[Federal Register Volume 89, Number 27 (Thursday, February 8, 2024)]
[Rules and Regulations]
[Pages 8550-8557]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-02495]



[[Page 8550]]

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DEPARTMENT OF HOMELAND SECURITY

Transportation Security Administration

49 CFR Part 1548

[Docket No. TSA-2020-0002]
RIN 1652-AA72


Frequency of Renewal Cycle for Indirect Air Carrier Security 
Programs

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

ACTION: Final rule.

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SUMMARY: The Transportation Security Administration (TSA) is modifying 
its regulations to reduce the frequency of renewal applications by 
indirect air carriers (IACs). Rather than requiring these entities to 
submit an application to renew their security program each year, TSA 
now requires renewal once every 3 years. This modification reduces the 
burden of compliance without a negative impact on security.

DATES: This rule is effective March 11, 2024.

FOR FURTHER INFORMATION CONTACT: Angel Rodriguez, telephone 1-571-227-
2108; email [email protected]; 6595 Springfield Center 
Drive, Springfield, VA 20598-6003.

SUPPLEMENTARY INFORMATION:

Availability of Rulemaking Document

    You can find an electronic copy of this rule using the internet by 
accessing the Government Publishing Office's web page at https://www.govinfo.gov/app/collection/FR/ to view the daily published Federal 
Register edition or accessing the Office of the Federal Register's web 
page at https://www.federalregister.gov. Copies are also available by 
contacting the individual identified for ``General Questions'' in the 
FOR FURTHER INFORMATION CONTACT section. Make sure to identify the 
docket number of this rulemaking.

Small Entity Inquiries

    The Small Business Regulatory Enforcement Fairness Act (SBREFA) of 
1996 requires TSA to comply with small entity requests for information 
and advice about compliance with statutes and regulations within TSA's 
jurisdiction. Any small entity that has a question regarding this 
document may contact the person listed in the FOR FURTHER INFORMATION 
CONTACT section. Persons can obtain further information regarding 
SBREFA on the Small Business Administration's web page at https://www.sba.gov/category/advocacy-navigation-structure/regulatory-policy/regulatory-flexibility-act/sbrefa.

Abbreviations and Terms Used in This Document

CCSF--Certified Cargo Screening Facility
CEQ--Council on Environmental Quality
DHS--Department of Homeland Security
DOT--Department of Transportation
E.O.--Executive Order
FOIA--Freedom of Information Act
IAC--Indirect Air Carrier
IACSSP--Indirect Air Carrier Standard Security Program
NEPA--National Environmental Policy Act
OMB--Office of Management and Budget
PRA--Paperwork Reduction Act of 1995
SBREFA--Small Business Regulatory Enforcement Fairness Act of 1996
SSI--Sensitive Security Information
TSA--Transportation Security Administration

I. Executive Summary

A. Purpose of the Regulation

    The Indirect Air Carrier (IAC), sometimes called a freight 
forwarder, acts as an intermediary between a shipper of air cargo and 
an air carrier by receiving and consolidating cargo from one or more 
shippers for transport on one or more aircraft flights. IACs are a 
critical component of the secure air cargo supply chain in the United 
States, helping to ensure the safe, timely, and efficient movement of 
goods every day. Approximately 3,800 IACs are operating in the United 
States and registered with TSA, ranging from sole proprietors working 
out of their homes to large corporations. Currently, TSA's regulations 
require IACs to renew their registration each year.
    TSA is modifying 49 CFR 1548.7 to reduce the frequency at which 
IACs must renew their registration from annual to once every 3 years. 
This modification reduces the burden of compliance by reducing the time 
and effort an IAC must devote to renewing their registration, 
permitting them to focus on other operational and business priorities. 
TSA has determined that the change will not have a negative impact on 
aviation security.

B. Summary of Major Provisions

    This final rule makes limited changes to 49 CFR 1548.7, which are 
necessary to change the regulatory requirement for the IAC security 
program-renewal from 1 year to 3 years. Table 1 identifies each change.

C. Costs and Benefits

    TSA has determined this modification reduces the cost of compliance 
without any negative impacts on security. As described in the notice of 
proposed rulemaking (NPRM) (87 FR 79264, December 27, 2022) and as 
noted below, TSA estimates that, over 10 years, cost savings aggregate 
to $7.8 million undiscounted, $6.6 million discounted at 3 percent, and 
$5.4 million discounted at 7 percent. This final rule would realize an 
annualized $0.8 million cost savings discounted at 7 percent over 10 
years.

II. General Discussion of the Rulemaking

A. Background

    To ensure the security of the air cargo system, TSA imposes 
security requirements on IACs in 49 CFR part 1548. Through these 
regulations, TSA ensures ``IACs are held accountable for securing the 
goods entrusted to them throughout those legs of the supply chain for 
which they are responsible.'' \1\
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    \1\ See Proposed Rule, Air Cargo Security Requirements, 69 FR 
65257, 65269 (Nov. 10, 2004).
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    Under 49 CFR 1548.5, each IAC must adopt and carry out the IAC 
Standard Security Program (IACSSP). Persons interested in becoming IACs 
are vetted by TSA and are required to implement security requirements 
in the IACSSP. These requirements are intended to ensure security 
during the period between when a package leaves a shipper and when it 
is presented to the aircraft operators. IACs must also ensure their 
employees understand and are trained to implement their security 
responsibilities.
    Current 49 CFR 1548.7(b) presents the processes an IAC must follow 
annually to seek renewed approval from TSA to operate under the IACSSP. 
In general, annual renewal is a continuation of current practices and 
security measures in the IACSSP, including any TSA-approved amendments 
issued under 49 CFR 1548.7(c), (d), and/or (e). IACs must submit the 
renewal request to TSA at least 30 calendar days before expiration of 
the IACSSP, as well as other standards for the submission.
    Since 2006, TSA has required IACs to renew their registration each 
year. Since the annual renewal requirement was imposed in 2006, TSA has 
determined that it is unnecessary to continue requiring annual renewal 
and that the program could be renewed once every 3 years without having 
a negative impact on security. As discussed below, this determination 
is based on two key factors: (1) TSA's inspection processes and 
priorities for IACs negate the need for annual renewals, and (2) the 
triennial renewal requirement for other TSA air cargo programs that 
have proven to be effective and secure.

