54822 Federal Register / Vol. 70, No. 179 / Friday, September 16, 2005 / Rules and Regulations 

1 49 U.S.C. 44726, also debars from FAA 

certification individuals convicted of engaging in 

fraudulent dealings. The statute also requires that 

current certificate holders who have been so 

convicted have their certificates revoked. The 

statute also permits the FAA to revoke a certificate 

absent a conviction if the agency determines that 

DEPARTMENT OF TRANSPORTATION 

Federal Aviation Administration 

14 CFR Part 3 

[Docket No.: FAA–2003–15062; Amendment 

No. 3–1] 

RIN 2120–AG08 

False and Misleading Statements 

Regarding Aircraft Products, Parts, 

Appliances and Materials 

AGENCY: Federal Aviation 

Administration (FAA), DOT. 

ACTION: Final rule. 

SUMMARY: This final rule amends FAA 

regulations to create additional rules 

banning certain false or misleading 

statements about type-certificated 

products, and products, parts, 

appliances and materials that may be 

used on type-certificated products. This 

action is necessary to help prevent 

people from representing that these 

items are suitable for use on typecertificated products when in fact they 

may not be. These rules are intended to 

provide assurance that aircraft owners 

and operators, and persons who 

maintain aircraft, have factual 

information on which to determine 

whether a product, part, appliance or 

material may be used in a given typecertificated product application. 

DATES: This amendment becomes 

effective October 17, 2005. 

FOR FURTHER INFORMATION CONTACT: 

Beverly Sharkey, Suspected 

Unapproved Parts Program Office 

(AVR–20), Federal Aviation 

Administration, 13873 Park Center 

Road, Herndon, Virginia 20171–3223; 

telephone (703) 668–3720, facsimile 

(703) 481–3002, e-mail 

beverly.j.sharkey@faa.gov. 

SUPPLEMENTARY INFORMATION: 

Availability of Rulemaking Documents 

You can get an electronic copy of this 

final rule using the Internet by: 

(1) Searching the Department of 

Transportation’s electronic Docket 

Management System (DMS) Web page 

(http://dms.dot.gov/search); 

(2) Visiting the Office of Rulemaking’s 

Web page at http://www.faa.gov/ 

regulations_policies/; or 

(3) Accessing the Government 

Printing Office’s Web page at http:// 

www.access.gpo.gov/su_docs/aces/ 

aces140.html. 

You can also get a copy by putting in 

a request to the Federal Aviation 

Administration, Office of Rulemaking, 

ARM–1, 800 Independence Avenue 

SW., Washington, DC 20591, or by 

calling (202) 267–9680. Make sure to 

identify the amendment number or 

docket number of this rulemaking. 

Anyone is able to search the 

electronic form of all comments 

received into any of our dockets by the 

name of the individual filing the 

comment (or signing the comment, if 

filed for an association, business, labor 

union). You may review DOT’s 

complete Privacy Act statement in the 

Federal Register published on April 11, 

2000 (Volume 65, Number 70; Pages 

19477–78) or you may visit http:// 

dms.dot.gov. 

Small Business Regulatory Enforcement 

Fairness Act 

The Small Business Regulatory 

Enforcement Fairness Act (SBREFA) of 

1996 requires FAA to comply with 

small entity requests for information or 

advice about compliance with statutes 

and regulations within its jurisdiction. If 

you are a small entity and you have a 

question about this document, you may 

contact your local FAA official, or the 

person listed under FOR FURTHER

INFORMATION CONTACT. You can find out 

more about SBREFA on the Internet at 

http://www.faa.gov/ 

regulations_policies/rulemaking/ 

sbre_act/, or by e-mailing us at 9-AWASBREFA@faa.gov. 

I. Background 

This final rule responds to a growing 

concern about how the aviation 

community represents products, parts, 

appliances and materials used on 

aircraft. This rule bans false or 

intentionally misleading statements 

about the airworthiness of typecertificated products and the 

acceptability of products, parts, 

appliances and materials for use on 

type-certificated products. 

Under FAA regulations, the person 

installing a product, part or appliance 

on an aircraft is responsible for 

determining its airworthiness. Because 

these individuals cannot determine 

airworthiness simply by inspecting the 

item, they often rely on the information 

provided by whoever sold it to them to 

support their airworthiness decisions. 

This process ordinarily works well 

because most products, parts and 

appliances are of the quality and 

condition described in their records. 

However, there have been cases in 

which false or misleading statements 

have led a person installing a product, 

part or appliance to believe that it was 

suitable for a particular use when, in 

fact, it was not. This creates a safety 

risk. 

A similar process applies to the use of 

materials. When materials are 

purchased, the buyer usually receives a 

certificate of conformance or similar 

document that shows what industry 

standard the material was produced to. 

In addition, these materials must meet 

the original engineering design data and 

quality requirements. Therefore, the 

records accompanying materials are 

critical for the buyer to determine 

whether the materials are fit for 

installation on or for fabrication of a 

product, part or appliance. 

Currently, our regulations do not 

directly address false or intentionally 

misleading statements about products, 

parts, appliances and materials. In 

addition, it is difficult for the FAA to 

look into many seemingly false or 

misleading statements because the FAA 

does not regulate the distributors of 

products, parts, appliances and 

materials. 

A. Summary of the NPRM 

On May 5, 2003, the FAA published 

a notice of proposed rulemaking 

(NPRM) entitled ‘‘False and Misleading 

Statements Regarding Aircraft Products, 

Parts and Materials’’ (68 FR 23808; 

May 5, 2003). Of particular concern to 

the FAA was representations made by 

the distributors of products, parts, and 

materials marketed to the aircraft 

industry. Such distributors may not be 

subject to existing restrictions, because 

they may not possess a certificate or 

otherwise be situated in a manner that 

would permit the FAA to pursue 

enforcement action against them. 

Records and representations related to 

the marketing of products, parts, and 

materials that are limited to certain 

experimental or military aircraft were 

not addressed by the NPRM. The FAA 

recognized that these types of aircraft do 

not necessarily require airworthiness 

certificates and that, to the extent such 

a certificate is not needed, the proposed 

rule could have a dampening effect on 

the development and continued 

operation of such aircraft. 

In the NPRM, the FAA proposed 

additional rules that it argued would 

help prevent misleading statements by 

extending existing prohibitions on 

intentionally false or fraudulent 

statements currently addressed by 14 

CFR 21.2, Falsification of applications, 

reports, and records, and 14 CFR 43.12, 

Maintenance records: Falsification, 

reproduction, or alteration, and by 18 

U.S.C. 38 and 18 U.S.C. 1001.1 The 

Federal Register / Vol. 70, No. 179 / Friday, September 16, 2005 / Rules and Regulations 54823 

the individual has committed acts that would lead 

to a conviction if pursued criminally. This statutory 

provision was not discussed in the NPRM. 

2The commenters argued that the FAA lacked the 

legislative mandate to duplicate the functions of the 

FTC, citing the requirement in 49 U.S.C. 44726 that 

the FAA automatically revoke the certification of a 

certificate-holder convicted of fraud in a criminal 

proceeding without additional hearing and subject 

to a limited request by law enforcement personnel. 

The FAA does not believe this example indicates 

any intent on the part of Congress to constrain the 

FAA in the manner suggested by ASA and AEA. 

This statutory provision applies only to individuals 

who have already been convicted of fraud by a 

court of competent jurisdiction and mandates that 

the FAA take certain action as a result of this 

conviction. By the same token the statute requires 

Continued 

NPRM also discussed the FAA’s broad 

enforcement authority under 49 U.S.C. 

40113. 

The NPRM specifically proposed to 

prohibit false or misleading statements 

representing the airworthiness of a 

product for which the FAA has issued 

a type certificate, or the acceptability of 

any part or material for use on any 

product for which a type certificate has 

been issued. The FAA has been 

particularly concerned about misleading 

statements, i.e., those that are not 

necessarily false, but which contain a 

material misrepresentation or omission 

that is likely to mislead a consumer 

acting reasonably under the 

circumstances. Such statements 

currently are not prohibited under the 

existing prohibitions discussed briefly 

above. 

The scope of the proposed new 

prohibition would apply to any record 

transmitted to a potential consumer that 

made a representation as to the 

airworthiness or acceptability of a part 

or material on a type-certificated 

product. Such records most notably 

included advertisements in the printed 

or electronic media, but also included 

those records regularly relied upon by 

installers of equipment to ensure the 

continued airworthiness of an aircraft. 

The NPRM also proposed a 

requirement that if a person were to 

express or imply that a product, part, or 

material met FAA airworthiness 

standards, it must ensure that the 

statement was true or else affirmatively 

state that the product, part, or material 

was not produced under an FAA 

production approval. 

Finally, the NPRM proposed 

regulatory language that would permit 

the FAA to inspect aircraft and aircraft 

products, parts, or materials to 

determine compliance with the 

proposed prohibitions. 

B. Summary of Comments 

The FAA received twenty-one 

comments in response to the proposed 

rule. One comment was from a foreign 

regulatory body (Transport Canada), one 

from a commercial carrier (Delta 

Airlines), and five from private citizens 

in their own capacity. Additionally, 

eight comments were submitted by 

aircraft or aircraft parts manufacturers 

or distributors (Midcoast Aviation, 

Cougar Helicopters, Boeing, Skybolt 

Aeromotive Corp. (Skybolt), General 

Electric Aircraft Engines (GEAE), 

Cessna, Airbus, and United 

Technologies Corp. (UTC)), with the 

remaining six comments filed by 

various aviation-related trade 

associations (European Association of 

Aerospace Industries (AECMA), 

Regional Airline Association (RAA), 

Aerospace Industries Association (AIA), 

Aeronautical Repair Station Association 

(ARSA), Aviation Suppliers Association 

(ASA), and Aircraft Electronics 

Association (AEA)). 

In general, the commenters expressed 

broad support for a prohibition against 

false statements regarding typecertificated products and parts and 

materials that may be used on typecertificated products. Fifteen of the 

commenters expressed general support 

for the efforts and objectives of the FAA 

in proposing the rule. Despite this 

support for the rule’s objectives, most of 

these commenters also recommended 

specific changes to the final regulatory 

language. In particular, significant 

concern was raised about the aspect of 

the NPRM addressing statements that 

are misleading rather than factually 

false and enforcement action against 

statements made in advertisements. A 

more detailed discussion of the 

recommended changes is provided in 

the substantive discussion of today’s 

rule. 

Two commenters, Delta Airlines and 

RAA, did not express support for the 

proposal one way or the other, but 

offered specific comments on limited 

aspects of the proposal. Cessna merely 

commented that it had no comments or 

recommendations on the proposal. 

Two of the remaining commenters, 

both private citizens, generally opposed 

the rulemaking, averring that they 

believe the FAA could use its resources 

better and the proposed rule is not 

needed because other rules adequately 

address the prohibition of false and 

misleading statements. The sentiment 

that there was no need for the proposed 

rule was echoed by ASA and AEA. 

Midcoast Aviation commented that 

the Civil Aviation Regulations already 

had a part 3, the part proposed to house 

this final rule. The Civil Aviation 

Regulations were recodified in the early 

1960s as FAA regulations and were 

renumbered under the numbering 

system used in the new regulations. 

Accordingly, there is no conflict in 

adopting a new part 3, and this 

comment will not be discussed further. 

II. Discussion of the Final Rule 

A. Summary of the Final Rule 

Today’s final rule extends the 

prohibition on fraudulent or 

intentionally false statements beyond 

those now covered by Title 14, Code of 

Federal Regulations (14 CFR) parts 21 

and 43. In addition, it provides a 

regulation prohibiting intentionally 

misleading statements that, if violated, 

can be addressed by FAA enforcement 

action. 

As discussed more fully below, the 

FAA has decided against requiring a 

disclaimer that a particular product was 

not produced under an FAA production 

approval if the individual marketing the 

product does not have specific records 

specifying that a production approval 

was given. The FAA recognizes that this 

provision was unnecessarily 

burdensome. Likewise, the general 

applicability section has been dropped 

because it was unnecessary. Finally, the 

FAA has decided against adopting an 

inspection requirement, because the 

agency already has general inspection 

authority. 

B. Need for the Final Rule 

The FAA is issuing this final rule 

because it has determined that the 

installation of products, parts, 

appliances and materials that are 

mistakenly believed to be airworthy or 

suitable for installation on typecertificated products creates an 

unacceptable risk to aviation safety. The 

FAA believes that part 3 will improve 

safety because it: 

(1) Fills gaps in the legal and 

regulatory structure by extending the 

prohibition on fraudulent or 

intentionally false statements beyond 

those now covered by parts 21 and 43; 

(2) Creates a new standard to 

determine what constitutes 

‘‘misleading;’’ and 

(3) Provides a means for the FAA to 

investigate possible violations of part 3. 

Two commenters, ASA and AEA, 

stated that the NPRM proposed new 

duties that the FAA will have difficulty 

meeting. They contended that this rule 

imposes a duty on the FAA to go after 

commercial speech violations that may 

have little or nothing to do with safety 

issues. They also argued that regulation 

of commercial speech is not within the 

FAA’s core mandate and is duplicative 

of the Federal Trade Commission’s 

(FTC) role.2

54824 Federal Register / Vol. 70, No. 179 / Friday, September 16, 2005 / Rules and Regulations 

the Administrator to revoke a certificate if she 

determines that the certificate holder knowingly, 

and with the intent to defraud, engaged in conduct 

that rises to the level of a criminal act, even if no 

conviction results from that act. 

ASA and AEA suggested there are 

other administrative and law 

enforcement agencies, including the 

FTC, that address fraud adequately. 

ASA and AEA contended the FAA is 

‘‘ill-prepared’’ to enforce rules that 

regulate commercial speech, as the FAA 

lacks the technical expertise to enforce 

commercial speech properly. They also 

pointed out the FAA has not shown that 

these agencies have failed to respond 

adequately to fraud and related issues in 

the aviation industry. Rather, they 

suggested that the creation of part 3 may 

divert the resources of these other 

agencies to non-aviation issues, 

potentially resulting in a diminution in 

aviation safety. ASA and AEA also 

stated there is no need for part 3 

because 18 U.S.C. 38 already covers 

aircraft parts fraud. 

Records containing false or 

intentionally misleading statements 

about the quality of aircraft products, 

parts, appliances and materials have a 

potentially large impact on the safety of 

the flying public. It is the FAA’s 

responsibility to write and enforce rules, 

as needed, to ensure the aviation 

community upholds the highest levels 

of safety. The FAA has determined that 

existing laws and regulations only 

partially cover the problems addressed 

by this rule. Although the FTC and 

other administrative and law 

enforcement agencies have undoubtedly 

enforced their regulations against fraud, 

the FAA notes that part 3 is more 

comprehensive and believes it will be a 

greater deterrent against false and 

intentionally misleading statements 

affecting aviation. 

The FAA acknowledges that 18 U.S.C. 

38 covers aircraft parts fraud. However, 

part 3 goes further. It creates an 

administrative enforcement scheme 

similar to those in parts 21 and 43. The 

FAA believes this approach will better 

protect against a potential safety hazard 

because the FAA may seek to impose 

civil penalties rather than straining the 

limited resources of the Federal courts. 

In the NPRM, the FAA discussed the 

possible compliance and enforcement 

action for violations of part 3. These 

actions range from counseling and 

corrective action, civil penalties, 

suspensions or revocation of an FAA 

certification, to criminal investigation. 

The action taken by the FAA will 

depend on all the circumstances of the 

violation. Each violation will be 

considered on a case-by-case basis and 

the FAA will decide at that time 

whether to pursue criminal prosecution. 

It is important to note that the FAA 

cannot institute criminal charges. We 

refer a case to the Department of 

Transportation Office of the Inspector 

General or the appropriate law 

enforcement authorities when the 

circumstances warrant. The ultimate 

decision of whether to pursue criminal 

prosecution is solely up to the law 

enforcement authorities. The FAA uses 

criminal prosecution referrals as a 

means to enforce its regulations about 

suspected unapproved parts. Currently, 

54 of the 236 open cases in this area 

(approximately 23%) are under review 

or investigation by law enforcement 

agencies. While not a direct correlation, 

we believe this shows how seriously we 

take violations in this area. The FAA 

intends to use criminal prosecution in 

much the same manner in enforcing the 

provisions of part 3. 

The FAA has the expertise necessary 

to enforce this rule properly. The FAA 

modeled § 3.5(b) on false and fraudulent 

statements on similar rules elsewhere in 

the regulations (§§ 21.2, 43.12, 61.59, 

and 65.20). These rules have been in 

existence for some time and the FAA 

has had experience and success in 

enforcing these regulations. We are 

confident that we can apply the 

expertise we gained in enforcing these 

other regulations to effectively enforce 

§ 3.5(b). 

As to the enforcement of intentionally 

misleading statements, the FAA believes 

the FTC’s regulatory approach to 

deceptive advertising provides an 

excellent model for § 3.5(c). Therefore, 

we will rely heavily on the precedents 

established by the FTC in resolving 

interpretative issues that may arise in 

enforcing this section. To ensure that 

the FAA’s inspectors are fully versed in 

the FTC’s regulatory approach to 

deceptive advertising, the FAA will 

develop guidance material and train its 

inspectors on the FTC’s established 

criteria and precedents. By relying on 

the FTC’s extensive background in this 

area, the FAA is confident that its 

personnel will be able to work 

efficiently and effectively with this new 

rule. 

RAA and GEAE stated that part 3 will 

subject persons now covered by parts 21 

and 43 to duplicative rulemaking. ARSA 

agreed, stating that §§ 21.2 and 43.12 

already ban intentionally false and 

fraudulent statements by maintenance 

providers, design approval holders and 

production approval holders. 

The FAA does not agree that part 3 

creates duplicative rulemaking with 

parts 43 and 21. As for part 43, § 43.12 

only bans fraudulent and intentionally 

false statements in records made to 

show compliance with part 43. There is 

no prohibition against misleading 

statements. The FAA recognizes the 

potential overlap between § 43.12 and 

§ 3.5(b). This is why § 3.1 excludes 

records made under part 43 from the 

terms of § 3.5(b). As for part 21, § 21.2 

bans fraudulent and intentional 

statements. However, § 21.2 limits this 

ban to applications for certificates or 

approvals under part 21, and on records 

that are kept, made, or used to show 

compliance with part 21. While § 21.2 

does address some of the terms in 

§ 3.5(b), it does not cover all records 

used by brokers, dealers, and other 

persons who are distributing and selling 

products, parts, appliances and 

materials, but who do not produce those 

items. Since § 21.2 only bans fraudulent 

and intentionally false statements, the 

prohibition against misleading 

statements in § 3.5(c) would not apply. 

C. Applicability of the Final Rule 

Today’s rule is applicable to any 

person who makes a record that is 

conveyed to another person when there 

is an associated potential for 

compensation if the record relates to a 

type-certificated product or a product, 

part, appliance or material that may be 

used on a type-certificated product. It 

does not apply to those experimental 

aircraft or military aircraft that are not 

otherwise type certificated. 

Originally, the FAA had proposed two 

applicability sections, one that generally 

related to persons ‘‘engaged in aviationrelated activities,’’ and a second that 

applied to any records about typecertificated products or part and 

materials that may be used on 

certificated products. The intent behind 

two different applicability sections was 

to permit the addition of other general 

requirements into part 3 without 

amending the applicability section. 

Based on the comments to the NPRM, 

we have decided that the regulation 

would be clearer with a single 

applicability section. Accordingly, the 

final rule only adopts the narrower 

language proposed to address false and 

intentionally misleading statements. 

We have, however, made several 

changes to that narrower applicability 

language. First, we have changed the 

section to reflect that the rule applies to 

persons who make certain records as 

opposed to the records themselves. Part 

1 of the FAA regulations sets forth the 

general definitions that apply to 

Subchapters A through K of Chapter 1 

of the FAA regulations. These 

definitions will apply to part 3. Under 

this section a ‘‘[p]erson means an 

individual, firm, partnership, 

Federal Register / Vol. 70, No. 179 / Friday, September 16, 2005 / Rules and Regulations 54825 

corporation, company, association, 

joint-stock association, or governmental 

entity. It includes a trustee, receiver, 

assignee, or similar representative of 

any of them.’’ In addition, the FAA 

intends to apply part 3 both to persons 

currently subject to FAA regulations 

and to those who are not currently 

directly regulated by the FAA. Second, 

we have added language to §§ 3.5(a) and 

3.5(b) limiting the applicability of those 

sections to only those records conveyed 

to another person when there is a 

potential or actual sales transaction. 

This refinement has been added to 

address commenters’ concerns that the 

rule could apply to in-house records 

with mistaken entries or related to 

internal investigations of parts, as well 

as records drafted in response to an 

FAA inquiry regarding new designs. 

The intention behind part 3 is not to 

penalize honest mistakes or to stifle 

internal investigations. It is to stop the 

practice of providing consumers with 

false or intentionally misleading 

statements that indicates a product, 

part, appliance or material is suitable for 

installation on a type-certificated 

aircraft when, in fact, it is not. We 

believe this refinement meets that need 

without unnecessarily restricting the 

communications of those persons 

engaged in the aviation business. 

AEA, ASA, AECMA and Airbus had 

all suggested alternative language that 

would have limited part 3 to those 

records that could be reasonably relied 

upon by a person making a 

determination that could affect the 

airworthiness of the aircraft or other 

conformity to type design or the safety 

of flight. We decided against this 

approach because we believe it would 

prove overly restrictive. As discussed in 

greater detail below, we remain 

concerned that some individuals may 

rely on information conveyed in an 

advertisement to their detriment. We do 

not believe it would ever be reasonable 

for an installer to rely on an 

advertisement as evidence of 

airworthiness or suitability for 

installation on a type-certificated 

product. However, the individual 

purchasing a particular product may not 

be the installer of the product. Persons 

selling aviation products should not be 

allowed to prey upon the inexperience 

of these uninformed consumers. 

GEAE commented that the rule 

should not apply only to typecertificated aircraft. GEAE suggested the 

rule apply to any aircraft, no matter 

what category or class, civil or public. 

In addition, GEAE expressed 

uncertainty about the rules applicability 

to amateur-built aircraft since amateurbuilt aircraft have both a type and 

airworthiness certificate. GEAE also 

noted there is no such type or class of 

aircraft as ‘‘military aircraft.’’ There are 

only civil aircraft and public aircraft. 

GEAE wanted the final rule to use the 

correct terminology. 

Part 3 does not apply to any aircraft 

for which the FAA has issued an 

experimental airworthiness certificate, 

unless the FAA had previously issued a 

different airworthiness certificate for 

that aircraft. In addition, amateur-built 

aircraft do not have type certificates, 

only experimental airworthiness 

certificates. The NPRM contained a 

detailed discussion about the rationale 

for excluding experimental aircraft from 

this rule. 

We recognize that military aircraft are 

public aircraft. However, unlike aircraft 

developed specifically for use by the 

military, other public aircraft are used 

much like civil aircraft. The distinction 

between the two lays not so much in 

their design and use characteristics as in 

their ownership status. We believe the 

aviation industry understands our 

distinction between military aircraft and 

other, type-certificated aircraft. Part 3 

does not apply to products, parts, 

appliances and materials that are for 

military aircraft and are not represented 

to be acceptable for civil application. 

However, if records for a military 

product, part, appliance or material 

represent that they are acceptable for 

use in type-certificated products, part 3 

would then apply. 

Some former military aircraft have 

been put into civil use and are now 

operated on a special or standard 

airworthiness certificate. Some unique 

products, parts, appliances and 

materials that otherwise are only 

manufactured for military designed 

aircraft may be needed to maintain these 

aircraft. Records about these products, 

parts, appliances and materials should 

not state or imply that they are 

acceptable for use in type-certificated 

products, other than the product for 

which acceptability has been 

determined. 

D. Lack of Specificity of Regulatory 

Terms 

1. Record 

The rule defines the term ‘‘record’’

broadly. We did this to include any 

means that communicates the 

airworthiness of a type-certificated 

product, or the acceptability of a 

product, part, appliance or material for 

use on type-certificated products. The 

FAA believes that a broad definition is 

the best means to ensure that aircraft 

owners, operators, producers, 

mechanics, and repairmen are relying 

on accurate information when making a 

determination about airworthiness. 

In fact, after further review, the FAA 

believes the definition proposed in the 

NPRM is not broad enough. The 

technologies used to convey information 

are constantly changing and the 

proposed language is presented as a list. 

Therefore, any item not on this list 

would not be a ‘‘record’’ under part 3. 

Finally, the proposed definition of 

‘‘record’’ is confusing because it 

presents two separate definitions. 

Based on the comments received and 

the FAA’s further review of part 3, we 

changed the final rule to include a 

definition of the word ‘‘record’’ to 

capture all existing and future means of 

communications. The definition now 

reads as follows: 

‘‘Record means any writing, drawing, map, 

recording, tape, film, photograph or other 

documentary material by which information 

is preserved or conveyed in any format, 

including, but not limited to, paper, 

microfilm, identification plates, stamped 

marks, bar codes or electronic format, and 

can either be separate from, attached to or 

inscribed on any product, part, appliance or 

material.’’

AIA believes the broad definition of a 

‘‘record’’ may reduce the quality of 

technical support provided to customers 

in the field. AIA believes that technical 

support personnel may limit their help 

and opinions for fear the FAA may cite 

them for violating § 3.5. 

In analyzing the commenter’s 

position, the FAA cannot understand 

how the prohibition against fraudulent 

or intentionally false statements might 

‘‘reduce the quality of technical support 

provided to customers in the field.’’ No 

one should encourage technical support 

personnel to make fraudulent or 

intentionally false statements. This rule 

only codifies what should be a common 

and accepted practice within the 

technical support field. 

As for intentionally misleading 

statements, the FAA understands that 

this definition could constrain technical 

support personnel from offering pure 

opinions about the airworthiness or 

acceptability of products, parts, 

appliances and materials. However, this 

is not necessarily a negative result. 

Technical support personnel should not 

make claims about their products, parts, 

appliances and materials unless 

appropriate records support these 

claims. These individuals should only 

state known facts about their products, 

parts, appliances and materials. These 

individuals should avoid unsupported 

opinions to eliminate the potential for 

the improper use of their products, 

parts, appliances and materials. 

54826 Federal Register / Vol. 70, No. 179 / Friday, September 16, 2005 / Rules and Regulations 

2. Airworthy 

ASA and AEA noted that the rule 

contains no clear description of what 

‘‘airworthy’’ means. According to these 

commenters, this lack of specificity 

rendered the proposed regulation 

unconstitutionally broad. We are 

adopting a definition of airworthy that 

is consistent with the FAA’s existing 

position and with the criteria 

established by the NTSB, namely that an 

aircraft is unairworthy if ‘‘the airframe 

[is] not in its original certificated or 

properly altered condition.’’ Under the 

definition adopted today, an aircraft 

must conform to its type design and be 

in a condition for safe operation in order 

to be airworthy. 

3. Acceptable for Installation 

ASA and AEA assert there is even less 

certainty about the meaning of 

‘‘acceptable for installation.’’ UTC 

echoed this concern. 

There are various ways to prove that 

a product, part, appliance or material is 

‘‘acceptable.’’ The most common is for 

it to be an approved product, part, 

appliance or material. Under part 1, the 

term ‘‘approved’’ means approved by 

the Administrator and, in this context, 

means a production approval holder 

(PAH) or a PAH approved supplier 

produced the product, part, appliance or 

material. 

Used products, parts and appliances 

must be maintained in accordance with 

FAA regulations to be acceptable. This 

arises from § 43.13, which requires the 

condition of the product, part or 

appliance used in maintenance is at 

least equal to its original or properly 

altered condition. In many instances, it 

will be quite easy for a regulated party 

to demonstrate that a product, part or 

appliance is suitable for installation. 

This is because many of these items are 

already required to be marked. For those 

items for which no FAA marking is 

available, a regulated party could still 

argue that the item is acceptable for 

installation and provide whatever 

documentation it has to support its 

argument. 

4. Material 

AIA, Transport Canada and UTC 

requested the FAA add a definition of 

the word ‘‘material’’ to the rule. GEAE 

likewise requested clarification that the 

term did not refer to specific 

metallurgical properties. The aviation 

industry normally uses the word 

‘‘material’’ to refer to the substances of 

which something is made or composed. 

This includes such things as sheet 

metal, unformed wood and bolts of 

fabric. For purposes of part 3, the FAA 

intends for the word ‘‘material’’ to be 

used in a manner consistent with the 

FAA’s enabling statute, the FAA 

regulations, and with common industry 

practice. 

5. Parts 

Transport Canada and UTC also 

requested the FAA include a definition 

of the word ‘‘parts.’’ Transport Canada 

recommended we use the same 

definition that is in § 21.1(b). As we 

explained in the NPRM, there are 

various words and phrases used to 

describe ‘‘parts’’ throughout the FAA’s 

enabling statute and regulations. Some 

of these words and phrases include 

appliance, equipment, apparatus, 

component, accessory, assembly, 

airframe, and appurtenance. The 

aviation industry often uses the term 

‘‘part’’ broadly to refer to anything that 

is, or could be, used as a piece of an 

aircraft, aircraft engine, or propeller, 

including appliances and component 

parts. However, the FAA recognizes that 

the word ‘‘part’’ is also listed as a 

subpart of the term ‘‘appliance’’ in § 1.1. 

This section sets forth the general 

definitions that are used in Subchapters 

A through K of Chapter I of the FAA’s 

regulations. Based on this, someone 

could make the argument that part 3 

does not apply to an ‘‘appliance’’ or any 

of the other items listed in the definition 

of the word ‘‘appliance.’’ Therefore, we 

changed § 3.1 to reflect that part 3 also 

applies to appliances. 

E. Application of the Final Rule on 

Advertisements 

We have decided to retain the 

proposed prohibition against false or 

intentionally misleading statements in 

advertisements. The application of 

today’s rule to such commercial speech 

was the subject of considerable 

comment on the NPRM. 

While Boeing and the AIA did not 

question the general authority of the 

FAA to impose and enforce this rule, 

they questioned the jurisdiction of the 

FAA over advertisements. Boeing stated 

its belief that advertisements are not 

within the FAA’s jurisdiction. Since 

advertisements have never been 

recognized as legitimate evidence of 

airworthiness, Boeing believes that the 

FTC and the marketplace should 

continue to regulate advertisements. 

UTC raised a concern about defining 

a ‘‘record’’ to include advertisements. 

UTC averred that this will lead to many 

subjective judgments when applying the 

terms of part 3 to advertisements. 

Boeing, AIA, and one individual 

commenter argued that FAA should 

exclude advertisements from the 

definition of a ‘‘record’’ because 

advertisements are invalid documents 

for showing airworthiness. 

Under 49 U.S.C. 44701, the 

Administrator has the authority to 

prescribe those regulations and 

minimum standards for practices, 

methods, and procedures the 

Administrator finds necessary for safety 

in air commerce. This legislative 

authority and the meaning of air 

commerce are broad enough to give the 

FAA the power to issue rules that affect 

commercial speech, including 

advertisements, if that speech threatens 

to have an adverse impact on aviation 

safety. 

We agree that aircraft parts installers 

should not rely on advertisements in 

determining whether a particular 

product is airworthy or appropriate for 

installation on type-certificated aircraft. 

However, we are also aware of instances 

where products have been purchased 

because of false or misleading 

advertisements and have subsequently 

been installed on aircraft. The risk of 

improper installation is particularly 

high when the product is shipped 

without the appropriate documentation 

or with no information as to suitability 

other than a series of numbers, the 

accuracy or presence of which could be 

easily overlooked. 

The FAA’s approach to aviation safety 

must, of necessity, be multi-faceted. 

While it is possible that the 

inappropriate part may be discovered 

during an inspection of a particular 

aircraft, it is also quite likely that it will 

not. Even if discovered, the aircraft may 

have been in operation with the 

inappropriate part for some time. If the 

FAA can prevent the sale of 

inappropriate products though 

enforcement action against false or 

intentionally misleading 

advertisements, then it logically will 

reduce the likelihood that the product 

will ever be installed on a typecertificated aircraft. 

Additionally, as discussed above, the 

purchasers of these products may be 

insufficiently informed to understand 

that certain representations made in 

advertisements may be misleading. 

Thus, they may purchase a product, not 

knowing what additional 

documentation is needed to ensure the 

product is appropriate for use on their 

aircraft. While an installer may refuse to 

install a product because it is not 

accompanied by the appropriate 

documentation, thus diminishing the 

safety risk, the aircraft would remain 

out of service until an appropriate 

product was procured. 

The standards for reviewing a 

potential violation of part 3 in an 

advertisement will be the same as the 

Federal Register / Vol. 70, No. 179 / Friday, September 16, 2005 / Rules and Regulations 54827 

3The term ‘‘false advertisement’’ is defined at 15 

U.S.C. 55(a)(1) as ‘‘an advertisement, other than 

labeling, which is misleading in a material respect, 

and in determining whether any advertisement is 

misleading, there shall be taken into account 

(among other things) not only representations made 

or suggested by statement, word, design, device, 

sound, or any combination thereof, but also the 

extent to which the advertisement fails to reveal 

facts material in the light of such representations or 

material with respect to consequences which may 

result from the use of the commodity to which the 

advertisement relates under the conditions 

prescribed in said advertisement, or under such 

conditions as are customary or usual.’’

standard applied to a review of any 

other ‘‘record.’’ As stated above, the 

FAA believes the FTC’s regulatory 

approach to deceptive advertising is an 

excellent model for this proposal. 

Therefore, we will rely heavily on the 

precedents established by the FTC in 

resolving interpretative issues that may 

arise when applying this rule. To ensure 

that FAA inspectors are fully versed in 

the FTC’s regulatory approach to 

deceptive advertising, the FAA will 

develop guidance material and train its 

inspectors on the FTC’s established 

criteria and precedents. By relying on 

the well-established foundation 

provided by the FTC, the FAA is 

confident that its personnel will be able 

to apply the standards of this rule 

uniformly. 

F. Prohibition on False and Fraudulent 

Statements 

Other than arguing that there was no 

need for additional regulations 

governing false and fraudulent 

statements and the applicability of any 

prohibition to advertisements, the 

commenters generally supported the 

FAA’s proposal to prohibit such 

statements. We have already addressed 

both of these objections, and have 

decided to adopt the prohibition as 

proposed. 

One individual commenter did 

suggest that any fraudulent statement is 

intentionally false by definition, and 

recommended the FAA drop 

‘‘fraudulent’’ from the regulatory 

language. We have decided against this 

recommendation because retaining the 

term provides us with greater flexibility 

in pursuing enforcement actions. 

As we explained in greater detail in 

the NPRM, an intentionally false 

statement consists of (1) a false 

representation, (2) in reference to a 

material fact, (3) made with knowledge 

of its falsity. A fraudulent statement 

consists of these three elements, plus (4) 

it was made with the intent to deceive, 

and (5) action was taken in reliance 

upon the representation. For purposes 

of part 3, the FAA considers 

‘‘intentionally false’’ and ‘‘fraudulent’’

statements to be two separate categories. 

UTC wanted the standard the FAA 

uses to determine ‘‘fraud’’ to stress a 

knowing and willful intent to deceive or 

trick. As discussed above, for a 

statement to be fraudulent under 

§ 3.5(b)(2), it must meet five criteria, one 

of which is the intent to deceive. The 

FAA agrees with the commenter that 

intent to deceive is a critical element of 

fraud. However, the FAA will not stress 

this over any of the other four 

requirements. All five must be present 

for the FAA to find that a fraudulent 

statement has been made. 

G. Prohibition on Intentionally 

Misleading Statements 

The FAA believes statements that 

meet the rule’s criteria for being 

‘‘misleading’’ under this rule are just as 

likely to adversely impact aviation 

safety as false statements. Based on this 

conclusion, the FAA has decided to 

adopt the prohibition against misleading 

statements with certain changes. First, 

we have adopted a scienter requirement. 

Second, we have omitted the 

requirement that airworthiness or 

suitability for installation be 

demonstrated through the presentation 

of acceptable records. Third, we have 

replaced the specification that a 

statement be express or implied by 

simply prohibiting a material 

representation or omission, either of 

which could mislead through an express 

or implied statement. Finally, we have 

added the legal requirement for 

demonstrating a misleading statement to 

the regulatory text. As drafted, the 

proposed text did not directly link the 

regulated party’s action to a misleading 

statement. 

ASA and AEA stated that the reliance 

on records in these sections is 

problematic, because the FAA has 

published no clear standard about what 

records are sufficient. They added that 

the FAA compounds this problem by 

not having any general requirements for 

parts documentation, and by not 

publishing standards for what is 

acceptable or not acceptable among 

commercial documents. In addition, 

ASA and AEA pointed out there is no 

FAA regulation or uniform industry 

standard for what must be included in 

commercial documentation about parts. 

The commenters argued that this lack of 

specific guidance renders the 

prohibition against misleading 

statements overbroad. 

Several commenters raised issues 

about the term ‘‘misleading.’’ Boeing 

averred that ‘‘misleading’’ is vague for 

regulatory enforcement. In a similar 

vein, GEAE and UTC posited that the 

FAA could use the proposed rule 

against people who make ‘‘honest’’ or 

‘‘legitimate’’ mistakes. AIA 

recommended this section only apply 

when a person intentionally or 

knowingly misleads. UTC agreed with 

AIA, while requesting the additional 

requirement of willfulness. UTC would 

further restrict this standard to records 

relating to FAA approval status. 

ARSA stated that evaluating whether 

a statement is misleading injects a far 

greater degree of subjectivity into the 

determination, resulting in an 

ambiguous and poorly defined standard. 

Therefore, ARSA recommended 

withdrawing this section and limiting 

part 3 to only a prohibition of conduct 

that is intentionally false or fraudulent. 

ASA and the AEA objected to the 

proposed language stating that the 

misleading statement could be the result 

of an express representation or could be 

through implication. They argued that 

no objective standard exists for industry 

to know when a communication is 

considered to ‘‘imply’’ a fact. 

In the NPRM, we discussed how we 

consulted with the FTC in developing 

§ 3.5(c). We also set forth the rationale 

underlying the standard the FAA will 

use to determine if a record is 

‘‘misleading.’’ For purposes of this rule, 

a misleading statement requires: 

(1) A material representation or 

omission; 

(2) That is likely to mislead the 

consumer; and 

(3) The consumer is acting reasonably 

under the circumstances. 

The FAA does not believe that this 

standard is vague, ambiguous or poorly 

defined for enforcement purposes. The 

FTC has successfully enforced its 

misleading statement terms 3 for years 

using this same standard. While it is 

true that there is no established 

aviation-specific caselaw on the 

prohibition against misleading 

statements, the existing FTC caselaw 

provides ample fact-scenarios that are 

comparable to what one would see in 

the aviation community. Equally 

important, enforcement actions are 

undertaken by attorneys capable of 

applying the legal standard. 

We believe much of the concern over 

the proposed standard arose from our 

assessment that the proposed 

prohibition lacked a scienter 

requirement. While an intentionally 

false statement requires knowledge of its 

falsity, we posited that a misleading 

statement does not require knowledge 

that it is misleading. In addition, under 

the proposal, there was no requirement 

that there be an intent to deceive when 

making misleading statements. 

The FAA is concerned whether a 

representation is likely to mislead rather 

54828 Federal Register / Vol. 70, No. 179 / Friday, September 16, 2005 / Rules and Regulations 

than whether it causes actual deception. 

Accordingly, we argued in the NPRM 

that there was no need to show actual 

intent in taking an enforcement action. 

We have reevaluated our position. We 

believe the burden of showing that a 

person intentionally made a statement 

knowing it could be misleading to a 

reasonable person is one that should be 

borne by the enforcement agency. The 

ultimate assessment of whether the 

requisite intent exists lies with the 

finder of fact. While this change in 

position adds significantly to the FAA’s 

enforcement burden, our previous 

position arguably amounted to a strict 

liability standard in which ambiguous 

statements automatically exposed one to 

an enforcement action. 

Thus, the FAA will consider all 

factors before deciding what 

enforcement action is necessary. 

Generally, we would first contact the 

person and discuss why the statement 

in question appears to be misleading. If 

the person who made the record in 

question can show a mistake was made, 

and such mistake was honest or 

legitimate, the FAA will not take 

enforcement action. However, if the 

statement is not corrected so as to 

remove its misleading character, or the 

mistake is one in a series of such 

mistakes, the FAA will presume 

knowledge on the part of the person 

sufficient to take enforcement action. 

We have also removed the proposed 

requirement that an individual 

demonstrate to the FAA the 

airworthiness or suitability for 

installation on a type-certificated 

product through records. We recognize 

that there may be other ways to 

demonstrate airworthiness or suitability 

and that there is no clear standard 

regarding what types of records are 

acceptable. The basis for showing 

airworthiness or suitability for 

installation is one of the factors that 

would be considered by the finder of 

fact in making a determination that a 

statement is misleading. 

The word ‘‘imply’’ and its variations 

are used in law to contrast the term 

‘‘express.’’ An implication occurs where 

the intent of the communication about 

the subject matter is not expressed by 

clear and direct words. Instead, the 

intent of the communication is 

determined by implication or necessary 

deduction from the circumstances, the 

general language or the conduct of the 

parties. 

However, we believe it is clearer to 

refer to the actual representation that is 

made rather than arguing over whether 

such representation was express or 

implied. In most cases, the aspect of the 

representation that is misleading will be 

implicit rather than explicit. Explicit 

statements may be more likely to be 

outright false rather than misleading. 

Accordingly, we have changed the 

language of § 3.5(c) to prohibit a person 

from representing that a product is 

airworthy or suitable for installation on 

a type-certificated product unless that 

person can demonstrate airworthiness 

or suitability of the particular product in 

question. 

H. Statements Regarding FAA 

Airworthiness Standards 

The FAA has decided against 

adopting the proposed restrictions on 

statements that a product, part or 

material meets FAA airworthiness 

standards. We had proposed that such 

statements must be supported by the 

appropriate documentation. In the 

absence of such documentation, the 

person holding out the product would 

be required to state that the product was 

not produced under an FAA production 

approval or, if a standard part, the part 

conformed to established industry or 

United States specifications. 

The FAA received numerous 

objections to this proposed requirement. 

Two major areas of concern were owneroperator produced parts and foreignmanufactured products regulated by the 

FAA via bilateral agreements. Since 

neither of these categories of products 

are ‘‘FAA approved,’’ commenters, 

including Delta Airlines, ARSA, Airbus, 

AECMA, and Transport Canada, noted 

that a declaration that there was no 

approval would be both misleading and 

detrimental to the sale of these parts. 

ASA and AEA argued that the 

proposed requirement created vague 

standards and required reliance on 

historical information concerning 

production approval that is not 

uniformly maintained and which is not 

otherwise legally required. In addition, 

they stated that the proposed 

requirement relied on airworthiness as a 

standard for demonstration when the 

term airworthy remains undefined in 

the regulations. 

Transport Canada noted that the 

statement that a part is not produced 

under a production approval provides 

no indication of the consequences of 

that statement. Transport Canada 

wanted the FAA to identify the 

consequences and require that the 

consequences are part of the statement 

required under the proposed 

requirement. 

Based on these comments, the FAA 

has decided not to adopt the proposed 

requirement. Part of the problem is that 

the proposed regulatory language did 

not cover all the means by which a 

product, part, appliance or material can 

meet FAA airworthiness standards. 

The FAA has tried to redraft this 

section’s language and has considered 

many options. However, none of these 

fix the problem. The goal of part 3 is to 

prevent certain false and misleading 

statements. The removal of this 

proposed requirement does not affect 

the ability of part 3 to achieve this goal 

effectively and efficiently. The proposed 

rule included the requirement to 

provide some guidance on what the 

FAA might look for when enforcing part 

3. However, the FAA recognizes that 

this guidance was confusing, was not 

complete, and detracts from the other 

terms of part 3. Therefore, it has been 

removed from the final rule. 

Several of the comments expressed 

the need for clarification about the 

applicability of part 3 to products, parts, 

appliances and materials imported to 

the U.S. under part 21, subpart N and 

to owner-operator produced products, 

parts, appliances and materials. The 

FAA wants to clarify that part 3 applies 

to all products, parts, appliances and 

materials imported to the U.S. under 

part 21, subpart N and all owneroperator produced products, parts, 

appliances and materials. While the 

FAA recognizes the difficulty in 

enforcing part 3 against foreign entities, 

the FAA believes that no product, part, 

appliance or material, regardless of its 

origin, should be excluded from the 

terms of part 3. By the same token, 

persons selling these products should be 

able to rely on the provenance created 

by bilateral agreements to defend 

themselves against any claims that they 

misrepresented that products were 

airworthy or suitable for installation on 

a type-certificated product. 

I. FAA Authority To Investigate 

ASA and AEA averred that the 

proposed inspection requirement, 

which stated that each person for whom 

the FAA could seek enforcement action 

for a misleading statement would have 

to make all records and product 

available for inspection violates the 

Fourth Amendment prohibition against 

unreasonable searches. They each 

argued that this prohibition precludes 

warrantless intrusions pursuant to civil 

or criminal investigations unless some 

recognized exception to the warrant 

process applies. Since the FAA has 

failed to identify an exception to the 

standard warrant process, ASA and 

AEA object to this section, arguing it 

allows unconstitutional searches. 

We have decided against adopting the 

proposed investigatory language 

because we have determined that the 

FAA’s existing authority to issue a 

Federal Register / Vol. 70, No. 179 / Friday, September 16, 2005 / Rules and Regulations 54829 

subpoena is sufficient to conduct 

investigations under this rule. 

Additionally, the FAA has determined 

the inclusion of the proposed language 

could be interpreted as an attempt by 

the FAA to extend its investigatory 

authority through regulation beyond any 

statutory constraints. 

Under 49 U.S.C. 40113, the 

Administrator has authority to conduct 

investigations that she considers 

necessary to carry out her duties relating 

to air commerce and safety. Also, 49 

U.S.C. 46101(a)(2) grants the 

Administrator authority to conduct an 

investigation about a person violating 

the air commerce and safety provisions 

of Title 49 if reasonable grounds appear 

for the investigation. These provisions 

give the FAA authority to conduct 

investigations against all persons, even 

non-certificate holders. 

The purpose of this rule is to improve 

air safety by preventing people from 

representing that any product, part, 

appliance or material is suitable for use 

on any type-certificated product when, 

in fact, the product, part, appliance or 

material may not be. Therefore, under 

the above sections of the United States 

Code, the FAA has authority to conduct 

investigations when it becomes aware of 

possible violations of this rule. 

The FAA is not asserting that it has 

the right to enter these businesses and 

inspect products, parts, appliances, 

materials and their records at will or by 

force. If a person fails to comply 

voluntarily with a request to produce 

records or a request to permit an 

inspection of a product, part, appliance 

or material, the FAA may get a 

subpoena to compel compliance. 

UTC raised a concern that the 

proposed language would have allowed 

the FAA to copy any records, including 

valuable commercial documents. UTC is 

concerned that these documents would 

then be available to UTC’s competition 

through a filing under the Freedom of 

Information Act (FOIA). 

Exemption 4 of FOIA protects ‘‘trade 

secrets and commercial or financial 

information from a person that is 

privileged or confidential.’’ The intent 

of this exemption is to protect the 

interests of both the FAA and the 

owners of such information. To the 

extent a FOIA request is received for 

any information that may be proprietary 

in nature, the FAA routinely asks the 

affected business to review the FOIA 

request and assert any privilege that 

may apply under exemption 4. The 

process would be no different for these 

records. 

J. FAA Resources To Investigate 

ASA and AEA argued the FAA is ‘‘illprepared’’ to enforce regulations that 

regulate commercial speech because of 

a lack of resources. Both commenters 

contended this rule will create a 

significant resource allocation problem 

since the FAA does not have enough 

resources to perform its current tasks. 

Another commenter, an individual, 

agreed with ASA and AEA. This 

commenter stated the FAA would use 

its resources better by conducting 

surveillance on installers and 

manufacturers. 

The FAA has the resources necessary 

to enforce this rule properly. The FAA 

expects that most violations of part 3 

will arise as a result of: 

(1) Reports made to the FAA by 

parties who relied on a false or 

misleading statement in the purchase or 

installation of a product, part, appliance 

or material; or 

(2) Findings resulting from an FAA 

inspection or investigation that FAA 

conducted for other purposes. 

We already receive these kinds of 

complaints and make findings based on 

the results of our investigations. 

Therefore, the resources needed to look 

into these cases will not be significant. 

In addition, the FAA believes that, with 

time, the existence of part 3 will 

effectively deter most people from 

issuing records that violate part 3. 

Finally, the FAA does not believe that 

FAA surveillance of installers and 

manufacturers for violations of part 3 

would be a good use of its resources. 

Surveillance for violations would 

require significantly more resources 

than enforcing part 3. In addition, the 

commenter has not provided any data to 

indicate that this approach would be 

more effective in addressing the issues 

covered by part 3. 

K. Miscellaneous Items 

1. Inclusion of Fluids 

The proposed rule did not cover 

records about fluids. As part of the 

NPRM, the FAA sought comments on 

whether there is a significant problem 

with false or misleading records about 

fluids used in aviation. In addition, the 

FAA sought comments about whether 

the final rule should apply these 

records. 

In response to this request, the FAA 

received three comments and all 

supported including fluids in the final 

rule. GEAE noted there is not a 

significant problem with records on 

fluids. However, GEAE believed the 

final rule should cover these records to 

be proactive. Boeing and AIA each 

stated the final rule should cover fluids 

since improperly represented fluids 

could detrimentally affect the 

airworthiness of aircraft. 

The FAA thanks those commenters 

that supplied comments about including 

fluids in the final rule. The FAA 

recognizes that false or misleading 

records about fluids could have a 

harmful affect on safety. Therefore, the 

FAA is considering the issues raised by 

these comments and the choices 

available to regulate these records. 

However, because of the complexities of 

these issues, the FAA does not want to 

delay issuing this final rule while the 

FAA analyzes these issues. Therefore, 

the final rule will not cover records 

about fluids. 

2. Quality Escapes and Production 

Overruns 

GEAE and AIA raised concerns about 

the impact of this rule on quality 

escapes. Boeing had a similar concern 

about production overruns. These 

commenters worried that the intent of 

this rule is to ‘‘outlaw’’ production 

overruns and to penalize those 

individuals associated with quality 

escapes. 

For purposes of this rule, the FAA is 

not concerned with how a product, part, 

appliance or material was produced or 

entered the pool of available products, 

parts, appliances or materials. Other 

FAA regulations address the 

implications of and ramifications arising 

from quality escapes and production 

overruns. This rule only applies to what 

is in the records that go with such 

products, parts, appliances or materials. 

If any record is false or intentionally 

misleading, a violation of this rule will 

occur as long as the record is 

disseminated for the purpose of 

supporting or effecting a commercial 

sale of a covered product, part, 

appliance, or material. The history of 

the item in question is irrelevant. 

3. Increased Costs Associated With 

Compliance 

ASA and AEA contend the records 

requirement of § 3.5 will have a 

tremendous financial impact. ASA and 

AEA believe that many parts in current 

inventories do not have records. In these 

cases, an installer is able to make a 

determination about airworthiness 

based on the testable physical 

characteristics of the part. ASA and 

AEA believe that these ‘‘record-less’’

parts could not be sold according to part 

3. 

Part 3 does not create record 

requirements for selling products, parts, 

appliances and materials. These 

standards exist in other FAA 

regulations. This rule only sets forth 

54830 Federal Register / Vol. 70, No. 179 / Friday, September 16, 2005 / Rules and Regulations 

4 Delta Airlines requests the rulemaking include 

a new requirement for IPCs. Delta asks the FAA to 

require manufacturers to list only FAA approved 

parts and suppliers in their IPCs. It is not the intent 

of this rule to create a standard for what must be 

in IPCs. However, part 3 applies to IPCs, and 

manufacturers should take proper steps to ensure 

that their IPCs do not violate the terms of part 3. 

standards about the contents of the 

records for products, parts, appliances 

and materials. Therefore, part 3 does not 

govern the possible sale of ‘‘record-less 

parts.’’ However, once these products, 

parts, appliances and materials have 

records, these records must comply with 

part 3. We note that any concerns about 

‘‘record-less parts’’ should be further 

eased by the removal of the requirement 

that indicia of airworthiness or 

suitability for installation in § 3.5(d) be 

demonstrated through records. 

4. Illustrated Parts Catalogues (IPCs) 

GEAE recommends the FAA define a 

‘‘record’’ to exclude IPCs. Boeing agrees, 

stating that it is not correct to imply 

FAA oversight of IPC content within 

this regulation. AIA and UTC also want 

to exclude IPCs from the definition to 

allow IPCs to continue to service the full 

range of business needs of customers. 

The FAA believes that IPCs should 

remain within the scope of the rule. 

While the FAA recognizes IPCs are not 

FAA approved, this should not be a 

reason to exclude these documents from 

this rule. IPCs are integral to ordering 

products, parts, appliances and 

materials. IPCs communicate to aircraft 

owners, operators, producers, 

mechanics, and repairmen the 

acceptability of a product, part, 

appliance or material for use on typecertificated products. While the FAA 

does not see why a manufacturer would 

put a false or intentionally misleading 

statement in an IPC, the FAA does not 

want to create a possible loophole for 

future abuse. Therefore, part 3 covers 

IPCs.4

5. Clarifying Changes to Regulatory Text 

When reviewing the proposed rule 

language, the FAA found some minor 

technical errors which are corrected 

here. 

(1) A ‘‘product’’ includes aircraft, 

engines and propellers. Since someone 

can install an engine or propeller on an 

aircraft, a ‘‘product’’ can technically be 

installed on a ‘‘product’’. Therefore, the 

FAA changed § 3.5(c) to insert the word 

‘‘product’’ into the language covering 

the acceptability of products, parts and 

materials for installation on products. 

(2) We changed the heading of § 3.5(a) 

from ‘‘(P)rohibition preventing 

misleading statements’’ to ‘‘(P)rohibition 

against misleading statements.’’ We did 

this to be consistent with the heading 

for § 3.5(b). 

(3) Based on the change to § 3.1 

adding the word ‘‘appliance,’’ we added 

the term ‘‘appliance’’ to § 3.5(c) where 

appropriate. 

(4) The proposed language of § 3.5 

covers statements about the 

acceptability of any product, part, 

appliance or material for ‘‘use’’ on 

products. Elsewhere in the regulation, 

the word ‘‘installation’’ is used. The 

FAA believes the word ‘‘installation’’

covers the intent of part 3. Therefore, 

§§ 3.5(b)(1) and 3.5(b)(2) are changed to 

delete the word ‘‘use’’ and replace it 

with ‘‘installation.’’

6. Effective Date 

There are no compliance dates or 

reporting requirements in this rule. The 

rule will take effect 30 days from the 

date of publication in the Federal 

Register. 

III. Regulatory Notices and Analyses 

Statement of Statutory Authority 

This rulemaking is promulgated 

under the authority described in 

Subtitle VII, part A, Section 40113, 

Administrative, Section 44701, General 

requirements, and Section 44704, Type 

certificates, production certificates, and 

airworthiness certificates. Under these 

sections, the FAA has been authorized 

to issue and enforce regulations 

governing the safety of aircraft products 

and the parts, appliances and material 

used on such products. 

Paperwork Reduction Act 

There are no current or new 

requirements for information collection 

associated with this amendment. 

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 the corresponding ICAO 

Standards and Recommended Practices 

and has identified no differences with 

these regulations. 

Economic Assessment, Regulatory 

Flexibility Determination, Trade Impact 

Assessment, and Unfunded Mandates 

Assessment 

Changes to Federal Regulations must 

undergo several economic analyses. 

First, Executive Order 12866 directs that 

each Federal agency should 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 

requires agencies to analyze the 

economic effect of regulatory changes 

on small businesses and other small 

entities. Third, the Office of 

Management and Budget directs 

agencies to assess the effect of 

regulatory changes on international 

trade. In conducting these analyses, the 

FAA has determined that this rule: 

(1) Will generate benefits that justify 

its additional costs, yet is a ‘‘significant 

regulatory action’’ as defined in the 

Executive Order due to the potential 

public interest in the regulation; 

(2) Is significant as defined in the 

Department of Transportation’s 

Regulatory Policies and Procedures; 

(3) Would not have a significant 

impact on a substantial number of small 

entities; 

(4) Would not constitute a barrier to 

international trade; and 

(5) Would not contain any Federal 

intergovernmental or private sector 

mandate. 

These analyses are summarized here 

in the preamble, and the full Regulatory 

Evaluation is in the docket. 

Total Costs and Benefits of This 

Rulemaking 

The estimated quantifiable net cost of 

this rulemaking is $1.1 million ($0.8 

million, discounted) over the next ten 

years. The benefits of this rulemaking 

are unquantifiable and cannot be 

estimated. 

Who is Potentially Affected by This 

Rulemaking 

This rulemaking affects anyone 

engaged in aviation-related activities, 

such as manufacturers, repair stations 

and mechanics, air carriers or other 

aircraft operators, including part 

distributors and part brokers. 

Our Cost Assumptions and Sources of 

Information 

(1) Discount rate—7%. 

(2) Period of analysis—2004–2013. 

(3) Monetary values expressed in 2003 

dollars. 

(4) Loaded wage rate of an FG–13 Step 

5—$47.64. 

Alternatives We Considered 

No alternatives were considered in 

this rulemaking analysis. 

Benefits of This Rulemaking 

Lack of relevant data prevents the 

FAA from quantifying the benefit 

analysis. However, the unquantifiable 

benefit is enhanced safety to the 

aviation community and flying public 

by ensuring that aircraft owners, aircraft 

operators and persons who maintain 

Federal Register / Vol. 70, No. 179 / Friday, September 16, 2005 / Rules and Regulations 54831 

aircraft have factual information on 

which to determine whether a product, 

part, appliance or material may be used 

in a given civil aircraft. 

Costs of This Rulemaking 

The FAA will incur costs of $1.1 

million ($0.8 million, discounted), and 

the entities affected by this rulemaking 

will not incur any costs. 

Changes From the NPRM to the Final 

Rule 

The FAA did not receive any 

comments that either questioned our 

analysis, or provided suggestions to 

consider altering our initial analysis. 

The only changes made in the analysis 

were that the loaded wage rate of a FG–

13, step 5 employee was increased from 

$40.16 to $47.64. 

Regulatory Flexibility Determination 

The Regulatory Flexibility Act of 1980 

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 principal, 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 is 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. 

This final rule will establish rules 

related to false and intentionally 

misleading statements about products, 

parts, appliances and materials that may 

be used on type-certificated aircraft. For 

the entities affected by this final rule, 

the FAA expects the annualized 

compliance costs to be minimal. 

Therefore, these small entities should 

incur only minimal additional costs as 

a result of the final rule. Accordingly, 

pursuant to the Regulatory Flexibility 

Act, 5 U.S.C. 605(b), the Federal 

Aviation Administration certifies that 

this final rule will not have a significant 

economic impact on a substantial 

number of small entities. 

International Trade Impact Assessment 

The Trade Agreement Act of 1979 

prohibits Federal agencies from 

engaging in any standards or related 

activities that create unnecessary 

obstacles to the foreign commerce of the 

United States. Legitimate domestic 

objectives, such as safety, are not 

considered unnecessary obstacles. The 

statute also requires consideration of 

international standards and where 

appropriate, that they be the basis for 

U.S. standards. 

The final rule will not affect trade 

opportunities for U.S. firms doing 

business overseas or for foreign firms 

doing business in the United States. 

Unfunded Mandates Assessment 

Title II of the Unfunded Mandates 

Reform Act of 1995 (the Act), enacted as 

Public Law 0104–4 on March 22, 1995, 

requires each Federal agency, to the 

extent permitted by law, to prepare a 

written assessment of the effects of any 

Federal mandate in a proposed or final 

agency rule that may result in the 

expenditure of $100 million or more 

(when adjusted annually for inflation) 

in any one year by State, local, and 

tribal governments in the aggregate, or 

by the private sector. The FAA currently 

uses an inflation-adjusted value of 

$120.7 million in lieu of $100 million. 

Section 204(a) of the Act, 2 U.S.C. 

1534(a), requires the Federal agency to 

develop an effective process to permit 

timely input by elected officers (or their 

designees) of State, local, and tribal 

governments on a proposed ‘‘significant 

intergovernmental mandate.’’ A 

‘‘significant intergovernmental 

mandate’’ under the Act is any 

provision in a Federal agency regulation 

that would impose an enforceable duty 

upon State, local, and tribal 

governments in the aggregate of $100 

million (adjusted annually for inflation) 

in any one year. Section 203 of the Act, 

2 U.S.C. 1533, which supplements 

section 204(a), provides that, before 

establishing any regulatory 

requirements that might significantly or 

uniquely affect small governments, the 

agency shall have developed a plan, 

which, among other things, must 

provide for notice to potentially affected 

small governments, if any, and for a 

meaningful and timely opportunity for 

these small governments to provide 

input in the development of regulatory 

proposals. 

This final rule does not contain any 

Federal intergovernmental or private 

sector mandates. Therefore, the 

requirements of Title II of the Unfunded 

Mandates Reform Act of 1995 do not 

apply. 

Executive Order 13132, Federalism 

The FAA has analyzed this final rule 

under the principles and criteria of 

Executive Order 13132, Federalism. We 

determined that this action will not 

have a substantial direct effect on the 

States, or the relationship between the 

national Government and the States, or 

on the distribution of power and 

responsibilities among the various 

levels of government, and therefore does 

not have federalism implications. 

Plain English 

Executive Order 12866 (58 FR 51735, 

Oct. 4, 1993) requires each agency to 

write regulations that are simple and 

easy to understand. We invite your 

comments on how to make these 

regulations easier to understand, 

including answers to questions such as 

the following: 

• Are the requirements in the 

regulations clearly stated? 

• Do the regulations contain 

unnecessary technical language or 

jargon that interferes with their clarity? 

• Would the regulations be easier to 

understand if they were divided into 

more (but shorter) sections? 

• Is the description in the preamble 

helpful in understanding the final rule? 

Please send your comments to the 

address specified in the ADDRESSES

section. 

Regulations Affecting Intrastate 

Aviation in Alaska 

Section 1205 of the FAA 

Reauthorization Act of 1996 (110 Stat. 

3213) requires the FAA, when 

modifying its regulations in a manner 

affecting intrastate aviation in Alaska, to 

consider the extent to which Alaska is 

not served by transportation modes 

other than aviation, and to establish 

appropriate regulatory distinctions. In 

the NPRM, we requested comments on 

whether the proposed rule should apply 

differently to intrastate operations in 

Alaska. We didn’t receive any 

comments, and we have determined, 

based on the administrative record of 

this rulemaking, that there is no need to 

make any regulatory distinctions 

applicable to intrastate aviation in 

Alaska. 

54832 Federal Register / Vol. 70, No. 179 / Friday, September 16, 2005 / Rules and Regulations 

Environmental Analysis 

FAA Order 1050.1E identifies FAA 

actions that are categorically excluded 

from preparation of an environmental 

assessment or environmental impact 

statement under the National 

Environmental Policy Act in the 

absence of extraordinary circumstances. 

The FAA has determined this 

rulemaking action qualifies for the 

categorical exclusion identified in 

paragraph 312d and involves no 

extraordinary circumstances. 

Regulations That Significantly Affect 

Energy Supply, Distribution, or Use 

The FAA has analyzed this final rule 

under Executive Order 13211, Actions 

Concerning Regulations that 

Significantly Affect Energy Supply, 

Distribution, or Use (May 18, 2001). We 

have determined that it is not a 

‘‘significant energy action’’ under the 

executive order because: 

(1) It is not a ‘‘significant regulatory 

action’’ under Executive Order 12866; 

and 

(2) It is not likely to have a significant 

adverse effect on the supply, 

distribution, or use of energy. 

List of Subjects in 14 CFR Part 3 

Aircraft, Aviation safety, False, Fraud, 

Misleading. 

The Amendment 

■ In consideration of the foregoing, the 

Federal Aviation Administration 

amends Chapter I of Title 14, Code of 

Federal Regulations as follows: 

■ 1. Add part 3 to read as follows: 

PART 3—GENERAL REQUIREMENTS 

Sec. 

3.1 Applicability. 

3.5 Statements about products, parts, 

appliances and materials. 

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

and 44704. 

§ 3.1 Applicability. 

(a) This part applies to any person 

who makes a record regarding: 

(1) A type-certificated product, or 

(2) A product, part, appliance or 

material that may be used on a typecertificated product. 

(b) Section 3.5(b) does not apply to 

records made under part 43 of this 

chapter. 

§ 3.5 Statements about products, parts, 

appliances and materials. 

(a) Definitions. The following terms 

will have the stated meanings when 

used in this section: 

Airworthy means the aircraft conforms 

to its type design and is in a condition 

for safe operation. 

Product means an aircraft, aircraft 

engine, or aircraft propeller. 

Record means any writing, drawing, 

map, recording, tape, film, photograph 

or other documentary material by which 

information is preserved or conveyed in 

any format, including, but not limited 

to, paper, microfilm, identification 

plates, stamped marks, bar codes or 

electronic format, and can either be 

separate from, attached to or inscribed 

on any product, part, appliance or 

material. 

(b) Prohibition against fraudulent and 

intentionally false statements. When 

conveying information related to an 

advertisement or sales transaction, no 

person may make or cause to be made: 

(1) Any fraudulent or intentionally 

false statement in any record about the 

airworthiness of a type-certificated 

product, or the acceptability of any 

product, part, appliance, or material for 

installation on a type-certificated 

product. 

(2) Any fraudulent or intentionally 

false reproduction or alteration of any 

record about the airworthiness of any 

type-certificated product, or the 

acceptability of any product, part, 

appliance, or material for installation on 

a type-certificated product. 

(c) Prohibition against intentionally 

misleading statements. 

(1) When conveying information 

related to an advertisement or sales 

transaction, no person may make, or 

cause to be made, a material 

representation that a type-certificated 

product is airworthy, or that a product, 

part, appliance, or material is acceptable 

for installation on a type-certificated 

product in any record if that 

representation is likely to mislead a 

consumer acting reasonably under the 

circumstances. 

(2) When conveying information 

related to an advertisement or sales 

transaction, no person may make, or 

cause to be made, through the omission 

of material information, a representation 

that a type-certificated product is 

airworthy, or that a product, part, 

appliance, or material is acceptable for 

installation on a type-certificated 

product in any record if that 

representation is likely to mislead a 

consumer acting reasonably under the 

circumstances. 

(d) The provisions of § 3.5(b) and 

§ 3.5(c) shall not apply if a person can 

show that the product is airworthy or 

that the product, part, appliance or 

material is acceptable for installation on 

a type-certificated product. 

Issued in Washington, DC, on September 9, 

2005. 

Marion C. Blakey, 

Administrator. 

[FR Doc. 05–18343 Filed 9–15–05; 8:45 am] 

BILLING CODE 4910–13–P