[Federal Register: September 16, 2005 (Volume 70, Number 179)]
[Rules and Regulations]
[Page 54821-54832]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr16se05-19]
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Part III
Department of Transportation
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Federal Aviation Administration
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14 CFR Part 3
False and Misleading Statements Regarding Aircraft Products, Parts,
Appliances and Materials; Final Rule
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DEPARTMENT OF TRANSPORTATION
Federal Aviation Administration
14 CFR Part 3
[Docket No.: FAA-2003-15062; Amendment No. 3-1]
RIN 2120-AG08
False and Misleading Statements Regarding Aircraft Products,
Parts, Appliances and Materials
AGENCY: Federal Aviation Administration (FAA), DOT.
ACTION: Final rule.
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SUMMARY: This final rule amends FAA regulations to create additional
rules banning certain false or misleading statements about type-
certificated products, and products, parts, appliances and materials
that may be used on type-certificated products. This action is
necessary to help prevent people from representing that these items are
suitable for use on type-certificated products when in fact they may
not be. These rules are intended to provide assurance that aircraft
owners and operators, and persons who maintain aircraft, have factual
information on which to determine whether a product, part, appliance or
material may be used in a given type-certificated product application.
DATES: This amendment becomes effective October 17, 2005.
FOR FURTHER INFORMATION CONTACT: Beverly Sharkey, Suspected Unapproved
Parts Program Office (AVR-20), Federal Aviation Administration, 13873
Park Center Road, Herndon, Virginia 20171-3223; telephone (703) 668-
3720, facsimile (703) 481-3002, e-mail beverly.j.sharkey@faa.gov.
SUPPLEMENTARY INFORMATION:
Availability of Rulemaking Documents
You can get an electronic copy of this final rule using the
Internet by:
(1) Searching the Department of Transportation's electronic Docket
Management System (DMS) Web page (http://dms.dot.gov/search); (2) Visiting the Office of Rulemaking's Web page at http://
http://www.faa.gov/regulations_policies/; or
(3) Accessing the Government Printing Office's Web page at http://www.access.gpo.gov/su_docs/aces/aces140.html
.
You can also get a copy by putting in a request to the Federal
Aviation Administration, Office of Rulemaking, ARM-1, 800 Independence
Avenue SW., Washington, DC 20591, or by calling (202) 267-9680. Make
sure to identify the amendment number or docket number of this
rulemaking.
Anyone is able to search the electronic form of all comments
received into any of our dockets by the name of the individual filing
the comment (or signing the comment, if filed for an association,
business, labor union). You may review DOT's complete Privacy Act
statement in the Federal Register published on April 11, 2000 (Volume
65, Number 70; Pages 19477-78) or you may visit http://dms.dot.gov.
Small Business Regulatory Enforcement Fairness Act
The Small Business Regulatory Enforcement Fairness Act (SBREFA) of
1996 requires FAA to comply with small entity requests for information
or advice about compliance with statutes and regulations within its
jurisdiction. If you are a small entity and you have a question about
this document, you may contact your local FAA official, or the person
listed under FOR FURTHER INFORMATION CONTACT. You can find out more
about SBREFA on the Internet at http://www.faa.gov/regulations_policies/rulemaking/sbre_act/
, or by e-mailing us at 9-AWA-SBREFA@faa.gov.
I. Background
This final rule responds to a growing concern about how the
aviation community represents products, parts, appliances and materials
used on aircraft. This rule bans false or intentionally misleading
statements about the airworthiness of type-certificated products and
the acceptability of products, parts, appliances and materials for use
on type-certificated products.
Under FAA regulations, the person installing a product, part or
appliance on an aircraft is responsible for determining its
airworthiness. Because these individuals cannot determine airworthiness
simply by inspecting the item, they often rely on the information
provided by whoever sold it to them to support their airworthiness
decisions. This process ordinarily works well because most products,
parts and appliances are of the quality and condition described in
their records. However, there have been cases in which false or
misleading statements have led a person installing a product, part or
appliance to believe that it was suitable for a particular use when, in
fact, it was not. This creates a safety risk.
A similar process applies to the use of materials. When materials
are purchased, the buyer usually receives a certificate of conformance
or similar document that shows what industry standard the material was
produced to. In addition, these materials must meet the original
engineering design data and quality requirements. Therefore, the
records accompanying materials are critical for the buyer to determine
whether the materials are fit for installation on or for fabrication of
a product, part or appliance.
Currently, our regulations do not directly address false or
intentionally misleading statements about products, parts, appliances
and materials. In addition, it is difficult for the FAA to look into
many seemingly false or misleading statements because the FAA does not
regulate the distributors of products, parts, appliances and materials.
A. Summary of the NPRM
On May 5, 2003, the FAA published a notice of proposed rulemaking
(NPRM) entitled ``False and Misleading Statements Regarding Aircraft
Products, Parts and Materials'' (68 FR 23808; May 5, 2003). Of
particular concern to the FAA was representations made by the
distributors of products, parts, and materials marketed to the aircraft
industry. Such distributors may not be subject to existing
restrictions, because they may not possess a certificate or otherwise
be situated in a manner that would permit the FAA to pursue enforcement
action against them.
Records and representations related to the marketing of products,
parts, and materials that are limited to certain experimental or
military aircraft were not addressed by the NPRM. The FAA recognized
that these types of aircraft do not necessarily require airworthiness
certificates and that, to the extent such a certificate is not needed,
the proposed rule could have a dampening effect on the development and
continued operation of such aircraft.
In the NPRM, the FAA proposed additional rules that it argued would
help prevent misleading statements by extending existing prohibitions
on intentionally false or fraudulent statements currently addressed by
14 CFR 21.2, Falsification of applications, reports, and records, and
14 CFR 43.12, Maintenance records: Falsification, reproduction, or
alteration, and by 18 U.S.C. 38 and 18 U.S.C. 1001.\1\ The
[[Page 54823]]
NPRM also discussed the FAA's broad enforcement authority under 49
U.S.C. 40113.
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\1\ 49 U.S.C. 44726, also debars from FAA certification
individuals convicted of engaging in fraudulent dealings. The
statute also requires that current certificate holders who have been
so convicted have their certificates revoked. The statute also
permits the FAA to revoke a certificate absent a conviction if the
agency determines that the individual has committed acts that would
lead to a conviction if pursued criminally. This statutory provision
was not discussed in the NPRM.
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The NPRM specifically proposed to prohibit false or misleading
statements representing the airworthiness of a product for which the
FAA has issued a type certificate, or the acceptability of any part or
material for use on any product for which a type certificate has been
issued. The FAA has been particularly concerned about misleading
statements, i.e., those that are not necessarily false, but which
contain a material misrepresentation or omission that is likely to
mislead a consumer acting reasonably under the circumstances. Such
statements currently are not prohibited under the existing prohibitions
discussed briefly above.
The scope of the proposed new prohibition would apply to any record
transmitted to a potential consumer that made a representation as to
the airworthiness or acceptability of a part or material on a type-
certificated product. Such records most notably included advertisements
in the printed or electronic media, but also included those records
regularly relied upon by installers of equipment to ensure the
continued airworthiness of an aircraft.
The NPRM also proposed a requirement that if a person were to
express or imply that a product, part, or material met FAA
airworthiness standards, it must ensure that the statement was true or
else affirmatively state that the product, part, or material was not
produced under an FAA production approval.
Finally, the NPRM proposed regulatory language that would permit
the FAA to inspect aircraft and aircraft products, parts, or materials
to determine compliance with the proposed prohibitions.
