This section of the FEDERAL REGISTER

contains regulatory documents having general

applicability and legal effect, most of which

are keyed to and codified in the Code of

Federal Regulations, which is published under

50 titles pursuant to 44 U.S.C. 1510.

The Code of Federal Regulations is sold by

the Superintendent of Documents. Prices of

new books are listed in the first FEDERAL

REGISTER issue of each week.

Rules and Regulations Federal Register

20295

Vol. 63, No. 79

Friday, April 24, 1998

DEPARTMENT OF AGRICULTURE

Rural Housing Service

Rural Business—Cooperative Service

Rural Utilities Service

Farm Service Agency

7 CFR Parts 1962, 1965, and 1980

RIN 0560–AE92

Subordination of Direct Loan Basic

Security To Secure a Guaranteed Line

of Credit

AGENCIES: Rural Housing Service, Rural

Business—Cooperative Service, Rural

Utilities Service, Farm Service Agency,

USDA.

ACTION: Final rule.

SUMMARY: This rule revises Farm Service

Agency (FSA) regulations regarding loan

security servicing in two ways that are

intended to increase the use of

subordinations to move direct farm loan

program borrowers to the private sector.

First, the Agency will allow

subordinations of direct loan basic

chattel and real estate security if

necessary to secure a guaranteed

operating line of credit. Second, this

rule revises FSA farm loan regulations

to allow subordination of Agency loan

security so another lender may

refinance a borrower’s debt. This change

is needed because recent legislation

places restrictions on the uses of direct

loans for refinancing.

EFFECTIVE DATE: The effective date of

this rule is May 26, 1998.

FOR FURTHER INFORMATION CONTACT:

Phillip Elder, Senior Loan Officer,

United States Department of

Agriculture, Farm Service Agency, Farm

Loan Programs Loan Servicing Division,

1400 Independence Avenue, SW, STOP

0523, Washington, D.C. 20250–0523.

Telephone (202) 690–4012. Electronic

mail: pelder@wdc.fsa.usda.gov.

SUPPLEMENTARY INFORMATION:

Executive Order 12866

This rule has been reviewed under

E.O. 12866 and was determined to be

not significant.

Executive Order 12372

1. For the reasons set forth in the

Notice related to 7 CFR part 3015,

subpart V (48 FR 29115, June 24, 1983),

Farm Ownership Loans, Farm Operating

Loans, and Emergency Loans are

excluded from the scope of E.O. 12372,

which requires intergovernmental

consultation with state and local

officials.

2. The Soil and Water Loan Program

is subject to and has met the provisions

of E.O. 12372.

Federal Assistance Program

These changes affect the following

FSA programs as listed in the Catalog of

Federal Domestic Assistance:

10.404—Emergency Loans

10.406—Farm Operating Loans

10.407—Farm Ownership Loans

10.416—Soil and Water Loans

Environmental Impact Statement

It is the determination of the issuing

agency that this action is not a major

Federal action significantly affecting the

environment. Therefore, in accordance

with the National Environmental Policy

Act of 1969, Pub. L. 91–190, and 7 CFR

part 1940, subpart G, an Environmental

Impact Statement is not required.

Executive Order 12988

This final rule has been reviewed in

accordance with E.O. 12988, Civil

Justice Reform. In accordance with this

rule: (1) All State and local laws and

regulations that are in conflict with this

rule will be preempted; (2) no

retroactive effect will be given to this

rule; and (3) administrative proceedings

in accordance with 7 CFR parts 11 and

780 must be exhausted before bringing

suit in court challenging action taken

under this rule unless those regulations

specifically allow bringing suit at an

earlier time.

Regulatory Flexibility Act

In compliance with the Regulatory

Flexibility Act (5 U.S.C. 601–602), the

undersigned has determined and

certified by signature of this document

that this rule will not have a significant

economic impact on a substantial

number of small entities. This rule does

not involve a new or expanded program

and new provisions included in this

rule will not impact a substantial

number of small entities to a greater

extent than large entities. Although it is

the intent of this rule to move direct

loans to guaranteed loans, participation

is voluntary and requires no action on

the part of small entities. Large entities

are subject to these rules to the same

extent as small entities. Therefore, a

regulatory flexibility analysis was not

performed.

Unfunded Mandates

Title II of the Unfunded Mandates

Reform Act of 1995 (UMRA), Public

Law 104–4, requires Federal agencies to

assess the effects of their regulatory

actions on State, local, and tribal

governments or the private sector.

