Ammonium Nitrate Regulatory Assessment

DHS-2008-0076-0047.pdf

Ammonium Nitrate Security Program

Ammonium Nitrate Regulatory Assessment

OMB: 1670-0022

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Regulatory Assessment

The Ammonium Nitrate Security Program
Notice of Proposed Rulemaking
DHS-2008-0076

July 1, 2011
U.S. Department of Homeland Security

Acronyms
AN

Ammonium Nitrate

ANPRM

Advanced Notice of Proposed Rulemaking

ANFO
ATF

CFATS

Ammonium Nitrate Fuel Oil explosives

Bureau of Alcohol, Tobacco, Firearms, and Explosives
Chemical Facility Anti-Terrorism Standards

CSAT

Chemical Security Assessment Tool

DOT

Department of Transportation

DOJ

FAST
HME
IED

IME

IRFA

NAICS

NPRM
POC
RFA
SBA

TSDB

TWIC

UMRA

4USDA
VSL

Department of Justice

Free and Secure Trade

Hazardous Materials Endorsement
Improvised Explosive Device

Institute of Makers of Explosives

Initial Regulatory Flexibility Analysis

North American Industrial Classification System
Notice of Proposed Rulemaking
Point of Contact

Regulatory Flexibility Act

Small Business Administration
Terrorist Screening Database

Transportation Workers Identification Credential

Unfunded Mandates Reform Act

U.S. Department of Agriculture
Value of Statistical Life

Contents
1. Executive Summary .................................................................................................................... 8
2. OMB Accounting Statement ..................................................................................................... 10
3. Benefits of the Ammonium Nitrate Security Program ............................................................. 11
4. NPRM Description.................................................................................................................... 20
5. Period of Analysis ..................................................................................................................... 23
6. Estimates of Regulated Population ........................................................................................... 23
Mixtures .................................................................................................................................... 25
Purchaser .................................................................................................................................. 26
Agents ........................................................................................................................................ 26
Sellers ........................................................................................................................................ 26
7. Registration of AN Sellers and AN Purchasers ........................................................................ 31
Appeals ...................................................................................................................................... 41
8. Point of Sale Activities ............................................................................................................. 44
Verification of AN Purchaser’s Identity ................................................................................... 46
Verification of AN Purchaser’s Registered User Number ........................................................ 46
Purchaser Verification Portal ................................................................................................ 47
Purchaser Verification Call Center ....................................................................................... 48
Purchaser Verification Portal and Call Center ...................................................................... 49
Visual Check of Photo ID ......................................................................................................... 49
Creation of the Transaction Record ......................................................................................... 49
Agent Verification ..................................................................................................................... 54
Opportunity Cost....................................................................................................................... 59
9. Recordkeeping .......................................................................................................................... 60
10. Reporting Theft and/or Loss ................................................................................................... 67
11. Audits and Inspections ............................................................................................................ 71
12. Federal Costs ........................................................................................................................... 73
13. Total Costs .............................................................................................................................. 77
14. Initial Regulatory Flexibility Analysis.................................................................................... 80
Section 1: Reasons for and Objectives of the Proposed Rule ................................................... 81
Section 2: Affected Small Business Population and Estimated Impact of Compliance ............ 81
Number of Small Entities that may be AN Purchasers ............................................................. 82
3

Number of Small Entities that may be AN Sellers..................................................................... 85
Alternatives Considered ............................................................................................................ 87
Average Costs per Facility........................................................................................................ 98
Identification of Duplication, Overlap and Conflict with Other Federal Rules ..................... 101
15. International Trade Impact Assessment ................................................................................ 101
16. Unfunded Mandates Reform Act (UMRA) .......................................................................... 102
Appendix A – Population Estimates ........................................................................................... 104
Appendix B – Wage Rates .......................................................................................................... 107
Appendix C – Computer and Internet Access on US Farms ...................................................... 111

Table 1. Summary of Estimated Total Costs ($ millions) .............................................................. 9
Table 2. Summary of Estimated Annualized Costs ($ millions) .................................................... 9
Table 3. Estimated 10-year Cost by Program Element ($ millions) ............................................... 9
Table 4. OMB Accounting Statement of Annualized Costs and Benefits (Program Years 1-10) 10
Table 5. Cost Valuation of an Attack Based upon 1995 Murrah Federal Building Attack (Primary
VSL Estimate; All $ millions) ...................................................................................................... 17
Table 6. Cost Valuation of an Attack Based upon 1995 Murrah Federal Building Attack (Lower
VSL Estimate; All $ millions) ...................................................................................................... 18
Table 7. Cost Valuation of an Attack Based upon 1995 Murrah Federal Building Attack (High
VSL Estimate; All $ millions) ...................................................................................................... 19
Table 8. Frequency of Attacks Averted for AN Security Costs to Equal Expected Benefits ($
millions; Frequency years)............................................................................................................ 20
Table 9. AN Purchasers ................................................................................................................ 30
Table 10. AN Sellers ..................................................................................................................... 31
Table 11. Cost of Registration Activities for AN Purchasers – Low Population Estimate* ........ 34
Table 12. Cost of Registration Activities for AN Purchasers – High Population Estimate*........ 36
Table 13. Cost of Pre-Registering Agents – Low Population Estimate* ...................................... 36
Table 14. Cost of Pre-Registering Agents – High Population Estimate ....................................... 37
Table 15. Cost of Registration Activities for AN Sellers – Low Population Estimate* ............... 38
Table 16. Cost of Registration Activities for AN Sellers – High Population Estimate ................ 38
Table 17. Summary Cost of Registration Activities – Initial Year, Low Population Estimate .... 39
Table 18. Summary Cost of Registration Activities – Initial Year, High Population Estimate ... 39
Table 19. Assumptions Regarding Growth in Registrations ........................................................ 40
Table 20. Total Registration Activity Costs by Program Year ..................................................... 40
Table 21. Cost of Appeals for AN Purchasers –Initial Year, Low Population Estimate* ............ 42
Table 22. Cost of Appeals for AN Purchasers –Initial Year, High Population Estimate* ........... 42
Table 23. Cost of Appeals for AN Sellers –Initial Year, Low Population Estimate* .................. 43
Table 24. Cost of Appeals for AN Sellers –Initial Year, High Population Estimate* .................. 43
Table 25. Cost of Appeals by Program Year ................................................................................ 44
Table 26. Physical Costs for Web Portal-Based Point of Sale Activities – Low Population
Estimate......................................................................................................................................... 50
Table 27. Physical Costs for Web Portal-Based Point of Sale Activities – High Population
Estimate......................................................................................................................................... 51
Table 28. Web Portal-based Seller Transaction and Labor Cost by Industry, Low Population
(First Year) .................................................................................................................................... 51
Table 29. Web Portal-based Seller Transaction and Labor Cost by Industry, .............................. 52
Table 30.Call Center-Based Transactions for Point of Sale Activities (Hours Spent) ................. 53
Table 31. Labor Costs for Call Center-Based Point of Sale Activities – Low Population Estimate
....................................................................................................................................................... 53
Table 32. Labor Costs for Call Center-Based Point of Sale Activities – High Population Estimate
....................................................................................................................................................... 54
Table 33. Labor Costs for Agent Verification – Low Population Estimate*................................ 55
Table 34. Labor Costs for Agent Verification – High Population Estimate* ............................... 56
Table 35. Total Costs for Web Portal-Based Point of Sale Activities by Program Year – Low
Population Estimate ($)................................................................................................................. 57

Table 36. Total Costs for Web Portal-Based Point of Sale Activities by Program Year– High
Population Estimate ($)................................................................................................................. 58
Table 37. Total Costs for Call Center -Based Point of Sale Activities by Program Year – Low
Population Estimate ($)................................................................................................................. 58
Table 38. Total Costs for Call Center-Based Point of Sale Activities by Program Year – High
Population Estimate ($)................................................................................................................. 58
Table 39. Point of Sale Opportunity Costs (First Year Detail and Yrs 1 -10) .............................. 59
Table 40. Physical Costs for Paper-Based Recordkeeping – Low Population Estimate .............. 61
Table 41. Physical Costs for Paper-Based Recordkeeping – High Population Estimate.............. 62
Table 42. Labor Costs for Paper-Based Recordkeeping – Low Population Estimate .................. 62
Table 43. Labor Costs for Paper-Based Recordkeeping – High Population Estimate.................. 63
Table 44. Total Costs for Paper-Based Recordkeeping – Low Population Estimate ................... 63
Table 45. Total Costs for Paper-Based Recordkeeping – High Population Estimate................... 64
Table 46. Physical Costs for Electronic-Based Recordkeeping – Low Population Estimate ....... 64
Table 47. Physical Costs for Electronic-Based Recordkeeping – High Population Estimate ...... 65
Table 48. Labor Costs for Electronic-Based Recordkeeping – Low Population Estimate ........... 65
Table 49. Labor Costs for Electronic-Based Recordkeeping – High Population Estimate .......... 66
Table 50. Total Costs for Electronic-Based Recordkeeping – Low Population Estimate ............ 66
Table 51. Total Costs for Electronic-Based Recordkeeping – High Population Estimate ........... 67
Table 52. Estimated Number of Theft/Loss Reports Generated ................................................... 69
Table 53. Costs for Reporting Theft and Loss – Low Population Estimate ................................. 69
Table 54. Costs for Reporting Theft and Loss – High Population Estimate................................. 70
Table 55. Annual Costs for Reporting Theft and Loss ................................................................. 70
Table 56. Cost of Audits/Inspections – Low Population Estimate ............................................... 72
Table 57. Cost of Audits/Inspections – High Population Estimate .............................................. 73
Table 58. Cost of Inspections/Audits ............................................................................................ 73
Table 59. Federal Costs System and Support, Fixed Level, All Populations .............................. 75
Table 60. Federal Costs System and Support, Fixed Level, All Populations (cont’d) ................ 75
Table 61.Federal Vetting and Total Costs, Low Population Scenario.......................................... 75
Table 62. Federal Vetting and Total Costs, High Population Scenario ........................................ 76
Table 63.Federal Vetting and Total Costs, Mean Population Scenario ........................................ 76
Table 64. . Summary of Costs (Undiscounted $ millions) – Low Population/Low Transactions
Estimate......................................................................................................................................... 77
Table 66. Summary of Costs (Undiscounted $ millions) – High Population/High Transactions
Estimate......................................................................................................................................... 78
Table 70. Summary of Costs (3 percent discount rate, $ millions) – Low Population/Low
Transactions Estimate ................................................................................................................... 79
Table 71. Summary of Costs (3 percent discount rate, $ millions) – Primary Estimate (mean of
High and Low) .............................................................................................................................. 79
Table 72. Summary of Costs (3 percent discount rate, $ millions) – High Population/High
Transactions Estimate ................................................................................................................... 80
Table 73. Number of U.S. Farms by the Market Value of Agricultural Products Sold (2007) .... 83
Table 74. Primary NAICS Codes, Descriptions and Definitions for Small Entities that May Be
AN Purchasers (Employee Size)*................................................................................................. 83
Table 75. Primary NAICS Codes, Descriptions and Definitions for Small Entities that May Be
AN Purchasers (Sales Size)* ........................................................................................................ 85
6

Table 76. Primary NAICS Codes, Descriptions and Definitions for Small Entities that May Be
AN Sellers (Employee Size)* ....................................................................................................... 86
Table 77. Primary NAICS Codes, Descriptions and Definitions for Small Entities that May Be
AN Sellers (Sales Size)* ............................................................................................................... 87
Table 78. Differences between alternatives costs ......................................................................... 90
Table 79. Point of Sale Average Cost Summary* ........................................................................ 91
Table 80. Average Cost per AN Purchaser - Low Population/Low Transactions * .................... 99
Table 81. .Average Cost per AN Purchaser - High Population/High Transactions * ................. 100
Table 82. . Average Cost per AN Seller Facility - Low Population/Low Transactions Estimate*
..................................................................................................................................................... 100
Table 83. Average Cost per AN Facility - High Population/High Transactions Estimate ......... 101
Table 84 . Hourly Wage Rates at 50th Percentile (median) ($/hour) .......................................... 108
Table 85. Total Compensation/Wage and Salary Multiplier ...................................................... 108
Table 86. Loaded Wage Rates at 50th Percentile (Hourly wage rate * multiplier) ($/hour) ....... 109
Table 87, Calculation of Population Weighted Average Fully loaded Rate for Opportunity cost
for purchasers; Low Population .................................................................................................. 109
Table 88, Calculation of Population Weighted Average Fully loaded Rate for Opportunity cost
for purchasers; High Population ................................................................................................. 110
Table 89. Computer and Internet Access for Top 15 Ammonium Nitrate Consuming States, 2007
..................................................................................................................................................... 112

1. Executive Summary
After the catastrophic terrorist attack in Oklahoma City in April 1995, in which ammonium
nitrate was used in the bomb that killed 168 people and injured nearly 600 more, industry
practices regarding the sale and transfer of ammonium nitrate have become increasingly
more secure. However, in the interest of national security, Congress has directed the
Department of Homeland Security (DHS or the Department) to promulgate regulations to
protect the public from the misuse of ammonium nitrate in an act of terrorism.
As a result, the Department proposes the Ammonium Nitrate Security Program, which is
outlined in the Notice of Proposed Rulemaking (NPRM). The program seeks to reduce the
likelihood of a terrorist attack involving misused ammonium nitrate.

Broadly speaking, this proposed rule creates a registration program for purchasers and
sellers of ammonium nitrate. Each purchaser and seller will be required to apply for an
Ammonium Nitrate (AN) Registered User Number with the Department. Suitability for
registration will be based on a comparison of the applicant against the Terrorist Screening
Database (TSDB). Transactions involving the sale or transfer of ammonium nitrate will be
regulated at the point of sale and procedures for reporting a theft or loss of ammonium
nitrate will be established. Sellers of ammonium nitrate will be required to deny sale or
transfer of ammonium nitrate to individuals who do not possess a valid AN Registered User
Number accompanied by a valid photo ID. Businesses will be required to keep records of all
ammonium nitrate transactions for two years.
The Department estimates the number of persons and entities that purchase ammonium
nitrate to range from 64,950 to 106,200. These purchasers include farms, fertilizer mixers,
farm supply wholesalers and cooperatives (co-ops), golf courses, landscaping services,
explosives distributors, mines, retail garden centers and lab supply wholesalers. The
Department estimates the number of persons and entities that sell ammonium nitrate to be
between 2,486 and 6,236, many of which are also purchasers. These sellers include
ammonium nitrate fertilizer and explosive manufacturers, fertilizer mixers, farm supply
wholesalers and co-ops, retail garden centers, explosives distributors, fertilizer applicator
services, and lab supply wholesalers. Individuals or firms that provide transportation
services within the distribution chain may be categorized as sellers, agents, or facilities
depending upon their business relationship with the other parties to the transaction. The
total number of potentially regulated farms and other businesses ranges from 64,986 to
106,236 (including overlap between the categories).
8

The cost of this proposed rule ranges from $300 million to $1,041 million over 10 years at a
7% discount rate. The primary estimate is the mean which is $670.6million. For
comparison, at a 3% discount rate, the cost of the program ranges from $364 million to
$1.3 billion with a primary (mean) estimate of $814 million. The average annualized cost
for the program ranges from $43 million to $148 million (with a mean of $96 million), also
employing a 7% discount rate. Tables 1 and 2 present the summary discounted total and
annualized costs for the rule.
Table 1. Summary of Estimated Total Costs ($ millions)
10 year/
Discount Rate
10 year , 7%
10 year, 3%

Low population
estimate
300.2
364.2

Primary estimate
670.6
814.0

High population
estimate
1,041.0
1,263.7

Table 2. Summary of Estimated Annualized Costs ($ millions)

10 year , 7%
10 year, 3%

Low population
estimate
42.7
42.7

Primary estimate
95.5
95.4

High population
estimate
148.2
148.1

The largest cost component of the proposed rule is related to the point of sale. Depending
on scenario (low population/low transactions vs. high population/high transactions), point
of sale activities account for 55% to 80% of the total program cost. This is followed by
registration activities, federal costs, recordkeeping, inspections/audits, and reporting
theft/loss. Table 3 presents the estimated 10-year cost by program element.
Table 3. Estimated 10-year Cost by Program Element ($ millions)

7% Discounted Low–
7% Discounted High–
3% Discounted Low–
3% Discounted High–

Registration
56.2

Appeals
0.2

Point of
Sale
166.0

Record
keeping
21.4

Reporting
Theft/
Loss
0.1

86.3

0.4

841.6

52.2

0.1

4.4

56.0

1,041.0

68.5

0.3

201.5

25.9

0.1

2.1

65.9

364.2

105.1

0.5

1,022.0

63.1

0.2

5.3

67.6

1,263.7

Audits/
Inspcts.
1.8

Federal
Costs
54.6

Total Cost
300.2

DHS conducted a break-even analysis that examines the required reduction in the potential
frequency of an attack. The proposed rule is cost effective if the result is a reduction in the
event frequency by at least one event the size of the Oklahoma City bombing per 14 years.

2. OMB Accounting Statement

As required by OMB Circular A-4, the Department has prepared an accounting statement
showing the classification of the costs and benefits associated with this rule. Table 4
provides an estimate of the dollar amount of these costs and benefits expressed in 2009
dollars, at three percent and seven percent discount rates. The Department estimates the
cost of this rule will be approximately $95.5 million annualized at the 7 percent discount
rate and $95.4 million annualized at the 3 percent discount rate. Non-quantified benefits
are reduced vulnerability.

Table 4. OMB Accounting Statement of Annualized Costs and Benefits (Program Years 1-10)
3% discount rate
Primary
Minimum
Estimate
Estimate

Maximum
Estimate

7% discount rate
Primary
Minimum
Estimate Estimate

Maximum
Estimate

COSTS
Annualized monetized costs

$95.4
million

Annualized quantified, but unmonetized costs
Qualitative (un-quantified) costs
BENEFITS
Annualized monetized benefits
Annualized quantified, but unmonetized benefits
Qualitative (un-quantified) benefits

$42.7
million

$148.1
million

$95.5
million

$42.7milli
on

None

$148.2
million

None
None

None

Reduced vulnerability to terrorist
attack using ammonium nitrate

3. Benefits of the Ammonium Nitrate Security Program
“The April 19, 1995, bombing of the Alfred P. Murrah Federal Building (Murrah Building) in
Oklahoma City sent shock waves throughout America. The bombing took its toll in human
life and property damage and changed the community's and the Nation's general sense of
safety and security. The explosion rocked downtown Oklahoma City, reduced the north face
of the Murrah Building to rubble, and dealt extensive damage to each of the nine floors as
they collapsed into the center, pancaking one on top of the other. When the dust cleared,
one-third of the building lay in ruins. The force of the blast damaged 324 surrounding
buildings, overturned automobiles, touched off car fires, and blew out windows and doors
in a 50-block area. News reports indicated the explosion was felt 55 miles from the site and
registered 6.0 on the Richter scale.” 1 “The bomb damaged 312 buildings in Oklahoma City.
Thirty buildings were heavily damaged and approximately 16 have since been torn down.
Twenty blocks of downtown [Oklahoma City] had to be cordoned off due to the bomb’s
extent.” 2 “At the close of the response, over 6,800 volunteers had worked on the job.” 3
“Within days after a terrorist bomb destroyed [the] Murrah Federal Building and took 168
lives in Oklahoma City, on April 19, 1995, [the Federal government] embarked upon a
program that has significantly upgraded security in the facilities under our control. Since
that awful day, [the Federal government has]:
•
•

Supervised the placement of nearly 8,000 security countermeasures
recommended by lay committees in Federal buildings;
Nearly doubled the size of our uniformed Federal Protective Service
Officers, from 376 officers to a planned strength of 724 (with all but 52
actually on board);

1Data

comes from multiple sources and is adjusted to $ 2010 using a 42.3% increase in the Consumer Price
Index (all items) between 1995 and 2010(Bureau of Labor Statistics, http://data.bls.gov/cgi-bin/cpicalc.pl ).
For various discussions of injuries and costs see:
"Physical Injuries and Fatalities Resulting From the Oklahoma City Bombing.” JAMA, August 7, 1996
Sue Mallonee, RN, MPH; Sheryll Shariat, MPH; Gail Stennies, MD, MPH; Rick Waxweiler, PhD;
David Hogan, DO; Fred Jordan, MD, pp 382-387available at:
http://jama.ama-assn.org/cgi/reprint/276/5/382 ; estimates of injuries differ by source. DHS used the detailed
JAMA article as it was based on survey and interview data and has thorough documentation. 167 individuals
were killed by the explosion and 1 additional death of an emergency worker occurred during the rescue and
recovery operation.
“Responding to Terrorism Victims: Oklahoma City and Beyond,” U.S. Department of Justice, Office of Justice
Programs, Office for Victims of Crime, October 2000, available at
http://www.ojp.usdoj.gov/ovc/publications/infores/respterrorism/welcome.html
2 National Park Service OKC FAQs available at http://www.nps.gov/okci/faqs.htm
3 The Oklahoma Department of Civil Emergency Management After Action Report: Alfred P. Murrah Federal
Building Bombing, 19 April 1995 in Oklahoma City, Oklahoma. Available at
http://www.ok.gov/OEM/documents/Bombing%20After%20Action%20Report.pdf

•
•

•

More than doubled the number of contracted guards in Federal work
locations, from 2,300 to more than 5,000;
Enhanced intelligence-sharing with other Federal law enforcement
agencies; and, revised our policies to provide more protected sites for
many new buildings and to discourage co-locating low-risk agencies with
higher-risk ones;
The Federal government has redirected training and duties of our
security force and issued revised design criteria for new and renovated
Federal buildings;
All this comes at a cost, of course. The [Building Security Committee]
countermeasures, which include large numbers of security screening and
surveillance devices and additional personnel to monitor them, have
come at a capital cost of $148 million, and with additional operating costs
totaling $249 million, for a cost of $397 million since 1995. Virtually all of
this cost has been funded through the Federal Buildings Fund, except for
a small supplemental appropriation in fiscal year 1995.” 4

While the attack in Oklahoma City marks the most significant, successful terrorist attack
using ammonium nitrate in the United States, for 30 years or more, ammonium nitrate has
been used successfully in terrorist attacks throughout the world. For instance, the
Provisional Irish Republican Army also used ammonium nitrate as part of its London
bombing campaign in the early 1980s. 5 More recently, ammonium nitrate was used in the
1998 East African embassy truck bombings, killing hundreds and injuring thousands at the
U.S. embassies in Dar es Salaam, Tanzania, and Nairobi, Kenya. 6 Ammonium nitrate was
also used in a November 2003 series of truck bombings in Turkey, killing over 50
individuals and injuring an additional 700 individuals at multiple locations across
Istanbul. 7 Additionally, since the events of 9/11, stores of ammonium nitrate have been
confiscated during raids on terrorist sites around the world, including raids on sites in
Canada, 8 England, 9 India, 10 and the Philippines. 11

Security In Federal Buildings, Statement Of Robert A. Peck, Commissioner , Public Buildings Service, General
Services Administration, Before The Subcommittee On Public Buildings And Economic Development,
Committee On Transportation And Infrastructure United States House Of Representatives, June 4, 1998. As
Retrieved From the Web on 03/18/2010.
http://www.gsa.gov/portal/gsa/ep/contentview.do?contenttype=gsa_basic&contentid=11807&noc=t
5
http://www.encyclopedia.com/doc/1P2-834282.html
6
http://www.justice.gov/opa/pr/2009/May/09-ag-496.html
7
http://www.cbsnews.com/stories/2004/04/14/world/main611898.shtml
8
http://threatswatch.org/inbrief/2006/06/canada-raid-breaks-cell-3-tons/
9
http://news.bbc.co.uk/2/hi/uk_news/3582921.stm
10
http://www.zeenews.com/news605486.html
11
US Department of State Office of the Coordinator for Counterterrorism Country Reports on Terrorism 2005, pg
78
4

By securing the nation’s supply of ammonium nitrate, it will be much more difficult for
terrorists to obtain ammonium nitrate materials for use in improvised explosive devices
(IEDs). As a result, there is a direct value in the deterrence of a catastrophic terrorist attack
using ammonium nitrate.
There are several key benefits of this proposed rule.
•

•

This proposed rule will standardize and build upon successful industry “know
your customer” initiatives and state regulations to prevent the misappropriation
or use of ammonium nitrate in a terrorist attack.
This proposed rule will provide timely, accurate vetting of persons wishing to
possess or transfer ammonium nitrate. By requiring individuals to be vetted
against the TSDB, known and suspected terrorists would be denied an AN
Registered User Number.
This proposed rule will allow AN Sellers to identify non-authorized persons and
requires them to deny sale or transfer of ammonium nitrate to these persons. By
complying with the point of sale requirements to verify the accuracy and
currency of a potential purchaser’s AN Registered User Number and an
inspection of his/her photo ID, AN Sellers will have the knowledge to allow or
deny sale or transfer of ammonium nitrate.
This proposed rule will eliminate gaps in Federal oversight of ammonium nitrate
supplies used in explosives manufacturing.

To understand the cost-benefit relationship, costs and benefits of reducing the risk of a
terrorist attack must first be quantified. The benefit of reducing risk of a terrorist attack is
comprised of two components: the incremental risk reduction and the value of such a
reduction. The incremental risk reduction is estimated in terms of casualties, property
damage, and other non-monetary impacts resulting from the implementation of the
proposed rule. Casualty and other non-monetary impacts are then translated into
monetary terms via one of several widely accepted valuation methods, such as willingness
to pay.

Ideally, the quantification and monetization of the beneficial security effects of this
proposed regulation would involve two steps. First, the Department would estimate the
reduction in the probability of a successful terrorist attack and avoidance of the
consequences of the terror attack resulting from implementation of the proposed rule.
Second, the Department would identify individuals’ willingness to pay for this incremental
risk reduction and multiply it by the population experiencing the benefit. Both of these
steps, however, rely on key data that are not available for the proposed rule. In light of
13

these limitations, the Department conducted a “break-even” analysis to determine what
reduction of overall risk of a terror attack, and consequently the resulting reduction in the
expected losses for the nation due to a terror attack, would be necessary in order for the
expected benefits of the proposed rule to exceed the domestic costs of compliance with the
proposed rule.

Break-Even Analysis 12
A break-even analysis for a rulemaking such as this proposed rule is aimed at framing the
relationships between the effects of the rulemaking (in increasing domestic security and
reducing the risk of terror attack), the cost of implementing the rule, and the baseline risks
of domestic terror attacks which would be mitigated by increased security of the AN supply
chain. Given the complex nature of the benefits expressed as reduced risk, it is difficult to
quantify these kinds of benefits with any certainty. This is also the case with quantifying
the risk reduction attributed to this proposed rule compared to the baseline risk of a terror
attack involving ammonium nitrate.

The intent of the analysis is to organize information on benefits and costs and present them
in a way to further inform decision makers in their assessment of the proposed rule. The
proposed rule is cost beneficial if the benefits of risk reduction exceed the cost of
implementing this proposed rule. The damages from a terror attack are many and it is
difficult to quantify such losses. Data from past attacks are a starting point for analysis, but
are imperfect proxies for what may occur in the future. In addition, it is difficult to estimate
the likelihood with which a successful attack may occur over any given time period. In fact,
this likelihood and the degree to which authorities are able to gauge it may change over
time as geopolitical circumstances change.

