2017 – Edition 1 – Feb. 3, 2017

Table of Contents

Note: The order of material varies in hotline emails, but is always presented the same on this landing page. Readers scrolling through content on or printing this page will find it organized consistent with the table of contents.

Christian’s Column
Symposium 2017
ARSA Works
Legal Briefs
ARSA on the Hill
Regulatory Outlook
Quality Time
Training
Membership
AVMRO News Portal
Upcoming Events

Christian’s Column

Speak Up – Reality over Rhetoric

By Christian A. Klein, Executive Vice President

The new president’s inauguration has Washington, D.C. and the nation a bit rattled. The nation’s capital has seen many transfers from one administration to another, but rarely with such a dramatic shift in tone and style. While the balance of power hasn’t shifted on Capitol Hill, Trump’s tenor and priorities have added new volatility to the legislative process.

Here is ARSA’s take on the latest policy landscape’s risks and opportunities for repair stations.

Let’s start with the opportunities, first for real regulatory reform that could improve the rulemaking process by making it more transparent and accountable. Legislation to improve career technical education programs and address America’s skilled worker shortage is also looking like a priority. And Congress may pass once-in-a-generation tax reform to make the code simpler and reduce rates for all businesses.

Now for the other side of the coin – risk. When it comes to tax reform, the devil will be in the details and there are sure to be winners and losers. With FAA funding set to expire in September, reauthorization will give lawmakers the chance to impose new mandates on the FAA and costs on repair stations. Trump’s hostility to free trade could create a political environment for opponents of contract maintenance to revive legislation harmful to both domestic and foreign repair stations. Tariffs and trade-war rhetoric creates enormous policy risk for the inherently international aviation maintenance industry.

In the new Washington, D.C. environment personal engagement with all parts of government matters more than ever. That means your voice must be heard. Make your representatives and senators listen, not just to ARSA, but to your business and personal perspective. Tell them about how the issues mentioned here will directly impact your company, employees and colleagues.

We must collectively educate the new crop of executive branch officials about the international and national aspects of the entire aviation industry, its massive economic impact, and then the critical role repair stations play in aviation safety.

ARSA is the aviation maintenance industry’s vehicle for engagement and ARSA’s 2017 Symposium and Legislative Day on March 15 – 17 provides the perfect forum. Our goal is to shatter all previous participation records and make the MRO voice in Washington, D.C. louder than ever. We count on you being there in person!

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Symposium 2017

Reserve Your Room

Registration is open for ARSA’s 2017 Legislative Day & Annual Repair Symposium and special room rates are available through Feb. 21.

Attendees will have access to all meals, receptions and social events in addition to three days of substantive agenda, congressional meetings and breakout sessions. 

For information about the symposium and to register, click here.

Lodging and Accommodations:

The 2017 Legislative Day and Annual Repair Symposium is hosted at The Ritz-Carlton, Pentagon City in Arlington, Virginia:

The Ritz-Carlton (Click for information)
1250 South Hayes Street
Arlington, VA 22202 United States

A block of rooms is available for ARSA attendees at special prices. To make your reservation, click here to visit the hotel’s website and select “Reserve Now.” On the registration form, enter the appropriate information and use the code “PYAPYAA.” 

NOTE: Special room rate expires on Feb. 21

Annual Member Meeting Notification

ARSA bylaws require the association hold an annual member meeting at such time and place as determined by the Board of Directors. This important session is held annually in conjunction with the Annual Repair Symposium; this year it will take place during the Breakfast and Annual Report on Friday, March 17 at 8:00 a.m. at the Ritz Carlton, Pentagon City in Arlington, Virginia.

ARSA President Warner Calvo will address members regarding the state of the association. After Calvo’s presentation, attendees are welcomed and encouraged to discuss matters relevant to the association.

If you are unable to attend – symposium registration is still open – but would like to submit comments/questions to ARSA’s board, please use the form on arsa.org/contact.

Speaker Prep: Get to Know the GAO

On March 16, ARSA will welcome Dr. Gerald Dillingham as special guest speaker during the symposium luncheon.  Dr. Dillingham the director of civil aviation issues at the U.S. Government Accountability Office (GAO), his research teams often contact the association for assistance when studying issues related to maintenance.

Readers of the hotline have already been introduced to Dr. Dillingham (click here to read the profile published last August), but may not know much about the GAO. Thanks to some guidance from the agency, ARSA can provide a basic primer:

The GAO exists to support to U.S. Congress in its responsibility to improve the performance and ensure the accountability of the federal government. Through timely information and objective, fact-based, nonpartisan, non-ideological, fair and balance reporting, these auditors oversee programs for the benefit of the American people.

Founded in 1921 as the General Accounting Office – its name was officially changed in 2004 to more-accurately describe its broad mission – the organization’s initial role was to oversee financial management after World War I. The modern GAO’s workload is mostly divided between performance audits, program evaluations and policy analyses.