B. Summary of Comments
The FAA received twenty-one comments in response to the proposed
rule. One comment was from a foreign regulatory body (Transport
Canada), one from a commercial carrier (Delta Airlines), and five from
private citizens in their own capacity. Additionally, eight comments
were submitted by aircraft or aircraft parts manufacturers or
distributors (Midcoast Aviation, Cougar Helicopters, Boeing, Skybolt
Aeromotive Corp. (Skybolt), General Electric Aircraft Engines (GEAE),
Cessna, Airbus, and United Technologies Corp. (UTC)), with the
remaining six comments filed by various aviation-related trade
associations (European Association of Aerospace Industries (AECMA),
Regional Airline Association (RAA), Aerospace Industries Association
(AIA), Aeronautical Repair Station Association (ARSA), Aviation
Suppliers Association (ASA), and Aircraft Electronics Association
(AEA)).
In general, the commenters expressed broad support for a
prohibition against false statements regarding type-certificated
products and parts and materials that may be used on type-certificated
products. Fifteen of the commenters expressed general support for the
efforts and objectives of the FAA in proposing the rule. Despite this
support for the rule's objectives, most of these commenters also
recommended specific changes to the final regulatory language. In
particular, significant concern was raised about the aspect of the NPRM
addressing statements that are misleading rather than factually false
and enforcement action against statements made in advertisements. A
more detailed discussion of the recommended changes is provided in the
substantive discussion of today's rule.
Two commenters, Delta Airlines and RAA, did not express support for
the proposal one way or the other, but offered specific comments on
limited aspects of the proposal. Cessna merely commented that it had no
comments or recommendations on the proposal.
Two of the remaining commenters, both private citizens, generally
opposed the rulemaking, averring that they believe the FAA could use
its resources better and the proposed rule is not needed because other
rules adequately address the prohibition of false and misleading
statements. The sentiment that there was no need for the proposed rule
was echoed by ASA and AEA.
Midcoast Aviation commented that the Civil Aviation Regulations
already had a part 3, the part proposed to house this final rule. The
Civil Aviation Regulations were recodified in the early 1960s as FAA
regulations and were renumbered under the numbering system used in the
new regulations. Accordingly, there is no conflict in adopting a new
part 3, and this comment will not be discussed further.
II. Discussion of the Final Rule
A. Summary of the Final Rule
Today's final rule extends the prohibition on fraudulent or
intentionally false statements beyond those now covered by Title 14,
Code of Federal Regulations (14 CFR) parts 21 and 43. In addition, it
provides a regulation prohibiting intentionally misleading statements
that, if violated, can be addressed by FAA enforcement action.
As discussed more fully below, the FAA has decided against
requiring a disclaimer that a particular product was not produced under
an FAA production approval if the individual marketing the product does
not have specific records specifying that a production approval was
given. The FAA recognizes that this provision was unnecessarily
burdensome. Likewise, the general applicability section has been
dropped because it was unnecessary. Finally, the FAA has decided
against adopting an inspection requirement, because the agency already
has general inspection authority.
B. Need for the Final Rule
The FAA is issuing this final rule because it has determined that
the installation of products, parts, appliances and materials that are
mistakenly believed to be airworthy or suitable for installation on
type-certificated products creates an unacceptable risk to aviation
safety. The FAA believes that part 3 will improve safety because it:
(1) Fills gaps in the legal and regulatory structure by extending
the prohibition on fraudulent or intentionally false statements beyond
those now covered by parts 21 and 43;
(2) Creates a new standard to determine what constitutes
``misleading;'' and
(3) Provides a means for the FAA to investigate possible violations
of part 3.
Two commenters, ASA and AEA, stated that the NPRM proposed new
duties that the FAA will have difficulty meeting. They contended that
this rule imposes a duty on the FAA to go after commercial speech
violations that may have little or nothing to do with safety issues.
They also argued that regulation of commercial speech is not within the
FAA's core mandate and is duplicative of the Federal Trade Commission's
(FTC) role.\2\
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\2\ The commenters argued that the FAA lacked the legislative
mandate to duplicate the functions of the FTC, citing the
requirement in 49 U.S.C. 44726 that the FAA automatically revoke the
certification of a certificate-holder convicted of fraud in a
criminal proceeding without additional hearing and subject to a
limited request by law enforcement personnel. The FAA does not
believe this example indicates any intent on the part of Congress to
constrain the FAA in the manner suggested by ASA and AEA. This
statutory provision applies only to individuals who have already
been convicted of fraud by a court of competent jurisdiction and
mandates that the FAA take certain action as a result of this
conviction. By the same token the statute requires the Administrator
to revoke a certificate if she determines that the certificate
holder knowingly, and with the intent to defraud, engaged in conduct
that rises to the level of a criminal act, even if no conviction
results from that act.
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ASA and AEA suggested there are other administrative and law
enforcement agencies, including the FTC, that address fraud adequately.
ASA and AEA contended the FAA is ``ill-prepared'' to enforce rules that
regulate commercial speech, as the FAA lacks the technical expertise to
enforce commercial speech properly. They also pointed out the FAA has
not shown that these agencies have failed to respond adequately to
fraud and related issues in the aviation industry. Rather, they
suggested that the creation of part 3 may divert the resources of these
other agencies to non-aviation issues, potentially resulting in a
diminution in aviation safety. ASA and AEA also stated there is no need
for part 3 because 18 U.S.C. 38 already covers aircraft parts fraud.
Records containing false or intentionally misleading statements
about the quality of aircraft products, parts, appliances and materials
have a potentially large impact on the safety of the flying public. It
is the FAA's responsibility to write and enforce rules, as needed, to
ensure the aviation community upholds the highest levels of safety. The
FAA has determined that existing laws and regulations only partially
cover the problems addressed by this rule. Although the FTC and other
administrative and law enforcement agencies have undoubtedly enforced
their regulations against fraud, the FAA notes that part 3 is more
comprehensive and believes it will be a greater deterrent against false
and intentionally misleading statements affecting aviation.
The FAA acknowledges that 18 U.S.C. 38 covers aircraft parts fraud.
However, part 3 goes further. It creates an administrative enforcement
scheme similar to those in parts 21 and 43. The FAA believes this
approach will better protect against a potential safety hazard because
the FAA may seek to impose civil penalties rather than straining the
limited resources of the Federal courts.
In the NPRM, the FAA discussed the possible compliance and
enforcement action for violations of part 3. These actions range from
counseling and corrective action, civil penalties, suspensions or
revocation of an FAA certification, to criminal investigation. The
action taken by the FAA will depend on all the circumstances of the
violation. Each violation will be considered on a case-by-case basis
and the FAA will decide at that time whether to pursue criminal
prosecution.
It is important to note that the FAA cannot institute criminal
charges. We refer a case to the Department of Transportation Office of
the Inspector General or the appropriate law enforcement authorities
when the circumstances warrant. The ultimate decision of whether to
pursue criminal prosecution is solely up to the law enforcement
authorities. The FAA uses criminal prosecution referrals as a means to
enforce its regulations about suspected unapproved parts. Currently, 54
of the 236 open cases in this area (approximately 23%) are under review
or investigation by law enforcement agencies. While not a direct
correlation, we believe this shows how seriously we take violations in
this area. The FAA intends to use criminal prosecution in much the same
manner in enforcing the provisions of part 3.
The FAA has the expertise necessary to enforce this rule properly.
The FAA modeled Sec. 3.5(b) on false and fraudulent statements on
similar rules elsewhere in the regulations (Sec. Sec. 21.2, 43.12,
61.59, and 65.20). These rules have been in existence for some time and
the FAA has had experience and success in enforcing these regulations.
We are confident that we can apply the expertise we gained in enforcing
these other regulations to effectively enforce Sec. 3.5(b).
