explosions
have occurred during the manufacture, storage, and transport of
ammonium nitrate. See J.J. Burns, G.S. Scott, G.W. Jones & Bernard
Lewis, 1. Despite the explosive hazard presented by ammonium nitrate,
however, it has been successfully and safely used for decades as a
fertilizer. See R.W. Van Dolah, F.C. Gibson & J.N. Murphy; Report of
Investigations 6746, 2. There is little scientific consensus about the
critical diameter of an explosive required for detonation and the size
of the conventional explosive charge (i.e., booster) necessary to
detonate unblended ammonium nitrate. These questions about detonability
all receive research attention today, and have also received research
attention in the past. See A. Bauer, R.D. Heater & J.H. Paterson, 1, 5
(1981). Preliminary results of ongoing research suggest that unblended
ammonium nitrate can be difficult to detonate with any reliability. To
date, terrorists typically have employed combinations of ammonium
nitrate and fuel oil when utilizing ammonium nitrate in terrorist
attacks.
To better understand the detonability of ammonium nitrate and its
use in explosives, the Department reviewed, and considered the results
of, a study conducted by Sandia National Laboratory. Due to the
detailed nature of its content and findings, however, this study, which
is ``For Official Use Only,'' is not available to the public. The
Department has also consulted with the Federal Bureau of
Investigation's (FBI) Explosives Unit. This consultation helped the
Department to understand the detonability of unblended ammonium
nitrate, the detonability of ammonium nitrate mixtures, and the role
ammonium nitrate plays in IED construction and terror-related
activities.
The Department seeks public comment on the detonability of ammonium
nitrate.
3. Federal Regulations Addressing Ammonium Nitrate
In developing this proposed rule, DHS reviewed other Federal
regulations that cover portions of the ammonium nitrate supply chain or
deal with identity verification; a number of these other regulations
are discussed below. DHS examined these regulations for potential
overlap with the proposed Ammonium Nitrate Security Program. In
developing this NPRM, the Department collaborated with many of its
Federal security partners in an attempt to harmonize this proposed rule
with other regulatory regimes.
a. Chemical Facility Anti-Terrorism Standards
In addition to the authority granted to DHS by Subtitle J, the
Department had authority under section 550 of the Homeland Security
Appropriations Act of 2007, Pub. L. 109-295, to issue regulations
governing the security of high-risk chemical facilities. Under that
authority, the Department promulgated an interim final rule titled the
Chemical Facility Anti-Terrorism Standards (CFATS), 6 CFR part 27. See
72 FR 17688 (April 9, 2007). Under CFATS, the Department regulates the
security of high-risk chemical facilities, including high-risk chemical
facilities that possess ammonium nitrate.
To help the Department identify high-risk chemical facilities under
CFATS,
[[Page 46913]]
the Department adopted a list of chemicals of interest (COI) as
Appendix A to CFATS. See 72 FR 65396 (November 20, 2007). Any chemical
facility that possesses any COI at or above the applicable screening
threshold quantity specified in Appendix A for that COI must complete
and submit to DHS certain consequence-based information via an online
tool called the Chemical Security Assessment Tool Top-Screen. Any
chemical facility preliminarily determined to be high-risk after DHS
review of the chemical facility's Top-Screen must then meet additional
security-related requirements under CFATS. Due to the risks ammonium
nitrate may pose if either (1) exploded on-site, or (2) stolen or
diverted to produce IEDs, ammonium nitrate (in both explosive and
specified fertilizer forms) is one of over 300 COI that DHS listed in
Appendix A to CFATS. See 72 FR 65407-65408, 65410.
Although Subtitle J and CFATS share a goal of preventing terrorism
risks associated with ammonium nitrate, the scopes and methods of
regulation under Subtitle J and CFATS are very different. The CFATS
rule--which addresses hundreds of chemicals in addition to ammonium
nitrate--is directed at the security of high-risk chemical facilities.
The CFATS rule does not, however, impose any limitations on the sale or
transfer of ammonium nitrate. By contrast, Subtitle J does not address
the physical security of ammonium nitrate facilities but does impose
certain conditions on the sale or transfer of ammonium nitrate (e.g.,
requiring that ammonium nitrate may only be transferred between
registered ammonium nitrate sellers and registered ammonium nitrate
purchasers (or purchasers' agents)).
In developing the rule required by Subtitle J, DHS intends to draw
on information gained under the CFATS program about ammonium nitrate,
and will work to ensure that CFATS and the new Subtitle J program
complement each other. For additional discussion of the CFATS program's
interaction with the proposed ammonium nitrate rule, see section
III.A.1 of this NPRM.
b. U.S. Coast Guard Maritime Security Regulations
The U.S. Coast Guard (USCG) regulates ammonium nitrate under
multiple programs. Under the Maritime Transportation Security Act
(MTSA), 46 U.S.C. 70101 et seq., USCG has authority to regulate
security both aboard maritime vessels and at facilities located in,
under, or adjacent to any waters subject to the jurisdiction of the
United States. Through its MTSA regulations, USCG regulates the
security of vessels transporting ammonium nitrate, as well as the
security of certain facilities that store, manufacture, use, or
distribute ammonium nitrate. In addition, USCG regulates the
transportation of ammonium nitrate, and the loading or unloading of
ammonium nitrate from vessels at any waterfront facility. See 33 CFR
part 126 (regulating the handling of ammonium nitrate at waterfront
facilities, and establishing penalties for handling ammonium nitrate
without a permit); 46 CFR 148.01-7 (regulating the bulk shipment of
ammonium nitrate).
USCG has also designated as a ``Certain Dangerous Cargo'' any
ammonium nitrate that is not certain dangerous cargo residue. See 33
CFR 160.204. Based on this designation, each vessel carrying ammonium
nitrate on bodies of water other than certain portions of inland rivers
must submit a Notice of Arrival prior to arrival in port. See 33 CFR
part 160, subpart C. The Notice of Arrival must contain certain
information, including the name of the vessel's owner and operator, the
names of the last five ports or places visited, the amount of ammonium
nitrate on board, and information pertaining to each crewmember aboard.
See 33 CFR 160.206. Owners and operators of U.S.-flagged vessels
carrying ammonium nitrate in bulk must have, and must operate in
compliance with, USCG-approved vessel security plans. See 33 CFR
104.410. Likewise, owners and operators of facilities that receive
vessels carrying ammonium nitrate in bulk must have and operate in
compliance with USCG-approved facility security plans. See 33 CFR
105.410.
c. Transportation Security Administration
The Transportation Security Administration (TSA) has broad
authority over security of all modes of transportation. These
authorities are found primarily in the Aviation and Transportation
Security Act of 2001 (ATSA), Public Law 107-71, which regulates the
transportation of cargo, including ammonium nitrate. ATSA broadly
allows TSA to ``exercise * * * powers, relating to transportation
security as [TSA] considers appropriate.'' See 49 U.S.C. 114. TSA
exercises its authority under ATSA in part by performing threat
assessments on truck drivers who must receive Hazardous Materials
Endorsements in order to be authorized to transport ammonium nitrate.
d. Bureau of Alcohol, Tobacco, Firearms, and Explosives
ATF, a principal law enforcement agency within the U.S. Department
of Justice, is dedicated to preventing terrorism, reducing violent
crime, and protecting our nation. Among its authorities, under 27 CFR
part 555, ATF is responsible for regulating the use of explosives,
which are defined by inclusion in ATF's annual List of Explosive
Materials, ATF Publication 5400.8. See 75 FR 1085 (Jan. 8, 2010)
(notice of annual list). While ATF does not consider ammonium nitrate
an explosive, ammonium nitrate explosive mixtures and ANFO are included
in ATF's list of explosive materials. ATF regulations require that no
person, other than a licensee or permittee, knowingly transport or
receive any explosive material (including ANFO). See 27 CFR 555.26(a).
Section III.A.3 of this NPRM discusses the interaction of ATF
regulations with the proposed ammonium nitrate rule.
e. Department of Transportation Hazardous Materials Regulations
The Federal Hazardous Materials Transportation Law (Federal Hazmat
Law, 49 U.S.C. 5101 et seq.) authorizes the Secretary of Transportation
to ``prescribe regulations for the safe transportation, including
security, of hazardous material in intrastate, interstate, and foreign
commerce.'' The Secretary of Transportation has delegated this
authority to Pipeline and Hazardous Materials Safety Administration
(PHMSA). PHMSA, through its Hazardous Materials Regulations (HMR; 49
CFR Parts 171-180), prescribes transportation requirements for
hazardous materials, including ammonium nitrate.
The Hazardous Materials Table (HMT; 49 CFR 172.101) lists several
shipping descriptions for ammonium nitrate and ammonium nitrate
mixtures or solutions. These descriptions vary based on the properties
of the particular ammonium nitrate at issue. As such, a shipment of
ammonium nitrate may be classed and regulated as a Division 1.1D
explosive, Division 5.1 oxidizer, or Class 9 miscellaneous hazardous
material. For transport in commerce these materials must comply with
all applicable HMR requirements (e.g., packaging, shipping papers,
marking, labeling, placarding, security plans, emergency response
information, training, etc.).
f. Department of Commerce
Under the Export Administration Regulations (EAR), the U.S.
Department
[[Page 46914]]
of Commerce's Bureau of Industry and Security regulates the export and
re-export of ammonium nitrate. A ``re-export'' is the shipment or
transmission of an item subject to the EAR from one foreign country
(i.e., a country other than the United States) to another foreign
country. A re-export also occurs when there is release of technology or
software subject to the EAR to a foreign national outside the United
States. See 15 CFR 734.2, and 15 CFR part 772 (definition of ``re-
export'').
Specifically, under the EAR, licensees are authorized to export or
re-export ammonium nitrate only to certain countries listed in the EAR,
and consistent with the terms of the issued export license. See 15 CFR
742.6 and 15 CFR 747.3. Under the EAR, ammonium nitrate is defined to
include fertilizers and fertilizer blends containing more than 15% by
weight ammonium nitrate, except liquid fertilizers (containing any
amount of ammonium nitrate) or dry fertilizers which contain less than
15% by weight ammonium nitrate. See 15 CFR part 774, Supplement 1 for
item-specific export licensing information. Individuals involved in the
domestic sale or transfer of ammonium nitrate, as defined by DHS, at
U.S.-based exporters of ammonium nitrate would be required to register
with the Department under the proposed Ammonium Nitrate Security
Program.
4. State Regulations Addressing Ammonium Nitrate
Virtually all 50 States regulate ammonium nitrate in some manner,
based on its use either as a fertilizer, an explosive, or both.
Although not in universal agreement, relevant State regulations
typically define ammonium nitrate as an ammonium and nitrate mixture
containing not less than 33 percent nitrate; require purchasers and
sellers of ammonium nitrate to register with a governing State body;
and require sellers of ammonium nitrate to maintain records of sales of
ammonium nitrate for at least two years. Many State regulations grant
State officials both the authority to inspect facilities possessing or
distributing ammonium nitrate and the authority to fine or otherwise
penalize facilities or individuals who fail to comply with regulations
concerning ammonium nitrate.
5. Voluntary Programs Addressing Ammonium Nitrate
In addition to efforts required by existing Federal and State
regulations, many producers, distributors, and users of ammonium
nitrate have undertaken voluntary efforts to secure the ammonium
nitrate supply chain. Chief among these voluntary efforts is the
``America's Security Begins With You'' program. This program is a
voluntary ``know-your-customer'' program developed jointly by the ATF
and members of the fertilizer industry following the 1995 attack on the
Alfred P. Murrah Federal Building in Oklahoma City. The Department
believes that, in many instances, voluntary programs already in place
can serve as good building blocks for meeting regulatory requirements.
The Department seeks comments providing details on voluntary programs
related to ammonium nitrate security and how they could potentially be
leveraged by ammonium nitrate users to meet the requirements of the
proposed rule.
III. Discussion of Proposed Rule: Implementing Subtitle J
What follows is a discussion of the approach DHS is proposing to
take in implementing Subtitle J. Where appropriate, potential
alternative approaches are also discussed. DHS welcomes public comment
on the proposed rule, and also on potential alternative approaches.
The cost to the public of this proposed rule ranges from $300
million to $1.041 billion over 10 years at a 7% discount rate. The
primary estimate is the mean which is $671 million. For comparison, at
a 3% discount rate, the cost of the proposed rule ranges from $364
million to $1.3 billion with a primary (mean) estimate of $814 million.
The average annualized cost for the program ranges from $43 million to
$148 million (with a mean of $85 million), also employing a 7% discount
rate. The following two tables present the summary discounted total and
annualized costs for the rule.
OMB Accounting Statement of Annualized Costs and Benefits Program Years 1-10)
--------------------------------------------------------------------------------------------------------------------------------------------------------
3 Percent discount rate 7 Percent discount rate
-----------------------------------------------------------------------------------------------
Primary Minimum Maximum Primary Minimum Maximum
estimate estimate estimate estimate estimate estimate
(millions) (millions) (millions) (millions) (millions) (millions)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Costs
Annualized Monetized Costs.............................. $95.4 $42.7 $148.1 $95.5 $42.7 $148.2
Benefits
-----------------------------------------------------------------------------------------------
Qualitative (un-quantified) Benefits.................... Reduced vulnerability to terrorist attack using ammonium nitrate.
--------------------------------------------------------------------------------------------------------------------------------------------------------
Summary of Costs ($ Millions, 7 Percent Discount Rate)--by Program Year
--------------------------------------------------------------------------------------------------------------------------------------------------------
Audits/
Registration Appeals Point of sale Recordkeeping inspections Federal costs * Total cost
--------------------------------------------------------------------------------------------------------------------------------------------------------
PY1..................................... 18.9 0.1 67.5 6.2 0.4 9.8 102.7
PY2..................................... 4.4 0.0 62.6 4.4 0.4 6.5 78.2
PY3..................................... 4.3 0.0 58.4 4.1 0.4 6.0 73.2
PY4..................................... 4.2 0.0 54.7 3.8 0.4 5.7 68.7
PY5..................................... 4.2 0.0 51.1 3.6 0.3 5.3 64.4
PY6..................................... 8.9 0.0 48.1 3.4 0.3 5.1 65.8
PY7..................................... 6.8 0.0 44.6 3.1 0.3 4.7 59.5
PY8..................................... 6.7 0.0 41.7 3.0 0.3 4.4 56.0
PY9..................................... 6.6 0.0 39.0 2.8 0.2 4.2 52.6
PY10.................................... 6.5 0.0 36.4 2.6 0.2 3.9 49.5
---------------------------------------------------------------------------------------------------------------
Total............................... 71.3 0.1 503.8 36.8 3.0 55.3 670.6
--------------------------------------------------------------------------------------------------------------------------------------------------------
* Reporting of Thefts rounds to zero in individual years and are omitted from this table but included in the total and regulatory analysis.
[[Page 46915]]
DHS also conducted a break-even analysis that examines the required
reduction in the potential frequency of terrorist attacks involving
ammonium nitrate. The proposed rule would be cost effective if it
resulted in a reduction in attack frequency by at least one attack the
size of the Oklahoma City bombing (which occurred 16 years ago) per 14
years. For discussion of this analysis, and for explanation of other
cost calculations, please see section IV of this NPRM, which discusses
various regulatory analyses conducted by DHS.
A. Ammonium Nitrate Subject to Subtitle J Requirements (See Section
31.105 of the Proposed Rule)
This section will address the definition of ammonium nitrate.
Congress has defined ammonium nitrate for purposes of Subtitle J to
include ``solid ammonium nitrate that is chiefly the ammonium salt of
nitric acid and contains not less than 33 percent nitrogen by weight.''
See 6 U.S.C. 488(1)(A). DHS proposes to use this definition of solid
ammonium nitrate in section 31.105 of the proposed rule.
Also included in the definition of ammonium nitrate for purposes of
Subtitle J is ``any mixture containing a percentage of ammonium nitrate
that is equal to or greater than the percentage determined by [DHS].''
See 6 U.S.C. 488(1)(B). In establishing this mixture percentage for
purposes of Subtitle J, the Department was required to consult with the
heads of appropriate Federal departments and agencies, including the
Secretary of Agriculture, and to provide notice and an opportunity for
comment. See 6 U.S.C. 488a(b). That consultation is discussed below.
This section will also discuss the Department's consideration of a
minimum threshold amount of ammonium nitrate that would have to change
hands as part of a sale or transfer before that sale or transfer
(including the individuals participating in the transaction) would be
subject to Subtitle J's requirements. This section will also discuss
the Department's discretionary ability to exempt from regulation ``a
person producing, selling, or purchasing ammonium nitrate exclusively
for use in the production of an explosive under a license or permit
issued under chapter 40 of title 18, United States Code.'' See 6 U.S.C.
488a(f).
1. Mixture Requirement
Mixtures containing high percentages of ammonium nitrate can be
effectively used in bomb-making. By proposing to include a mixture
requirement in the Ammonium Nitrate Security Program, the Department is
seeking to capture under this rule mixtures that terrorist bomb-makers
would be most interested in acquiring. To assist in determining an
appropriate threshold percentage of ammonium nitrate in a mixture for
purposes of Subtitle J, the Department reviewed multiple detonability
studies, examined mixture requirements employed by other Federal and
State regulatory programs, and consulted with a variety of Federal,
State, and private sector entities. Based on this research and after
consultation with the FBI's Explosives Unit, the Department proposes to
define ammonium nitrate in section 31.105 to include any mixture that
is 30 percent or more ammonium nitrate by weight. By setting the
mixture requirement at 30 percent, the Department believes the proposed
rule will capture those ammonium nitrate mixtures that could be most
effectively used in bomb-making, or that could be most effectively
retooled or reconfigured for use in bomb-making.
The Department is aware that this proposed mixture requirement
differs from the mixture requirements used for ammonium nitrate under
CFATS. Under CFATS, a mixture containing ammonium nitrate is counted
towards the screening threshold quantity for ammonium nitrate if
ammonium nitrate makes up 33 percent or more of the mixture. Therefore,
this proposed mixture requirement for this rule would apply more
broadly than the mixture requirement in CFATS; the ammonium nitrate
mixtures covered under this proposed requirement would include ammonium
nitrate mixtures containing between 30 and 33 percent ammonium nitrate
by weight, while CFATS' mixture requirements do not cover mixtures
containing between 30 and 33 percent ammonium nitrate by weight.
There are two main reasons for the difference between the CFATS
approach to ammonium nitrate mixtures and the proposed Ammonium Nitrate
Security Program approach to mixtures. First, the two mixture
requirements exist to accomplish different goals. The CFATS mixture
requirements exist to help the Department identify potentially high-
risk chemical facilities subject to CFATS. The CFATS mixture
requirements are not an assertion by the Department that only ammonium
nitrate mixtures containing 33 percent or more ammonium nitrate are
vulnerable to misuse in acts of terrorism. The proposed Ammonium
Nitrate Security Program mixture requirement, however, is solely meant
to identify ammonium nitrate mixtures that have the potential to be
misused in acts of terrorism. Accordingly, a more conservative and
inclusive mixture requirement is appropriate for Subtitle J.
Second, during the development of this proposed rule, the
Department obtained information from the Department of Justice,
indicating that under certain circumstances, experiments that have
shown that mixtures containing as low as 30 percent ammonium nitrate by
weight can be used as components of viable explosives. This information
was unavailable to DHS when it wrote and published the CFATS mixture
requirements. In light of this evidence and the purpose for which the
Subtitle J mixture requirement is being established, the Department
believes that setting the proposed mixture requirement at 30 percent
ammonium nitrate is the correct course of action.
The Department's proposed mixture requirement would exempt persons
and entities from coverage under the proposed rule only to the extent
that they possess or obtain mixtures containing less than 30 percent
ammonium nitrate by weight. The proposed requirement would not exempt
persons and entities from coverage to the extent that they possess or
obtain solid ammonium nitrate which they intend to incorporate into
ammonium nitrate mixtures. The Department thus proposes that the
purchase, sale, transfer, or acquisition of solid ammonium nitrate to
be incorporated into mixtures will be treated the same as the purchase,
sale, transfer, or acquisition of ammonium nitrate not to be
incorporated into mixtures.
The Department is interested in receiving comments on this proposed
approach, including comments on the Department's proposal to define
ammonium nitrate to include any mixture that is 30 percent or more
ammonium nitrate by weight. DHS requests comments addressing the
appropriateness of this percentage, comments addressing whether it
would be more appropriate to express this percentage as a percentage of
mixture weight or as a percentage of mixture volume, and comments
discussing whether a higher or lower mixture percentage would be more
appropriate. The Department is also interested in comments addressing
possible consumer and retail impacts of the proposed mixture
requirement, and on the detonability of ammonium nitrate and ammonium
nitrate mixtures of varying percentages.
[[Page 46916]]
2. Threshold Weight and Individual Products Exemptions
The Department's understanding is that, outside of small sample or
research quantities, ammonium nitrate is primarily sold either in bulk
or in pre-packaged bags containing no less than 50 pounds of ammonium
nitrate. Mixtures that contain small percentages or amounts of ammonium
nitrate are also found in various retail products, including home and
garden products (e.g., fertilizer mixtures) and cold packs.
Under Subtitle J, the Department has authority to regulate
transactions (and the individuals conducting them) involving any amount
of ammonium nitrate. The Department is proposing to establish a
threshold weight to which the regulation would apply, and is
considering whether the marginal security benefits gained from
regulating transactions involving de minimis quantities of ammonium
nitrate are outweighed by the costs of regulating those transactions.
Similarly, the Department is considering whether the security benefits
gained from regulating transactions involving products packaged such
that they are unlikely to be used to make an explosive are outweighed
by the costs of regulating those transactions. To avoid capturing these
transactions under its regulatory regime, and to avoid complicating
ammonium nitrate transactions that may only pose a de minimis security
risk, the Department is considering applying both a minimum threshold
weight and an individual products exemption for cold packs to this
rulemaking.
The Department is considering establishing a threshold weight
whereby each transaction would be subject to Subtitle J's regulatory
requirements only if the transaction involves the sale, transfer, or
purchase of ammonium nitrate that, in the aggregate, is equal to or
greater than the threshold weight. Specifically, section 31.105 of the
proposed rule contains a 25 pound threshold weight. The Department
believes that this weight is low enough to prevent a bad actor from
easily acquiring a sufficient quantity of ammonium nitrate to pose a
terrorist threat. The Department also believes that this weight is high
enough to avoid capturing small laboratory quantities of ammonium
nitrate or transactions involving other de minimis quantities of
ammonium nitrate that are unlikely to be misappropriated for use in a
terrorist act. The Department believes that such de minimis quantities
are unlikely to be misappropriated for use in a terrorist act due to
the large number of transactions in de minimis quantities that would be
required to accumulate sufficient ammonium nitrate to construct an
explosive that poses a significant terrorist threat. This threshold
should also reduce the economic impact of the Ammonium Nitrate Security
Program by avoiding regulation of those transactions that present de
minimis security risk.
In order to determine the utility of this approach, the Department
solicits comments on the manners in which ammonium nitrate is sold and
packaged, the manners and frequencies of use of ammonium nitrate in
small quantities, and the utility of setting a threshold weight. The
Department additionally requests comments addressing the
appropriateness of the proposed 25 pound threshold weight.
Specifically, the Department asks whether another threshold weight,
such as 5 pounds, 10 pounds, 50 pounds, or another quantity, would
better achieve the desired results of the proposed rule.
If the Ammonium Nitrate Security Program does include a threshold
weight, DHS proposes that the threshold weight would apply to mixtures
as well as to unblended ammonium nitrate. As such, the proposed rule
would apply to an ammonium nitrate mixture only if (1) the mixture
weighs at least the threshold weight, and (2) the mixture contains at
least 30 percent ammonium nitrate by weight. Both conditions would need
to be satisfied in order for the proposed rule to apply to a given
mixture.
The Department proposes that when applying the threshold weight to
an ammonium nitrate mixture, the total weight of the mixture should be
counted, as opposed to just the weight of the ammonium nitrate in the
mixture. In other words, all ten pounds of a single ten-pound bag (or
all ten pounds of ten one-pound bags) of fertilizer mixture containing
30 percent ammonium nitrate by weight would count towards the threshold
weight, and not just the three pounds which is the weight of the
ammonium nitrate portion of that mixture. The Department believes this
approach would be more effective at preventing a bad actor from
acquiring sufficient quantities of ammonium nitrate than would an
alternative approach under which only the ammonium nitrate content of a
mixture is counted towards threshold weight. The Department solicits
comments on the utility and manner of application of the proposed
threshold weight to mixtures containing ammonium nitrate.
In addition to including a threshold weight in the proposed rule,
the Department is proposing to exempt cold packs containing ammonium
nitrate from regulation. In section 31.105 of the proposed rule the
Department proposes to define a ``cold pack'' as a small, commercially-
available package commonly used as a replacement for ice in the
application of first aid, containing unmixed water and ammonium nitrate
that, immediately prior to use, can be manipulated to cause the
comingling of the water and the ammonium nitrate resulting in an
endothermic reaction that significantly lowers the temperature of the
package. For the following reasons, DHS does not believe that Congress
intended the people and facilities buying and selling cold packs to be
regulated by Subtitle J.
The Department believes that the security benefits obtained from
regulating sales and transfers of cold packs would be minimal and
outweighed by significant impact on the general public. Cold packs
individually contain extremely small amounts of ammonium nitrate such
that collecting very large numbers of them would be necessary in order
to obtain enough ammonium nitrate to produce a dangerous explosive
device.
The Department also believes that regulating sales and transfers of
cold packs would impose substantial economic impacts on the public,
which would not be justified by the minimal security benefit gained by
cold packs regulation. Specifically, DHS is concerned that regulation
of cold packs would have serious and negative impacts on the provision
of first aid, first responders, and the medical sector generally. These
substantial impacts would be spread over a large variety of retail
stores, medical facilities, health care providers, athletic teams,
regulated industries that require first aid kits containing cold packs,
and individuals using cold packs for personal first aid purposes. A
preliminary examination indicates that the potential affected
populations could easily exceed six million individuals, businesses,
and organizations or public entities. Complicating the issue is the
fact that many cold pack manufacturers do not use ammonium nitrate in
their products--many manufactures assemble cold packs that contain
other chemicals instead of ammonium nitrate. Cold pack purchasers or
sellers might not know which chemicals are present in the cold packs
they obtain, prior to obtaining them, which could complicate their
abilities to comply with any regulatory requirements.
For these reasons, the Department does not believe that Congress
intended cold packs--or the sporting goods stores, recreational
centers, schools, and other entities that purchase or sell
[[Page 46917]]
them--to be covered under Subtitle J. DHS requests comments describing
the populations that could be impacted by cold packs regulation,
including comments discussing those populations' abilities to comply
with the proposed regulatory requirements.
The Department's proposed cold packs exemption would exempt persons
and entities from coverage under the rule only to the extent that they
purchase, sell, or transfer cold packs containing ammonium nitrate. The
proposed rule would not exempt persons and entities (such as
manufacturers of cold packs) from coverage to the extent that they
purchase or transfer ammonium nitrate which they intend to incorporate
into cold packs. The Department thus proposes that the purchase, sale,
transfer, or acquisition of ammonium nitrate to be incorporated into
cold packs will be treated the same as the purchase, sale, transfer, or
acquisition of ammonium nitrate not to be incorporated into cold packs.
The Department solicits comments on these proposed exemptions. The
Department also solicits comments describing uses for ammonium nitrate
other than as a fertilizer, a cold packs component, or an explosives
ingredient. DHS solicits comments on whether any other uses of ammonium
nitrate warrant exemptions.
3. Explosives Exemption
The Department has the discretion to exempt from regulation persons
and facilities producing, selling, transferring, or purchasing ammonium
nitrate exclusively for use in the production of explosives under a
license or permit issued under the Federal explosives laws, 18 U.S.C.
Chapter 40, and associated regulations. See 6 U.S.C. 488a(f).
ATF is responsible for enforcing federal explosives laws and has
established regulations for doing so. See 27 CFR Part 555. ATF's
regulatory authority over a facility or individual licensed to use an
ammonium nitrate-based explosive is limited to ammonium nitrate that
(1) has been mixed with a fuel (i.e., ANFO) which is defined in 27 CFR
555.11 as an ``explosive'' and (2) is contained on ATF's List of
Explosive Materials. Unblended ammonium nitrate, however, is not
defined as an explosive under 27 CFR part 555, and thus ATF does not
regulate ammonium nitrate that has not been mixed with a fuel oil,
outside of the limited separation distance requirements governing the
storage of ammonium nitrate when stored in the vicinity of other high
explosives and blasting agents, as set forth in 27 CFR 555.220. This is
the case even where unblended ammonium nitrate is being produced,
purchased, or stored by a facility regulated by ATF as a manufacturer
of ANFO. It is also the Department's understanding that facilities
producing ANFO typically have inventories of ammonium nitrate on hand
for use in manufacturing ANFO, while entities engaged solely in the re-
sale or purchase of ANFO are unlikely to possess any ammonium nitrate
other than that which is contained within ANFO mixtures.
The Department is considering three possible approaches for
regulating individuals and facilities involved in the production of
ANFO. These approaches are summarized in the following table, and
discussed thereafter.
----------------------------------------------------------------------------------------------------------------
Option 1 Option 2 Option 3
----------------------------------------------------------------------------------------------------------------
Would DHS opt to exempt individuals No..................... Yes.................... Partial Exemption.
and facilities that purchase, sell,
or transfer ammonium nitrate solely
for use in the production of
explosives?
Brief description of option.......... Ammonium nitrate Ammonium nitrate Ammonium nitrate
transactions would be purchases, sales, or combined with fuel oil
regulated by DHS transfers by (ANFO) would not be
whether or not the individuals and regulated by DHS.
ammonium nitrate facilities solely to
purchased, sold, or enable use of ammonium
transferred has been nitrate in the
combined with fuel oil production of
to create ANFO. explosives would not
be regulated by DHS.
Would DHS regulate ammonium nitrate Yes.................... No..................... No.
mixtures that are ``explosives''
subject to ATF regulation (i.e.,
ANFO)?
What duplication would result from Individuals and Individuals and Certain facilities
this option? facilities would be facilities regulated (e.g., those that
subject to regulation by ATF under the produce ANFO) would be
by both DHS under Federal explosives subject to both DHS
Subtitle J and ATF laws would not be and ATF regulations.
under the Federal regulated by DHS. No
explosives laws. duplication would
result.
What gaps would result from this No gaps in coverage of Could create a Compromise approach
option? ammonium nitrate as it considerable gap in closes gaps in
moves through the regulatory coverage security of the
supply chain. throughout the ammonium nitrate
ammonium nitrate supply chain.
supply chain, as ATF
regulations apply
solely to ANFO and not
the ammonium nitrate
used to create it.
----------------------------------------------------------------------------------------------------------------
The first option is to apply the final rule implementing Subtitle J
to individuals and facilities that purchase, sell, or transfer ammonium
nitrate for use in the production of explosives. Under this approach,
such individuals and facilities would be subject to regulation by both
DHS under Subtitle J and ATF under the Federal explosives laws. By not
exempting ammonium nitrate used in explosives from coverage, DHS would
be treating all individuals and facilities who purchase, sell, or
transfer ammonium nitrate--whether as part of ANFO mixtures or not--the
same. This approach would ensure that there are no gaps in coverage of
ammonium nitrate as it moves through the supply chain--ammonium nitrate
would be captured under DHS's ammonium nitrate program both before and
after being combined with fuel oil to create ANFO, and would be
captured under ATF's regulations after being
[[Page 46918]]
combined with fuel oil to create ANFO. The major disadvantage of not
exempting ammonium nitrate used in explosives is that individuals and
facilities who purchase, sell, or transfer ammonium nitrate for the
purpose of manufacturing explosives would be subject to potentially
duplicative regulatory requirements, including two sets of licensing
requirements, two sets of recordkeeping requirements, two sets of point
of sale requirements, and inspections by both ATF and DHS. In response
to the October 29, 2008 ANPRM, some commenters expressed concern over
these potentially repetitive regulatory requirements.