[[Page 8551]]

    TSA published an NPRM on December 27, 2022,\2\ proposing to change 
the renewal period, and requested comments from the public to be 
submitted by February 27, 2023. TSA received two comments, both from 
interested industry associations.
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    \2\ 87 FR 79264 (Dec. 27, 2022).
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B. Summary of Comments

    TSA received two comments, both from interested industry 
associations. One trade association representing indirect air carriers 
and aircraft operators expressed general support for the rule, and 
expressed the belief that the rule would not negatively impact 
security.\3\ Another trade association representing airline pilots 
recommended that TSA not move forward with the rulemaking.\4\ The 
association for the airline pilots stated: (1) TSA should not reduce 
oversight in pursuit of economic relief, which could reduce 
opportunities to discover evolving security threats; (2) TSA's 
estimated burden of 4 hours to complete annual certification is not a 
meaningful burden on industry; (3) the high turnover rate among IAC 
staff requires TSA audits and training verification on an annual basis 
at a minimum; and (4) if TSA's process for revalidating IACs is tied to 
their security program renewals, the shift to a 3-year renewal cycle 
would create an unnecessary security risk and TSA should assess IACs 
for security risks on an annual basis, or more frequently.
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    \3\ https://www.regulations.gov/docket/TSA-2020-0002/comments, 
TSA-2020-0002-0002.
    \4\ https://www.regulations.gov/docket/TSA-2020-0002/comments, 
TSA-2020-0002-0003.
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    TSA Response: Following review of the issues raised by the airlines 
pilots' association, TSA has determined that the commenter provided no 
new information to counter TSA's previous determination on the benefits 
and need for this rulemaking. First, TSA is not sacrificing security in 
order to obtain economic benefits. These limited changes to the IAC 
regulation are consistent with 49 U.S.C. 114(l)(3), which requires TSA 
to consider the costs of any proposed regulation relative to its 
security benefit. In addition, Executive Order (E.O.) 13563 of January 
18, 2011 (Improving Regulation and Regulatory Review), requires 
agencies to periodically review existing regulations to identify 
requirements that ``may be outmoded, ineffective, insufficient, or 
excessively burdensome, and to modify, streamline, expand, or repeal 
them in accordance with what has been learned.'' \5\ Before proposing 
this change, TSA conducted a risk analysis and determined that the 
revision would not have a negative impact on security due to other 
compensating procedures. This final rule provides an overall reduction 
in the burden of compliance without negatively affecting security.\6\
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    \5\ See sec. 6 of E.O. 13563.
    \6\ 87 FR 79265.
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    Second, the costs of compliance with the annual renewal requirement 
may be relatively small for each IAC, but TSA estimates that over 10 
years the cost savings aggregate to $7.8 million undiscounted, $6.6 
million discounted at 3 percent, and $5.4 million discounted at 7 
percent. The rule would realize annualized savings of $0.8 million in 
2020 dollars.\7\ These cost savings accrue for both the industry and 
TSA. Reducing the administrative burden on TSA staff of reviewing 
annual renewal applications allows TSA to focus additional resources 
and staff effort on the highest air cargo security priorities.
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    \7\ 87 FR 79266.
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    Third, as noted in the NPRM, the transition from an annual security 
program certification to a 3-year security program certification 
renewal period does not mean that IACs will only be assessed or audited 
for compliance once every 3 years. As discussed in the NPRM and below, 
TSA has determined that a 3-year renewal cycle is effective, efficient, 
and secure when coupled with an appropriately staffed and resourced 
inspection and enforcement program.\8\ TSA acknowledges the airline 
pilots association concern regarding turnover in the IAC industry, but 
an extension of the recertification period does not mean a reduction in 
regulatory inspections. This determination is supported by TSA's 
experience with other air cargo security regulations, specifically the 
Certified Cargo Screening Program (CCSP), and TSA believes it will be 
similarly effective with IACs.\9\
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    \8\ See id. for more discussion on this issue.
    \9\ Id.
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    Fourth, under this final rule, within any 3-year period, every IAC 
will be subject to at least one triennial comprehensive inspection, two 
targeted annual inspections in years when a comprehensive inspection is 
not conducted, and possible supplemental inspections whenever TSA's 
assessment of risk or evolving compliance posture indicate that 
additional inspections are warranted. TSA's process for inspecting and 
revalidating IACs is not tied to the annual renewal of IAC security 
programs because the inspection and revalidation schedules of TSA 
inspectors are managed separately from TSA's program renewal efforts. 
TSA implements a national inspection plan based on regular cycles, and 
conducts focused Special Emphasis Assessments and Special Emphasis 
Inspections whenever necessary. Further, TSA's local inspection plans 
augment the national plan with risk-based local inspection and 
revalidation schedules that consider regional threats, a specific IAC's 
past performance, and other factors.
    TSA's local field offices determine whether to conduct additional 
inspections of an individual IAC by assessing the results of prior 
compliance reviews in light of evolving and emerging threat 
information. TSA's local field offices may conduct more frequent 
inspections of IACs that have lower compliance rates, or otherwise 
present an elevated security risk. All IACs are subject to supplemental 
inspections if the local field office determines one is necessary.
    When TSA imposed the annual renewal requirement in 2006, TSA 
expected that the annual cycle of renewals would be the primary method 
to ensure the agency regularly reviewed each IAC and confirmed 
compliance with TSA security requirements. As described above, TSA now 
ensures compliance with the program through the nationwide schedule of 
regular annual inspections, Special Emphasis Assessments and 
Inspections, and additional inspections at the discretion of the local 
field office.
    An additional safeguard is provided by 49 CFR 1540.301, which 
allows TSA to withdraw approval of an IAC security program if TSA 
determines continued operation is contrary to security and the public 
interest. If TSA withdraws approval, an IAC must discontinue operation 
immediately, regardless of the renewal date of its program 
certification.
    As TSA noted in the NPRM,\10\ the triennial renewal requirement for 
other TSA air cargo programs have proven to be effective and secure. In 
addition to recognizing the effectiveness of its regular inspections to 
ensure compliance with the IAC program, TSA considered the requirements 
for the IAC program compared to other aviation security requirements, 
specifically requirements for the CCSP under 49 CFR part 1549. When TSA 
finalized the rule establishing the CCSP in 2011, TSA provided a 3-year 
renewal period for Certified Cargo Screening Facilities (CCSFs). 
Experience gained by more than a decade of implementing the CCSP 
validates that the triennial recertification cycle does not have a 
negative impact on security. The final rule does not change the actions 
that

