ILTA, AFPM, ACC Urge USCG to Develop, Publish Timetable for TWIC-Reader Risk Analysis

Commandant (CG–6P)
Attn: Paperwork Reduction Act Manager
U.S. Coast Guard
2703 Martin Luther King Jr. Ave SE, Stop 7710
Washington, DC 20593–7710.

Attention: Docket Number USCG-2020-0484
Submitted electronically to regulations.gov

Re: Comments on 60-Day Notice re ICR for Updating the
Risk Analysis for TWIC Readers at Maritime Facilities

Dear Sir or Madam:

The American Chemistry Council (“ACC”), the American Fuel & Petrochemical
Manufacturers (“AFPM”), and the International Liquid Terminals Association
(“ILTA”) (collectively, the “Associations”) appreciate this opportunity to provide
comments on the Information Collection Request (“ICR”) that will enable the U.S.
Coast Guard (“USCG”) to update the risk analysis supporting the TWIC Reader Rule.1

Summary

The Associations welcome the Coast Guard’s commitment to updating the risk
analysis underlying the TWIC Reader Rule – and we support this ICR. We strongly
urge USCG to engage with regulated facilities in an open, interactive fashion, just as
the Homeland Security Operational Analysis Center (HSOAC) did when it developed
its assessment of the risk mitigation value of the TWIC program.2 We pledge to
facilitate this process in the same way that we did in assisting HSOAC previously.

At the same time, the Associations urge USCG to move expeditiously. As USCG
knows, “HSOAC doubt[ed] the benefits of the [TWIC] program would exceed the
costs,” but proposed that “[a] more favorable break-even point could be achieved by
. . . reduc[ing] the number of facilities that are subject to the TWIC Reader Rule.”3

This update should, therefore, lead to changes in the scope of the TWIC Reader Rule.
But that prospect creates significant uncertainty regarding regulated facilities’
compliance obligations, which confounds the Associations’ members’ ability to make
prudent technical and capital investment decisions. The TWIC Reader Rule is now
scheduled to go into effect in May 2023 – 31 months from now. Typically, facilities
need 18-24 months to plan, purchase and implement capital-intensive measures to
meet compliance obligations. Therefore, the regulated community needs to
understand its compliance obligations clearly as soon as practically possible, but no
later than May 2021. The Coast Guard should promptly develop and publish a
timetable for the risk analysis, including when it would make any determinations
that will affect compliance obligations.

Statement of Interest

ACC represents the leading companies engaged in the business of chemistry, which
is a $797 billion enterprise and the nation’s largest exporter, accounting for 14
percent of all U.S. exports. AFPM is a national trade association whose members
comprise most U.S. refining and petrochemical manufacturing capacity. ILTA
represents more than 85 companies operating liquid terminals in all 50 states and
in over 40 countries that handle liquid commodities, such as crude oil, petroleum
products, chemicals, renewable fuels, fertilizers, vegetable oils and other food-grade
materials that are central to the U.S. economy.

ACC, AFPM, and ILTA members work closely with USCG and the Department of
Homeland Security (“DHS”) in strengthening facility security under the Maritime
Transportation Security Act (“MTSA”) and more broadly. The Associations’
members are the owners or operators of MTSA-regulated facilities in practically
every Captain of the Port Sector. For this reason, MTSA requirements, particularly
involving the use of TWIC readers, are important to the Associations. The
Associations commented on both of the ICR notices associated with the HSOAC
assessment.

Discussion

The Associations support the basic premise of the TWIC Reader Rule. But they have
challenged the way the final rule dramatically expanded the universe of covered
facilities. The impact of that change, as the Associations estimated, was to:

• Increase the number of facilities subject to the rule from slightly over 500 to
potentially as many as 2,000;
• Increase the number of entry points subject to the rule’s biometric access
control requirements at covered facilities—thus increasing the per-facility
costs; and
• As a result of both factors, increase the annualized cost of the rule over 10
years from $26.5 million to over $100 million—thus making the rule an
economically significant rule under Executive Order 12866.

Since 2016, the Associations have worked to get USCG to understand the significant
economic and operational impacts caused by this expansion in scope. The HSOAC
assessment, and USCG’s summary Report to Congress,4 took the first step. These
documents recognized that:

• “[T]he lack of clarity regarding the definition of CDC facility could increase
the number of facilities potentially subject to the final reader rule. We
estimated that up to three times as many facilities could fall under the
broader definition of CDC facility. . . . Using these criteria, we estimated that
about 1,500 facilities could fall under the broader definition of CDC facility
and therefore be subject to the TWIC-reader rule.”5

• “We assess . . . that the 2015 regulatory analysis underestimated the average
number of readers required per facility for compliance.”6