The second option is to entirely exempt from Subtitle J
requirements facilities and persons that purchase, sell, or transfer
ammonium nitrate solely for use in the production of explosives, as
they are already regulated by ATF. In this model, facilities and
persons that are licensed by ATF to mix ammonium nitrate with fuel to
create ANFO, but that do not purchase, sell, or transfer ammonium
nitrate for other purposes and do not perform ammonium nitrate
application services, would not be subject to the rule implementing
Subtitle J. The primary advantage of this approach is that it would
prevent potentially duplicative regulatory requirements from applying
to ammonium nitrate facilities and individuals that are already subject
to ATF regulations. This approach, however, could create a considerable
gap in regulatory coverage throughout the ammonium nitrate supply
chain, as ATF regulations apply solely to ANFO and not the ammonium
nitrate used to create it. For example, facilities that produce
ammonium nitrate to sell to manufacturers of ANFO but who themselves do
not produce ANFO would be subject to neither ATF nor DHS regulation
under this approach. Similarly, stores of ammonium nitrate at
facilities producing ANFO would not be subject to any regulatory
requirements (e.g., recordkeeping requirements, reporting of theft or
loss requirements) by DHS or ATF under this approach. This would create
regulatory gaps in the ammonium nitrate supply chain which could be
exploited by terrorists.
The third option would exempt from regulation ammonium nitrate
mixtures that are ``explosives'' subject to ATF regulation (i.e.,
ANFO). DHS is proposing this option in section 31.305 of the proposed
rule. Under this approach, entities and individuals that purchase,
sell, or transfer ANFO, but who do not produce ANFO or possess ammonium
nitrate for other reasons, would be exempt from all Subtitle J
requirements and would be subject solely to ATF regulation. Individuals
producing ANFO, however, would be subject to the Subtitle J
requirements, as they, by necessity, possess ammonium nitrate (which
they possess as unblended ammonium nitrate before combining it with
fuel oil to make ANFO). This approach recognizes both the fact that ATF
already regulates ANFO, as well as the fact that ATF's jurisdiction is
limited such that ATF does not regulate the ammonium nitrate used by
facilities to make ANFO. Through this compromise approach, individuals
and entities whose ammonium nitrate-related operations are already
regulated by ATF are spared the duplicative DHS oversight that would
result from the first option (discussed above), while gaps in security
of the ammonium nitrate supply chain that would be created by the
second option (discussed above) are avoided. The primary drawback of
this approach is that it would make certain facilities (e.g., those
that produce ANFO) subject to both DHS and ATF regulations. To minimize
this impact, the Department and ATF currently are discussing ways to
coordinate inspections and other compliance activities for these
ammonium nitrate facilities, and will work together to ensure that
there is minimal duplication of effort or burden caused by this
approach, if adopted.
The Department welcomes comments on this proposed approach to
ammonium nitrate produced, bought, sold, or transferred exclusively for
the purpose of producing explosives. The Department also welcomes
comments on any other exemptions that it should consider.
B. Requirements for the Registration of AN Sellers and AN Purchasers
(See Sections 31.200-31.250 of the Proposed Rule)
1. Overview
Pursuant to 6 U.S.C. 488a(c), 6 U.S.C. 488a(d), 6 U.S.C.
488e(a)(3)(A), and 6 U.S.C. 488e(a)(3)(B), the Department must
establish a process by which persons owning or operating ``AN
Facilities'' and persons intending to purchase ammonium nitrate must
register with the Department. Section 31.105 of the proposed rule
defines an ``AN Facility'' as any person or entity that produces,
sells, or otherwise transfers ownership of, or provides application
services for, ammonium nitrate. The Department proposes to define
``application services'' in section 31.105 as the physical deposit of
fertilizer onto turf, fields, crops, or other agricultural property,
where these services are provided by an individual or entity other than
the person or entity owning or operating the property upon which the
fertilizer is deposited. The Department is interested in receiving
comments on these definitions, as well as all other definitions
included in the proposed rule.
The proposed registration process would include conducting a check
of appropriate identifying information of any person seeking to
register against identifying information that appears in the Terrorist
Screening Database. Accordingly, prospective applicants would be
required to provide specific identifying information to the Department.
Appearance in the TSDB is grounds for denial of a registration number
(an ``AN Registered User Number''). In section 31.220(a)(1) of the
proposed rule, the Department proposes to develop an online web portal
through which individuals will apply for AN Registered User Numbers.
The Department proposes that AN Registered User Numbers will be
disseminated to successful applicants via e-mail or through the DHS web
portal. The Department also proposes in section 31.235 to make AN
Registered User Numbers valid for a period of five years. Additional
proposals on who would be required to register and on various aspects
of the registration process are discussed in the following paragraphs.
The Department seeks public comment on its proposed registration
methodology, on other methods the Department may consider for
registration, and on the length of time registration numbers should
remain valid.
2. Who Must Register
6 U.S.C. 488a(c)(1)(A) and 6 U.S.C. 488e(a)(3)(B) require owners
and operators of AN Facilities (including facilities that provide
ammonium nitrate application services) to register with the Department.
For the reasons provided below, the Department proposes in section
31.200 that any person who may individually perform a sale or transfer
of ammonium nitrate on behalf of an AN Facility would be required to
register as an owner or operator. Registered AN Facility personnel
(whether owners or operators) involved with sales, transfers, or
provision of application services are collectively referred to in the
proposed rule as ``AN Sellers,'' of which ``AN Facility
Representatives'' and ``Designated AN Facility Points of Contact
(POCs)'' are subsets that have special responsibilities under the
proposed rule. ``AN Facility Representatives'' are any AN Facility
[[Page 46919]]
personnel, be they owners or operators, designated to act on behalf of
an AN Facility for purposes of compliance with this rule. A
``Designated AN Facility POC'' is the AN Facility Representative
designated by an AN Facility to act as the primary point of contact
with the Department on behalf of the AN Facility for purposes of
compliance with this rule.
6 U.S.C. 488a(d) and 6 U.S.C. 488e(a)(3)(A) also require anyone who
intends to purchase ammonium nitrate to register with the Department.
The proposed rule refers to these individuals as ``AN Purchasers.''
Additional details on the registration of AN Sellers, AN Facility
Representatives, Designated AN Facility POCs, and AN Purchasers follow.
The Department welcomes public comment on the usefulness of these
registration categories.
DHS also welcomes public comment discussing other potential
registration categories. DHS is interested in comments addressing the
benefits and costs of potentially registering organizations in addition
to the registration of individual persons. The Department's proposed
rule would require only the registration of individual persons,
although DHS is interested in receiving comments addressing what
benefits and costs, if any, there would be in requiring registration of
organizations involved in ammonium nitrate sales, transfers, or
application services. DHS is interested in receiving comments
addressing which types of organizations (if any) should register--
organizations affiliated with AN Facilities, organizations affiliated
with AN Purchasers, both, or neither. The Department also invites
comments addressing organizational structures, and whether different
registration requirements should apply to organizations with different
ownership, governance, or operational structures. The Department also
seeks comments discussing potential ways in which organizational
registration could take place.
3. Registering AN Sellers
6 U.S.C. 488a(c)(1)(A) and 6 U.S.C. 488e(a)(3)(B) require persons
who own and persons who operate AN Facilities to register with the
Department. DHS believes that Subtitle J's registration requirements
for AN Facility personnel will be satisfied if AN Facilities designate
AN Sellers, AN Facility Representatives, and/or Designated AN Facility
POCs to register and perform the sale, transfer, and application
service responsibilities discussed elsewhere in this NPRM. The
Department proposes to require only those owners and operators actually
involved in sales, transfers, or application services to register. DHS
is also considering, however, whether Subtitle J requires all owners to
register. DHS welcomes comments on this issue and the benefits and
costs imposed by a registration requirement for various types of
owners. We understand that some would consider it overly burdensome to
require all owners or operators of AN Facilities to register, because
not all owners or operators are involved in or have influence over
their organizations' ammonium nitrate operations, and because not all
owners or operators have the capability to cause ammonium nitrate
misappropriation.
Some AN Facilities, such as those owned by large companies, may
have many persons who could be considered owners under 6 U.S.C.
488a(c)(1)(A) and 6 U.S.C. 488e(a)(3)(B). The Department requests
comment on who should be required to register to fulfill Subtitle J's
owner registration requirements for these types of facilities. DHS also
requests comment describing how registration of various owners would or
would not fulfill the objective of Subtitle J--``to prevent the
misappropriation or use of ammonium nitrate in an act of terrorism.''
See 6 U.S.C. 488a(a).
The Department is also interested in obtaining more information
about individuals who operate (but do not own) AN Facilities,
particularly at AN Facilities where owners themselves are not involved
in day-to-day operations and do not personally sell, transfer, or
perform application services for ammonium nitrate. Operators include
employees or other persons who could act on behalf of a facility in
conducting sales and transfers, such as sales clerks, cashiers, sales
managers, and persons who provide ammonium nitrate transportation
services (e.g., delivery truck drivers) or application services.
Enabling operator registration is consistent with the Department's
authority under 6 U.S.C. 488a(a) and 6 U.S.C. 488e(a)(3)(B), and is
necessary in order to ensure that persons with the ability to sell,
transfer, or provide application services for ammonium nitrate are not
terrorists. DHS welcomes comments on which operators involved in the
sale and transfer of ammonium nitrate, or involved in ammonium nitrate
application services, should be required and why they should be
required to register with the Department.
In light of the Department's understanding of the roles of AN
Facility owners and operators, DHS is proposing that several categories
of individuals register as ``AN Sellers'':
(1) Any individual who has an ownership interest in an AN Facility
may register as an AN Seller.
(2) Any individual designated to act on behalf of an AN Facility
for purposes of compliance with this regulation would be required to
register as an AN Seller, such as, possibly, a site manager, sales
manager, or corporate officer.
(3) Any individual involved in the sale or transfer of ammonium
nitrate on behalf of an AN Facility would be required to register as an
AN Seller, such as a sales clerk or cashier.
(4) Any individual performing ammonium nitrate application services
on behalf of an AN Facility would be required to register as an AN
Seller.
DHS proposes that every sale, transfer, or provision of ammonium
nitrate application services would have to be conducted by a registered
individual (or by multiple registered individuals). Accordingly, while
every AN Facility will be required to have at least one AN Seller
registered with the Department, not every individual with job at an AN
Facility would have to register to be an AN Seller. These proposals
would largely give AN Facilities the flexibility to seek registration
of and to conduct business with the personnel of their choosing, while
also ensuring that all sales, transfers, and application services are
conducted by individuals who have been vetted by and registered with
the Department.
DHS is proposing that within the category of AN Sellers there be a
subcategory of individuals called ``AN Facility Representatives.'' The
qualifications and responsibilities of AN Facility Representatives will
be discussed in the following section. AN Sellers who are not AN
Facility Representatives would have authority to perform all of the
regulatory activities that owners or operators must perform pursuant to
Subtitle J (e.g., verifying the identities of prospective AN
Purchasers, recording the details of completed sales, and handing over
possession of ammonium nitrate to approved AN Purchasers), but would
not be responsible for ensuring that other AN Facility personnel are
following the Department's regulations. For a description of
permissible responsibilities of AN Sellers, refer to section 31.210 of
the proposed rule.
The Department proposes that every AN Facility would have to have
at least one registered AN Seller (i.e., the Designated AN Facility
POC), but may seek the registration of as many other AN Facility
Representatives and AN Sellers as it deems appropriate. The
[[Page 46920]]
Department proposes that whether or not an AN Facility seeks
registration of more than a single person will be discretionary.
In section 31.220(c)(3), the Department proposes that each person
registering as an AN Seller, AN Facility Representative, or Designated
AN Facility POC will be expected to provide information identifying all
AN Facilities at which he/she will perform sales or transfers of
ammonium nitrate, or on behalf of which he/she will perform application
services. In section 31.220(b), the Department proposes that a single
individual may serve as an AN Seller for multiple AN Facilities.
4. Registering AN Facility Representatives
The Department recognizes that not all AN Sellers will have the
same level of non-regulatory responsibility and authority within an AN
Facility, and that some AN Sellers may not be in a position to monitor
or control overall AN Facility compliance or the compliance of other AN
Facility employees with the final regulations. In light of this, in
section 31.215(b), the Department is proposing the creation of a
subcategory of individuals called ``AN Facility Representatives''
within the broader class of AN Sellers. The Department proposes that AN
Facility Representatives would be AN Sellers who are not only
responsible for their own compliance with the regulations, but also
would be responsible for the AN Facility's overall compliance with the
regulations and the compliance of all other AN Facility employees.
The Department also proposes that, for purposes of these
regulations, the definition of ``AN Facility Representative'' be broad
enough to include not only individuals who own all or part of AN
Facilities, but also any non-owner AN Facility operators, employees, or
contractors designated to act on behalf of an AN Facility for purposes
of compliance with this proposed rule. Thus, for purposes of the
proposed rule, an AN Facility would be allowed to designate as an AN
Facility Representative an individual without any ownership in the AN
Facility, such as, possibly, a site manager, sales manager, or
corporate officer, to meet the ``owner'' and ``operator'' registration
requirements of Subtitle J.
In section 31.215(b), the Department proposes that every AN
Facility would have to have at least one AN Facility Representative
registered on its behalf, but may have as many AN Facility
Representatives registered on its behalf as it deems appropriate.
Whether or not an AN Facility seeks registration of any additional AN
Facility Representatives is entirely discretionary. The Department also
proposes that while an AN Facility would have to have at least one
registered AN Facility Representative, whether or not an AN Facility
seeks registration of any additional AN Sellers who are not AN Facility
Representatives is entirely discretionary. Under the Department's
proposed approach, an AN Facility may decide that it is most cost-
effective to register only AN Facility Representatives; however, in
that case, AN Facility Representatives would have to be able to perform
all applicable regulatory compliance activities in this rule.
While the Department's proposal does not preclude the registration
of multiple AN Facility Representatives for a single AN Facility, each
AN Facility will be required to designate a single AN Facility
Representative to act as the primary point of contact with the
Department on behalf of the AN Facility. This individual will be
referred to as the ``Designated AN Facility POC.'' The qualifications
and responsibilities of Designated AN Facility POCs will be discussed
in the following section.
An individual registering as an AN Facility Representative will be
expected to provide the name of and contact information for the
Designated AN Facility POC for each AN Facility on behalf of which he/
she is registering. Please note that a single individual may serve as
an AN Facility Representative for multiple AN Facilities.
5. Registering a Designated AN Facility POC
In section 31.215(a) of the proposed rule, the Department proposes
requiring each AN Facility to designate a single AN Facility
Representative to act as the primary point of contact with the
Department on behalf of the AN Facility. The Department proposes that
the Designated AN Facility POC will be the individual who is
responsible for contacts with the Department regarding regulatory
activities, such as the scheduling of inspections under sections 31.500
and 31.505 of the proposed rule. The Department proposes that the
Designated AN Facility POC will have this point-of-contact
responsibility in addition to all other AN Facility Representative
responsibilities.
Please note that a single individual may serve as a Designated AN
Facility POC for multiple AN Facilities.
6. Summary of AN Facility Personnel Registration Proposals
In summary, the Department is proposing that any individual working
at or for an AN Facility that performs sales or transfers of ammonium
nitrate, or that performs ammonium nitrate application services, would
have to register with the Department. Sales, transfers, or application
services may only be performed by an individual who successfully
registers with the Department and is granted an AN Registered User
Number as an AN Seller (or AN Facility Representative or Designated AN
Facility POC, as both AN Facility Representatives and Designated AN
Facility POCs are subsets of AN Sellers). An AN Facility may have as
many or as few registered AN Sellers as it deems fit, and would be
required to have at least one registered AN Facility Representative.
AN Facility Representatives have several responsibilities that AN
Sellers who are not AN Facility Representatives do not have (i.e.,
responsibilities for ensuring an AN Facility's holistic compliance with
Subtitle J requirements). Each AN Facility would be required to
designate a single AN Facility Representative to be that facility's
Designated AN Facility POC, who will serve as the facility's primary
point of contact with the Department.
The Department welcomes comments on the propriety and effectiveness
of this proposed approach, including comments that address the
following issues:
The ownership and management structures of AN Facilities;
The proposed qualifications for being an AN Facility
Representative, including whether individuals who do not own all or
part of an AN Facility should be able to register as AN Facility
Representatives;
The proposed regulatory compliance responsibilities of AN
Sellers and AN Facility Representatives, which will be described in
further detail throughout the remainder of this NPRM;
Whether or not proof of ownership (for owners) or proof of
delegation of authority from company ownership or management (for non-
owners) should be required for individuals registering as AN Facility
Representatives; and
The proposal that not all AN Facility owners or operators
should be required to register.
The Department also welcomes comments on potential alternative
approaches. Several such alternative approaches follow:
Permitting only individuals who own all or part of an AN
Facility to
[[Page 46921]]
register, and requiring those individuals to perform all applicable
regulatory compliance activities, such as verifying AN Purchasers' AN
Registered User Numbers and identities (as described in sections 31.300
and 31.305 of the proposed rule); or
Permitting only AN Facility Representatives to register,
but allowing any facility personnel to conduct ammonium nitrate sales,
transactions, and application services; or
Permitting only AN Facility Representatives to register,
but allowing non-registered facility personnel whose names have been
provided to the Department to be involved in ammonium nitrate sales,
transactions, and application services.
7. Registering AN Purchasers
6 U.S.C. 488a(d) and 6 U.S.C. 488e(a)(3)(A) require any individual
who intends to purchase or acquire ammonium nitrate to register with
the Department. Specifically, the Department proposes in section 31.205
to require that each individual person attempting to purchase or
acquire ammonium nitrate from an AN Facility would be required to
register with the Department. Whether that person is the owner of the
purchasing entity or simply an employee thereof, the Department
proposes to require that person to have a valid AN Registered User
Number. Moreover, whether a purchasing entity would want to have a
single individual complete all purchases or have multiple individuals
with purchasing authority would be within that entity's discretion, but
the Department would require any individual attempting to purchase
ammonium nitrate to be registered before an AN Facility would be
authorized to sell ammonium nitrate to him/her. This is necessary to
ensure that each individual taking ownership of ammonium nitrate has
been vetted before obtaining ammonium nitrate. The Department welcomes
public comment on this proposed approach.
The Department also proposes that it will not require persons
receiving ammonium nitrate application services to register as AN
Purchasers. The Department does not believe that Subtitle J requires
registration and TSDB vetting of owners/operators of agricultural
property who receive application services, as long as those individuals
do not otherwise qualify for registration under this proposed rule.\1\
DHS does not believe that ammonium nitrate fertilizer is likely to be
misappropriated for use in acts of terrorism after it has been applied
to agricultural property. The Department welcomes public comment on
this conclusion.
---------------------------------------------------------------------------
\1\ If an owner or operator receives and possesses ammonium
nitrate for any length of time before it is applied as fertilizer to
his/her agricultural property, he/she would qualify as an AN
Purchaser under the Department's proposed rule. Such an owner or
operator would have to register with DHS as an AN Purchaser, would
have to be screened against the TSDB, and would have to fulfill the
other proposed obligations of AN Purchasers as described elsewhere
in this NPRM.
---------------------------------------------------------------------------
8. Federal/State/Tribal/Local Government-Owned Entities That Are AN
Facilities or AN Purchasers
While the Department does not believe that many Federal, State,
tribal, or local governmentally-owned entities engage in the sale,
transfer, or purchase of ammonium nitrate, the Department believes that
some such entities do. In Subtitle J, Congress did not exempt from
regulation AN Facilities that are owned by, or AN Purchasers who work
for, Federal, State, tribal, or local governments. Accordingly, the
Department is proposing to treat such entities like any other AN
Facilities or AN Purchasers, and is proposing to require them to comply
with all applicable regulatory requirements. The Department solicits
comments on the existence of governmentally-owned entities engaged in
the sale, transfer, or purchase of ammonium nitrate; on the existence
of government-owned entities that provide application services;
examples of such entities; and whether or not such entities should
receive special treatment under the Ammonium Nitrate Security Program.
9. Registration Process
The Department is proposing that each applicant for an AN
Registered User Number would be required to register as a Designated AN
Facility POC, AN Facility Representative, AN Seller, and/or AN
Purchaser through an online Web portal (the ``AN User Registration
Portal'') developed by the Department and made available via the
Internet. Proposed procedures for applying for an AN Registered User
Number and registering as a Designated AN Facility POC, AN Facility
Representative, AN Seller, and/or AN Purchaser can be found in section
31.220 of the proposed rule. (This NPRM refers to applicants who have
successfully registered under these proposed procedures as ``registered
users.'')
One alternative to Internet-only registration is to add a phone
registration option to the current Internet option. This alternative
would provide both an online Web portal and phone-based registration
system. Applicants could choose between Web portal registration and
phone registration--DHS would accept either if it implemented this
alternative. Under this alternative, DHS could accept registration
applications over the phone, vet applicants against the TSDB (as
described in section III.B.11 of this NPRM), and subsequently mail
applicants paper letters containing registration numbers or
registration denials. DHS could also potentially provide each applicant
with the option of receiving a call, conveying registration results or
registration status, prior to receipt of a paper letter in the mail.
Calls could be provided to enable applicants to learn their statuses
prior to receiving letters in the mail.
Although DHS is proposing Internet-only registration at this time,
the Department invites public comments addressing the above alternative
registration approach, and any other alternative registration
approaches that commenters believe would enable applicants and DHS to
efficiently carry out their respective registration obligations.
Specifically, DHS is interested in identifying alternative approaches
to the Internet that would allow DHS to meet its statutory requirements
to, ``to the extent practicable, issue or deny registration numbers
under [Subtitle J] not later than 72 hours after the time [DHS]
receives a complete registration application, unless [DHS] determines,
in the interest of national security, that additional time is necessary
to review an application[,]'' and to ``notify a person seeking to
register with the Department [* * *] of the status of the application
of that person not later than 72 hours after the time [DHS] receives a
complete registration application.'' See 6 U.S.C. 488a(i)(3). The
Department will consider and examine alternatives suggested in public
comments in assessing whether to require online registration in the
final rule. DHS is particularly interested in receiving public comments
addressing the business and economic impacts that various registration
alternatives would have on the regulated community, including the costs
and benefits of the various alternatives on individual registration
applicants. Because it is proposing to implement an online registration
system, DHS requests comments addressing the level of access to the
Internet that registration applicants currently have, comments
addressing the level of access applicants anticipate having in the
future, and
[[Page 46922]]
comments addressing how registration applicants who do not have
readily-accessible Internet access could obtain the access necessary to
register online. DHS specifically requests information, data, and/or
studies pertaining to the regulated community's access to the Internet.
The Department will consider any data or studies received on any
aspects of registration or on any alternatives, as well as other
comments, and if appropriate, modify the registration system proposed
in this NPRM.
While not every potential applicant may have personal access to the
Internet, the Internet is widely available, such as at public libraries
or in other public buildings. AN Facilities are also welcome, but not
required, to provide Internet access to potential applicants. The
Department believes that there are significant benefits to an online
approach. The benefits to applicants, registered users, and the
Department of an online approach include: (1) Quicker response from the
Department, thereby minimizing the time during which an applicant or
registered user would not be able to purchase, sell, or transfer
ammonium nitrate, or perform ammonium nitrate application services; (2)
ability for an applicant or registered user to access, view, update,
and manage his/her personally identifiable information; and (3) ability
for a registered user to easily renew his/her AN Registered User Number
once it has expired. Additional benefits of online registration, and
description of rationales for online registration, follow.
As described in section III.B.11 of this NPRM, DHS proposes to vet
registration applicants against the TSDB as part of the Ammonium
Nitrate Security Program. Accurate TSDB vetting depends upon DHS
obtaining accurate information from registration applicants. Because
TSDB vetting results or submissions of inaccurate or improper
registration information to DHS could lead to registration denials or
revocations (as described in sections III.B.12 and 13 of this NPRM),
preventing individuals from being able to access ammonium nitrate and
thus impacting their livelihoods, DHS believes that it should implement
the most accurate registration system possible. DHS believes that
implementing an online registration system would reduce the risk of
human error in submission and transcription of registration
information, as compared to the phone-in registration alternative
mentioned above or as compared to mail-in or other possible
registration alternatives. DHS is seeking comment on this assumption.
DHS also believes that implementing an online registration system would
reduce the risks of lost paperwork or misdirected mail, both by
registration applicants and by DHS, which would be inherent in any
alternative registration systems relying on mailed correspondence or
paper forms. While allowing registration over the phone would eliminate
the potential loss of mailed paper forms by registration applicants, it
would not entirely eliminate the potential for some paper letters from
DHS containing registration numbers or registration denials to be lost.
DHS thus believes that an online registration system is likely to be
the most accurate registration system possible; it would be less prone
to the types of errors identified above than alternative registration
systems. DHS seeks comments on how errors could be reduced through
alternative registration systems.
DHS proposes Internet-only registration because Subtitle J directs
the Department to ``establish procedures to efficiently receive
applications for registration numbers.'' See 6 U.S.C. 488a(i)(1)(A). A
major goal of Subtitle J is to expedite and streamline the registration
and regulatory compliance processes that are part of the Ammonium
Nitrate Security Program. See, e.g., 6 U.S.C. 488a(i)(3)(A) (directing
DHS to, ``to the extent practicable, issue or deny registration numbers
under [Subtitle J] not later than 72 hours after the time [DHS]
receives a complete registration application [* * *]''); 6 U.S.C.
488a(i)(1)(A) (directing DHS to ``promptly issue or deny'' registration
numbers (emphasis added)); 6 U.S.C. 488a(i)(1)(B) (directing DHS to
structure the program to maximize the number of registration applicants
that apply for registration soon after implementation of the program);
6 U.S.C. 488a(i)(3)(B) (directing DHS to notify registration applicants
whenever there are delays in processing registration applications); and
6 U.S.C. 488a(i)(4)(A) (directing DHS to create an expedited appeals
process for individuals whose registration applications are denied).
Implementing an online registration system would not only enable DHS to
return registration results to applicants over the Internet within the
72-hour timeframe set forth in 6 U.S.C. 488a(i)(3)(A), it would also
enable DHS to return registration results to applicants faster than
under any of the other possible registration alternatives, thereby best
achieving the goal of expediting registration that underlies Subtitle
J. The Department proposes the Internet-only approach because mail
processing times, delays associated with transcribing phoned-in
registrations, and delays associated with generating and processing
paper forms mailed to or from DHS would slow DHS's responses to
registration applications. For these reasons, a phone-in or mail-in
registration alternative would not expedite registration in comparison
to online registration. However, DHS seeks comment on whether or not
possible registration delays would be preferable to the burdens of
having to access public computers that would be imposed by an Internet-
only registration approach on individuals without readily-accessible
Internet access. DHS is also seeking comments on other ways in which
these burdens might be mitigated for those without readily-accessible
Internet access.
DHS acknowledges that the proposed Internet-only registration
procedures, if finalized, would impose costs and burden on regulated
members of the public. Online registration would likely be more
burdensome for individuals without readily-accessible access to the
Internet than for others. Subtitle J, however, specifies that persons
do not need to be registered to purchase, sell, transfer, or receive
ammonium nitrate until six months after the issuance of the final rule
implementing the Ammonium Nitrate Security Program. See 6 U.S.C.
488e(e). DHS believes that this six-month period will provide a
sufficient opportunity for those without readily-accessible Internet
access to obtain the brief Internet access necessary to register with
the Department. The period of time between issuance of a final rule and
implementation of the registration requirement (i.e., that individuals
possess AN Registered User Numbers) should minimize burden or business
disruption felt by registration applicants. Nevertheless, the
Department seeks comments on the likely burdens (in terms of time and
expense) on those who would need to access public computers in order to
register online. DHS also seeks comments on any additional costs
incurred besides those associated with registration.
In Subtitle J, 6 U.S.C. 488a(i)(1)(B) additionally directs the
Department to take steps to maximize the number of registration
applications that are submitted and processed during the six months
following the issuance of the final rule. In order to accomplish this,
the Department intends to engage in a concerted outreach effort both
immediately before and immediately after the release of the final rule
in an
[[Page 46923]]
effort to raise awareness of Subtitle J's registration requirements and
the process for completing them. The Department welcomes public
comments on both potential outreach targets and other steps the
Department can take to maximize the number of registration applications
that are submitted and processed during the initial six-month
registration period.
The Department's proposal would require online registration, but
would not mandate what sort of Internet access registration applicants
must obtain in order to complete the registration process. As mentioned
previously, registration applicants could use public computers and
internet connections, or computers and Internet connections provided by
AN Facilities, in order to register if they do not have access to
personal computers and the internet. DHS recognizes that use of public
computers or unsecured Internet connections can increase privacy risks
and risks of loss of sensitive personal data. The Department has
published a Privacy Impact Assessment concurrently with publication of
this NPRM addressing these risks, and also addressing other privacy
risks and safeguards relevant to the Ammonium Nitrate Security Program.
The Department's Ammonium Nitrate Security Program Privacy Impact
Assessment can be found online, at http://www.dhs.gov/privacy. DHS
encourages members of the public to read the Privacy Impact Assessment,
and submit comments on this NPRM regarding the risks and safeguards
that is addresses. The Department is particularly interested in
receiving comments addressing privacy risks associated with use of
public computers or unsecured internet connections as part of the
proposed registration process, and comments addressing how DHS and
registration applicants can protect personal information and sensitive
information transmitted online.
In summary, the Department proposes that registration applications
be collected only though an online web portal. The Department seeks
public comments on this proposed Internet-only approach, and on
potential alternative approaches. DHS will consider alternatives
submitted in selecting which type of registration system to implement
as part of the final rule.
10. Initial Applications
Upon accessing the AN User Registration Portal, DHS proposes in
section 31.220(c)(1) that each applicant will be asked a series of
questions designed to allow the Department to vet the individual
against the TSDB, and to subsequently enable point of sale
verifications. The Department is proposing in section 31.220(c)(1) that
each applicant provide his/her name, address, telephone number, photo
identification document type, photo identification document issuing
entity, photo identification document number, place of birth, date of
birth, citizenship, and gender, along with any other information deemed
necessary by the Department to carry out TSDB vetting.
To ensure that appropriate user roles are assigned to each AN
Registered User Number, DHS proposes in section 31.220(b) that each
applicant would also be asked to declare his/her ammonium nitrate user
status in general terms (i.e., AN Seller; AN Facility Representative;
Designated AN Facility POC; AN Purchaser). In section 31.220(b), the
Department proposes to allow an applicant the ability to register as
both an AN Seller and an AN Purchaser. The Department is interested in
receiving comments on the utility of this proposal.
The Department is also proposing in section 31.220(c)(3) that each
AN Seller, AN Facility Representative, and Designated AN Facility POC
would be required to submit information identifying all AN Facilities
at or for which he/she serves as an AN Seller, AN Facility
Representative, or Designated AN Facility POC.