[[Page 8552]]

IACs must perform to recertify or the requirements they must meet to 
maintain approval to operate as an IAC; the final rule simply reduces 
the frequency with which they must recertify.
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    \10\ 87 FR 79266.
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C. Section-by-Section Analysis

    After consideration of each comment and any relevant potential 
changes to the proposed rule, TSA is adopting the revisions as proposed 
in the NPRM. TSA has addressed all issues and concerns derived from 
these comments in the discussion below.
    Table 1 identifies each change made to 49 CFR 1548.7 as a result of 
this rulemaking.

                                        Table 1--Changes to 49 CFR 1548.7
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              Section                              Prior text                           Revised text
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1548.7(a)(4).......................  Removing the words ``one year after    Adding in their place ``3 years
                                      the month it was approved''.           after the month it was approved, or
                                                                             until the program has been
                                                                             surrendered or withdrawn, whichever
                                                                             is earlier''.
1548.7(a)(5).......................  .....................................  In the introductory text, adding the
                                                                             words ``or renewal'' after the
                                                                             words ``submitted during its
                                                                             initial''.
1548.7(b)(1).......................  Removing the words ``at least 30       Adding in their place ``at least 30
                                      calendar days prior to the first day   calendar days before the 36th month
                                      of the anniversary month of initial    after the initial approval''.
                                      approval''.
1548.7(b)(4).......................  Removing the words ``one year after    Adding in their place ``3 years
                                      the month it was renewed''.            after the month it was renewed, or
                                                                             until the program has been
                                                                             surrendered or withdrawn, whichever
                                                                             is earlier''.
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III. Regulatory Analyses

    TSA conducted a regulatory impact analysis (RIA) for the NPRM, 
posted in the docket for this rulemaking. As there were no comments 
related to the regulatory impact analysis in the NPRM, TSA has made no 
changes to the analysis in this final rule. TSA considered numerous 
statutes and executive orders related to rulemaking when developing 
this rule. The following summarizes TSA's analyses of the impact of the 
rulemaking as directed by these statutes or Executive orders.

A. Regulatory Planning and Review

1. Background
    Under the requirements of E.O. 12866 of September 30, 1993 
(Regulatory Planning and Review),\11\ as amended by E.O. 14094 of April 
6, 2023 (Modernizing Regulatory Review),\12\ and E.O. 13563 of January 
18, 2011 (Improving Regulation and Regulatory Review),\13\ agencies 
must assess the costs and benefits of available regulatory alternatives 
and, if regulation is necessary, select regulatory approaches that 
maximize net benefits (including potential economic, environmental, 
public health and safety effects, distributive impacts, and equity). 
These requirements were supplemented by E.O. 13563, which emphasizes 
the importance of quantifying both costs and benefits, of reducing 
costs, of harmonizing rules, and of promoting flexibility.
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    \11\ Published at 58 FR 51735 (Oct. 4, 1993).
    \12\ Published at 88 FR 21879 (Apr. 6, 2023).
    \13\ Published at 76 FR 3821 (Jan. 21, 2011).
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    The Office of Management and Budget (OMB) has determined this rule 
is not a significant regulatory action under section 3(f) of E.O. 
12866, as amended. Accordingly, OMB has not reviewed this rule.
    In conducting these analyses, TSA has certified that this 
rulemaking does not have a significant economic impact on a substantial 
number of small entities.
    The basis for this conclusion is set forth below.
    This final rule reduces regulatory costs by reducing the frequency 
that IACs must renew their security program certifications. This final 
rule reduces the frequency of annual IAC security program 
certifications to once every 3 years. This rule does not impose any 
incremental costs because regulated entities are already performing all 
actions required to obtain the certification in question. The expected 
outcome will be a minimal impact with positive net benefits.
2. Estimated Cost Savings to Affected Entities
    The cost savings from this rule arise from extending the duration 
of IAC security programs approved by TSA from 1 year to 3 years. This 
change aligns the duration of the IAC security program with the 
CCSP.\14\ Table 2 summarizes the change and impact from this action.
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    \14\ See 49 CFR 1549.7(a)(6). See also supra notes 8 and 10, and 
accompanying text.

