FAA's regulations are pretty clear on what the agency's designated engineering representatives (DERs) can approve. But what about the power to revoke?
The regulations--specifically, FAR Part 183.29--discuss in detail what DERs "may approve," but don't discuss revoking things for being unsafe. However, the agency's guidance--specifically, FAA Order 8110.37E (.pdf)--seems to make clear that only FAA can "issue determination of an unsafe condition."
ARSA thinks so, at least, and has asked FAA to clarify the issue (.pdf) after learning that a DER issued a repair station approval and then revoked it. Writes ARSA to FAA Aircraft Engineering Division Manager David Hempe:
[D]espite clarity in the rules and FAA national policy and attempts to work out the issue at the FAA aircraft certification office level, the matter that gave rise to this letter remains unresolved. For that reason, and to prevent similar confusion in the future, we respectfully ask the FAA to clarify that, once granted, as RS-DER approved RS cannot be revoked by a designee; an approved RS remains valid unless and until the FAA determines that an unsafe condition exists, and notifies the RS holder in writing that the approval is no longer valid.
More from ARSA here.