TWIC-Reader Requirements; Second Delay of Effective Date

SUPPLEMENTARY INFORMATION:

Table of Contents for Preamble

I. Abbreviations

II. Basis, Purpose, and Regulatory History

III. Background

IV. Discussion of Comments

V. Discussion of the Rule To Delay the Effective Date

VI. Regulatory Analyses

A. Regulatory Planning and Review

B. Small Entities

C. Assistance for Small Entities

D. Collection of Information

E. Federalism

F. Unfunded Mandates

G. Taking of Private Property

H. Civil Justice Reform

I. Protection of Children

J. Indian Tribal Governments

K. Energy Effects

L. Technical Standards

M. Environment

I. Abbreviations

2006 NPRM “Transportation Worker Identification Credential (TWIC) Implementation in the Maritime Sector; Hazardous Materials Endorsement for a Commercial Driver's License” notice of proposed rulemaking published May 22, 2006

2007 final rule “Transportation Worker Identification Credential (TWIC) Implementation in the Maritime Sector; Hazardous Materials Endorsement for a Commercial Driver's License” final rule published January 25, 2007

2016 TWIC Reader final rule “Transportation Worker Identification Credential (TWIC)-Reader Requirements” final rule published August 23, 2016

2020 TWIC Reader Delay final rule “TWIC-Reader Requirements; Delay of Effective Date” final rule published March 9, 2020

2022 Second Reader Delay NPRM “Transportation Worker Identification Credential (TWIC)-Reader Requirements; Second Delay of Effective Date” notice of proposed rulemaking, published Dec. 6, 2022

2023 Authorization Act James M. Inhofe National Defense Authorization Act for Fiscal Year 2023

2023 Conforming Amendment “Transportation Worker Identification Credential—Facility Reader Requirement; Conforming Amendment” final rule, conforming amendments published April 17, 2023

2023 TWIC Reader Delay rule “TWIC—Reader Requirements; Second Delay of Effective Date” final rule published October 31, 2024.

ANPRM Advance notice of proposed rulemaking

BEA U.S. Bureau of Economic Analysis

BLS Bureau of Labor Statistics

CAP Corrective Action Plan

CDC Certain dangerous cargoes

CFR Code of Federal Regulations

DHS Department of Homeland Security

FR Federal Register

GDP Gross Domestic Product

HSOAC Homeland Security Operational Analysis Center

MSRAM Maritime Security Risk Analysis Model

MTSA Maritime Transportation Security Act of 2002

NIPA National Income and Product Accounts

NPRM Notice of proposed rulemaking

OMB Office of Management and Budget

PIN Personal identification number

Pre-CA Pre-Conforming Amendment

RA Regulatory Analysis

SAFE Port Act Security and Accountability for Every Port Act of 2006

§ Section

TSA Transportation Security Administration

TSI Transportation security incident

TWIC Transportation Worker Identification Credential

U.S.C. United States Code

II. Basis, Purpose, and Regulatory History

Pursuant to the Maritime Transportation Security Act of 2002 (MTSA), and in accordance with the Security and Accountability for Every Port Act of 2006 (SAFE Port Act), the electronic inspection of Transportation Worker Identification Credentials (TWICs) is required inside secure areas on certain vessels and facilities in the United States. Specifically, the SAFE Port Act requires that the Secretary put into effect regulations that require the deployment of electronic transportation security card readers. To implement this requirement in an effective manner, the Coast Guard initiated a series of regulatory actions, updating its facility and vessel plan requirements based on 46 U.S.C. 70103, to implement electronic TWIC inspections at certain high-risk vessels and facilities regulated under MTSA.

