[Federal Register Volume 69, Number 13 (Wednesday, January 21, 2004)]
[Proposed Rules]
[Pages 2970-2986]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-1133]



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Part II





Department of Transportation





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Federal Aviation Administration



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14 CFR Parts 21, 121, 135, 145, and 183



Establishment of Organization Designation Authorization Procedures; 
Proposed Rule

  Federal Register / Vol. 69, No. 13 / Wednesday, January 21, 2004 / 
Proposed Rules  

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DEPARTMENT OF TRANSPORTATION

Federal Aviation Administration

14 CFR Parts 21, 121, 135, 145, and 183

[Docket No. FAA-2003-16685; Notice No. 03-13]
RIN 2120-AH79


Establishment of Organization Designation Authorization 
Procedures

AGENCY: Federal Aviation Administration (FAA), DOT.

ACTION: Notice of proposed rulemaking (NPRM).

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SUMMARY: The FAA proposes to create an Organization Designation 
Authorization (ODA) program. This program would expand the approval 
functions of FAA organizational designees; standardize these functions 
to increase efficiency; and expand eligibility for organizational 
designees, including organizations not eligible under the current 
rules. In addition, as the FAA transitions to the ODA program, the 
agency would phase-out the Delegation Option Authorization (DOA), 
Designated Alteration Station Authorization (DAS), SFAR 36 
authorization, and the Organizational Designated Airworthiness 
Representative (ODAR). These actions are necessary to provide the FAA 
with a more efficient process to delegate certain tasks to external 
organizations. The intended effect of these actions is to preserve and 
increase aviation safety.

DATES: Send your comments by May 20, 2004.

ADDRESSES: You may send comments (identified by Docket Number FAA-2003-
16685) using any of the following methods:
    [sbull] DOT Docket Web site: Go to http://dms.dot.gov and follow 
the instructions for sending your comments electronically.
    [sbull] Government-wide rulemaking Web site: Go to http://www.regulations.gov and follow the instructions for sending your 
comments electronically.
    [sbull] Mail: Docket Management Facility; U.S. Department of 
Transportation, 400 Seventh Street, SW., Nassif Building, Room PL-401, 
Washington, DC 20590-001.
    [sbull] Fax: 1-202-493-2251.
    [sbull] Hand Delivery: Room PL-401 on the plaza level of the Nassif 
Building, 400 Seventh Street, SW., Washington, DC, between 9 a.m. and 5 
p.m., Monday through Friday, except Federal holidays.

For more information on the rulemaking process, see the SUPPLEMENTARY 
INFORMATION section of this document.
    Privacy: We will post all comments we receive, without change, to 
http://dms.dot.gov, including any personal information you provide. For 
more information, see the Privacy Act discussion in the SUPPLEMENTARY 
INFORMATION section of this document.
    Docket: To read background documents or comments received, go to 
http://dms.dot.gov or to Room PL-401 on the plaza level of the Nassif 
Building, 400 Seventh Street, SW., Washington, DC, between 9 a.m. and 5 
p.m., Monday through Friday, except Federal holidays.

FOR FURTHER INFORMATION CONTACT: Ralph Meyer, Delegation and 
Airworthiness Programs Branch, Aircraft Engineering Division (AIR-140), 
Aircraft Certification Service, Federal Aviation Administration, 6500 
S. MacArthur Blvd, ARB Room 304A, Oklahoma City, OK, 73169; telephone 
(405) 954-7072; facsimile (405) 954-4104, e-mail [email protected].

SUPPLEMENTARY INFORMATION:

Comments Invited

    The FAA invites interested persons to participate in this 
rulemaking by sending written comments, data, or views. We also invite 
comments about 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 your 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.
    Privacy Act: Using the search function of our docket Web site, 
anyone can find and read the comments received into any of our dockets, 
including the name of the individual sending the comment (or signing 
the comment on behalf of an association, business, labor union, etc.). 
You may review DOT's complete Privacy Act Statement in the Federal 
Register published on April 11, 2000 (65 FR 19477-78), or you may visit 
http://dms.dot.gov.
    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 about 
this proposal, include with your comments a preaddressed, stamped 
postcard on which the docket number appears. We will stamp the date on 
the postcard and mail it to you.

Availability of Rulemaking Documents

    You can get an electronic copy using the Internet by:
    (1) Searching the Department of Transportation's electronic Docket 
Management System (DMS) Web page (http://dms.dot.gov/search);
    (2) Visiting the Office of Rulemaking's Web page at http://www.faa.gov/avr/arm/index.cfm; or
    (3) Accessing the Government Printing Office's Web page at http://www.access.gpo.gov/su_docs/aces/aces140.html.
    You can also get a copy by sending 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

Legal Authority

    Title 49 section 44702(d) of the United States Code provides that 
the Administrator may delegate to a qualified private person, or an 
employee supervised by that person, a matter related to the 
examination, testing, and inspection necessary to issue a certificate 
and the issuance of the certificate. The term ``private person'' means 
an individual or organization other than a governmental authority.
    Under the statutory authority, the FAA has set up a delegation 
system to designate individuals and organizations to perform certain 
certification functions. Those holding these designations are commonly 
referred to as ``representatives of the Administrator'' and 
``designees.'' When acting as representatives of the Administrator, 
designees are required to perform in a manner consistent with the 
policies, guidelines, and directives of the Administrator. When 
performing a delegated function, designees are legally distinct from 
and act independent of the organizations that employ them.

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    Regulations about individuals and organizations performing airman 
and aircraft certification functions have been promulgated in 14 CFR 
parts 21 and 183, and Special Federal Aviation Regulation (SFAR) 36.

Industry/FAA Working Group

    The FAA established the Aviation Rulemaking Advisory Committee 
(ARAC) in January 1991 to provide a continuing mechanism to involve the 
public in the regulatory process (56 FR 2190, January 22, 1991; 59 FR 
9230, February 19, 1993). One subject that ARAC addresses is aircraft 
certification procedures (57 FR 39267, August 28, 1992).
    On March 29, 1993, the FAA established the Delegation System 
Working Group of ARAC (58 FR 16573) to examine one aspect of 
certification procedures. Specifically, the Delegation System Working 
Group was tasked with reviewing the current designee programs to 
determine what would improve the safety and the quality and 
effectiveness of the system. Also, the Working Group was tasked with 
recommending to the ARAC new rules, revised rules, and advisory, 
guidance, and other collateral materials (including legislative and 
training materials).
    The FAA sought a recommendation for a comprehensive, up-to-date, 
systematic approach for delegating aircraft certification functions to 
both individuals and organizations. The expectation was the proposed 
approach would provide a smooth transition from the current designation 
system to the recommended system, and the recommended system would be 
compatible with similar aviation systems of other countries. The 
Delegation System Working Group members were directed to send their 
recommendations to the ARAC, which would determine whether to send them 
to the FAA.
    On June 19, 1998, the FAA expanded the task of the Delegation 
Working Group (63 FR 33758, June 19, 1998) to include recommendations 
on designating organizational Designated Airworthiness Representatives 
(DARs) under Sec.  183.33. Further, the expanded task included 
evaluation of organizations that would be designated to find compliance 
for issuing operating certificates under parts 133 and 137, air agency 
certificates under part 141, and training center certificates under 
part 142. The Working Group was also asked to review Sec.  183.15 about 
the duration of designations under part 183.
    The ARAC Delegation System Working Group sent a recommendation to 
the ARAC. The ARAC accepted the recommendation and gave it to the FAA. 
This proposed rule is based on this recommendation.

History

    The present delegation system has evolved over many decades of 
aircraft certification experience and regulatory development.
    In the mid 1940s the FAA's predecessor agency, the Civil 
Aeronautics Administration (CAA), set up programs to appoint designees 
to perform airman-, airworthiness-, and certification-approval tasks. 
These designee programs included the Designated Engineering 
Representative (DER), the Designated Manufacturing Inspection 
Representative (DMIR), and the Designated Pilot Examiner (DPE).
    In the early 1950s, because of the rapidly expanding aircraft 
industry and limited CAA engineering and manufacturing resources, the 
CAA began Delegation Option Authorization (DOA) procedures (currently 
in part 21, subpart J) for performing aircraft certification functions. 
The DOA procedures facilitate certification of products manufactured by 
experienced, knowledgeable organizations. DOAs are granted to 
manufacturers after an evaluation of their engineering competency, 
facilities, personnel, and experience. DOAs may be used for 
certification and airworthiness approval of the products manufactured 
by the authorization holder.
    During the mid 1950s, the CAA received many complaints from the 
aviation industry about delays in issuing supplemental type 
certificates (STCs) to approve major alterations. In cooperation with 
an industry committee representing modification facilities, the CAA 
studied these delays. The resulting recommendation was the delays could 
be decreased by allowing approved engineering staffs of repair stations 
to issue STCs. Amendment No. 21-6 (30 FR 11379, September 8, 1965) 
established the procedures for the Designated Alteration Station (DAS) 
in 14 CFR part 21, subpart M. This designation allows eligible air 
carriers, commercial operators, domestic repair stations, and 
manufacturers of products to issue STCs and related airworthiness 
certificates.
    In the mid 1970s, the FAA conducted an operations review program to 
increase the agency's responsiveness to the needs of the public and the 
aviation community. While major alteration data could be approved using 
STCs issued under the DAS provisions of subpart M, similar provisions 
did not allow approval of major repair data. The FAA, therefore, issued 
SFAR 36 (43 FR 3085, January 23, 1978) to allow eligible air carriers, 
commercial operators, and domestic repair stations to develop and use 
major repair data without getting FAA approval.
    During the 1980s, there was an increase in requests for FAA 
airworthiness certification functions. As a result, Amendment 183-8 (48 
FR 16176, April 14, 1983) was adopted in 1983 to set up the Designated 
Airworthiness Representative (DAR) as a new category of designee. The 
rule authorized functions not previously covered in 14 CFR part 183. 
Also, Sec.  183.33 allowed for the designation of organizations to 
serve as DARs. Such a designation is known as an Organizational 
Designated Airworthiness Representative (ODAR).
    In the late 1990s, the FAA formed a team to consolidate FAA 
policies and procedures for DAS, DOA, and SFAR 36 authorization 
holders. The goal of the team was to standardize the selection, 
oversight, and certification processes of these designated 
organizations throughout the FAA. As a result, the FAA developed Order 
8100.9, DAS, DOA, and SFAR 36 Authorization Procedures. The 
requirements of the Order will serve as the basis for managing future 
delegation efforts, including ODA.
    The present system of designations of organizations (DOA, DAS, SFAR 
36, and ODAR) has evolved over more than 40 years, during which 
organizational designations have gained specific experience in aircraft 
certification. The FAA's management and supervision of the designee 
system has ensured the system works well. Based on its decades of 
experience with the system, the FAA has determined the quality of 
approvals processed by these designee organizations equals those 
processed by the FAA. The designee system has continually improved 
procedures and has become essential to the certification system. These 
programs are examples of those that have continued under the FAA and 
that have been valuable to the agency and to the aviation industry. 
They have allowed the FAA to target its direct involvement to the most 
critical certification functions and provide timely services to the 
aviation industry, while assuring the airworthiness of aeronautical 
products.
    Also, the FAA has delegated other functions about airmen and 
operations approvals. For example, the agency has authorized 
organizations to conduct the knowledge tests that lead to the 
certification of airmen (Computer Test Designee Program). Further, it 
has issued a number of Letters of Authorization and Memorandums of

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Understanding to organizations for determining operational functions. 
Examples of related programs include--
    [sbull] The Aerobatic Competency Evaluator Program that authorizes 
the International Council of Air Shows to conduct functions under 14 
CFR part 91; and
    [sbull] The National Designated Pilot and Designated Flight 
Engineer Examiners Program that authorizes the Experimental Aircraft 
Association to conduct functions leading to the certification of pilot 
and crew-member applicants in vintage aircraft under 14 CFR parts 61 
and 63.
    In addition, other operational functions have been authorized to 
help with FAA approvals in various specialized areas.