Under section 31.220(c)(1) of the proposed rule the Department may
also collect information necessary to enable it to verify applicants'
enrollments in other TSDB vetting programs. The Department is
considering exercising its authority under 6 U.S.C. 488a(i)(6)(A) to
recognize the results of equivalent TSDB vetting conducted on
applicants enrolled in other appropriate DHS programs where possible.
This approach would limit the number of instances in which different
DHS programs may vet the same applicant against the TSDB. The
Department would appreciate comments regarding whether or not this or
other information would be worthwhile to collect, and regarding the
burden on the regulated community of such collection. The Department
also welcomes public comment on the totality of this proposed
registration application process, including public comment discussing
potential alternative processes.
Pursuant to the Privacy Act, 5 U.S.C. 552a(e)(3), DHS intends to
provide notice to individuals submitting information to DHS through the
AN User Registration Portal about the authority for DHS's collection of
application information, the purposes for collecting application
information, the uses of application information, and the impacts on
individuals by providing or failing to provide application information.
DHS expects to provide this notice electronically, within the AN User
Registration Portal.
11. Applicant Vetting Process
In section 31.225, the Department proposes to vet applicants
against the TSDB and/or verify each applicant's enrollment in a
Department program that conducts equivalent TSDB vetting prior to
issuing him/her an AN Registered User Number. See 6 U.S.C.
488a(i)(2)(A) (requiring TSDB vetting). Under section 31.230(b)(1) of
the proposed rule, applicants whose identifying information appears in
the TSDB may be denied AN Registered User Numbers. See 6 U.S.C.
488a(i)(2)(B). Each applicant who applies for an AN Registered User
Number will be vetted against the TSDB before being approved to
purchase, sell, transfer, or provide application services for ammonium
nitrate.
The Department is aware that some applicants may have already been
vetted against the TSDB as part of other DHS programs prior to
submission of their AN Registered User Number applications. Sections
31.220 and 31.230 of the proposed rule would enable, but would not
require, DHS to recognize the results of TSDB vetting completed by
other DHS programs as part of AN Registered User Number application
reviews. The Department is interested in receiving comments on the
utility of this proposal.
The Department welcomes public comment on the means by which it
proposes to accomplish vetting, and on any other aspects of the
proposed approach to vetting applicants for AN Registered User Numbers.
At a date after publication of the Ammonium Nitrate Security Program
NPRM in the Federal Register, but prior to final rule implementation,
the Department will publish in the Federal Register both a System of
Records Notice (SORN) for the Ammonium Nitrate Security Program and a
separate Notice of Proposed Rulemaking proposing to exempt the Ammonium
Nitrate Security Program from certain Privacy Act requirements. The
Department will also publish, on the Department's Web site, a Privacy
Impact Assessment. In these documents the Department will outline the
potential privacy impacts of the proposed rule, including the privacy
impacts of the vetting process and the circumstances under which DHS
intends to share information collected
[[Page 46924]]
under the Ammonium Nitrate Security Program with Federal law
enforcement agencies as a part of law enforcement investigations into
terrorist ties of applicants for AN Registered User Numbers.
12. Notification of Approval or Denial
Consistent with 6 U.S.C. 488a(i)(3)(A) and 6 U.S.C. 488a(i)(3)(B),
to the extent practicable, the Department intends to approve or deny
each application for an AN Registered User Number, and to issue each AN
Registered User Number, not later than 72 hours after the time the
Department receives a complete application. The Department may deny an
applicant an AN Registered User Number if that applicant's name or
identifying information appears in the TSDB. See 6 U.S.C.
488a(i)(2)(B). The Department proposes in section 31.230(c) to provide
notification of registration application approval or denial to each
applicant electronically.
If a registration application is approved, the notification of such
approval will contain a unique AN Registered User Number assigned to
the applicant. The Department is considering including in the
notification issued to each successful applicant a certificate
including the AN Registered User Number that he/she can print and keep
as part of his/her records and use to facilitate the AN Purchaser
verification process.
The Department welcomes public comment on the efficiency and
sufficiency of notifying applicants of AN Registered User Number
approvals and denials via e-mail or other electronic means, and also
welcomes public comment addressing potential alternative means for
providing such notice, such as notification via telephone or letter.
The Department also welcomes public comment addressing the appropriate
contents of registration approvals and denials.
The Department intends to issue or deny AN Registered User Numbers
within 72 hours of application, as required by Subtitle J. See 6 U.S.C.
488a(i)(3). When this is not practicable, or when the Department
determines in the interest of national security that additional time is
needed to review an application, the Department proposes to provide
notice of delay to applicants whose registration determinations are
delayed in the same manner as approvals or denials will be issued, as
stated in section 31.230(e) of the proposed rule. The Department
welcomes public comment on the efficiency, sufficiency, costs and
benefits of this manner of providing notice of delay, and also welcomes
public comment addressing potential alternative means of providing such
notice.
13. Revocation of Registration Numbers
Under section 31.245 of the proposed rule, the Department proposes
to revoke an individual's AN Registered User Number upon determining
that it is in the interest of national security to revoke that AN
Registered User Number based on the results of the activities described
in section 31.225 of the proposed rule, or that the AN Registered User
holding that AN Registered User Number obtained it by submitting
fraudulent or false information. See 6 U.S.C. 488a(i)(7)(A). To support
these determinations, in section 31.225(b) the Department proposes to
recurrently vet individuals who have previously been issued AN
Registered User Numbers. See 6 U.S.C. 488a(i)(7)(A). As appropriate,
before revoking an individual's AN Registered User Number, the
Department must provide notice to the individual, and after the
revocation of the AN Registered User Number, the Department must
provide the affected individual an opportunity to appeal. See 6 U.S.C.
488a(i)(7)(B). In sections 31.245(b) and (c), DHS proposes that
notification of revocation will be provided to each affected individual
in writing, along with instructions on the process for appealing the
Department's revocation decision. The appellate process will mirror
that provided to individuals whose initial applications for AN
Registered User Numbers are denied, as described below in the following
section and in section 31.250 of the proposed rule. The Department
welcomes public comment on the efficiency and sufficiency of this
method of providing notice of revocation and on the proposed appeals
process, and also welcomes public comment on potential alternative
means for either.
14. Appealing Registration Denials and Registration Revocations
This section discusses proposed appeal procedures for persons
denied AN Registered User Numbers and for persons whose AN Registered
User Numbers are revoked under Subtitle J. These procedures can be
found in section 31.250 of the proposed rule. A later section of this
NPRM, section III.H, discusses proposed adjudication and appeal
procedures for persons and entities issued civil penalties by the
Department under Subtitle J. These two sets of procedures are mutually
exclusive; the Department proposes that registration and revocation
appeals will be governed only by the appeals mechanisms described in
this section of this NPRM, while civil penalty adjudications and
appeals will be governed only by the mechanisms described in section
III.H of this NPRM.
The reason for this mutual exclusivity is because registration
denials and revocations are fundamentally different from imposition of
civil penalties under the Department's proposed rule. Under the
Department's proposal, individuals or other entities will only be
issued civil penalties for violating the rules of the Ammonium Nitrate
Security Program. Individuals or other entities will not be issued
civil penalties for having their registrations denied or revoked.
Adjudication or appeal of civil penalties will thus involve assessment
of whether or not individuals or other entities have violated the final
Ammonium Nitrate Security Program rules. On the other hand, appeal of
denial or revocation of registration numbers will involve review of the
completeness and accuracy of registration applications, and review of
TSDB vetting results and national security interests if applicable. The
appeal procedures listed in this section of the NPRM are intended to
enable reviews of registration application denials and revocations of
registration numbers, while the adjudication and appeal procedures
listed in section III.H are intended to enable reviews of civil
penalties and of alleged regulatory violations.
Subtitle J requires the Department to afford persons denied AN
Registered User Numbers, and persons whose AN Registered User Numbers
are revoked, the opportunity to appeal such denials and revocations in
an expedited manner. See 6 U.S.C. 488a(i)(4). The Department proposes
to fulfill this requirement by permitting each person to request copies
of the materials on which denial or revocation was based, and to file
statements explaining why he/she believes that he/she has been
inappropriately denied registration and containing any applicable
supporting evidence, to be reviewed by the Department. These proposed
appeals procedures are based, in part, on appeals procedures the
Department offers as part of the Transportation Worker Identification
Credential (TWIC) and Hazardous Materials Endorsement (HME) programs.
See 49 CFR 1515.9(a)-(b); 49 CFR 1515.5.
Specifically, the Department proposes that, after having received
an ammonium nitrate registration denial or revocation, a person may
initiate an appeal by filing a written Request for Materials requesting
copies of the materials on which denial or revocation was based. The
Department proposes to
[[Page 46925]]
require that each Request for Materials be submitted to the Department
within 60 days of the date of denial or revocation.
The Department proposes that after the receipt of a Request for
Materials, it will send the appellant a DHS Response containing copies
of the releasable materials upon which denial or revocation was based.
DHS will not include any classified information in this DHS Response
nor will it include any other information or material protected from
disclosure under law, although as appropriate it will include
unclassified summaries of classified evidence supporting denial or
revocation. The Department proposes that it will serve its DHS Response
on the appellant within 60 days of Request for Materials receipt,
unless additional time is required in the interest of national
security.
Upon review of those releasable materials, the Department proposes
that an appellant may reply to the Department with a Request for Appeal
containing the rationale or information upon which he/she disputes the
Department's denial or revocation determination. The Department
proposes that an appellant will have 60 days from the date of the
Department's Response in which to file such rationale or information.
The Department proposes that after reviewing this rationale or
information, it will serve the appellant with a Final Determination of
the Department's resolution of his/her appeal. The Department proposes
that it will perform this service within 72 hours of Request for Appeal
receipt, to the extent practicable, as required by 6 U.S.C.
488a(i)(4)(A)(ii).
For good cause shown, the Department additionally proposes to grant
appellants extensions of the 60-day appeals submission periods
mentioned above. This will afford appellants the necessary time in
which to work with other government agencies to correct records and
materials contributing to the Department's denial/revocation
determinations when those records and materials contain incorrect or
outdated information.
The Department welcomes public comment on this appeals mechanism,
and also welcomes public comment on potential alternative appeals
mechanisms.
15. Registration Updates and Expiration
Under Subtitle J, DHS may require registrants to update
registration information submitted to DHS ``as appropriate.'' See 6
U.S.C. 488a(6)(b). Pursuant to this authority, section 31.220(a)(2)
proposes to require registration applicants and AN Registered Users to
update submitted information within 30 days of a change to any of the
information submitted as part of the application (e.g., name, address).
An applicant or AN Registered User would be able to update his/her
information through the proposed AN User Registration Portal. DHS seeks
public comment on its proposed approach to updating registration
information, including how often and under what circumstances to
require registrants to update the information submitted to DHS as part
of registration. DHS also requests public comments on potential
alternative approaches to requiring registration information to be
updated through the proposed AN User Registration Portal, including
comments on the feasibility and practicality of allowing updates to be
accomplished over the telephone or through the mail.
The Department proposes in section 31.235 of the proposed rule to
make each AN Registered User Number issued under Subtitle J valid for
five years after the date of issuance (unless revoked before expiration
pursuant to 6 U.S.C. 488a(i)(7)). Under this proposal, the Department
expects many applicants to apply to renew their AN Registered User
Numbers every five years.
In proposing five years as the duration of each AN Registered User
Number, the Department is seeking to balance the benefits of requiring
renewals against the burdens to both the regulated community and the
Department of the renewal process. As part of its evaluation of
potential expiration and renewal processes, the Department has
considered the expiration/renewal schedules for ATF's Federal
Explosives Regulations (three years), for DHS programs that conduct
TSDB vetting (e.g., five years for TSA's TWIC program and five years
for U.S. Customs and Border Protection's Trusted Traveler programs),
and for various State ammonium nitrate licensing regulations (generally
one year). The Department believes that the five-year renewal cycle for
AN Registered User Numbers is appropriate because it will minimize the
burden on the regulated community, in comparison to screening programs
with shorter renewal cycles. Additionally, a five-year validity period
aligns with DHS's practice of recurrently vetting information against
the TSDB for five years as part of certain transportation and critical
infrastructure security programs.
The Department proposes in section 31.240 to allow each AN
Registered User to apply for a five-year extension of his/her AN
Registered User Number via the proposed AN User Registration Portal
anytime beginning 60 days prior to the expiration of his/her AN
Registered User Number through one year after the expiration of his/her
AN Registered User Number. After completion of the renewal process,
each renewed AN Registered User Number will be valid for an additional
five years. To facilitate this, the Department intends to maintain an
AN Registered User's registration application information for a period
of one year following the expiration of his/her AN Registered User
Number. If an individual fails to renew his/her AN Registered User
Number within one year of its expiration, the AN Registered User Number
will be permanently retired. Such an individual will need to apply for
a new AN Registered User Number to purchase, sell, transfer, or provide
application services for ammonium nitrate after his/her initial AN
Register User Number has been permanently retired.
The Department seeks public comment on this proposed approach,
including the utility, benefits, and costs of requiring re-registration
of ammonium nitrate users in general, and on the proposed five-year
time period in particular.
16. Initial Six-Month Registration Period
6 U.S.C. 488e(e) specifies that persons do not need to be
registered to purchase, sell, transfer, or receive ammonium nitrate
until six months after the issuance of the final rule implementing
Subtitle J. 6 U.S.C. 488a(i)(1)(B) directs the Department to take steps
to maximize the number of registration applications that are submitted
and processed during the six months following the issuance of the final
rule. In order to accomplish this, the Department intends to engage in
a concerted outreach effort both immediately prior to and immediately
following the release of the final rule in an effort to raise awareness
of Subtitle J's registration requirements and the process for
completing them. The Department welcomes suggestions on both potential
outreach targets and other steps the Department can take to maximize
the number of registration applications that are submitted and
processed during the initial six-month registration period.
C. Purchaser Verification Activities (See Sections 31.300-31.310 of the
Proposed Rule)
1. Overview
Subtitle J specifies that only individuals with valid AN Registered
[[Page 46926]]
User Numbers may purchase ammonium nitrate, and that AN Sellers would
be required to refuse to sell ammonium nitrate to prospective AN
Purchasers who do not possess valid AN Registered User Numbers. See 6
U.S.C. 488e(a)(2) and 6 U.S.C. 488e(a)(3). To this end, AN Sellers
would be required to verify that each prospective AN Purchaser has a
valid (i.e., current and authentic) AN Registered User Number prior to
transfer of ammonium nitrate. Subtitle J also requires AN Sellers to
verify each prospective AN Purchaser's identity prior to transfer of
ammonium nitrate to that prospective AN Purchaser. See 6 U.S.C.
488a(e)(2)(D). DHS therefore proposes to require that an AN Facility
refuse to sell or transfer ammonium nitrate to a prospective AN
Purchaser whose identity or AN Registered User Number the AN Seller is
unable to verify. These proposed requirements can be found in section
31.300 of the proposed rule, and are further discussed throughout the
remainder of section III.C of this NPRM.
In addition to verifying the identity and AN Registered User Number
of a prospective AN Purchaser, if an AN Purchaser whose identity and AN
Registered User Number has been verified uses an agent on his or her
behalf at the point of sale, the AN Seller must also verify the
identity of the agent. See 6 U.S.C. 488a(e)(2)(D). Identity
verification of AN Purchasers (and, where applicable, their agents) by
AN Sellers is to occur in accordance with procedures proposed in
section 31.300.
AN Facilities would also be required to record certain information
regarding prospective AN Purchasers (and, if applicable, the agents
acting on their behalves) for each sale or transfer as part of Subtitle
J's recordkeeping requirements. See 6 U.S.C. 488a(e)(2).
2. Manner of Sale or Transfer of Ammonium Nitrate
The Department is aware that the ways in which sales and transfers
of ammonium nitrate are conducted can vary by AN Facility, and that
differences in ammonium nitrate transaction protocols could impact the
timing and performance of identity verification and other required
point of sale activities. Through conversations with industry, the
Department has identified three principal transaction formats commonly
used to sell or transfer ammonium nitrate: (1) The AN Purchaser appears
at an AN Facility and takes possession of ammonium nitrate from the AN
Seller directly; (2) the AN Purchaser places an advanced order either
in person or through other means (e.g., telephone, online), and the AN
Seller delivers ammonium nitrate to the AN Purchaser; or (3) the AN
Purchaser places an advanced order either in person or through other
means (e.g., telephone, online), and an agent acting on behalf of the
AN Purchaser takes possession of the ammonium nitrate from the AN
Seller. Other transaction formats are also possible.
In addition to the aforementioned approaches to transferring
possession of ammonium nitrate as part of a sale or transfer, depending
on the financial arrangements entered into between an AN Facility and
an AN Purchaser, the payment of funds or other services in exchange for
ammonium nitrate may occur prior to, concurrent with, or after the
actual transfer of possession of ammonium nitrate.
The Department is interested in comments regarding the frequency of
these various modes of delivery and payment, as well as any other
transactional formats that are used to sell or transfer ammonium
nitrate.
The verification activities described in section III.C of this NPRM
are required for each sale or transfer of ammonium nitrate. The
Department seeks comments on its proposed definition of ``transfer,''
including what should be considered a transfer subject to Subtitle J.
For purposes of this rule, the Department is proposing that
``transfer'' of ammonium nitrate be defined generally as ``[t]he
transfer of possession or ownership of ammonium nitrate from one person
or entity to another person or entity for use outside of the AN
Facility from which the ammonium nitrate is being transferred.
Transfers of ammonium nitrate include transfers of possession or
ownership that occur as part of sales and other business or commercial
transactions, and also include transfers of possession or ownership
that are not part of sales or other business or commercial
transactions. The physical deposit of fertilizer onto turf, fields,
crops, or other agricultural property is not a transfer of ammonium
nitrate.'' Elaboration on this definition follows.
The Department is aware that transaction protocols may be different
for sales or transfers that occur as part of imports or exports of
ammonium nitrate than for purely domestic sales or transfers. As part
of this proposed rule, DHS proposes to regulate all ammonium nitrate
transfers that occur within the United States. As such, DHS would
require the verification and recordkeeping activities described below
whenever possession of ammonium nitrate changes hands inside the United
States. For example, if an individual brings ammonium nitrate into the
country and transfers possession of it to another person within the
United States, the verification and recordkeeping activities described
below would be required. Similarly, if an individual in the United
States transfers possession of ammonium nitrate to another person who
intends to export that ammonium nitrate, the verification and
recordkeeping activities described below would be required.
Verification and recordkeeping would not be required, however, if an
individual transports ammonium nitrate out of the country as long as
there is no transfer of possession of the ammonium nitrate when it is
inside the United States. Likewise, verification and recordkeeping
would not be required if an individual brings ammonium nitrate into the
country as long as there was no transfer of possession of that ammonium
nitrate when it is inside the United States. DHS seeks comments on this
proposal, on the methods of conducting ammonium nitrate imports and
exports, and on any potential alternative treatments of imported or
exported ammonium nitrate.
When ammonium nitrate is used or moved within a single AN Facility,
or when possession of ammonium nitrate changes within a single AN
Facility but that ammonium nitrate does not leave the AN Facility, the
verification activities described below are not required. The reason
for this is that, under Subtitle J, DHS is authorized only to regulate
sales, transfers, and application services; how ammonium nitrate is
stored, used, or processed within the confines of individual AN
Facilities is not the subject of Subtitle J. As such, persons using or
moving ammonium nitrate within an AN Facility, or obtaining possession
of ammonium nitrate for use within the same AN Facility, would not need
to be registered with DHS.
The application of ammonium nitrate fertilizer to property by an
application service would not be regulated as a transfer under the
Department's proposal. The Department does not believe that ammonium
nitrate fertilizer is likely to be misused in acts of terrorism after
it has been applied to agricultural property. Accordingly, farmers and
other persons who have ammonium nitrate fertilizer spread on their
agricultural property do not need to register with the Department, nor
do their identities need to be verified by AN Sellers prior to their
receipt of
[[Page 46927]]
application services.\2\ Pursuant to the Department's proposal,
however, transfer of ammonium nitrate from an AN Facility to a separate
application service would be regulated. Regulation of application
services is required under Subtitle J. See 6 U.S.C. 488(2).
Specifically, the Department believes that regulation of transfers to
application services is necessary in order to ensure that terrorists
cannot easily obtain ammonium nitrate by infiltrating, posing as, or
working for application services. The Department seeks comments on
these proposals, and is particularly interested in comments discussing
interactions between AN Facilities, application services, and ammonium
nitrate end users.
---------------------------------------------------------------------------
\2\ Persons who perform application services, however, must be
registered with DHS under the proposed rule. For elaboration on this
registration requirement, see section 31.210(c) of the proposed rule
and see sections III.B.2 and 3 of this NPRM.
---------------------------------------------------------------------------
Persons who transport ammonium nitrate from one AN Facility to a
delivery location outside that AN Facility (e.g., truck drivers)
conduct regulated transfers under this proposed rule, regardless of
whether the AN Facility and delivery location are owned or operated by
the same business or organization, and are therefore subject to this
regulation. Ammonium nitrate transportation would be regulated in three
ways under the proposed rule, depending upon particular transporters'
relationships with AN Facilities or AN Purchasers. Any particular
transportation would have to be regulated pursuant to one (and only
one) of the three options listed immediately below.\3\
---------------------------------------------------------------------------
\3\ Transporters of ammonium nitrate can also be subject to
other Federal and State regulations regarding the transportation of
hazardous materials. Registration and compliance with DHS's proposed
Ammonium Nitrate Security Program would not relieve transporters of
duties or registration requirements under USCG, TSA, or DOT rules,
or under other Federal or State programs. See sections II.D.3 and
II.D.4 of this document for descriptions of other select rules and
programs.
---------------------------------------------------------------------------
(1) Transporters who are the agents of AN Purchasers. Any person
possessing valid photo identification could transport ammonium nitrate
from an AN Facility to an AN Purchaser, pursuant to the Department's
proposed rules for ``AN Agents'' as described in sections III.C.4
through III.C.9 of this NPRM. ``AN Agent'' transporters would not need
to be registered with or vetted by DHS. Any AN Purchaser to which an
``AN Agent'' transporter delivers ammonium nitrate, however, would need
to be registered with and vetted by the Department. Similarly, any AN
Seller from whom an ``AN Agent'' transporter obtains ammonium nitrate
(i.e., any AN Seller who provides ammonium nitrate to be loaded into an
``AN Agent'' transporter's truck or other vehicle) would need to be
registered with and vetted by the Department.
Before an ``AN Agent'' transporter can pick up or obtain possession
of ammonium nitrate (i.e., before it can be loaded into his/her truck
or other vehicle), his/her identity would need to be verified by the AN
Facility from which he/she seeks to pick up ammonium nitrate, as
described in sections III.C.8 and III.C.9 of this NPRM. Before an ``AN
Agent'' transporter can pick up ammonium nitrate, the AN Facility from
which he/she seeks to pick it up would also need to verify that he/she
has legitimately been asked to serve as an ``AN Agent'' by a registered
AN Purchaser. See sections III.C.7 and III.C.9 of this NPRM. Before an
``AN Agent'' transporter can pick up ammonium nitrate, the AN Facility
from which he/she seeks to pick it up would also need to verify that
the AN Purchaser to whom the ``AN Agent'' transporter plans to deliver
the ammonium nitrate is properly registered with DHS. See sections
III.C.4, 6, and 9 of this NPRM.
Under this proposed rule, an ``AN Agent'' transporter would not
need to perform any identity verification or registration verification
on the AN Purchaser to whom he/she delivers ammonium nitrate.
Similarly, ``AN Agent'' transporters would not need to maintain any
records or paperwork under this proposed rule.
(2) Transporters who work for AN Facilities. Transporters could
work for or deliver ammonium nitrate on behalf of AN Facilities, and
could register under the Department's proposed rules as AN Sellers for
those facilities. See section III.B.3 of this NPRM. Transporters who
register as AN Sellers would be vetted against the TSDB. See sections
III.B.10 and III.B.11 of this NPRM.
Once registered as an AN Seller on behalf of a particular AN
Facility, a transporter could pick up or obtain possession of ammonium
nitrate from that AN Facility (i.e., it could be loaded into his/her
truck or other vehicle at that AN Facility) without having to undergo
the identity verification or AN Registered User Number verification
activities described in sections III.C.3 through III.C.9 of this NPRM.
Before a transporter who is registered as an AN Seller delivers or
drops off ammonium nitrate to an AN Purchaser, however, he/she (or
other registered employees of the AN Facility with which he/she is
associated) would have to conduct registration verification and
identification verification on the AN Purchaser receiving the ammonium
nitrate. See sections III.C.3 through III.C.9 of this NPRM. The AN
Facility with which the transporter is associated would also have to
maintain records of the transporter's delivery. See section III.D of
this NPRM.
(3) Independent transporters. Transporters who fit into neither of
the previous two categories would be regulated as both AN Purchasers
and AN Sellers under the Department's proposed rule. As such, they
would have to register with the Department and be vetted against the
TSDB. See sections III.B.10 and III.B.11 of this NPRM. Any AN Seller
from whom an independent transporter picks up or obtains ammonium
nitrate (i.e., any AN Seller who provides ammonium nitrate to be loaded
into the independent transporter's truck or other vehicle) would also
need to be registered with and vetted by the Department. Similarly, any
AN Purchaser to whom an independent transporter delivers ammonium
nitrate would also need to be registered with and vetted by the
Department.
Independent transporters would need to be registered as AN
Purchasers in order to pick up or obtain ammonium nitrate (i.e., in
order to have it loaded into their trucks or other vehicles). Before an
independent transporter can pick up or obtain possession of ammonium
nitrate (i.e., before it can be loaded into his/her truck or other
vehicle), his/her identity would need to be verified and his/her AN
Registered User Number would need to be verified by the AN Facility
from which he/she seeks to pick up or obtain ammonium nitrate. See
sections III.C.4, III.C.5, and III.C.9 of this NPRM.
Independent transporters would also need to be registered as AN
Sellers in order to deliver ammonium nitrate to other AN Purchasers.
Before an independent transporter delivers or drops off ammonium
nitrate to an AN Purchaser, he/she (or other employees registered on
behalf of his/her organization) would have to conduct a registration
verification and identity verification on the AN Purchaser receiving
the ammonium nitrate. See sections III.C.3 through III.C.9 of this
NPRM. The AN Facility with which the independent transporter is
associated would also have to maintain records of the transporter's
delivery. See section III.D of this NPRM.
The Department is interested in comments addressing coverage of
truck drivers and other transporters of ammonium nitrate. The
Department is particularly interested in comments
[[Page 46928]]
addressing transporters' relationships to AN Facilities and AN
Purchasers, and addressing transporters' abilities to perform the
activities required of regulated persons. The Department specifically
requests comments addressing the three types of transportation
arrangements described above, including comments discussing whether any
particular types of transportation arrangements should be exempt from
proposed regulatory requirements, and if so, discussing why particular
transportation arrangements should be exempt.
DHS proposes that transportation of ammonium nitrate where
possession moves between different AN Facilities or other locations
would be regulated as a transfer. Both of these types of transfers
would require all the registration, verification, and recordkeeping
activities required of transfers elsewhere in this NPRM. A person
delivering ammonium nitrate from one AN Facility to another location
would be regulated as part of one of the three transporter categories
listed above, regardless of whether that person's delivery location is
part of the same company or business as the AN Facility from which he/
she obtains the ammonium nitrate transported.
By proposing to require that transportation between related
business entities qualifies as a regulated transfer of ammonium
nitrate, DHS would ensure that all entities from which transportation
of ammonium nitrate originates have AN Registered Users on staff who
are screened for terrorist ties who can be responsible for carrying out
the security requirements of Subtitle J. Likewise, by proposing to
require that transportation between related business entities qualifies
as a regulated transfer of ammonium nitrate, DHS would also ensure that
all entities receiving shipments of ammonium nitrate have AN Registered
Users on staff who are screened for terrorist ties and who can be
responsible for carrying out the security requirements of Subtitle J.
Similarly, by proposing to require that transportation between related
business entities qualifies as a regulated transfer of ammonium
nitrate, DHS would also ensure that intra-company transportation of
ammonium nitrate is conducted by AN Registered Users or ``AN Agents.''
These features of the Department's proposed rule would help to ensure
that persons screened for terrorist ties (or their agents) would be
responsible for a given company's or business's ammonium nitrate during
times when that ammonium nitrate might be most vulnerable to
misappropriation.
The Department seeks comments on the proposal that transportation
of ammonium nitrate would be regulated where possession moves between
different locations but where ownership is not transferred (i.e., where
transfer takes place within a single corporate entity). DHS realizes,
however, that this proposal could have a significant impact on
businesses with multiple locations, and that it might not increase
ammonium nitrate security for every AN Facility or entity to which it
would apply. Accordingly, the Department seeks comments on this
proposal. DHS also seeks comments suggesting alternative ways in which
Subtitle J's requirements regarding the regulation of ammonium nitrate
transfers could be achieved. The Department is interested in comments
generally describing the organizational structures and transportation
needs of the companies or other entities owning or operating AN
Facilities, and in comments addressing whether transportation between
locations owned or operated under the same corporate structure should
be exempt from coverage under the Ammonium Nitrate Security Program.
3. Required Verification Activities
Based on statutory requirements and the Department's understanding
of the ways in which sales and transfers of ammonium nitrate typically
occur, the Department is proposing to require that an AN Seller perform
the specific verification activities discussed below for each sale or
transfer of ammonium nitrate.
The AN Seller would always be required to verify the currency and
authenticity of the prospective AN Purchaser's AN Registered User
Number.
The AN Seller would be required to verify the prospective AN
Purchaser's identity as specified by DHS. The manner of verification of
a prospective AN Purchaser's identity would vary depending on whether
or not the AN Purchaser has opted to use an agent (an ``AN Agent'') to
procure ammonium nitrate for him/her. If the AN Purchaser opted not to
use an agent, then the AN Seller verifies the AN Purchaser's identity
based upon the visual check of the AN Purchaser's photo identification.
If the AN Purchaser opted to use an agent, then the AN Seller verifies
the AN Purchaser's identity by submitting certain information provided
by the AN Purchaser to the Department for comparison against
information contained in the AN Purchaser's AN Registered User Number
application.
In the event that a prospective AN Purchaser uses an agent to
complete the transaction, the AN Seller would also be required to
verify both (1) the agent's identity based upon a visual check of the
agent's photo identification, and (2) that the agent is acting on the
approved AN Purchaser's behalf.
Each of these required verification activities is described in
greater detail in the following sections of the NPRM. Although the
Department proposes to require these verification activities for sales
and transfers of ammonium nitrate, DHS proposes not to require these
verification activities prior to provision of ammonium nitrate
application services. The Department seeks comments on its proposal not
to require verification activities prior to provision of ammonium
nitrate application services.
4. Verification of the Currency and Authenticity of a Prospective AN
Purchaser's AN Registered User Number
In order to bolster the effectiveness of AN Registered User Numbers
in preventing the misappropriation of ammonium nitrate, DHS proposes
that the AN Seller will be required to verify the currency and
authenticity of a prospective AN Purchaser's AN Registered User Number
prior to completing a sale or transfer of ammonium nitrate. DHS
proposes in section 31.305(a) to provide each AN Seller the capability
to verify the currency and authenticity of a prospective AN Purchaser's
AN Registered User Number either electronically through a web portal
designed by the Department (the ``Purchaser Verification Portal'') or
telephonically through a call center maintained by the Department (the
``Purchaser Verification Call Center''). The Department proposes in
section 31.305(a)(3) to compare the prospective AN Purchaser's name and
AN Registered User Number, which a prospective AN Purchaser would be
required to provide an AN Seller for submission to DHS, to information
contained in the Department's AN Registered User database, and to
provide rapid confirmation or rejection of the prospective AN
Purchaser's information to the AN Seller via the same mechanism (i.e.,
the Purchaser Verification Portal or the Purchaser Verification Call
Center). This approach provides a reasonable degree of confidence as to
the currency and authenticity of the AN Purchaser's AN Registered User
Number. Both the proposed Purchaser Verification Portal and the
proposed Purchaser Verification Call Center are described in greater
detail below.