                                           Table 2--Comparison of Current 49 CFR Part 1548 and the Final Rule
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               Current                        Final rule                        Impact                               Estimated cost savings
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Requires annual renewal of security    Revises to renewal       (1) Aligns part 1548 renewal period     TSA estimates the annualized cost saving to
 program.                               every 3 years.           with that of the TSA-approved           industry and Federal government to be $0.8
                                                                 Certified Cargo Screening Program,      million annualized at a 7 percent discount
                                                                 part 1549.                              rate. Cost savings arise from time saved due to
                                                                (2) Provides cost savings to industry    a less frequent security program renewal cycle.
                                                                 and TSA.
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    To estimate cost savings, TSA calculates the number of instances an 
IAC would resubmit a security program under the current annual 
requirement, and the number of instances that would be avoided under 
the final rule's 3-year requirement. TSA uses the difference in the 
number of resubmission instances between the current requirement and 
the final rule as the basis for the cost savings.
    TSA uses historical data on the number of existing IACs to forecast 
the number of security programs submitted for certification over the 
10-year period of analysis. TSA assumes that the regulatory change for 
less frequent

[[Page 8553]]

recertification does not impact the annual number of forecasted active 
IAC certifications. Based on historical program data, TSA assumes the 
aggregate population of active and approved IACs under the baseline and 
the final rule decreases each year with more dropping out than 
entering. TSA calculates that the aggregate active population decreases 
at an annual rate of 1.61 percent \15\ and compounds this rate to 
estimate the aggregate active IAC population for the next 10 years, as 
displayed in column a of Table 3. The aggregate active population of 
IACs (column a) also represents the number of security program 
submissions and resubmissions under the baseline annual renewal 
requirement.
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    \15\ Based on TSA data, there were 4,576 IACs in 2008 and 3,768 
in 2020. TSA calculates a negative compound annual growth rate of 
1.61% = (3,768 / 4,576)(1 / (2020-2008))-1.
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    TSA postulates that the number of newly approved IAC applications 
represents a proportion of the number of aggregate active IACs in the 
same year. This proportion has stabilized over the last 5 years at 5.41 
percent. TSA applied this percentage to the forecasted aggregate number 
of active IACs during a year to estimate the number of newly approved 
IAC applications during the same year \16\ as displayed in column c of 
Table 3.
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    \16\ The number of aggregate active IACs is estimated using the 
previous year aggregate value and the negative growth rate. For 
instance, the year 0 (2022) aggregate number of active IACs of 3,648 
is estimated applying the negative growth rate to the year-1 (2021) 
aggregate number of 3,707: 3,648 = 3,707 x (1-1.61%). The number of 
new IAC applications in year 0 is estimated at 197 by multiplying 
the estimated number of aggregate IACs in year 0 (3,648) by the 
average proportion of new IAC applications: 197 = 3,648 x 5.41%.
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    The aggregate active population of IACs during a year is composed 
of IAC renewals and newly approved IAC applications. Since TSA 
calculates the number of newly approved IAC applications by assuming 
they are a constant proportion of the number of aggregate active IACs, 
then the number of renewals must be estimated applying the 
complementary proportion to the number of aggregate active IACs, as 
shown in column b of Table 3.\17\
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    \17\ The number of IAC renewals is estimated applying the 
percentage complementary to the proportion of new IAC applications 
(1-5.41%) into the aggregate number of active IACs. For instance, 
the year 0 (2022) number of renewals is estimated multiplying the 
number of aggregate active IACs, or 3,648, by the complementary 
percentage of 94.59% to obtain 3,451 (3,648 x 94.59%). The number of 
IAC renewals can also be estimated subtracting the number of newly 
approved IAC applications from the number of aggregate active IACs.
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    The exit rate of IAC in a given year is based on the subtraction of 
the given year's active IAC population from the preceding year's active 
IAC population, and the removal of the given year's newly approved 
IACs,\18\ as displayed in column d of Table 2. Since the number of IAC 
exits is estimated based on the number of active IACs during the year 
and the number of newly approved IAC applications, an exit rate is 
derived from these two estimates for the purposes of compounding the 
number of exits over time. TSA calculates an IAC exit rate of 6.92 
percent \19\ (i.e., do not resubmit or are not approved) from year to 
year. The exit rate in a specific year is the percentage of IACs that 
do not request their security program renewed \20\ out of the total 
number of IACs that had a security program in place before this year.
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    \18\ For example, calculations of Year 0, Year 1 and Year 2 IAC 
Exits are as follows:-257 (Year 0 Exits) = 3,648 (Year 0 Active 
IACs)-3,707 (Year-1 Active IACs)-197 (Year 0 Newly Approved IACs);-
253 (Year 1 Exits) = 3,589 (Year 1 Active IACs)-3,648 (Year 0 Active 
IACs)-194 (Year 1 Newly Approved IACs); and-249 (Year 2 Exits) = 
3,532 (Year 2 Active IACs)-3,395 (Year 1 Active IACs)-191 (Year 2 
Newly Approved IACs).
    \19\ The exit rate is estimated by dividing the number of IAC 
exits by the aggregate number of active IACs in the previous year. 
For example, TSA estimates there would be 257 exits in year 0 (197 
exits that were replaced by new entrants plus the 60 exits that 
decreased the aggregate population). TSA calculates a 6.92% exit 
rate in year 0 (257 exits / 3,707 aggregate active IACs in year-1). 
This exit rate is the same throughout the 10-year period of 
analysis. The exit rate for future years can also be derived 
mathematically as follows: (Newly Approved IAC Proportion) x (1 + 
Active IAC Growth Rate)-(Active IAC Growth Rate), which numerically 
is equal to: 6.92% = 5.41% (1-1.61%)-(-1.61%).
    \20\ Firms do not get renewals either because a submission was 
not filed or was not approved.
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    TSA estimates the total number of submissions in two blocks: the 
first block includes submissions associated with the current IAC 
population in each year, and the second block includes submissions from 
new applicants. This final rule is expected to be implemented in year 1 
and the relevant prior year active IAC population will have, by then, a 
valid security plan; which will have to be renewed following the new 3-
year cycle.\21\ New applicants would also have to follow this 3-year 
renewal cycle. In both blocks, there is a share of IAC firms that will 
not renew their security plans during the next renewal event, and a 
share of IAC firms that will renew. The number of IACs resubmitting in 
a given year is estimated by multiplying the number of program 
submissions from 3 years prior by a factor that results from 
compounding the annual exit rate over 3 years; this retention factor, 
estimated to be 80.6 percent,\22\ is multiplied by the number of 
program submissions from 3 years before estimate the number of renewals 
in the corresponding year.
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    \21\ It is assumed that the validity of security plans will be 
extended until year 1 once this action is executed. If an IAC firm 
in the year 0 population wants to remain active over the 10 years of 
analysis it will have to obtain four renewals during this period, in 
years 1, 4, 7, and 10.
    \22\ 80.6% = (100%-6.92% exit rate)(3-year cycle).
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    Table 3 staggers recertifications under the final rule's 3-year 
cycle \23\ in four separate columns for submissions one to four in the 
10-year projection span. For example, TSA estimates that 2,738 of the 
3,395 IAC recertifications in year 1 would resubmit their security 
programs in year 4,\24\ and that 159 of the 197 new entrants in year 1 
would resubmit for the first time in year 4 (see columns e and f 
regarding first and second submissions). In Table 3, TSA takes into 
account four recertification cycles \25\ within the 10-year framework 
(columns e through h) and sums all the recertifications under the final 
rule in column i. Finally, TSA calculates the number of eliminated 
recertifications (column j) by subtracting the final rule 
recertifications (column i) from the baseline annual recertifications 
(column b).
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    \23\ A cycle is the period in between renewals (or between the 
first renewal and the initial approval). The 3-year cycle means that 
submissions have to be renewed every 3 years. The current submission 
cycle is annual, one submission every year.
    \24\ Note IACs that were approved by TSA in year-1 (2 years 
before the start date of this rule) and partially in year 0 (1 year 
before the publication of this final rule) would need to resubmit 36 
months from their last approval. IACs that were approved before the 
publication of the final rule (-1 & 0) are included in year-1, for 
the purpose of this analysis. For example: (Year 4 Second Cycle 
Resubmissions) = (Year 1 Renewals) x 80.6%.
    \25\ The frequency in which an IAC must resubmit their security 
program for review.