Delegation Holders Are Not Certificate Holders

    Title 49 United States Code section 44702 provides the 
Administrator of the FAA with the authority to issue certificates 
(44702(a)) and to make delegations (44702(d)). Delegation holders have 
different rights than certificate holders. Specifically, a person who 
holds a delegation holds it at the Administrator's discretion. The 
Administrator may suspend or revoke the delegation at any time for any 
reason. This power is specifically described in section 44702(d)(2). By 
comparison, once a certificate is issued under the power of section 
44702(a), that certificate holder has specific appeal rights external 
to the Administrator, which include a right to appeal an adverse 
decision to the National Transportation Safety Board (NTSB).
    Unfortunately, some existing Federal Aviation Regulations use the 
term ``certificate'' to describe the document evidencing a delegation. 
For example, 14 CFR part 183 says a ``Certificate of Designation'' or a 
``Certificate of Authority'' is issued to a person who receives a 
delegation. Although the term ``certificate'' is used to describe the 
document, the authority granted is a delegation by the Administrator 
under 44702(d), not a certificate issued under section 44702(a).
    Because of the statutory structure, the authority granted to an ODA 
Holder under the proposed regulation will be a 44702(d) delegation, not 
a 44702(a) certificate. This authorization will be in the form of an 
ODA Letter of Designation. The authority of the Administrator to 
suspend, revoke, or withhold issuance of the delegations will not be 
subject to appeal to the NTSB. The procedures used to determine whether 
delegations will be made, suspended, or revoked will be controlled by 
administrative procedures set up by the Administrator under the 
applicable Order.

The Need for Regulatory Change

    The FAA's designee management system is essential to the FAA's 
safety management system and the certification procedures within that 
system. The designee system enables the FAA to meet its safety 
requirements and responsibilities and provide timely certification 
services. Delegating FAA authority to designees maximizes FAA 
participation in certification projects and allows the FAA to focus on 
critical safety areas.
    Through the designee system, the FAA can focus resources on new 
applications of existing technology, on new and evolving technologies, 
and on the growth in the aviation industry as a whole. By consolidating 
designee programs, the agency can further its standardization efforts 
and use the resources of the aviation industry more effectively.
    There are several factors that are beginning to affect the 
certification process. FAA workload continues to increase because of 
increased requests for services and increased levels of complexity in 
the products being introduced in the aerospace market. Also, the FAA 
has focused its resources toward continuing the operational safety of 
in-service products, and developing regulations and airworthiness 
standards necessary to increase the level of safety. The net effect is 
a decrease in FAA capacity to perform certification of products or 
other certificate holders. In combination, these factors have made it 
more difficult for the FAA to provide timely services to its customers.
    A report issued by the United States General Accounting Office 
(GAO), entitled ``Aircraft Certification: New FAA Approach Needed to 
Meet Challenges of Advanced Technology'' (GAO/RCED-93-155, September 
1993), states that since the late 1950s, official estimates show a 
fivefold increase in the work needed to certificate a new aircraft. 
During this same period, the FAA's workload increased in areas such as 
monitoring already certificated aircraft, issuing airworthiness 
directives, and developing new regulations and policies. With the rise 
in workload, the FAA's dependence on the designee system has increased. 
This is particularly true for the certification of new, advanced-
technology aircraft software and computer systems.
    The report entitled ``Challenge 2000: Recommendations for Future 
Aviation Safety Regulations'' prepared for the FAA by Booz-Allen and 
Hamilton, Incorporated (April 1996), lends support to enhancing the 
designee program. The report states given the increasing complexity in 
aircraft manufacturing and maintenance, and in airline operations, 
ownership, and services, when Federal government resources are being 
constrained, the FAA must find a means to ``do more with less.'' One of 
the resources available to the FAA involves working in concert with 
industry and improving the designation process to make it more 
effective; this would, in turn, provide industry with needed 
flexibility to manage its affairs more efficiently. It would also allow 
the FAA to focus on safety-critical issues.
    In response to issues raised in these reports and in recognition of 
the environment that led to their publication, the FAA determined that 
the designee program would be further improved by expanding the 
eligibility for qualified organizations. Currently, a designated 
organization must hold some type of FAA certificate, such as a repair 
station or manufacturer approval. The proposal will allow qualified 
organizations without FAA certificates to be eligible for certain 
designations. Also, the current rules are limited in what functions may 
be delegated. The proposal will allow the FAA to delegate functions it 
considers necessary to qualified organizations. This expansion would 
reduce the time and cost of the certification process.
    These added designations and delegated functions would benefit 
general aviation operations because these operations are widely varied 
and specialized. For example, agricultural aviation is one area where 
delegation to conduct inspections and issue operating certificates 
would benefit the FAA and industry. Operators associated with the 
agricultural aviation industry tend to remain in the industry, and 
little of that expertise finds its way to the FAA ranks. By allowing 
delegations in this area, the FAA could benefit from this expertise.
    Added benefit is gained by appointing organizations rather than 
individual designees. Organizational designees are managed using a 
systems approach, which relies on the experience and qualifications of 
the organization, approval of the procedures used by the organization 
and oversight of the functions the organization performs. Thus, the FAA 
can focus on that organization's delegated functions as one system, 
rather than concentrating on monitoring and supervising individual 
designees. Such partnerships with industry leverage the abilities of 
industry and maximize the effectiveness

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of the certification process for both the FAA and the organization.
    Increasing the number of delegations to organizations will also 
help prepare industry and the FAA for future certification programs, 
which may include the Certified Design Organization. Certified Design 
Organizations were authorized in section 227 of the FAA reauthorization 
bill-Vision 100--Century of Aviation Reauthorization Act. Under the 
Certified Design Organization concept, manufacturers would be 
responsible for ensuring the systems they design and manufacture comply 
with all FAA requirements. The FAA would rate qualified certificate 
holders according to their experience and allow them to make the 
approvals necessary for the certification of the projects they 
manufacture. The system management concepts implemented under ODA could 
serve as a basis for the structure and management of the Certified 
Design Organizations.
    In summary, the designee system allows the FAA to maintain the 
highest level of safety by performing certification services. Through 
the designee system, the FAA can focus on safety critical issues and 
its core workload of continued operational safety and regulatory 
development. By expanding organizational designee programs, the agency 
can further its standardization efforts and use resources more 
effectively.

General Discussion of the Proposed Rule

    The proposed rule would standardize the duration of certificates 
for aircraft certification and flight standards individual designees. 
The designation of individuals would continue under the authority of 
part 183, subparts B and C. The proposal would create a new subpart D 
in part 183 that would contain one set of rules to apply to all types 
of organizational designees. The proposed rule would replace the 
existing DAS, DOA, SFAR 36, and ODAR delegation programs with a new 
delegation program for organizations. Accordingly, subparts J and M of 
part 21, and SFAR 36 would be phased out.
    The proposed designation would be called an Organization 
Designation Authorization (ODA). The ODA would typically include an ODA 
Unit and an ODA Holder. The ODA Unit would be an identifiable unit of 
two or more individuals within an organization that performs the 
functions on behalf of the Administrator. The ODA Holder would be the 
parent organization that the FAA grants an ODA Letter of Designation. A 
common misconception is a designated organization and its parent 
certificate holder are the same entity. The proposal specifies separate 
requirements for the designee organization (ODA Unit) and the parent 
organization (ODA Holder).
    Because there will be no eligibility requirement that an applicant 
hold any FAA certificate, consultant-type groups of engineering and 
inspection personnel could form an organization, which would be 
eligible for an ODA. In this situation, it is possible the ODA Holder 
would be made up entirely by the ODA Unit. The individuals within an 
organization can perform functions both on behalf of the ODA Unit (as 
an FAA authority) and the ODA Holder.
    The proposal would allow the FAA to delegate aircraft certification 
approval functions to qualified organizations other than manufacturers, 
air carriers, commercial operators, or repair stations. The proposal 
would make organizations that have demonstrated competence, integrity, 
and expertise in aircraft certification functions eligible for an ODA. 
More qualified organizations would be eligible for designations to 
perform airmen and general aviation operations functions discussed in 
the paragraphs that follow.
    The proposal also expands the designee system to delegate more 
functions related to aircraft certification and new functions 
pertaining to certification and authorization of airmen, operators, and 
air agencies. For general aviation operations, the proposed rule would 
allow designated organizations to issue airman certificates or 
authorizations under 14 CFR parts 61, 63, and 91. Additionally, the 
proposed rule would allow designated organizations to find compliance 
or conduct functions leading to the issuance of certificates or 
authorizations for--
    [sbull] Parachute jumping operations under 14 CFR part 105;
    [sbull] Rotorcraft external load operations under 14 CFR part 133;
    [sbull] Agricultural operations under 14 CFR part 137;
    [sbull] Air agencies operations under 14 CFR part 141; and
    [sbull] Training centers operators under 14 CFR part 142 (air 
carrier functions excluded).
    The proposed rule would contain general requirements to provide 
flexibility for FAA delegation programs. The proposal allows for future 
expansion of the designation of organizations and the delegation of 
functions without further rulemaking. Because every type of delegated 
function that could be performed by an ODA Unit cannot be foreseen, it 
is not possible to specify in the regulation all areas in which an ODA 
Unit may perform. So, specific functions that may be delegated and the 
eligibility requirements for those functions would be described in the 
associated FAA Order. The Order also addresses the specific selection, 
appointment, and oversight procedures the FAA will follow to manage 
these designations. You may get a draft of this Order, entitled 
Organization Designation Authorization Procedures, from the Internet at 
http://av-info.faa.gov/dst/oda.
    The proposed rule provides safeguards to ensure the integrity of 
the ODA Holder. The proposal requires the ODA Holder to perform self-
audits and ensure that no one interferes with individuals performing 
functions for the FAA. These terms are in addition to current 
authorization requirements for procedures manuals, recordkeeping, 
inspections, and data review if an airworthiness problem or unsafe 
condition occurs. ODA Holders would also be required to cooperate with 
the FAA in its audit, oversight, and surveillance of their facilities.
    The proposal requires the ODA Unit to function as an identifiable 
unit when performing FAA functions. The proposal does not specify 
requirements for the structure of the organization. But the structure 
must ensure the ODA Unit members have enough authority and independence 
to perform their delegated function without interference. The 
organizational structure of the existing delegations vary from 
integrated organizational structures with a matrix-type relationship, 
which DOAs have successfully employed for many years, to ``stand-
alone'' organizations performing the delegated functions. Under this 
proposal, the FAA will continue to allow similar variations in 
structure. Consultants may serve on the ODA Unit as needed. This 
proposal would require these individuals to be made part of the ODA 
Unit before they perform activities on behalf of the ODA Unit.
    The ODA Holder is ultimately responsible for the functions 
performed by the ODA Unit. The procedures that the ODA Unit and ODA 
Holder follow would be identified in the procedures manual. The 
administration of the ODA Unit would be independent of other parts of 
the organization whose work the ODA Unit is reviewing and, therefore, 
the ODA Unit may not be subjected to pressure by any other part of the 
organization.
    The FAA intends to evaluate the performance of the ODA Holder and 
ODA Unit, using the management principles originally established under

