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Is the FAA Grounding Your Profits?

Is the FAA Grounding Your Profits?. Marshall S. Filler. Legal Fine Print.

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Is the FAA Grounding Your Profits?

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  1. Is the FAA Grounding Your Profits? Marshall S. Filler Aviation Distributors and Manufacturers Association

  2. Legal Fine Print Disclaimer: This material is provided for educational and informational purposes only. It does not constitute legal, consulting or any other type of professional advice. Laws, regulations, guidance and government policies change frequently. While OFM&K 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. Aviation Distributors and Manufacturers Association

  3. A Specialized World • Regulators have only some of the information needed to make informed decisions. • Regulations are the “products” they produce. • Regulatory law is usually “practiced” by technical personnel. • Most lawyers consider this “way too technical.” • International aviation law is an added complication. Aviation Distributors and Manufacturers Association

  4. What You Should Know • Knowledge is power. Understanding- • The FAA’s organization, rules and policies • Information sources • The international component • Will save your company money • Allow you to ensure that the regulations are applied in a fair, even-handed and standardized manner Aviation Distributors and Manufacturers Association

  5. Stay in the Right Legal Box! • Regulatory • Contract • Tort • Intellectual property • Criminal • One or more of the above may apply in any particular situation. Aviation Distributors and Manufacturers Association

  6. Overview • Federal jurisdiction • FAA organization and activities • International safety regulation • New FAA rules • FAR Part 3 • Hazmat Training • Organization Designation Authorization • Thermal/acoustic insulation • ASA Petition for Exemption Aviation Distributors and Manufacturers Association

  7. Federal Jurisdiction Over Civil Aviation Aviation Distributors and Manufacturers Association

  8. Some Important Laws • Aviation • Federal Aviation Act of 1958, as amended • Transportation • Independent Safety Board Act of 1976, as amended • Hazardous Materials Transportation Act of 1975, as amended • General • Administrative Procedure Act, as amended • Freedom of Information Act, as amended Aviation Distributors and Manufacturers Association

  9. U.S. GovernmentThe Legislative Branch Congress • Authorizing Committees (substantive law) • Senate Commerce, Science and Transportation • House Transportation and Infrastructure • Each with an Aviation Subcommittee • Appropriations Committees (money) • Senate and House • Each with a Transportation Subcommittee Aviation Distributors and Manufacturers Association

  10. U.S. GovernmentThe Legislative Branch Congress • Tax Committees • Aviation Trust Fund Taxes • House Ways & Means • Senate Finance • Conference Committees (ad hoc) • GAO Aviation Distributors and Manufacturers Association

  11. U.S. GovernmentThe Executive Branch Aviation Distributors and Manufacturers Association

  12. The Legal Hierarchy • Laws and federal court decisions • Rules and administrative decisions • Legislative and regulatory history • Guidance • Policy • Orders and bulletins • Advisory circulars • Office of Chief Counsel legal interpretations Aviation Distributors and Manufacturers Association

  13. Regulatory Links in the Safety Chain • Design • Production • Operations • Maintenance • Distribution? • Common link? Aviation Distributors and Manufacturers Association

  14. FAA OrganizationOffice of Aviation Safety • Design and Production • Aircraft Certification Service • Headquarters Divisions • Engineering • Production and Airworthiness Approval • Directorates (Transport Airplane, Small Airplane, Rotorcraft, Engine and Propeller) • Field Offices • ACO • MIDO/MIO Aviation Distributors and Manufacturers Association

  15. FAA Design (Engineering) Approvals • Type certificate • Supplemental type certificate • PMA • TSOA • Technical data supporting major repairs and major alterations • Repair process specifications Aviation Distributors and Manufacturers Association

  16. FAA Production Approvals • Production certificate • APIS (production under a type certificate only) • PMA • TSOA Aviation Distributors and Manufacturers Association

  17. FAA OrganizationOffice of Aviation Safety • Operations and Maintenance • Flight Standards Service • Headquarters Divisions • Air Transportation • Aircraft maintenance • General aviation and commercial • Field Offices • FSDO • IFO Aviation Distributors and Manufacturers Association

  18. Operations Certificates and Authorizations • Operating certificates (Parts 119/125/135) • Air carrier certificates (Parts 119/121/135) • Foreign air carriers (Part 129) • Rotorcraft External Load (Part 133) • Agricultural (Part 137) Aviation Distributors and Manufacturers Association

  19. Maintenance Certificates • Part 65 mechanics and IA holders • Part 121/135 air carriers • Part 145 repair stations • Note: Manufacturers (PAHs may rebuild and alter their own products) Aviation Distributors and Manufacturers Association

  20. Difficult Cross-over Issues • Approval of technical data in support of major repairs and alterations (i.e., field approvals) • Maintenance fabrication (repair vs. manufacturing) • Instructions for Continued Airworthiness (maintenance/overhaul manuals) Aviation Distributors and Manufacturers Association

  21. International Safety Regulation • International Law • Chicago Convention of 1944 • ICAO • Standards and Recommended Practices (SARPs) in 18 Annexes • National Aviation Authorities • Bilateral agreements Aviation Distributors and Manufacturers Association

  22. The Five States of ICAOAssigning Responsibility Among Nations • Contracting State • State of Design • State of Manufacture • State of the Operator • State of Registry • Question: Where does EASA fit? Aviation Distributors and Manufacturers Association

  23. ICAO State Responsibilities • Contracting States-must comply with most of the 18 Annexes. • State of Design issues original TC and mandatory continuing airworthiness information (ADs). • State of Manufacture oversees production organization and issues airworthiness approvals for new products. Aviation Distributors and Manufacturers Association

  24. ICAO State Responsibilities • State of Registry generally controls maintenance/alterations and must act on ADs issued by State of Design. • State of the Operator certificates and oversees holders of air operator certificates. • Service difficulties must be reported by the State of the Operator/State of Registry to the State of Design. Aviation Distributors and Manufacturers Association

  25. Important International Concepts • Differences • Between ICAO standards and the regulations of member States • Validation • One State accepting the rules or approvals issued by another State, with or without conditions • Harmonization • Standardization to the extent possible Aviation Distributors and Manufacturers Association

  26. New FAA Regulations Aviation Distributors and Manufacturers Association

  27. FAR Part 3(70 FR 54822, September 16, 2005) • Intentionally false, fraudulent and misleading statements • Final rule effective October 17, 2005 • Another rule that applies to distributors • Designed to fill gaps in existing regulations (i.e., section 21.2, 43.12, etc.) • Regulated conduct may also involve criminal violations. Aviation Distributors and Manufacturers Association

  28. Applicability • Persons who make a record (or cause one to be made) relating to a TC’d product or an article that may be installed on that product • Applies when conveying information relating to an advertisement or sales transaction (actual or potential for compensation) • Does not apply to • experimental or military aircraft (not TC’d) • fluids Aviation Distributors and Manufacturers Association

  29. Definitions • Airworthy • Conformity to approved design • Condition for safe operation • Product • Aircraft • Aircraft engine • Propeller • Record Aviation Distributors and Manufacturers Association

  30. Records • Broadly defined • Includes any documentary material by which information is preserved or conveyed on a- • Product • Part • Appliance • Material • Includes paper, microfilm, ID plates, stamped marks, bar codes, any electronic format Aviation Distributors and Manufacturers Association

  31. Intentional Falsification and Fraud • Statements in any record or reproduction/ alteration of any record relating to- • Airworthiness of TC’d product • Acceptability of article for installation on above • Does not apply to records made under FAR Part 43 • Does apply to records made under Part 21 Aviation Distributors and Manufacturers Association

  32. Required Elements • Intentional falsification • False statement • Material fact • Made with actual knowledge of its falsity • Fraud • The elements of intentional falsification, plus • Intent to deceive • Action taken in reliance on representation Aviation Distributors and Manufacturers Association

  33. Intentionally Misleading Statements • Material representation or omission of material information relating to- • Airworthiness of a product • Acceptability for installation of article on TC product • Test: is it likely to mislead a consumer acting reasonably under the circumstances? • FAA relying on FTC precedents Aviation Distributors and Manufacturers Association