[[Page 8554]]



                                                           Table 3--Number of Final Rule Eliminated Security Program Recertifications
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                                                                         Baseline                                               Recertification cycle \28\
                          Year                            Active IACs    recerts      New IACs       IAC exits     ----------------------------------------------------  Final rule   Eliminated
                                                              \26\         \27\                                         1st          2nd          3rd          4th        recerts      recerts
                                                              a(-1) =   b1 = first     c = an x               dn =   e1 = b1 en  fn = e(n-3)  gn = f(n-3)         hn =  i = e + f +      j = b-i
                                                          initial pop         year      (5.41%)     (an-a(n-1))-cn     = c(n-3)    x (0.806)    x (0.806)       g(n-3)        g + h
                                                                    a     renewals                                    x (0.806)                              x (0.806)
                                                           = a(n-1) x    bn = an x
                                                            (1-1.61%)    (1-5.41%)
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1.......................................................        3,589        3,395          194               -253        3,395            0            0            0        3,395            0
2.......................................................        3,532        3,341          191               -249          162            0            0            0          162        3,179
3.......................................................        3,475        3,287          188               -245          159            0            0            0          159        3,128
4.......................................................        3,419        3,234          185               -241          156        2,738            0            0        2,894          340
5.......................................................        3,364        3,182          182               -237          154          130            0            0          284        2,898
6.......................................................        3,310        3,131          179               -233          151          128            0            0          280        2,852
7.......................................................        3,257        3,081          176               -229          149          126        2,207            0        2,483          598
8.......................................................        3,205        3,032          173               -226          147          124          105            0          376        2,656
9.......................................................        3,153        2,983          170               -222          144          122          103            0          370        2,613
10......................................................        3,103        2,935          168               -218          142          120          102        1,780        2,144          791
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Note: Calculations may not be exact due to rounding in the table.

    TSA estimates a time burden of 4 hours for an IAC manager to review 
and resubmit a security program. To calculate the hourly savings to 
industry, TSA multiplies the 4-hour burden by the fully loaded hourly 
wage rate for an IAC manager. TSA calculates the wage rate by 
estimating a weighted wage rate for two occupations across two industry 
subgroups.\29\ To calculate the weighted wage rate, TSA multiplies each 
labor category wage rate by its respective number of employees, sums 
the product of these calculations, and then divides the result by the 
total number of employees across all four wage rates. Table 4 
illustrates the weighted average wage calculation.
---------------------------------------------------------------------------

    \26\ The active IAC population in subsequent years was estimated 
by applying the negative growth rate of 1.61% to the active IAC 
population. The negative growth rate represents the net change in 
the active IAC population accounting for IAC exits and entries. Year 
1's value accounts for 3 years of negative growth derived from 3,768 
IACs as of the end of fiscal year 2020 based on TSA records.
    \27\ Baseline renewals represent Active IACs minus New IACs.
    \28\ A retention factor of 0.806 is calculated as the exit rate 
of 6.92 percent compounded over 3 years to account for the number of 
IACs still operating who submitted a security program 3 years prior.
    \29\ Bureau of Labor Statistics (BLS), U.S. Department of Labor, 
May 2020 National Industry Specific Occupation Employment and Wage 
Estimates, First-Line Supervisors of Transportation and Material 
Moving Workers (SOC 53-1040) in Freight Transportation Arrangement 
(NAICS 488510) and Administrative Management and General Management 
Consulting Services (NAICS 541611), and to Transportation, Storage, 
and Distribution Managers (SOC 11-3071) in (NAICS 488510) and (NAICS 
541611). (Accessed May 19, 2021 at https://www.bls.gov/oes/2020/may/naics4_541600.htm and https://www.bls.gov/oes/2020/may/naics4_488500.htm).

                           Table 4--Calculation of Weighted Average Industry Wage Rate
----------------------------------------------------------------------------------------------------------------
                                                                                     Wage rate       Number of
                                                                                 ----------------    employees
            Industry NAICS                             Occupations                               ---------------
                                                                                         a               b
----------------------------------------------------------------------------------------------------------------
Freight Transportation Arrangement      First-Line Supervisors of Transportation          $28.72           3,460
 (488510).                               and Material Moving Workers (53-1040).
                                        Transportation, Storage, and                       46.41           4,920
                                         Distribution Managers (11-3071).
Management, Scientific, and Technical   First-Line Supervisors of Transportation           27.52           3,190
 Consulting Services (541611).           and Material Moving Workers (53-1040).
                                        Transportation, Storage, and                       50.65           2,680
                                         Distribution Managers (11-3071).
----------------------------------------------------------------------------------------------------------------
Industry Weighted Average Wage Rate = [sum](ai x bi) / [sum]b    $38.68
----------------------------------------------------------------------------------------------------------------
Note: Calculations may not be exact due to rounding in the table.

    Next, TSA adjusts this wage rate to account for employer 
benefits,\30\ which results in an industry compensation rate of $57.90 
per hour. Table 5 illustrates the calculation of the hourly industry 
compensation rate based on these adjustments.
---------------------------------------------------------------------------

    \30\ The average compensation factor is 1.4968. 1.4968 = 
(($31.76 + $30.89 + $30.99 + $30.40) / 4) / (($21.35 + $20.62 + 
$20.61 + $20.29) / 4). The compensation factor is calculated based 
on the average of the quarterly total compensation divided by the 
average of the quarterly total wages. Source: BLS, News Releases, 
2020 Employer Costs for Employee Compensation, Table 4: Employer 
Costs for Employee Compensation for private industry workers by 
occupational and industry group (Transportation and Material Moving 
Occupational Group), as published in June 2020, September 2020, 
December 2020, and March 2021. (Accessed May 19, 2021 at https://www.bls.gov/bls/news-release/ecec.htm.)

           Table 5--Calculation of Industry Compensation Rate
------------------------------------------------------------------------
                                                   Compensation rate  (c
Weighted wage rate  (a)    Benefits factor  (b)          = a x b)
------------------------------------------------------------------------
               $38.68                   1.4968                   $57.90
------------------------------------------------------------------------


[[Page 8555]]

    TSA multiplies 4 hours per resubmission by the $57.90 for an IAC 
manager to calculate a unit cost savings of $232 per 
recertification.\31\
---------------------------------------------------------------------------

    \31\ $231.61 Renewal Unit Cost to Industry = 4-Hour Renewal Time 
Burden x $57.90 Compensation Rate for IAC Managers.
---------------------------------------------------------------------------

    TSA estimates a duration of 2.25 hours for TSA staff to review a 
resubmission. The TSA review staff is composed of two ``I'' pay band 
members \32\ and four ``J'' pay band members. Each submission could be 
reviewed by any one of these staff members. TSA calculates a staff 
compensation rate based on the weighted average of two different TSA 
pay-bands that conduct reviews. To calculate the TSA weighted 
compensation rate, TSA multiplies the respective pay band compensation 
\33\ by the respective number of employees, sums the product of these 
calculations, and then divides by the total number of employees. Table 
6 displays this weighted average calculation.
---------------------------------------------------------------------------

    \32\ TSA uses an SV pay grading system, which is a discrete 
salary system with pay ranges, incorporated into pay bands.
    \33\ TSA, DHS Modular Cost Standards, Washington DC Metropolitan 
Area Locality Pay, I-Band $70.62 = $147,382 annual compensation / 
2,087 hours and J-Band $83.17 = $173,585 annual compensation / 2,087 
hours (Office Personnel Management changed the 2,080 work hours for 
federal employees to 2,087 by amending 5 U.S.C. 5504(b). Source: 
Consolidated Omnibus Budget Reconciliation Act of 1985, Public Law 
99-272 (100 Stat. 82; April 7, 1986).