Agencies generally must prepare a

written statement, including a cost

benefit analysis, for proposed and final

rules with ‘‘Federal mandates’’ that may

result in expenditures of $100 million or

more in any 1 year for State, local, or

tribal governments, in the aggregate, or

to the private sector. UMRA generally

requires agencies to consider

alternatives and adopt the more cost

effective or least burdensome alternative

that achieves the objectives of the rule.

This rule contains no Federal

mandates, as defined under Title II of

the UMRA, for State, local, and tribal

governments or the private sector. Thus,

this rule is not subject to the

requirements of sections 202 and 205 of

UMRA.

Paperwork Reduction Act

The amendments to 7 CFR parts 1962,

1965 and 1980 set forth in this final rule

require no revisions to the information

collection requirements that were

previously approved by OMB under the

provisions of 44 U.S.C. chapter 35. A

proposed rule containing an estimate of

the burden impact of this rule was

published on September 9, 1997 [62 FR

47384, 47385]. No comments on the

burden estimate were received.

Discussion of Comments Received

The Agency received comments on

the proposed rule (62 FR 47384–47388)

from five parties, including FSA

employees, employee organizations, a

commercial bank, and the American

Banker’s Association. All comments

received were in support of the
20296 Federal Register / Vol. 63, No. 79 / Friday, April 24, 1998 /Rules and Regulations

proposed changes and recommended

their adoption with a few clarifications.

Two commenters suggested

clarification of the excess security

requirement proposed for

§ 1980.108(a)(1)(vi)(A) or removal of the

requirement entirely. This comment was

seriously considered but not adopted.

The Agency proposed to change its

regulations to allow a combination

guaranteed loan and subordination of

direct loan security because lenders in

selected areas of the country were

reluctant to provide farmers with a line

of credit secured only by planned crop

production, even when the loan was 90

percent guaranteed against loss by the

government. We understand from

industry advocates that this reluctance

is due to the large annual fluctuations

in crop income experienced in those

areas. Because the risk of loss on these

lines of credit is inordinately large, as

evidenced by the policies of the local

lenders, the Agency felt it was necessary

to restrict these combination

subordination and guarantees to those

direct loan borrowers whose loans are

well secured in order to protect the

Government’s interest. However, the

Agency has clarified this paragraph to

require that the total unpaid balance of

the direct loan be less than or equal to

75 percent of the value of the security

for the direct loan, excluding the value

of growing crops and planned

production at the time of the

subordination. The Agency also

clarified that a lender making the

subject guaranteed loan is responsible

for obtaining any appraisals necessary to

document compliance with this

provision.

Two commenters also indicated

confusion about proposed

§ 1962.30(a)(3) and questioned the need

for a separate provision for a

subordination to purchase crop

insurance. The Agency agrees. Since

§ 1962.30(a)(2) allows a subordination

for any authorized direct loan purpose

and the payment of crop insurance

premiums is an allowable use of direct

operating loan funds, the Agency agrees

that paragraph (a)(3) was redundant and

has removed it accordingly.

Another commenter pointed out that

proposed § 1965.12 needed to be

clarified as to the allowable uses of

Single Family Housing (SFH) loan

funds. Since the proposed rule was

drafted, the Rural Housing Service

(RHS) promulgated new program

regulations and is no longer covered by

part 1965, subpart A. Since FSA

employees are not responsible for

servicing RHS loans, § 1965.12(a)(9) has

been removed. This regulation still

allows a subordination to be made for

the purpose of improving a farm

residence in some instances under

§ 1965.12(a)(1) as an authorized direct

loan purpose. FSA will consider RHS

debt with regard to subordinations as it

would any other lien.

The fourth comment received

suggested that subordinations of direct

loan basic real estate security to secure

a guaranteed line of credit should be

prohibited or very rare. This rule is

being issued specifically to allow

subordinations of real estate to secure a

guaranteed loan. Regardless, the

limitations included in § 1980.108(a)

will allow subordinations of direct loan

basic security in only those cases where

the likelihood of a Government loss on

the direct loan is small.

One commenter requested that the

rule be revised to not require that the

Agency loan be secured after the

subordination, but rather to allow a

subordination as long as the Agency’s

position is not damaged. This comment

was not adopted. The condition

mentioned by the commenter was not

added as part of the proposed rule.

