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CHANGES TO PRODUCTION CERTIFICATES AND APPROVALS (Final 

Rule)—Regulatory Evaluation, Regulatory Flexibility Analysis, International 

Trade Assessment, and Unfunded Mandates Assessment 

Daniel Leach, APO-300 

FTC Draft 2-March 12, 2015 (Final draft) 

A. Regulatory Evaluation

Changes to Federal regulations must undergo several economic analyses. First, Executive 

Orders 12866 and 13563 direct 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 (Pub. L. 96-354), as codified in 5 U.S.C. § 603 et 

seq., requires agencies to analyze the economic impact of regulatory changes on small entities. 

Third, the Trade Agreements Act (Pub. L. 96-39), as amended by the Uruguay Round 

Agreements Act (Pub. L. 103-465), prohibits agencies from setting standards that create 

unnecessary obstacles to the foreign commerce of the United States. In developing U.S. 

standards, the Trade Act requires agencies to consider international standards and, where 

appropriate, that they be the basis of U.S. standards. Fourth, the Unfunded Mandates Reform Act 

of 1995 (Pub. L. 104-4), as codified in 2 U.S.C. § 1532, 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 with 

base year of 1995). This portion of the preamble summarizes the FAA’s analysis of the economic 

impacts of this final rule. 

 Department of Transportation Order DOT 2100.5 prescribes policies and procedures for 

simplification, analysis, and review of regulations. If the expected cost impact is so minimal that 

a proposed or final rule does not warrant a full evaluation, this order permits that a statement to 
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that effect and the basis for it be included in the preamble if a full regulatory evaluation of the 

costs and benefits is not prepared. Such a determination has been made for this final rule. The 

reasoning for this determination follows.

 As summarized in the table below, the provisions of this final rule (1) are minimal cost, 

(2) will impose no additional costs because the provisions will clarify only, or are current 

practice, or (3) are voluntary and therefore inherently cost-beneficial. Our determination has not 

changed from that made in the NPRM regulatory evaluation. And the FAA received no 

comments to the docket on the NPRM regulatory evaluation. More detailed explanations follow 

the table.

Provision Costs/Benefits 

Require Identification of 

Accountable Manager 

Minimal cost—Requires identification of an existing manager, who is 

responsible for and has authority over a Production Approval Holder 

(PAH)’s operations, as a PAH’s primary contact with the FAA. 

Allow PC Holders to 

Manufacture and Install 

Interface Components 

Codifying the practice, previously allowed by exemption, will reduce 

regulatory compliance costs. 

Modify Supplier Control 

Requirements 

No additional cost—Clarifies existing requirement that PAHs are 

responsible for conformity throughout their supply chains and gives 

PAHs flexibility in establishing a supplier-reporting process for 

nonconforming releases. 

Allow PAHs to Issue 

Authorized Release Documents 

for Aircraft Engines, Propellers 

and Articles 

Voluntary, so expected benefits will exceed expected costs. 

Exclude Fixed-Pitch Wooden 

Propellers from Fireproof 

Marking Requirements 

The FAA found the exemption provides an equivalent level of safety. 

Codifying the practice, previously allowed by exemption, will reduce 

regulatory compliance costs. 

1. Require Identification of an Accountable Manager 

Under this provision, the FAA will require each applicant for, or holder of, a Production 

Certificate (PC), Parts Manufacturer Approval (PMA), or Technical Standard Order (TSO) 
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authorization to identify an accountable manager, who is responsible for, and has authority over, 

a PAH’s operations, as a PAH’s primary contact with the FAA. This provision is not intended to 

require the PAH to create a new position within its organization and will not mandate that an 

individual in a specific position be identified as the accountable manager. Consequently, the 

costs, if any, associated with this requirement are minimal. 

2. Allow Production Certificate Holders to Manufacture and Install Interface Components 

PC holders previously could not install interface components (ICs) on their type-certificated 

products without an exemption. Previous regulations governing the production limitation record 

and the amendment of PCs restricted the PC holder to the manufacture of products only (aircraft, 

aircraft engines, or propellers) and did not authorize installation.1

 The FAA has granted 

exemptions to engine manufacturers, allowing them to manufacture and install airframe 

components that interface between the engine and the airframe provided they own or are licensed 

to use the IC type design and installation data. In granting these exemptions, the FAA found that 

allowing engine manufacturers to produce and install ICs improved safety and efficiency by 

eliminating disassembly, reassembly and retesting, as well as related scoring of fatigue sensitive 

parts; damage to critical parts; and air/fuel/oil leaks.2

 This provision will codify the practice, 

previously allowed by exemption, of allowing PC holders to manufacture and install ICs, and 

will apply to any articles designated by the TC holder that interface between products. 

Therefore, this provision applies to the interface between propeller and aircraft engine and 

between propeller and aircraft, as well as between aircraft engine and aircraft. 

 

1

 Before 2010, §§ 21.142 (production limitation record) and 21.147 (amendment of production certificates) were 

codified at §§ 21.151 and 21.153, respectively. 

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 The production and installation of ICs by engine manufacturers also increase efficiency by allowing delivery of 

quick-change replacement engines to end users such as air carriers and charter operators. Some piece parts (or kits), 

such as the engine buildup unit (EBU), rather than being installed by the PC holder, may be shipped separately to an 

aircraft manufacturer for the purpose of just-in-time manufacturing operations, or to an airline that may want kits on 

hand for routine maintenance operations or to replace hardware damaged during operations. 
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Codifying the previous practice of allowing PC holders to manufacture and install ICs 

implies no change in safety or efficiency benefits. Codifying the practice, however, will reduce 

regulatory costs since paperwork requirements involved in periodic application for and granting 

of exemptions will be eliminated. 

3. Modification of Supply Control 

With this provision the FAA intends to clarify existing requirements that the PAH is 

responsible for (1) conformity throughout the supply chain and (2) establishing a supplier 

reporting process for nonconforming releases. As there was no definition of supplier in the 

previous regulations, the final rule defines supplier as “a person that provides a product, article, 

or service at any tier in the supply chain that is used or consumed in the design or manufacture 

of, or installed on, a product or article.” 

The final rule changes the language to § 21.137(c) as shown in the following table:

Previous Rule Language Final Rule Language 

Supply Control—Procedures that 

(1) Ensure that each supplier-furnished product 

or article conforms to its approved design; and 

(2) Require each supplier to report to the 

production approval holder if a product or 

article has been released from that supplier and 

subsequently found not to conform to the 

applicable design data. 

Supply Control—Procedures that 

1) Ensure that each supplier-provided product, article, or 

service conforms to the product approval holder’s 

requirements; and 

(2) Establish a supplier reporting process for products, 

articles or services that have been released from the supplier 

and subsequently found not to conform to the production 

approval holder’s requirements. 

 

 As provision (1) just clarifies the FAA’s intent and current practice, while provision (2) gives 

PAHs greater flexibility, there will be no additional cost resulting from these provisions. 
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4. Allow Production Approval Holders to Issue Authorized Release Documents for Aircraft 

Engines, Propellers, and Articles 

Previously only the FAA was allowed to document that an aircraft engine, propeller, or 

article conforms to its approved design and is in condition for safe operation. The FAA provides 

documentation with an airworthiness approval, using FAA Form 8130-3, “Authorized Release 

Certificate/FAA Form 8130-3 Airworthiness Approval Tag.” This provision allows, but does not 

require, qualified PAHs to issue authorized release documents, using FAA Form 8130-3, for 

aircraft engines, propellers, and articles for which the PAH has a production approval. We refer 

to the issuance of Form 8130-3 by a PAH as an “authorized release document” because, as 

defined by 14 CFR § 21.1(b)(1), only the FAA is allowed to issue an airworthiness approval. 

PAHs choosing not to issue these authorized release documents may continue to obtain 

approvals from the FAA. 

