[Federal Register Volume 68, Number 86 (Monday, May 5, 2003)]
[Proposed Rules]
[Pages 23808-23817]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-10946]



[[Page 23807]]

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Part II





Department of Transportation





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Federal Aviation Administration



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14 CFR Part 3



False and Misleading Statements Regarding Aircraft Products, Parts, and 
Materials; Proposed Rule

  Federal Register / Vol. 68, No. 86 / Monday, May 5, 2003 / Proposed 
Rules  

[[Page 23808]]


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DEPARTMENT OF TRANSPORTATION

Federal Aviation Administration

14 CFR Part 3

[Docket No. FAA-2003-15062; Notice No. 03-07]
RIN 2120-AG08


False and Misleading Statements Regarding Aircraft Products, 
Parts, and Materials

AGENCY: Federal Aviation Administration (FAA), (DOT).

ACTION: Notice of proposed rulemaking (NPRM).

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SUMMARY: The FAA proposes additional rules that would prohibit certain 
false or misleading statements regarding type certificated products, 
and parts and materials that may be used on type certificated products. 
The proposals would also allow increased inspection by the FAA of 
records and parts regarding the quality of aircraft parts. The 
additional rules are needed to help prevent persons from representing 
parts as suitable for use on type certificated products when in fact 
they may not be. The proposals are intended to provide assurance that 
aircraft owners and operators, and persons who maintain aircraft, have 
factual information on which to determine whether a part may be used in 
a given type certificated product application.

DATES: Send your comments by August 4, 2003.

ADDRESSES: Address your comments to the Docket Management System (DMS), 
U.S. Department of Transportation, Room Plaza Level 401, 400 Seventh 
Street, SW., Washington, DC 20590-0001. You must identify the docket 
number ``FAA-2003-15062'' at the beginning of your comments, and you 
should submit two copies of your comments. If you wish to receive 
confirmation that FAA received your comments, include a self-addressed, 
stamped postcard.
    You may also submit comments through the Internet to http://dms.dot.gov. You may review the public docket containing comments to 
these proposed regulations in person in the Dockets Office between 9 
a.m. and 5 p.m., Monday through Friday, except Federal holidays. The 
Dockets Office is on the plaza level of the NASSIF Building at the 
Department of Transportation at the above address. Also, you may review 
public dockets on the Internet at http://dms.dot.gov.

FOR FURTHER INFORMATION CONTACT: Beverly Sharkey, Suspected Unapproved 
Parts Program Office (AVR-20), Federal Aviation Administration, 45005 
Aviation Drive, Suite 214, Dulles, VA 20166-7541; telephone (703) 661-
0580, facsimile (703) 661-0113, e-mail [email protected].

SUPPLEMENTARY INFORMATION:

Comments Invited

    The FAA invites interested persons to take part in this rulemaking 
by submitting written comments, data, or views. We also invite comments 
on the economic, environmental, energy, or federalism impacts that 
might result from adopting the proposals in this document. The most 
helpful comments reference a specific portion of the proposal, explain 
the reason for any recommended change, and include supporting data. We 
ask that you send us two copies of written comments.
    We will file in the docket all comments we receive, as well as a 
report summarizing each substantive public contact with FAA personnel 
about this proposed rulemaking. The docket is available for public 
inspection before and after the comment closing date. If you wish to 
review the docket in person, go to the address in the ADDRESSES section 
of this preamble between 9 a.m. and 5 p.m., Monday through Friday, 
except Federal holidays. You may also review the docket using the 
Internet at the web address in the ADDRESSES section.
    Before acting on this proposal, we will consider all comments we 
receive by the closing date for comments. We will consider comments 
filed late if it is possible to do so without incurring expense or 
delay. We may change this proposal because of the comments we receive.
    If you want the FAA to acknowledge receipt of your comments on this 
proposal, include with your comments a pre-addressed, stamped postcard 
on which the docket number appears. We will stamp the date on the 
postcard and mail it to you.

Availability of NPRMs

    You can get an electronic copy using the Internet by taking the 
following steps:
    (1) Go to the search function of the Department of Transportation's 
electronic Docket Management System (DMS) Web page (http://dms.dot.gov/search).
    (2) On the search page type in the last four digits of the Docket 
number shown at the beginning of this proposed rule. Click on 
``search.''
    (3) On the next page, which contains the Docket summary information 
for the Docket you selected, click on the document number of the item 
you wish to view.
    You can also get an electronic copy using the Internet through the 
Office of Rulemaking's web page at http://www.faa.gov/avr/armhome.htm 
or the Federal Register's web page at http://www.access.gpo.gov/su_docs/aces/aces140.html.
    You can also get a copy by submitting a request to the Federal 
Aviation Administration, Office of Rulemaking, ARM-1, 800 Independence 
Avenue SW, Washington, DC 20591, or by calling (202) 267-9680. Make 
sure to identify the docket number, notice number, or amendment number 
of this rulemaking.

Background

Statement of the Problem

    There has been a growing concern about the representation of parts 
used on aircraft. Under FAA regulations, the person installing parts on 
an aircraft is responsible for ensuring the parts are airworthy. 
Because airworthiness cannot be determined simply by inspecting a part, 
parts installers often have to rely on information provided by the 
persons who sold them the parts. Most parts in the aviation system are 
of the quality and condition described in their records. There have 
been cases, however, in which false or misleading statements in 
advertisements and other records have led a person installing the part 
to believe the part was suitable for a particular use when, in fact, it 
was not.
    Currently, there are few regulations concerning false or misleading 
statements regarding aircraft parts. Further, it may be difficult for 
the FAA to investigate apparent false or misleading statements because 
the FAA does not regulate parts distributors.
    The FAA proposes to issue additional rules that would (1) help 
prevent misleading statements by extending the prohibition on 
fraudulent or intentionally false statements beyond those now covered 
by Title 14, Code of Federal Regulations (14 CFR) parts 21 and 43; (2) 
provide a regulation covering fraudulent and intentionally false 
statements that, if violated, would be addressed by FAA enforcement 
action; and (3) provide for FAA investigation of representations made 
regarding the quality of aircraft parts.

Petition for Rulemaking

    The FAA received a petition for rulemaking to amend part 21 to 
prohibit false, fictitious, or fraudulent statements or representations 
associated with the sale or transfer of aircraft parts. The

[[Page 23809]]

petition, submitted by Roger C. Forshee (Docket No. FAA-2000-8053), 
proposed rulemaking to address aircraft parts that are being offered 
for sale as ``aircraft quality,'' when, in fact, the quality and origin 
of the parts are unknown. The FAA denied the petition as a separate 
rulemaking action because FAA had already undertaken the present 
rulemaking, which it considers responsive to the issues raised in Mr. 
Forshee's petition.