                         Table 6--Calculation of Weighted Average TSA Compensation Rate
----------------------------------------------------------------------------------------------------------------
                                                                                   Compensation      Number of
                                                                                      rate *         employees
                                  TSA pay band                                  --------------------------------
                                                                                        a                b
----------------------------------------------------------------------------------------------------------------
TSA I Band.....................................................................           $70.62               2
TSA J Band.....................................................................            83.17               4
----------------------------------------------------------------------------------------------------------------
Weighted Average TSA Compensation Rate = [sum](ai x bi ) / [sum]b..............               $78.99
----------------------------------------------------------------------------------------------------------------
* Compensation Rate includes employer benefits.

    TSA multiplies 2.25 hours by the TSA compensation rate of $78.99 
per hour to obtain a unit cost savings per recertification of $178.\34\
---------------------------------------------------------------------------

    \34\ $177.73 Renewal Unit Cost to TSA = $78.99 I/J Band TSA 
Weighted Compensation Rate x 2.25 Hour Burden for Renewal Review.
---------------------------------------------------------------------------

    To calculate savings, TSA multiplies the number of eliminated 
resubmissions from column j of Table 3, by the respective unit cost 
savings for industry ($232) and TSA ($178). Table 7 displays the 
industry, TSA, and total savings from modifying the security program 
resubmission frequency from 1 to 3 years. TSA estimates that over 10 
years cost savings aggregate to $7.8 million undiscounted, $6.6 million 
discounted at 3 percent, and $5.4 million discounted at 7 percent. The 
final rule would realize an annualized $0.8 million cost savings 
discounted at 7 percent over 10 years.

                                                     Table 7--Total Cost Savings From the Final Rule
                                                                      [$Thousands]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                              Eliminated    Industry savings     TSA savings           (Cost savings) d = [sum]b,c
                                                            resubmissions  -----------------------------------------------------------------------------
                           Year                           -----------------  b = a x $231.61   c = a x $177.73                   Discounted   Discounted
                                                                  a              / 1,000           / 1,000       Undiscounted      at 3%        at 7%
--------------------------------------------------------------------------------------------------------------------------------------------------------
1........................................................  ...............                $0                $0              $0           $0           $0
2........................................................            3,179               736               565           1,301        1,227        1,137
3........................................................            3,128               725               556           1,280        1,172        1,045
4........................................................              340                79                60             139          124          106
5........................................................            2,898               671               515           1,186        1,023          846
6........................................................            2,852               660               507           1,167          978          778
7........................................................              598               139               106             245          199          153
8........................................................            2,656               615               472           1,087          858          633
9........................................................            2,613               605               464           1,070          820          582
10.......................................................              791               183               141             324          241          165
                                                          ----------------------------------------------------------------------------------------------
    Total................................................           19,056             4,413             3,387           7,800        6,641        5,443
                                                          ----------------------------------------------------------------------------------------------
        Annualized.......................................  ...............  ................  ................  ..............         $775         $779
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note: Calculation may not be exact in table due to rounding.

B. Small Entities

    As required by the Regulatory Flexibility Act,\35\ TSA considered 
whether this final rule would have a significant economic impact on a 
substantial number of small entities, including small businesses and 
not-for-profit organizations that are independently owned and operated 
and are not dominant in their fields, and governmental jurisdictions 
with populations of less than 50,000. This rule does not place any new 
requirements on the regulated industry or small businesses. In 
addition, TSA received no comments related to the regulatory impact 
analysis in the NPRM, therefore has made no changes to this analysis in 
the final rule. TSA has certified that this rule does not have a 
significant economic impact on a substantial number of small entities.
---------------------------------------------------------------------------

    \35\ See Public Law 96-354 (94 Stat. 1164; Sept. 19, 1980) as 
codified at 5 U.S.C. 601 et seq.
---------------------------------------------------------------------------

C. Collection of Information

    The Paperwork Reduction Act of 1995 (PRA) (44 U.S.C. 3501. et seq.) 
requires that TSA consider the impact of paperwork and other 
information collection burdens imposed on the

[[Page 8556]]

public and, under the provisions of 44 U.S.C. 3507(d), obtain approval 
from the OMB for each collection of information it conducts, sponsors, 
or requires through regulations. As provided by the PRA, 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 currently 
valid OMB control number. The collection of information covered by this 
final rule is covered by OMB control number 1652-0040.
    This final rule impacts the collection of information by reducing 
the frequency that information must be submitted. This reduction would 
decrease the current number of security program recertifications 
submitted from an estimated annual average of 3,700 to 1,239 responses 
(a reduction of 2,461). The corresponding burden is also reduced from 
an annual average of 14,800 hours to 4,956 hours (a reduction of 9,844 
hours). Table 8 displays the annual number of responses and burden hour 
estimates associated with the final rule.

                                             Table 8--PRA Information Collection Responses and Burden Hours
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                               Responses
                                              ---------------------------------------------------------------------------
                                                                                                            Time  burden                  Average annual
             Collection activity                                                    Total        Average         per        Total hours        hours
                                                 Year 1     Year 2     Year 3     responses      annual       response
                                                                                                responses      (hours)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Final Rule Recerts...........................     3,395        162        159         3,716         1,239   ............          4,956           1,652
--------------------------------------------------------------------------------------------------------------------------------------------------------

    As required by the PRA (44 U.S.C. 3507(d)), TSA has submitted a 
copy of the final rule to the OMB for its review of the collection of 
information.

