July 20, 2001

Dear Ms. Knapp:

     For the reasons described below and in accordance with Executive Order. No. 12866, section 6, we are returning to you for reconsideration a draft final rule from the Department of Transportation's (DOT) Federal Aviation Administration (FAA) entitled, "Part 145 Review : Repair Stations" submitted to the Office of Management and Budget (OMB) on July 13, 2001. This final rule would update and revise existing regulations for repair stations. The rule is intended to better reflect changes in repair station business practices, advancements in technology, and aircraft maintenance practices.

     Under Executive Order 12866, agencies are to avoid regulations that are incompatible with the regulatory policies of other Federal agencies and the Federal government. While we fully support the objectives of the draft final rule, we are concerned that certain provisions may have adverse international consequences. The preamble to the draft final rule states that the rule contains "a requirement that repair stations outside the United States must show that the certificate is necessary to maintain U. S.-registered or U. S. operated articles. There are various methods that can be utilized for determining the 'necessity' for certification of a repair station outside the United States, thus allowing the initiation of the certification process. Methods could include, for example, the applicant providing the FAA with a binding contract or a proposal for aircraft maintenance services. The FAA will not certificate a repair station located outside the United States when the applicant cannot provide the FAA with objective evidence that the necessity requirement is met."

     As part of our review of the draft rule, we sought the views of the State Department and the Office of the United States Trade Representative. Those agencies indicated that this language could be read by other governments as a "needs test" for foreign repair stations that would raise a significant issue about our compliance with applicable international trade agreements. Moreover, the agencies indicated that the preamble language raises questions of U. S. intent that could complicate relations with other countries. We share these concerns.

     Due to the concerns identified above, we are returning this rule for your reconsideration. Our staff is available for further discussion with you on these issues.