As to the enforcement of intentionally misleading statements, the
FAA believes the FTC's regulatory approach to deceptive advertising
provides an excellent model for Sec. 3.5(c). Therefore, we will rely
heavily on the precedents established by the FTC in resolving
interpretative issues that may arise in enforcing this section. To
ensure that the FAA's inspectors are fully versed in the FTC's
regulatory approach to deceptive advertising, the FAA will develop
guidance material and train its inspectors on the FTC's established
criteria and precedents. By relying on the FTC's extensive background
in this area, the FAA is confident that its personnel will be able to
work efficiently and effectively with this new rule.
RAA and GEAE stated that part 3 will subject persons now covered by
parts 21 and 43 to duplicative rulemaking. ARSA agreed, stating that
Sec. Sec. 21.2 and 43.12 already ban intentionally false and
fraudulent statements by maintenance providers, design approval holders
and production approval holders.
The FAA does not agree that part 3 creates duplicative rulemaking
with parts 43 and 21. As for part 43, Sec. 43.12 only bans fraudulent
and intentionally false statements in records made to show compliance
with part 43. There is no prohibition against misleading statements.
The FAA recognizes the potential overlap between Sec. 43.12 and Sec.
3.5(b). This is why Sec. 3.1 excludes records made under part 43 from
the terms of Sec. 3.5(b). As for part 21, Sec. 21.2 bans fraudulent
and intentional statements. However, Sec. 21.2 limits this ban to
applications for certificates or approvals under part 21, and on
records that are kept, made, or used to show compliance with part 21.
While Sec. 21.2 does address some of the terms in Sec. 3.5(b), it
does not cover all records used by brokers, dealers, and other persons
who are distributing and selling products, parts, appliances and
materials, but who do not produce those items. Since Sec. 21.2 only
bans fraudulent and intentionally false statements, the prohibition
against misleading statements in Sec. 3.5(c) would not apply.
C. Applicability of the Final Rule
Today's rule is applicable to any person who makes a record that is
conveyed to another person when there is an associated potential for
compensation if the record relates to a type-certificated product or a
product, part, appliance or material that may be used on a type-
certificated product. It does not apply to those experimental aircraft
or military aircraft that are not otherwise type certificated.
Originally, the FAA had proposed two applicability sections, one
that generally related to persons ``engaged in aviation-related
activities,'' and a second that applied to any records about type-
certificated products or part and materials that may be used on
certificated products. The intent behind two different applicability
sections was to permit the addition of other general requirements into
part 3 without amending the applicability section. Based on the
comments to the NPRM, we have decided that the regulation would be
clearer with a single applicability section. Accordingly, the final
rule only adopts the narrower language proposed to address false and
intentionally misleading statements.
We have, however, made several changes to that narrower
applicability language. First, we have changed the section to reflect
that the rule applies to persons who make certain records as opposed to
the records themselves. Part 1 of the FAA regulations sets forth the
general definitions that apply to Subchapters A through K of Chapter 1
of the FAA regulations. These definitions will apply to part 3. Under
this section a ``[p]erson means an individual, firm, partnership,
[[Page 54825]]
corporation, company, association, joint-stock association, or
governmental entity. It includes a trustee, receiver, assignee, or
similar representative of any of them.'' In addition, the FAA intends
to apply part 3 both to persons currently subject to FAA regulations
and to those who are not currently directly regulated by the FAA.
Second, we have added language to Sec. Sec. 3.5(a) and 3.5(b) limiting
the applicability of those sections to only those records conveyed to
another person when there is a potential or actual sales transaction.
This refinement has been added to address commenters' concerns that the
rule could apply to in-house records with mistaken entries or related
to internal investigations of parts, as well as records drafted in
response to an FAA inquiry regarding new designs. The intention behind
part 3 is not to penalize honest mistakes or to stifle internal
investigations. It is to stop the practice of providing consumers with
false or intentionally misleading statements that indicates a product,
part, appliance or material is suitable for installation on a type-
certificated aircraft when, in fact, it is not. We believe this
refinement meets that need without unnecessarily restricting the
communications of those persons engaged in the aviation business.
AEA, ASA, AECMA and Airbus had all suggested alternative language
that would have limited part 3 to those records that could be
reasonably relied upon by a person making a determination that could
affect the airworthiness of the aircraft or other conformity to type
design or the safety of flight. We decided against this approach
because we believe it would prove overly restrictive. As discussed in
greater detail below, we remain concerned that some individuals may
rely on information conveyed in an advertisement to their detriment. We
do not believe it would ever be reasonable for an installer to rely on
an advertisement as evidence of airworthiness or suitability for
installation on a type-certificated product. However, the individual
purchasing a particular product may not be the installer of the
product. Persons selling aviation products should not be allowed to
prey upon the inexperience of these uninformed consumers.
GEAE commented that the rule should not apply only to type-
certificated aircraft. GEAE suggested the rule apply to any aircraft,
no matter what category or class, civil or public. In addition, GEAE
expressed uncertainty about the rules applicability to amateur-built
aircraft since amateur-built aircraft have both a type and
airworthiness certificate. GEAE also noted there is no such type or
class of aircraft as ``military aircraft.'' There are only civil
aircraft and public aircraft. GEAE wanted the final rule to use the
correct terminology.
Part 3 does not apply to any aircraft for which the FAA has issued
an experimental airworthiness certificate, unless the FAA had
previously issued a different airworthiness certificate for that
aircraft. In addition, amateur-built aircraft do not have type
certificates, only experimental airworthiness certificates. The NPRM
contained a detailed discussion about the rationale for excluding
experimental aircraft from this rule.
We recognize that military aircraft are public aircraft. However,
unlike aircraft developed specifically for use by the military, other
public aircraft are used much like civil aircraft. The distinction
between the two lays not so much in their design and use
characteristics as in their ownership status. We believe the aviation
industry understands our distinction between military aircraft and
other, type-certificated aircraft. Part 3 does not apply to products,
parts, appliances and materials that are for military aircraft and are
not represented to be acceptable for civil application. However, if
records for a military product, part, appliance or material represent
that they are acceptable for use in type-certificated products, part 3
would then apply.
Some former military aircraft have been put into civil use and are
now operated on a special or standard airworthiness certificate. Some
unique products, parts, appliances and materials that otherwise are
only manufactured for military designed aircraft may be needed to
maintain these aircraft. Records about these products, parts,
appliances and materials should not state or imply that they are
acceptable for use in type-certificated products, other than the
product for which acceptability has been determined.
D. Lack of Specificity of Regulatory Terms
1. Record
The rule defines the term ``record'' broadly. We did this to
include any means that communicates the airworthiness of a type-
certificated product, or the acceptability of a product, part,
appliance or material for use on type-certificated products. The FAA
believes that a broad definition is the best means to ensure that
aircraft owners, operators, producers, mechanics, and repairmen are
relying on accurate information when making a determination about
airworthiness.
In fact, after further review, the FAA believes the definition
proposed in the NPRM is not broad enough. The technologies used to
convey information are constantly changing and the proposed language is
presented as a list. Therefore, any item not on this list would not be
a ``record'' under part 3. Finally, the proposed definition of
``record'' is confusing because it presents two separate definitions.
Based on the comments received and the FAA's further review of part
3, we changed the final rule to include a definition of the word
``record'' to capture all existing and future means of communications.
The definition now reads as follows:
``Record means any writing, drawing, map, recording, tape, film,
photograph or other documentary material by which information is
preserved or conveyed in any format, including, but not limited to,
paper, microfilm, identification plates, stamped marks, bar codes or
electronic format, and can either be separate from, attached to or
inscribed on any product, part, appliance or material.''
AIA believes the broad definition of a ``record'' may reduce the
quality of technical support provided to customers in the field. AIA
believes that technical support personnel may limit their help and
opinions for fear the FAA may cite them for violating Sec. 3.5.