[[Page 46929]]
Verification of a prospective AN Purchaser's AN Registered User
Number would be required regardless of whether or not the AN Purchaser
opts to use an agent on his or her behalf to take possession of
ammonium nitrate.
5. Verification of a Prospective AN Purchaser's Identity When the AN
Purchaser Opts Not To Use an Agent
Consistent with 6 U.S.C. 488a(e)(2)(D), the Department proposes
that the AN Seller will be required to verify the prospective AN
Purchaser's identity. If the AN Purchaser opts not to use an agent, DHS
proposes in section 31.305(b) that the AN Seller would be required to
verify, by performing a visual check of a photo identification document
such as a driver's license or passport, the identity of the AN
Purchaser no later than when the AN Purchaser directly takes possession
of ammonium nitrate from the AN Seller at the completion of the sale or
transfer.
The Department proposes using a definition of ``photo
identification document'' similar to the definition used by the
Department's Secure Flight Program, to establish what qualifies as an
acceptable form of identification for this verification process.
Specifically, in section 31.105, the Department proposes defining
``photo identification document'' as ``[a]ny of the following documents
containing a unique document number: (1) An unexpired passport issued
by a foreign government which contains a photograph; or (2) An
unexpired document issued by a U.S. Federal, State, or tribal
government that includes the following information for the person: (i)
Full name; (ii) date of birth; and (iii) photograph; or (3) Such other
documents that the Department may designate as valid identification
documents.'' Cf. 49 CFR 1560.3. The Department also assumes that each
AN Purchaser and each AN Agent will possess a photo identification
document. The Department seeks comments on this proposed requirement
and assumption, including comment on the forms of identification that
should be acceptable for purposes of the visual identification
verification check.
6. Verification of a Prospective AN Purchaser's Identity When the AN
Purchaser Opts to Use an Agent
Consistent with 6 U.S.C. 488a(e)(2)(D), the Department proposes in
section 31.310(a) that the AN Seller will be required to verify the
prospective AN Purchaser's identity with DHS when the prospective AN
Purchaser chooses to use an agent to take possession of ammonium
nitrate. Specifically, before completing a sale or transfer of ammonium
nitrate the AN Seller would have to provide certain prospective AN
Purchaser information (e.g., name; photo identification document
number; AN Registered User Number) to DHS either electronically through
the Purchaser Verification Portal or telephonically through the
Purchaser Verification Call Center. The Department proposes to compare
this information, which a prospective AN Purchaser would be required to
provide to an AN Seller for submission to the Department, to
information contained in the Department's AN Registered User Database.
The Department would provide rapid confirmation or rejection of the
prospective AN Purchaser's information to the AN Seller via the same
mechanism (i.e., the Purchaser Verification Portal or the Purchaser
Verification Call Center). The Department believes that this
confirmation or rejection would take about the same amount of time as
it takes merchants to receive credit card authorizations at retail
stores.
This approach would enable use of an agent when it is not possible
to verify the identity of the AN Purchaser in person (i.e., by
conducting a visual inspection of the photo identification of the AN
Purchaser and comparing the photo identification with the AN Purchaser
physically present). The Department seeks comments on this approach,
including comments addressing whether AN Purchasers would be likely to
provide identity verification information to AN Sellers themselves
(e.g., by providing this information to AN Sellers over the telephone),
or whether AN Purchasers would be likely to ask their agents to provide
this information to AN Sellers in person. DHS also seeks comments on
the advisability, costs, and benefits of enabling agents to provide AN
Purchasers' identity verification information directly to AN Sellers,
and seeks comments on possible alternative methods that could be
employed to verify AN Purchasers' identities in sales or transfers
involving AN Agents.
Both the proposed Purchaser Verification Portal and the proposed
Purchaser Verification Call Center are described in greater detail
below.
7. For Sales Involving Agents, Verification That the Agent Is Acting on
Behalf of the AN Purchaser
Subtitle J limits registration and vetting requirements to AN
Purchasers, and does not extend registration and vetting requirements
to the agents of AN Purchasers. See 6 U.S.C. 488a(d) and 6 U.S.C.
488a(e). In order to help minimize the likelihood that agents would be
used to circumvent the intentions of Subtitle J, the Department
believes it is imperative for AN Sellers to ensure that an agent is
acting at the direction of a registered AN Purchaser before the AN
Seller transfers possession of ammonium nitrate to that agent. To
accomplish this, the Department is considering various approaches:
(1) Requiring AN Purchasers to submit the names of their agents to
DHS via the AN User Registration Portal, and requiring the AN Seller to
confirm with DHS, prior to transferring possession of ammonium nitrate
to an agent, that the name of that agent has been previously submitted
to DHS by the relevant AN Purchaser.
(2) Requiring the AN Seller to orally confirm with the prospective
AN Purchaser prior to each transfer of ammonium nitrate that the agent
is acting on behalf of the AN Purchaser.
(3) Allowing both options, whereby an AN Seller first should check
with DHS to see if the prospective AN Purchaser has submitted the name
of the agent to DHS. If not, then the AN Seller would be required to
orally confirm with the prospective AN Purchaser that the agent is
acting on his/her behalf. DHS proposes this third approach in section
31.310(b) of the proposed rule.
Under the first approach, each AN Purchaser would be required to
provide to DHS the names of any agents that might act on his/her behalf
at the point of sale. AN Purchasers would submit names of agents to DHS
via the AN User Registration Portal. An AN Purchaser could submit an
agent's name when he/she applies for an AN Registered User Number or at
any other time prior to conducting a purchase involving that agent.
Then, prior to transferring possession of ammonium nitrate to an agent,
an AN Seller would need to verify with the Department that the
prospective AN Purchaser has designated the agent as an approved agent
to represent the AN Purchaser at the point of sale. This verification
would occur through the same mechanism that is used for the other
prospective AN Purchaser identity verification activities (i.e., the
Purchaser Verification Portal or the Purchaser Verification Call
Center). Note, however, that agent information that the AN Purchases
and AN Sellers provided to the Department would not be vetted against
the TSDB or otherwise checked by the Department; rather, it would
simply be maintained in the AN Registered User Database as a data field
linked to the AN Purchaser for use in the agent verification process.
[[Page 46930]]
Under the second approach, the Department would require an AN
Seller to verify with the prospective AN Purchaser that the agent is
actually acting on behalf of the prospective AN Purchaser for each
specific transaction. Much like the other verification activities
contained in the proposed rule, this could occur at the time the
prospective AN Purchaser places the order, when the agent arrives to
take possession of ammonium nitrate, or any other time, so long as it
occurs prior to the AN Seller transferring possession of ammonium
nitrate to the prospective AN Purchaser's agent. Note, if this approach
were adopted, the Department would propose requiring this confirmation
to occur for each transaction/occurrence in which an agent is taking
possession of ammonium nitrate; a blanket verification of an agent by
an AN Purchaser would not be acceptable. Additionally, as an e-mail or
letter can be easily forged, under this approach the Department would
require that the AN Seller receive this verification orally (e.g., in
person, telephonically) from the prospective AN Purchaser.
The third approach--the option the Department proposes to use in
this NPRM--is a combination of the first two approaches. Specifically,
AN Purchasers would be expected to provide the Department with the
names of their agent(s), and an AN Seller would be expected to verify
either through the Purchaser Verification Portal or Purchaser
Verification Call Center that the agent information has been provided
by the AN Purchaser to the Department. As opposed to the first approach
under which a sale cannot occur unless the agent's name has been
provided to the Department by the prospective AN Purchaser, this third
option would allow the AN Seller to complete a sale or transfer after
either (1) verifying that the agent has been designated by the
prospective AN Purchaser through the Purchaser Verification Portal or
Purchaser Verification Call Center, or (2) orally confirming with the
prospective AN Purchaser that the agent is acting on the prospective AN
Purchaser's behalf for the sale or transfer at issue. The Department
expects that in the majority of cases, this oral confirmation would
occur telephonically. This third option has the benefit of minimizing
the point of sale impact of the agent verification process while
allowing a means for a sale or transfer to be completed even if a
prospective AN Purchaser forgets or is otherwise unable to provide the
Department with the agent's name prior to using the agent at the point
of sale. For these reasons, the Department proposes this third
approach.
If DHS implements either the first approach or the third approach
in an Ammonium Nitrate Security Program final rule, the Department will
construct the AN User Registration Portal such that AN Purchasers could
submit the names of their agents to DHS through that portal. If so, DHS
would require AN Purchasers to notify agents that their names could be
submitted to DHS in this manner. DHS seeks public comment on how such
notification should be carried out, if the Department implements either
the first approach or the third approach.
The Department seeks comment on the benefits, costs, economic
impacts, and practicality of all these approaches, as well as any
potential alternate approaches for verifying that an AN Agent is acting
on behalf of a prospective AN Purchaser.
8. Verification of the Agent's Identity Based on the Visual Check of
the Agent's Photo Identification
Consistent with 6 U.S.C. 488a(e)(2)(D), DHS proposes in section
31.310(c)(1) that the AN Seller would be required to verify, by
performing a visual check of a photo identification document such as a
driver's license or passport, the identity of the agent taking
possession of ammonium nitrate from the AN Seller at the completion of
a sale or transfer. This visual check would mirror the process and
requirements used by the AN Seller when performing a visual check on an
AN Purchaser, when an AN Purchaser takes possession of ammonium
nitrate.
9. Timing of Verification Activities
All of the aforementioned verification activities would be required
to occur before the AN Seller transfers possession of ammonium nitrate
to the prospective AN Purchaser or the agent acting on the prospective
AN Purchaser's behalf. Outside of that requirement, the time at which
the AN Seller performs the verification activities would be entirely
within the discretion of the AN Seller. For instance, in a situation
where the AN Purchaser places an advance order for ammonium nitrate to
be picked up at a later date, the AN Seller may perform these
activities at the time of sale or at the time of transfer of
possession.
The proposed rule would regulate all transfers of ammonium nitrate,
including both transfers that involve payments or sales, and transfers
that do not involve payments or sales. Note that AN Sellers may
transfer possession of ammonium nitrate to AN Purchasers or their
agents only after the verification activities discussed above have been
completed. Payment for transfer of possession may happen at any time,
either before or after verification activities have been completed.
10. Departmental Role in Verification Process
As part of the verification process, the Department proposes to
require AN Sellers to provide the Department with sufficient
information to verify (1) the currency and authenticity of prospective
AN Purchasers' AN Registered User Numbers, and (2) prospective AN
Purchasers' identities when AN Purchasers use agents. The Department
also proposes to enable AN Sellers to verify through DHS, where
applicable, that prospective AN Purchasers have submitted the names of
the agents acting on their behalves to the Department. To help AN
Sellers accomplish this, the Department is considering developing a
secure AN Purchaser verification web portal (``Purchaser Verification
Portal'') and a call center (``Purchaser Verification Call Center'')
through which AN Sellers can submit information to the Department that
will allow the Department to nearly immediately (1) Verify or disaffirm
prospective AN Purchasers' AN Registered User Numbers, (2) verify or
disaffirm prospective AN Purchasers' identities, and, where applicable,
(3) verify or disaffirm the preapproval of agents.
11. Purchaser Verification Portal
The first option the Department is considering is to develop a
Purchaser Verification Portal that would be available via the Internet
to registered AN Sellers only. To gain access to the portal, AN sellers
would be asked to provide their AN Registered User Number, a password,
and potentially other identifying information. The Department proposes
in sections 31.305 and 31.310 that, upon accessing the portal, an AN
Seller would enter into the system, at a minimum, the prospective AN
Purchaser's name and AN Registered User Number to verify the
prospective AN Purchaser's AN Registered User Number. If the
prospective AN Purchaser uses an agent, then the AN Seller would enter
into the system the prospective AN Purchaser's photo identification
document number (along with additional photo identification document
information, such as type of photo identification document, and photo
identification document issuing entity), to aid in verifying the
prospective AN Purchaser's identity. This information
[[Page 46931]]
should allow the Department to verify for the AN Seller that the
prospective AN Purchaser is who he/she claims to be and that he/she
possesses a valid AN Registered User Number. The Department is
interested in receiving comments on the information it proposes to
collect for AN Purchaser verification purposes, including specific
comments on potential photo identification document numbers that the
Department may collect, such as driver's license or passport numbers.
The Department considered requiring individuals' Social Security
Numbers in lieu of photo identification document numbers. The
Department believes, however, that photo identification document
numbers are preferable to Social Security Numbers for two significant
reasons. First, photo identification document numbers are typically
contained on physical identification cards that include photographs
that could be visually checked by AN Sellers. Second, use of photo
identification document numbers would minimize the potential privacy
impact on AN Purchasers of having to share their Social Security
Numbers. The Department seeks comments on the costs and benefits of
Social Security Number use.
The Department is also considering requiring AN Sellers to enter
additional information into the Purchaser Verification Portal, such as
each quantity of ammonium nitrate sold or transferred and each
prospective AN Purchaser's proposed use of the ammonium nitrate to be
procured. Such additional information could help strengthen the AN
Purchaser identification process and facilitate the performance of
compliance audits and inspections, and would generally help to prevent
the misappropriation or use of ammonium nitrate in acts of terrorism.
Comments on the utility of collecting additional information, as well
as the types of information that it may be worthwhile for the
Department to collect, are welcome.
The Department proposes that information entered into the Purchaser
Verification Portal will be transmitted to the Department which, upon
receipt, will check the information against the AN Registered User
records maintained by the Department. The Department would
electronically notify the AN Seller of the result once the Department
(1) verifies or disaffirms the prospective AN Purchaser's identity
(i.e., determines whether the identifying information provided matches
the information submitted in the prospective AN Purchaser's AN
Registered User Number application), if appropriate, (2) verifies that
the prospective AN Purchaser's AN Registered User Number is current and
authentic (i.e., matches the AN Registered User Number assigned to the
prospective AN Purchaser), and (3) verifies that the prospective AN
Purchaser has listed his/her agent with the Department as authorized to
act on his/her behalf, if appropriate.
To support recordkeeping requirements, the Department is
considering providing to the AN Seller, along with its web verification
notice, a confirmation number and/or printable web verification notice
record receipt. For recordkeeping requirements, see sections III.C.4-8.
Comments on the utility, benefits, and costs of providing either a
confirmation number or printable record receipt via the Purchaser
Verification Portal are welcome.
The Department proposes that if the Department notified an AN
Seller that the identity and AN Registered User Number of a prospective
AN Purchaser were verified, then the AN Seller would proceed with the
second portion of the identity verification--a visual check of the
identification document of the individual taking possession of the
ammonium nitrate (i.e., the AN Purchaser or, where applicable, his or
her agent).
If the Department were to discover that either (1) the prospective
AN Purchaser's identity does not match the information of record for
the given AN Registered User Number, or (2) the AN Registered User
Number provided by the prospective AN Purchaser is not current and
authentic, then the Department would issue a notice to the AN Seller
indicating that the sale or transfer of ammonium nitrate to the
prospective AN Purchaser is not authorized. The Department anticipates
that the confirmation or denial notice resulting from the web
verification process will typically be sent to and received by the AN
Seller quickly, much like how merchants receive approval or denial
notices prior to authorizing purchases via credit card.
As mentioned earlier, the Department is aware that sales and
transfers of ammonium nitrate occur in many different ways, and that AN
Facilities' varying ammonium nitrate sales procedures can impact the
timing and performance of verification activities. Depending on the
structure of the transaction, the manner in which the AN Seller goes
about verifying the prospective AN Purchaser's identity, AN Registered
User Number, and use of an agent may vary. In all cases, DHS proposes
that the AN Seller will complete these verifications prior to
transferring possession of ammonium nitrate.
The Department welcomes public comment on the overall
effectiveness, propriety, benefits, and costs of these Purchaser
Verification Portal identity and registration verification mechanisms,
and also welcomes public comment on or suggestion of potential
alternative methods for identity and registration verification.
12. Purchaser Verification Call Center
The second option the Department is considering is to develop a
Purchaser Verification Call Center. The overall principle behind a call
center verification system is similar to the principle behind the
Purchaser Verification Portal--that is, a prospective AN Purchaser's
identity (for sales involving an agent) and possession of a current and
authentic AN Registered User Number could be verified quickly prior to
the transfer of possession of ammonium nitrate through use of a call
center verification system. Under this approach, AN Sellers would call
a toll-free phone number established by the Department where they would
either talk to a person or be led through a series of telephone tree
menus. During the phone call, each AN Seller would be expected to
provide, at a minimum, his/her name, his/her AN Registered User Number,
and the prospective AN Purchaser's name, AN Registered User Number,
and, for sales involving an agent, the AN Purchaser's photo
identification document number. The Department is also considering
requiring or enabling AN Sellers to provide additional information,
such as the quantity and intended use of the ammonium nitrate being
sold or transferred. The operator or automated telephone system would
enter the information provided into the Department's Registered User
database system, wait for electronic confirmation, and then provide
verbal confirmation to the caller along with a confirmation number for
that specific transaction.
A call center may be preferable to a web portal, as presumably all
AN Facilities have telephones while not all AN Facilities have
computers with Internet access, particularly at the point of sale.
There are some potential disadvantages, though, including the
likelihood that the call center approach would take more time per
transaction than the web portal approach, and that it would be
significantly more costly for the Department to establish and operate a
call center.
[[Page 46932]]
13. Purchaser Verification Portal and Call Center
A third option is for the Department to establish both a Purchaser
Verification Portal and a Purchaser Verification Call Center. This is
the approach the Department is proposing in sections 31.305 and 31.310.
This approach is identical to the Purchaser Verification Portal option
described above, integrated with the Purchaser Verification Call Center
option. The advantage of this alternative is that all AN Facilities
would be accommodated--those with telephone access only and those with
both telephone and Internet access who find the verification web portal
option more efficient. This approach, however, would be the most costly
of the alternatives for the Department to establish and operate.
As indicated in sections 31.305 and 31.310 of the proposed rule,
DHS proposes that as part of the verification processes described in
section III.C of this NPRM, AN Purchasers and/or AN Agents will be
required to provide information to AN Facilities in order to enable use
of the Purchaser Verification Portal or the Purchaser Verification Call
Center. DHS will require AN Facilities to notify the AN Purchasers and
AN Agents providing this information about why it is collected. DHS
will also require AN Facilities to notify AN Purchasers and AN Agents
that the information they provide may be shared with DHS. DHS seeks
public comment on how such notifications should be carried out.
The Department welcomes public comment on the overall effectiveness
and propriety of these alternative identity and registration
verification mechanisms, and also welcomes public comment on or
suggestion of potential alternative methods for identity and
registration verification.
14. Suspicious Purchases and Attempted Purchases of Ammonium Nitrate
Subtitle J encourages AN Sellers to be wary of suspicious purchases
and attempted purchases of ammonium nitrate. See 6 U.S.C. 488c(c)(1)
and 6 U.S.C. 488f. To this end, Subtitle J encourages AN Sellers to
exercise their commercial rights to deny the sale or transfer of
ammonium nitrate to prospective AN Purchasers when prospective AN
Purchasers attempt to purchase ammonium nitrate under ``suspicious''
circumstances. See 6 U.S.C. 488f. Furthermore, Subtitle J encourages AN
Sellers to contact law enforcement entities, as appropriate, in
response to ``suspicious'' purchases or ``suspicious'' attempted
purchases. See 6 U.S.C. 488c(c)(1)(A). Moreover, Subtitle J provides
that if an AN Seller refuses to sell or transfer ammonium nitrate to
any person, or in good faith discloses to the Department or appropriate
law enforcement authorities the actual or attempted purchase or
transfer of ammonium nitrate, based on a reasonable belief that the
person seeking to purchase or transfer ammonium nitrate may use the
ammonium nitrate to create an explosive device to be employed in an act
of terrorism or for another unlawful purpose, the AN Seller shall not
be liable in any civil action relating to that refusal to sell or that
disclosure. See 6 U.S.C. 488f(a).
To assist AN Sellers in determining what a ``suspicious''
circumstance is and what appropriate responsive actions are, Subtitle J
requires the Department to issue guidance addressing ``suspicious''
circumstances. See 6 U.S.C. 488c(c)(1). The Department will issue such
guidance, along with other statutorily required guidance, along with
the final rule implementing the Ammonium Nitrate Security Program. The
Department welcomes public comment on topics to be addressed in this
guidance, including comment on ``suspicious'' purchases and attempted
purchases. The Department also welcomes public comment on the formats
in which its guidance materials should be published and the means of
dissemination of guidance materials.
D. Recordkeeping (See Sections 31.315 and 31.515 of the Proposed Rule)
1. Overview
Pursuant to Subtitle J, AN Facilities must maintain records of each
sale or transfer of ammonium nitrate for a two-year period beginning on
the date of that sale or transfer. See 6 U.S.C. 488a(e)(1). AN
Facilities must take reasonable actions to ensure the protection of the
information included in such records. See 6 U.S.C. 488a(e)(3). 6 U.S.C.
488b authorizes DHS to inspect and audit AN Facility records for the
purpose of monitoring compliance with Subtitle J or for the purpose of
deterring or preventing the misappropriation or use of ammonium nitrate
in acts of terrorism.
2. Entities Responsible for Keeping Records
Pursuant to Subtitle J and section 31.315(a) of the proposed rule,
AN Facility Representatives must ensure that records of each sale or
transfer of ammonium nitrate are maintained. See 6 U.S.C. 488a(e)(1).
As discussed above, the Department is aware that there are many types
of facilities selling or transferring ammonium nitrate, including but
not limited to corporations, partnerships, cooperatives, and sole
proprietorships. For many of these organizational forms, it may not be
reasonable to expect an AN Facility Representative to be engaged in or
have direct oversight over recordkeeping at the AN Facility. In
recognition of this, the Department is proposing that while a
facility's AN Facility Representative or Representatives would be
responsible for their AN Facility's compliance with the proposed rule's
recordkeeping requirements, any facility employee, regardless of
whether or not he/she is a registered AN Seller, could perform
recordkeeping activities on behalf of the facility. The Department,
however, is proposing in sections 31.315(d) and (e) to require each AN
Facility Representative to ensure that his/her facility maintains
records in compliance with the rule. DHS welcomes public comment on the
propriety and effect of this proposal.
AN Purchasers are under no obligation to maintain records pursuant
to Subtitle J.
3. Records To Be Kept
For each sale or transfer of ammonium nitrate, the Department is
proposing in section 31.315(a) of the proposed rule to require that the
records kept by the AN Facility include the date of sale/transfer; form
and amount of payment; quantity of ammonium nitrate sold/transferred;
type of packaging; delivery location; the name, address, telephone
number, AN Registered User Number, and photo identification document
information of the AN Purchaser to whom it was sold/transferred; and,
if the AN Purchaser uses an agent at the point of sale, the name,
address, telephone number, and photo identification document
information of the agent acting on behalf of the AN Purchaser.
In addition to keeping records containing the information listed
above, DHS proposes to require AN Facilities to maintain records
related to the verification of a prospective AN Purchaser AN Registered
User Number's currency and authenticity, and verification of a
prospective AN Purchaser's and (where applicable) agent's identity.
These requirements are discussed in sections 31.315(a)(8) and (9) of
the proposed rule. Such requirements are important to allow the
Department to monitor compliance under the regulations, to deter or
[[Page 46933]]
prevent the misappropriation or use of ammonium nitrate in acts of
terrorism, and to support the investigation of reported theft or loss
of ammonium nitrate. The Department welcomes comment on the benefits
and costs of maintaining records regarding the AN Purchaser (and, where
applicable, agent) verification process.
In addition to the proposed records requirements discussed above,
the Department also is considering requiring AN Facilities to keep
photocopies of each individual AN Purchaser's or agent's photo
identification document and/or printouts of the Department's electronic
verification of the authenticity and currency of each individual's AN
Registered User Number (if the Department decides to use the Purchaser
Verification Portal). The Department is interested in receiving public
comment regarding what types of records should be considered adequate
records for the purpose of showing completed verification activities,
as well as what the costs and benefits of generating and maintaining
these records would be.
In addition to transaction records and verification records, there
are a variety of other records that may be necessary for AN Facilities
to maintain in order to support compliance monitoring by the
Department. These include: (1) Maintenance by each AN Facility of
copies of the AN Registered User Number certificates of the AN Facility
Representatives, Designated AN Facility POC, and/or all other AN
Sellers employed by the facility (note, this presumes that the
Department does in fact decide to issue approved applicants
certificates along with their AN Registered User Numbers); (2) copies
of reports of theft or loss made to the Federal Government pursuant to
Subtitle J; (3) any reports showing the reconciliation of sales/
transfers and inventory; and (4) any orders or other correspondence
issued by the Department to an AN Facility regarding activities
regulated by Subtitle J. These records all may have value in monitoring
compliance with the regulations or in deterring or preventing the
misappropriation or use of ammonium nitrate in acts of terrorism. The
Department is considering requiring AN Facilities to maintain these
records, and welcomes public comment on the value of each and the costs
associated with each.
As indicated in sections 31.315(b) and (c) of the proposed rule,
DHS proposes that as part of ammonium nitrate sales or transfers AN
Purchasers and/or AN Agents will be required to provide some of the
information listed in this section of the NPRM to AN Facilities in
order to enable facility recordkeeping. DHS will require AN Facility
personnel to notify the AN Purchasers and AN Agents providing this
information about why it is collected. DHS will also require AN
Facility personnel to notify AN Purchasers and AN Agents that the
information they provide may be shared with DHS. DHS seeks public
comment on how such notifications should be carried out.
4. Length of Retention of Records
Subtitle J provides that each record of sale or transfer of
ammonium nitrate must be maintained by the relevant AN Facility for at
least two years from the date of the transaction that generates that
record. See 6 U.S.C. 488a(e)(1)(A). For consistency purposes, in
section 31.315(d) of the proposed rule the Department proposes that an
AN Facility would be required to maintain for two years all records
required under this rule. The Department seeks comments on this
proposal.
5. Format and Storage of Records
Pursuant to 6 U.S.C. 488a(e)(3), and as proposed in section
31.315(e), an AN Facility must take ``reasonable actions'' to ensure
protection of the information included in records maintained pursuant
to Subtitle J. Subtitle J, however, does not explicitly prescribe any
format or storage requirements. In an effort to minimize the burden on
regulated AN Facilities and to provide flexibility to allow AN
Facilities to leverage existing recordkeeping efforts to meet this
regulatory requirement, the Department proposes allowing AN Facilities
to choose methods of records storage for themselves. The Department is
considering, however, providing AN Facilities the capability to create
and maintain appropriate records in the web-based Purchaser
Verification Portal. This would give AN Facilities the opportunity to
use the portal to store their records, but would not require them to do
so. The Department welcomes comments on this proposal.
DHS proposes that AN Facilities be allowed to maintain records in
paper or electronic format, and that AN Facilities may use whatever
template or form they choose for individual records. An AN Facility
simply would be required to ensure that its records contain all of the
data required by the final rule implementing the Ammonium Nitrate
Security Program, and to make the records available for inspection by
DHS officials as described in section 31.515 of the proposed rule. DHS
proposes that each AN Facility be required to make records available
within the specified timeframes, and to take reasonable actions to
protect the records. The Department proposes allowing an AN Facility to
maintain records onsite or offsite, so long as the records are made
available for inspection when DHS inspectors arrive for inspections
where the AN Facility has received prior notice of the inspection or
within four hours of inspectors' arrivals for unannounced inspections.
The Department also proposes giving AN Facilities flexibility to
determine what constitutes ``reasonable actions'' for ensuring the
protection of records, and is considering defining ``reasonable
actions'' as actions commensurate with the actions that an AN Facility
would take to secure sensitive or confidential business records.
Typical actions could include storage in locked file cabinets for paper
recordkeeping or password-protecting files for electronic
recordkeeping.
The Department welcomes public comment on the proposed record
formatting options, security standards, and production timeframes, as
well as any potential alternative approaches or additional requirements
the Department should consider.
E. Reporting of Theft or Loss of Ammonium Nitrate (See Sections 31.400-
31.405 of the Proposed Rule)
1. Overview
Pursuant to Subtitle J, any AN Facility Representative who has
knowledge of theft or unexplained loss of ammonium nitrate is required
to report such theft or loss to Federal law enforcement authorities
within 24 hours of the time at which knowledge of theft or loss is
acquired. See 6 U.S.C. 488d. The Department additionally encourages all
other individuals who have possession of or control over ammonium
nitrate to report any thefts or unexplained losses of ammonium nitrate
of which they become aware. Voluntary reporting is provided for in
section 31.405(b) of the proposed rule.
2. Who Must Report Theft or Loss
Although any employee at an AN Facility may report a theft or loss
of ammonium nitrate, DHS proposes in section 31.400 that it will be the
responsibility of each facility's AN Facility Representatives to ensure
that theft or loss from the facility is reported in a timely fashion.
Additionally, while there is no legal requirement for AN Purchasers or
agents acting on their behalf to report thefts or unexplained losses of
ammonium nitrate, the Department encourages them to do so
[[Page 46934]]
using the same procedures that AN Facility personnel would use.
3. Level of Theft or Loss Warranting Reporting
Any time an AN Facility Representative or any other individual
employed by an AN Facility comes to believe that a theft of ammonium
nitrate has occurred, AN Facility Representatives would be responsible
for ensuring that that theft is reported using the procedures set forth
in section 31.400. Determining when to report a loss, however, is not
as straightforward a proposition, because it is typical for small
percentages of bulk ammonium nitrate to be ``lost'' as part of normal
bulk ammonium nitrate industrial and shipping business practices. While
individually such losses may tend to be de minimis, in the aggregate
they may amount to large amounts of lost ammonium nitrate. The
Department seeks not to unduly burden individuals involved in the
manufacturing, storage, transportation, or use of bulk ammonium
nitrate, but on the other hand does seek to impose loss reporting
requirements which will aid in preventing misappropriation of ammonium
nitrate. Accordingly, the Department proposes to require that AN
Facility Representatives ensure that losses of ammonium nitrate from
their facilities be reported using the procedures described below when
those losses deviate from the amount of loss that typically occurs
during routine production, storage, transportation, or use of ammonium
nitrate.
The Department seeks public comment on its proposed approach to
defining the circumstances under which a theft or loss would be
required to be reported and whether the theft/loss reporting
requirements should apply only to theft or loss of ammonium nitrate
above a minimum threshold amount. If a minimum threshold amount should
apply, the Department is also interested in receiving comments
addressing the level at which this amount should be set. The Department
is particularly interested in public comments addressing how theft/loss
reporting requirements should vary, if at all, based on AN Facility
business size or other AN Facility business characteristics.
4. Process for Reporting Theft or Loss
The Department proposes in section 31.405(a) to require reporting
of theft/loss to ATF. The Department will coordinate with ATF to ensure
proper tracking and coordination of reported ammonium nitrate thefts
and losses; however, ATF, not the Department, will conduct appropriate
law enforcement actions in response to theft/loss reporting, due to
ATF's unique explosives-related law enforcement mission.