On May 22, 2006, the Coast Guard and the Transportation Security Administration (TSA) jointly published a notice of proposed rulemaking (NPRM) titled “Transportation Worker Identification Credential (TWIC) Implementation in the Maritime Sector; Hazardous Materials Endorsement for a Commercial Driver's License” (“2006 NPRM”). After considering comments on the 2006 NPRM, the Coast Guard and TSA published the final rule on January 25, 2007, also titled “Transportation Worker Identification Credential (TWIC) Implementation in the Maritime Sector; Hazardous Materials Endorsement for a Commercial Driver's License” (“2007 final rule”). The 2007 final rule mandated that all persons allowed unescorted access to secure areas in MTSA-regulated vessels and facilities were required to possess a TWIC card. The rule did not mandate that a TWIC card be read with an electronic reader. The card could be verified by visual inspection alone, without making use of the electronic security features built into the card.

Although the 2006 NPRM proposed certain TWIC reader requirements, after reviewing the public comments, the Coast Guard and TSA decided not to include those proposed requirements in the 2007 final rule. Instead, we addressed them in a separate rulemaking, discussed below, and conducted a pilot program to address the feasibility of reader requirements before issuing another final rule. For a detailed discussion of the public comments to the 2006 NPRM, and our responses to them, please refer to the 2007 final rule.

On March 27, 2009, the Coast Guard published an advance notice of proposed rulemaking (ANPRM) on the topic of TWIC reader requirements, “Transportation Worker Identification Credential (TWIC)-Reader Requirements.” The ANPRM discussed dividing vessels and facilities into three “risk groups”—Risk Group A for high-risk vessels and facilities, Risk Group B for medium-risk vessels and facilities, and Risk Group C for low-risk vessels and facilities. The ANPRM also considered different electronic inspection requirements for Risk Groups A and B, and no electronic inspection requirements for Risk Group C.

On March 22, 2013, we published an NPRM, “Transportation Worker Identification Credential (TWIC)-Reader Requirements” that proposed the three risk groups (A, B, and C), but limited the proposed electronic TWIC inspection requirements to Risk Group A vessels and facilities only.

On August 23, 2016, we published a final rule titled “Transportation Worker Identification Credential (TWIC)—Reader Requirements” (“2016 TWIC Reader final rule”) that eliminated the three risk group structure and required that high-risk vessels and facilities (still referred to as Risk Group A) conduct electronic TWIC inspections for all personnel seeking unescorted access to secure areas of the vessel or facility. Risk Group A vessels and facilities are defined in title 33 of the Code of Federal Regulations (CFR), §§ 104.263, 105.253, and 106.258.

Congress also passed several laws that impacted implementation of the TWIC reader program. On December 16, 2016, the President signed the bill titled “Transportation Security Card Program Assessment.” This law required the Secretary of the Department of Homeland Security (DHS) to commission a report reviewing the security value of the TWIC program by (1) evaluating the extent to which the TWIC program addresses known or likely security risks in the maritime and port environments; (2) evaluating the potential for a non-biometric credential alternative; (3) identifying the technology, business process, and operational impact of the TWIC card and readers in maritime and port environments; (4) assessing the costs and benefits of the TWIC program, as implemented; and (5) evaluating the extent to which DHS has addressed the deficiencies of the TWIC program previously identified by the Government Accountability Office and the DHS Office of the Inspector General.

On May 15, 2017, the Coast Guard received a petition for rulemaking requesting that it revise the 2016 TWIC Reader final rule and impose electronic TWIC inspection requirements on only those vessels and facilities that engage in the maritime transfer of certain dangerous cargoes (CDC).

On June 22, 2018, we published a second NPRM, “TWIC-Reader Requirements; Delay of Effective Date”, which proposed delaying the implementation of the 2016 TWIC Reader final rule until August 23, 2021, for two categories of facilities: (1) facilities that handle CDC in bulk, but do not transfer these cargoes from or to a vessel; and (2) facilities that receive vessels carrying CDC in bulk, but do not, during that vessel-to-facility interface, transfer these bulk cargoes from or to those vessels.

On August 2, 2018, the President signed the “Transportation Worker Identification Credential Accountability Act of 2018,” which prohibited the Coast Guard from implementing the 2016 TWIC Reader final rule until at least 60 days after the Coast Guard submits the report on the security value of the TWIC program to Congress, as required by the 2016 bill, “Transportation Security Card Program Assessment.”