In analyzing the commenter's position, the FAA cannot understand
how the prohibition against fraudulent or intentionally false
statements might ``reduce the quality of technical support provided to
customers in the field.'' No one should encourage technical support
personnel to make fraudulent or intentionally false statements. This
rule only codifies what should be a common and accepted practice within
the technical support field.
As for intentionally misleading statements, the FAA understands
that this definition could constrain technical support personnel from
offering pure opinions about the airworthiness or acceptability of
products, parts, appliances and materials. However, this is not
necessarily a negative result. Technical support personnel should not
make claims about their products, parts, appliances and materials
unless appropriate records support these claims. These individuals
should only state known facts about their products, parts, appliances
and materials. These individuals should avoid unsupported opinions to
eliminate the potential for the improper use of their products, parts,
appliances and materials.
[[Page 54826]]
2. Airworthy
ASA and AEA noted that the rule contains no clear description of
what ``airworthy'' means. According to these commenters, this lack of
specificity rendered the proposed regulation unconstitutionally broad.
We are adopting a definition of airworthy that is consistent with the
FAA's existing position and with the criteria established by the NTSB,
namely that an aircraft is unairworthy if ``the airframe [is] not in
its original certificated or properly altered condition.'' Under the
definition adopted today, an aircraft must conform to its type design
and be in a condition for safe operation in order to be airworthy.
3. Acceptable for Installation
ASA and AEA assert there is even less certainty about the meaning
of ``acceptable for installation.'' UTC echoed this concern.
There are various ways to prove that a product, part, appliance or
material is ``acceptable.'' The most common is for it to be an approved
product, part, appliance or material. Under part 1, the term
``approved'' means approved by the Administrator and, in this context,
means a production approval holder (PAH) or a PAH approved supplier
produced the product, part, appliance or material.
Used products, parts and appliances must be maintained in
accordance with FAA regulations to be acceptable. This arises from
Sec. 43.13, which requires the condition of the product, part or
appliance used in maintenance is at least equal to its original or
properly altered condition. In many instances, it will be quite easy
for a regulated party to demonstrate that a product, part or appliance
is suitable for installation. This is because many of these items are
already required to be marked. For those items for which no FAA marking
is available, a regulated party could still argue that the item is
acceptable for installation and provide whatever documentation it has
to support its argument.
4. Material
AIA, Transport Canada and UTC requested the FAA add a definition of
the word ``material'' to the rule. GEAE likewise requested
clarification that the term did not refer to specific metallurgical
properties. The aviation industry normally uses the word ``material''
to refer to the substances of which something is made or composed. This
includes such things as sheet metal, unformed wood and bolts of fabric.
For purposes of part 3, the FAA intends for the word ``material'' to be
used in a manner consistent with the FAA's enabling statute, the FAA
regulations, and with common industry practice.
5. Parts
Transport Canada and UTC also requested the FAA include a
definition of the word ``parts.'' Transport Canada recommended we use
the same definition that is in Sec. 21.1(b). As we explained in the
NPRM, there are various words and phrases used to describe ``parts''
throughout the FAA's enabling statute and regulations. Some of these
words and phrases include appliance, equipment, apparatus, component,
accessory, assembly, airframe, and appurtenance. The aviation industry
often uses the term ``part'' broadly to refer to anything that is, or
could be, used as a piece of an aircraft, aircraft engine, or
propeller, including appliances and component parts. However, the FAA
recognizes that the word ``part'' is also listed as a subpart of the
term ``appliance'' in Sec. 1.1. This section sets forth the general
definitions that are used in Subchapters A through K of Chapter I of
the FAA's regulations. Based on this, someone could make the argument
that part 3 does not apply to an ``appliance'' or any of the other
items listed in the definition of the word ``appliance.'' Therefore, we
changed Sec. 3.1 to reflect that part 3 also applies to appliances.
E. Application of the Final Rule on Advertisements
We have decided to retain the proposed prohibition against false or
intentionally misleading statements in advertisements. The application
of today's rule to such commercial speech was the subject of
considerable comment on the NPRM.
While Boeing and the AIA did not question the general authority of
the FAA to impose and enforce this rule, they questioned the
jurisdiction of the FAA over advertisements. Boeing stated its belief
that advertisements are not within the FAA's jurisdiction. Since
advertisements have never been recognized as legitimate evidence of
airworthiness, Boeing believes that the FTC and the marketplace should
continue to regulate advertisements.
UTC raised a concern about defining a ``record'' to include
advertisements. UTC averred that this will lead to many subjective
judgments when applying the terms of part 3 to advertisements. Boeing,
AIA, and one individual commenter argued that FAA should exclude
advertisements from the definition of a ``record'' because
advertisements are invalid documents for showing airworthiness.
Under 49 U.S.C. 44701, the Administrator has the authority to
prescribe those regulations and minimum standards for practices,
methods, and procedures the Administrator finds necessary for safety in
air commerce. This legislative authority and the meaning of air
commerce are broad enough to give the FAA the power to issue rules that
affect commercial speech, including advertisements, if that speech
threatens to have an adverse impact on aviation safety.
We agree that aircraft parts installers should not rely on
advertisements in determining whether a particular product is airworthy
or appropriate for installation on type-certificated aircraft. However,
we are also aware of instances where products have been purchased
because of false or misleading advertisements and have subsequently
been installed on aircraft. The risk of improper installation is
particularly high when the product is shipped without the appropriate
documentation or with no information as to suitability other than a
series of numbers, the accuracy or presence of which could be easily
overlooked.
The FAA's approach to aviation safety must, of necessity, be multi-
faceted. While it is possible that the inappropriate part may be
discovered during an inspection of a particular aircraft, it is also
quite likely that it will not. Even if discovered, the aircraft may
have been in operation with the inappropriate part for some time. If
the FAA can prevent the sale of inappropriate products though
enforcement action against false or intentionally misleading
advertisements, then it logically will reduce the likelihood that the
product will ever be installed on a type-certificated aircraft.
Additionally, as discussed above, the purchasers of these products
may be insufficiently informed to understand that certain
representations made in advertisements may be misleading. Thus, they
may purchase a product, not knowing what additional documentation is
needed to ensure the product is appropriate for use on their aircraft.
While an installer may refuse to install a product because it is not
accompanied by the appropriate documentation, thus diminishing the
safety risk, the aircraft would remain out of service until an
appropriate product was procured.
The standards for reviewing a potential violation of part 3 in an
advertisement will be the same as the
[[Page 54827]]
standard applied to a review of any other ``record.'' As stated above,
the FAA believes the FTC's regulatory approach to deceptive advertising
is an excellent model for this proposal. Therefore, we will rely
heavily on the precedents established by the FTC in resolving
interpretative issues that may arise when applying this rule. To ensure
that FAA inspectors are fully versed in the FTC's regulatory approach
to deceptive advertising, the FAA will develop guidance material and
train its inspectors on the FTC's established criteria and precedents.
By relying on the well-established foundation provided by the FTC, the
FAA is confident that its personnel will be able to apply the standards
of this rule uniformly.
F. Prohibition on False and Fraudulent Statements
Other than arguing that there was no need for additional
regulations governing false and fraudulent statements and the
applicability of any prohibition to advertisements, the commenters
generally supported the FAA's proposal to prohibit such statements. We
have already addressed both of these objections, and have decided to
adopt the prohibition as proposed.
One individual commenter did suggest that any fraudulent statement
is intentionally false by definition, and recommended the FAA drop
``fraudulent'' from the regulatory language. We have decided against
this recommendation because retaining the term provides us with greater
flexibility in pursuing enforcement actions.
As we explained in greater detail in the NPRM, an intentionally
false statement consists of (1) a false representation, (2) in
reference to a material fact, (3) made with knowledge of its falsity. A
fraudulent statement consists of these three elements, plus (4) it was
made with the intent to deceive, and (5) action was taken in reliance
upon the representation. For purposes of part 3, the FAA considers
``intentionally false'' and ``fraudulent'' statements to be two
separate categories.
UTC wanted the standard the FAA uses to determine ``fraud'' to
stress a knowing and willful intent to deceive or trick. As discussed
above, for a statement to be fraudulent under Sec. 3.5(b)(2), it must
meet five criteria, one of which is the intent to deceive. The FAA
agrees with the commenter that intent to deceive is a critical element
of fraud. However, the FAA will not stress this over any of the other
four requirements. All five must be present for the FAA to find that a
fraudulent statement has been made.
G. Prohibition on Intentionally Misleading Statements
The FAA believes statements that meet the rule's criteria for being
``misleading'' under this rule are just as likely to adversely impact
aviation safety as false statements. Based on this conclusion, the FAA
has decided to adopt the prohibition against misleading statements with
certain changes. First, we have adopted a scienter requirement. Second,
we have omitted the requirement that airworthiness or suitability for
installation be demonstrated through the presentation of acceptable
records. Third, we have replaced the specification that a statement be
express or implied by simply prohibiting a material representation or
omission, either of which could mislead through an express or implied
statement. Finally, we have added the legal requirement for
demonstrating a misleading statement to the regulatory text. As
drafted, the proposed text did not directly link the regulated party's
action to a misleading statement.
ASA and AEA stated that the reliance on records in these sections
is problematic, because the FAA has published no clear standard about
what records are sufficient. They added that the FAA compounds this
problem by not having any general requirements for parts documentation,
and by not publishing standards for what is acceptable or not
acceptable among commercial documents. In addition, ASA and AEA pointed
out there is no FAA regulation or uniform industry standard for what
must be included in commercial documentation about parts. The
commenters argued that this lack of specific guidance renders the
prohibition against misleading statements overbroad.
Several commenters raised issues about the term ``misleading.''
Boeing averred that ``misleading'' is vague for regulatory enforcement.
In a similar vein, GEAE and UTC posited that the FAA could use the
proposed rule against people who make ``honest'' or ``legitimate''
mistakes. AIA recommended this section only apply when a person
intentionally or knowingly misleads. UTC agreed with AIA, while
requesting the additional requirement of willfulness. UTC would further
restrict this standard to records relating to FAA approval status.
ARSA stated that evaluating whether a statement is misleading
injects a far greater degree of subjectivity into the determination,
resulting in an ambiguous and poorly defined standard. Therefore, ARSA
recommended withdrawing this section and limiting part 3 to only a
prohibition of conduct that is intentionally false or fraudulent.
ASA and the AEA objected to the proposed language stating that the
misleading statement could be the result of an express representation
or could be through implication. They argued that no objective standard
exists for industry to know when a communication is considered to
``imply'' a fact.
In the NPRM, we discussed how we consulted with the FTC in
developing Sec. 3.5(c). We also set forth the rationale underlying the
standard the FAA will use to determine if a record is ``misleading.''
For purposes of this rule, a misleading statement requires:
(1) A material representation or omission;
(2) That is likely to mislead the consumer; and
(3) The consumer is acting reasonably under the circumstances.
The FAA does not believe that this standard is vague, ambiguous or
poorly defined for enforcement purposes. The FTC has successfully
enforced its misleading statement terms \3\ for years using this same
standard. While it is true that there is no established aviation-
specific caselaw on the prohibition against misleading statements, the
existing FTC caselaw provides ample fact-scenarios that are comparable
to what one would see in the aviation community. Equally important,
enforcement actions are undertaken by attorneys capable of applying the
legal standard.
---------------------------------------------------------------------------
\3\ The term ``false advertisement'' is defined at 15 U.S.C.
55(a)(1) as ``an advertisement, other than labeling, which is
misleading in a material respect, and in determining whether any
advertisement is misleading, there shall be taken into account
(among other things) not only representations made or suggested by
statement, word, design, device, sound, or any combination thereof,
but also the extent to which the advertisement fails to reveal facts
material in the light of such representations or material with
respect to consequences which may result from the use of the
commodity to which the advertisement relates under the conditions
prescribed in said advertisement, or under such conditions as are
customary or usual.''
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We believe much of the concern over the proposed standard arose
from our assessment that the proposed prohibition lacked a scienter
requirement. While an intentionally false statement requires knowledge
of its falsity, we posited that a misleading statement does not require
knowledge that it is misleading. In addition, under the proposal, there
was no requirement that there be an intent to deceive when making
misleading statements.
The FAA is concerned whether a representation is likely to mislead
rather
[[Page 54828]]
than whether it causes actual deception. Accordingly, we argued in the
NPRM that there was no need to show actual intent in taking an
enforcement action. We have reevaluated our position. We believe the
burden of showing that a person intentionally made a statement knowing
it could be misleading to a reasonable person is one that should be
borne by the enforcement agency. The ultimate assessment of whether the
requisite intent exists lies with the finder of fact. While this change
in position adds significantly to the FAA's enforcement burden, our
previous position arguably amounted to a strict liability standard in
which ambiguous statements automatically exposed one to an enforcement
action.
Thus, the FAA will consider all factors before deciding what
enforcement action is necessary. Generally, we would first contact the
person and discuss why the statement in question appears to be
misleading. If the person who made the record in question can show a
mistake was made, and such mistake was honest or legitimate, the FAA
will not take enforcement action. However, if the statement is not
corrected so as to remove its misleading character, or the mistake is
one in a series of such mistakes, the FAA will presume knowledge on the
part of the person sufficient to take enforcement action.
We have also removed the proposed requirement that an individual
demonstrate to the FAA the airworthiness or suitability for
installation on a type-certificated product through records. We
recognize that there may be other ways to demonstrate airworthiness or
suitability and that there is no clear standard regarding what types of
records are acceptable. The basis for showing airworthiness or
suitability for installation is one of the factors that would be
considered by the finder of fact in making a determination that a
statement is misleading.
The word ``imply'' and its variations are used in law to contrast
the term ``express.'' An implication occurs where the intent of the
communication about the subject matter is not expressed by clear and
direct words. Instead, the intent of the communication is determined by
implication or necessary deduction from the circumstances, the general
language or the conduct of the parties.
However, we believe it is clearer to refer to the actual
representation that is made rather than arguing over whether such
representation was express or implied. In most cases, the aspect of the
representation that is misleading will be implicit rather than
explicit. Explicit statements may be more likely to be outright false
rather than misleading. Accordingly, we have changed the language of
Sec. 3.5(c) to prohibit a person from representing that a product is
airworthy or suitable for installation on a type-certificated product
unless that person can demonstrate airworthiness or suitability of the
particular product in question.
H. Statements Regarding FAA Airworthiness Standards
The FAA has decided against adopting the proposed restrictions on
statements that a product, part or material meets FAA airworthiness
standards. We had proposed that such statements must be supported by
the appropriate documentation. In the absence of such documentation,
the person holding out the product would be required to state that the
product was not produced under an FAA production approval or, if a
standard part, the part conformed to established industry or United
States specifications.
The FAA received numerous objections to this proposed requirement.
Two major areas of concern were owner-operator produced parts and
foreign-manufactured products regulated by the FAA via bilateral
agreements. Since neither of these categories of products are ``FAA
approved,'' commenters, including Delta Airlines, ARSA, Airbus, AECMA,
and Transport Canada, noted that a declaration that there was no
approval would be both misleading and detrimental to the sale of these
parts.