Current Requirements

Determining Status of Parts

    Persons who own or operate aircraft are responsible for maintaining 
the aircraft in an airworthy condition. See, for instance, 14 CFR 
91.403.
    Under 14 CFR 43.13, persons performing maintenance, preventive 
maintenance, or alterations are required to use materials of such a 
quality that the aircraft, airframe, aircraft engine, propeller, or 
appliance after the maintenance is at least equal to its original or 
properly altered condition. Persons must use replacement products, 
parts, and materials that will allow them to return the aircraft to 
service in an airworthy condition.
    To determine that a product, part, or material is suitable for use 
in a particular installation on a type certificated product, the person 
maintaining the product must use various information sources. For 
aircraft, the airworthiness certificate and the maintenance records for 
the airframe and powerplant must be reviewed.
    For airframes, engines, propellers, appliances, other parts, and 
materials, several items must be reviewed. For instance, the part 
number is important, and it is critical to know whether the part was 
produced by an FAA production approval holder (PAH) \1\ or a PAH 
approved supplier. If the part is required to be replaced or serviced 
after a specified time in service, or has a limited shelf life, it is 
essential to know time in service or time since manufacture.
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    \1\ Production approval holders are persons that have been 
approved by the FAA to produce aircraft products or parts. 
Production approvals include parts manufacturer approvals (PMA) 
(Part 21, Subpart K), production certificates (PC) (Part 21, Subpart 
G), technical standard order authorizations (TSAO) (Part 21, Subpart 
O), and approved production inspection systems (APIS) (Part 21, 
Subpart F).
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    For a used part, it is important to know whether maintenance has 
been performed on the part, what was done, who performed the work, and 
whether the part has been approved for return to service by an 
appropriately certificated person. If it is a life-limited part, the 
installer must know the current life status of the part. All of this 
information is used to determine whether the part may be used in a 
given application, and whether it must be serviced in any way before 
use.
    Similarly, persons producing aircraft, engines, propellers, 
appliances, and other parts must use materials and parts that will 
allow them to produce a product that conforms to the approved design. 
They obtain materials and parts from various sources. Producers have 
extensive procedures in place to assure that they are using quality 
parts, but they, too, must rely on representations made by others 
regarding the parts and materials.
    There are several sources of this information. The status of a part 
is not completely apparent simply by visual examination, and usually 
various records must be used.
    This may start with an advertisement claiming the part meets FAA 
standards, or is of aviation quality. On receiving the part, the 
installer must make sure the part is appropriate for the intended use. 
Some parts are required to be marked, and those markings contain some 
of the required information. Markings, however, do not contain 
information regarding the part's time in service, overhaul, or repair 
history. Additional information needed may be on an FAA Form 8130-3 
(Authorized Release Certificate--Airworthiness Approval Tag), a Joint 
Aviation Authorities (JAA) Form One (Authorized Release Certificate), 
or another record completed by a repair station or appropriately 
authorized person.
    Other necessary information may come from a shipping document, 
invoice, maintenance log, or other record showing the manufacturer, 
part number, time in service, and other information.

Current Regulations and Laws

    Existing laws and regulations partially cover the statements made 
in parts records regarding quality and condition of such parts. For 
instance, 14 CFR 21.2 prohibits fraudulent and intentionally false 
statements, but only on applications for certificates or approvals 
under part 21, and on records that are kept, made, or used to show 
compliance with part 21. Part 21 does not cover all distribution and 
sale of aircraft parts by brokers, dealers, and other persons who are 
not producing those parts.
    Similarly, 14 CFR 43.12 prohibits fraudulent and intentionally 
false statements, but only on records kept, made, or used to show 
compliance with part 43. That part applies to the maintenance, 
preventive maintenance, rebuilding, and alteration of type certificated 
aircraft. While it covers some records used in distributing parts, it 
does not cover all of them.
    Some criminal sanctions may apply. The Aircraft Safety Act of 2000 
added section 38 to Title 18 of the United States Code (18 U.S.C. 38) 
to safeguard against the dangers posed by the installation of 
nonconforming, defective, or counterfeit aircraft and space vehicle 
parts. This law prohibits certain false or fraudulent representations 
regarding the sale or installation of aircraft and space vehicle parts. 
Specifically, the law prohibits any falsification or concealment of any 
material fact concerning any aircraft or space vehicle part; prohibits 
any materially fraudulent representation concerning any aircraft or 
space vehicle part; and prohibits the making or use of any materially 
false writing, entry, certification, document, record, data plate, 
label, or electronic communication concerning any aircraft or space 
vehicle part. The law also prohibits fraudulent representations 
relating to the export, import, introduction, sale, trade, or 
installation of aircraft or space vehicle parts. There are criminal 
sanctions for violations of section 38, as well as civil remedies, such 
as ordering the destruction of the parts.
    Also, 18 U.S.C. 1001, provides criminal penalties for whomever, in 
any matter within the jurisdiction of any department or agency of the 
United States, knowingly and willfully falsifies, conceals, or covers 
up by any trick, scheme, or device a material fact, or makes or uses 
any false writing or document knowing the same to contain any false, 
fictitious, or fraudulent statement or entry.
    Existing laws and regulations also provide the FAA with the means 
to investigate potential violations. The FAA may conduct 
investigations, as necessary, to carry out its duties under 49 U.S.C. 
40113. Parts dealers and other persons that do not hold FAA 
certificates, however, are not required to cooperate with the 
investigation unless the FAA issues a subpoena.

General Discussion of the Proposals

New Part 3

    The additional rules proposed here would not fit well within any 
existing CFR part. The FAA proposes to create a new part 3 that would 
contain rules that apply broadly. It would have two sections, dealing 
with applicability (Sec.  3.1) and false and misleading

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statements regarding aircraft parts (Sec.  3.5).
    Aircraft and parts may be bought and sold, and records about them 
created, by various persons, some of which are currently subject to FAA 
regulation, such as manufacturers (see part 21), repair stations and 
mechanics (see parts 43, 65, and 145), and air carriers or other 
aircraft operators (see parts 119, 121, 125, and 135). These proposals 
would also cover persons who are not currently directly regulated by 
the FAA, such as distributors and brokers. Note that 18 U.S.C. 38 
applies to both certificated and non-certificated persons.
    Eventually part 3 may contain other rules of broad applicability.

Section 3.1 Applicability

    This part applies to persons engaged in aviation-related 
activities, as set forth in this part.

Section 3.5(a) Applicability of this Section

    Paragraph (a) would set forth the applicability of this section. 
The section would apply to all records regarding aircraft and aircraft 
products, parts, and materials, except that paragraph (c) of this 
section does not apply to records made under part 43, Maintenance, 
preventive maintenance, rebuilding, and alteration. That part already 
has a section prohibiting intentional falsification and fraud (Sec.  
43.12), and other sections that govern the content and meaning of 
records under that part, such as Sec.  43.2, Records of overhauling and 
rebuilding; and Sec.  43.9, Content, form, and disposition of 
maintenance, preventive maintenance, rebuilding, and alteration 
records. For this reason, the new requirements of proposed Sec.  3.5(c) 
would not be necessary for part 43 records. While part 43 already 
contains prohibitions against false or fraudulent statements, it does 
not address misleading statements. This proposal intends to address 
misleading statements in records including those required under part 43 
by applying proposed Sec.  3.5(d).