 Although such airworthiness documentation is required only when requested by a foreign 

civil aviation authority, it has become increasingly valued in the aviation industry. Several U.S. 

manufacturers have requested the privilege to issue such documentation, which is already 

enjoyed by their European and Canadian counterparts. As it is voluntary, this provision is 

inherently cost beneficial.3

5. Marking of Fixed-Pitch Wooden Propellers 

 As noted in the preamble above, the FAA granted an exemption to Sensenich Wood 

Propeller Company from the regulations requiring that a propeller, propeller blade, or propeller 

hub be marked using an approved fireproof method. In granting the exemption, the FAA found 

 

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 For aircraft, an export airworthiness approval will continue to be issued only by the FAA, using Form 8130-4, 

“Export Certificate of Airworthiness.”
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that stamping the hub of the propeller with the identification markers will achieve an equivalent 

level of safety to the rule. The FAA maintains that finding in this final rule and, in any case, 

codifying the practice, previously allowed by exemption, implies no change in safety benefits.4

Codifying the practice, however, will reduce regulatory costs since the costs of paperwork 

requirements involved in periodic application for and granting of the exemptions will be 

eliminated. 

B. Regulatory Flexibility Determination 

The Regulatory Flexibility Act of 1980 (Pub. L. 96-354) (RFA) establishes “as a 

principle of regulatory issuance that agencies shall endeavor, consistent with the objectives of the 

rule and of applicable statutes, to fit regulatory and informational requirements to the scale of the 

businesses, organizations, and governmental jurisdictions subject to regulation.” To achieve this 

principle, agencies are required to solicit and consider flexible regulatory proposals and to 

explain the rationale for their actions to assure that such proposals are given serious 

consideration.” The RFA covers a wide-range of small entities, including small businesses, notfor-profit organizations, and small governmental jurisdictions. 

 Agencies must perform a review to determine whether a rule will have a significant 

economic impact on a substantial number of small entities. If the agency determines that it will, 

the agency must prepare a regulatory flexibility analysis as described in the RFA. 

 However, if an agency determines that a rule is not expected to have a significant 

economic impact on a substantial number of small entities, section 605(b) of the RFA provides 

that the head of the agency may so certify and a regulatory flexibility analysis is not required. 

 

4

 Variable-pitch wooden propellers do not require exception from the fireproof marking requirement since they have 

metal hubs. 
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The certification must include a statement providing the factual basis for this determination, and 

the reasoning should be clear. 

 As discussed above, the provisions of this final rule (1) are minimal cost, (2) would 

impose no additional costs because the provisions would clarify only, or are current practice, or 

(3) are voluntary. And we received no comments on our determination in the NPRM that there 

was no significant impact on a substantial number of small entities. 

 Therefore, as provided in section 605(b), the head of the FAA certifies that this final rule 

will not have a significant impact on a substantial number of small entities. 

C. International Trade Impact Assessment 

 The Trade Agreements Act of 1979 (Pub. L. 96-39), as amended by the Uruguay Round 

Agreements Act (Pub. L. 103-465), prohibits Federal agencies from establishing standards or 

engaging in related activities that create unnecessary obstacles to the foreign commerce of the 

United States. Pursuant to these Acts, the establishment of standards is not considered an 

unnecessary obstacle to the foreign commerce of the United States, so long as the standard has a 

legitimate domestic objective, such as the protection of safety, and does not operate in a manner 

that excludes imports that meet this objective. The statute also requires consideration of 

international standards and, where appropriate, that they be the basis for U.S. standards. 

The FAA has assessed the potential effect of this final rule and determined that the rule’s 

provision allowing PAHs to issue export airworthiness approvals would be in accord with the 

Trade Agreements Act as this provision uses European standards as the basis for United States 

regulation. The remaining provisions have a minimal domestic impact only and therefore no 

effect on international trade. 
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D. Unfunded Mandates Assessment 

 Title II of the Unfunded Mandates Reform Act of 1995 (Public Law 104-4) requires each 

Federal agency to prepare a written statement assessing the effects of any Federal mandate in a 

proposed or final agency rule that may result in an expenditure of $100 million or more (in 1995 

dollars) in any one year by State, local, and tribal governments, in the aggregate, or by the 

private sector; such a mandate is deemed to be a "significant regulatory action." The FAA 

currently uses an inflation-adjusted value of $143.1 million in lieu of $100 million. This final 

rule does not contain such a mandate; therefore, the requirements of Title II of the Act do not 

apply.