Section 1965.12(a)(9) provides that the

Agency loan must still be adequately

secured after the subordination, or the

value of the security will be increased

by at least the amount of advances made

under the subordination. Also, this

requirement will not overly restrict the

Agency’s ability to make subordinations

under the authorities provided in this

rule.

Another commenter suggested that

the Agency require a formal application

for a subordination. The Agency

currently requires borrowers to submit a

‘‘Request for Subordination, Release or

Consent,’’ to be considered for a

subordination. Therefore, this comment

was not adopted. However, the Agency

agrees with the concerns of the

commenter that subordinations are not

sufficiently recorded or monitored. The

Agency is exploring methods to improve

its data on subordinations and expects

its internal records system to be revised

soon.

Finally, a commenter suggested that

the county committee not be required to

make recommendations regarding

subordinations. Proposed

§ 1965.12(a)(10) required, ‘‘When the

subordination will be used to acquire

land, the FSA county committee has

made a favorable recommendation.’’ We

agree with the commenter that county

committee concurrence with this loan

servicing action is not necessary;

therefore, this provision has been

removed.

In addition to these changes, the

Agency has made several administrative

changes to the proposed rule. First, the

Agency has determined that in some

instances an Agency subordination to

allow the borrower to obtain a loan from

the Rural Housing Service or the

Commodity Credit Corporation may be

prudent. Accordingly, the Agency has

removed proposed § 1962.30(b)(6)

which prohibited subordinations to

other USDA Agencies. The Agency will

treat USDA agencies like other Federal

Agencies for subordination purposes.

Second, the Agency has removed

proposed § 1965.12(a)(3). This section

conditioned a subordination on it

furthering the purpose of the loan. A

subordination is limited to eligible loan

purposes; thus, this provision was

redundant. Taken together with the

other conditions under § 1962.30 or

1965.12, any eligible loan purpose

would further the objectives of the loan.

Third, proposed § 1965.12(a)(4) has

been removed. The provision required

FSA to obtain as security an assignment

of the beneficial interest of any stock

required in connection with a loan. This

requirement was included in previous

versions of this regulation because Farm

Credit System (FCS) institutions

required that a borrower purchase stock

in the local association. Agency

experience indicates that the assignment

is unnecessary. The Farm Credit

Administration (FCA) requires a

minimum purchase of $1,000 or 1

percent of the loan amount. Local

associations may require up to 5 percent

of the loan amount, but most

associations are requiring only the

minimum stock purchase of $1,000.

Consequently, the value of cooperative

stock is negligible and does not impact

the Agency’s decision to grant a

subordination. Besides, the treatment of

the stock has no effect since it is

invariably applied to the FCS loan when

it is paid in full. Proceeds from the

liquidation of a beneficial interest in a

cooperative generally have not been

applied to an Agency loan as a result of

this requirement.

Fourth, proposed § 1965.12(e) has

been added to clarify the appraisal

requirements for a real estate security

subordination.

Fifth, paragraphs (b)(6) and (7) and (e)

and (f) were added to section 1962.30 to

make the chattel provisions consistent

with the real estate provisions in section

1965.12. Section 1962.20(f) requires a

chattel appraisal if the existing appraisal

is more than 2 years old or inadequate

for the FSA official to make a

subordination determination under that

section. The 2 year standard is

consistent with current chattel appraisal

requirements under § 1941.25.

Paragraphs (a)(10) and (11) were added
Federal Register / Vol. 63, No. 79 / Friday, April 24, 1998 /Rules and Regulations 20297

to section 1965.12 to make it consistent

with section 1962.30.

Sixth, section 1962.30(b)(2) was

clarified and 1965.12(a)(10) was added

to clarify that a subordination is

provided to secure a specific loan to be

made and that the loan is to be made as

soon as practical after the subordination

is granted. This change will clarify that

a subordination is approved only for a

limited period. This limitation is on the

subordination form but is not currently

contained in the regulation.

Seventh, section 1980.108(a)(1)(iii)

was revised to delete subordination

provisions now covered by paragraph

(a)(1)(v) of that section. The revision

was inadvertently omitted from the

proposed rule.

Finally, the Agency has revised

proposed § 1980.108(a)(1)(v) to clarify

that the conditions contained in

§§ 1962.30 and 1965.12 as appropriate

apply when the Agency subordinates its

security interest in direct loan security

when a guaranteed loan is being made.

This change was made to allow removal

of duplicative conditions under the

guaranteed loan provision. Proposed

§ 1980.108 (a)(1)(vi)(K) has been

removed as unnecessary because the

notification requirements of §§ 1980.145

and 1980.146 of the same subpart

require specific lender actions when a

guaranteed loan becomes delinquent.

List of Subjects

7 CFR Part 1962

Crops, Government property,

Livestock, Loan programs—Agriculture,

Rural areas.

7 CFR Part 1965

Real property—Foreclosure, Loan

programs—Agriculture, Rural areas.

7 CFR Part 1980

General—Agriculture, Loan

programs—Agriculture, EM.

Accordingly, 7 CFR chapter XVIII is

amended as follows:

PART 1962—PERSONAL PROPERTY

1. The authority citation for part 1962

continues to read as follows:

Authority: 5 U.S.C. 301; 7 U.S.C. 1989; 42

U.S.C. 1480.

Subpart A—Servicing and Liquidation

of Chattel Security

2. Section 1962.30 is revised to read

as follows:

§ 1962.30 Subordination and waiver of

liens on chattel security.

(a) Purposes. Subject to the

limitations set out in paragraph (b) of

this section, the Agency chattel liens

may be subordinated to a lien of another

creditor in either of the following

situations:

(1) The prior lien will soon mature or

has matured and the prior lienholder

desires to extend or renew the

obligation, or the obligation can be

refinanced. The relative lien position of

the Agency must be maintained; and

(2) The subordination will permit

another creditor to refinance other debt

or lend for an authorized direct loan

purpose.

(b) Conditions. Agency chattel liens

may be subordinated to a lien of another

creditor if all of the following

conditions are met:

(1) If the lien is on basic chattel

security, the amount of subordination is

necessary to provide the lender with the

security it requires to make the loan;

(2) Approval of a subordination is

limited to a specific amount and the

loan to be secured by the subordination

is closed within a reasonable time;

(3) Only one subordination to one

creditor may be outstanding at any one

time in connection with the same

security;

(4) The borrower has not been

convicted of planting, cultivating,

growing, producing, harvesting or

storing a controlled substance under

Federal or state law. ‘‘Borrower’’ for

purposes of this provision, specifically

includes an individual or entity

borrower and any member stockholder,

partner, or joint operator, of an entity

borrower and any member, stockholder,

partner, or joint operator of an entity

borrower. ‘‘Controlled substance’’ is

defined at 21 CFR part 1308. The

borrower will be ineligible for a

subordination for the crop year in which

the conviction occurred and the four

succeeding crop years. Applicants must

attest on the Agency application form

that it and its members, if an entity,

have not been convicted of such a

crime;

(5) The loan funds will not be used in

such a way that will contribute to

erosion of highly erodible land or

conversion of wetlands for the

production of an agricultural

commodity according to subpart G of

part 1940 of this chapter;

(6) The borrower can document the

ability to repay the total amount due

under the subordination and pay all

other debt payments scheduled for the

subject operating cycle; and

(7) The Agency loan is still adequately

secured after the subordination, or the

value of the loan security will be

increased by at least the amount of the

advances to be made under the terms of

the subordination.

(c) Subordination to make a

guaranteed loan. In addition to the

requirements of this section,

subordinations on chattel security to

make a guaranteed loan will be

approved in accordance with § 1980.108

of subpart B of part 1980 of this chapter.

(d) Forms. Subordinations will be

requested and executed on Agency

forms available in any Agency office or

on any other form approved by the

Agency.

(e) Rescheduling of existing Agency

debts. The Agency may consent to

rescheduling of an existing Agency debt

when a subordination is granted to the

debt of another lender. The

rescheduling will be allowed only when

the borrower cannot reasonably be

expected to meet all currently

scheduled installments when due and

the conditions of subpart S of part 1951

of this chapter are met.

(f) Appraisal. The Agency will

prepare a chattel appraisal report when

the existing appraisal report is more

than 2 years old or is inadequate to

make the determination in this section.

The Agency may use an appraisal

submitted by the borrower if it is

substantially similar to Form RD 440–

21, ‘‘Appraisal of Chattel Property,’’ and

prepared by a licensed appraiser.