Led by the Comptroller General of the United States, who is selected by both Congress and the president to serve a 15-year term, the agency’s approximately 3,000 staff members are spread between its Washington, D.C. headquarters and 11 field offices. This diverse and highly-educated team responds to congressional requests for review of existing programs and advice on ways to make the government more efficient, effective, ethical, equitable and responsive.

Every report produced by the GAO followed a carefully prescribed process of engagement, evidence gathering, analysis and product development. Research teams will often engage stakeholders – as they do ARSA and its member – at repeated intervals throughout this work. While the final findings won’t always perfectly align with the perspective of any individual affected group (a fact often expressed by the association in its feedback), the act of routinely evaluating the effectiveness of the federal government is a vital exercise. Hopefully Dr. Dillingham’s visit during symposium will encourage ARSA members to pay more attention to the GAO’s work and seek out ways to participate in its ongoing mission.

Learn more at: www.gao.gov.

Meet an Exhibitor: BSI Group

BSI is a global business standards company returning to the symposium for its second year. Founded in 1901, BSI was the world’s first national standards body. In March, set aside some time to chat with the company’s representatives and see how a century’s worth of experience can be put to work for you.

If you’re eager to learn more right now, listen to Vice President of Global Accounts, Projects and Logistics Marc Rougeot explain how BSI makes excellence a habit:

Explore more at www.bsigroup.com.

Sponsor Salute: A Precious, Growing List

Just like the precious metals they represent, the collection of symposium sponsors at the platinum, gold and silver levels are invaluable to the association. Take a look at the growing list – new logos to be added soon – of organizations that have already stepped up to support the maintenance community’s premier event.

2017 Platinum Sponsor

2017 Gold Sponsors

2017 Silver Sponsors

2017 sponsorship opportunities still available – visit arsa.org/news-media/events/arsa-symposium and check the appropriate menu to see how to secure yours today.

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ARSA Works

Serving Through Survey Responses – Oliver Wyman and ARSA

On Jan. 30, Oliver Wyman opened its annual MRO survey. The global consulting firm has surveyed members of the maintenance, manufacturing, airline and aviation finance communities for more than a decade.  Through its partnership with ARSA – which produces the association’s annual market assessment – the survey team has invited repair stations to participate.

ARSA members should also be alert for the forthcoming arrival of the association’s member survey, which will be delivered soon via email to each primary contact. You can warm up your mind by responding to Oliver Wyman’s survey:

• It will take no more than 20 minutes to complete.
• Questions focus on technology advancement, fleet planning and workforce issues.
• Participants may receive a detailed report of results and summary of key findings.
• The survey will close on Monday, Feb. 13.

The entire aviation community, including ARSA and its members, benefits from good data. By taking time to respond to this survey – and saving some for ARSA’s – you will move the industry forward.

To access the survey and submit your response, visit:
http://oliverwyman.co1.qualtrics.com/SE/?SID=SV_3ydOviy9YgjPIYR.

Questions specific to Oliver Wyman’s survey should be directed to the research team at MROsurvey@oliverwyman.com.

The 2017 Global Fleet & MRO Market Assessment, prepared by Oliver Wyman, will be unveiled in March during ARSA’s Legislative Day & Annual Repair Symposium. Click here to register now.

ARSA on FAA’s Gilligan: An Exceptional Example

Peggy Gilligan, Associated Administrator for Aviation Safety, FAA – Image Credit: FAA

Sarah MacLeod, ARSA’s executive director, issued the following statement in response to the retirement announcement by Margaret “Peggy” Gilligan. On Jan. 30, Gilligan informed the aviation community that she planned to leave her position as associate administrator for aviation safety, which she’d held since Jan. 5, 2009.

“An advantage of a long career is experiencing the growth, maturation and long-term success of others devoted to good government and public service. If you seek an exceptional example of a representative for those principles, look no further than Peggy Gilligan. From the FAA’s eastern region to the chief counsel’s office to chief of staff for four different administrators and finally serving more than 20 years in the Aviation Safety organization, she has always been an honest, forthright broker unstintingly serving her country and the flying public through shifting political crosswinds. She earned the respect of the international aviation industry and certainly has mine.

“In Peggy’s message announcing her retirement, she joked about having joined the agency before some of her staff were born. We can only hope they absorbed a smidgen of her knowledge and experience; the depth and breadth of her impact on international aviation is the result of hard work, active listening and thoughtful interaction with the industry, legislators, regulators and colleagues.

“ARSA looks forward to working with whomever will assume her role, but we all recognize that nobody can take her place. Thank you, Peggy, and best wishes.”

ARSA Begins Official Partnership with Remanufacturing Industries Council

On Jan. 31, ARSA and the Remanufacturing Industries Council (RIC) announced the signing of a memorandum of understanding to enhance information sharing and help involve the repair station community more directly in the broader “remanufacturing” movement. (For ARSA members in search of more-familiar terms, read “remanufacturing” as “maintenance, preventive maintenance and alteration.”)

On the same day, RIC also completed MOUs with the Automotive Parts Remanufacturers Association (APRA), the International Imaging Technology Council (I-ITC) and the Professional Electrical Apparatus Recyclers League (PEARL) recognizing the long-standing partnership between these associations and creating a framework for cooperation and support of strategic initiatives for advancing industry objectives in all sectors.

According to RIC Chairman Bill Davies, “the new Memorandum of Understanding between our organization and these sector associations marks an important step forward in RIC’s ongoing efforts to advocate, educate and collaborate on behalf of the entire remanufacturing industry.”

The RIC represents and advances the interests of the broader remanufacturing industry, and provides a unified voice in effort to address common challenges like trade barriers and the unintentional impacts of regulatory constraints. RIC also helps educate the public and policymakers alike about the positive environmental and economic impacts of the remanufacturing industry. www.remancouncil.org.

“ARSA is pleased to be working with RIC and its partner organizations,” Executive Vice President Christian A. Klein said.  “We look forward to RIC serving as a bridge for trade associations, businesses and learning institutions to enhance understanding on all sides, augment efficiencies for our member companies, and improve government policy – all of which will shape the next generation of engineers and technical personnel.”

The MoU comes at a time when the remanufacturing industry is experiencing promising growth, but still needs a unified voice in order to realize its full potential. In this light, RIC will continue its efforts to collaborate with other remanufacturing sector associations in its mission to advance the remanufacturing industry as a whole.

For more information, or to find out how to get involved, please contact Jenn Brake, Interim Director, at RICDirector@remancouncil.org or 585.475.4210.

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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.

Contracted Party or Maintenance Provider?

By Ryan M. Poteet, Regulatory Affairs Manager

On Oct. 7, 2016, the FAA issued a legal interpretation attempting to clarify just who is the contracted maintenance provider for the purposes of the Maintenance Provider List (MPL). The interpretation came in response to a series of internal agency disagreements regarding the requirements for maintenance such lists.

Part 121 and 135 air carriers are required to keep lists of contract maintenance providers. Among other things, the list required by § 121.368(h) and § 135.426(h) must include the name, contact information and description of maintenance functions performed. As the FAA grappled with just how to read its own rules, the main issue seemed to focus on when air carriers must include individual part 65-certificated mechanics on that list. As with most things, the best answer starts with asking the right question.

In this case, that question would be: Who are the “persons” authorized to perform maintenance in the first place?

The only persons that can perform work on U.S. registered aircraft (and their components) and approve that work for return to service are: (1) certificated and appropriately-rated mechanics that possess the requisite knowledge and experience; (2) a repairman working for an air carrier or repair station; (3) a noncertificated person directly supervised by a certificated person; (4) appropriately rated repair stations; and (5) properly trained air carrier employees. See 14 C.F.R. § 43.3(b)-(f).

Using that information, we can correctly analyze who qualifies as a “maintenance provider” and therefore must be included on the air carrier’s MPL. Parts 121 and 135 define a maintenance provider as any person who performs maintenance, preventive maintenance or alterations for the air carrier and is not directly employed by the air carrier. Because air carriers can only contract with persons that are qualified to perform and approve for return to service work on their aircraft, the certificate holder that issues the approval for return to service must be the maintenance provider regardless of who turns the wrench.

The FAA’s legal interpretation presents five different scenarios where an air carrier contracts with a mixture of certificated and noncertificated “persons” that use part 65-certificated mechanics to perform (and approve for return to service) maintenance. Throughout its analysis, the agency struggles to distinguish between the company hired by the air carrier (the contracted party) and the certificate holder actually performing the work and/or issuing the approval for return to service (the maintenance provider). By failing to start with the right question, the agency’s interpretation has mistakenly left many thinking that all part 65-certificated mechanics must be listed on the air carriers’ MPL.

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ARSA on the Hill

ARSA to New Congress: Get to Know Aviation Maintenance

On Jan. 3, ARSA’s Vice President of Legislative Affairs Daniel B. Fisher issued the following statement as the 115^th Congress was sworn-in on Capitol Hill.

“Congratulations to the 115^th Congress.  Whether new or returning, Democrat, Republican, or Independent, ARSA looks forward to introducing you to the hardworking men and woman at aviation maintenance facilities worldwide.

“The small business-dominated civil aviation maintenance industry ensures flight safety while employing nearly 274,000 people and generating $43.1 billion in economic activity.  For ARSA members, good safety is good business.  Regardless of government regulations, repair stations have a responsibility to never compromise the quality of their work.  Cumbersome, unnecessary mandates only hinder operational freedom and do nothing to enhance safety while stifling the ability of U.S. companies to compete internationally.

“We look forward to working with the new Congress on FAA reauthorization legislation, tax reform,  workforce and labor policy and other issues impacting the aviation industry and small-medium-sized businesses.  Remember, we may be easy to overlook, but you can’t fly without us!”

For more information on the association’s legislative advocacy, and to see how you can get involved, visit: arsa.org/legislative.

Farewell to Fisher

On Jan. 30, ARSA’s Vice President of Legislative Affairs Daniel B. Fisher left the association to take a position as the senior lobbyist for a construction industry trade group.

Fisher joined ARSA in 2009 after serving four years on the Senate Judiciary Committee staff of Sen. Arlen Specter (Pa.), where he advised on a wide range of issues including bankruptcy, antitrust, the confirmation of Supreme Court justices and investigations into the National Football League. During his nearly eight years of service to the association, Fisher fought for repair stations through multiple reauthorizations of the FAA, helped lift the ban, represented the industry’s interests on the TSA’s Aviation Security Advisory Council and spearheaded countless efforts to save the maintenance community from Congress’ penchant towards misguided micromanagement.

Fisher now joins a long list of professionals who have honed their skills with ARSA members in order to write their own chapter in service of the working men and women of the United States. In parting with him, the association has solidified its reputation as an incubator of policy talent. It’s no less painful a loss, but Fisher will continue his commitment to the American transportation system in his new role.

In Fisher’s absence, ARSA members can look forward to Executive Vice President Christian A. Klein taking a more active role in the association’s legislative program. With decades of experience working on and around Capitol Hill, Klein – who has served as an ARSA executive for years – will be a committed force on behalf of maintenance providers (see his piece in this edition to see what’s ahead in 2017).

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Regulatory Outlook

White House Outlines Federal Regulatory Policies and Hiring Freeze

In a series of presidential actions between Jan. 23 and 30, the White House outlined instructions to federal agencies for overhauling standards for regulatory activity and freezing federal hiring. As part of a flurry of action during President Trump’s first 10 days in office, the documents provide insight into the administration’s policy plans but leave questions as to implementation details.

Regulatory Freeze Pending Review

The memo on freezing regulatory activity, from White House Chief of Staff Reince Priebus, describes six steps by which executive agencies shall cease regulatory activities. In general, no new regulation may be submitted to the Federal Register until it has been reviewed by one of President Trump’s appointees or designees. Anything sent to the Federal Register but not yet published should be immediately withdrawn and regulations published but not completed shall be delayed pending review.

The memo grants the director or acting director of the Office of Management and Budget authority to provide exceptions for “emergency situations or other urgent circumstances relating to health, safety, financial, or national security matters, or otherwise.” Just what constitutes such conditions is not defined, but agencies may submit requests for consideration to OMB.

In the context of the memo, “regulation” is broadly defined to include any regulatory action or guidance document as indicated under previous executive order. After review, should agency heads determine that any action raises “substantial questions of law or policy” they must submit it to the OMB director for review.

The entire memo can be accessed on the White House website at: www.whitehouse.gov/the-press-office/2017/01/20/memorandum-heads-executive-departments-and-agencies.

Reducing Regulations and Controlling Regulatory Costs

The executive order issued Jan. 30 aims to manage costs associated with the governmental imposition of private expenditures to comply with Federal regulations.  It requires that in 2017, “whenever an executive department or agency publicly proposes for comment or otherwise promulgates a new regulation, it shall identify at least two existing regulations to be repealed” and that total incremental cost of all new regulations and repealed regulations finalized this year shall be no greater than zero (unless required by law or allowed by OMB director).  Any new incremental costs must be offset by eliminating costs associated with existing regulations.

For future years, the head of each agency is directed to identify, for each regulation that increases incremental cost, the offsetting regulations and approximation of total costs or savings associated with new regulation or repeal.  It also requires regulations approved by OMB director during presidential budget process to be included in the Unified Regulatory Agenda; if it’s not in the agenda, an agency can’t issue a new rule unless approved by the OMB director.  Agencies will also be given an incremental cost budget as part of budget process and can’t exceed cost budget unless approved by OMB director.

The entire EO can be accessed on the White House website at: https://www.whitehouse.gov/the-press-office/2017/01/30/presidential-executive-order-reducing-regulation-and-controlling

Presidential Memorandum Regarding the Hiring Freeze

The memo freezes all hiring for federal positions vacant as of Jan. 22 and prevents agencies from creating new vacancies or utilizing contract support to circumvent the intent of the policy. The memo applies to all federal agencies and departments, regardless of funding source, with the exception of active-duty military personnel.  Agency and department heads are also given leeway to exempt positions deemed necessary to meet national security or public safety responsibilities

During this initial restriction on hiring, the directors of OMB and the Office of Personnel Management (OPM) have 90 days to submit a plan for long-term reduction of the size of the federal workforce. In the meantime, the president encouraged federal offices to use the freeze to make their operations leaner:

“In carrying out this memorandum, I ask that you seek efficient use of existing personnel and funds to improve public services and the delivery of these services. Accordingly, this memorandum does not prohibit making reallocations to meet the highest priority needs and to ensure that essential services are not interrupted and national security is not affected.”

As with the limitation on regulatory action, the director of OMB has been granted authority to make exceptions for federal hiring under special, unspecified circumstances.

The entire memo can be accessed on the White House website at: www.whitehouse.gov/the-press-office/2017/01/23/presidential-memorandum-regarding-hiring-freeze.

Assessment

While ARSA supports the effort to simplify regulatory requirements and streamline the federal government, such work must be done in consideration of existing governmental mandates placed on certificate holders. The association has long reminded Congress to give the FAA the resources it needs to do its job, which often means complying with statutory mandates. Any reduction in force or rulemaking overhaul should be done in consideration of the industry’s needs and avoid incursions into current operations, which often require active engagement by government agents.

While these memos represent clear first steps by President Trump’s administration, there is considerable detail yet to be determined. ARSA will continue to engage on behalf of its members. In the meantime, please keep us informed about how your company is being impacted by the recent administration moves.

ARSA Resources

For the opportunity to engage personally in this work, come to the nation’s capital in March for Legislative Day (click here for information and to register).

To learn – from your home or office – what’s at stake this year in Washington, register now for ARSA’s online training sessions on regulatory reform (arsa.org/reg-reform-training/) and what to expect from the president and new Congress (arsa.org/trump-training).

Analysis for Action – Control Regulatory Costs by Reporting Them

By Sarah MacLeod, Executive Director and Christian A. Klein, Executive Vice President

President Trump’s executive order to control regulatory costs enhances the director of the Office of Management and Budget’s role as the “hall monitor” for executive agencies. The director is to ensure that every agency “manage the costs associated with the governmental imposition of private expenditures required to comply with Federal regulations. Toward that end, it is important that for every one new regulation issued, at least two prior regulations be identified for elimination, and that the cost of planned regulations be prudently managed and controlled through a budgeting process.” Additionally, unless contrary to law, the president directs that “[f]or fiscal year 2017, which is in progress, the heads of all agencies are directed that the total incremental cost of all new regulations, including repealed regulations, to be finalized this year shall be no greater than zero…”

The directive also defines the word “regulation” very broadly to include ‘“an agency statement of general or particular applicability and future effect designed to implement, interpret, or prescribe law or policy or to describe the procedure or practice requirements of an agency…”  Given that expansive definition, the order may very likely apply to guidance, which articulates (i.e., interprets) acceptable methods of compliance with a regulation (i.e., law).  We expect OMB to soon provide clarification about how the Order is to be implemented.

The presidential directive may be heartening to those of us in aviation being inundated by orders and policy in the guise of regulations, but it will take more work on industry’s part to ensure that the director of OMB and the FAA actually understand the executive order’s impact.  This is our chance to remove redundant and confusing rules, but without explaining the amount of money that will be saved, the presidential objectives cannot be achieved for either the agency or the industry.

If you’re not already, you should start thinking about regulations not simply in terms of the frustration and headaches they cause you, but in how much time is associated with compliance and how much money that is worth.  Organizations that are able to articulate those metrics will be the most successful in the new regulatory environment.

ARSA Will Build Chao’s Aviation Experience

President-elect Donald Trump’s nominee for Transportation Secretary Elaine Chao, in a photo during her service as head of the Department of Labor. Source: http://elainelchao.com.

On Jan. 31, the U.S. Senate confirmed Elaine Chao as Secretary of Transportation. After the Commerce Committee’s positive reception of Chao during her nomination hearing, the 93-6 vote was something of a foregone conclusion.

Christian A. Klein, ARSA’s executive vice president, congratulated Sec. Chao on her confirmation and assured the new head of DOT that the association would be a resource in building her aviation understanding.

“We know that [Sec. Chao] is no stranger to executive branch leadership and that her personal management experience will serve her well as the nation’s senior transportation official,” Klein said in a statement issued shortly after the vote. “Her focus on rebuilding American infrastructure and willingness to seek new mechanisms for funding transportation investment will well serve both the aviation community and the flying public.

“Of course, we also know that Sec. Chao’s aviation experience is limited. ARSA and the aviation maintenance industry will make that a good thing and support her service by showing her the many reasons why the nation can’t fly without us.”

Finding opportunities to work directly with the new administration is a top priority for ARSA in 2017. Members are encouraged to play an active role in this engagement by taking advantage of this year’s Legislative Day on March 15. By coming to the nation’s capitol, participants can show elected officials and appointed leaders the value of the repair station industry and its impact on both aviation safety and the American economy.

EASA’s First eRules Publication Available

On Jan. 20, the European Aviation Safety Agency’s (EASA) eRules project issued its first publication, “Easy Access Rules for Continuing Airworthiness.”

The EASA eRules project is being implemented in close cooperation with the agency’s member states and industry organizations. It aims to be a comprehensive system for the drafting, sharing and storing of rules – a single source for regulations applicable to European airspace users. In addition to online access, the project will attempt to implement improvements to the rulemaking system through automation, consultation and international comparisons of regulatory regimes.

“Easy Access Rules for Continuing Airworthiness” was developed in 2016 as part of the first of ten modules planned for the project. It is organized to present each implementing rule along with its related guidance material. It covers all the annexes of Regulation (EU) No 1321/2014 (e.g. part-M, part-145, part-66, part-147, part-T) and offers advanced navigation features through links and bookmarks as well as identification of General Aviation alleviations.

As part of the eRules intitiatve, EASA will update the document “within a short time” or rule or supporting material amendment. In 2017, the agency will work on the second eRules module, which will include initial airworthiness and airports.

To access the publication, click here.

To learn more about eRules, visit: https://www.easa.europa.eu/document-library/regulations/erules.

Final Documents/Your Two Cents

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

Trade Compliance Issues in the New Administration – Part I – Export/Sanctions Laws

By Thomas McVey, Esq., Williams Mullen

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. 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.

The new presidential administration will likely bring changes in export/sanctions laws and compliance obligations.  Regardless of your politics, these will most likely affect your company and you should use care to stay abreast of developments.  Here are a number of issues to watch during this transition:

Russia/Ukraine 

If there is an improvement in U.S. relations with Russia, look for a possible roll-back of sanctions under the Office of Foreign Assets Control (OFAC) Ukraine/Russia-Related sanctions program, the Bureau of Industry and Security’s (BIS) Russian Industry Section Sanctions and related Russia EAR restrictions and the ITAR policy of denial for Russia, as well as a possible repeal of the embargo involving Crimea.

Iran

During the campaign, candidate Trump repeatedly threatened to re-negotiate the Iran agreement under the Joint Comprehensive Plan of Action (JCPOA).  If things deteriorate, look for a possible “snap-back” of some or all of the recent JCPOA sanctions relief.  This will mostly affect the secondary sanction on foreign companies and banks, but could also affect civil aircraft and parts under General License H and importers of specialized Iranian products.

USML Categories I, II and III 

Export compliance personnel are well aware of the difficult political issues surrounding the transfer of items in U.S. Munitions List (USML) Categories I, II and III (firearms, ammunitions and accessories) to the Commerce Control List (CCL) under ECR. Following the recent election, Trump’s strong vocal support for gun owners has radically the political dynamics – the administration can score quick and easy points by transfering jurisdiction of firearms from the USML to the CCL in his first 100 days.

Cuba

The Trump administration could decide to roll back the Obama administration’s amendments involving Cuba.  The reinvigorated Republican Congress could also enter this debate and issue new mandates.

North Korea

North Korea may be the first real foreign policy test for the new administration.  If President Kim Jong-un provokes President Trump, look for expanded North Korean sanctions – this will most likely affect secondary sanctions on foreign companies, particularly in China. If China feels threatened by extraterritorial U.S. sanctions, this could result in retaliatory measures.

Cyber-Related Sanctions Under 31 CFR Part 578

In light of recent increases in cyber-attacks by foreign governments on U.S. companies, political organizations and government agencies (including by North Korea, China, Iran and Russia), the new administration could impose sanctions against any of these governments under the newly authorized Cyber-Related Sanctions at 31 CFR Part 578.  In addition, the imposition of U.S. sanctions on China under Part 578 in response to ongoing cyber-attacks on U.S. firms could provide President Trump with significant leverage on other issues such as imports of Chinese products.

Expanded Military Deployments

Candidate Trump repeatedly promised to beef up the U.S. military and be more assertive with foreign adversaries.  It is possible that the United States could soon be embroiled in a major military initiative involving ISIL, Syria, Libya, North Korea, Iran or any of a number of other “hot spots.”  Military build-up and deployments involve significant U.S. contractor support, which triggers the usual increase of export compliance requirements including ITAR registrations, TAA’s, export licenses, reexport/retransfer authorizations and related compliance activities.  Following Export Control Reform, requirements will apply under the EAR as well.  Companies should be ready if these requirements arise.

Enforcement Climate

Will enforcement of the U.S. export laws increase or decrease under the Trump administration?  Will the Yates policy of holding individuals personally liable for corporate violations continue or be rescinded?  Candidate Trump espoused two separate, and possibly contradictory, themes during the campaign: First, to get tough on crime and “drain the swamp” of criminal wrongdoing, and then to roll back regulation on businesses.  The new administration could advance the traditional Republican view of limiting enforcement of regulatory violations, at least for corporate wrongdoing.  Alternatively, it could take a strong law-and-order position for strict enforcement, including export laws.  (This could also extend to related areas including the Foreign Corrupt Practices Act, False Claims Act, Customs/import laws, etc.)  At this point it is too early to tell.  Much will depend on whether the new Attorney General keeps or repeals the Yates policy.  A lot can happen on this issue within the next few weeks, so businesses should pay particular attention.

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.

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.

Upcoming Live Sessions

D&A Testing – Traps for the Unwary
Description: This session provides information on avoiding many of the common drug and alcohol-related mistakes that can subject companies to enforcement action, typically in the form of civil penalties (full description available on registration page).
Date & Time: February 8, 2017 at 11:00 a.m. EST
Instructor: Marshall S. Filler
Click here to register (bundle pricing available).

Self Disclosure – How to Avoid Self-Exposure
Description: This session will review the best methods for investigating a potential non-compliance, including how to distinguish between business and regulatory requirements and how to use language that relates facts to the regulations without creating unnecessary consternation or scrutiny. To obtain to the most from this season, participants must have a basic knowledge of the FAA’s program elements.
Date & Time: February 15, 2017 at 11:00 a.m. EST
Instructor: Sarah MacLeod
Click here to register (bundle pricing available).

D&A Testing – Case Study: Testing Your Knowledge
Description: This session will test the participants’ knowledge of the drug and alcohol testing requirements in 14 and 49 CFR by presenting several hypothetical case studies (full description available on registration page).
Date & Time: February 22, 2017 at 11:00 a.m. EST
Instructor: Marshall S. Filler
Click here to register (bundle pricing available).

The Trump Administration and the 115th Congress – What to Expect
Description: This session provides an overview of what to expect from the Trump administration and Congress. The presenters will discuss the predicted agenda of key congressional committees and leadership, as well as the new administration. Learn who the key players are and their predicted area of focus. The presenter will also explore further down the road at the 2018 midterm elections and its impact on current Congress.
Date & Time: March 1, 2017 at 11:00 a.m. EST
Instructor: Christian A. Klein
Click here to register.

In addition to participation in the live event, registration for an ARSA-provided training session includes:

• Unlimited access for 90 days to the on-demand, recorded version of the webinar.
• A copy of the presentation and all reference material with links to relevant resources and citations.
• Upon completion of the class as well as any test material, a completion certificate.

Regulatory Reform Opportunities in the New Political Environment

Businesses in all sectors complain about over-regulation, inconsistent enforcement and a lack of regulator accountability.  The new administration and new Congress present the first real opportunity in years to improve how regulations are crafted and enforced.

ARSA Executive Vice President Christian Klein and Institute for Liberty President Andrew Langer, a long-time champion for regulatory reform, will discuss why regulatory reform is so desperately needed, what reform proposals are likely to gain traction, how the policy debate is likely to play out, and how concerned individuals can help move the process forward.

Click here to register and get access for 90 days.

Registration for an ARSA-provided training session includes:

• Unlimited access for 90 days to the recording, made available on-demand after the live session is complete.
• A copy of the presentation and all reference material with links to relevant resources and citations.
• Upon completion of the class as well as any test material, a completion certificate.

Self Disclosure – Know What to Show

On. Jan.25, Executive Director Sarah MacLeod began ARSA’s online training series on voluntary self disclosure. The first session covers the who, what, why, when, where and how of filing voluntary reports with the FAA. Catch up on demand and join the next session on Feb. 15 to learn how to file those reports without creating unnecessary headaches.

The Elements (On Demand)
This session will review the elements of self-disclosure established by the FAA. It will cover the who, what, why, when, where and how of filing a voluntary self-disclosure report with the agency. Additionally, it will cover how the agency is to handle the report and its expectations for follow up actions.

Click here to register and get access for 90 days (bundle pricing available with live session).

How to Avoid Self-Exposure (Live Online)
February 15, 2017 at 11:00 a.m. EST: This session will review the best methods for investigating a potential non-compliance, including how to distinguish between business and regulatory requirements and how to use language that relates facts to the regulations without creating unnecessary consternation or scrutiny. To obtain the most from this session, participants must have a basic knowledge of the FAA’s program elements.

Click here to register (bundle pricing available with recorded session).

Registration for an ARSA-provided training session includes:

• Unlimited access for 90 days to the on-demand, recorded version of the webinar.
• A copy of the presentation and all reference material with links to relevant resources and citations.
• A completion certificate upon completion of the class.

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.

D&A Testing Requirements Session on 49 CFR

Jump into Marshall S. Filler’s extensive exploration of drug and alcohol testing requirements: Register now for the on-demand recording of Filler’s Jan. 18 session – the second in the series – on the requirements of 49 CFR part 40.

Requirements of 49 CFR part 40
This session provides information on the requirements of the Department of Transportation (DOT) set forth in 49 CFR part 40, Procedures for Transportation Workplace Drug and Alcohol Testing Programs (full description available on registration page).
Click here to register and get access for 90 days.

Additional live sessions…

Traps for the Unwary
February 8, 2017 at 11:00 a.m. EST – This session provides information on avoiding many of the common drug and alcohol-related mistakes that can subject companies to enforcement action, typically in the form of civil penalties (full description available on registration page).
Click here to register (bundle pricing available).

Case Study: Testing Your Knowledge
February 22, 2017 at 11:00 a.m. EST – This session will test the participants’ knowledge of the drug and alcohol testing requirements in 14 and 49 CFR by presenting several hypothetical case studies (full description available on registration page).
Click here to register (bundle pricing available).

Already on demand…

Requirements of 14 CFR part 120
This session provides basic information on the Federal Aviation Administration’s drug and alcohol testing requirements contained in Title 14 CFR part 120, Drug and Alcohol Testing Program (full description available on registration page).
Click here to register and get access for 90 days.

Registration for an ARSA-provided training session includes:

• Unlimited access for 90 days to the on-demand, recorded version of the webinar.
• A copy of the presentation and all reference material with links to relevant resources and citations.
• A completion certificate upon completion of the class.

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.

Regulatory Compliance Training

By ARSA Training and Regulatory Teams

Test your knowledge of 14 CFR § 43.11 – Content, form, and disposition of records for inspections conducted under parts 91 and 125 and §§ 135.411(a)(1) and 135.419 of this chapter.

Click here to download the training sheet.

ARSA Online Training Calendar

D&A Testing – Traps for the Unwary
February 8, 2017

Self Disclosure – How to Avoid Self-Exposure
February 15, 2017

D&A Testing – Case Study: Testing Your Knowledge
February 22, 2017

The Trump Administration and the 115th Congress – What to Expect
March 1, 2017

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Membership

2017 Member Survey – Our Snapshot of Aviation Maintenance

On Feb. 7, ARSA’s Annual Member Survey will be emailed to the primary contact at every member organization. Don’t miss the opportunity to contribute to ARSA’s work on behalf of the industry.

Responses are invaluable to the association as it works with regulators and lawmakers, develops resources and addresses the challenges most impactful to the repair station community. This is our snapshot of aviation maintenance – make it useful.

Visit ARSA’s data and advocacy page to view all of the association’s published reports, data and infographics describing the maintenance community.

Want to ensure that your company will get the survey? We can help.

Don’t Let Technology Keep You from ARSA

By ARSA Membership Team

Thanks to spam filters, firewalls and quarantines, it can sometimes be difficult for organizations like ARSA to get messages into your inbox. To ensure you have access to every newsletter, alert and update, ensure that the following domains are on your “safe list”:

@arsa.org
@potomac-law.com
@multibriefs.com

To know what to look for:

Weekly: The Dispatch newsletter is distributed every Wednesday.
Monthly: The hotline newsletter is distributed the first week of each month.
Various:  Member alerts are distributed as necessary – usually the association sends three or four each month.

To learn more about ARSA’s communications efforts – including how to advertise – visit arsa.org/news-media. For assistance with technical issues, consult your organization’s IT department/assistant as necessary.

Make ARSA’s Voice Your Own: Advertise

ARSA has a menu of advertising opportunities for arsa.org, the hotline and the ARSA Dispatch.

Take advantage of these great opportunities today to showcase your company, a new product or event. For more information go to arsa.org/advertise.

Stand Up for ARSA by Sponsoring in 2017

In order to provide world-class resources for its members, the association depends on the commitment of the aviation community. By sponsoring events and activities, supporters can help ARSA’s work on behalf of repair stations to endure.

Need a place to start? Check out the platinum, gold and silver level sponsorships for Legislative Day and the Annual Repair Symposium. Promote your company while showing support for ARSA:

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A Member Asked…

Q: Should the “training forms” be placed in the training program manual versus the forms manual?

A: Unfortunately, no regulation directly relates to the training program forms, only how long you must keep the training records. However, the program is explained in guidance material. AC 145-10 outlines the elements of the PROGRAM manual – see paragraph 203d, page 5. The ARSA model manual explains how and when forms will be used but does not include the forms in the training program manual since they have to and can change frequently, so we have always encouraged including them in the forms manual.

Follow Up: Are all forms required by the regulations to have instructions?

A: The only forms that are required to be included in the forms manual are MAINTENANCE and INSPECTION forms. In other words, those used to comply with section 43.9. Again, the ARSA forms manual separates each type of form, i.e., administrative, company, training, etc. from “maintenance and inspection” forms. While all the model manual forms do have instructions, it can be made which need instructions per section 145.211(c)(3).

Learn more about ARSA’s model manuals by visiting arsa.org/publications.

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Resources

ARSA strives to provide resources to educate the general public about the work of the association’s member organizations; should you need to provide a quick reference or introductory overview to the global MRO industry, please utilize AVMRO.ARSA.org.

AVMRO Industry Roundup

ARSA monitors media coverage on aviation maintenance to spread the word about the valuable role repair stations play globally by providing jobs and economic opportunities and in civic engagement. These are some of this month’s top stories highlighting the industry’s contributions.

You can explore these stories through ARSA’s Dispatch news portal.

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Industry Calendar

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