ASA and AEA argued that the proposed requirement created vague
standards and required reliance on historical information concerning
production approval that is not uniformly maintained and which is not
otherwise legally required. In addition, they stated that the proposed
requirement relied on airworthiness as a standard for demonstration
when the term airworthy remains undefined in the regulations.
Transport Canada noted that the statement that a part is not
produced under a production approval provides no indication of the
consequences of that statement. Transport Canada wanted the FAA to
identify the consequences and require that the consequences are part of
the statement required under the proposed requirement.
Based on these comments, the FAA has decided not to adopt the
proposed requirement. Part of the problem is that the proposed
regulatory language did not cover all the means by which a product,
part, appliance or material can meet FAA airworthiness standards.
The FAA has tried to redraft this section's language and has
considered many options. However, none of these fix the problem. The
goal of part 3 is to prevent certain false and misleading statements.
The removal of this proposed requirement does not affect the ability of
part 3 to achieve this goal effectively and efficiently. The proposed
rule included the requirement to provide some guidance on what the FAA
might look for when enforcing part 3. However, the FAA recognizes that
this guidance was confusing, was not complete, and detracts from the
other terms of part 3. Therefore, it has been removed from the final
rule.
Several of the comments expressed the need for clarification about
the applicability of part 3 to products, parts, appliances and
materials imported to the U.S. under part 21, subpart N and to owner-
operator produced products, parts, appliances and materials. The FAA
wants to clarify that part 3 applies to all products, parts, appliances
and materials imported to the U.S. under part 21, subpart N and all
owner-operator produced products, parts, appliances and materials.
While the FAA recognizes the difficulty in enforcing part 3 against
foreign entities, the FAA believes that no product, part, appliance or
material, regardless of its origin, should be excluded from the terms
of part 3. By the same token, persons selling these products should be
able to rely on the provenance created by bilateral agreements to
defend themselves against any claims that they misrepresented that
products were airworthy or suitable for installation on a type-
certificated product.
I. FAA Authority To Investigate
ASA and AEA averred that the proposed inspection requirement, which
stated that each person for whom the FAA could seek enforcement action
for a misleading statement would have to make all records and product
available for inspection violates the Fourth Amendment prohibition
against unreasonable searches. They each argued that this prohibition
precludes warrantless intrusions pursuant to civil or criminal
investigations unless some recognized exception to the warrant process
applies. Since the FAA has failed to identify an exception to the
standard warrant process, ASA and AEA object to this section, arguing
it allows unconstitutional searches.
We have decided against adopting the proposed investigatory
language because we have determined that the FAA's existing authority
to issue a
[[Page 54829]]
subpoena is sufficient to conduct investigations under this rule.
Additionally, the FAA has determined the inclusion of the proposed
language could be interpreted as an attempt by the FAA to extend its
investigatory authority through regulation beyond any statutory
constraints.
Under 49 U.S.C. 40113, the Administrator has authority to conduct
investigations that she considers necessary to carry out her duties
relating to air commerce and safety. Also, 49 U.S.C. 46101(a)(2) grants
the Administrator authority to conduct an investigation about a person
violating the air commerce and safety provisions of Title 49 if
reasonable grounds appear for the investigation. These provisions give
the FAA authority to conduct investigations against all persons, even
non-certificate holders.
The purpose of this rule is to improve air safety by preventing
people from representing that any product, part, appliance or material
is suitable for use on any type-certificated product when, in fact, the
product, part, appliance or material may not be. Therefore, under the
above sections of the United States Code, the FAA has authority to
conduct investigations when it becomes aware of possible violations of
this rule.
The FAA is not asserting that it has the right to enter these
businesses and inspect products, parts, appliances, materials and their
records at will or by force. If a person fails to comply voluntarily
with a request to produce records or a request to permit an inspection
of a product, part, appliance or material, the FAA may get a subpoena
to compel compliance.
UTC raised a concern that the proposed language would have allowed
the FAA to copy any records, including valuable commercial documents.
UTC is concerned that these documents would then be available to UTC's
competition through a filing under the Freedom of Information Act
(FOIA).
Exemption 4 of FOIA protects ``trade secrets and commercial or
financial information from a person that is privileged or
confidential.'' The intent of this exemption is to protect the
interests of both the FAA and the owners of such information. To the
extent a FOIA request is received for any information that may be
proprietary in nature, the FAA routinely asks the affected business to
review the FOIA request and assert any privilege that may apply under
exemption 4. The process would be no different for these records.
J. FAA Resources To Investigate
ASA and AEA argued the FAA is ``ill-prepared'' to enforce
regulations that regulate commercial speech because of a lack of
resources. Both commenters contended this rule will create a
significant resource allocation problem since the FAA does not have
enough resources to perform its current tasks.
Another commenter, an individual, agreed with ASA and AEA. This
commenter stated the FAA would use its resources better by conducting
surveillance on installers and manufacturers.
The FAA has the resources necessary to enforce this rule properly.
The FAA expects that most violations of part 3 will arise as a result
of:
(1) Reports made to the FAA by parties who relied on a false or
misleading statement in the purchase or installation of a product,
part, appliance or material; or
(2) Findings resulting from an FAA inspection or investigation that
FAA conducted for other purposes.
We already receive these kinds of complaints and make findings
based on the results of our investigations. Therefore, the resources
needed to look into these cases will not be significant. In addition,
the FAA believes that, with time, the existence of part 3 will
effectively deter most people from issuing records that violate part 3.
Finally, the FAA does not believe that FAA surveillance of
installers and manufacturers for violations of part 3 would be a good
use of its resources. Surveillance for violations would require
significantly more resources than enforcing part 3. In addition, the
commenter has not provided any data to indicate that this approach
would be more effective in addressing the issues covered by part 3.
K. Miscellaneous Items
1. Inclusion of Fluids
The proposed rule did not cover records about fluids. As part of
the NPRM, the FAA sought comments on whether there is a significant
problem with false or misleading records about fluids used in aviation.
In addition, the FAA sought comments about whether the final rule
should apply these records.
In response to this request, the FAA received three comments and
all supported including fluids in the final rule. GEAE noted there is
not a significant problem with records on fluids. However, GEAE
believed the final rule should cover these records to be proactive.
Boeing and AIA each stated the final rule should cover fluids since
improperly represented fluids could detrimentally affect the
airworthiness of aircraft.
The FAA thanks those commenters that supplied comments about
including fluids in the final rule. The FAA recognizes that false or
misleading records about fluids could have a harmful affect on safety.
Therefore, the FAA is considering the issues raised by these comments
and the choices available to regulate these records. However, because
of the complexities of these issues, the FAA does not want to delay
issuing this final rule while the FAA analyzes these issues. Therefore,
the final rule will not cover records about fluids.
2. Quality Escapes and Production Overruns
GEAE and AIA raised concerns about the impact of this rule on
quality escapes. Boeing had a similar concern about production
overruns. These commenters worried that the intent of this rule is to
``outlaw'' production overruns and to penalize those individuals
associated with quality escapes.
For purposes of this rule, the FAA is not concerned with how a
product, part, appliance or material was produced or entered the pool
of available products, parts, appliances or materials. Other FAA
regulations address the implications of and ramifications arising from
quality escapes and production overruns. This rule only applies to what
is in the records that go with such products, parts, appliances or
materials. If any record is false or intentionally misleading, a
violation of this rule will occur as long as the record is disseminated
for the purpose of supporting or effecting a commercial sale of a
covered product, part, appliance, or material. The history of the item
in question is irrelevant.