PART 1965—REAL PROPERTY

3. The authority citation for part 1965

continues to read as follows:

Authority: 5 U.S.C. 301; 7 U.S.C. 1989 and

42 U.S.C. 1480.

Subpart A—Servicing of Real Estate

Security for Farmer Program Loans

and Certain Note-Only Cases

4. Section 1965.12 is revised to read

as follows:

§ 1965.12 Subordination of an Agency

mortgage.

(a) Conditions. A subordination may

be granted if all of the following

conditions are met:

(1) The subordination is to refinance

debt or for an authorized direct loan

purpose;

(2) The Agency debt cannot be

refinanced without a subordination;

(3) The borrower can document the

ability to repay the total amount due

under subordination and pay all other

debt payments scheduled for the subject

operating cycle;

(4) The loan funds will not be used in

such a way that will contribute to

erosion of highly erodible land or

conversion of wetlands for the

production of an agricultural

commodity according to subpart G of

part 1940 of this chapter;
20298 Federal Register / Vol. 63, No. 79 / Friday, April 24, 1998 /Rules and Regulations

(5) Any planned development is

performed in a manner directed by the

creditor and agreed to by the Agency

and reasonably attains the objectives of

subpart A of part 1924 of this chapter;

(6) Funds to be used to develop or to

acquire land will be deposited in a

supervised bank account that is subject

to signature by the Agency and the

borrower, or in a similar arrangement, to

ensure that funds will be spent for the

planned purposes;

(7) In cases of land purchase or

exchange of property, the Agency will

obtain a valid mortgage on the acquired

land. Title clearance and loan closing

will be required as for an initial or

subsequent FO loan, as appropriate;

(8) The borrower has not been

convicted of planting, cultivating,

growing, producing, harvesting or

storing a controlled substance under

Federal or state law. ‘‘Borrower’’ for

purposes of this provision, specifically

includes an individual or entity

borrower and any member stockholder,

partner, or joint operator, of an entity

borrower and any member, stockholder,

partner, or joint operator of an entity

borrower. ‘‘Controlled substance’’ is

defined at 21 CFR part 1308. The

borrower will be ineligible for a

subordination for the crop year in which

the conviction occurred and the four

succeeding crop years. An applicant

must attest on the Agency application

form that it and its members, if an

entity, have not been convicted of such

a crime;

(9) The Agency loan is still adequately

secured after the subordination, or the

value of the loan security will be

increased by at least the amount of the

advances to be made under the terms of

the subordination;

(10) The subordination is limited to a

specific amount and the loan to be

secured by the subordination is closed

within a reasonable time; and

(11) Only one subordination to one

creditor may be outstanding at any one

time in connection with the same

security.

(b) Subordination on real estate

owned by an entity member.

Notwithstanding the provisions of

paragraph (a) of this section, when the

borrower is an entity and the Agency

has taken real estate as additional

security on property owned by an entity

member, a subordination for any

authorized Farm Loan Programs loan

purpose may be approved when it is

needed for the entity member to finance

a separate operation. The subordination,

however, may be approved only if it

does not cause the unpaid principal and

accrued interest balance of the Agency

loan to exceed the value of the loan

security or otherwise adversely affect

the security.

(c) Request for subordination. A

borrower must complete an application

provided by the Agency to receive

consideration for a subordination.

(d) Notice of foreclosure. The

lienholder requesting the subordination

will agree to give notice of foreclosure

as required by the Agency.

(e) Appraisal. The Agency will

prepare a current appraisal report in

accordance with part 1922, subpart E, of

this chapter when property is to be

purchased or exchanged, or when the

existing appraisal report is more than 1

year old or is inadequate to make the

determination required in this section.

The Agency may use the appraisal

report prepared for another lender if it

complies with the requirements of

subpart E of part 1922 of this chapter.

(f) Reamortizing existing Agency

debts. The Agency may consent to a

reamortization of an existing Agency

debt when a subordination is granted to

the debt of another lender. The

reamortization will be allowed only

when the borrower cannot reasonably be

expected to meet all currently

scheduled installments when due and

the conditions of subpart S of part 1951

of this chapter are met.

(g) Subordination to make a

guaranteed loan. In addition to the

requirements of this section,

subordinations of liens on real estate

security to make a guaranteed loan will

be approved in accordance with

§ 1980.108 of this chapter.