The Department welcomes public comment on this proposal to leverage
ATF's theft/loss reporting and response capabilities, and welcomes
public comment on potential alternative reporting mechanisms. The
Department also welcomes public comment on the information to be
required as part of each theft/loss report. The Department proposes to
require that each theft/loss report be made to ATF in a manner
prescribed by DHS after consultation with ATF, and contain information
similar to that currently required by ATF for reports of theft or loss
of explosives. This likely would involve modified versions of the
process and tools established by ATF in support of the ATF regulations
regarding the reporting of theft or loss of explosive materials. See
generally 27 CFR 555.30. ATF requires reporting of the theft or loss of
explosives by telephoning a nationwide toll free number, followed up
with submission to ATF of a completed form detailing the incident. The
Department would work with ATF to determine the appropriate information
to be reported and the proper template for a form specific to reporting
the theft or loss of ammonium nitrate. The Department welcomes public
comment on this proposed approach for reporting theft and loss of
ammonium nitrate, and also welcomes public comment addressing any
potential alternative approaches or additional requirements the
Department should consider.
Although there is no statutory requirement for AN Facility
Representatives or other registered individuals who have knowledge of
thefts or unexplained losses to report such incidents to local law
enforcement, the Department encourages AN Facilities and individuals to
do so in addition to reporting the theft or loss to ATF.
F. Inspections and Audits (See Sections 31.500-31.515 of the Proposed
Rule)
Subtitle J states that DHS ``shall establish a process for the
periodic inspection and auditing of the records maintained by owners of
ammonium nitrate facilities for the purpose of monitoring compliance *
* * or for the purpose of deterring or preventing the misappropriation
or use of ammonium nitrate in an act of terrorism.'' See 6 U.S.C. 488b.
As part of these inspections and audits, the Department proposes to
inspect and audit the records required to be maintained under the
``recordkeeping'' requirements of the final rule implementing the
Ammonium Nitrate Security Program. (See section III.D of this NPRM for
discussion of proposed recordkeeping requirements.) The Department
welcomes public comment on the types of records and other items or
activities it should review during inspections or audits.
The Department proposes to conduct inspections at AN Facilities
and/or any other locations where records subject to the inspection/
audit requirements are located. The Department also proposes that it
conduct inspections during AN Facilities' regular business hours except
when warranted by exigent circumstances. The Department welcomes public
comment on inspections, including comments addressing how often
inspections should be undertaken.
Generally speaking, the Department will provide an AN Facility, via
its Designated AN Facility POC, with a minimum of 24 hours notice prior
to conducting an inspection or audit, as proposed in section 31.505(a).
The Department, however, proposes to reserve the right to conduct
audits or inspections without prior notice when warranted by exigent
circumstances or when delay in conducting an inspection might be
seriously detrimental to security, as described in sections
31.505(a)(1) and (2). Such inspections, conducted without prior notice,
will require approval by a supervisory manager at DHS.
The Department has also considered not providing notice prior to
conducting inspections or audits in order to align with inspections
processes carried out by other agencies, such as ATF. The Department
welcomes comments addressing how much notice, if any, should be
provided to AN Facilities prior to inspections or audits, including
comments addressing whether the Department should align its notice
procedures with ATF's (or with any other entity's) notice procedures.
When prior notice of an inspection has been provided to an AN
Facility, DHS expects that the facility will have all records required
to be maintained by this rule available for review/inspection/audit at
the time of arrival of inspectors, as proposed in section 31.515(a). In
cases where the Department has initiated an inspection or audit without
giving an AN Facility prior notice, the facility will be expected to
make all records required to be maintained by the final ammonium
nitrate rule available to inspectors within four hours of receipt of an
inspector request to review/inspect/
[[Page 46935]]
audit such records, as proposed in section 31.515(b).
Inspections and audits would be conducted by DHS personnel or by
other Federal, State, local, or tribal government personnel authorized
to perform AN Facility inspections pursuant to this rule. The
Department may conduct remote inspections and audits in addition to in-
person inspections and audits, as proposed in sections 31.500(b),
31.505(b), and 31.515(c)-(d). The Department welcomes comments and
suggestions as to when a remote inspection would be reasonable, cost
effective, and of benefit to AN Facilities or the Department.
G. Guidance Materials and Posters
Under Subtitle J, the Department is required to develop and provide
to members of the regulated community several types of guidance
documents and materials. First, 6 U.S.C. 488a(i)(4)(C) requires the
Department to issue to any individual who is denied an AN Registered
User Number guidance on the procedures for appealing that denial.
Second, 6 U.S.C. 488c(c)(1) requires the Department to make available
to owners of AN Facilities guidance on the identification of suspicious
ammonium nitrate purchases, transfers, attempted purchases, and
attempted transfers, as well as guidance on appropriate actions to be
taken by AN Facilities with respect to such suspicious activities.
Additionally, 6 U.S.C. 488c(c)(3) requires the Department to make
available materials suitable for posting at locations where ammonium
nitrate is sold that notify prospective AN Purchasers of Subtitle J's
recordkeeping requirements and the penalties for violating those
requirements.
As the procedures and requirements that will be detailed in these
materials are to a large degree dependent on the final rule for
Subtitle J, the Department is still gathering information, input, and
data, which it will use to assist in developing these guidance
materials and posters. It is the Department's intent to work with the
regulated community to determine appropriate content and means of
dissemination for these guidance materials and posters. The Department
welcomes comments from the public on these matters.
H. Civil Penalties, Civil Penalty Adjudications, and Civil Penalty
Appeals (See Sections 31.600-31.735 of the Proposed Rule)
This section discusses proposed requirements for adjudication and
appeal procedures for the issuance and assessment of civil penalties by
the Department under Subtitle J. An earlier section of this NPRM,
section III.B.14, discusses proposed appeal rights and procedures for
persons denied AN Registered User Numbers and for persons whose AN
Registered User Numbers are revoked under Subtitle J. These two sets of
procedures are mutually exclusive; the Department proposes that civil
penalty adjudications and appeals would be governed only by the
mechanisms described in this section, while registration and revocation
appeals would be governed only by the appeals mechanisms described in
section III.B of this NPRM.
The reason for this mutual exclusivity is because registration
denials and revocations are fundamentally different from imposition of
civil penalties under the Department's proposed rule. Under the
Department's proposal, individuals or other entities will only be
issued civil penalties for violating the rules of the Ammonium Nitrate
Security Program. Individuals or other entities will not be issued
civil penalties for having their registrations denied or revoked.
Adjudication or appeal of civil penalties will thus involve assessment
of whether or not individuals or other entities have violated the final
Ammonium Nitrate Security Program rules. On the other hand, appeal of
denial or revocation of registration numbers will involve review of the
completeness and accuracy of registration applications, and review of
TSDB vetting results and national security interests if applicable. The
adjudication and appeal procedures listed in this section of the NPRM
are intended to enable reviews of civil penalties and of alleged
regulatory violations, while the appeal procedures listed in section
III.B are intended to enable reviews of registration application
denials and revocations of registration numbers.
The Department is authorized to assess civil penalties against
persons violating the rules promulgated under Subtitle J. See 6 U.S.C.
488e(b). In section 31.600, the Department proposes that, upon becoming
aware of regulatory violations, the Department would authorize and
order civil penalties of up to $50,000 per regulatory violation against
violating persons and entities much in the same way as the CFATS rules
enable it to authorize and order civil penalties against chemical
facilities violating CFATS. Specifically, the Department proposes to
issue Orders Assessing Civil Penalty against persons (and, as
appropriate, against entities owning or operating AN Facilities) for
violating these rules. The Department proposes in section 31.700(a)
that subject persons/entities shall have the option of initiating
adjudicatory proceedings to challenge the propriety of the Department's
determinations. The Department also proposes in section 31.735(a) that
subject persons/entities may appeal adverse adjudication decisions. The
Department welcomes public comment on these mechanisms, and welcomes
suggestions of possible alternatives or modifications to them.
Subtitle J requires the Department to consider a number of factors
in issuing and setting the amounts of civil penalties against persons
violating Subtitle J and its implementing regulations. See 6 U.S.C.
488e(c). The Department proposes to consider the factors listed in
section 31.605, among other factors as justice requires, in issuing and
setting the amounts of civil penalties. The Department welcomes public
comment on additional factors that it should consider in issuing and
setting civil penalties, and also welcomes public comment on the size
of the civil penalties it should issue for different types of
regulatory violations.
Subtitle J also requires the Department to afford each person
potentially subject to civil penalties the opportunity to defend
himself in an administrative hearing to be held ``in the county,
parish, or incorporated city of residence of that person.'' See 6
U.S.C. 488e(d). As such, the Department proposes in section 31.725(b)
to conduct all hearings and adjudications in the counties, parishes, or
incorporated cities of residence of the persons or entities seeking
those hearings and adjudications, unless those persons or entities
waive this right. The Department believes that it may be more
expeditious, from time to time, for the Department and for subject
persons to conduct hearings and adjudications elsewhere, or to conduct
them via teleconferencing or videoconferencing, and accordingly thinks
it economical to all to offer subject persons this option. The
Department welcomes public comment on the efficiency of allowing
subject persons to waive the statutory right to local hearing and
adjudication.
I. Consultation Requirements
6 U.S.C. 488a(g) requires the Department to ``consult with the
Secretary of Agriculture, States, and appropriate private sector
entities, to ensure that the access of agricultural producers to
ammonium nitrate is not unduly burdened.'' Similarly, 6 U.S.C. 488a(b)
requires the Department to consult ``with the heads of appropriate
Federal departments and agencies (including the Secretary of
Agriculture)'' when establishing a threshold
[[Page 46936]]
percentage for ammonium nitrate in a substance. Finally, in 6 U.S.C.
488a(i)(4)(B), Congress directed the Department to consult with
appropriate stakeholders when developing the process for appealing the
denial of an application for an AN Registered User Number.
During the development of this NPRM, the Department has identified
relevant points of contact for consultation purposes within numerous
Federal, State, and private sector entities. For example, the U.S.
Department of Agriculture (USDA) assisted the Department with gaining a
better understanding of the potentially affected population, and with
understanding how agricultural users acquire and use ammonium nitrate.
The Explosives Unit at the FBI provided substantial insight into the
detonability of ammonium nitrate and mixtures containing ammonium
nitrate. The Office of Enforcement Programs and Services at ATF
outlined how ATF regulates ammonium nitrate and ammonium nitrate
explosive mixtures as well as how ATF manages the reporting of theft or
loss of explosives. The Department also met with State fertilizer
control officials from over a dozen States who provided significant
insight into how ammonium nitrate is used within their States and how
they currently regulate ammonium nitrate. The Department also held
listening sessions with numerous industry associations representing
members of the likely regulated community, as well as with individual
producers, distributors, and users of ammonium nitrate.
Subsequent to the release of this NPRM, the Department will
continue to consult with Federal, State, and private sector entities as
it develops the final rule. The Department intends to hold meetings,
open to the public and to Federal and State government entities, at
various locations across the country in order to further consult with
ammonium nitrate stakeholders. The Department intends to publish the
dates, times, and locations of these public meetings in the Federal
Register.
J. Delegation of Authority
The Department may enter into cooperative agreements with USDA or
any State department of agriculture to carry out certain provisions of
Subtitle J. See 6 U.S.C. 488c(a)(1). Subtitle J further requires the
Department, at the request of a governor of a State, to delegate to
that State authority to carry out the administration and enforcement of
select portions of Subtitle J, ``if the Secretary [of Homeland
Security] determines that the State is capable of satisfactorily
carrying out such functions.'' See 6 U.S.C. 488c(b)(2). If the
Department delegates any functions to a State, ``subject to the
availability of appropriations * * * the Secretary shall provide to
that State sufficient funds to carry out the delegated functions.'' See
6 U.S.C. 488c(b)(3).
In regards to delegation of its authority to individual States, the
Department proposes the following process: If a State is interested in
performing the administration and enforcement activities required by
Subtitle J, the governor of the State would submit a written request to
the Department asking for delegation of those authorities and
articulating the State's ability to ``satisfactorily carry out such
functions.'' See 6 U.S.C. 488c(b)(2). Upon receipt of the request, the
Department would evaluate whether the State is ``capable of
satisfactorily carrying out such functions'' and, upon completion of
the evaluation, would provide the State with a written response
informing it of the Department's determination. In order to make a fair
evaluation, the Department is likely to request information from the
State and consult with the State before a final determination is made.
IV. Regulatory Analyses
Changes to Federal regulations must undergo several economic
analyses. First, Executive Order 12866, as supplemented by Executive
Order 13563, Regulatory Planning and Review (58 FR 51735, October 4,
1993; 76 FR 18134, January 18, 2011), directs each Federal agency to
propose or adopt a regulation only upon a reasoned determination that
the benefits of the intended regulation justify its costs. Second, the
Regulatory Flexibility Act of 1980 (5 U.S.C. 601 et seq., as amended by
the Small Business Regulatory Enforcement Fairness Act of 1996)
requires agencies to consider the economic impact of regulatory changes
on small entities. Third, the Trade Agreements Act (19 U.S.C. 2531-
2533) prohibits agencies from setting standards that create unnecessary
obstacles to assess the effect of regulatory changes on foreign
commerce of the United States. In developing U.S. standards, the Trade
Agreements Act requires agencies to consider international trade
standards where appropriate, as the basis of U.S. standards. Fourth,
the Unfunded Mandates Reform Act of 1995 (2 U.S.C. 1531-1538) requires
agencies to prepare a written assessment of the costs, benefits, and
other effects of proposed or final rules that include a Federal mandate
likely to result in the expenditure by State, local, or tribal
governments, in the aggregate, or by the private sector, of $100
million or more annually (adjusted for inflation).
A. Executive Order 12866 and Executive Order 13563: Regulatory Planning
and Review
This proposed rule is an economically significant regulatory action
under Executive Order 12866 as supplemented by Executive Order 13563,
because it could result in the expenditure of over $100 million in any
one year. Accordingly, this proposed rule has been reviewed by the
Office of Management and Budget (OMB). The OMB Circular A-4 Accounting
statement is included in the separate Regulatory Assessment.
A Regulatory Assessment, which more thoroughly explains the
assumptions used to generate the estimated costs and benefits of this
proposed rule, is available in the docket as indicated under the
ADDRESSES section. Interested persons are invited to provide comment on
all aspects of the Regulatory Assessment. Comments that will provide
the most assistance to the Department with the rulemaking include the
economic impact (both long-term and short-term, quantifiable and
qualitative) of the implementation of Subtitle J; the monetary and
other costs anticipated to be incurred by AN Facility Representatives,
AN Sellers, AN Purchasers, and anyone else potentially impacted by
Subtitle J, any distributional effects on U.S. citizens; and the
security benefits of the rulemaking.
Comments containing trade secrets, confidential commercial or
financial information, CVI, or SSI should be appropriately marked and
submitted per the directions in section I of this NPRM (Public
Participation) above.
1. Cost Impacts
DHS estimates the number of entities that purchase ammonium nitrate
to range from 64,950 to 106,200. These entities include farms,
fertilizer mixers, farm supply wholesalers and co-ops, golf courses,
landscaping services, explosives distributors, mines, retail garden
centers, and lab supply wholesalers. The Department estimates between
2,486 and 6,236 entities sell ammonium nitrate, many of which also
purchase ammonium nitrate as well. Entities that sell ammonium nitrate
include ammonium nitrate fertilizer and explosive manufacturers,
fertilizer mixers, farm supply wholesalers and co-ops, retail garden
centers, explosives distributors, fertilizer applicator
[[Page 46937]]
services, and lab supply wholesalers. Individuals or firms that provide
transportation services within the distribution chain may be
categorized as sellers, agents, or facilities depending upon their
business relationship with the other parties to the transaction. The
total number of potentially regulated farms and other businesses ranges
from 64,986 to 106,236 (including overlap between the categories).
The cost of the Ammonium Nitrate Security Program ranges from $300
million to $1.041 billion over 10 years at a 7% discount rate. The
primary estimate is the mean, which is $670.6 million. For comparison,
at a 3% discount rate, the cost of the program ranges from $364.2
million to $1.3 billion with a primary (mean) estimate of $814 million.
The average annualized cost for the program ranges from $43 million to
$148 million (with a mean of $96 million), also employing a 7% discount
rate. The largest cost component of the proposed rule is related to the
point of sale. The point of sale activities account for approximately
55% to 80% of the total program cost. This is followed by registration
activities, recordkeeping, inspections/audits, and reporting theft/
loss.
2. Benefits of the Ammonium Nitrate Security Program
This rule will help secure the nation's supply of ammonium nitrate.
According to a U.S. Department of Justice report, ``[t]he April 19,
1995, bombing of the Alfred P. Murrah Federal Building (Murrah
Building) in Oklahoma City sent shock waves throughout America. The
bombing took its toll in human life and property damage and changed the
community's and the Nation's general sense of safety and security. The
explosion rocked downtown Oklahoma City, reduced the north face of the
Murrah Building to rubble, and dealt extensive damage to each of the
nine floors as they collapsed into the center, pancaking one on top of
the other. When the dust cleared, one-third of the building lay in
ruins. The force of the blast damaged 324 surrounding buildings,
overturned automobiles, touched off car fires, and blew out windows and
doors in a 50-block area. News reports indicated the explosion was felt
55 miles from the site and registered 6.0 on the Richter scale.'' See
``Responding to Terrorism Victims: Oklahoma City and Beyond,'' U.S.
Department of Justice, Office of Justice Programs, Office for Victims
of Crime, October 2000, available at http://www.ojp.usdoj.gov/ovc/publications/infores/respterrorism/executive.html and http://www.ojp.usdoj.gov/ovc/publications/infores/respterrorism/chap1.html.
The attack, which occurred 16 years ago, killed 168 people (167
individuals were killed by the explosion and 1 additional death of an
emergency worker occurred during the rescue and recovery operation) and
an additional 592 people suffered non-fatal injuries. See ``Physical
Injuries and Fatalities Resulting From the Oklahoma City Bombing.''
JAMA, August 7, 1996 Sue Mallonee, RN, MPH; Sheryll Shariat, MPH; Gail
Stennies, MD, MPH; Rick Waxweiler, PhD; David Hogan, DO; Fred Jordan,
MD, pp 382-387available at: http://jama.ama-assn.org/cgi/reprint/276/5/382; http://jama.ama-assn.org/cgi/content/abstract/276/5/382 (estimates
of injuries differ by source; DHS used the detailed JAMA article as it
was based on survey and interview data and has thorough documentation).
There are several key benefits of the Ammonium Nitrate Security
Program proposed rule:
The Ammonium Nitrate Security Program will standardize and
build upon successful industry ``know your customer'' initiatives and
state regulations to prevent the misappropriation of ammonium nitrate.
The Ammonium Nitrate Security Program will provide timely,
accurate vetting of persons wishing to possess and transfer ammonium
nitrate. By requiring individuals to be vetted against the TSDB, known
bad actors may be stopped from legally purchasing ammonium nitrate.
The Ammonium Nitrate Security Program will allow AN
Sellers to identify non-authorized persons and requires them to deny
sale of ammonium nitrate to these persons. By complying with the point
of sale requirements to verify the accuracy and currency of a potential
AN Purchaser's AN Registered User Number and an inspection of his/her
photo identification document, AN Sellers will have the knowledge to
allow or deny sale of ammonium nitrate.
The Ammonium Nitrate Security Program will eliminate gaps
in Federal oversight of ammonium nitrate supplies used in explosives
manufacturing.
To better inform the comparison of the costs of implementing the
ammonium nitrate program in the proposed rule with the benefits to
homeland security it will afford due to reduced risk of successful
terror attack involving ammonium nitrate, DHS performed a break-even
analysis. In this break-even analysis, DHS compared the annualized
costs of the proposed rule to the expected benefits of preventing an
ammonium nitrate based terrorist attack, such as the attack on the
Murrah federal building. In order to estimate the impact of this attack
in dollar terms, DHS must assume a value per statistical life (VSL).
The Department emphasizes this VSL is not an estimate of what a
particular life may be worth, but is only an estimate what one would be
willing to pay to receive a reduction in mortality risk. The Department
is assuming a VSL of $6 million, which is equivalent to saying someone
is willing to pay $6 to receive a one-in-a-million reduction in the
risk of death or $60 to receive a one-in-a-one-hundred-thousand
reduction in the risk of death.
Applying the $6 million VSL to the 168 deaths from the Murrah
attack plus the cost of other expenditures that are directly related to
the attack (such as the cost of replacing the Murrah Building), DHS
estimates the cost to society of the Murrah attack to be approximately
of $1.35 billion (2010 dollars). As this proposed rule is expected to
cost society approximately $95.5 million annually, this proposed rule
would be cost effective if it prevented one terrorist attack similar to
the Murrah building attack every 14.1 years ($1.35 billion attack cost/
$95.5 million annual rulemaking cost). See the Regulatory Assessment in
the public docket for more information on this break-even analysis.
In addition to reducing the possibility of an ammonium nitrate-
based terrorist attack, promulgating this rulemaking provides the
benefit of allowing DHS to comply with the law. Subtitle J states the
``Secretary shall regulate the sale and transfer of ammonium nitrate by
an ammonium nitrate facility [hellip]to prevent the misappropriation or
use of ammonium nitrate in an act of terrorism.'' Section II.A of this
preamble provides a more detailed background discussion of the
regulatory requirements expressly contained in Subtitle J, such as the
registration requirement for certain ammonium nitrate sellers and
purchasers. DHS believes this rulemaking allows the Department to
comply with the regulatory requirements of Subtitle J.
B. Regulatory Flexibility Act
The Regulatory Flexibility Act of 1980 (RFA) establishes ``as a
principle of regulatory issuance that agencies shall endeavor,
consistent with the objective of the rule and of applicable statutes,
to fit regulatory and informational requirements to the scale of the
business, organizations, and governmental jurisdictions subject to
regulation.'' To achieve that principle, the RFA requires agencies to
consider the potential impacts of their rules on small entities. The
RFA covers a wide
[[Page 46938]]
range of small entities, including small businesses, not-for-profit
organizations, and small governmental jurisdictions. Although DHS does
not believe the proposed rule will have a significant economic impact
on a substantial number of small entities, the agency has prepared an
Initial Regulatory Flexibility Analysis (IRFA) for public review and
comment. DHS requests comments on this IRFA and the potential impacts
of the proposed rule on small entities. Below is a summary of the IRFA.
1. Reasons for and Objectives of the Proposed Rule
Reason for the Proposed Rule. Section 563 of the Fiscal Year 2008
Department of Homeland Security Appropriations Act amends the Homeland
Security Act of 2002 and provides DHS with the authority to ``regulate
the sale and transfer of ammonium nitrate by an ammonium nitrate
facility * * * to prevent the misappropriation or use of ammonium
nitrate in an act of terrorism.'' For additional information on the
security hazards presented by the use of ammonium nitrate, see sections
II.D.1 and 2 of this preamble.
Objective of the Proposed Rule. This proposed rule aims to prohibit
a known or suspected terrorist from purchasing or legally acquiring
ammonium nitrate from an AN Facility. Additionally, only individuals
favorably vetted by the Department will be able to legally acquire
ammonium nitrate above the threshold level proposed by this rule.
2. Affected Small Business Population and Estimated Impact of
Compliance
At this time, DHS's preliminary estimate of the number of
establishments that either sell, purchase, or sell and purchase
ammonium nitrate that will be covered by the Ammonium Nitrate Security
Program rules range from 64,986 to 106,236 facilities. This estimate is
DHS's best estimate based on listening sessions with industry
representatives and plant food control officials, consultation with
other Federal agencies and departments (e.g., USDA), and research
across available information provided by industry and governmental
sources. During the ANPRM, DHS did not receive any information on small
nonprofits or small governmental jurisdictions that might be directly
regulated by this rule. However, some of the entity types identified in
the analysis of purchasers are similar to activities that could be
conducted by small nonprofits or small governmental jurisdictions. DHS
believes impacts on small nonprofits or small governmental
jurisdictions would be similar as any other purchaser in this analysis.
DHS invites comments from any small nonprofit or small governmental
jurisdiction that believes it is being directly regulated by this rule.
After AN Sellers and AN Purchasers register with DHS there will be a
better understanding of how many and which specific AN Facilities will
be subject to the requirements under the Ammonium Nitrate Security
Program. Consequently, without the benefit of having the AN Registered
User Number results, it is very difficult to know which AN Facilities
will have to undergo the burden of verifying AN Registered User
Numbers, and maintaining records of transactions involving ammonium
nitrate. In addition, the Department has offered some degree of
flexibility when choosing the method of verifying AN Registered User
Numbers and maintaining records. DHS expects that AN Facilities will
take full advantage of this flexibility in order to minimize the cost
of this proposed rule to their operations.
3. Number of Small Entities That Purchase Ammonium Nitrate
The Small Business Administration (SBA) classifies farms as a small
business if it has receipts less than $750,000. The USDA Census of
Agriculture provides data on the number of farms by economic class
based on the market value of agricultural products sold (excluding
government payments). The next table shows that 94.5% of farms had
receipts of $0.5 million or less; 97.4% of farms had receipts less than
$1.0 million. Thus, it is clear that the majority of farms are small
entities. Comments are requested concerning the provided information.
Number of U.S. Farms by the Market Value of Agricultural Products Sold
[2007]
------------------------------------------------------------------------
Market value of agricultural
products sold ($) Number of farms Percent of total
------------------------------------------------------------------------
Less than $1000................... 499,880 22.7
$1000-$2,499...................... 270,712 12.3
$2500-$5,000...................... 246,309 11.2
$5,000-$9,999..................... 254,834 11.6
$10,000-$24,999................... 274,274 12.4
$25,000-49,999.................... 163,500 7.4
$50,000-$99,999................... 129,124 5.9
$100,000-$249,000................. 149,049 6.8
$250,000-$499,999................. 96,251 4.4
$500,000-$999,999................. 63,567 2.9
More than $1,000,000.............. 57,292 2.6
-------------------------------------
Total Farms................... 2,204,792 100.0
------------------------------------------------------------------------
Source: 2007 Census of Agriculture, USDA (Table 3--page 10).
The next two tables show the primary North American Industrial
Classification System (NAICS) codes, descriptions and SBA definitions
for small entities that purchase ammonium nitrate. This comparison
shows that the majority of businesses likely to purchase ammonium
nitrate are small entities.
[[Page 46939]]
Primary NAICS Codes, Descriptions and Definitions for Small Entities That May Purchase Ammonium Nitrate
[Employee size] *
----------------------------------------------------------------------------------------------------------------
Establishments by employee size
---------------------------------------------------------------------------------
NAICS Description (Subtotal) <
0-4 5-9 10-19 20-99 100-499 499 500+
----------------------------------------------------------------------------------------------------------------
2121......... Coal Mining.... 194 96 100 233 149 772 375
% of total..... 17% 8% 9% 20% 13% 67% 33%
2122......... Metal Mining... 131 39 18 26 21 235 72
% of total..... 43% 13% 6% 8% 7% 77% 23%
2123......... Nonmetallic 1,434 666 603 877 501 4,081 1,743
Mineral Mining
and Quarrying.
% of total..... 25% 11% 10% 15% 9% 70% 30%
325314....... Fertilizer 111 64 56 89 62 382 94
(Mixing Only)
Manufacturing.
% of total..... 23% 13% 12% 19% 13% 80% 20%
42491........ Farm Supplies 2,473 983 673 948 765 5,842 1,901
Merchant
Wholesalers.
% of total..... 32% 13% 9% 12% 10% 76% 25%
42469........ Other Chemical 3,352 1,155 846 1,082 648 7,083 2,405
& Allied
Products
Merchant
Wholesalers.
% of total..... 35% 12% 9% 11% 7% 74% 25%
----------------------------------------------------------------------------------------------------------------
* Totals may be affected by rounding.
Primary NAICS Codes, Descriptions and Definitions for Small Entities That May Purchase Ammonium Nitrate
[Sales size] *
----------------------------------------------------------------------------------------------------------------
Establishments by sales size
---------------------------------------------------------------------------------
NAICS Description <$0.1 $.1-0.5 $0.5-1 $5-10 (Subtotal) < > $10
mill mill mill $1-5 mill mill $10 mill mill
----------------------------------------------------------------------------------------------------------------
213113....... Support 47 98 38 101 16 300 46
services for
Coal Mining.
% of total..... 14% 28% 11% 29% 5% 87% 13%
213114....... Support 19 26 14 20 ......... 79 104
services for
Metal Mining.
% of total..... 10% 14% 8% 11% 0% 43% 57%
213115....... Support 24 47 17 40 8 136 15
services for
Nonmetallic
Mining.
% of total..... 16% 31% 11% 26% 5% 89% 10%
44422........ Nursery, Garden 1,872 5,004 2,675 3,941 830 14,322 3,461
Center, and
Farm Supply
Stores.
% of total..... 11% 28% 15% 22% 5% 81% 20%
56173........ Landscaping 23,993 36,446 6,935 5,095 490 72,959 1,249
Services.
% of total..... 32% 49% 9% 7% 1% 98% 1%
71391........ Golf Courses & 1,172 3,802 2,041 3,333 588 10,936 906
Country Clubs.
% of total..... 10% 32% 17% 28% 5% 92% 7%
----------------------------------------------------------------------------------------------------------------
* Totals may be affected by rounding.
4. Number of Small Entities That Sell Ammonium Nitrate
In addition to regulating AN Purchasers, the proposed rule places
additional burdens on entities that sell ammonium nitrate. These
additional burdens include registration for AN Registered User Number,
verifying AN Purchasers' AN Registered User Number and photo ID at the
point of sale, maintaining records of point of sale transactions for
two years and reporting theft and loss of AN. AN Facilities that are in
the middle of the supply chain from manufacturer to end-use consumer
both sell and purchase ammonium nitrate. The primary NAICS codes,
descriptions, and definitions (both employee size and revenues) for
small entities that sell ammonium nitrate are shown in the next two
tables. The SBA classifies the majority of these AN Facilities as small
entities.
Primary NAICS Codes, Descriptions and Definitions for Small Entities That May Sell Ammonium Nitrate
[Employee size] *
----------------------------------------------------------------------------------------------------------------
Establishments by employee size
---------------------------------------------------------------------------------
NAICS Description (Subtotal) <
0-4 5-9 10-19 20-99 100-499 499 500+
----------------------------------------------------------------------------------------------------------------
325311....... Nitrogenous 46 19 23 15 11 114 31
Fertilizer
Manufacturing.
% of total..... 32% 13% 16% 10% 8% 79% 21%
325314....... Fertilizer 111 64 56 89 62 382 94
(Mixing Only)
Manufacturing.
% of total..... 23% 13% 12% 19% 13% 80% 20%
32592........ Explosives 8 4 10 16 13 51 31
Manufacturing.
[[Page 46940]]
% of total..... 10% 5% 12% 20% 16% 63% 38%
42291........ Farm Supplies 2,473 983 673 948 765 5,842 1,901
Merchant
Wholesalers.
% of total..... 32% 13% 9% 12% 10% 76% 25%
42269........ Other Chemical 3,352 1,155 846 1,082 648 7,083 2,405
and Allied
Products
Merchant
Wholesalers.
% of total..... 35% 12% 9% 11% 7% 74% 25%
----------------------------------------------------------------------------------------------------------------
* Totals may be affected by rounding.
