Repair Stations, 46971-46985 [2014-18938]

Download as PDF Federal Register / Vol. 79, No. 155 / Tuesday, August 12, 2014 / Rules and Regulations directly to the ACO, send it to ATTN: Program Manager, Continuing Operational Safety, FAA, New York ACO, 1600 Stewart Avenue, Suite 410, Westbury, NY 11590; telephone 516–228–7300; fax 516–794–5531. Before using any approved AMOC, notify your appropriate principal inspector, or lacking a principal inspector, the manager of the local flight standards district office/ certificate holding district office. The AMOC approval letter must specifically reference this AD. (2) Contacting the Manufacturer: For any requirement in this AD to obtain corrective actions from a manufacturer, the action must be accomplished using a method approved by the Manager, New York ACO, ANE–170, Engine and Propeller Directorate, FAA; or Transport Canada Civil Aviation (TCCA); or Bombardier, Inc.’s TCCA Design Approval Organization (DAO). If approved by the DAO, the approval must include the DAOauthorized signature. pmangrum on DSK3VPTVN1PROD with RULES (l) Related Information (1) Refer to Mandatory Continuing Airworthiness Information (MCAI) Canadian Emergency Airworthiness Directive CF– 2014–19, dated June 20, 2014, for related information. You may examine the MCAI on the Internet at http://www.regulations.gov by searching for and locating Docket No. FAA– 2014–0490. (2) Service information identified in this AD that is not incorporated by reference may be obtained at the addresses specified in paragraphs (m)(3) and (m)(4) of this AD. (m) Material Incorporated by Reference (1) The Director of the Federal Register approved the incorporation by reference (IBR) of the service information listed in this paragraph under 5 U.S.C. 552(a) and 1 CFR part 51. (2) You must use this service information as applicable to do the actions required by this AD, unless this AD specifies otherwise. (i) Bombardier Alert Service Bulletin A600–0769, Revision 01, dated June 26, 2014. (ii) Canadair Temporary Revision 600/29, dated June 20, 2014, to the Canadair CL–600– 1A11 Airplane Flight Manual. (iii) Canadair Temporary Revision 600/30, dated June 6, 2014, to the Canadair CL–600– 1A11 Airplane Flight Manual. (iv) Canadair Temporary Revision 600–1/ 24, dated June 20, 2014, to the Canadair CL– 600–1A11 Airplane Flight Manual (Winglets) including Erratum, Publication No. PSP 600– 1AFM (US), TR No. 600–1/24, June 20, 2014. (v) Canadair Temporary Revision 600–1/ 26, dated June 6, 2014, to the Canadair CL– 600–1A11 Airplane Flight Manual (Winglets). (3) For service information identified in ˆ this AD, contact Bombardier, Inc., 400 Cote´ Vertu Road West, Dorval, Quebec H4S 1Y9, Canada; telephone 514–855–5000; fax 514– 855–7401; email thd.crj@ aero.bombardier.com; Internet http:// www.bombardier.com. (4) You may view this service information at the FAA, Transport Airplane Directorate, 1601 Lind Avenue SW., Renton, WA. For information on the availability of this material at the FAA, call 425–227–1221. VerDate Mar<15>2010 15:41 Aug 11, 2014 Jkt 232001 (5) You may view this service information that is incorporated by reference at the National Archives and Records Administration (NARA). For information on the availability of this material at NARA, call 202–741–6030, or go to: http:// www.archives.gov/federal-register/cfr/ibrlocations.html. 46971 Federal Aviation Administration Additional Information’’ in the section of this document. FOR FURTHER INFORMATION CONTACT: For technical questions concerning this action, contact Susan Traugott, Repair Station Branch (AFS–340), Federal Aviation Administration, 800 Independence Avenue SW., Washington, DC 20591; telephone (214) 277–8534; email Susan.M.Traugott@ faa.gov. For legal questions concerning this action, contact Edmund Averman, Office of the Chief Counsel (AGC–210), Federal Aviation Administration, 800 Independence Avenue SW., Washington, DC 20591; telephone (202) 267–3147; email Ed.Averman@faa.gov. SUPPLEMENTARY INFORMATION: 14 CFR Part 145 Authority for This Rulemaking [Docket No.: FAA–2006–26408; Amdt. No. 145–30] The FAA’s authority to issue rules on aviation safety is found in Title 49 of the United States Code. Subtitle I, section 106, describes the authority of the FAA Administrator. Subtitle VII, Aviation Programs, describes in more detail the scope of the agency’s authority. This rulemaking is promulgated under the authority described in title 49, subtitle VII, part A, subpart III, section 44701, General requirements, and section 44707, Examining and rating air agencies. Under section 44701, the FAA may prescribe regulations and standards in the interest of safety for inspecting, servicing, and overhauling aircraft, aircraft engines, propellers, and appliances. The FAA may also prescribe equipment and facilities for, and the timing and manner of, inspecting, servicing, and overhauling these items. Under section 44707, the FAA may examine and rate repair stations. This regulation is within the scope of section 44707 since it specifies instances when the FAA may deny the issuance of a repair station certificate, especially when a previously held certificate has been revoked. Issued in Renton, Washington, on August 4, 2014. Jeffrey E. Duven, Manager, Transport Airplane Directorate, Aircraft Certification Service. [FR Doc. 2014–18866 Filed 8–11–14; 8:45 am] BILLING CODE 4910–13–P DEPARTMENT OF TRANSPORTATION RIN 2120–AJ61 Repair Stations Federal Aviation Administration (FAA), DOT. ACTION: Final rule. AGENCY: This rule amends the FAA’s repair station regulations to allow the FAA to deny an application for a new repair station certificate if the applicant or certain associated key individuals had materially contributed to the circumstances that caused a previous repair station certificate revocation action. The rule also adds a new section prohibiting fraudulent or intentionally false entries or omissions of material facts in any application, record, or report made under the repair station rules, and provides that making the fraudulent or intentionally false entry or omitting or concealing the material fact is grounds for imposing a civil penalty and for suspending or revoking any certificate, approval, or authorization issued by the FAA to the person who made or caused the entry or omission. These changes are necessary because the repair station rules do not presently provide these safeguards as do other parts of the FAA’s regulations. Both of these changes will enhance safety by reducing the number of individuals in the repair station industry who commit intentional and serious violations of the regulations or who demonstrate they are otherwise unqualified to hold repair stations certificates. DATES: Effective November 10, 2014. ADDRESSES: For information on where to obtain copies of rulemaking documents and other information related to this final rule, see ‘‘How To Obtain SUMMARY: PO 00000 Frm 00011 Fmt 4700 Sfmt 4700 SUPPLEMENTARY INFORMATION I. Background A. NTSB Recommendations As a result of a fatal accident, the National Transportation Safety Board (NTSB) recommended 1 that an applicant’s past performance should be a consideration in determining whether a new certificate should be issued. The NTSB was concerned that the FAA had no mechanism for preventing individuals who have been associated with a previously revoked repair station certificate from continuing to operate through a new repair station certificate. 1 NTSB Recommendation No. A–04–01, February 9, 2004. E:\FR\FM\12AUR1.SGM 12AUR1 46972 Federal Register / Vol. 79, No. 155 / Tuesday, August 12, 2014 / Rules and Regulations pmangrum on DSK3VPTVN1PROD with RULES The NTSB pointed out that the FAA has addressed this issue in the context of air carriers and other commercial operators. Specifically, 14 CFR 119.39(b) allows the FAA to deny an application for a part 121 or 135 air carrier or operating certificate if the applicant has previously held a certificate that was revoked or if a person who exercised control over (or held a key management position in) an operator with a revoked certificate will be exercising control over (or holding a key management position in) the new operator. Additionally, § 119.39(b) allows the FAA to deny certification to an applicant who is substantially owned by (or who intends to fill a key management position with) an individual who had a similar interest in a certificate holder whose certificate was (or is being) revoked when that individual materially contributed to the circumstances causing revocation. The FAA agrees with the NTSB that part 145 should have the same safeguards as § 119.39(b). The NTSB also took issue with the practice of an individual whose repair station was being investigated for serious violations of the regulations surrendering the certificate to stop the investigation process. Accordingly, the NTSB recommended that the ‘‘FAA should complete the investigation to the extent necessary to document all available facts relating to the fitness of the involved individuals; . . . .’’ 2 The FAA is publishing this final rule in part to address these recommendations from the NTSB. technology. The agency proposed the changes to modernize the regulations to keep pace with current industry standards and practices. The comment period was scheduled to close on August 20, 2012. However, the FAA received a request from the Aeronautical Repair Station Association (ARSA) and other organizations to extend the comment period. In a notice published on August, 17, 2012 (77 FR 49740), the FAA granted a 90-day comment period extension to November 19, 2012. The NPRM proposed to amend part 145 by: • Significantly revising the system of ratings to eliminate class, radio, instrument, and accessory ratings; • Requiring each repair station choosing to use a capability list to audit the list for currentness at least every two years; • Requiring new applicants for a repair station certificate to include a letter of compliance as part of their application; • Requiring repair stations to provide permanent housing for their facilities, equipment, materials, and personnel; • Identifying specific reasons that the issuance of a repair station certificate could be denied; • Prohibiting fraudulent or intentionally false entries in an application, record, or report made under the repair station rules; and • Accommodating revisions made to 14 CFR parts 91 and 43 providing for the change in rating system and standardization of language. B. Summary of NPRM On May 21, 2012, the FAA published a notice of proposed rulemaking (NPRM) titled ‘‘Repair Stations’’ (77 FR 30054). In the NPRM, the FAA proposed to amend the regulations for repair stations by revising the system of ratings, the repair station certification requirements, and the regulations applicable to repair stations providing maintenance for air carriers. The proposal also addressed the NTSB recommendation (discussed previously) by proposing amendments that would permit the FAA to deny certain applicants new certificates based on their enforcement history. The FAA believed these changes were necessary because many portions of the existing repair station regulations do not reflect current repair station aircraft maintenance and business practices, and the existing regulations have not kept pace with advances in aircraft C. Summary of Comments The FAA received more than 230 public comments to the NPRM. The majority of the commenters, including Aircraft Electronics Association (AEA), Aerospace Industries Association (AIA), Aircraft Owners & Pilots Association (AOPA), Aeronautical Repair Station Association (ARSA), Aviation Suppliers Association (ASA), Experimental Aircraft Association (EAA), General Aviation Manufacturers Association (GAMA), Helicopter Association International (HAI), Modification and Replacement Parts Association (MARPA), National Air Transportation Association (NATA), the Small Business Administration (SBA) Office of Advocacy, Coordinating Agency for Supplier Evaluation (CASE) and several individual commenters had serious concerns with the proposed changes, and many suggested withdrawing the entire proposal. Although commenters recognized that the system of ratings is outdated, there was general dissatisfaction with the 2 NTSB Recommendation No. A–04–02, February 9, 2004. VerDate Mar<15>2010 15:41 Aug 11, 2014 Jkt 232001 PO 00000 Frm 00012 Fmt 4700 Sfmt 4700 proposed new system of ratings and the transition process. Commenters also expressed concerns on the proposals for a capability list, recurring audit, letter of compliance, permanent housing, facilities and equipment, and the FAA’s proposed authority to deny a repair station application. D. Differences Between the NPRM and the Final Rule In the NPRM, the FAA proposed significant changes to the system of ratings, the repair station certification requirements, and the rules for repair stations providing maintenance for air carriers. The FAA is withdrawing most of the changes proposed in the NPRM because of the issues raised by commenters. Many commenters argued that the proposed ratings system would not be satisfactory for current and future repair stations. Also, many expressed concern that the FAA does not have sufficient resources to perform recertification of all currently certificated repair stations while continuing to certificate new repair stations in the course of the proposed 24-month transition. This concern is exacerbated by the possible influx of hundreds of repair station applicants resulting from the finalization of the Transportation Security Administration foreign repair station rule, which allows for the certification of new repair stations outside the United States for the first time since 2004. The NPRM proposed extensive changes to the repair station regulations with accommodating changes to 14 CFR parts 43 and 91. The final rule implements only the denial authority, the falsification penalty, and several minor revisions and corrections. The rule also requires that a certificate surrender is not complete until the FAA accepts the certificate for surrender. The final rule does not change 14 CFR parts 43 and 91 as initially proposed. II. Overview of Final Rule Currently, 14 CFR 145.53 provides that, with certain exceptions, an applicant who meets the requirements of the rule is entitled to a repair station certificate. Section 145.53 does not provide an exception related to a past regulatory non-compliance history. There has been at least one incident where the FAA revoked a repair station certificate for serious maintenancerelated safety violations, and a key management official from the repair station shortly thereafter obtained a new repair station certificate under which improper maintenance resulted in a fatal accident. E:\FR\FM\12AUR1.SGM 12AUR1 pmangrum on DSK3VPTVN1PROD with RULES Federal Register / Vol. 79, No. 155 / Tuesday, August 12, 2014 / Rules and Regulations As a result of the fatal accident, the NTSB recommended that an applicant’s past performance should be a consideration in determining whether a new certificate should be issued. The FAA agrees that this is an important consideration in assessing an applicant’s overall fitness to hold a certificate and is providing a new exception to certificate entitlement in § 145.51(e). The new exception will apply to: • An applicant who previously held a repair station certificate that was revoked or is in the process of being revoked; • An applicant who intends to fill certain key management positions with individuals who had materially contributed to the circumstances that led to a prior repair station certificate revocation, or to an ongoing revocation action against a repair station; and • An applicant whose repair station will be owned or controlled by an individual or individuals who previously owned or exercised control over a repair station that had its certificate revoked or is in the process of being revoked. With regard to the exception stated in the second bullet above, the FAA notes that in the NPRM the agency erroneously proposed two nearly identical paragraphs— (§§ 145.1051(e)(2) and 145.1051(e)(3)) pertaining to individuals who would be slated to hold management positions with a new applicant. Proposed paragraph (e)(2) addressed instances where the applicant intended to (or did) fill a management position with an individual who exercised control over or who held the same or a similar position with a repair station that had its certificate previously revoked, and paragraph (e)(3) addressed instances where an individual who would hold a management position in the new repair station previously held a management position with a repair station that had a certificate revoked. The FAA has determined that these two paragraphs are largely redundant and would accomplish essentially the same thing. As discussed below, proposed § 145.51(e) was meant to parallel the similar exceptions found for air carrier operating certificates in 14 CFR 119.39(b), and that section does not contain the text of paragraph (e)(3) discussed above. Therefore, the FAA is withdrawing § 145.51(e)(3) as proposed in the NPRM. Under this new exception, the FAA may still issue a new certificate, but the applicant will no longer be entitled to a certificate, even if other qualifying criteria are met. Knowledge of the VerDate Mar<15>2010 15:41 Aug 11, 2014 Jkt 232001 compliance disposition of key management personnel is an important component of the fitness assessment the FAA makes in determining the overall qualifications of an applicant who will conduct repair station operations. To implement this new exception, the FAA is adding a two-part question to FAA Form 8310–3, Application for Repair Station Certificate and/or Rating. The question asks: Will any person as described in part 145.51(e) be involved with the management, control, or have substantial ownership of the repair station? If yes, provide a detailed explanation on a separate page. The detailed response to a ‘yes’ answer will allow the FAA to evaluate the circumstances of the revocation and determine whether the certification will or will not continue. Also, in response to the NTSB recommendation, the FAA is adding a requirement that a certificate surrender is not complete until the FAA accepts the certificate for surrender. The new surrender requirement codifies existing FAA policy, and will prevent a repair station under investigation from attempting to circumvent a possible enforcement action that could result in a revocation of the repair station certificate by surrendering its certificate to stop the investigation before it is completed. The other significant amendments in this final rule are: • The addition of a new § 145.12 that prohibits fraudulent or intentionally false entries or omissions in applications, records, or reports made under the repair station rules. The rule provides that making a prohibited fraudulent or intentionally false entry or knowingly omitting a material fact is grounds for suspending or revoking any certificate, approval, or authorization the FAA issued to the person who made the entry or caused the omission. • A revision to paragraph (a) of § 145.53 to incorporate the new grounds for denying a certificate under § 145.51(e) (discussed above) as another exception to certificate entitlement even if the other qualification requirements are met. • A revision to § 145.55 to add that a certificate surrender is not complete until the FAA accepts the certificate for cancellation. This final rule will also make the following amendments: • A revision to § 145.55 to add a new paragraph (c)(3) to require that a repair station outside the United States applying for certificate renewal must show the required fee has been paid. • A revision to § 145.57 to add a requirement in paragraph(a)(1) that a PO 00000 Frm 00013 Fmt 4700 Sfmt 4700 46973 certificate change is necessary if the repair station certificate holder changes the name of the repair station. • A revision to § 145.57(b), which currently requires that if a repair station’s assets are sold the new owner must apply for a certificate. The revision clarifies that a new owner will need to apply for a new certificate only if the new owner chooses to operate as a repair station. • Revisions to §§ 145.153, 145.157, and 145.213 to add the terms ‘‘appropriately’’ before ‘‘certificated’’ and ‘‘as a mechanic or repairman’’ before ‘‘under part 65’’ in three instances: (1) Supervisory personnel requirements (§ 145.153(b)(1)); (2) Personnel authorized to approve an article for return to service (§ 145.157(a)); and (3) Inspection of maintenance, preventive maintenance, or alterations (§ 145.213(d)). The first two of these revisions were proposed in the NPRM; however, the third was inadvertently omitted, and we are including it here for clarity and consistency. As discussed in the NPRM, the omission of the term ‘‘appropriately’’ in the 2001 final rule was an oversight we proposed to correct with this final rule. This omission technically provides that any individual holding a certificate issued under part 65 (other than mechanics and repairmen—such as air traffic control tower operators and aircraft dispatchers) could fill these positions. Under these amendments, supervisors and persons authorized to inspect and approve an article for return to service would, at a minimum, have to hold a certificate appropriate for the work being performed (e.g., a mechanic or a repairman certificate). • A revision to § 145.155 to remove the word ‘‘and’’ at the end of paragraph (a)(2). Since no § 145.155(a)(3) currently exists, it is an error for ‘‘and’’ to appear after paragraph (a)(2), and its removal corrects this error. • A revision to § 145.163 to add the term ‘‘and use’’ after ‘‘must have’’ in paragraph (a). This section requires a repair station to have an approved training program, but does not provide a specific requirement that the program be used. This revision is necessary to clarify the intent of the current rule that repair stations must have and use an employee training program approved by the FAA. This rule also removes the reference to April 6, 2006, (added by the 2001 amendments) as the date by which the FAA required new applicants to submit a training program for approval, and also the starting date from which each existing repair station would be required to submit its training program E:\FR\FM\12AUR1.SGM 12AUR1 46974 Federal Register / Vol. 79, No. 155 / Tuesday, August 12, 2014 / Rules and Regulations for approval based on the specified staggered schedule, i.e., by the last day of the month in which its repair station certificate had been issued. This revision results in the necessary inclusion of the text of paragraph (a)(1) into § 145.163(a) and the consequent deletion of paragraphs (a)(1) and (a)(2). In addition, we are also making a correction that was not proposed in the NPRM. Specifically, we are correcting § 145.221(a) to remove the erroneous insertion of the word ‘‘serious’’ when addressing the service difficulty reporting requirements from any failure, malfunction, or defect. The word ‘‘serious’’ was removed through notice and comment rulemaking in the 2001 final rule entitled ‘‘Repair Stations,’’ (66 FR 41088, August 6, 2001) that significantly revised part 145. The word ‘‘serious’’ was inadvertently inserted by a separate final rule entitled ‘‘Service Difficulty Reports,’’ (65 FR 56191, September 15, 2000). Section 553(b)(3)(B) of the Administrative Procedure Act (APA) (5 U.S.C.) authorizes agencies to dispense with notice and comment procedures for rules when the agency for good cause finds that those procedures are ‘‘impracticable, unnecessary, or contrary to the public interest.’’ Under this section, an agency, upon finding good cause, may issue a final rule without seeking comment prior to the rulemaking. The removal of the term ‘‘serious’’ in § 145.221(a) does not change a standard, nor will there be any effect on regulated entities other than to prevent future misunderstandings that would have been resolved when interested persons contacted the FAA. Accordingly, due to the nature and circumstances of the error explained above, the FAA finds that further notice and comment are unnecessary to effect the correction. pmangrum on DSK3VPTVN1PROD with RULES III. Summary of the Costs and Benefits of the Final Rule The FAA determined that the expected outcome of the rule will be a minimal impact with positive net benefits. Therefore, a regulatory evaluation was not prepared for this final rule. The FAA has, therefore, determined that this final rule is not a ‘‘significant regulatory action’’ as defined in section 3(f) of Executive Order 12866, and is not ‘‘significant’’ as defined in DOT’s Regulatory Policies and Procedures. VerDate Mar<15>2010 15:41 Aug 11, 2014 Jkt 232001 IV. Discussion of Public Comments and Final Rule A. System of Ratings (§§ 145.59 and 145.61) The NPRM proposed reducing the number of repair station ratings from eight to five, and revising the ratings’ definitions to indicate the type of work that a repair station would be authorized to perform. Approximately 190 commenters, including AEA, AIA, GAMA, and Duncan Aviation, commented specifically on the proposed change to the system of ratings. Generally, these organizations stated that the proposed rule would not modernize the ratings (or that the changes would be regressive), would be cost prohibitive, and would not enhance safety. The following are some examples of the comments received on this proposal. AEA noted that the proposed changes in the rating system are the basis for the reissuance of the repair station certificates, but that the perceived added benefit of the ratings revision does not justify the extreme cost of reapplication. AEA recommended that the FAA retain the current rating classification system and provide a better description of the maintenance authorized by each rating. AIA stated that class ratings are beneficial to industry, and that the FAA’s proposal to eliminate this type of rating would cause additional burdens beyond those set forth in the NPRM. AIA further stated that the transition from class to category will most likely cause significant disruption to existing repair stations with no appreciable safety benefit. Large repair stations would need time and resources to make the transition based on the breadth of their customer base and complexity of their operations. Small repair stations would be faced with an overwhelming burden, with a lack of resources to make the transition to build compliant capability lists or operations specifications systems. GAMA stated that the FAA’s proposal would allow airframe-rated repair stations to repair and alter radios and instruments without any specific ratings or obvious qualifications. GAMA added that the FAA’s proposed ratings did not provide due consideration to avionics, which are increasingly more complex integrated systems that require greater and unique levels of technical skills to maintain properly. Duncan Aviation stated that the current outdated rating system was better than the proposed rating system, which added no value to the way a repair station conducts business. PO 00000 Frm 00014 Fmt 4700 Sfmt 4700 Duncan Aviation suggested that the current system remain in place until a better system is developed with input from industry. Based on the comments received, and because the ARAC recommendation on which the FAA based the proposed ratings changes is dated, the FAA will retain the current system of ratings until such time it can better understand and learn from all stakeholders what the future of repair station ratings should look like. The comments on the proposed ratings system changes clearly point to differences between those repair stations that are well suited to the current ratings system and those who find the current ratings system outdated and not meaningfully descriptive. B. Certification Requirements (§§ 145.51, 145.103, and 145.163) In the NPRM, the FAA proposed changes to allow for certification denial when certain enforcement history exists. The proposal also clarified existing regulatory language. Approximately 175 commenters, including EAA, AOPA, AIA, ARSA, ASA, CASE, GAMA, NATA, and the SBA Office of Advocacy expressed concerns with several of the proposed changes to the repair station certification requirements. EAA, GAMA, NATA, and other commenters also expressed concerns with the FAA’s proposed requirement that equipment, tools, test apparatus, materials, and personnel must be in place for inspection at the time of certification, with no provision that the equipment requirement could be met with an acceptable contract for its availability when needed. They proposed that the FAA retain the current language. GAMA further stated that the proposed change would require a financial impact assessment. EAA added that the requirement is unrealistic and noted that many of today’s modern materials are shelf-life limited and would likely expire during the application and approval process, and that it was unrealistic to begin hiring technicians when the repair station certification process could take as long as 24 to 36 months. As to the proposal to eliminate the option for an applicant to have a contract to make equipment available at the time of certification and any other time when needed when the relevant work is being performed in lieu of actually having the equipment on site, the FAA believes there is uncertainty within the industry on both the current and proposed requirements. This uncertainty is exacerbated by the inconsistent application of the contract clause regarding whether the equipment E:\FR\FM\12AUR1.SGM 12AUR1 pmangrum on DSK3VPTVN1PROD with RULES Federal Register / Vol. 79, No. 155 / Tuesday, August 12, 2014 / Rules and Regulations or only the contract must be on hand during the certification inspection. Many certificate holders have long argued that it makes no economic sense to own or have on hand expensive, seldom used tools and equipment during certification. In view of these comments, the FAA is withdrawing the proposal to require that the equipment must be in place for inspection at the time of certification or rating approval by the FAA. The original purpose for permitting applicants to meet the equipment requirement at certification approval by having a contract to make the equipment available when the relevant work is being performed remains. This is because it makes no economic sense to require an applicant to have on site expensive and seldom used equipment that would be costly to locate on site and that might sit unused for extended periods of time. By having a contract acceptable to the FAA, an applicant would be able to demonstrate that the required equipment could be made available when needed. In some cases this ‘‘contract’’ may actually be a letter of intent from an air carrier for which the repair station intends to perform work, or something similar from an equipment supplier. We recognize that the mere existence of a contract at the time of certification does not guarantee equipment availability at some unknown future date—indeed, contracts may be broken and suppliers may go out of business. Nevertheless, the presence of documentation that the repair station has planned for its needs and has at least a present means of meeting those needs provides some assurance to the FAA that it would not be certificating a ‘‘paper repair station.’’ Because of the potential ambiguity in the existing text of § 145.51(b), however, we are amending the paragraph for clarification. We proposed this clarification in the 2006 NPRM, which was withdrawn in its entirety on May 7, 2009, due to the large number of adverse comments received on many of the other proposals. The ambiguity arose from the text in paragraph (b) that states: ‘‘An applicant may meet the equipment requirement of this paragraph if the applicant has a contract acceptable to the FAA with another person to make the equipment available to the applicant at the time of certification and at any time that it is necessary when the relevant work is being performed by the repair station.’’ (§ 145.51(b), emphasis added.) Except that we are no longer including tools and test apparatus in this paragraph as proposed in 2006, our reasoning to clarify this paragraph as VerDate Mar<15>2010 15:41 Aug 11, 2014 Jkt 232001 proposed in the 2006 NPRM remains, and is quoted in pertinent part below: The FAA proposes to clarify the text of § 145.51(b) by removing the ambiguity in the relieving provision concerning the availability of the equipment at the time of certification. This ambiguity results from the phrase specifying that the equipment requirement of the paragraph could be met ‘‘if the applicant has a contract acceptable to the FAA with another person to make the equipment available to the applicant at the time of certification. * * * ’’ The FAA believes that the phrase lacks clarity and could be subject to arbitrary application in individual cases, i.e., one inspector might require the contract to be executed and all the equipment brought to the premises for a pre-certification inspection, while another inspector might only review the contract for the specified items. In the first example, the equipment could be returned to the supplier the next day, and not be returned to the repair station until the relevant work is being performed, as required by § 145.109(a). Consistent with the requirement in § 145.109(a), and as noted by some of the commenters to the proposal in Notice No. 99–09, it is important that the equipment be in place when the work is being performed. That is the safety basis for the equipment requirement If, at the time of initial certification or rating approval, an applicant has a contract acceptable to the FAA to make the equipment available when the relevant work is being performed, the FAA will be able to determine that the repair station has assessed its relevant needs, and that it has the means to obtain the pertinent equipment . . . when necessary. (71 FR 70256, Dec. 1, 2006 (emphasis in original)). EAA, NATA, and other commenters questioned the legality of the proposed regulatory transition and expressed concern over the FAA’s ability to recertify every repair station in a timely manner during the 24-month transition period. Several commenters stated that the intent of the proposed language was unclear and that the procedural elements lacked safety benefits. EAA commented that the FAA does not have the necessary resources to reissue approximately 5,000 repair station certificates in 24 months. Another commenter stated that it is currently not uncommon for applicants to experience extended delays in processing new and amended repair station certificates due to the reported lack of availability of FAA staff and resources. NATA stated that the recertification effort is likely to be impossible to achieve given the scope of the other proposed changes in the NPRM. As a result, the proposed rule would be too costly for repair stations and would result in some existing repair stations ceasing operations. The SBA Office of Advocacy and others expressed concern that the cost estimate associated with re-certification PO 00000 Frm 00015 Fmt 4700 Sfmt 4700 46975 was understated. Additionally, NATA added that the FAA will likely have far less than 24 months for approving or disapproving applications and foresees a situation of cascading delays. Pratt & Whitney, The Boeing Company, and other commenters suggested a grandfather clause limiting the need for existing repair stations to re-apply. Based on the negative comments and concerns regarding the FAA’s ability to resource and complete the recertification of all currently certificated repair stations in 24 months, and because this lengthy transition period was prompted by the proposed new ratings system that the FAA is not adopting in this rule, the FAA is not proceeding with the proposed transition. With respect to the proposed amendment to § 145.103 that would have required each certificated repair station to provide and maintain suitable permanent housing for its facilities, equipment, materials, and personnel, AEA, GAMA, and other commenters stated that any definition of ‘‘maintain’’ would impose requirements that do not comport with the FAA’s intent to provide flexible requirements that align with current repair station business practices. Additionally, they argued that the proposed language would require a certificate holder to have sole operational control of its housing at all times, and any repair stations that may currently share space within a hangar would no longer be permitted to share space. Some commenters stated that the FAA failed to provide a definition of ‘‘maintain’’ in the proposed requirement that each repair station ‘‘provide and maintain’’ suitable permanent housing for its facilities, etc., whereas the current rule requires only that the certificate holder ‘‘provide’’ this housing. They also stated that this proposal would have imposed additional costs not reflected in the FAA’s economic impact assessment. As pointed out by commenters, FAA did not define ‘‘maintain’’ in changing ‘‘provide suitable permanent housing’’ to ‘‘provide and maintain suitable permanent housing.’’ This lack of definition created confusion. The FAA agrees with the commenters and is not amending § 145.103. EAA, GAMA, and several other commenters questioned the need for the proposal that repair stations provide a description of their training program for approval by the FAA. EAA stated that the FAA had not adequately explained the failure of the current training program requirements and the need to increase the regulatory burden by E:\FR\FM\12AUR1.SGM 12AUR1 46976 Federal Register / Vol. 79, No. 155 / Tuesday, August 12, 2014 / Rules and Regulations pmangrum on DSK3VPTVN1PROD with RULES requiring a description of the training program for FAA approval. GAMA questioned the purpose of the language when the entire training program, not just a description of the training program, is required to be approved by the FAA. Both organizations requested that the FAA retain the current language. With respect to commenters’ concerns that requiring a description of the training program for approval to be included in the application package would be burdensome and not justified, the FAA notes that a meaningful description of the program would be necessary under the current training requirements regulation (§ 145.163), which requires the program be approved by the FAA. The agency concurs, however, that this description is not necessary as a separate part of the application, and is withdrawing this proposed requirement. C. Personnel Requirements (§§ 145.153 and 145.157) In the NPRM, the FAA proposed requiring supervisors to be present to oversee the work being performed by the repair station and that they be appropriately certificated under 14 CFR part 65 for the work being supervised. The NPRM also proposed that both supervisors and inspection personnel be able to speak English. The FAA is not adopting this proposal, except for a minor editorial change. Many of the large repair stations, as well as ARSA, did not concur with the proposals that supervisors be present to oversee the work performed and that they speak English. AEA and others commented that if the FAA proceeded with the proposed regulation, it would have essentially required a supervisor to be present and to oversee every individual performing every maintenance activity at repair stations. This also would have had broad implications for contract maintenance. The commenters further stated that a clear unintended consequence of this proposed language would have been a substantial increase in the cost of maintenance services to compensate additional supervisory positions, as well as a corresponding decrease in availability of maintenance services due to limited availability of supervisory personnel. Most of the comments regarding the proposal that supervisors be present when the work was performed stated that this requirement would have required industry to hire numerous additional supervisory personnel at great cost to cover eventualities such as night work, emergency field VerDate Mar<15>2010 15:41 Aug 11, 2014 Jkt 232001 maintenance, line maintenance, and work conducted at additional fixed locations. EAA commented that the proposed requirement for supervisors to speak English was not justified, and that the Americans with Disabilities Act prohibits such discrimination. EAA reasoned that a supervisor might not be able to speak English, but could effectively ‘‘communicate’’ in English. Pratt and Whitney suggested the requirement to speak English served no purpose, was subjective, and would be a detriment to safety by forcing foreign persons to speak in a non-native language. Foreign repair stations Hong Kong Aircraft Engineering Company, Ltd., and Tamagawa Aero Systems Co., Ltd., and other domestic repair stations and individuals commented that the requirement to speak English was unnecessary as it did not enhance safety. The commenters also disagreed with the proposed requirement for inspection personnel to speak English. Commenters also disagreed with the proposed requirement for a repair station inspector to be available at the article while performing inspections. The commenters viewed the need to have an inspector at each phase while the work was being performed as too costly and not necessary. Based on the comments received, the FAA will not revise the current requirements for supervisory personnel, inspection personnel, or personnel authorized to approve an article for return to service, except to insert ‘‘appropriately’’ before ‘‘certificated’’ and ‘‘as a mechanic or repairmen’’ before ‘‘under part 65’’ in §§ 145.153 and 145.157. This will correct the inadvertent omissions from the 2001 rulemaking. The repair station industry generally agreed with this proposed editorial change. As discussed above in the Overview of Final Rule section, we are making the same change to § 145.213(d) for clarification and consistency. D. Denial Authority (§§ 145.51, 145.53, and 145.55) As proposed in the NPRM, the FAA may deny a repair station a certificate in instances where one or more key individuals had materially contributed to the circumstances causing a previous repair station certificate revocation. As discussed previously, the FAA’s proposed changes were based on an NTSB recommendation, and the proposal was influenced to a large extent by 14 CFR 119.39(b). The FAA is also amending § 145.55, to now contain a certificate surrender provision that requires acceptance for cancellation by PO 00000 Frm 00016 Fmt 4700 Sfmt 4700 the FAA to render the certificate no longer effective. Some commenters were concerned with the proposed amendment to § 145.55 (Duration and renewal of certificate) that would maintain the effectiveness of a surrendered repair station certificate until the FAA accepts it for cancellation. This new requirement addresses a loophole that allowed certificate holders to avoid the ramifications of a revoked certificate by voluntarily surrendering a repair station certificate at any point during the FAA’s investigation prior to the certificate’s actual revocation. Once surrendered, there would be no certificate to take action against, and the investigation would stop. Accordingly, no order would be issued, and there would be no findings of violations or certificate revocation of record. Several commenters expressed their understanding of the proposed denial provision and credited the FAA’s desire for safety, but they asserted that the agency’s implementation of the denial provision in a fair and uniform manner would be difficult. The commenters generally stated that the increase in safety was outweighed by the burden that would be placed on the agency and the industry. In addition, the requirement would waste FAA resources through unnecessary paperwork exercises without providing any safety benefits. The SBA Office of Advocacy stated that small entities expressed concerns about repair stations lacking the knowledge and ability to track parties whose certificates have been revoked or who voluntarily surrendered certificates during an enforcement proceeding. Additionally, repair stations have no way of knowing who these disqualified individuals are, thereby making the cost of complying with the certificate denial provisions highly unpredictable or impossible. Small entity representatives suggested that if the agency adopted this proposal, the FAA should maintain a list of disqualified individuals. GAMA recommended the insertion of ‘‘knowingly’’ in proposed § 145.1051(e)(2) (§ 145.51(e)(2) in this final rule) to implicate the intent of an applicant and suggested that the text be amended to read ‘‘the applicant knowingly fills or intends to fill a management position.’’ The FAA declines to adopt this suggestion because, in general, the purpose of this provision is to help ensure that persons who have committed serious (and often intentional) violations of the regulations are not able to continue doing so under a newly issued repair station certificate. E:\FR\FM\12AUR1.SGM 12AUR1 pmangrum on DSK3VPTVN1PROD with RULES Federal Register / Vol. 79, No. 155 / Tuesday, August 12, 2014 / Rules and Regulations It is important that the FAA be aware of the compliance disposition of key management personnel when the agency assesses the fitness of those who will be operating repair stations. This safeguard is necessary whether or not the applicant has knowledge of the person’s compliance history. An applicant’s knowledge of the person’s compliance history is implicated only when he or she completes the application and checks ‘‘Yes’’ or ‘‘No’’ to the 2-part question on FAA Form 8310–3, whether key personnel described in § 145.51(e) will be involved in the management or control of the new repair station. If the applicant knowingly provides a false answer to this question, the entry would be considered intentionally false and in violation of § 145.12. The International Association of Machinist Aircraft Workers (IAMAW), International Brotherhood of Teamsters—Aircraft Division (IBT–AD), Transportation Trades Department (TTD) of the AFL–CIO, and Transportation Workers Union (TWU) endorsed the new requirement. The IAMAW stated that it is a common sense reform. The IBT–AD stated that the proposal did not go far enough, and suggested that the FAA consider maintaining a list of persons or entities that have been involved in repair station certificate revocations, or require an applicant to affirmatively disclose whether it has previously had a certificate revoked. AIA, ASA, GAMA, NATA, and HEICO Aerospace generally supported the FAA’s intent to follow the NTSB’s recommendation. However, with regard to the FAA’s proposal to change the word ‘‘entitled’’ in § 145.53(a) to ‘‘eligible,’’ as one means to implement the denial provisions, AIA stated that it was unclear what the specifics of being found ‘‘eligible’’ are, and that the term left too much discretion to FAA inspector preference or interpretation. AIA also stated that its membership recognizes that there may be circumstances where the public interest is best served by denying a certificate, even when the other conditions are met. AIA suggested that ‘‘entitled’’ be retained with an additional exception that would remove the variability of local inspector preference or interpretation, but which would retain the intent of the proposal. The FAA agrees with the suggestion from AIA that the term ‘‘entitled’’ be retained in § 145.53(a), and that an additional exception to entitlement reference be added to include the new exceptions. The FAA also agrees and will retain the current language that provides for entitlement of the VerDate Mar<15>2010 15:41 Aug 11, 2014 Jkt 232001 certificate when the requirements of part 145 have been met. Paragraph (a) of § 145.53, however, is amended to add the denial authority (found in new § 145.51(e)) as another exception to the current certificate entitlement provision. EAA believes it is not an applicant’s responsibility to determine if certain individuals are subject to this provision and that the responsibility for this determination should remain with the FAA. EAA is concerned that the proposal introduces uncertainty and confusion into the application process by not providing a method for determining whom a repair station should not employ. To address this concern, the FAA will respond to an applicant request for information regarding specific persons. MARPA stated that the proposed language would permit the FAA to deny a certificate to a range of applicants associated with previous certificate revocations and requested that the entire proposed rule be rescinded. MARPA noted the following effects this proposal would have on the repair station industry: • It would impose a de facto blacklist of certain parties, potentially excluding those on the list from significant participation in the repair station industry, and could include personnel who may have had nothing to do with the offenses that caused the prior repair station certificate to be revoked. • It would have a chilling effect on subsequent employment of experienced repair station personnel who had previous association with repair stations whose certificates were revoked. • Although the language is permissive (‘‘may be denied’’), the expense of a repair station certificate application would make it impractical to proffer an application that might be denied on a discretionary basis, further leading to an effective blacklisting of such persons. MARPA noted further that in cases where a repair station (especially a small one) accepts a revocation by the FAA due to a lack of resources to fight the action, the applicant would be effectively blacklisted from the repair station industry. It added that in such cases in the past, FAA employees have specifically advised certificate holders to accept the proposed revocation and then to reapply. For all past revocations, the proposed rule would effectively impose a new penalty that was unanticipated at the time of the original revocation. MARPA also stated that the ex post facto imposition of such a penalty on a class of persons represents a Bill of Attainder (or a Regulation of PO 00000 Frm 00017 Fmt 4700 Sfmt 4700 46977 Attainder) and is in violation of Article I, Section 9, of the U.S. Constitution. The FAA does not agree with MARPA’s assertion that the new denial authority amendments to § 145.51 would effectively impose a new penalty that was unanticipated at the time of the original revocation, and therefore that this would amount to an ex post facto imposition of a penalty on a class of persons. Because the agency did not discuss the prospective nature of the proposal in the NPRM, it is understandable that MARPA raised this concern. The FAA intends, however, that the new denial authority in § 145.51(e) will be exercised only prospectively. It will be applied only in instances where the revocation at issue takes place after the effective date of this rule. Accordingly, no ‘‘ex post facto imposition of a penalty’’ issue could arise. The FAA also disagrees with MARPA’s characterization that the denial provision would represent a Bill of Attainder (or a Regulation of Attainder). Black’s Law Dictionary defines Bill of Attainder as: ‘‘Legislative acts, no matter what their form, that apply either to named individuals or to easily ascertainable members of a group in such a way as to inflict punishment on them without a judicial trial.’’ 