On March 9, 2020, the Coast Guard published a final rule titled “TWIC-Reader Requirements; Delay of Effective Date” (“2020 TWIC Reader Delay final rule”). The 2020 TWIC Reader Delay final rule extended the effective date of the 2016 TWIC Reader final rule, only for Risk Group A facilities that handle CDC in bulk, until May 8, 2023. The implementation date for facilities designated as Risk Group A, because they receive vessels certificated to carry more than 1,000 passengers, remained unchanged. The 2016 TWIC Reader final rule was implemented on June 8, 2020. However, the Coast Guard delayed enforcing this regulation until January 1, 2022, because of the global COVID-19 pandemic.

In 2020, the Coast Guard commissioned the Homeland Security Operational Analysis Center (HSOAC)—operated by the RAND Corporation—to conduct an analysis. The purpose of the analysis was to (1) identify the population of facilities handling CDC impacted by the 2016 TWIC Reader final rule; (2) develop a risk-consequence analysis for these facilities; and (3) conduct a benefit-cost analysis based on the information collected and analyzed during this subsequent study. The Coast Guard received the RAND Corporation's analysis on July 29, 2022, and is currently evaluating the options for implementing the 2016 TWIC Reader final rule. The 2022 RAND Corporation's analysis is included in the docket. For instructions on locating the docket, see the ADDRESSES section of this preamble.

While we evaluate the HSOAC analysis, the Coast Guard is continuing to delay the original rule's implementation with this final rule to avoid the 2016 TWIC Reader final rule going into effect. We are delaying that rule's implementation for three categories of facilities: (1) facilities that handle CDC in bulk but do not transfer those cargoes from or to a vessel; (2) facilities that handle CDC in bulk and do transfer those cargoes from or to a vessel; and (3) facilities that receive vessels carrying CDC in bulk, but do not, during that vessel-to-facility interface, transfer those bulk cargoes from or to those vessels—to May 8, 2029, to avoid creating confusion and conflicts between the 2016 TWIC Reader final rule's original requirements and the potential outcomes of the study. The 2016 TWIC Reader final rule remains in effect for facilities receiving vessels certificated to carry more than 1,000 passengers. This final rule does not affect those facilities.

On December 23, 2022, Congress enacted the James M. Inhofe National Defense Authorization Act for Fiscal Year 2023 (“2023 Authorization Act”). Section 11804 of the 2023 Authorization Act directs the Secretary of Homeland Security to not implement TWIC reader regulations for “covered facilities” before May 8, 2026. The 2023 Authorization Act identifies covered facilities as facilities that (1) handle CDC in bulk and transfer such cargoes from or to a vessel; (2) handle CDC in bulk but do not transfer it from or to a vessel; and (3) receive vessels carrying CDC in bulk but, during the vessel-to-facility interface, do not transfer it from or to the vessel. These three categories are identical to the facilities identified in 33 CFR 105.253(a)(2) through (4).

Two weeks before the 2023 Authorization Act was enacted, the Coast Guard published an NPRM titled “Transportation Worker Identification Credential (TWIC)-Reader Requirements; Second Delay of Effective Date.” (“2022 Second Reader Delay NPRM”) In it, we proposed to change the implementation dates for the categories in § 105.253(a)(2) through (4) to May 8, 2026, and requested comments on whether we should extend the date as late as May 8, 2029.

On April 17, 2023, consistent with the 2023 Authorization Act, the Coast Guard published the “Transportation Worker Identification Credential—Facility Reader Requirement; Conforming Amendment” (“2023 Conforming Amendment”), which changed the implementation dates in 33 CFR 105.253(a)(2) through (4) from May 8, 2023, to May 8, 2026. The 2023 Conforming Amendment aligned Coast Guard regulations with the Congressionally mandated minimum delay for implementation of TWIC readers for the covered facilities.

