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2016 – Edition 4 – May 6

the hotline 1984


Table of Contents

Sarah Says
Hotline Features
ARSA Works
Legal Briefs
ARSA on the Hill
Regulatory Outlook
Quality Time
Training
Membership
AVMRO News Portal
Upcoming Events


Sarah Says – The Price of Success

By Sarah MacLeod, Executive Director

The association works hard to meet the expectations of its members; in order to do so, tangential issues often must be addressed. Recent examples of how these peripheral matters become important are the changes to the regulations on air carrier contract maintenance providers and to the Maintenance Annex Guidance associated with the U.S.-EU bilateral aviation safety agreement.

In the first instance, regulations were driven by congressionally-mandated changes made through the last FAA reauthorization. The association lobbied hard to amend the language associated with contract-maintenance providers to air carriers. Unfortunately, ambiguous and harmful provisions made it into the statute and then into the regulations. In fact, the FAA exceeded the legislative mandate by changing rules on part 135 operators, who were not targeted by the statute. Neither the law nor the regulations “directly” impact repair stations; that, however, did not stop the association from addressing the tangential effect. (See Daniel Fisher’s column in ARSA on the Hill for more on ARSA’s David vs. Goliath efforts on Capitol Hill.)

In the second situation, the association found itself requesting relief for production approval holders (PAHs) in order to ensure FAA Form 8130-3s could accompany new parts in an efficient and effective manner. The bottom line is that the MAG 5 changes on repair stations cannot be fully implemented until production approval holders issue FAA Form 8130-3s like they do certificates of conformity. The MAG 5 changes were scheduled for implementation in December 2015 before part 21 quality systems allowed the issuances of the FAA Form 8130-3 as an “authorized release.” ARSA immediately requested an extension of the implementation of MAG 5 as well as early compliance to section 21.137(o). The association is now being joined by design and production approval holders in demanding the ability to issue FAA Form 8130-3s as “authorized release” documents as well as “export airworthiness” documents. The former would be through the PAH approved quality system while the latter would be issued by FAA designees. While the issuance of FAA Form 8130-3s for new parts directly impact PAHs, they result in problems for repair stations.

ARSA’s competent team members have many talents. As a result, both our members and industry allies have high expectations about what the association can accomplish.  We appreciate that confidence and will continue to work hard to pursue international “good government”; at the same time we beg our members and the industry to understand the drain on available time and energy.

Our resources are limited, but the more we have, the more we can do.  Help us help you by growing our membership and revenues by taking advantage of all the great programs ARSA offers (Aerojobs.org, online training, etc.).

We’ll meet your expectations, and then some.

 


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Hotline Features


Don’t Take ARSA’s Word for It – Legislative Day & Symposium

By Brett Levanto, Vice President of Communications

The association strives to provide members with a broad range of benefits to improve the business of repair stations. Whether in advocacy efforts on Capitol Hill and in the halls of government agencies, or through trainingpublications (model manuals, forms, supplements) and web-based resources (AVMRO.arsa.org,AeroJobs.org), ARSA works to make you better.

The association’s Legislative Day and Annual Repair Symposium is the brightest spotlight for ARSA’s good work and itself valuable resource for the repair station community. You’ve heard plenty about the engagement and access provided during the event, but you don’t have to take ARSA’s word for it – the feedback from attendees is pretty clear:

Feedback Survey Item Rating (1-5)
Overall value for the registration price 4.32
Venue and accommodations 4.47
Communication of symposium information 4.58
Registration process 4.68
Legislative Day 4.67
Ice breaker reception 4.69
Symposium general sessions 4.47
Club lounge happy hour 4.44
Membership breakfast 4.67
Breakout sessions 4.47

Most importantly, nearly 80 percent of respondents plan to attend in 2017. Join them. For event information and to see what happened in 2016, visit arsa.org/symposium.

 



2016 Member Survey – Thank You

By Brett Levanto, Vice President of Communications

The 2016 member survey is officially closed. The association is thankful to each of the nearly 100 individuals who took the time to submit a response on behalf of their member organization.

ARSA team members will use response data to update advocacy resources, assess ARSA 20/20 and seek solutions to the challenges facing the repair station industry. Each response is invaluable to the association in its role as the voice of the aviation maintenance community.

Thank you for helping take a clear snapshot of aviation maintenance. Stay tuned as ARSA – through all of its works – makes it useful.

For more information and to submit questions about the survey or any ARSA program or resource, visit arsa.org/contact.

 



Rep. Foxx Visits with N.C. Repair Stations

By ARSA Legislative Team

On March 29, Rep. Virginia Foxx (R-N.C.), a senior member of the House Education and the Workforce Committee, participated in an ARSA-organized event at Piedmont Propulsion Systems in Winston-Salem, North Carolina.

In addition to executives from Piedmont Propulsion Systems’ and its parent company First Aviation Services, Inc., HAECO Americas’ leadership team participated, including ARSA Board Member David Latimer, the company’s vice president of regulatory compliance. North State Aviation was also represented at the meeting.

Rep. Virginia Foxx (second from right) visits with employees at Piedmont Propulsion Systems in Winston-Salem, N.C.

Rep. Virginia Foxx (second from right) visits with employees at Piedmont Propulsion Systems in Winston-Salem, N.C.

In conjunction with Rep. Foxx’s visit, ARSA PAC presented a contribution to support her reelection campaign.  Rep. Foxx has demonstrated leadership on issues important to the aviation maintenance industry, including addressing the skilled technical workforce shortage, one of ARSA’s top priorities.

“Rep. Foxx is a champion for issues important to ARSA and its membership”, said First Aviation Services’ Senior Vice President and ARSA Government Affairs Chairman Josh Krotec.  “It’s important that the industry support our allies on Capitol Hill to ensure they have the campaign resources to win reelection and return to Washington.”

ARSA’s legislative team frequently emphasizes inviting lawmakers and candidates to visit repair stations around the country.  “I can’t stress enough the importance of hosting elected officials at your facility,” Latimer said.  “The best way to educate is to show policymakers what the industry does and how we contribute every day to economic growth and job creation while ensuring aviation safety.”

To learn more about ARSA PAC and hosting a facility visit, check out arsa.org/legislative.

See what a congressional visit is like: click here to view photos of the event.

 



ARSA at MRO Americas – MacLeod on Buying, Selling

By Brett Levanto, Vice President of Communications

On April 6, ARSA’s Executive Director Sarah MacLeod lead a discussion on the various business and legal issues surrounding buying or selling a repair station.

Continuing their discussion from ARSA’s 2016 Annual Repair Symposium, MacLeod once again joined Al Givray of Davis, Graham & Stubbs and Seabury Group’s Brian Karpiel to explore the nuances of buying or selling an aviation maintenance operation. The session was an open discussion on the who, what, where, when, how and why of acquiring or releasing an MRO business. It included a series of “do’s and don’ts” useful for good business management even at organizations where a sale (or purchase) is not on the immediate horizon.

Couldn’t attend at MRO but interested in the topic? Contact ARSA to learn more about resources for buying or selling a repair station. To see what other content is available via the association’s online training program, click here.

 


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ARSA Works

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

New AD Legal Interpretation Draws Ire from Maintenance Industry

By ARSA Ryan Poteet, Regulatory Affairs Manager

On April 27, the FAA responded to public comments on a proposed legal interpretation that further defines the nuances of complying with an airworthiness directive (AD). The interpretation was made is response to a request by the FAA’s Organization Procedures Working Group of the Airworthiness Directive Implementation Aviation Rulemaking Committee (AD ARC) – of which ARSA was an active member – to address a number of AD-related compliance issues. Most notably, the AD ARC asked the agency to elaborate on an operator’s continuing obligation to maintain a product in an AD-mandated configuration after the unsafe condition is resolved. Unfortunately, the proposed interpretation continues to reiterate that AD’d products will never be able to re-enter a traditional maintenance program.

As a general matter, ARSA pointed out in its July 2011 comments that the agency’s interpretation fundamentally misunderstands the existing relationship between the design, production, maintenance and operating rules in Title 14 of the Code of Federal Regulations (CFR). Moreover, by ignoring the independent nature of individual regulations – such as the AD rules in part 39 – it disregards the regulatory structure thereby creating conflicting requirements and considerable confusion. When applied as intended the rules provide a logical means to address unsafe conditions in both new products and operating aircraft.

The FAA’s proposed interpretation, however, finds that initial and continuing compliance for all ADs is required. This overly broad application even includes ADs that require a “terminating action” to remove an unsafe condition. A typical example of a terminating AD would be one that mandates the removal or replacement of a defective part. The FAA asserts that once the terminating action is completed, the resulting configuration is an FAA-approved type design which must be maintained under §§ 39.7 and 39.9.

ARSA and a number of AD ARC members rejected this position arguing that continued compliance for terminating ADs falls within the ambit of the maintenance and operations rules. In other words, once the AD actions have been accomplished, other rules apply to the proper operation, condition and continued airworthiness of the aircraft. In order to be airworthy, an aircraft must conform to its type design and be in a condition for safe operation. New aircraft that have been released from the factory sans the unsafe condition under an updated type design are maintained and operated in accordance with part 43 and the various operations rules. If an aircraft’s type design is modified by an AD, there is no reason to treat it differently and require it to be maintained under part 39. In both instances the aircraft must be maintained in an airworthy condition, which means complying with the approved design.

While the FAA fails to understand its own regulatory framework, ARSA will continue to work with the agency on developing a clear and coherent AD compliance policy. Regulations that are unambiguous do not need to be interpreted any further. The existing regulatory structure logically and effectively resolves unsafe conditions and prevents their reintroduction into the U.S. fleet. All the FAA needs to do is get out of its own way and let its system work.

 


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FAA Policy Jeopardizes AD Compliance

By Ryan Poteet, Regulatory Affairs Manager

On April 29, ARSA requested the FAA revise a legal interpretation regarding second and third-tier documents that are purportedly incorporated by reference (IBR’d) in an airworthiness directive (AD). ARSA’s letter points out that the legal interpretation – and existing guidance – violate the Administrative Procedure Act (APA) and force maintenance providers to divine what is required to comply with the AD.

Here is an example:

An AD specifically references a service bulletin (SB) and mandates that maintenance providers accomplish specific instructions therein. The SB then references a manual and that document references a standard practice manual. The only document actually referenced in the AD is the SB.

According to the agency, unless maintenance providers have an alternative method of compliance (AMOC), they must follow the requirements contained in a laundry list of subsidiary references (e.g., a manual, a standard practice manual) in order to comply with the AD. The agency overlooks the fact that manufacturer maintenance information is not binding unless it is made so through a rulemaking (refer to this 2009 interpretation for an example). Part and parcel of any rulemaking is that the agency actually tells the public what is required to comply with the mandate.

ARSA challenged the FAA’s legal interpretation that multi-tiered references are binding because that conclusion expressly contravenes APA protections. To add insult to injury, the agency justifies noncompliance with the APA by conflating separate and distinct legal concepts. Thankfully, federal courts have already rejected similar arguments from other federal agencies.

Aviation safety demands unsafe conditions be accurately identified and resolved in an unambiguous manner. Simply pointing to a list of voluminous documents and placing the burden on maintenance providers to determine what is mandatory will not suffice. For that reason, ARSA will continue to press the agency to clearly articulate what is necessary to comply with an AD.

 



ARSA to FAA: Starting on the Same Page through Training Access

By Ryan Poteet, Regulatory Affairs Manager

On April 20, ARSA submitted a letter to the directors of the Flight Standards and Aircraft Certification Services requesting development of criteria for agency personnel to use when determining whether FAA Academy training will be accessible to non-FAA attendees.

The FAA’s Safety Assurance System (SAS) is a risk-based, data-supported system meant to standardize the procedures Aviation Safety Inspectors (ASI) use to evaluate and surveil certificate holders. The agency notes that the SAS is not a separate safety standard and does not impose additional requirements on certificate holders; however, as we all know, the devil is in the details.

ARSA has been in discussions with the FAA to obtain access to the SAS training provided to ASIs. In dialogue with members of the Consistency of Regulatory Interpretation Aviation Rulemaking Committee (CRI-ARC), the agency actively encouraged submission of requests to attend/access internal FAA trainings on SAS and other subjects. Unfortunately, agency personnel have since stated that certificate holders would not be granted access to internal trainings on the SAS system.

In its letter, ARSA proposed the agency’s default position should be to grant access unless the training in question contains safety-sensitive internal procedures or proprietary information, or is otherwise not subject to disclosure under the Freedom of Information Act. At the very minimum, ARSA requested the agency make all SAS and Safety Management System (SMS) trainings available to certificate holders. The association strongly believes that the success of any regulatory scheme depends on all parties having access to the same information.

If the FAA is going to implement a new process for conducting oversight, it is imperative that certificate holders understand that system and know where the boundaries lie. The agency indicated that it would be creating industry-specific trainings in the future; however, such efforts are duplicative and expensive. ASIs and certificate holders must be able to have a conversation based on mutual understanding of what is expected. Ensuring ASIs and certificate holders have the same information is a step in the right direction.

 



It’s Time to Audit the FAA’s Quality Manual

By Ryan Poteet, Regulatory Affairs Manager

The aviation industry lives and breathes by audits and a quality manual is the bible for a maintenance organization. Whether conducted internally, by outside certification organizations or the FAA, audits are a part of life. Even though many mechanics would hate to admit it, audits make the industry better and keep the public safer.

In 2006, the FAA realized it too needed to get its house in order and implemented an International Organization for Standardization (ISO) 9001:2000 compliant Quality Management System (QMS). The purpose of the QMS is to improve regulatory oversight (i.e., consistent implementation and application of regulations and guidance), improve responsiveness to stakeholders and support the interests of the flying public. Implementing a QMS helps the FAA achieve those objectives and enables it to identify its shortcomings.

Part of the ISO certification process requires the FAA to develop a quality manual, much like the one(s) used by the industries it regulates. The quality manual and its constituent parts identify processes and procedures, which if followed will lead to a measurable result. The FAA has developed a manual and supporting documents to assist the agency in conducting the public’s business in a fair and consistent manner.

The FAA has paraded the QMS as the way it will interact with the public and hold itself accountable. Much as the FAA doesn’t take a repair station’s word that it follows its quality manual, the public should not be forced to take the agency at its word that it follows its own. If the FAA plans to use the QMS to dictate how guidance will be developed, and how regulations are interpreted, implemented and applied, the FAA should be compelled to let the public – to whom it is accountable – audit the agency.

 


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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.

Laundry List Compliance: An Unsafe Approach to Issuing and Enforcing Airworthiness Directives

By Ryan Poteet, Regulatory Affairs Manager

On April 29,  ARSA challenged (see FAA Policy Jeopardizes AD Compliance, above) the FAA’s position that second- and third-tier documents that are purportedly incorporated by reference (IBR’d) in an airworthiness directive (AD) are binding and enforceable. ARSA first called the agency’s attention to this issue in 2013 with a request that the FAA revise guidance that maintenance providers must comply with multi-tiered documents that are not referenced in the parent AD. Although ARSA highlighted the dubious legal foundation of the IBR policy, the agency refused to back down and even revised other guidance documents to comport with its original position. ARSA’s renewed challenge addresses each argument asserted by the agency.

The Rule Book

The Administrative Procedure Act (APA) is the rulebook by which all federal agencies must play when issuing rules and regulations. The APA mandates that agencies separately state and currently publish substantive rules of general applicability in the Federal Register. Congress requires agencies to publish new or revised rules in order to keep the public informed of what is required by the agency. Generally, if an agency intends to enforce a requirement, the rule must be published in its entirety. Alternatively, requirements in unpublished materials will be deemed published—and enforceable—if the material is “reasonably available” to the public and the agency received permission from the Federal Register to incorporate that material by reference in the published rule. Even when an agency clears both hurdles, it must still use precise and complete language to identify what in the unpublished materials is intended to be incorporated into the final rule.

Multi-Tiered Incorporation by Reference

The FAA asserts that once a document is IBR’d in an AD, any material referenced therein—including any requirements in subsidiary references—are enforceable. Here’s a typical example: An AD specifically references a service bulletin (SB) and mandates that specific instructions in the SB be accomplished. The SB then references a component maintenance manual, which in turn references a standard practice manual. Although the only document properly IBR’d in the AD is the SB, the FAA argues that any material in the standard practice manual, including any documents referenced in that manual, are also binding. Moreover, this practice is highly problematic because the agency has failed to precisely identify the material in a long chain of voluminous documents that must be followed to comply with the parent AD.

The APA places the burden on the government to identify what is required to comply with a rule. When ARSA pressed the FAA on this issue, it tacitly admitted that multi-tiered references must be properly IBR’d or published in the Federal Register. Not to be deterred from its original policy however, the FAA now argues that unpublished materials are enforceable because maintenance providers have “actual notice” of the documents’ existence.

Reasonable Availability is not Actual Notice

A narrow exception to the APA’s publication requirement enables agencies to enforce an unpublished substantive rule when a regulated party has “actual notice” of the requirement. The FAA stresses that multi-tiered references in ADs are to documents that maintenance providers “typically” use or are “generally required” to have to perform maintenance. Because the unpublished materials are “reasonably available”, the FAA alleges that maintenance providers have actual notice of the unpublished materials’ existence. Federal courts, however, disagree and have held that the availability of an unpublished document is insufficient to establish someone has actual notice of which materials in that document are intended to be mandatory.

For instance, in Appalachian Power Co. v. Train, the Fourth Circuit held that a 275-page “development document” detailing a standard the Environmental Protection Agency (EPA) would use to approve water intake systems was unenforceable for want of publication.[1] The EPA, like the FAA, asserted that the development document was “reasonably available,” and therefore, regulated entities had “actual notice” of the standard. The court rejected the argument noting that the APA “sharply distinguishes between the concepts of actual notice and reasonable availability.”

Indeed, “actual notice” is a substitute for publication while the “reasonable availability” of an unpublished document is one of two conjunctive requirements for IBR. The court emphasized that mere availability of a document “does not suffice to establish that regulated entities had actual notice of which materials in the development document were intended to be incorporated.” At best, the EPA could establish that regulated entities had the ability to acquire actual notice; however, the ability to acquire notice and actual notice are not one and the same.[2]

The FAA likewise cannot establish that maintenance providers have actual notice of multi-tiered references simply because they are allegedly “reasonably available.” Even if the agency could establish the documents’ availability, it fails to demonstrate there is actual notice of the exact materials or portions of the documents mandated by the parent AD. Service Bulletins and standard practice manuals are voluminous and contain numerous references to other documents, which in turn reference additional documents. As the Fourth Circuit noted in Appalachian Power, mere knowledge that a document may exist is insufficient to establish a person has actual notice of which materials therein are intended to be incorporated. The APA requires agencies to use precise and complete language clearly identifying material intended to be mandatory, especially when incorporating unpublished material into a final rule.[3] At best, there is an ability to obtain knowledge that a manual or standard practice exists, but that does not establish actual notice of which requirements therein must be followed to comply with the parent AD. This renders any alleged requirements in an unpublished document unenforceable.

Uncertain Mandates

Existing policy further complicates the issue because neither owners or operators nor maintenance providers are required to follow the very documents that the agency asserts are reasonably available. Even though maintenance providers are supposed to have the appropriate manufacturer’s information to perform the work, this information can be disregarded in favor of other methods techniques acceptable to the administrator.[4] Agency guidance clearly indicates that that manufacturer maintenance information is not mandatory unless made so through notice and comment rulemaking; however, in this instance, the FAA fails to specify when multi-tiered references are necessary to comply with the AD.[5] This forces the aviation industry to divine when manufacturer information is necessary to resolve an unsafe condition and when it is not.

Aviation Safety Demands Clarity

The APA requires the government clearly articulate what is expected from the public to comply with regulations. By disregarding the APA, the FAA’s IBR policy has created significant uncertainty in how to comply with an AD. The burden of identifying and resolving an unsafe condition has been shifted from the government to the individual mechanic. This leaves aviation safety inspectors to their own devices when determining whether a certificate holder complied with an AD. The result is a patchwork approach to AD compliance and creates the potential for unsafe conditions to continue. Aviation safety demands the FAA clearly articulate what information must be followed in an AD. Simply pointing to a laundry list of documents and telling maintenance providers to go figure it out will not suffice.

[1] Appalachian Power Co. v. Train, 566 F.2d 451 (4th Cir. 1977).
[2] Id.
[3] 1 C.F.R. § 51.9.
[4] 14 C.F.R. § 109(d); 14 C.F.R. § 43.13(a) (stating maintenance providers must use the methods, techniques, and practices contained in manufacturer maintenance manuals, or Instructions for Continued Airworthiness, or other methods, techniques, and practices acceptable to the Administrator); see also Memorandum from Asst. Chief Counsel for Regulations to Sacramento FSDO, Legal Interpretation of “Current” as it applies to Maintenance Manuals and Other Documents Referenced in 14 C.F.R. §§ 43.13(a) and 145.109(d), (Aug. 13, 2010) (discussing inter alia
§ 145.109(d)’s requirement for repair stations to possess certain documents but that section does not determine which version of the documents must be followed when completing the work); Legal Interpretation to Michael D. Busch (Aug. 11, 2006) (stating that § 43.13(a) “provides a number of options when performing work,” including manufacturer maintenance manuals, but cautioning that SBs referenced therein are not mandatory; at most the data, methods, techniques and practices referenced in the SB are acceptable to the Administrator).
[5] Legal Interpretation to David M Schultz (Mar. 25, 2009) (citing Memorandum to AFS-300 (Dec. 5, 2008) and explaining why manufacturers’ instructions and revisions to them are not mandatory unless made so by the FAA through notice and comment rulemaking).

 


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ARSA on the Hill

It is an Investment!

By Daniel B. Fisher, Vice  President of Legislative Affairs

ARSA’s been sounding alarm bells for years: the FAA reauthorization process is wrought with threats and opportunities for the aviation maintenance sector. Unfortunately, as in past years, dangers from unnecessary, burdensome mandates divert the association’s time and energy away from actually seeking productive policies that would improve conditions for repair stations. The industry has to play defense and the reason is simple—scarce resources.

The aviation industry and lawmakers rely upon ARSA for its expertise and savvy. We organized industry lobbying efforts to defeat burdensome mandates regarding life-limited parts and restricting FAA foreign repair station certifications. The association is seeking modifications to the “repair station” specific provisions in both the House and Senate reauthorization bills. While the broader aviation industry is willing to support our campaigns, ARSA is expected to carry the water. And the association does it on a shoestring budget.

Examine the first quarter 2016 lobbying disclosure reports. The Transport Workers Union of America (AFL-CIO), Transportation Trades Department (AFL-CIO) and the International Association of Machinists and Aerospace Workers are leading the charge for provisions to drive up costs on contract maintenance providers. Included are burdensome pre-employment background checks and foreign drug and alcohol testing requirements (that would once again halt foreign repair station certifications until finalized). These well-heeled organizations spent $735,000 during the first three months of the year compared to about $30,000 from ARSA—nearly 24 times more resources obviously buys more lobbyists, Capitol Hill contacts, and access.

ARSA’s Capitol Hill successes have been the result of hard work, adeptness at navigating the legislative process, regulatory and industry expertise. We’ll continue to fight hard and win battles, but well-funded organizations are perpetuating false safety, security, and economic arguments against contract maintenance. To win the war we need greater resources. There’s a saying in Washington, “if you’re not at the table, you’re on the menu.” ARSA’s is certainly at the table, but it can’t afford all the courses.

Lobbying resources come from the portion of member dues set aside for advocacy. Help grow this pot by recruiting new members, making sure all of your company’s locations pay dues or upgrade your membership. Even better, help all ARSA programs by purchasing a publication, utilizing the services of a preferred provider, sponsoring an event or attending an online training session.

Your investment furthers the association’s efforts on behalf of the maintenance community in all arenas. I promise you’ll see an exponential return.

 



Senate FAA Bill Passes, McCaskill Amendments Defeated

By ARSA Legislative Team

On April 19, the Senate approved an 18-month FAA reauthorization bill with overwhelming bipartisan support, 95-3.

ARSA and its members succeeded in ensuring two amendments filed by Sen. Claire McCaskill (D-Mo.) were kept out of the Senate-approved bill.  One proposed country-specific bans on foreign repair stations and the other would have prevented the FAA from issuing new foreign repair station certificates unless the agency completed a foreign drug and alcohol testing rulemaking and a pre-employment background check mandate in an expedited manner.  These provisions were defeated with the help of swift response from the association’s membership – grassroots action to oppose the amendments.

Unfortunately, the legislation still contains ARSA-opposed language that micromanages repair station oversight. The bill requires the FAA to complete its foreign repair station drug and alcohol testing rulemaking in an extremely expedited manner (despite no safety justification) and mandate maintenance companies working on air carrier aircraft conduct extensive pre-employment background checks.

Action now turns to the House of Representatives where leadership must determine whether to move forward with the Transportation & Infrastructure Committee-approved AIRR Act (and its controversial air traffic control provision) or pursue other options.  House Transportation & Infrastructure Committee Chairman Bill Shuster (R-Pa.) has already signaled his unfriendliness toward the Senate-passed bill.

Stay tuned to ARSA as the situation develops.

 


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Regulatory Outlook


MAG Change 5: FAA, EASA Confirm 8130-3 Requirement Extension

By Brett Levanto, Vice President of Communications

On April 20, ARSA received a letter from the FAA and EASA confirming the postponement of the “new” parts documentation requirement imposed on U.S.-based production approval holders by change 5 to the U.S.-EU Maintenance Annex Guidance. The letter arrived after an April 1 email from the FAA to its aviation safety inspectors originally announced the extension.

The letter recounted months of action by a coalition of aviation groups led by ARSA and noted the provision’s effective date was originally delayed four months to accommodate the needs of U.S. PAHs. Having earned the original extension from Dec. 8, 2015 to April 1, 2016, the association joined a chorus of aviation stakeholders in persuading both agencies that industry circumstances demanded another postponement.

“[In March 2016], at the occasion of ARSA’s Annual Repair Station Symposium,” the letter noted, highlighting the broad engagement by the maintenance community on the issue, “[Managing Director and General Counsel Marshall S. Filler] informed us that the actual implementation of the provisions/privileges contained in Title 14, Code of Federal Regulations § 21.137(o) was taking much longer than expected and that the extended deadline of April 1, 2016 was not allowing most of the PAHs to get the required approval under § 21.137(o) by their supervising Manufacturing Inspection District Offices (MlDOs).”

In addition to the concerted efforts put forth by the 13 trade associations represented on the original Oct. 7, 2015 letter (see “Aviation Coalition Requests Orderly Transition Period” below), both agencies received repeated requests from industry members for more time to institute the privileges of § 21.137(o). While the entire aviation community should be relieved to have another extension, much work remains to fully implement the privileges of § 21.137(o).

To read the full letter, click here.

 


 

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


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 Compliance: Challenges for Repair Stations

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 introduced in the first edition of this series, there are three areas of export controls important to the aviation maintenance industry:

(i) International Traffic In Arms Regulations (ITAR).
(ii) Export Administration Regulations.
(iii) OFAC sanctions laws.

Of these, ITAR represents the highest level of control and the starting point for organizing your export compliance efforts. Due to the large number of aerospace products subject to these controls, repair stations must clearly understand these requirements and how they apply to their business.

Although recent amendments to the U.S. export laws transferred many items previously regulated under ITAR to the Commerce Department under the Export Administration Regulations, many aircraft parts and components, as well as specialized electronics, avionics, software and mission systems, continue to be regulated under ITAR.

Background. ITARs are administered by the State Department and regulate the export, temporary import and manufacture of defense products. ITAR requirements include registration, licensing, restrictions on transferring regulated technical data and performing defense services, among others.

U.S. Munitions List

The ITAR contains a list of products subject to controls called the U.S. Munitions List (USML). There are a number of categories of the USML of particular interest to repair stations, including Category VIII (Aircraft), Category XIX (Gas Turbine Engines) and Category XI (Electronics). Category VIII(h) identifies a number of specific aircraft parts, components, accessories, attachments, software and associated equipment that are “specially designed” for listed military aircraft; similarly Category XIX(f) identifies specific parts, components, accessories and attachments “specially designed” for specified gas turbine engines. The term “specially designed” has a specific definition adopted as part of Export Control Reform and parties need to apply that definition in interpreting the USML.

Product Exports

If a company wishes to export or temporarily import a USML item, it is required to obtain a license from the State Department unless a license exemption applies. Thus if a repair station wishes to ship an ITAR-controlled replacement part overseas or export specialized ITAR-controlled equipment, it will be required to obtain a license unless an exemption applies. Similarly, if it wishes to temporarily import an ITAR-controlled component to perform maintenance or other work, it will be required to obtain a license unless an exemption applies (see discussion of the license exemption under ITAR §123.4(a) below that applies in certain instances).

Technical Data and Software

ITAR also covers “technical data” and software. If a product is on the USML, technical data related to that item is also on the list and subject to these controls. Technical data includes technical drawings, specifications, operating manuals and other types of non-public information regarding the listed item. Companies are prohibited from (i) exporting controlled technical data or (ii) disclosing controlled technical data to foreign nationals in the United States, unless a license is obtained or an exemption applies. This requirement applies even if the foreign national is an employee of the company. Thus if a repair station wishes to e-mail a repair manual or a technical report involving an ITAR-controlled item to a party overseas, or disclose them to a foreign national in the United States, it will be required to obtain a license unless an exemption applies. Similar controls apply for software.

Defense Services

ITAR also covers “defense services.” If an item is on the USML, performing most types of services related to that item for foreign persons is also controlled under ITAR – the U.S. company will be required to obtain State Department authorization called a Technical Assistance Agreement (TAA). If a repair station performs services for a foreign party involving a military aircraft, such as maintenance, a TAA is required unless an exemption applies. The TAA would be required even if the services were performed in the United States.

License Exemptions

If a license or TAA is required, license exemptions may be available. Exemptions that could be particularly useful include:

(i) ITAR § 123.16(b)(2) (components and spare parts with $500 value or less).
(ii) ITAR § 123.4(a) (temporary imports for servicing or repair).
(iii) ITAR § 124.2(c) (maintenance for NATO member governments, Australia, Japan and Sweden).

Be aware that license exemptions are subject to significant conditions and limitations and cannot be used in all instances; exporters are advised to check the applicable conditions prior to using a particular exemption. Conditions that frequently apply for certain ITAR exemptions include that the exemptions cannot be used:

(a) For exports to ITAR § 126.1 “Proscribed Countries.”
(b) By exporters who are ineligible under ITAR § 120.1(c).
(c) For exports that require Congressional notification.
(d) For exports of Significant Military Equipment.

In addition, the State Department requires that exporters be registered under ITAR and maintain records of their use of exemptions in particular transactions.

The following is a more detailed listing of requirements under ITAR:

  • Registration – if the company manufactures or exports a defense article or performs a defense service the company must register with the U.S. State Department (even if it does not export any of its products).
  • Transfer of Technical Data And Software to Foreign Nationals – the company is prohibited from transferring software or technical data on the USML to foreign nationals, either in the United States or abroad, without an export license.
  • Defense Services – the company is prohibited from performing “defense services” related to items on the USML for foreign parties, either in the United States or abroad, without obtaining a TAA.
  • Export License – the company is prohibited from exporting products listed on the USML without obtaining an export license.
  • Temporary Imports – The company is prohibited from importing defense items listed on the USML in temporary import transactions without obtaining a temporary import license. (In addition, parties that import items on the USML in permanent import transactions will be subject to regulations promulgated by the Bureau of Alcohol, Tobacco, Firearms and Explosives).
  • Recordkeeping Requirement – the company is required to maintain records in accordance with the ITAR recordkeeping requirements.
  • Brokering – the company is prohibited from “brokering” or facilitating the sale of defense items without complying with the Directorate of Defense Trade Controls (DDTC) brokering requirements.
  • Reports For Payments of Sales Commission, Fees and Political Contributions – the company is subject to restrictions on the payment of sales commissions, fees and political contributions made in connection with defense transactions and is required to file reports with the State Department related to such payments.
  • Transactions With Debarred Parties – the company is prohibited from entering transactions subject to ITAR regulation with certain debarred parties identified on the State Department’s two debarred party lists.
  • 126.1 Proscribed Countries – the company is prohibited from entering defense transactions in countries listed in ITAR § 126.1 (referred to as the “proscribed countries”) and prohibited from submitting marketing proposals or presentations to parties in such countries without advanced authorization from DDTC.

Due to the significant civil and criminal penalties for ITAR violations, companies are advised to adopt compliance practices to address these requirements. This would include appointing a person within the company to be in charge of ITAR compliance, adopting written policies and procedures and conducting training for key staff members.

Other compliance best practices include:

(i) Proper classification of products being exported.
(ii) Compliance with licensing requirements (including licensing conditions and provisos).
(iii) Proper agreement administration for TAA’s, manufacturing license agreements and other authorizations.
(iv) Employee training.
(v) Procedures for screening against prohibited parties, prohibited countries and prohibited end-uses.
(vi) Compliance with export recordkeeping requirements.
(vii) Periodic compliance audits.
(viii) Taking prompt remedial action in the event of suspected violations.

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.

Online 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.
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.
Click here to register and get access for 90 days.

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.
Click here to register and get access for 90 days.

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.

 



On-Demand Training – Recordkeeping

By Brett Levanto, Vice President of Communications

Proper maintenance demands proper documentation. Join ARSA’s Executive Director Sarah MacLeod and Managing Director and General Counsel Marshall S. Filler and learn how to “finish the job with proper paperwork.” With sessions targeted at mechanics, repair stations and airlines, pick the class that will give you the tools to manage complex recordkeeping requirements:

Recordkeeping for Mechanics
Description:
 This session will define the regulatory responsibilities of the operator versus the maintenance provider in creating and maintaining maintenance records, including how obligations can be shifted by contract, but not under aviation safety regulations. It will also cover maintenance recordkeeping regulations; the documents essential to making airworthiness determinations.
On Demand – Available Anytime
Click here to register and get access for 90 days.

Recordkeeping for Repair Stations
Description:
 This session will delineate the differences between operator maintenance records and those required to be created, maintained and provided by repair stations.
On Demand – Available Anytime
Click here to register and get access for 90 days.

Recordkeeping for Airlines
Description:
 Air carriers have unique recordkeeping requirements under parts 121 and 135 that do not match the requirements for transferring an aircraft under part 91 or obtaining maintenance records from individual mechanics or repair stations under part 43. This session differentiates among and between the varying requirements so regulatory and contractual obligations can be clearly delineated.
On Demand – Available Anytime
Click here to register and get access for 90 days.

 



Online Training – Public Aircraft 

By Brett Levanto, Vice President of Communications

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 viewed in order, completion of each pre-requisite – either via a live session or on-demand recording – is necessary for access to subsequent classes.

Series Schedule:

Session 1 – The Law and Regulations: On Demand – Available Anytime
Session 2 –  FAA Guidance: On Demand – Available Anytime
Note: Sessions 1 and 2 must be viewed on demand before new registrants can access session 3.
Session 3 – Case Study: May 18, 2016 at 11:00 a.m. EDT

Instructor: Marshall S. Filler

Click here to register for the series and receive a “bundle” discount.

PLEASE NOTE – Appropriate member discounts for these sessions are applied through price selection on the series page. Use of member-specific coupon codes are not necessary for discounted purchases of this content.

 



Online Training – Audit Activism

By Brett Levanto, Vice President of Communications

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. Continuing with creating appropriate interfaces among certificate holder(s), the government(s) and the customer (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
Description:
  This session provides steps and tips on how to manage an audit process that ensures responses are appropriate, timely and effective.
Instructor: Sarah MacLeod
Date: May 11, 2016
Time: 11:00 a.m. EDT
Click here to register.

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

PLEASE NOTE – Appropriate member discounts for these sessions are applied through price selection on the session or series page. Use of member-specific coupon codes are not necessary for discounted purchases of this content.

 


 

Regulatory Compliance Training

Test your knowledge of 14 CFR § 43.2 – Records of overhaul and rebuilding.

 


 

ARSA Online Training Calendar

Audit Activism Part 2 – May 11
Public Aircraft Part 3: Case Study: Testing Your Knowledge – May 18
ICA – The Basics – May 25
ICA – The Business Side – June 1
ICA – Case Study: Testing Your Knowledge – June 15

 


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Membership

Member Spotlight – Aeroman

By ARSA Communications Team

Aeroman was established in 1983 as the maintenance and engineering division of TACA Airlines in El Salvador. Since then, the company has grown to more than 2,400 people with five narrow and wide-body hangars capable of supporting up to 18 lines of maintenance. In 2015, Aeroman opened its state-of-the-art Hangar #5, which is capable of accommodating four wide-body aircraft simultaneously.

Aeroman’s Central American headquarters allows easy access to airlines in the United States, Mexico, and the Caribbean as well as Central and South America. Its facility at El Salvador International Airport includes structures, components, paint, seats, heat treatment, welding, machining, inflatables, air conditioning, avionics and metrology shops.

Aeroman has been an ARSA member since 1998. To learn more, visit www.aeroman.com.sv.

 



Have You Seen this Person – U.S. Senator John Thune (R-S.D.)

By ARSA Communications Team

ThuneRepresentative John Thune grew up in Murdo, South Dakota. His career in politics was sparked as a freshman in high school when he began a friendship with former South Dakota Representative Jim Abdnor. Abnor, a well-known sports enthusiast, approached Thune after a high school basketball game and noted that the future senator had missed a free throw (he’d made five others, apparently unnoticed).

After earning his MBA from the University of South Dakota in 1984, he married Kimbery Weems and followed his attraction to public service to Washington. He worked for Abdnor and then served at the Small Business Administration under an appointment from President Ronald Reagan.

In 1989, Thune and his family returned to South Dakota, where he served as the executive director of the South Dakota Republican Party. In 1991, Governor George S. Mickelson appointed him the state railroad director, a position he held until 1993 when he became executive director of the South Dakota Municipal League.

In 1996, Thune won his first term as South Dakota’s lone member of the U.S. House of Representatives; he was reelected two years later by the largest margin in South Dakota history. He honored a 1996 campaign pledge, serving on three terms in the House, running for Senate in 2002 before winning his current U.S. Senate seat in 2004, making history by defeating a sitting U.S. Senate party leader for the first time in 52 years.

For the 114th Congress, Thune serves on the Agriculture, Nutrition and Forestry Committee and the Finance Committee and is the chairman of the Commerce, Science and Transportation Committee. He also serves as the Chairman of the Senate Republican Conference, the number three position in Senate Republican leadership.

In recent weeks, Thune has loomed large in the aviation world, successfully shepherding an 18-month reauthorization of the FAA through the Senate. Stay tuned to arsa.org/faa-reauthorization as the reauthorization drama plays out and learn more about Thune by visiting www.thune.senate.gov.

 


 


 

Target Your Message: Advertise Today in ARSA’s Newsletters and Website!

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 http://arsa.org/advertise/.

 


 

Exhibit, Sponsor the 2017 Repair Symposium

As the maintenance industry’s top event devoted exclusively to regulatory compliance, the ARSA Symposium attracts a highly qualified professional audience.

Use this opportunity to promote your company while showing support for ARSA. Get more information at http://arsa.org/news-media/events/arsa-symposium/arsa-annual-repair-symposium-sponsorship/.

 


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A Member Asked…

Q: Our company is an OEM of power supplies and also a repair station for our articles. I am writing in regards to the FAA/EASA letter sent to Mr. Marshall Filler dated April 14, 2016.

We have PMA or TSO on many of our products, but not all. The new MAG 5 requirement regarding new components used in the repair station has us in a quandary. While our DMIRs can issue 8130-3s for new components that are used on PMA or TSO items, they can’t when the new component is only used on an item controlled by another production approval holder (PAH). We recently revised our PAH Quality manual to incorporate the new part 21 changes, but our MIDO inspector would not accept the change that included the text below between asterisks; we had to remove the text before he would approve the manual.

Personnel authorized by the FAA will perform the inspection and issue the FAA Form 8130-3 for export or domestic shipments. ***Additionally, company personnel trained to an FAA approved procedure can perform the inspection and issue an Authorized Release Document using FAA Form 8130-3 for export or domestic shipments.***

Even with a six month extension we do not know how we will totally comply with the MAG 5 requirement except to hire a DAR. We feel that the FAA MIDO offices have received no guidance on how to allow a PAH to comply with the MAG 5 requirement for new components.

A: As you correctly stated, your company cannot issue authorized release documents without being a production approval holder (PAH) for the article in question. For the other articles, you must either obtain your own production approval or direct ship authorization from the production approval holder with the added ability to issue the authorized release statement on behalf of that PAH. (Even having a DAR issue the FAA Form 8130-3 will not meet the literal MAG CHG 5 language since the form would not be from a PAH. However, as a result of discussions with FAA and EASA staff we expect this unintended consequence to be fixed prior to the Oct. 1, 2016 deadline.)

MAG 5 aligns with the EASA system, which requires PAHs to issue the EASA Form 1 without need for a national aviation authority designee; its PAHs can designate suppliers (such as your company) to issue the form on the PAH’s behalf without further ado; not so in the United States. An industry group is working closely with the FAA to allow U.S. PAHs to issue FAA Form 8130-3 as an authorized release under their QUALITY SYSTEMs like a certificate of conformity. When that happens, the statement you suggested (and had to withdraw) will be acceptable.

If a customer needs a true export document, the FAA Form 8130-3 must be issued by a designee IF the importing country requires “the FAA” issue the form (that would be contained in the importing countries requirements). The FAA has sent letters to its bilateral partners encouraging all to accept an authorized release document as an export tag in the same way as if it was issued by the FAA (i.e., a designee). We expect that most of them will accept the authorized release document as sufficient to meet their importing requirements.

The TIP associated with the U.S.-EU bilateral requires FAA Form 8130-3s to be issued for “exports,” along with specific language in block 12 regarding a part’s criticality. As a result of prior FAA correspondence, industry is seeking clarification whether exports include shipments to repair stations in the United States that are going to issue a dual release maintenance record with a right-hand signature FAA Form 8130-3. We don’t view these as exports, but the previous FAA correspondence states that they are.

 


 

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AVMRO News Portal

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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Upcoming Events


Regional Airline Association Convention –  Charlotte, North Caroline – May 9-12
EBACE 2016 –  Geneva, Switzerland – May 24-26
Global MRO Procurement Expo  –  London – June 1-2
FAA-EASA International Aviation Safety Conference – Washington – June 14-16
Farnborough International Airshow – Hampshire, England – July 11-17
EAA Airventure Oshkosh – Oshkosh, Wisconsin – July 25-31


the hotline is the monthly publication of the Aeronautical Repair Station Association (ARSA), the not-for-profit international trade association for certificated repair stations. It is for the exclusive use of ARSA members and federal employees on the ARSA mailing list. For a membership application, please call 703.739.9543 or visit http://arsa.org/membership/join/. This material is provided for educational and informational purposes only. It does not constitute legal, consulting, tax or any other type of professional advice. Law, regulations, guidance and government policies change frequently. While ARSA updates this material, we do not guarantee its accuracy. In addition, the application of this material to a particular situation is always dependent on the facts and circumstances involved. The use of this material is therefore at your own risk. All content in the hotline, except where indicated otherwise, is the property of ARSA. This content may not be reproduced, distributed or displayed, nor may derivatives or presentations be created from it in whole or in part, in any manner without the prior written consent of ARSA. ARSA grants its members a non-exclusive license to reproduce the content of the hotline. Employees of member organizations are the only parties authorized to receive a duplicate of the hotline. ARSA reserves all remaining rights and will use any means necessary to protect its intellectual property.

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