3. Increased Costs Associated With Compliance
ASA and AEA contend the records requirement of Sec. 3.5 will have
a tremendous financial impact. ASA and AEA believe that many parts in
current inventories do not have records. In these cases, an installer
is able to make a determination about airworthiness based on the
testable physical characteristics of the part. ASA and AEA believe that
these ``record-less'' parts could not be sold according to part 3.
Part 3 does not create record requirements for selling products,
parts, appliances and materials. These standards exist in other FAA
regulations. This rule only sets forth
[[Page 54830]]
standards about the contents of the records for products, parts,
appliances and materials. Therefore, part 3 does not govern the
possible sale of ``record-less parts.'' However, once these products,
parts, appliances and materials have records, these records must comply
with part 3. We note that any concerns about ``record-less parts''
should be further eased by the removal of the requirement that indicia
of airworthiness or suitability for installation in Sec. 3.5(d) be
demonstrated through records.
4. Illustrated Parts Catalogues (IPCs)
GEAE recommends the FAA define a ``record'' to exclude IPCs. Boeing
agrees, stating that it is not correct to imply FAA oversight of IPC
content within this regulation. AIA and UTC also want to exclude IPCs
from the definition to allow IPCs to continue to service the full range
of business needs of customers.
The FAA believes that IPCs should remain within the scope of the
rule. While the FAA recognizes IPCs are not FAA approved, this should
not be a reason to exclude these documents from this rule. IPCs are
integral to ordering products, parts, appliances and materials. IPCs
communicate to aircraft owners, operators, producers, mechanics, and
repairmen the acceptability of a product, part, appliance or material
for use on type-certificated products. While the FAA does not see why a
manufacturer would put a false or intentionally misleading statement in
an IPC, the FAA does not want to create a possible loophole for future
abuse. Therefore, part 3 covers IPCs.\4\
---------------------------------------------------------------------------
\4\ Delta Airlines requests the rulemaking include a new
requirement for IPCs. Delta asks the FAA to require manufacturers to
list only FAA approved parts and suppliers in their IPCs. It is not
the intent of this rule to create a standard for what must be in
IPCs. However, part 3 applies to IPCs, and manufacturers should take
proper steps to ensure that their IPCs do not violate the terms of
part 3.
---------------------------------------------------------------------------
5. Clarifying Changes to Regulatory Text
When reviewing the proposed rule language, the FAA found some minor
technical errors which are corrected here.
(1) A ``product'' includes aircraft, engines and propellers. Since
someone can install an engine or propeller on an aircraft, a
``product'' can technically be installed on a ``product''. Therefore,
the FAA changed Sec. 3.5(c) to insert the word ``product'' into the
language covering the acceptability of products, parts and materials
for installation on products.
(2) We changed the heading of Sec. 3.5(a) from ``(P)rohibition
preventing misleading statements'' to ``(P)rohibition against
misleading statements.'' We did this to be consistent with the heading
for Sec. 3.5(b).
(3) Based on the change to Sec. 3.1 adding the word ``appliance,''
we added the term ``appliance'' to Sec. 3.5(c) where appropriate.
(4) The proposed language of Sec. 3.5 covers statements about the
acceptability of any product, part, appliance or material for ``use''
on products. Elsewhere in the regulation, the word ``installation'' is
used. The FAA believes the word ``installation'' covers the intent of
part 3. Therefore, Sec. Sec. 3.5(b)(1) and 3.5(b)(2) are changed to
delete the word ``use'' and replace it with ``installation.''
6. Effective Date
There are no compliance dates or reporting requirements in this
rule. The rule will take effect 30 days from the date of publication in
the Federal Register.
III. Regulatory Notices and Analyses
Statement of Statutory Authority
This rulemaking is promulgated under the authority described in
Subtitle VII, part A, Section 40113, Administrative, Section 44701,
General requirements, and Section 44704, Type certificates, production
certificates, and airworthiness certificates. Under these sections, the
FAA has been authorized to issue and enforce regulations governing the
safety of aircraft products and the parts, appliances and material used
on such products.
Paperwork Reduction Act
There are no current or new requirements for information collection
associated with this amendment.
International Compatibility
In keeping with U.S. obligations under the Convention on
International Civil Aviation, it is FAA policy to comply with
International Civil Aviation Organization (ICAO) Standards and
Recommended Practices to the maximum extent practicable. The FAA has
reviewed the corresponding ICAO Standards and Recommended Practices and
has identified no differences with these regulations.
Economic Assessment, Regulatory Flexibility Determination, Trade Impact
Assessment, and Unfunded Mandates Assessment
Changes to Federal Regulations must undergo several economic
analyses. First, Executive Order 12866 directs that each Federal agency
should propose or adopt a regulation only upon a reasoned determination
that the benefits of the intended regulation justify its costs. Second,
the Regulatory Flexibility Act requires agencies to analyze the
economic effect of regulatory changes on small businesses and other
small entities. Third, the Office of Management and Budget directs
agencies to assess the effect of regulatory changes on international
trade. In conducting these analyses, the FAA has determined that this
rule:
(1) Will generate benefits that justify its additional costs, yet
is a ``significant regulatory action'' as defined in the Executive
Order due to the potential public interest in the regulation;
(2) Is significant as defined in the Department of Transportation's
Regulatory Policies and Procedures;
(3) Would not have a significant impact on a substantial number of
small entities;
(4) Would not constitute a barrier to international trade; and
(5) Would not contain any Federal intergovernmental or private
sector mandate.
These analyses are summarized here in the preamble, and the full
Regulatory Evaluation is in the docket.
Total Costs and Benefits of This Rulemaking
The estimated quantifiable net cost of this rulemaking is $1.1
million ($0.8 million, discounted) over the next ten years. The
benefits of this rulemaking are unquantifiable and cannot be estimated.
Who is Potentially Affected by This Rulemaking
This rulemaking affects anyone engaged in aviation-related
activities, such as manufacturers, repair stations and mechanics, air
carriers or other aircraft operators, including part distributors and
part brokers.
Our Cost Assumptions and Sources of Information
(1) Discount rate--7%.
(2) Period of analysis--2004-2013.
(3) Monetary values expressed in 2003 dollars.
(4) Loaded wage rate of an FG-13 Step 5--$47.64.
Alternatives We Considered
No alternatives were considered in this rulemaking analysis.
Benefits of This Rulemaking
Lack of relevant data prevents the FAA from quantifying the benefit
analysis. However, the unquantifiable benefit is enhanced safety to the
aviation community and flying public by ensuring that aircraft owners,
aircraft operators and persons who maintain
[[Page 54831]]
aircraft have factual information on which to determine whether a
product, part, appliance or material may be used in a given civil
aircraft.
Costs of This Rulemaking
The FAA will incur costs of $1.1 million ($0.8 million,
discounted), and the entities affected by this rulemaking will not
incur any costs.
Changes From the NPRM to the Final Rule
The FAA did not receive any comments that either questioned our
analysis, or provided suggestions to consider altering our initial
analysis. The only changes made in the analysis were that the loaded
wage rate of a FG-13, step 5 employee was increased from $40.16 to
$47.64.
Regulatory Flexibility Determination
The Regulatory Flexibility Act of 1980 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 principal, the Act requires agencies to solicit and
consider flexible regulatory proposals and to explain the rationale for
their actions. The Act covers a wide-range of small entities, including
small businesses, not-for-profit organizations and small governmental
jurisdictions.
Agencies must perform a review to determine whether a proposed or
final rule will have a significant economic impact on a substantial
number of small entities. If the determination is that it will, the
agency must prepare a regulatory flexibility analysis (RFA) as
described in the Act.
However, if an agency determines that a proposed or final rule is
not expected to have a significant economic impact on a substantial
number of small entities, section 605(b) of the 1980 Act provides that
the head of the agency may so certify and an RFA is not required. The
certification must include a statement providing the factual basis for
this determination, and the reasoning should be clear.
