36244 Federal Register / Vol. 65, No. 110 / Wednesday, June 7, 2000 / Rules and Regulations

DEPARTMENT OF TRANSPORTATION

Federal Aviation Administration

14 CFR Parts 11, 21, and 25

[Docket No. 28903; Amdt. No. 11–45, 21–

77, 25–99]

RIN 2120–AF68

Type Certification Procedures for

Changed Products

AGENCY: Federal Aviation

Administration (FAA), DOT.

ACTION: Final rule; request for

comments.

SUMMARY: This document amends the

procedural regulations for the

certification of changes to type

certificated products. These

amendments affect changes

accomplished through either an

amended type certificate or a

supplemental type certificate. The

amendments are needed to address the

trend toward fewer products that are of

completely new design and more

products with multiple changes to

previously approved designs. This final

rule action will enhance safety by

applying the latest airworthiness

standards, to the greatest extent

practicable, for the certification of

significant design changes of aircraft,

aircraft engines, and propellers.

DATES: Effective June 7, 2000.

Mandatory compliance dates are

December 10, 2001 for transport

category airplanes and restricted

category airplanes that have been

certified using transport category

standards, and December 9, 2002 for all

other category aircraft and engines and

propellers. Comments on the

information collection requirements and

the Regulatory Evaluation section,

which includes the regulatory flexibility

analysis, must be submitted on or before

August 7, 2000.

ADDRESSES: Comments for this final rule

should be mailed or delivered, in

triplicate, to the Federal Aviation

Administration, Office of the Chief

Counsel, Attn: Rules Docket (AGC–200),

Docket No. 28903, Room 915G, 800

Independence Avenue, SW,

Washington, DC 20591. Comments

submitted must include the regulatory

docket or amendment number.

Comments may also be sent

electronically to the following Internet

address: 9–NPRM–CMTS@faa.gov.

Comments may be filed or examined in

Room 915G on weekdays, except

Federal holidays, between 8:30 a.m. and

5:00 p.m.

FOR FURTHER INFORMATION CONTACT:

Randall Petersen, Certification

Procedures Branch (AIR–110), Aircraft

Certification Service, Federal Aviation

Administration, 800 Independence

Avenue, SW, Washington, DC 20591,

telephone (202) 267–9583.

SUPPLEMENTARY INFORMATION:

Compliance Dates

This final rule requires that major

changes to transport category airplanes

and restricted category airplanes that

have been certified using transport

category standards, be evaluated under

the new rules beginning 18 months from

today’s date of publication in the

Federal Register. Major changes to all

other category aircraft and engines and

propellers are required to be evaluated

under the new rules beginning 30

months from today’s date of publication

in the Federal Register.

Comments Invited

In the NPRM, the FAA certified that

the proposed rule would not have a

significant economic impact on a

substantial number of small entities.

The FAA has revisited the question of

the potential impact on small entities

and has determined that an analysis

under the Regulatory Flexibility Act of

1980, as amended, is required. This

analysis and a complete analysis of

potential costs and benefits are set out

in the Regulatory Evaluation Summary

portion of this preamble. As stated in

this final rule document, the FAA

determined that there could be a

significant impact on a substantial

number of small entities. Additionally,

the cost analysis of the regulatory

evaluation has undergone a substantial

revision, and comments on the entire

regulatory evaluation are requested.

Since this rule is being adopted

without prior notice and prior public

comment on the increased information

collection requirements listed in the

Paperwork Reduction Act section of this

document, interested persons are also

invited to submit such written data,

views, or arguments, as they may desire,

relating to the information collection

requirements.

Pending the evaluation of the public

comments, the FAA has decided to

proceed with due diligence. This rule

differs from the NPRM and has been

revised to address the concerns of the

majority of small entities likely to be

affected by the rule. The FAA will

consider and respond to comments on

the Regulatory Flexibility Analysis and

the information collection requirements

that are subject to review by the Office

of Management and Budget (OMB)

under the Paperwork Reduction Act of

1995 before the compliance dates

published in this document.

The FAA will consider all comments

received, and will publish in the

Federal Register a summary of the

disposition of those comments and, if

appropriate, changes to the rule that

may result from consideration of those

comments.

Comments must include the

regulatory docket or amendment

number and must be submitted in

triplicate to the address above. All

comments received, as well as a report

summarizing each substantive public

contact with FAA personnel on this

rulemaking, will be filed in the public

docket and will be considered by the

FAA. The docket is available for public

inspection before and after the comment

closing date.

Commenters who want the FAA to

acknowledge receipt of their comments

submitted in response to this final rule

must include a preaddressed, stamped

postcard with those comments on which

the following statement is made:

‘‘Comments to Docket No. 28903.’’ The

postcard will be date-stamped by the

FAA and mailed to the commenter.

Availability of Final Rule

An electronic copy of this final rule

may be downloaded, by using a modem

and suitable communications software,

from: the FAA regulations section of the

FedWorld electronic bulletin board

service (telephone: (703) 321–3339), or

the Government Printing Office’s (GPO)

electronic bulletin board service

(telephone: (202) 512–1661).

Internet users may reach the FAA’s

web page at http://www.faa.gov/avr/

arm/nprm/nprm.htm, or the GPO’s web

page at http://www.access.gpo.gov/nara,

for access to recently published

rulemaking documents.

Any person may obtain a copy of this

final rule by submitting a request to:

FAA, Office of Rulemaking, Attention:

ARM–1, 800 Independence Avenue,

SW, Washington, DC 20591; or by

telephoning (202) 267–9680. Individuals

requesting a copy of this final rule

should identify their request with the

amendment number or docket number.

Persons interested in being placed on

the mailing list for future rulemaking

documents should request from the

above office a copy of Advisory Circular

No. 11–2A, Notice of Proposed

Rulemaking Distribution System, that

describes the application procedure.

Small Business Regulatory Enforcement

Fairness Act

The Small Business Regulatory

Enforcement Fairness Act (SBREFA) of

1996, requires the FAA to comply with

Federal Register / Vol. 65, No. 110 / Wednesday, June 7, 2000 / Rules and Regulations 36245

small entity requests for information or

advice about compliance with statutes

and regulations within its jurisdiction.

Therefore, any small entity that has a

question regarding this document may

contact their local FAA official. Internet

users can find additional information on

SBREFA on the FAA’s web page at

http://www.faa.gov/avr/arm/sbrefa.htm

and may send electronic inquiries to the

following Internet address: 9–AWA–

SBREFA@faa.gov.

Background

Statement of the Problem

Under the regulations in effect prior

to the early 1940’s, an applicant for a

changed product, such as an alternate

engine installation, was required to

apply for a new type certificate and

comply with the standards current at

the time of application. This did not

present an unreasonable burden on the

applicant then because the

airworthiness standards did not change

appreciably over short periods of time.

That is, the standards current at the time

of an application for a change were

essentially the same as those with

which the original product had to

comply. Since the early 1940’s,

however, rapid changes in technology

have resulted in significant changes in

the airworthiness standards over

relatively short periods of time.

Therefore, an applicant for an extensive

change to a type certificated product,

which required a new type certificate,

could be faced with complying with

safety standards that varied

considerably from the standards for the

original product. To relieve this

situation, the FAA’s predecessor agency

required an application for a new type

certificate only if the change was quite

extensive.

In recent years, a trend has developed

towards fewer products that involve

substantial design changes that would

require a new type certificate. In many

cases, over a period of time, a series of

changes could permissively be made to

a product by amending its original type

certificate such that the resultant model

is substantially different from the

original model. Although each changed

product in such a series of changes may

differ little from its immediate

predecessor, the changes could

collectively result in a product with

considerable differences from the

original product. As a result, many

changed aeronautical products have not

been required to demonstrate

compliance with all the recent

airworthiness standards. This rule is

intended to clarify under what

conditions more recent airworthiness

amendments need to be applied to

changed products.

In order to achieve this goal, the FAA

published a proposed rule (Notice No.

97–7; 62 FR 24288, May 2, 1997) to

amend the procedural regulations for

the certification of changes to type

certificated products whether the

change is accomplished through an

amended type certificate or through a

supplemental type certificate. The

FAA’s purpose in including

supplemental type certificates (STC)

was to ensure that all significant

changes to a type certificated product

would follow the same procedure. A

related purpose was to avoid creating a

loophole that would allow a type

certificate (TC) applicant to choose the

STC process thereby avoid complying

with later amendments.

History of Type Certification

Title 49 U.S.C. 44701 authorizes the

FAA Administrator to promote safety of

flight of civil aircraft in air commerce by

prescribing minimum standards

governing the design and construction

of aircraft, aircraft engines, and

propellers as may be required in the

interest of safety, and such minimum

standards governing appliances as may

be required in the interest of safety.

Under 49 U.S.C. 44704, the FAA may

issue type certificates, including

supplemental type certificates, for

aircraft, aircraft engines, propellers, and

certain appliances.

The general certification procedures

for products (aircraft, aircraft engines,

and propellers) and parts are set forth in

14 CFR part 21 (part 21). As described

in §§ 21.13 and 21.15, any interested

person may apply for a type certificate

by submitting an application

accompanied by the required

documentation to the FAA. Sections

21.16 through 21.21, 21.101, and 21.115

specify certain regulations and

designate the applicable airworthiness

standards for type certification of both

new and changed products. The term

‘‘changed product’’ is used throughout

part 21 and throughout this preamble to

include changes that are made through

an amended type certificate, as well as

those made under a supplemental type

certificate. A person who is not the type

certificate holder has only the STC

option while the type certificate holder

has the option of applying either for an

amended type certificate or for an STC.

Section 21.17 designates the

applicable regulations for the issuance

of type certificates. In order to be issued

a type certificate, the applicant must

show that the product complies with the

airworthiness standards contained in

one of the following 14 CFR parts, as

applicable: Part 23 for normal, utility,

acrobatic, and commuter category

airplanes; part 25 for transport category

airplanes; part 27 for normal category

rotorcraft; part 29 for transport category

rotorcraft; part 31 for manned free

balloons; part 33 for aircraft engines;

part 35 for propellers; and part 21

(§ 21.17(b) and (f)) for special classes of

aircraft and primary category aircraft,

respectively.

The airworthiness standards in these

parts of the regulations may be amended

as needed to reflect continually

changing technology, correct design

deficiencies, and provide for safety

enhancements. An applicant for a type

certificate is required under current

§ 21.17, with certain exceptions, to

show that the product meets the

applicable airworthiness standards that

are in effect on the date of the

application. The exceptions include

instances in which the Administrator

specifies otherwise, or in which the

applicant either elects or is required

under specific circumstances to comply

with later effective amendments. In

addition, the Administrator may

prescribe special conditions.

Under § 21.16, special conditions may

be prescribed if the Administrator finds

that the existing airworthiness standards

do not contain adequate or appropriate

safety standards because of novel or

unusual design features of the product

to be type certificated relative to the

design features considered in the

applicable airworthiness standards.

Also, under § 21.21(b)(1), if any

applicable airworthiness standards are

not complied with, an applicant may

nevertheless be entitled to a type

certificate if the Administrator finds that

those standards not complied with are

compensated for by factors that provide

an equivalent level of safety. Such

determinations are commonly referred

to as ‘‘equivalent safety findings’’ and

are made with respect to the level of

safety intended by the applicable

standard. In addition, under

§ 21.21(b)(2), an applicant may be

denied a type certificate if the

Administrator finds an unsafe feature or

characteristic of the aircraft for the

category in which type certification is

requested, even though the aircraft may

comply fully with the applicable

airworthiness standards.

Taken together §§ 21.16, 21.17, and

21.21 designate the applicable

airworthiness regulations for type

certification and accommodate those

circumstances when the airworthiness

standards do not adequately cover the

design features of a product. These

sections recognize and balance the

following four important considerations:

36246 Federal Register / Vol. 65, No. 110 / Wednesday, June 7, 2000 / Rules and Regulations

(1) The FAA is obligated, under 49

U.S.C. 44701, to keep the airworthiness

standards required in the interest of

safety, (i.e., parts 23, 25, 27, 29, 31, 33

and 35) as current as practicable.

(2) The type certificate applicant

needs to know, early in a certification

program, what the applicable

airworthiness standards will be in order

to finalize the detailed design of its

product and to enable the applicant to

make reasonable performance

guarantees to its potential customers.

(3) In the interest of safety, rapid

technological advances presently being

made by the civil aircraft industry

necessitate that the FAA be able to issue

special conditions to address novel or

unusual design features that it has not

yet had an opportunity to address in the

airworthiness standards through the

general rulemaking process, or to

address novel or unusual design

features that were not considered by the

appropriate airworthiness standards

applicable to changes to type

certificates.

(4) It is also important to allow

flexibility in design. Wherever possible,

the airworthiness standards of 14 CFR

Chapter 1, subchapter C, are

intentionally written as performance

standards, and the procedural

regulations permit design changes over

the operational life of a product.

History of Type Certification of Changes

Part 21 designates the applicable

airworthiness standards for changed

products. Section 21.19 describes the

circumstances in which an applicant for

type certification of a changed product

must apply for a new type certificate. As

previously discussed, before the early

1940’s, an applicant for a changed

product, such as an airplane with an

alternative engine installation, was

required to apply for a new type

certificate. For the reasons already

described, by the early 1940’s, an

application for a new type certificate

was required only if the change was

quite extensive.

Under § 21.101, the original type

certificate may be amended to include

changes to the product when the

applicant demonstrates that it complies

with the same airworthiness standards

as the original product plus appropriate

special conditions, and the change does

not warrant making a new application

for a type certificate under § 21.19.

Because § 21.101(a) and (b) are

incorporated by reference in § 21.115,

these procedures are equally applicable

to persons applying for supplemental

type certificates.

Section 21.101(a) requires that an

applicant for a change to a type

certificate must comply with either the

regulations incorporated by reference in

the type certificate or the applicable

regulations in effect on the date of

application, plus any other amendments

the Administrator finds to be directly

related. The ‘‘regulations incorporated

by reference’’ are the regulations that

were the certification basis for the

original issuance of the type certificate

or any later regulations that were the

certification basis for any changes to the

original type certificate.

If an applicant chooses to show

compliance with the regulations in

effect on the date of the application for

the change, the applicant must also

comply with any other amendments that

are directly related. In some instances,

a regulation may have been amended to

become less stringent, while a related

regulation has become more stringent.

In this situation, an applicant must also

comply with the related more stringent

regulation. Current § 21.101(a) does not

otherwise require compliance with later

amendments and does not grant the

Administrator the authority to require

compliance with later regulations as a

method to increase the level of safety of

a product.

An applicant for a change to a type

certificated product is responsible for

showing that the product, as altered, not

just the change itself, complies with the

existing certification basis, because

areas that have not been changed may

be affected by the change. However, the

applicant need not resubstantiate those

areas of the product where the original

substantiation has not been invalidated

by the change.

Current § 21.101(b) pertains to

changes for which the regulations

incorporated by reference do not

provide adequate standards. Such

changes generally involve features that

were not envisaged at the time the

regulations incorporated by reference

were adopted and are, therefore, novel

or unusual with respect to those

regulations. For these changes, the

applicant must comply with regulations

in effect on the date of application for

the change as found necessary to

provide a level of safety equal to that

established by the regulations

incorporated by reference. In this case,

the applicant is not able to select any

amendment of the regulation it chooses

between those incorporated by reference

and those in existence on the date of the

application. When regulations in effect

on the date of application for the change

fail to provide adequate standards, the

applicant must comply with special

conditions to provide a level of safety

equal to that established by the

regulations incorporated by reference.

Trends in Type Certification of Changes

In recent years, a trend has developed

toward fewer products that are of

completely new designs, which would

require new type certificates. Over a

period of time, a series of changes to an

original product may have been made so

that the current model is considerably

different from the original model.

Although each changed product in such

a series of changes may differ little from

its immediate predecessor, the changes

could result collectively in a product

with substantial differences from the

original product.

Another trend in manufacturing is to

keep products in production over

several decades. Some currently

manufactured airplanes have, for

example, evolved from airplane models

originally type-certificated 25 years ago.

This does not imply that those airplanes

are ‘‘unsafe,’’ because they do, in

practice, have features that address the

intent of most of the current

airworthiness standards. However,

current procedural regulations (part 21)

do not require that changed products

demonstrate compliance with all the

current airworthiness standards.

The basic premise behind the FAA’s

current policies for the procedures and

airworthiness standards for type

certification is that the highest possible

degree of safety in the public interest

should be achieved by products being

certificated at any given time. In dealing

with this premise, the FAA has had to

continually weigh the desire for the

highest level of safety with the cost to

the manufacturers, operators, and

traveling public for achieving the

highest possible degree of safety in the

public interest. This balance between

safety and cost has been exacerbated by

the introduction of highly sophisticated

products whose development and

manufacture have become enormously

expensive. As already stated, this is one

reason manufacturers choose to produce

more and more changed products that,

by the FAA regulations, are not required

to have new type certificates.

The FAA maintains that the issue

should not be whether a product is

produced under a new type certificate

or a changed one. The issue is whether

or not the level of safety of the product,

embodied in the airworthiness

standards it complies with, is as high as

practicable. In addition, to require areas

unaffected by the change to comply

with the later standards could not only

be unreasonably costly but could reduce

the level of safety of the product due to

unforeseen developmental problems.

The manufacturers are constantly

issuing service information that

Federal Register / Vol. 65, No. 110 / Wednesday, June 7, 2000 / Rules and Regulations 36247

describes approved alterations that

users may make to improve the level of

safety of the product.

When establishing the highest

practicable level of safety for a changed

product, the FAA has determined that it

is appropriate to assess the service

history of a product, as well as the later

airworthiness standards. It makes little

sense to mandate changes to well

understood designs, whose service

experience has been acceptable, merely

to comply with new standards. The

clear exception to this premise is if the

new standards were issued to address a

deficiency in the design in question, or

if the service experience is not

applicable to the new standards. This

consideration of airworthiness

standards and service experience should

form the basis for developing the

certification basis for a change in a

product.

While it can be argued that, for

consistency, new airworthiness

standards should apply across-the-board

to the entire aircraft fleet, application of

new standards would not be practical in

every case. Although newly designed

aircraft are required to meet all

applicable current airworthiness

standards, in many cases a product

being changed, for which only an

amended type certificate is needed, is

required to meet only the standards

referenced in the original type

certificate or in an amended type

certificate. Thus, there may be a

considerable difference between the

standards required for a new product

and for a product undergoing change. A

product undergoing change that met the

applicable standards at the time of

original or amended type certification is

not currently required to meet more

current airworthiness standards, except

in those instances where retroactive

regulations have been issued or the

applicant elects to comply with later

amendments.

In recent rulemakings, the FAA has

carefully considered whether

corresponding retroactive action is

warranted whenever a change to the

airworthiness standards for type

certification was proposed. In those

cases where it has been determined that

an across-the-board safety benefit

commensurate with the cost could be

achieved, the rulemaking has also

included a proposal to change the

relevant operating regulations to require

newly manufactured airplanes or

airplanes in service, or both, to comply

with the new standards, regardless of

whether such compliance would be

required as a condition of type

certification. For instance, some of the

regulations implemented in recent

revisions to part 25 for newly designed

airplanes were required for the existing

fleet and were implemented in the

operating regulations, such as part 121.

Recent FAA Actions

In addition to the safety

considerations previously described,

there has also been a growing

international concern that some

changed products are given an unfair

competitive advantage over those that

are of new design and must comply

with later standards.

Because of these concerns, beginning

in 1989 the FAA participated in an ad

hoc committee sponsored by the

Aerospace Industries Association of

America, known as the International

Certification Procedures Task Force

(ICPTF). In addition to the FAA, this

task force included representatives of

the European Joint Aviation Authorities,

Transport Canada Civil Aviation

Authority (TCCAA), Aerospace

Industries Association of America, Air

Transport Association of America,

General Aviation Manufacturers

Association, International Air Transport

Association, The European Association

of Aerospace Industries (AECMA),

Aerospace Industries Association of

Canada, Air Line Pilots Association, and

Association of European Airlines.

The ICPTF was organized to develop

the philosophy and the necessary

regulatory text and advisory material

that would provide for the

implementation of later regulatory

amendments applicable to aeronautical

products undergoing change, products

in production, and products in service.

The specific tasks of the ICPTF were: (1)

develop the type certification

philosophy for changes to aeronautical

products, including revisions to the

regulations and associated advisory

material; (2) develop the necessary

guidance information on the use of

‘‘service experience’’ in the type

certification process; and (3) develop a

method to evaluate the safety impact

and cost effectiveness of revisions to the

airworthiness standards.

In order to develop future proposed

safety standards by using a system-type

analysis, the FAA chartered a committee

of safety experts, known as the Aviation

Rulemaking Advisory Committee

(ARAC), on February 5, 1991. This

committee established the International

Certification Procedures Working

Group, which consisted of the original

ad hoc committee formerly known as

the ICPTF. The task assigned to this

working group was to present to ARAC

various proposals pursuant to its area of

expertise. ARAC then had the option to

submit these recommendations to the

FAA, and the FAA would decide

whether or not to issue a proposal based

on the ARAC recommendations.

The working group presented to

ARAC a recommended NPRM and

associated advisory material concerning

the type certification procedures for

changes to aeronautical products,

changed products, and products already

in service. ARAC, in turn, submitted

these documents, dated October 14,

1994, as recommendations to the FAA.

The rulemaking proposed by the FAA

in Notice No. 97–7 reflects the ARAC

recommendations in the type

certification procedures for changed

products with mostly minor changes in

the preamble to the proposed rule. The

Joint Aviation Authorities (JAA) have

published similar proposed changes.

That document was circulated for

public comment on June 10, 1996, in

NPA 21–7.

At the same time the FAA issued

Notice No. 97–7, the FAA announced

the availability of a proposed

companion advisory circular (AC) for

public comment. While the FAA’s

proposed AC was based on a draft

submitted by the ARAC, the FAA’s

version was significantly reorganized

and rewritten except for the proposed

appendices which were identical to

those recommended by the ARAC. Also,

the FAA stated in Notice No. 97–7 that

while the ARAC recommended that the

safety benefit resource evaluation guide

included in the proposed AC (Appendix

2) be considered an acceptable means of

showing compliance with the

exceptions of proposed § 21.101(b), the

FAA included this guide for information

purposes only. The FAA stated, ‘‘The

safety benefit resource guide does

describe some of the kinds of issues that

the applicant would address, and the

FAA would consider, in determining

the certification basis in accordance

with the proposed rule.’’

After the comment period on Notice

No. 97–7 closed, the FAA tasked the

ARAC to review the public comments

and to recommend to the FAA a

disposition of the comments and a draft

final rule document. This final rule

reflects most of the work of the ARAC

under this task. This work was

accomplished largely through a series of

ARAC working group meetings held

between August of 1997 and July of

1998. Because of an FAA imposed

deadline date of September 1, 1998, the

working group members submitted their

comments to the ARAC based on a draft

final rule dated August 4, 1998. The

August 4, 1998, draft was based on the

working group’s previous recommended

disposition of comments and on

discussions and agreements reached at

36248 Federal Register / Vol. 65, No. 110 / Wednesday, June 7, 2000 / Rules and Regulations

the final working group meeting held on

July 7–8, 1998. The ARAC, at FAA’s

request, forwarded a report that

included this draft and the comments to

the FAA at the August 24, 1998, issues

meeting. At the time of the report,

consensus had not been reached on the

draft final rule. Because many of the

comments received from working group

members and from the full ARAC

members before and at the August 24

meeting duplicated comments that were

made on the NPRM, the FAA has not

attempted to deal separately and

repetitively in this preamble with these

post-comment period ARAC comments.

FAA Rulemaking on Changed Products

This rulemaking amends the type

certification procedures for changes to

type certificated products to bring the

certification basis for significantly

changed products (whether the change

is by amended type certificate,

supplemental type certificate, or

amended supplemental type certificate)

closer to the current regulations. The

intent is to ensure that when an

essentially new product is developed

through a series of changes, the final

product achieves a level of safety

similar to that of a comparable new

product.

By this rulemaking, the FAA requires

all proposed changes for all typecertificated products to comply with the

latest amendments of the airworthiness

standards, unless one of the stated

exceptions applies. The long term result

of this rule change will be that a

changed product will have a

certification basis that provides a

similar level of safety to that provided

by the certification basis of a new type

certificate for the same product, except

as provided in the rule.

As discussed more fully later in this

preamble, the final rule contains an

approach that was not discussed in the

NPRM. This approach should help

minimize the procedural burden for

applicants for amended type certificates

and STC’s for aircraft (other than a

rotorcraft) with a maximum weight of

6,000 pounds or less and for nonturbine rotorcraft with a maximum

weight of 3,000 pounds or less.

As stated, the FAA will issue an

advisory circular based on this

rulemaking. This advisory circular will

provide guidance on determining the

certification basis for changed

aeronautical products, including

identifying the conditions under which

it will be necessary to apply for a new

type certificate. For the reasons

discussed below, this final advisory

circular will follow the draft AC

originally proposed by the ARAC, with

changes as necessary to conform to the

final rule language and to international

harmonization.

Discussion of Comments Received on

the NPRM

The FAA received over 90 comments

on the NPRM. Commenters included

aircraft manufacturers and operators,

organizations representing these groups,

foreign entities, and individuals.

More than half of the comments focus

on the issue of applicability of the

proposed rule changes to supplemental

type certificates (STC’s) and type

certification amendments for small part

23 airplanes, particularly older

airplanes. Virtually all of these

commenters state that the proposed rule

and advisory circular were designed for

transport category aircraft by persons

involved in manufacturing or using

transport category aircraft. These

commenters urge that non-transport

category aircraft not be included in the

final rule. Several request an extension

of, or reopening of, the comment period,

stating that the in-service modifier

community was not involved in the

development of the NPRM and asserting

that much of this community was not

even aware of the NPRM until after the

comment period closed. (For further

detail, see discussion of comments

under the heading ‘‘Applicability to

General Aviation Aircraft and to

Supplemental Type Certificates.’’)

Many of the commenters request that

the preamble and advisory circular be

rewritten to reflect more closely the

recommendations by the Aviation

Rulemaking Advisory Committee

(ARAC). Many of these commenters

state that one of the main purposes of

this NPRM was to achieve

harmonization with the Joint Aviation

Authorities (JAA) and that to the extent

the FAA departed from the ARAC

recommendation, harmonization was

lost because the JAA Notice of Proposed

Amendment (NPA) was very closely

aligned with the ARAC recommended

document. (For further detail, see

discussion of comments under ‘‘ARAC

Recommendation and Harmonization’’

and ‘‘Rewrite of AC from ARAC Draft.’’)

Comments that suggest specific

substantive changes to the proposed

rule language are summarized and

addressed under the section-by-section

portion of this preamble.

Many commenters made specific

comments on the proposed advisory

circular. These comments are not

discussed in this document but are

being considered by the FAA.

In view of the harmonization goal of

this rulemaking and the intended close

relationship between the FAA’s Notice

No. 97–7 and the JAA’s NPA 21–7, the

FAA included the comments received

by the JAA in the FAA public docket

and the ARAC reviewed the relevant

comments on NPA 21–7. Except for the

issue of applicability to aircraft

modifiers, the comments on NPA 21–7

were mostly from the same entities that

commented on this rulemaking and

these comments did not differ

significantly from the comments on

FAA’s Notice No. 97–7. Therefore, this

document does not separately address

the comments received on NPA 21–7.

General and Miscellaneous Comments

Comments: One commenter, in

reference to the preamble section

‘‘Recent FAA Actions,’’ says that the

FAA’s mandate, under 49 U.S.C.

§ 44701, is to promote safety and safety

regulations. This commenter says that

the FAA has no mandate or legal basis

for ‘‘making regulations designed to

manipulate competitive forces or

marketplace decisions.’’

Fairchild Aircraft Inc. (Dornier) also

states its concern that the real problem

being addressed by the FAA is not a

safety problem, but rather the potential

for an unfair trade advantage.

Hiller Aircraft expresses opposition to

the proposal and states that current

§§ 21.16, 21.19, and 39.1 already

provide the FAA with ‘‘the regulatory

flexibility to prescribe applicable rules

for any newly proposed design, any

design being considered for change and

any design found to be unsafe through

field experience.’’ Hiller says that the

proposal would be administratively

burdensome on the FAA and

manufacturers, while not providing the

FAA with any additional regulatory

power. Fairchild also concludes that the

proposed rule would only create more

bureaucratic paperwork, and increase

the cost of the certificated product

without compensating increases in

safety.

FAA Response: While international

concern over potential unfair

competitive advantages that could result

if different standards are applied to

similar changed products, was cited as

one of the triggering events for this

rulemaking, that concern was not the

basis for justifying the changes proposed

in Notice No. 97–7. As the NPRM

preamble described at some length, and

as summarized in the Background

section of this preamble, the FAA’s

justification for the proposed change

was a safety justification, namely, to

ensure that significantly changed

products comply with later

requirements that apply to new

products to the maximum extent

practicable.

Federal Register / Vol. 65, No. 110 / Wednesday, June 7, 2000 / Rules and Regulations 36249

With respect to the possible increased

administrative burden on the FAA, this

rule will, to some extent, decrease the

FAA’s administrative burden. Under the

present rule, the FAA must demonstrate

that the regulations incorporated by

reference in the type certificate are not

adequate to achieve the established

level of safety when an applicant

applies for a change to a type certificate.

Under the proposed and final rule

language, except for certain specified

smaller aircraft, the initial burden will

be on the applicant to show that it

should not be required to comply with

the regulations in effect on the date of

the application because it meets one of

the stated exceptions. As stated in the

NPRM, compliance with the regulations

in effect on the date of application

where required by this rule will

enhance the level of safety for the

changed product. The burdens on the

applicants are unavoidable if the

objectives of the rule are to be achieved.

Advisory Circular 21.101–XX that will

be issued prior to the mandatory

compliance dates of this rule will

contain guidance intended to reduce the

administrative burden on both the

applicant and the FAA.

Retroactive and Retrofit Requirements

Comments: The European Association

of Aerospace Industries (AECMA) states

that the ‘‘key point in ensuring steps

forward in safety is to clearly define the

applicability of the new standards at the

time of the rule elaboration.’’

Applicability to changed, newly

manufactured or in-service aircraft may

be mandated through appropriate

amendments to CFR §§ 23.2, 25.2, 27.2

and 29.2 (special retroactive

requirements), or to the operational

regulations (for instance part 121,

subpart J).

AECMA also states that the

methodology used to assess possible

retroactive applicability of new

standards should follow the principles

of AC 21.101–XX, Appendix 2, with the

necessary adjustments for each category

of product. In addition, the

harmonization process should be

extended to the retroactive

requirements. While promoting the

implementation of the real safety

improvements, this approach would

allow the manufacturers to clearly

anticipate the requirements applicable

to their products, instead of entering

into case by case non-public discussions

with possible unequal treatment.

FAA Response: Whenever the FAA

adopts a new design requirement, it

determines whether to apply that

requirement to previously type

certificated, but changed products,

through a retroactive design

requirement, or to previously

manufactured aircraft through an

operating rule. However, that

determination is not the same as the

determination that must be made when

the FAA receives an application for a

changed product. The determination of

which amendments should be applied

depends on the safety benefits to be

realized from the proposed change, and

the design, operational, and other cost

burdens. Therefore, the FAA does not

agree that the generalized normal

retroactive and retrofit determinations

are sufficient for dealing with specific

changed products.

Consistency of Application within FAA

Comments: Raytheon suggests that in

conjunction with the implementation of

this rule the FAA should consider an

Aircraft Certification Office (ACO)

oversight program that would include

(1) annual review of ACO’s and new

changes to type certificated products; (2)

quarterly report submittal from ACO’s

stating amendment level of rules

mandated for incremental changes; and

(3) feedback from the FAA Directorate if

it sees a consistent pattern from one

ACO where the later rule amendments

are not being imposed. Raytheon’s

recommendations are intended to

ensure more equitable compliance

requirements to avoid giving some

region or manufacturer an economic

advantage. Raytheon also recommends

that the FAA implement an appeal

process for an applicant who strongly

disagrees with an ACO decision.

FAA Response: One of the tasks

assigned to the ARAC was to assist the

FAA in developing follow-up training

for both government and industry to

facilitate implementation of this final

rule. It is the FAA’s intent that all FAA

employees called on to implement this

final rule will receive appropriate

training and implementation

documents, such as internal orders and

handbooks. The FAA will also

implement other appropriate follow-up

actions to ensure that the rule is being

implemented uniformly throughout the

FAA.

The ability of an applicant to appeal

an ACO certification decision would not

be changed by this rule. If not sooner

resolved by the FAA appeals process

(through the accountable Directorate),

such a decision would be, ultimately,

adjudicated as part of a certificate

denial. A certificate denial is a ‘‘final

order of the Administrator,’’ appealable

to a U.S. Court of Appeals pursuant to

49 U.S.C. § 46110.

Potential for Adverse Safety Effect

Comments: One commenter predicts

that the likely effect of enacting the

proposed rule will be that no changes to

existing aircraft designs will be

incorporated due to the increased cost

of certification. As a result, no safety

improvements would occur.

Representatives of the in-service

modifier community make the same

point with respect to safety

improvements that would require an

STC. (See discussion under

‘‘Applicability to General Aviation

Aircraft and to Supplemental Type

Certificates’’).

FAA Response: The FAA does not

agree that this rule will be a

disincentive. The FAA recognizes the

impact on airlines and independent

modification companies of the

requirement to have the data in order to

determine significance. However, the

FAA needs, in the interest of safety, to

ensure that all significant changes move

to the latest certification basis for

affected areas when the change would

contribute materially to the level basis

of safety of the changed product and

would be practical.

ARAC Recommendation and

Harmonization

Comments: The most common issue

discussed by the commenters (who were

not focused on the in-service modifier/

STC issue) related to the differences

between the FAA NPRM and

accompanying draft AC and the ARAC

documents, and the resulting lack of

harmonization with the JAA NPA which

the commenters state is closer to the

ARAC recommendation.

The United Kingdom’s Civil Aviation

Authority (CAA) states that in the

NPRM the FAA policy appears to be

moving towards accepting previously

certificated products with a greater level

of change before requiring certification

as a new product. CAA comments

support the need to positively limit the

extent to which manufacturers should

be allowed to change products without

being required to certificate a product to

the latest airworthiness standards. CAA

suggests that the harmonization of FAA

and JAA requirements remains

incomplete until it is clearly understood

by both FAA and JAA the extent to

which the criteria for a changed product

is to be applied in a particular instance.

The General Aviation Manufacturers

Association (GAMA) submitted the

complete ARAC recommendation dated

October 14, 1994, with its comment and

requests that the FAA reconsider the

original ARAC recommendation in

developing the final rule. Other

36250 Federal Register / Vol. 65, No. 110 / Wednesday, June 7, 2000 / Rules and Regulations

commenters that state their concern that

the FAA’s NPRM and draft advisory

circular were significantly different

from the original ARAC

recommendation (and therefore

different from JAA’s NPA 21–7) are the

European Association of Aerospace

Industries (AECMA), Pratt and Whitney

Canada, Bombardier, and the Aerospace

Industries Association.

FAA Response: A number of the

commenters suggest rewording of the

NPRM preamble to make it consistent

with the document submitted by the

ARAC to the FAA. The FAA has

considered the substance of these

comments and where appropriate, they

are addressed in this final rule

preamble. In general, the differences

between Notice No. 97–7 and the

document submitted to the FAA by the

ARAC involved additional preamble

language included by the FAA to clarify

the intent of the proposed changes. With

one exception the proposed rule

language in Notice No. 97–7 was

identical to the rule language

recommended by the ARAC. The draft

AC, which is a non-binding tool to aid

compliance, is discussed later in this

preamble.

Applicability to General Aviation

Aircraft and to Supplemental Type

Certificates

Comments: Over half of the comments

received focus exclusively on the

question of the applicability of the

proposed changes to aircraft that are not

certificated under part 25 (i.e., to nontransport category aircraft, frequently

referred to by commenters as ‘‘general

aviation aircraft’’) and the applicability

to supplemental type certificates in

general. Most of these commenters state

that part 23 aircraft should be entirely

excluded from this rulemaking. The

specific substantive statements are

summarized below.

The thrust of the comments from the

general aviation and in-service modifier

communities received in the public

docket fell into one or more of the

following categories:

1. The in-service modifier community

was not aware until late in the comment

period that the ARAC recommendation

and the resulting FAA Notice No. 97–7

would affect it at all. Several request an

extension of the comment period.

2. The basis for Notice No. 97–7 was

developed and recommended by an

ARAC working group composed entirely

of representatives of manufacturers of

transport category aircraft and their

counterparts in the represented civil

aviation authorities. The in-service

modifier community believed that the

ICPTF/ARAC working group was

focused on a problem involving the

manufacture of transport category

aircraft, not the alteration of general

aviation aircraft. The in-service modifier

community argues that the older the

aircraft, the more the burden would

increase on STC applicants and the less

relevant would be the problems and

examples used to justify the rule

change.

3. Notice No. 97–7 gave no indication

that it would affect applicants for

supplemental type certificates and none

of the stated justification warranted

changing the rules for STC’s.

4. Nowhere in Notice No. 97–7 is

there any statement to indicate a

problem with STC’s. The entire

discussion of the problem, the

regulatory history, and recent FAA

actions used aircraft manufacturing

examples and mostly examples

involving transport category airplanes.

5. Little or no consideration was given

to the potential impact of the proposed

rule and associated advisory material on

general aviation aircraft production or

on the STC process. For example, the

finding under the Regulatory Flexibility

Act that the proposed amendments

would not have a significant economic

impact on a substantial number of small

entities ignores the potential impact on

persons seeking STC’s for general

aviation aircraft.

6. Substantively, and therefore of

most significance, the proposed change

would shift the burden from the FAA to

the applicant to prove whether a

proposed change should comply with

type design amendments that have

occurred after the original type

certificate was issued. The in-service

modifier comments and representatives

state that this change in burden from a

‘‘bottom up’’ approach to a ‘‘top down’’

approach would add significant costs to

numerous small businesses which apply

for the majority of current STC’s. The

in-service modifiers also dispute the

relevance of FAA Order 8110.4 that

established a top-down approach as a

matter of policy in 1990. The in-service

modifiers state that this order cannot be

used to justify the rule changes

proposed in Notice No. 97–7 because it

was not enforceable since the rule was

not changed and further because the

FAA has not previously sought to apply

this policy to STC’s. For these reasons,

this community was not even aware of

its existence.

Specific written comments on the

STC issue can be summarized as

follows:

GAMA, EAA, NATA, and AOPA state

that the proposal would be burdensome

for older general aviation airplanes that

would have to undergo significant and

costly changes each time the in-service

product is upgraded under STC

procedures. GAMA adds that the reentry into production of airplanes with

older type certificates would be

prevented because ‘‘product changes

dictated by the FAA would be so

extensive that changed products would

not be cost effective due to the expense

of such changes.’’ EAA states that the

change ‘‘will block safety improvements

in general aviation aircraft by creating

such a difficult barrier to approving

Supplemental Type Certificates (STC’s)

that few improvements will be

attempted on older aircraft designs.’’

These commenters believe that the rule

could have exactly the opposite of the

intended effect by discouraging general

aviation aircraft owners from improving

their aircraft.

GAMA and AOPA state that, if

present type certificate holders were

prevented from resuming production

due to economic reasons, the result

would be a lack of spare parts and

technical assistance needed by current

airplane owners for the continued

airworthiness of their airplanes.

GAMA says that the proposal would,

in effect, ‘‘render the type certificates for

older out-of-production airplanes

valueless due to the extensiveness of

mandated FAA product changes. . . .’’

AOPA states that the ‘‘proposed changes

would have a tremendous negative

impact on the fledgling revitalization of

the general aviation industry in this

country by rendering nearly all existing

out of production type certificates

virtually valueless.’’

NATA states that the NPRM fails to

specifically limit the application of the

rule and expresses concern that the rule

requirements could be applied to

unintended areas such as maintenance.

FAA Response: The ARAC

recommended an exception from the

most burdensome impact of this

rulemaking for a significant segment of

aircraft that are mostly used in general

aviation operations. The FAA has

adopted, in this final rule, a process that

will apply to changes to these aircraft.

Therefore, as is more fully discussed

and explained in the section by section

discussion of § 21.101, changes to

aircraft (other than rotorcraft) with a

maximum weight of 6,000 pounds or

less and non-turbine powered rotorcraft

with a maximum weight of 3,000

pounds or less, will be evaluated

starting with the latest certification basis

for changes to a type certificate (whether

through an amendment or an STC). This

exception should address the concerns

of most of the in-service modifiers listed

above. Reduction of the potential costs

from this change are discussed in the

Federal Register / Vol. 65, No. 110 / Wednesday, June 7, 2000 / Rules and Regulations 36251

Regulatory Evaluation Summary portion

of this preamble.

While it is unfortunate that the inservice modifier community may not

have recognized the potential impact on

it of this rulemaking, the in-service

modifier community had full

opportunity to participate in the ARAC

process from the date that the FAA

tasked the ARAC. The fact that inservice modifier interests may not have

been fully represented in the ARAC

working group is not because in-service

modifiers were excluded but because

they elected not to participate until after

the NPRM was issued.

The working group distributed its

draft NPRM and AC to all ARAC

members on August 30, 1994, for review

and consideration. The ARAC met on

October 13 and unanimously passed the

proposals as written, with no

substantive comments or changes.

Among the organizations present at the

October 13 meeting were several inservice modifier community

representatives, such as, Aviation

Repair Station Association (ARSA),

National Air Transportation Association

(NATA), Experimental Aircraft

Association (EAA), General Aviation

Manufacturers Association (GAMA),

and the Airline Suppliers Association

(ASA).

Furthermore, while the FAA decided

not to extend or reopen the comment

period, as previously noted,

representatives of the ARAC working

group and the FAA met with

representatives of in-service modifiers

on several occasions during the ARAC

working group meetings to dispose of

the comments to the NPRM.

Additionally, representatives from the

General Aviation community met with

the Associate and the Deputy Associate

Administrators for Regulation and

Certification to express their concern

with the conduct of the working group

meetings. Their concerns were

addressed and a record of these

meetings are reflected in the docket.

The STC issue and potential

applicability to non-transport category

airplanes were addressed in Notice No.

97–7. Section 21.1(a) of part 21

prescribes procedural requirements ‘‘for

the issue of type certificates and

changes to those certificates; the issue of

production certificates; the issue of

airworthiness certificates; and the issue

of export airworthiness approvals.’’

(Emphasis added.) Supplemental type

certificates are not mentioned in § 21.1

or throughout part 21 because the word

‘‘changes’’ is clearly used to cover all

possible changes to a type certificated

product whether made by the type

certificate holder, the aircraft owner, or

a third party. Section 21.19 states that

certain changes will require a new type

certificate. Subpart D of part 21

prescribes ‘‘procedural requirements for

the approval of changes to type

certificates.’’ Subpart E covers

supplemental type certificates, which

§ 21.113 states must be applied for by

any person ‘‘who alters a product by

introducing a major change in type

design, not great enough to require a

new application for a type certificate

under § 21.19 . . . except that the

holder of a type certificate for the

product may apply for amendment of

the original type certificate.’’ Section

21.115, which Notice No. 97–7

proposed to amend, states that an

applicant for an STC must ‘‘show that

the altered product meets applicable

airworthiness requirements’’ of § 21.101,

that is, the same requirements that

would apply to the holder of the type

certificate. Thus, persons familiar with

part 21, as are the representatives of the

major in-service modifiers that

commented on Notice No. 97–7, know

that each proposed rule that affects

‘‘changes’’ under part 21 has potential

broad application.

Notice No. 97–7 contained numerous

statements that made it clear that the

proposed amendments to existing

regulations would affect persons other

than transport category type certificate

holders. For example:

1. Section 21.115, which applies to all

applicants for an STC, is referenced

early in the ‘‘History of Type

Certification’’ section of the preamble.

2. In the ‘‘History of Type

Certification of Changes’’ section of the

preamble the following sentence

appears:

Because § 21.101(a) and (b) are

incorporated by reference in § 21.115 these

procedures are equally applicable to persons

applying for supplemental type certificates.

3. In the ‘‘Recent FAA Actions’’

portion of the preamble the following

sentences appear:

The ICPTF was organized to develop the

philosophy and the necessary regulatory text

and advisory material that would provide for

the implementation of later regulatory

amendments applicable to aeronautical

products undergoing change, products in

production, and products in service.

(Emphasis added.)

The working group presented to ARAC an

NPRM and associated advisory material

concerning the type certification procedures

for changes to aeronautical products,

changed products, and products already in

service. (Emphasis added.)

4. In the section by section discussion

of § 21.115 the following sentence

appeared:

There should not be a difference in the

certification basis for a change to a typecertificated product between these two

methods of approval, amended type

certificate, or supplemental type certificate.

5. In the Regulatory Evaluation

Summary the following sentence

appears:

The formalization of this policy by

regulation would expedite decisions about

the certification basis of proposed changed

products and, therefore, would provide

manufacturers and modifiers with earlier and

more dependable information on which to

base their product development decisions.

In view of the opportunity provided

by the ARAC process before and after

issuance of Notice No. 97–7 and the

number of references to STC’s and

modifiers throughout the NPRM

preamble, the in-service modifier

community had adequate notice of the

potential impact of Notice No. 97–7 and

adequate opportunity to participate. In

the Regulatory Evaluation Summary

portion of this preamble the FAA has

revisited the question of the potential

impact on small entities and has

determined that an analysis under The

Regulatory Flexibility Act of 1980, as

amended, is required. This analysis and

a complete analysis of potential costs

and benefits are set out in the

Regulatory Evaluation Summary portion

of this preamble.

Transport Category Aircraft STC’s

Comments: ATA says that the

proposal’s requirement for an applicant

to prove that a proposed change to be

accomplished under an STC does not

invoke a new safety standard will

consume time and resources without

improving airworthiness. ATA says that

the current STC process is effective in

ensuring that changes to an aircraft

design are airworthy and recommends

that the FAA exclude STC’s from the

proposed rule.

FAA Response: As discussed in the

preamble to the NPRM Notice No. 97–

7, the FAA has determined that an

application for a design change through

the STC process should be certificated

to the same level of safety as an

application for the same change through

an amended type certificate. The FAA’s

intent is to establish an airworthiness

certification basis that is not dependent

on whether the applicant is applying for

an amended or a supplemental type

certificate.

Section-by-Section Discussion

Section 11.11

Current § 11.11 lists special

conditions required as prescribed under

§ 21.101(b)(2) as an FAA record that is

36252 Federal Register / Vol. 65, No. 110 / Wednesday, June 7, 2000 / Rules and Regulations

maintained in current docket form in

the Office of the Chief Counsel. To

remain consistent with the changes to

§ 21.101, described later, the NPRM

proposed to amend § 11.11 to refer to

§ 21.101(c) (now § 21.101(d)) instead of

§ 21.101(b)(2). The NPRM also proposed

revisions to make the section read

easier.

There were no substantive comments

on this section and it is adopted as

proposed with the cross-reference

change described above.

Section 21.19

Current § 21.19(a) states that any

person who proposes to change a

product must make a new application

for a type certificate if the Administrator

finds that the proposed change in

design, configuration, power, power

limitations (engines), speed limitations

(engines), or weight is so extensive that

a substantially complete investigation of

compliance with the applicable

regulations is required. In addition,

current paragraphs (b), (c), and (d) list

other specific types of changes that

mandate a new application for a type

certificate. Notice No. 97–7 proposed to

include only the general language of

current paragraph (a) into the new

§ 21.19, while the previously listed

specific changes would be subject to

case-specific evaluations to determine

whether they are substantial.

Current § 21.19(b) describes specific

changes for which the applicant must

apply for a new aircraft type certificate.

These include (1) changes in the

number of engines or rotors; and (2)

changes to engines or rotors using

different principles of propulsion, or to

rotors using different principles of

operation. Historically, these types of

changes have fallen into one of two

categories—those that were not

extensive enough to require a new

application for a type certificate, as

evidenced by the large number of

exemptions that have been granted over

the past quarter century, or those that

were so extensive that a new application

was required because a complete

investigation of compliance was

required. Accordingly, as was discussed

in the NPRM preamble, the provisions

of current § 21.19(b) are not needed and

were not included in the proposal.

Recently, the FAA considered a

petition for exemption from 14 CFR

§ 21.19(b)(2), to replace turbopropeller

engines with turbofan engines on a

transport category airplane. The

petitioner argued that the certification

basis for the changed airplane should be

developed using the approach proposed

in the NPRM. In responding to the

petition, the FAA pointed out that while

the NPRM proposed to eliminate the

specific reference to a change to engines

using different principles of propulsion,

that kind of change normally would be

considered so extensive that a

substantially complete investigation of

compliance would be required. Thus, it

should be noted that new § 21.19 does

not necessarily change how one would

evaluate ‘‘extensive’’ in each case.

Instead, new § 21.19 eliminates the legal

presumption that certain changes are

automatically ‘‘extensive.’’

Current § 21.19(c) describes another

specific change in which the applicant

must apply for a new aircraft engine

type certificate. This change is in the

principle of operation. In addition,

current § 21.19(d) describes specific

changes in which the applicant must

apply for a new propeller type

certificate. The NPRM proposed to

delete these types of changes from

§ 21.19. Under proposed § 21.101, with

certain exceptions, these types of

changes and all areas, systems,

components, equipment, and appliances

affected by the changes would have to

comply with the regulations in effect on

the date of application for the change to

the type certificate.

Comments: CAA recommends that

this section (§ 21.19) be cross-referenced

in § 21.101(a).

One commenter recommends that

wing modifications be added to the list

of design changes listed in the

preamble. This would be written as:

‘‘New wing (external geometry,

structure, and performance.)’’

FAA Response: The CAA comment is

discussed under § 21.101(a). The list of

design changes typically regarded as

substantial that were referenced in the

NPRM preamble have not been included

in this document. However, they will be

addressed in the forthcoming Advisory

Circular. Section 21.19 is adopted as

proposed.

Section 21.101(a)

Current § 21.101(a) states that if a

person applies for a change in a type

certificate, the product must comply

with either the regulations referenced in

the type certificate or the applicable

regulations in effect on the date of the

application for the change, if elected by

the applicant, plus any other

amendments the Administrator finds to

be directly related.

In Notice No. 97–7, the FAA proposed

to amend § 21.101(a) to require an

applicant for a change to a type

certificate to comply with the applicable

regulations in effect on the date of the

application for the change and with

parts 34 and 36, unless the applicant

falls within one of the exceptions that

would allow compliance with an earlier

amendment. The primary purpose of

this proposed change was to ensure that

products being changed in a significant

manner meet the latest airworthiness

standards wherever practicable.

Under this approach, the starting

basis is the applicable regulations in

effect on the date of the application for

the change. The burden is on the

applicant to prove that compliance with

earlier regulations would provide an

acceptable safety level. Under the

current regulation, the starting basis is

the regulations incorporated by

reference in the type certificate. In this

case, the burden is on the FAA to find

that later amendments are directly

related to the proposed change, or that

there are other reasons (e.g., the

regulations incorporated in the type

certificate do not provide adequate

standards with respect to the proposed

change) for requiring compliance with

later amendments.

The FAA points out that current part

21 and amendments resulting from this

rulemaking, only address ‘‘major’’ type

design changes under § 21.93. ‘‘Minor’’

design changes are ‘‘approved’’ under

§ 21.95, and are not considered to be the

changes to a type certificate that are

covered under § 21.101.

Comments: The comments that

address the substantive issue of the

safety justification for, and potential

cost of, changing from an original or

previously amended certification basis

approach to a current amendments

approach were addressed earlier in the

General and Miscellaneous Comments

section of this preamble.

The CAA says that § 21.101(a) should

be amended to cross reference § 21.19 to

clarify that this section applies only

when a new type certificate is not

required under § 21.19. The CAA

suggested rewording the paragraph to

read as follows:

Where the Administrator finds that an

application for a new type certificate is not

required under § 21.19 and except as

provided in paragraph (b)....

Raytheon recommends that proposed

paragraph (a)(1) of § 21.101 be rewritten

so that the word ‘‘and’’ after the term

‘‘changed product’’ is deleted.

FAA Response: The FAA does not

agree with the CAA’s suggested

rewording as § 21.19 stands on its own

and there is no need for a crossreference to it in § 21.101. As rewritten,

the ‘‘and’’ in § 21.101(a)(1) is not

included. The general phrase,

‘‘airworthiness requirements applicable

to the category of product’’ has been

substituted for the references to parts

23, 25, 27, 29, 31, 33, and 35. As

Federal Register / Vol. 65, No. 110 / Wednesday, June 7, 2000 / Rules and Regulations 36253

adopted, § 21.101(a), with minor

revisions for clarification, replaces

proposed § 21.101(a)(1) and (2) without

substantive changes.

Section 21.101(b)

Proposed § 21.101(b) provided

exceptions to the regulation in proposed

paragraph (a), that, when met, would

allow the applicant to comply with

earlier amendments to the regulations.

When choosing the amendment level of

a regulation, all regulations associated

with any relevant paragraphs in that

amendment level would have to be

included. The amendment level chosen

may not predate either the latest

certification basis or anything required

by the retroactive sections, that is,

§§ 23.2, 25.2, 27.2, or 29.2.

The intent of the proposed change

was to apply the applicable regulations

in effect on the date of the application

to those areas, systems, components,

equipment, and appliances significantly

affected by the change, unless the

Administrator finds that compliance

with a regulation would not, (1)

contribute materially to the level of

safety of the changed product, or (2)

would be impractical. For those areas,

systems, components, equipment, and

appliances not significantly affected by

the change, or otherwise excepted,

continued compliance with the

regulations incorporated by reference in

the type certificate would be considered

acceptable.

Proposed paragraph (b)(1) stated that

the applicant would be allowed to

demonstrate compliance with earlier

regulations, but not earlier than the

regulations incorporated in the latest

certification basis, if the effect of the

proposed change is not significant,

taking into account earlier design

changes and previous updating of the

type certification basis.

Proposed paragraph (b)(2) stated that

the applicant may show compliance

with earlier regulations for those areas,

systems, components, equipment, and

appliances that are not affected by the

change.

Proposed paragraph (b)(3) stated that,

if compliance with a regulation in effect

on the date of the application for the

change would not contribute materially

to the level of safety of the product to

be changed, or would be impractical,

the applicant may demonstrate

compliance with an earlier amendment

of a regulation provided that the

amended regulation does not precede

either the corresponding regulation in

§§ 23.2, 25.2, 27.2, or 29.2 of this

chapter, or the corresponding regulation

incorporated by reference in the type

certificate.

A proposed advisory circular

contained a safety benefit resource

evaluation guide, which was

recommended by the ARAC to be an

acceptable means of compliance with

the ‘‘impractical’’ exception of proposed

§ 21.101(b)(3), but which was included

by the FAA for purposes of information

only.

For the reasons discussed in more

detail below, proposed § 21.101(b) is

adopted with minor clarification

changes, but without substantive

changes.

Comments: Erickson Air-Crane Co.

recommended a change in the wording

of the rule to make it clearer that ‘‘You

don’t comply with the amendment

alone, but rather the entire regulation at

a given amendment level.’’

FAA Response: The FAA does not

agree that an applicant would always

have to comply with an entire

amendment level. The proposal was to

require compliance only with the

relevant portions of a particular

amendment level.

Comments: CAA states that the

objective of the certification policy for

changed products should be to ensure,

as far as is practicable, that a changed

product will achieve the same level of

safety as a new product introduced

concurrently. CAA states that the

proposal, Notice No. 97–7, will not

achieve this objective for the following

reasons:

(a) The proposed § 21.101(b)(2) allows

areas not affected by the change being

considered to continue to use superseded

airworthiness requirements, some of which

may have been amended with the objective

of improving the general level of safety. The

fact that a product is a changed product,

rather than a new product, should not be the

reason for allowing it to continue to use

outdated safety standards indefinitely. Even

for areas not affected by the changes there

needs to be a point beyond which a changed

product is required to comply with the latest

standards where amendments have been

made as part of an initiative to improve

general safety levels in such areas.

(b) The proposed § 21.101(b)(3) allows the

continued use of superseded airworthiness

requirements where compliance ‘‘would not

contribute materially to the safety of the

changed product.’’ Although NPRM 97–7

acknowledges the need to assess the

accumulative effect of a number of small

changes on the level of safety, the text of

Paragraph (b)(3) is written in terms of the

effect of a single change . . . there is a need

to establish the datum as the original design

standard of the product originally

certificated.

CAA believes that § 21.101(b) is

difficult to understand and should be redrafted and cross-referenced to

paragraphs (b)(1), (b)(2), and (b)(3).

CAA comments, as it did on the JAA

proposal that the phrase ‘‘For each area,

system, component, equipment, or

appliance’’ should be replaced with

‘‘For each feature of the product.’’ CAA

acknowledges that this change, if

adopted, would require extensive

interpretive material to clarify what the

word ‘‘feature’’ means.

FAA Response: There is very little

language difference, and no substantive

difference, between the FAA’s proposed

rule language and the language in JAA’s

NPA 21–7. Nonetheless, for reasons

discussed below, § 21.101(b) has been

rewritten for clarification. The ARAC

working group had numerous

discussions as to the meaning of

‘‘nonsignificant’’ in the proposed rule.

The working group focused particularly

on the draft Advisory Circular (AC)

circulated for public comment at the

same time as Notice No. 97–7 because

the draft AC contained language

explaining ‘‘nonsignificant.’’ The ARAC

recommended that some of the

proposed AC language be included in

the final rule to make it clear, in

determining whether a change would be

nonsignificant, that an applicant would

go back to the latest certification basis

and not the original certification basis.

The draft AC provided that the

following are nonsignificant:

‘‘Changes that do not modify the

general characteristics of the product in

that: (1) The general configuration and

principles of construction are retained;

and (2) The assumptions used for

certification of the basic product remain

valid and the results can be extrapolated

to cover the changed product.’’

In view of the ARAC discussions, the

FAA has decided that it would be

helpful to use the affirmative term

‘‘significant’’ rather than the negative

term, ‘‘nonsignificant’’ and to more fully

explain in the rule itself the term

‘‘significant.’’ As adopted § 21.101(b)(1)

reads as follows:

(b) If paragraphs (b)(1), (2), or (3) of this

section apply, an applicant may show that

the changed product complies with an earlier

amendment of a regulation required by

paragraph (a) of this section, and of any other

regulation the Administrator finds is directly

related. However, the earlier amended

regulation may not precede either the

corresponding regulation incorporated by

reference in the type certificate, or any

regulation in §§ 23.2, 25.2, 27.2, or 29.2 of

this chapter that is related to the change. The

applicant may show compliance with an

earlier amendment of a regulation for any of

the following:

(1) A change that the Administrator finds

not to be significant. In determining whether

a specific change is significant, the

Administrator considers the change in

context with all previous relevant design

36254 Federal Register / Vol. 65, No. 110 / Wednesday, June 7, 2000 / Rules and Regulations

changes and all related revisions to the

applicable regulations incorporated in the

type certificate for the product. Changes that

meet one of the following criteria are

automatically considered significant:

(i) The general configuration and the

principles of construction are not retained;

and

(ii) The assumptions used for certification

of the product to be changed do not remain

valid.

This language should help both the

applicant and the FAA reviewer to

determine whether the effect of a change

is significant, when considered in

context with all previous changes to the

design and all related changes to the

latest ‘‘certification basis.’’ Again, the

overall intent of this rulemaking is to

ensure that products developed through

a series of changes, achieve a level of

safety similar to that of a comparable

new product. The final rule language

makes it clear that, in determining

whether a change is significant, the FAA

will consider the latest amendments to

the airworthiness standards adopted

after the most recent type certification

basis.

This is particularly important because

a subsequent amendment of a regulation

can indicate an important change in the

emphasis in an area of the regulations.

For example, if the regulations have

been amended in an affected area, then

the assumptions used for certification of

the product may no longer be valid. The

FAA considers these changes in the rule

language to be clarifying since they are

consistent with the intent of Notice 97–

7 and with the explanations given in the

accompanying draft Advisory Circular.

Comments: One commenter states that

the FAA should reconsider its proposal

to delete the existing § 21.101(b)(1) that

allows the FAA to apply later

regulations without regard to the

exceptions in proposed § 21.101(b)(1),

(2), and (3). This commenter provides

an example of a transport category

airplane with an early certification basis

built with independent round dial

instruments. The commenter notes that

a number of rules were added that

applied to replacing independent round

dial instruments with a multifunction

display or an electronic flight

instrument system. The commenter

suggests that the proposed rule would

preclude compliance with the added

rules for that kind of design change.

This commenter suggests that

proposed § 21.101(b)(3) is not an

improvement over the issue paper

process, where that applicant would

have an opportunity to apply for an

exemption from the rule, which the

applicant did not agree with, through a

public notice process.

This commenter also expressed

concerns regarding the use of the service

history of an already changed product

when analyzing the ‘‘impractical’’

exception to application of the latest

regulations to a change of that product.

Specifically, the commenter is

concerned that, when a later rule

addresses hazards or failures in very

small probabilities and a product

change is certificated using that later

amendment, the older version of that

product may have not yet reached the

total exposure to the hazard or failure

addressed by the later rule. In this case,

the service history of the older version

of the product would ‘‘bask in the glow’’

of the uneventful service history of the

newer version that complies with the

later amendment, making it appear that

compliance with the latest amendments

would be unwarranted.

Additionally, this commenter states

that the preamble discussion of

‘‘impractical’’ mentions both a cost

analysis and a benefit-resource

evaluation and states that the applicant

will only be able to provide a cost

analysis and that there would not be

enough data to make a comparison.

This commenter does not believe the

use of a cost/benefit analysis to be

practical as a tool to determine if a later

rule should be applied under the

proposed § 21.101. The commenter

states that if such an approach is used

then the FAA should at least eliminate

the proposed AC Appendix 2 as it

appears biased and without

justification.

The ARAC working group had

numerous discussions on the limited

applicability of the data in Appendix 2

of the draft AC because this data was

drawn from, and therefore only

applicable to, transport category

airplanes. The ARAC recommended that

data be developed for other airplanes

and for rotorcraft. The ARAC also

recommended delayed compliance

dates to allow time for development of

this data.

FAA Response: The FAA construes

the first comment to mean that the

exceptions in proposed § 21.101(b)(1),

(2), and (3) are too broad, so as to overly

limit FAA discretion to impose later

requirements. With respect to the

example, the FAA notes that such a

design change would be significant, and

that it would be difficult, if not

impossible, for the applicant to

demonstrate that one of the exceptions

applies. Therefore, compliance with the

later regulations would most likely be

required. The FAA has found that the

public interest is satisfied by limiting

the situations of required compliance

with the latest airworthiness standards

to each significant change, each area

affected by the change, and each

instance where compliance would

contribute materially to the level of

safety of the product and would be

practical. In addition, special conditions

may be required in accordance with the

existing regulations. Nothing more is

necessary for the safety enhancement of

changed products.

Regarding the second comment,

proposed § 21.101(b)(3) was not

intended to replace the issue paper

process, but to change the standards of

certification, allowing an applicant to

use earlier regulations if compliance

with the latest regulation has been

determined to be impractical or would

not contribute to the level of safety. An

individual’s right to request an

exemption from any rule has not been

eliminated. As a result of the issue

paper process, the applicant may still

decide to petition for an exemption.

This final rule does not change the

applicant’s ability to apply for that

exemption.

The commenter’s concerns with

respect to service history are

unwarranted. First, as was noted in the

preamble to the NPRM, the service

history that would be considered in

deciding whether to invoke an

exception to compliance with a later

amendment would be the applicable

service experience. In the case cited by

the commenter, the relevant, service

experience applicable to a change to the

later version of the product would be

the service experience of that later

version, which complies with the later

amendment. The relevant, service

experience applicable to a change to the

older version of the product would be

the service experience of that older

version, which doesn’t comply with the

later amendment. Second, as explained

in this preamble and the preamble to the

NPRM, the starting point of the analysis

in determining whether the latest

amendments should be applied to an

already changed product is the changed

product’s latest certification basis.

In response to the last comment, the

preamble to Notice No. 97–7 referenced

a safety benefit resource evaluation

guide as part of the draft advisory

circular. The guide was developed by

the Aviation Rulemaking Advisory

Committee, and was included in the

draft circular for information purposes

only. In consideration of comments

received and after further discussion

with the ARAC, the FAA has

determined that, in theory, a safety

benefit resource evaluation guide could

be used by the applicant to demonstrate

that compliance with the later

amendment would be impractical. An

Federal Register / Vol. 65, No. 110 / Wednesday, June 7, 2000 / Rules and Regulations 36255

applicant who elects to make a showing

using this guide would be required to

submit data on potential benefits and

costs that would justify compliance

with an amendment level in effect

before the date of the application for a

change. As mentioned earlier, the

burden of the initial showing of costs

and benefits rests with the applicant.

The FAA will consider the analysis

along with other factors in its

assessment and determination of the

appropriate amendment level. A safety

benefit resource evaluation guide,

therefore, will likely be retained in the

final advisory circular as a tool to assist

the applicant in developing arguments

as to the appropriate certification basis.

The safety benefit resource evaluation

guide recommended by the ARAC could

not be endorsed as a sole means of

determining the amendment level

because the process cannot be proven

through any rational financial analysis

determination. In addition, the guide

includes factors that are not relevant in

determining applicable regulations. For

example, the guide suggested a change

to a single production item could be

certificated differently than the same

change to multiple production items. In

determining whether a regulation

should apply, the FAA considers the

level of safety, not the quantity of

production items as the basis.

Comments: AECMA states that few of

the changes proposed during the life of

a product are really significant and that

therefore, it is an administrative burden

to require elaboration and

documentation of a justification for

application of one of the exceptions in

§ 21.101(b) for each change. This

commenter emphasized an established

procedure described in the Action

Notice A8110.23, ‘‘requiring application

of the latest requirements only for

changed parts of the product and

affected area warranted equivalent

results with less bureaucratic burden.’’

FAA Response: FAA’s Action Notice

8110.23, which was replaced by Order

8110.4, was an interim action intended

to move applicants in the direction of

the regulations in effect on the date of

the application for a change. Neither

document has, nor were they intended

to have, the regulatory impact of the

rule language proposed in Notice No.

97–7. These documents were, however,

directed at all derivative aircraft,

engines, and propellers where a change

is significant, but not so extensive as to

require a new type certificate. The

action notice and subsequent order

applied to all changed products whether

the approval method was an amended

type certificate or an STC.

Comments: Raytheon states that the

intent of the word ‘‘impractical’’ in

proposed § 21.101(b)(3) ‘‘should be

defined as not providing added value

(perceived or actual) to the operator,

manufacturer, or traveling public, or not

achieving the desired effect, as in nonmeritorious or ineffectual.’’ Raytheon

suggests, ‘‘Perhaps impractical could be

defined as ‘without value enhancement,’

to stress that any change required as a

result of a new regulation which doesn’t

result in a value enhancement may,

with analytical substantiation, be

exempted from compliance.’’

FAA Response: There is little, if any,

difference between the FAA’s

explanation of compliance that would

not contribute materially to the level of

safety and Raytheon’s understanding of

compliance that would be

‘‘impractical.’’ The question of whether

compliance with a later regulation

would be impractical arises only after it

has been determined that compliance

with the later regulation would

‘‘contribute materially to the level of

safety of the changed product. . . .’’ The

cost burden introduced by

impracticality is considered in relation

to the potential safety benefit. In order

to show impracticality the applicant

considers whether the cost to

incorporate the change, plus the cost of

the subsequent operation of the changed

product, would not be commensurate

with the potential increase in safety.

Comments: One commenter states that

if an applicant is granted an exception

under proposed § 21.101(b)(2)

(unaffected areas) it should be subject to

mandatory periodic FAA reviews of

safety related issues for airplanes that

continue in production under the same

type certificate. This commenter states

that for airplanes that have continued in

production for many years and at

substantial quantities, the claim of

excessive economic burden may be

invalid and that a reasonable time

period for periodic reviews would be

ten years, starting from the date the

exception was first granted. The

commenter recommends that mandated

changes should be incorporated in

newly produced airplanes within three

years after the review. Furthermore, the

FAA should consider expected size of

the future market when considering

granting an exception for production

airplanes.

On the topic of ‘‘impractical’’ this

commenter believes the concept is

acceptable, although balancing safety

with economics is not something readily

acceptable to the public at large. The

commenter states ‘‘cost-effective/not

cost-effective’’ should be used instead of

‘‘practical/impractical’’ since the latter

terms are too broad and not descriptive

of the concept.

FAA Response: Since the basis for an

exception under proposed § 21.101(b)(2)

is a finding that the area, system,

component, etc. is not affected by the

change, the FAA does not agree that

there is a need for a periodic review of

the ground for the exception, nor does

the FAA agree that economic burden is

a factor in this determination. With

respect to whether compliance with the

later regulation would be impractical,

the FAA cannot agree that the terms

‘‘cost effective/not cost effective’’ would

be more descriptive. While costs and

benefits stated in dollar terms are

essential ingredients, a safety benefit

resource analysis involves more than

costs.

The benefit-resource analysis is a

composite evaluation of four elements

that are key to determining the

contribution to safety made by meeting

a particular rule. The four critical

elements are:

(1) The frequency of occurrence of the

hazard the rule is intended to mitigate.

(2) The potential severity of the

hazard.

(3) How well the configuration being

certificated will mitigate the hazard by

meeting the rule.

(4) What resources are required if the

design must meet the rule. While cost is

one element of this evaluation, all four

elements must be considered in

evaluating the application of a rule.

Furthermore, because application of the

rule will set appropriate standards for

the product design and the design

change, the concern of the comment

regarding length of production where no

design change is proposed is beyond the

scope of this rulemaking.

Section 21.101(c) (New)

Section 21.101(c) in this final rule

contains the previously mentioned

exceptions for aircraft (other than

rotorcraft) of 6,000 pounds or less

maximum weight, as defined in

§ 23.25(a), and non-turbine rotorcraft of

3,000 pounds or less maximum weight,

as defined in § 27.25(a). Inclusion of

these exceptions will address some of

the concerns expressed by the aircraft

modifiers who commented on Notice

No. 97–7.

The primary impact of the exception

language in § 21.101(c) will be that the

starting point for determining the

applicable regulations for a changed

product will continue to be, as in

current § 21.101, the regulations

incorporated by reference in the type

certificate, rather than the regulations in

effect on the date of application for the

change. To ensure that later regulations

36256 Federal Register / Vol. 65, No. 110 / Wednesday, June 7, 2000 / Rules and Regulations

are applied when appropriate,

§ 21.101(c) contains language that

allows the administrator ‘‘to designate

an amendment to the regulation

incorporated by reference that applies to

the change and any regulation that the

Administrator finds is directly related,

unless the Administrator also finds that

compliance with that amendment or

regulation would not contribute

materially to the level of safety of the

changed product or would be

impractical.’’

Thus, as adopted, for the excepted

aircraft the starting point for

determining the applicable regulations

will be the latest certification basis

rather than those regulations in effect on

the date of application for the change.

In this case, the FAA would make the

finding that applying later amendments

is necessary. The later amendments

would not be applied, however, if the

Administrator also finds that one of the

exceptions applies. This part of the rule,

like other regulations, leaves the burden

on the applicant to demonstrate that

compliance with those later

amendments would not contribute

materially to the level of safety, or

would be impractical. For example, the

burden is on an applicant for a pilot

certificate to provide the evidence on

which the Administrator finds that he or

she is qualified to hold a certificate.

Historically FAA and its predecessor

agencies have treated light airplanes and

small non-turbine rotorcraft differently

from other classes of aircraft. Aircraft of

6,000 pounds or less maximum weight

and non-turbine rotorcraft of 3,000

pounds or less maximum weight are

usually of less complex design than the

larger aircraft. In addition design

changes to these aircraft usually are of

less complexity. Furthermore, the

certification requirements for these

aircraft are many times less complex

than those for larger aircraft. Examples

of this are simplified design load criteria

and performance requirements.

The exception in § 21.101(c) is

premised on the assumption that the

lesser complexity of design, design

changes, and requirements will allow

the FAA Aircraft Certification Office

(ACO) to more easily identify the

current airworthiness standards

appropriate for the areas of the product

affected by the proposed change.

Nonetheless, § 21.101(c) also allows the

applicant to submit data on which the

ACO could decide to allow one or more

of the exceptions to requiring the latest

airworthiness standards.

Most importantly, although the

process for determining the appropriate

level of safety for these aircraft and

rotorcraft will be different from the

more complex large aircraft, the final

result should be the same. The level of

safety for both types will be enhanced

because the most appropriate

airworthiness standards will be used.

Section 21.101(d)

Section 21.101(d) (proposed

§ 21.101(c)) retains the provisions of

current § 21.101(b)(2) concerning

special conditions. This paragraph

addresses novel or unusual design

features where the Administrator finds

that the regulations incorporated by

reference in the type certificate do not

provide adequate standards. For a

product that has a novel or unusual

design feature, the applicant must

comply with the regulations in effect on

the date of the application for the

change and any necessary special

conditions ‘‘to provide a level of safety

equal to that established by the

regulations incorporated by reference in

the type certificate for the product.’’ For

consistency with the other proposed

changes to § 21.101, this proposed

paragraph stated that an applicant for a

change must comply with any special

conditions, and amendments to those

special conditions, if any, that provide

a level of safety equal to that established

by the regulations in effect on the date

of the application for the change.

The provisions of current § 21.101(c),

concerning the replacement of

reciprocating engines with

turbopropeller engines, have been

removed because a change of this nature

would usually be considered a

significant change, and compliance with

the regulations in effect on the date of

application of the change would,

therefore, be required.

Comments: CAA recommends that the

words ‘‘established by the regulations’’

be replaced with the words ‘‘intended

by the regulations.’’

FAA Response: The phrase ‘‘intended

by the regulations’’ is not appropriate

rule language. Except for the change

from paragraph (c) to paragraph (d) this

section is adopted as proposed.

Section 21.101(e)

Section 21.101(e) (proposed

§ 21.101(d)) sets a limit of five years on

an application for a change to a type

certificate for a transport category

aircraft, and sets a limit of three years

on an application for a change to a type

certificate for all other products. The

durations for these amended or

supplemental type certificate

applications are the same as those for

applications for the corresponding type

certificates. If an application for a

design change expires, an applicant may

file a new application or apply for an

extension of the original application as

provided in § 21.17(c) and (d).

This section is adopted as proposed,

except that paragraph (e)(2) has been

clarified. New paragraph (e)(2) allows

the applicant to select a new date. The

new application date may not precede

the date the change is approved by more

than the time period established under

paragraph (e). For example, a person

applies for a change to a transport

category airplane in 2000. In 2003, the

applicant decides that the project

cannot be completed by 2005 (the time

period required by paragraph (e)). The

applicant, however, decides that the

project can be completed by 2007.

Under paragraph (e)(2), the applicant

may elect 2002 (2007 minus 5 years

equals 2002) as the new certification

basis date.

Section 21.101(f)

Section 21.101(f) (proposed

§§ 21.101(e)(1) and (2)) requires the

certification basis for a change to a

product certificated under predecessor

regulations be established in the same

manner as that for a change to a

certification basis for a product

certificated under parts 23, 25, 27, 29,

31, 33, or 35.

Changes to products type certificated

under §§ 21.21 and 21.29 and changes to

aircraft type certificated under §§ 21.24,

21.25, 21.27, as well as special classes

of aircraft (where regulations from the

airworthiness standards listed in

Chapter 1 are a part of the certification

basis) would be required to comply with

the requirements of § 21.101(a).

Comments: Pratt & Whitney Canada

states that neither the proposed

Canadian regulation nor the related JAA

NPA 21–7 contain requirements similar

to this proposal and recommends that

the FAA consider tasking ARAC to

address this issue in the interest of

harmonization, if a safety concern

exists.

Bombardier and Transport Canada

believe extending the applicability of

this requirement to restricted category

aircraft (§ 21.25) would be contrary to

the ARAC recommendation. Bombardier

advises that the ARAC proposal

excluded this category of aircraft

because ‘‘compliance with the

‘applicable’ regulations (whether earlier

or latest) was not required for the

original model when justified with the

regulating Authority.’’

The Aerospace Industries Association

(AIA) asserts that § 21.101(f) (proposed

§ 21.101(e)) contains the same

requirements as § 21.101(a). AIA

believes these sections ‘‘make no

exception for products originally

certificated to regulations that existed

Federal Register / Vol. 65, No. 110 / Wednesday, June 7, 2000 / Rules and Regulations 36257

prior to the codification of the

applicable part(s) of 14 CFR nor for

products certificated as restricted,

surplus military, or other unique types.’’

AIA recommends this proposal be

eliminated.

Transport Canada recommends the

paragraph be revised in a manner

similar to proposed § 21.101(a)(1),

which specifically states ‘‘each

regulation that is applicable to the

changed product.’’

FAA Response: The intent of

proposed paragraph (e)(1) was to ensure

that the predecessor regulations (former

CAR’s, etc.) would continue to be the

starting basis for aircraft that were

originally type certificated under earlier

regulations. The recodification of the

regulations did not remove

airworthiness requirements under

which products were type certificated.

Therefore, the FAA agrees, in part, with

AIA in that proposed paragraph (e)(1) is

redundant. Proposed paragraph (e)(1)

has not been adopted.

However, § 21.101(f)(proposed

§ 21.101(e)(2)) is still needed to address

aircraft type certificated under §§ 21.24,

21.25, 21.27, and special classes of

aircraft covered by § 21.17(b). The

airworthiness requirements applicable

to the category of aircraft in effect on the

date of the application for the change

must include any airworthiness

requirements that the Administrator

finds to be appropriate for the type

certification of the aircraft in accordance

with those sections.

The FAA has determined that some

restricted category aircraft should

comply with the requirements of this

rulemaking action and the reference to

§ 21.25 has been retained. Although

Transport Canada has somewhat

comparable ‘‘restricted category’’

provisions in their regulations, the JAA

have no comparable provisions in their

regulations. However, the FAA does

certificate some restricted category

aircraft using airworthiness standards

and has determined that this

requirement is needed to ensure that the

aircraft certificated using regulations

from parts 23, 25, 27, and 29 are

included in the rule. The requirements

of proposed § 21.101(e)(2) have been

revised and retained as § 21.101(f) in the

final rule. Due to the revision of

§ 21.101(f), the language to which

Transport Canada referred is no longer

in the paragraph.

Section 21.115

A type certificate holder may obtain

approval for a change by amending the

original type certificate under § 21.101,

or by obtaining a supplemental type

certificate under § 21.115. Other

modifiers must obtain supplemental

type certificates under § 21.115. Because

the provisions of § 21.115 incorporate

by reference the provisions of current

§ 21.101(a) and (b), the provisions to

amend the type certificate are

essentially the same as the provisions

for supplemental type certificates. To

align the provisions of proposed

changes to § 21.101 and appropriate

references to those changes in proposed

§ 21.115, the paragraph designators (a)

and (b) have been removed.

By deleting the paragraph designators

the FAA, in effect, proposed to require

applicants for a supplemental type

certificate to show that the modified

product complies with the applicable

regulations in effect on the date of the

application for the STC is met.

Comments: Virtually all of the

commenters who commented on

proposed § 21.115 (including the oral

comments from the in-service modifiers

represented at the ARAC working group

meetings) opposed this proposal and the

substantive change proposed in

§ 21.101(a) that requires that STC

applicants make a finding of compliance

with later applicable regulations. These

commenters recommend no changes to

the current requirements for an STC.

FAA Response: As mentioned earlier

under the discussions in § 21.101(b), the

FAA has provided an exception, in

§ 21.101(c), for aircraft of 6,000 pounds

or less maximum weight and nonturbine rotorcraft of 3,000 pounds or

less maximum weight. The primary

impact of this exception will be that the

starting point for determining the

applicable regulations for a changed

product will continue to be the

regulations incorporated by reference in

the type certificate. The administrator

may designate an amendment to the

regulation incorporated by reference

that applies to the change and any

regulation that the Administrator finds

is directly related, unless the

Administrator also finds that

compliance with that amendment or

regulation would not contribute

materially to the level of safety of the

changed product or would be

impractical.

The exception applies to both

amended and supplemental type

certificates. This is because there is no

legal difference between the number of

products that can be modified using an

amended type certificate versus using

supplemental type certificates.

Section 25.2

Current § 25.2(c) incorporates by

reference the provisions of current

§§ 21.101(a) and (b) concerning special

retroactive requirements applicable to

airplanes for which the regulations

referenced in the type certificate predate

subsequent amendments. Section

25.2(c) has been revised consistent with

the changes to § 21.101(a).

Comments: Raytheon believes that

§§ 23.2, 27.2, and 29.2 should be

amended to use the same language as

§ 25.2.

FAA Response: Current §§ 23.2, 27.2,

and 29.2 do not contain references to

§ 21.101 no change is needed in these

sections.

Paperwork Reduction Act

This rule contains information

collections that are subject to review by

OMB under the Paperwork Reduction

Act of 1995 (44 U.S.C. section 3507(d)).

As previously stated, comments on the

information were not invited at the

proposed rule stage and therefore are

being invited in this final rule

document. The Department of

Transportation has submitted the

information requirements associated

with this rule to the Office of

Management and Budget (OMB) for its

review. The title, description, and

number of respondents, frequency of the

collection, and estimate of the annual

total reporting and recordkeeping

burden are shown below.

Title: Type Certification Procedures

for Changed Products.

Summary: This rule will constitute a

reporting burden for applicants seeking

an amended Type Certificate or a

Supplemental Type Certificate for

changes to aeronautical products. This

rule requires applicants, with some

exceptions, to comply with the latest

regulations in effect on the date of the

application for the design changes of

aircraft, aircraft engines, and propellers.

Compliance with the latest regulations

will not be required:

(1) if the change is not significant,

(2) for those areas or components not

affected by the change,

(3) if such compliance would not

contribute materially to the level of

safety, or

(4) if such compliance would be

impractical.

The applicant for most product

changes now will incur an additional

incremental administrative cost to

document an analysis based on the

latest certification basis and identify to

the FAA those regulations they will or

will not be complying with, based on

the above four criteria. This analysis is

part of the applicant’s compliance

review document.

Applicants for product changes to

non-turbine rotorcraft of 3,000 pounds

or less maximum weight, or other

aircraft of 6,000 pounds or less would

36258 Federal Register / Vol. 65, No. 110 / Wednesday, June 7, 2000 / Rules and Regulations

not necessarily be required to perform

this analysis. For such applications, the

FAA would make an initial finding to

require compliance with appropriate

regulations. In that case, the applicant

may decide to demonstrate compliance

with those regulations, or may perform

the analysis to demonstrate that

compliance is not warranted.

Use of: Because the rule shifts most of

the responsibility from the FAA to the

applicant to evaluate and demonstrate

the applicable certification basis for

product changes, the applicant must

produce additional documentation

when submitting an application to the

FAA. The FAA will review all

documentation provided with the

amended TC or STC application and

determine the certification basis for the

changed product.

Respondents: Any individual or

business entity desiring to submit an

application for a change to a TC or an

STC; i.e., a current TC or STC holder,

a manufacturer, or a modifier of

aeronautical products.

Frequency: Approximately 2,860

applications are received by the FAA

annually. Of these, an average of 1,649

applications per year result in

certificates being issued. The difference

of 1,211 applications per year represents

an estimate of the applications that are

initiated but are never completed; e.g.,

withdrawn, canceled, or inactive. The

sum of the 1,649 annual applications

completed for certification, and 75

percent of the 1,211 applications not

completed, equals the administrative

equivalent of 2,557 applications per

year.

Annual Burden Estimate: The full

regulatory evaluation forecasts costs

over a 20-year period, beginning in the

year 2000, and assumes a 3 percent

annual increase in applications. For all

applicants, the first year administrative

costs of the rule are projected to equal

$1,975,530 (1998 present value

$1,725,504) divided by an overhead rate

of $105 an hour, which equals 18,815

total annual hours.

Using the 1500-employee size

standard, small firms are projected to

incur 56.6 percent of those costs,

equaling $1,118,679 with a 1998 present

value of $977,098. The small business

proportion of expected administrative

costs (56.6 percent) is lower than the

proportion of applications expected

from small business (62.1 percent)

because a significantly higher

proportion of the administrative

exceptions under the rule are projected

for small business applicants. This

disproportionate exception rate also

causes the average increased

administrative cost per small business

application ($664) to be smaller than the

average for all applicants ($728.)

For the 20-year study period,

incremental small business

administrative costs under the rule are

projected to total $30,059,321 with a

1998 present value of $13,938,179.

The agency solicits public comment

on the information collection

requirements to:

(1) evaluate whether the collection of

information 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 of the

collection of information, including the

validity of the methodology and

assumptions used;

(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 through the

use of appropriate automated,

electronic, mechanical, or other

technological collection techniques or

other forms of information technology,

(e.g.. permitting electronic submission

responses).

Individuals and organizations may

submit comments on this information

collection requirements by August 7,

2000, and should direct them to the

address listed in the ADDRESSES section

of this document.

Persons are not required to respond to

a collection of information unless it

displays a currently valid OMB control

number. The burden associated with

this rule has been submitted to OMB for

review. The FAA will publish a notice

in the Federal Register notifying the

public of the approval number.

Information collection requirements

to other sections of part 21 have

previously been approved by the Office

of Management and Budget (OMB)

under the provisions of the Paperwork

Reduction Act of 1995 (44 U.S.C.

3507(d)), and have been assigned OMB

Control Number 2120–0018.

International Compatibility

In keeping with U.S. obligations

under the Convention on International

Civil Aviation, it is FAA policy to

comply with International Civil

Aviation Organization (ICAO) Standards

and Recommended Practices to the

maximum extent practicable.

The FAA has reviewed corresponding

ICAO Standards and Recommended

Practices and Joint Aviation

Airworthiness Authorities regulations,

where they exist, and has identified and

discussed similarities and differences in

these proposed amendments and foreign

regulations.

The final rule results, primarily, from

a recommendation harmonized with the

aviation authorities of Canada and

Europe. Transport Canada and the Joint

Aviation Authorities have proposed

similar corresponding changes to

regulations governing type certification

procedures for changed products.

Economic Evaluation, 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, as amended, requires agencies

to analyze the economic impact of

regulatory changes on small entities.

Third, the Trade Agreements Act (19

U.S.C. §§ 2531–2533) prohibits agencies

from setting standards that create

unnecessary obstacles to the foreign

commerce of the U.S. And 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 rule: (1) would

generate benefits that justify its costs;

and is ‘‘a significant regulatory action’’

under Executive Order 12866 and under

the regulatory policies and procedures

of the Department of Transportation (44

FR 11034, February 26, 1979), (2) would

have a significant economic impact on

a substantial number of small entities;

(3) would not constitute a barrier to

international trade; and (4) does not

contain a significant intergovernmental

or private sector mandate. These

analyses, available in the docket, are

summarized below.

Response to Economic Comments

Comment: The Air Transport

Association (ATA) and a private aircraft

owner both raise due process concerns

based on the failure of the FAA to

quantify the costs and benefits of the

proposal in the Notice of Proposed

Rulemaking (NPRM). While the NPRM

stated that the FAA was not able to

quantify the costs and benefits of this

Federal Register / Vol. 65, No. 110 / Wednesday, June 7, 2000 / Rules and Regulations 36259

proposal, the NPRM also stated that the

benefits would exceed the costs. In

previous rulemakings the FAA was able

to justify part 25 amendments

applicable to new type designs, but

failed to satisfy reasonable cost-benefit

criteria essential to making them

applicable to derivatives, new

production units, or the existing fleet.

Based on this, ATA doubts that the

benefits of the proposal exceed the

costs, and, in general, holds that

government should not adopt

regulations for which the costs and

benefits have not been quantified.

FAA Response: The FAA’s assessment

that the proposed rule would be costbeneficial was, and is, based on the

provision of the rule that, in the final

instance, compliance with later

regulations will not be required if such

compliance ‘‘. . .would not contribute

materially to the level of safety of the

changed product or would be

impractical.’’ In the discussion of this

provision, the NPRM further explained

that ‘‘compliance with a later

amendment would be considered

’impractical’ when the applicant can

establish that the cost of the design

change and related changes necessary to

demonstrate compliance with the

amendment would not be

commensurate with the resultant safety

benefit.’’

Executive Order 12866, which is the

basis for federal regulatory evaluation,

explicitly recognizes that costs and

benefits may not always be quantifiable.

The Order states that, ‘‘costs and

benefits shall be understood to include

both quantifiable measures (to the

fullest extent that these can be usefully

estimated) and qualitative measures of

costs and benefits that are difficult to

quantify, but nevertheless essential to

consider.’’

Discussion of Costs and Benefits

The costs imposed by the final rule

will be incurred by future applicants for

amended and supplemental type

certificates for aeronautical products.

Two categories of costs may be imposed:

(1) administrative costs, and (2) the

costs of compliance with later

regulations.

The final rule will require applicants

to comply with the regulations in effect

on the date of the application for the

change, as compared to the latest

certification basis of the product to be

changed, unless one of several

conditions is met. Compliance with the

later set of regulations will not be

required:

(1) if the change is not significant,

(2) for those areas or components not

affected by the change,

(3) if such compliance would not

contribute materially to the level of

safety of the changed product, or

(4) if such compliance would be

impractical; i.e., would result in costs

that would not be commensurate with

the safety benefit that would be derived.

Applicants for changes to most

products would incur the incremental

administrative cost of evaluating and

demonstrating to the FAA the

applicability of these four conditions to

their product changes. The final rule,

unlike the proposed rule, would make

an exception to this administrative

responsibility for applicants for changes

to either: (1) non-turbine rotorcraft of

3,000 pounds or less maximum weight,

or (2) other aircraft of 6,000 pounds or

less. For such applications, the FAA

would maintain the administrative

responsibility of demonstrating that the

certification basis for a changed product

should incorporate the latest

airworthiness standards.

Survey Methodology

The evaluation of this rule was based

on a sample of records from the FAA’s

Aircraft Certification Office Subsystem

(ACOS) database. The ACOS system is

used to track FAA certification projects

at the individual certification office

level. All pertinent (amended and

supplemental) certification actions,

where the date of application was 1994

or later, were selected and combined

into a single database. That filter

resulted in a set of 13,448 project

records, from which, a random sample

of 250 project records were selected for

detailed review and analysis. These

sample project records were then used

to forecast the expected distribution of

characteristics for future amended and

supplemental certification actions under

the final rule.

The 250 sample project records were

evaluated by a team of field-experienced

FAA certification employees. Based on

the data provided for each project in the

sample, the review team assessed the

following five areas for each sample

record:

1. Categorized the number of

employees in the firm submitting each

application. This information was used

to evaluate the potential effects of the

rule on small entities.

2. Assessed the weight and type of the

affected aeronautical product in order to

estimate the proportion of applications

that would fall within the final rule’s

specified exceptions for certain small

aircraft.

3. Estimated the existing

administrative effort for each

application under current procedures.

4. Estimated the incremental

administrative work that would be

caused by the final rule. The review

team also estimated the additional

administrative work for those

applications that would actually be

excepted by the rule’s small-aircraft

provision. These estimates were needed

to measure the amount of relief that

would be afforded by this exception.

5. Estimated the proportional split

between the certification projects that

would and would not be required to

meet later regulations. For those projects

that would not be required to meet later

requirements, the responses were used

to measure the distribution of

conditions that would lead to that

determination. Conversely, for those

projects that would be required to meet

later regulations, these responses were

used to categorize the relative cost

impact of meeting those regulations.

For 227 of the 250 sample project

applications, the ACOS data system

contained sufficient information for the

FAA review team to estimate answers

for the five-part evaluations described

above. Insufficient data were available

to assess the remaining 23 project

records, which were removed and were

not considered further.

Costs

The following procedure was used to

estimate the administrative costs of the

rule. First, the sample data were

tabulated to determine the proportional

distributions of results for each item

area in the sample. This distribution for

the sample project applications was

then expanded to represent the

characteristics that would be expected

for all affected applications in a year.

The ACOS data show that an average of

2,860 applications for amended or

supplemental type certificates are

received into the system each year. Of

these, an average of 1,649 applications

per year result in certificates being

issued. The difference of 1,211

applications per year represents an

estimate of the applications that are

initiated but are never completed; e.g.,

withdrawn, canceled, or inactive.

The regulatory evaluation assumes

that the additional administrative efforts

caused by the final rule would apply to

all projects that are completed, and that

75 percent of that additional

administrative effort would actually

take place for the ‘‘never completed’’

projects. The sum of the 1,649 annual

applications completed for certification,

and 75 percent of the 1,211 applications

not completed, equals the

administrative equivalent of 2,557

applications per year. The projected

numbers of applications, by category,

36260 Federal Register / Vol. 65, No. 110 / Wednesday, June 7, 2000 / Rules and Regulations

were then computed by multiplying the

percentage distributions of the sample

data by this administrative equivalent of

2,557 applications per year.

Next, the annual increased hours of

administrative work that will be caused

by the rule was computed by

multiplying the matrix of 2,557

applications by the respective average

increases in administrative hours per

application, as determined from the

review team evaluations of Item 4. This

methodology projects that the rule will

impose a total additional 17,218

applicant hours of administrative work

per year. By comparison, the rule’s

exception provision for small aircraft

applications is projected to preclude an

additional 3,985 hours of applicant

administration from being imposed.

The increased annual administrative

costs of the rule were then computed by

multiplying the incremental

administrative hours, from above, by a

unit cost factor of $105 per hour. This

factor is intended to be a representative,

fully burdened labor rate for the highest

skill level necessary to make and

support the determinations called for

under the rule. These calculations

project a base annual administrative

burden of approximately $1.8 million.

The administrative costs of the rule

were then projected over a 20-year study

period. For computational simplicity,

all administrative costs were assumed to

begin in the year 2000, even though the

effective date of the rule will vary by

product type. The computations

assumed an annual 3 percent increase in

certification applications, and

accordingly, a 3 percent annual increase

in attributable costs. The initial year

2000 cost was computed from the $1.8

million base annual administrative

burden described above and inflated at

3 percent annually from 1997 to the year

2000. These calculations predict that the

20-year administrative costs of the rule

will total $53.1 million, with a 1998

present value of $24.6 million. Parallel

calculations were made for the costs

that will be excepted under the rule’s

provision for certain small aircraft. This

exception will preclude an estimated

$12.3 million in applicant

administrative costs over the study

period, with a 1998 present value of

$5.7 million.

In addition to the administrative costs

detailed above, additional costs will be

imposed by the rule’s conditional

requirements for compliance with later

certification regulations. It is important

to note that the final rule’s exception for

small aircraft only applies to the

administrative burden of proof under

the rule. Accordingly, applications that

are excepted from the rule’s incremental

administrative costs may still incur the

incremental costs of complying with

later, and likely more stringent,

regulations.

A second important difference

between the calculations for

administrative costs versus compliance

costs concerns the base number of

affected applications. The previous

computations of administrative costs

included a proportion (75 percent) of

those applications that were never

finalized, and where no amended or

supplemental type certificate was

issued. By comparison, any additional

compliance requirements resulting from

this rule would only apply in situations

where an amended or supplemental

type certificate is actually issued. As

such, the compliance cost calculations

are based on the average 1,649 amended

and supplemental certificates issued

each year, as reported from the ACOS

data. Using this base number, the

annual numbers of certifications that

would be subject to the rule over the 20-

year study period were forecast, based

on a 3 percent growth rate.

The expected annual numbers of

certification projects that would have to

meet later regulations were estimated

from the sample results. Item 5 from the

team evaluation areas assessed the

simulated effect of the rule on the

certification basis of each sample

project. The percentage distribution of

that assessment follows.

Percent of

samples

Rule would not invoke later

regulations:

Change would be not significant ............................ 49.3

Change would not contribute materially to safety or would be impractical ................................. 9.7

Rule would invoke later regulations:

Compliance costs would

increase less than 10% 36.1

Compliance costs would

increase 10%–25% ........ 3.5

Compliance costs would

increase over 25% ......... 1.3

Total ........................... 100.0

This regulatory evaluation uses the

three compliance impact level

percentages to project the annual

numbers of applications where later

regulations would be invoked and

additional compliance costs could

result. Separate estimates were made for

each of the three ranges of compliance

impact. This procedure projected that,

in the first year, cost increases of less

than 10 percent would result from

applying later regulations to 651

certification projects. Similarly, 64

projects were projected to incur cost

increases of 11 to 25 percent, and 24

projects would have cost increases of

over 25 percent. Annual impact

estimates were projected over the entire

study period through the year 2019,

again assuming a 3 percent growth.

It would be informative to have more

detailed compliance impact estimates

than the broad categorizations of

relative percentages that were possible

using the sample review methodology

employed in this evaluation. However,

the scope of projects that will be

affected by this rule is wide, and

reliable measures of the sample project

production levels were not available for

this evaluation. Therefore, in an effort to

provide useful information, without

portraying a higher degree of confidence

than is supportable, estimates were

made of the future annual compliance

cost impacts of the rule per assumed

$100,000 unit of project size. This

assumed average project size is a direct

factor to the resulting projected

compliance costs, and alternate

assumptions are readily calculable.

While this analysis uses a compliance

cost of $100,000 for a single project, the

FAA believes there is a wide range of

compliance costs. For example:

1. A $100 thousand dollar project. An

emergency medical service system for a

helicopter over 3,000 pounds. This

modification includes a litter/restraint

system, medical equipment (oxygen,

ventilator, air pump, defibrillator, etc.),

and an auxiliary electrical system.

2. A $20 to $50 thousand dollar

project. An improved stainless steel

exhaust system for a twin-engine

general aviation aircraft.

3. A $15 thousand dollar project. The

purchase and installation of an avionics

instrument system. For a simple

sensitivity test, the compliance cost

estimate is directly related to changes in

the assumed $100,000 compliance cost

per project. If, for example, the project

cost for small business is better

represented by $20,000, then the

compliance cost estimates should be

reduced by 80 percent.

The unit-project-size cost estimates

were computed as the product of: (1) the

relevant number of annually affected

projects described above, (2) an

assumed median value for the

percentage impact ranges at each of the

three impact levels, and (3) the assumed

$100,000 unit project size. For example,

the year 2000 cost estimate for projects

in the less-than-10-percent cost impact

category was computed as the product

of:

Federal Register / Vol. 65, No. 110 / Wednesday, June 7, 2000 / Rules and Regulations 36261

(1) the projected 651 affected projects

from Table 7,

(2) an assumed mid-range cost impact

of 5 percent, and

(3) the assumed unit project level of

$100,000.

This subcalculation produces a cost

impact estimate of $3,255,000 for

projects in the ‘‘less-than-10-percent’’

cost impact category in the year 2000, as

shown in Table 8. When applied to all

3 cost impact categories, and summed,

this methodology produces an annual

compliance cost impact of $4.8 million

in the year 2000. Total twenty-year

compliance costs, at the $100,000 unit

project level, are projected to equal

$128.0 million, with a 1998 present

value of $59.4 million.

In summary, the 20-year

administrative costs of the rule are

projected to total $53.1 million, with a

1998 present value of $24.6 million.

Parallel compliance costs, assuming a

$100,000 unit project level, equal $128.0

million, with a 1998 present value of

$59.4 million. An additional $12.3

million ($5.7 million, 1998 present

value) in applicant administration costs

will be averted by the small-aircraft

exception provision in the rule.

Benefits

The directly attributable benefit of

this final rule is the augmented safety

that will result in those cases where

future changed products will be

required to comply with later, more

stringent airworthiness standards than

those that would be required in the

absence of this rule. These benefits

cannot be accurately predicted and

quantified, but the rule includes

provisions to assure that any actions

taken pursuant to it will be costbeneficial.

The benefits of amendments to the

airworthiness standards are evaluated at

the time of those amendments. Some

amendments are based on the FAA’s

evaluation of accidents or incidents;

other amendments are based on the

FAA’s evaluation of probable or likely

safety problems that may not be

attributable to a specific accident. The

changed products rule is FAA’s

proactive approach to addressing safety

issues before they arise. The FAA does

not have to wait for an accident to

justify a rule.

As noted previously, the rule will

require compliance with all later

regulations where such compliance will

contribute materially to the level of

safety. The rule will not require

compliance with later regulations: (1) if

the change in the aeronautical product

is not significant, (2) for those areas or

components of the product not affected

by the change, (3) if such compliance

would not contribute materially to the

level of safety of the changed product,

(4) or in the final analysis, if such

compliance would be impractical.

Compliance with later regulations will

be considered impractical if the

applicant can show that such

compliance would result in costs that

are not consistent with the possible

safety benefits. Since each action taken

under the rule will be cost-beneficial,

the FAA has determined that the

benefits of the rule will justify its costs.

Smaller Aircraft Exception Provision

The exception in § 21.101 for nonturbine rotorcraft under 3000 pounds

and for other aircraft under 6000

pounds places the burden on the FAA

to make an initial determination

whether or not to require the applicant

to demonstrate compliance with a later

airworthiness standard. The

certification basis for the change could

be approved in several ways:

(a) If the FAA determines that no later

regulation is to be applied, the applicant

would demonstrate compliance with the

existing certification basis, and there

would be no administrative or

compliance costs associated with

application of this changed products

rule.

(b) If the FAA determines that a later

regulation is to be applied, the applicant

can accept that determination, and,

while there would be compliance costs

associated with accepting the FAA

determination, there would be no

administrative costs.

(c) If the FAA determines that a later

regulation is to be applied, the applicant

could submit a technical analysis to

demonstrate that, for example,

compliance with the later regulation

would be impractical or would not

contribute materially to the level of

safety of the product. In that case—

(1) If the FAA agrees with the

applicant’s technical analysis, the

applicant would demonstrate

compliance with the existing

certification basis, and, while there

would be no compliance costs, there

would be administrative costs.

(2) If the FAA does not agree with the

applicant’s technical analysis, the

applicant would demonstrate

compliance with the later regulation,

and there would be resultant

administrative and compliance costs.

Thus, in practice, the total costs to

applicants for changes to the smaller

aircraft could be a combination of ‘‘no

costs’’ (scenario ‘‘(a)’’ above),

compliance costs only (scenario ‘‘(b)’’

above), administrative costs only

(scenario ‘‘(c)(1)’’ above), and

compliance and administrative costs

(scenario ‘‘(c)(2)’’ above). The

calculations in this regulatory analysis

are based on the assumption that, if the

FAA determines that a later regulation

should apply, the applicant will

demonstrate compliance with the later

regulation, and will not attempt to

demonstrate that one of the exceptions

in § 21.101 applies, e.g., that compliance

with the later regulation would be

impractical or would not contribute

materially to the level of safety.

However, one needs to consider the

following. The applicant will make their

own educated determination as to the

applicability of the later regulation, and

will decide to accept compliance with

that regulation only when they are

relatively certain that the administrative

costs of demonstrating that one of the

§ 21.101 exceptions applies and will

exceed the costs of demonstrating

compliance with the later regulation.

Thus, this regulatory analysis somewhat

over-estimates total compliance costs in

that it assumes that applicants will

always forego their opportunities to

convince the FAA that compliance with

the later regulation would be

impractical or would not contribute

materially to the level of safety. By the

same token, that assumption results,

somewhat, in an under-estimation of the

total administrative costs. Only when an

applicant has decided that compliance

costs are likely to actually exceed

administrative costs, will the applicant

choose to expend the resources to make

the ‘‘impracticality,’’ ‘‘contribution to

safety,’’ or other arguments.

Furthermore, an applicant is more likely

to choose to make those arguments

when there is a persuasive technical

foundation for them. Therefore, this

regulatory analysis over-estimates

compliance costs by including those

costs that would tend to be avoided by

the more efficient expenditure of

administrative resources. And, by the

same token, the administrative costs

that are ‘‘unaccounted for’’ due to the

above under-estimation are more likely

to be spent in realistic efforts to avoid

even higher compliance costs. The net

effect is that this regulatory evaluation

over-estimates total costs.

Regulatory Flexibility Analysis

The Regulatory Flexibility Act of 1980

(5 U.S.C. 601–612) establishes, ‘‘as a

principle of regulatory issuance that

agencies shall endeavor, consistent with

the objective of the rule and of

applicable statutes, to fit regulatory and

informational requirements to the scale

of the business, organizations, and

governmental jurisdictions subject to

regulation.’’ To achieve that principle,

36262 Federal Register / Vol. 65, No. 110 / Wednesday, June 7, 2000 / Rules and Regulations

the Act requires agencies to solicit and

consider flexible regulatory proposals

and to explain the rationale for their

actions. The Act covers a wide range of

small entities, including small

businesses, not-for-profit organizations,

and small governmental jurisdictions.

Agencies must perform a review to

determine whether a proposed or final

rule will have a significant economic

impact on a substantial number of small

entities. If the determination finds that

it will, the agency must prepare a

regulatory flexibility analysis (RFA) as

described in the Act.

However, 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 1980 act

provides that the head of the agency

may so certify, and an RFA is not

required. The certification must include

a statement providing the factual basis

for this determination, and the

reasoning should be clear.

Recently, the Office of Advocacy of

the Small Business Administration

(SBA) published new guidance for

Federal agencies responding to the

requirements of the Small Business

Regulatory Enforcement Act of 1996.

Following the SBA guidance, the FAA

conducted the required review of this

rule and determined that, based on the

cost assumptions described above, it

will have a significant impact on a

substantial number of small entities.

Accordingly, a full regulatory flexibility

analysis was conducted and is

summarized as follows.

1. A Description of The Reasons Why

Action By The Agency Is Being

Considered

In recent years, a trend has developed

toward fewer products that are of

completely new designs, which would

require new type certificates. Over a

period of time, a series of changes to an

original product may have been made so

that the current model is considerably

different from the original model.

Although each changed product in such

a series of changes may differ little from

its immediate predecessor, the

collective changes can result in a

product with substantial differences

from the original product.

Another trend in manufacturing is to

keep products in production over

several decades. Some currently

manufactured airplanes have evolved

from airplane models originally typecertificated 25 years ago. This does not

imply that those airplanes are unsafe,

because they do, in practice, have

features that address the intent of most

of the current airworthiness standards.

However, current procedural regulations

(part 21) do not require that changed

products demonstrate compliance with

all current airworthiness standards.

The FAA maintains that the issue

should not be whether a product is

produced under a new type certificate

or an amended one, or changed under

a supplemental type certificate. Nor

should the certification basis of a

changed product turn on the fact that

the product is to be modified or initially

operated by a small (as opposed to a

large) entity. The issue is whether or not

the level of safety of the product,

embodied in the airworthiness

standards it complies with, is as high as

practical.

2. A Succinct Statement of The

Objectives Of, and Legal Basis For, The

Proposed Rule

The objective of this rule is to

enhance safety by applying the latest

airworthiness standards, to the greatest

extent practical, for the certification of

significant design changes to aircraft,

aircraft engines, and propellers.

The legal basis for the rule derives

from Title 49, U.S.C. 44701 which

authorizes the FAA Administrator to

promote safety of flight of civil aircraft

in air commerce by prescribing, in part,

minimum standards governing the

design and construction of aircraft,

aircraft engines, and propellers, as may

be required in the interest of safety.

Under 49 U.S.C. § 44704, the FAA may

issue type certificates, including

supplemental type certificates, for

aircraft, aircraft engines, and propellers.

3. A Description of The Projected

Reporting, Recordkeeping and Other

Compliance Requirements of The

Proposed Rule, Including an Estimate of

The Classes or Types of Small Entities

That Will Be Subject to The

Requirement and The Type of

Professional Skills Necessary For

Preparation of The Report or Record

As detailed previously in the

regulatory evaluation, the requirements

imposed by this rule will affect future

applicants for amended and

supplemental type certificates for

changed aeronautical products. The rule

will impose both administrative

requirements (with certain exceptions)

and compliance requirements. It will

require applicants to comply with the

regulations in effect on the date of the

application for the change, as compared

to the latest certification basis of the

product to be changed, unless one of

several conditions is met. Compliance

with the later set of regulations will not

be required: (1) if the change is not

significant, (2) for those areas or

components not affected by the change,

(3) if such compliance would not

contribute materially to the level of

safety of the changed product, or (4) if

such compliance would be impractical;

i.e., would result in costs that would not

be commensurate with the safety benefit

that would be derived.

Applicants for changes to most

products would need to evaluate and

demonstrate to the FAA the

applicability of these four conditions to

their product changes, if compliance to

regulations other than the most current

is to be required. The skill level

necessary to make these determinations

will vary widely with the scale and

engineering complexity of the

individual product change involved. In

general, these skills would include a

working knowledge of the pertinent

aviation regulations, the ability to

evaluate and approve technical data,

and a combination of training and

responsible experience in the field or

fields of engineering pertinent to the

product change. In assessing the

administrative costs of this rule, the

regulatory evaluation assumes a fully

burdened labor rate of $105 per hour for

the highest skill level necessary to make

and support the determinations called

for under the rule.

4. An Identification, to The Extent

Practicable, of All Relevant Federal

Rules That May Duplicate, Overlap, or

Conflict With The Rule

The FAA is unaware of any federal

rules that would duplicate, overlap, or

conflict with the final rule.

5. A Description and An Estimate of The

Number of Small Entities To Which The

Rule Will Apply

This rule will apply to future

applicants for amended and

supplemental type certificates for

changed aeronautical products. FAA

regulations are typically directed toward

some closely identified industry or

occupation; such as domestic air

carriers or private pilots. By

comparison, the applicants under this

rule are not uniquely defined, and may

be found in a wide variety of industries.

In assessing this rule, the FAA

identified 63 industry groups in 19

different four-digit standard industrial

classifications (SIC) that would

reasonably include applicants for

certifications to changed aeronautical

products. These industries are listed as

Table 9 of the appendix to the full

regulatory evaluation.

The Small Business Administration

(SBA) provides descriptive national data

for the year 1995 on U.S. firms,

aggregated at the four-digit SIC level.

Federal Register / Vol. 65, No. 110 / Wednesday, June 7, 2000 / Rules and Regulations 36263

1Note that these are average costs per application,

not per affected application. Based on the sample,

36 percent of all small business applications would

meet the ‘‘small aircraft’’ exception under the rule

and incur no incremental administrative costs.

2Note that the ‘‘small aircraft’’ exception under

the rule will not alter compliance decisions nor

alleviate their costs.

3For computational simplicity, the regulatory

evaluation overstates initial annual compliance

costs by assuming that all such costs would occur

in the year that the project is approved. In reality,

they would occur over several years.

4Aircraft operators or modifiers typically do not

amortize the incremental cost of $3,200 for a

modification totaling $100,000 or more.

These data include the numbers of

firms, numbers of establishments,

employment, annual payroll, and

estimated receipts by employment size

of firm. Information for the 19 industry

classifications identified under this rule

were combined to produce the following

distributions.

Number of

employees

Percent of

firms

Annual receipts

per employee

($1,000’s)

1—99 .............. 83.2 148.0

100—499 ........ 8.0 163.9

500 or more .... 8.8 207.6

Total ........ 100.0 Avg: 200.1

The SBA also provides small business

size standards for each industry. The 19

industry groups that could include firms

affected under this rule fall into four

separate SBA standards for small

business definition: 500, 750, 1000, or

1500 employees. As part of the

evaluation for this rule, the FAA

analyzed the employment size of firms

for a random sample of 227

supplemental and amended type

certification projects. The size

distribution of these samples is

presented below.

Number of

employees

Percent of

samples

Cumulative

percent of

samples

1—100 ............ 44.1 44.1

101—500 ........ 12.3 56.4

501—750 ........ 2.6 59.0

751—1000 ...... 1.8 60.8

1001—1500 .... 1.3 62.1

1501 or more .. 37.9 100.0

Total ........ 100.00 .........................

As presented in the table, depending

on which size standard is applied,

between 56.4 percent to 62.1 percent of

the changed-product applications that

would be affected by this rule will be

submitted by small businesses. To

simplify discussion, the remainder of

this analysis is based on the 62.1

percent proportion and uses the under

1500-employee size standard. As

estimated in the full regulatory

evaluation, the FAA expects the

administrative equivalent of 2,557

applications will be submitted each

year, and 1,588 of those would be from

small firms.

The final rule, unlike the original

rule, includes an administrative

exception for applications related to

certain small aircraft. Based on the

sample of projects that were analyzed

for this rule, 16.7 percent of all

applications would fall under this

exception, and 97.4 percent of the

excepted applications would be

submitted by small firms. An estimated

417 of the total annual 1,588 smallbusiness applications would qualify for

this exception, and the remaining 1,171

would not.

In addition to the administrative

requirements for applications that are

submitted, the rule will also invoke

certain regulatory compliance

requirements for the proportion of

applications that are completed and

certificated. Some 1,649 of the total

applications are completed annually as

amended or supplemental type

certificates and would be subject to the

rule’s compliance provisions. Of these,

an estimated 1,024 will be from small

firms.

Regulatory Flexibility Cost Analysis

The full regulatory evaluation

forecasted costs over a 20-year period,

beginning in the year 2000, and

assumed a three-percent annual increase

in applications. For all applicants, the

first year administrative costs of the rule

are projected to equal $1,975,530 (1998

present value $1,725,504). Using the

1500-employee size standard, small

firms are projected to incur 56.6 percent

of those costs, equaling $1,118,679 with

a 1998 present value of $977,098. The

small business proportion of expected

administrative costs (56.6 percent) is

lower than the proportion of

applications expected from small

business (62.1 percent) because a

significantly higher proportion of the

administrative exceptions under the

rule are projected for small business

applicants. This disproportionate

exception rate also causes the average

increased administrative cost per small

business application ($664) 1 to be

smaller than the average for all

applicants ($728.) For the 20-year study

period, incremental small business

administrative costs under the rule are

projected to total $30,059,321 with a

1998 present value of $13,938,179.

The regulatory evaluation also details

the incremental costs expected under

the rule for compliance with later

regulations. Based on the evaluation of

sample applications, 48 percent of the

future certifications from small business

firms would be required to meet some

measure of additional later regulations.

This proportion is higher than the

parallel figure of 41 per cent for

applications from all firms.2 In turn, this

higher incidence rate also produces

higher small business costs per

certification action if it is assumed that

the scale and complexity of small

business and large business certification

projects are the same. In the absence of

reliable project size estimates, the

regulatory evaluation has employed a

uniform $100,000 project size as a unit

factor to facilitate decision-making.

However, the FAA does not believe that

the projects submitted by small and

large businesses are typically equal in

scale and complexity.

While this analysis uses a compliance

cost of $100,000 for a single project, the

FAA believes there is a wide range of

compliance costs. For example:

1. A $100 thousand dollar project. An

emergency medical service system for a

helicopter over 3,000 pounds. This

modification includes a litter/restraint

system, medical equipment (oxygen,

ventilator, air pump, defibrillator, etc.),

and an auxiliary electrical system.

2. A $20 to $50 thousand dollar

project. An improved stainless steel

exhaust system for a twin-engine

general aviation aircraft.

3. A $15 thousand dollar project. The

purchase and installation of an avionics

instrument system. For a simple

sensitivity test, the compliance cost

estimate is directly related to changes in

the assumed $100,000 compliance cost

per project. If, for example, the project

cost for small business is better

represented by $20,000, then the

compliance cost estimates should be

reduced by 80 percent.

With the above sensitivity test in

mind and using the $100,000 project

size cost, small business applications

are expected to incur a year 2000

compliance cost of $3,582,317 (with a

1998 present value of $3,128,934).3 This

represents an average increase of $3,198

per project, assuming a unit $100,000

base project size.4 Over the twenty-year

study period, small business

compliance costs under this scenario are

projected to total $96,006,280 (with a

1998 present value of $44,532,108).

Affordability Analysis

If the assumed $100,000 unit of

project size is also assumed to be the

average size for a small-business project,

36264 Federal Register / Vol. 65, No. 110 / Wednesday, June 7, 2000 / Rules and Regulations

5FAA analysis of the ACOS data shows that 52%

of applications were submitted by firms that only

submitted one application in that year.

the increased administrative cost per

project ($664) can be added to the

increased compliance cost per project

($3,198) to provide an expected average

increase of $3,862 per project. The

relative effect of these costs per small

firm is a function of: (1) the size

(receipts) of that firm, and (2) the

number of project applications that a

firm submits/completes per year.5 The

following table presents the average

impact of the rule as a percentage of a

firm’s annual receipts, for various

assumptions on firm size and annual

number of projects. For example, a firm

with 5 projects per year would incur

additional costs of 5 times $3,862; or

$19,310 for the year. If that firm

employs 10 people, with each employee

producing an average $148,000 of

receipts per year (from the ‘‘annual

receipts per employee’’ factors reported

above in paragraph 5) the firm’s total

receipts would equal $1.48 million. For

this example combination of employees

and projects, the $19,310 one-year

impact of the rule would equal 1.30

percent of the $1.48 million estimated

annual receipts of the firm. As a matter

of context, it should be noted that FAA

analysis of the ACOS data shows that 52

percent of applications were submitted

by firms that only submitted one

application in that year.

AVERAGE IMPACT OF RULE AS A

PERCENTAGE OF ANNUAL RECEIPTS

Employees

Annual No. of projects

1 5 10

10 ............. 0.26% 1.30% 2.61%

100 ........... 0.02% 0.12% 0.24%

1000 ......... 0.00% 0.01% 0.02%

Disproportionality Analysis

As discussed in the cost and

affordability analyses above, a higher

proportion of total certification

applications is received from small

businesses (62.1 percent) than from

large businesses (37.9 percent). This is

not surprising given the relative

proportions of numbers of small and

large businesses. By comparison, the

small business proportion of expected

administrative costs (56.6 percent) will

be lower than the proportion of

applications expected from small

businesses (62.1 percent) because a

significantly higher proportion of the

administrative exceptions under the

rule are projected for small business

applicants. By comparison, the sample

survey assessment predicts that small

business applicants will

disproportionately incur the additional

costs of complying with later

regulations as a result of the rule. The

sample survey predicts that the rule will

require 48 percent of small business

applications, as compared to 29 percent

of large business applications, to

comply with later regulations.

Competitiveness Analysis

As discussed above, it appears that

there will be proportionally higher

compliance costs imposed by the rule

on small than on large businesses. This

information is not sufficient, however,

to determine the impact of the

competitiveness of small business vis-a ́-

vis large entities. There is a wide

divergence in the characteristics and

ultimate consumer of products. There is

a fundamental difference among large,

fixed-wing commercial aviation, general

aviation, and rotorcraft. Also, the

products that are produced by the

companies that are subject to the rule

are not homogeneous. The wide range of

products that would be certificated

under this rule includes major aircraft

components such as wings, diversely

unique avionics, and small

subassemblies such as seat fasteners.

Also, many of the larger companies in

this field are assemblers of products that

often are produced by small companies.

As such, the large companies may be

customers rather than competitors to the

affected small companies.

Business Closure Analysis

The FAA believes that the average

impact of the rule gauged by the cost of

the rule per year relative to an affected

firm’s average annual receipts is likely

to be low. In cases where the potential

costs would be prohibitive, firms may

decide not to proceed with the intended

change. This would prevent cash flow

problems, losses, and business closure

in the short run. However, a series of

decisions not to certify new products

could affect long run business viability.

Based on the sample of 250 applications

analyzed by the FAA, the agency

believes that the vast majority of

applications would not impose high

enough compliance costs to threaten

business closure of small business.

Description of Alternatives

Three primary alternatives were

considered in crafting this rule. The first

would be to take no new rulemaking

action and to retain the changedproduct certification process as it now

exists. The FAA opposes this alternative

because it would not address the

problem whereby a series of cumulative

changes can result in a model that is

substantially different from the original

model, yet that product is not required

to demonstrate compliance with all the

recent airworthiness standards.

The second evident alternative would

be to retain the existing certification

process for changes to small aircraft,

since the bulk of these applications are

submitted by small firms. Again, the

FAA opposes this alternative since it

would leave the existing problem for a

segment of the industry and would

create an unacceptable inequity across

aircraft model sizes.

As an alternative to full exclusion

from the rule, the FAA has included a

small-aircraft exception for the

administrative responsibilities of the

final rule, but not for its compliance

provisions. This exception was

specifically added to address small

business concerns that arose from the

proposed rule. The exception will apply

to applicants for changes to either: (1)

non-turbine rotorcraft of 3,000 pounds

or less maximum weight, or (2) other

aircraft of 6,000 pounds or less. For

changes to such products, the FAA (i.e.,

the Aircraft Certification Office (ACO)

processing the application) may make

an initial determination that one or

more later airworthiness standards

should be part of the certification basis

of the changed product. If the ACO

makes that determination, the applicant

may submit technical analyses to

convince the ACO that compliance with

the later regulation(s) would be

impractical or would not contribute

materially to the level of safety of the

product. However, as discussed

previously in this summary, the

regulatory analysis makes the

conservative assumption that the

applicant will forgo the administrative

costs of those technical analyses and

incur the compliance costs (estimated to

be twice that of administrative costs)

attributable to the later regulation(s).

Based on the sample survey, 16.7

percent of all project applications would

qualify for this exception, and 97.4

percent of the excepted applications

would come from small firms (fewer

than 1500 employees). In point of fact,

81.6 percent of the exceptions would go

to firms with less than 100 employees.

The value of applicant costs that will

be averted by the small-aircraft

exception is detailed in the full

regulatory evaluation. The expected

value of all exceptions in the first year

of the rule (year 2000) is calculated at

$457,224. Over the 20-year study

period, the value of exceptions totals to

$12.3 million with a 1998 present value

of $5.7 million. Again, over 97 percent

of this relief will go to small businesses.

Federal Register / Vol. 65, No. 110 / Wednesday, June 7, 2000 / Rules and Regulations 36265

The small-aircraft exception provision is

predicted to reduce the rule’s

administrative burden on small

businesses by 27.6 percent from the

level that would exist without it. The

total small business cost burden

(administrative and compliance costs)

will be 6 percent lower as a result of this

exception.

Other alternatives were considered,

but were determined not to be

practicable. These included (1)

requiring applicants for changes to

comply with the latest regulations, with

no exceptions; and (2) requiring a

complete recertification at certain

intervals (10 years).

Compliance Assistance

The FAA will issue an advisory

circular based on this rulemaking. The

circular will provide examples and

guidance for determining the

certification basis of changed

aeronautical products. Small businesses

and other applicants may follow this

guidance in developing their own

arguments as to the appropriate

certification basis of their changed

products. The circular will be available

from the FAA’s aircraft certification

offices and through the FAA website.

The agency intends to use a variety of

additional mechanisms to inform

applicants and industry trade

associations of the rule change and to

explain the new procedures. The FAA

will serve copies of this final rule

document, with the Regulatory

Evaluation Summary, on trade

associations that represent most of the

small entities affected by this rule. The

FAA also will utilize its directorate

newsletters to inform industry. The

agency will present information on the

new rule at industry and FAA designee

meetings. In addition, a training video

and instructional materials are being

developed that will introduce the new

rule and explain the respective roles of

applicants and FAA personnel. These

products will also be available to small

businesses through the aircraft

certification offices.

International Trade Impact Assessment

The provisions of this rule promote

international trade for U.S. firms doing

business in foreign countries and

foreign firms doing business in the

United States. The final rule results,

primarily, from a recommendation

harmonized with the aviation

authorities of Canada and Europe.

Transport Canada and the Joint Aviation

Authorities have proposed similar

corresponding changes to regulations

governing type certification procedures

for changed products.

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 U.S. This final rule

imposes additional safety requirements

for aviation products that are registered

in the U.S. Thus, this final rule does not

create any unnecessary obstacles to the

foreign commerce of the U.S.

Unfunded Mandates Reform Act

Title II of the Unfunded Mandates

Reform Act of 1995 (the Act), codified

as 2 U.S.C. 1501–1571, 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 expenditures by State, local,

and tribal governments, in the aggregate,

or by the private sector of $100 million

or more (adjusted annually for inflation)

in any one year.

This rule does not meet the thresholds

of the Act. Therefore, the requirements

of Title II 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. We

determined that this action would not

have a substantial direct effect on the

States, on the relationship between the

national Government and the States, or

on the distribution of power and

responsibilities among the various

levels of government. Therefore, we

determined that this notice does not

have federalism implications.

Environmental Analysis

FAA Order 1050.1D defines FAA

actions that may be categorically

excluded from preparation of a National

Environmental Policy Act (NEPA)

environmental assessment or

environmental impact statement. In

accordance with FAA Order 1050.1D,

appendix 4, paragraph 4(j), this

rulemaking action qualifies for a

categorical exclusion.

Energy Impact

The energy impact of the rule has

been assessed in accordance with the

Energy Policy and Conservation Act

(EPCA) Pub. L. 94–163, as amended (42

U.S.C. 6362). It has been determined

that it is not a major regulatory action

under the provisions of the EPCA.

List of Subjects

14 CFR Part 11

Administrative practices and

procedures reporting

14 CFR Part 21

Aircraft, Aviation safety, Safety, Type

certification

14 CFR Part 25

Aircraft, Aviation safety, Safety, Type

certification

Adoption of Amendments

Accordingly, the FAA amends parts

11, 21, and 25, Chapter 1 of Title 14,

Code of Federal Regulations, as follows:

PART 11—GENERAL RULEMAKING

PROCEDURES

1. The authority citation for part 11

continues to read as follows:

Authority: 49 U.S.C. 106(g), 40101, 40103,

40105, 40109, 40113, 44110, 44502, 44701–

44702, 44711, 46102.

2. Section 11.11 is amended by

removing the first sentence and adding

two sentences, in its place, to read as

follows:

§ 11.11 Docket.

Official FAA records relating to

rulemaking actions are maintained in

current docket form in the Office of the

Chief Counsel. These records include:

Proposals, notices of proposed

rulemaking, written material received in

response to notices, petitions for

rulemaking and exemptions, written

material received in response to

summaries of petitions for rulemaking

and exemptions, petitions for rehearing

or reconsideration, petitions for

modification or revocation, notices

denying petitions for rulemaking,

notices granting or denying exemptions,

summaries required to be published

under § 11.27, special conditions

required as prescribed under §§ 21.16 or

21.101(d) of this chapter, written

material received in response to

published special conditions, reports of

proceedings conducted under § 11.47,

notices denying proposals, and final

rules or orders. * * *

PART 21—CERTIFICATION

PROCEDURES FOR PRODUCTS AND

PARTS

3. 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.

4. Section 21.19 is revised to read as

follows:

§ 21.19 Changes requiring a new type

certificate.

Each person who proposes to change

a product must apply for a new type

certificate if the Administrator finds that

36266 Federal Register / Vol. 65, No. 110 / Wednesday, June 7, 2000 / Rules and Regulations

the proposed change in design, power,

thrust, or weight is so extensive that a

substantially complete investigation of

compliance with the applicable

regulations is required.

5. Section 21.101 is revised to read as

follows:

§ 21.101 Designation of applicable

regulations.

(a) An applicant for a change to a type

certificate must show that the changed

product complies with the

airworthiness requirements applicable

to the category of the product in effect

on the date of the application for the

change and with parts 34 and 36 of this

chapter. Exceptions are detailed in

paragraphs (b) and (c) of this section.

(b) If paragraphs (b)(1), (2), or (3) of

this section apply, an applicant may

show that the changed product complies

with an earlier amendment of a

regulation required by paragraph (a) of

this section, and of any other regulation

the Administrator finds is directly

related. However, the earlier amended

regulation may not precede either the

corresponding regulation incorporated

by reference in the type certificate, or

any regulation in §§ 23.2, 25.2, 27.2, or

29.2 of this chapter that is related to the

change. The applicant may show

compliance with an earlier amendment

of a regulation for any of the following:

(1) A change that the Administrator

finds not to be significant. In

determining whether a specific change

is significant, the Administrator

considers the change in context with all

previous relevant design changes and all

related revisions to the applicable

regulations incorporated in the type

certificate for the product. Changes that

meet one of the following criteria are

automatically considered significant:

(i) The general configuration or the

principles of construction are not

retained.

(ii) The assumptions used for

certification of the product to be

changed do not remain valid.

(2) Each area, system, component,

equipment, or appliance that the

Administrator finds is not affected by

the change.

(3) Each area, system, component,

equipment, or appliance that is affected

by the change, for which the

Administrator finds that compliance

with a regulation described in paragraph

(a) of this section would not contribute

materially to the level of safety of the

changed product or would be

impractical.

(c) An applicant for a change to an

aircraft (other than a rotorcraft) of 6,000

pounds or less maximum weight, or to

a non-turbine rotorcraft of 3,000 pounds

or less maximum weight may show that

the changed product complies with the

regulations incorporated by reference in

the type certificate. However, if the

Administrator finds that the change is

significant in an area, the Administrator

may designate compliance with an

amendment to the regulation

incorporated by reference in the type

certificate that applies to the change and

any regulation that the Administrator

finds is directly related, unless the

Administrator also finds that

compliance with that amendment or

regulation would not contribute

materially to the level of safety of the

changed product or would be

impractical.

(d) If the Administrator finds that the

regulations in effect on the date of the

application for the change do not

provide adequate standards with respect

to the proposed change because of a

novel or unusual design feature, the

applicant must also comply with special

conditions, and amendments to those

special conditions, prescribed under the

provisions of § 21.16, to provide a level

of safety equal to that established by the

regulations in effect on the date of the

application for the change.

(e) An application for a change to a

type certificate for a transport category

aircraft is effective for 5 years, and an

application for a change to any other

type certificate is effective for 3 years.

If the change has not been approved, or

if it is clear that it will not be approved

under the time limit established under

this paragraph, the applicant may do

either of the following:

(1) File a new application for a change

to the type certificate and comply with

all the provisions of paragraph (a) of this

section applicable to an original

application for a change.

(2) File for an extension of the original

application and comply with the

provisions of paragraph (a) of this

section. The applicant must then select

a new application date. The new

application date may not precede the

date the change is approved by more

than the time period established under

this paragraph (e).

(f) For aircraft certificated under

§§ 21.17(b), 21.24, 21.25, and 21.27 the

airworthiness requirements applicable

to the category of the product in effect

on the date of the application for the

change include each airworthiness

requirement that the Administrator

finds to be appropriate for the type

certification of the aircraft in accordance

with those sections.

6. Section 21.115 is amended by

revising paragraph (a) to read as follows:

§ 21.115 Applicable requirements.

(a) Each applicant for a supplemental

type certificate must show that the

altered product meets applicable

requirements specified in § 21.101 and,

in the case of an acoustical change

described in § 21.93(b), show

compliance with the applicable noise

requirements of part 36 of this chapter

and, in the case of an emissions change

described in § 21.93(c), show

compliance with the applicable fuel

venting and exhaust emissions

requirements of part 34 of this chapter.

* * * * *

PART 25—AIRWORTHINESS

STANDARDS: TRANSPORT

CATEGORY AIRPLANES

7. The authority citation for part 25

continues to read as follows:

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

44702, 44704.

8. Section 25.2 is amended by revising

paragraph (c) to read as follows:

§ 25.2 Special retroactive requirements.

* * * * *

(c) Compliance with subsequent

revisions to the sections specified in

paragraph (a) or (b) of this section may

be elected or may be required in

accordance with § 21.101(a) of this

chapter.

Issued in Washington, DC, on May 31,

2000.

Jane F. Garvey,

Administrator.

[FR Doc. 00–14052 Filed 6–2–00; 10:13 am]

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