Primary NAICS Codes, Descriptions and Definitions for Small Entities That May Sell Ammonium Nitrate
[Sales size] *
----------------------------------------------------------------------------------------------------------------
Establishments by sales size
----------------------------------------------------------------------- > $10
NAICS Description < $0.1 $.1-0.5 $0.5-1 $5-10 (subtotal) < mill
mill mill mill $1.5 mill mill $10 mill
----------------------------------------------------------------------------------------------------------------
115112....... Soil 509 992 413 395 30 2,339 86
Preparation, 21% 41% 18% 16% 1% 96% 4%
Planting, and
Cultivating.
% of total..... ......... ......... ......... ......... ......... .............. .........
44422........ Nursery, Garden 1,872 5,004 2,675 3,941 830 14,322 3,461
Center, and
Farm Supply
Stores.
% of total..... 11% 28% 15% 22% 5% 81% 20%
----------------------------------------------------------------------------------------------------------------
* Totals may be affected by rounding.
5. Alternatives Considered
The Department considered several alternatives when developing the
Ammonium Nitrate Security Program proposed rule. The alternatives
considered were: (a) Register individuals applying for an AN Registered
User Number using a paper application (via facsimile or the U.S. mail)
rather than through in person application at a local Cooperative
Extension office or only through a web-based portal; (b) verify AN
Purchasers through both an Internet based verification portal and call
center rather than only a verification portal or call center; (c)
communicate with applicants for an AN Registered User Number through
U.S. Mail rather than only through e-mail or a secure web-based portal;
(d) establish a specific capability within the Department to receive,
process, and respond to reports of theft or loss rather than leverage a
similar capability which already exists with the ATF; (e) require AN
Facilities to maintain records electronically in a central database
provided by the Department rather than providing flexibility to the AN
Facility to maintain their own records either in paper or
electronically; (f) require agents to register with the Department
prior to the sale or transfer of ammonium nitrate involving an agent
rather than allow oral confirmation of the agent with the AN Purchaser
on whose behalf the agent is working; and (g) exempt explosives from
this regulation rather than not exempting them. Each of these
alternatives is discussed below.
a. Registration
The Department considered using one or more of three potential
approaches for AN Seller and AN Purchaser registration: paper
applications submitted via facsimile or U.S. Mail; electronic
applications via a web-based portal; or telephone application for a
limited number of applicants. The Department is proposing the use of a
web-based portal--the ``AN User Registration Portal''--as the sole
means for registering to be an AN Purchaser or AN Seller.
1. Registration through Facsimile or U.S. Mail
Paper registration via facsimile or U.S. Mail would require
potential applicants to obtain and fill out an application form and fax
it or mail it to the Department. The Department would then process the
application and communicate the results back to the potential applicant
via facsimile or U.S. Mail.
Registration through facsimile or U.S. Mail would have costs to
both the industry and the Department. For the industry, each
prospective AN Seller or AN Purchaser applying for an AN Registered
User Number would have to spend approximately 45 minutes reading about
the rule and procedures for registration before completing the
registration application. If the application is paper-based, DHS
assumes it will take each applicant about 15 minutes to complete a
paper application, fax or mail it to the Department, and file it for
his or her records. For the Department, supporting paper submission of
application materials via facsimile or U.S. Mail would require the
hiring of staff to manually extract information from the submitted
application form for performance of the TSDB check and submission into
a registered user database maintained by the Department. The paper
application process was not pursued or developed, as the Department
believes that it would result in unacceptably lengthy application
processing times, and unacceptable delays between submission of
applications and receipt of AN Registered User Numbers.
2. Registration Through Local Cooperative Extension Office
During the ANPRM DHS received the suggestion to consider the USDA
extension offices as an application
[[Page 46941]]
method. The USDA provided explanations why this was not feasible.
3. Registration Through the AN User Registration Portal
Through a Department developed website, potential applicants could
apply for an AN Registered User Number online. With the widespread
availability of the Internet, applicants could apply from home, a
public library, or place or employment, for instance. Further, nothing
in the proposed rule would prohibit an AN Facility from providing an
Internet access point to potential applicants for use when applying for
AN Registered User Numbers. Potential applicants would go to the
Department's website and access the AN User Registration Portal. There,
potential applicants would apply online for an AN Registered User
Number and submit their application directly to the Department. The
Department would receive the information, process it, and communicate
back to the applicant via e-mail.
Online registration through a Department developed, operated, and
maintained website would have costs to both the industry and the
Department. Each prospective AN Seller or AN Purchaser applying for an
AN Registration User Number will spend approximately 45 minutes reading
about the rule and procedures for registration before completing the
registration application. If the application is online, the Department
assumes it will take the applicant approximately 15 minutes to find the
website, enter information, submit the information to the Department,
and print and file a copy for his or her records. Both the individual
applicant and government costs are developed in the relevant sections
of the evaluation The Department intends to leverage the Chemical
Security Assessment Tool developed and deployed in support of CFATS,
thus significantly lowering both the initial development costs and the
annual operating and maintenance costs.
The Department is proposing that registration be done through an
online web portal. See section III.B.1 of this preamble. While not
every potential applicant may have personal access to the Internet, the
Internet is widely available, and the Department believes that there
are significant benefits to using an online approach. The benefits to
both the applicant and the Department of an online approach include:
(1) Substantially quicker response from the Department, thereby
minimizing the time during which the applicant would not be able to
purchase or sell ammonium nitrate; (2) the ability for an applicant or
registered user to access, view, update, and manage their personally
identifiable information; (3) and greater control over managing their
participation in the Ammonium Nitrate Security Program, such as ease in
renewing their AN Registered User Number. The Department proposes that
neither paper registration applications nor in person applications at
local Cooperative Extension offices be offered.
Registration Via a Telephone Application Process
The applicant would contact the AN Helpdesk and ask to register
over the phone. The Helpdesk operator would collect all the information
necessary to complete an application for an AN Registered User Number.
The IT system would then route the application as if it were an
application through the web portal. The evaluation of the vetting
against the TSDB would be the same.
Once a decision had been made as to whether or not to approve or
deny an application, the system would identify the response to be
mailed to the applicant. The system would route the information to a
vendor to process the letter. The vendor would print and mail the
letter. The letter would require tracking, signature, certification
(i.e., verification of identify), and next day delivery. DHS would also
require evidence of delivery from the vendor. These are required to
ensure delivery and receipt of the AN Registered User Number to the
correct individual.
DHS is not recommending the telephone option but invites public
comment on the concept. The following tables provide information on the
costs that vary between the recommended web-portal approach and the
phone approach.
Differences Between Alternatives Costs
[$ millions, 10-year total costs, 7 percent discount]
----------------------------------------------------------------------------------------------------------------
Web-portal Phone option Difference
----------------------------------------------------------------------------------------------------------------
Registration Costs..................................... 71.3 20.3 51.0
Federal Costs.......................................... 55.3 81.5 -26.2
All Other Costs........................................ 544.0 540.7 3.3
--------------------------------------------------------
Total Costs........................................ 670.6 642.5 28.1
----------------------------------------------------------------------------------------------------------------
b. Verification
The Department considered three potential approaches to verify a
prospective AN Purchaser; establishing a web-based portal (i.e.,
Purchaser Verification Portal), establishing a call center, and
establishing both capabilities. The Department is proposing to
establish both a web-based portal and call center.
1. Purchaser Verification Portal
Verifying AN Purchaser status through a web-based portal will have
costs to both industry and the Department. The Department will bear the
cost of developing and maintaining the verification portal and related
guidance on its use and proper verification processes. The cost to
industry of this activity is having a computer and access to the
Internet. Beyond that, cost to the industry is the incremental time
spent during an ammonium nitrate transaction to verify the identity and
AN Registered User Number of the prospective AN Purchaser. Accordingly,
the overall cost would depend on the number of ammonium nitrate
transactions that occur and the time it takes to perform a simple
identity check and enter basic AN Purchaser information into the web-
portal. Based upon the detailed data in the evaluation, the following
table summarizes the average costs per transaction.
[[Page 46942]]
Point of Sale Average Cost Summary*
----------------------------------------------------------------------------------------------------------------
Low total High total
estimate estimate Mean
----------------------------------------------------------------------------------------------------------------
Total POS Annual Costs ($)............................. 23,886,565 120,516,567 72,201,566
Purchaser POS Costs ($)................................ 3,488,523 18,112,934 10,800,728
Seller POS Costs ($)................................... 20,398,042 102,403,633 61,400,837
Transactions........................................... 5,486,000 29,340,000 17,413,000
Sellers................................................ 2,486 6,236 4,361
Purchasers............................................. 64,950 106,200 85,575
Transactions/Seller/Week............................... 42.4 90.5 66.5
Transactions/Purchaser/Week............................ 1.6 5.3 3.5
Seller Cost/Transaction ($)............................ 3.7 3.5 3.5
Purchaser Cost/Transaction ($)......................... 0.64 0.62 0.62
----------------------------------------------------------------------------------------------------------------
* Data is for all entities and comes from the detailed evaluation, particularly Tables 9, 10, 26-29, 35-36.
2. Purchaser Verification Call Center
The Department also considered a Purchaser Verification Call
Center. Under this approach, AN Sellers would use a telephone to call a
toll-free phone number established by the Department where they would
either talk to a person or be led through a series of telephone tree
menus. During the phone call, the AN Seller would be expected to
provide information about the AN Purchaser. The operator or automated
telephone system would enter the information provided into the
Department's Registered User database system, wait for electronic
confirmation, and then provide verbal confirmation to the caller along
with a confirmation number for that specific transaction.
Verifying AN Purchaser status through a call center will have costs
to both industry and the Department. The burden to the industry for the
call center option rests upon having a telephone and the time spent
relaying the relevant AN Purchaser information to the call center. The
cost to the Department is the establishment of the call center and
potentially employing staff to standby and field calls regarding AN
purchases.
3. Purchaser Verification Portal and Call Center
The Department proposes to establish both a Purchaser Verification
Portal and a Purchaser Verification Call Center. See section III.C.13.
This approach is identical to the Purchaser Verification Portal
described above, integrated with the Purchaser Verification Call Center
capability. This approach presumably would be the cheapest for the
regulated community as each AN Facility likely would choose to employ
the most cost-effective means of verification; however, it would be the
most costly of the alternatives for the Department to establish and
operate as it would bear the costs associated with the development and
maintenance of both a web verification portal and call center.
When creating a manner in which AN Sellers can verify the required
information on a potential ammonium nitrate purchase by an AN
Purchaser, the Department found both advantages and disadvantages to
each option considered. A call center may be preferable to a web
portal, as presumably all AN Facilities have telephones while not all
AN Facilities have computers with Internet access, particularly at the
point of sale. However, there are some potential disadvantages. For
instance, the call center approach would take more time per transaction
than the web portal approach, and it would be significantly more costly
for the Department to establish and operate a call center. The
advantage of this alternative is that all AN Facilities would be
accommodated--those with telephone access only and those with both
telephone and Internet access who find the verification web portal
option more efficient. As a result, the Department proposes to offer
both online and call center options despite the higher costs to the
Department.
c. Communication With Applicants
The Department must communicate with applicants throughout the
registration process. The Department considered two alternatives to
communicating with applicants: (1) communication by U.S. Mail, and (2)
communication by electronic means. The Department proposes to
communicate with applicants by electronic means.
1. U.S. Mail
The U.S. Mail could act as the communication medium between the
Department and the regulated community. If the U.S. Mail were chosen as
the communication mechanism, the Ammonium Nitrate Security Program
would be paper-based. While there would be some minimal cost to the
industry (e.g., postage), the time to complete paperwork would be
equivalent to the submission of information electronically. The costs
to the Department, however, would be more substantial. The Department
would have to hire or devote staff to process incoming correspondence.
2. Electronic Means
The other option for communication could be by electronic means.
Program communication would occur through e-mail and secure web
portals. The cost to the industry can be broken down to computer and
Internet access. The cost to the Department hinges on developing web
portals and databases to securely store information.
The Department assumes that most applicants have Internet access
with one exception. Based upon information from the USDA, approximately
60% of farms have Internet access. Thus, DHS assumes that in the
agricultural sector, approximately 60% of farms have computers with
Internet access. The Department therefore estimated that 40% of these
individuals will have to travel a short distance to public library, or
other location where access to the Internet is available to apply for
an AN Registered User Number. Further, DHS assumes that for applicants
without Internet access, two trips will be required; one to complete
the AN Registered User Number application, and a second trip after 72
hours to retrieve the e-mail containing the AN User Registration
Number. The Department has assumed farmers without Internet access will
make two trips. The Department assumes that the round trip distance is
50 miles per trip and has used the IRS mileage rate of $0.55 per mile.
DHS assumes the total extra time for each trip will average
approximately one hour each way. Each trip will include an additional
hour for the Internet access and registration. Multiplying 50 miles
times two trips times $0.55 per mile totals $55 per individual for the
two trips associated
[[Page 46943]]
with applying for and receiving an AN Registered User Number.
Additionally, DHS included approximately $1.9 million for farmers who
attempt to make a purchase without knowing about the regulation and
must then make one extra trip. These calculations are detailed in
Tables 11 and 12 in Section 7 of the full evaluation. Because of the
minimal time and effort it takes to apply for and receive an AN
Registered User Number, the Department believes this approach to be a
cost-effective way to prevent misappropriation of ammonium nitrate.
The Department considered using the U.S. Mail as the primary medium
for communication; however, the Department ultimately rejected this
approach due to the additional time it would take to notify applicants
of their AN Registered User Number. The Department also cited the
significant availability of the Internet. Therefore, the Department is
proposing to use electronic means as the primary medium for
communication. Additionally, the Department believes that electronic
communication is more secure and faster than U.S. Mail.
d. Reporting Theft or Loss
The Department considered two alternatives pursuant to Subtitle J,
which requires an AN Facility Representative who has knowledge of theft
or unexplained loss of ammonium nitrate to report such theft or loss to
Federal law enforcement authorities within 24 hours of the time at
which knowledge of theft or loss is acquired. The Department considered
requiring an AN Facility Representative to report to either the
Department or ATF. The Department proposes to require reporting of
theft/loss to ATF.
Under either option, there is a burden to the industry. The cost to
industry of this activity will be the time to gather details and report
the theft or loss of AN. Because of the seriousness of theft or loss of
AN, the total time to report a theft or loss is assumed to include two
hours each for an inventory manager and sales person, plus one hour for
the general manager. This includes the time for the reporter to
organize useful details for law enforcement and conduct a brief
investigation. There will likely be additional time for a necessary
follow-up investigation. Strictly for purposes of this analysis, the
Department assumes that two percent of AN Facilities and AN Purchasers
will report loss or theft once per year. Based on these assumptions,
there will be 88 reports of theft or loss annually, at a total annual
cost to industry of $13,350.
1. ATF Reporting
One of the many responsibilities of ATF is regulating the use of
explosives. Because pure ammonium nitrate does not fall within the
scope of the statutory definition of ``explosives'' set forth at 18
U.S.C. 841(d), it is not subject to ATF's controls on importation,
manufacture, distribution or storage; however, ammonium nitrate
explosive mixtures and ANFO are included in ATF's List of Explosive
Materials. ATF has an existing program for reporting the theft or loss
of explosives. Individuals that discover the theft or unexplained loss
of ammonium nitrate would contact ATF by phone and facsimile and
provide the pertinent information. The costs to the industry for
reporting to ATF the theft or unexplained loss of ammonium nitrate
would be minimal. The costs to the Department would be minimal as well,
unless DHS funded ATF efforts.
2. DHS Reporting
Similar to ATF's method for reporting theft or loss of explosives,
individuals upon discovering the theft or unexplained loss of ammonium
nitrate would contact DHS. The costs to the industry for reporting the
theft or unexplained loss of ammonium nitrate to DHS would be minimal.
The costs to the Department would be greater than when compared to the
ATF reporting requirement. DHS would be required to create and
establish the theft/loss reporting policies, procedures, and
infrastructure.
The Department is proposing to require reporting of theft/loss to
ATF. See section III.E of this preamble. ATF already possesses the
unique experience in collecting and responding to the theft/loss of
explosive related materials. Additionally, DHS wishes to avoid
duplicative efforts at the Federal level.
e. Recordkeeping
The Department considered two options to maintain records: (1)
Mandatory use of a central electronic database, and (2) the flexibility
to maintain records in paper format or in electronic format. The
Department proposes allowing AN Facilities to select the method of
records storage for themselves. See section III.F of this preamble.
The Department selected this alternative because the burden to
submit and maintain electronic records in a central database would
increase the burden on the industry without measurable benefit to the
industry. The benefit would be limited to the confidence an AN Facility
would have, that if it maintained its records in a central database, it
would meet Department recordkeeping requirements.
The costs to industry associated with this alternative are the
costs of the time spent during each transaction collecting and
recording the information required under the regulations, the costs of
the time spent on ongoing recordkeeping activities throughout the year,
and any capital investment costs an AN Facility incurs in acquiring
equipment to facilitate the safe storage of the AN transaction records.
f. Agents
The Department considered three options to minimize the likelihood
that agents are used to circumvent the intentions of Subtitle J.
Specifically, the Department believes it is imperative for AN Sellers
to ensure that an agent is acting at the direction of a registered AN
Purchaser before the AN Seller transfers possession of ammonium nitrate
to that agent. To accomplish this, the Department is considering the
following alternatives:
1. Requiring AN Purchasers to submit the names of their agents to
DHS via the AN User Registration Portal, and requiring the AN Seller to
confirm with DHS, prior to transferring possession of the ammonium
nitrate, that the prospective AN Purchaser has submitted the name of
the agent to DHS;
2. Requiring the AN Seller to orally confirm with the prospective
AN Purchaser prior to each sale that the agent is acting on behalf of
the AN Purchaser;
3. A combination of the first two options, whereby an AN Seller
first should check with DHS to see if the prospective AN Purchaser has
submitted the name of the agent to DHS and, if not, then the AN Seller
must orally confirm with the prospective AN Purchaser that the agent is
acting on his/her behalf. DHS is proposing this third approach.
Under the first approach, each AN Purchaser would be required to
provide to DHS the names of any agents that might act on his/her behalf
at the point of sale. The AN purchaser would submit names of agents to
DHS via the AN User Registration Portal. An AN Purchaser could submit
an agent's name when he/she applies for an AN Registered User Number or
at any other time prior to conducting a purchase involving that agent.
Then, prior to transferring possession of ammonium nitrate to an agent,
an AN Seller would need to verify with the Department that the
prospective AN Purchaser has designated the agent as an approved agent
to represent the AN Purchaser at
[[Page 46944]]
the point of sale. This verification would occur through the same
mechanism that is used for the other prospective AN Purchaser
verification activities (i.e., the Purchaser Verification Portal or the
Purchaser Verification Call Center). The agent's information provided
to the Department by AN Purchasers and AN Sellers would not be vetted
against the TSDB nor otherwise checked by the Department; rather, it
would simply be maintained in the AN Registered User Database as a data
field linked to the AN Purchaser for use in the agent verification
process.
Under the second approach, the Department would require the AN
Seller to verify with the prospective AN Purchaser that the agent is
actually acting on behalf of the prospective AN Purchaser for each
specific transaction. Much like the other verification activities, this
could occur at the time the prospective AN Purchaser places the order,
when the agent arrives to take possession of ammonium nitrate, or any
other time, so long as it occurs prior to the AN Seller transferring
possession of ammonium nitrate to the prospective AN Purchaser's agent.
If this approach were adopted, the Department would propose requiring
this confirmation to occur for each transaction/occurrence in which an
agent is taking possession of ammonium nitrate; a blanket verification
of an agent by an AN Purchaser would not be acceptable. Additionally,
as an e-mail or letter can be easily forged, under this approach the
Department would require that the AN Seller must receive this
verification orally (e.g., in person; telephonically) from the
prospective AN Purchaser.
The third approach--the option the Department is proposing in this
NPRM--is a combination of the first two approaches. Specifically, AN
Purchasers would be expected to provide the Department with the names
of their agent(s), and an AN Seller would be expected to verify either
through the Purchaser Verification Portal or Purchaser Verification
Call Center that the agent information has been provided by the AN
Purchaser to the Department. As opposed to the first approach, under
which a sale cannot occur unless the agent's name has been provided to
the Department by the prospective AN Purchaser, under this third option
the AN Seller would be allowed to complete the sale or transfer after
either (1) verifying the agent has been designated by the prospective
AN Purchaser in the Purchaser Verification Portal or Purchaser
Verification Call Center, or (2) orally confirming with the prospective
AN Purchaser that the agent is acting on the prospective AN Purchaser's
behalf for this individual sale. The Department expects that in the
majority of cases this oral confirmation would occur telephonically.
This third option has the benefit of minimizing the point of sale
impact of the agent verification process, while allowing a means for a
sale or transfer to be completed even if a prospective AN Purchaser
forgets or is otherwise unable to provide the Department with the
agent's name prior to using the agent at the point of sale. For these
reasons, this third approach is the option proposed by the Department.
g. Exemption of Explosives Regulated by ATF
Pursuant to Subtitle J, the Department has the discretion to exempt
from regulation persons producing, selling, or purchasing ammonium
nitrate exclusively for use in the production of explosives under a
license or permit issued under the Federal explosives laws, 18 U.S.C.
Chapter 40, and associated regulations. ATF is responsible for
enforcing Federal explosives laws, and has established regulations for
doing so. The Department is proposing to exempt from regulation
ammonium nitrate mixtures that are ``explosives'' subject to ATF
regulation (i.e., ANFO). The Department also considered two other
approaches. The first option is to apply these rules to individuals who
purchase, sell, or transfer ammonium nitrate for use in the production
of explosives. The other option considered is to entirely exempt from
Subtitle J requirements facilities and persons that purchase, sell, or
transfer ammonium nitrate solely for use in the production of
explosives, as they are already regulated by ATF.
1. Exempt AN Mixtures That Are ``Explosives'' Subject to ATF Regulation
Under this approach, entities and individuals that purchase, sell,
or transfer ANFO, but who do not produce ANFO or possess ammonium
nitrate for other reasons, would be exempt from all Subtitle J
requirements and would be subject solely to ATF regulation. This
approach minimizes cost to the industry as well as the Department.
2. Regulate Individuals Who Purchase, Sell, or Transfer AN for the
Production of Explosives
Under this approach, such individuals would be subject to
regulation by both DHS under Subtitle J and ATF under the Federal
explosives laws. By not exempting ammonium nitrate used in explosives,
DHS would be treating all individuals who purchase, sell, or transfer
ammonium nitrate--whether as part of ANFO mixtures or not--the same.
This approach would ensure that there are no gaps in coverage of
ammonium nitrate as it moves through the supply chain--ammonium nitrate
would be captured under DHS's ammonium nitrate program both before and
after being combined with fuel oil to create ANFO, and would be
captured under ATF's regulations after being combined with fuel oil to
create ANFO. There could potentially be heightened costs to the
industry due to potentially duplicative regulation. The costs to the
Department would hinge upon a greater number of AN Facilities to
regulate.
3. Entirely exempt from Subtitle J requirements facilities and persons
that purchase, sell, or transfer ammonium nitrate solely for use in the
production of explosives
Under this approach, facilities and persons that purchase, sell, or
transfer ammonium nitrate solely for use in the production of
explosives would be entirely exempt from Subtitle J requirements, as
they are already regulated by ATF. In this model, facilities and
persons that are licensed by ATF to mix ammonium nitrate with fuel to
create ANFO which do not purchase, sell, or transfer ammonium nitrate
for other purposes would not be subject to these regulations. This
approach, however, could create a considerable gap in regulatory
coverage throughout the ammonium nitrate supply chain, as ATF
regulations apply solely to ANFO and not the ammonium nitrate used to
create it. The costs to the industry, as well as the Department, would
be low because certain individuals and facilities would not fall under
the regulation.
The Department proposes to exempt from all Subtitle J requirements
entities and individuals that purchase, sell, or transfer ANFO, but who
do not produce ANFO or possess ammonium nitrate for other reasons.
These entities and individuals are regulated by ATF. This approach
avoids duplicative regulation yet it does not create a potential
regulatory gap in the ammonium nitrate supply chain.
6. Average Costs per AN Facility
The largest cost driver is activities related to the point of sale.
While variation in cost by facility is largely driven by the number of
point of sale transactions that each AN Facility conducts, it is
helpful to examine the average cost per AN Purchaser and AN Facility.
The average costs per entity that purchases ammonium nitrate are
presented in the following tables. Both
[[Page 46945]]
the lower and upper bounds of the estimate are provided. In either
case, the highest cost will be for farms without Internet access. The
cost of compliance to AN Purchasers is the time to apply for an AN
Registered User Number with the Department of Homeland Security and
additional time during the purchase. This registration cost averages
$57 to $700 once every five years. DHS believes for even the smallest
farms, other businesses, nonprofits, and small jurisdictions that only
purchase ammonium nitrate, this registration cost does not represent a
significant economic impact. DHS invites comments on this impact,
particularly impacts related to the point of sale costs.
Average Cost per Entity That Purchases Ammonium Nitrate--Low Population/Low Transactions Estimate *
----------------------------------------------------------------------------------------------------------------
Purchaser Purchase Total Average cost
registration Appeals ($) opportunity purchaser Number of per entity
($) cost ($) cost ($) entities ($)
----------------------------------------------------------------------------------------------------------------
Farms with internet access.. 2,079,500 28,100 1,674,500 3,782,100 30,000 126
Farms w/o internet access... 12,998,000 18,700 1,116,300 14,133,000 20,000 707
Golf courses................ 169,000 3,500 334,900 507,400 6,000 85
Landscaping services........ 144,000 2,900 251,200 398,100 4,500 88
Blasting services........... 16,000 200 14000 30,200 300 121
Mines....................... 71,000 1,500 97,700 170,200 1,800 97
-----------------------------------------------------------------------------------
Total................... 15,477,500 54,900 3,488,500 19,020,900 62,500 304
----------------------------------------------------------------------------------------------------------------
* Totals may not add due to rounding.
Average Cost per Entity That Purchases Ammonium Nitrate--High Population/High Transactions Estimate *
----------------------------------------------------------------------------------------------------------------
Purchaser Purchase Total Average cost
registration Appeals ($) opportunity purchaser Number of per entity
($) cost ($) cost ($) entities ($)
----------------------------------------------------------------------------------------------------------------
Farms with internet access.. 3,119,300 42,100 8,150,800 11,312,200 45,000 251
Farms w/o internet access... 19,497,500 28,100 5,433,900 24,959,500 30,000 832
Golf courses................ 339,000 6,900 2,173,600 2,519,500 12,000 210
Landscaping services........ 287,000 5,800 1,630,200 1,923,000 9,000 214
Blasting services........... 33,000 700 90600 124,300 500 249
Mines....................... 142,000 2,800 634,000 778,800 3,500 223
-----------------------------------------------------------------------------------
Total................... 23,417,800 86,400 18,112,900 41,617,100 100,000 416
----------------------------------------------------------------------------------------------------------------
* Totals may not add due to rounding.
The average per AN Facility cost to comply with the proposed rule
ranges from $6,400 for laboratory suppliers (low population/low
transactions scenario) to $23,800 for an explosives distributor (high
population/high transactions scenario).
Average Cost per AN Facility--Low Population/Low Transactions Estimate *
--------------------------------------------------------------------------------------------------------------------------------------------------------
Reg. Point of Reporting Audits/ Total Number of
activities Appeals ($) sale (Web Record- theft/loss inspections seller cost AN Average
($) portal) ($) keeping ($) ($) ($) ($) facilities cost ($)
--------------------------------------------------------------------------------------------------------------------------------------------------------
AN fert. manuf..................... 8,000 0 125,800 43,100 100 2,700 179,700 0 6,900
AN expl. manuf..................... 3,000 0 50,800 17,400 0 1,100 72,400 0 7,200
Fertilizer mixers.................. 83,000 1,700 1,935,500 663,200 1,100 41,500 2,726,000 400 6,800
Explosives dist.................... 102,000 2,100 5,494,500 834,200 1,500 51,600 6,486,000 500 13,000
Farm whol./co-ops.................. 92,000 1,800 4,524,100 742,100 1,600 52,600 5,414,100 500 10,800
Retail garden ctrs................. 72,000 1,300 3,791,900 703,400 1,600 49,200 4,619,400 500 9,200
Fertilizer app..................... 73,000 1,300 4,254,800 717,100 1,400 50,100 5,097,700 500 10,200
Lab. supply........................ 9,000 0 220,700 83,400 100 5,600 318,800 100 6,400
--------------------------------------------------------------------------------------------------------------------
Total.......................... 442,000 8,200 20,398,100 3,803,900 7,400 254,400 24,914,100 2,500 10,000
--------------------------------------------------------------------------------------------------------------------------------------------------------
* Totals may not add due to rounding.
Average Cost per AN Facility--High Population/High Transactions Estimate *
--------------------------------------------------------------------------------------------------------------------------------------------------------
Reg. Point of Reporting Audits/ Total Number of
activities Appeals ($) sale (Web Record- theft/loss inspections seller cost AN Average
($) portal) ($) keeping ($) ($) ($) ($) facilities cost ($)
--------------------------------------------------------------------------------------------------------------------------------------------------------
AN fert. manuf..................... 8,000 0 311,200 43,100 100 2,700 365,100 0 14,000
AN expl. manuf..................... 3,000 0 125,700 17,400 0 1,100 147,300 0 14,700
Fertilizer mixers.................. 123,000 2,600 7,181,800 994,800 1,700 62,200 8,366,000 600 13,900
Explosives dist.................... 202,000 4,200 21,807,900 1,668,500 3,100 103,200 23,788,900 1,000 23,800
[[Page 46946]]
Farm whol./co-ops.................. 184,000 3,400 17,841,300 1,484,200 3,200 105,100 19,621,100 1,000 19,600
Retail garden ctrs................. 357,000 6,000 37,281,300 3,517,200 7,900 246,100 41,415,400 2,500 16,600
Fertilizer app..................... 146,000 2,800 16,764,200 1,434,200 2,900 100,100 18,450,200 1,000 18,500
Lab. supply........................ 19,000 500 1,090,400 166,800 300 11,100 1,288,200 100 12,900
--------------------------------------------------------------------------------------------------------------------
Total.......................... 1,042,000 19,500 102,403,800 9,326,200 19,200 631,600 113,442,200 6,200 18,200
--------------------------------------------------------------------------------------------------------------------------------------------------------
* Totals may not add due to rounding.
7. Identification of Duplication, Overlap and Conflict With Other
Federal Rules
A thorough discussion of the relationship to other rules is
provided earlier in section II.D of this preamble.
C. Executive Order 13132: Federalism
Executive Order 13132 requires DHS to develop a process to ensure
``meaningful and timely input by State and local officials in the
development of regulatory policies that have federalism implications.''
To meet this requirement, the Department has, and will continue to,
consult with State fertilizer control officials, members of the
American Association of Plant Food Control Officials, and others
throughout the development of these regulations. Such consultation is
expressly required by 6 U.S.C. 488a(g). Consultation with the
aforementioned groups has informed the Department on potential
regulatory avenues, and on the use and movement of ammonium nitrate
through its life cycle within the potentially regulated community.
Additionally, the Department is hereby specifically requesting comments
from State and local officials on regulatory policies that have
federalism implications.
Chief among potential federalism implications is preemption of
State ammonium nitrate regulations. As discussed in Part II.D of this
preamble, a number of States currently regulate the security of
ammonium nitrate. Subtitle J explicitly addresses preemption of such
regulations, and ``preempts the laws of any State, to the extent that
such laws are inconsistent with [Subtitle J], except that [Subtitle J]
shall not preempt any State law that provides additional protection
against the acquisition of ammonium nitrate by terrorists or the use of
ammonium nitrate in explosives in acts of terrorism or for other
illicit purposes, as determined by the [Department].'' See 6 U.S.C.
