Vulcanair AD Final Regulatory Flexibility Analysi s George Euring Draft: 12/04 /2013 (Revised 04

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- 2014) Introduction and Purpose of This Analysis The Regulatory Flexibility Act of 1980 (Public Law 96

- 354) (RFA) establishes “as a principle of regulatory i ssuance that agencies shall endeavor, consistent with the objectives of the rule and of applicable statutes, to fit regulatory and informational requirements to the scale of the businesses, organizations, and governmental jurisdictions subject to regulatio n. To achieve this principle, agencies are required to solicit and consider flexible regulatory proposals and to explain the rationale for their actions to assure that such proposals are given serious consideration.” The RFA covers a wide

- range of small entities, including small businesses, not

- for

- profit organizations, and small governmental jurisdictions. Agencies must perform a review to determine whether a rule will have a significant economic impact on a substantial number of small entities. If the agency determines that it will, the agency must prepare a regulatory flexibility analysis as described in the RFA.

Final R egulatory Flexibility Analysis (FRFA) Section 60 4 of the Act requires agencies to prepare a final regulatory flexibility analysis ( FRFA) describing the impact of final rules on small entities.

Section 60 4 (a ) of the Act specifies the content of a n FRFA.

Each FRFA must contain:
1. A statement of the need for, and objectives of, the rule;
2. A statement of the significant issues raised by the public comments in response to the initial regulatory flexibility analysis, a statement of the assessment of the agency of such issues, and a statement of any changes made in the proposed rule as a result of such comments;3. The response of the agency t o any comments filed by the Chief Counsel for Advocacy of the Small Business Administration in response to the proposed rule, and a detailed statement of any change made to the proposed rule in the final rule as a result of the comments;
4. A description of a nd an estimate of the number of small entities to which the rule will apply or an explanation of why no such estimate is available;
5. A description of the projected reporting, recordkeeping and other compliance requirements of the rule, including an estimate of the classes of small entities which will be subject to the requirement and the type of professional skills necessary for preparation of the report or record; and
6. A description of the steps the agency has taken to minimize the significant economic impac t on small entities consistent with the stated objectives of applicable statutes, including a statement of the factual, policy, and legal reasons for selecting the alternative adopted in the final rule and why each one of the other significant alternatives to the rule considered by the agency which affect the impact on small entities was rejected.

1. Need For and Objective of T his Final Rule This final AD results from mandatory continuing airworthiness information (MCAI) originated by EASA and will super sede existing AD 2008

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- 11. The existing AD established safe limits for the wing structure of Vulcanair P.68 Series airplanes and requires repetitive inspection and repair of the wing and stabilator structures when the airplanes reach safe life limits

. Operation beyond existing conservative safe limits (with inspections and repair) is allowed pending establishment of final safe limits and a terminating action.This final AD significantly increases wing structure life limits (in a few cases requiring ki t modification of the wing structure), but establishes a terminating action requiring replacement of the wing structure and wing fuselage attachments and bolts when new established safe limits are reached. Prior to the wing structure safe life limit being reached, the final AD also requires special inspections of the wing structure with time limits, since new, of 6,000, 12,000, and 18,000 flight hours. 1

2. Response to Public Comments There were no public comments on the initial Regulatory Flexibility An alysis (IRFA). 3. Response to Comments b y the Chief Counsel for Adv o cacy of the Small Business Administration There were no comments made by the Chief Counsel for Advocacy. 4. A Description of and an Estimate of the Number of Small Entities to wh ich the Final Rule Will Apply This final rule will affe ct 67 U.S.

- registered airplanes. Forty eight of these airplanes are owned by private entities and 19 of these airplanes are owned by governmental entities. Of the 48 airplanes owned by private entities, one trustee owns 3 airplanes, one trustee owns 2 airplanes, and two companies each own two airplanes (2+2). The remaining 39 airplanes are owned by 39 corporations and individuals. The FAA believes that all, or nearly all, of these private secto r owners are privately held small firms, for which we cannot obtain financial records. Of the 19 airplanes owned by governmental entities, 2 are owned by the federal government and 17 are owned by state governments. We conclude that the final rule will affect a substantial number of small entities.
5. Reporting, Record Keeping, and Other Compliance Requirements of the Final Rule

1 After the fir st special inspection subsequent inspections must be every 6000 flight hours thereafter.Small entities will incur no new reporting and record

- keeping requirements as a result of this final rule.

The additiona l requirements of this final AD compared to the existing AD are the special wing structure inspections at 6,000, 12,000, and 18,000 flight hours, the terminating action to replace the wing structure when the wing structure safe limit is reached, and, for

a irplanes with serial numbers 1

- 256 for which a spar crack was found under previous Vulcanair SB65, replacement of the four main spar lower cap angles using Vulcanair Kit SB162. The costs of the required actions provided in the final AD are as follows:

Re quirement Work
hours Labor Cost Cost of Materials Total Cost Special inspections 60 $ 5,100 Wing structure replacement 300 $ 25,500 $ 443,406 $ 468,906 Replacement of lower spar cap angles with kit SB162 (S/N 1

- 256) 120 $ 10,200 $ 2,595 $ 12,795
Note s : 1. Labor cost per hour is $85. The cost of crack repair is not provided in the final AD. The requirement to replace the wing structure, at considerable cost, occurs when the airplanes are old and have low value, often less than the cost of wing structure replacement. Therefore, in many cases airplane retirement is the least cost alternative, in which case the effective cost of the requirement is the loss in airplane value net of salvage value. The requirement to replace the lower s par cap angles applies to at most ten U.S.

- registered airplanes and only if a front spar crack was previously found under SB No. 65. The expected present value cost of this requirement is thus minimal. The requirement for special inspections at 6,000, 12 ,000, and 18,000 flight hours applies to all AD

- affected airplanes. Economic Impact on Small Entities Since we have no financial information of the privately held firms that constitute most of the operators of the affected airplanes, we assess the econo mic impact of t his final ruleusing airplane values. As the Vulcanair P.68 airplanes are not listed in the Aircraft Bluebook Price Digest, we undertook an internet search and found that the resale value of older P.68 airplanes, manufactured between 1975 a nd 1984 ranged from about $80,000 to $300,000. Many of these airplanes will be subject to the special inspection at 6,000 flight hours or even the special inspection at 12,000 flight hours

. Using a significant economic impact criterion of 2% of airplane value, for operators of many of these airplanes there is a significant economic impact based on just one $5,100 inspection. Taking into account the present value cost of 2

- 3 possible future inspections and possible repair, as well as the present value cos t of forced early retirement, there is a significant economic impact on most if not all of these operators. We therefore conclude that this final rule will have a significant impact on a substantial number of small firms.

6 . Steps the Agency has Take n to Minimize the Significant Economic Impact on Small Entities Because of an unsafe condition that is likely to exist or develop on the airplanes identified in this final AD, there is no feasible significant alternative to requiring the actions of this f inal AD. Therefore, there are no steps that the Agency can take to minimize the significant economic impact on small entities. Therefore this final rule will have a significant economic impact on a substant ial number of small entities.