D. International Trade Impact Assessment

    The Trade Agreements Act of 1979 \36\ prohibits Federal agencies 
from establishing any standards or engaging in related activities that 
create unnecessary obstacles to the foreign commerce of the United 
States. Pursuant to these requirements, the establishment of standards 
is not considered an unnecessary obstacle to the foreign commerce of 
the United States, so long as the standard has a legitimate domestic 
objective, such as the protection of safety, and does not operate in a 
manner that excludes imports that meet this objective. The statute also 
requires consideration of international standards and, where 
appropriate, that they be the basis for U.S. standards. TSA has 
assessed the potential effect of the final rule and has determined that 
it does not impose any new requirements. Therefore, the rule would not 
have an adverse impact on international trade.
---------------------------------------------------------------------------

    \36\ See Public Law 96-39 (93 Stat. 144; July 26, 1979) as 
amended by the Uruguay Round Agreements Act, Public Law 103-465 (108 
Stat 4809; Dec. 8, 1994), codified at 19 U.S.C. 2531-2533.
---------------------------------------------------------------------------

E. Unfunded Mandates Assessment

    Title II of the Unfunded Mandates Reform Act of 1995 \37\ 
establishes requirements for Federal agencies to assess the effects of 
their regulatory actions on State, local, and tribal governments and 
the private sector. Under sec. 202 of the Unfunded Mandates Reform Act, 
TSA generally must prepare a written statement, including a cost-
benefit analysis, for proposed and final rules with ``Federal 
mandates'' that may result in expenditures by State, local, and tribal 
governments in the aggregate or by the private sector of $100 million 
(adjusted for inflation) or more in any one year. The final rule does 
not contain such a mandate. Therefore, the written statement 
requirements of the Act do not apply.
---------------------------------------------------------------------------

    \37\ See Public Law 104-4 (109 Stat. 48; Mar. 22, 1995), 
codified at 2 U.S.C. 1501-1538.
---------------------------------------------------------------------------

F. Environment

    TSA has reviewed this rulemaking for purposes of the National 
Environmental Policy Act of 1969 (NEPA) (42 U.S.C. 4321-4347) and has 
determined that this action will not have a significant effect on the 
human environment. This action is covered by categorical exclusion 
number A3(b) in DHS Management Directive 023-01 (formerly Management 
Directive 5100.1), Environmental Planning Program, which guides TSA 
compliance with NEPA.G. International Compatibility and Cooperation.
    E.O. 13609 of May 1, 2012 (Promoting International Regulatory 
Cooperation),\38\ promotes international regulatory cooperation to meet 
shared challenges involving health, safety, labor, security, 
environmental, and other issues and to reduce, eliminate, or prevent 
unnecessary differences in regulatory requirements. TSA analyzed this 
action under the policies and agency responsibilities of E.O. 13609, 
and has determined that this action would have no effect on 
international regulatory cooperation. In keeping with U.S. obligations 
under the Convention on International Civil Aviation (also known as the 
``Chicago Convention''), it is TSA policy to comply with International 
Civil Aviation Organization Standards and Recommended Practices to the 
maximum extent practicable. TSA has determined that this regulation has 
no direct relationship to the Chicago Convention.
---------------------------------------------------------------------------

    \38\ Published at 77 FR 26413 (May 4, 2012).
---------------------------------------------------------------------------

H. Executive Order 13132, Federalism

    TSA has analyzed this rule under the principles and criteria of 
E.O. 13132 of August 4, 1999 (Federalism).\39\ TSA has determined that 
this action will not have a substantial direct effect on the States, or 
the relationship between the Federal Government and the States, or on 
the distribution of power and responsibilities among the various levels 
of government, and, therefore, does not have federalism implications.
---------------------------------------------------------------------------

    \39\ Published at 64 FR 43255 (Aug. 10, 1999).
---------------------------------------------------------------------------

I. Energy Impact Analysis

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

List of Subjects in 49 CFR Part 1548

    Air transportation, Reporting and recordkeeping requirements, 
Security measures.

The Amendment

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

[[Page 8557]]

Subchapter C--Civil Aviation Security

PART 1548--INDIRECT AIR CARRIER SECURITY

0
1. The authority citation for part 1548 continues to read as follows:

    Authority:  49 U.S.C. 114, 5103, 40113, 44901-44905, 44913-
44914, 44916-44917, 44932, 44935-44936, 46105.


Sec.  1548.7  [Amended]

0
2. Amend Sec.  1548.7 by:
0
a. In paragraph (a)(4), removing the words ``one year after the month 
it was approved'' and adding in their place ``3 years after the month 
it was approved, or until the program has been surrendered or 
withdrawn, whichever is earlier''.
0
b. In paragraph (a)(5) introductory text, adding the words ``or 
renewal'' after the words ``submitted during its initial''.
0
c. In paragraph (b)(1), removing the words ``at least 30 calendar days 
prior to the first day of the anniversary month of initial approval'' 
and adding in their place ``at least 30 calendar days before the 36th 
month after the initial approval''.
0
d. In paragraph (b)(4), removing the words ``one year after the month 
it was renewed'' and adding in their place ``3 years after the month it 
was renewed, or until the program has been surrendered or withdrawn, 
whichever is earlier''.

    Dated: February 1, 2024.
David P. Pekoske,
Administrator.
[FR Doc. 2024-02495 Filed 2-7-24; 8:45 am]
BILLING CODE 9110-05-P