488g(b). The Department specifically seeks comment on the interaction
of the proposed rule with existing State and local laws and
regulations, including comment on any laws that may be inconsistent
with Subtitle J and laws that provide additional protections against
the acquisition of ammonium nitrate or its use in terrorist attacks.
D. Unfunded Mandates Reform Act
The Unfunded Mandates Reform Act of 1995 (UMRA), enacted as Public
Law 104-4 on March 22, 1995, is intended, among other things, to curb
the practice of imposing unfunded Federal mandates on State, local, and
tribal governments. Title II of UMRA requires each Federal agency to
prepare a written statement assessing the effects of any Federal
mandate in a proposed or final agency rule that may result in a $100
million or more expenditure (adjusted annually for inflation) in any
one year by State, local, and tribal governments, in the aggregate, or
by the private sector. The primary cost estimate for this proposed
rulemaking would not impose such an unfunded mandate on State, local,
or tribal governments, but the upper end of the estimate would show an
unfunded mandate in excess of $100 million (adjusted for inflation) on
the private sector. The analysis required under Title II of UMRA is
satisfied by the regulatory impact assessment prepared in conjunction
with this NPRM.
The Department recognizes that some AN Facilities of entities that
purchase ammonium nitrate may be owned by state or local government
entities. These entities would be required to comply with the
provisions of this proposed rule.
Further, under Subtitle J, the Department may enter into
cooperative agreements with the USDA or any State department of
agriculture to carry out the provisions of Subtitle J. See 6 U.S.C.
488c(a)(1). Subtitle J further requires the Department, at the request
of a governor of a State, to delegate to that State the authority to
carry out the administration and enforcement of Subtitle J, if the
Department determines that the State is capable of satisfactorily
carrying out such functions. See 6 U.S.C. 488c(b)(2). If the Department
delegates any functions to a State, subject to the availability of
appropriations, the Department must provide to the state sufficient
funds to carry out those functions. See 6 U.S.C. 488c(b)(3).
The Department proposes the following process for evaluating
requests from governors: If a State is interested in performing the
administration and enforcement activities required by Subtitle J, the
governor of the State must submit a written request to the Department
asking for delegation of those authorities. Upon receipt of the
request, the Department will initiate an evaluation to determine if the
State is capable of satisfactorily performing those functions and, upon
completion of the evaluation, will provide the State with a written
response informing it of the Department's determination. In order to
make a fair evaluation, the Department is likely to request information
from the State and consult with the State before a final determination
is made. Because the responsibility would be transferred only at the
request of the state, and only when funding is available, no unfunded
mandate would be created.
E. National Environmental Policy Act
The Department has analyzed this proposed rule for purposes of the
National Environmental Policy Act of 1969 (42 U.S.C. 4321-4347) under
Department of Homeland Security Directive 023-01--Environmental
Planning Program, and has concluded that this proposed rule comes
within Categorical Exclusion A3 ``promulgation of rules * * * (a) of a
strictly administrative or procedural nature.'' We find no basis for
believing that there are extraordinary circumstances which would
require further analysis; however, we invite comment on this
conclusion.
F. Paperwork Reduction Act
This NPRM contains collection of information requirements under the
Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520). ``Collection of
information,'' as defined in 5 CFR 1320.3(c), includes reporting,
record
[[Page 46947]]
keeping, monitoring, posting, labeling, and other similar actions.
Subtitle J provides DHS with authority to regulate the sale and
transfer of ammonium nitrate. This collection will enable the
Department to ``regulate the sale and transfer of ammonium nitrate by
an ammonium nitrate facility * * * to prevent the misappropriation or
use of ammonium nitrate in an act of terrorism.'' See 6 U.S.C. 488a(a).
This NPRM introduces a new collection with OMB Control Number 1670-
NEW. The Ammonium Nitrate Security Program information collection has
eight new instruments: Ammonium Nitrate Registration; Appeals for
Denial or Revocation of AN Registered User Numbers; Purchaser
Verification; Ammonium Nitrate Helpdesk; Electronic Recordkeeping
Database; Reporting Theft and Loss; Adjudication or Appeal of an Order
Assessing Civil Penalty; and Inspections and Audits.
This NPRM includes a solicitation for comments for a new
information collection, 1670-NEW. Any comments submitted will be
reviewed by DHS and OMB prior to publication of a final rule, and prior
to OMB approval of this new information collection. This NPRM describes
the nature of the information collection, the categories of
respondents, and estimated burdens and costs.
Under the protections provided by the Paperwork Reduction Act, as
amended, an agency may not conduct or sponsor, and a person is not
required to respond to, a collection of information unless it displays
a valid OMB control number. The Department will begin collecting
information as soon as an OMB control number is issued, or as soon as
the mechanism for collecting information is publicly available, or when
the rule implementing the Ammonium Nitrate Security Program becomes
effective, whichever is latest.
Table 1--Estimates of Annualized Burden Hours and Costs
----------------------------------------------------------------------------------------------------------------
Total annual
Number of Responses per Avg. burden Total annual respondent
Instrument respondents respondent per response burden (in cost (in
(in hours) hours) dollars)
----------------------------------------------------------------------------------------------------------------
Ammonium Nitrate Registration... 116,800 1 2.02 235,912 11,114,000
Appeals for Denial or Revocation 223 1 6.00 1,336 49,500
of AN Registered User Numbers..
Purchaser Verification.......... 6,236 4,705 0.08 2,445,001 93,262,600
Ammonium Nitrate Helpdesk....... 248,460 119 0.02 551,114 20,680,100
Electronic Recordkeeping 6,236 4,705 0.02 448,992 8,591,600
Database.......................
Reporting of Theft & Loss....... 125 1 2.80 349 18,300
Adjudication or Appeal of an Less Than 10 N/A N/A N/A N/A
Order Assessing Civil Penalty..
Inspections and Audits.......... 1,559 1 12.00 18,708 621,100
----------------------------------------------------------------------------------------------------------------
Title: Ammonium Nitrate Registration
Summary of Collection of Information: Information is collected
through a web-based portal directly from each applicant who wishes to
apply for an AN Registered User Number. The information collected will
be used to determine if the applicant is eligible for an AN Registered
User Number. Specifically, 6 U.S.C. 488a(i)(2)(A) requires the
Department to conduct a check of identifying information of all
applicants against identifying information that appears in the TSDB.
Consistent with 6 U.S.C. 488a(i)(3)(A) and 6 U.S.C. 488a(i)(3)(B),
to the extent practicable, the Department intends to approve or deny
each registration application, and to issue each AN Registered User
Number, not later than 72 hours after the time DHS receives a complete
registration application. DHS may deny an applicant an AN Registered
User Number if the TSDB indicates that the applicant may pose a threat
to national security. See 6 U.S.C. 488a(i)(2)(B).
As proposed in section 31.215(a), at least one individual who is
designated to act on behalf of a facility for purposes of compliance
with this regulation must (1) apply for an AN Registered User Number,
and (2) register as a Designated AN Facility POC for the AN Facility.
In addition, sections 31.210 and 31.215 would allow any individual who
has an ownership interest in an AN Facility; is designated to act on
behalf of a facility for purposes of compliance with this regulation,
such as, possibly, a site manager, sales manager, or corporate officer;
is involved in the sale or transfer of ammonium nitrate at an AN
Facility, such as a sales clerk or cashier; or performs ammonium
nitrate application services to register as an AN Seller. Sections
31.210 and 31.215 would require that any person who individually
performs a sale or transfer of ammonium nitrate on behalf of an AN
Facility, or who performs ammonium nitrate application services, must
be registered. Pursuant to section 31.205 of the proposed rule, any
person who intends to purchase ammonium nitrate must also be
registered.
Use of: The information collected will be used to (1) conduct a
check of identifying information of applicants against identifying
information that appears in the TSDB, and (2) issue the Department's
approval or denial of each registration application.
Need for Information: The information collected is needed to comply
with section 563 of the Fiscal Year 2008 Department of Homeland
Security Appropriations Act, which requires the Department to issue AN
Registered User Numbers.
Description of the Respondents: DHS anticipates that there will be
an average of 116,800 respondents annually.
Frequency of Response: On occasion.
Annual Burden Estimate: Each respondent is estimated to have a
burden of 2.02 hours to register, update, and subsequently renew his/
her AN Registered User Number. The annual hour burden is estimated to
be 235,912 hours.
Title: Appeals for Denial or Revocation of AN Registered User
Numbers.
Summary of Collection of Information: Individuals who have had
their AN Registered User Numbers denied or revoked may appeal the
Department's denials or revocations, pursuant to section 31.250 of the
proposed rule. Each individual requesting an appeal is required to file
a Request for Materials, a Request for Appeal, and other filings as
necessary.
Use of: The information collected will be used to process appeals.
Need for Information: The Department needs the collected
[[Page 46948]]
information to ensure that all necessary information is collected in
order to process appeals and records correction requests.
Description of the Respondents: DHS anticipates that there will be
an average of 223 respondents annually.
Frequency of Response: On occasion.
Annual Burden Estimate: Each respondent is estimated to have a
burden of 6 hours to complete the necessary filings. The annual hour
burden is estimated to be 1,336 hours.
Title: Purchaser Verification.
Summary of Collection of Information: AN Sellers will be required
to conduct verification of AN Purchaser's identities and AN Registered
User Numbers prior to sales and transfers of ammonium nitrate, as
required by sections 31.305, 31.310, and 31.315 of the proposed rule.
Verification will involve the submission to DHS by AN Sellers of
prospective purchasers' AN Registered User Numbers, of matching
information (e.g., names and drivers' license numbers) from AN
Purchasers' photo identification documents, and of the names of AN
Agents taking possession of ammonium nitrate on behalf of prospective
purchasers. As part of this information collection AN Sellers will also
submit information identifying themselves, including their own AN
Registered User Numbers, to DHS. AN Sellers will submit this
information to DHS through the Purchaser Verification Portal or the
Purchaser Verification Call Center. The Purchaser Verification Portal
or Purchaser Verification Call Center will compare information
submitted as to each AN Purchaser or AN Seller against the information
on record for that AN Purchaser or AN Seller.
Use of: The information collected will be used to conduct
verification of AN Registered User Numbers and of AN Purchasers' and AN
Agents' identities, prior to transfer of ammonium nitrate, as required
by sections 31.305, 31.310, and 31.315 of the proposed rule.
Need for Information: The Department needs the information to
verify that ammonium nitrate is only sold or transferred by individuals
authorized by the Department to individuals authorized by the
Department.
Description of the Respondents: DHS anticipates that there will be
an average of 6,236 respondents annually.
Frequency of Response: On occasion.
Annual Burden Estimate: Each respondent is estimated to have a
burden of 0.08 hours to complete AN Registered User Number
verification. The annual hour burden is estimated to be 2,445,001
hours.
Title: Ammonium Nitrate Helpdesk.
Summary of Collection of Information: The Ammonium Nitrate Helpdesk
will respond to questions from industry and the public.
Use of: The information collected will be used to respond to
questions from industry and the public.
Need for Information: The Department needs to collect the
information from the individuals contacting the Ammonium Nitrate
Helpdesk to respond to their questions.
Description of the Respondents: DHS anticipates that there will be
an average of 248,460 respondents annually.
Frequency of Response: On occasion.
Annual Burden Estimate: Each respondent is estimated to have a
burden of 0.02 hours per AN Helpdesk contact. The annual hour burden is
estimated to be 551,114 hours.
Title: Electronic Recordkeeping Database.
Summary of Collection of Information: To collect information to
support AN Facilities with the recordkeeping requirements proposed in
section 31.315 of the proposed rule.
Use of: The information collected will be used to support AN
Facilities with the recordkeeping requirements proposed in section
31.315 of the proposed rule.
Need for Information: Under section 31.315, AN Facilities would be
required to keep various records. The use of this recordkeeping
instrument, however, is voluntary.
Description of the Respondents: DHS anticipates that there will be
an average of 6,236 respondents annually.
Frequency of Response: On occasion.
Annual Burden Estimate: Each respondent is estimated to have a
burden of 0.02 hours. The annual hour burden is estimated to be 448,992
hours.
Title: Reporting Theft and Loss.
Summary of Collection of Information: To report a theft or loss of
ammonium nitrate, an individual would contact ATF. ATF will collect
information and other details for a report of a theft or loss of
ammonium nitrate, pursuant to sections 31.400 and 31.405 of the
proposed rule.
Use of: The information collected would be used to track and
potentially respond appropriately to the theft or loss of ammonium
nitrate.
Need for Information: The information collected is needed to track
and potentially respond appropriately to the theft or loss of ammonium
nitrate.
Description of the Respondents: DHS anticipates that there will be
an average of 125 respondents annually.
Frequency of Response: On occasion.
Annual Burden Estimate: Each respondent is estimated to have a
burden of 2.8 hours to complete a theft or loss of ammonium nitrate
report. The annual hour burden is estimated to be 349 hours.
Title: Adjudication or Appeal of an Order Assessing Civil Penalty.
Summary of Collection of Information: Pursuant to section 31.700 of
the proposed rule, any person or entity against whom an Order Assessing
Civil Penalty has been issued is entitled to a hearing and
adjudication, by a Presiding Officer, on any issue of material fact
relevant to any civil penalty issued against such person or entity.
Pursuant to section 31.735 of the proposed rule any person or entity
having received an Initial Decision has the right to appeal.
Use of: The information collected will be used to conduct hearings,
adjudications, and appeals.
Need for Information: The information collected is needed to
conduct hearings, adjudications, and appeals.
Description of the Respondents: DHS anticipates that there will be
fewer than 10 respondents annually.
Frequency of Response: On occasion.
Annual Burden Estimate: The Department did not estimate the annual
burden.
Title: Inspections and Audits
Summary of Collection of Information: Pursuant to section 31.500 of
the proposed rule, the Department is authorized to enter AN Facilities,
or other locations where records are stored, to inspect and audit the
records proposed in section 31.315. DHS may also inspect and audit any
other records that pertain to misappropriation or preventing
misappropriation of ammonium nitrate, and to inspect and audit any
other records required by the Assistant Secretary to be maintained
pursuant to Subtitle J. During an inspection or audit the Department
may copy such records. DHS may also take original copies of pertinent
records out of the subject AN Facilities for duplication. DHS may also
perform remote inspections or audits, and require AN Facilities, AN
Facility Representatives, and Designated AN Facility POCs to make the
records available to the Department by facsimile, mail, or e-mail.
Use of: The information collected will be used to perform
inspections or audits.
Need for Information: The information collected is needed to
perform inspections or audits.
Description of the Respondents: DHS anticipates that there will be
an average of 1,559 respondents annually.
Frequency of Response: On occasion.
[[Page 46949]]
Annual Burden Estimate: Each respondent is estimated to have a
burden of 12 hours to prepare for and comply with an inspection or
audit. The annual hour burden is estimated to be 18,708 hours.
Solicitation of Comments
As required by the Paperwork Reduction Act of 1995 (44 U.S.C.
3507(d)), the Department has submitted a copy of the proposed rule to
OMB for its review of the collections of information. DHS is soliciting
comments to:
(1) Evaluate whether the proposed information requirement is
necessary for the proper performance of the functions of the agency,
including whether the information will have practical utility;
(2) Evaluate the accuracy of the agency's estimate of the burden;
(3) Enhance the quality, utility, and clarity of the information to
be collected; and
(4) Minimize the burden of the collection of information on those
who are to respond, including using appropriate automated, electronic,
mechanical, or other technological collection techniques or other forms
of information technology.
Individuals and organizations may submit comments to DHS or OMB on
the information collection requirements by October 3, 2011. Direct
information collection comments to the DHS or OMB addresses listed in
the ADDRESSES section of this NPRM. A comment is most effective if DHS
or OMB receives it within 30 days of the publication of this NPRM.
G. International Trade Impact Assessment
The Trade Agreement Act of 1979 prohibits Federal agencies from
activities that create unnecessary obstacles to the foreign commerce of
the United States. Legitimate domestic objectives, such as security,
are not considered unnecessary obstacles. The statute also requires
consideration of international standards and, where appropriate, that
they be the basis for U.S. standards. In addition, the general benefits
and desirability of free trade influenced the development of this
notice of proposed rulemaking to remove or diminish, to the extent
feasible, barriers to international trade, including both barriers
affecting the export of American goods and services to foreign
countries and barriers affecting the import of foreign goods and
services into the United States.
As entities that purchase or sell ammonium nitrate, or as
individual AN Purchasers and AN Sellers, importers and exporters would
be required to register with the Department and comply with the
requirements of the NPRM in the same manner as their domestic
counterparts when ammonium nitrate physically changes possession, as a
part of sales or transfers by ammonium nitrate facilities, within the
jurisdiction of the United States. Thus, DHS has assessed the potential
effect of this NPRM and has determined that it would not create
unnecessary barriers to international trade.
For the reasons set forth in the preamble, the Department of
Homeland Security proposes to add Part 31 to Title 6, Code of Federal
Regulations, to read as follows:
Title 6--Domestic Security
Chapter 1--Department of Homeland Security, Office of the Secretary
PART 31--AMMONIUM NITRATE SECURITY PROGRAM
Subpart A--General
Sec.
31.100 Purpose.
31.105 Definitions.
31.110 Applicability.
31.115 Severability.
Subpart B--Registration of AN Purchasers, AN Sellers, AN Facility
Representatives, and Designated AN Facility POCs
31.200 Permitted Applicants, Generally.
31.205 Permitted AN Purchasers.
31.210 Permitted AN Sellers.
31.215 AN Facility personnel registration requirements.
31.220 Registration procedures and registration updates.
31.225 AN Registered User number applicant vetting.
31.230 Registration approval and denial.
31.235 Registration expiration.
31.240 Registration extension.
31.245 Registration revocation.
31.250 Appealing registration denial or revocation determination.
Subpart C--Point of Sale Requirements
31.300 General transfer and sale restrictions.
31.305 Verification of AN Purchaser AN Registered User numbers and
identities--purchases not involving AN Agents.
31.310 Verification of AN Purchaser AN Registered User numbers and
identities--purchases involving AN Agents.
31.315 Recordkeeping requirements.
Subpart D--Reporting Theft and Loss
31.400 Reporting obligations.
31.405 Reporting.
Subpart E--Inspections and Audits
31.500 Authority.
31.505 Manner of inspections and audits.
31.510 Inspectors.
31.515 Records availability requirements.
Subpart F--Civil Penalties
31.600 Orders Assessing Civil Penalty, generally.
31.605 Setting Civil Penalty amounts.
31.610 Procedures for issuing Orders Assessing Civil Penalty.
Subpart G--Adjudications and Appeals
31.700 Neutral adjudications, generally.
31.705 Appointment of presiding officers.
31.710 Commencement of adjudication proceedings.
31.715 Prohibition on ex parte communications during adjudication.
31.720 Burden of proof.
31.725 Hearing and adjudication procedures.
31.730 Completion of adjudication procedures.
31.735 Appeals.
Subpart H--Other
31.800 State law preemption.
Authority: Pub. L. 110-161, sec. 563.
Subpart A--General
Sec. 31.100 Purpose.
The purpose of this part is to enhance the security of the Nation
by regulating the sale and transfer of ammonium nitrate, and to
implement Section 563 of the Fiscal Year 2008 Consolidated
Appropriations Act, Public Law 110-161 (December 26, 2007).
Sec. 31.105 Definitions.
Ammonium nitrate (AN). (1) Notwithstanding paragraph (2) of this
definition, ammonium nitrate is--
(i) Solid ammonium nitrate that is chiefly the ammonium salt of
nitric acid, that contains not less than 33 percent nitrogen by weight,
or
(ii) Any mixture containing 30 percent or more solid ammonium
nitrate, by weight, that is chiefly the ammonium salt of nitric acid.
The solid ammonium nitrate in the mixture must contain not less than 33
percent nitrogen by weight.
(2) The following are not ammonium nitrate:
(i) Mixtures containing less than 30 percent ammonium nitrate; or
(ii) Mixtures classified as ``explosives'' under 27 CFR 555.11; or
(iii) Ammonium nitrate or mixtures containing ammonium nitrate
weighing less than 25 pounds; or
(iv) Cold packs.
AN Agent. Any person who obtains possession of ammonium nitrate on
behalf of an AN Purchaser.
AN Facility. Any person or entity that produces, sells or otherwise
transfers ownership of, or provides application services for, ammonium
nitrate.
AN Facility Representative. Any AN Facility operator, owner, or
employee who is designated as an AN Facility
[[Page 46950]]
Representative by the subject AN Facility.
AN Purchaser. Any person, other than an AN Agent, who purchases or
obtains ammonium nitrate from an AN Facility.
AN Registered User. A person who possesses a valid AN Registered
User Number for the purpose(s) of acquiring, possessing, producing,
purchasing, selling, transferring ownership or possession of, and/or
providing application services for ammonium nitrate.
AN Registered User Number. A registered user number issued by the
Department of Homeland Security under subpart B of this part to a
person intending to acquire, possess, produce, purchase, sell, transfer
ownership or possession of, and/or provide application services for
ammonium nitrate.
AN Seller. Any person designated as an AN Seller by the AN Facility
at which he/she works or with which he/she is associated, for the
purpose(s) of performing sales or transfers of ammonium nitrate or for
performing certain other regulatory compliance activities under this
Part.
Applicant. Any person who has submitted an application for an AN
Registered User Number for the purpose(s) of acquiring, possessing,
producing, purchasing, selling, transferring ownership or possession
of, and/or providing application services for ammonium nitrate.
Application services. The provision of services related to the
physical deposit of fertilizer onto turf, fields, crops, or other
agricultural property, where these services are provided by a person or
entity other than the person or entity owning or operating the property
upon which the fertilizer is deposited. The provision of application
services is not a sale or transfer of ammonium nitrate.
Assistant Secretary. The Assistant Secretary for Infrastructure
Protection of the United States Department of Homeland Security, or any
successors to that position within the Department, or such other
Department officials as may be designated by the Assistant Secretary to
act on his/her behalf.
Cold pack. A small, commercially-available package commonly used as
a replacement for ice in the application of first aid, containing
unmixed water and ammonium nitrate that, immediately prior to use, can
be manipulated to cause the comingling of the water and the ammonium
nitrate resulting in an endothermic reaction that significantly lowers
the temperature of the package.
Department. The United States Department of Homeland Security.
Designated AN Facility POC. An AN Facility Representative who is
designated by an AN Facility as that AN Facility's chief point of
contact (POC) for communications with the Department for purposes of
compliance with this Part.
Office of the General Counsel. The Office of the General Counsel of
the United States Department of Homeland Security.
Photo identification document. Any of the following documents
containing a unique document number:
(1) An unexpired passport issued by a foreign government which
contains a photograph; or
(2) An unexpired document issued by a U.S. Federal, State, or
tribal government that includes the following information for the
person:
(i) Full name;
(ii) Date of birth; and
(iii) Photograph; or
(3) Such other documents that the Department may designate as valid
identification documents.
Secretary. The Secretary of Homeland Security or such other
Department officials as may be designated by the Secretary of Homeland
Security to act on his/her behalf.
Subtitle J. Subtitle J of the Homeland Security Act of 2002, as
created by Section 563 of the Fiscal Year 2008 Consolidated
Appropriations Act, Public Law 110-161 (December 26, 2007).
Transfer. The transfer of possession or ownership of ammonium
nitrate from one person or entity to another person or entity for use
outside of the AN Facility from which the ammonium nitrate is being
transferred. Transfers of ammonium nitrate include transfers of
possession or ownership that occur as part of sales and other business
or commercial transactions, and also include transfers of possession or
ownership that are not part of sales or other business or commercial
transactions. The physical deposit of fertilizer onto turf, fields,
crops, or other agricultural property is not a transfer of ammonium
nitrate.
Under Secretary. The Under Secretary for National Protection and
Programs of the United States Department of Homeland Security, or any
successors to that position within the Department, or such other
Department officials as may be designated by the Under Secretary to act
on his/her behalf.
Sec. 31.110 Applicability.
This Part applies to any person or entity that possesses, acquires,
purchases, sells, transfers, or provides application services for
ammonium nitrate.
Sec. 31.115 Severability.
If a court finds any portion of this Part to have been promulgated
without proper authority, the remainder of this Part will remain in
full effect.
Subpart B--Registration of AN Purchasers, AN Sellers, AN Facility
Representatives, and Designated AN Facility POCs
Sec. 31.200 Permitted applicants, generally.
Only persons who intend to acquire, possess, produce, purchase,
sell, transfer ownership or possession of, and/or provide application
services for ammonium nitrate may register or attempt to register under
this Subpart.
Sec. 31.205 Permitted AN Purchasers.
No person may purchase or take ownership of ammonium nitrate, or
request that an AN Agent take possession of ammonium nitrate on his/her
behalf, without a valid AN Purchaser AN Registered User Number issued
under this Subpart.
Sec. 31.210 Permitted AN Sellers.
(a) Only persons registered under this Subpart as AN Sellers, AN
Facility Representatives, or Designated AN Facility POCs may sell or
transfer possession of ammonium nitrate to any person or entity.
(b) Only persons registered under this Subpart as AN Sellers, AN
Facility Representatives, or Designated AN Facility POCs may, as
required by this Part, verify AN Registered User Numbers of AN
Purchasers, the identities of AN Purchasers, and the identities of AN
Agents.
(c) Only persons registered under this Subpart as AN Sellers, AN
Facility Representatives, or Designated AN Facility POCs may perform
ammonium nitrate application services.
Sec. 31.215 AN Facility personnel registration requirements.
(a) Designated AN Facility POC. (1) Each AN Facility must have one
Designated AN Facility POC registered on its behalf.
(2) Only one Designated Facility POC can be registered for each AN
Facility.
(b) AN Facility Representatives. Each AN Facility must have at
least one AN Facility Representative registered on its behalf.
(c) AN Sellers. Any person affiliated with an AN Facility, who is
neither a Designated AN Facility POC nor an AN Facility Representative,
must register under this Subpart as an AN Seller in order to perform
the activities described in 6 CFR 31.210.
[[Page 46951]]
Sec. 31.220 Registration procedures and registration updates.
(a) Submission of Application Information. (1) Applications for
registration under this Subpart must be submitted to the Department
through an online web portal to be developed by the Department. The web
address of this online web portal will be announced by the Department
in a future notice published in the Federal Register.
(2) Each applicant and AN Registered User must notify the
Department of any changes to his/her submitted application information,
within 30 days of any such changes, through the online web portal used
for registration application.
(b) Application Information Identifying Type of Applicant. In order
for an applicant to be considered for registration, he/she must
identify whether he/she is applying as an AN Seller, AN Facility
Representative, Designated AN Facility POC, and/or AN Purchaser. An
applicant may apply for more than one role.
(c) Application Information--General. (1) In order for an applicant
to be considered for registration, his/her registration application
must include his/her name, address, telephone number, photo
identification document type, photo identification document issuing
entity, photo identification document number, place of birth, date of
birth, citizenship, gender, any other information deemed necessary by
the Department to carry out vetting under 6 CFR 31.225, and, as
appropriate, any other information deemed necessary by the Department
to verify the applicant's enrollment in a Department program that
conducts equivalent TSDB vetting.
(2) Each AN Purchaser applicant's registration application must
also include a description of the intended use of the ammonium nitrate
planned to be purchased or acquired by the applicant.
(3) Each AN Seller, AN Facility Representative, and Designated AN
Facility POC must also submit information identifying all AN Facilities
at or for which he/she will serve as an AN Seller, AN Facility
Representative, or Designated AN Facility POC.
(d) Identifying AN Agents. (1) AN Purchasers and AN Purchaser
applicants may, through the online web portal mentioned in 6 CFR
31.220(a), identify any AN Agents whom they authorize to obtain
ammonium nitrate on their behalves.
(2) When a person named as an AN Agent is no longer authorized to
obtain ammonium nitrate on behalf of an applicant or AN Purchaser, the
applicant or AN Purchaser must notify the Department through the online
web portal within 30 days of the date on which the AN Agent becomes
unauthorized to obtain ammonium nitrate.
Sec. 31.225 AN Registered User number applicant vetting.
(a) The Department will vet applicants' identifying information
against the Terrorist Screening Database (TSDB) and/or verify each
applicant's enrollment in a Department program that conducts equivalent
TSDB vetting.
(b) The Department will compare each AN Registered User's
identifying information against new and/or updated TSDB records as
those new and/or updated records become available.
Sec. 31.230 Registration approval and denial.
(a) Registration approval. The Department will issue AN Registered
User Numbers based on the results of TSDB vetting and the submission of
complete registration applications by applicants.
(b) Registration denial. A registration applicant may be denied an
AN Registered User Number if:
(1) Based on TSDB vetting and/or verification of previous TSDB
vetting results under 6 CFR 31.225, the Assistant Secretary determines
that it is in the interest of national security to deny the
registration application; or
(2) The applicant submits an incomplete registration application;
or
(3) Information contained in the registration application is
fraudulent or false.
(c) AN Registered User number issuance. The Department will provide
AN Registered User Numbers to approved applicants by e-mail or by an
online web portal to be developed by the Department.
(d) Notice of registration denial. The Assistant Secretary will
provide Notice of Registration Denial to denied applicants by e-mail or
by an online web portal to be developed by the Department. This Notice
will include the date of denial, and will also include instructions
about how to appeal such a denial pursuant to 6 CFR 31.250.
(e) Notice of delay. (1) When the Department is unable to approve
or deny a registration application within 72 hours of receipt, the
Department will provide Notice of Delay to the applicant by e-mail or
by an online web portal to be developed by the Department.
(2) When the Department determines that, in the interest of
national security, longer than 72 hours is required to review a
registration application or to issue or deny an AN Registered User
Number, the Department will provide Notice of Delay to the applicant by
e-mail or by an online web portal to be developed by the Department.
Sec. 31.235 Registration expiration.
An AN Registered User Number issued under this subpart expires five
years after the date it is issued.
Sec. 31.240 Registration extension.
(a) Extension prior to registration expiration. An AN Registered
User can apply for an extension of his/her AN Registered User Number
not more than 60 days before its scheduled expiration.
(b) Extension after registration expiration. An AN Registered User
can apply for an extension of his/her AN Registered User Number after
the expiration date of that AN Registered User Number for up to one
year from the date of expiration.
(c) Application for new number after registration expiration of
more than one year. An AN Registered User with an AN Registered User
Number that has been expired for more than one year must apply for, and
obtain, a new AN Registered User Number before engaging in the
acquisition, purchase, sale, or transfer of ammonium nitrate, or before
providing ammonium nitrate application services.
(d) Extension procedures. An AN Registered User can apply for an
extension of his/her AN Registered User Number by following the
registration procedures set forth in 6 CFR 31.220. Extensions will be
issued or denied using the registration issuance and denial procedures
and criteria set forth in 6 CFR 31.230.
Sec. 31.245 Registration revocation.
(a) The Assistant Secretary may revoke an AN Registered User Number
if he/she determines that:
(1) It is in the interest of national security to revoke that AN
Registered User Number based on the results of the activities described
in 6 CFR 31.225; or
(2) The AN Registered User holding that AN Registered User Number
obtained it by submitting fraudulent or false information.
(b) The Assistant Secretary will provide Notice of Revocation to
each AN Registered User whose AN Registered User Number is revoked.
Notice of Revocation will be provided prior to the effective date of
revocation, unless the Assistant Secretary determines that it is in the
interest of national security to revoke an AN Registered User Number
prior to or at the same time as provision of Notice of Revocation.