Section 3.5(b) Terms Used in this Section

    Paragraph (b) would define two terms used in this section.
    The term ``product'' means an aircraft, aircraft engine, or 
propeller. This is the same meaning as in Sec.  21.1(b).
    The term ``record'' includes all forms of records, including paper, 
microfilm, identification plates, stamped marks on parts, bar codes, 
and electronic records. ``Record'' includes logbooks, inspection 
records, reports, advertisements, and labels. The term is defined 
broadly to include any means that communicates to aircraft owners, 
operators, producers, mechanics, and repairmen the airworthiness of a 
type certificated product, or acceptability of a part or material for 
use on type certificated products. Examples of marks on parts include 
the marks required under Sec.  45.14 on critical components and the 
marks required under Sec.  45.15 on parts produced under a PMA. An 
example of an electronic record is a company's web page that represents 
the quality of aircraft parts the company is offering for sale.
    There are other terms used in this proposal that are not 
specifically defined in proposed Sec.  3.5(b) Throughout the FAA's 
enabling statute and regulations, there are various words and phrases 
used to describe aircraft parts, including such terms as appliance, 
equipment, apparatus, component, accessory, assembly, airframe, and 
appurtenance. The FAA has attempted to avoid being unduly wordy, yet to 
use the words in a manner consistent with the statute, the regulations, 
and with common industry practice. The FAA, therefore, refers 
throughout the proposed rule to ``part or material for use on a type 
certificated product.''
    In this proposal, the term ``part or material for use on a type 
certificated product'' is used extensively, but is not defined in the 
rule itself. ``Aircraft part'' frequently is used broadly in the 
industry to refer to anything that is, or could be, used as a piece of 
an aircraft, aircraft engine, or propeller, including appliances and 
component parts. The FAA proposes to use this term in the same manner 
here. For instance, the word ``part'' is used in Sec.  21.303 to refer 
to all portions of an aircraft, including standard parts. Software, as 
used in some flight systems and instruments, also is considered a 
``part'' for purposes of these rules. Under this proposed rule, false 
or misleading statements regarding the acceptability of the software 
would be prohibited.
    ``Material'' normally is used to refer to the substances of which a 
thing is made or composed. It generally includes such things as sheet 
metal, unformed wood, and bolts of fabric. The concepts of ``part'' and 
``material'' often overlap in common usage, but for this proposed rule 
it does not matter whether an item is a ``part'' or a ``material,'' 
both are considered under this proposal.
    The proposed rule also refers to the ``acceptability'' of aircraft 
products, parts, and materials. There are various ways a part can be 
shown to be ``acceptable.'' The most common is for the part to be an 
approved part. ``Approved,'' under part 1, means approved by the 
Administrator, and, in this context, generally means the part was 
produced by a PAH or a PAH approved supplier. To be acceptable, used 
parts must also have been maintained in accordance with the 
regulations. This derives from Sec.  43.13 which requires that the 
condition of the product or part used in maintenance be at least equal 
to its original or properly altered condition.
    The FAA intends these terms to be interpreted broadly to fulfill 
the purposes of the rule. The FAA specifically requests comments on 
whether these terms are sufficiently clear, whether they should be 
defined in the regulations, or whether different terms should be used.
    This proposal does not cover statements regarding fluids, that is, 
substances that are used to service an aircraft or product or that may 
be added to an engine, container, or fitting. Fluids include fuel, oil, 
grease, and metal treatments. Fuel and other fluids are not approved 
(nor does FAA develop the standard) as a material under part 21, 
Subpart K--Approval of Materials, Parts, Processes, and Appliances. The 
FAA only judges acceptability of a fluid for use in a proposed type 
design. The FAA recognizes that false or misleading records regarding 
fluids could have a detrimental safety impact. The FAA is considering 
adding to the final rule prohibitions on false or misleading statements 
regarding fluids. We request comments on whether there is a significant 
problem with false or misleading records regarding fluids used in 
aviation, and whether the final rule should apply to records regarding 
fluids.

Section 3.5(c) Prohibition Against False Statements

    The proposed rules would apply to statements representing the 
airworthiness of a product for which the FAA has issued a type 
certificate; or the acceptability of any part, or material for use on a 
product for which the FAA has issued a type certificate. The FAA issues 
type certificates for aircraft, aircraft engines, and propellers. 
Applying the proposed rules to type certificated products means, for 
instance, that the proposed rules would not apply to aircraft for which 
Special Airworthiness Certificates in the experimental category 
(experimental aircraft) have been issued, or military aircraft.
    Paragraph (c)(1) would prohibit any fraudulent or intentionally 
false statement in any record that represents the airworthiness of a 
type certificated product, or the acceptability of any part

[[Page 23811]]

or material for use on type certificated products. Such records are the 
kind that are relied on by owners, operators, producers, and 
maintainers to determine the airworthiness of an aircraft, or the 
acceptability of aircraft products and parts for a given application; 
therefore, they must be truthful.
    Paragraph (c)(2) would prohibit any reproduction or alteration, for 
fraudulent or intentionally false purpose, of any record that 
represents the airworthiness of a type certificated product, or the 
acceptability of any part or material for use on type certificated 
products.
    Paragraph (c) is modeled on similar provisions elsewhere in the 
regulations, such as Sec. Sec.  21.2, 43.12, 61.59, and 65.20. These 
provisions have long been in the regulations and have worked well.
    An intentionally false statement consists of (1) a false 
representation, (2) in reference to a material fact, (3) made with 
knowledge of its falsity. A fraudulent statement consists of these 
three elements, plus (4) it was made with the intent to deceive, and 
(5) action was taken in reliance upon the representation. See, Hart v. 
McLucus, 535 F.2d 516, 519 (9th Cir. 1976). There have been many cases 
under the existing rules interpreting these terms, which will assist in 
understanding the proposed rule.
    Some differences from the current rules should be noted, however. 
Currently, Sec.  21.2 refers to ``* * * a false entry in any record or 
report that is required to be kept, made, or used to show compliance 
with any requirement for the issuance or the exercise of the privileges 
of any certificate or approval issued under this part.'' (Emphasis 
added.) For the most part, although a person may be required to show 
that an acceptable part was installed on an aircraft, the rules do not 
require any particular records to be used to document aircraft 
products, parts, and materials, and, as discussed above, various 
records are used. To avoid any misunderstanding, the word ``required'' 
is not included in the proposed rule. The proposal is intended to cover 
any records that, in fact, represent the airworthiness of a type 
certificated product, or the acceptability of a part or material for 
installation on a type certificated product.
    In addition, the words ``kept, made, or used'' that appear in 
current rules are not used in the proposed Sec.  3.5(c); rather, the 
proposal refers to ``any record that represents the airworthiness. * * 
*'' The words of the current rules might be read by some as focusing on 
the intent of the person making the record. It is the FAA's view, 
however, that the important issue is whether the record represents to 
the reader that an aircraft is airworthy, or a part is acceptable, 
because the reader may rely on the record in making decisions that 
affect safety. The proposed wording is intended to avoid confusion on 
this point.

Section 3.5(d) Preventing Misleading Statements

    Proposed Sec.  3.5(d) would provide that no person in any record 
may express or imply, or cause to be expressed or implied, that a type 
certificated product is airworthy, or a part or material is acceptable 
for installation on type certificated products, unless the person can 
show with appropriate records the representation is true. Under this 
rule, a person would have to have a demonstrable basis for stating or 
implying the aircraft is airworthy, or part or material is acceptable 
for installation. Examples of a demonstrable basis include that the 
part was produced under a production certificate (PC), parts 
manufacturer approval (PMA), or technical standard order authorization 
(TSOA).
    There currently is little regulation concerning misleading 
statements. Some statements may be literally true, but mislead. A 
statement that a part ``fits'' a Cessna 172, for instance, may be 
literally true. But, that statement may mislead a potential buyer to 
think the part is acceptable for use in a Cessna 172, when it may not 
be.
    In advertisements, shipping papers, inserts in parts boxes, and 
other records the FAA has seen examples of statements that are worded 
in such a way that a person may be misled to believe the part is 
approved by the Administrator or is otherwise acceptable, when neither 
fact has been demonstrated. Proposed Sec.  3.5(d) is intended to 
prevent such statements.
    In developing this proposal, we have reviewed the Federal Trade 
Commission's (FTC) regulation of deceptive advertising, and discussed 
with the FTC staff the relevance to this proposal of their approach. 
Although our purposes are quite different--the FTC is concerned 
primarily with consumer protection, whereas we are concerned 
exclusively with aviation safety--we've concluded that the FTC's 
regulatory approach to deceptive advertising establishes an excellent 
model for this proposal. Therefore, we intend to rely heavily on 
precedents established by the FTC in resolving interpretative issues 
that may arise in the application of this proposed rule. The following 
discussion is, therefore, derived from our review of the FTC regulatory 
scheme.
    For the purposes of this rule a misleading statement requires (1) a 
material representation or omission (2) that is likely to mislead the 
consumer (3) acting reasonably under the circumstances.
    Misleading statements include misrepresentations as well as a 
failure to disclose material information regarding the product. A 
misrepresentation is an express or implied statement that is contrary 
to fact. A misleading omission occurs when information necessary to 
prevent a representation, or a reasonable expectation or belief, from 
being misleading is not disclosed. In determining whether the omission 
is deceptive or misleading, we will examine the overall impression 
created by the representation. Unlike the definition of an 
intentionally false statement, there does not have to be knowledge that 
the statement would mislead; nor must there be the intent to deceive. 
The issue with which the FAA is concerned is whether the representation 
is likely to mislead rather than whether it causes actual deception.
    A representation or omission is considered material if it is likely 
to affect the consumer's decisions about the product. The claim must be 
likely to be believed and acted on in a certain way, and injury must be 
found likely to exist because of the representation. Injury exists if 
the consumer would have chosen differently but for the deception. Some 
statements, especially those affecting health or safety, are 
presumptively material in nature.
    Finally, a representation or omission will be considered from the 
perspective of a reasonable consumer under the circumstances. In 
evaluating a particular representation, we will look to the effect of 
the representation on a reasonable member of the targeted audience. To 
be considered reasonable, an interpretation of a statement does not 
have to be the only one. For instance, if an advertiser's 
representation suggests more than one meaning to a reasonable consumer, 
one of which is misleading, the advertiser would be liable for the 
misleading interpretation.
    Proposed Sec.  3.5(d) is also intended to prevent persons from 
stating or implying that a part is acceptable when the person does not 
know whether it is acceptable. An example is where a person obtains 
surplus military parts that lack sufficient documentation to determine 
whether the parts are approved or acceptable for use on type 
certificated products, yet advertises them as acceptable parts. Under 
this proposed paragraph, the person would

[[Page 23812]]

be prohibited from advertising the part as acceptable for use in type 
certificated products.
    The ``appropriate records'' that would form a basis for stating or 
implying that a part is acceptable would be the records that a mechanic 
or repairman would use in determining that a part properly could be 
installed on an aircraft. Guidance on such records is found in Advisory 
Circulars (ACs) 21-9, 20-62, and 00-56, Voluntary Industry Distributor 
Accreditation Program.

Section 3.5(e) FAA Airworthiness Standards

    Proposed paragraph (e) would apply to records that make statements 
regarding FAA airworthiness standards. It would provide that if a 
person expresses or implies, or causes to be expressed or implied, in 
any record that a product, part, or material meets FAA airworthiness 
standards, the person must ensure that either (1) the product, part, or 
material was produced under an FAA production approval, such as a 
production certificate, parts manufacturer approval, or technical 
standard order authorization; or (2) the record clearly and expressly 
states that the part was not produced under an FAA production approval.
    To obtain an FAA design approval, an applicant must show compliance 
with FAA airworthiness standards, which the FAA adopts to establish the 
minimum level of safety. They are set forth in 14 CFR parts 23-35. 
Under 14 CFR part 21, these approvals are issued in the form of type 
certificates, changes to type certificates (supplemental and amended 
type certificates), TSOAs, and PMAs. The FAA also issues production 
approvals to persons who demonstrate that they can consistently produce 
a product or part that meets the design standard. An example of a 
production approval is a production certificate under part 21 to 
manufacture the Boeing 777. Some approvals include both a design 
approval and a production approval, such as a TSOA and a PMA.
    Statements that a product, part, or material is produced under a 
production approval essentially is a statement that it meets FAA 
airworthiness standards. For instance, a statement that a part ``is 
PMA'd'' is heavily relied on by the industry to show the part is 
acceptable for use. If the statement is false or misleading, the person 
installing the part could install a part that does not meet the FAA 
airworthiness standards and may create a danger in flight. Similarly, 
if a record states that a part ``meets TSO XXX'' it implies the part 
was made under a TSOA or otherwise has an approved design and has been 
produced under an FAA approval. If this is not true, the product or 
part may not in fact be eligible for installation. Standard parts, 
described in Sec.  21.303(b)(4) as nuts, bolts, etc., conform to 
established industry of U.S. specifications. The FAA does not require 
that standard parts be produced under an FAA production approval. The 
subject of standard parts is discussed in more detail later in this 
document.

Section 3.5(f) Inspection

    To allow the FAA to better monitor compliance with this proposed 
rule, Sec.  3.5(f) would provide that the FAA could inspect aircraft, 
and aircraft products, parts, and materials to determine compliance 
with the statute and Sec.  3.5. This would apply to any person who 
expressly or by implication represents, or causes to be expressly or by 
implication represented, in any record that a type certificated product 
is airworthy, or a part or material is acceptable for installation on a 
type certificated product. This would give the FAA more tools to use in 
investigating possible false and misleading statements under proposed 
Sec.  3.5.
    The design, manufacture, and maintenance of aircraft products, 
parts, and materials used in the civil aviation industry are highly 
regulated. Promoting the integrity of records in the system is equally 
important. If any person chooses to represent a type certificated 
product as airworthy or a part or material as acceptable for 
installation on a type certificated product, that person must be 
prepared to show why the representation is true. The proposed rule 
would not apply to persons who do not represent parts as acceptable for 
aviation products. Persons who sell items without representing those 
parts as acceptable for type certificated product use would not be 
subject to Sec.  3.5(f).