  34. Hazmat Training Issues • FAA hazmat training final rule • 70 FR 58796 (October 7, 2005) • Expanded training for air carriers, particularly “will not carry” airlines • Notification to repair stations about carrier’s status • 49 CFR training rules referenced in Part 145 • Repair station compliance certification to FAA Aviation Distributors and Manufacturers Association

  35. FAA Designee System • Part 183 of the FARs • Private “persons” that perform FAA functions • A designation is not a certificate • Not an entitlement • Little due process rights • FAA expanding the designee concept to help address resource constraints Aviation Distributors and Manufacturers Association

  36. Designee Functions Aviation Distributors and Manufacturers Association

  37. Individuals and Organizations • Most FAA designees are individuals • Organizational delegations have also been issued: • Airworthiness (manufacturing and maintenance; ODAR) • Designated Alteration Stations (DAS) • Delegation Option Authorizations (DOA) • SFAR 36 • And now … Aviation Distributors and Manufacturers Association

  38. Organization Designation Authorization (ODA)(70 FR 59932; October 13, 2005) • Applications beginning November 2006 • Gradual phase-out of existing organizational delegations (DAS, DOA, ODAR, SFAR 36) • FAA will give priority to existing designee organizations that expect to increase their workload • Eliminates need to hold an FAA certificate (i.e., air carrier, repair station, production approval) Aviation Distributors and Manufacturers Association

  39. Authorized ODA Functions • Any function determined to be appropriate by the FAA • Find compliance • Determine conformity • Determine airworthiness • Issue certificates • Issue authorizations and endorsements • Issue approvals Aviation Distributors and Manufacturers Association

  40. ODA Qualifications • Facilities, resources and personnel • Experience with FAA requirements, processes and procedures • Sufficient relevant experience Aviation Distributors and Manufacturers Association

  41. Personnel and Procedures • ODA Unit personnel • Administrator • Technically qualified and experienced staff • Procedures manual • Recordkeeping and reporting • Two year, five year and “for duration of authorization” retention periods • Reporting as required by the FAA Aviation Distributors and Manufacturers Association

  42. Continuing Requirements • Investigating and reporting • Service difficulties • Potentially unsafe conditions • Articles not meeting airworthiness standards • Improperly issued approvals and authorizations • Corrective action reports to FAA Aviation Distributors and Manufacturers Association

  43. FAA Priorities in Selection of ODAs • Need for the organization • Ability of the FAA to oversee the organization’s activity • Previously demonstrated capability as a designee organization • Willingness to assume more delegated responsibilities Aviation Distributors and Manufacturers Association

  44. ODA Policy Issues • Transition to ODA will be more difficult for ODARs • New procedures • In house training • No additional review of existing representatives’ qualifications. • Expected decrease in the number of individual designations (except for consultant DERs) • Will allow ODAs in foreign countries Aviation Distributors and Manufacturers Association

  45. Insulation Rule(68 FR 45046, July 31, 2003; FSAW 05-09 and -10) • Amended Parts 91, 121, 125 and 135 • New flammability requirements for thermal/acoustic insulation installed in fuselage of Part 25 airplanes. • Blankets, wiring bundles, tape, hook and loop fasteners (Velcro), microwave ovens, coffee makers, wiring sleeves, air ducting, avionics, every piece of installed equipment with insulation Aviation Distributors and Manufacturers Association

  46. Insulation Rule(68 FR 45046, July 31, 2003; FSAW 05-09 and -10) • Rule is overly broad • Some manufacturers have not produced compliant replacement parts. • FAA’s focus is on insulation inaccessible in flight • Existing aircraft: When existing insulation is replaced, it must comply with new section 25.856 flammability requirements. • No requirement to replace insulation Aviation Distributors and Manufacturers Association

  47. Insulation Rule(68 FR 45046, July 31, 2003; FSAW 05-09 and -10) • The following is not covered by the new rule • Repairs to insulation • Insulation installed prior to September 2, 2005 • Reinstallation of insulation during maintenance • Robbed insulation • Insulation not located in the fuselage • Replacement parts from stores are covered • AC 25-856-1, Thermal/Acoustic Insulation Flame Propagation Test Method Details (June 24, 2005) