[Federal Register Volume 81, Number 181 (Monday, September 19, 2016)]
[Proposed Rules]
[Pages 64088-64092]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-22215]


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DEPARTMENT OF STATE

22 CFR Part 22

[Public Notice: 9520]
RIN 1400-AD81


Schedule of Fees for Consular Services, Department of State and 
Overseas Embassies and Consulates--Passport Services Fee Changes

AGENCY: Department of State.

ACTION: Proposed rule.

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SUMMARY: The Department of State proposes an adjustment to the Schedule 
of Fees for Consular Services of the Department of State's Bureau of 
Consular Affairs (``Schedule of Fees'' or ``Schedule'') for the 
execution fee for passport books and cards. The Department is adjusting 
this fee in light of the findings of the most recent annual update to 
the Cost of Service Model to better align the fees for consular 
services with the costs of providing those services.

DATES: The Department of State will accept comments on this proposed 
rule until November 18, 2016.

ADDRESSES: Interested parties may submit comments to the Department by 
any of the following methods:
     Visit the Regulations.gov Web site at: http://www.regulations.gov and search for the Regulatory Information Number 
(RIN) 1400-AD81 or docket number DOS-2016-0029.
     Mail paper document: U.S. Department of State, Office of 
the Comptroller, Bureau of Consular Affairs (CA/C), SA-17, 8th Floor, 
Washington, DC 20522-1707.
     Email: [email protected]. You must include the RIN (1400-
AD81) in the subject line of your message.
     All comments should include the commenter's name, the 
organization the commenter represents, if applicable, and the 
commenter's address. If the Department is unable to read your comment 
for any reason, and cannot contact you for clarification, the 
Department may not be able to consider your comment. After the 
conclusion of the comment period, the Department will publish a Final 
Rule (in which it will address relevant comments) as expeditiously as 
possible.

FOR FURTHER INFORMATION CONTACT: James McDaniel, Management Analyst, 
Office of the Comptroller, Bureau of Consular Affairs, Department of 
State; phone: 202-485-6694, telefax: 202-485-6826; email: 
[email protected].

SUPPLEMENTARY INFORMATION: 

Background

    The proposed rule makes a change to the Schedule of Fees. The 
Department sets and collects its fees based on the concept of full cost 
recovery. The Department completed its most recent review of current 
consular fees and will implement a change to the Schedule of Fees based 
on the costs of services calculated by the Fiscal Year 2014 update to 
the Cost of Service Model.

What is the authority for this action?

    The Department of State derives the general authority to set fees 
based on the cost of the consular services it provides, and to charge 
those fees, from the general user charges statute, 31 U.S.C. 9701. See, 
e.g., 31 U.S.C. 9701(b)(2)(A) (``The head of each agency . . . may 
prescribe regulations establishing the charge for a service or thing of 
value provided by the agency . . . based on . . . the costs to the 
government.''). As implemented through Executive Order 10718 of June 
27, 1957, 22 U.S.C. 4219 further authorizes the Department to establish 
fees to be charged for official services provided by U.S. embassies and 
consulates.
    Several statutes address specific fees relating to passports. For 
instance, 22 U.S.C. 214(a) authorizes the Secretary of State to set the 
passport execution fee by regulation, and to authorize state and local 
government officials and the U.S. Postal Service to collect and retain 
the execution fee for each application for a passport accepted by such 
officials or the U.S. Postal Service.
    Certain people are exempted by law or regulation from paying 
specific fees. They include, for instance, exemptions from the passport 
execution and application fees for officers or employees of the U.S. 
government proceeding abroad in the discharge of official duties and 
exemption from the passport execution fee if those officers or 
employees execute their application before a federal official. See 22 
U.S.C. 214(a); 22 CFR 22.1; 22 CFR 51.52(b).
    The Department last changed fees for passport services in an 
interim final rule

[[Page 64089]]

dated September 8, 2015. See Department of State Schedule of Fees for 
Consular Services, Department of State and Overseas Embassies and 
Consulates, 22 CFR part 22 (80 FR 53704). Those changes to the Schedule 
went into effect September 26, 2015. A final rule regarding those fees 
has not yet been published.

Why is the Department adjusting fees at this time?

    With certain exceptions--such as the reciprocal nonimmigrant visa 
issuance fee--the Department of State generally sets consular fees at 
an amount calculated to achieve recovery of the costs to the U.S. 
government of providing the consular service, in a manner consistent 
with general user charges principles, regardless of the specific 
statutory authority under which the fees are authorized. As set forth 
in OMB Circular A-25, as a general policy, each recipient should pay a 
reasonable user charge for government services, resources, or goods 
from which he or she derives a special benefit, at an amount sufficient 
for the U.S. government to recover the full costs to it of providing 
the service, resource, or good. See OMB Circular No. A-25, sec. 
6(a)(2)(a). The OMB guidance covers all Federal Executive Branch 
activities that convey special benefits to recipients beyond those that 
accrue to the general public. See id., sections 4(a), 6(a)(1).
    The Department reviews consular fees through an annual update to 
its Cost of Service Model to determine the appropriateness of each fee 
in light of OMB guidance. The Department proposes to make the change 
set forth below in the Schedule of Fees accordingly. The Cost of 
Service Model is an activity-based costing model that determines the 
current direct and indirect costs to the U.S. government associated 
with each consular good and service the Department provides. The model 
update identified the direct and indirect cost of the passport 
execution fee, and the update's results formed the basis of the change 
herein proposed to the Schedule.

Activity-Based Costing

    To set fees in accordance with the general user charges principles, 
the Department must determine the true cost of providing consular 
services. Following guidance provided in ``Managerial Cost Accounting 
Concepts and Standards for the Federal Government,'' OMB's Statement #4 
of Federal Accounting Standards (SFFAS #4), available at http://www.fasab.gov/pdffiles/sffas-4.pdf, the Department chose to develop and 
use an activity-based costing (ABC) model to determine the true cost of 
each of its consular services.
    The Government Accountability Office (GAO) defines activity-based 
costing as a ``set of accounting methods used to identify and describe 
costs and required resources for activities within processes.'' Because 
an organization can use the same staff and resources (computer 
equipment, production facilities, etc.) to produce multiple products or 
services, ABC models seek to identify and assign costs to processes and 
activities, and then to individual products and services through the 
identification of key cost drivers referred to as ``resource drivers'' 
and ``activity drivers.'' ABC models also seek to identify the amount 
of time an organization's personnel spend on each service and how much 
overhead cost (rent, utilities, facilities maintenance, etc.) is 
associated with delivering each service. ABC models require financial 
and accounting analysis, and modeling skills combined with a detailed 
understanding of an organization's business processes. ABC models 
require an organization to identify all activities required to produce 
a particular product or service (``activities'') and all resources 
consumed (costs) in the course of producing that product or service. An 
organization also must measure the quantity of resources consumed 
(``resource driver''); and the frequency and intensity of demand placed 
on activities to produce services (``activity driver''). SFFAS 
Statement #4 provides a detailed discussion of the use of cost 
accounting by the U.S. government.

The Department's Cost of Service Model

    The Department conducted periodic Cost of Service Studies using ABC 
methods to determine the costs of its consular services through 2009. 
In 2010, the Department moved to adopt an annually updated Cost of 
Service Model (CoSM) that measures all of its consular operations and 
costs, including all of the activities needed to provide consular 
services, whether fee-based or not. This provides a comprehensive and 
detailed look at all consular services and all services that the 
Department performs for other agencies in connection with its consular 
operations. The CoSM now includes approximately 80 distinct activities, 
and enables the Department to model its consular-related costs with a 
high degree of precision.
    The Department uses three methods outlined in SFFAS Statement #4 
(paragraph 149(2)) to assign resource costs to activities: (a) Direct 
tracing; (b) estimation based on surveys, interviews, or statistical 
sampling; and (c) allocations. The Department uses direct tracing to 
assign the cost of, for example, a physical passport book or the visa 
foil placed in a visa applicant's passport. Assigning costs to 
activities such as adjudicating a passport or visa application requires 
estimation based on surveys, interviews, or statistical sampling to 
determine who performs an activity and how long it takes. Indirect 
costs (overhead) in the CoSM are allocated according to the level of 
effort needed for a particular activity. Where possible, the model uses 
overhead cost pools to assign indirect costs only to related 
activities. For instance, the cost of rent for domestic passport 
agencies is assigned only to passport costs, not to visas or other 
services the Department provides only overseas. The Department 
allocates indirect support costs to each consular service by the 
portion of each cost attributable to consular activities. For example, 
the model allocates a portion of the cost of the Department's Bureau of 
Human Resources to consular services. The total amount of this 
allocation is based on the number of Bureau of Human Resources staff 
members who support Bureau of Consular Affairs personnel. In turn, this 
amount is allocated among the different consular services by the level 
of effort to provide them.
    To assign labor costs, the Department relies on a variety of 
industry-standard estimation methodologies. To document how consular 
staff divide their time overseas, the Department conducts the Consular 
Overseas Data Collection (CODaC) survey of a representative sample of 
posts each year. The Department uses CODaC survey data in conjunction 
with volume data from more than 200 individual consular sections in 
consulates and embassies worldwide, to develop resource drivers to 
assign labor costs to activities. For consular activities that take 
place in the United States, the Department collects volume data from 
periodic workload reports, including Passport Agency Task Reports 
pulled from management databases that include Passport's Management 
Information System. Financial information is gathered from reports by 
the Bureau of Consular Affairs' Office of the Comptroller. The 
Department converts the cost and workload data it collects into 
resource drivers and activity drivers for each resource and activity.
    Because approximately 70 percent of the workforce involved in 
providing consular services are full-time Federal employees, if demand 
for a service falls precipitously, the Department cannot

[[Page 64090]]

shed employees as quickly as the private sector. Likewise, should 
demand rise precipitously, the Department cannot add employees quickly, 
because delivering the majority of consular services requires specially 
trained employees who cannot begin their training until they have 
completed the Federal hiring process and obtained a security clearance. 
Additionally, given government procurement rules and security 
requirements, the Department must commit to many of its facilities and 
infrastructure costs years before a facility becomes available. In 
spite of changes in demand, the Department is obligated to cover these 
costs. Given these and other constraints on altering the Department's 
cost structure in the short term, changes in service volumes can have 
dramatic effects on whether a fee is self-sustaining. Therefore, the 
CoSM includes two years of predictive data and three years of actual 
data. Predictive workloads are based on projections by the Office of 
Visa Services, the Office of Passport Services, and other parts of the 
Bureau of Consular Affairs that are consistent with Department budget 
documents prepared for Congress.
    The costs the Department enters into the CoSM include every line 
item of costs, including items such as physical material for making 
passports and visas, salaries, rent, supplies, and IT hardware and 
software. The Department then determines a resource driver (from, for 
example, the responses to the CODaC survey) for each of these costs, as 
discussed above and enters the resource drivers and assignments into 
the model. The Department then selects an activity driver, such as the 
volume data discussed above, for each activity, in order to assign 
these costs to each service type. This process allows the model to 
calculate a total cost for each of the Schedule of Fees' line items for 
visa services, passport services, and overseas citizens services, and 
services for other government agencies and no-fee services. The model 
then divides this total cost by the total volume of the service or 
product in question in order to determine a final unit cost for the 
service or product. Projected costs for predictive years also are 
included to take account of changes in the size of consular staff, 
workload, and similar factors. The resulting database constitutes the 
CoSM. The Department continues to refine and update the CoSM in order 
to set fees commensurate with the cost of providing consular services. 
Because the CoSM is a complex series of iterative computer processes 
incorporating more than a million calculations, it is not reducible to 
a tangible form such as a document. Inputs are formatted in 
spreadsheets for entry into the ABC software package. The ABC software 
package itself is an industry standard commercial off-the-shelf 
product, SAP Business Objects. The software's output includes 
spreadsheets with raw unit costs, validation reports, and management 
reports.
    A number of fees are set at levels other than cost. These include 
passport fees for minors, which are set below cost as a longstanding 
matter of policy, and the reduced Border Crossing Card Fee for Mexican 
Minors, which is set by law. The true cost of these services must be 
offset by other fees. These offsets are calculated on additional 
spreadsheets outside the model software. Final unit costs incorporate 
these offsets.

Schedule of Fees Updates

    The last broad set of amendments to the Schedule of Fees occurred 
in 2014, though the Department has made some specific amendments to it 
since that time. Some fees, including the Immigrant Visa petition and 
the Immigrant Visa ineligibility waiver (items 31(a) and 35(c) 
respectively), are set by the Department of Homeland Security and were 
most recently updated by that agency on November 23, 2010. The change 
to the current Schedule of Fees is discussed below. The CoSM estimate 
discussed below is based on projected workload for Fiscal Year 2016, 
and the proposed fee has been rounded to make it easier to collect.

Passport Execution Fee

    The Department proposes to increase the execution fee for passport 
books and cards from $25 to $35, excepting those persons who are 
exempted statutorily from paying the passport execution fee. The 
passport execution fee is applicable to all first-time passport 
applicants and certain other applicants who must apply in person, such 
as minors under the age of 16. Applicants apply in-person at post 
offices and other acceptance facilities, such as local clerks of court, 
and at the Department's passport offices. The passport execution fee 
includes the costs associated with accepting passport applications and 
fees in-person, including salaries, benefits, and an allocated portion 
of overhead including, but not limited to, rent, utilities, supplies, 
and equipment. The Department's CoSM showed that these costs were more 
than $33. The U.S. Postal Service--the acceptance agent for the 
majority of passport applications--regularly conducts a similar study 
and found that these costs were more than $34. See 22 U.S.C. 214(a); 22 
CFR 51.51(b).
    The $10 increase in the passport execution fee will result in a $10 
increase to the cost to first-time passport applicants and certain 
applicants who must appear at post offices and other acceptance 
facilities such as local clerks of court. Individuals who apply for a 
passport renewal by mail will not see a fee increase.

Regulatory Findings

Administrative Procedure Act
    The Department is publishing this rule as a proposed rule, with a 
60-day provision for public comments.
Regulatory Flexibility Act
    The Department reviewed this proposed rule and, by approving it, 
certifies that it will not have a significant economic impact on a 
substantial number of small entities as defined in 5 U.S.C. 601(6).
Unfunded Mandates Act of 1995
    This proposed rule will not result in the expenditure by state, 
local, and tribal governments, in the aggregate, or by the private 
sector, of $100 million or more in any year, and it will not 
significantly or uniquely affect small governments. Therefore, no 
actions were deemed necessary under the provisions of the Unfunded 
Mandates Reform Act of 1995, 2 U.S.C. 1501-1504.
Small Business Regulatory Enforcement Fairness Act of 1996
    This proposed rule is a major rule as defined by 5 U.S.C. 804(2).
Executive Order 12866
    The Department has reviewed this proposed rule to ensure its 
consistency with the regulatory philosophy and principles set forth in 
the Executive Orders. OMB determined that this rule is significant 
under Executive Order 12866, and the Department confirmed that it is 
economically significant as defined by the Executive Order.
    This proposed rule is necessary in light of the Department of 
State's CoSM finding that the cost of executing first-time passports is 
higher than the current fee. The Department is setting the fees in 
accordance with 31 U.S.C. 9701 and other applicable authority, as 
described in more detail above. See, e.g., 31 U.S.C. 9701(b)(2)(A) 
(``The head of each agency . . . may prescribe regulations establishing 
the charge for a service or thing of value provided by the agency . . . 
based on . . . the costs to the Government.''). This regulation 
generally sets the fee for passport

[[Page 64091]]

executions at the amount required to recover the costs associated with 
providing this service.
    Details of the proposed fee change are as follows:

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                                                                                                                             Estimated
                                                                                                                           annual number     Estimated
                        Item No.                           Proposed fee     Current fee    Change in fee    Percentage          of           change in
                                                                                                             increase      applications     annual fees
                                                                                                                                \1\        collected \1\
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                                                         SCHEDULE OF FEES FOR CONSULAR SERVICES
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                                                                      * * * * * * *
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                                                            PASSPORT AND CITIZENSHIP SERVICES
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1. Passport Book or Card Execution: Required for first-              $35             $25             $10             40%      11,763,831    $117,638,310
 time applicants and others who must apply in person....
                                                         -----------------------------------------------------------------------------------------------
    Total...............................................  ..............  ..............  ..............  ..............  ..............    $117,638,310
 
                                                                      * * * * * * *
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\1\ Based on projected FY 2016 workload.

    The Department of State does not anticipate that demand for 
passport services affected by this proposed rule will change 
significantly because of these fee changes, and welcomes public comment 
on that expectation.
    The Department does not believe that passport application fees are 
a significant determining factor when U.S. citizens decide to travel 
internationally. The price of a passport book or card remains minor in 
comparison with other costs associated with foreign travel, given that 
taxes and surcharges alone on an international airfare can easily 
surpass $100. As a result, the Department does not believe passport 
demand will be significantly affected by increases of the size 
proposed.
Executive Orders 12372 and 13132
    This regulation will not have substantial direct effects on the 
states, on the relationship between the national government and the 
states, or on the distribution of power and responsibilities among the 
various levels of government. Therefore, in accordance with section 6 
of Executive Order 13132, it is determined that this rule does not have 
sufficient federalism implications to require consultations or warrant 
the preparation of a federalism summary impact statement. The 
regulations implementing Executive Order 12372 regarding 
intergovernmental consultation on federal programs and activities do 
not apply to this regulation.
Executive Order 13175
    The Department determined that this proposed rulemaking will not 
have tribal implications, will not impose substantial direct compliance 
costs on Indian tribal governments, and will not preempt tribal law. 
Accordingly, the requirements of Executive Order 13175 do not apply to 
this rulemaking.
Paperwork Reduction Act
    This information collection contained in this proposed rule is 
pursuant to the Paperwork Reduction Act, 44 U.S.C. Chapter 35. 
Information Collection 1405-0004, form DS-11 is related to this 
proposed rule. The Notice of Proposed Rulemaking proposes an increase 
in the passport execution fee, from $25 to $35, based on the result of 
the Department CoSM, which found that the government's cost of 
executing a first-time passport is higher than the fee that the 
Department was charging an individual applicant. The CoSM is an 
activity-based costing model that determines the current direct and 
indirect costs to the U.S. government associated with each consular 
good and service the Department provides.
    This information collection was renewed on August 30, 2016, with an 
expiration date of August 31, 2019. This notice request comments as it 
pertains to the proposed fee increase from $25 to $35.
(1) Title of Information Collection: Application for a U.S. Passport.
(2) OMB Control Number: 1405-0004.
(3) Type of Request: Revision of a Currently Approved Collection.
(4) Form Number: DS-11.
(5) Respondents: Individuals or Households.
(6) Estimated Number of Respondents: 11,763,831.
(7) Estimated Number of Responses: 11,763,831.
(8) Average Time per Response: 85 Minutes.
(9) Total Estimated Burden Time: 16,665,427 hours.
(10) Frequency: On occasion.
(11) Obligation to Respond: Required to Obtain a Benefit.
(12) Submit comments to OMB by the following methods:
Office of Management and Budget (OMB):
     Direct comments to the Department of State Desk Officer in 
the Office of Information and Regulatory Affairs at the Office of 
Management and Budget (OMB). You may submit comments by the following 
methods:
     Email: [email protected]. You must include the 
DS form number, information collection title, and the OMB control 
number in the subject line of your message.
    Fax: 202-395-5806. Attention: Desk Officer for Department of State.
Abstract of Proposed Collection
    The DS-11 solicits data necessary for Passport Services to issue a 
U.S. passport (book and/or card format) pursuant to authorities granted 
to the Secretary of State by 22 U.S.C. 211a et seq. and Executive Order 
(E.O.) 11295 (August 5, 1966) for the issuance of passports to U.S. 
nationals.
    The issuance of U.S. passports requires the determination of 
identity, nationality, and entitlement with reference to the provisions 
of Title III of the Immigration and Nationality Act (INA) (8 U.S.C. 
1401-1504), the 14th Amendment to the Constitution of the United 
States, other applicable treaties and laws, and implementing 
regulations at 22 CFR parts 50 and 51. The specific regulations 
pertaining to the Application for a U.S. passport are at 22 CFR 51.20 
through 51.28.

[[Page 64092]]

Methodology
    The information collected on the DS-11 is used to facilitate the 
issuance of passports to U.S. citizens and nationals. The primary 
purpose of soliciting the information is to establish citizenship, 
identity, and entitlement to the issuance of the U.S. passport or 
related service, and to properly administer and enforce the laws 
pertaining to the issuance thereof.
    Passport Services collects information from U.S. citizens and non-
citizen nationals when they complete and submit the Application for a 
U.S. passport. Passport applicants can either download the DS-11 from 
the Internet or obtain one from an Acceptance Facility/Passport Agency. 
The form must be completed and executed at an acceptance facility or 
passport agency, and submitted with evidence of citizenship and 
identity.

List of Subjects in 22 CFR Part 22

    Consular services, Fees, Passports.

    Accordingly, for the reasons stated in the preamble, 22 CFR part 22 
is proposed to be amended as follows:

PART 22--SCHEDULE OF FEES FOR CONSULAR SERVICES--DEPARTMENT OF 
STATE AND FOREIGN SERVICE

0
1. The authority citation for part 22 is revised to read as follows:

    Authority:  8 U.S.C. 1101 note, 1153 note, 1183a note, 1351, 
1351 note, 1714, 1714 note; 10 U.S.C. 2602(c); 11 U.S.C. 1157 note; 
22 U.S.C. 214, 214 note, 1475e, 2504(a), 2651a, 4201, 4206, 4215, 
4219, 6551; 31 U.S.C. 9701; Exec. Order 10,718, 22 FR 4632 (1957); 
Exec. Order 11,295, 31 FR 10603 (1966).

0
2. Revise item 1 in the table ``Schedule of Fees for Consular 
Services'' in Sec.  22.1 to read as follows:


Sec.  22.1  Schedule of fees.

* * * * *

                 Schedule of Fees for Consular Services
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                        Item No.                               Fee
------------------------------------------------------------------------
                    Passport and Citizenship Services
------------------------------------------------------------------------
    1. Passport Book or Card Execution: Required for                $35
     first-time applicants and others who must apply in
     person (Applicants applying for both the book and
     card simultaneously on the same application pay
     only one execution fee.)..........................
 
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    Dated: July 31, 2016.
Patrick F. Kennedy,
Under Secretary for Management.
[FR Doc. 2016-22215 Filed 9-16-16; 8:45 am]
 BILLING CODE 4710-13-P