[Federal Register Volume 83, Number 21 (Wednesday, January 31, 2018)]
[Rules and Regulations]
[Pages 4425-4428]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-01809]


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DEPARTMENT OF STATE

22 CFR Part 22

[Public Notice 10027]
RIN 1400-AD81


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

AGENCY: Department of State.

ACTION: Final rule.

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SUMMARY: The Department of State implements an adjustment to the 
Schedule of Fees for Consular Services of the Department of State's 
Bureau of Consular Affairs (``Schedule of Fees'' or ``Schedule'') to 
raise the execution fee for passport books and cards from $25 to $35. 
The Department is adjusting this fee in light of the findings of the 
most recently approved update to the Cost of Service Model to better 
align the fees for consular services with the costs of providing those 
services.

DATES: In accordance with the Congressional Review Act, this rule is 
effective on April 2, 2018.

FOR FURTHER INFORMATION CONTACT: Rob Schlicht, Management Analyst, 
Office of the Comptroller, Bureau of Consular Affairs, Department of 
State; phone: 202-485-6685, telefax: 202-485-6826; email: 
[email protected].

SUPPLEMENTARY INFORMATION:

Background

    This rule makes a change to the Schedule of Fees for passport 
services (passport books and cards). The Department published a notice 
of proposed rulemaking (NPRM) on September 19, 2016 (81 FR 64088), with 
60 days provided for public comment. This final rule addresses the 
relevant comments. Justification for this rulemaking can be found in 
the NPRM.

Analysis of Comments

    The Department received 34 comments, of which 26 are addressed 
herein. The other eight were duplicates submitted to regulations.gov 
and [email protected].
    The majority of the comments were in favor of raising the fee from 
$25 to $35. Four were opposed to raising the fee and one comment 
referred to visa fees which are not addressed in this rulemaking.
    A majority of the comments that were in favor of the fee increase 
cited increased overhead, with most mentioning staffing and postage as 
major costs. Other comments expressed the view that the small increase 
in fee would not affect business or personal travel.
    Two commenters who opposed the fee increase expressed concern that 
the fee would be a burden to some travelers. Although the Department is 
sympathetic to the impact the fee increase may have on the public, the 
fee increase reflects the result of an evaluation to determine the cost 
of the service provided so that the U.S. Government may recover the 
full cost of the service in accordance with 31 U.S.C. 9701 and guidance 
from the Office of Management and Budget (OMB). Federal agencies make 
every effort to ensure that fees for services are sufficient to recover 
the full cost to the government. (See OMB Circular A-25, ] 6(a)(1), 
(a)(2)(a).)
    Two commenters stated that the government should work more 
efficiently rather than raise fees. The Department of State's Bureau of 
Consular Affairs along with its partner acceptance facilities strive to 
optimize business functions to increase efficiency and effectively 
manage financial and capital resources funded by consular fees. There 
are approximately 7,400 acceptance facilities throughout the United 
States, including those at post offices and clerks of court. This fee 
is necessary to ensure that acceptance agents are compensated for the 
time and materials required to accept applications on behalf of the 
Department of State. The fee has remained the same for over nine years 
even though the cost of labor and material has increased during the 
same time period. In 2008, the Department lowered the execution fee for 
passport books from $30 to $25 based on costs at the time. The proposed 
$10 increase to $35, from the current fee of $25, is in line with cost 
increases for both the Department and United States Postal Service 
during the past nine years.
    In an effort to improve business practices, the Department 
publishes a guide that standardizes processes for acceptance facilities 
and provides annual training to ensure the processes are followed. 
Additionally, the Department conducts regular audits and inspections of 
the acceptance facilities to protect the integrity of the application 
process, prevent mis/malfeasance, and promote standardization and 
efficiency.
    The revenue from retained consular fees fund CA's domestic and 
overseas operations and consular-related programs. These operations 
protect the lives and serve the interests of United States citizens and 
strengthen U.S. border security.
    One commenter stated that the amount of time and effort it takes to

[[Page 4426]]

process applications does not justify the cost of service. The person 
believes that fees should be less for children when they apply with 
their family. As described in the section of this rule describing 
activity-based costing, the fee is determined in its totality, not as 
an individual transaction with consideration given to family 
circumstances. Conforming to guidance from OMB, federal agencies make 
every effort to ensure that fees for service are sufficient to recover 
the full cost to the government of providing the service. (See OMB 
Circular A-25, ] 6(a)(1), (a)(2)(a).) Activity-based costing was 
explained in the NPRM, and the Department will summarize the 
explanation here, for convenience.

Activity-Based Costing

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

The Department's Cost of Service Model

    The Department conducted periodic Cost of Service Studies using ABC 
methods to determine the costs of its consular services through 2009. 
In 2010, the Department moved to adopt an annually updated Cost of 
Service Model that measures all of its consular operations and costs, 
including all activities needed to provide consular services, whether 
fee-based or not. This provides a comprehensive and detailed look at 
all consular services as well as all services the Department performs 
for other agencies in connection with its consular operations. The Cost 
of Service Model now includes approximately 80 distinct activities, and 
enables the Department to model its consular-related costs with a high 
degree of precision.
    The Department uses three methods outlined in SFFAS Statement #4 
(paragraph 149(2)) to assign resource costs to activities: (a) Direct 
tracing; (b) estimation based on surveys, interviews, or statistical 
sampling; and (c) allocations. The Department uses direct tracing to 
assign the cost of, for example, a physical passport book or the visa 
foil placed in a visa applicant's passport. Assigning costs to 
activities such as adjudicating a passport or visa application requires 
estimation based on surveys, interviews, or statistical sampling to 
determine who performs an activity and how long it takes. Indirect 
costs (overhead) in the Cost of Service Model are allocated according 
to the level of effort needed for a particular activity. Where 
possible, the model uses overhead cost pools to assign indirect costs 
only to related activities. For instance, the cost of rent for domestic 
passport agencies is assigned only to passport costs, not to visas or 
other services the Department provides only overseas. The Department 
allocates indirect support costs to each consular service by the 
portion of each cost attributable to consular activities. For example, 
the model allocates a portion of the cost of the Department's Bureau of 
Human Resources to consular services. The total amount of this 
allocation is based on the number of Bureau of Human Resources staff 
members who support Bureau of Consular Affairs personnel. In turn, this 
amount is allocated between the different consular services by the 
level of effort to provide them.
    To assign labor costs, the Department relies on a variety of 
industry-standard estimation methodologies. To document how consular 
staff divide their time overseas, the Department conducts the Consular 
Overseas Data Collection (CODaC) survey of a representative sample of 
posts each year. The Department uses CODaC survey data in conjunction 
with volume data from over 200 individual consular sections in 
consulates and embassies worldwide, to develop resource drivers to 
assign labor costs to activities. For consular activities that take 
place in the United States, the Department collects volume data from 
periodic workload reports including Passport Agency Task Reports pulled 
from management databases that include Passport's Management 
Information System. Financial information is gathered from reports by 
the Comptroller and Global Financial Services bureau financial systems. 
The Department converts the cost and workload data it collects into 
resource drivers and activity drivers for each resource and activity.
    Roughly 70 percent of the workforce involved in providing consular 
services are full-time Federal employees. When demand for a service 
rises, it takes time for the Department to increase the number of 
employees because of the lengthy security clearance process and special 
training involved. Likewise, it is difficult to rapidly decrease the 
number of employees when demand for a service falls. Additionally, 
given government procurement rules and security requirements, the 
Department must commit to many of its facilities and infrastructure 
costs years before a facility becomes available. In spite of changes in 
demand, the Department is obligated to cover these costs. Given these 
and other constraints on altering the Department's cost structure in 
the short term, changes in service volumes can have dramatic effects on 
whether a fee is self-sustaining. Therefore, the Cost of Service Model 
includes predictive data as well as actual data. Predictive workloads 
are based on projections by the Office of Visa Services, the Office of 
Passport Services, and other parts of the Bureau of Consular Affairs 
that are consistent with Department budget documents prepared for 
Congress. As notified in the FY 2018 Congressional Budget 
Justification, the Department estimates a workload of 20.2 million 
passport applications, 14.4 million nonimmigrant visa applications, and 
600,000 immigrant visa applications in FY 2018.
    The costs the Department enters into the Cost of Service Model 
include every line item of costs, such as physical

[[Page 4427]]

material for making passports and visas, salaries, rent, supplies, and 
IT hardware and software. The Department then calculates a resource 
driver for overseas staff time based on responses to the Consular 
Overseas Data Collection survey for overseas compensation costs and 
enters the resource drivers and activity assignments into the model. 
The Department then selects an activity driver, such as the volume data 
discussed above, for each activity, in order to assign these costs to 
each service type. This process allows the model to calculate a total 
cost for each of the Schedule of Fees line items for visa services, 
passport services, and overseas citizens services as well as services 
for other government agencies and no fee services. The model then 
divides this total cost by the total volume of the service or product 
in question in order to determine a final unit cost for the service or 
product. Projected costs for predictive years are also included to take 
account of changes in the size of consular staff, workload, and similar 
factors.\1\ The resulting database constitutes the Cost of Service 
Model. The Department continues to refine and update the Cost of 
Service Model in order to set fees commensurate with the cost of 
providing consular services.
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    \1\ Workload volume increases and decreases are the main drivers 
for staffing changes, but other factors may impact staffing or the 
speed of staffing changes (e.g., the length of the recruitment and 
clearance processes).
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    The Cost of Service Model is a complex series of iterative computer 
processes incorporating more than a million calculations, housed in an 
industry standard commercial off-the-shelf product, SAP Enterprise 
Performance Management; therefore, it is not reducible to a tangible 
form such as a document. Inputs are formatted in spreadsheets for entry 
into the ABC software package. The software's output includes 
spreadsheets with raw unit costs, validation reports, and management 
reports. All data inputs and outputs are considered Sensitive but 
Unclassified and therefore cannot be made publically available.
    The new cost reflected in the Schedule of Fees is based on 
projected workload for Fiscal Year 2018, and the fee has been rounded 
to make it easier to collect.

The New Passport Execution Fee

    The Department is increasing the execution fee for passport books 
and cards from $25 to $35, excepting those persons who are statutorily 
exempted from paying the passport execution fee. The costs of providing 
passport services to exempt individuals are covered by fees paid by 
non-exempt individuals. The passport execution fee is applicable to all 
first-time passport applicants and certain other applicants who must 
apply in person, such as minors under the age of 16. Applicants apply 
in person at post offices and other acceptance facilities, such as 
local clerks of court, as well as at the Department's passport offices. 
The passport execution fee includes the costs associated with accepting 
passport applications and fees in-person, including salaries, benefits, 
and an allocated portion of overhead including, but not limited to, 
rent, utilities, supplies and equipment. The Department's Cost of 
Service Model showed that these costs were over $33. The United States 
Postal Service--the acceptance agent for the majority of passport 
applications--regularly conducts a similar study and found that these 
costs were more than $34.\2\ See 22 U.S.C. 214(a); 22 CFR 51.51(b).
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    \2\ The United States Postal Service does not produce a public 
report on this study.
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    The $10 increase in the passport execution fee will affect first-
time passport applicants and certain applicants who must appear at post 
offices and other acceptance facilities such as local clerks of court. 
Individuals who apply for a passport renewal by mail will not see a fee 
increase.

Regulatory Findings

Administrative Procedure Act

    The Department published this rule as a proposed rule on September 
19, 2016, with a 60-day provision for public comments. See 81 FR 64088. 
In accordance with the Congressional Review Act, this rule will be 
effective 60 days after publication and receipt by Congress and the 
GAO.

Regulatory Flexibility Act

    The Department has reviewed this rule and, by approving it, 
certifies that it will not have a significant economic impact on a 
substantial number of small entities as defined in 5 U.S.C. 601(6).

Unfunded Mandates Act of 1995

    This rule will not result in the expenditure by state, local, or 
tribal governments, in the aggregate, or by the private sector, of $100 
million or more in any year, and it will not significantly or uniquely 
affect small governments. Therefore, no actions were deemed necessary 
under the provisions of the Unfunded Mandates Reform Act of 1995, 2 
U.S.C. 1501-1504.

Small Business Regulatory Enforcement Fairness Act of 1996

    This rule is a major rule as defined by 5 U.S.C. 804(2). The 
Congressional Review Act, 5 U.S.C. 801 et seq., as added by the Small 
Business Regulatory Enforcement Fairness Act of 1996, generally 
provides that before a rule may take effect, the agency promulgating 
the rule must submit a rule report, which includes a copy of the rule, 
to each House of the Congress and to the Comptroller General of the 
United States. The Department will submit the required information to 
the U.S. Senate, the U.S. House of Representatives, and the Comptroller 
General of the United States prior to publication of the rule in the 
Federal Register. This rule will take effect 60 days after it is 
published in the Federal Register and receipt by Congress and the GAO.

Executive Order 12866

    The Department has reviewed this rule to ensure its consistency 
with the regulatory philosophy and principles set forth in the 
Executive Orders. OMB has determined that this rule is economically 
significant under Executive Order 12866.
    This rule is necessary in light of the Department of State's Cost 
of Service Model finding that the cost of executing first-time 
passports is higher than the current fee. The Department is setting 
this fee in accordance with 22 U.S.C. 214(a) (``There shall be 
collected and paid into the Treasury of the United States . . . a fee, 
prescribed by the Secretary of State by regulation, for executing each 
such [passport] application) and 31 U.S.C. 9701(``The head of each 
agency . . . may prescribe regulations establishing the charge for a 
service or thing of value provided by the agency . . . based on . . . 
the costs to the Government.''). This regulation generally sets the fee 
for passport executions at the amount required to recover the costs 
associated with providing this service.
    Details of the fee change are as follows:

[[Page 4428]]



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                                                                                                                     Estimated annual   Estimated change
                     Item No.                        Proposed fee     Current fee    Change in fee    Percentage        number of        in annual fees
                                                                                                       increase      applications \1\    collected \1\
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                                                         Schedule of Fees for Consular Services
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                                                                      * * * * * * *
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                                                            Passport and Citizenship Services
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1. Passport Book or Card Execution: Required for               $35             $25             $10              40         11,500,000       $115,000,000
 first-time applicants and others who must apply
 in person........................................
                                                   -----------------------------------------------------------------------------------------------------
    Total.........................................  ..............  ..............  ..............  ..............  .................       $115,000,000
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                                                                      * * * * * * *
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\1\ Based on projected FY 2018 workload.

    As noted in the NPRM, the Department of State does not anticipate 
that demand for passport services affected by this rule will change 
significantly due to the fee change.
    The Department does not believe that passport application fees are 
a significant determining factor when Americans decide to travel 
internationally. The price of a passport book or card remains minor in 
comparison with other costs associated with foreign travel, given that 
taxes and surcharges alone on international airfare can easily surpass 
$100. As a result, the Department does not believe passport demand will 
be significantly affected by the new fee.

Executive Order 13771

    This rule is not an E.O. 13771 regulatory action because it is a 
transfer rule that changes only the fee for a service without imposing 
any new costs.

Executive Orders 12372 and 13132

    This regulation will not have substantial direct effects on the 
states, on the relationship between the national government and the 
states, or on the distribution of power and responsibilities among the 
various levels of government. Therefore, in accordance with section 6 
of Executive Order 13132, it is determined that this rule does not have 
sufficient federalism implications to require consultations or warrant 
the preparation of a federalism summary impact statement. The 
regulations implementing Executive Order 12372 regarding 
intergovernmental consultation on federal programs and activities do 
not apply to this regulation.

Executive Order 13175

    The Department has determined that this rulemaking will not have 
tribal implications, will not impose substantial direct compliance 
costs on Indian tribal governments, and will not preempt tribal law. 
Accordingly, the requirements of Executive Order 13175 do not apply to 
this rulemaking.

Paperwork Reduction Act

    Information collection 1405-0004, which relates to this rule, is 
approved by OMB pursuant to the Paperwork Reduction Act, 44 U.S.C. 
Chapter 35. Other than the comments summarized above, the Department 
received no public comments regarding this rulemaking. This information 
collection has been renewed until August 31, 2019.

List of Subjects in 22 CFR Part 22

    Consular Services, Fees, Passports.

    Accordingly, 22 CFR part 22 is amended as follows:

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

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

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

0
2. In Sec.  22.1, in the table, revise item 1 to read as follows:


Sec.  22.1  Schedule of fees.

* * * * *

                 Schedule of Fees for Consular Services
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                           Item No.                               Fee
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Passport and Citizenship Services:
  1. Passport Book or Card Execution: Required for first-time        $35
   applicants and others who must apply in person............
 
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 Carl C. Risch,
Assistant Secretary for Consular Affairs, Department of State.
[FR Doc. 2018-01809 Filed 1-30-18; 8:45 am]
 BILLING CODE 4710-06-P