The types of attacks that would be prevented by this regulation could vary widely in
intensity and effect, depending both on the intent and effectiveness of those undertaking
the attack. The most widely known incident involving ammonium nitrate in the U.S. was the
April 19, 1995, bombing of the Alfred P. Murrah Federal Building in Oklahoma City.

The practice of benefits valuation is based on an extensive literature of an individual’s
willingness to pay for an incremental reduction in the risk of injury or death, constrained
by that individual’s financial resources. Because the willingness to pay for a reduction in
risk of injury or death is not observable in the marketplace, economists use other methods

12 For a background on break even analysis as applied to regulatory analysis in the context of terrorism
prevention, see Latourrette, T. and Henry H. Willis, Rand Corporation, “Using Probabilistic Terrorism Risk
Modeling for Regulatory Benefit-Cost Analysis: Application to the Western Hemisphere Travel Initiative
Implemented in the Land Environment”, May 2007, available at
http://www.rand.org/pubs/working_papers/2007/RAND_WR487.pdf.

to elicit the value society places on these risk reductions. Surveys of individuals’
preferences in a hypothetical situation can reveal these values, as can observations of
individuals’ purchases of items that reduce risk of injury or death (e.g., bike helmets). This
measure of willingness to pay is known as Value of a Statistical Life (VSL). In order to
compare the losses associated with such an event to the cost of the proposed rule, the
Department assigns a statistical monetary value to potential casualties, and also takes into
account other direct costs due to the attack, such as property damage. This analysis uses
the Department of Transportation’s (DOT) VSL of $6.0 million. 13 The VSL represents an
individuals’ willingness to pay to avoid a fatality, based on economic studies of the value
individuals place on small changes in risk. The same guidance on the use of VSL
recommends the use of a range of values rather than a point estimate. For this analysis the
Department used the DOT 2009 guidance of one standard deviation which results in a
range from $3.4 million to $8.6 million ($6.0±$2.6). Lastly, based on the same DOT
standards, DHS values moderate injuries at 1.55% of the VSL and severe injuries at 18.75%
of the VSL. The Department emphasizes that the VSL is a statistical value used only for
regulatory comparison and in no way suggests that the actual value of a life can be stated in
dollar terms.
Table 5 shows many cost components from the Oklahoma City attack. For the purpose of
the break-even analysis, the Department believes that this is the best example to use as a
potential attack. There were 168 deaths which are used as the multiplier times the value of
a statistical life which results in just over $1 billion in valuation. ($6.0 million/statistical life
* 168 lives = $1,008 million). The Department utilized “Physical Injuries and Fatalities
Resulting from the Oklahoma City Bombing” for the injury data. Because the article
categorizes injuries as to where they were treated and separately by specific kinds of
injuries but without severity, there was no definite crosswalk to the DOT injury categories
the Department utilizes. The Department used the hospitalization numbers for the severe
injuries (18.75% of the VSL) and non-hospitalization valued at the DOT moderate category
(1.55% of the VSL). The 83 hospitalizations results in $93.4 million while the nonhospitalization injuries add another $47.3 million. The statistical valuation for fatalities and
injuries equates to somewhat more than $1.1 billion. The emergency appropriations in
1995 14 provided funding for the Federal building replacement and a number of
Department of Justice (DOJ) emergency expenses directly related to the incident. Other
agencies received emergency appropriations to cover losses but the information in the act
is less clear as to the nature of the expenses. The DOJ expenses are clearly direct expenses

13 U.S. Department of Transportation memorandum, Treatment of the Economic Value of a Statistical Life in
Departmental Analyses. 2009 Annual Revision. Office of the Secretary of Transportation, March 19, 2009 at
http://gov.rosenet.org/uploads/254/treatment_of_a_statistical_life_dot.pdf
14 The emergency appropriations language and values is available at http://frwebgate.access.gpo.gov/cgibin/getdoc.cgi?dbname=104_cong_public_laws&docid=f:publ19.104.pdf

and would likely represent similar costs should another event occur. The statute and other
references mentioned earlier in this section identify damage to 312 other buildings and
businesses. The appropriation identified these costs at $39.4 million. The Oklahoma
Department of Civil Emergency Management After Action Report 15 and GSA Commissioner
Peck’s testimony 16 reports these values as substantially higher with significantly more
categories of expense. However, the descriptions mix indirect with direct cost so the
Department has not included the larger numbers. Those items were described at the
beginning of the benefits section to provide insight to potential costs even though not
included in the values below. When the1995 non-injury costs are adjusted with an inflation
factor of 1.42 17 the total event valuation is approximately $1.35 billion. The Department
notes that our $1.35 billion estimate may not include every possible societal cost that
stemmed from the attack, such as the economic turmoil it caused. The Department
welcomes additional information from commenters that further informs our $1.35 billion
estimate.
In addition to reducing the possibility of an ammonium nitrate-based terrorist attack,
promulgating this rulemaking provides the benefit of allowing the Department to comply
with the law. The Consolidated Appropriations Act, 2008 18, (H.R. 2764; Public Law 110–
161) states the “Secretary shall regulate the sale and transfer of ammonium nitrate by an
ammonium nitrate facility . . . to prevent the misappropriation or use of ammonium nitrate
in an act of terrorism.” Section II. A of the accompanying preamble provides a more
detailed background discussion of the regulatory requirements expressly contained in the
statute, such as the registration requirement for certain ammonium nitrate sellers and
purchasers.

The Oklahoma Department of Civil Emergency Management After Action Report: Alfred P. Murrah Federal
Building Bombing, 19 April 1995 in Oklahoma City, Oklahoma. Available at
http://www.ok.gov/OEM/documents/Bombing%20After%20Action%20Report.pdf
16 Security In Federal Buildings, Statement Of Robert A. Peck, Commissioner , Public Buildings Service,
General Services Administration, Before The Subcommittee On Public Buildings And Economic Development,
Committee On Transportation And Infrastructure United States House Of Representatives, June 4, 1998. As
Retrieved from the Web on 03/18/2010.
http://www.gsa.gov/portal/gsa/ep/contentview.do?contenttype=gsa_basic&contentid=11807&noc=t
17 CPI-U seasonally adjusted values from BLS. http://www.bls.gov/cpi/#data as of 4/12/2010 and represent
the most recently available and August 1995 for the appropriations values (217.59/152.9=1.42).
18
The Consolidated Appropriations Act, 2008, (H.R. 2764; Public Law 110–161) as found on pages 10021009. Retrieved from http://frwebgate.access.gpo.gov/cgibin/getdoc.cgi?dbname=110_cong_house_committee_prints&docid=f:39564e.pdf. All references in this
evaluation to this act refer to this citation. For simplicity, some references have been shortened to the 2008
Consolidate Appropriations Act, Subtitle J, or merely legislation when mentioned near text that also discusses
the statute.
15

Table 5. Cost Valuation of an Attack Based upon 1995 Murrah Federal Building Attack
(Primary VSL Estimate; All $ millions)

Number
(A)
168
83
509

Lives Lost
Severe Injuries
Moderate Injuries
Subtotal Valuation Life and Injuries

Murrah Building Replacement Costs
Congressional Emergency Appropriation
Other Building Recovery and community aid
Attorney General Terrorism fund associated to
OKC
US Attorney Extraordinary expenses due to
bombing
Additional Judge Security
Subtotal Property and Other Direct

VSL
(B)
$6.0
$6.0
$6.0

VSL
Multiplier
for
Injuries
(C)
100%
18.75%
1.55%

Value
($1995)
(D)
$ 40.4

Inflation
Multiplier
(E)
1.42

$ 34.2

1.42

$ 39.4
$ 10.3
$ 16.6

Total Impact (sum of 2 subtotals)

1.42
1.42
1.42

Valuation
(D)= A*B*C
$ 1,008.0
$ 93.4
$ 47.3
$ 1,148.7
Value
($2010)
(F)=D*E
$ 57.5
$ 56.1
$ 48.7
$ 14.7

$ 23.6
$ 200.5
$ 1,349.2

Because VSL is likely to represent a range, this analysis uses the DOT guidance of plus or
minus 1 standard deviation. Based on $6.0 million ± $2.6 million the lower VSL is $3.4
million and the upper is $8.6 million. The non-injury costs do not change but using the
upper and lower VSL values moves costs ± $497.8 million around the $1.35 billion
estimate. The detailed calculations are shown in the next two tables.

Table 6. Cost Valuation of an Attack Based upon 1995 Murrah Federal Building Attack
(Lower VSL Estimate; All $ millions)

VSL

VSL
Multiplier
for
Injuries

Value
($1995)
(D)
$ 40.4

Inflation
Multiplier
(E)
1.42

Number
(A)
168
83
509

Lives Lost
Severe Injuries
Moderate Injuries
Subtotal Valuation Life and Injuries

Murrah Building Replacement Costs
Congressional Emergency Appropriation
Economic revitalization, Other Building Recovery
Attorney General Terrorism fund associated to OKC
US Attorney Extraordinary expenses due to bombing
Additional Judge Security
Subtotal Property and Other Direct
Total Impact (sum of 2 subtotals)

(B)
$3.4
$3.4
$3.4

$
$
$
$

39.4
34.2
10.3
16.6

1.42
1.42
1.42
1.42

Valuation
(D)=
A*B*C
$ 571.2
$ 52.9
$ 26.8
$ 650.9
Value
($2010)
(F)=D*E
$ 57.5

$ 56.1
$ 48.7
$ 14.7
$ 23.6
$ 200.6

$ 851.5

Table 7. Cost Valuation of an Attack Based upon 1995 Murrah Federal Building Attack (High
VSL Estimate; All $ millions)

VSL

VSL
Multiplier
for
Injuries

Value
($1995)
(D)
$ 40.4

Inflation
Multiplier
(E)
1.42

Number
(A)
168
83
509

Lives Lost
Severe Injuries
Moderate Injuries
Subtotal Valuation Life and Injuries

(B)
$8.6
$8.6
$8.6

$
$
$
$

39.4
34.2
10.3
16.6

1.42
1.42
1.42
1.42

Valuation
(D)=
A*B*C
$ 1,444.8
$ 133.8
$ 67.8
$ 1,646.5
Value
($2010)
(F)=D*E
$ 57.5
$ 56.1
$ 48.7
$ 14.7
$ 23.6
$ 200.5

$ 1,847.0

If the program is to be cost effective, the amount by which baseline risk must be reduced by
the Ammonium Nitrate Security Program can be directly calculated as a ratio of annualized,
discounted program costs to attack consequences. However, the underlying baseline risk of
an attack in any given year is highly uncertain and variable over time, making the breakeven analysis especially useful. To determine the frequency of attack that results in a
break-even point, we divide the total attack valuation by the annualized proposed rule
program costs discounted at 7%. The table below shows the calculation for three VSL
values. The minimum frequency reductions in years between attacks are 14.1, 8.9, and 19.3
which represent the minimum reduction of one attack the size of the 1995 Oklahoma City
bombing per the calculated number of years.

Table 8. Frequency of Attacks Averted for AN Security Costs to Equal Expected Benefits ($
millions; Frequency years)

Total Impact (sum of 2 subtotals)

Total rule cost annualized at 7%
(from Accounting Summary)

Frequency of Attacks Averted by AN
Security Procedures to Break Even.
(Total Impact/Total Cost)
Interpret attack rate as one attack per
number of years

VSL=$6.0

VSL-1 Std
Deviation
($3.4)

VSL+1 Std
Deviation
($8.6)

$1,349.2

$851.4

$1,847.0

$95.5

One attack every
14.1 years

One attack every
8.9
years

One attack every
19.3
Years

4. NPRM Description
The 2008 Consolidated Appropriations Act amends the Homeland Security Act of 2002 and
provides the Department with the authority to “regulate the sale and transfer of
ammonium nitrate by an ammonium nitrate facility . . . to prevent the misappropriation or
use of ammonium nitrate in an act of terrorism.” The Department published an Advance
Notice of Proposed Rulemaking (ANPRM) for the Secure Handling of Ammonium Nitrate
Program on October 28, 2008 (73 FR 64280). The ANPRM summarized the activities
expected to be covered in this proposed regulatory program, including registration
activities, point of sale activities, theft or loss reporting, inspections and audits, appeals and
penalties, and establishing a threshold level of ammonium nitrate in a mixture for the
purposes of regulation under this program. Simultaneously with the release of this
Regulatory Assessment, the Department is releasing a Notice of Proposed Rulemaking
containing a proposed rule. The proposed rule includes alternatives considered, and
solicits public comment on the proposed approach.
This regulatory evaluation attempts to mirror the provisions laid out in the NPRM. The
Department has made no attempt, however, to precisely replicate rule or NPRM language
in this regulatory evaluation. Should there be a discrepancy between the regulatory
evaluation and the proposed rule or NPRM, the language of the proposed rule or NPRM will
20

have precedence. This is particularly important with regards to terminology describing AN
Facilities and AN Purchasers. For regulatory purposes, these two terms have specific legal
definitions. To clearly identify cost groups and specific definitions applicable to analysis in
support of the Regulatory Flexibility Act, such as the Initial Regulatory Flexibility Act
Analysis (IRFA) in this document, some compromise and simplification is necessary to
maintain simplicity when labeling cost information, particularly in tables. DHS believes the
use of these two terms and similar terms in this document should be readily
understandable. Use of these terms in this document does not alter the specific definitions
and usage in the proposed rule text or in the NPRM. When we use these terms in this
document, we are using them terms in broad manners, not in the precise manners in which
they are used in the NPRM or in the proposed rule text. For purposes of this document only,
‘AN Sellers’ can include individuals who are AN Sellers, AN Facility Representatives, and
Designated AN Facility POCs, and can also include businesses, organizations, and other
entities that sell or transfer ammonium nitrate. Similarly, for purposes of this document
only, ‘AN Purchasers’ can include individuals who are AN Purchasers, and can also include
businesses, organizations, and other entities that buy or obtain ammonium nitrate. DHS
invites comments on the clarity of the use of these simplified terms in this document.

For purposes of the proposed rule, an AN Facility is any person or entity that produces,
sells, or otherwise transfers ownership of, or provides application services for, ammonium
nitrate. The proposed rule requires that all AN Sellers (i.e., any individual involved in the
sale or transfer of ammonium nitrate from an AN Facility or designated to act on behalf of
an AN Facility for purposes of compliance with the proposed rule) and AN Purchasers (i.e.,
any individual seeking to purchase ammonium nitrate from an AN Facility) register with
the Department to obtain an AN Registered User Number. Each applicant for an AN
Registered User Number must apply electronically using the AN User Registration Portal,
an online web portal. AN Facilities include producers, distributors, and some independent
transporters of ammonium nitrate. The term producer is not used in Subtitle J and
therefore the Department has not used this term in the proposed preamble and rule. For
purposes of this Regulatory Assessment, the Department considers producers to be a
subset of AN Facilities because they manufacture ammonium nitrate, sell or transfer the
ammonium nitrate to distributors, applicators, retailers, etc. Therefore, producers of
ammonium nitrate are subject to the same regulatory requirements as all other AN
Facilities.

To register, AN Sellers must provide information including: name, address, telephone
number, photo identification document number, place of birth, date of birth, citizenship,
gender, and information identifying all AN Facilities where applicant will serve as an AN
Seller or AN Facility Representative or Designated AN Facility POC. Additionally,
application information we are reserving the right to collect includes any other information
21

deemed necessary by the Department to carry out vetting, and any other information
deemed necessary by the Department to verify the results of previous TSDB vetting. Each
applicant will be checked against the TSDB and may be denied an AN Registered User
Number if there is a match on the TSDB. The Department intends to provide each applicant
with their AN Registered User Number via e-mail within 72 hours. Where this is not
practicable, the Department intends to provide notice of the delay to the applicants within
the 72 hour timeframe. Each AN Registered User Number would be valid for five years after
its generation by the Department.
Purchasers of ammonium nitrate will also have to register with the Department using the
AN User Registration Portal. They will have to provide information as describe above for
sellers, and may also provide names of any agents who may act on the AN Purchaser’s
behalf at the point of sale. Each purchaser’s registration application will also have to
provide a description of the intended use of the ammonium nitrate the purchaser plans to
procure. As with AN Sellers, AN Purchaser’s information will be checked against the TSDB.
If a person moves, changes their name, etc., they are responsible for notifying the
Department of these changes. They must notify the Department via the AN Registered User
Portal.

The proposed rule requires the AN Seller to verify the purchaser holds a valid AN
Registered User Number. The Department believes this will occur at the point of sale 19
although that is not a requirement. To do this, the Department is considering requiring the
AN Seller to enter the potential purchaser’s AN Registered User Number into an online web
portal or call a call-center established by the Department for verification of the prospective
purchaser’s AN Registered User Number. For purposes of the primary estimate in this
Regulatory Assessment, the Department is assuming that only the online web portal will be
available to AN Sellers to use for this verification. The Department will confirm that the
number provided is a valid AN Registered User Number.

The AN Seller must also perform a visual check of the photo identification (e.g., driver’s
license; passport) of the individual taking possession of the ammonium nitrate (i.e., the AN
Purchaser or his/her agent). The AN Seller must record pertinent details about each
ammonium nitrate transaction, including the AN Purchaser’s (and, if applicable, agent’s)
name, address, telephone number, AN Registered User Number, Department Confirmation,
documentation that a photo ID was inspected, and amount of ammonium nitrate in the
transaction. Where an agent is used, photo ID of the agent must also be presented to verify
the identity of the agent. The AN Facility must keep these records for at least two years.
The “point of sale” is the point at which the possession of AN is transferred from an AN Facility to an AN
Purchaser or his/her agent pursuant to a sale or transfer of AN.
19

Further, the Department requires that these records be and secured during this two-year
period.

AN Facility Representatives (i.e., any AN Seller with responsibility for an AN Facility’s
overall compliance with the proposed rule) and Designated AN Facility POCs must report a
theft or loss of ammonium nitrate to Federal law enforcement within one calendar day of
discovering the theft or loss. The Department recognizes that much of the ammonium
nitrate supply is bulk and because of the hygroscopic nature of the material, some losses
are inevitable.

5. Period of Analysis

The Department has presented the costs for a ten year period. The Department assumes
implementation will begin early in 2012 or 2013.

6. Estimates of Regulated Population

Congress defines ammonium nitrate for purposes of the 2008 Consolidated Appropriations
Act as “solid ammonium nitrate that is chiefly the ammonium salt of nitric acid and
contains not less than 33 percent nitrogen by weight.” Included in the definition of
ammonium nitrate is “any mixture containing a percentage of ammonium nitrate that is
equal to or greater than the percentage determined by [the Department].” In establishing
this mixture percentage, the Department is required to consult with the heads of
appropriate Federal departments and agencies (including the Secretary of Agriculture) and
to provide notice and an opportunity for comment. The Department is also considering
establishing a minimum threshold amount of ammonium nitrate that must change hands as
part of a sale or transfer before that sale or transfer (including the individuals participating
in the transaction) is subject to Subtitle J’s requirements.

Ammonium nitrate is primarily used as a nitrogen source in fertilizer and as an input into
industrial explosives. The majority of ammonium nitrate in commerce is solid while a small
amount of solution is used as a direct application fertilizer. Under Subtitle J, the
Department has authority to regulate transactions (and the individuals conducting them)
involving any amount of ammonium nitrate regardless of packaging. The Department
believes, however, that the security benefits gained from regulating transactions involving
either de minimis quantities of ammonium nitrate or products packaged in such a way as to
make them unlikely to be chosen by an individual for conversion to an ammonium nitratebased explosive may be outweighed by the costs of regulating those transactions. To avoid
including these transactions and the individuals conducting them under its regulatory
23

authority, the Department is considering including both a minimum threshold weight and
an individual products exemption in the definition of ammonium nitrate.

In agricultural applications, ammonium nitrate is used to fertilize pastureland, wheat, corn,
grapes, fruit orchards, and other agricultural products. It is a readily available source of
nitrogen and its fast release makes it a preferred fertilizer to other nitrogenous fertilizers
(including urea, calcium ammonium nitrate, and ammonium sulfate) in relatively dry
climates. According to the Fertilizer Institute, the largest ammonium nitrate consuming
States include: Missouri, Alabama, Tennessee, Texas, Mississippi, Kentucky, Kansas,
Arkansas, Georgia, and Oklahoma. Combined, these ten States accounted for 77.4% of
ammonium nitrate fertilizer consumption in 2007. 20 There is no source of information
about how many individual farms use ammonium nitrate fertilizer. According to the U.S.
Department of Agriculture, 1,022,036 farms incurred expenses for Commercial fertilizer,
lime, and soil conditioners. 21 Only a fraction of these farms use ammonium nitrate
fertilizer, however. The Department assumes that between 100,000 and 150,000 farms use
ammonium nitrate based on information provided by state plant food control officials. 22
Informed by discussions with the fertilizer industry, the Department assumes
approximately 50% of these farms use fertilizer applicator services, 23 and thus never
purchase ammonium nitrate directly. Rather, they purchase ammonium nitrate application
services. Others in the ammonium nitrate supply chain include manufacturers, fertilizer
mixers, explosives distributors, farm wholesalers/co-ops, retail garden centers, golf
courses, landscaping services, blasting services, mines, and laboratory supply companies.
Refer to Appendix A for more information on population estimates. Because point
estimates were difficult to obtain, the Department has provided range estimates for several
segments of the potentially regulated population. The Department welcomes comment on
the estimates of AN Purchasers, Agents and Facilities.
Ammonium nitrate is also used in very small amounts in first aid cold packs 24 to generate
an endothermic reaction when mixed with water. At this time, the list of such products that

20 Association of American Plant Food Control Officials and The Fertilizer Institute, Commercial Fertilizers
2007, page 11.
21 U.S. Department of Agriculture, National Agricultural Statistics Services, 2007 Census of Agriculture (US
data), Table 45.
22 4/17/09 listening session with plant food control officials from several States. Roughly 50,000 – 75,000
farms in Missouri and 3,000 farms in Texas were reported to use AN fertilizer. Estimating the average
fertilizer consumption per State and applying to the national totals, DHS estimates roughly 100,000 to
150,000 farms using AN fertilizer.
23 4/17/09 listening session with plant food control officials from several States. Nationally, about half of
farms were thought to use applicator services and thus never take custody of ammonium nitrate fertilizer.
24 For purposes of the proposed rule, the Department proposes defining a cold pack as a small, commerciallyavailable package commonly used as a replacement for ice in the application of first-aid. Only those cold
packs containing unmixed water and AN that, immediately prior to use, is manipulated to cause the
comingling of the water and the AN resulting in an endothermic reaction that significantly lowers the

the Department is considering granting an individual exemption to is limited to cold packs.
The Department believes that not only would the cost of regulating cold packs far exceed
the security benefit gained by including them in the regulations, but also that Congress did
not intend cold packs—nor the sporting goods stores, recreational centers, schools, and
other entities that purchase or sell/transfer them—to be covered under the Act.

Mixtures

For purposes of the proposed rule, the Department proposes to define ammonium nitrate
to include any mixture that is 30 percent or more ammonium nitrate by weight. By setting
the mixture rule at 30 percent, the Department believes the regulations will capture those
ammonium nitrate mixtures that could be most effectively used in bomb-making, or that
could be most effectively retooled or reconfigured for use in bomb-making.

The Department is aware that this proposed mixture rule differs from the mixture rule
used for ammonium nitrate under the DHS Chemical Facility Anti-Terrorism Standards
(CFATS). 25 Under CFATS, a mixture containing ammonium nitrate is counted towards the
screening threshold quantity for ammonium nitrate if the ammonium nitrate represents 33
percent or more of the mixture. There are two primary reasons for the difference between
this and the CFATS approach to ammonium nitrate mixtures. First, the two mixture rules
exist to accomplish two different goals. First, the CFATS mixture rule exists to help the
Department identify potentially high-risk chemical facilities subject to CFATS, and at the
time of the development of CFATS, the Department believed that setting the ammonium
nitrate mixture at 33 percent accomplished this goal. For this proposed rule, the threshold
is solely meant to identify ammonium nitrate mixtures that have the potential to be
misused in acts of terrorism. Accordingly, a more conservative and inclusive mixture rule is
appropriate. Second, the CFATS mixture rule was based on the best information available
to the Department at the time of the issuance of CFATS Appendix A, which occurred over
eighteen months ago. Since that time the Department has better information from the FBI’s
Explosives Unit concerning experiments that have shown that mixtures containing as low
as 30 percent ammonium nitrate by weight can be processed into viable explosives. In light
of this new evidence, , the Department believes that setting the mixture rule for this
rulemaking at 30 percent ammonium nitrate is the correct course of action.
temperature of the package, could be affected. Many cold packs do not contain AN and would not require an
exemption.
25
CFATS was implemented by rulemaking and is an ongoing program. The original final rule can be viewed at
http://www.regulations.gov/search/Regs/contentStreamer?objectId=09000064802228b5&disposition=attachment&c
ontentType=pdf

For a variety of reasons discussed more extensively in the NPRM, the Department is
proposing exempting mixtures regulated as “explosives” by the Bureau of Alcohol, Tobacco,
Firearms, and Explosives (ATF) from the definition of ammonium nitrate for purposes of
the regulation.

Purchaser

Individuals seeking to purchase or otherwise acquire 25 pounds or more of ammonium
nitrate must apply to the Department of Homeland Security for an AN Registered User
Number. As mentioned in the NPRM, most home use fertilizer doesn’t contain enough AN to
be regulated. The purchaser will be required to present his/her AN Registered User
Number and submit to a purchaser identity verification process in order to purchase
ammonium nitrate based upon the proposed thresholds for weight and mix.

Agents

The use of agents during the conduct of purchases or transfers of ammonium nitrate is a
common practice. For example, an AN Purchaser’s agent or representative will go to an AN
Seller to arrange a transaction of ammonium nitrate and take custody of the ammonium
nitrate on behalf of the AN Purchaser. Agents are not required to possess an AN Registered
User Number. The Department may, however, require AN Purchasers to identify on their
applications for a Registered AN User Number agents who they intend to use at the point of
sale and/or to verify for the AN Seller at the time of an ammonium nitrate transaction that
an individual is acting as an agent on the AN Purchaser’s behalf.

Sellers

AN Sellers that must register with the Department include any person who may
individually perform all aspects of a sale or transfer of ammonium nitrate on behalf of an
AN Facility, including purchaser identity verification activities. Under this proposed rule
framework, there are three categories of AN Sellers:
1. AN Seller
2. AN Facility Representative
3. Designated AN Facility POC

Subtitle J requires any person who owns an AN Facility to register with the Department.
The Department is aware, however, that facilities selling or transferring ammonium nitrate
come in many forms, including but not limited to corporations, partnerships, cooperatives,
and sole proprietorships. For many of these organizations, it may not be practical or
26

sensible to require all “owners” to register (for example, it would not be sensible to require
every shareholder of a publically-held company to register with the Department). Similarly,
for some AN Facilities, such as those owned by large, publically-held companies, there is no
single “owner” who can register on behalf of the AN Facility. Moreover, in many cases
regardless of ownership structure, the AN Facility “owner” is not involved in the day-to-day
transactions of an AN Facility, and thus would have no direct involvement in, or potentially
even oversight of, sales or transfers of ammonium nitrate. For these reasons, simply
requiring all AN Facility “owners” to register is not practicable.
In light of this, the Department is proposing that, any individual who has an ownership or
operator interest in an AN Facility; is designated to act on behalf of an AN Facility for
purposes of compliance with this regulation, such as, possibly, a site manager, sales
manager, or corporate officer; or is involved in the sale or transfer of ammonium nitrate at
an AN Facility, such as a sales clerk or cashier, may register as an “AN Seller.” This would
allow AN Facilities to conduct sales or transfers without direct involvement of an owner of
the AN Facility, while also ensuring that no sale or transfer on behalf of an AN Facility is
conducted by an individual who has not been vetted by and registered with the
Department. For these reasons, the Department also is proposing that, while every AN
Facility will be required to have at least one AN Seller registered with the Department, not
every individual with an ownership interest in an AN Facility must register to be an AN
Seller.

Within the category of AN Sellers, there is a subcategory of individuals called “AN Facility
Representatives.” The qualifications and responsibilities of AN Facility Representatives are
discussed below. AN Sellers who are not AN Facility Representatives would have authority
to perform all of the regulatory activities that “owners” must (e.g., verifying the identities of
prospective AN Purchasers, recording the details of completed sales or transfers, and
handing over possession of ammonium nitrate to approved AN Purchasers), but would not
be liable for ensuring that other AN Facility personnel are following the Department’s
regulations.

The Department proposes that every AN Facility must have at least one registered AN
Seller, but may register as many AN Sellers as it deems appropriate. Whether or not an AN
Facility seeks registration of any additional AN Sellers is entirely discretionary. Under the
Department’s proposed approach, an AN Facility may decide that it is most cost-effective to
register only a single AN Seller; however, in that case the single AN Seller must perform all
point of sale purchaser verification activities and other regulatory compliance activities
proposed by the NPRM.
27

The Department recognizes that not all AN Sellers will have the same level of nonregulatory responsibility and authority within an AN Facility, and that some AN Sellers may
not be in a position to monitor or control overall AN Facility compliance or the compliance
of other AN Facility employees with the final regulations. In light of this, the Department is
proposing the creation of a subcategory of individuals called “AN Facility Representatives”
within the broader class of AN Sellers. The Department proposes that AN Facility
Representatives would be AN Sellers who are not only responsible for their own
compliance with the regulations, but also would be responsible for the AN Facility’s overall
compliance with the regulations and the compliance of all other AN Facility employees.
The Department also proposes that, for purposes of these regulations, the definition of “AN
Facility Representative” be broad enough to include not only individuals who own all or
part of an AN Facility, but also any non-owner AN Facility employee or contractor
designated to act on behalf of an AN Facility for purposes of compliance with this
regulation. Thus, for purposes of the proposed regulation, an AN Facility would be allowed
to designate as an “AN Facility Representative” an individual without any ownership in the
AN Facility, such as, possibly, a site manager, sales manager, or corporate officer, to meet
the “owner” registration requirements.
The Department proposes that every AN Facility must register at least one AN Facility
Representative, but may register as many AN Facility Representatives as it deems
appropriate. Whether or not an AN Facility seeks registration of any additional AN Facility
Representatives is entirely discretionary. The Department also proposes that while an AN
Facility must have at least one registered AN Facility Representative, whether or not an AN
Facility seeks registration of any additional AN Sellers who are not AN Facility
Representatives is entirely discretionary.
While the Department’s proposal does not preclude the registration of multiple AN Facility
Representatives for a single AN Facility, each AN Facility will be required to designate a
single AN Facility Representative to act as the primary point of contact with the
Department on behalf of the AN Facility. This individual will be referred to as the
“Designated AN Facility POC.” The Designated AN Facility POC will be the individual
responsible for contacts with the Department regarding regulatory activities, such as the
scheduling of inspections.

An individual registering as an AN Facility Representative will be expected to provide the
name of and contact information for the Designated AN Facility POC for each AN Facility on
behalf of which he/she is registering. Please note that a single individual may serve as an
AN Facility Representative and/or Designated AN Facility POC for multiple AN Facilities.

Individuals can register for more than one class and the Department expects that many
will. For the purpose of this analysis, however, the Department assumes that AN
Purchasers and AN Sellers will be unique individuals.

The Department recognizes that some AN Facilities may be owned by State or local
government entities. DHS invites comments about this kind of entity to assist in evaluating
the burden on other government entities These AN Facilities would be required to comply
with the provisions of this proposed rule.
The estimated number of AN Purchasers and AN Sellers is based in large part on
discussions between the Department and members of multiple agricultural fertilizer and
explosive industry associations, who represent a cross-section of many of the industry
segments most likely to be covered by these regulations. These estimates also are based on
discussions between the Department and various State officials (e.g., State plant food
control officials) responsible for overseeing ammonium nitrate use within their respective
States. The Department welcomes comment on the size of the regulated population.
Table 9 estimates the number of purchasers of ammonium nitrate that will apply for an AN
Registered User Number. For the purpose of this analysis, it is assumed that each
establishment will have more than one person apply for an AN Registered User Number.
The Department assumes that farms, mines, golf courses, landscaping and landscaping
services will register two people at each establishment. Larger businesses and businesses
engaged in reselling or distributing ammonium nitrate are assumed to have three
applicants per establishment. The Department welcomes comment on the number of AN
Purchasers and the number of AN Registered Users per establishment.

Table 9. AN Purchasers
Average
number of AN
Registered
Users per
establishment
(C)

Number of
establishments
(A)
(B)
Low
High

Number of individual
applicants
(A x C)
(B x C)
Low
High

400
500
500
500
50,000
6,000
4,500

600
1,000
2,500
1,000
75,000
12,000
9,000

1,200

1,800

1,500
1,500
1,500
100,000
12,000
9,000

3,000
7,500
3,000
150,000
24,000
18,000

3
3
3
3
2
2
2

Explosives Sector
Explosives distributors
Blasting services
Mines

500
250
1,750

1,000
500
3,500

1,500
750
3,500

3,000
1,500
7,000

3
3
2

Other
Laboratory supply

100

150

300

Total AN Purchasers

64,950

106,200

132,600

219,100

n/a

Agricultural sector
Fertilizer mixers
Farm wholesalers/co-ops
Retail garden centers
Fertilizer applicators
Farms
Golf courses
Landscaping services

Table 10 estimates the number of AN Sellers. Many AN Sellers are also AN Purchasers due
to their “middle position” in the supply chain. The Department assumes that most
businesses will have five AN Registered Users at each establishment. Manufacturers of
ammonium nitrate fertilizer and explosives are assumed to have ten AN Sellers at each
establishment, while fertilizer applications are assumed to have three registered AN Sellers
at each establishment. The Department welcomes comment on the number of AN Sellers
and the assumptions regarding the number of AN Registered Users per establishment.
Table 10. AN Sellers

AN fertilizer manufacturers
AN explosives manufacturers
Fertilizer mixers
Explosives distributors
Farm wholesalers/co-ops
Retail garden centers
Fertilizer applicators
Laboratory supply
Total AN Sellers

500

1,000

1,500

3,000

100

250

500

Average
number of AN
Registered
Users per
establishment
(C)
10
10
5
5
5
5
3
5

2,486

6,236

11,610

29,360

n/a

Number of
establishments

Number of
individual applicants

(A)

(B)

(A x C)

(B x C)

Low
26
10
400
500
500
500

High
26
10
600
1,000
1,000
2,500

Low
260
100
2,000
2,500
2,500
2,500

High
260
100
3,000
5,000
5,000
12,500

7. Registration of AN Sellers and AN Purchasers
In order to legally sell or transfer ammonium nitrate, individuals, including those acting on
behalf of a business enterprise, must first register with the Department to receive an AN
Registered User Number.
The Department proposes registering to become an AN Seller (including designation as an
AN Facility Representative or Designated AN Facility POC), will be done through an online
web portal (the “AN User Registration Portal”) developed by the Department and made
available via the Internet. The Department preliminarily has decided that this will be the
only available means of registration, and that alternate registration application processes
will not be available. The Department will check the applicant’s personal information
against the TSDB and may deny the applicant an AN Registered User Number if their
information matches information contained in the TSDB.
31

An individual may choose to register for multiple categories. Transporters of AN will
register in one or more categories based upon the three different possible business
relationship in their transactions. Based on the category(s) selected, the individual will be
asked to provide answers to a series of questions, including, at a minimum, the following
statutorily required information: name; address; telephone number; and, for AN
Purchasers, the intended use of the ammonium nitrate.

OMB Circular A-4 directs agencies to consider alternative regulatory approaches; however,
the Circular also affords agencies considerable flexibility to specify the number and type of
alternatives that should be fully analyzed according to the formal principles of Executive
Order 12866. In this case, the Department used this discretion to define a set of alternative
approaches that reflected the most relevant policy choices made for this rulemaking.

The Department briefly considered having a paper-based registration system. This may
have lowered costs for some applicants who will have to travel to use a computer with
Internet access. Paper-based registration introduces opportunities for transcribing errors
and subsequent delays in receiving an AN Registered User Number. It would be difficult to
assure that AN Registered User Numbers could be generated within the 72 hour window
because of the delay with mail and/or fax. Once DHS determined the paper option would
not comply with the maximum response time, no further consideration or development of
the concept was pursued. Also, the Department has had success with the Chemical Security
Assessment Tool (CSAT) system for Top-Screen under CFATS and expects the regulated
community will find the AN Registration Portal to be equally easy to navigate.
Tables 11 and 12 present the cost of registration activities for AN Purchasers for both the
low and high population estimates. To estimate the cost of the time to register for an AN
Registered User Number, the Department has assumed that individuals equivalent to a
“purchasing manager” will undergo the application process. An average hourly wage at the
50th percentile plus benefits is assumed for each industry. To estimate the cost of
individual’s time registering for an AN Registered User Number, the Department has
applied a loaded average hourly rate. Hourly rates represent the 50th percentile hourly
rates published by the Bureau of Labor Statistics (BLS), Occupational Employment and
Wage estimates (May 2008. 26
According to the U.S. Department of Agriculture (USDA), approximately 60% of crop farms
have Internet access. 27 Thus, the Department assumes that in the agricultural sector,
26
27

All wage rate information with links to BLS data is provided in table form in Appendix B.
Sources: “Farm Computer Usage and Ownership,” United States Department of Agriculture National

Agricultural Statistics

approximately 60% of farms have computers with Internet access. For this portion of the
population, the time to apply for an AN Registered User Number is limited to the time to
access the website, provide the required information, check their e-mail for registration
confirmation, and record their AN Registered User Number. For the 40% of farms without
computers with Internet access, the Department assumes that these AN Purchasers will
travel a short distance public library, or other location where access to the Internet is
available to apply for an AN Registered User Number. Further, the Department assumes
that for applicants without Internet access, two trips will be required; one to complete the
AN Registered User Number application, and a second trip after 72 hours to retrieve the email containing the AN Registered User Number. The Department assumes that the round
trip distance is 50 miles per trip 28 and has used the IRS mileage rate of $0.55 per mile. 29
The Department assumes the total extra time for each trip will average approximately one
hour each way plus 1 hour for Internet access and registration for a total of 6 hours per
farm registration. By multiplying 50 miles times two trips times $0.55 per mile totals $55
per individual for the mileage for the two trips associated with applying for and receiving
an AN Registered User Number. Because of the minimal time and effort it takes to apply for
and receive an AN Registered User Number, the Department believes this approach to be a
cost-effective way to prevent ammonium nitrate misappropriation. DHS recognizes that in
some instances farmers may be unaware of the requirements to have a registration
number to make an Ammonium Nitrate purchase. These individuals would incur the
opportunity cost of time to travel to make their purchase, but would not be able to
complete their purchase in that trip. In order to calculate the opportunity cost of these
missed purchases, we first need to determine how much of the regulated population might
be unaware of the requirements of this regulation. DHS was unable to find a study that was
highly specific to the population being regulated by thus rule; however, DHS did consult
two papers 30 that addressed regulatory non-compliance due to lack of knowledge of the
Service, August 2009, p. 1. As retrieved at http://usda.mannlib.cornell.edu/usda/current/FarmComp/FarmComp-08-14-2009.pdf
on 7/22/2010
28

DHS is using an average of one way distance of 25 miles based upon: “In the 2004 Agricultural Resource
Management Survey, a joint effort by ERS and USDA’s National Agricultural Statistics Service, farmers were asked
how far they travel to purchase most of their farm inputs and equipment. Farmers were also asked the distance to the
nearest town (the average was 8.3 miles) and nearest city of more than 10,000 people (the average was 24.2 miles).”
USDA, Economic Research Service using data from USDA’s Agricultural Resource Management Survey, 2004 Phase III, Version 1,
summarized in Amber Waves, June 10, 2010, retrieved at http://www.ers.usda.gov/AmberWaves/June10/PDF/FarmExpenditures.pdf on
07/22/2010
29 http://www.irs.gov/formspubs/article/0,,id=178004,00.html. IRS lists the data currency as “Page Last
Reviewed or Updated: January 07, 2010”

EPA/CMA Root Cause Analysis Pilot Project: An Industry Sur-vey” EPA 305 R 99 001) at
http://www.epa.gov/compliance/resources/publications/assistance/sectors/rootcauseanalysis.pdf?bcsi_scan_1CFAD6D
3D20A37D6=0&bcsi_scan_filename=rootcauseanalysis.pdf (27% p14); and Use of Random Response to Estimate Angler
Noncompliance with Fishing Regulations North American Journal of Fisheries Management Volume 15, Issue 4, 1995,
Pages 721 - 731 Authors: D. I. Schilla; P. A. Klinea at
https://research.idfg.idaho.gov/Fisheries%20Research%20Reports/ResSchilil1996%20Use%20of%20Random%20Response%20to%20Estimate%20Angler%20Noncompliance%20With%20Fi
30

requirements. For the purpose of this analysis, DHS considered the likely differences in the
effectiveness of the planned outreach program and the very likely difference that farmers
with internet have more access to information. DHS considered the available information
and used the average of the two papers at the high end, 25% noncompliance for farmers
without internet. For farmers with internet DHS believes the requirements will be much
better known. As a starting point for public comment, DHS has used one quarter of the
upper estimate average or 6.5% for the farmers with internet.
DHS assumes farmers attempting to make a purchase that do not have registration
numbers will proceed directly to a public internet access point and register. For those
farmers without internet, an additional 30 minutes was added onto their time to account
for the opportunity cost of the missed purchase. Table 11 below provides the weighted
average time for all farmers without internet which includes the additional 30 minutes that
25% of the farmers will need.

For farmers with internet, DHS assumes one additional trip for the 6.5% of the farmers that
were unable to make the purchase and went home to register. The opportunity cost of this
additional trip includes the estimated 2 hours to drive to and from the store (6.5% * 60,000
farmers * 2 hours) as well as the mileage cost (25% * 60,000 farmers * $.55/mile * 50
miles). The time for the additional trip for 6.5% of the farmers with internet has been
added in to the total amount of time for all farmers with internet to register and divided by
the total population to arrive at a weighted average registration time. These additional
opportunity costs have been included in Table 11 below.

Businesses have a higher Internet penetration rate and usually are in close proximity to
other businesses or public Internet access. Therefore, DHS has not adjusted other
estimates for the opportunity cost of the missed purchase.
Table 11. Cost of Registration Activities for AN Purchasers – Low Population Estimate*

Number of
Applicants

Loaded
Hourly
Wage Purchasing
Agents*

Hours
required to
register for
AN
Registered
User
Number

Total
Hours

Cost of Time
to apply for
AN
Registered
User
Number
($)

Travel
Mileage
Cost
($)

Total
Registration
Cost
($)

AxC

AxBxC

(AxBxC)+D

shing%20Regulations.pdf (pp 721, 725, and 726: 29% noncompliance * 75% accidental = 22%) Averaging 22% and the
27% yields 25% Additionally different sampled populations had noncompliance rates from .4% to 28% )

Fertilizer mixers
Farm wholesalers/coops
Retail garden centers
Fertilizer applicators
Farms w/ Internet
access
Farms w/o Internet
access
Golf courses
Landscaping services
Explosives distributors
Blasting services
Mines
Laboratory supply
Total

1,200

0.5

600

24,000

n/a

24,000

1,500

0.5

750

24,000

n/a

24,000

1,500
1,500

16
40

0.5
0.5

750
750

12,000
30,000

n/a
n/a

12,000
30,000

60,000

0.6
37,500

1,539,000
10,670,000
150,000
128,000
29,000
14,000
63,000
3,000
11,557,000

412,500

40,000

6.5

12,000
9,000
1,500
750
3,500
150

25
28
39
38
36
39

0.5
0.5
0.5
0.5
0.5
0.5

260,000
6,000
4,500
750
375
1,750
75

132,600

n/a

313,800

* Wage rate information is fully explained in Appendix B. Rounding may affect totals.

1,951,500
2,200,000
n/a
n/a
n/a
n/a
n/a
n/a

12,870,000
150,000
128,000
29,000
14,000
63,000
3,000

2,612,500

15,298,500

Table 12. Cost of Registration Activities for AN Purchasers – High Population Estimate*

Number of
Applicants

Loaded
Hourly
Wage Purchasing
Agents*

Hours
required to
register for
AN
Registered
User
Number

Total
Hours

Cost of Time
to apply for
AN
Registered
User
Number
($)

A
B
C
AxC
AxBxC
Fertilizer mixers
1,800
39
0.5
900
35,000
Farm wholesalers/co-ops
3,000
32
0.5
1,500
47,000
Retail garden centers
7,500
16
0.5
3,750
61,000
3,000
40
0.5
1,500
61,000
Fertilizer applicators
Farms w/ Internet access
90,000
41
0.6
56,250
2,308,000
Farms w/o Internet access
60,000
41
6.5
390,000
16,005,000
Golf courses
24,000
25
0.5
12,000
301,000
Landscaping services
18,000
28
0.5
9,000
255,000
Explosives distributors
3,000
39
0.5
1,500
58,000
Blasting services
1,500
38
0.5
750
29,000
Mines
7,000
36
0.5
3,500
126,000
Laboratory supply
300
39
0.5
150
6,000
Total
219,100
n/a
n/a
480,800
19,292,000
* Wage rate information is fully explained in Appendix B. Rounding may affect totals.

Travel
Mileage
Cost
($)

Total
Registration
Cost
($)

D
n/a
n/a
n/a
n/a
618,750
3,300,000
n/a
n/a
n/a
n/a
n/a
n/a
3,918,750

(AxBxC)+D
35,000
47,000
61,000
61,000
2,926,750
19,305,000
301,000
255,000
58,000
29,000
126,000
6,000
23,210,750

While not required by this proposed rule, AN Purchasers may wish to register their agents
with the Department of Homeland Security through the secure User Number Registration
Portal. The pre-registration of agents is assumed to take 15 minutes (0.25 hours) for each
AN Purchaser that pre-registers agents, including the time to log into the system and
update the AN Registered User Number’s record to include the names of his/her agents.
The submission of an agent’s name would simply be for ease of point of sale transactions,
not for vetting against the TSDB. The agent’s name is simply stored in the AN Purchaser
Verification Portal to facilitate transactions involving a AN Purchaser’s regular agent. As
discussed in Section 7 - Point of Sale transactions, an oral confirmation (via telephone or in
person) may be required when a transaction involves an agent that is not pre-registered
with the Department. When a pre-registered agent appears at an AN Facility to take
possession of ammonium nitrate on behalf of a registered AN Purchaser, the agent’s name
will be linked to the AN Registered User Number of the AN Purchaser and the time
consuming process of obtaining a verbal confirmation is avoided. The Department assumes
that 25% of AN Purchasers will register one or more agents. Tables 13 and 14 present the
costs related to pre-registering agents.
Table 13. Cost of Pre-Registering Agents – Low Population Estimate*

Number of AN
Purchasers that will
Pre-Register Agents
Fertilizer mixers
Farm wholesalers/co-ops
Retail garden centers
Fertilizer applicators
Farms
Golf courses
Landscaping services
Explosives distributors
Blasting services
Mines
Laboratory supply
Total

A
300
375
375
375
25000
3000
2250
375
187.5
875
37.5
33,150

Loaded Hourly
Wage - Purchasing
Agents
B
39
32
16
40
41
25
28
39
38
36
39
n/a

Hours
Required to
Pre-Register
Agents
C
0.25
0.25
0.25
0.25
0.25
0.25
0.25
0.25
0.25
0.25
0.25
n/a

Total Hours to
Pre-Register
Agents

Cost of Time to
Pre-Register
Agents

AxC

AxBxC
75
94
94
94
6250
750
563
94
47
219
9
8,289

$3,000
$3,000
$2,000
$4,000
$256,000
$19,000
$16,000
$4,000
$2,000
$8,000
$317,000

* Wage rate information is fully explained in Appendix B. Rounding may affect totals.
Table 14. Cost of Pre-Registering Agents – High Population Estimate
Number of AN
Purchasers that
will PreRegister Agents

Fertilizer mixers
Farm wholesalers/co-ops
Retail garden centers
Fertilizer applicators
Farms
Golf courses
Landscaping services
Explosives distributors
Blasting services
Mines
Laboratory supply
Total

A
450
750
1,875
750
37,500
6,000
4,500
750
375
1,750
75
54,775

Loaded Hourly
Wage Purchasing
Agents*
B
39
32
16
40
41
25
28
39
38
36
39
n/a

Hours
Required to
Pre-Register
Agents
C
0.25
0.25
0.25
0.25
0.25
0.25
0.25
0.25
0.25
0.25
0.25
n/a

* Wage rate information is fully explained in Appendix B. Rounding may affect totals.

Total Hours
to PreRegister
Agents

Cost of Time
to PreRegister
Agents

AxC

AxBxC
113
188
469
188
9,375
1,500
1,125
188
94
438
19
13,697

$4,000
$6,000
$8,000
$8,000
$385,000
$38,000
$32,000
$7,000
$4,000
$16,000
$1,000
$509,000

Tables 15 and 16 present the costs for registration activities of AN Sellers at the low and
high population. The Department proposes requiring each AN Facility to register one and
only one Designated AN Facility POC, while an AN Facility may register as many AN Sellers
as it chooses. For the purpose of estimating the cost of their time, the Department assumes
that the Designated AN Facility POC is an individual equivalent to a Sales Manager, and AN
Sellers are individuals who are equivalent to “sales representatives.”

Table 15. Cost of Registration Activities for AN Sellers – Low Population Estimate*
No. of
AN Seller
Owners/
POC

Other AN
Seller
Applicants

Total
Number of
Applicants

Hours
required to
apply for AN
Registered
User
Number

Total Hours

AN explosives manuf.

260
100

61
74

52
54

0.5
0.5

137
53

7,000
3,000

Fertilizer mixers

400

1,600

2,000

0.5

1050

56,000

500
500
500
500
50
2,486

2,000
2,000
2,000
1,000
200
9,124

2,500
2,500
2,500
1,500
250
11,610

73
63
44
87
73
n/a

47
38
32
36
47
n/a

0.6
0.6
0.6
0.6
0.5
n/a

1375
1438
1438
863
131
6,485

72,000
62,000
50,000
46,000
7,000
303,000

Farm wholes./co-ops
Retail garden centers
Fertilizer applicators
Laboratory supply
Total

(AxE)+(BxE)

Total
Registration
Cost
(AxExC)+
(BxExD)

234
90

Explosives distributors

A+B

Loaded
hourly
Wage Sales
Rep.

26
10

AN fertilizer manuf.

Loaded
Hourly
Wage –
Sales
Manager

* Wage rate information is fully explained in Appendix B. Rounding may affect totals.

Table 16. Cost of Registration Activities for AN Sellers – High Population Estimate
No. of
AN Seller
Owners/
POC

Other AN
Seller
Applicants

Total
Number of
Applicants

Loaded
Hourly
Wage Sales
Manager

A+B

AN fertilizer manuf.

234

260

AN explosives manuf.

100

Fertilizer mixers

600

2,400

3000

1,000

4,000

5000

$52
$54

0.5
0.5

137
53

7,000
3,000

$52
$47
$38
$32
$36
$47

0.5

1,575

0.6
0.6
0.6
0.6
0.5

n/a

2,750
2,875
7,188
1,725
263
16,564

85,000
144,000
124,000
248,000
91,000
14,000
716,000

1,000

4,000

5000

Retail garden centers

2,500

10,000

12500

Fertilizer applicators

1,000

2,000

3000

100

400

500

6,236

23,124

29,360

n/a

Total

Total Hours

* Wage rate information is fully explained in Appendix B. Rounding may affect totals.

(AxE)+(BxE)

Total
Registration
Cost
(AxExC)+
(BxExD)

Farm wholes./co-ops

Laboratory supply

Hours
required to
apply for AN
Registered
User
Number

$61
$74
$61
$73
$63
$44
$87
$73

Explosives distributors

Loaded
hourly
Wage Sales
Rep.

Tables 17 and 18 summarize the cost of registration activities for the low and high
population estimates as detailed in Tables 11 - 16. The individual agent is not a registrant
but providing the purchasers provision of the information as part of the registration or
update process is a part of the costs of registering. Therefore the pre-registration of agents
is a registration activity that is included in summary calculations from this point forward.
Table 17. Summary Cost of Registration Activities – Initial Year, Low Population Estimate

AN Purchaser Registration
Pre-Registration of AN Agents
AN Seller Registration
Total AN Purchasers and Sellers

Total
Number of
Applicants/
Activities
132,600
33,150
11,610
177,360

Travel Cost

Total
Registration
Cost

313,800

2,612,500

15,298,500

8,289

n/a

317,000

6,485

n/a

304,000

328,574

2,612,500

15,919,500

Total
Hours

Table 18. Summary Cost of Registration Activities – Initial Year, High Population Estimate

AN Purchaser Registration
AN Purchasers Pre-Registering Agents
AN Seller Registration
Total AN Purchasers and Sellers

Total Number
of Applicants/
Activities
219,100
54,775
29,360
303,235

Travel Cost

Total
Registration
Cost

480,800

3,918,750

23,210,750

13,697

n/a

509,000

16,564

n/a

740,000

511,061

3,918,750

24,459,750

Total
Hours

Table 19 presents the Department’s assumptions regarding patterns in registration
activity. Based upon DHS program staff industry knowledge and the conversations with
industry described elsewhere, the Department assumes that new entrants will apply for AN
Registered User Numbers at a rate of 20% of the total registered user population per
year 31. In addition, the Department assumes 5% of applicants will update their information
in a given year. Both updating and renewing an AN Registration are assumed to take 30
minutes, the same amount of time as an initial AN Registration. Following the five-year
registration period, the Department assumes 15% of AN Registered Users will leave the
program (i.e., not renew after five years). The timely renewal of an AN Registered User
Number will allow the user to keep the same number. An applicant may renew his/her AN
Registered User Number within 60 days before its expiration. After one year beyond the
expiration of the AN Registered User Number, the applicant will be required to submit a
new application and will receive a new AN Registered User Number.
31

When individuals move between employers, their existing registration number remains valid at the new employer.
Because of this provision, many “new” employees will already have numbers in the system. As in all aspects of the
evaluation, DHS invites comments on these assumptions.

Table 19. Assumptions Regarding Growth in Registrations
New Entrants
20%
Updated Information
5%
Leaving Program (not renewing)
15%
* Note: These averages apply against different base amounts therefore cannot be
summed for a net percentage. Details are provided in the next two charts

Table 20 presents the total registration activity costs by program year. Each AN Registered
User Number is valid for five
years. For purposes of this Regulatory Assessment, the Department assumes all AN
Purchasers and AN Sellers will register during the first year of implementation.
Table 20. Total Registration Activity Costs by Program Year
Registration
Activities
Low Population
PY1
PY2
PY3
PY4
PY5
PY6
PY7
PY8
PY9
PY10
Total

Total Registration
Cost - Low
Population

Registration Activities
High Population

Total Registration
Cost - High
Population

177,360
44,340
46,557
48,885
51,329
116,589
95,814
100,605
105,635
110,917

$15,918,500
$3,979,600
$4,178,600
$4,387,500
$4,606,900
$10,464,200
$8,599,600
$9,029,600
$9,481,000
$9,955,100

303,235
75,809
79,599
83,579
87,758
199,334
163,815
172,006
180,606
189,637

$24,435,750
$6,108,938
$6,414,384
$6,735,104
$7,071,859
$16,063,031
$13,200,820
$13,860,861
$14,553,904
$15,281,600

898,032

$80,600,600

1,535,379

$123,726,251

Appeals
Individuals denied an AN Registered User Number, or whose AN Registered User Number
has been revoked by the Department have the opportunity to appeal. The Department
proposes to fulfill this requirement by permitting each person to request copies of the
materials on which denial or revocation was based, and to file statements explaining why
he/she believes that he/she has been inappropriately denied registration and containing
any applicable supporting evidence, to be reviewed by the Department. These proposed
appeals procedures are based, in part, on appeals procedures the Department offers as part
of the TWIC and HME programs. Specifically, the Department proposes that a person may
initiate an appeal by filing a written Request for Materials requesting copies of the
materials on which denial or revocation was based within 60 days of the date of denial or
revocation. Upon review of those releasable materials, the appellant will have 60 days to
file a Request for Appeal containing the rationale or information upon which he/she
disputes the Department’s denial or revocation determination. After reviewing this
rationale or information, the Department will serve the appellant with a Final
Determination of the Department’s resolution of his/her appeal.

It is difficult to estimate the number of individuals that may be found to be a potential
security threat. Strictly for purposes of this analysis, we will assume approximately 0.2% of
workers may be disqualified based on their TSDB vetting results. Of these, DHS assumes
95% will appeal. The remaining 5% may be discouraged and will not seek an appeal. DHS
assumes the time it will take to prepare the needed paperwork to request the appeal, if
necessary, would take an average of 6 hours to complete. As discussed previously, DHS
assumes a weighted average loaded hourly wage rate of $16-$42 per hour based on the
50th percentile hourly wage for AN Purchasers. For AN Sellers, the weighted average
loaded hourly wage rate ranges from $64-$86. The costs of appeals are presented in Tables
21 through 24.

Table 21. Cost of Appeals for AN Purchasers –Initial Year, Low Population Estimate*

Number of
Applicants
A

Fertilizer mixers
Farm wholesalers/co-ops
Retail garden centers
Fertilizer applicators
Farms with Internet access
Farms w/o Internet access
Golf courses
Landscaping services
Explosives distributors
Blasting services
Mines
Laboratory supply
Total

1,200
1,500
1,500
1,500
50,000
50,000
12,000
9,000
1,500
750
3,500
150
132,600

Loaded
hourly
Wage Prchsng.
Agent

% of
Applicants
that Appeal

No. of
Hours
per
Appeal

0.20%
0.20%
0.20%
0.20%
0.20%
0.20%
0.20%
0.20%
0.20%
0.20%
0.20%
0.20%
n/a

95%
95%
95%
95%
95%
95%
95%
95%
95%
95%
95%
95%
n/a

6
6
6
6
6
6
6
6
6
6
6
6
n/a

$39
$32
$16
$40
$41
$41
$25
$28
$39
$38
$36
$39
n/a

DQ Rate

Total
Number of
Appeals

Total Cost of
Appeals

AxBxC

AxBxCxDxE

2
3
3
3
95
95
23
17
3
1
7
0
252

500
600
300
500
23,400
23,400
3,500
2,900
700
200
1,500
0
57,500

* Wage rate information is fully explained in Appendix B. Rounding may affect totals.

Table 22. Cost of Appeals for AN Purchasers –Initial Year, High Population Estimate*

Number of
Applicants

A
Fertilizer mixers
Farm wholesalers/co-ops
Retail garden centers
Fertilizer applicators
Farms with Internet access
Farms w/o Internet access
Golf courses
Landscaping services
Explosives distributors
Blasting services
Mines
Laboratory supply
Total

1,800
3,000
7,500
3,000
90,000
60,000
24,000
18,000
3,000
1,500
7,000
300
219,100

DQ Rate

B
0.20%
0.20%
0.20%
0.20%
0.20%
0.20%
0.20%
0.20%
0.20%
0.20%
0.20%
0.20%
n/a

% of
Applicants
that
Appeal

No. of
Hours
per
Appeal

C
95%
95%
95%
95%
95%
95%
95%
95%
95%
95%
95%
95%
n/a

D
6
6
6
6
6
6
6
6
6
6
6
6
n/a

* Wage rate information is fully explained in Appendix B. Rounding may affect totals.

Loaded
hourly Wage
- Prchsng.
Agent

Total
Number
of
Appeals

Total Cost
of Appeals

E
$39
$32
$16
40
$41
$41
$25
$28
$39
$38
$36
$39
n/a

AxBxC
3
6
14
6
171
114
46
34
6
3
13
1
417

AxBxCxDxE
700
1,100
1,400
1,500
42,100
28,100
6,900
5,800
1,400
700
2,800
200
92,700

Table 23. Cost of Appeals for AN Sellers –Initial Year, Low Population Estimate*

DQ
Rate

% of
Applicants
that
Appeal

No. of
Hours
per
Appeal

Loaded
hourly
Wage Sales
Rep.

Total
Number
of
Appeals

Total Cost
of Appeals

A
260
100
2,000
2,500
2,500

B
0.20%
0.20%
0.20%
0.20%
0.20%

C
95%
95%
95%
95%
95%

D
6
6
6
6
6

E
52
54
52
47
38

AxBxC
0
0
4
5
5

AxBxCxDxE
$0
$0
$1,200
$1,400
$1,200

2,500
1,500
250
11,610

0.20%
0.20%
0.20%
n/a

95%
95%
95%
n/a

6
6
6
n/a

32
36
47
n/a

5
3
0
22

Number
of
Applicants
AN fertilizer manuf.
AN explosives manuf.
Fertilizer mixers
Explosives distributors
Farm wholesalers/coops
Retail garden centers
Fertilizer applicators
Laboratory supply
Total

$1,000
$600
$0
$5,400

* Wage rate information is fully explained in Appendix B. Rounding may affect totals.

Table 24. Cost of Appeals for AN Sellers –Initial Year, High Population Estimate*

DQ
Rate

% of
Applicants
that
Appeal

No. of
Hours
per
Appeal

Loaded
hourly
Wage Sales
Rep.

Total
Number
of
Appeals

Total Cost
of Appeals

A
260
100
3,000
5,000
5,000

B
0.20%
0.20%
0.20%
0.20%
0.20%

C
95%
95%
95%
95%
95%

D
6
6
6
6
6

E
52
54
52
47
38

AxBxC
0
0
6
10
10

AxBxCxDxE
$0
$0
$1,900
$2,800
$2,300

12,500
3,000
500
29,360

0.20%
0.20%
0.20%
n/a

95%
95%
95%
n/a

6
6
6
n/a

32
36
47
n/a

Number
of
Applicants
AN fertilizer manuf.
AN explosives manuf.
Fertilizer mixers
Explosives distributors
Farm wholesalers/coops
Retail garden centers
Fertilizer applicators
Laboratory supply
Total

24
6
1
57

$4,600
$1,300
$300
$13,200

* Wage rate information is fully explained in Appendix B. Rounding may affect totals.

The costs of appeals by program year are presented below. The Department assumes that
the number of new entrants into the system is 20% per year and 5% of applicants will
update their information in a given year. By year 4, the Department assumes 15% of
applicants will leave the program. The annual changes combined with the mass registration
43

in the beginning which is good for five years results in peaks beginning every five years
thereafter. The cost appeals by program year are detailed in Table 25.
Table 25. Cost of Appeals by Program Year

PY1
PY2
PY3
PY4
PY5
PY6
PY7
PY8
PY9
PY10
Total

Total Appeals Cost Low Population

Total Appeals
Cost - High
Population

$63,100

$105,900

$15,900

$26,600

$16,600

$27,900

$17,500

$29,300

$18,400

$30,800

$41,700

$69,700

$34,300

$57,400

$35,900

$60,100

$37,800

$63,200

$39,600

$66,400

$320,800

$537,300

8. Point of Sale Activities
Only AN Purchasers with valid AN Registered User Numbers may purchase ammonium
nitrate. AN Facilities must refuse to sell or transfer ammonium nitrate to prospective AN
Purchasers who are not validly registered. The “point of sale” is the point at which the
possession of ammonium nitrate is transferred from an AN Facility to an AN Purchaser or
his/her agent pursuant to a sale or transfer of ammonium nitrate.

AN Facilities must refuse to sell or transfer ammonium nitrate to prospective AN
Purchasers unable to satisfactorily prove their identities at the point of sale. AN Facilities
must also record certain identity information at the point of sale. Further, DHS is required
to encourage AN Facilities to exercise caution in selling or transferring ammonium nitrate
under suspicious circumstances, and to take other precautionary measures designed to
prevent the misappropriation of ammonium nitrate. AN Sellers should deny a sale or
transfer of ammonium nitrate under “suspicious” circumstances and are encouraged to
contact law enforcement officials in the event of a “suspicious” ammonium nitrate
transaction or attempted transaction.

As mentioned previously, the Department is aware that ammonium nitrate transactions
occur in a variety of formats and that there may be a time lag between when the
ammonium nitrate is ordered and when it is ultimately transferred. All of the verification
activities must occur before the AN Seller transfers possession of ammonium nitrate to the
44

prospective AN Purchaser or an agent acting on the prospective AN Purchaser’s behalf.
Outside of that requirement, the time at which the AN Seller performs the verification
activities is entirely within the discretion of the AN Seller. For instance, in a situation where
the AN Purchaser places an advance order for ammonium nitrate to be picked up at a later
date, the AN Seller may perform these activities at the time of sale or at the time of transfer
of possession. Similarly, for transactions in which the prospective AN Purchaser intends to
use an agent on his or her behalf, the identity verification activities can occur
simultaneously (e.g., when the prospective AN Purchaser places the order; when the agent
arrives to take possession of the ammonium nitrate), or can be done separately (e.g.,
verifying the identity and AN Registered User Number of the prospective AN Purchaser
when the order is placed and verifying the agent’s identity immediately prior to transfer of
possession). At least 12 states already have a similar process in place which reduces the
expected burden due to this proposed regulation.
Based upon the DHS staff industry experience, the Department has identified three
principal transaction formats commonly used to sell or transfer ammonium nitrate:

1. The AN Purchaser appears at the AN Facility and takes possession of the ammonium
nitrate from the AN Seller directly. Based upon DHS program industry knowledge,
DHS believes that sales models will resemble other commercial purchases with
order information provided to a customer service representative separate from the
payment or verification step which allows the purchaser to minimize delay. For this
reason, DHS has shown the opportunity cost of this delay as similar to a merchant
credit card or check transaction (calculations and costs shown in at the end of this
section);
2. The AN Purchaser places an advanced order either in person or through other
means (e.g., via telephone; online), and the AN Seller delivers the ammonium nitrate
to the AN Purchaser; or
3. The AN Purchaser places an advanced order either in person or through other
means (e.g., via telephone; online), and an agent acting on behalf of the AN
Purchaser takes possession of the ammonium nitrate from the AN Seller.

The Department is proposing to require that an AN Seller perform the following specific
verification activities for each sale or transfer of ammonium nitrate:

1. Verification of a prospective AN Purchaser’s identity (based on the prospective AN
Purchaser’s AN Registered User Number application information);
2. Verification of the currency and accuracy of the prospective AN Purchaser’s AN
Registered User Number;
45

3. Visual check of the photo identification of the individual taking possession of
ammonium nitrate (either the AN Purchaser or his/her agent); and
4. If an agent is used, verification that the agent is acting on the approved AN
Purchaser’s behalf.

Verification of AN Purchaser’s Identity

The AN Seller must verify the prospective AN Purchaser’s identity as required by the
Department. The manner of verification of a prospective AN Purchaser’s identity varies
depending on whether or not the AN Purchaser has opted to use an agent. If the AN
Purchaser opted not to use an agent, then the AN Seller verifies the AN Purchaser’s identity
based upon the visual check of the AN Purchaser’s photo identification. If the AN Purchaser
opted to use an agent, then the AN Seller verifies the AN Purchaser’s identity by submitting
certain information provided by the AN Purchaser to the Department for comparison
against information contained in the AN Purchaser’s AN Registered User Number
application.
In the event a prospective AN Purchaser’s uses an agent to complete the transaction, the
AN Seller must also verify both (1) the agent’s identity based upon a visual check of the
agent’s photo identification, and (2) that the agent is acting on the approved AN
Purchaser’s behalf.

Verification of AN Purchaser’s Registered User Number

In order to bolster the effectiveness of AN Registered User Numbers in preventing the
misappropriation of ammonium nitrate, the Department proposes that the AN Seller will be
required to verify the authenticity and currency of a prospective AN Purchaser’s AN
Registered User Number prior to completing transfer of ammonium nitrate. This will be
done in the same manner as the verification of the prospective AN Purchaser’s identity
against information contained in the prospective AN Purchaser’s AN Registered User
Number Application (i.e., through either the Purchaser Verification Portal or the Purchaser
Verification Call Center).

To provide sellers of ammonium nitrate with the ability to check the accuracy and currency
of a prospective AN Purchaser AN Registered User Number, the Department is considering
several approaches:
•
•
•

Purchaser Verification Portal (an Internet-based application)
Purchaser Verification Call Center
Combination of both the Internet-based verification portal and the call center.
46

Purchaser Verification Portal
The first option is to create a secure purchaser verification web portal (“Purchaser
Verification Portal”) through which AN Sellers can submit information to the Department
that will allow the Department to confirm or deny for the AN Seller the prospective AN
Purchaser’s right to purchase or possess ammonium nitrate. The Department proposes
making the Purchaser Verification Portal available via the Internet to registered AN Sellers
only, who will be asked to provide their AN Registered User Number and authenticate
themselves (enter a password or answer a series of security questions) to gain access to
the portal. Upon accessing the portal, the AN Seller will enter into the system, at a
minimum, the prospective AN Purchaser’s name and AN Registered User Number. To help
strengthen the purchaser identification process, facilitate the performance of compliance
audits and inspections, and better prevent the misappropriation or use of ammonium
nitrate in an act of terrorism, the Department is considering requiring the AN Seller to
enter additional information into the portal, such as the quantity of ammonium nitrate
being purchased and the prospective AN Purchaser’s proposed use of the ammonium
nitrate.

The Department anticipates that the confirmation or denial notice resulting from the web
verification process will typically be sent to and received by the seller much like how
merchants receive approval or denial notices prior to authorizing purchases via credit card.
To support recordkeeping requirements, the Department is considering providing to the
AN Seller, along with its web verification notice, confirmation and/or printable web
verification notice record receipt.
To be able to use the Purchaser Verification Portal, an AN Seller must have a computer and
an Internet connection. DHS assumes the majority of AN Facilities already have this
equipment in order to conduct business. Table 26 provides a description of assumptions by
industry and cost component 32. For the purpose of this analysis, DHS assumes a percentage
of AN Facilities will require the purchase of a computer and the installation and
maintenance of a second phone line to be used for point of sale AN Purchaser verification.
DHS assumes a standard computer and printer can be purchased for $1,000. 33 According to
32

The Impact of Broadband Speed and Price on Small BusinessColumbia Telecommunications Corporation for
SBA Office of Advocacy. . Vol. under contract number SBAHQ-09-C-0050., 2010. ; page 33. Approximately 94%
of businesses responding to the survey use computers, including 95% of metro businesses and 90% of rural
businesses. DHS applied the report percentages to the seller population to determine how many would need to
make the purchases.

http://www.dell.com.

the Federal Communications Commission the average installation cost for a business phone
line is $100, and the average annual cost of maintaining a business phone line is $600 per
year. 34 The Department assumes that businesses will purchase a new computer and printer
every five years as equipment becomes obsolete.
Purchaser Verification Call Center

The second option the Department is considering is the creation of a Purchaser Verification
Call Center to perform verification of an AN Purchaser’s AN Registered User Number. Via
the call center, the AN Seller would dial a toll-free number to connect via telephone to the
Department. Once connected to the Department, the AN Seller would talk to a person or be
led through a series of telephone tree menus. During the phone call, the AN Seller would be
expected to provide, at a minimum, the prospective AN Purchaser’s name and AN
Registered User Number. An option being considered would have AN Sellers provide
information regarding quantities being transferred and other data that would allow the
Department to monitor the accuracy of records during AN Facility inspections. The
operator or automated telephone system would enter the information provided into the
Department’s Registered User database system, wait for electronic confirmation, and then
provide verbal confirmation to the caller along with a Department confirmation for that
specific transaction.

A call center may be preferable to a web portal, as presumably all AN Sellers have
telephones, while not all AN Sellers have computers with Internet access, particularly at the
point of sale. There are some potential disadvantages, though, including the likelihood that
the call center approach would take more time per transaction than the web portal
approach; if manned at all, the call center potentially would only be manned during specific
times (e.g., regular business hours); and it would be significantly more costly for the
government to establish and operate a call center.
For the purpose of this analysis, the Department assumes that some AN Sellers will install a
dedicated phone line to handle ammonium nitrate verification activities. The average
installation cost for a business phone line is $100 and the average annual cost of
maintaining a business phone line is $600 per year. 35

Federal Communications Commission, Reference Book of Rates, Price Indices, and Household Expenditures
for Telephone Service (2008). http://hraunfoss.fcc.gov/edocs_public/attachmatch/DOC-292593A1.pdf. The
Internet market and pricing is constantly changing. Very low cost dialup still exists while testimony before the FCC
put broadband costs around $36/month. The $600 per year is likely to be a conservative cost estimate as the
$36/month equates to $432/month. The testimony is available at
http://www.ustelecom.org/uploadedFiles/Issues/Filings/USTelecom-CITI-Comments.pdf.
35 Federal Communications Commission, Reference Book of Rates, Price Indices, and Household Expenditures
for Telephone Service (2008). http://hraunfoss.fcc.gov/edocs_public/attachmatch/DOC-292593A1.pdf
34

Purchaser Verification Portal and Call Center
The third approach DHS is considering is providing both the Internet-based verification
portal and a call center. The advantage of this alternative is that all AN Facilities would be
accommodated – those with telephone access only and those with Internet access who find
the verification web portal option more efficient. However, this approach would be the
most costly of the alternatives for the government to establish and operate but is the
method in the costing of the primary alternative.

Visual Check of Photo ID

DHS also proposes that the AN Seller must verify, by performing a visual check of an
identification document such as a driver’s license or passport, the identity of the individual
(either the prospective AN Purchaser or an AN Agent acting on his/her behalf) who will be
taking possession of ammonium nitrate from the AN Seller at the completion of the sale or
transfer. The Department proposes using the definition of “identification document”
similar to that used by the Department’s Secure Flight Program, 49 CFR 1560.3, to establish
what qualifies as an acceptable form of identification for this verification process.
Specifically, the Department proposes defining “identification document” as: “Any of the
following documents containing a unique document number: (a) An unexpired passport
issued by a foreign government which contains a photograph; or (b) An unexpired
document issued by a U.S. Federal, State, or tribal government that includes the following
information for the person: (1) full name; (2) date of birth; and (3) photograph; or (3) Such
other documents that the Department may designate as valid identification documents.”

Creation of the Transaction Record

For each sale or transfer of ammonium nitrate, the AN Seller must record, among other
things, the name, address, telephone number, and AN Registered User Number issued to
the purchaser of ammonium nitrate; if applicable, must record the name, address, and
telephone number of an agent acting on behalf of the registered AN Purchaser at the point
of sale; and must record the date of sale or transfer and the quantity of ammonium nitrate
sold. In addition, the AN Seller may be required to record the DHS confirmation and photo
identification document number. The Department allows some flexibility regarding how
these records are stored. These records could be stored electronically or on paper, either as
an amendment to a sales invoice or with a log book similar to the one many pharmacies use
to record information on sales of certain regulated medicines. Some states with the same
requirement have recommended the information be recorded directly on the retained
49

invoice copy. If the Department decides to use a Purchaser Verification Portal online, it
may require that the confirmation that appears on the screen be printed and attached to
other paper records. The Department assumes that each transaction will take five minutes
to complete (or 0.083 hours) for transactions using the web-based Purchaser Verification
Portal. Each transaction is assumed to take six minutes (0.10 hours) when the call center is
used. The additional minute for the call center option factors in additional time to use a
phone tree menu and the relative awkwardness of using a telephone keypad vs. computer
keyboard. In addition to the per transaction costs, the Department assumes each AN
Facility will spend one hour each year to train each registered AN Seller to conduct
compliant ammonium nitrate transactions.
The Department recognizes that some AN Facilities may choose to integrate this process
into their existing point of sale systems. Because electronic records are not required,
estimates to retrofit existing point of sale and other accounting/billing software to capture
ammonium nitrate transactions are not presented in this analysis. The Department
welcomes comments on these costs.

Tables 26 and 27 present the assumptions regarding how many AN Seller Facilities will
have a computer with Internet access required to use the web-based Purchaser Verification
Portal and the costs associated with purchasing a computer, printer, and bringing in an
extra phone line. Based upon the SBA Office of Advocacy (2010) report just mentioned,
DHS assumed that only a handful of ammonium nitrate manufacturers, mixers, and
laboratory supply businesses (5%) will require the purchase of a new computer and the
installation of an extra phone line. The Department assumes 10% of explosives distributors
and 15% of farm wholesalers/co-ops and retail garden centers will require the additional
equipment.

Table 26. Physical Costs for Web Portal-Based Point of Sale Activities – Low Population
Estimate
Initial
Installation
Cost

Computer &
Printer

Annual Cost
of Phone
Line

Total Initial
Cost

Total Annual
Cost

5%
5%
5%
10%

C
100
100
100
100

D
1,000
1,000
1,000
1,000

E
600
600
600
600

AxBx(C+D+E)
2,200
900
34,000
85,000

AxBxE
800
300
12,000
30,000

500

15%

100

1,000

600

127,500

45,000

500
500
50

15%
15%
5%

100
100
100

1,000
1,000
1,000

600
600
600

127,500
127,500
4,300

45,000
45,000
1,500

Number of
AN Facilities
AN fertilizer manuf.
AN explosives manuf.
Fertilizer mixers
Explosives distributors
Farm wholesalers/coops
Retail garden centers
Laboratory supply

A
26
10
400
500

% without
computer &
phone
B

Total

2,486

n/a

$508,900

$179,600

Table 27. Physical Costs for Web Portal-Based Point of Sale Activities – High Population
Estimate

AN fertilizer manuf.
AN explosives manuf.
Fertilizer mixers
Explosives distributors
Farm wholesalers/coops
Retail garden centers
Laboratory supply
Total

Number of
AN Facilities

% without
computer &
phone

B
26
10
600
1000
1000
2500
1000
100
6,236

Initial
Installation
Cost
C

Computer &
Printer

Annual Cost
of Phone
Line

Total Initial
Cost

Total Annual
Cost

5%
5%
5%
10%

100
100
100
100

1,000
1,000
1,000
1,000

600
600
600
600

AxBx(C+D+E)
2,200
900
51,000
170,000

AxBxE
800
300
18,000
60,000

15%

100

1,000

600

255,000

90,000

15%
15%
5%
n/a

100
100
100
n/a

1,000
1,000
1,000
n/a

600
600
600
n/a

637,500
255,000
8,500
$1,380,100

225,000
90,000
3,000
$487,100

Table 28 presents DHS estimates of the total hours per year spent on point of sale activities
using the web-based AN Verification Portal. DHS assumes that all the point of sale activities
and transaction record creation will take five minutes per transaction (or 0.083 hours).
Further, DHS assumes that the number of annual transactions per AN Facility to be
between 1,000 and 5,000 per year based on discussions with the fertilizer and explosives
industries and State plant food control officials. 36 The total number of annual ammonium
nitrate transactions at all points in the supply chain range from 5 million to 30 million. DHS
welcomes comment on the number of transactions.
Table 28. Web Portal-based Seller Transaction and Labor Cost by Industry, Low Population
(First Year)

Ammonium
nitrate fertilizer
manufacturers

Number of
AN
Facilities
A

Number of
Transactions
per Facility
B

Total
Number of
Transactions
C=A x B

Estimated
Total Annual
Hours
(5 minutes/60
minutes/hr *
transactions)
D = 5/60 * C

1,000

26,000

2,167

Loaded hourly
Wage - Sales
Representative
$
E

Annual Cost
of
Compliance
$
F=DxE

112,400

Avg Cost/
Transaction
G=F/C

36 There is a dearth of information on the number of transactions that occur in the ammonium nitrate supply
chain. Some AN Facilities may have relatively few transactions during a given year while others may be
involved in a high number of transactions. The number of transactions drives the point of sale costs and thus,
the cost of the program. DHS has assumed a broad range to capture the potential variation in this variable and
seeks comment on these assumptions.

4.32

AN explosives
manufacturers
Fertilizer mixers
Explosives
distributors
Farm
wholesalers/coop
s
Retail garden
centers
Fertilizer
applicators
Laboratory supply
Total

1,000

10,000

833

45,400

400

1,000

400,000

33,333

1,728,700

500

2,500

1,250,000

104,167

4,917,700

500

2,500

1,250,000

104,167

3,996,900

500

2,500

1,250,000

104,167

3,331,300

500

2,500

1,250,000

104,167

3,752,100

1,000

50,000

4,167

196,700

2,486

n/a

5,486,000

457,168

n/a

18,081,200

2,207
Average
* Wage rate information is fully explained in Appendix B.

184

4.54
4.32
3.93
3.20
2.67
3.00
3.93
3.30

3.30

Tables 29 and 30 present the labor costs for web portal-based point of sale activities for the
low and high population estimates. AN Sellers engaged in day-to-day sales are assumed to
be equivalent to a sales representative.
Table 29. Web Portal-based Seller Transaction and Labor Cost by Industry,
High Population Estimate

Ammonium nitrate
fertilizer manufacturers
AN explosives
manufacturers
Fertilizer mixers
Explosives distributors
Farm
wholesalers/coops
Retail garden centers
Fertilizer applicators
Laboratory supply
Total
Average

Number of
AN Facilities

Number of
Transactions
per Facility

Total
Number of
Transactions

Estimated
Total Annual
Hours
(5 minutes/60
minutes/hr *
transactions)

C=A x B

D = 5/60 * C

Loaded
hourly Wage
- Sales Rep
$

Annual
Cost of
Compliance
$

Avg Cost/
Transaction

F=DxE

G=
F/C

2,500

65,000

5,417

280,900

4.32

2,500

25,000

2,083

113,500

4.54

600
1,000

2,500
5,000

1,500,000
5,000,000

125,000
416,667

52
47

6,482,500
19,670,800

4.32
3.93

1,000

5,000

5,000,000

416,667

15,987,500

3.20

2,500
1,000
100

5,000
5,000
2,500

12,500,000
5,000,000
250,000

1,041,667
416,667
20,833

32
36
47

33,312,500
15,008,300
983,500

2.67
3.00
3.93

6,236

n/a
4,705

29,340,000

2,445,001
392

n/a

91,839,500
3.13

3.13

* Wage rate information is fully explained in Appendix B.

In lieu of (or in addition to) the web-based portal, the Department is also considering a call
center-based system to verify AN Purchasers’ AN Registered User Numbers. All activities
conducted with the web-based portal (including verification of an AN Registered User
Number, checks of pre-registered agents, etc.) could be conducted telephonically via the
call center. Table 30 estimates the total hours spent on point of sale activities under the call
center option. DHS estimates it will take six minutes per transaction (0.10 hours) to obtain
and record verification via a call center.
Table 30.Call Center-Based Transactions for Point of Sale Activities (Hours Spent)
Number of
Transactions per AN
Facility
Low
High
A
B
AN fertilizer manufacturers
AN explosives manufacturers
Fertilizer mixers
Explosives distributors
Farm wholesalers/co-ops
Retail garden centers
Fertilizer applicators
Laboratory supply

Hours per
Transaction
C

Hours Spent on POS
Transactions per Year
Low
High
AxC
BxC

1,000

2,500

0.1

100

250

1,000

2,500

0.1

100

250

1,000

2,500

0.1

100

250

2,500

5,000

0.1

250

500

2,500

5,000

0.1

250

500

2,500

5,000

0.1

250

500

2,500

5,000

0.1

250

500

1,000

2,500

0.1

100

250

Tables 31 and 32 present the labor costs for call center-based point of sale activities for the
low and high population estimates. AN Sellers engaged in day-to-day sales are assumed to
be equivalent to a sales representative. These estimates are presented for comparison
purposes.

Table 31. Labor Costs for Call Center-Based Point of Sale Activities – Low Population
Estimate

AN fertilizer manuf.
AN explosives manuf.
Fertilizer mixers
Explosives distributors
Farm wholesalers/co-ops
Retail garden centers
Fertilizer applicators
Laboratory supply
Total

Number
of AN
Facilities
A
26
10
400
500
500
500
500
50
2,486

Estimated
Annual
Hours
B
100
100
100
250
250
250
250
100
n/a

Estimated Total
Annual Hours
AxB
2,600
1,000
40,000
125,000
125,000
125,000
125,000
5,000
548,600

Loaded hourly
Wage - Sales
Representative
C
52
54
52
47
38
32
36
47
n/a

Annual Cost of
Compliance
AxBxC
$134,800
$54,500
$2,074,400
$5,901,300
$4,796,300
$3,997,500
$4,502,500
$236,100
$21,697,400

* Wage rate information is fully explained in Appendix B.

Table 32. Labor Costs for Call Center-Based Point of Sale Activities – High Population
Estimate

AN fertilizer manuf.
AN explosives
manuf.
Fertilizer mixers
Explosives
distributors
Farm
wholesalers/co-ops
Retail garden
centers
Fertilizer applicators
Laboratory supply
Total

Number
of AN
Facilities
A
26

Estimated
Annual
Hours
B
250

Estimated Total
Annual Hours
AxB
6,500

Loaded hourly
Wage - Sales
Representative
C
52

Annual Cost of
Compliance
AxBxC
$337,100

10
600

250
250

2,500
150,000

54
52

$136,200
$7,779,000

1,000

500

500,000

$23,605,000

1,000

500

500,000

$19,185,000

2,500
1,000
100
6,236

500
500
250
n/a

1,250,000
500,000
25,000
2,934,000

32
36
47
n/a

$39,975,000
$18,010,000
$1,180,300
$110,207,600

* Wage rate information is fully explained in Appendix B.

Agent Verification
An agent is a person obtaining possession of ammonium nitrate on behalf of an AN
Purchaser. Because agents are not required to apply for and present an AN Registered User
Number, measures must be taken to confirm that the agent who is taking possession of
ammonium nitrate has been authorized to do so by the AN Purchaser. The Department
proposes three options to verify the identity of AN Purchaser’s agents.

1. Requiring AN Purchasers to submit the names of their agents to the Department via
the User Number Registration Portal, and requiring the AN Seller to confirm with
the Department, prior to transferring possession of the ammonium nitrate, that the
prospective AN Purchaser has submitted the name of the agent to the Department;
2. Requiring the AN Seller to orally confirm with the AN Purchaser prior to each sale or
transfer that the agent is acting on behalf of the AN Purchaser;
3. A combination of the first two options, where an AN Seller checks with the
Department to see if the prospective AN Purchaser has submitted the name of the
agent to the Department and, the AN Seller verbally confirms with the prospective
AN Purchaser that the agent is acting on his/her behalf.
54

Based on discussions with industry, the Department assumes about 20% of ammonium
nitrate transactions will involve an agent. For the purposes of analysis, the Department
assumes that 25% of agent transactions (5% of the total transactions) will require verbal
confirmation. The AN Seller must confirm with the AN Purchaser that the agent is acting on
the AN Purchaser’s behalf prior to the transfer of ammonium nitrate to the agent. Each
agent verification is assumed to take 10 minutes. The Department assumes the remaining
75% of transactions involving agents will use an agent that has been pre-registered with
the Department, and thus, will not require verbal confirmation. The costs of preregistration of agents by AN Purchasers are discussed in Section 6 - Registration Activities.
Tables 33 and 34 present the costs associated with verifying agents.

Table 33. Labor Costs for Agent Verification – Low Population Estimate*

AN fertilizer manuf.
AN explosives manuf.
Fertilizer mixers
Explosives distributors
Farm wholesale/coops
Retail garden centers
Fertilizer applicators
Laboratory supply
Total

Number
of AN
Facilities

5% of
Transactions
per AN
Facility

Hours per
verification
(10
minutes)

Hours Spent
on POS
Agent
Verifications
per Year

Loaded hourly
Wage - Sales
Representative

A
26
10
400
500

B
50
50
50
125

C
0.2
0.2
0.2
0.2

BxC
8.3
8.3
8.3
20.8

D
$52
$54
$52
$47

AxBxCxD
11,200
4,500
172,900
491,800

500
500
500
50
2,486

125
125
125
50
n/a

0.2
0.2
0.2
0.2
n/a

20.8
20.8
20.8
8.3
n/a

$38
$32
$36
$47
n/a

399,700
333,100
375,200
19,700
1,808,100

* Wage rate information is fully explained in Appendix B. Rounding may affect totals.

Annual Cost
of Agent
Verification

Table 34. Labor Costs for Agent Verification – High Population Estimate*
5% of
Transactions
per AN
Facility

Hours per
verification
10
minutes)

Hours Spent
on POS
Agent
Verifications
per Year

Loaded hourly
Wage - Sales
Representative

A
26
10
600
1000
1000

B
125
125
125
250
250

C
0.2
0.2
0.2
0.2
0.2

BxC
20.8
20.8
20.8
41.7
41.7

D
$52
$54
$52
$47
$38

AxBxCxD
28,100
11,300
648,300
1,967,100
1,598,800

2500
1000
100
6,236

250
250
125
n/a

0.2
0.2
0.2
n/a

41.7
41.7
20.8
n/a

$32
$36
$47
n/a

3,331,300
1,500,800
98,400
9,184,100

Number
of AN
Facilities
AN fertilizer manuf.
AN explosives manuf.
Fertilizer mixers
Explosives distributors
Farm wholesale/coops
Retail garden centers
Fertilizer applicators
Laboratory supply
Total

* Wage rate information is fully explained in Appendix B. Rounding may affect totals.

Annual Cost
of Agent
Verification

Tables 35 to 36 present the total costs by program year for web portal-based point of sale
activities.

Table 35. Total Costs for Web Portal-Based Point of Sale Activities by Program Year – Low
Population Estimate ($)

PY1
PY2
PY3
PY4
PY5
PY6
PY7
PY8
PY9
PY10

Total

Computer and
Phone Line

Labor Costs
(Transactions)

Agent
Verification

Purchaser
Opportunity
Cost

508,900
179,600
179,600
179,600
179,600
508,900
179,600
179,600
179,600
179,600

18,081,000
18,081,000
18,081,000
18,081,000
18,081,000
18,081,000
18,081,000
18,081,000
18,081,000
18,081,000

1,808,100
1,808,100
1,808,100
1,808,100
1,808,100
1,808,100
1,808,100
1,808,100
1,808,100
1,808,100

3,488,500
3,488,500
3,488,500
3,488,500
3,488,500
3,488,500
3,488,500
3,488,500
3,488,500
3,488,500

23,886,500
23,557,200
23,557,200
23,557,200
23,557,200
23,886,500
23,557,200
23,557,200
23,557,200
23,557,200

2,454,600

180,810,000

18,081,000

34,885,000

236,230,600

Total
Annual
Costs

Table 36. Total Costs for Web Portal-Based Point of Sale Activities by Program Year– High
Population Estimate ($)
Computer and
Phone Line

Labor Costs
(Transactions)

Agent
Verification

Purchaser
Opportunity
Cost

Total Annual
Costs

PY1
PY2
PY3
PY4
PY5
PY6
PY7
PY8
PY9
PY10

1,380,100
487,100
487,100
487,100
487,100
1,380,100
487,100
487,100
487,100
487,100

91,839,600
91,839,600
91,839,600
91,839,600
91,839,600
91,839,600
91,839,600
91,839,600
91,839,600
91,839,600

9,184,000
9,184,000
9,184,000
9,184,000
9,184,000
9,184,000
9,184,000
9,184,000
9,184,000
9,184,000

18,112,900
18,112,900
18,112,900
18,112,900
18,112,900
18,112,900
18,112,900
18,112,900
18,112,900
18,112,900

120,516,600
119,623,600
119,623,600
119,623,600
119,623,600
120,516,600
119,623,600
119,623,600
119,623,600
119,623,600

Total

6,657,000

918,396,000

91,840,000

181,129,000

1,198,022,000

Tables 37 and 38 present the total costs by program year for call center-based point of sale
activities.
Table 37. Total Costs for Call Center -Based Point of Sale Activities by Program Year – Low
Population Estimate ($)

PY1
PY2
PY3
PY4
PY5
PY6
PY7
PY8
PY9
PY10
Total

Labor Costs
(Transactions)
21,697,200
21,697,200
21,697,200
21,697,200
21,697,200
21,697,200
21,697,200
21,697,200
21,697,200
21,697,200
216,972,000

Agent
Verification
1,808,100
1,808,100
1,808,100
1,808,100
1,808,100
1,808,100
1,808,100
1,808,100
1,808,100
1,808,100
18,081,000

Total
Annual Costs
23,505,300
23,505,300
23,505,300
23,505,300
23,505,300
23,505,300
23,505,300
23,505,300
23,505,300
23,505,300
235,053,000

Table 38. Total Costs for Call Center-Based Point of Sale Activities by Program Year – High
Population Estimate ($)
Labor Costs
(Transactions)

Agent Verification

Total Annual Costs

PY1
PY2
PY3
PY4
PY5
PY6
PY7
PY8
PY9
PY10
Total

110,207,500
110,207,500
110,207,500
110,207,500
110,207,500
110,207,500
110,207,500
110,207,500
110,207,500
110,207,500
1,102,075,000

9,184,000
9,184,000
9,184,000
9,184,000
9,184,000
9,184,000
9,184,000
9,184,000
9,184,000
9,184,000
91,840,000

119,391,500
119,391,500
119,391,500
119,391,500
119,391,500
119,391,500
119,391,500
119,391,500
119,391,500
119,391,500
1,193,915,000

Opportunity Cost
Whether the seller utilizes a web-based portal, the call center option, or some combination,
the purchaser will likely have some additional time added to the transaction purchase. As
described at the beginning of this section (Point of Sale Activities) any increase in time is an
opportunity cost to the purchaser. Based upon the Department’s estimate that the average
increase will resemble a credit card or check verification, the Department has used an
estimate of an average of 60 seconds (.017 hrs) for each transaction times the number of
transactions times the average loaded wage rate from Appendix B. DHS believes most
transactions will resemble existing commercial order fulfillment with orders being place in
advance such that the purchaser contact time for information exchange will be minimal,
perhaps almost as quick as a normal credit card transaction. Additionally, as previously
mentioned, 12 states already require the same basic information except for the registration
number DHS is proposing. The following table shows the calculations of this marginal cost.
Table 39. Point of Sale Opportunity Costs (First Year Detail and Yrs 1 -10)

First Year Detail

Total
Number of
Transactions
(A)

Hrs/
Transaction
(B)

Total Hours
(C=A*B)

Weighted
Average
Wage Rate
(D: From
Appendix
B)

Low Estimate

5,486,700

0.017

91,445

$38.15

$3,488,523

$0.64

High Estimate

29,342,486

0.017

489,041

$37.04

$18,112,934

$0.62

Purchaser
Opportunity
Cost
(E=C*D)

Avg Cost/
Transaction
(F=E/A)

9. Recordkeeping
The Department requires that AN Facilities maintain records of each ammonium nitrate
sale or transfer that include among other elements:
• Date of sale or transfer;
• Quantity of ammonium nitrate sold or transferred;
• Name, address, telephone number, AN Registered User Number, and passport or
photo identification document number of the AN Purchaser purchasing or taking
possession of the ammonium nitrate sold or transferred;
• If an AN Agent purchases or takes possession of ammonium nitrate, name, address,
telephone number, and passport or driver’s license number of the AN Agent
purchasing or taking possession of the ammonium nitrate sold or transferred; and
• Confirmation received from the Department as part of the notification process
described in 6 CFR 31.305(a) (4) and 6 CFR 31.310(a) (4).

The records generated at the point of sale must be kept on file for two years. These records
could be stored electronically or on paper, in any format the seller chooses, for example as
an amendment to a sales invoice or with a log book similar to the one many pharmacies use
to record information on sales of certain regulated medicines. The cost of creating the
transaction record is included in the cost of point of sale activities. The Department
requires that these records be protected by reasonable actions. Recent point of sale records
can be kept out of public view in an employee-only area.
For the purpose of this analysis, the Department assumes that all AN Facilities will
purchase a locked filing cabinet to maintain records at a cost of $350 each. 37 In addition,
AN Facilities that use paper records will also incur the cost of additional paper and printer
ink/toner. The department assumes an additional box of paper ($50) and additional
printer ink/toner supplies ($200). 38

The Department assumes an administrative or office worker will spend 48 hours per year
(four hours per month) maintaining records, such as filing, binding, etc. The average loaded
hourly wage at the 50th percentile ranges from $17 to $24 per hour.
The Department also considered requiring maintaining records in encrypted electronic
files. This would have placed a significant burden on the regulated community with little
gain in the security of the records. Rather, the Department is allowing the regulated

37
38

http://www.staples.com.
http://www.staples.com.

community to maintain their records either electronically or on paper as long as
reasonable actions are taken to protect the information.

The Department also considered requiring AN Facilities to keep more detailed transaction
records, including information on the number of acres treated (for agricultural consumers).
AN Purchasers are under no obligation to maintain records proposed in this rule. Tables
40-45 show the costs for paper-based recordkeeping, the primary estimate.
Table 40. Physical Costs for Paper-Based Recordkeeping – Low Population Estimate

AN fertilizer manuf.
AN explosives manuf.
Fertilizer mixers
Explosives distributors
Farm wholesalers/co-ops
Retail garden centers
Fertilizer applicators
Laboratory supply
Total

Number
of AN
Facilities
A

Locked
filing
cabinet
B

Paper &
Toner
C

Initial Cost
B+C

350

250

350

250

400

350

500

350

500
500

Annual
Cost
C

Total
Initial
Cost
Ax(B+C)

Total
Annual
Cost
AxC

600

250

15,600

6,500

600

250

6,000

2,500

250

600

250

240,000

100,000

250

600

250

300,000

125,000

350

250

600

250

300,000

125,000

350

250

600

250

300,000

125,000

500

350

250

600

250

300,000

125,000

350

250

600

250

30,000

12,500

2,486

350

250

600

250

1,491,600

621,500

Table 41. Physical Costs for Paper-Based Recordkeeping – High Population Estimate

AN fertilizer manuf.
AN explosives manuf.
Fertilizer mixers
Explosives distributors
Farm wholesalers/co-ops
Retail garden centers
Fertilizer applicators
Laboratory supply
Total

Number
of AN
Facilities
A

Locked
filing
cabinet
B

Paper &
Toner
C

350

Initial Cost
B+C

Annual
Cost
C

Total
Initial
Cost
Ax(B+C)

Total
Annual
Cost
AxC

250

600

250

15,600

6,500

350

250

600

250

6,000

2,500

600

350

250

600

250

360,000

150,000

1,000

350

250

600

250

600,000

250,000

1,000

350

250

600

250

600,000

250,000

2,500

350

250

600

250

1,500,000

625,000

1,000

350

250

600

250

600,000

250,000

100

350

250

600

250

60,000

25,000

6,236

350

250

600

250

3,741,600

1,559,000

Table 42. Labor Costs for Paper-Based Recordkeeping – Low Population Estimate

AN fertilizer manufacturers
AN explosives manufacturers
Fertilizer mixers
Explosives distributors
Farm wholesalers/co-ops
Retail garden centers
Fertilizer applicators
Laboratory supply
Total

Number of
AN Facilities

Average loaded
hourly wage Office &
administrative
support services

Hours per AN
Facility spent
on
recordkeeping

Total cost for
recordkeeping

A
26
10
400
500
500
500
500
50
2,486

B
$22
$24
$22
$22
$18
$17
$17
$22
n/a

C
48
48
48
48
48
48
48
48
n/a

AxBxC
27,500
11,400
423,200
534,200
442,100
403,400
417,100
53,400
2,312,300

* Wage rate information is fully explained in Appendix B.

Table 43. Labor Costs for Paper-Based Recordkeeping – High Population Estimate

AN fertilizer manufacturers
AN explosives manufacturers
Fertilizer mixers
Explosives distributors
Farm wholesalers/co-ops
Retail garden centers
Fertilizer applicators
Laboratory supply
Total

Number of
AN Facilities

Average loaded
hourly wage Office &
administrative
support services*

Hours per AN
Facility spent
on
recordkeeping

Total cost for
recordkeeping

A
26
10
600
1,000
1,000
2,500
1,000
100
6,236

B
$22
$24
$22
$22
$18
$17
$17
$22
n/a

C
48
48
48
48
48
48
48
48
n/a

AxBxC
27,500
11,400
634,800
1,068,500
884,200
2,017,200
834,200
106,800
5,584,600

* Wage rate information is fully explained in Appendix B.

Table 44. Total Costs for Paper-Based Recordkeeping – Low Population Estimate
Physical costs
Total cost for
for
time for
Labor costs for
recordkeeping
recordkeeping
recordkeeping
PY1
1,491,600
2,312,400
3,804,000
PY2
621,500
2,312,400
2,933,900
PY3
621,500
2,312,400
2,933,900
PY4
621,500
2,312,400
2,933,900
PY5
621,500
2,312,400
2,933,900
PY6
621,500
2,312,400
2,933,900
PY7
621,500
2,312,400
2,933,900
PY8
621,500
2,312,400
2,933,900
PY9
621,500
2,312,400
2,933,900
PY10
621,500
2,312,400
2,933,900
Total
7,085,100
23,124,000
30,209,100

Table 45. Total Costs for Paper-Based Recordkeeping – High Population Estimate
Physical costs
Total cost for
for
time for
Labor costs for
recordkeeping
recordkeeping
recordkeeping
PY1
3,741,600
5,584,600
9,326,200
PY2
1,559,000
5,584,600
7,143,600
PY3
1,559,000
5,584,600
7,143,600
PY4
1,559,000
5,584,600
7,143,600
PY5
1,559,000
5,584,600
7,143,600
PY6
1,559,000
5,584,600
7,143,600
PY7
1,559,000
5,584,600
7,143,600
PY8
1,559,000
5,584,600
7,143,600
PY9
1,559,000
5,584,600
7,143,600
PY10
1,559,000
5,584,600
7,143,600
Total
17,772,600
55,846,000
73,618,600

Alternatively, although it is not required, businesses may keep their records electronically.
Under this scenario, DHS assumes that a small number of businesses will need to purchase
a computer loaded with basic spreadsheet software. Additionally, there may be a larger
time commitment to updating records and inputting data into a spreadsheet. Therefore,
DHS estimates six hours per month to maintain electronic records. Tables 46 to 51 present
the costs associated with the alternative electronic-based recordkeeping.

Table 46. Physical Costs for Electronic-Based Recordkeeping – Low Population Estimate
Annual
Maintenance
Number of
% without Computer &
AN Facilities
computer
Printer
Initial Cost (10% of total)
AN fertilizer manufacturers
AN explosives manufacturers
Fertilizer mixers
Explosives distributors
Farm wholesalers/co-ops
Retail garden centers
Fertilizer applicators
Laboratory supply
Total

D=AxBxC

.1 * D

1,000

1,300

130

1,000

500

400

1,000

20,000

2,000

500

10%

1,000

50,000

5,000

500

15%

1,000

75,000

7,500

500

15%

1,000

75,000

7,500

500

15%

1,000

75,000

7,500

1,000

2,500

250

2,486

n/a

299,300

29,930

Table 47. Physical Costs for Electronic-Based Recordkeeping – High Population Estimate
Annual
Maintenance
Number
%
of AN
without Computer
Initial
(10% of
Facilities computer & Printer
Cost
total)
AN fertilizer manufacturers
AN explosives manufacturers
Fertilizer mixers
Explosives distributors
Farm wholesalers/co-ops
Retail garden centers
Fertilizer applicators
Laboratory supply
Total

C D=AxBxC

.1 * D

1000

1,300

130

1000

500

600

1000

30,000

3,000

1000

10%

1000

100,000

10,000

1000

15%

1000

150,000

15,000

2500

15%

1000

375,000

37,500

1000

15%

1000

150,000

15,000

100

1000

5,000

500

6,236

n/a

811,800

81,180

Table 48. Labor Costs for Electronic-Based Recordkeeping – Low Population Estimate
Average loaded
hourly wage - Hours per AN
Office &
Facility spent
Number of
administrative
on
AN
Total cost for
Facilities support services* recordkeeping recordkeeping
AN fertilizer manufacturers
AN explosives manufacturers
Fertilizer mixers
Explosives distributors
Farm wholesalers/co-ops
Retail garden centers
Fertilizer applicators
Laboratory supply
Total

A
26
10
400
500
500
500
500
50
2,486

B
22
24
22
22
18
17
17
22
n/a

* Wage rate information is fully explained in Appendix B.

C
72
72
72
72
72
72
72
72
n/a

AxBxC
41,259
17,107
634,752
801,360
663,120
605,160
625,680
80,136
3,468,574

Table 49. Labor Costs for Electronic-Based Recordkeeping – High Population Estimate

AN fertilizer manufacturers
AN explosives manufacturers
Fertilizer mixers
Explosives distributors
Farm wholesalers/co-ops
Retail garden centers
Fertilizer applicators
Laboratory supply
Total

Number of
AN Facilities

Average loaded
hourly wage Office &
administrative
support services*

Hours per AN
Facility spent
on
recordkeeping

Total cost for
recordkeeping

AxBxC

22.04

41,259

23.76

17,107

600

22.04

952,128

1,000

22.26

1,602,720

1,000

18.42

1,326,240

2,500

16.81

3,025,800

1,000

17.38

1,251,360

100

22.26

160,272

6,236
* Wage rate information is fully explained in Appendix B.

n/a

8,376,886

Table 50. Total Costs for Electronic-Based Recordkeeping – Low Population Estimate
Physical costs
for
Labor costs for
Total cost for time
recordkeeping
recordkeeping
for recordkeeping
PY1
299,300
3,468,574
3,767,874
PY2
29,930
3,468,574
3,498,504
PY3
29,930
3,468,574
3,498,504
PY4
29,930
3,468,574
3,498,504
PY5
29,930
3,468,574
3,498,504
PY6
299,300
3,468,574
3,767,874
PY7
29,930
3,468,574
3,498,504
PY8
29,930
3,468,574
3,498,504
PY9
29,930
3,468,574
3,498,504
PY10
29,930
3,468,574
3,498,504
Total
838,040
34,685,741
35,523,781

Table 51. Total Costs for Electronic-Based Recordkeeping – High Population Estimate

PY1
PY2
PY3
PY4
PY5
PY6
PY7
PY8
PY9
PY10
Total

Physical costs for
recordkeeping
811,800
81,180
81,180
81,180
81,180
811,800
81,180
81,180
81,180
81,180
2,273,040

Labor costs for
recordkeeping
8,376,886
8,376,886
8,376,886
8,376,886
8,376,886
8,376,886
8,376,886
8,376,886
8,376,886
8,376,886
83,768,861

Total cost for time for
recordkeeping
9,188,686
8,458,066
8,458,066
8,458,066
8,458,066
9,188,686
8,458,066
8,458,066
8,458,066
8,458,066
86,041,901

10. Reporting Theft and/or Loss
Any AN Facility Representative who has knowledge of theft or unexplained loss of
ammonium nitrate is required to report such theft or loss to Federal law enforcement
authorities within 24 hours of the time at which knowledge of theft or loss is acquired. The
Department additionally encourages all other individuals who have possession or control
over ammonium nitrate (be they AN Sellers, AN Purchasers, any agents acting on their
behalf, or any other individuals) similarly to report any theft or unexplained loss of
ammonium nitrate that they become aware of.

Any time an AN Facility Representative or any other individual employed by an AN Facility
encounters a situation where they believe a theft of ammonium nitrate has occurred, the
AN Facility Representative is responsible for ensuring that the theft is reported using the
procedures described below. Determining when to report a loss, however, is not as
straightforward a proposition, as for bulk ammonium nitrate (as opposed to packaged or
bagged ammonium nitrate), it is not atypical for small percentages of ammonium nitrate to
be “lost” as part of normal industrial and shipping business practices. While individually,
such losses may tend to be de minimis, in the aggregate, they may amount to large amounts
of lost ammonium nitrate. The Department seeks not to unduly burden individuals
involved in the manufacturing, storage, transportation, or use of bulk ammonium nitrate,
but on the other hand does seek to impose loss reporting requirements which will aid the
Federal government in preventing terrorist misappropriation of ammonium nitrate.
Accordingly, the Department is proposing to require the AN Facility Representative to
report any loss of ammonium nitrate they become aware of to ATF when the loss deviates
67

from the amount of loss that typically occurs during routine production, storage,
transportation, or use of the ammonium nitrate. Because of ATF’s unique explosivesrelated law enforcement mission, the Department is proposing allowing ATF to take the
lead on investigating theft or loss of ammonium nitrate. If this occurs, the Department will
coordinate with ATF to ensure proper tracking and coordination of reported ammonium
nitrate thefts and losses.

Thefts and losses of ammonium nitrate are to be reported to ATF by telephoning a
nationwide toll free number, followed up with submission to ATF of a completed paper
form detailing the incident. The Department would work with ATF to determine the
appropriate information to be reported and proper template for a form specific to
reporting the theft or loss of ammonium nitrate. While there is no statutory requirement
for AN Facility Representatives or other registered individuals who have knowledge of a
theft or unexplained loss to report such incidents to local law enforcement, the Department
encourages AN Facilities and individuals to do so in addition to reporting the theft or loss
to ATF.
Because of the seriousness of theft or loss of ammonium nitrate, the total time to report a
theft or loss is assumed to include 1.8 hours of an inventory manager plus one hour of the
general manager. This includes the time for the reporter to organize useful details for law
enforcement and conduct a brief investigation. There will likely be additional time for a
more thorough follow-up investigation. Strictly for purposes of this analysis, the
Department assumes that 2% of AN Facilities will report loss or theft once per year.

Table 52 shows the number of theft and loss reports expected to be generated in a typical
year.
Table 52. Estimated Number of Theft/Loss Reports Generated

Annual Number of
Theft/Loss Reports
Generated
Low
High
AxC
BxC

2.0%

0.5

2.0%

0.2

400

600

2.0%

500

1,000

2.0%

500

1,000

2.0%

500

2,500

2.0%

500

1,000

2.0%

100

2.0%

2,486

6,236

n/a

125

AN Facility Owners
Low
High
A
B
AN fertilizer manufacturers
AN explosives manufacturers
Fertilizer mixers
Explosives distributors
Farm wholesalers/co-ops
Retail garden centers
Fertilizer applicators
Laboratory supply
Total

% of AN Facilities
reporting
theft/loss

Tables 53 through 55 present the costs for reporting theft and loss.

Table 53. Costs for Reporting Theft and Loss – Low Population Estimate

AN fertilizer
manufacturers
AN explosives
manufacturers
Fertilizer mixers
Explosives distributors
Farm wholesalers/co-ops
Retail garden centers
Fertilizer applicators
Laboratory supply
Total

Annual
Number of
Reports

Total Hours
for
Inventory
Manager
(1.8 hours
per report)

Average
loaded hourly
wage Transportation
,
storage, &
dist mgr*

Total
Hours for
General
Manager
(1.0 hour
per
report)

Average
loaded
hourly
wage General
Manager

Total cost

Ax1.8

Ax1.0

(1.8AxB)+(AxC)

0.5

0.9

0.5

0.2

0.4

0.2

14.4

1166

18.0

1661

18.0

1486

18.0

1294

18.0

1671

1.8

166

89.5

n/a

7,554

* Wage rate information is fully explained in Appendix B.

Table 54. Costs for Reporting Theft and Loss – High Population Estimate

AN fertilizer
manufacturers
AN explosives
manufacturers
Fertilizer mixers
Explosives distributors
Farm wholesalers/coops
Retail garden centers
Fertilizer applicators
Laboratory supply
Total

Annual
Number of
Reports
A

Total Hours
for
Inventory
Manager
(1.8 hours
per report)
Ax1.8

Average
loaded hourly
wage Transportation
,
storage, & dist
mgr*
B

Total
Hours
for
General
Manager
(1.0 hour
per
report)
Ax1.0

0.5

0.9

0.52

0.2

0.4

0.2

21.6

1,749

36.0

3,323

36.0

2,971

90.0

6,470

36.0

3,343

3.6

332

125

224.0

n/a

125

n/a

18,297

Average
loaded
hourly
wage General
Manager
C

* Wage rate information is fully explained in Appendix B.

Table 55. Annual Costs for Reporting Theft and Loss

PY1
PY2
PY3
PY4
PY5
PY6
PY7
PY8
PY9
PY10

Total

Low Population
7,556
7,556
7,556
7,556
7,556
7,556
7,556
7,556
7,556
7,556
75,556

High population
19,143
19,143
19,143
19,143
19,143
19,143
19,143
19,143
19,143
19,143
191,428

Total cost
(1.8AxB)+(AxC)
76

11. Audits and Inspections
The proposed rule requires AN Facilities to undergo an inspection or audit of their records
to evaluate their compliance with the ammonium nitrate rules. This includes a review of all
records maintained as part of the recordkeeping requirements for point of sale
transactions. Further, the Department is considering inspecting documents relating to the
identities and registration status of persons selling, transferring, and/or purchasing
ammonium nitrate. For this analysis, it is assumed that 25% of AN Facilities will be
audited/inspected per year. Thus, about 500-1,300 inspections/audits would be performed
each year. Generally speaking, DHS inspectors will give AN Facilities a minimum of 24
hours notice prior to an audit/inspection. Preparation for an inspection/audit will take two
hours of both an AN Facility Manager (or equivalent position) and a clerical person. The
audits could take less than an hour for a small business to a full day for a larger volume
business, but on average, each audit is assumed to take four hours to complete. During the
day of the audit/inspection, the Department assumes another four hours for both the AN
Facility Manager and a clerical person who will be on hand to retrieve the records and be
available to answer questions of the auditor. Thus, each inspection is expected to require a
total of six hours of each the AN Facility Manager and a clerical person. The average loaded
hourly wage for the AN Facility Manager ranges from $47-$52 and the average loaded
hourly wage for the clerical person ranges from $17 - $24.

Tables 56 to 58 present the costs associated with preparing for and undergoing audits and
inspections.
Table 56. Cost of Audits/Inspections – Low Population Estimate

AN Facilities

AN fertilizer
manuf.
AN explosives
manuf.
Fertilizer mixers
Explosives
distributors
Farm wholesalers/
co-ops
Retail garden
centers
Fertilizer
applicators
Laboratory supply
Total

%
Receiving
Inspection

Hours of
inspection

Loaded hourly
wage Transportation
, storage, &
dist mgr*

Loaded hourly
wage - Office &
administrative
support
services

Total Cost
per
Inspection

Total Cost
of Audits/
Inspections

Cx(D+E)

AxBxCx
(D+E)

25%

415

2,696

25%

455

1,138

400

25%

415

41,484

500

25%

446

55,703

500

25%

397

49,673

500

25%

384

48,008

500

25%

372

46,538

50
2,486

25%
n/a

6
n/a

446

5,570

n/a

250,809

* Wage rate information is fully explained in Appendix B.

Table 57. Cost of Audits/Inspections – High Population Estimate

AN fertilizer manuf.
AN explosives manuf.
Fertilizer mixers
Explosives distributors
Farm wholesalers/
co-ops
Retail garden centers
Fertilizer applicators
Laboratory supply
Total

AN
Facilities

%
Receiving
Inspection

Hours of
inspection

Loaded hourly
wage Transportation
, storage, &
dist mgr*

Cx(D+E
)

AxBxCx
(D+E)

26
10
600
1000
1000

25%
25%
25%
25%
25%

6
6
6
6
6

415

2,696

455

1,138

415

62,226

446

111,405

397

99,345

2500
1000
100
6,236

25%
25%
25%
n/a

6
6
6
n/a

384

240,038

372

93,075

446

11,141

n/a

621,064

Loaded hourly
wage - Office &
administrative
support services

Total
Cost
per
Inspecti
on

Total Cost of
Audits/
Inspections

* Wage rate information is fully explained in Appendix B.

Table 58. Cost of Inspections/Audits
Low
High
Population Population
Estimate
Estimate
PY1
PY2
PY3
PY4
PY5
PY6
PY7
PY8
PY9
PY10
Total

250,809

621,064

250,809

621,064

250,809

621,064

250,809

621,064

250,809

621,064

250,809

621,064

250,809

621,064

250,809

621,064

250,809

621,064

250,809

621,064

2,508,088

6,210,635

12. Federal Costs
The federal government will incur cost to create, staff, and maintain the infrastructure the
rule implementation will require. A number of the costs are fairly constant over time after
initial startup and certain costs are dependent upon the number of vetting transactions
73

that occur in a year. The first group of costs relate to the web-portal, the purchaser
verification portal, electronic records database, theft report support, inspection and audit,
the help desk, and various TSA support costs. The various vetting costs vary with the
annual vetting transactions. Tables 59-60 reflect these fixed level costs for 10 years of the
program and are made up of the following types of costs:
Registration Web-Portal Costs
The annual registration web-portal costs include: (1) Operating and Maintenance (O&M)
costs estimated at $750,000; and (2) the associated management and coordination costs
for the web-portal activity estimated at $165,900. (i.e., the fully loaded cost of employing
one government employee at the GS-14 level).

Purchaser Verification Portal Costs
The annual Purchaser Verification Portal costs include: (1) Operating and Maintenance
(O&M) costs estimated at $750,000 and (2) the associated management and coordination
costs for the web-portal activity estimated at $165,900 (i.e., the fully loaded cost of
employing one government employee at the GS-14 level).

Electronic Recordkeeping Database Web-Portal
The annual Electronic Recordkeeping Database web-portal costs include: (1) Operating and
Maintenance (O&M) costs estimated at $750,000 and (2) the associated management and
coordination costs for the web-portal activity estimated at $165,900 (i.e., the fully loaded
cost of employing one government employee at the GS-14 level).
Reporting Theft and Loss
Funds to support the ATF activities associated with theft and loss reporting are estimated
to be $250,000.

Inspections & Audits
The associated management and coordination costs for the information collected due to
Inspections & Audits are equivalent to the fully loaded cost of employing two government
employees at the GS-14 level and are estimated to be $331,800.
Ammonium Nitrate Helpdesk Costs
Based upon historical experience, the annual cost to implement and manage a helpdesk is
estimated to be $2,400,000.
TSA Support Costs

In addition to the vetting, TSA will charge the program for TSA program support, startup
capital, O&M, and match resolution. These costs are $3.2 million for the first year and
$$1.4 million for out years.
Table 59. Federal Costs System and Support, Fixed Level, All Populations
Web Registration Portal
Startup
Portal
and O&M
Manager
(A)
(B)

Purchaser Verification
Portal
Portal
Manager
(C)
O&M (D)

Electronic Records
Database Portal
Portal
Manager
(E)
O&M (F)

PY1
PY2
PY3
PY4
PY5
PY6
PY7
PY8
PY9
PY10

1,500,000
750,000
750,000
750,000
750,000
750,000
750,000
750,000
750,000
750,000

165,900
165,900
165,900
165,900
165,900
165,900
165,900
165,900
165,900
165,900

750,000
750,000
750,000
750,000
750,000
750,000
750,000
750,000
750,000
750,000

165,900
165,900
165,900
165,900
165,900
165,900
165,900
165,900
165,900
165,900

750,000
750,000
750,000
750,000
750,000
750,000
750,000
750,000
750,000
750,000

Total

8,250,000

1,659,000

7,500,000

1,659,000

7,500,000

Table 60. Federal Costs System and Support, Fixed Level, All Populations (cont’d)

PY1
PY2
PY3
PY4
PY5
PY6
PY7
PY8
PY9
PY10
Total

Theft
Report
Processing
(G)

Inspection
and Audits
(H)

250,000
250,000
250,000
250,000
250,000
250,000
250,000
250,000
250,000
250,000
2,500,000

331,800
331,800
331,800
331,800
331,800
331,800
331,800
331,800
331,800
331,800
3,318,000

Help Desk
(I)

TSA
Support
Costs (J)

SubTotal System and
Support Costs
(Sum of Table 58 and
59 A-K)

2,400,000
2,400,000
2,400,000
2,400,000
2,400,000
2,400,000
2,400,000
2,400,000
2,400,000
2,400,000
24,000,000

3,167,689
1,418,235
1,418,235
1,418,235
1,418,235
1,418,235
1,418,235
1,418,235
1,418,235
1,418,235
15,931,804

9,647,189
7,147,735
7,147,735
7,147,735
7,147,735
7,147,735
7,147,735
7,147,735
7,147,735
7,147,735
73,976,804

Tables 61-63 show the annual transactions times the cost/transaction for the annual
vetting cost for low, high, and mean population scenarios.
Table 61.Federal Vetting and Total Costs, Low Population Scenario

PY1
PY2
PY3
PY4
PY5
PY6
PY7
PY8
PY9
PY10
Total

New Vetting
Transactions
144,210
36,053
37,855
39,748
41,735
94,798
77,906
81,801
85,891
90,186
730,183

Cost /
Transaction
3.97
3.97
3.97
3.97
3.97
3.97
3.97
3.97
3.97
3.97
3.97

Vetting Cost
572,514
143,128
150,285
157,799
165,689
376,346
309,287
324,751
340,988
358,038
2,898,825

Subtotal from
Detailed
Federal
Tables
9,647,189
7,147,735
7,147,735
7,147,735
7,147,735
7,147,735
7,147,735
7,147,735
7,147,735
7,147,735
73,976,804

Total Federal
Costs
10,219,703
7,290,863
7,298,020
7,305,534
7,313,424
7,524,081
7,457,022
7,472,486
7,488,723
7,505,773
76,875,629

Table 62. Federal Vetting and Total Costs, High Population Scenario

PY1
PY2
PY3
PY4
PY5
PY6
PY7
PY8
PY9
PY10
Total

New Vetting
Transactions
248,460
62,115
65,221
68,482
71,906
163,327
134,224
140,936
147,982
155,382
1,258,035

Cost /
Transaction
3.97
3.97
3.97
3.97
3.97
3.97
3.97
3.97
3.97
3.97
3.97

Vetting Cost
986,386
246,597
258,926
271,873
285,466
648,409
532,871
559,515
587,490
616,865
4,994,398

Subtotal from
Detailed Federal
Tables
9,647,189
7,147,735
7,147,735
7,147,735
7,147,735
7,147,735
7,147,735
7,147,735
7,147,735
7,147,735
73,976,804

Total Federal
Costs
10,633,575
7,394,332
7,406,661
7,419,608
7,433,201
7,796,144
7,680,606
7,707,250
7,735,225
7,764,600
78,971,202

Table 63.Federal Vetting and Total Costs, Mean Population Scenario

PY1
PY2
PY3
PY4
PY5
PY6
PY7
PY8
PY9
PY10
Total

New Vetting
Transactions
196,335
49,084
51,538
54,115
56,821
129,062
106,065
111,368
116,937
122,784
994,109

Cost /
Transaction
3.97
3.97
3.97
3.97
3.97
3.97
3.97
3.97
3.97
3.97
3.97

Vetting Cost
779,450
194,862
204,606
214,836
225,578
512,378
421,079
442,133
464,239
487,451
3,946,612

Subtotal from
Detailed Federal
Tables
9,647,189
7,147,735
7,147,735
7,147,735
7,147,735
7,147,735
7,147,735
7,147,735
7,147,735
7,147,735
73,976,804

Total Federal
Costs
10,426,639
7,342,597
7,352,341
7,362,571
7,373,313
7,660,113
7,568,814
7,589,868
7,611,974
7,635,186
77,923,416

13. Total Costs
Tables 64 to 72 detail the total costs by program year of this proposed rule. The
undiscounted 10 year costs range from $433 million for the low population/low
transactions scenario to $1.5 billion for the high population/high transactions scenario.
Similarly, we have provided estimates of the total costs for the proposed rule at discount
rates of 7% and 3%. The average costs by type of AN Facility and program element for this
proposed rule are presented in Section 14 – Initial Regulatory Flexibility Analysis in Tables
79 through 83.

Table 64. . Summary of Costs (Undiscounted $ millions) – Low Population/Low Transactions
Estimate*

PY1
PY2
PY3
PY4
PY5
PY6
PY7
PY8
PY9
PY10

Registration

15.9
4.0
4.2
4.4
4.6
10.5
8.6
9.0
9.5
10.0

Appeals
0.1
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0

Point
of
Sale

23.9
23.6
23.6
23.6
23.6
23.9
23.6
23.6
23.6
23.6

Total

80.7
0.1 236.6
*Totals may not sum due to rounding

Recordkeeping

Reporting
Theft/Loss

Audits/
Inspections

29.9

0.0

3.0

3.8
2.9
2.9
2.9
2.9
2.9
2.9
2.9
2.9
2.9

0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0

0.3
0.3
0.3
0.3
0.3
0.3
0.3
0.3
0.3
0.3

Federal
Costs

10.2
7.3
7.3
7.3
7.3
7.5
7.5
7.5
7.5
7.5

76.9

Total
Cost

54.2
38.1
38.3
38.5
38.7
45.1
42.9
43.3
43.8
44.3

427.2

Table 65. Summary of Costs (Undiscounted $ millions) – Primary Estimate (mean of High and
Low)*

PY1
PY2
PY3
PY4
PY5
PY6
PY7
PY8
PY9
PY10

Registration
20.2
5.1
5.3
5.6
5.9
13.3
10.9
11.5
12.1
12.7

Appeals
0.1
0.0
0.0
0.0
0.0
0.1
0.1
0.1
0.1
0.1

Total
102.3
0.4
*Totals may not sum due to rounding

Point of
Sale
72.2
71.6
71.6
71.6
71.6
72.2
71.6
71.6
71.6
71.6

Recordkeeping
6.6
5.0
5.0
5.0
5.0
5.0
5.0
5.0
5.0
5.0

Reporting
Theft/Loss
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0

Audits/
Inspections
0.5
0.5
0.5
0.5
0.5
0.5
0.5
0.5
0.5
0.5

Federal
Costs
10.4
7.4
7.4
7.4
7.4
7.7
7.6
7.6
7.6
7.7

Total Cost
109.9
89.5
89.7
90.0
90.3
98.7
95.6
96.2
96.8
97.4

717.2

51.6

0.0

4.5

77.9

953.8

Table 66. Summary of Costs (Undiscounted $ millions) – High Population/High Transactions
Estimate*

PY1
PY2
PY3
PY4
PY5
PY6
PY7
PY8
PY9
PY10

Registration

24.4
6.1
6.4
6.7
7.1
16.1
13.2
13.9
14.6
15.3

Point of
Sale

Appeals

0.1
0.0
0.0
0.0
0.0
0.1
0.1
0.1
0.1
0.1

120.5
119.6
119.6
119.6
119.6
120.5
119.6
119.6
119.6
119.6

Total

123.8
0.6
*Totals may not sum due to rounding

1,197.8

Recordkeeping

9.3
7.1
7.1
7.1
7.1
7.1
7.1
7.1
7.1
7.1

73.2

Reporting
Theft/Loss

Audits/
Inspections

0.0

6.0

0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0

0.6
0.6
0.6
0.6
0.6
0.6
0.6
0.6
0.6
0.6

Federal
Costs

Total Cost

10.6
7.4
7.4
7.4
7.4
7.8
7.7
7.7
7.7
7.8

165.5
140.8
141.1
141.4
141.8
152.2
148.3
149.0
149.7
150.5

78.9

1,480.3

Table 67. Summary of Costs (7 percent discount rate, $ millions) – Low Population/Low
Transactions Estimate*

PY1
PY2
PY3
PY4
PY5
PY6
PY7
PY8
PY9
PY10

Registration

14.9
3.5
3.4
3.3
3.3
7.0
5.4
5.3
5.2
5.1

Appeals

0.1
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0

Total

Point of
Sale

56.2
0.2
*Totals may not sum due to rounding

22.3
20.6
19.2
18.0
16.8
15.9
14.7
13.7
12.8
12.0

Record-keeping

166

3.6
2.6
2.4
2.2
2.1
2.0
1.8
1.7
1.6
1.5

21.4

Reporting
Theft/Loss

0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0

0.1

Audits/
Inspections
0.2
0.2
0.2
0.2
0.2
0.2
0.2
0.1
0.1
0.1

Federal
Costs

1.8

9.6
6.4
6.0
5.6
5.2
5.0
4.6
4.3
4.1
3.8
54.6

Total
Cost

50.7
33.3
31.2
29.3
27.6
30.1
26.7
25.1
23.8
22.5

300.2

Table 68. Summary of Costs (7 percent discount rate, $ millions) – Primary Estimate
(mean of High and Low)*
PY1
PY2
PY3
PY4
PY5
PY6
PY7

Registration
18.9
4.4
4.3
4.2
4.2
8.9
6.8

Appeals
0.1
0.0
0.0
0.0
0.0
0.0
0.0

Point of
Sale
67.5
62.6
58.4
54.7
51.1
48.1
44.6

Recordkeeping
6.2
4.4
4.1
3.8
3.6
3.4
3.1

Reporting
Theft/Loss
0.0
0.0
0.0
0.0
0.0
0.0
0.0

Audits/
Inspections
0.4
0.4
0.4
0.4
0.3
0.3
0.3

Federal
Costs
9.8
6.5
6.0
5.7
5.3
5.1
4.7

Total Cost
102.7
78.2
73.2
68.7
64.4
65.8
59.5

PY8
PY9
PY10

6.7
6.6
6.5

0.0
0.0
0.0

Total

71.3
0.1
*Totals may not sum due to rounding

41.7
39.0
36.4

3.0
2.8
2.6

0.0
0.0
0.0

0.3
0.2
0.2

4.4
4.2
3.9

56.0
52.6
49.5

503.8

36.8

0.0

3.0

55.3

670.6

Table 69. Summary of Costs (7 percent discount rate, $ millions) – High Population/High
Transactions Estimate
Point of
Sale
112.6
104.5
97.6
91.3
85.3
80.3
74.5
69.6
65.1
60.8

Recordkeeping
8.7
6.2
5.8
5.4
5.1
4.8
4.4
4.2
3.9
3.6

Reporting
Theft/Loss
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0

Audits/
Inspectio
ns
0.6
0.5
0.5
0.5
0.4
0.4
0.4
0.4
0.3
0.3

Federal
Costs
9.9
6.5
6.0
5.7
5.3
5.2
4.8
4.5
4.2
3.9

Total
Cost
154.7
123.0
115.1
108.0
101.1
101.4
92.3
86.8
81.4
76.4

86.3
0.4
841.6
*Totals may not sum due to rounding

52.2

0.1

4.4

1,041.0

PY1
PY2
PY3
PY4
PY5
PY6
PY7
PY8
PY9
PY10

Registratio
n
22.8
5.3
5.2
5.1
5.0
10.7
8.2
8.1
7.9
7.8

Appeal
s
0.1
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0

Tota
l

Table 70. Summary of Costs (3 percent discount rate, $ millions) – Low Population/Low
Transactions Estimate*
Point of
Sale
23.2
22.2
21.6
20.9
20.3
20.0
19.2
18.6
18.1
17.5

Recordkeeping
3.7
2.8
2.7
2.6
2.5
2.5
2.4
2.3
2.2
2.2

Reporting
Theft/Loss
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0

Audits/
Inspectio
ns
0.2
0.2
0.2
0.2
0.2
0.2
0.2
0.2
0.2
0.2

Federal
Costs
9.9
6.9
6.7
6.5
6.3
6.3
6.1
5.9
5.7
5.6

Total
Cost
52.6
35.9
35
34.1
33.3
37.8
34.9
34.1
33.5
32.9

68.5
0.3
201.5
*Totals may not sum due to rounding

25.9

0.1

2.1

65.9

364.2

PY1
PY2
PY3
PY4
PY5
PY6
PY7
PY8
PY9
PY10

Registratio
n
15.5
3.8
3.8
3.9
4.0
8.8
7.0
7.1
7.3
7.4

Appeal
s
0.1
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0

Tota
l

Table 71. Summary of Costs (3 percent discount rate, $ millions) – Primary Estimate (mean
of High and Low)*

PY1
PY2

Registration
19.6
4.8

Appeals
0.1
0.0

Point of
Sale
70.1
67.5

Recordkeeping
6.4
4.8

Reporting
Theft/Loss
0.0
0.0

Audits/
Inspections

0.4
0.4

Federal
Costs

10.1
7.0

Total Cost
106.7
84.4

PY3

4.9

0.0

65.6

4.6

0.0

0.4

6.8

82.2

PY4

5.0

0.0

63.6

4.5

0.0

0.4

6.6

80.0

PY5

5.1

0.0

61.8

4.4

0.0

0.4

6.4

77.9

PY6

11.2

0.1

60.5

4.3

0.0

0.4

6.4

82.7

PY7

8.9

0.0

58.3

4.1

0.0

0.4

6.2

77.7

PY8

9.0

0.0

56.5

4.0

0.0

0.4

6.0

75.8

PY9

9.3

0.0

54.9

3.9

0.0

0.4

5.8

74.2

PY10

9.4

0.0

53.3

3.8

0.0

0.4

5.7

72.5

86.9
0.2
611.9
Total
*Totals may not sum due to rounding

44.5

0.0

3.7

66.8

814.0

Table 72. Summary of Costs (3 percent discount rate, $ millions) – High Population/High
Transactions Estimate*
Point of
Sale
117.0
112.8
109.5
106.3
103.2
100.9
97.3
94.4
91.7
89.0

Recordkeeping
9.1
6.7
6.5
6.3
6.2
6.0
5.8
5.6
5.5
5.3

Reporting
Theft/Loss
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0

Audits/
Inspectio
ns
0.6
0.6
0.6
0.6
0.5
0.5
0.5
0.5
0.5
0.5

Federal
Costs
10.3
7.0
6.8
6.6
6.4
6.5
6.2
6.1
5.9
5.8

Total
Cost
160.8
132.9
129.3
125.8
122.4
127.5
120.5
117.5
114.8
112

105.1
0.5
1,022.0
*Totals may not sum due to rounding

63.1

0.2

5.3

67.6

1,263.7

PY1
PY2
PY3
PY4
PY5
PY6
PY7
PY8
PY9
PY10

Tota
l

Registratio
n
23.7
5.8
5.9
6.0
6.1
13.5
10.7
10.9
11.2
11.4

Appeal
s
0.1
0.0
0.0
0.0
0.0
0.1
0.0
0.0
0.0
0.0

14. Initial Regulatory Flexibility Analysis
The Regulatory Flexibility Act of 1980 (RFA) establishes “as a principle of regulatory
issuance that agencies shall endeavor, consistent with the objective of the rule and of
applicable statutes, to fit regulatory and informational requirements to the scale of the
business, organizations, and governmental jurisdictions subject to regulation.'' To achieve
that principle, the RFA requires agencies to consider the potential impacts of their rules on
small entities. The RFA covers a wide range of small entities, including small businesses,
not-for-profit organizations, and small governmental jurisdictions.
Although the Department does not believe the proposed rule will have a significant
economic impact on a substantial number of small entities, the agency has prepared an
Initial Regulatory Flexibility Analysis (IRFA) for public review and comment. The
80

Department requests comments on this IRFA and the potential impacts of the proposed
rule on small entities.

Section 1: Reasons for and Objectives of the Proposed Rule

Reason for the Proposed Rule
The FY 2008 Department of Homeland Security Appropriations Act (P.L. 110-161) amends
the Homeland Security Act of 2002 and provides the Department with the authority to
“regulate the sale and transfer of ammonium nitrate by an ammonium nitrate facility . . . to
prevent the misappropriation or use of ammonium nitrate in an act of terrorism.” For
additional information on the security hazards presented by the use of ammonium nitrate,
see Sections II.D.1 & 2 of the preamble. For additional information on the benefits of this
rule, please refer to Section 3 above.
Objective of the Proposed Rule
This proposed rule aims to prohibit a known or suspected terrorist from purchasing or
legally acquiring ammonium nitrate from an ammonium nitrate facility; additionally, only
individuals favorably vetted by the Department will be able to legally acquire ammonium
nitrate.