• TWIC compliance costs would exceed $100 million in each of the first two
years of implementation, for total undiscounted costs of $321 million over
ten years.7

USCG also conceded then that the “confusion among commenters” caused by the
uncertain scope of the rule “may have affected the ability of some facility operators
to effectively comment on the full costs of the rule.”8

To its credit, USCG further delayed the effective date of the TWIC Reader Rule until
May 2023, in part to “allow us to develop a more precise risk-analysis methodology
that would better identify which of these facilities . . . would benefit from the
electronic TWIC inspection requirements.”9 This will include “attempt[ing] to get a
much fuller estimate of the [regulated] population. . . .”10 The Associations
commend USCG for undertaking this work – which could ultimately result in a
future rulemaking to narrow the scope of the rule, as DHS originally promised in
2013.11

A key goal of the Paperwork Reduction Act is to “maximize the practical utility” of
the information collected.12 Here, a risk analysis update would have tremendous
utility. As just noted, the HSOAC report confirmed that the expanded scope of the
TWIC Reader Rule also roughly quadrupled its overall, annualized compliance costs.
The updated risk analysis could easily save the regulated community tens of
millions of dollars if it results in a risk-based right-sizing of the TWIC reader
requirements. As HSOAC concluded, the TWIC Reader Rule likely cannot be costjustified,
but would be more cost-effective if restored to the scope of the proposed
rule:

HSOAC’s analysis suggests the benefits of the TWIC Reader Rule are unlikely
to exceed the associated costs of the regulation as proposed. A more
favorable break-even point could be achieved by . . . changing the regulation
to reduce the number of facilities that are subject to the TWIC Reader Rule.13
The Notice asks how USCG can enhance the quality and utility of the planned
collection. The answer is simple: USCG should follow the same approach as was
followed by the RAND Corporation, which operates the HSOAC, in its earlier study.
RAND’s approach was inclusive, thorough and objective. Their staff reached out to

the Associations and our members early and often. We coordinated numerous site
visits during the latter half of 2018. These typically lasted 1-2 days, with follow-up
communications. Our members have learned even more over the past two years
about how to manage and reduce security risks associated with the presence of
CDCs at their facilities – as well as the relative security benefits provided (or not
provided) by TWIC readers. Our members have also learned just how challenging
implementing a TWIC reader compliance program has been (or will be). They are
eager to present those learnings to USCG or its contractors.

We urge USCG to move very expeditiously, however. In its current form, the TWIC
Reader Rule will have a profound negative impact on the regulated community. But
the updated risk analysis has the potential to lessen that impact by narrowing the
scope of the TWIC reader requirement. The Coast Guard should develop and
publish a timetable for the risk analysis, including when it would make
determinations that will affect compliance obligations. That timetable should
conclude no later than May 2021. Otherwise, USCG should exercise its enforcement
discretion to ensure that companies have 24 months to comply after conclusion of
the risk analysis.

Once again, we reiterate our support for the TWIC program overall, and we welcome
USCG’s updated risk analysis. We stand ready to assist that process in any way we
can, and look forward to a successful collaboration.

Sincerely,
William Erny
Senior Director
American Chemistry Council
Bill_Erny@americanchemistry.com
(202) 249-6412

Jeff Gunnulfsen
Senior Director, Security and Risk Management
American Fuel & Petrochemical Manufacturers
JGunnulfsen@afpm.org
(202) 844-5483

Kathryn Clay
President
International Liquid Terminals Association
Kclay@ilta.org
(703) 875-2011

cc: P. Ray, OMB/OIRA
S. Thallam, OMB/OIRA
R. Palmieri, OMB/OIRA
B. Clare, DHS/USCG/PFC

1 85 Fed. Reg. 46684 (Aug. 3, 2020) (“the Notice”). The TWIC Reader Rule was
published at 81 Fed. Reg. 57652 (Aug. 23, 2016).
2 HSOAC, “The Risk Mitigation Value of the Transportation Worker Identification
Credential” (2019).

3 DHS, “Results from the Assessment of the Risk Mitigation Value of the
Transportation Worker Identification Credential” (Feb. 28, 2020), at vi, 16.

4 Id.
5 HSOAC Report at 165.
6 Id. at 151.
7 Id. at 154.

8 85 Fed. Reg. 13493, 13498 (March 9, 2020). See also DHS, “Corrective Action Plan
from the Assessment of the Risk Mitigation Value of the Transportation Worker
Identification Credential” (June 2020).
9 85 Fed. Reg. at 13495.
10 Id. at 13502.
11 See 78 Fed. Reg. 17782, 17811 (March 22, 2013) (“As noted earlier, if USCG
changes the risk groupings, it will be done through rulemaking and the public will
have an opportunity to comment.”).
12 44 U.S.C. § 3504(c)(4).
13 Report to Congress at 16.