III. Background

The 2016 TWIC Reader final rule established electronic TWIC reader regulations for certain high-risk vessels and MTSA-regulated facilities. Shortly after the 2016 TWIC Reader final rule was published, the chemical industry expressed concern that the final rule significantly expanded the scope of the 2013 NPRM for that rulemaking and requested that the Coast Guard narrow the classes of chemical facilities that would be subject to the enhanced security requirements. An industry association representing terminal companies nationwide then sued DHS in 2017, claiming that the 2016 TWIC Reader final rule violated the Administrative Procedure Act. The court dismissed the action, holding that the issue was not ripe for adjudication, because Congress passed legislation delaying the implementation of the final rule, and there was a likelihood that Congress or the Coast Guard might amend or replace the regulation.

In June 2020, DHS published the Coast Guard's corrective action plan (CAP) titled “Corrective Action Plan from the Assessment of the Risk Mitigation Value of the Transportation Worker Identification Credential.” The CAP identified the need to conduct a risk analysis over the next 3 years to identify all facilities handling CDC and to analyze the need for TWIC readers.

In September 2020, the Coast Guard commissioned the HSOAC, operated by the RAND Corporation, to conduct an analysis to identify the population of facilities handling CDC impacted by the 2016 TWIC Reader final rule, develop a risk-consequence analysis for these facilities, and conduct a benefit-cost analysis.

In response to the 2023 Authorization Act mandate discussed previously, the Coast Guard published the 2023 Conforming Amendment on April 17, 2023, which changed the implementation dates in 33 CFR 105.253(a)(2) through (4) from May 8, 2023, to May 8, 2026.

IV. Discussion of Comments

In response to the 2022 Second Reader Delay NPRM, which proposed a delay of 3, 4, 5, or 6 years, the Coast Guard received five public comments, two of which were duplicate submissions. All commenters supported the Coast Guard's proposal to delay the implementation of the TWIC reader rule. Additionally, all commenters generally supported a delay of 6 years.

All comments the Coast Guard received mentioned the 2022 RAND Corporation's HSOAC analysis, titled “Risk-Informed Analysis of Transportation Worker Identification Credential (TWIC) Reader Requirements,” and either raised concerns or agreed with the conclusions found in the analysis.

The Coast Guard acknowledges receipt of the HSOAC analysis and appreciates the work that was performed to assemble the report. However, at present, we are not able to comment on the analysis, as we continue to evaluate its findings and recommendations.

While all commenters generally supported a delay of up to 6 years, one commenter thought the current 3-year delay could potentially be sufficient for the Coast Guard to review the RAND study, receive additional stakeholder input, and promulgate a new TWIC rule consistent with the new data. That commenter raised concerns about the uncertainty that a lengthy delay may cause for industry, particularly for vendors involved in the production and maintenance of TWIC readers. Two commenters also suggested areas for further study, including on the potential costs of implementing TWIC readers, and proposed several ways of amending the 2016 TWIC Reader final rule in light of the RAND study findings. While we recognize the industry's need for regulatory certainty and clarity, we believe that the delay to May 8, 2029, although potentially lengthening a period of uncertainty, is for the valid purpose of providing time to determine the best course of action with regard to the 2016 TWIC Reader final rule.

V. Discussion of the Rule To Delay the Effective Date

In this final rule (also referred to as the “2023 TWIC Reader Delay rule”), we delay the effective date for certain facilities to May 8, 2029. The 2016 TWIC Reader final rule remains in effect for facilities receiving vessels certificated to carry more than 1,000 passengers, as this final rule does not affect those facilities.

This final rule delays implementing TWIC readers for (1) facilities that handle CDC in bulk but do not transfer those cargoes from or to a vessel; (2) facilities that handle CDC in bulk and do transfer those cargoes from or to a vessel; and (3) facilities that receive vessels carrying CDC in bulk, but do not, during that vessel-to-facility interface, transfer those bulk cargoes from or to those vessels. This delay allows the Coast Guard to accurately determine the affected population through the 2022 RAND Corporation's HSOAC analysis and have further time to analyze the potential effectiveness of the TWIC reader requirement for these facilities. The HSOAC analysis assesses potential risks of CDC, including the types of CDC, population density within a certain distance of the facility, and other risk and consequence aspects.