Section 2: Affected Small Business Population and Estimated Impact of Compliance

At this time, the Department’s preliminary estimate of the number of establishments that
either sell, purchase, or sell/transfer and purchase ammonium nitrate that will be covered
by this proposed rule range from 64,986 to 106,236 AN Facilities. This estimate is the
Department’s best estimate based on listening sessions with industry representatives and
plant food control officials, consultation with other Federal agencies and departments (e.g.,
USDA), and research across available information provided by industry and governmental
sources. Some of the business types identified in the analysis of purchasers are similar to
activities that could be conducted by nonprofits or small jurisdiction. The Department
believes impacts on nonprofits or small jurisdictions would be the same as any other
purchaser in this analysis. During the advanced notice of proposed rulemaking, the
Department did not receive any information on nonprofits or small jurisdictions that might
be impacted and invites comments from these entities. After AN Sellers and AN Purchasers
register with the Department there will be a better understanding of how many and which
specific AN facilities will be subject to the requirements under this proposed rule.
Consequently, without the benefit of having the AN Registered User Number results, it is
very difficult to know which AN Facilities will have to undergo the burden of verifying AN
Registered User Numbers, and maintaining records of ammonium nitrate transactions. In
81

addition, the Department has offered some degree of flexibility when choosing the method
of verifying AN Registered User Numbers and maintaining records. The Department
expects that AN Facilities will take full advantage of this flexibility in order to minimize the
cost of this rule to their operations. These uncertainties make it very difficult to estimate
the extent of the economic impact of this rule on small entities.

Number of Small Entities that may be AN Purchasers

The Small Business Administration (SBA) classifies farms as a small business if it has
receipts less than $750,000. The USDA Census of Agriculture provides data on the number
of farms by economic class based on the market value of agricultural products sold
(excluding government payments). Table 64 shows that 94.5% of farms had receipts of
$0.5 million or less; 97.4% of farms had receipts less than $1.0 million. Thus, it is clear that
the majority of farms are small entities.

Table 73. Number of U.S. Farms by the Market Value of Agricultural Products Sold (2007)
Market value of
agricultural products
sold ($)
Number of Farms % of Total
less than $1000
499,880
22.7%
$1000-$2,499
270,712
12.3%
$2500-$5,000
246,309
11.2%
$5,000-$9,999
254,834
11.6%
$10,000-$24,999
274,274
12.4%
$25,000-49,999
163,500
7.4%
$50,000-$99,999
129,124
5.9%
$100,000-$249,000
149,049
6.8%
$250,000-$499,999
96,251
4.4%
$500,000-$999,999
63,567
2.9%
more than $1,000,000
57,292
2.6%
Total Farms
2,204,792
100.0%
Source: 2007 Census of Agriculture, USDA (Table 3 - page
10)

Tables 74 and 75 show the primary North American Industrial Classification System
(NAICS) codes, descriptions and SBA definitions for small entities that are AN Purchasers.
This comparison shows that the majority of businesses likely to be AN Purchasers are small
entities.

Table 74. Primary NAICS Codes, Descriptions and Definitions for Small Entities that May Be
AN Purchasers (Employee Size)*
Establishments by Employee Size
NAICS
2121

2122

2123

325314

Description

0-4

5-9

10-19

20-99

100-499

(Subtotal)
<499

500+

Coal Mining

194

100

233

149

772

375

% of total

17%

20%

13%

67%

33%

Metal Mining

131

235

% of total

43%

13%

77%

23%

Nonmetallic Mineral Mining
and Quarrying

1,434

666

603

877

501

4,081

1,743

% of total

25%

11%

10%

15%

70%

30%

Fertilizer (Mixing Only)
Manufacturing

111

382

% of total

23%

13%

12%

19%

13%

80%

20%

42491

42469

Farm Supplies Merchant
Wholesalers

2,473

983

673

948

765

5,842

1,901

% of total

32%

13%

12%

10%

76%

25%

Other Chemical & Allied
Products Merchant
Wholesalers

3,352

1,155

846

1,082

648

7,083

2,405

% of total

35%

12%

11%

74%

25%

* Totals may be affected by rounding.

Table 75. Primary NAICS Codes, Descriptions and Definitions for Small Entities that May Be
AN Purchasers (Sales Size)*
Establishments by Sales Size

NAICS

Description

213113

Support services
for Coal Mining

44422

56173

71391

$0.5-1 mill

$1-5
mill

$5-10
mill

(Subtotal)
<$10 mill

>$10 mill

101

300

14%

28%

11%

29%

87%

13%

104

10%

14%

11%

43%

57%

136

% of total

16%

31%

11%

26%

89%

10%

Nursery, Garden
Center, and Farm
Supply Stores

1,872

5,004

2,675

3,941

830

14,322

3,461

% of total

11%

28%

15%

22%

81%

20%

23,993

36,446

6,935

5,095

490

72,959

1,249

% of total

32%

49%

98%

Golf Courses &
Country Clubs

1,172

3,802

2,041

3,333

588

10,936

906

% of total

10%

32%

17%

28%

92%

Support services
for Metal Mining
% of total

213115

$.1-0.5
mill

% of total
213114

< $0.1
mill

Support services
for Nonmetallic
Mining

Landscaping
Services

* Totals may be affected by rounding.

Number of Small Entities that may be AN Sellers
In addition to regulating purchasers of ammonium nitrate, the proposed rule places
additional burdens on AN Sellers. These additional burdens include application for AN
Registered User Number, verifying AN Purchasers’ AN Registered User Numbers and photo
ID at the point of sale, maintaining records of point of sale transactions for two years and
reporting theft and loss of ammonium nitrate. AN Facilities that are in the middle of the
supply chain from manufacturer to end-use consumer are both AN Sellers and AN
Purchasers. Data for each side of the transaction is included in the appropriate seller or
purchaser analysis. Costs to business that are both are likely to be something slightly less
than the sum of the two corresponding amounts for their business. It is likely that some of
the individuals needing registration numbers will conduct both sales and purchase
transactions. To the degree that this happens, the costs presented here are overstated by
85

the number of individuals who only have to go through the registration process once
(subject to renewal and updates), rather than having two separate individuals.

Tables 76 and 76 show the primary NAICS codes, descriptions and definitions (both
employee size and revenues) for small entities that are AN Sellers. The majority of these AN
Facilities are classified as small entities by the Small Business Administration.

Table 76. Primary NAICS Codes, Descriptions and Definitions for Small Entities that May Be
AN Sellers (Employee Size)*
Establishments by Employee Size
NAICS
325311

325314

32592

42291

42269

Description
Nitrogenous Fertilizer
Manufacturing
% of total
Fertilizer (Mixing Only)
Manufacturing
% of total

0-4

5-9

10-19

20-99

100-499

(Subtotal)
<499

500+

114

32%

13%

16%

10%

79%

21%

111

382

23%

13%

12%

19%

13%

80%

20%

Explosives Manufacturing

% of total
Farm Supplies Merchant
Wholesalers
% of total
Other Chemical and Allied
Products Merchant
Wholesalers
% of total

10%

12%

20%

16%

63%

38%

2,473

983

673

948

765

5,842

1,901

32%

13%

12%

10%

76%

25%

3,352

1,155

846

1,082

648

7,083

2,405

35%

12%

11%

74%

25%

* Totals may be affected by rounding.

Table 77. Primary NAICS Codes, Descriptions and Definitions for Small Entities that May Be
AN Sellers (Sales Size)*
Establishments by Sales Size

NAICS
115112

44422

Description
Soil Preparation,
Planting, and Cultivating
% of total
Nursery, Garden Center,
and Farm Supply Stores

% of total
* Totals may be affected by rounding.

< $0.1
mill

$.1-0.5
mill

509

992

21%

$0.5-1
mill

$1-5
mill

$5-10
mill

(Subtotal)
<$10 mill

>$10
mill

413

395

2,339

41%

17%

16%

96%

1,872

5,004

2,675

3,941

830

14,322

3,461

11%

28%

15%

22%

81%

20%

Alternatives Considered
The Department considered several alternatives when developing this proposed rule. The
alternatives considered were: (1) register individuals applying for an AN Registered User
Number using a paper application (via facsimile or the US mail); through a web-based
portal, or a telephone application process; (2) verify AN Purchasers through both an
Internet-based verification portal and call center rather than only a verification portal or
call center; (3) communicate with applicants for an AN Registered User Number through
US Mail rather than only through e-mail or a secure web-portal; (4) establish a specific
capability within the Department to receive, process, and respond to reports of theft or loss
rather than leverage a similar capability which already exists with the ATF; (5) require AN
Sellers and AN Facilities to maintain records electronically in a central database provided
by the Department rather than providing flexibility to the AN Seller and AN Facility to
maintain their own records either in paper or electronically; (6) require agents to register
with the Department prior to the sale or transfer of ammonium nitrate involving an agent
rather than allow oral confirmation of the agent with the AN Purchaser on whose behalf the
agent is working; and (7) exempt explosives from this regulation rather than not exempting
them. Each of these alternatives is discussed below.

A.
B.
C.
D.
E.
F.
G.

Registration
Verification
Communication with Applicants
Reporting Theft or Loss
Recordkeeping
Agents
Exemption of Explosives Regulated by ATF

A. Registration

The Department considered using one or more of three potential approaches for AN Seller
and AN Purchaser registration: paper applications submitted via facsimile or US Mail;
electronic applications via a web-based portal; or telephone application for a limted
number of applicants. The Department is proposing the use of a web-based portal - the “AN
User Registration Portal” – as the sole means for registering to be an AN Purchaser or AN
Seller.
1. Registration through Facsimile or US Mail

Paper registration via facsimile or US Mail would require potential applicants to obtain and
fill out an application form and fax it or mail it to the Department. The Department would
then process the application and communicate the results back to the potential applicant
via facsimile or US Mail.

Registration through facsimile or US Mail would have costs to both the industry and the
Department. For the industry, each prospective AN Seller or AN Purchaser applying for an
AN Registered User Number would have to spend approximately 45 minutes reading about
the rule and procedures for registration before completing the registration application. If
the application is paper-based, the Department assumes it will take each applicant about
15 minutes to complete a paper application, fax or mail it to the Department, and file it for
his or her records. For the Department, supporting paper submission of application
materials via facsimile or US Mail would require the hiring of staff to manually extract
information from the submitted application form for performance of the TSDB check and
submission into a registered user database maintained by the Department. The paper
application process was not pursued or developed as the Department believes that it would
result in unacceptably lengthy application processing times, and unacceptable delays
between submission of applications and receipt of AN Registered User Numbers.
2. Registration through USDA Extension Service Office
88

During the ANPRM DHS received the suggestion to consider the USDA extension offices. As
an application method. The USDA provided explanations why this was not feasible; DHS
did not develop the idea beyond the intial concept.
3. Registration through the AN User Registration Portal
Through a Department developed website, potential applicants could apply for an AN
Registered User Number online. With the wide spread availability of the Internet,
applicants could apply from home, a public library, or place of employment, for instance.
Potential applicants would go to the Department’s website and access the AN User
Registration Portal. There, potential applicants would apply online for an AN Registered
User Number and submit their application directly to the Department. The Department
would receive the information, process it, and communicate back to the applicant via email.

Online registration through a Department developed, operated, and maintained website
would have costs to both the industry and the Department. Each prospective AN Seller or
AN Purchaser applying for an AN Registration User Number will spend approximately 45
minutes reading about the rule and procedures for registration before completing the
registration application. If the application is online, the Department assumes it will take the
applicant approximately 15 minutes to find the website, enter information, submit it to the
Department, and print and file a copy for his or her records. Both the individual applicant
and government costs are developed in the relavent sections of the evaluation If the
Department is able to leverage CSAT or another existing secure web-portal, both the initial
development costs and the annual operating and maintenance costs likely would be
significantly lowered.
The Department is proposing that registering be done through an online web portal (see
Section B 9). While not every potential applicant may have personal access to the Internet,
the Internet is widely available, and the Department believes that there are significant
benefits to using an online approach. The benefits to both the applicant and the
Department of an online approach include: (1) substantially quicker response from the
Department thereby minimizing the time during which the applicant would not be able to
purchase or sell/transfer ammonium nitrate; (2) ability for an applicant or registered user
to access, view, update, and manage their personally identifiable information; (3) and
greater control over managing their participation, such as ease in renewing their AN
Registered User Number. The Department proposes that neither paper registration
applications no in person applications at USDA Extension Service Offices be offered.
4. Registration via a telephone application process.
89

The applicant would contact the AN helpdesk and the helpdesk operator would collect all
the information necessary to complete an application for an AN Registered User Number.
The IT system would then route the application as if it were an application through the web
portal. The evaluation of the vetting against the TSDB would be the same.
Once a decision had been made as to whether or not to approve or deny an application the
system would identify the response to be mailed to the applicant. The system would route
the information to a vendor to process the letter. The vendor would print and mail the
letter. The letter would require tracking, signature, certification (i.e., verification of
identity), and next day delivery. DHS would also require evidence of delivery from the
vendor. These are required to ensure delivery and receipt of the AN Registered User
Number to the correct individual.

DHS is not recommending the telephone option but invites public comment on the concept.
The following tables provide information on the costs that vary between the recommended
web-portal approach and the phone approach.
Table 78. Differences between alternatives costs
($ millions, 10-year total costs, 7% Discount)
Web-portal
Phone Option
Registration Costs
71.3
20.3
Federal Costs
55.3
81.5
All Other Costs
544.0
540.7
Total Costs
670.6
642.5

Difference
51.0
-26.2
3.3
28.1

B. Verification

The Department considered three potential approaches to verify a prospective AN
Purchaser; establishing a web-based portal (i.e., Purchaser Verification Portal), establishing
a call center, and establishing both capabilities. The Department is proposing to establish
both a web-based portal and call center.
1. Purchaser Verification Portal

Verifying AN Purchaser status through a web-portal will have costs to both industry and
the Department. The Department will bear the cost of developing and maintaining the
verification portal and related guidance on its use and proper verification processes.
The cost to industry of this activity is having a computer and access to the Internet. Beyond
that, cost to the industry is the incremental time spent during an ammonium nitrate
90

transaction to verify the identity and AN Registered User Number of the prospective AN
Purchaser. Accordingly, the overall cost would depend on the number of ammonium nitrate
transactions that occur and the time it takes to perform a simple identity check and enter
basic AN Purchaser information into the web-portal. Based upon the detailed data in the
evaluation, the following table summarizes the average costs per transaction.
Table 79. Point of Sale Average Cost Summary*

Low Total Estimate

High Total Estimate

Mean

23,886,565
3,488,523
20,398,042
5,486,000
2,486
64,950
42.4
1.6
3.7

120,516,567
18,112,934
102,403,633
29,340,000
6,236
106,200
90.5
5.3
3.5

72,201,566
10,800,728
61,400,837
17,413,000
4,361
85,575
66.5
3.5
3.5

0.64
* Data is for all entities and comes from the detailed evaluation,
particularly Tables 9,10,26-29,35-36

0.62

Total Pos Annual Costs ($)
Purchaser POS Costs ($)
Seller POS Costs ($)
Transactions
Sellers
Purchasers
Transactions/Seller/Week
Transactions/Purchaser/Week
Seller Cost/Transaction ($)
Purchaser Cost/Transaction ($)

2. Purchaser Verification Call Center
The Department also considered a Purchaser Verification Call Center. Under this approach,
AN Sellers would use a telephone to call a toll-free phone number established by the
Department where they would either talk to a person or be led through a series of
telephone tree menus. During the phone call, the AN Seller would be expected to provide
information about the AN Purchaser. The operator or automated telephone system would
enter the information provided into the Department’s Registered User database system,
wait for electronic confirmation, and then provide verbal confirmation to the caller along
with a confirmation number for that specific transaction.

Verifying AN Purchaser status through a call center will have costs to both industry and the
Department. The burden to the industry for the call center option rests upon having a
telephone and the time spent relaying the relevant AN Purchaser information to the call
center. The cost to the Department is the establishment of the call center and potentially
employing staff to standby and field calls regarding ammonium nitrate purchases.
3. Purchaser Verification Portal and Call Center

The Department proposes to establish both a Purchaser Verification Portal and a Purchaser
Verification Call Center (see Section C 6). This approach is identical to the Purchaser
Verification Portal described above, integrated with the Purchaser Verification Call Center
capability. This approach presumably would be the cheapest for the regulated community
as each AN Facility likely would choose to employ the most cost-effective means of
verification; however, it would be the most costly of the alternatives for the Department to
establish and operate as it would bear the costs associated with the development and
maintenance of both a web verification portal and call center.

When creating a manner in which AN Sellers can verify the required information on a
potential ammonium nitrate purchase by an AN Purchaser, the Department found both
advantages and disadvantages to each option considered. A call center may be preferable to
a web-portal, as presumably all AN Sellers have telephones while not all AN Sellers have
computers with Internet access, particularly at the point of sale. However, there are some
potential disadvantages. For instance, the call center approach would take more time per
transaction than the web portal approach, and that it would be significantly more costly for
the Department to establish and operate a call center. The advantage of this alternative is
that all AN Facilities would be accommodated – those with telephone access only and those
with both telephone and Internet access who find the verification web portal option more
efficient. As a result, the Department proposes to offer both online and call center options
despite the higher costs to the Department.
C. Communication with Applicants

The Department must communicate with applicants throughout the registration process.
The Department considered two alternatives to communicating with applicants: (1)
communication by US Mail, and (2) communication by electronic means. The Department
proposes to communicate with applicants by electronic means.
1. US Mail

The US Mail could act as the communication medium between the Department and the
regulated community. If the US Mail was chosen as the communication mechanism the
Ammonium Nitrate Security Program would be paper-based. While there would be some
minimal cost to the industry (e.g. postage). The time to complete paperwork would be
equivalent to the submission of information electronically. The costs to the Department,
however, would be more substantial. The Department would have to hire or devote staff to
process incoming correspondence.
92

2. Electronic Means
The other option for communication could be by electronic means. Program
communication would occur through e-mail and secure web portals. The cost to the
industry can be broken down to computer and Internet access. The cost to the Department
hinges on developing web portals and databases to securely store information.

The Department assumes that most applicants have Internet access with one exception.
Based upon the USDA, approximately 60% of farms have Internet access. Thus, DHS
assumes that in the agricultural sector, approximately 60% of farms have computers with
Internet access. The Department therefore estimated that these individuals will have to
travel a short distance to an agricultural extension office, public library, or other location
where access to the Internet is available to apply for an AN Registered User Number.
Further, DHS assumes that for applicants without Internet access, two trips will be
required; one to complete the AN Registered User Number application, and a second trip
after 72 hours to retrieve the e-mail containing the AN Registered User Number. In the vast
majority of cases, the e-mail containing the AN User Registration will be sent within an
hour, but to be conservative, the Department has assumed farmers without Internet access
will make two trips. The Department assumes that the round trip distance is 50 miles per
trip and has used the standard IRS mileage rate of $0.55 per mile. The Department assumes
the total extra time for each trip will average approximately one hour each way plus 1 hour
for Internet access and registration for a total of 6 hours per farm registration. By
multiplying 50 miles times two trips times $0.55 per mile totals $55 per individual for the
mileage for the two trips associated with applying for and receiving an AN Registered User
Number. Additionally, DHS included approximately $1.9 million for farmers who attempt to
make a purchase without knowing about the regulation and must then make one extra trip.
These calculations are detailed in Tables 11 and 12 in Section 7 of this evaluation. Because
of the minimal time and effort it takes to apply for and receive an AN Registered User
Number, the Department believes this approach to be a cost-effective way to prevent
misappropriation of ammonium nitrate.
The Department considered using the US Mail as the primary medium for communication;
however, the Department ultimately rejected this approach due to the additional time it
would take to notify applicants of their AN Registered User Number. The Department also
cited the significant availability of the Internet. Therefore, the Department is proposing to
use electronic means as the primary medium for communication. Additionally, the
Department believes that electronic communication is more secure and faster than US Mail.
D. Reporting Theft or Loss

The Department considered two alternatives for reporting theft or loss to Federal law
enforcement authorities within 24 hours of the time at which knowledge of theft or loss is
acquired. The Department considered requiring an AN Facility Representative to report to
either the Department or ATF. The Department proposes to require reporting of theft/loss
to ATF.

Under either option there is a burden to the industry. The cost to industry of this activity
will be the time to gather details and report the theft or loss of ammonium nitrate. Because
of the seriousness of theft or loss of ammonium nitrate, the total time to report a theft or
loss is assumed to include two hours each for an inventory manager, plus one hour for the
general manager. This includes the time for the reporter to organize useful details for law
enforcement and conduct a brief investigation. There will likely be additional time for a
necessary follow-up investigation. Strictly for purposes of this analysis, the Department
assumes that two percent of AN Facilities and AN Purchasers will report loss or theft once
per year. Based on these assumptions, on average there will be 88 reports of theft or loss
annually, at an average total annual cost to industry of $13,350.
1. ATF Reporting

One of the many responsibilities of ATF is regulating the use of explosives. While ATF does
not consider ammonium nitrate an explosive, ammonium nitrate explosive mixtures and
ammonium nitrate fuel oil explosives (ANFO) are included in ATF’s list of explosive
materials. ATF has an existing program for reporting the theft or loss of explosives.
Individuals that discover the theft or unexplained loss of ammonium nitrate would contact
ATF by phone or facsimile and provide the pertinent information. The costs to the industry
for reporting to ATF the theft or unexplained loss of ammonium nitrate would be minimal.
The costs to the Department would be minimal as well, unless the Department funded ATF
efforts.
2. DHS Reporting

Similar to ATF’s method for reporting theft or loss of explosives, individuals upon
discovering the theft or unexplained loss of ammonium nitrate would contact DHS. The
costs to the industry for reporting the theft or unexplained loss of ammonium nitrate to the
Department would be minimal. The costs to the Department would be greater than when
compared to the ATF reporting requirement. The Department would be required to create
and establish the theft/loss reporting policies, procedures, and infrastructure.
94

The Department is proposing to require reporting of theft/loss to ATF (see Section E). ATF
already possesses the unique experience in collecting and responding to the theft/loss of
explosive related materials. Additionally, the Department wishes to avoid duplicative
efforts at the Federal level.
E. Recordkeeping

The Department considered two alternatives for maintaining records: (1) mandatory the
use of a central electronic database, and (2) the flexibility to maintain their records in
paper format or in electronic format. The Department proposes allowing AN Facilities to
select the method of records storage for themselves (see Section F).

The Department selected this alternative because the burden to submit and maintain
electronic records in a central database would increase the burden on the industry without
measurable benefit to the industry. The benefit would be limited to the confidence an AN
Facility would have, that if it maintained its records in a central database, it would meet
Department recordkeeping requirements.
The costs to industry associated with this alternative are the costs of the time spent during
each transaction collecting and recording the information required under the regulations,
the costs of the time spent on ongoing recordkeeping activities throughout the year, and
any capital investment costs an AN Facility incurs in acquiring equipment to facilitate the
safe storage of the ammonium nitrate transaction records.
F. Agents

The Department considered three options to minimize the likelihood that agents are used
to circumvent the requirements of this proposed rule. Specifically, the Department
believes it is imperative for AN Sellers to ensure that an agent is acting at the direction of a
registered AN Purchaser before the AN Seller transfers possession of ammonium nitrate to
that agent. To accomplish this, the Department is considering the following alternatives:
•

•

Requiring AN Purchasers to submit the names of their agents to the
Department via the AN User Registration Portal, and requiring the AN
Seller to confirm with the Department, prior to transferring possession of
the ammonium nitrate, that the prospective AN Purchaser has submitted
the name of the agent to the Department;
Requiring the AN Seller to orally confirm with the prospective AN
Purchaser prior to each sale or transfer that the agent is acting on behalf
of the AN Purchaser;
95

•

A combination of the first two options, where an AN Seller first should
checks with the Department to see if the prospective AN Purchaser has
submitted the name of the agent to the Department and, if not, than the
AN Seller must verbally confirms with the prospective AN Purchaser that
the agent is acting on his/her behalf.

Under the first approach, each AN Purchaser would be required to provide to the
Department the names of any agents that might act on his/her behalf at the point of sale.
Agent names would be submitted by the AN Purchaser to the Department via the AN User
Registration Portal. An AN Purchaser could submit an agent’s name when he/she applies
for an AN Registered User Number or at any other time prior to conducting a purchase
involving that agent. Then, prior to transferring possession of ammonium nitrate to an
agent, an AN Seller would need to verify with the Department that the prospective AN
Purchaser has designated the agent as an approved agent to represent the AN Purchaser at
the point of sale. This verification would occur through the same mechanism that is used
for the other prospective AN Purchaser verification activities (i.e., the Purchaser
Verification Portal or the Purchaser Verification Call Center). The agent’s information
provided to the Department by AN Purchasers and AN Sellers would not be vetted against
the TSDB nor otherwise checked by the Department; rather, it would simply be maintained
in the AN Registered User Database as a data field linked to the AN Purchaser for use in the
agent verification process.

Under the second approach, the Department would require the AN Seller to verify with the
prospective AN Purchaser that the agent is actually acting on behalf of the prospective AN
Purchaser for each specific transaction. Much like the other verification activities, this
could occur at the time the prospective AN Purchaser places the order, when the agent
arrives to take possession of ammonium nitrate, or any other time, so long as it occurs
prior to the AN Seller transferring possession of ammonium nitrate to the prospective AN
Purchaser’s agent. If this approach were adopted, the Department would propose requiring
this confirmation to occur for each transaction/occurrence in which an agent is taking
possession of ammonium nitrate; a blanket verification of an agent by an AN Purchaser
would not be acceptable. Additionally, as an e-mail or letter can be easily forged, under this
approach the Department would require that the AN Seller must receive this verification
orally (e.g., in person; telephonically) from the prospective AN Purchaser.
The third approach – the option the Department is proposing in this NPRM – is a
combination of the first two approaches. Specifically, AN Purchasers would provide the
Department with the names of their agent(s), and an AN Seller would verify either through
the Purchaser Verification Portal or Purchaser Verification Call Center that the agent
information has been provided by the AN Purchaser to the Department. As opposed to the
96

first approach under which a sale or transfer cannot occur unless the agent’s name has
been provided to the Department by the prospective AN Purchaser, under this third option
the AN Seller would be allowed to complete the sale or transfer after either (1) verifying
the agent has been designated by the prospective AN Purchaser in the Purchaser
Verification Portal or Purchaser Verification Call Center, or (2) orally confirming with the
prospective AN Purchaser that the agent is acting on the prospective AN Purchaser’s behalf
for this individual sale or transfer. The Department expects that in the majority of cases
this oral confirmation would occur telephonically. This third option has the benefit of
minimizing the point of sale impact of the agent verification process, while allowing a
means for a sale or transfer to be completed even if a prospective AN Purchaser forgets or
is otherwise unable to provide the Department with the agent’s name prior to using the
agent at the point of sale. For these reasons, this third approach is the option proposed by
the Department.
G. Exemption of Explosives Regulated by ATF

The Department has the discretion to exempt from regulation persons producing,
selling/transferring, or purchasing ammonium nitrate exclusively for use in the production
of explosives under a license or permit issued under the Federal explosives laws, 18 U.S.C.
Chapter 40, and associated regulations. ATF is responsible for enforcing Federal explosives
laws, and has established regulations for doing so. The Department is proposing to exempt
from regulation ammonium nitrate mixtures that are “explosives” subject to ATF regulation
(i.e., ANFO). The Department also considered two other approaches. The first approach is
to apply these rules to individuals who purchase, sell, or transfer ammonium nitrate for use
in the production of explosives. The second approach considered is to entirely exempt
facilities and persons that purchase, sell, or transfer ammonium nitrate solely for use in the
production of explosives, as they are already regulated by ATF.

1. Exempt ammonium nitrate mixtures that are “explosives” subject to ATF
regulation

Under this approach, entities and individuals that purchase, sell, or transfer ANFO, but who
do not produce ANFO or possess ammonium nitrate for other reasons, would be exempt
from these requirements and would be subject solely to ATF regulation. This approach
minimizes cost to the industry as well as the Department.
2. Regulate individuals who purchase, sell, or transfer ammonium
nitrate, whether that ammonium nitrate is incorporated into
“explosives” or not
97

Under this approach, such individuals would be subject to regulation by both the
Department and ATF under the Federal explosives laws. By not exempting ammonium
nitrate used in explosives, the Department would be treating all individuals who purchase,
sell, or transfer ammonium nitrate – whether as part of ANFO mixtures or not – the same.
This approach would ensure that there are no gaps in coverage of ammonium nitrate as it
moves through the supply chain – ammonium nitrate would be captured under the
Department’s ammonium nitrate program both before and after being combined with fuel
oil to create ANFO, and would be captured under ATF’s regulations after being combined
with fuel oil to create ANFO. There could potentially be heightened costs to the industry
due to potentially duplicative regulation. The costs to the Department would hinge upon a
greater number of AN Facilities to regulate.
3. Entirely exempt facilities and persons that purchase, sell, or
transfer ammonium nitrate solely for use in the production of
explosives

Under this approach facilities and persons that purchase, sell, or transfer ammonium
nitrate solely for use in the production of explosives would be entirely exempt from these
requirements, as they are already regulated by ATF. In this model, facilities and persons
that are licensed by ATF to mix ammonium nitrate with fuel to create ANFO which do not
purchase, sell, or transfer ammonium nitrate for other purposes would not be subject to
these regulations. This approach, however, could create a considerable gap in regulatory
coverage throughout the ammonium nitrate supply chain, as ATF regulations apply solely
to ANFO and not the ammonium nitrate used to create it. The costs to the industry, as well
as the Department, would be low because certain individuals and AN Facilities would not
fall under the regulation.

The Department proposes to exempt entities and individuals that purchase, sell, or transfer
ANFO, but who do not produce ANFO or possess ammonium nitrate for other reasons.
These entities and individuals are regulated by ATF. This approach avoids duplicative
regulation yet it does not create a potential regulatory gap in the ammonium nitrate supply
chain.

Average Costs per Facility

The largest cost driver is activities related to the point of sale. While variation in cost by AN
Facility is largely driven by the number of point of sale transactions that each AN Facility
conducts, it is helpful to examine the average cost per AN Purchaser and AN Facility. The
average costs per AN Purchaser are presented in tables 74 and 75. The average costs per
AN Facility are presented in tables 76 and 77. Both the lower and upper bounds of the
98

estimate are provided. In either case, the highest cost will be for farms without Internet
access. The cost of compliance to AN Purchasers is the time to apply for an AN Registered
User Number with the Department of Homeland Security and additional time during the
purchase. This registration cost averages $57 to $700 once every five years. The
Department believes for even the smallest farms and other businesses that only purchase
ammonium nitrate, this registration cost does not represent a significant economic impact.
The Department invites comments on this impact.
Table 80. Average Cost per AN Purchaser - Low Population/Low Transactions *

Farms with Internet
access
Farms w/o Internet
access
Golf courses

Landscaping
services

Blasting services
Mines
Total

Purchaser
Registration

2,079,500

12,998,000

169,000
144,000

16,000
71,000

15,477,500

*Totals may not add due to rounding.

Appeals

28,100

Purchase
Opportunity
Cost

1,674,500

18,700

3,500
200

14,133,000

251,200

398,100

14000

1,500

97,700

54,900

3,488,500

3,782,100

1,116,300

334,900

2,900

Total
Purchaser
Cost

507,400
30,200

170,200

19,020,900

Number
of
Facilities

Average
Cost per
AN
Purchaser

20,000

707

30,000
6,000
4,500

126
85
88

300

121

62,500

304

1,800

Table 81. .Average Cost per AN Purchaser - High Population/High Transactions *

Farms with Internet
access
Farms w/o Internet
access
Golf courses

Purchaser
Registration

3,119,300

8,150,800

28,100

339,000

5,433,900

6,900

287,000

Blasting services
Total

42,100

19,497,500

Landscaping
services
Mines

Appeals

Purchase
Opportunity
Cost

2,173,600

5,800

33,000

1,630,200

700

142,000

90600

2,800

23,417,800

634,000

86,400

*Totals may not add due to rounding.

18,112,900

Total
Purchaser
Cost

11,312,200
24,959,500

2,519,500
1,923,000

124,300
778,800

41,617,100

Number
of
Facilities

Average
Cost per
AN
Purchaser

30,000

832

45,000

251

12,000

210

9,000

214

500

249

3,500

223

100,000

416

The average per AN Seller facility cost to comply with the proposed rule ranges from
$6,400 for laboratory suppliers (low population/low transactions scenario) to $23,800 for
an explosives distributor (high population/high transactions scenario).

Table 82. . Average Cost per AN Seller Facility - Low Population/Low Transactions Estimate*
Reg.
Activities
AN fert.
Manuf.
AN expl.
manuf.
Fertilizer
mixers
Explosives
dist.
Farm
whol./coops
Retail
garden
ctrs.
Fertilizer
app.
Lab.
Supply
Total

Recordkeeping

Reporting
Theft/
Loss

Audits/
Inspections

Total
Seller Cost

Number
of AN
Facilities

Average
Cost

Appeals

Point of Sale
(Web Portal)

8,000

125,800

43,100

100

2,700

179,700

6,900

3,000

50,800

17,400

1,100

72,400

7,200

83,000

1,700

1,935,500

663,200

1,100

41,500

2,726,000

400

6,800

102,000

2,100

5,494,500

834,200

1,500

51,600

6,486,000

500

13,000

92,000

1,800

4,524,100

742,100

1,600

52,600

5,414,100

500

10,800

72,000

1,300

3,791,900

703,400

1,600

49,200

4,619,400

500

9,200

73,000

1,300

4,254,800

717,100

1,400

50,100

5,097,700

500

10,200

9,000

220,700

83,400

100

5,600

318,800

100

6,400

442,000

8,200

20,398,100

3,803,900

7,400

254,400

24,914,100

2,500

10,000

100

Table 83. Average Cost per AN Facility - High Population/High Transactions Estimate
Reg.
Activities
AN fert.
Manuf.
AN expl.
manuf.
Fertilizer
mixers
Explosives
dist.
Farm
whol./coops
Retail
garden
ctrs.
Fertilizer
app.
Lab.
Supply
Total

Recordkeeping

Reporting
Theft/
Loss

Audits/
Inspections

Total Seller
Cost

Number
of AN
Facilities

Average
Cost

Appeals

Point of Sale
(Web Portal)

8,000

311,200

43,100

100

2,700

365,100

14,000

3,000

125,700

17,400

1,100

147,300

14,700

123,000

2,600

7,181,800

994,800

1,700

62,200

8,366,000

600

13,900

202,000

4,200

21,807,900

1,668,500

3,100

103,200

23,788,900

1,000

23,800

184,000

3,400

17,841,300

1,484,200

3,200

105,100

19,621,100

1,000

19,600

357,000

6,000

37,281,300

3,517,200

7,900

246,100

41,415,400

2,500

16,600

146,000

2,800

16,764,200

1,434,200

2,900

100,100

18,450,200

1,000

18,500

19,000

500

1,090,400

166,800

300

11,100

1,288,200

100

12,900

1,042,000

19,500

102,403,800

9,326,200

19,200

631,600

113,442,200

6,200

18,200

*Totals may not add due to rounding.

Identification of Duplication, Overlap and Conflict with Other Federal Rules
A thorough discussion of the relationship to other rules is provided earlier in Section II.D
Research Efforts and Findings of the rule preamble.

15. International Trade Impact Assessment

The Trade Agreement Act of 1979 prohibits Federal agencies from activities that create
unnecessary obstacles to the foreign commerce of the United States. Legitimate domestic
objectives, such as security, are not considered unnecessary obstacles. The statute also
requires consideration of international standards and, where appropriate, that they be the
basis for U.S. standards. In addition, the general benefits and desirability of free trade
influenced the development of this notice of proposed rulemaking to remove or diminish,
to the extent feasible, barriers to international trade, including both barriers affecting the
export of American goods and services to foreign countries and barriers affecting the
import of foreign goods and services into the United States.

As entities that purchase or sell ammonium nitrate, or as individual AN Purchasers and AN
Sellers, importers and exporters would be required to register with the Department and
comply with the requirements of the NPRM in the same manner as their domestic
101

counterparts when ammonium nitrate physically changes possession, as a part of sales or
transfers by ammonium nitrate facilities, within the jurisdiction of the United States. Thus,
the Department has assessed the potential effect of this NPRM and has determined that it
would not create barriers to international trade.

16. Unfunded Mandates Reform Act (UMRA)

The Unfunded Mandates Reform Act of 1995 (UMRA), enacted as Public Law 104-4 on
March 22, 1995, is intended, among other things, to curb the practice of imposing unfunded
Federal mandates on State, local, and tribal governments. Title II of UMRA requires each
Federal agency to prepare a written statement assessing the effects of any Federal mandate
in a proposed or final agency rule that may result in a $100 million or more expenditure
(adjusted annually for inflation) in any one year by State, local, and tribal governments, in
the aggregate, or by the private sector. The primary (i.e., mean) estimate for this proposed
rulemaking would not impose an unfunded mandate on State, local, or tribal governments,
but the upper end of the estimate would show an unfunded mandate in the aggregate. The
analysis required under Title II of UMRA is satisfied by this regulatory impact assessment.
The Department recognizes that some AN Sellers or AN Purchasers may be by State or local
government entities. These AN Facilities would be required to comply with the provisions
of this proposed rule.

Further, under Subtitle J, the Department may enter into cooperative agreements with the
U.S. Department of Agriculture or any State department of agriculture to carry out the
provisions of this subtitle. The statute further requires the Department, at the request of a
Governor of a State, to delegate to that State authority to carry out the administration and
enforcement if the Department determines that the State is capable of satisfactorily
carrying out such functions. If the Department delegates any functions to a State, subject to
the availability of appropriations, the Department must provide to the State sufficient funds
to carry out those functions.
In regards to delegation of its authority to individual States, the Department proposes the
following process: If a State is interested in performing the administration and
enforcement activities, the Governor of the State must submit a written request to the
Department asking for delegation of those authorities. Upon receipt of the request, the
Department will initiate an evaluation to determine if the State is capable of satisfactorily
performing those functions and, upon completion of the evaluation, will provide the State
with a written response informing it of the Department’s determination. In order to make a
fair evaluation, the Department is likely to request information from the State and consult
with the State before a final determination is made. Because the responsibility would be
102

transferred only at the request of the State, and then with funding, no unfunded mandate is
created.

103

Appendix A – Population Estimates
This regulatory evaluation makes several assumptions regarding the number of businesses
potentially impacted by this proposed rule. Below are the details of the sources and
underlying assumptions for each category of the regulated population considered. The
Department seeks comment on the number of businesses potentially affected by this
proposed rule. Unless noted otherwise, NAICS specific business populations come directly
from the U.S. Census Statistics of US Business, 2006, US All Industries, available at
http://www2.census.gov/econ/susb/data/2006/us_6digitnaics_2006.xls.
AMMONIUM NITRATE FOR FERTILIZER

Farms: According to the U.S. Department of Agriculture, 1,022,036 farms incurred expenses
for Commercial fertilizer, lime, and soil conditioners. 39 Only a fraction of the total use
ammonium nitrate fertilizer. According to the 4/17/09 listening session with plant food
control officials from several States, roughly 50,000 – 75,000 farms in Missouri and 3,000
farms in Texas were reported to use ammonium nitrate fertilizer. Estimating the average
fertilizer consumption per farm in those States and applying to the national totals, DHS
estimates roughly 100,000 to 150,000 farms using ammonium nitrate fertilizer. In a
4/17/09 listening session with plant food control officials from several States, the
Department heard that nationally, about half of farms were thought to use applicator
services and thus, never take custody of ammonium nitrate fertilizer, thus for this analysis,
the Department assumes 50,000 to 75,000 farms could be impacted by this proposed rule.

Fertilizer applicator services: The Department assumes that about 25% to 50% of NAICS
115112 (soil preparation, planting and cultivating) provide applicator services for
ammonium nitrate. Thus, 500 to 1,000 of these businesses could be impacted by this
proposed rule.
Ammonium nitrate (for fertilizer): According to SRI Consulting, there were 26
manufacturers of ammonium nitrate fertilizer in 2008.

Fertilizer mixers: According to the Census Bureau, 40 there were 476 businesses engaged in
mixing fertilizers, which is creating formulations of fertilizer materials for specific plant
nutrition purposes. Thus, the Department has assumed a range of 400 to 600 fertilizer
mixers that could be impacted by this proposed rule.
39 U.S. Department of Agriculture, National Agricultural Statistics Services, 2007 Census of Agriculture (US
data), Table 45.
40 NAICS 325314 at Statistics of US Business, 2006, US All Industries available at
http://www2.census.gov/econ/susb/data/2006/us_6digitnaics_2006.xls

104

Farm wholesalers/co-ops: During the 4/17/09 listening session with plant food control
officials, it was suggested that the number of farm wholesalers/co-ops selling/transferring
ammonium nitrate fertilizer ranged from 500 to 1,000.

Retail garden centers: Because of the concern regarding the misappropriation of
ammonium nitrate, State plant food control officials advised the Department that very few,
if any, retail outlets are still in the business of selling straight ammonium nitrate fertilizer.
None of the big home improvement/garden center chains carry pure ammonium nitrate.
To include these businesses in the regulatory evaluation, the Department assumes that 500
to as many as 2,500 retail garden centers nationwide sell ammonium nitrate in its pure
form.
Golf courses: According to the Census Bureau, 41 there were nearly 12,000 golf courses and
country clubs (NAICS 71391). The Department assumes that many of these apply
ammonium nitrate fertilizer, thus 6,000 to 12,000 golf courses and country clubs may be
impacted by this proposed rule.

Landscaping services: According to the Census Bureau there were about 90,000
landscaping businesses (NAICS 56173). 42 Only a fraction of these services apply fertilizer,
and a fraction of those apply ammonium nitrate fertilizer. As a result, the Department
assumes that many of these apply ammonium nitrate fertilizer, thus 4,500 to 9,000 of these
businesses may be impacted by this proposed rule.
Laboratory supply: The Department assumes that approximately 50 - 100 laboratory
supply wholesalers may stock ammonium nitrate above the threshold.
AMMONIUM NITRATE FOR EXPLOSIVES

Ammonium nitrate (for explosives) manufactures: According to data from the 2002 Census
of Manufacturers, there were approximately 10 manufacturers of low-density ammonium
nitrate for use in explosives. This was confirmed by members of the Institute of Makers of
Explosives (IME).

Explosives distributors: According to the IME, there are a relatively small number of
explosives distributors that process transactions involving ammonium nitrate. DHS
assumes that 500 to 1,000 explosives distributors could be affected by this proposed rule.
41
42

Statistics of US Business, 2006
Statistics of US Business, 2006

105

Blasting services: A specialized sub-segment of NAICS 213113-5 (Support Services for
Mining, excluding oil and gas drilling), these businesses are engaged in coming to the mine
site and preparing and detonating explosives, including making ammonium nitrate fuel oil
(ANFO) mixtures. Members of the IME suggested that only a fraction of 750 businesses in
NAICS 213113-5 was engaged in blasting activities. The Department assumes that 250-500
of these businesses could be affected by this proposed rule.
Mines: According to the Mine Safety and Health Administration’s Part 50 data, there were
about 7,000 mines. Members of the IME suggested that 50%-75% of these mines use
blasting services and thus never take custody of ammonium nitrate. As a result, the
Department assumes 1,750 to 3,500 mines could be impacted by this proposed rule.

106

Appendix B – Wage Rates
Wage rates for non-farm workers are readily available from the Bureau of Labor statistics
and our methodology is explained below. Attributing a wage to farm owners or managers is
much more difficult as these wages are specifically excluded from BLS data. The U.S
Department of Agriculture, Economic Research Service (ERS), studies the economic issues
of agriculture. One of the known characteristics of farm income, and therefore a wage
proxy, is highly volatile over time. Additionally, much of the income may come from off
farm activity. This volatility is explored in the ERS report, Income, Wealth, and the
Economic Well-Being of Farm Households, Ashok K. Mishra, Hisham S. El-Osta, Mitchell J.
Morehart, James D. Johnson, and Jeffrey W. Hopkins, Agricultural Economic Report No.
(AER812) 77 pp, July 2002. It is available at
http://www.ers.usda.gov/publications/aer812/aer812.pdf. Because there is no truly
representative wage rate specifically for the farm owners or managers who will be
applying for an AN Registered User Number, the Department is using an average of the
loaded wage rates for all affected populations.

For non-farm wages, the wage rates used throughout this analysis reflect the 50th
percentile (median) hourly wage rate for each occupational classification for each industry.
The base hourly wages were pulled from the Bureau of Labor Statistics Occupational
Employment Statistics Survey (May 2008). Wage rates can be retrieved from BLS several
different ways. Detailed wage tables are available at various NAICS industry level. The
Department used the files that matched the corresponding NAICS level of detail in the
charts below. Those wage rates are available as complete tables at
http://www.bls.gov/oes/oes_dl.htm, as follows:

National 3-digit NAICS Industry-Specific
estimates (1,966 KB)
National 4-digit NAICS Industry-Specific
estimates (4,397 KB)
National 5-digit NAICS Industry-Specific
estimates (745 KB)

ftp://ftp.bls.gov/pub/special.requests/oes/oesm08in
3.zip
ftp://ftp.bls.gov/pub/special.requests/oes/oesm08in
4.zip
ftp://ftp.bls.gov/pub/special.requests/oes/oesm08in
5.zip

Where exact data matches were unavailable, wage rates from a similar occupational
classification or aggregate industry were substituted. To reflect a “loaded” wage (including
employer-paid benefits), each base wage was multiplied by benefit multiplier. BLS reports
employer costs by industry and broad occupational category which provides different
multipliers for different wages. These multipliers are listed below and were retrieved on:
March 30, 2010 from BLS at http://data.bls.gov/cgi-bin/surveymost for complete data
tables and http://data.bls.gov:8080/PDQ/outside.jsp?survey=cm for menu driven query.
The multiplier is derived for each intersection of occupation and NAICS by dividing total
107

compensation by wages and salaries. The values range from 1.32 to 1.54 and are multiplied
times the corresponding wage rate to get a total compensation loaded wage rate. All labor
pricing throughout the evaluation utilizes the corresponding industry and occupation
loaded rate developed below.
Table 84 . Hourly Wage Rates at 50th Percentile (median) ($/hour)

Industry Category

NAICS
Code

Fertilizer applicator services
Mines
Blasting services
AN fertilizer manuf./Fertilizer mixers
AN explosives manuf.
Explosives distributors/Laboratory supply
Farm wholesalers/co-ops
Retail garden centers
Landscaping
Golf courses

115100
212000
213000
325300
325900
424600
424900
444200
561730
713900

Purchasing
agents,
except
wholesale,
retail, and
farm products
13-1023
$27.34
$25.17
$24.86
$25.51
$24.70
$25.12
$22.17
$12.30
$21.44
$18.96

Sales
Manager
11-1022
$65.01
$44.33
$43.78
$45.70
$55.62
$54.35
$46.86
$33.31
$29.84
$39.02

Sales
representatives,
wholesale and
manufacturing,
technical and
scientific
products
41-4011
$24.36
$29.13
$32.36
$33.71
$35.40
$33.11
$26.91
$24.13
$23.09
$16.19

Transportation,
storage, and
distribution
managers
11-3071
$30.21
$38.36
$38.41
$31.85
$35.24
$35.17
$32.33
$31.92
$33.77
$35.35

Office and
administrat
ive support
43-0000
$12.16
$14.78
$14.47
$15.42
$16.63
$15.58
$12.89
$11.76
$13.29
$11.44

Transportation
, storage, and
distribution
managers
11-3071
1.48
1.48
1.48
1.48
1.48
1.48
1.48
1.48
1.48
1.48

Office and
administrativ
e support
occupations
43-0000
1.43
1.43
1.43
1.43
1.43
1.43
1.43
1.43
1.43
1.43

Table 85. Total Compensation/Wage and Salary Multiplier

Industry Category

NAICS
Code

115100
212000
213000
325300
325900
424600
424900
444200
561730
713900

Purchasing
agents,
except
wholesale,
retail, and
farm
products
13-1023
1.48
1.43
1.54
1.54
1.54
1.54
1.43
1.33
1.32
1.32

Sales
Manager
11-1022
1.33
1.33
1.33
1.33
1.33
1.33
1.33
1.33
1.33
1.33

108

Sales
representatives
, wholesale and
manufacturing,
technical and
scientific
products
41-4011
1.48
1.48
1.54
1.54
1.54
1.43
1.43
1.33
1.32
1.32

Table 86. Loaded Wage Rates at 50th Percentile (Hourly wage rate * multiplier) ($/hour)

Industry Category

NAICS
Code

115100
212000
213000
325300
325900
424600
424900
444200
561730
713900

Purchasing
agents,
except
wholesale,
retail, and
farm products
13-1023
40.42
36.10
38.24
39.24
38.00
38.64
31.61
16.30
28.37
25.08

Sales
Manager
11-1022
86.73
59.14
58.40
60.97
74.20
72.51
62.51
44.44
39.81
52.05

Sales
representatives,
wholesale and
manufacturing,
technical and
scientific
products
41-4011
36.02
43.07
49.78
51.86
54.46
47.21
38.37
31.98
30.55
21.42

Transportation,
storage, and
distribution
managers
11-3071
44.67
56.73
56.80
47.10
52.11
52.01
47.81
47.20
49.94
52.28

Office and
administrat
ive support
43-0000
17.38
21.12
20.68
22.04
23.76
22.26
18.42
16.81
18.99
16.35

As discussed at the beginning of this section, the average of rates in Table 75, $41.04 is
used for farm applicants.

Table 87, Calculation of Population Weighted Average Fully loaded Rate for Opportunity cost
for purchasers; Low Population

Industry Category

Purchasing
agents, except
wholesale, retail,
and farm
products

Registration
Population

Share of total

Contribution to
weighted average

13-1023
Agricultural sector
Fertilizer mixers

39.24

1,200

0.009

Farm wholesalers/co-ops

31.61

1,500

0.011

0.36

Retail garden centers

16.30

1,500

0.011

0.18

0.36

Fertilizer applicators

40.42

1,500

0.011

0.46

Farms

41.04

100,000

0.754

30.95

Golf courses

25.08

12,000

0.090

2.27

Landscaping services

28.37

9,000

0.068

1.93

Explosives Sector
Explosives distributors

38.64

1,500

0.011

0.44

Blasting services

38.24

750

0.006

0.22

Mines

36.10

3,500

0.026

0.95

150

0.001

132,600

1.00

Other
Laboratory supply

38.64

Total

109

$
$

0.04
38.15

Table 88, Calculation of Population Weighted Average Fully loaded Rate for Opportunity cost
for purchasers; High Population

Industry Category

Purchasing
agents, except
wholesale, retail,
and farm
products

Registration
Population

Share of total

Contribution to
weighted average

13-1023
Agricultural sector
Fertilizer mixers

39.24

1,800

0.008

0.32

Farm wholesalers/co-ops

31.61

3,000

0.014

0.43

Retail garden centers

16.30

7,500

0.034

0.56

Fertilizer applicators

40.42

3,000

0.014

0.55

Farms

41.04

150,000

0.685

28.10

Golf courses

25.08

24,000

0.110

2.75

Landscaping services

28.37

18,000

0.082

2.33

Blasting services

38.64

3,000

0.014

0.53

Mines

38.24
36.10

1,500
7,000

0.007
0.032

$
$

0.26
1.15

300

0.001

0.05

219,100

1.00

37.04

Explosives Sector
Explosives distributors

Other
Laboratory supply

38.64

Total

110

Appendix C – Computer and Internet Access on US Farms
The question has been raised of whether the potential regulated community for this
proposed rule has sufficient access to the Internet for the purpose of conducting one-time
online registration. The Department provides the following snapshot as information only.
State specific data is not used in the evaluation. Data from USDA suggests that only slightly
more than half of all farms in the States likely to be the most affected had access to the
Internet in 2007. Using historical growth rates on the proliferation of Internet access on
farms, about 58% of farms will have Internet access in 2009. For farms without direct
Internet access, however, access to the Internet is generally available in these communities
through other venues, such as State extension offices, public libraries, etc.
According to the 2007 Census of Agriculture (USDA) Volume 1, Table 46, nationwide, 63%
of farms had computer access and 55% had Internet access. There was considerable
variability between States with regard to Internet access. Wyoming was the most
“connected” with 75% of farms having Internet access. The least connected State was
Kentucky with 39% of farms with Internet access.

Looking at just the top 15 ammonium nitrate consuming States (direct application only),
which combined account for 88.8% of direct application ammonium nitrate consumption,
the median percentage of farms with Internet access was slightly more than half at 52% in
2007. Using data from 2003-2007, we project about 58% of these farms will have Internet
access in 2009. The table below details computer and Internet access by the top 15
ammonium nitrate consuming States in 2007. Based upon a more recent USDA survey
(http://usda.mannlib.cornell.edu/usda/current/FarmComp/FarmComp-08-14-2009.pdf)
The Department has assumed that 60% of farms will have Internet access.

111

Table 89. Computer and Internet Access for Top 15 Ammonium Nitrate Consuming States,
2007

Rank
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15

State
Missouri
Alabama
Tennessee
Texas
Mississippi
Kentucky
Kansas
Arkansas
Georgia
Oklahoma
Louisiana
North Carolina
Wyoming
Florida
Nebraska
Top 15
Total US
*Direct application only

Percent of
Farms with
Computer
Access
56%
48%
60%
62%
51%
50%
68%
59%
46%
55%
57%
61%
82%
61%
66%
59%
63%

Percent of
Farms with
Internet
access
50%
40%
52%
57%
41%
39%
57%
52%
42%
51%
55%
55%
75%
55%
55%
52%
55%

Consumption of
AN* (short tons
material)
221,357
123,331
105,246
89,637
73,150
58,090
43,803
37,714
35,553
29,870
28,022
27,384
23,967
20,611
20,207
937,942
1,056,148

% Total US AN
Consumption
21.0%
11.7%
10.0%
8.5%
6.9%
5.5%
4.1%
3.6%
3.4%
2.8%
2.7%
2.6%
2.3%
2.0%
1.9%
88.8%
100.0%

Sources: Computer access is available in table 46, Volume 1, of the 2007 U.S. Census of Agriculture available at
http://www.agcensus.usda.gov/Publications/2007/Full_Report/usv1.pdf, p. 619 or
http://www.agcensus.usda.gov/Publications/2007/Full_Report/Volume_1,_Chapter_2_US_State_Level/st99_2_04
6_046.pdf. Phone conversations with two State officials who are a part of Association of American Plant Food
Control Officials provided the Department with their State information on direct application of ammonium nitrate.
Using their information, application rates were then used to estimate State consumption. Additionally,
"Commercial Fertilizers 2007", The Fertilizer Institute (report is not online but is available for order at
http://www.tfi.org/publications/commercialorder.pdf) provided additional consumption information. The
Department invites comments providing improved data sources.

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