3 Section 145.51(e) will not provide for punishment of any person without due process. First, a full appeal process through the NTSB and the federal courts is provided by 49 U.S.C. 44709 for any person identified in paragraph (e)(1)— an applicant who holds a repair station certificate that is undergoing a revocation process, or who held a repair station certificate that had been revoked. Second, to respond to the commenters’ concerns about an absence of due process for individuals identified in paragraph (e)(2) and (3), we are adding a new paragraph (f) to § 145.51 to provide that, if the FAA revokes a repair station certificate for violations of the repair station regulations, those individuals identified in § 145.51(e)(2) and (3) may be subject to an order finding that they materially contributed to the circumstances causing the revocation. Issuance of these orders will be governed by the FAA’s Investigative and Enforcement Procedures, 14 CFR part 13—specifically the procedures set forth in § 13.20 will apply, including the right to a hearing under subpart D of part 13. In order to effectively implement this new provision, the FAA’s investigation underpinning the revocation process 3 Black’s Law Dictionary, West Publishing Company (1079). E:\FR\FM\12AUR1.SGM 12AUR1 pmangrum on DSK3VPTVN1PROD with RULES 46978 Federal Register / Vol. 79, No. 155 / Tuesday, August 12, 2014 / Rules and Regulations must develop evidence that supports the factual allegations leading to a charge that the identified person materially contributed to the circumstances that caused the revocation. The FAA will develop guidance to assist agency inspectors in gathering and documenting the necessary evidence simultaneously with an investigation leading to the associated repair station certificate revocation. In accordance with § 13.20, except in egregious matters in which the Administrator determines that an emergency exists requiring immediate issuance of an order, each identified individual would first be provided with a notice that would include the pertinent factual allegations and the charge that he or she materially contributed to the circumstances causing the revocation. Though § 13.20 presently does not provide for the opportunity for a person who receives a notice under that section to participate in an informal conference with an FAA attorney prior to the FAA issuing an order, the agency is simultaneously with this rule amending the part 13 regulation to provide for that option. The FAA believes that providing this option for all orders issued under § 13.20 would be beneficial for all affected parties because often the issues are resolved, or at least narrowed, at that stage, providing for economies of resources. Section 145.51(e) is nearly identical to the similar rule for air carriers. In the same manner that § 119.39(b) applies to air carriers, this new repair station rule is intended to help ensure those persons who exercise operational authority over business decisions in a repair station are those who have not demonstrated an unwillingness or an inability to ensure safe and compliant operations. Along these lines, the FAA views the restriction on new repair stations being controlled or managed by persons identified in § 145.51(e)(2) and (3) as a continuing and ongoing requirement. In other words, the FAA would look with disfavor on the actions of a certificate holder who, sometime after obtaining the certificate with no association with key personnel identified in those paragraphs, becomes associated with one or more of the persons the regulation was designed to preclude from controlling repair station operations. In egregious cases, such a repair station could be subject to an enforcement action under § 145.51(e) based on its not meeting the original certification requirement. The FAA Administrator has previously decided that a regulation imposing a requirement addressed to an VerDate Mar<15>2010 15:41 Aug 11, 2014 Jkt 232001 ‘‘applicant’’ can impose an ongoing and continuing qualification requirement. See Alphin Aircraft, Inc., FAA Order No. 97–10 at 3 (1997), 1997 WL 93230 (FAA). For air carriers, in applying the similar provisions of 14 CFR 119.39(b), the FAA considers the obligation for an air carrier not to be controlled by one or more of these persons to be ongoing and continuing. For the purposes of implementing § 145.51(e)(2) and (3), the notice sent to an identified individual will set forth the factual allegations supporting the agency’s determination and advise the person that he or she may be subject to an order finding that he or she materially contributed to the revocation circumstances. The notice will also advise the person that, if the order described above is issued and affirmed, the person’s name will be included in an FAA data base of individuals that have been found to have materially contributed to the circumstances causing a repair station certificate revocation. In addition, the notice will also advise that, under § 145.51(e), an applicant for a new repair station certificate in the future may be denied the certificate if a person in this data base will have the same or similar position of authority or control over the new repair station’s operations. The notice should also advise that, as described above, the person may be denied a similar controlling role in an existing repair station. The means to facilitate this preclusion would be an action against the repair station to enforce the provisions of § 145.51(e). AEA stated that it did not understand the proposed change to § 145.55—that a surrender of a certificate was not effective until the FAA accepted the certificate for cancellation. AEA stated the proposed language was not clear and recommended the current text be retained without that addition. ARSA was vehemently opposed to the FAA having to ‘‘accept’’ the surrender of a repair station certificate and therefore requested the proposal not be adopted. Airborne Maintenance and Engineering Services, Inc. (Airborne) commented that adopting the proposed requirement would encourage entities working on the fringes of the regulations to impede or otherwise not support FAA inspector corrective actions and create a disincentive for a poorly run repair station to voluntarily surrender its certificate. The FAA is including the proposed amendment to § 145.55(a) to make clear that an attempt by a repair station undergoing an enforcement investigation to surrender its certificate in order to stop the investigation will be PO 00000 Frm 00018 Fmt 4700 Sfmt 4700 ineffective, as the certificate will remain effective until the FAA accepts it for cancellation or otherwise takes appropriate enforcement action. As a consequence, the investigation would continue, and, if appropriate, enforcement action could be taken. If serious violations of the regulations were found and the FAA concluded that the certificate holder lacked qualifications to hold the certificate, an order revoking the certificate could ensue. E. Falsification of Records (§ 145.12) The FAA is adding new § 145.12 to prohibit any fraudulent or intentionally false entry or omission of a material fact in any application, record, or report made under part 145. Among other things, this new prohibition will help discourage applications that fail to include the names of the persons contemplated by the denial provisions found in § 145.51(e). The sanction for any of those acts is suspension or revocation of the repair station certificate and any certificate, approval, or authorization issued by the FAA and held by the person committing the act. Several companies, along with three associations and one individual, commented on this proposal. None of the commenters disagreed with the need to prohibit fraudulent or intentionally false entries. The most common concerns were that the proposed requirement lacked due process, and that it was redundant to a similar prohibition in the maintenance rules, specifically 14 CFR 43.12. At least three of the commenters raised issues concerning determinations made by individual inspectors in initiating enforcement actions. Gulfstream Aerospace Corporation questioned whether ‘‘intent’’ to make the false entry must be determined. Other than expressing concerns over possible abuses resulting from determinations made by individual inspectors, the comments concerning a lack of due process were rather vague and unspecific. The FAA notes that any report of an alleged violation made by an individual inspector will be reviewed at several levels within the FAA—including by legal counsel— before a notice or order is issued. Further, legal counsel will not issue a notice or order unless the agency has evidence that such a violation, in fact, had occurred. In any case brought by the FAA against an alleged violator of a falsification regulation, or any other regulation, the burden of proving the violation is on the agency, and the affected person is entitled to a full appeal process. Alleged violators of a E:\FR\FM\12AUR1.SGM 12AUR1 pmangrum on DSK3VPTVN1PROD with RULES Federal Register / Vol. 79, No. 155 / Tuesday, August 12, 2014 / Rules and Regulations prohibition against making intentionally false entries, as with any other alleged violation, are entitled to due process in accordance with 49 U.S.C. 44709 or 46301 and associated FAA and NTSB regulations. In answer to a comment by Gulfstream Aerospace Corporation as to whether ‘‘intent’’ must be determined, the answer is yes, but only to the extent that the false entry was made knowingly. That is, at the time the person made the false entry, the person knew the entry was false. Other FAA regulations already prohibit fraudulent or intentionally false entries, either of which necessarily incorporates an element of intentionality in making the false entry, i.e., the person knew at the time of making the entry that it was false, but the person made the entry anyway. Similarly, an explicit element of the new paragraph (b) in this final rule (discussed below) is a knowing concealment of a material fact. As with knowingly making a false entry, paragraph (b) is triggered when a person knew that he or she failed to include the material fact in the document at issue. As to the comments that opined that the proposal was redundant to the falsification prohibition already existing in the maintenance rules (§ 43.12), the FAA addressed both the differences between that rule and the one proposed for repair stations, and the need for this regulation in the NPRM. While § 43.12 provides for suspension or revocation of the applicable airman and other mentioned certificates and privileges for requisite maintenance record falsifications or fraudulent acts, it does not provide for repair station certificate suspension or revocation for the same kind of conduct (77 FR 30066, May 21, 2012). In addition, we are adding two additional consequences that will apply to the making of intentionally false entries or omissions. The first additional potential consequence is that the proscribed conduct may warrant imposition of a civil penalty either in addition to or in combination with a certificate action. This sanction option reflects the civil penalty authority granted to the FAA by the Congress in 49 U.S.C. 46301, whereby the FAA can assess civil penalties against both individuals and businesses for violations of the statute and the agency’s regulations. Depending on the circumstances, sometimes a civil penalty may be an appropriate deterrent. The second additional consequence is that the FAA may deny an application if it is supported by an intentionally false entry or omission. The FAA views this consequence to be VerDate Mar<15>2010 15:41 Aug 11, 2014 Jkt 232001 within the scope of what was proposed in the NPRM. This reflects the common sense notion that, if a certificate could be suspended or revoked based on an intentional falsification, it would make no economic sense for the agency to first issue the certificate and then turn around and initiate a certificate action based on the falsification. This change is consistent with a November 2013 amendment to 14 CFR part 121, in which the agency added a new § 121.9, which, among other things, provides for the imposition of a civil penalty and/or the denial of an application if a person made or caused to be made a fraudulent or intentionally false statement or knowing omission as described in that section (78 FR 67836; Nov. 12, 2013). The agency notes that, while § 43.12(b) does provide for the suspension or revocation of an applicable operator certificate, in addition to the applicable airman certificate, it does not provide for the suspension or revocation of a repair station certificate. Because of the importance to safety of accurate records, this final rule adopts the text proposed that provides for the suspension or revocation of not only the repair station certificate but also of any FAA-issued certificate, approval, or authorization held by the person who committed the falsification. As stated in the NPRM, in view of the FAA’s limited resources, both the agency and ultimately the flying public depend heavily on the integrity of the system of self-reports. Because of the importance of honest and trustworthy records and reports to aviation safety, the FAA believes that any person who makes or causes to be made an intentionally false or fraudulent entry in any record or report the agency needs to provide proper oversight of repair stations should be subject to enforcement action as noted above. Accordingly, the agency may suspend or revoke not only the repair station certificate, but any certificate, approval, or authorization issued by the FAA and held by that person.4 Another company, Airborne, expressed concern that most of the other falsification prohibition regulations referenced in the NPRM (e.g., §§ 61.37, 61.59, 63.18, 63.20, 65.18, 65.20, and 67.403) refer to certificates held by individuals, not companies. Airborne stated that its review of other operating rules (e.g., those in parts 121, 125, 129, and 135) found no similar falsification provisions applicable to those certificate holders. The company also referenced Chapter 7 of the FAA’s Compliance and 4 77 PO 00000 FR 30067; May 21, 2012. Frm 00019 Fmt 4700 Sfmt 4700 46979 Enforcement Program, FAA Order 2150.3B, Paragraph 2.a(1), which states that the agency generally suspends the certificates of individual certificate holders for violations, but usually takes civil penalty action against air carriers and airports. The commenter was especially concerned that a wrongful act (fraudulent or intentional falsification) by a single individual could result in the closing of an entire certificated entity. Although Airborne may be correct in observing that the other falsification prohibition regulations cited in the NPRM refer to suspending or revoking certificates held by individuals and not by companies, the FAA does not believe that is a reason to refrain from issuing this rule. Besides, as discussed briefly above, in November 2013 (approximately a year and a half after the Repair Station NPRM), the FAA published amendments to 14 CFR part 121, which added a new § 121.9 (Fraud and falsification), which provided for sanctions against air carriers and persons employed by them for violations of similar proscribed conduct. Those sanctions include: (1) A civil penalty; (2) suspension or revocation of any FAA-issued certificate held by that person; (3) the denial of an application for any FAA-issued approval; and (4) the removal of any FAA-issued approval (78 FR 67836; November 12, 2013). As noted in the NPRM, the importance of accurate records to assist the FAA in exercising its aviation safety oversight responsibilities cannot be overstated. If repair station officials know that one consequence of falsifying records is the loss of the repair station certificate, they may be motivated to produce accurate and truthful records. The FAA also notes that Airborne, in opposing a regulation that could result in the revocation of a repair station’s certificate, selectively quoted from the FAA’s Compliance and Enforcement Program, FAA Order 2150.3B, when it stated: ‘‘Thus, the agency generally suspends the certificates of individual certificate holders for violations. However, the FAA usually takes civil penalty action against air carriers and airports. . . .’’ Airborne, however, neglected to reference the next sentence in Order 2150.3B, which states: ‘‘Nevertheless, when the FAA determines that safety considerations warrant it, the agency will suspend the certificate of any type of certificate holder. In no case will the FAA take civil penalty action alone when remedial legal action is necessary or E:\FR\FM\12AUR1.SGM 12AUR1 pmangrum on DSK3VPTVN1PROD with RULES 46980 Federal Register / Vol. 79, No. 155 / Tuesday, August 12, 2014 / Rules and Regulations appropriate.’’ 5 Additional FAA guidance in this area is found in paragraph 2.b(4) of the Order which states that revocation is normally appropriate when a certificate-holding entity deliberately or flagrantly violates the statute or regulations or falsifies records. Moreover, in the FAA’s published sanction guidance, the sanction generally called for in the case of an intentionally false or fraudulent entry, reproduction, or alteration in a record or report is certificate revocation.6 As discussed above, however, we have added the additional sanctions of a civil penalty and the denial of an application. Consistent with § 121.9 (Fraud and falsification), three different sanctions will be available to the agency to enforce this rule. Section 145.12(c) provides that committing an act prohibited by either paragraph (a) or (b) is a basis for any one or any combination of (1) suspension or revocation, (2) a civil penalty, and (3) denial of an application. The addition of the civil penalty sanction addresses commenters’ concerns that in some cases a civil penalty would be more appropriate for a company than a revocation of its certificate. Whether a civil penalty, a certificate action, or both, is an appropriate sanction would depend on the actual circumstances of the matter and a consideration of appropriate factors, including agency sanction guidance, related to determining the sanction or sanctions to be applied. As discussed above and in the NPRM, the FAA has long considered intentional falsification of required records to be a serious safety-related problem with a potential for dire consequences. The referenced regulatory prohibitions against individual falsifications are long-standing, as are the recommended sanctions for both individuals and entities in the agency’s published sanction guidance. Including in the regulations a proscription against entities falsifying records made, kept, or used to show compliance with a requirement is in the public interest, and the FAA is adopting this section as proposed, but with the added clarification that a falsification in material submitted in support of an application is also proscribed. This is to forestall an argument that information submitted, while false, technically was not in the application, and therefore was 5 FAA Order 2150.3B, Ch. 7, Para. 2.a(1). Order 2150.3B, Appendix B, Table of Sanctions, in Part Two, Section 1 (U.S. Air Carriers, U.S. Commercial Operators, Part 125 Operators, and Part 129 Operators) in Figure B–1–j (Records and Reports), in (1)(a). 6 FAA VerDate Mar<15>2010 15:41 Aug 11, 2014 Jkt 232001 outside the reach of the regulation. Also, in response to a comment, the FAA is adding a proscription against concealment of a material fact by omission, as discussed below. Finally ARSA, in stating it had no objection to the proposal, also noted that the FAA should be mindful that similar sections in 14 CFR include omission of material information as equally egregious. Consequently, ARSA suggested that the FAA may wish to consistently express all prohibitions of such actions. The FAA agrees with ARSA’s recommendation that the regulation should prohibit omissions of material information. ARSA’s reference in its comments to similar sections in 14 CFR that include omission of material information may be a reference to the omission prohibition in 14 CFR 3.5(c)(2). The FAA issued 14 CFR part 3 in 2005 to prohibit persons from making fraudulent or intentionally false statements in records when conveying information in an advertisement or sales transaction about the airworthiness of a type-certificated product. Section 3.5(c)(2) provides, in pertinent part, that no person may make, or cause to be made, through the omission of material information, a representation that a type-certificated product is airworthy if that representation is likely to mislead a consumer. Clearly, omissions of material information can be as damaging as the insertion of false information in a required document. This issue is brought to light in contemplation of new § 145.51(e) (Application for certificate), in which the FAA seeks information on who an applicant proposes to place in management or controlling positions. Information on the compliance history of these personnel is important to the FAA in determining the qualifications, including the compliance disposition, of those persons who could make operational decisions. Omitting the requested information could be as damaging as making an intentionally false entry. The NTSB, in interpreting the plain language of current falsification prohibition regulations, has held that the failure to make an entry cannot constitute an intentionally false entry because the omission is not an entry.7 The FAA aims to close this ‘‘loophole’’ by adding new paragraph (b) to new § 145.12, to provide that no person may, by omission, knowingly conceal or cause to be concealed, a material fact. 7 Administrator v. Alvarez, 5 NTSB 1906, 1907 NTSB Order No. EA–2504, 1987 WL 122066 (N.T.S.B.) PO 00000 Frm 00020 Fmt 4700 Sfmt 4700 This text also finds support in the Government’s general falsification prohibition statute, 18 U.S.C. 1001, which, in paragraph (a)(1), provides for criminal penalties for whoever falsifies, conceals, or covers up by any trick, scheme, or device a material fact. The FAA has also eliminated the phrase ‘‘required to be’’ with regard to any record or report made, kept, or used to show compliance. The agency has done so to forestall an argument a falsifier could make that, although the falsity occurred in a record or report that was made, kept, or used to show compliance, it was not a record or report that was required by a regulation to be made or kept. The NTSB has already rejected that argument in addressing a violation of § 43.12.8 There, the respondent argued that he was not required to use those particular records that formed the basis for the falsification charge. The NTSB agreed instead with the FAA’s position that the rule reaches falsifications in any maintenance documents kept or used to show compliance with a requirement in part 43, whether or not the documents are records or reports in a form or format the FAA requires an individual to keep or to use for that purpose. The NTSB offered a second rationale in that case for construing the term ‘‘required’’ in the regulation. The term should not be restricted to mean ‘‘required’’ by the FAA Administrator. The NTSB decision noted that the term can also be broadly construed to mean required by the circumstances for which compliance is sought or necessary. Here, the respondent presented documents purporting to establish compliance with various airworthiness directives to establish that the aircraft was airworthy. The respondent’s submission of the records attesting the airworthiness directives’ accomplishment represented his recognition that they constitute records that he was required to make, keep, and use in order to satisfy the requirements of part 43. Even though NTSB case law should preclude an alleged falsifier from arguing the false entry at issue was not in a required record or report, the FAA determined that eliminating the term from this regulation will, at a minimum, remove the potential ambiguity. The FAA also notes that a similar falsification prohibition in the FAA’s certification rules (14 CFR part 21) does not contain the phrase ‘‘required to be’’ to modify the phrase ‘‘kept, made, or used.’’ Specifically, § 21.2(a)(2) prohibits any fraudulent, intentionally 8 Administrator v. Anderson, NTSB Order No. EA–4564, 1997 WL 355350 (N.T.S.B.). E:\FR\FM\12AUR1.SGM 12AUR1 Federal Register / Vol. 79, No. 155 / Tuesday, August 12, 2014 / Rules and Regulations pmangrum on DSK3VPTVN1PROD with RULES false, or misleading statement in any record or report that is kept, made, or used to show compliance with any requirement of this part. The FAA’s removal of the phrase ‘‘required to be’’ from the text proposed in the NPRM simply aligns this rule with the existing certification falsification provision and, as noted above, accords with NTSB precedent. F. Other Specific Comments The comments in this section concern proposed changes in definitions, contract maintenance, and compliance costs. All of the concerns raised by the commenters in this section are addressed by the FAA’s withdrawal of the applicable proposed sections. AEA, ARSA, CASE, EAA, and some repair stations voiced objection to the definitions of avionics and line maintenance proposed in § 145.1003, Definition of terms. AEA did not concur with the definition of avionics and suggested that it should include both mechanical and electronic radios, indicators, and instruments. Both AEA and ARSA commented that although the FAA defined avionics, the agency never used the term in part 145. ARSA added that the definition is unnecessary and should be removed in its entirety. AEA and EAA objected to the definition of line maintenance, stating that the FAA has not given justification for establishing a new requirement on where line maintenance may be performed. AEA stated that maintenance authorizations may be limited to commercial operators; however the definition of line maintenance is much broader than unscheduled maintenance for a part 121 and 135 air carrier. ARSA stated that the line maintenance definition should be stricken in its entirety and that the term can be defined only within the context of a repair station’s capabilities and the operator’s requirements. Therefore, the amount, type, and extent of line maintenance is already controlled by the performance standards; the only additional ‘‘control’’ needed under part 145 is the validation that the repair station has appropriate capabilities and quality procedures. ARSA also stated that if the agency keeps the definition it cannot be limited purely to work under parts 121 and 135; it must include part 91, subpart K, at a minimum. Further, the time allotment must be removed; it places an artificial barrier on the type of work that can and should be performed with limited resources in accordance with part 43. GAMA commented on the proposed section covering contract maintenance, VerDate Mar<15>2010 15:41 Aug 11, 2014 Jkt 232001 stating that on-site inspection of the subcontractor would be required before any maintenance is performed by that person. GAMA emphasized that this is not stated in the rule and should not be added as an interpretation without being added to the rule. For organizations with multiple service facilities, the proposed rule would have required each facility to inspect the subcontractor, which would place an undue burden on both the repair station and the subcontractor. Almost all commenters disagreed with the FAA’s economic forecast. They stated that the FAA’s calculations grossly underestimated the costs to industry. EAA added that at a time when the aviation industry is in perilous condition, it does not seem appropriate to impose a large economic impact on aviation businesses and their customers for little or no safety benefit. NATA, AOPA, Mobile Transponder Services, LLC, and others stated that the FAA identified two compliance costs to repair stations: The cost to apply for a rating and the cost to revise their manuals. However, the FAA also proposed significant changes to training program requirements but did not account for the resources required to develop the new training curriculum and the staff-hours necessary to re-train all applicable staff members. Some commenters also stated the FAA did not consider the complications and costs of limiting mobile maintenance operations, particularly to general aviation aircraft owners and operators. These expenses will increase the cost of these elements of the proposed rules exponentially. Additionally, several commenters, including AOPA, noted that the agency estimated the average one-time compliance costs would be $1,146 for a small repair station, and $2,848 for a medium sized repair station. The commenters argued that those costs are just a fraction of the cost of the proposed rule. They also expressed the view that even considering just the costs identified by the FAA (application for rating and revision of manuals) the estimates are unrealistically low. Furthermore, the commenters stated that the costs assigned by the FAA are especially unreasonable if the FAA intended for currently certificated repair stations to complete a letter of compliance, in addition to enduring the entire certification process and revising manuals and other documents. Collectively, the commenters stated that in large repair stations, ‘‘supervisors’’ are often hourly-paid lead personnel. The term ‘‘supervisor’’ in some instances may refer to the administrative supervisor who does not PO 00000 Frm 00021 Fmt 4700 Sfmt 4700 46981 give technical guidance to those who are unfamiliar with all the necessary job requirements. Therefore, the commenters argued that naming each supervisor on a roster, as proposed in the NPRM, would be ineffective for enhancing safety. The FAA is withdrawing the overarching ratings proposal with associated certification and personnel requirements. The proposals for changes to definitions, contract maintenance, and the required 24-month transition are inseparably linked to the overarching proposals and are not adopted in this final rule. This rule contains only the amendments that add denial authority, require FAA acceptance of a surrendered certificate, and prohibit fraudulent or intentionally false entries and omissions, as well as several minor administrative changes. V. Regulatory Notices and Analyses A. Regulatory Evaluation Changes to Federal regulations must undergo several economic analyses. First, Executive Order 12866 and Executive Order 13563 direct that each Federal agency shall 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 of 1980 (Pub. L. 96–354) requires agencies to analyze the economic impact of regulatory changes on small entities. Third, the Trade Agreements Act (Pub. L. 96–39) prohibits agencies from setting standards that create unnecessary obstacles to the foreign commerce of the United States. In developing U.S. standards, the Trade Act requires agencies to consider international standards and, where appropriate, that they be the basis of U.S. standards. Fourth, the Unfunded Mandates Reform Act of 1995 (Pub. L. 104–4) requires agencies to prepare a written assessment of the costs, benefits, and other effects of proposed or final rules that include a Federal mandate likely to result in the expenditure by State, local, or tribal governments, in the aggregate, or by the private sector, of $100 million or more annually (adjusted for inflation with base year of 1995). This portion of the preamble summarizes the FAA’s analysis of the economic impacts of this final rule. Department of Transportation Order DOT 2100.5 prescribes policies and procedures for simplification, analysis, and review of regulations. If the expected cost impact is so minimal that a proposed or final rule does not warrant a full evaluation, this order permits that a statement to that effect E:\FR\FM\12AUR1.SGM 12AUR1 pmangrum on DSK3VPTVN1PROD with RULES 46982 Federal Register / Vol. 79, No. 155 / Tuesday, August 12, 2014 / Rules and Regulations and the basis for it to be included in the preamble if a full regulatory evaluation of the cost and benefits is not prepared. Such a determination has been made for this final rule. The reasoning for this determination follows: This rule amends regulations for repair stations in four areas. First, it introduces a new exception that enables the FAA to deny an applicant a repair station certificate if the applicant previously held a repair station certificate that had been revoked, or if certain key individuals (those that would be in a management position or who would have control or a substantial ownership interest in the applicant) had materially contributed to the circumstances that caused a previous repair station certificate revocation. Along these lines, the rule also provides that a repair station’s attempt to surrender its certificate is not effective until the FAA accepts the certificate for cancellation. Secondly, the rule provides that false or fraudulent entries or omissions in applications, records, or reports may result in revocation of any certificate issued by the FAA. Thirdly, the rule adopts administrative changes to clarify the intent of the current rule. Lastly, the rule corrects several errors in the repair station regulations. Current regulations do not allow the FAA to deny a repair station certificate to a technically qualified applicant, regardless of conduct. This rule permits the FAA to deny an application if the applicant previously had a certificate revoked or if the certificate is in the process of being revoked, or the applicant intends to fill a position with an individual as described in part 145.51(e). To determine if an applicant fits the criteria described in part 145.51(e), the FAA will add one twopart question to FAA Form 8310–3 ‘‘Application for Repair Station Certificate and/or Rating.’’ The new question is: ‘‘Will any person as described in part 145.51(e) be involved with the management, control, or have substantial ownership of the repair station? If ’YES’, provide a detailed explanation on a separate page.’’ If an applicant declares ‘‘No,’’ no additional explanation by the applicant is required. If an applicant declares ‘‘Yes,’’ the applicant is required to give a written narrative of the circumstances leading to the revocation. Based on the information provided in the narrative, the FAA can deny the applicant a repair station certificate, if warranted. In addition, an applicant, on occasion, may find it necessary to contact FAA personnel to determine if a certain individual has been identified as a contributor to a repair station certificate VerDate Mar<15>2010 15:41 Aug 11, 2014 Jkt 232001 revocation. The time expended by both parties for this query, as well as the increased time required for an applicant to complete revised FAA Form 8310–3, is expected to be negligible. Since the expected outcome will be a minimal impact with positive net benefits, a regulatory evaluation was not prepared. The FAA has, therefore, determined that this final rule is not a ‘‘significant regulatory action’’ as defined in section 3(f) of Executive Order 12866, and is not ‘‘significant’’ as defined in DOT’s Regulatory Policies and Procedures. B. Regulatory Flexibility Determination The Regulatory Flexibility Act of 1980 (Pub. L. 96–354) (RFA) establishes ‘‘as a principle of regulatory issuance that agencies shall endeavor, consistent with the objectives of the rule and of applicable statutes, to fit regulatory and informational requirements to the scale of the businesses, organizations, and governmental jurisdictions subject to regulation.’’ To achieve this principle, agencies are required to solicit and consider flexible regulatory proposals and to explain the rationale for their actions to assure that such proposals are given serious consideration.’’ The RFA covers a wide-range of small entities, including small businesses, not-forprofit organizations, and small governmental jurisdictions. Agencies must perform a review to determine whether a rule will have a significant economic impact on a substantial number of small entities. If the agency determines that it will, the agency must prepare a regulatory flexibility analysis as described in the RFA. However, if an agency determines that a rule is not expected to have a significant economic impact on a substantial number of small entities, section 605(b) of the RFA provides that the head of the agency may so certify and a regulatory flexibility analysis is not required. The certification must include a statement providing the factual basis for this determination, and the reasoning should be clear. For this regulatory flexibility analysis, the FAA used the SBA-defined categories of ‘‘small’’ (1,500 or fewer employees) and ‘‘non-small’’ (more than 1,500 employees) for the aircraft manufacturing industry. As of May 2013, there were 4,779 FAA certificated repair stations. Of these repair stations, a vast majority (99.5 percent or 4,753) are defined as ‘‘small.’’ The last time a PO 00000 Frm 00022 Fmt 4700 Sfmt 4700 certificate application was made by a ‘‘non-small’’ entity was in 2005.9 During the three-year period from 2010 through 2012, the FAA received 526 applications for repair station certification, for an average of 175 applications per year.10 All 526 applications for certification were submitted by small entities. Consequently, it is projected that most future applicants for repair stations certificates will also be small entities. Accordingly, this final rule will impact a substantial number of small entities. The SBA Office of Advocacy provided comments to the FAA on the NPRM. One comment was that the cost estimate for the re-certification of repair stations (which was prompted by a new ratings system) is understated. The FAA withdrew the provision for a new ratings system from the final rule. Thus, the cost estimate for recertification of repair stations has been eliminated. The SBA also commented that small industry representatives stated that they lack the knowledge and ability to track parties whose certificates were either revoked or voluntarily surrendered during an enforcement proceeding, thereby making the cost of complying with the ‘‘bad actor’’ provisions highly unpredictable or impossible. The representatives recommended that should this provision be adopted then the FAA should maintain a list of disqualified individuals. Repair station applicants could then query the FAA regarding that information on certain persons. To address this concern, the FAA will respond to an applicant request for information regarding specific persons; however a list of disqualified persons will not be made available to the public. There will be a substantial number of small entities impacted by this rule. However the expected economic impact to these entities will be minimal. To assist in implementing this rule, the FAA will add one additional two-part question to the application for a repair station certificate. To further assist applicants in answering this question, the FAA will answer an applicant’s inquiry as to whether a named individual has contributed to the revocation of a repair station certificate. Thus, the cost of this incremental time required for these activities is expected to be minimal. If an agency determines that a rulemaking will not result in a 9 Federal Aviation Administration Safety Performance Analysis System Database (SPAS). 10 SPAS Database—Applications for Repair Station Certificates: CY 2010—185 applications; CY 2011—171 applications; CY 2012—168 applications. E:\FR\FM\12AUR1.SGM 12AUR1 Federal Register / Vol. 79, No. 155 / Tuesday, August 12, 2014 / Rules and Regulations significant economic impact on a substantial number of small entities, the head of the agency may so certify under section 605(b) of the RFA. Therefore, as provided in section 605(b), the head of the FAA certifies that this rulemaking will not result in a significant economic impact on a substantial number of small entities. C. International Trade Impact Assessment The Trade Agreements Act of 1979 (Pub. L. 96–39), as amended by the Uruguay Round Agreements Act (Pub. L. 103–465), prohibits Federal agencies from establishing standards or engaging in related activities that create unnecessary obstacles to the foreign commerce of the United States. Pursuant to these Acts, the establishment of standards is not considered an unnecessary obstacle to the foreign commerce of the United States, so long as the standard has a legitimate domestic objective, such as the protection of safety, and does not operate in a manner that excludes imports that meet this objective. The statute also requires consideration of international standards and, where appropriate, that they be the basis for U.S. standards. The FAA has assessed the potential effect of this final rule and determined that it will impose the same costs on domestic and international entities and thus has a neutral trade impact. pmangrum on DSK3VPTVN1PROD with RULES D. Unfunded Mandates Assessment Title II of the Unfunded Mandates Reform Act of 1995 (Pub. L. 104–4) requires each Federal agency to prepare a written statement assessing the effects of any Federal mandate in a proposed or final agency rule that may result in an expenditure of $100 million or more (in 1995 dollars) in any one year by State, local, and tribal governments, in the aggregate, or by the private sector; such a mandate is deemed to be a ‘‘significant regulatory action.’’ The FAA currently uses an inflation-adjusted value of $151.0 million in lieu of $100 million. This final rule does not contain such a mandate; therefore, the requirements of Title II of the Act do not apply. E. Paperwork Reduction Act The Paperwork Reduction Act of 1995 (44 U.S.C. 3507(d)) requires that the FAA consider the impact of paperwork and other information collection burdens imposed on the public. According to the 1995 amendments to the Paperwork Reduction Act (5 CFR 1320.8(b)(2)(vi)), an agency may not collect or sponsor the collection of information, nor may it impose an VerDate Mar<15>2010 15:41 Aug 11, 2014 Jkt 232001 information collection requirement unless it displays a currently valid Office of Management and Budget (OMB) control number. This final rule will impose a revision to the existing information collection requirements previously approved under OMB Control Number 2120–0682, Application for Repair Station Certificate and/or Rating (FAA Form 8310–3). The FAA has determined that the revision to the information collection is not significant or substantive and does not change the terms of the existing OMB approval. As required by the Paperwork Reduction Act, the FAA submitted the information collection revision to OMB for its review to ensure that the public record is accurate. F. International Compatibility and Cooperation (1) In keeping with U.S. obligations under the Convention on International Civil Aviation, it is FAA policy to conform to International Civil Aviation Organization (ICAO) Standards and Recommended Practices to the maximum extent practicable. The FAA has determined that there are no ICAO Standards and Recommended Practices that correspond to these proposed regulations. (2) Executive Order (EO) 13609, Promoting International Regulatory Cooperation, promotes international regulatory cooperation to meet shared challenges involving health, safety, labor, security, environmental, and other issues and to reduce, eliminate, or prevent unnecessary differences in regulatory requirements. The FAA has analyzed this action under the policies and agency responsibilities of EO 13609, and has determined that this action would have no effect on international regulatory cooperation. G. 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 312(d) and involves no extraordinary circumstances. VI. Executive Order Determinations A. Executive Order 13132, Federalism The FAA has analyzed this final rule under the principles and criteria of Executive Order 13132, Federalism. The PO 00000 Frm 00023 Fmt 4700 Sfmt 4700 46983 agency determined that this action will not have a substantial direct effect on the States, or the relationship between the Federal 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. B. Executive Order 13211, Regulations That Significantly Affect Energy Supply, Distribution, or Use The FAA analyzed this final rule under Executive Order 13211, Actions Concerning Regulations that Significantly Affect Energy Supply, Distribution, or Use (May 18, 2001). The agency has determined that it is not a ‘‘significant energy action’’ under the executive order and it is not likely to have a significant adverse effect on the supply, distribution, or use of energy. VII. How To Obtain Additional Information A. Rulemaking Documents An electronic copy of a rulemaking document may be obtained by using the Internet— 1. Search the Federal eRulemaking Portal (http://www.regulations.gov); 2. Visit the FAA’s Regulations and Policies Web page at http:// www.faa.gov/regulations_policies/ or 3. Access the Government Printing Office’s Web page at http:// www.gpo.gov/fdsys/. Copies may also be obtained by sending a request (identified by notice, amendment, or docket number of this rulemaking) to the Federal Aviation Administration, Office of Rulemaking, ARM–1, 800 Independence Avenue SW., Washington, DC 20591, or by calling (202) 267–9680. B. Comments Submitted to the Docket Comments received may be viewed by going to http://www.regulations.gov and following the online instructions to search the docket number for this action. Anyone is able to search the electronic form of all comments received into any of the FAA’s dockets by the name of the individual submitting the comment (or signing the comment, if submitted on behalf of an association, business, labor union, etc.). C. 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. A small entity with questions regarding this document, may contact its local E:\FR\FM\12AUR1.SGM 12AUR1 46984 Federal Register / Vol. 79, No. 155 / Tuesday, August 12, 2014 / Rules and Regulations FAA official, or the person listed under the FOR FURTHER INFORMATION CONTACT heading at the beginning of the preamble. To find out more about SBREFA on the Internet, visit http:// www.faa.gov/regulations_policies/ rulemaking/sbre_act/. List of Subjects in 14 CFR Part 145 Air carriers, Air transportation, Aircraft, Aviation safety, Recordkeeping and reporting, Safety. The Amendment In consideration of the foregoing, the Federal Aviation Administration amends 14 CFR part 145 as follows: PART 145—REPAIR STATIONS 1. The authority citation for part 145 continues to read as follows: ■ Authority: 49 U.S.C. 106(g), 40113, 44701– 44702, 44707, 44709, 44717. 2. Section 145.12 is added to subpart A to read as follows: ■ pmangrum on DSK3VPTVN1PROD with RULES § 145.12 Repair station records: Falsification, reproduction, alteration, or omission. (a) No person may make or cause to be made: (1) Any fraudulent or intentionally false entry in: (i) Any application for a repair station certificate or rating (including in any document used in support of that application); or (ii) Any record or report that is made, kept, or used to show compliance with any requirement under this part; (2) Any reproduction, for fraudulent purpose, of any application (including any document used in support of that application), record, or report under this part; or (3) Any alteration, for fraudulent purpose, of any application (including any document used in support of that application), record, or report under this part. (b) No person may, by omission, knowingly conceal or cause to be concealed, a material fact in: (1) Any application for a repair station certificate or rating (including in any document used in support of that application); or (2) Any record or report that is made, kept, or used to show compliance with any requirement under this part. (c) The commission by any person of an act prohibited under paragraphs (a) or (b) of this section is a basis for any one or any combination of the following: (1) Suspending or revoking the repair station certificate and any certificate, approval, or authorization issued by the FAA and held by that person. VerDate Mar<15>2010 15:41 Aug 11, 2014 Jkt 232001 (2) A civil penalty. (3) The denial of an application under this part. ■ 3. Amend § 145.51 by revising paragraph (b), and adding paragraphs (e) and (f) to read as follows: § 145.51 Application for certificate. * * * * * (b) The equipment, personnel, technical data, and housing and facilities required for the certificate and rating, or for an additional rating, must be in place for inspection at the time of certification or rating approval by the FAA. However, the requirement to have the equipment in place at the time of initial certification or rating approval may be met if the applicant has a contract acceptable to the FAA with another person to make the equipment available to the repair station at any time it is necessary when the relevant work is being performed. * * * * * (e) The FAA may deny an application for a repair station certificate if the FAA finds that: (1) The applicant holds a repair station certificate in the process of being revoked, or previously held a repair station certificate that was revoked; (2) The applicant intends to fill or fills a management position with an individual who exercised control over or who held the same or a similar position with a certificate holder whose repair station certificate was revoked, or is in the process of being revoked, and that individual materially contributed to the circumstances causing the revocation or causing the revocation process; or (3) An individual who will have control over or substantial ownership interest in the applicant had the same or similar control or interest in a certificate holder whose repair station certificate was revoked, or is in the process of being revoked, and that individual materially contributed to the circumstances causing the revocation or causing the revocation process. (f) If the FAA revokes a repair station certificate, an individual described in paragraphs (e)(2) and (3) of this section is subject to an order under the procedures set forth in 14 CFR 13.20, finding that the individual materially contributed to the circumstances causing the revocation or causing the revocation process. ■ 4. Amend § 145.53 by revising paragraph (a) to read as follows: § 145.53 Issue of certificate. (a) Except as provided in § 145.51(e) or paragraph (b), (c), or (d) of this PO 00000 Frm 00024 Fmt 4700 Sfmt 4700 section, a person who meets the requirements of subparts A through E of this part is entitled to a repair station certificate with appropriate ratings prescribing such operations specifications and limitations as are necessary in the interest of safety. * * * * * ■ 5. Amend § 145.55 by revising paragraphs (a), (b), and adding paragraph (c)(3) to read as follows: § 145.55 Duration and renewal of certificate. (a) A certificate or rating issued to a repair station located in the United States is effective from the date of issue until the repair station surrenders the certificate and the FAA accepts it for cancellation, or the FAA suspends or revokes it. (b) A certificate or rating issued to a repair station located outside the United States is effective from the date of issue until the last day of the 12th month after the date of issue unless the repair station surrenders the certificate and the FAA accepts it for cancellation, or the FAA suspends or revokes it. The FAA may renew the certificate or rating for 24 months if the repair station has operated in compliance with the applicable requirements of part 145 within the preceding certificate duration period. (c) * * * (3) Show that the fee prescribed by the FAA has been paid. * * * * * ■ 6. Revise § 145.57 to read as follows: § 145.57 Amendment to or transfer of certificate. (a) A repair station certificate holder applying for a change to its certificate must submit a request in a format acceptable to the Administrator. A change to the certificate must include certification in compliance with § 145.53(c) or (d), if not previously submitted. A certificate change is necessary if the certificate holder— (1) Changes the name or location of the repair station, or (2) Requests to add or amend a rating. (b) If the holder of a repair station certificate sells or transfers its assets and the new owner chooses to operate as a repair station, the new owner must apply for an amended or new certificate in accordance with § 145.51. ■ 7. Amend § 145.153 by revising paragraph (b)(1) to read as follows: § 145.153 Supervisory personnel requirements. * * * (b) * * * E:\FR\FM\12AUR1.SGM 12AUR1 * * Federal Register / Vol. 79, No. 155 / Tuesday, August 12, 2014 / Rules and Regulations (1) If employed by a repair station located inside the United States, be appropriately certificated as a mechanic or repairman under part 65 of this chapter for the work being supervised. * * * * * ■ 8. Amend § 145.155 by revising paragraph (a)(2) to read as follows: Issued under authority provided by 49 U.S.C. 106(f), 44701(a), and 44707 in Washington, DC, on July 14, 2014. Michael P. Huerta, Administrator. § 145.155 Inspection personnel requirements. FEDERAL TRADE COMMISSION (a) * * * (2) Proficient in using the various types of inspection equipment and visual inspection aids appropriate for the article being inspected. * * * * * ■ 9. Amend § 145.157 by revising paragraph (a) to read as follows: 16 CFR Part 305 * * * * (d) Except for individuals employed by a repair station located outside the United States, only an employee appropriately certificated as a mechanic or repairman under part 65 is authorized to sign off on final inspections and maintenance releases for the repair station. ■ 12. Amend § 145.221 by revising paragraph (a) to read as follows: pmangrum on DSK3VPTVN1PROD with RULES * Service difficulty reports. (a) A certificated repair station must report to the FAA within 96 hours after it discovers any failure, malfunction, or defect of an article. The report must be in a format acceptable to the FAA. * * * * * Jkt 232001 The amendments published in this Notice involve routine, technical and minor, or conforming changes to the labeling requirements in the Rule. These technical amendments merely provide a routine change to the range and cost information required on EnergyGuide labels. Accordingly, the Commission finds for good cause that public comment for these technical, procedural amendments is impractical and unnecessary (5 U.S.C. 553(b)(A)(B) and (d)). Federal Trade Commission. Final rule. SUMMARY: § 145.213 Inspection of maintenance, preventive maintenance, or alterations. 15:41 Aug 11, 2014 The Commission issued the Energy Labeling Rule in 1979, 44 FR 66466 (Nov. 19, 1979) pursuant to the Energy Policy and Conservation Act of 1975 (‘‘EPCA’’).1 The Rule covers several categories of major household appliances, including central air conditioners and heat pumps. It requires manufacturers of covered appliances to disclose specific energy consumption or efficiency information (derived from DOE test procedures) at the point-ofsale. In addition, each label must include a ‘‘range of comparability’’ indicating the highest and lowest energy consumption or efficiencies for comparable models. The Commission updates these ranges periodically. ACTION: Training requirements. VerDate Mar<15>2010 III. Administrative Procedure Act BILLING CODE 4910–13–P AGENCY: (a) A certificated repair station must have and use an employee training program approved by the FAA that consists of initial and recurrent training. An applicant for a repair station certificate must submit a training program for approval by the FAA as required by § 145.51(a)(7). * * * * * ■ 11. Amend § 145.213 by revising paragraph (d) to read as follows: § 145.221 I. Background [FR Doc. 2014–18938 Filed 8–11–14; 8:45 am] Energy Labeling Rule (a) A certificated repair station located inside the United States must ensure each person authorized to approve an article for return to service under the repair station certificate and operations specifications is appropriately certificated as a mechanic or repairman under part 65. * * * * * ■ 10. Amend § 145.163 by revising paragraph (a) to read as follows: § 145.163 The Federal Trade Commission (‘‘Commission’’) amends its Energy Labeling Rule (‘‘Rule’’) by publishing new ranges of comparability for required labels on central air conditioners, heat pumps, and weatherized furnaces. DATES: The amendments announced in this document will become effective on January 1, 2015. FOR FURTHER INFORMATION CONTACT: Hampton Newsome, Attorney, Division of Enforcement, Federal Trade Commission, Washington, DC 20580 (202–326–2889). SUPPLEMENTARY INFORMATION: 6, 2013 Federal Register Notice (78 FR 8362), the Commission issued new EnergyGuide label requirements to help consumers, distributors, contractors, and installers easily determine whether a specific furnace or central air conditioner meets applicable DOE regional efficiency standards. Among other things, these amendments revised labels for central air conditioners, heat pumps, and weatherized furnaces that will be required on January 1, 2015. In the 2013 Notice, the Commission did not publish updated comparability ranges for those products because energy data available at that time would likely become obsolete before the January 1, 2015 date. However, the Commission explained it would publish new ranges for central air conditioners, heat pumps, and weatherized furnaces, when more current data became available before 2015.2 That date serves as the effective date for the new FTC labels and the new comparability ranges for these products. In addition to publishing the new ranges, the Commission is updating the prototype and sample labels in the Rule to reflect these range changes. As discussed in a Federal Register Notice published this year, the Commission plans to address updates for other heating products, including boilers and non-weatherized furnaces, separately.3 [RIN 3084–AB03] § 145.157 Personnel authorized to approve an article for return to service. 46985 II. Range Updates for Central Air Conditioners, Heat Pumps, and Weatherized Furnaces The Commission is updating the Rule’s ranges of comparability, based on current data, for central air conditioners, heat pumps, and weatherized furnaces, effective January 1, 2015. In a February 1 42 U.S.C. 6294. EPCA also requires the Department of Energy (‘‘DOE’’) to set minimum efficiency standards and develop test procedures to measure energy use. PO 00000 Frm 00025 Fmt 4700 Sfmt 4700 IV. Regulatory Flexibility Act The provisions of the Regulatory Flexibility Act relating to a Regulatory Flexibility Act analysis (5 U.S.C. 603– 604) are not applicable to this proceeding because the amendments do not impose any new obligations on entities regulated by the Energy Labeling Rule. These technical amendments merely provide a routine change to the range information required on EnergyGuide labels. Thus, the amendments will not have a ‘‘significant economic impact on a 2 78 3 79 E:\FR\FM\12AUR1.SGM FR at 8365. FR 34642, 34652 (June 18, 2014). 12AUR1