PART 1980—GENERAL

5. The authority citation for part 1980

continues to read as follows:

Authority: 5 U.S.C. 301; 7 U.S.C. 1989 and

42 U.S.C. 1480

Subpart B—Farmer Programs Loans

6. Section 1980.108 is amended to

add paragraphs (a)(1)(v) and (a)(1)(vi),

and to revise paragraphs (a)(1)(iii) and

(d) to read as follows:

§ 1980.108 General provisions.

(a) * * *

(1) * * *

(iii) When the Agency and the lender

are involved in separate loans to the

same borrower, separate collateral must

be clearly identified for both the

Agency’s loan and the lender’s loan.

Different lien positions on real estate are

considered separate collateral.

* * * * *

(v) The Agency may subordinate its

security interest on a direct loan when

a guaranteed loan is being made if the

requirements of § 1962.30 or § 1965.12

of this chapter, as appropriate, are met

and only in any the following

circumstances:

(A) To permit a guaranteed lender to

advance funds and perfect a security

interest in crops, feeder livestock, or

livestock products, (milk, eggs, wool,

etc.);

(B) When the lender requesting the

guarantee needs the subordination of

the Agency’s lien position to maintain

its lien position when servicing or

restructuring;

(C) When the lender requesting the

guarantee is refinancing the debt of

another lender, and the Agency’s

position on real estate security will not

be adversely affected; or

(D) To permit a Contract of

Guarantee—Line of Credit to be

advanced for annual operating needs in

accordance with § 1980.175(c)(2).

(vi) The Agency may subordinate its

security in a direct loan under

paragraph (a)(1)(v)(D) of this section

only when both of the following

additional conditions are met:

(A) The total unpaid balance of the

direct loan is less than or equal to 75

percent of the value of the security for

the direct loan, excluding the value of

growing crops or planned production, at

the time of the subordination. This

direct loan security value shall be

determined by an appraisal that

complies with subpart E of part 1922 of

this chapter. This appraisal will be

provided by the lender requesting the

guarantee. The lender may charge the

applicant a reasonable fee for the

appraisal.

(B) The applicant cannot obtain

sufficient credit through a conventional

guaranteed loan.

* * * * *

(d) Relationship between Agency

loans, direct and guaranteed. A

guaranteed FO or OL loan may be made

to an insured borrower with the same

type of direct loan provided:

(1) The outstanding combined direct

and guaranteed FO or OL principal

balance owed by the loan applicant or

owed by anyone who will sign the note

as cosigner may not exceed the

authorized guaranteed loan limit for that

type of loan; and

(2) Chattel and real estate collateral

must be separate and identifiable so as

to be discernible from the collateral

pledged to the Agency for a direct loan.

Different lien positions on real estate are

considered separate and identifiable

collateral.

7. Section 1980.175 is amended to

add paragraph (h)(3) as follows:

§ 1980.175 Operating loans.

* * * * *
Federal Register / Vol. 63, No. 79 / Friday, April 24, 1998 /Rules and Regulations 20299

(h) * * *

(3) Subject to the requirements of this

section, the Agency may approve a

Contract of Guarantee for a line of credit

to be secured by basic chattel or real

estate security in which the Agency has

subordinated its lien position in

accordance with § 1980.108.

* * * * *

Signed in Washington, D.C., on April 10,

1998.

August Schumacher, Jr.,

Under Secretary, Farm and Foreign

Agricultural Services.

Dated: April 10, 1998.

Jill Long Thompson,

Under Secretary, Rural Development.

[FR Doc. 98–10902 Filed 4–23–98; 8:45 am]

BILLING CODE 3410–05–U

DEPARTMENT OF TRANSPORTATION

Federal Aviation Administration

14 CFR Part 39

[Docket No. 97–NM–263–AD; Amendment

39–10483; AD 98–09–04]

RIN 2120–AA64

Airworthiness Directives; Aerospatiale

Model ATR72 Series Airplanes

AGENCY: Federal Aviation

Administration, DOT.

ACTION: Final rule.

SUMMARY: This amendment adopts a

new airworthiness directive (AD),

applicable to certain Aerospatiale Model

ATR72 series airplanes, that requires a

one-time high frequency eddy current

inspection to detect cracking of the

lower fuselage structure, and repair, if

necessary. This amendment also

requires modification of certain fastener

holes in the lower fuselage structure.

This amendment is prompted by

issuance of mandatory continuing

airworthiness information by a foreign

civil airworthiness authority. The

actions specified by this AD are

intended to prevent reduced structural

integrity of the airplane due to fatigue

cracking in the lower fuselage structure.

DATES: Effective May 29, 1998.

The incorporation by reference of

certain publications listed in the

regulations is approved by the Director

of the Federal Register as of May 29,

1998.

ADDRESSES: The service information

referenced in this AD may be obtained

from Aerospatiale, 316 Route de

Bayonne, 31060 Toulouse, Cedex 03,

France. This information may be

examined at the Federal Aviation

Administration (FAA), Transport

Airplane Directorate, Rules Docket,

1601 Lind Avenue, SW., Renton,

Washington; or at the Office of the

Federal Register, 800 North Capitol

Street, NW., suite 700, Washington, DC.

FOR FURTHER INFORMATION CONTACT:

Norman B. Martenson, Manager,

International Branch, ANM–116, FAA,

Transport Airplane Directorate, 1601

Lind Avenue, SW., Renton, Washington

98055–4056; telephone (425) 227–2110;

fax (425) 227–1149.

SUPPLEMENTARY INFORMATION: A

proposal to amend part 39 of the Federal

Aviation Regulations (14 CFR part 39) to

include an airworthiness directive (AD)

that is applicable to certain Aerospatiale

Model ATR72 series airplanes was

published in the Federal Register on

February 5, 1998 (63 FR 5900). That

action proposed to require a one-time

high frequency eddy current inspection

to detect cracking of the lower fuselage

structure, and repair, if necessary. That

action also proposed to require

modification of certain fastener holes in

the lower fuselage structure.

Comments

Interested persons have been afforded

an opportunity to participate in the

making of this amendment. Due

consideration has been given to the

single comment received.

The commenter supports the

proposed rule.

Conclusion

After careful review of the available

data, including the comment noted

above, the FAA has determined that air

safety and the public interest require the

adoption of the rule as proposed.

Cost Impact

The FAA estimates that 7 airplanes of

U.S. registry will be affected by this AD.

Accomplishment of the actions

specified in Aerospatiale Service

Bulletin ATR72–53–1022 will take

approximately 80 work hours per

airplane, at an average labor rate of $60

per work hour. Required parts will be

provided by the manufacturer at no cost

to the operators. Based on these figures,

the cost impact on U.S. operators of the

actions specified in this service bulletin

and required by this AD is estimated to

be $4,800 per airplane.

Accomplishment of the actions

specified in Aerospatiale Service

Bulletin ATR72–53–1034 will take

approximately 65 work hours per

airplane, at an average labor rate of $60

per work hour. Required parts will be

provided by the manufacturer at no cost

to the operators. Based on these figures,

the cost impact on U.S. operators of the

actions specified in this service bulletin

and required by this AD is estimated to

be $3,900 per airplane.

Accomplishment of the actions

specified in Aerospatiale Service

Bulletin ATR72–53–1053 will take

approximately 65 work hours per

airplane, at an average labor rate of $60

per work hour. Required parts will be

provided by the manufacturer at no cost

to the operators. Based on these figures,

the cost impact on U.S. operators of the

actions specified in this service bulletin

and required by this AD is estimated to

be $3,900 per airplane.

The cost impact figures discussed

above are based on assumptions that no

operator has yet accomplished any of

the requirements of this AD action, and

that no operator would accomplish

those actions in the future if this AD

were not adopted.

Regulatory Impact

The regulations adopted herein will

not have substantial direct effects 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, in

accordance with Executive Order 12612,

it is determined that this final rule does

not have sufficient federalism

implications to warrant the preparation

of a Federalism Assessment.

For the reasons discussed above, I

certify that this action (1) is not a

‘‘significant regulatory action’’ under

Executive Order 12866; (2) is not a

‘‘significant rule’’ under DOT

Regulatory Policies and Procedures (44

FR 11034, February 26, 1979); and (3)

will not have a significant economic

impact, positive or negative, on a

substantial number of small entities

under the criteria of the Regulatory

Flexibility Act. A final evaluation has

been prepared for this action and it is

contained in the Rules Docket. A copy

of it may be obtained from the Rules

Docket at the location provided under

the caption ADDRESSES.

List of Subjects in 14 CFR Part 39

Air transportation, Aircraft, Aviation

safety, Incorporation by reference,

Safety.

Adoption of the Amendment

Accordingly, pursuant to the

authority delegated to me by the

Administrator, the Federal Aviation

Administration amends part 39 of the

Federal Aviation Regulations (14 CFR

part 39) as follows: