[Federal Register Volume 68, Number 99 (Thursday, May 22, 2003)]
[Rules and Regulations]
[Pages 27904-27907]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-12552]


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DEPARTMENT OF DEFENSE

Office of the Secretary

32 CFR Part 207

RIN 0790-AH02


Implementation of Section 740 of the Wendell H. Ford Aviation 
Investment and Reform Act for the 21st Century as Amended by Section 
1051 of the National Defense Authorization Act for Fiscal Year 2003

AGENCY: Department of Defense.

ACTION: Interim final rule.

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SUMMARY: This rule prescribes regulations to implement Section 740 of 
the Wendell H. Ford Aviation Investment and Reform Act for the 21st 
Century as amended by Section 1051 of the National Defense 
Authorization Act for Fiscal Year 2003. The regulations will establish 
procedures for the sale of excess Department of Defense aircraft to 
persons or entities that provide oil spill response services (including 
the application of oil dispersants by air) pursuant to an oil spill 
response plan that has been approved by the Secretary of the Department 
in which the Coast Guard is operating.

DATES: Effective May 22, 2003 until September 30, 2006. Comments are 
requested by July 21, 2003.

ADDRESSES: Forward comments to the Assistant Deputy Under Secretary of 
Defense (Supply Chain Integration),

[[Page 27905]]

3500 Defense Pentagon, Room 3B730, Washington, DC 20301-3500.

FOR FURTHER INFORMATION CONTACT: Debra Bennett (703) 692-6031.

SUPPLEMENTARY INFORMATION:

I. Background

    Section 740 of the Wendell H. Ford Aviation Investment and Reform 
Act for the 21st Century (Public Law 016-181, 114 Stat. 173) states 
that, notwithstanding section 202 of the Federal Property and 
Administrative Services Act of 1949 (40 U.S.C. 483) and subject to 
subsections (b) and (c), the Secretary of Defense may sell, during the 
period beginning on the date of enactment of this Act and ending 
September 30, 2002, certain aircraft and aircraft parts to a person or 
entity that provides oil spill response services (including the 
application of oil dispersants by air) pursuant to an oil spill 
response plan that has been approved by the Secretary of the Department 
in which the Coast Guard is operating. Section 740 states that, as soon 
as practicable after the date of enactment of the Act, the Secretary of 
Defense, in consultation with the Secretary of Transportation and the 
Administrator of General Services, shall prescribe regulations relating 
to the sale of aircraft and aircraft parts under this section. Section 
1051 of the National Defense Authorization Act for Fiscal Year 2003 
(Pub. L. 107-314, 116 Stat. 2648) provides for a four-year extension to 
this authority. This interim final rule prescribes such regulations.

II. Administrative Requirements

A. Executive Order 12866

    It has been determined that 32 CFR 207 is not a significant 
regulatory action. The rule does not (1) have an annual effect on the 
economy of $100 million or more or adversely affect in a material way 
the economy, a sector of the economy, productivity, competition, jobs, 
the environment, public health or safety, or state, local, or tribal 
governments or communities; (2) create a serious inconsistency or 
otherwise interfere with an action taken or planned by another agency; 
(3) materially alter the budgetary impact of entitlements, grants, user 
fees, or loan programs, or the rights and obligations of the recipients 
thereof; or (4) raise novel legal or policy issues arising out of legal 
mandates, the President priorities, or the principles set forth in this 
Executive Order.

B. Unfunded Mandates Reform Act

    It has been certified that 32 CFR part 207 does not contain a 
Federal Mandate that my result in the expenditure by State, local, and 
tribal governments, in aggregate, or by the private sector, of $100 
million or more in any one year.

C. Regulatory Flexibility Act

    It has been determined that this rule is not subject to the 
Regulatory Flexibility Act (5 U.S.C. 601) because it would not, if 
promulgated, have a significant economic impact on a substantial number 
of small entities. This rule applies only to the sale of certain 
aircraft and aircraft parts to those entities that provide oil spill 
response services. The U.S. Department of Transportation provides the 
list of eligible entities that may bid on aircraft and aircraft parts.

D. Paperwork Reduction Act

    It has been certified that 32 CFR part 207 does not impose any 
reporting or record-keeping requirements under the Paperwork Reduction 
Act of 1995 (44 U.S.C. Chapter 44).

E. Executive Order 13132

    It has been certified that 32 CFR part 207 does not have federalism 
implications, as set forth in Executive Order 13132.

List of Subjects in 32 CFR Part 207

    Aircraft, Oil spill, Oil dispersant.

0
Accordingly, 32 CFR Part 207 is added to read as follows:

PART 207--IMPLEMENTATION OF SECTION 740 OF THE WENDELL H. FORD 
AVIATION INVESTMENT AND REFORM ACT FOR THE 21ST CENTURY AS AMENDED 
BY SECTION 1051 OF THE NATIONAL DEFENSE AUTHORIZATION ACT FOR 
FISCAL YEAR 2003

Sec.
207.1 Background and purpose.
207.2 Applicability.
207.3 Restrictions.
207.4 Qualifications.
207.5 Sale procedures.
207.6 Reutilization and transfer procedures.
207.7 Reporting requirements.
207.8 Expiration.

    Authority: Section 740 of Public Law 106-181, 114 STAT. 173 as 
amended by Section 1051 of Public Law 107-314, 116 STAT. 2648.


Sec.  207.1  Background and purpose.

    Section 740 of the Wendell H. Ford Aviation Investment and Reform 
Act for the 21st Century, as amended, allows the Department of Defense 
(DoD), during the period 4 April 2000 through 30 September 2006, to 
sell aircraft and aircraft parts to a person or entity that provides 
oil spill response services (including the application of oil 
dispersants by air). This part implements that section.


Sec.  207.2  Applicability.

    The sections in this part apply to the sale of aircraft and 
aircraft parts determined to be DoD excess under the definition of the 
Federal Property Management Regulations (FPMR) or the Federal 
Management Regulation (FMR), and listed in Attachment 1 of Chapter 4 of 
DoD 4160.21-M (August 1997) \1\ as Category A aircraft authorized for 
commercial use, to contractors providing oil spill response services.
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    \1\ Copies may be obtained via Internet at http://www.dla.mil/dlaps/dod/41602lm/guide.asp.
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Sec.  207.3  Restrictions.

    (a) Aircraft and aircraft parts sold under the Act shall be used 
primarily for oil spill spotting, observation, and dispersant delivery, 
and may not have a secondary purpose that interferes with oil spill 
response efforts under an oil spill response plan. Use for a secondary 
purpose requires the prior written approval of the Secretary of Defense 
and the Secretary of Transportation, and a certificate from the Federal 
Aviation Administration, to be obtained in advance, for the proposed 
secondary use.
    (b) Aircraft may not be flown outside of or removed from the U.S. 
except for the purpose of fulfilling an international agreement to 
assist in oil spill dispersing efforts, for immediate response efforts 
for an oil spill outside United States waters that has the potential to 
threaten United States waters, or for purposes that are jointly 
approved by the Secretary of Defense and the Secretary of 
Transportation.
    (c) The DoD sale of aircraft and aircraft parts sold under the Act 
shall not extend past the time limits of the Act.


Sec.  207.4  Qualifications.

    The Secretary of Transportation must certify in writing to the 
Secretary of Defense prior to sale that the person or entity is capable 
of meeting the terms and conditions of a contract to perform oil spill 
response services by air, and that the overall system to be employed by 
the person or entity for the delivery and application of oil spill 
dispersants has been sufficiently tested to ensure that the person or 
entity is capable of participating in an oil spill response plan that 
has been approved by the Secretary of the Department in which the Coast 
Guard is operating.
    (a) Prior to sales offerings of aircraft or aircraft parts, the 
U.S. Department of Transportation (DoT) must provide to

[[Page 27906]]

the Defense Reutilization and Marketing Service (DRMS), in writing, a 
list or persons or entities eligible to bid under this Act, including 
expiration date of each DOT contract, and locations covered by the DOT 
contract.
    (b) This requirement may not be delegated to the U.S. Coast Guard 
(USCG).


Sec.  207.5  Sale procedures.

    Sale of aircraft and aircraft parts must be in accordance with the 
provisions of Chapter 4 of DoD 4160.21-M (August 1997), paragraph B 2, 
and with other pertinent parts of this manual, with the following 
changes and additions:
    (a) Sales shall be limited to the aircraft types listed in 
Attachment 1 of Chapter 4 of DoD 4160.21-M (August 1997), and parts 
thereto.
    (b) Sales shall be made at fair market value (FMV), as determined 
by the Secretary of Defense and, to the extent practicable, on a 
competitive basis.
    (1) DRMS must conduct sales utilizing FMVs that are either provided 
by the Military Services on the Disposal Turn-In Documents (DTIDs) or 
based on DRMS's professional expertise and knowledge of the market. 
Advice regarding FMV shall be provided to DRMS by DOT, as appropriate.
    (2) If the high bid for a sale item does not equal or exceed the 
FMV, DRMS is vested with the discretion to reject all bids and reoffer 
the item:
    (i) As excess property on another oil spill sale, if there is 
indication that reoffer may be successful; or,
    (ii) As surplus property if, after reporting the aircraft to the 
General Services Administration (GSA) for utilization and donation 
screening, there are no Federal or State Agency requirements as 
determined by GSA.
    (3) Disposition of proceeds from sale of aircraft under the Act, 
net of DRMS's expenses, will be to the general fund of the United 
States Treasury as miscellaneous receipts.
    (c) Purchasers shall certify that aircraft and aircraft parts will 
be used only in accordance with conditions stated in Sec.  207.3.
    (1) Sales solicitations will require bidders to submit end-use 
certificates with their bids, stating the intended use and proposed 
areas of operation.
    (2) The completed end-use certificates shall be used in the bid 
evaluation process.
    (d) Sales contracts shall include terms and conditions for 
verifying and enforcing the use of the aircraft and aircraft parts in 
accordance with provisions of the guidance.
    (1) The DRMS Sales Contracting Officer (SCO) is responsible for 
verifying and enforcing the use of aircraft and aircraft parts in 
accordance with the terms and conditions of the sales contract.
    (i) Sales contracts include provisions for on-site visits to the 
purchaser's place(s) of business and/or worksite(s).
    (ii) Sales contracts require the purchaser to make available to the 
SCO, upon his or her request, all records concerning the use of 
aircraft and aircraft parts.
    (2) DOT shall nominate in writing, and the SCO shall appoint, 
qualified Government employees (not contract employees) to serve as 
Contracting Officer's Representatives (CORs) for the purpose of 
conducting on-site verification and enforcement of the use of aircraft 
and aircraft parts for those purposes permitted by the sales contract.
    (i) COR appointments must be in writing and must state the COR's 
duties, the limitations of the appointment, and the reporting 
requirements.
    (ii) DOT bears all COR costs.
    (iii) The SCO may reject any COR nominee for cause, or terminate 
any COR appointment for cause.
    (3) Sales contracts require purchasers to comply with the Federal 
Aviation Agency (FAA) requirements in Chapter 4 of DoD 4160.21-M 
(August 1997), paragraphs B 2 b (4) (d) 2 through B 2 b (4) (d) 5.
    (4) Sales contracts require purchasers to comply with the Flight 
Safety Critical Aircraft Parts regime in Chapter 4 of DoD 4160.21-M 
(August 1997), paragraph B 26 c and d, and in Attachment 3 to Chapter 4 
of DoD 4160.21-M (August 1997).
    (5) Sales contracts require purchasers to obtain the prior written 
consent of the SCO for resale of aircraft or aircraft parts purchased 
from DRMS under this Act. Resales are only permitted to other entities 
that, at time of resale, meet the qualifications required of initial 
purchasers. The SCO must seek, and DOT must provide, written assurance 
as to the acceptability of a prospective repurchaser before approving 
resale. Resales will normally be approved for oil spill response 
contractors that have completed their contracts, or that have had their 
contracts terminated, or that can provide other valid reasons for 
seeking resale that are acceptable to the SCO.
    (i) If it is determined by the SCO that there is no interest in the 
aircraft or aircraft parts being offered for resale among entities 
deemed qualified repurchasers by DOT, the SCO may permit resale to 
entities outside the oil spill response industry.
    (ii) When an aircraft or aircraft parts are determined to be 
uneconomically repairable and suitable only for cannibalization and/or 
scrapping, the purchaser shall advise the SCO in writing and provide 
evidence in the form of a technical inspection document from a 
qualified FAA airframe and powerplant mechanic, or equivalent.
    (iii) The policy outlined in paragraph (d)(5) of this section also 
applies to resales by repurchasers, and to all other manner of proposed 
title transfer (including, but not limited to, exchanges and barters).
    (iv) Sales of aircraft and aircraft parts under the Act are 
intended for principals only. Sales offerings will caution prospective 
purchasers not to buy with the expectation of acting as brokers, 
dealers, agents, or middlemen for other interested parties.
    (6) The failure of a purchaser to comply with the sales contract 
terms and conditions may be cause for suspension and/or debarment, in 
addition to other administrative, contractual, civil, and criminal 
(including, but not limited to, 18 U.S.C. 1001) remedies which may be 
available to the Department of Defense.
    (7) Aircraft parts will be made available as follows:
    (i) DRMS may, based on availability and demand, offer for sale 
under the Act whole unflyable aircraft, aircraft carcasses for 
cannibalization, or aircraft parts, utilizing substantially the same 
provisions outlined in paragraphs (a) through (d)(6) of this section 
for flyable aircraft.
    (ii) Sales contracts for unflyable aircraft shall contain a 
restriction in perpetuity against use for flight. DRMS will not issue a 
bill of sale for these aircraft. When unflyable aircraft or aircraft 
residue is to be sold for parts use, the data plates must be removed 
and destroyed by the owning military service prior to releasing the 
aircraft to the contractor.
    (iii) If DOT requests that DRMS set aside parts for sale under Act, 
DOT must provide listings of parts required, by National Stock Number 
and Condition Code.
    (iv) Only qualified oil spill response operators who fly the end-
item aircraft will be allowed to purchase unflyable aircraft, aircraft 
carcasses, or aircraft parts applicable to that end-item.
    (v) FMVs are not required for aircraft parts. DRMS will utilize 
historic prices received for similar parts in making sale 
determinations.

[[Page 27907]]

Sec.  207.6  Reutilization and transfer procedures.

    Prior to any sales effort, the Secretary of Defense shall, to the 
maximum extent practicable, consult with the Administrator of GSA, and 
with the heads of other Federal departments and agencies as 
appropriate, regarding reutilization and transfer requirements for 
aircraft and aircraft parts under this Act (see Chapter 4 of DoD 
4160.21-M (August 1997), paragraphs B 2 b (1) through B 2 b (3)).
    (a) DOT shall notify Army, Navy, and/or Air Force, in writing, of 
their aircraft requirements as they arise, by aircraft type listed in 
Attachment 1 of Chapter 4 of DoD 4160.21-M (August 1997).
    (b) When aircraft become excess, the owning Military Service will 
screen for reutilization requirements within the Department of Defense, 
and those requirements shall take precedence over DOT requirements 
under this Act.
    (c) Federal agency transfer: (1) The Military Service shall report 
aircraft that survive reutilization screening to GSA Region 9 on a 
Standard Form 120. The Military Service must advise GSA Region 9 if DOT 
has lodged a written requirement for the aircraft for use in oil spill 
response. GSA will screen for Federal agency transfer requirements in 
accordance with the FMR.
    (2) If a Federal agency requirement exists, GSA shall advise the 
owning Military Service, in writing, of its intent to issue the 
aircraft to satisfy the Federal agency requirement. The Military 
Service will notify DOT of the competing Federal requirement for the 
aircraft. If DOT disputes the priority given to the Federal 
requirement, it shall end a written notice of dispute to the owning 
Military Service and to the Deputy Under Secretary of Defense 
(Logistics and Materiel Readiness (DUSD (L&MR)) within thirty (30) days 
of receipt of notice from the Military Service. DUSD (L&MR) shall then 
resolve the dispute, in writing. The aircraft cannot be issued until 
notification is given and any dispute is resolved.
    (d) The Military Services shall: (1) Respond to the DOT, in 
writing, when excess aircraft that can meet DOT's stated requirements 
have survived reutilization and transfer screening.
    (2) Report excess aircraft that survive reutilization and transfer 
screening and are available for sale to Headquarters, Defense 
Reutilization and Marketing Service, ATTN: DRMS-LMI, Federal Center, 74 
Washington Avenue North, Battle Creek, Michigan 49017-3092. The 
Military Services must use a DD Form 1348-1A, DTID, for this purpose.
    (3) Transfer excess aircraft that survive reutilization and 
transfer screening to the Aerospace Maintenance and Regeneration Center 
(AMARC), Davis-Monthan AFB, AZ, and place the aircraft in an ``excess'' 
storage category while aircraft are undergoing oil spill response sale. 
Aircraft shall not be made available or offered to oil spill response 
operators from the Military Service's airfield. The Military Service 
shall be responsible for the AMARC aircraft induction charges. The 
aircraft purchaser will be liable for all AMARC withdrawal charges, to 
include any aircraft preparation required from AMARC. Sale of parts 
required for aircraft preparation is limited to those not required for 
the operational mission forces, and only if authorized by specific 
authority of the respective Military Service's weapon system program 
manager.


Sec.  207.7  Reporting requirements.

    Not later than 31 March 2003, the Secretary of Defense must submit 
to the Committees on Armed Services and Commerce, Science, and 
Transportation of the Senate and the Committees on National Security 
and Transportation and Infrastructure of the House of Representatives a 
report setting forth the following:
    (a) The number and type of aircraft sold under this authority, and 
the terms and conditions under which the aircraft were sold.
    (b) The persons or entities to which the aircraft were sold.
    (c) An accounting of the current use of the aircraft sold.
    (d) DOT must submit to Headquarters, Defense Reutilization and 
Marketing Service, ATTN: DRMS-LMI, Federal Center, 74 Washington Avenue 
North, Battle Creek, Michigan, 49017-3092, not later than 1 February 
2006, a report setting forth an accounting of the current disposition 
of all aircraft sold under the authority of the Act.
    (e) DRMS must compile the report, based on sales contract files and 
(for the third report element) input from the DOT. The report must be 
provided to Headquarters Defense Logistics Agency not later than 1 
March 2006. Headquarters Defense Logistics Agency shall forward the 
report to Deputy Under Secretary of Defense (Logistics & Materiel 
Readiness) not later than 15 March 2006.


Sec.  207.8  Expiration.

    This part expires on 30 September 2006.

    Dated: May 12, 2003.
Patricia L. Toppings,
Alternate OSD Federal Register Liaison Officer, Department of Defense.
[FR Doc. 03-12552 Filed 5-21-03; 8:45 am]
BILLING CODE 5001-08-M