2016 – Edition 5 – June 3

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Hotline Features

AMT Day 2016 – Making Charles Proud

By Brett Levanto, Vice President of Communications

Charles Taylor, the Wright Brothers’ mechanic and father of aviation maintenance, was born on May 24, 1868. This year– 148 years later – we celebrate his legacy with every safe arrival.

The association celebrated this year’s Aviation Maintenance Technician Day by thanking the men and women who work every day on maintenance lines and in component shops in service of the flying public. Just as Orville and Wilbur couldn’t have flown without their mechanic, we can’t fly without you.

To help make that point, ARSA members are encouraged to take a moment to watch the association’s seven-minute documentary on the maintenance industry. Shot on location at member facilities, the film provides a glimpse of the vital work being done at repair stations around the world:

You Can’t Fly Without Us – The World of Aviation Maintenance

Of course, members should make the most of this year’s AMT Day by ensuring they’re taking advantage of ARSA’s work. Are you fully enjoying all of the association’s member benefits? Visit arsa.org/membership to find out.

Thank you for helping to keep the world safely in flight. Working together, we’ll continue to make Charles proud.

ARSA Works

To see all the ways ARSA works as the voice of the aviation maintenance industry, visit the ARSA Works page.

ARSA Asks FAA to Release Association’s Working Away Advisory

By Ryan M. Poteet, Regulatory Affairs Manager

On May 23, ARSA requested the FAA issue an advisory circular on the ability of a repair station to work away from its fixed location. To assist in this effort, the association provided a draft advisory circular it developed based on the plain language of the regulations and internal agency guidance.

Conditions under which a repair station works away from its fixed location have changed dramatically over the years. At one time, the need to perform work under the auspices of a repair station certificate was limited to a permanent location, or in the event of a special circumstance, such as an aircraft on the ground, away from that fixed location.

Today, work is performed at various locations away from the fixed location, some are familiar sites or facilities known to the repair station and used sporadically to meet customer demands and business needs. Other locations may be ad hoc, where work is done at a customer’s behest for varying periods of time. Some repair stations utilize mobile repair units that may travel across state lines or even internationally to address commercial obligations and provide customer maintenance services.

The purpose of the ARSA’s advisory circular is to outline the ability and conditions for repair stations to work away from their fixed locations, and methodologies for controlling such work under its quality system, taking into account the current business environment. The document was created in response to numerous member inquiries regarding 14 CFR § 145.203, in order to a “compliance road map” for repair stations.

While ARSA works with the agency to get the AC issued, the association’s version is available for free to members. To order your copy, click here and complete the publications order form.

ARSA’s Filler to Join FAA, EASA at International Safety Conference

By Brett Levanto, Vice President of Communications

From June 14-16, the international aviation safety community will converge on Washington, D.C.’s Mayflower Hotel for the 2016 Aviation Safety Conference. This event, co-chaired by the FAA and EASA, will focus on the theme of “Global Partnerships: The Keystone for Safety.”

The conference will provide attendees an open forum to discuss international cooperation while considering emerging safety challenges. In addition to guest speakers and plenary sessions addressing aviation’s most critical needs, participants may use the venue to create and strengthen professional partnerships.

The plenary sessions begin on June 14 with an investigation of bilateral agreements. Marshall S. Filler, ARSA’s managing director and general counsel, will join EASA Executive Director Patrick Ky and representatives from Textron and Airbus for the panel discussion on international cooperation, moderated by officials from the FAA:

Plenary Session A – Panel Information: How Do We Achieve the True Benefits of the Bilateral?

This discussion will address the public/private aspects of bilateral agreements.  The public (government) aspect will focus on mutual recognition of authority competency, risk-based application of international resources, harmonization of efforts between civil aviation authorities.  The private (industry) aspect will focus on the multilateral concept, reduction of redundant activities from bilateral agreements resulting in industry burden (certification & oversight) and the financial impact of changes to the bilateral.

Filler’s participation in the conference has become an annual tradition; it is part of the association’s commitment to international regulatory cooperation.

The conference registration deadline is June 3. For more information, visit www.regonline.com/2016FAA-EASA-Conference.

Legal Briefs

Editor’s note: This material is provided as a service to association members for educational and informational purposes only. It does not constitute legal or professional advice and is not privileged or confidential.

Continuing Regulatory Education: Instructions for Continued Airworthiness

By Ryan M. Poteet, Regulatory Affairs Manager

On May 25, ARSA launched the first of a three-part training series evaluating every aspect of the ICA issue. Since its inception, ARSA has worked to ensure that basic safety information is made available to persons authorized by the regulations to perform the essential task of maintaining the world’s fleets.

Title 14 CFR § 21.50(b) imposes an affirmative obligation on design approval holders (DAH) to prepare information essential to the continued airworthiness of aviation products (ICA in current parlance) and to make that basic safety data available to persons required to comply with the terms of the instructions. Under part 91, owners are required to ensure the information is followed and recorded; however, only specific persons, namely maintenance providers, are authorized by part 43 to perform and record maintenance and alteration functions set forth in the ICAs.

Notwithstanding the clear language of § 21.50(b), the FAA has been slow to enforce DAHs’ obligation to make ICA available. On the other hand, the agency has vigilantly enforced the requirement that those performing maintenance do so in accordance with the ICA (see §§ 43.13, 145.51(b) and 145.109).

ARSA has taken numerous steps to ensure the regulations are properly interpreted and evenly enforced.  Notably, ARSA raised this enforcement anomaly with FAA and the European Aviation Safety Agency (EASA); between 2003 and 2008, ARSA filed four complaints with the aviation authorities. While EASA’s response acknowledged the type certificate (TC) holders’ obligation to provide ICA to persons required to comply, including repair stations holding EASA approvals, it stopped short of taking any action. The FAA has yet to respond and ARSA formally withdrew one complaint for staleness.

In 2009, the association requested the FAA issue a legal Interpretation clarifying that CMMs referenced in the Airworthiness Limitations section (ALS) were part of the ICA. After three years of debate the FAA confirmed that all CMMs referenced in the ALS are part of the ICA. Further, modifications to the ALS triggers the DAH’s obligation to make that information—and any updates—available to properly rated repair stations. At this time, the FAA has declined to extend CMM availability to all properly rated repair stations absent a statement of need (e.g., possession of component, contract, work order), ignoring the plain language of 14 CFR § 43.16.

In March 2012 the FAA issued its ICA Policy (PS-AIR-21.50-01) to address alleged anti-competitive practices and prohibitions on the distribution of maintenance information. The policy specifically states that “the FAA will not accept restrictive statements or terms in ICA documents, or restrictive access or use agreements that limit the appropriate availability or use of the ICA.” Furthermore, DAHs cannot distinguish between the use of ICA by the product owner or the maintenance provider, or place any conditions or limitations on such use. Admittedly the policy is a step in the right direction but it did not include many of ARSA’s recommendations, which would have aligned the policy with existing regulations.

In October 2015, the European Commission’s Directorate General for Competition’s (DG-COMP) opened a preliminary investigation into how manufacturers may be limiting the availability of maintenance manuals and the possible anti-competitive effects. The EC stated that it was “closely monitoring competitive conditions as regards maintenance of engines and components of large commercial aircraft.” As part of that investigation, individual companies and aviation industry trade groups (including ARSA) received questionnaires seeking in-depth information on certain practices of specific design approval holders. ARSA’s responses focused on aviation safety rules and how the enforcement of those rules by national aviation authorities affects competition.

Most recently, in March 2016, the International Air Transport Association (IATA) announced that it filed a formal complaint in the EC’s investigation, signifying that the ICA issue remains a controversial issue.

ICA has been a key focus of ARSA’s work on behalf of the maintenance community for decades and it continues to demand attention from aviation businesses worldwide. Please join ARSA’s Managing Director and General Counsel Marshall S. Filler for a three-part series analyzing how to comply with ICA, how to obtain access to the information, and options for working around impediments so that you can better serve your customers (click here to register). Further information on what the association has accomplished on this issue can be found here.

ARSA on the Hill

The Times Are a-Changin’

By Daniel B. Fisher, Vice  President of Legislative Affairs

As the presidential primaries trickle to a conclusion, many Americans are dissatisfied for any number of reasons with their choices to lead the country. However, for the global aviation maintenance and manufacturing industry the trepidation should extend beyond the current debates to the potential for growth-hindering policies for repair stations.

Regardless of political leanings, maintenance providers around the world should be very worried about election 2016.  The competitiveness of the industry in the United States depends on access to foreign markets and free exchange in services and parts.  While Democratic presidential candidates have traditionally been anti-free trade (interestingly, except Bill Clinton), Republicans typically touted globalization and open markets.  Not in 2016.  Both Republican Donald Trump and Democrat Hillary Clinton (and Bernie Sanders) have stepped up the rhetoric about ending free trade agreements under which companies ship Americans jobs overseas.

Up to this point, the presidential candidates haven’t focused specifically on aviation policy issues (aside from a mention by the Clinton campaign that she’s against Norwegian Air operating in the United States).  However, the same false arguments utilized by contract maintenance’s opponents on Capitol Hill (American jobs lost overseas) are repeated by the campaigns while attacking free trade. It could mean trouble for the aviation industry as a President Trump or President Clinton imposes protectionist policies on U.S. sectors that thrive both domestically and internationally (such as aviation maintenance and manufacturing).

We know false economic arguments about contract maintenance can be rebutted by facts.  ARSA’s most-recent research determined global air transport MRO (for jets and turboprops) is expected to be $67.7B in 2016. Considering expected expansion in both passenger traffic and the size of international fleets as well as the emergence of new technology, the aviation maintenance industry is forecast to grow by 3.9 percent annually over the next decade. By 2026, the industry’s global economic impact will approach $100B. Here in the United States, more than 3,800 maintenance firms employing 136,000 men and women generate $43.0B in economic activity across all 50 states. Eighty-eight percent of these American businesses have fewer than 50 employees. That’s 3,400 small businesses working in our communities every day as a part of this larger industry. In all, the maintenance and production of aviation parts and equipment accounts for nearly 300,000 jobs across the country.

Nonetheless, history tells us that politics often trumps (no pun intended) good policy.  Combine false safety arguments (the misnomer pushed by anti-contract maintenance interests that repair stations are inherently unsafe and lack oversight) with fabricated economic scare tactics and the next administration could set its sights on our industry.  While we know Hillary Clinton has supported legislation to impose cumbersome and unnecessary mandates on repair stations, Donald Trump’s views on global maintenance issues are unknown.

The 2016 election will be among the most interesting in history.  As campaign season ramps up, remember to demand answers from the candidates on where they stand on aviation issues and based your support on those views. Buckle up as there could be turbulence ahead.

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Regulatory Outlook

FAA Notice Extends MAG Change 5 Requirement

By Brett Levanto, Vice President of Communications

Effective May 2, the FAA issued Notice 8900.360 extending the implementation date of the guidance established by Notice 8900.336, Maintenance Annex Guidance, Change 5 requirements for the FAA Form 8130-3 from Production Approval Holders from April 1 to Oct. 1. The notice language is consistent the April 14 letter sent by the FAA and EASA to ARSA .

ARSA continues to work closely with the FAA and its industry coalition partners to resolve a variety of issues associated with MAG change 5. The association will update its members as new developments occur.

To view the notice, click here.

To see all of ARSA’s coverage of MAG Change 5 and the privileges of production approval holders, visit arsa.org/mag-change-5 and arsa.org/production-certificates.

Editor’s Note: MAG Change 6 was released by the FAA and EASA on June 1. While it will be covered in the next edition of the hotline (which will review all of June’s activities), ARSA’s initial analysis is available at arsa.org/mag-change-6.

Employers Have Six Months to Prepare for New Overtime Requirements

This list includes Federal Register publications, such as final rules, Advisory Circulars and policy statements, as well as proposed rules and policies of interest to ARSA members. To view the list, click here.

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 Quality Time

Editor’s note: The views and opinions expressed by contributing authors do not necessarily state or reflect those of ARSA and shall not be used for endorsement purposes.

Export Administration Regulations – The Cornerstone of Compliance

By Thomas McVey, Esq., Williams Mullen

Author’s note: This article contains general, condensed summaries of actual legal matters, statutes and opinions for information purposes. It is not intended and should not be construed as legal advice.

As discussed previously in this column, there are three principal areas of U.S. export controls.[1] Of these, the Export Administration Regulations (EAR) provide the broadest array of requirements.  In light of its broad application, and the severity of the criminal and civil penalties, repair stations must have a clear understanding of the law.

The EAR – traditionally applied to commercial and “dual-use” items – are administered by the Commerce Department’s Bureau of Industry and Security.  Export Control Reform implementation brought many low-level military aircraft, systems, parts and components previously regulated under the International Traffic In Arms Regulations (ITAR) under the EAR.  Most of these items have been placed in a new 600 Series section of the EAR’s Commerce Control List (CCL). These include avionics, radar, navigation, communication and other systems used in aircraft.  Consequently the requirements under the EAR must be considered alongside ITAR by aerospace companies servicing both civilian and military aircraft.

CCL-Based Controls

If an item is placed on the CCL, the EAR applies requirements similar to those dictated by the ITAR, including the need to obtain licenses for the export of the items to certain countries, restrictions on “re-exports” and “re-transfers” in foreign countries, restrictions on disclosure to foreign nationals, recordkeeping and other obligations.[2]

The CCL contains a broad array of items within civil aerospace industries.  Examples include:

• Category 9: Aerospace and propulsion products, certain gas turbine engines, specified aircraft ground equipment, certain flight control and other operational systems, UAV’s, military aircraft not listed on the U.S. Munitions List (USML), “other” aircraft not elsewhere specified (see, ECCN 9A991), parts and components “specially designed” for the above items.
• Category 7: Avionics and navigation equipment.
• Category 6: Radar equipment, lasers, sensors.
• Category 3: Electronics and related equipment.

As with ITAR, the EAR regulates end items as well as many subsystems, specialized equipment and parts, components, accessories and attachments that are “specially designed” to be used with aviation items listed on the CCL.  The CCL includes specialized manufacturing and test equipment, and specialized tools used in aircraft repair, testing and maintenance.

The term “specially designed” is used throughout the CCL and USML to identify items that are subject to controls – this term has a special definition adopted under Export Control Reform; parties must be familiar with this term’s definitions in applying the different regulations.[3]

Aircraft parts represent the largest single category of export licenses issued by the Commerce Department along with encryption items.

License Exceptions

If a license is required, exceptions may be available.  License exceptions under the EAR that could be particularly useful for repair stations include:

• 15 C.F.R. section 9 – Temporary Exports, Imports, Re-exports (TMP)
  • Section 740.9(a)(1) – Tools of Trade
  • Section 740.9(a)(4) – Replacement Parts Kits
  • Section 740.9(a)(6) – Inspection, Test, Calibration and Repair
• 15 C.F.R. section 10 – Servicing and Replacement of Parts and Equipment (RPL)
• 15 C.F.R. section 15 – Aircraft, Vessels and Spacecraft (AVS)

Be aware that license exceptions are subject to significant conditions and limitations; they will not and cannot be used in all instances – check and double-check the applicable conditions prior to using a particular exception, see in particular 15 CFR section 740.2.

Controls On “Technology” and Software

As with ITAR, the CCL covers physical items and “technology” (e.g., information about the design, operation or use of an item) and software.  Parties are restricted from transferring technology related to controlled items (including technical drawings, specifications, manuals, etc.) to foreign nationals either in the United States or abroad unless an export license is obtained or a license exception is available.  If an item requires an export license, parties are prohibited from taking drawings, manuals, specifications or other non-public materials related to the items in their laptops or other personal communications devices when traveling to the country without the license unless an exception applies.  This can include materials that are commonly used by aviation maintenance professionals in performing such as repair manuals, system specifications, and the like.

Requirements That Apply In All Export Transactions

The EAR contains requirements that apply to all export transactions, even if the item is not listed on the CCL.  For example, there are prohibitions against exporting to certain embargoed countries,[4] to certain restricted parties[5] and there are certain prohibited end-uses.[6] These include:

• Know Your Customer Requirements – Need to conduct a due diligence review prior to the export transaction – 15 CFR part 732, Supplement No. 3.
• Restricted Party Lists – Prohibition against entering into transactions with parties on three Commerce Dept. Restricted Party Lists – 15 CFR parts 764 and 744.
• Recordkeeping Requirements – Requirement to maintain export records for 5 year periods – 15 CFR part 762.
• Shipment documentation – Requirement to file and or retain specific export documentation – 15 CFR part 758.
• Prohibited End-Use Controls – Restrictions against entering into export/re-export transactions of the items if the result is a “prohibited end use” – 15 CFR part 744.

Penalties For Violations

Violations of the EAR can result civil and criminal penalties including fines of up to $1,000,000 per violation and up to 20 years imprisonment.  Thus the stakes are high, both for the company and its individual employees, officers, directors and owners.

As noted, the EAR may arise in many contexts in the aviation maintenance field including: (i) transferring controlled items out of the U.S.; (ii) disclosing controlled technical data to foreign nationals (including through e-mails, demonstrations, etc.); (ii) shipping or taking controlled specialized testing, diagnostic equipment, specialized tools or production equipment out of the U.S.; (iv) taking technical manuals or drawings of controlled items out of the U.S. in laptops, iPhones, iPads and other electronic devices.  In each of these instanceswhen items are subject to export restrictions an export license may be required, unless a license exception applies.

These examples reinforce the importance of following fundamental compliance practices – these protect not just the company but the individuals involved.  These fundamentals are: (i) adoption of an Export Compliance Program with written policies and procedures; (ii) employee training; (iii) proper classification of items before exporting; (iv) compliance with licensing requirements (including conditions and provisos); (v) procedures for screening against prohibited parties, countries and end-uses; (vi) compliance with export recordkeeping requirements; (vii) proper agreement administration for ITAR, technical assistance agreements (TAA), manufacturing license agreements (MLA) and other authorizations; (vii) periodic compliance audits; and (ix) prompt remedial action in the event of suspected violations.

Footnotes:

[1] These are: (i) the International Traffic In Arms Regulations (“ITAR”); (ii) the Export Administration Regulations (“EAR”); and (iii) the Office of Foreign Assets Control (OFAC) sanctions laws.
[2] Under the U.S. export classification procedure, companies are required to first check the U.S. Munitions List (“USML”) to determine if the article is regulated under ITAR. If the item is not controlled by ITAR, the CCL must be checked to determine if the article is subject to the EAR.
[3] The EAR definition of “Specially Designed” is set out at 15 CFR part 772.  The ITAR definition of “Specially Designed” is found at 22 CFR section 120.41.
[4] See 15 CFR part 746.
[5] See 15 CFR part 744.
[6] See 15 CFR part 744.

Thomas McVey is the Chair of the International Practice Group at Williams Mullen in Washington DC where he advises clients on export control issues under ITAR, the Export Administration Regulations and the OFAC Sanctions Laws. tmcvey@williamsmullen.com; 202 293-8118.

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Training

The association’s training program is provided through Obadal, Filler, MacLeod & Klein, P.L.C., the firm that manages ARSA. To go directly to OFM&K’s online training portal, visit potomaclaw.inreachce.com. To learn more about the association’s training program and see course availability, visit arsa.org/training.

Instructions for Continued Airworthiness

By Brett Levanto, Vice President of Communications

Join ARSA’s Managing Director and General Counsel Marshall S. Filler for a three-part series on instructions for continued airworthiness. ICA has been a key focus of ARSA’s work on behalf of the maintenance community for decades – turn that experience into your benefit.

ICA – The Basics
Description:  This session provides an overview of the regulatory basis for ICA, including what documents are considered ICA and the obligations of design approval holders to prepare, furnish and otherwise make them available under 14 CFR § 21.50(b). It also covers the related regulations that apply to operators and maintenance providers regarding the use of ICA and their availability. Finally, it shows how the FAA has interpreted some of the more important ICA requirements in Order 8110.54.
On Demand – Available Anytime
Click here to register and get access for 90 days.

ICA – The Business Side
Description:  This session explains the importance of ICA and describes ARSA’s efforts to strike an appropriate balance between the often competing regulatory and business considerations. It also addresses various design approval holder business practices that affect the availability and use of ICA and explains the FAA’s policy prohibiting DAHs from engaging in certain behaviors. It also explores various FAA legal interpretations on ICA and some of the issues being examined in an ongoing anti-trust inquiry by the European Commission’s competition directorate.
On Demand – Coming Soon

ICA – Case Study: Testing Your Knowledge
Description:  This session will test the participants’ knowledge of the ICA regulations in Title 14 CFR and FAA guidance by presenting several hypothetical case studies. Each one will focus on one or more of the significant ICA regulatory principles.
Date & Time: June 15, 2016 at 11:00 a.m. EDT
Click here to register.

Purchase all three sessions together and save.

Note: Sessions must be viewed in order. Completion of each pre-requisite – either via a live session or on-demand recording – is required for access to subsequent classes.

Registration for each session includes:

• Attendance for live, online class session on the scheduled date.
• Access to the on-demand recording available after the live session is complete.
• Digital copies of the presentation and all reference material with links to relevant resources and citations.
• A certificate upon completion of each class (including any test material).

On-Demand Training – Audit Activism

By Brett Levanto, Vice President of Communications

Sarah MacLeod’s two-part series on establishing a proactive approach to audits is available for on-demand viewing. The sessions provide tips on how to manage an audit process that ensures responses are appropriate, timely and effective.

Series Information:

Audit Activism – Part 1
Description: This session provides instruction in establishing a proactive approach to audits, starting with the differences between regulatory compliance and business requirements. It also addresses the creating appropriate interfaces among certificate holder(s), government(s) and customers (since all three must work together) to establish regulatory and business compliance.
Instructor: Sarah MacLeod
On Demand – Available Anytime
Click here to register and get access for 90 days.

Audit Activism – Part 2
Instructor: Sarah MacLeod
Description:  This session provides steps and tips on how to manage an audit process that ensures responses are appropriate, timely and effective.
On Demand – Available Anytime
Click here to register and get access for 90 days.

Interested in both Audit Activism sessions? Click here to purchase them together and save.

Public Aircraft Series Package 

By Brett Levanto, Vice President of Communications

ARSA’s three-part series on the regulations and guidance for public aircraft operation is ready for on-demand purchase. Purchase now and get 90 days access – unlimited viewing – to all three sessions. After completing the substantive presentation on the law and regulations and a review of FAA guidance pertaining to PAO, challenge your staff with 11 case studies designed to test comprehension and apply the rules and guidance to “ripped from the headlines” examples.

Description: This three-part series on the regulations and guidance for public aircraft operation will provide in-depth analysis and case-study review of various requirements. Sessions must be purchased together and viewed in order, completion of each pre-requisite – either via a live session or on-demand recording – is required for access to subsequent classes.
Instructor: Marshall S. Filler

Session 1 – The Law and Regulations
Session 2 – FAA Guidance
Session 3 – Case Study 

Entire Series On Demand – Available Anytime. Click her for package information.

Note: Public aircraft sessions must be viewed in order. Completion of each pre-requisite is required for access to subsequent classes.

TSA’s Repair Station Security Rule – Effectively Complying with the Regulation

Description: This session covers the requirements set forth in the Transportation Security Administration’s (TSA) repair station security rules. The regulation, which was a direct result of a congressional mandate, applies to all repair stations certificated by the FAA under 14 CFR part 145 (except those located on U.S. or foreign government military bases). Learn a repair station’s mandated security responsibilities and how to ensure regulatory compliance.

Date & Time: June 22 at 11:00 a.m. EDT
Instructor: Daniel B. Fisher

Click here to register.

Regulatory Compliance Training