This final rule will establish rules related to false and
intentionally misleading statements about products, parts, appliances
and materials that may be used on type-certificated aircraft. For the
entities affected by this final rule, the FAA expects the annualized
compliance costs to be minimal. Therefore, these small entities should
incur only minimal additional costs as a result of the final rule.
Accordingly, pursuant to the Regulatory Flexibility Act, 5 U.S.C.
605(b), the Federal Aviation Administration certifies that this final
rule will not have a significant economic impact on a substantial
number of small entities.
International Trade Impact Assessment
The Trade Agreement Act of 1979 prohibits Federal agencies from
engaging in any standards or related activities that create unnecessary
obstacles to the foreign commerce of the United States. Legitimate
domestic objectives, such as safety, 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.
The final rule will not affect trade opportunities for U.S. firms
doing business overseas or for foreign firms doing business in the
United States.
Unfunded Mandates Assessment
Title II of the Unfunded Mandates Reform Act of 1995 (the Act),
enacted as Public Law 0104-4 on March 22, 1995, requires each Federal
agency, to the extent permitted by law, to prepare a written assessment
of the effects of any Federal mandate in a proposed or final agency
rule that may result in the expenditure of $100 million or more (when
adjusted annually for inflation) in any one year by State, local, and
tribal governments in the aggregate, or by the private sector. The FAA
currently uses an inflation-adjusted value of $120.7 million in lieu of
$100 million. Section 204(a) of the Act, 2 U.S.C. 1534(a), requires the
Federal agency to develop an effective process to permit timely input
by elected officers (or their designees) of State, local, and tribal
governments on a proposed ``significant intergovernmental mandate.'' A
``significant intergovernmental mandate'' under the Act is any
provision in a Federal agency regulation that would impose an
enforceable duty upon State, local, and tribal governments in the
aggregate of $100 million (adjusted annually for inflation) in any one
year. Section 203 of the Act, 2 U.S.C. 1533, which supplements section
204(a), provides that, before establishing any regulatory requirements
that might significantly or uniquely affect small governments, the
agency shall have developed a plan, which, among other things, must
provide for notice to potentially affected small governments, if any,
and for a meaningful and timely opportunity for these small governments
to provide input in the development of regulatory proposals.
This final rule does not contain any Federal intergovernmental or
private sector mandates. Therefore, the requirements of Title II of the
Unfunded Mandates Reform Act of 1995 do not apply.
Executive Order 13132, Federalism
The FAA has analyzed this final rule under the principles and
criteria of Executive Order 13132, Federalism. We determined that this
action will not have a substantial direct effect on the States, or the
relationship between the national Government and the States, or on the
distribution of power and responsibilities among the various levels of
government, and therefore does not have federalism implications.
Plain English
Executive Order 12866 (58 FR 51735, Oct. 4, 1993) requires each
agency to write regulations that are simple and easy to understand. We
invite your comments on how to make these regulations easier to
understand, including answers to questions such as the following:
Are the requirements in the regulations clearly stated?
Do the regulations contain unnecessary technical language
or jargon that interferes with their clarity?
Would the regulations be easier to understand if they were
divided into more (but shorter) sections?
Is the description in the preamble helpful in
understanding the final rule? Please send your comments to the address
specified in the ADDRESSES section.
Regulations Affecting Intrastate Aviation in Alaska
Section 1205 of the FAA Reauthorization Act of 1996 (110 Stat.
3213) requires the FAA, when modifying its regulations in a manner
affecting intrastate aviation in Alaska, to consider the extent to
which Alaska is not served by transportation modes other than aviation,
and to establish appropriate regulatory distinctions. In the NPRM, we
requested comments on whether the proposed rule should apply
differently to intrastate operations in Alaska. We didn't receive any
comments, and we have determined, based on the administrative record of
this rulemaking, that there is no need to make any regulatory
distinctions applicable to intrastate aviation in Alaska.
[[Page 54832]]
Environmental Analysis
FAA Order 1050.1E identifies FAA actions that are categorically
excluded from preparation of an environmental assessment or
environmental impact statement under the National Environmental Policy
Act in the absence of extraordinary circumstances. The FAA has
determined this rulemaking action qualifies for the categorical
exclusion identified in paragraph 312d and involves no extraordinary
circumstances.
Regulations That Significantly Affect Energy Supply, Distribution, or
Use
The FAA has analyzed this final rule under Executive Order 13211,
Actions Concerning Regulations that Significantly Affect Energy Supply,
Distribution, or Use (May 18, 2001). We have determined that it is not
a ``significant energy action'' under the executive order because:
(1) It is not a ``significant regulatory action'' under Executive
Order 12866; and
(2) It is not likely to have a significant adverse effect on the
supply, distribution, or use of energy.
List of Subjects in 14 CFR Part 3
Aircraft, Aviation safety, False, Fraud, Misleading.
The Amendment
0
In consideration of the foregoing, the Federal Aviation Administration
amends Chapter I of Title 14, Code of Federal Regulations as follows:
0
1. Add part 3 to read as follows:
PART 3--GENERAL REQUIREMENTS
Sec.
3.1 Applicability.
3.5 Statements about products, parts, appliances and materials.
Authority: 49 U.S.C. 106(g), 40113, 44701, and 44704.
Sec. 3.1 Applicability.
(a) This part applies to any person who makes a record regarding:
(1) A type-certificated product, or
(2) A product, part, appliance or material that may be used on a
type-certificated product.
(b) Section 3.5(b) does not apply to records made under part 43 of
this chapter.
Sec. 3.5 Statements about products, parts, appliances and materials.
(a) Definitions. The following terms will have the stated meanings
when used in this section:
Airworthy means the aircraft conforms to its type design and is in
a condition for safe operation.
Product means an aircraft, aircraft engine, or aircraft propeller.
Record means any writing, drawing, map, recording, tape, film,
photograph or other documentary material by which information is
preserved or conveyed in any format, including, but not limited to,
paper, microfilm, identification plates, stamped marks, bar codes or
electronic format, and can either be separate from, attached to or
inscribed on any product, part, appliance or material.
(b) Prohibition against fraudulent and intentionally false
statements. When conveying information related to an advertisement or
sales transaction, no person may make or cause to be made:
(1) Any fraudulent or intentionally false statement in any record
about the airworthiness of a type-certificated product, or the
acceptability of any product, part, appliance, or material for
installation on a type-certificated product.
(2) Any fraudulent or intentionally false reproduction or
alteration of any record about the airworthiness of any type-
certificated product, or the acceptability of any product, part,
appliance, or material for installation on a type-certificated product.
(c) Prohibition against intentionally misleading statements.
(1) When conveying information related to an advertisement or sales
transaction, no person may make, or cause to be made, a material
representation that a type-certificated product is airworthy, or that a
product, part, appliance, or material is acceptable for installation on
a type-certificated product in any record if that representation is
likely to mislead a consumer acting reasonably under the circumstances.
(2) When conveying information related to an advertisement or sales
transaction, no person may make, or cause to be made, through the
omission of material information, a representation that a type-
certificated product is airworthy, or that a product, part, appliance,
or material is acceptable for installation on a type-certificated
product in any record if that representation is likely to mislead a
consumer acting reasonably under the circumstances.
(d) The provisions of Sec. 3.5(b) and Sec. 3.5(c) shall not apply
if a person can show that the product is airworthy or that the product,
part, appliance or material is acceptable for installation on a type-
certificated product.
Issued in Washington, DC, on September 9, 2005.
Marion C. Blakey,
Administrator.
[FR Doc. 05-18343 Filed 9-15-05; 8:45 am]
BILLING CODE 4910-13-P