After the Coast Guard completes its review of the HSOAC analysis, its conclusions, and its recommendations, we will determine whether any future rulemaking regarding the effective date of the 2016 TWIC Reader final rule is necessary. If such a rulemaking begins, industry will be able to provide further input through notice and comment rulemaking.

VI. Regulatory Analyses

This final rule further delays the effective date for three types of facilities affected by the 2016 TWIC Reader final rule. Specifically, these are (1) facilities that handle CDC in bulk, but do not transfer those cargoes from or to a vessel; (2) facilities that handle CDC in bulk and do transfer those cargoes from or to a vessel; and (3) facilities that receive vessels carrying CDC in bulk, but do not, during that vessel-to-facility interface, transfer those bulk cargoes from or to those vessels. Currently, the effective date for these facilities is May 8, 2026.

Below, we provide an updated regulatory analysis of the 2020 TWIC Reader Delay final rule that presents the impacts of delaying the effective date of the final rule for the three types of Risk Group A facilities defined in the preceding paragraph. For this updated analysis, we estimated the costs of this 2023 final rule, the costs of the 2023 Conforming Amendment, and the 2020 TWIC Reader Delay final rule, utilizing a 13-year analysis period in order to compare them to derive the cost savings for our baselines.

A. Regulatory Planning and Review

Executive Orders 12866 (Regulatory Planning and Review), as amended by Executive Order 14094 (Modernizing Regulatory Review), and affirmed by Executive Order 13563 (Improving Regulation and Regulatory Review) direct agencies to assess the costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety effects, distributive impacts, and equity). Executive Order 13563 emphasizes the importance of quantifying costs and benefits, reducing costs, harmonizing rules, and promoting flexibility.

This final rule is a significant regulatory action under section 3(f) of Executive Order 12866, as amended by Executive Order 14094, but it is not significant under section 3(f)(1). Accordingly, the Office of Management and Budget (OMB) has reviewed this final rule. A Regulatory Analysis (RA) follows.

On the 17th of April 2023, the Coast Guard published the 2023 Conforming Amendment, altering the implementation date for TWIC readers in certain risk group A facilities from May 8, 2023, to May 8, 2026. This final rule replaces the 2023 Conforming Amendment, which is currently in effect, and thus delays implementation until May 8, 2029. In order to provide a comprehensive estimate of the impacts of this rulemaking, the Coast Guard utilizes two baselines, a “Pre-Conforming Amendment” (“Pre-CA”) baseline and a “No Action” baseline.

The No Action baseline represents the current state without this rulemaking in other words a world in which the requirements would go into effect in 2025. Quantifying costs against the No Action baseline includes only costs directly attributable to this rule and excludes any costs derived from the 2023 Conforming Amendment. The period of impact for costs for the No Action baseline is 2025 to 2034, and any change in cost or cost savings can be attributed to the difference between the expiration of the 2023 Conforming Amendment and this final rule.

The Pre-CA baseline captures costs across two different time horizons. First, it provides transparency regarding cost savings realized from 2022 to 2025 due to the 2023 Conforming Amendment. Second, it captures new cost savings between 2025 to 2034 that stem from this final rule. The entire period of impact for the Pre-CA baseline is 2022 to 2034. We compare the costs attributed to this baseline to the costs under the 2020 TWIC Reader Delay final rule, resulting in the outlined cost savings. We use an aligned period of analysis across both the No Action and Pre-CA baselines to provide a consistent comparison for our estimates. Therefore, the period of analysis for each baseline in our RA is 2022 to 2034. See Illustration 1 for a depiction of our baselines, periods of impact, and period of analysis.

In accordance with OMB Circular A-4, we have prepared an accounting statement for each baseline showing the classification of impacts associated with both the Pre-CA and the No Action baselines. We have updated our dollar year to 2023. The No Action baseline can be seen in table 1A, while the Pre-CA baseline can be seen in table 1B.