Agencies

[Federal Register Volume 79, Number 155 (Tuesday, August 12, 2014)]
[Rules and Regulations]
[Pages 46971-46985]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-18938]


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DEPARTMENT OF TRANSPORTATION

Federal Aviation Administration

14 CFR Part 145

[Docket No.: FAA-2006-26408; Amdt. No. 145-30]
RIN 2120-AJ61


Repair Stations

AGENCY: Federal Aviation Administration (FAA), DOT.

ACTION: Final rule.

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SUMMARY: This rule amends the FAA's repair station regulations to allow 
the FAA to deny an application for a new repair station certificate if 
the applicant or certain associated key individuals had materially 
contributed to the circumstances that caused a previous repair station 
certificate revocation action. The rule also adds a new section 
prohibiting fraudulent or intentionally false entries or omissions of 
material facts in any application, record, or report made under the 
repair station rules, and provides that making the fraudulent or 
intentionally false entry or omitting or concealing the material fact 
is grounds for imposing a civil penalty and for suspending or revoking 
any certificate, approval, or authorization issued by the FAA to the 
person who made or caused the entry or omission. These changes are 
necessary because the repair station rules do not presently provide 
these safeguards as do other parts of the FAA's regulations. Both of 
these changes will enhance safety by reducing the number of individuals 
in the repair station industry who commit intentional and serious 
violations of the regulations or who demonstrate they are otherwise 
unqualified to hold repair stations certificates.

DATES: Effective November 10, 2014.

ADDRESSES: For information on where to obtain copies of rulemaking 
documents and other information related to this final rule, see ``How 
To Obtain Additional Information'' in the SUPPLEMENTARY INFORMATION 
section of this document.

FOR FURTHER INFORMATION CONTACT: For technical questions concerning 
this action, contact Susan Traugott, Repair Station Branch (AFS-340), 
Federal Aviation Administration, 800 Independence Avenue SW., 
Washington, DC 20591; telephone (214) 277-8534; email 
Susan.M.Traugott@faa.gov. For legal questions concerning this action, 
contact Edmund Averman, Office of the Chief Counsel (AGC-210), Federal 
Aviation Administration, 800 Independence Avenue SW., Washington, DC 
20591; telephone (202) 267-3147; email Ed.Averman@faa.gov.

SUPPLEMENTARY INFORMATION: 

Authority for This Rulemaking

    The FAA's authority to issue rules on aviation safety is found in 
Title 49 of the United States Code. Subtitle I, section 106, describes 
the authority of the FAA Administrator. Subtitle VII, Aviation 
Programs, describes in more detail the scope of the agency's authority.
    This rulemaking is promulgated under the authority described in 
title 49, subtitle VII, part A, subpart III, section 44701, General 
requirements, and section 44707, Examining and rating air agencies. 
Under section 44701, the FAA may prescribe regulations and standards in 
the interest of safety for inspecting, servicing, and overhauling 
aircraft, aircraft engines, propellers, and appliances. The FAA may 
also prescribe equipment and facilities for, and the timing and manner 
of, inspecting, servicing, and overhauling these items. Under section 
44707, the FAA may examine and rate repair stations.
    This regulation is within the scope of section 44707 since it 
specifies instances when the FAA may deny the issuance of a repair 
station certificate, especially when a previously held certificate has 
been revoked.

I. Background

A. NTSB Recommendations

    As a result of a fatal accident, the National Transportation Safety 
Board (NTSB) recommended \1\ that an applicant's past performance 
should be a consideration in determining whether a new certificate 
should be issued. The NTSB was concerned that the FAA had no mechanism 
for preventing individuals who have been associated with a previously 
revoked repair station certificate from continuing to operate through a 
new repair station certificate.

[[Page 46972]]

The NTSB pointed out that the FAA has addressed this issue in the 
context of air carriers and other commercial operators. Specifically, 
14 CFR 119.39(b) allows the FAA to deny an application for a part 121 
or 135 air carrier or operating certificate if the applicant has 
previously held a certificate that was revoked or if a person who 
exercised control over (or held a key management position in) an 
operator with a revoked certificate will be exercising control over (or 
holding a key management position in) the new operator.
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    \1\ NTSB Recommendation No. A-04-01, February 9, 2004.
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    Additionally, Sec.  119.39(b) allows the FAA to deny certification 
to an applicant who is substantially owned by (or who intends to fill a 
key management position with) an individual who had a similar interest 
in a certificate holder whose certificate was (or is being) revoked 
when that individual materially contributed to the circumstances 
causing revocation. The FAA agrees with the NTSB that part 145 should 
have the same safeguards as Sec.  119.39(b).
    The NTSB also took issue with the practice of an individual whose 
repair station was being investigated for serious violations of the 
regulations surrendering the certificate to stop the investigation 
process. Accordingly, the NTSB recommended that the ``FAA should 
complete the investigation to the extent necessary to document all 
available facts relating to the fitness of the involved individuals; . 
. . .'' \2\
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    \2\ NTSB Recommendation No. A-04-02, February 9, 2004.
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    The FAA is publishing this final rule in part to address these 
recommendations from the NTSB.

B. Summary of NPRM

    On May 21, 2012, the FAA published a notice of proposed rulemaking 
(NPRM) titled ``Repair Stations'' (77 FR 30054). In the NPRM, the FAA 
proposed to amend the regulations for repair stations by revising the 
system of ratings, the repair station certification requirements, and 
the regulations applicable to repair stations providing maintenance for 
air carriers. The proposal also addressed the NTSB recommendation 
(discussed previously) by proposing amendments that would permit the 
FAA to deny certain applicants new certificates based on their 
enforcement history. The FAA believed these changes were necessary 
because many portions of the existing repair station regulations do not 
reflect current repair station aircraft maintenance and business 
practices, and the existing regulations have not kept pace with 
advances in aircraft technology. The agency proposed the changes to 
modernize the regulations to keep pace with current industry standards 
and practices.
    The comment period was scheduled to close on August 20, 2012. 
However, the FAA received a request from the Aeronautical Repair 
Station Association (ARSA) and other organizations to extend the 
comment period. In a notice published on August, 17, 2012 (77 FR 
49740), the FAA granted a 90-day comment period extension to November 
19, 2012.
    The NPRM proposed to amend part 145 by:
     Significantly revising the system of ratings to eliminate 
class, radio, instrument, and accessory ratings;
     Requiring each repair station choosing to use a capability 
list to audit the list for currentness at least every two years;
     Requiring new applicants for a repair station certificate 
to include a letter of compliance as part of their application;
     Requiring repair stations to provide permanent housing for 
their facilities, equipment, materials, and personnel;
     Identifying specific reasons that the issuance of a repair 
station certificate could be denied;
     Prohibiting fraudulent or intentionally false entries in 
an application, record, or report made under the repair station rules; 
and
     Accommodating revisions made to 14 CFR parts 91 and 43 
providing for the change in rating system and standardization of 
language.

C. Summary of Comments

    The FAA received more than 230 public comments to the NPRM. The 
majority of the commenters, including Aircraft Electronics Association 
(AEA), Aerospace Industries Association (AIA), Aircraft Owners & Pilots 
Association (AOPA), Aeronautical Repair Station Association (ARSA), 
Aviation Suppliers Association (ASA), Experimental Aircraft Association 
(EAA), General Aviation Manufacturers Association (GAMA), Helicopter 
Association International (HAI), Modification and Replacement Parts 
Association (MARPA), National Air Transportation Association (NATA), 
the Small Business Administration (SBA) Office of Advocacy, 
Coordinating Agency for Supplier Evaluation (CASE) and several 
individual commenters had serious concerns with the proposed changes, 
and many suggested withdrawing the entire proposal.
    Although commenters recognized that the system of ratings is 
outdated, there was general dissatisfaction with the proposed new 
system of ratings and the transition process. Commenters also expressed 
concerns on the proposals for a capability list, recurring audit, 
letter of compliance, permanent housing, facilities and equipment, and 
the FAA's proposed authority to deny a repair station application.

D. Differences Between the NPRM and the Final Rule

    In the NPRM, the FAA proposed significant changes to the system of 
ratings, the repair station certification requirements, and the rules 
for repair stations providing maintenance for air carriers.
    The FAA is withdrawing most of the changes proposed in the NPRM 
because of the issues raised by commenters. Many commenters argued that 
the proposed ratings system would not be satisfactory for current and 
future repair stations. Also, many expressed concern that the FAA does 
not have sufficient resources to perform recertification of all 
currently certificated repair stations while continuing to certificate 
new repair stations in the course of the proposed 24-month transition. 
This concern is exacerbated by the possible influx of hundreds of 
repair station applicants resulting from the finalization of the 
Transportation Security Administration foreign repair station rule, 
which allows for the certification of new repair stations outside the 
United States for the first time since 2004.
    The NPRM proposed extensive changes to the repair station 
regulations with accommodating changes to 14 CFR parts 43 and 91. The 
final rule implements only the denial authority, the falsification 
penalty, and several minor revisions and corrections. The rule also 
requires that a certificate surrender is not complete until the FAA 
accepts the certificate for surrender. The final rule does not change 
14 CFR parts 43 and 91 as initially proposed.

II. Overview of Final Rule

    Currently, 14 CFR 145.53 provides that, with certain exceptions, an 
applicant who meets the requirements of the rule is entitled to a 
repair station certificate. Section 145.53 does not provide an 
exception related to a past regulatory non-compliance history. There 
has been at least one incident where the FAA revoked a repair station 
certificate for serious maintenance-related safety violations, and a 
key management official from the repair station shortly thereafter 
obtained a new repair station certificate under which improper 
maintenance resulted in a fatal accident.

[[Page 46973]]

    As a result of the fatal accident, the NTSB recommended that an 
applicant's past performance should be a consideration in determining 
whether a new certificate should be issued. The FAA agrees that this is 
an important consideration in assessing an applicant's overall fitness 
to hold a certificate and is providing a new exception to certificate 
entitlement in Sec.  145.51(e).
    The new exception will apply to:
     An applicant who previously held a repair station 
certificate that was revoked or is in the process of being revoked;
     An applicant who intends to fill certain key management 
positions with individuals who had materially contributed to the 
circumstances that led to a prior repair station certificate 
revocation, or to an ongoing revocation action against a repair 
station; and
     An applicant whose repair station will be owned or 
controlled by an individual or individuals who previously owned or 
exercised control over a repair station that had its certificate 
revoked or is in the process of being revoked.
    With regard to the exception stated in the second bullet above, the 
FAA notes that in the NPRM the agency erroneously proposed two nearly 
identical paragraphs-- (Sec. Sec.  145.1051(e)(2) and 145.1051(e)(3)) 
pertaining to individuals who would be slated to hold management 
positions with a new applicant. Proposed paragraph (e)(2) addressed 
instances where the applicant intended to (or did) fill a management 
position with an individual who exercised control over or who held the 
same or a similar position with a repair station that had its 
certificate previously revoked, and paragraph (e)(3) addressed 
instances where an individual who would hold a management position in 
the new repair station previously held a management position with a 
repair station that had a certificate revoked. The FAA has determined 
that these two paragraphs are largely redundant and would accomplish 
essentially the same thing. As discussed below, proposed Sec.  
145.51(e) was meant to parallel the similar exceptions found for air 
carrier operating certificates in 14 CFR 119.39(b), and that section 
does not contain the text of paragraph (e)(3) discussed above. 
Therefore, the FAA is withdrawing Sec.  145.51(e)(3) as proposed in the 
NPRM.
    Under this new exception, the FAA may still issue a new 
certificate, but the applicant will no longer be entitled to a 
certificate, even if other qualifying criteria are met. Knowledge of 
the compliance disposition of key management personnel is an important 
component of the fitness assessment the FAA makes in determining the 
overall qualifications of an applicant who will conduct repair station 
operations.
    To implement this new exception, the FAA is adding a two-part 
question to FAA Form 8310-3, Application for Repair Station Certificate 
and/or Rating. The question asks: Will any person as described in part 
145.51(e) be involved with the management, control, or have substantial 
ownership of the repair station? If yes, provide a detailed explanation 
on a separate page. The detailed response to a `yes' answer will allow 
the FAA to evaluate the circumstances of the revocation and determine 
whether the certification will or will not continue.
    Also, in response to the NTSB recommendation, the FAA is adding a 
requirement that a certificate surrender is not complete until the FAA 
accepts the certificate for surrender. The new surrender requirement 
codifies existing FAA policy, and will prevent a repair station under 
investigation from attempting to circumvent a possible enforcement 
action that could result in a revocation of the repair station 
certificate by surrendering its certificate to stop the investigation 
before it is completed.
    The other significant amendments in this final rule are:
     The addition of a new Sec.  145.12 that prohibits 
fraudulent or intentionally false entries or omissions in applications, 
records, or reports made under the repair station rules. The rule 
provides that making a prohibited fraudulent or intentionally false 
entry or knowingly omitting a material fact is grounds for suspending 
or revoking any certificate, approval, or authorization the FAA issued 
to the person who made the entry or caused the omission.
     A revision to paragraph (a) of Sec.  145.53 to incorporate 
the new grounds for denying a certificate under Sec.  145.51(e) 
(discussed above) as another exception to certificate entitlement even 
if the other qualification requirements are met.
     A revision to Sec.  145.55 to add that a certificate 
surrender is not complete until the FAA accepts the certificate for 
cancellation.
    This final rule will also make the following amendments:
     A revision to Sec.  145.55 to add a new paragraph (c)(3) 
to require that a repair station outside the United States applying for 
certificate renewal must show the required fee has been paid.
     A revision to Sec.  145.57 to add a requirement in 
paragraph(a)(1) that a certificate change is necessary if the repair 
station certificate holder changes the name of the repair station.
     A revision to Sec.  145.57(b), which currently requires 
that if a repair station's assets are sold the new owner must apply for 
a certificate. The revision clarifies that a new owner will need to 
apply for a new certificate only if the new owner chooses to operate as 
a repair station.
     Revisions to Sec. Sec.  145.153, 145.157, and 145.213 to 
add the terms ``appropriately'' before ``certificated'' and ``as a 
mechanic or repairman'' before ``under part 65'' in three instances: 
(1) Supervisory personnel requirements (Sec.  145.153(b)(1)); (2) 
Personnel authorized to approve an article for return to service (Sec.  
145.157(a)); and (3) Inspection of maintenance, preventive maintenance, 
or alterations (Sec.  145.213(d)). The first two of these revisions 
were proposed in the NPRM; however, the third was inadvertently 
omitted, and we are including it here for clarity and consistency. As 
discussed in the NPRM, the omission of the term ``appropriately'' in 
the 2001 final rule was an oversight we proposed to correct with this 
final rule. This omission technically provides that any individual 
holding a certificate issued under part 65 (other than mechanics and 
repairmen--such as air traffic control tower operators and aircraft 
dispatchers) could fill these positions. Under these amendments, 
supervisors and persons authorized to inspect and approve an article 
for return to service would, at a minimum, have to hold a certificate 
appropriate for the work being performed (e.g., a mechanic or a 
repairman certificate).
     A revision to Sec.  145.155 to remove the word ``and'' at 
the end of paragraph (a)(2). Since no Sec.  145.155(a)(3) currently 
exists, it is an error for ``and'' to appear after paragraph (a)(2), 
and its removal corrects this error.
     A revision to Sec.  145.163 to add the term ``and use'' 
after ``must have'' in paragraph (a). This section requires a repair 
station to have an approved training program, but does not provide a 
specific requirement that the program be used. This revision is 
necessary to clarify the intent of the current rule that repair 
stations must have and use an employee training program approved by the 
FAA. This rule also removes the reference to April 6, 2006, (added by 
the 2001 amendments) as the date by which the FAA required new 
applicants to submit a training program for approval, and also the 
starting date from which each existing repair station would be required 
to submit its training program

[[Page 46974]]

for approval based on the specified staggered schedule, i.e., by the 
last day of the month in which its repair station certificate had been 
issued. This revision results in the necessary inclusion of the text of 
paragraph (a)(1) into Sec.  145.163(a) and the consequent deletion of 
paragraphs (a)(1) and (a)(2).
    In addition, we are also making a correction that was not proposed 
in the NPRM. Specifically, we are correcting Sec.  145.221(a) to remove 
the erroneous insertion of the word ``serious'' when addressing the 
service difficulty reporting requirements from any failure, 
malfunction, or defect. The word ``serious'' was removed through notice 
and comment rulemaking in the 2001 final rule entitled ``Repair 
Stations,'' (66 FR 41088, August 6, 2001) that significantly revised 
part 145. The word ``serious'' was inadvertently inserted by a separate 
final rule entitled ``Service Difficulty Reports,'' (65 FR 56191, 
September 15, 2000).
    Section 553(b)(3)(B) of the Administrative Procedure Act (APA) (5 
U.S.C.) authorizes agencies to dispense with notice and comment 
procedures for rules when the agency for good cause finds that those 
procedures are ``impracticable, unnecessary, or contrary to the public 
interest.'' Under this section, an agency, upon finding good cause, may 
issue a final rule without seeking comment prior to the rulemaking. The 
removal of the term ``serious'' in Sec.  145.221(a) does not change a 
standard, nor will there be any effect on regulated entities other than 
to prevent future misunderstandings that would have been resolved when 
interested persons contacted the FAA. Accordingly, due to the nature 
and circumstances of the error explained above, the FAA finds that 
further notice and comment are unnecessary to effect the correction.

III. Summary of the Costs and Benefits of the Final Rule

    The FAA determined that the expected outcome of the rule will be a 
minimal impact with positive net benefits. Therefore, a regulatory 
evaluation was not prepared for this final rule. The FAA has, 
therefore, determined that this final rule is not a ``significant 
regulatory action'' as defined in section 3(f) of Executive Order 
12866, and is not ``significant'' as defined in DOT's Regulatory 
Policies and Procedures.

IV. Discussion of Public Comments and Final Rule

A. System of Ratings (Sec. Sec.  145.59 and 145.61)

    The NPRM proposed reducing the number of repair station ratings 
from eight to five, and revising the ratings' definitions to indicate 
the type of work that a repair station would be authorized to perform. 
Approximately 190 commenters, including AEA, AIA, GAMA, and Duncan 
Aviation, commented specifically on the proposed change to the system 
of ratings. Generally, these organizations stated that the proposed 
rule would not modernize the ratings (or that the changes would be 
regressive), would be cost prohibitive, and would not enhance safety. 
The following are some examples of the comments received on this 
proposal.
    AEA noted that the proposed changes in the rating system are the 
basis for the reissuance of the repair station certificates, but that 
the perceived added benefit of the ratings revision does not justify 
the extreme cost of reapplication. AEA recommended that the FAA retain 
the current rating classification system and provide a better 
description of the maintenance authorized by each rating.
    AIA stated that class ratings are beneficial to industry, and that 
the FAA's proposal to eliminate this type of rating would cause 
additional burdens beyond those set forth in the NPRM. AIA further 
stated that the transition from class to category will most likely 
cause significant disruption to existing repair stations with no 
appreciable safety benefit. Large repair stations would need time and 
resources to make the transition based on the breadth of their customer 
base and complexity of their operations. Small repair stations would be 
faced with an overwhelming burden, with a lack of resources to make the 
transition to build compliant capability lists or operations 
specifications systems.
    GAMA stated that the FAA's proposal would allow airframe-rated 
repair stations to repair and alter radios and instruments without any 
specific ratings or obvious qualifications. GAMA added that the FAA's 
proposed ratings did not provide due consideration to avionics, which 
are increasingly more complex integrated systems that require greater 
and unique levels of technical skills to maintain properly.
    Duncan Aviation stated that the current outdated rating system was 
better than the proposed rating system, which added no value to the way 
a repair station conducts business. Duncan Aviation suggested that the 
current system remain in place until a better system is developed with 
input from industry.
    Based on the comments received, and because the ARAC recommendation 
on which the FAA based the proposed ratings changes is dated, the FAA 
will retain the current system of ratings until such time it can better 
understand and learn from all stakeholders what the future of repair 
station ratings should look like. The comments on the proposed ratings 
system changes clearly point to differences between those repair 
stations that are well suited to the current ratings system and those 
who find the current ratings system outdated and not meaningfully 
descriptive.

B. Certification Requirements (Sec. Sec.  145.51, 145.103, and 145.163)

    In the NPRM, the FAA proposed changes to allow for certification 
denial when certain enforcement history exists. The proposal also 
clarified existing regulatory language. Approximately 175 commenters, 
including EAA, AOPA, AIA, ARSA, ASA, CASE, GAMA, NATA, and the SBA 
Office of Advocacy expressed concerns with several of the proposed 
changes to the repair station certification requirements.
    EAA, GAMA, NATA, and other commenters also expressed concerns with 
the FAA's proposed requirement that equipment, tools, test apparatus, 
materials, and personnel must be in place for inspection at the time of 
certification, with no provision that the equipment requirement could 
be met with an acceptable contract for its availability when needed. 
They proposed that the FAA retain the current language. GAMA further 
stated that the proposed change would require a financial impact 
assessment. EAA added that the requirement is unrealistic and noted 
that many of today's modern materials are shelf-life limited and would 
likely expire during the application and approval process, and that it 
was unrealistic to begin hiring technicians when the repair station 
certification process could take as long as 24 to 36 months.
    As to the proposal to eliminate the option for an applicant to have 
a contract to make equipment available at the time of certification and 
any other time when needed when the relevant work is being performed in 
lieu of actually having the equipment on site, the FAA believes there 
is uncertainty within the industry on both the current and proposed 
requirements. This uncertainty is exacerbated by the inconsistent 
application of the contract clause regarding whether the equipment

[[Page 46975]]

or only the contract must be on hand during the certification 
inspection. Many certificate holders have long argued that it makes no 
economic sense to own or have on hand expensive, seldom used tools and 
equipment during certification.
    In view of these comments, the FAA is withdrawing the proposal to 
require that the equipment must be in place for inspection at the time 
of certification or rating approval by the FAA. The original purpose 
for permitting applicants to meet the equipment requirement at 
certification approval by having a contract to make the equipment 
available when the relevant work is being performed remains. This is 
because it makes no economic sense to require an applicant to have on 
site expensive and seldom used equipment that would be costly to locate 
on site and that might sit unused for extended periods of time. By 
having a contract acceptable to the FAA, an applicant would be able to 
demonstrate that the required equipment could be made available when 
needed. In some cases this ``contract'' may actually be a letter of 
intent from an air carrier for which the repair station intends to 
perform work, or something similar from an equipment supplier. We 
recognize that the mere existence of a contract at the time of 
certification does not guarantee equipment availability at some unknown 
future date--indeed, contracts may be broken and suppliers may go out 
of business. Nevertheless, the presence of documentation that the 
repair station has planned for its needs and has at least a present 
means of meeting those needs provides some assurance to the FAA that it 
would not be certificating a ``paper repair station.''
    Because of the potential ambiguity in the existing text of Sec.  
145.51(b), however, we are amending the paragraph for clarification. We 
proposed this clarification in the 2006 NPRM, which was withdrawn in 
its entirety on May 7, 2009, due to the large number of adverse 
comments received on many of the other proposals. The ambiguity arose 
from the text in paragraph (b) that states: ``An applicant may meet the 
equipment requirement of this paragraph if the applicant has a contract 
acceptable to the FAA with another person to make the equipment 
available to the applicant at the time of certification and at any time 
that it is necessary when the relevant work is being performed by the 
repair station.'' (Sec.  145.51(b), emphasis added.) Except that we are 
no longer including tools and test apparatus in this paragraph as 
proposed in 2006, our reasoning to clarify this paragraph as proposed 
in the 2006 NPRM remains, and is quoted in pertinent part below:

    The FAA proposes to clarify the text of Sec.  145.51(b) by 
removing the ambiguity in the relieving provision concerning the 
availability of the equipment at the time of certification. This 
ambiguity results from the phrase specifying that the equipment 
requirement of the paragraph could be met ``if the applicant has a 
contract acceptable to the FAA with another person to make the 
equipment available to the applicant at the time of certification. * 
* * '' The FAA believes that the phrase lacks clarity and could be 
subject to arbitrary application in individual cases, i.e., one 
inspector might require the contract to be executed and all the 
equipment brought to the premises for a pre-certification 
inspection, while another inspector might only review the contract 
for the specified items. In the first example, the equipment could 
be returned to the supplier the next day, and not be returned to the 
repair station until the relevant work is being performed, as 
required by Sec.  145.109(a).
    Consistent with the requirement in Sec.  145.109(a), and as 
noted by some of the commenters to the proposal in Notice No. 99-09, 
it is important that the equipment be in place when the work is 
being performed. That is the safety basis for the equipment 
requirement If, at the time of initial certification or rating 
approval, an applicant has a contract acceptable to the FAA to make 
the equipment available when the relevant work is being performed, 
the FAA will be able to determine that the repair station has 
assessed its relevant needs, and that it has the means to obtain the 
pertinent equipment . . . when necessary. (71 FR 70256, Dec. 1, 2006 
(emphasis in original)).

    EAA, NATA, and other commenters questioned the legality of the 
proposed regulatory transition and expressed concern over the FAA's 
ability to recertify every repair station in a timely manner during the 
24-month transition period. Several commenters stated that the intent 
of the proposed language was unclear and that the procedural elements 
lacked safety benefits.
    EAA commented that the FAA does not have the necessary resources to 
reissue approximately 5,000 repair station certificates in 24 months. 
Another commenter stated that it is currently not uncommon for 
applicants to experience extended delays in processing new and amended 
repair station certificates due to the reported lack of availability of 
FAA staff and resources. NATA stated that the recertification effort is 
likely to be impossible to achieve given the scope of the other 
proposed changes in the NPRM. As a result, the proposed rule would be 
too costly for repair stations and would result in some existing repair 
stations ceasing operations.
    The SBA Office of Advocacy and others expressed concern that the 
cost estimate associated with re-certification was understated. 
Additionally, NATA added that the FAA will likely have far less than 24 
months for approving or disapproving applications and foresees a 
situation of cascading delays. Pratt & Whitney, The Boeing Company, and 
other commenters suggested a grandfather clause limiting the need for 
existing repair stations to re-apply.
    Based on the negative comments and concerns regarding the FAA's 
ability to resource and complete the re-certification of all currently 
certificated repair stations in 24 months, and because this lengthy 
transition period was prompted by the proposed new ratings system that 
the FAA is not adopting in this rule, the FAA is not proceeding with 
the proposed transition.
    With respect to the proposed amendment to Sec.  145.103 that would 
have required each certificated repair station to provide and maintain 
suitable permanent housing for its facilities, equipment, materials, 
and personnel, AEA, GAMA, and other commenters stated that any 
definition of ``maintain'' would impose requirements that do not 
comport with the FAA's intent to provide flexible requirements that 
align with current repair station business practices. Additionally, 
they argued that the proposed language would require a certificate 
holder to have sole operational control of its housing at all times, 
and any repair stations that may currently share space within a hangar 
would no longer be permitted to share space.
    Some commenters stated that the FAA failed to provide a definition 
of ``maintain'' in the proposed requirement that each repair station 
``provide and maintain'' suitable permanent housing for its facilities, 
etc., whereas the current rule requires only that the certificate 
holder ``provide'' this housing. They also stated that this proposal 
would have imposed additional costs not reflected in the FAA's economic 
impact assessment.
    As pointed out by commenters, FAA did not define ``maintain'' in 
changing ``provide suitable permanent housing'' to ``provide and 
maintain suitable permanent housing.'' This lack of definition created 
confusion. The FAA agrees with the commenters and is not amending Sec.  
145.103.
    EAA, GAMA, and several other commenters questioned the need for the 
proposal that repair stations provide a description of their training 
program for approval by the FAA. EAA stated that the FAA had not 
adequately explained the failure of the current training program 
requirements and the need to increase the regulatory burden by

[[Page 46976]]

requiring a description of the training program for FAA approval. GAMA 
questioned the purpose of the language when the entire training 
program, not just a description of the training program, is required to 
be approved by the FAA. Both organizations requested that the FAA 
retain the current language.
    With respect to commenters' concerns that requiring a description 
of the training program for approval to be included in the application 
package would be burdensome and not justified, the FAA notes that a 
meaningful description of the program would be necessary under the 
current training requirements regulation (Sec.  145.163), which 
requires the program be approved by the FAA. The agency concurs, 
however, that this description is not necessary as a separate part of 
the application, and is withdrawing this proposed requirement.

C. Personnel Requirements (Sec. Sec.  145.153 and 145.157)

    In the NPRM, the FAA proposed requiring supervisors to be present 
to oversee the work being performed by the repair station and that they 
be appropriately certificated under 14 CFR part 65 for the work being 
supervised. The NPRM also proposed that both supervisors and inspection 
personnel be able to speak English. The FAA is not adopting this 
proposal, except for a minor editorial change.
    Many of the large repair stations, as well as ARSA, did not concur 
with the proposals that supervisors be present to oversee the work 
performed and that they speak English. AEA and others commented that if 
the FAA proceeded with the proposed regulation, it would have 
essentially required a supervisor to be present and to oversee every 
individual performing every maintenance activity at repair stations. 
This also would have had broad implications for contract maintenance.
    The commenters further stated that a clear unintended consequence 
of this proposed language would have been a substantial increase in the 
cost of maintenance services to compensate additional supervisory 
positions, as well as a corresponding decrease in availability of 
maintenance services due to limited availability of supervisory 
personnel.
    Most of the comments regarding the proposal that supervisors be 
present when the work was performed stated that this requirement would 
have required industry to hire numerous additional supervisory 
personnel at great cost to cover eventualities such as night work, 
emergency field maintenance, line maintenance, and work conducted at 
additional fixed locations.
    EAA commented that the proposed requirement for supervisors to 
speak English was not justified, and that the Americans with 
Disabilities Act prohibits such discrimination. EAA reasoned that a 
supervisor might not be able to speak English, but could effectively 
``communicate'' in English. Pratt and Whitney suggested the requirement 
to speak English served no purpose, was subjective, and would be a 
detriment to safety by forcing foreign persons to speak in a non-native 
language. Foreign repair stations Hong Kong Aircraft Engineering 
Company, Ltd., and Tamagawa Aero Systems Co., Ltd., and other domestic 
repair stations and individuals commented that the requirement to speak 
English was unnecessary as it did not enhance safety. The commenters 
also disagreed with the proposed requirement for inspection personnel 
to speak English.
    Commenters also disagreed with the proposed requirement for a 
repair station inspector to be available at the article while 
performing inspections. The commenters viewed the need to have an 
inspector at each phase while the work was being performed as too 
costly and not necessary.
    Based on the comments received, the FAA will not revise the current 
requirements for supervisory personnel, inspection personnel, or 
personnel authorized to approve an article for return to service, 
except to insert ``appropriately'' before ``certificated'' and ``as a 
mechanic or repairmen'' before ``under part 65'' in Sec. Sec.  145.153 
and 145.157. This will correct the inadvertent omissions from the 2001 
rulemaking. The repair station industry generally agreed with this 
proposed editorial change. As discussed above in the Overview of Final 
Rule section, we are making the same change to Sec.  145.213(d) for 
clarification and consistency.

D. Denial Authority (Sec. Sec.  145.51, 145.53, and 145.55)

    As proposed in the NPRM, the FAA may deny a repair station a 
certificate in instances where one or more key individuals had 
materially contributed to the circumstances causing a previous repair 
station certificate revocation. As discussed previously, the FAA's 
proposed changes were based on an NTSB recommendation, and the proposal 
was influenced to a large extent by 14 CFR 119.39(b). The FAA is also 
amending Sec.  145.55, to now contain a certificate surrender provision 
that requires acceptance for cancellation by the FAA to render the 
certificate no longer effective.
    Some commenters were concerned with the proposed amendment to Sec.  
145.55 (Duration and renewal of certificate) that would maintain the 
effectiveness of a surrendered repair station certificate until the FAA 
accepts it for cancellation. This new requirement addresses a loophole 
that allowed certificate holders to avoid the ramifications of a 
revoked certificate by voluntarily surrendering a repair station 
certificate at any point during the FAA's investigation prior to the 
certificate's actual revocation. Once surrendered, there would be no 
certificate to take action against, and the investigation would stop. 
Accordingly, no order would be issued, and there would be no findings 
of violations or certificate revocation of record.
    Several commenters expressed their understanding of the proposed 
denial provision and credited the FAA's desire for safety, but they 
asserted that the agency's implementation of the denial provision in a 
fair and uniform manner would be difficult. The commenters generally 
stated that the increase in safety was outweighed by the burden that 
would be placed on the agency and the industry. In addition, the 
requirement would waste FAA resources through unnecessary paperwork 
exercises without providing any safety benefits.
    The SBA Office of Advocacy stated that small entities expressed 
concerns about repair stations lacking the knowledge and ability to 
track parties whose certificates have been revoked or who voluntarily 
surrendered certificates during an enforcement proceeding. 
Additionally, repair stations have no way of knowing who these 
disqualified individuals are, thereby making the cost of complying with 
the certificate denial provisions highly unpredictable or impossible. 
Small entity representatives suggested that if the agency adopted this 
proposal, the FAA should maintain a list of disqualified individuals.
    GAMA recommended the insertion of ``knowingly'' in proposed Sec.  
145.1051(e)(2) (Sec.  145.51(e)(2) in this final rule) to implicate the 
intent of an applicant and suggested that the text be amended to read 
``the applicant knowingly fills or intends to fill a management 
position.'' The FAA declines to adopt this suggestion because, in 
general, the purpose of this provision is to help ensure that persons 
who have committed serious (and often intentional) violations of the 
regulations are not able to continue doing so under a newly issued 
repair station certificate.

[[Page 46977]]

    It is important that the FAA be aware of the compliance disposition 
of key management personnel when the agency assesses the fitness of 
those who will be operating repair stations. This safeguard is 
necessary whether or not the applicant has knowledge of the person's 
compliance history. An applicant's knowledge of the person's compliance 
history is implicated only when he or she completes the application and 
checks ``Yes'' or ``No'' to the 2-part question on FAA Form 8310-3, 
whether key personnel described in Sec.  145.51(e) will be involved in 
the management or control of the new repair station. If the applicant 
knowingly provides a false answer to this question, the entry would be 
considered intentionally false and in violation of Sec.  145.12.
    The International Association of Machinist Aircraft Workers 
(IAMAW), International Brotherhood of Teamsters--Aircraft Division 
(IBT-AD), Transportation Trades Department (TTD) of the AFL-CIO, and 
Transportation Workers Union (TWU) endorsed the new requirement. The 
IAMAW stated that it is a common sense reform. The IBT-AD stated that 
the proposal did not go far enough, and suggested that the FAA consider 
maintaining a list of persons or entities that have been involved in 
repair station certificate revocations, or require an applicant to 
affirmatively disclose whether it has previously had a certificate 
revoked.
    AIA, ASA, GAMA, NATA, and HEICO Aerospace generally supported the 
FAA's intent to follow the NTSB's recommendation. However, with regard 
to the FAA's proposal to change the word ``entitled'' in Sec.  
145.53(a) to ``eligible,'' as one means to implement the denial 
provisions, AIA stated that it was unclear what the specifics of being 
found ``eligible'' are, and that the term left too much discretion to 
FAA inspector preference or interpretation. AIA also stated that its 
membership recognizes that there may be circumstances where the public 
interest is best served by denying a certificate, even when the other 
conditions are met. AIA suggested that ``entitled'' be retained with an 
additional exception that would remove the variability of local 
inspector preference or interpretation, but which would retain the 
intent of the proposal.
    The FAA agrees with the suggestion from AIA that the term 
``entitled'' be retained in Sec.  145.53(a), and that an additional 
exception to entitlement reference be added to include the new 
exceptions. The FAA also agrees and will retain the current language 
that provides for entitlement of the certificate when the requirements 
of part 145 have been met. Paragraph (a) of Sec.  145.53, however, is 
amended to add the denial authority (found in new Sec.  145.51(e)) as 
another exception to the current certificate entitlement provision.
    EAA believes it is not an applicant's responsibility to determine 
if certain individuals are subject to this provision and that the 
responsibility for this determination should remain with the FAA. EAA 
is concerned that the proposal introduces uncertainty and confusion 
into the application process by not providing a method for determining 
whom a repair station should not employ. To address this concern, the 
FAA will respond to an applicant request for information regarding 
specific persons.
    MARPA stated that the proposed language would permit the FAA to 
deny a certificate to a range of applicants associated with previous 
certificate revocations and requested that the entire proposed rule be 
rescinded. MARPA noted the following effects this proposal would have 
on the repair station industry:
     It would impose a de facto blacklist of certain parties, 
potentially excluding those on the list from significant participation 
in the repair station industry, and could include personnel who may 
have had nothing to do with the offenses that caused the prior repair 
station certificate to be revoked.
     It would have a chilling effect on subsequent employment 
of experienced repair station personnel who had previous association 
with repair stations whose certificates were revoked.
     Although the language is permissive (``may be denied''), 
the expense of a repair station certificate application would make it 
impractical to proffer an application that might be denied on a 
discretionary basis, further leading to an effective blacklisting of 
such persons.
    MARPA noted further that in cases where a repair station 
(especially a small one) accepts a revocation by the FAA due to a lack 
of resources to fight the action, the applicant would be effectively 
blacklisted from the repair station industry. It added that in such 
cases in the past, FAA employees have specifically advised certificate 
holders to accept the proposed revocation and then to reapply. For all 
past revocations, the proposed rule would effectively impose a new 
penalty that was unanticipated at the time of the original revocation. 
MARPA also stated that the ex post facto imposition of such a penalty 
on a class of persons represents a Bill of Attainder (or a Regulation 
of Attainder) and is in violation of Article I, Section 9, of the U.S. 
Constitution.
    The FAA does not agree with MARPA's assertion that the new denial 
authority amendments to Sec.  145.51 would effectively impose a new 
penalty that was unanticipated at the time of the original revocation, 
and therefore that this would amount to an ex post facto imposition of 
a penalty on a class of persons. Because the agency did not discuss the 
prospective nature of the proposal in the NPRM, it is understandable 
that MARPA raised this concern. The FAA intends, however, that the new 
denial authority in Sec.  145.51(e) will be exercised only 
prospectively. It will be applied only in instances where the 
revocation at issue takes place after the effective date of this rule. 
Accordingly, no ``ex post facto imposition of a penalty'' issue could 
arise.
    The FAA also disagrees with MARPA's characterization that the 
denial provision would represent a Bill of Attainder (or a Regulation 
of Attainder). Black's Law Dictionary defines Bill of Attainder as: 
``Legislative acts, no matter what their form, that apply either to 
named individuals or to easily ascertainable members of a group in such 
a way as to inflict punishment on them without a judicial trial.'' \3\ 
Section 145.51(e) will not provide for punishment of any person without 
due process. First, a full appeal process through the NTSB and the 
federal courts is provided by 49 U.S.C. 44709 for any person identified 
in paragraph (e)(1)--an applicant who holds a repair station 
certificate that is undergoing a revocation process, or who held a 
repair station certificate that had been revoked. Second, to respond to 
the commenters' concerns about an absence of due process for 
individuals identified in paragraph (e)(2) and (3), we are adding a new 
paragraph (f) to Sec.  145.51 to provide that, if the FAA revokes a 
repair station certificate for violations of the repair station 
regulations, those individuals identified in Sec.  145.51(e)(2) and (3) 
may be subject to an order finding that they materially contributed to 
the circumstances causing the revocation. Issuance of these orders will 
be governed by the FAA's Investigative and Enforcement Procedures, 14 
CFR part 13--specifically the procedures set forth in Sec.  13.20 will 
apply, including the right to a hearing under subpart D of part 13.
---------------------------------------------------------------------------

    \3\ Black's Law Dictionary, West Publishing Company (1079).
---------------------------------------------------------------------------

    In order to effectively implement this new provision, the FAA's 
investigation underpinning the revocation process

[[Page 46978]]

must develop evidence that supports the factual allegations leading to 
a charge that the identified person materially contributed to the 
circumstances that caused the revocation. The FAA will develop guidance 
to assist agency inspectors in gathering and documenting the necessary 
evidence simultaneously with an investigation leading to the associated 
repair station certificate revocation. In accordance with Sec.  13.20, 
except in egregious matters in which the Administrator determines that 
an emergency exists requiring immediate issuance of an order, each 
identified individual would first be provided with a notice that would 
include the pertinent factual allegations and the charge that he or she 
materially contributed to the circumstances causing the revocation. 
Though Sec.  13.20 presently does not provide for the opportunity for a 
person who receives a notice under that section to participate in an 
informal conference with an FAA attorney prior to the FAA issuing an 
order, the agency is simultaneously with this rule amending the part 13 
regulation to provide for that option. The FAA believes that providing 
this option for all orders issued under Sec.  13.20 would be beneficial 
for all affected parties because often the issues are resolved, or at 
least narrowed, at that stage, providing for economies of resources.
    Section 145.51(e) is nearly identical to the similar rule for air 
carriers. In the same manner that Sec.  119.39(b) applies to air 
carriers, this new repair station rule is intended to help ensure those 
persons who exercise operational authority over business decisions in a 
repair station are those who have not demonstrated an unwillingness or 
an inability to ensure safe and compliant operations. Along these 
lines, the FAA views the restriction on new repair stations being 
controlled or managed by persons identified in Sec.  145.51(e)(2) and 
(3) as a continuing and ongoing requirement. In other words, the FAA 
would look with disfavor on the actions of a certificate holder who, 
sometime after obtaining the certificate with no association with key 
personnel identified in those paragraphs, becomes associated with one 
or more of the persons the regulation was designed to preclude from 
controlling repair station operations. In egregious cases, such a 
repair station could be subject to an enforcement action under Sec.  
145.51(e) based on its not meeting the original certification 
requirement. The FAA Administrator has previously decided that a 
regulation imposing a requirement addressed to an ``applicant'' can 
impose an ongoing and continuing qualification requirement. See Alphin 
Aircraft, Inc., FAA Order No. 97-10 at 3 (1997), 1997 WL 93230 (FAA). 
For air carriers, in applying the similar provisions of 14 CFR 
119.39(b), the FAA considers the obligation for an air carrier not to 
be controlled by one or more of these persons to be ongoing and 
continuing.
    For the purposes of implementing Sec.  145.51(e)(2) and (3), the 
notice sent to an identified individual will set forth the factual 
allegations supporting the agency's determination and advise the person 
that he or she may be subject to an order finding that he or she 
materially contributed to the revocation circumstances. The notice will 
also advise the person that, if the order described above is issued and 
affirmed, the person's name will be included in an FAA data base of 
individuals that have been found to have materially contributed to the 
circumstances causing a repair station certificate revocation. In 
addition, the notice will also advise that, under Sec.  145.51(e), an 
applicant for a new repair station certificate in the future may be 
denied the certificate if a person in this data base will have the same 
or similar position of authority or control over the new repair 
station's operations. The notice should also advise that, as described 
above, the person may be denied a similar controlling role in an 
existing repair station. The means to facilitate this preclusion would 
be an action against the repair station to enforce the provisions of 
Sec.  145.51(e).
    AEA stated that it did not understand the proposed change to Sec.  
145.55--that a surrender of a certificate was not effective until the 
FAA accepted the certificate for cancellation. AEA stated the proposed 
language was not clear and recommended the current text be retained 
without that addition. ARSA was vehemently opposed to the FAA having to 
``accept'' the surrender of a repair station certificate and therefore 
requested the proposal not be adopted.
    Airborne Maintenance and Engineering Services, Inc. (Airborne) 
commented that adopting the proposed requirement would encourage 
entities working on the fringes of the regulations to impede or 
otherwise not support FAA inspector corrective actions and create a 
disincentive for a poorly run repair station to voluntarily surrender 
its certificate.
    The FAA is including the proposed amendment to Sec.  145.55(a) to 
make clear that an attempt by a repair station undergoing an 
enforcement investigation to surrender its certificate in order to stop 
the investigation will be ineffective, as the certificate will remain 
effective until the FAA accepts it for cancellation or otherwise takes 
appropriate enforcement action. As a consequence, the investigation 
would continue, and, if appropriate, enforcement action could be taken. 
If serious violations of the regulations were found and the FAA 
concluded that the certificate holder lacked qualifications to hold the 
certificate, an order revoking the certificate could ensue.

E. Falsification of Records (Sec.  145.12)

    The FAA is adding new Sec.  145.12 to prohibit any fraudulent or 
intentionally false entry or omission of a material fact in any 
application, record, or report made under part 145. Among other things, 
this new prohibition will help discourage applications that fail to 
include the names of the persons contemplated by the denial provisions 
found in Sec.  145.51(e). The sanction for any of those acts is 
suspension or revocation of the repair station certificate and any 
certificate, approval, or authorization issued by the FAA and held by 
the person committing the act.
    Several companies, along with three associations and one 
individual, commented on this proposal. None of the commenters 
disagreed with the need to prohibit fraudulent or intentionally false 
entries. The most common concerns were that the proposed requirement 
lacked due process, and that it was redundant to a similar prohibition 
in the maintenance rules, specifically 14 CFR 43.12. At least three of 
the commenters raised issues concerning determinations made by 
individual inspectors in initiating enforcement actions. Gulfstream 
Aerospace Corporation questioned whether ``intent'' to make the false 
entry must be determined.
    Other than expressing concerns over possible abuses resulting from 
determinations made by individual inspectors, the comments concerning a 
lack of due process were rather vague and unspecific. The FAA notes 
that any report of an alleged violation made by an individual inspector 
will be reviewed at several levels within the FAA--including by legal 
counsel--before a notice or order is issued. Further, legal counsel 
will not issue a notice or order unless the agency has evidence that 
such a violation, in fact, had occurred. In any case brought by the FAA 
against an alleged violator of a falsification regulation, or any other 
regulation, the burden of proving the violation is on the agency, and 
the affected person is entitled to a full appeal process. Alleged 
violators of a

[[Page 46979]]

prohibition against making intentionally false entries, as with any 
other alleged violation, are entitled to due process in accordance with 
49 U.S.C. 44709 or 46301 and associated FAA and NTSB regulations.
    In answer to a comment by Gulfstream Aerospace Corporation as to 
whether ``intent'' must be determined, the answer is yes, but only to 
the extent that the false entry was made knowingly. That is, at the 
time the person made the false entry, the person knew the entry was 
false. Other FAA regulations already prohibit fraudulent or 
intentionally false entries, either of which necessarily incorporates 
an element of intentionality in making the false entry, i.e., the 
person knew at the time of making the entry that it was false, but the 
person made the entry anyway. Similarly, an explicit element of the new 
paragraph (b) in this final rule (discussed below) is a knowing 
concealment of a material fact. As with knowingly making a false entry, 
paragraph (b) is triggered when a person knew that he or she failed to 
include the material fact in the document at issue.
    As to the comments that opined that the proposal was redundant to 
the falsification prohibition already existing in the maintenance rules 
(Sec.  43.12), the FAA addressed both the differences between that rule 
and the one proposed for repair stations, and the need for this 
regulation in the NPRM. While Sec.  43.12 provides for suspension or 
revocation of the applicable airman and other mentioned certificates 
and privileges for requisite maintenance record falsifications or 
fraudulent acts, it does not provide for repair station certificate 
suspension or revocation for the same kind of conduct (77 FR 30066, May 
21, 2012).
    In addition, we are adding two additional consequences that will 
apply to the making of intentionally false entries or omissions. The 
first additional potential consequence is that the proscribed conduct 
may warrant imposition of a civil penalty either in addition to or in 
combination with a certificate action. This sanction option reflects 
the civil penalty authority granted to the FAA by the Congress in 49 
U.S.C. 46301, whereby the FAA can assess civil penalties against both 
individuals and businesses for violations of the statute and the 
agency's regulations. Depending on the circumstances, sometimes a civil 
penalty may be an appropriate deterrent. The second additional 
consequence is that the FAA may deny an application if it is supported 
by an intentionally false entry or omission. The FAA views this 
consequence to be within the scope of what was proposed in the NPRM. 
This reflects the common sense notion that, if a certificate could be 
suspended or revoked based on an intentional falsification, it would 
make no economic sense for the agency to first issue the certificate 
and then turn around and initiate a certificate action based on the 
falsification. This change is consistent with a November 2013 amendment 
to 14 CFR part 121, in which the agency added a new Sec.  121.9, which, 
among other things, provides for the imposition of a civil penalty and/
or the denial of an application if a person made or caused to be made a 
fraudulent or intentionally false statement or knowing omission as 
described in that section (78 FR 67836; Nov. 12, 2013).
    The agency notes that, while Sec.  43.12(b) does provide for the 
suspension or revocation of an applicable operator certificate, in 
addition to the applicable airman certificate, it does not provide for 
the suspension or revocation of a repair station certificate. Because 
of the importance to safety of accurate records, this final rule adopts 
the text proposed that provides for the suspension or revocation of not 
only the repair station certificate but also of any FAA-issued 
certificate, approval, or authorization held by the person who 
committed the falsification.
    As stated in the NPRM, in view of the FAA's limited resources, both 
the agency and ultimately the flying public depend heavily on the 
integrity of the system of self-reports. Because of the importance of 
honest and trustworthy records and reports to aviation safety, the FAA 
believes that any person who makes or causes to be made an 
intentionally false or fraudulent entry in any record or report the 
agency needs to provide proper oversight of repair stations should be 
subject to enforcement action as noted above. Accordingly, the agency 
may suspend or revoke not only the repair station certificate, but any 
certificate, approval, or authorization issued by the FAA and held by 
that person.\4\
---------------------------------------------------------------------------

    \4\ 77 FR 30067; May 21, 2012.
---------------------------------------------------------------------------

    Another company, Airborne, expressed concern that most of the other 
falsification prohibition regulations referenced in the NPRM (e.g., 
Sec. Sec.  61.37, 61.59, 63.18, 63.20, 65.18, 65.20, and 67.403) refer 
to certificates held by individuals, not companies. Airborne stated 
that its review of other operating rules (e.g., those in parts 121, 
125, 129, and 135) found no similar falsification provisions applicable 
to those certificate holders. The company also referenced Chapter 7 of 
the FAA's Compliance and Enforcement Program, FAA Order 2150.3B, 
Paragraph 2.a(1), which states that the agency generally suspends the 
certificates of individual certificate holders for violations, but 
usually takes civil penalty action against air carriers and airports. 
The commenter was especially concerned that a wrongful act (fraudulent 
or intentional falsification) by a single individual could result in 
the closing of an entire certificated entity.
    Although Airborne may be correct in observing that the other 
falsification prohibition regulations cited in the NPRM refer to 
suspending or revoking certificates held by individuals and not by 
companies, the FAA does not believe that is a reason to refrain from 
issuing this rule. Besides, as discussed briefly above, in November 
2013 (approximately a year and a half after the Repair Station NPRM), 
the FAA published amendments to 14 CFR part 121, which added a new 
Sec.  121.9 (Fraud and falsification), which provided for sanctions 
against air carriers and persons employed by them for violations of 
similar proscribed conduct. Those sanctions include: (1) A civil 
penalty; (2) suspension or revocation of any FAA-issued certificate 
held by that person; (3) the denial of an application for any FAA-
issued approval; and (4) the removal of any FAA-issued approval (78 FR 
67836; November 12, 2013). As noted in the NPRM, the importance of 
accurate records to assist the FAA in exercising its aviation safety 
oversight responsibilities cannot be overstated. If repair station 
officials know that one consequence of falsifying records is the loss 
of the repair station certificate, they may be motivated to produce 
accurate and truthful records.
    The FAA also notes that Airborne, in opposing a regulation that 
could result in the revocation of a repair station's certificate, 
selectively quoted from the FAA's Compliance and Enforcement Program, 
FAA Order 2150.3B, when it stated: ``Thus, the agency generally 
suspends the certificates of individual certificate holders for 
violations. However, the FAA usually takes civil penalty action against 
air carriers and airports. . . .'' Airborne, however, neglected to 
reference the next sentence in Order 2150.3B, which states: 
``Nevertheless, when the FAA determines that safety considerations 
warrant it, the agency will suspend the certificate of any type of 
certificate holder. In no case will the FAA take civil penalty action 
alone when remedial legal action is necessary or

[[Page 46980]]

appropriate.'' \5\ Additional FAA guidance in this area is found in 
paragraph 2.b(4) of the Order which states that revocation is normally 
appropriate when a certificate-holding entity deliberately or 
flagrantly violates the statute or regulations or falsifies records. 
Moreover, in the FAA's published sanction guidance, the sanction 
generally called for in the case of an intentionally false or 
fraudulent entry, reproduction, or alteration in a record or report is 
certificate revocation.\6\
---------------------------------------------------------------------------

    \5\ FAA Order 2150.3B, Ch. 7, Para. 2.a(1).
    \6\ FAA Order 2150.3B, Appendix B, Table of Sanctions, in Part 
Two, Section 1 (U.S. Air Carriers, U.S. Commercial Operators, Part 
125 Operators, and Part 129 Operators) in Figure B-1-j (Records and 
Reports), in (1)(a).
---------------------------------------------------------------------------

    As discussed above, however, we have added the additional sanctions 
of a civil penalty and the denial of an application. Consistent with 
Sec.  121.9 (Fraud and falsification), three different sanctions will 
be available to the agency to enforce this rule. Section 145.12(c) 
provides that committing an act prohibited by either paragraph (a) or 
(b) is a basis for any one or any combination of (1) suspension or 
revocation, (2) a civil penalty, and (3) denial of an application. The 
addition of the civil penalty sanction addresses commenters' concerns 
that in some cases a civil penalty would be more appropriate for a 
company than a revocation of its certificate. Whether a civil penalty, 
a certificate action, or both, is an appropriate sanction would depend 
on the actual circumstances of the matter and a consideration of 
appropriate factors, including agency sanction guidance, related to 
determining the sanction or sanctions to be applied.
    As discussed above and in the NPRM, the FAA has long considered 
intentional falsification of required records to be a serious safety-
related problem with a potential for dire consequences. The referenced 
regulatory prohibitions against individual falsifications are long-
standing, as are the recommended sanctions for both individuals and 
entities in the agency's published sanction guidance. Including in the 
regulations a proscription against entities falsifying records made, 
kept, or used to show compliance with a requirement is in the public 
interest, and the FAA is adopting this section as proposed, but with 
the added clarification that a falsification in material submitted in 
support of an application is also proscribed. This is to forestall an 
argument that information submitted, while false, technically was not 
in the application, and therefore was outside the reach of the 
regulation. Also, in response to a comment, the FAA is adding a 
proscription against concealment of a material fact by omission, as 
discussed below.
    Finally ARSA, in stating it had no objection to the proposal, also 
noted that the FAA should be mindful that similar sections in 14 CFR 
include omission of material information as equally egregious. 
Consequently, ARSA suggested that the FAA may wish to consistently 
express all prohibitions of such actions.
    The FAA agrees with ARSA's recommendation that the regulation 
should prohibit omissions of material information. ARSA's reference in 
its comments to similar sections in 14 CFR that include omission of 
material information may be a reference to the omission prohibition in 
14 CFR 3.5(c)(2). The FAA issued 14 CFR part 3 in 2005 to prohibit 
persons from making fraudulent or intentionally false statements in 
records when conveying information in an advertisement or sales 
transaction about the airworthiness of a type-certificated product. 
Section 3.5(c)(2) provides, in pertinent part, that no person may make, 
or cause to be made, through the omission of material information, a 
representation that a type-certificated product is airworthy if that 
representation is likely to mislead a consumer.
    Clearly, omissions of material information can be as damaging as 
the insertion of false information in a required document. This issue 
is brought to light in contemplation of new Sec.  145.51(e) 
(Application for certificate), in which the FAA seeks information on 
who an applicant proposes to place in management or controlling 
positions. Information on the compliance history of these personnel is 
important to the FAA in determining the qualifications, including the 
compliance disposition, of those persons who could make operational 
decisions. Omitting the requested information could be as damaging as 
making an intentionally false entry.
    The NTSB, in interpreting the plain language of current 
falsification prohibition regulations, has held that the failure to 
make an entry cannot constitute an intentionally false entry because 
the omission is not an entry.\7\ The FAA aims to close this 
``loophole'' by adding new paragraph (b) to new Sec.  145.12, to 
provide that no person may, by omission, knowingly conceal or cause to 
be concealed, a material fact. This text also finds support in the 
Government's general falsification prohibition statute, 18 U.S.C. 1001, 
which, in paragraph (a)(1), provides for criminal penalties for whoever 
falsifies, conceals, or covers up by any trick, scheme, or device a 
material fact.
---------------------------------------------------------------------------

    \7\ Administrator v. Alvarez, 5 NTSB 1906, 1907 NTSB Order No. 
EA-2504, 1987 WL 122066 (N.T.S.B.)
---------------------------------------------------------------------------

    The FAA has also eliminated the phrase ``required to be'' with 
regard to any record or report made, kept, or used to show compliance. 
The agency has done so to forestall an argument a falsifier could make 
that, although the falsity occurred in a record or report that was 
made, kept, or used to show compliance, it was not a record or report 
that was required by a regulation to be made or kept. The NTSB has 
already rejected that argument in addressing a violation of Sec.  
43.12.\8\ There, the respondent argued that he was not required to use 
those particular records that formed the basis for the falsification 
charge. The NTSB agreed instead with the FAA's position that the rule 
reaches falsifications in any maintenance documents kept or used to 
show compliance with a requirement in part 43, whether or not the 
documents are records or reports in a form or format the FAA requires 
an individual to keep or to use for that purpose.
---------------------------------------------------------------------------

    \8\ Administrator v. Anderson, NTSB Order No. EA-4564, 1997 WL 
355350 (N.T.S.B.).
---------------------------------------------------------------------------

    The NTSB offered a second rationale in that case for construing the 
term ``required'' in the regulation. The term should not be restricted 
to mean ``required'' by the FAA Administrator. The NTSB decision noted 
that the term can also be broadly construed to mean required by the 
circumstances for which compliance is sought or necessary. Here, the 
respondent presented documents purporting to establish compliance with 
various airworthiness directives to establish that the aircraft was 
airworthy. The respondent's submission of the records attesting the 
airworthiness directives' accomplishment represented his recognition 
that they constitute records that he was required to make, keep, and 
use in order to satisfy the requirements of part 43. Even though NTSB 
case law should preclude an alleged falsifier from arguing the false 
entry at issue was not in a required record or report, the FAA 
determined that eliminating the term from this regulation will, at a 
minimum, remove the potential ambiguity.
    The FAA also notes that a similar falsification prohibition in the 
FAA's certification rules (14 CFR part 21) does not contain the phrase 
``required to be'' to modify the phrase ``kept, made, or used.'' 
Specifically, Sec.  21.2(a)(2) prohibits any fraudulent, intentionally

[[Page 46981]]

false, or misleading statement in any record or report that is kept, 
made, or used to show compliance with any requirement of this part. The 
FAA's removal of the phrase ``required to be'' from the text proposed 
in the NPRM simply aligns this rule with the existing certification 
falsification provision and, as noted above, accords with NTSB 
precedent.

F. Other Specific Comments

    The comments in this section concern proposed changes in 
definitions, contract maintenance, and compliance costs. All of the 
concerns raised by the commenters in this section are addressed by the 
FAA's withdrawal of the applicable proposed sections.
    AEA, ARSA, CASE, EAA, and some repair stations voiced objection to 
the definitions of avionics and line maintenance proposed in Sec.  
145.1003, Definition of terms. AEA did not concur with the definition 
of avionics and suggested that it should include both mechanical and 
electronic radios, indicators, and instruments. Both AEA and ARSA 
commented that although the FAA defined avionics, the agency never used 
the term in part 145. ARSA added that the definition is unnecessary and 
should be removed in its entirety.
    AEA and EAA objected to the definition of line maintenance, stating 
that the FAA has not given justification for establishing a new 
requirement on where line maintenance may be performed. AEA stated that 
maintenance authorizations may be limited to commercial operators; 
however the definition of line maintenance is much broader than 
unscheduled maintenance for a part 121 and 135 air carrier.
    ARSA stated that the line maintenance definition should be stricken 
in its entirety and that the term can be defined only within the 
context of a repair station's capabilities and the operator's 
requirements. Therefore, the amount, type, and extent of line 
maintenance is already controlled by the performance standards; the 
only additional ``control'' needed under part 145 is the validation 
that the repair station has appropriate capabilities and quality 
procedures. ARSA also stated that if the agency keeps the definition it 
cannot be limited purely to work under parts 121 and 135; it must 
include part 91, subpart K, at a minimum. Further, the time allotment 
must be removed; it places an artificial barrier on the type of work 
that can and should be performed with limited resources in accordance 
with part 43.
    GAMA commented on the proposed section covering contract 
maintenance, stating that on-site inspection of the subcontractor would 
be required before any maintenance is performed by that person. GAMA 
emphasized that this is not stated in the rule and should not be added 
as an interpretation without being added to the rule. For organizations 
with multiple service facilities, the proposed rule would have required 
each facility to inspect the subcontractor, which would place an undue 
burden on both the repair station and the subcontractor.
    Almost all commenters disagreed with the FAA's economic forecast. 
They stated that the FAA's calculations grossly underestimated the 
costs to industry. EAA added that at a time when the aviation industry 
is in perilous condition, it does not seem appropriate to impose a 
large economic impact on aviation businesses and their customers for 
little or no safety benefit.
    NATA, AOPA, Mobile Transponder Services, LLC, and others stated 
that the FAA identified two compliance costs to repair stations: The 
cost to apply for a rating and the cost to revise their manuals. 
However, the FAA also proposed significant changes to training program 
requirements but did not account for the resources required to develop 
the new training curriculum and the staff-hours necessary to re-train 
all applicable staff members. Some commenters also stated the FAA did 
not consider the complications and costs of limiting mobile maintenance 
operations, particularly to general aviation aircraft owners and 
operators. These expenses will increase the cost of these elements of 
the proposed rules exponentially.
    Additionally, several commenters, including AOPA, noted that the 
agency estimated the average one-time compliance costs would be $1,146 
for a small repair station, and $2,848 for a medium sized repair 
station. The commenters argued that those costs are just a fraction of 
the cost of the proposed rule. They also expressed the view that even 
considering just the costs identified by the FAA (application for 
rating and revision of manuals) the estimates are unrealistically low. 
Furthermore, the commenters stated that the costs assigned by the FAA 
are especially unreasonable if the FAA intended for currently 
certificated repair stations to complete a letter of compliance, in 
addition to enduring the entire certification process and revising 
manuals and other documents.
    Collectively, the commenters stated that in large repair stations, 
``supervisors'' are often hourly-paid lead personnel. The term 
``supervisor'' in some instances may refer to the administrative 
supervisor who does not give technical guidance to those who are 
unfamiliar with all the necessary job requirements. Therefore, the 
commenters argued that naming each supervisor on a roster, as proposed 
in the NPRM, would be ineffective for enhancing safety.
    The FAA is withdrawing the overarching ratings proposal with 
associated certification and personnel requirements. The proposals for 
changes to definitions, contract maintenance, and the required 24-month 
transition are inseparably linked to the overarching proposals and are 
not adopted in this final rule. This rule contains only the amendments 
that add denial authority, require FAA acceptance of a surrendered 
certificate, and prohibit fraudulent or intentionally false entries and 
omissions, as well as several minor administrative changes.

V. Regulatory Notices and Analyses

A. Regulatory Evaluation

    Changes to Federal regulations must undergo several economic 
analyses. First, Executive Order 12866 and Executive Order 13563 direct 
that each Federal agency shall 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 of 1980 (Pub. 
L. 96-354) requires agencies to analyze the economic impact of 
regulatory changes on small entities. Third, the Trade Agreements Act 
(Pub. L. 96-39) prohibits agencies from setting standards that create 
unnecessary obstacles to the foreign commerce of the United States. In 
developing U.S. standards, the Trade Act requires agencies to consider 
international standards and, where appropriate, that they be the basis 
of U.S. standards. Fourth, the Unfunded Mandates Reform Act of 1995 
(Pub. L. 104-4) requires agencies to prepare a written assessment of 
the costs, benefits, and other effects of proposed or final rules that 
include a Federal mandate likely to result in the expenditure by State, 
local, or tribal governments, in the aggregate, or by the private 
sector, of $100 million or more annually (adjusted for inflation with 
base year of 1995). This portion of the preamble summarizes the FAA's 
analysis of the economic impacts of this final rule.
    Department of Transportation Order DOT 2100.5 prescribes policies 
and procedures for simplification, analysis, and review of regulations. 
If the expected cost impact is so minimal that a proposed or final rule 
does not warrant a full evaluation, this order permits that a statement 
to that effect

[[Page 46982]]

and the basis for it to be included in the preamble if a full 
regulatory evaluation of the cost and benefits is not prepared. Such a 
determination has been made for this final rule. The reasoning for this 
determination follows:
    This rule amends regulations for repair stations in four areas. 
First, it introduces a new exception that enables the FAA to deny an 
applicant a repair station certificate if the applicant previously held 
a repair station certificate that had been revoked, or if certain key 
individuals (those that would be in a management position or who would 
have control or a substantial ownership interest in the applicant) had 
materially contributed to the circumstances that caused a previous 
repair station certificate revocation. Along these lines, the rule also 
provides that a repair station's attempt to surrender its certificate 
is not effective until the FAA accepts the certificate for 
cancellation. Secondly, the rule provides that false or fraudulent 
entries or omissions in applications, records, or reports may result in 
revocation of any certificate issued by the FAA. Thirdly, the rule 
adopts administrative changes to clarify the intent of the current 
rule. Lastly, the rule corrects several errors in the repair station 
regulations.
    Current regulations do not allow the FAA to deny a repair station 
certificate to a technically qualified applicant, regardless of 
conduct. This rule permits the FAA to deny an application if the 
applicant previously had a certificate revoked or if the certificate is 
in the process of being revoked, or the applicant intends to fill a 
position with an individual as described in part 145.51(e). To 
determine if an applicant fits the criteria described in part 
145.51(e), the FAA will add one two-part question to FAA Form 8310-3 
``Application for Repair Station Certificate and/or Rating.'' The new 
question is: ``Will any person as described in part 145.51(e) be 
involved with the management, control, or have substantial ownership of 
the repair station? If 'YES', provide a detailed explanation on a 
separate page.'' If an applicant declares ``No,'' no additional 
explanation by the applicant is required. If an applicant declares 
``Yes,'' the applicant is required to give a written narrative of the 
circumstances leading to the revocation. Based on the information 
provided in the narrative, the FAA can deny the applicant a repair 
station certificate, if warranted. In addition, an applicant, on 
occasion, may find it necessary to contact FAA personnel to determine 
if a certain individual has been identified as a contributor to a 
repair station certificate revocation. The time expended by both 
parties for this query, as well as the increased time required for an 
applicant to complete revised FAA Form 8310-3, is expected to be 
negligible.
    Since the expected outcome will be a minimal impact with positive 
net benefits, a regulatory evaluation was not prepared. The FAA has, 
therefore, determined that this final rule is not a ``significant 
regulatory action'' as defined in section 3(f) of Executive Order 
12866, and is not ``significant'' as defined in DOT's Regulatory 
Policies and Procedures.

B. Regulatory Flexibility Determination

    The Regulatory Flexibility Act of 1980 (Pub. L. 96-354) (RFA) 
establishes ``as a principle of regulatory issuance that agencies shall 
endeavor, consistent with the objectives of the rule and of applicable 
statutes, to fit regulatory and informational requirements to the scale 
of the businesses, organizations, and governmental jurisdictions 
subject to regulation.'' To achieve this principle, agencies are 
required to solicit and consider flexible regulatory proposals and to 
explain the rationale for their actions to assure that such proposals 
are given serious consideration.'' The RFA 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 rule will 
have a significant economic impact on a substantial number of small 
entities. If the agency determines that it will, the agency must 
prepare a regulatory flexibility analysis as described in the RFA.
    However, if an agency determines that a rule is not expected to 
have a significant economic impact on a substantial number of small 
entities, section 605(b) of the RFA provides that the head of the 
agency may so certify and a regulatory flexibility analysis is not 
required. The certification must include a statement providing the 
factual basis for this determination, and the reasoning should be 
clear.
    For this regulatory flexibility analysis, the FAA used the SBA-
defined categories of ``small'' (1,500 or fewer employees) and ``non-
small'' (more than 1,500 employees) for the aircraft manufacturing 
industry. As of May 2013, there were 4,779 FAA certificated repair 
stations. Of these repair stations, a vast majority (99.5 percent or 
4,753) are defined as ``small.'' The last time a certificate 
application was made by a ``non-small'' entity was in 2005.\9\
---------------------------------------------------------------------------

    \9\ Federal Aviation Administration Safety Performance Analysis 
System Database (SPAS).
---------------------------------------------------------------------------

    During the three-year period from 2010 through 2012, the FAA 
received 526 applications for repair station certification, for an 
average of 175 applications per year.\10\ All 526 applications for 
certification were submitted by small entities. Consequently, it is 
projected that most future applicants for repair stations certificates 
will also be small entities. Accordingly, this final rule will impact a 
substantial number of small entities.
---------------------------------------------------------------------------

    \10\ SPAS Database--Applications for Repair Station 
Certificates: CY 2010--185 applications; CY 2011--171 applications; 
CY 2012--168 applications.
---------------------------------------------------------------------------

    The SBA Office of Advocacy provided comments to the FAA on the 
NPRM. One comment was that the cost estimate for the re-certification 
of repair stations (which was prompted by a new ratings system) is 
understated. The FAA withdrew the provision for a new ratings system 
from the final rule. Thus, the cost estimate for recertification of 
repair stations has been eliminated.
    The SBA also commented that small industry representatives stated 
that they lack the knowledge and ability to track parties whose 
certificates were either revoked or voluntarily surrendered during an 
enforcement proceeding, thereby making the cost of complying with the 
``bad actor'' provisions highly unpredictable or impossible. The 
representatives recommended that should this provision be adopted then 
the FAA should maintain a list of disqualified individuals. Repair 
station applicants could then query the FAA regarding that information 
on certain persons. To address this concern, the FAA will respond to an 
applicant request for information regarding specific persons; however a 
list of disqualified persons will not be made available to the public.
    There will be a substantial number of small entities impacted by 
this rule. However the expected economic impact to these entities will 
be minimal. To assist in implementing this rule, the FAA will add one 
additional two-part question to the application for a repair station 
certificate. To further assist applicants in answering this question, 
the FAA will answer an applicant's inquiry as to whether a named 
individual has contributed to the revocation of a repair station 
certificate. Thus, the cost of this incremental time required for these 
activities is expected to be minimal.
    If an agency determines that a rulemaking will not result in a

[[Page 46983]]

significant economic impact on a substantial number of small entities, 
the head of the agency may so certify under section 605(b) of the RFA. 
Therefore, as provided in section 605(b), the head of the FAA certifies 
that this rulemaking will not result in a significant economic impact 
on a substantial number of small entities.

C. International Trade Impact Assessment

    The Trade Agreements Act of 1979 (Pub. L. 96-39), as amended by the 
Uruguay Round Agreements Act (Pub. L. 103-465), prohibits Federal 
agencies from establishing standards or engaging in related activities 
that create unnecessary obstacles to the foreign commerce of the United 
States. Pursuant to these Acts, the establishment of standards is not 
considered an unnecessary obstacle to the foreign commerce of the 
United States, so long as the standard has a legitimate domestic 
objective, such as the protection of safety, and does not operate in a 
manner that excludes imports that meet this objective. The statute also 
requires consideration of international standards and, where 
appropriate, that they be the basis for U.S. standards. The FAA has 
assessed the potential effect of this final rule and determined that it 
will impose the same costs on domestic and international entities and 
thus has a neutral trade impact.

D. Unfunded Mandates Assessment

    Title II of the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-
4) requires each Federal agency to prepare a written statement 
assessing the effects of any Federal mandate in a proposed or final 
agency rule that may result in an expenditure of $100 million or more 
(in 1995 dollars) in any one year by State, local, and tribal 
governments, in the aggregate, or by the private sector; such a mandate 
is deemed to be a ``significant regulatory action.'' The FAA currently 
uses an inflation-adjusted value of $151.0 million in lieu of $100 
million. This final rule does not contain such a mandate; therefore, 
the requirements of Title II of the Act do not apply.

E. Paperwork Reduction Act

    The Paperwork Reduction Act of 1995 (44 U.S.C. 3507(d)) requires 
that the FAA consider the impact of paperwork and other information 
collection burdens imposed on the public. According to the 1995 
amendments to the Paperwork Reduction Act (5 CFR 1320.8(b)(2)(vi)), an 
agency may not collect or sponsor the collection of information, nor 
may it impose an information collection requirement unless it displays 
a currently valid Office of Management and Budget (OMB) control number.
    This final rule will impose a revision to the existing information 
collection requirements previously approved under OMB Control Number 
2120-0682, Application for Repair Station Certificate and/or Rating 
(FAA Form 8310-3). The FAA has determined that the revision to the 
information collection is not significant or substantive and does not 
change the terms of the existing OMB approval. As required by the 
Paperwork Reduction Act, the FAA submitted the information collection 
revision to OMB for its review to ensure that the public record is 
accurate.

F. International Compatibility and Cooperation

    (1) In keeping with U.S. obligations under the Convention on 
International Civil Aviation, it is FAA policy to conform to 
International Civil Aviation Organization (ICAO) Standards and 
Recommended Practices to the maximum extent practicable. The FAA has 
determined that there are no ICAO Standards and Recommended Practices 
that correspond to these proposed regulations.
    (2) Executive Order (EO) 13609, Promoting International Regulatory 
Cooperation, promotes international regulatory cooperation to meet 
shared challenges involving health, safety, labor, security, 
environmental, and other issues and to reduce, eliminate, or prevent 
unnecessary differences in regulatory requirements. The FAA has 
analyzed this action under the policies and agency responsibilities of 
EO 13609, and has determined that this action would have no effect on 
international regulatory cooperation.

G. 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 312(d) and involves no extraordinary 
circumstances.

VI. Executive Order Determinations

A. Executive Order 13132, Federalism

    The FAA has analyzed this final rule under the principles and 
criteria of Executive Order 13132, Federalism. The agency determined 
that this action will not have a substantial direct effect on the 
States, or the relationship between the Federal 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.

B. Executive Order 13211, Regulations That Significantly Affect Energy 
Supply, Distribution, or Use

    The FAA analyzed this final rule under Executive Order 13211, 
Actions Concerning Regulations that Significantly Affect Energy Supply, 
Distribution, or Use (May 18, 2001). The agency has determined that it 
is not a ``significant energy action'' under the executive order and it 
is not likely to have a significant adverse effect on the supply, 
distribution, or use of energy.

VII. How To Obtain Additional Information

A. Rulemaking Documents

    An electronic copy of a rulemaking document may be obtained by 
using the Internet--
    1. Search the Federal eRulemaking Portal (http://www.regulations.gov);
    2. Visit the FAA's Regulations and Policies Web page at http://www.faa.gov/regulations_policies/ or
    3. Access the Government Printing Office's Web page at http://www.gpo.gov/fdsys/.
    Copies may also be obtained by sending a request (identified by 
notice, amendment, or docket number of this rulemaking) to the Federal 
Aviation Administration, Office of Rulemaking, ARM-1, 800 Independence 
Avenue SW., Washington, DC 20591, or by calling (202) 267-9680.

B. Comments Submitted to the Docket

    Comments received may be viewed by going to http://www.regulations.gov and following the online instructions to search the 
docket number for this action. Anyone is able to search the electronic 
form of all comments received into any of the FAA's dockets by the name 
of the individual submitting the comment (or signing the comment, if 
submitted on behalf of an association, business, labor union, etc.).

C. 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. A small entity with questions regarding this document, 
may contact its local

[[Page 46984]]

FAA official, or the person listed under the FOR FURTHER INFORMATION 
CONTACT heading at the beginning of the preamble. To find out more 
about SBREFA on the Internet, visit http://www.faa.gov/regulations_policies/rulemaking/sbre_act/.

List of Subjects in 14 CFR Part 145

    Air carriers, Air transportation, Aircraft, Aviation safety, 
Recordkeeping and reporting, Safety.

The Amendment

    In consideration of the foregoing, the Federal Aviation 
Administration amends 14 CFR part 145 as follows:

PART 145--REPAIR STATIONS

0
1. The authority citation for part 145 continues to read as follows:

    Authority:  49 U.S.C. 106(g), 40113, 44701-44702, 44707, 44709, 
44717.

0
2. Section 145.12 is added to subpart A to read as follows:


Sec.  145.12  Repair station records: Falsification, reproduction, 
alteration, or omission.

    (a) No person may make or cause to be made:
    (1) Any fraudulent or intentionally false entry in:
    (i) Any application for a repair station certificate or rating 
(including in any document used in support of that application); or
    (ii) Any record or report that is made, kept, or used to show 
compliance with any requirement under this part;
    (2) Any reproduction, for fraudulent purpose, of any application 
(including any document used in support of that application), record, 
or report under this part; or
    (3) Any alteration, for fraudulent purpose, of any application 
(including any document used in support of that application), record, 
or report under this part.
    (b) No person may, by omission, knowingly conceal or cause to be 
concealed, a material fact in:
    (1) Any application for a repair station certificate or rating 
(including in any document used in support of that application); or
    (2) Any record or report that is made, kept, or used to show 
compliance with any requirement under this part.
    (c) The commission by any person of an act prohibited under 
paragraphs (a) or (b) of this section is a basis for any one or any 
combination of the following:
    (1) Suspending or revoking the repair station certificate and any 
certificate, approval, or authorization issued by the FAA and held by 
that person.
    (2) A civil penalty.
    (3) The denial of an application under this part.

0
3. Amend Sec.  145.51 by revising paragraph (b), and adding paragraphs 
(e) and (f) to read as follows:


Sec.  145.51  Application for certificate.

* * * * *
    (b) The equipment, personnel, technical data, and housing and 
facilities required for the certificate and rating, or for an 
additional rating, must be in place for inspection at the time of 
certification or rating approval by the FAA. However, the requirement 
to have the equipment in place at the time of initial certification or 
rating approval may be met if the applicant has a contract acceptable 
to the FAA with another person to make the equipment available to the 
repair station at any time it is necessary when the relevant work is 
being performed.
* * * * *
    (e) The FAA may deny an application for a repair station 
certificate if the FAA finds that:
    (1) The applicant holds a repair station certificate in the process 
of being revoked, or previously held a repair station certificate that 
was revoked;
    (2) The applicant intends to fill or fills a management position 
with an individual who exercised control over or who held the same or a 
similar position with a certificate holder whose repair station 
certificate was revoked, or is in the process of being revoked, and 
that individual materially contributed to the circumstances causing the 
revocation or causing the revocation process; or
    (3) An individual who will have control over or substantial 
ownership interest in the applicant had the same or similar control or 
interest in a certificate holder whose repair station certificate was 
revoked, or is in the process of being revoked, and that individual 
materially contributed to the circumstances causing the revocation or 
causing the revocation process.
    (f) If the FAA revokes a repair station certificate, an individual 
described in paragraphs (e)(2) and (3) of this section is subject to an 
order under the procedures set forth in 14 CFR 13.20, finding that the 
individual materially contributed to the circumstances causing the 
revocation or causing the revocation process.

0
4. Amend Sec.  145.53 by revising paragraph (a) to read as follows:


Sec.  145.53  Issue of certificate.

    (a) Except as provided in Sec.  145.51(e) or paragraph (b), (c), or 
(d) of this section, a person who meets the requirements of subparts A 
through E of this part is entitled to a repair station certificate with 
appropriate ratings prescribing such operations specifications and 
limitations as are necessary in the interest of safety.
* * * * *

0
5. Amend Sec.  145.55 by revising paragraphs (a), (b), and adding 
paragraph (c)(3) to read as follows:


Sec.  145.55  Duration and renewal of certificate.

    (a) A certificate or rating issued to a repair station located in 
the United States is effective from the date of issue until the repair 
station surrenders the certificate and the FAA accepts it for 
cancellation, or the FAA suspends or revokes it.
    (b) A certificate or rating issued to a repair station located 
outside the United States is effective from the date of issue until the 
last day of the 12th month after the date of issue unless the repair 
station surrenders the certificate and the FAA accepts it for 
cancellation, or the FAA suspends or revokes it. The FAA may renew the 
certificate or rating for 24 months if the repair station has operated 
in compliance with the applicable requirements of part 145 within the 
preceding certificate duration period.
    (c) * * *
    (3) Show that the fee prescribed by the FAA has been paid.
* * * * *

0
6. Revise Sec.  145.57 to read as follows:


Sec.  145.57  Amendment to or transfer of certificate.

    (a) A repair station certificate holder applying for a change to 
its certificate must submit a request in a format acceptable to the 
Administrator. A change to the certificate must include certification 
in compliance with Sec.  145.53(c) or (d), if not previously submitted. 
A certificate change is necessary if the certificate holder--
    (1) Changes the name or location of the repair station, or
    (2) Requests to add or amend a rating.
    (b) If the holder of a repair station certificate sells or 
transfers its assets and the new owner chooses to operate as a repair 
station, the new owner must apply for an amended or new certificate in 
accordance with Sec.  145.51.

0
7. Amend Sec.  145.153 by revising paragraph (b)(1) to read as follows:


Sec.  145.153  Supervisory personnel requirements.

* * * * *
    (b) * * *

[[Page 46985]]

    (1) If employed by a repair station located inside the United 
States, be appropriately certificated as a mechanic or repairman under 
part 65 of this chapter for the work being supervised.
* * * * *

0
8. Amend Sec.  145.155 by revising paragraph (a)(2) to read as follows:


Sec.  145.155  Inspection personnel requirements.

    (a) * * *
    (2) Proficient in using the various types of inspection equipment 
and visual inspection aids appropriate for the article being inspected.
* * * * *

0
9. Amend Sec.  145.157 by revising paragraph (a) to read as follows:


Sec.  145.157  Personnel authorized to approve an article for return to 
service.

    (a) A certificated repair station located inside the United States 
must ensure each person authorized to approve an article for return to 
service under the repair station certificate and operations 
specifications is appropriately certificated as a mechanic or repairman 
under part 65.
* * * * *

0
10. Amend Sec.  145.163 by revising paragraph (a) to read as follows:


Sec.  145.163  Training requirements.

    (a) A certificated repair station must have and use an employee 
training program approved by the FAA that consists of initial and 
recurrent training. An applicant for a repair station certificate must 
submit a training program for approval by the FAA as required by Sec.  
145.51(a)(7).
* * * * *

0
11. Amend Sec.  145.213 by revising paragraph (d) to read as follows:


Sec.  145.213  Inspection of maintenance, preventive maintenance, or 
alterations.

* * * * *
    (d) Except for individuals employed by a repair station located 
outside the United States, only an employee appropriately certificated 
as a mechanic or repairman under part 65 is authorized to sign off on 
final inspections and maintenance releases for the repair station.

0
12. Amend Sec.  145.221 by revising paragraph (a) to read as follows:


Sec.  145.221  Service difficulty reports.

    (a) A certificated repair station must report to the FAA within 96 
hours after it discovers any failure, malfunction, or defect of an 
article. The report must be in a format acceptable to the FAA.
* * * * *

    Issued under authority provided by 49 U.S.C. 106(f), 44701(a), 
and 44707 in Washington, DC, on July 14, 2014.
Michael P. Huerta,
Administrator.
[FR Doc. 2014-18938 Filed 8-11-14; 8:45 am]
BILLING CODE 4910-13-P