Application of the Proposed Rule

    This proposed rule refers to statements that a type certificated 
product is airworthy, or that a part or material is acceptable for 
installation on type certificated product. These terms are intended to 
cover any statements that express or imply the product, part, or 
material is acceptable for use on type certificated products.
    A statement regarding the airworthiness of a type certificated 
product or the acceptability of a part or material for installation on 
type certificated product includes records that represent that the 
product, part, or material is approved by the FAA, or otherwise is 
acceptable for use in maintenance, preventive maintenance, rebuilding, 
alteration, or production of type certificated products, airframes, 
aircraft engines, propellers, appliances, or component parts. These 
statements may take many forms.
    Statements made in advertisements or shipping documents that 
compare an aircraft part to aviation standards or FAA approvals, such 
as ``aviation quality,'' ``TSO'd,'' ``FAA certification,'' ``FAA/PMA,'' 
and ``STC'd,'' imply the part has been found acceptable for 
installation on type certificated products. Similarly, statements made 
regarding the ability to use an aircraft part on type certificated 
products, such as ``direct replacement for aircraft XX,'' ``ready to 
use in your aircraft,'' ``reproduction of part number XX,'' ``fits 
aircraft model number XX,'' ``original,'' ``direct replacement,'' and 
``replaces aircraft model XX part number YY,'' can be reasonably 
interpreted to mean that all FAA requirements for use on a specific 
type certificated product have been met. Under the proposed Sec.  
3.5(c) and (d), such statements would be prohibited if they were false 
or misleading. If a record states the part ``fits aircraft model number 
XX,'' but the part is not approved or otherwise acceptable for use on 
the aircraft, the statement would be in violation of the proposed rule. 
Under proposed Sec.  3.5(e), the person making the statement must 
ensure that either the product, part, or material was produced under an 
FAA production approval, or must state the product, part, or material 
was not produced under an FAA production approval.
    Less direct statements, but just as misleading, include statements 
that suggest the producer of the part was authorized to produce 
approved parts, when in fact the part being sold is not approved. 
Statements on an invoice or advertisement, such as ``authorized 
supplier to (an aircraft producer)'' imply the part is made under that 
authorization, unless the record clearly states the part is not 
approved. Statements on an invoice letterhead that the producer is a 
PMA holder imply the part was made under the PMA, unless the record 
clearly states that it was not.
    The use of a part number, or a number confusingly similar to a part 
number, used on an aircraft product, part, or material that is approved 
by or acceptable to the FAA, is a direct method of stating or implying 
the product, part, or material is approved or acceptable to the FAA. 
For instance, it is a common practice for PMA holders who produce 
replacement parts to use a part number that is the same as the original 
part, with a prefix or suffix to

[[Page 23813]]

show who produced the replacement part. This practice helps in 
identifying what parts may be used as replacements for the original, 
and the FAA allows this practice.
    The proposed Sec. Sec.  3.5(c) and (d) would prohibit the use of 
such numbers when they are false or misleading. For instance, if a 
producer assigned a part number to a replacement part that was the same 
as, or confusingly similar to an approved part, but the replacement 
part was not approved or acceptable, the producer would be in violation 
of the proposed Sec. Sec.  3.5(c) or (d). The producer of the part 
might also be in violation of Sec.  3.5(e) unless the producer clearly 
stated the part was not produced under an FAA production approval.
    Another example is a PAH that produces a part with both a type-
certificated application and a military application. The military 
version may not be produced under all the requirements of the FAA 
production approval, including design and quality control standards. If 
the military part is assigned the same part number as the FAA-approved 
version, that number could erroneously imply the part is acceptable for 
use on type certificated product. That practice would constitute a 
violation of the proposed Sec.  3.5(d). A military part, however, may 
be eligible for installation on a type-certificated product provided 
the documentation accompanying the part establishes the part meets the 
standards to which it was manufactured, interchangeability with the 
original part can be established, and the part is in compliance with 
all applicable airworthiness directives (ADs).
    Another example is where a PAH contracts with a supplier to produce 
a given number of approved parts under the PAHs approval. The PAH is 
responsible under the regulations for ensuring the parts conform to the 
approved design and that all approved processes and materials were used 
in the production of the parts. If the supplier produces additional 
parts not authorized by the PAH and marks them with the PAHs part 
number, that supplier is stating or implying that those additional 
parts were made under the PAHs approval when in fact they were not. The 
additional parts are not approved parts.
    Illustrated parts catalogues (IPC) are another type of document 
that may contain misleading statements regarding what parts are 
approved or acceptable for use in maintaining an aircraft. 
Manufacturers typically publish IPCs to inform their customers of 
sources of replacement parts, and operators and repair stations widely 
use IPCs for that purpose. Some manufacturers make little or no effort 
to ensure their IPCs are current or the identified suppliers have 
obtained FAA production approvals (for example, PMA). Thus, a 
manufacturer's ``current'' IPC might include suppliers who not only do 
not have PMA, but whose contracts with the manufacturer may have been 
canceled for various reasons. Yet many parts buyers assume that, 
because a supplier is listed in an IPC, their parts are acceptable. The 
FAA recognizes that for business reasons the manufacturers often do not 
wish to expend the resources necessary to ensure the IPC is always 
current. The FAA also recognizes, however, that given the potential 
reliance on the IPC it should avoid misleading people who use it to 
maintain aircraft. The IPC would comply with this rule if it clearly 
stated that the suppliers listed may not currently hold FAA approvals 
and the maintainer must determine whether the supplier's parts can be 
used.
    Other statements may be misleading when representing a part's life 
status, such as the cycles or hours accumulated on the part. For 
instance, a record may indicate that a life-limited part has no time in 
service (is new) when, in fact, the part actually has some time in 
service. This may influence an aircraft owner to use the part beyond 
its service life. Such a statement would be in violation of either 
Sec.  3.5(c) or (d), or both.

Continuing Responsibility of Owners, Operators, Mechanics, and Repair 
Stations

    The owner or operator of an aircraft is responsible for maintaining 
the aircraft in an airworthy condition. See, for instance, Sec.  
91.403(a). Further, each person maintaining or altering an aircraft, or 
performing preventive maintenance, is responsible for ensuring the 
aircraft will be at least equal to its original or properly altered 
condition. See Sec.  43.13(b). The proposed Sec.  3.5 would not change 
these responsibilities.
    These proposed rules are intended to assist owners, operators, and 
maintainers by prohibiting false and misleading statements in the 
records they rely on. But, these rules would not replace the current 
responsibility of owners, operators, and maintainers to obtain 
appropriate documentation for aircraft and products, parts, and 
materials. For instance, even though these rules would prohibit false 
and misleading statements in advertisements, advertisements alone are 
not sufficient documentation for parts used to maintain or alter 
aircraft. Before a person returns an aircraft to service following 
maintenance, preventive maintenance, or alteration, the person must 
have a reasonable basis to believe the aircraft will be in at least its 
original or properly altered condition, in accordance with Sec.  43.13. 
To do so, the person must take care to obtain and examine the records 
on replacement and alteration products, parts, and materials, to ensure 
they are appropriate for the task. FAA Advisory Circular (AC) 20-62 has 
further guidance regarding the documentation that should be used.

Relationship of Proposal to Standard Parts

    Standard parts are described in Sec.  21.303(b)(4) as nuts, bolts, 
etc., conforming to established industry or U.S. specifications. The 
FAA does not require they be produced under an FAA production approval. 
They are not unique to aviation and may be used in many different 
applications outside civil aviation.
    Parts distributors and others, however, may actively advertise to 
the aviation industry as being able to provide standard parts for use 
in aviation. Records regarding standard parts would be subject to this 
proposed rule where the records express or imply that the standard 
parts are suitable for use on type certificated products. Records would 
also be subject to the proposed rule if, under the circumstances of the 
sale, it was apparent the standard parts were being sold for use on 
type certificated products, such as when the parts are sold to an 
aircraft producer. And, a record would be subject to the proposal if it 
expresses or implies that a part conforms to a particular standard. In 
such cases, the record would have to be not fraudulent or intentionally 
false under proposed Sec.  3.5(c), and not misleading under proposed 
Sec.  3.5(d).

Relationship of Proposal to Aircraft Parts Distributors

    The FAA does not certificate or regulate aircraft parts 
distributors. Distributors include brokers, dealers, resellers, or 
other persons and agencies engaged in the sale of parts that might be 
installed in type-certificated aircraft, aircraft engines, propellers, 
and appliances.
    Past initiatives addressing direct FAA certification and regulation 
of distributors concluded that detailed regulation is not practicable 
because of the potential size of the group, estimated at several 
thousand entities, and the FAA's limited resources to conduct the 
required oversight. The FAA does, however, recognize the significant 
role distributors play in providing parts to the aviation industry,

[[Page 23814]]

and that the documentation they provide is critical in establishing 
acceptability of a part for use on type certificated products. When 
distributors do not provide necessary or forthright documentation, the 
airworthiness of a part is questionable.
    The FAA strongly endorses the voluntary industry oversight of 
distributors through third-party accreditation. In 1996, the FAA 
published AC 00-56, Voluntary Industry Distributor Accreditation 
Program. Under this type of accreditation, an independent entity, other 
than the distributor and the buyer, provides a quality system standard 
that describes acceptable system elements, including mandatory 
documentation, which are subsequently audited for adherence to that 
standard. Parts procured from such ``accredited distributors'' should 
convey an assurance to the buyer that the parts are the quality stated 
and that the appropriate documentation is on file at the distributor's 
place of business.
    The Aviation Suppliers Association (ASA) is the trade association 
that represents the interests of the aircraft parts distributor 
community. ASA was formed in 1993 and was one of the organizations that 
helped FAA in developing the Voluntary Industry Distributor 
Accreditation Program. ASA currently maintains the program database 
that tracks distributors accredited in accordance with AC 00-56. Since 
1998, the number of accredited distributors has increased from 86 to 
218.
    Although increasing numbers of distributors are restructuring 
company procedures to meet the accreditation requirements, some 
distributors continue to be less than forthright in their documentation 
associated with the sale of aircraft parts. The FAA's Suspected 
Unapproved Parts (SUP) Program Office database shows that parts 
distributors were either the primary or secondary focus in 22 percent 
of all SUP investigations conducted between 1998 and 2001. 
Approximately one-fourth of all SUP investigations relates to 
distributors.
    The proposed rule would apply to all persons who make records 
regarding the airworthiness of a type certificated product, or the 
acceptability of any part or material for use on a type certificated 
product, whether the person holds an FAA certificate or not. It would, 
therefore, apply to parts distributors, which are the source of many of 
the parts for mechanics, repair stations, and others who maintain 
aircraft.

Relationship of Proposal to Compliance and Enforcement

    The FAA could take compliance and enforcement action for violation 
of the proposed rules. The action could range from counseling and 
corrective action through civil penalties (currently $1,100 per 
infraction) under 49 U.S.C. 46301 and 14 CFR 13.15 and 13.16, and 
suspension or revocation of an FAA certificate held by the violator 
under 49 U.S.C. 44709 and 14 CFR 13.19. The action taken by the FAA 
would depend on all the circumstances of the violation.
    If the FAA believed that the person had made misleading statements 
in violation of proposed Sec.  3.5, for instance, in the first instance 
the FAA might first seek to have the person take corrective action to 
avoid misleading owners, operators, maintainers, and others in 
aviation. If the statements were not corrected, the FAA might take 
stronger action. Depending on the seriousness of the offense, however, 
even the first instance of making misleading statements in violation of 
the rule could result in the FAA taking strong enforcement action.
    If the evidence establishes that a person made fraudulent or 
intentionally false statements, however, the FAA generally takes the 
strongest enforcement action, including revocation of any FAA 
certificates held by the person. In appropriate cases, the FAA refers 
such cases for criminal investigation.

Relationship of Proposal to Experimental Aircraft

    Not all experimental aircraft must be maintained in accordance with 
part 43, and for most parts, the regulatory standards are far less 
stringent than for aircraft that must be maintained under part 43. 
Although it is important that people who build and maintain these 
aircraft have accurate information on which to make informed decisions 
as to which parts to use, applying the rule to experimental aircraft, 
parts, and materials may have an unduly chilling effect on the 
experimental aircraft community. Persons who build experimental 
aircraft are responsible for evaluating claims and making decisions 
accordingly regarding which parts and materials to use on such 
aircraft. They use both FAA-approved products and parts, and items not 
otherwise considered to be aviation products and parts. The FAA is not 
aware of significant problems with false or misleading statements 
regarding products, parts, and materials used in experimental aircraft.
    For instance, an engine manufacturer that does not have any FAA 
design or production approval may be aware that its engine is used for 
experimental aircraft. That manufacturer may provide information to 
builders regarding the engine's performance, maintenance requirements, 
and so on. If proposed Sec.  3.5 were to apply to those statements, the 
manufacturer might hesitate to provide such information, because it may 
not have developed that information using all the rigorous requirements 
called for in the FAA regulations for FAA-approved engines. The FAA 
does not want to discourage such a manufacturer from providing 
information to persons who build experimental aircraft. Thus, the 
manufacturer could provide such information to the experimental 
aircraft builder without being subject to proposed Sec.  3.5, so long 
as the information did not express or imply that the engine was 
acceptable for use in a type certificated product. The manufacturer 
would be subject to proposed Sec.  3.5(e), however, if it expressed or 
implied that the engine met FAA airworthiness standards, without also 
clearly and expressly stating that engine was not produced under an FAA 
production approval.
    This exception for experimental aircraft does not apply, however, 
if FAA regulations or the terms of the aircraft's airworthiness 
certificate require certain parts to be approved. Statements made in 
records regarding these parts, even when installed in experimental 
aircraft, must be truthful and not misleading. The fact that the part 
or material is eventually installed on an experimental aircraft does 
not make the false or misleading statement acceptable.

Relationship of Proposal to Parts for Military Aircraft

    Military aircraft are not civil aircraft, and proposed Sec.  3.5 
would not apply to parts that are for military aircraft and are not 
represented to be acceptable for civil application. If the records 
regarding military parts, by implication, represent, however, that they 
are acceptable for use in type certificated products, proposed Sec.  
3.5 would apply.
    Some former military aircraft have been put into civil use and are 
now operated on a special or standard airworthiness certificate. Some 
unique parts that otherwise are only manufactured for military designed 
aircraft may be needed to maintain these aircraft. Records regarding 
these parts should not state or imply that the parts are acceptable for 
use in type certificated products, other than the

[[Page 23815]]

product for which acceptability has been determined.

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. We have determined there are 
no new information collection requirements associated with this 
proposed rule.
    The FAA has considered whether proposed Sec.  3.5(d) would create a 
burden within the meaning of the Paperwork Reduction Act. That section 
would require that if a person made certain representations regarding 
type certificated products, or parts and materials to be used on type 
certificated products, the person would have to have records to support 
those representations (except for statements made under part 43, as 
explained above). It is FAA's experience that the industry in the 
normal course of its activities transfers the records called for under 
the proposed rule. For instance, when air carriers buy parts, the usual 
and customary practice is for the air carrier to require the dealer to 
provide the records that substantiate the source and quality of the 
part. The major practical effect of the proposal would be to provide 
for FAA enforcement action if those records proved to be intentionally 
false, fraudulent, or misleading within the meaning of the rule.
    Accordingly, the FAA has determined that the resources necessary to 
comply with the proposal are excluded from the ``burden'' under 5 CFR 
1320.3(b)(2), and there are no information collection requirements 
associated with this proposed rule within the meaning of the Paperwork 
Reduction Act.
    The FAA requests comments on this determination. Individuals and 
organizations may submit comments by August 4, 2003, and should direct 
them to the address listed in the ADDRESSES section of this document.

International Compatibility

    In keeping with U.S. obligations under the Convention on 
International Civil Aviation, it is FAA policy to comply with 
International Civil Aviation Organization (ICAO) Standards and 
Recommended Practices to the maximum extent practicable. The FAA has 
reviewed the corresponding ICAO Standards and Recommended Practices and 
has identified no differences with these proposed regulations.

Regulations Affecting Intrastate Aviation in Alaska

    Section 1205 of the FAA Reauthorization Act of 1996 (110 Stat. 
3213) requires the Administrator, when changing regulations in Title 14 
of the CFR in a manner affecting intrastate aviation in Alaska, to 
consider the extent to which Alaska is not served by transportation 
modes other than aviation, and to establish such regulatory 
distinctions as he or she considers appropriate. Because this proposed 
rule would apply to all persons who may make or cause to be made 
records regarding products, parts, or material for use on type 
certificated products, it could if adopted, affect intrastate aviation 
in Alaska. The FAA, therefore, specifically, requests comments on 
whether there is justification for applying the proposed rule 
differently in intrastate operations in Alaska.

Executive Order 12866 and DOT Regulatory Policies and Procedures

    Proposed changes to Federal regulations must undergo several 
economic analyses. First, Executive Order 12866 directs that each 
Federal agency propose or adopt a regulation only on a determination 
that the benefits of the intended regulation justify its costs. Second, 
the Regulatory Flexibility Act of 1980 requires agencies to analyze the 
economic impact of regulatory changes on small entities. Third, the 
Trade Agreements Act (19 U.S.C. 2531-2533) prohibits agencies from 
setting standards that create unnecessary obstacles to the foreign 
commerce of the United States. In developing U.S. standards, this Trade 
Act also requires agencies to consider international standards and, 
where appropriate, use them as the basis of U.S. standards. Fourth, the 
Unfunded Mandates Reform Act of 1995 (Public Law 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).
    In conducting these analyses, the FAA has determined that the 
economic impact of this proposed rule does not meet the standards for a 
``significant regulatory action'' under section 3(f) of Executive Order 
12866 and under the regulatory policies and procedures of the 
Department of Transportation. The FAA has determined, however, that 
because of the public interest in the subject of aircraft parts, this 
proposed rule is considered significant and, therefore, is subject to 
review by the Office of Management and Budget. This rule will not have 
a significant impact on a substantial number of small entities; will 
not constitute a barrier to international trade; and does not impose an 
unfunded mandate on state, local, or tribal governments, or on the 
private sector. These analyses, available in the docket, are summarized 
below.

Costs

    The FAA estimates that the total cost expected to accrue from 
implementation of the proposed rule to be $176,700 annually in 2000 
dollars or $1,241,000 over the next 10 years when costs are discounted 
at 7 percent. The FAA expects to incur all of the above costs. Costs to 
industry cannot be quantified with any degree of accuracy, but are 
expected to be small.
    The FAA is seeking cost and benefits data to better quantify the 
impact of the proposed rule on potentially affected entities. To that 
extent, the FAA seeks information on the costs and benefits that 
manufacturers and operators would incur to comply with the proposed 
rule. Such cost estimates should include equipment costs, modification 
costs, etc. Documentation such as sources for the cost data should also 
be provided. Similarly, benefits estimates should include estimates of 
cost savings, etc. Again, documentation of these estimates should be 
included.

Benefits

    The potential benefits of the proposed rule are enhanced safety to 
the aviation community and flying public by ensuring that aircraft 
owners and operators and persons who maintain aircraft have factual 
information on which to determine whether a part may be used in a given 
civil aircraft.
    Enhanced safety would be achieved because this rulemaking (1) would 
fill in gaps in the legal and regulatory structure, to extend the 
prohibition on fraudulent or intentionally false statements beyond 
those now covered by Title 14, Code of Federal Regulations (14 CFR) 
parts 21 and 43; (2) would provide FAA enforcement action for some 
fraudulent and intentionally false statements; and (3) would provide 
for investigation of representations made regarding the quality of 
aircraft parts.
    For example, unapproved parts manufacturers might be less likely to 
fraudulently state the parts as coming from the prime manufacturer, and 
ship them with look-alike packaging and paperwork. Thus, the frequency 
of a part being a look-alike and unsuitable

[[Page 23816]]

for its intended function may be reduced.
    Reducing the likelihood of an unapproved part from being installed 
would lessen the potential for an accident or an incident. The FAA has 
documented cases of fatal aircraft accidents where unapproved parts 
(that could have been installed due to false or misleading statements) 
have been installed on the subject aircraft. Unapproved parts that have 
been found installed in aircraft involved in accidents include fuel 
lines, propeller system/drive assemblies, engine bearings, and 
electrical systems.

Conclusions

    Based on the low compliance cost coupled with the potential safety 
benefits, the FAA concludes that the proposed rule is cost beneficial.

Regulatory Flexibility Determination

    The Regulatory Flexibility Act of 1980 (RFA), 5 U.S.C. 601-612, 
establishes ``as a principle of regulatory issuance that agencies shall 
endeavor, consistent with the objective of the rule and of applicable 
statutes, to fit regulatory and informational requirements to the scale 
of the business, organizations, and governmental jurisdictions subject 
to regulation.'' To achieve that principle, the RFA requires agencies 
to request and consider flexible regulatory proposals and to explain 
the reason for their actions. 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 proposed or 
final rule will have a significant economic impact on a substantial 
number of small entities. If the determination is that it will, the 
agency must prepare a regulatory flexibility analysis as described in 
the RFA.
    If an agency determines, however, that a proposed or final rule is 
not expected to have a significant economic impact on a substantial 
number of small entities, section 605(b) of the 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 the entities that would be affected by this proposed rule, the 
FAA expects the annualized compliance costs to be minimal. Thus, the 
FAA certifies that the rule will not have a significant economic impact 
on a substantial number of small entities. The FAA solicits comments 
from the public regarding this finding.

Trade Impact Assessment

    The Trade Agreement Act of 1979 prohibits Federal agencies from 
establishing any standards or engaging in related activities that 
create unnecessary obstacles to the foreign commerce of the United 
States. Legitimate domestic objectives, such as safety, are not 
considered unnecessary obstacles. The statute also requires 
consideration of international standards and, where appropriate, that 
they be the basis for U.S. standards.
    In accordance with the above statute, the FAA has assessed the 
potential effect of this rulemaking and has determined that it will 
have only a domestic impact and therefore no effect on any trade-
sensitive activity.

Unfunded Mandates Assessment

    Title II of the Unfunded Mandates Reform Act of 1995 (the Act), 
requires each Federal agency, to the extent permitted by law, to 
prepare a written assessment of the effects of any Federal mandate in a 
proposed or final agency rule that may result in the expenditure by 
State, local, and tribal governments, in the aggregate, or by the 
private sector, of $100 million or more (adjusted annually for 
inflation) in any one year. Section 204(a) of the Act, 2 U.S.C. 
1534(a), requires the Federal agency to develop an effective process to 
permit timely input by elected officers (or their designees) of State, 
local, and tribal governments on a proposed ``significant 
intergovernmental mandate.'' A ``significant intergovernmental 
mandate'' under the Act is any provision in a Federal agency regulation 
that would impose an enforceable duty upon State, local, and tribal 
governments, in the aggregate, of $100 million (adjusted annually for 
inflation) in any one year. Section 203 of the Act, 2 U.S.C. 1533, 
which supplements section 204(a), provides that before establishing any 
regulatory requirements that might significantly or uniquely affect 
small governments, the agency shall have developed a plan that, among 
other things, provides for notice to potentially affected small 
governments, if any, and for a meaningful and timely opportunity to 
provide input in the development of regulatory proposals.
    This proposed rule does not meet the cost thresholds described 
above. Further, this proposed rule would not impose a significant cost 
on small governments and would not uniquely affect those small 
governments. The requirements of Title II of the Act of 1995, 
therefore, do not apply.

Executive Order 13132, Federalism

    The FAA has analyzed this proposed rule under the principles and 
criteria of Executive Order 13132, Federalism. We determined that this 
action would not have a substantial direct effect on the States, on the 
relationship between the national Government and the States, or on the 
distribution of power and responsibilities among the various levels of 
government. We determined, therefore, that this notice of proposed 
rulemaking would not have federalism implications.

Environmental Analysis

    FAA Order 1050.1D defines FAA actions that may be categorically 
excluded from preparation of a National Environmental Policy Act (NEPA) 
environmental impact statement. In accordance with FAA Order 1050.1D, 
appendix 4, paragraph 4(j), this proposed rulemaking action qualifies 
for a categorical exclusion.

Energy Impact

    The energy impact of the proposed rule has been assessed in 
accordance with the Energy Policy and Conservation Act (EPCA) Public 
Law 94-163, as amended (42 U.S.C. 6362) and FAA Order 1053.1. It has 
been determined that the proposed rule is not a major regulatory action 
under the provisions of the EPCA.

List of Subjects in 14 CFR Part 3

    Aircraft, Aviation safety, False, Fraud, Misleading.

The Proposed Amendment

    In consideration of the foregoing, the Federal Aviation 
Administration proposes to add a new part 3 to Chapter I of Title 14, 
Code of Federal Regulations as follows:

PART 3--GENERAL REQUIREMENTS

Sec.
3.1 Applicability.
3.5 Statements regarding aircraft, and aircraft products, parts, and 
materials.

    Authority: 49 U.S.C. 106(g), 40113, 44701, and 44704.


Sec.  3.1  Applicability.

    This part applies to persons engaged in aviation-related 
activities, as set forth in this part.


Sec.  3.5  Statements regarding aircraft, and aircraft products, parts, 
and materials.

    (a) Applicability of this section. This section applies to all 
records regarding type certificated products, and to parts

[[Page 23817]]

and materials that may be used on type certificated products, except 
that paragraph (c) of this section does not apply to records made under 
part 43 of this chapter.
    (b) Terms used in this section.
    Product means an aircraft, aircraft engine, or propeller.
    Record includes all forms of records, including paper, microfilm, 
identification plates, stamped marks on parts, bar codes, and 
electronic records. ``Record'' includes logbooks, inspection records, 
reports, advertisements, and labels.
    (c) Prohibition against false statements. No person may make or 
cause to be made--
    (1) Any fraudulent or intentionally false statement in any record 
that represents the airworthiness of a type certificated product, or 
the acceptability of any part or material for use on type certificated 
product.
    (2) Any fraudulent or intentionally false reproduction or 
alteration of any record that represents the airworthiness of any type 
certificated product, or the acceptability of any part or material for 
use on type certificated product.
    (d) Preventing misleading statements. No person in any record may 
express or imply, or cause to be expressed or implied, that a type 
certificated product is airworthy, or that a part or material is 
acceptable for installation on type certificated product, unless the 
person can show with appropriate records that the product is airworthy 
or that the part or material is acceptable for installation on a type 
certificated product.
    (e) FAA airworthiness standards. If a person expresses or implies, 
or causes to be expressed or implied, in any record that a product, 
part, or material meets FAA airworthiness standards, the person must 
ensure that--
    (1) The product, part, or material was produced under an FAA 
production approval, such as a production certificate, parts 
manufacturer approval, or technical standard order authorization;
    (2) The record clearly and expressly states that the part was not 
produced under an FAA production approval; or
    (3) The part is a standard part (such as bolts and nuts) conforming 
to established industry or United States specifications.
    (f) Inspection. In order for the Administrator to determine 
compliance with 49 U.S.C. Subtitle VII and this section, each person 
who expressly or by implication represents, or causes to be expressly 
or by implication represented, in any record that a type certificated 
product is airworthy, or a part or material is acceptable for 
installation on type certificated product, shall allow the 
Administrator to--
    (1) Inspect and copy records relating to the source and 
acceptability of the product, part, or material; and
    (2) Inspect the product, part, or material.

    Issued in Washington, DC, on April 25, 2003.
Beverly Sharkey,
Acting Manager, Suspected Unapproved Parts Program Office.
[FR Doc. 03-10946 Filed 5-2-03; 8:45 am]
BILLING CODE 4910-13-P