Notice of Revocation will include both the date on which the subject AN
Registered User Number is
[[Page 46952]]
to be revoked and the means by which revocation can be appealed.
(c) Notices of Revocation will be disseminated to subject AN
Registered Users by e-mail, by an online web portal to be developed by
the Department, or by other written communication.
Sec. 31.250 Appealing registration denial or revocation
determination.
(a) Appealing registration denial. A person whose application for
registration has been denied may appeal the Assistant Secretary's
denial of his/her application under this subsection.
(b) Appealing revocation. A person who has received a Notice of
Revocation may appeal the Assistant Secretary's revocation
determination under this subsection.
(c) Appellant's request for materials. To appeal a denial or
revocation determination, a person whose registration application is
denied, or whose AN Registered User Number is revoked, must initiate an
appeal by filing a Request for Materials with the Office of the General
Counsel. This Request for Materials must be submitted to the Office of
the General Counsel within 60 days of the date of denial or revocation.
(d) The department's response. The Department will serve the
appellant with copies of the releasable materials upon which denial or
revocation was based within 60 days of receipt of a Request for
Materials, unless the Department determines that additional time is
required in the interest of national security. The Department will not
include any classified information in this Response, nor will it
include any other information or material protected from disclosure
under law. As appropriate, the Department will include in this Response
unclassified summaries of classified evidence supporting denial or
revocation.
(e) Appellant's request for appeal. To appeal the denial or
revocation, the appellant must serve upon the Office of the General
Counsel a Request for Appeal within 60 days of service of the
Department's Response under paragraph (d) of this section. The
appellant's Request for Appeal must be written and include the
rationale and information upon which the appellant disputes the basis
of denial or revocation.
(f) Correcting materials. The Request for Appeal must include any
corrections, additions, or clarifications to the materials provided by
the Department under paragraph (d) of this section if the appellant
believes that his/her denial or revocation was based on materials or
information that he/she believes to be erroneous or incomplete.
(g) Final determination. (1) After reviewing an appellant's Request
for Appeal, the Department will serve the appellant with a Final
Determination.
(2) A Final Determination will be signed by the Under Secretary,
and will:
(i) Uphold the denial or revocation; or
(ii) Reverse the denial or revocation.
(3) To the extent practicable, the Department will issue a Final
Determination within 72 hours of receipt of the appellant's Request for
Appeal, unless the Department determines that additional time is
required in the interest of national security. The Department will not
include any classified information in this service, nor will it include
any other information or material protected from disclosure under law.
(4) Following a Final Determination reversing a registration
denial, the Department will issue to the appellant an AN Registered
User Number as described in 6 CFR 31.230(c).
(h) Extension of time. For good cause shown, the Department may
grant an appellant an extension of time to file a Request for Materials
or Request for Appeal. An appellant's request for an extension of time
must be in writing and must be received by the Office of the General
Counsel within a reasonable time before the due date to be extended; or
an appellant may request an extension after the passing of a due date
by sending a written request describing why the failure to file within
the prescribed time limits should be excusable.
(i) Final agency action. For purposes of judicial review, a Final
Determination constitutes final agency action by the Department. A
Notice of Registration Application Denial or a Notice of Registration
Revocation constitutes final agency action if not timely appealed
pursuant to this section.
Subpart C--Point of Sale Requirements
Sec. 31.300 General transfer and sale restrictions.
(a) An AN Facility, AN Seller, AN Facility Representative, or
Designated AN Facility POC may only transfer possession of ammonium
nitrate to an AN Purchaser in possession of a valid AN Registered User
Number issued under subpart B of this part, or to a person acting as an
authorized AN Agent under this Part.
(b) An AN Facility, AN Seller, AN Facility Representative, or
Designated AN Facility POC may only transfer possession of ammonium
nitrate to an AN Purchaser or AN Agent after verification of his/her
identity as required by this subpart.
(c) An AN Facility, AN Seller, AN Facility Representative, or
Designated AN Facility POC may not transfer possession of ammonium
nitrate to an AN Agent when such AN Agent is attempting to obtain
ammonium nitrate on behalf of an AN Purchaser whose registration is
deficient under this Part.
(d) An AN Facility, AN Seller, AN Facility Representative, or
Designated AN Facility POC may only transfer possession of ammonium
nitrate to an AN Agent after confirming with either the Department or
the AN Purchaser that the AN Agent is authorized to act on the AN
Purchaser's behalf.
Sec. 31.305 Verification of AN Registered User Numbers and
Identities--purchases or transfers not involving AN Agents.
(a) AN Purchaser electronic or telephonic verification. Prior to
transferring possession of ammonium nitrate, the AN Seller, AN Facility
Representative, or Designated AN Facility POC conducting the sale or
transfer must obtain the unexpired AN Registered User Number and the
name of the AN Purchaser seeking to take possession of ammonium
nitrate.
(1) Prior to transfer, the AN Seller, AN Facility Representative,
or Designated AN Facility POC conducting the sale or transfer must
submit this collected information to the Department by telephone or
through an online web portal to be developed by the Department.
(2) Prior to transfer, the AN Seller, AN Facility Representative,
or Designated AN Facility POC conducting the sale or transfer must also
submit information identifying the AN Facility from which ammonium
nitrate is being transferred, as well as his/her own name and his/her
own AN Registered User Number, to the Department by telephone or
through the online web portal mentioned in 6 CFR 31.305(a)(1).
(3) Upon receipt of this information, the Department will determine
whether the information provided indicates that the AN Seller, AN
Facility Representative, or Designated AN Facility POC submitting this
information is authorized to sell or transfer ammonium nitrate. The
Department will also determine whether the information provided
indicates that the person attempting to purchase or obtain ammonium
nitrate is authorized under Subpart B of this Part to do so.
(4) The Department will then notify the AN Seller, AN Facility
Representative, or Designated AN Facility POC, by telephone or through
the online web portal mentioned in 6 CFR 31.305(a)(1), of the
determinations made pursuant to 6 CFR 31.305(a)(3).
[[Page 46953]]
The AN Seller, AN Facility Representative, or Designated AN Facility
POC may not transfer ammonium nitrate unless and until each of these
determinations indicates that the Department has authorized the sale or
transfer.
(b) AN Purchaser visual verification. Prior to transferring
possession of ammonium nitrate, the AN Seller, AN Facility
Representative, or Designated AN Facility POC conducting the sale or
transfer must examine the photo identification document of the AN
Purchaser seeking to take possession of ammonium nitrate.
(1) The photo identification document must contain a photograph of
the person attempting to take possession of the ammonium nitrate. AN
Sellers, AN Facility Representatives, or Designated AN Facility POCs
must not transfer possession of ammonium nitrate to any person unable
to provide a photo identification document. No AN Purchaser may take
possession of, or attempt to take possession of, ammonium nitrate
without presenting a photo identification document.
(2) The AN Seller, AN Facility Representative, or Designated AN
Facility POC conducting the sale or transfer must not transfer
possession of ammonium nitrate unless he/she determines, to the best of
his/her ability, that the person attempting to take possession of
ammonium nitrate is the same person as the person who is depicted on
the examined photo identification document.
Sec. 31.310 Verification of AN Registered User Numbers and
Identities--purchases or transfers involving AN Agents.
(a) AN Purchaser electronic or telephonic verification. An AN
Seller, AN Facility Representative, or Designated AN Facility POC,
prior to transferring possession of ammonium nitrate to an AN Agent,
must obtain the name, the unexpired AN Registered User Number, the
photo identification document type, the photo identification document
issuing entity, and the photo identification document number of the AN
Purchaser.
(1) Prior to transfer, the AN Seller, AN Facility Representative,
or Designated AN Facility POC conducting the sale or transfer must
submit this collected information to the Department by telephone or
through an online web portal to be developed by the Department.
(2) Prior to transfer, the AN Seller, AN Facility Representative,
or Designated AN Facility POC conducting the sale or transfer must also
submit information identifying the AN Facility from which ammonium
nitrate is being transferred, as well as his/her own name and his/her
own AN Registered User Number, to the Department by telephone or
through the online web portal discussed in 6 CFR 31.310(a)(1).
(3) Upon receipt of this information, the Department will determine
whether the information provided indicates that the AN Seller, AN
Facility Representative, or Designated AN Facility POC submitting this
information is authorized to sell or transfer ammonium nitrate. The
Department will also determine whether the information provided
indicates that the AN Purchaser is authorized under Subpart B of this
Part to purchase or obtain ammonium nitrate. The Department will not
determine that the AN Purchaser is authorized to purchase or obtain
ammonium nitrate unless the photo identification document information
provided matches the photo identification document information
previously provided by that person to the Department under 6 CFR
31.220(a)(2) or (c)(1).
(4) The Department will then notify the AN Seller, AN Facility
Representative, or Designated AN Facility POC, by telephone or through
the online web portal mentioned in 6 CFR 31.310(a)(1), of the
determinations made pursuant to 6 CFR 31.310(a)(3). The AN Seller, AN
Facility Representative, or Designated AN Facility POC may not transfer
ammonium nitrate unless and until each of these determinations
indicates that the Department has authorized the transfer.
(b) Confirmation of agency. An AN Seller, AN Facility
Representative, or Designated AN Facility POC, prior to transferring
possession of ammonium nitrate to an AN Agent, must obtain confirmation
from the Department or from the AN Purchaser that the AN Agent is
authorized to act on the AN Purchaser's behalf. This confirmation must
be obtained in either of two ways:
(1) By submitting the name of the AN Agent to the Department by
telephone or through the online web portal mentioned in 6 CFR
31.310(a)(1). If the named AN Agent has been previously authorized by
the AN Purchaser to take possession of ammonium nitrate on his/her
behalf, pursuant to 6 CFR 31.220(d), then the Department will provide a
notice of confirmation, by telephone or through online web portal, to
the AN Seller, AN Facility Representative, or Designated AN Facility
POC making this submission.
(2) Orally from the AN Purchaser. Oral confirmation may be obtained
by an AN Seller, AN Facility Representative, or Designated AN Facility
POC representing the AN Facility conducting the transfer. Such oral
confirmation must be obtained in person or by telephone, prior to
transfer of possession to the AN Agent.
(c) AN Agent visual verification. Prior to transferring possession
of ammonium nitrate to an AN Agent, an AN Seller, AN Facility
Representative, or Designated AN Facility POC must examine the photo
identification document of the AN Agent seeking to take possession of
ammonium nitrate.
(1) The photo identification document must contain a photograph of
the person attempting to take possession of the ammonium nitrate. AN
Sellers, AN Facility Representatives, or Designated AN Facility POCs
may not transfer possession of ammonium nitrate to persons unable to
provide photo identification documents. An AN Agent must not take
possession of, or attempt to take possession of, ammonium nitrate
without presenting a photo identification document.
(2) The AN Seller, AN Facility Representative, or Designated AN
Facility POC must not transfer possession of ammonium nitrate unless
he/she determines, to the best of his/her ability, that the person
attempting to take possession of the ammonium nitrate is the same
person as the person who is depicted on the examined photo
identification document, and is the same person as confirmed to be an
authorized AN Agent under 6 CFR 31.310(b).
Sec. 31.315 Recordkeeping requirements.
(a) An AN Facility and its AN Facility Representative(s) and
Designated AN Facility POC must each ensure that the AN Facility
maintains records pertaining to each sale or transfer of ammonium
nitrate consisting, at a minimum, of the following:
(1) Date of sale or transfer;
(2) Form and amount of payment, if any;
(3) Quantity of ammonium nitrate sold or transferred;
(4) Type of packaging of the ammonium nitrate sold or transferred;
(5) Location where the AN Purchaser, or if applicable AN Agent,
will take possession of the ammonium nitrate sold or transferred;
(6) Name, address, telephone number, AN Registered User Number,
photo identification document type, photo identification document
issuing entity, and photo identification document number of the AN
Purchaser purchasing or taking possession of the ammonium nitrate sold
or transferred;
[[Page 46954]]
(7) If an AN Agent takes possession of ammonium nitrate, name,
address, telephone number, photo identification document type, photo
identification document issuing entity, and photo identification
document number of the AN Agent taking possession of the ammonium
nitrate sold or transferred;
(8) If an AN Agent takes possession of ammonium nitrate, a record
of the date and means by which confirmation of agency was received
pursuant to 6 CFR 31.310(b); and
(9) Confirmation numbers or confirmation records, if any, received
from the Department as part of the notification processes described in
6 CFR 31.305(a)(4) and 6 CFR 31.310(a)(4).
(b) In sales or transfers not involving AN Agents, AN Purchasers
must provide the information required by 6 CFR 31.315(a)(6) to AN
Facility personnel prior to transfer of ammonium nitrate. AN
Facilities, AN Sellers, AN Facility Representatives, and Designated AN
Facility POCs must not transfer possession of ammonium nitrate to any
persons failing to provide this information prior to transfer.
(c) In sales or transfers involving AN Agents, AN Purchasers and/or
the AN Agents obtaining ammonium nitrate on their behalves must provide
the information required by 6 CFR 31.315(a)(6) and (7) to AN Facility
personnel prior to transfer of ammonium nitrate. AN Facilities, AN
Sellers, AN Facility Representatives, and Designated AN Facility POCs
must not transfer possession of ammonium nitrate to any AN Agent if
this information has not been provided prior to transfer.
(d) An AN Facility and its AN Facility Representative(s) and
Designated AN Facility POC must each ensure that the AN Facility
maintains the records required by 6 CFR 31.315(a), as to each sale or
transfer of ammonium nitrate, for a minimum of two years from the date
of sale or transfer.
(e) An AN Facility and its AN Facility Representative(s) and
Designated AN Facility POC must each take reasonable actions to ensure
that the AN Facility secures the records required by 6 CFR 31.315(a)
from damage, theft, and loss.
Subpart D--Reporting Theft and Loss
Sec. 31.400 Reporting obligations.
(a) Any AN Facility Representative or Designated AN Facility POC
who has knowledge of the theft or unexplained loss of ammonium nitrate
must report such theft or loss to the Bureau of Alcohol, Tobacco,
Firearms and Explosives of the U.S. Department of Justice (ATF), or
direct other AN Facility personnel to report such theft or loss to ATF,
as provided in 6 CFR 31.405.
(b) Each AN Facility and its AN Facility Representative(s) and
Designated AN Facility POC must ensure that the AN Facility implements
internal reporting procedures which require all AN Facility
Representatives, AN Sellers, and other AN Facility personnel (as
appropriate) to notify the appropriate AN Facility Representative or
Designated AN Facility POC of any theft or unexplained loss of ammonium
nitrate, to report such theft or loss directly to ATF, or both.
Sec. 31.405 Reporting.
(a) General reporting requirements. Persons required to report
theft or loss under this Subpart must report each theft or loss to ATF
by telephone and by facsimile, not later than 24 hours after becoming
aware of such theft or loss. If facsimile is not available, persons
required to report theft or loss under this Subpart must report each
theft or loss to ATF by telephone and U.S. mail, not later than 24
hours after becoming aware of such theft or loss.
(b) Voluntary reporting. Persons not required to report theft or
loss under this Subpart may report theft or loss of ammonium nitrate by
contacting ATF by the same means described in paragraph (a) of this
section.
Subpart E--Inspections and Audits
Sec. 31.500 Authority.
(a) On-site inspections and audits. In order to assess compliance
with the requirements of this part and with the requirements of
subtitle J, and in order to prevent the misappropriation or use of
ammonium nitrate in acts of terrorism, authorized Department officials
may enter AN Facilities, or other locations where records are stored,
to inspect and audit the records required to be maintained pursuant to
6 CFR 31.315, to inspect and audit any other records that pertain to
misappropriation or preventing misappropriation of ammonium nitrate,
and to inspect and audit any other records required by the Assistant
Secretary to be maintained pursuant to Subtitle J.
(b) Remote inspections and audits. In order to assess compliance
with the requirements of this part and with the requirements of
subtitle J, and in order to prevent the misappropriation or use of
ammonium nitrate in acts of terrorism, the Department may require AN
Facilities, AN Facility Representatives, and Designated AN Facility
POCs to make the records mentioned in 6 CFR 31.500(a) available to the
Department by facsimile, mail, or e-mail.
Sec. 31.505 Manner of inspections and audits.
(a) On-Site inspections and audits. Authorized Department officials
will conduct on-site inspections and audits at reasonable times and in
reasonable manners. The Department will provide a minimum of 24 hours
notice to an AN Facility, if possible through its Designated AN
Facility POC, before any on-site inspection and audit, except when:
(1) The Assistant Secretary determines that an on-site inspection
and audit without such notice is warranted by exigent circumstances and
approves such on-site inspection and audit; or
(2) Any delay in conducting an on-site inspection and audit might
be seriously detrimental to security, and the Assistant Secretary
determines that an on-site inspection and audit without notice is
warranted, and approves an Inspector to conduct such on-site inspection
and audit.
(b) Remote inspections and audits. Authorized Department officials
will conduct remote inspections and audits at reasonable times and in
reasonable manners. The Department will provide a minimum of 24 hours
notice to an AN Facility, if possible through its Designated AN
Facility POC, before that AN Facility is required to remotely submit
records to the Department. The Department may provide less than 24
hours notice before an AN Facility is required to remotely submit
records to the Department only when:
(1) The Assistant Secretary determines that a remote inspection and
audit without such notice is warranted by exigent circumstances and
approves such remote inspection and audit; or
(2) Any delay in conducting a remote inspection and audit might be
seriously detrimental to security, and the Assistant Secretary
determines that a remote inspection and audit without notice is
warranted, and approves an Inspector to conduct such remote inspection
and audit.
Sec. 31.510 Inspectors.
(a) Inspections and audits will be conducted by personnel duly
authorized and designated for that purpose as ``Inspectors'' by the
Assistant Secretary, or any person who is authorized by the Department
to perform inspections pursuant to a cooperative agreement or a
delegation of authority established under subtitle J.
[[Page 46955]]
(b) An Inspector will, on request, present his or her credentials
for examination by AN Facility personnel during an on-site inspection
and audit, but these credentials may not be reproduced or retained by
any AN Facility, by any AN Facility personnel, by any AN Seller, by any
AN Facility Representative, or by any Designated AN Facility POC.
Sec. 31.515 Records availability requirements.
(a) Records availability during on-site inspections and audits for
which the department has provided at least 24 hours notice. Each AN
Facility and its AN Facility Representative(s) and Designated AN
Facility POC must make all records required to be maintained by this
Part available to Inspectors immediately upon the commencement of an
on-site inspection and audit. Each AN Facility and its AN Facility
Representative(s) and Designated AN Facility POC must provide
Inspectors with the use of photocopiers, computers, and other equipment
necessary to copy such records, if subject AN Facilities have access to
such equipment. If Inspectors deem that photocopying or other
reproduction of records is necessary, but subject AN Facilities do not
have access to necessary photocopying/reproduction equipment,
Inspectors must be permitted to take original copies of pertinent
records out of the subject AN Facilities for duplication and prompt
return.
(b) Records availability during on-site inspections and audits for
which the department has provided less than 24 hours notice. Each AN
Facility and its AN Facility Representative(s) and Designated AN
Facility POC must make all records required to be maintained by this
Part available to Inspectors as quickly as possible upon the
commencement of an on-site inspection and audit. Each AN Facility and
its AN Facility Representative(s) and Designated AN Facility POC must
make such records available, at a maximum, within four hours of the
commencement of an on-site inspection and audit. Inspectors must be
provided with the use of photocopiers, computers, and other equipment
necessary to copy such records, if subject AN Facilities have access to
such equipment. If Inspectors deem that photocopying or other
reproduction of records is necessary, but subject AN Facilities do not
have access to necessary photocopying/reproduction equipment,
Inspectors must be permitted to take original copies of pertinent
records out of the subject AN Facilities for duplication and prompt
return.
(c) Records availability for remote inspections and audits for
which the department has provided at least 24 hours notice. Each AN
Facility and its AN Facility Representative(s) and Designated AN
Facility POC must remotely submit any and all records requested by the
Department under this Part to the Department by the time prescribed in
the Department's notice.
(d) Records availability for remote inspections and audits for
which the department has provided less than 24 hours notice. Each AN
Facility and its AN Facility Representative(s) and Designated AN
Facility POC must remotely submit all records requested by the
Department under this Part to the Department as quickly as possible
after, and in no case more than four hours later than, receipt of the
Department's notice.
Subpart F--Civil Penalties
Sec. 31.600 Orders Assessing Civil Penalty, generally.
When the Assistant Secretary determines that any person or entity
has violated any provision or provisions of this Part, the Assistant
Secretary may issue an Order Assessing Civil Penalty against such
person or entity making such person or entity liable to the United
States for a civil penalty of not more than $50,000 per violation of
this part.
Sec. 31.605 Setting civil penalty amounts.
In determining the amount of a civil penalty, the Assistant
Secretary will consider: The nature and circumstances of the
violation(s) underlying the civil penalty; the history of prior
violations by the person or entity determined to have committed the
violation underlying the civil penalty; the ability to pay of the
person or entity determined to have committed the violation underlying
the civil penalty; the ability to continue to do business of the person
or entity determined to have committed the violation underlying the
civil penalty; and any other matters that the Assistant Secretary
determines that justice requires.
Sec. 31.610 Procedures for issuing Orders Assessing Civil Penalty.
(a) At a minimum, each Order Assessing Civil Penalty will be signed
by the Assistant Secretary, dated, and include as to each person or
entity subject to such Order Assessing Civil Penalty:
(1) The name, address, and (where applicable) AN Registered User
Number of such person or entity;
(2) A listing of the provision(s) of this Part alleged to have been
violated;
(3) A statement of facts upon which the alleged instances of
violation are based;
(4) A statement of the amount of the civil penalty assessed;
(5) A statement of the date by which such person or entity must pay
the civil penalty assessed, and a statement of the date by which such
person or entity may file a Notice for Application for Review pursuant
to Subpart G of this Part, as an alternative to civil penalty payment;
(6) A statement of the means by which such person or entity may
file a Notice for Application for Review pursuant to Subpart G of this
Part; and
(7) A statement of the means by which payment may be made.
(b) The Assistant Secretary may establish procedures for issuance
of Orders Assessing Civil Penalty.
(c) Each person or entity subject to an Order Assessing Civil
Penalty must comply with the terms of such Order Assessing Civil
Penalty by the date specified in such Order Assessing Civil Penalty
unless such person or entity has filed a timely Notice for Application
for Review under Subpart G of this Part.
(d) An Order Assessing Civil Penalty issued under this section
becomes a final agency action when the time specified in such Order
Assessing Civil Penalty to file a Notice for Application for Review has
passed without such filing.
Subpart G--Adjudications and Appeals
Sec. 31.700 Neutral adjudications, generally.
(a) Any person or entity against whom an Order Assessing Civil
Penalty has been issued is entitled to a hearing and adjudication, by a
Presiding Officer, on any issue of material fact relevant to any civil
penalty issued against such person or entity under this Part.
(b) A Presiding Officer will issue an Initial Decision on any
material issue related to an Order Assessing Civil Penalty before any
such issue is reviewed on appeal pursuant to 6 CFR 31.735.
Sec. 31.705 Appointment of Presiding Officers.
(a) Immediately upon the filing of any Notice for Application for
Review under 6 CFR 31.710, the Secretary shall appoint an attorney, who
is employed by the Department and who has not performed any
investigative or prosecutorial function with respect to the matter, to
act as a neutral adjudications officer or Presiding Officer for the
compilation of a factual
[[Page 46956]]
record and the recommendation of an Initial Decision for each
Proceeding.
(b) Notwithstanding paragraph (a) of this section, the Secretary
may appoint one or more attorneys who are employed by the Department
and who do not perform any investigative or prosecutorial function with
respect to this subpart, to serve generally in the capacity as
Presiding Officer(s) for such matters pursuant to such procedures as
the Secretary may hereafter establish.
Sec. 31.710 Commencement of Adjudication Proceedings.
(a) Any person or entity against whom an Order Assessing Civil
Penalty has been issued may institute proceedings to review the
propriety of such civil penalty by filing a Notice for Application for
Review specifying that such person or entity requests a hearing and
adjudication.
(b) Each person or entity requesting a hearing and adjudication
must serve each Notice for Application for Review and all subsequent
filings on the Office of the General Counsel.
(c) Each Notice for Application for Review must be accompanied by
all appropriate legal memoranda, declarations, affidavits, other
documents and other evidence supporting the position asserted by the
person or entity requesting a hearing and adjudication.
(d) The Assistant Secretary will file and serve a Response,
accompanied by all appropriate legal memoranda, declarations,
affidavits, other documents and other evidence supporting the position
asserted by the Assistant Secretary, within 14 calendar days of the
filing and service of the Notice for Application for Review and all
supporting papers.
Sec. 31.715 Prohibition on ex parte communications during
adjudication.
(a) At no time after the designation of a Presiding Officer for a
proceeding and prior to the issuance of a Final Decision on an appeal
pursuant to 6 CFR 31.735(e) will the designated Presiding Officer, or
any person who will advise that official in the decision on the matter,
discuss ex parte the merits of the proceeding with any interested
person outside the Department, with any Department official who
performs a prosecutorial or investigative function in such proceeding
or a factually related proceeding, or with any representative of such
person.
(b) If, after the designation of a Presiding Officer and prior to
the issuance of a Final Decision on an appeal pursuant to 6 CFR
31.375(e), the designated Presiding Officer, or any person who will
advise that official in the decision on the matter, receives from or on
behalf of any party, by means of an ex parte communication, information
which is relevant to the decision of the matter and to which other
parties have not had an opportunity to respond, a summary of such
information will be served on all other parties, who will have an
opportunity to reply to the ex parte communication within a time set by
the designated Presiding Officer.
(c) The consideration of classified or Sensitive But Unclassified
information or materials pursuant to an in camera procedure does not
constitute a prohibited ex parte communication for purposes of this
subpart.
Sec. 31.720 Burden of proof.
The Assistant Secretary bears the initial burden of proving the
facts necessary to support the challenged Order Assessing Civil Penalty
at every proceeding instituted under this subpart.
Sec. 31.725 Hearing and adjudication procedures.
(a) Following filing and receipt of Notice for Application for
Review and Response, the assigned Presiding Officer will conduct
scheduling conferences or issue scheduling orders as appropriate;
accept or order pre-hearing memoranda, motions, and briefings as
appropriate; and order discovery as appropriate.
(b) Any hearing and adjudication will be held as expeditiously as
possible in the county, parish, or incorporated city of residence of
the person or entity filing the Notice for Application for Review
instituting the hearing and adjudication, at a precise location to be
determined by the assigned Presiding Officer, or, with the consent of
such person or entity, at any other location conducive to a prompt
presentation of any necessary testimony or other proceedings.
(c) Videoconferencing and teleconferencing may be used where
appropriate at the discretion of the assigned Presiding Officer.
(d) Each party offering the affirmative testimony of a witness must
present that testimony by declaration, affidavit, or other sworn
statement submitted in advance as ordered by the assigned Presiding
Officer.
(e) Any witness presented for examination will be asked to testify
under oath or affirmation.
(f) The hearing and adjudication will be recorded verbatim.
(g) A person or entity may appear to be heard on his own behalf or
through any counsel of his choice.
(h) A person or entity, individually or through counsel, may offer
relevant and material information including written direct testimony
which that person or entity believes should be considered in opposition
to the Order Assessing Civil Penalty at issue.
(i) A person or entity, individually or through counsel, may
conduct cross-examination as may be specifically allowed by the
assigned Presiding Officer for a full determination of relevant facts.
Sec. 31.730 Completion of adjudication procedures.
(a) The assigned Presiding Officer will close and certify the
record of the adjudication promptly upon the completion of the hearing
and upon the submission of post-hearing briefs, if any are ordered by
the assigned Presiding Officer.
(b) The assigned Presiding Officer will issue an Initial Decision
based on the certified record, and the decision will be subject to
appeal pursuant to 6 CFR 31.735.
(c) An Initial Decision will become a final agency action on the
expiration of the time for an appeal pursuant to 6 CFR 31.735.
(d) An Initial Decision will specify the time by which the subject
person or entity must pay the ordered civil penalty, or the Presiding
Officer's modification of such penalty, if any. Such deadline will be
stayed, however, during the pendency of any appeal pursuant to 6 CFR
31.735.
Sec. 31.735 Appeals.
(a) Right to appeal. The Assistant Secretary, or any person or
entity having received an Initial Decision under this Subpart, has the
right to appeal to the Under Secretary acting as a neutral appeals
officer.
(b) Procedure for appeals. (1) The Assistant Secretary, or any
person or entity who has received an Initial Decision under this
Subpart, may institute an appeal by filing a Notice of Appeal with the
Office of the General Counsel.
(2) A Notice of Appeal must be filed within seven calendar days of
the service of the Presiding Officer's Initial Decision. Where the
Assistant Secretary initiates an appeal, the Assistant Secretary will
serve a copy of this Notice of Appeal on the appellee.
(3) An Initial Decision is stayed from the timely filing of a
Notice of Appeal until the Under Secretary issues a Final Decision.
(4) The appellant must file a Brief with the Office of the General
Counsel within 28 calendar days of the filing of
[[Page 46957]]
the Presiding Officer's Initial Decision. Where the Assistant Secretary
initiates an appeal, the Assistant Secretary will serve a copy of this
Brief on the appellee.
(5) The appellee must file its/his/her Opposition Brief with the
Office of the General Counsel within 28 calendar days of the filing of
the appellant's Brief. Where the Assistant Secretary is an appellee,
the Assistant Secretary will serve a copy of this Opposition Brief on
the appellant.
(c) Expedited appeals. The Under Secretary may provide for
expedited appeals for appropriate matters.
(d) Ex parte communications. (1) At no time after the filing of a
Notice of Appeal and prior to the issuance of a Final Decision on an
appeal pursuant to 6 CFR 31.735(e) will the Under Secretary, his
designee, or any person who will advise that official in the decision
on the matter discuss ex parte the merits of the proceeding with any
interested person outside the Department, with any Department official
who performs a prosecutorial or investigative function in such
proceeding or a factually related proceeding, or with any
representative of such person.
(2) If, after the filing of a Notice of Appeal and prior to the
issuance of a Final Decision on an appeal pursuant to 6 CFR 31.375(e),
the Under Secretary, his designee, or any person who will advise that
official in the decision on the matter receives from or on behalf of
any party, by means of an ex parte communication, information which is
relevant to the decision of the matter and to which other parties have
not had an opportunity to respond, a summary of such information will
be served on all other parties, who will have an opportunity to reply
to the ex parte communication within a time set by the Under Secretary
or his/her designee.
(3) The consideration of classified or Sensitive But Unclassified
information or materials pursuant to an in camera procedure does not
constitute a prohibited ex parte communication for purposes of this
subpart.
(e) Final decisions. The Under Secretary will issue a Final
Decision and serve it upon the parties. A Final Decision made by the
Under Secretary constitutes final agency action.
(f) Conduct of appeals. The Secretary may establish procedures for
the conduct of appeals pursuant to this subpart.
Subpart H--Other
Sec. 31.800 State law preemption.
Subject to subtitle J, the laws of any State are preempted to the
extent that such laws are inconsistent with this part or with subtitle
J, except that this section shall not preempt any State law that
provides additional protection against the acquisition of ammonium
nitrate by terrorists or the use of ammonium nitrate in explosives in
acts of terrorism or for other illicit purposes, as determined by the
Secretary.
Janet Napolitano,
Secretary.
[FR Doc. 2011-19313 Filed 8-2-11; 8:45 am]
BILLING CODE 9119-9P-P