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Order 8100.9, DAS, DOA and SFAR 36 Authorization Procedures. The FAA 
does not intend to focus on the activities of individuals but will 
focus instead on the performance of the ODA Holder's system and how the 
functions are carried out. The FAA always retains the authority to 
monitor and supervise the ODA Unit to the extent necessary to ensure 
that the designee functions are carried out properly. For example, an 
individual may be removed from a designee function to correct any 
deficiency.
    Organizations that currently have individual designees could--
    [sbull] Continue to use only these designees and operate under 
standard certification procedures;
    [sbull] Choose to operate under an ODA rather than use individual 
designees; or
    [sbull] Operate under both systems (but not on the same project or 
program), depending on the certification needs of the organization and 
the regulatory needs of the FAA.
    Organizations that get ODAs would be expected to surrender a 
significant number of individual designees. Even those organizations 
that operate under both ODA and standard certification procedures in 
the future would need a much smaller number of individual designees. 
The FAA envisions that the functions most designees employed by the 
organization perform would be done under the auspices of the ODA 
system. This is necessary to reduce the FAA's administrative burden 
associated with managing individual designees.
    The FAA does not intend to issue authorizations to all qualified 
organizations that might apply for an ODA. The FAA will issue 
authorizations only if it has resources to manage the organization and 
only if the designation will benefit the FAA and the public. Like all 
designations, the proposed ODA designations may be revoked or canceled 
at any time for any reason the Administrator considers proper.
    Although the FAA is proposing to expand the delegation system to 
include organizations that are not eligible under current rules, the 
proposed system would not dramatically increase aircraft-approval-
related delegations. Except for the general aviation operations 
functions, and certain aircraft-approval-related functions, most of the 
functions are already delegated to either individuals or organizations. 
The FAA expects that most ODAs will be issued to existing DAS, DOA, 
SFAR 36, and ODAR organizations, and other organizations currently 
authorized to perform delegated functions.

Transition to ODA Procedures

    No new DAS, DOA, SFAR 36, or ODAR applications would be accepted 
after the date the final rule is published. Existing DAS, DOA, SFAR 36, 
and ODAR designations would need to reapply under part 183, subpart D 
for an ODA. This will allow the FAA to determine if each applicant 
meets all the requirements of the ODA regulations, such as the 
requirements for the procedures manual. To allow for an orderly 
transition from the current designation system to an ODA, the FAA 
proposes a transition period of 3 years to begin on the date the final 
rule is published. At the end of the 3 years, current subparts J and M 
of part 21 would be terminated. SFAR 36 would terminate 3 years after 
the publication date of the final rule. Also, all DAS, DOA, SFAR 36, 
and ODAR designations would be terminated.
    Current DASs, DOAs, SFAR 36s, and ODARs would need to apply for an 
ODA as soon as possible after the publication date of the final rule to 
allow time for the FAA to review their applications, draft procedures 
manuals, and other materials. Other qualified organizations may apply 
for an ODA after publication of the final rule. The FAA's main priority 
during the 3-year transition period would be to manage the transition 
of the existing authorizations to ODAs. Other applications would be 
processed as FAA resources allow.

The Proposed Rule--Section-by-Section

Part 21, Subparts J and M; SFAR 36

    Sections 21.230, 21.430, and section 4 of SFAR 36 would fix a date 
after which applications for DAS, DOA, or SFAR 36 authority would no 
longer be accepted. Sections 21.230 and 21.430 would prohibit 
performing DAS and DOA functions under those authorizations after 3 
years from the publication date of the final rule. Section 4 of SFAR 36 
sets the expiration date of the SFAR at the same 3-year date. Existing 
DASs, DOAs, SFAR 36s, and ODARs must convert to an ODA system within 3 
years after the date the final rule is published to maintain their 
delegated authority.
    For further discussion of the transition period for existing 
authorizations, see the section immediately preceding this one entitled 
``Transition to ODA Procedures.''

Section 183.1 Scope

    The current Sec.  183.1 refers to ``designating private persons.'' 
As defined in The Federal Aviation Regulations, ``person'' can refer to 
an individual or various types of organizations (14 CFR 1.1). Section 
183.1 would be revised to reflect that subparts B and C would cover 
designations of private individuals, while new subpart D would cover 
private organizations.

Section 183.15 Duration of Certificates

    Currently, the duration of certificates for individual designees 
under part 183 varies. For Aircraft Certification and Flight Standards 
designees, the FAA proposes to amend Sec.  183.15(b) to state that the 
designations are effective until the expiration date shown on the 
Certificate of Authority. This is the same system currently used for 
DARs. The appointing office may set a period of 1 to 5 years, depending 
on the experience and track record of the individual. The specific 
instructions for the appointing office would be detailed in the 
associated FAA Order.

Section 183.41 Applicability and Definitions

    This section begins the proposed new subpart D that would apply to 
any organization that seeks an ODA to perform functions leading to 
certification or authorization in the areas of engineering, 
manufacturing, operations, airworthiness, and maintenance. This section 
introduces the subpart and contains definitions for terms used in 
subpart D.

Section 183.43 Application

    This section describes the application process and prescribes the 
application contents. The specific application form, content, 
instruction, and processes would be provided in the associated FAA 
Order.

Section 183.45 Issuance of Organization Designation Authorizations

    This proposed section states the Administrator may issue an ODA 
Letter of Designation if the Administrator finds the applicant complies 
with applicable requirements of this subpart and there is an FAA need 
for the functions requested. The proposed section incorporates what is 
implicit in 49 U.S.C. 44702(d) that the designation is at the 
Administrator's discretion. There would be no assurance that qualified 
applicants would receive a designation. Designations would be issued 
when they benefit the FAA and the public.
    The ODA Letter of Designation would identify the authorized 
functions and limitations; and, as applicable, list the categories of 
products, components, parts, appliances, and ratings, which may be 
approved under the designation. The list could be a general list of

[[Page 2975]]

products, components, parts, appliances, and ratings, authorized under 
the ODA, or it could be more specific, such as a listing of specific 
Technical Standard Order items.

Section 183.47 Eligibility

    The FAA proposes that only applicants within the United States that 
have enough experience using standard certification procedures or are 
current designation holders would be eligible for an ODA. Oversight of 
non-U.S. activities would be unduly burdensome to the FAA.
    The proposed eligibility requirements in paragraph (b) would 
include all persons who are now eligible under subpart J or subpart M 
of part 21 or under SFAR 36, and would expand the eligibility to 
include STC (supplemental type certificate) holders.
    Under proposed Sec.  183.47(b)(6), an applicant that has not been 
issued one of the certificates or authorizations listed would be 
eligible for an ODA if the applicant has enough experience and proper 
experience in performing the functions sought. This allows the FAA to 
issue ODAs to any qualified organization. The specific qualifications 
and experience requirements for specific designations and functions 
would be described in the associated FAA Order.
    Proposed Sec.  183.47(c) applies to any applicant seeking a 
designation for a production system. Experience in production is 
necessary to demonstrate the ODA applicant's production competence. 
Applicants in this category would have to demonstrate experience in 
both design approval and production approval.
    Proposed Sec.  183.47(d) would clarify that for purposes of this 
section, specifically 183.47(b)(1), standard procedures would not 
include transfers and licenses issued under part 21 and approvals based 
on identicality covered under Sec.  21.303(c)(4). Thus, certificates 
used to establish eligibility must have been issued to the applicant by 
the FAA. The certificates could not have been obtained by transfer from 
another party, or in the case of Parts Manufacturer Approvals (PMA), 
could not have been obtained based on findings of identicality.

Section 183.49 Authorized Functions

    Under proposed Sec.  183.49(a), the authorized functions are 
dependent on the qualifications and experience of the applicant, and an 
ODA Unit is allowed to perform only those functions specifically 
authorized by the FAA Administrator.
    Current designation regulations and functions are specific to the 
type of authorization and provide specific procedures that the 
authorized person must follow. To simplify the regulations and maintain 
greater flexibility, the proposed rule would remove specific details, 
which would instead be contained in the associated FAA Order and in the 
applicant's procedures manual.
    Proposed Sec.  183.49(c) states that the ODA functions are based on 
finding compliance with the applicable regulations ``of this chapter,'' 
which refers to the Federal Aviation Regulations in 14 CFR parts 1-199. 
The proposed list of functions include, among others, approving 
technical data, finding compliance with airworthiness requirements, and 
approving or accepting manuals and changes or supplements to manuals. 
Many of these listed functions are now allowed under current 
designation regulations. Paragraph (c)(1) lists approving technical 
data and changes to such data as one of the functions that may be 
granted; these data refer not only to data associated with aircraft 
certification functions, but they also refer to data relevant to flight 
standards and maintenance functions. Proposed paragraph (c)(6) lists 
``approving or accepting manuals and changes/supplements to manuals'' 
(e.g., maintenance manuals and operations manuals).
    General aviation operations functions are listed in Sec.  
183.49(c). Included are functions leading to certification 
authorization for parachute jumping operations, external load 
operators, and agricultural aircraft operators under parts 105, 133, 
and 137, respectively. Also included are functions for air agencies 
under part 141, training centers under part 142 (for non-air carriers), 
and pilots and crewmembers under parts 61, 63, and 91. ODA Holders in 
these areas would provide initial evaluations and briefings for 
applicants, review manuals and procedures, inspect facilities, conduct 
knowledge and skill tests (as appropriate), conduct conformity 
inspections (as required), and complete the proper certification 
reports required in the certification process.
    Functions currently authorized for individuals to perform would be 
available to ODA Holders. For example, issuing pilot certificates and 
authorizations, to include authorizations to conduct aerobatic 
maneuvers in wavered airspace, Letters of Authorization (LOA) to 
operate aircraft for which no type designation exists, and evaluation 
authority to issue additional pilot ratings or certificates.
    The proposed list of functions is not meant to cover all possible 
functions. Proposed Sec.  183.49(c)(15) would allow delegations for 
other functions considered proper by the Administrator. This would 
allow the Administrator to authorize added functions, if appropriate, 
based on the applicant's qualifications and experience. The associated 
FAA Order would provide a matrix of options for functions that an 
organization may request authority to perform based on the 
organization's qualifications.
    The FAA has determined that certain functions will not be delegated 
at this time because they are reserved for the FAA to perform or 
because experience should be gained with the new delegation system 
before expanding it to include these functions. The list that follows 
identifies those areas where the FAA would reserve the functions to 
itself. The proposed ODA system would allow future delegations in some 
of these areas if judged proper. Currently, delegation to ODAs would 
not be considered for--
    [sbull] Finding compliance for issuing repair station certificates 
under part 145;
    [sbull] Finding compliance for issuing training center certificates 
under part 142 for approval of air carrier training programs;
    [sbull] Issuing a Type Certificate and an amended Type Certificate;
    [sbull] Issuing a Production Certificate;
    [sbull] Approving quality assurance procedures and manuals;
    [sbull] Issuing a Parts Manufacturer Approval (PMA);
    [sbull] Making certain findings for issuing a design or a 
production approval (e.g., establishing the certification basis or 
special conditions, establishing means of compliance not previously 
accepted by the FAA, and determining equivalent level of safety);
    [sbull] Determining operational suitability (Flight Standardization 
Board);
    [sbull] Approving Master Minimum Equipment List;
    [sbull] Approving Air Carrier Minimum Equipment List;
    [sbull] Approving air carrier flight crew operating manuals; and
    [sbull] Approving air carrier instructions for continued 
airworthiness, which includes Maintenance Review Board (MRB) and 
associated maintenance documents.
    The issuance of certain certificates may also involve both 
discretionary and ``objective'' findings. Thus, the FAA would limit ODA 
Unit findings of compliance for issuing parts 133, 137, 141, and 142 
certificates to those that are objective.

[[Page 2976]]

    Additionally, there is no regulatory basis for designees to perform 
rulemaking activity or FAA oversight of certificate holders or other 
designees. Therefore, ODA will not allow delegation of any of the 
following:
    [sbull] Issuing an Airworthiness Directive (AD).
    [sbull] Issuing an exemption.
    [sbull] Conducting surveillance and oversight.

Section 183.51 Personnel

    The proposed personnel requirements of Sec.  183.51 would call for 
each ODA applicant to have within its ODA Unit a qualified ODA 
administrator(s) and staff. The staff for aircraft-approval-related 
functions would be required to meet the same requirements as individual 
designees that perform similar functions. Examples include the 
following:
    [sbull] ODA Unit personnel making findings of compliance or 
approving technical data would have to meet the same qualification 
requirements as a DER.
    [sbull] Organizations seeking general aviation operations functions 
would need individuals who have worked as an operator, have held 
positions required by the FAA that directly relate to the activity the 
ODA Unit would perform, or have worked for organizations that hold one 
or more of the certificates listed in Sec.  183.47(b).
    [sbull] ODA administrators would need 5 years of experience working 
with the FAA on similar projects as those approved under the ODA and a 
comprehensive knowledge of related FAA regulations and procedures.
    [sbull] Both ODA administrators and staff would need to demonstrate 
integrity and a cooperative attitude with the FAA. The specific 
administrator and staff eligibility requirements are contained in the 
draft ODA Order and Order 8100.8, Designee Management Handbook.
    [sbull] ODA Holders performing operations functions leading to 
certifications or authorizations under parts 61, 63, 105, 133, 137, 
141, and 142 would need to employ qualified, experienced individuals 
who have held positions in areas directly related to the activity or 
function to be performed by the ODA Unit.

Section 183.53 Procedures Manual

    The proposed rule would require an ODA Holder to have an FAA-
approved procedures manual, containing at least the material specified 
in Sec.  183.53. The procedures manual would specify the authorized 
functions and limitations of the organization and prescribe the 
procedures used to perform the authorized functions. The FAA must 
approve changes to the procedures manual before implementation. As 
discussed in the following section, the procedures manual is also 
important in identifying the scope of the ODA Unit's function.

Section 183.55 Limitations

    Proposed Sec.  183.55(a) limits the authority of the ODA Unit to 
the certification and approval functions defined in its approved 
procedures manual. Any change in limitations or functions desired by 
the ODA Holder must be approved by the FAA and incorporated into the 
procedures manual before the ODA Unit may perform the function. 
Limitations will be defined based on the experience and knowledge of 
the ODA Holder and ODA Unit.
    Proposed Sec.  183.55(b) states the ODA Unit may not perform a 
function if there is a change in the Unit or Holder that might affect 
its ability to perform that function. Changes that might affect 
performing a function must be approved by the FAA and documented in the 
procedures manual. For example, for ODA Units performing production 
functions (e.g., conformity inspections, issuance of airworthiness 
certificates, export, etc.), FAA approval of a change in facilities 
would be required. The proposal, however, does not require that every 
change in the location of facilities or organizational structure of 
every ODA Holder and ODA Unit be approved. Rather, under Sec.  
183.53(l), the ODA Holder's procedures manual would show what changes 
can be made without prior FAA approval. These would be changes that do 
not affect its qualifications to perform a function. For example, an 
ODA Unit could continue to perform authorized functions after a minor 
change in organizational structure if it met the requirements set forth 
in its procedures manual.
    Proposed Sec.  183.55(c) states that an ODA Unit may not issue a 
certificate or other approval for which a finding of the Administrator 
is required, such as equivalent level of safety findings, until the 
Administrator makes that finding. An ODA Holder needs to be aware of 
the limits of its authority and of the obligation to get necessary 
approvals from the FAA before exercising its authorized function.
    Under proposed Sec.  183.55(d) an ODA Unit would also be subject to 
any other limitations specified by the Administrator. For example, the 
ARAC recommendation was to not list the names of ODA Unit staff members 
in the ODA procedures manual but, instead, identify the positions and 
qualifications of these staff members. The ARAC proposed that the 
procedures manual would describe how to maintain and remove the names 
of the staff members, but the names would be maintained in a file 
separate from the procedures manual. The ARAC anticipated the staff-
member file could be updated without letting the FAA know. The FAA 
disagrees with the last part of the ARAC recommendation and would 
continue (as in the current delegation systems) to require FAA approval 
of ODA Unit staff changes. ODA Unit staff members could be identified 
in a file separate from the procedures manual. The FAA determined that 
continuing to approve staff members would enable the agency to gain 
experience working with these organizations while developing and 
assessing the systems approach to management of the organizations. The 
FAA expects that, in the future, qualified ODA Holders will be allowed 
to make ODA Unit staff changes without FAA involvement, but the FAA 
would still require notice of staff changes. Although the FAA is not 
specifically proposing rule language for this requirement, the FAA 
intends to implement it under Sec.  183.55(d).

Section 183.57 Responsibilities of an ODA Holder

    Proposed Sec.  183.57 would show certain responsibilities of an ODA 
Holder. In effect, when performing the authorized functions, the ODA 
Unit represents the FAA within the organization. As such, employees 
performing the designated functions specified in the FAA-approved 
procedures manual would report to the ODA administrator(s) when 
performing FAA functions.
    Clearly, personnel performing ODA functions must have 
organizational authority and independence to ensure that authorized 
functions are performed according to FAA requirements. While performing 
authorized functions, an ODA Unit within an organization would report 
to a level of management high enough to enable the ODA Unit to operate 
without pressure or influence from other organizational segments or 
individuals. The ODA Unit must be free of conflicting restraints that 
would limit the ODA Holder's ability to ensure that authorized 
functions are performed in compliance with FAA regulations. The ODA 
Holder would also be responsible for cooperating with the FAA during 
the FAA's audit, oversight, and surveillance activities.

[[Page 2977]]

Section 183.59 Continued Eligibility

    Proposed Sec.  183.59 would require the ODA Holder to notify the 
FAA of any change that could affect its ability to meet the 
requirements of the regulations. For example, if its ODA administrator 
were to leave the organization, the ODA Holder would have to notify the 
FAA. The specific changes that require notice would be determined by 
the types of functions the organization is authorized to perform, and 
the basis of the organization's eligibility.

Section 183.61 Inspection

    The proposed language would require both ODA Holders and applicants 
to allow the FAA to make any inspection necessary to determine 
compliance with the regulations. Applicants may be inspected as part of 
evaluating their application. ODA Holders would have to provide access 
for the FAA to perform on-site evaluations of the ODA Holder, as the 
FAA considers necessary.

Section 183.63 Records and Reports

    Proposed Sec.  183.63 would require an ODA Holder to maintain and 
make available certain records. The required records depend on the ODA 
Holder's specific authority and the work performed under that 
authority.
    Proposed Sec.  183.63(d) would require an ODA Holder and ODA Unit 
under this part to make such reports that are prescribed by the 
Administrator. The specific reports would be described in the 
associated FAA Order.

Section 183.65 Data Review and Service Experience

    Proposed Sec.  183.65 would require an ODA Unit to investigate 
safety concerns it or the FAA identifies. The FAA would require that 
such investigations take priority over all delegated functions 
performed by the organization. Additionally, the ODA Unit must provide 
the FAA with any information in its possession that is necessary to 
implement corrective action. These responsibilities for safety concerns 
apply to all approvals and certificates issued by the ODA Unit. This 
would also apply to certificates and approvals the ODA Unit transfers 
to other persons.

Section 183.67 Transferability and Duration

    Proposed Sec.  183.67(a) states that an ODA Letter of Designation 
is not transferable and is effective until the expiration date shown on 
the Letter of Designation. Proposed Sec.  183.67(b) states the 
circumstances for which an ODA is terminated or suspended. This 
proposed language is substantively the same as the termination and 
suspension rules for individual designees. The associated FAA Order 
will describe some of the reasons for which the FAA might terminate or 
suspend an ODA. The reasons include improper performance; lack of care, 
poor judgment, or lack of integrity; lack of FAA need or ability to 
manage; insufficient activity; and lapse of qualifications. The Order 
will also outline a means for the ODA Holder to appeal a termination or 
suspension decision. The right to appeal depends on the reason for the 
termination or suspension. See the associated draft FAA Order for more 
information.

Paperwork Reduction Act

    This proposal contains the following new information collection 
requirements. As required by the Paperwork Reduction Act of 1995 (44 
U.S.C. 3507(d)), the Department of Transportation has sent the 
information requirements associated with this proposal to the Office of 
Management and Budget for its review.
    Title: Establishment of Organization Designation Authorization 
Procedures.
    Summary: This proposal requires the creation of an Organization 
Designation Authorization (ODA) program. This program would expand the 
approval functions of FAA organizational designees; standardize these 
functions to increase efficiency; and expand eligibility for 
organizational designees, including organizations not eligible under 
the current rules. In addition, as the FAA transitions to the ODA 
program, the agency would phase-out the Delegation Option Authorization 
(DOA), Designated Alteration Station Authorization (DAS), SFAR 36 
authorization, and the Organizational Designated Airworthiness 
Representative (ODAR).
    Use of: The information in this proposal is required to establish 
the qualifications of prospective applicants and to manage the 
activities of organizations authorized as Organization Designation 
Authorization Holders. Reporting and recordkeeping requirements are 
necessary to manage the various approvals issued by the organization 
and to document approvals issued that must be maintained to address any 
future safety issues.
    Respondents (including number of): The likely respondents to this 
proposed information requirement are organizations and companies within 
industry that desire the authority to make approvals on behalf of the 
FAA. During the initial 3-year period, it is expected that about 60 
applications per year will be processed. We expect about 10 per year 
after the initial 3-year period.
    Frequency: After initial application and authorization, the 
frequency of submittals will be dependent upon the type of authority 
granted by the FAA. Recurrent information requirements are based on the 
approvals issued by the organization and changes to the authorization 
desired by the authorization holder.
    Annual Burden Estimate: We estimate the proposed rule imposes an 
annual public reporting burden of $235,840 based on 4288 hours at 
$55.00 per hour. The estimated recordkeeping costs are $161,700, based 
on 2940 hours at $55.00 per hour. Both of these cost estimates are 
based on clerical, technical, and overhead expenses.
    Estimates of the burden created by the rule are based on the 
following: The rule will phase-out over 3 years the existing Designated 
Alteration Station and Delegation Option Authorization rules contained 
in subparts J and M of part 21, as well as Special Federal Aviation 
Regulation No. 36. The collection and recordkeeping requirements 
imposed by those rules will transition to the requirements contained 
here over the initial 3-year period. In addition, existing Organization 
Designated Airworthiness Representatives that are currently managed 
under part 183 will also be converted to Organization Designation 
Authorization over the initial 3-year period. As a result, the initial 
3-year burden will be large, with a smaller burden over the life of the 
program. It is expected that about 180 applications will be processed 
within the first 3 years of the program, with an estimated 10 more 
applications being submitted per year over the life of the program.
    The annual cost to the Federal government to analyze and process 
the information received is estimated to be $69,300 per year. This 
estimate is based on 1260 hours at $55.00 per hour.
    The agency is seeking comments to--
    (1) Evaluate whether the proposed information requirement is 
necessary for the proper performance of the functions of the agency, 
including whether the information will have practical utility;
    (2) Evaluate the accuracy of the agency's estimate of the burden;
    (3) Enhance the quality, utility, and clarity of the information to 
be collected; and
    (4) Minimize the burden of the collection of information on those 
who are to respond, including responses through the use of proper 
automated, electronic, mechanical, or other technological collection 
techniques, or other forms of information technology.

[[Page 2978]]

    Individuals and organizations may send comments on the information 
collection requirement by March 22, 2004, and should direct them to the 
address listed in the ADDRESSES section of this document.
    According to the regulations, implementing the Paperwork Reduction 
Act of 1995 (5 CFR 1320.8(b)(2)(vi)), an agency may not conduct or 
sponsor, and a person is not required to respond to, a collection of 
information unless it displays a currently valid OMB control number. 
The OMB control number for this information collection will be 
published in the Federal Register, after the Office of Management and 
Budget approves it.

International Compatibility

    In keeping with U.S. obligations under the Convention on 
International Civil Aviation, it is the FAA's policy to comply with 
International Civil Aviation Organization (ICAO) Standards and 
Recommended Practices to the maximum extent practicable. The FAA 
determined that there are no ICAO Standards and Recommended Practices 
that correspond to these proposed regulations.

Economic Evaluation, Initial Regulatory Flexibility Determination, 
International Trade Impact Assessment, and Unfunded Mandates Assessment

    Proposed changes to Federal regulations must undergo several 
economic analyses. First, Executive Order 12866 directs 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 requires agencies 
to analyze the economic effect 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 requires agencies to consider international 
standards and, where appropriate, that they be the bases 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).
    In conducting these analyses, the FAA has determined that this 
proposed rule: (1) Would generate benefits that justify its costs and 
would not be ``a significant regulatory action;'' (2) would not have a 
significant impact on a substantial number of small entities; (3) would 
have little effect on international trade; and (4) would impose no 
unfunded mandates on State, local, or tribal governments, or on the 
private sector. These analyses, contained in the Initial Regulatory 
Evaluation, Regulatory Flexibility Analysis, Trade Impact Assessment, 
and Unfunded Mandates Act Determination for Proposed Rule: 
Establishment of Organization Designation Authorization Procedures, 
which is available in the docket, are summarized as follows.

Request for Comments

    The FAA requests comments on its assumptions, methodology, and data 
used in its economic analyses. The FAA also requests that commentators 
provide data with supporting documentation for their comments.

Costs

    The potential costs of compliance with the proposed rule would 
occur because the proposed requirement that all organizational 
designation authorizations under part 21, subparts J or M, or under 
part 121, SFAR 36, or under part 183 would end within 3 years of the 
publication date of the final rule. As a result, the costs of 
compliance would be the added (or incremental) costs required for a 
company or an organization to apply for and to operate an ODA above the 
costs required for it to operate its existing designation 
authorizations. These costs would be both initial (first-year) costs 
and annual (recurring) costs.
    To estimate the potential costs, the FAA used a telephone survey of 
8 of the 21 programs that volunteered to participate in the DDS (an 
acronym taken from DOA, DAS, and SFAR 36) program developed under Order 
8100.9. As the DDS program was developed to closely model the proposed 
ODA program, the FAA assumed the experiences of these DDS participants 
would likely model the experiences of future ODA programs. These DDS 
participants have voluntarily experienced the initial compliance costs 
involved in setting up their programs. However, as the DDS program has 
not become active at this time, these DDS participants have not 
experienced the annual compliance costs but did provide anticipated 
estimates based on their experiences with their existing designation 
programs. In addition, as there are no ODAR programs in the DDS 
program, the FAA could not use the DDS participant estimates to proxy 
the compliance costs for ODAR programs. Rather, the FAA used its 
knowledge and expertise to develop compliance cost estimates for the 
ODAR programs.
    Compliance costs would vary across companies depending upon the 
amount of activity that would be administered by the ODA, the size of 
the company, and the extent to which the existing designated 
procedures, personnel, and systems would already meet the proposed ODA 
requirements. Based on the telephone survey, the FAA determined that 
the larger the DOA, DAS, and SFAR 36 program, the higher the cost would 
tend to be. The FAA then assumed that a similar result would occur for 
ODAR programs. On that basis, the FAA estimated the cost impact of an 
average ``large'' ODA program and an average ``small'' ODA program. The 
FAA then assumed that a company with an existing designation 
authorization having more than 1,500 employees would typically have a 
large ODA program, while one with fewer than 1,500 employees would 
typically have a small ODA program. Thus, the FAA classified the 
existing designation authorization programs into the following four 
general categories. The first category is large DOA, DAS, and SFAR 36 
programs (assumed to have an average of 20 ODA personnel). The second 
category is small DOA, DAS, and SFAR 36 programs (assumed to have an 
average of 10 ODA personnel). The third category is large ODAR programs 
(assumed to have an average of 10 ODA personnel). The fourth category 
is small ODAR programs (assumed to have an average of five ODA 
personnel).
    The primary costs of compliance would result from the number of 
labor hours of engineers/administrators necessary to meet various 
proposed requirements. On that basis, the estimated number of 
additional hours for each of the several requirements in the proposed 
rule that the DDS participants pointed out would involve incremental 
costs by type of current designation and by size of designation 
activity are contained in Table 1. The paragraphs following Table 1 
briefly explain these estimated hours. A more complete discussion is 
found in the Initial Regulatory Evaluation.

[[Page 2979]]



Table 1.--Initial Number of Administrative Hours Per Company by Type of Current Designation Authorization and by
                                                Size of Operation
----------------------------------------------------------------------------------------------------------------
                                        Large non-DDS      Small non-DDS
      Type of initial activity           participant        participant         Large ODAR         Small ODAR
----------------------------------------------------------------------------------------------------------------
Revise Procedures Manual............                 40                 20                 16                 12
Revise Recordkeeping System.........                  4                  4                  4                  4
Initial Employee Instruction........                 40                 20                 20                 10
FAA Application.....................                 26                 16                 14                 14
ODA Administrator Travel............                  8                  8                  8                  8
                                     ---------------------------------------------------------------------------
    Total...........................                118                 68                 62                 48
----------------------------------------------------------------------------------------------------------------

    All the DDS participants reported that their procedures had 
followed accepted industry practices and did not need to be changed for 
the DDS program. However, the manuals had to be rewritten into the FAA-
approved format and this entailed rewriting and then checking to be 
certain that the rewrite had not inadvertently introduced potential 
errors into the procedures. Clearly, then, the more procedures 
involved, the more time required for the rewrite. Thus, the number of 
hours would tend to vary with the size of the ODA program.
    The number of hours to review the recordkeeping system was 
determined not to vary very much with the size of the records because 
it would be a record system review and not a review of each individual 
type of record.
    The number of hours for the initial ODA employee instruction was 
based mainly on training the employees on the new formats and forms 
rather than on learning new technical procedures. On that basis, the 
FAA estimated that this initial training would take 2 hours per ODA 
employee, which, when multiplied by the average number of ODA 
employees, produces the estimated number of hours in Table 1.
    The number of hours to apply for an FAA approval was based on the 
size and complexity of the ODA program. These estimates included the 
number of engineering/administration hours needed to respond to likely 
FAA questions concerning the program after the initial application was 
made.
    Finally, the proposed FAA Order requires an ODA administrator to 
attend an ODA Standardization class that would be given by the FAA. The 
FAA assumed that this would be a class that would require the ODA 
administrator to spend 1 day (including travel time) away from work.
    Thus, the FAA determined that the proposed rule would involve 
between 48 and 128 additional, initial engineering/administration hours 
to apply for an ODA.
    Similarly, Table 2 contains the FAA's estimate of the annual number 
of additional engineering/administration hours that would be needed to 
remain in compliance with the proposed rule. The paragraphs following 
Table 2 briefly explain these estimated hours. A more complete 
discussion is found in the Initial Regulatory Evaluation.

 Table 2.--Annual Number of Administrative Hours Per Company by Type of Current Designation Authorization and by
                                                Size of Operation
----------------------------------------------------------------------------------------------------------------
                                        Large non-DDS      Small non-DDS
       Type of annual activity           participant        participant         Large ODAR         Small ODAR
----------------------------------------------------------------------------------------------------------------
Refresher Training..................                 40                 20                 20                 10
Additional ODA Administrator Time...                 16                 12                 12                  8
Periodic Self-Audits................                 36                 16                 16                 16
FAA Review..........................                 32                 12                  8                  8
ODA Administrator Travel............                  4                  4                  4                  4
                                     ---------------------------------------------------------------------------
    Total...........................                128                 64                 60                 56
----------------------------------------------------------------------------------------------------------------

    Five of the DDS participants reported that they did not have a 
scheduled refresher training program as would be effectively required 
by the proposed FAA Order that ODA personnel receive biennial refresher 
training. Three reported that they did have a scheduled biennial 
program. On the basis that the DDS participants that did have a 
training program reported that each employee would need between 4 to 6 
hours every 2 years, the FAA estimated that an annual equivalent would 
be 3 hours per year. Given the expected number of programs that would 
not incur additional training time, the FAA estimated that, on average, 
all ODA programs would need to add 2 hours of annual training to comply 
with the proposed requirement. This increase, when multiplied by the 
average number of ODA employees, produces the estimated number of 
additional engineer training hours in Table 2.
    The annual additional ODA administrator time is based on the 
perception of the surveyed DDS participants that an ODA program may 
require an administrator to perform more documentation for personnel 
than is required for the previous designation authorizations. As a 
result, this extra paperwork would likely be directly related to the 
size and complexity of the ODA program, which is reflected in the 
estimated numbers of ODA administrator hours in Table 2.
    The periodic self-audits were determined to vary by size and 
complexity of the work being performed under an ODA program. On that 
basis, the FAA estimated that the large non-DDS participant would need 
12 engineering/administration hours and all other designation 
authorization programs would need 8 engineering/administration hours 
for a complete self-audit. In addition, the FAA estimated that a large 
non-DDS participant would conduct three of these self-audits annually 
while all other designation authorization

[[Page 2980]]

programs would conduct two annual self-audits.
    Similarly, the FAA anticipates that it would spend more time 
reviewing larger and more complex ODA programs, which, in turn, would 
require a larger ODA program to spend more time cooperating with FAA 
reviews. On that basis, the FAA estimated that it would take 16 
engineering/administration hours for a large non-DDS participant ODA 
program, 12 engineering/administration hours for a small non-DDS 
participant ODA program, and 8 engineering/administration hours for an 
ODAR program to cooperate with an FAA review. The FAA also anticipates 
that it would perform these reviews twice a year for the large non-DDS 
participant ODA programs and once a year for all other ODA programs.
    Finally, the ODA administrator would need to attend the 1-day 
biennial ODA Standardization class. This analysis assumed that this 
every other year activity could be approximated by dividing the 8 hours 
biennial amount of time for travel and class attendance into annual 4-
hour equivalents.
    Thus, the FAA determined the proposed rule would involve between 56 
and 128 more annual engineering/administration hours to apply for an 
ODA from the FAA.
    In converting these hours to dollar values, the FAA assumed that, 
on average, the total hourly compensation (salary plus fringe benefits) 
for an engineer/administrator would be $110. This $110 value also 
incorporates the costs associated with any non-engineering/
administration ancillary hours that would be needed for compliance. In 
addition, the FAA assumed the travel costs for an ODA administrator to 
attend the FAA ODA Standardization class would be $500 per trip.
    On that basis, the FAA calculated the initial and the annual costs 
of compliance. The initial compliance cost per ODA program is contained 
in Table 3. The annual compliance cost per ODA program is calculated 
based on evenly dividing the biennial travel costs of $500 and lost 
engineering/administration labor cost of $880 by 2 to obtain an annual 
travel cost of $250 and an annual lost engineering/administration labor 
cost of $440. The annual compliance cost per ODA program is contained 
in Table 4.

   Table 3.--Per Company Initial Compliance Cost by Type of Designation Authorization and by Size of Operation
----------------------------------------------------------------------------------------------------------------
                                        Large non-DDS      Small non-DDS
     Type of initial expenditure         participant        participant         Large ODAR         Small ODAR
----------------------------------------------------------------------------------------------------------------
Revise Procedures Manual............             $4,400             $2,200             $1,760             $1,320
Revise Recordkeeping System.........                440                440                440                440
Initial Employee Instruction........              4,400              2,200              2,200              1,100
FAA Application.....................              2,860              1,760              1,540              1,540
Travel..............................              1,380              1,380              1,380              1,380
                                     ---------------------------------------------------------------------------
    Total...........................             13,480              7,980              7,320              5,780
    Present Value...................             12,490              7,400              6,780              5,350
----------------------------------------------------------------------------------------------------------------


   Table-4.--Per Company Annual Compliance Cost by Type of Designation Authorization and by Size of Operation
----------------------------------------------------------------------------------------------------------------
                                        Large non-DDS      Small Non-DDS
     Type of annual expenditure          participant        participant         Large ODAR         Small ODAR
----------------------------------------------------------------------------------------------------------------
Refresher Training..................             $4,400             $2,200             $2,200             $1,100
Additional ODA Administrator Time...              1,760              1,320              1,320                880
Periodic Self-Audits................              3,960              1,760              1,760              1,760
FAA Review..........................              3,520              1,320                880                880
Travel..............................                690                690                690                690
                                     ---------------------------------------------------------------------------
    Total...........................             14,330              7,290              6,850              5,310
    Present Value...................             10,980              5,590              4,835              3,975
----------------------------------------------------------------------------------------------------------------

    In estimating the total compliance costs, the FAA determined that 
the designation authorization programs taking part in the DDS program 
would incur minimal compliance costs because they have already incurred 
the initial costs and they would incur similar annual costs if they 
remained in the DDS program. Companies in the DDS program have already 
voluntarily made the initial expenditures and have voluntarily agreed 
to make the future annual expenditures to remain in the program.
    On that basis, the FAA determined that large companies would 
operate 24 of the non-DDS participant programs and small companies 
would operate 14 of the non-DDS participant programs. The FAA also 
determined that large companies would operate 36 of the ODAR programs 
and small companies would operate 77 of the ODAR programs. As seen in 
Table 5, the FAA estimates that the undiscounted total initial 
compliance costs would be $1.144 million, which has a present value of 
$1.060 million. Further, as seen in Table 6, the FAA estimates that the 
undiscounted total annual compliance costs would be $1.102 million.

[[Page 2981]]



                               Table 5.--Total Initial Cost by Type of Designation Authorization and by Size of Operation
                                                            [Values rounded to nearest $100]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                             Large non-DDS      Small non-DDS
               Type of initial expenditure                    participant        participant         Large ODAR         Small ODAR           Total*
--------------------------------------------------------------------------------------------------------------------------------------------------------
Revise Procedures Manual.................................           $105,600            $30,800            $63,400           $101,600           $301,400
Revise Recordkeeping System..............................             10,600              6,200             15,800             33,900             66,400
Initial Employee Instruction.............................            105,600             30,800             79,200             84,700            300,300
FAA Application..........................................             68,600             24,600             55,400            118,600            208,400
Travel...................................................             33,100             19,300             49,700            102,300      208,40033,220
                                                          ----------------------------------------------------------------------------------------------
    Total*...............................................            323,500            111,700            263,500            445,100          1,143,800
    Present Value........................................            299,800            103,500            244,200            412,400         1,059,900
--------------------------------------------------------------------------------------------------------------------------------------------------------
*Note: Totals may not add due to rounding.


                                Table 6.--Total Annual Cost by Type of Designation Authorization and by Size of Operation
                                                            [Values rounded to nearest $100]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                             Large non-DDS      Small non-DDS
                Type of annual expenditure                    participant        participant         Large ODAR         Small ODAR           Total*
--------------------------------------------------------------------------------------------------------------------------------------------------------
Refresher Training.......................................           $105,600            $30,800            $79,200            $84,700           $300,300
Additional ODA Administrator Time........................             21,100             12,300             31,700             67,800            132,900
Periodic Self-Audits.....................................             95,000             24,600             63,400            135,500            318,600
FAA Review...............................................             84,500             18,500             31,700             67,800            202,400
ODA Administrator Travel.................................             16,600              9,700             24,800             53,100            104,200
                                                          ----------------------------------------------------------------------------------------------
    Total*...............................................            343,900            102,100            246,600            408,900          1,101,500
    Present Value........................................            280,800             83,300            201,300            333,800           899,100
--------------------------------------------------------------------------------------------------------------------------------------------------------
*Note: Totals may not add due to rounding.

    Further, the FAA did not estimate the benefits or costs for 
companies or organizations that do not now hold a designation 
authorization but that might apply for an ODA. Any estimate of the 
number of such companies and organizations would be speculative. 
Although they would incur costs, their decisions would be voluntary 
choices because they could continue to employ FAA-approved personnel 
following standard procedures to meet the FAA requirements. Thus, the 
decision to apply for an ODA would be made only if a company 
anticipated making a profit; that is, incurring negative net costs.
    Finally, the FAA does not have enough information at this time to 
estimate the potential costs for companies and organizations to apply 
for ODAs that would be applicable in the general aviation sector. The 
FAA requests data and information on these companies and organizations.

Benefits

    The proposed rule would enhance safety by: (1) Setting up an 
improved designation authorization system; and (2) allowing the FAA to 
better distribute its increasingly scarce certification and inspection 
resources.
    The safety benefits that would arise from an improved designation 
authorization system would primarily be derived from: (1) An improved 
FAA-approved procedures manual that would result in higher quality 
certification processes; and (2) periodic ODA self-audits that would 
ensure certification activities were performed according to the 
procedures manual. Although the FAA believes that these are real safety 
benefits, the FAA is unable to calculate a quantitative value for them 
because the effect of these improvements in processes cannot be 
directly translated into a percentage increase in safety. That is, the 
FAA cannot state that ``the airplane will be X percent safer under an 
ODA system than under the current designation authorization system. As 
a result, the FAA can only provide this qualitative discussion of the 
expected benefits of establishing an ODA system.
    The safety benefits that would arise from allowing the FAA to 
better distribute its increasingly scarce resources would derive from 
the FAA's applying these resources to evaluating the quality of the 
certificate and approval holders' performances rather than on 
witnessing tests and evaluating data. As the number of certifications 
and approvals increase over time, it is unlikely that FAA resources 
will increase commensurately. Thus, efficient use of these resources 
dictates that the FAA review and evaluate the overall quality of the 
certificate and approval holders' performances that directly relate to 
maintaining safety; that is, compliant designs and conforming products. 
This shift in FAA activity would be particularly significant when the 
FAA is tasked with evaluating designs involving new technology. By 
using ODAs to address findings of compliance for designs of familiar 
technology, the FAA would be able to devote more of its certification 
and inspection resources to addressing the safety concerns associated 
with new technology. Also, there are certain specialized general 
aviation areas where the FAA has not been able to obtain adequate 
resources to perform its certifications and authorizations at the 
desired quality level. At this time, the FAA cannot quantify the extent 
of the potential certification and inspection hours that it would be 
able to shift to other certification and inspection activities because 
the FAA cannot predict the number of companies that would apply for an 
ODA or the amount of these activities that would be delegated to the 
ODA.
    By way of illustrating the potential savings in hours associated 
with a new aircraft certification, the FAA Aircraft Certification 
Services has estimated that it expended approximately 130,000 labor 
hours on a recent large transport category airplane certification. 
Using an estimate of $110 per hour total compensation rate for an FAA 
engineer/administrator (including salary, medical, vacation and other 
benefits as

[[Page 2982]]

well as an adjustment factor for supervisory and administrative 
personnel time), the FAA estimates that its Aircraft Certification 
Services spent about $14.3 million over the 4-year certification 
program. Note that these estimated hours do not include those hours 
expended by FAA Flight Standard Service in this same program. Had an 
organizational designee system approach been in effect, the FAA 
estimated that it could have shifted between 10 percent and 20 percent 
or about 13,000 to 26,000 of these hours from that certification 
program to programs that would have focused on the continued 
airworthiness of the commercial transport fleet. The FAA would still 
have expended about 104,000 to 117,000 hours in overseeing the 
operation of that manufacturer's ODA program for that program's 
activities.

Cost Savings

    The proposed rule would provide potential cost savings to the 
aviation industry by reducing: (1) The number and length of some delays 
in work schedules due to the existing designation authorization system; 
and (2) the number of tests that must be performed.
    Industry work schedules have been interrupted and work delayed 
because the FAA could not complete the requested certifications and 
approvals at the time needed due to its limited resources, other 
requests, and other agency priorities. Most of the DDS participants 
stated that the potential reduction of aircraft downtime was an 
important consideration in voluntarily undertaking the effort required 
for the DDS program. As an illustration of the amount of time savings 
that may be achieved, a member of the Delegation Authorization Working 
Group reported that his transport category airplane manufacturer 
implemented an internal designee program similar to that of an ODA and 
this was estimated to save an average of 50 hours per delivered 
airplane. This estimate was based on actual post-type certification 
scheduled activity over a specific period.
    Under the current system, some certification tests are performed 
once for the company's engineers and then repeated for an FAA observer. 
Further, performing these tests often involve considerable equipment 
expense to the company, as well as the extra personnel time required. 
The proposed ODA program would remove some of these duplicate tests, 
although the Delegation Authorization Working Group members were unable 
to estimate the number of duplicate tests that would be eliminated.

Cost/Benefit Comparison

    The Delegation Authorization Working Group and companies 
participating in the DDS program believe that the proposed rule would 
be cost beneficial. As noted earlier, companies that currently use FAA-
approved personnel operating under standard practices to get FAA 
approvals could continue to operate under that system. Those companies 
would not be required to develop an ODA unless they believed it would 
be to their financial advantage. Companies that currently have 
designation authorizations would, however, be required to obtain an ODA 
if they intend to continue to have a designation authorization. If they 
do not intend to continue to have a designation authorization, they 
would be able to use FAA-approved personnel operating under standard 
practices. Members of the Delegation Authorization Working Group and 
seven of the eight surveyed DDS participants believe that the financial 
advantages from having an ODA would be sufficiently large that all, or 
nearly all, of the companies holding a current designation 
authorization would develop an ODA. They further reported that an ODA, 
as proposed in this rule, would be more cost-effective and would 
provide greater safety benefits than those provided by the current 
designation authorizations. Finally, the fact that many more 
designation authorization programs than the 21 ultimately selected by 
the FAA tried to enroll in the prototype program, provides strong 
evidence that those programs had expected a positive benefit cost 
result from participating in an ODA-like system.
    Regarding general aviation, the FAA believes extending an ODA 
system to areas in general aviation that currently do not have 
designation authorization type programs would similarly benefit many in 
general aviation by reducing certification and authorization delays. On 
net, the FAA believes that the expansion of the ODA program in general 
aviation would have a positive net benefit.
    In conclusion, the FAA believes that the benefits from the proposed 
rule would be greater than the costs of complying with the proposed 
rule.

Regulatory Flexibility Determination

    The Regulatory Flexibility Act of 1980 (RFA) 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 Act requires agencies to 
solicit and consider flexible regulatory proposals and to explain the 
rationale for their actions.
    Agencies must perform a review to determine whether a proposed or a 
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 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.
    This proposed rule would promote greater efficiency gains than it 
would create added costs. For example, small manufacturing companies 
would be able to set their production schedules without being dependent 
upon an outside individual's availibility at the required time to 
approve a product. Further, small airlines and repair stations would be 
able to minimize the amount of aircraft downtime, which results in lost 
revenue, to complete specified repairs. In addition, a small company 
that does not now have a designation authorization would voluntarily 
choose to apply for an ODA only if it was financially advantageous. 
Finally, the costs for an individual small business would ultimately be 
borne by the end user and the distribution of those costs between large 
and small businesses could not be determined.
    Because of those arguments, the FAA Administrator certifies that 
the proposed rule would not have a significant economic impact on a 
substantial number of small entities.

International Trade Impact Analysis

    The Trade Agreement Act of 1979 prohibits Federal agencies from 
engaging in any standards or related activities that would 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 proper, that they be the basis for 
U.S. standards. The FAA has assessed the

[[Page 2983]]

potential effect of this proposed rule, according to that standard.
    Thus, for both U.S. and European companies with plants and repair 
stations operating in the United States, the proposed rule would reduce 
the costs of certifying certain exams, tests, and inspections. The 
European aviation product certification system is so significantly 
different from the U.S. system that a harmonization effort is not 
possible. As a result, the FAA concludes that the proposed rule would 
have a minimal impact on international trade.

Unfunded Mandates Assessment

    Title II of the Unfunded Mandates Reform Act of 1995 (the Act), 
enacted as Pub. L. 104-4 on March 22, 1995, requires each Federal 
agency, to the extent permitted by law, to prepare a written assessment 
of the effects of any Federal mandate in a proposed or final agency 
rule that may result in the expenditure 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 1 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 will impose an 
enforceable duty upon State, local, and tribal governments, in the 
aggregate, of $100 million (adjusted annually for inflation) in any one 
year. The FAA determined that this proposed rule would not contain a 
Federal intergovernmental or private sector mandate that would exceed 
$100 million in any year, therefore, the requirements of the Act do not 
apply.

Executive Order 13132, Federalism

    The FAA has analyzed this proposed rule under the principles and 
criteria of Executive Order 13132, Federalism. The FAA has 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. Also, the FAA has determined that this 
notice of proposed rulemaking would not have federalism implications.

List of Subjects

14 CFR Part 21

    Aircraft, Aviation safety, Exports, Imports, Reporting and 
recordkeeping requirements.

14 CFR Part 121

    Air carriers, Aircraft, Airmen, Aviation safety, Reporting and 
recordkeeping requirements, Safety, Transportation.

14 CFR Part 135

    Air taxis, Aircraft, Airmen, Aviation safety, Reporting and 
recordkeeping requirements.

14 CFR Part 145

    Aircraft, Aviation safety, Reporting and recordkeeping 
requirements.

14 CFR Part 183

    Aircraft, Airmen, Authority delegations (Government agencies), 
Reporting and recordkeeping requirements.

The Proposed Amendment

    The Federal Aviation Administration proposes to amend parts 21, 
121, 135, 145, and 183 of the Federal Aviation Regulations as follows:

PART 21--CERTIFICATION PROCEDURES FOR PRODUCTS AND PARTS

    1. The authority citation for part 21 continues to read as follows:

    Authority: 42 U.S.C. 7572; 49 U.S.C. 106(g), 40105, 40113, 
44701-44702, 44707, 44709, 44711, 44713, 44715, 45303.

    2. Section 21.230 is added to read as follows:


Sec.  21.230  Compliance dates.

    (a) No person may apply for a Delegation Option Authorization under 
this subpart after [insert date of publication in the Federal Register 
of the final rule]. A person may apply for an Organization Designation 
Authorization under subpart D of part 183 of this chapter on or after 
[insert date of publication in the Federal Register of the final rule].
    (b) No person may perform the functions of a Delegation Option 
Authorization issued under this subpart after [insert date 3 years 
after date of publication in the Federal Register of the final rule].
    3. Section 21.430 is added to read as follows:


Sec.  21.430  Compliance dates.

    (a) No person may apply for a Designated Alteration Station 
authorization under this subpart after [insert date of publication in 
the Federal Register of the final rule]. A person may apply for an 
Organization Designation Authorization under subpart D of part 183 of 
this chapter on or after [insert date of publication in the Federal 
Register of the final rule].
    (b) No person may perform the functions of a designated alteration 
station authorization issued under this subpart after [insert date 3 
years after date of publication in the Federal Register of the final 
rule].

PART 121--OPERATING REQUIREMENTS: DOMESTIC, FLAG, AND SUPPLEMENTAL 
OPERATIONS

    4. The authority citation for part 121 continues to read as 
follows:

    Authority: 49 U.S.C. 106(g), 40113, 40119, 44101, 44701-44702, 
44705, 44709-44711, 44713, 44716-44717, 44722, 44901, 44903-44904, 
44912, 46105.

PART 135--OPERATING REQUIREMENTS: COMMUTER AND ON DEMAND OPERATIONS 
AND RULES GOVERNING PERSONS ON BOARD SUCH AIRCRAFT

    5. The authority citation for part 135 continues to read as 
follows:

    Authority: 49 U.S.C. 106(g), 40113, 44701-44702, 44705, 44709, 
44711-44713, 44715-44717, 44722.

PART 145--REPAIR STATIONS

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

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

    7. In parts 121, 135, and 145, Special Federal Aviation Regulation 
No. 36, the text of which is found at the beginning of part 121, is 
amended by--
    (a) Revising the introductory text of section 4 as set forth below; 
and
    (b) Revising the unnumbered paragraph in section 13 to read as set 
forth below.

Special Federal Aviation Regulation No. 36

* * * * *
    4. Application. The applicant for an authorization under this 
Special Federal Aviation Regulation must submit an application before 
[insert date of publication of final rule], in writing, and signed by 
an officer of the applicant, to the certificate holding district 
office. On or after [insert date of publication in the Federal Register 
of the final rule] a person may apply for an Organization Designation 
Authorization under subpart D of part 183 of this chapter. The 
application must contain--
* * * * *

[[Page 2984]]

    This Special Federal Aviation Regulation terminates [insert date 3 
years after date of publication in the Federal Register of the final 
rule], and no person may perform a function authorized under this SFAR 
after that date.

PART 183--REPRESENTATIVES OF THE ADMINISTRATOR

    8. The authority citation for part 183 continues to read as 
follows:

    Authority: 31 U.S.C. 9701; 49 U.S.C. 106(g), 40113, 44702, 
44721, 45303.

    9. Section 183.1 is revised to read as follows:


Sec.  183.1  Scope.

    This part describes the requirements for designating private 
persons to act as representatives of the Administrator in examining, 
inspecting, and testing persons and aircraft for the purpose of issuing 
airman, operating, and aircraft certificates. In addition, this part 
states the privileges of those representatives and prescribes rules for 
the exercising of those privileges, as follows:
    (a) Private individuals may be designated as representatives of the 
Administrator under subparts B and C of this part.
    (b) Private organizations may be designated as representatives of 
the Administrator by obtaining Organization Designation Authorizations 
under subpart D of this part.
    10. Section 183.15 is amended by removing paragraph (c), 
redesignating paragraph (d) as paragraph (c), and revising paragraphs 
(a) and (b) to read as follows:


Sec.  183.15  Duration of certificates.

    (a) Unless sooner terminated under paragraph (c) of this section, a 
designation as an Aviation Medical Examiner is effective for 1 year 
after the date it is issued, and may be renewed for additional periods 
of 1 year at the Federal Air Surgeon's discretion. A renewal is 
effected by a letter and issuance of a new identification card 
specifying the renewal period.
    (b) Unless sooner terminated under paragraph (c) of this section, a 
designation as Flight Standards or Aircraft Certification Service 
Designated Representative as described in Sec. Sec.  183.27, 183.29, 
183.31, or 183.33 is effective until the expiration date shown on the 
Certificate of Authority.
* * * * *
    11. A new subpart D is added to part 183 to read as follows:
Subpart D--Organization Designation Authorization
Sec.
183.41 Applicability and definitions.
183.43 Application.
183.45 Issuance of Organization Designation Authorizations.
183.47 Eligibility.
183.49 Authorized functions.
183.51 Personnel.
183.53 Procedures manual.
183.55 Limitations.
183.57 Responsibilities of an ODA Holder.
183.59 Continued eligibility.
183.61 Inspection.
183.63 Records and reports.
183.65 Data review and service experience.
183.67 Transferability and duration.


Sec.  183.41  Applicability and definitions.

    (a) This subpart prescribes--
    (1) The procedural requirements for obtaining an Organization 
Designation Authorization (ODA) to perform functions authorized in the 
areas of engineering, manufacturing, operations, airworthiness, and 
maintenance; and
    (2) The rules governing the holders and units of such 
authorizations.
    (b) For the purposes of this subpart--
    (1) ODA Unit means an identifiable unit of two or more individuals 
within an organization that performs the functions on behalf of the 
Administrator, according to this subpart;
    (2) ODA Holder means the parent organization that obtained an ODA 
Letter of Designation; and
    (3) ODA means the authorization to perform functions on behalf of 
the FAA.


Sec.  183.43  Application.

    (a) An application for an ODA must be submitted in a form and 
manner prescribed by the Administrator.
    (b) The application must include the following:
    (1) A description of the authorized functions requested and 
evidence of eligibility for the functions in accordance with Sec.  
183.47.
    (2) A description of the applicant's proposed organizational 
structure, including the ODA Unit as it relates to the relevant overall 
structure.
    (3) A proposed procedures manual as described in Sec.  183.53.


Sec.  183.45  Issuance of Organization Designation Authorizations.

    The Administrator may issue an ODA Letter of Designation if the 
Administrator finds that the applicant meets the applicable 
requirements of this subpart and if there is an FAA need.
    (a) The ODA Letter of Designation identifies the ODA Holder, type 
of ODA, the ODA number, expiration date, location of facilities, date 
issued, authorizing office, and authorized functions with any 
limitations; and as applicable, the categories of products, components, 
parts, appliances, ratings, or specific certificates or authorizations.
    (b) An ODA Holder must apply to and obtain approval from the 
Administrator for any changes to the authorized functions or 
limitations.


Sec.  183.47  Eligibility.

    (a) To be eligible for an ODA, the applicant must--
    (1) Have adequate facilities located in the United States, 
resources, personnel, and qualifications appropriate to the functions 
sought; and
    (2) Have sufficient experience with FAA requirements, policy, 
processes, and procedures appropriate to the functions sought.
    (b) An applicant for an ODA must meet one or more of the following 
requirements as appropriate to the functions sought:
    (1) Have been issued and hold a current type certificate, 
supplemental type certificate (STC), or parts manufacturer approval 
(PMA) under the standard procedures of part 21 of this chapter for a 
product approved under the same or predecessor regulation part for 
which an ODA is sought.
    (2) Have been issued and hold a current repair station certificate 
under part 145 of this chapter.
    (3) Have been issued and hold a current air carrier or commercial 
operating certificate under part 119 of this chapter.
    (4) Hold or have held designation authority for the issuance of 
airman certificates or authorizations.
    (5) Hold or have held designation authority for conducting pilot 
and flight engineer proficiency checks.
    (6) Have sufficient experience, as determined by the Administrator, 
in design approval; airworthiness inspection; conformity inspection; 
certification and authorizations of pilots and crew members; external 
load operations; agricultural operations; pilot schools; training 
centers; or parachute jumping operations, as appropriate for performing 
the ODA authorizations sought.
    (c) An applicant seeking functions in the area of production must 
also meet the following requirements:
    (1) For the product, components, parts, or appliances for which the 
applicant seeks functions, the applicant must have one of the following 
design approvals:
    (i) A current type certificate.
    (ii) A current supplemental type certificate.
    (iii) Design data developed by the PMA applicant under standard

[[Page 2985]]

procedures using tests and computations. This means the Administrator 
approved the data.
    (2) For the product, components, parts, or appliances for which the 
applicant is seeking designation authorization, the applicant must have 
a current Production Certificate or PMA issued under the standard 
procedures of part 21 of this chapter.
    (d) For the purposes of this section, standard procedures do not 
include transfers and licenses issued under part 21 of this chapter and 
approvals based on identicality under Sec.  21.303(c)(4) of this 
chapter.


Sec.  183.49  Authorized functions.

    (a) The Administrator may authorize, consistent with the ODA 
Holder's qualifications and experience, functions that may be performed 
by an ODA Unit.
    (b) The ODA Unit may perform, within the limits prescribed by and 
under the general supervision of the Administrator, functions 
authorized by the Administrator.
    (c) ODA functions that may be authorized by the Administrator, 
based on findings of compliance with the applicable regulations of this 
chapter, may include one or more of the following:
    (1) Approving technical data and changes to approved data.
    (2) Determining means of compliance with airworthiness standards 
previously approved by the Administrator.
    (3) Finding compliance with airworthiness standards.
    (4) Issuing STCs.
    (5) Issuing PMA supplements for test and computations or licensing 
agreements.
    (6) Approving or accepting manuals and changes/supplements to 
manuals.
    (7) Issuing certain Airworthiness Certificates and related 
approvals.
    (8) Establishing conformity requirements and determining 
conformity.
    (9) Finding compliance to part 21, subpart G necessary to issue a 
Production Limitation Record.
    (10) Conducting knowledge tests required for the certification of 
airmen.
    (11) Finding compliance with operating requirements for 
certification and authorization of pilots and crewmembers under parts 
61 and 63, and authorizations under part 91.
    (12) Issuing authorizations for determining operational competency 
or proficiency.
    (13) Issuing authorizations for parachute jumping operations under 
part 105.
    (14) Finding compliance with operating requirements for 
certification and authorization of air agencies under part 141, 
training centers under part 142, external load operators under part 
133, and agricultural operators under part 137.
    (15) Performing any other functions deemed appropriate by the 
Administrator.


Sec.  183.51  Personnel.

    Each ODA Holder must have within the ODA Unit--
    (a) A qualified ODA administrator(s); and
    (b) A staff consisting of engineering, flight test, inspection, and 
maintenance personnel appropriate for the performance of authorized 
functions, who have the experience and expertise in aircraft 
certification to find compliance, determine conformity and 
airworthiness, issue certificates; or
    (c) A staff consisting of operations personnel who have the 
experience and expertise to find compliance for the issuance of pilot, 
crew member, or operating certificates, authorizations, or endorsements 
as appropriate for the performance of functions requested.


Sec.  183.53  Procedures manual.

    An ODA may be issued under this subpart when the applicant submits 
to the FAA and obtains approval of a procedures manual. The current 
approved procedures manual must be made available to each individual of 
the ODA Unit. Changes to the procedures manual may not be implemented 
until approved by the FAA. The procedures manual must contain--
    (a) The authorized certification and approval functions and the 
appropriate categories of products, certificates, authorizations, or 
ratings for the designation requested, and any limitations;
    (b) The procedures for performing the authorized functions;
    (c) Procedures that explain the ODA organizational structure and 
responsibilities;
    (d) A description of the facilities used in performing the 
authorized functions;
    (e) A process and procedure for self-audit by the ODA Holder of the 
ODA Unit;
    (f) Procedures that document the self-audit results and demonstrate 
that all necessary corrective actions were taken;
    (g) The requirements, methods, and procedures for communicating and 
consulting with the appropriate FAA offices;
    (h) The training required for personnel performing functions 
authorized under the ODA Unit;
    (i) The content of records and manner of maintaining records;
    (j) Position descriptions and required qualifications;
    (k) The procedures for appointing ODA Unit staff members and the 
means for documenting the names of such individuals;
    (l) The method of documenting and determining the approval 
requirements for changes in facilities or organizational structure;
    (m) The procedures for obtaining and maintaining related regulatory 
guidance material;
    (n) Procedures for performing continued airworthiness functions, 
including coordinating and assisting the FAA in the investigation and 
resolution of service difficulties; and
    (o) The process and procedures for revising the procedures manual 
and notifying the FAA of the changes.


Sec.  183.55  Limitations.

    (a) An ODA Unit may perform only the certification, authorization, 
and approval functions set forth in the procedures manual.
    (b) An ODA Unit may not perform an authorized function if there has 
been a change within the ODA Unit or ODA Holder that may affect the 
Unit's qualifications or ability to perform that function (including 
but not limited to changes in location of facilities, resources, 
personnel or the organizational structure) until the Administrator is 
notified of the change and the change has been appropriately documented 
and approved as required in the procedures manual.
    (c) An ODA Unit may not issue a certificate, authorization, or 
other approval for which a finding of the Administrator is required 
until the Administrator makes that finding.
    (d) An ODA Unit is subject to any other limitations as specified by 
the Administrator.


Sec.  183.57  Responsibilities of an ODA Holder.

    The ODA Holder must--
    (a) Comply with the procedures in its approved procedures manual;
    (b) Give its personnel performing as ODA authorized representatives 
within the ODA Unit, sufficient authority and independence to enable 
them to administer and perform the authorized functions according to 
FAA regulations and policies;
    (c) Ensure that no interference or conflicting restraints are 
placed on the ODA Unit or on the personnel performing the designated 
functions while complying with this part and the approved procedures 
manual; and
    (d) Cooperate with the FAA, as necessary, in the performance of the

[[Page 2986]]

FAA's audit, oversight, and surveillance of an ODA Unit.


Sec.  183.59  Continued eligibility.

    An ODA Holder must continue to meet the requirements of this 
subpart. The ODA Holder must notify the FAA Administrator within 48 
hours of a change that could affect the ODA Holder's ability to meet 
the requirements of this subpart.


Sec.  183.61  Inspection.

    Each applicant and ODA Holder must allow the FAA to inspect 
facilities, products, components, parts, appliances, procedures, 
operations, and records associated with the authorized designation to 
determine compliance with this part.


Sec.  183.63  Records and reports.

    (a) The ODA Holder must--
    (1) Upon request of the FAA, make available, at any time, for 
examination, the records and data specified in this section; and
    (2) Identify and send the records and data specified in this 
section to the Administrator as soon as the ODA is surrendered, 
suspended, revoked, or otherwise terminated.
    (b) Each ODA Holder must maintain or ensure that the following 
records are maintained for the duration of the authorization:
    (1) The records required to approve technical data. These records 
must include any other data as prescribed by 14 CFR part 21, the 
original type inspection report, amendments to that report, required 
certification reports, and associated correspondence.
    (2) The data required to be submitted with the application for a 
production certificate, PMA and amendments thereof.
    (3) The data required to be submitted to support the issuance of 
supplemental type certificates, airworthiness certificates, export 
approvals, production limitation record, or any other approval 
authorized under this subpart.
    (4) A list of the products, components, parts, or appliances for 
which an ODA Unit performs an authorized function. For each product, 
the list must include manufacturer and model, manufacturer's serial 
number, as applicable, and any FAA identification number that has been 
issued under this subpart or under a type certificate, amended type 
certificate, supplemental type certificate, or a major repair or 
alteration as applicable.
    (5) The names (including signatures), responsibilities, and 
qualifications of individuals, who are performing or have performed 
functions under the ODA.
    (6) Applications and applicable data for issuance of certificates 
and/or approvals.
    (7) A copy of the approved or accepted manuals, including all 
changes.
    (8) Training records showing ODA Unit personnel and ODA 
administrator training.
    (9) Self-audit and corrective action records.
    (10) All other records required by the approved ODA procedures 
manual.
    (c) Each ODA Holder must maintain for 2 years--
    (1) A complete inspection record, by serial number, for each 
product manufactured and data covering the processes and tests to which 
the product's materials and parts are subjected; and
    (2) A record of service difficulties reported to the ODA Unit.
    (d) Each ODA Holder and each ODA Unit under this subpart must make 
such reports as prescribed by the Administrator.


Sec.  183.65  Data review and service experience.

    (a) If the Administrator or ODA Unit finds that a potentially 
unsafe condition exists in a product or the product does not meet the 
applicable airworthiness requirements for which approval or issuance of 
a certificate or authorization was authorized under this subpart, the 
ODA Unit, in coordination with the FAA, must investigate the matter. 
The investigation must take priority over all other delegated 
activities. The ODA Unit must report to the FAA the results of the 
investigation and action, if any, taken or proposed by the ODA Holder, 
as required by 14 CFR 21.3 and 21.99.
    (b) If the Administrator determines that further action is 
necessary for the safe operation of the product for a condition 
specified in paragraph (a) of this section, the ODA Unit must submit to 
the FAA the information in its possession necessary to support the FAA 
in implementing corrective action.
    (c) An ODA Unit performing operations certification or 
authorization under parts 61, 63, 91, 105, 133, 137, 141, or 142 of 
this chapter, that finds an unsafe or unsatisfactory condition must 
notify the Administrator and halt the certification or authorization 
process until such time as the condition or operation has been 
determined by the Administrator to be corrected and in compliance with 
the requirements.


Sec.  183.67  Transferability and duration.

    (a) An Organization Designation Authorization is effective until 
the expiration date shown on the Letter of Designation and is not 
transferable.
    (b) An ODA terminates, or may be suspended, upon any of the 
following circumstances:
    (1) The written request of the ODA Holder.
    (2) A determination by the Administrator that the ODA Unit has not 
properly performed its duty under the designation.
    (3) A determination by the Administrator that the assistance of the 
ODA Unit is no longer needed.
    (4) Any other reason the Administrator considers appropriate.

    Issued in Washington, DC, on January 13, 2004.
John J. Hickey,
Director, Aircraft Certification Service.
[FR Doc. 04-1133 Filed 1-20-04; 8:45 am]
BILLING CODE 4910-13-P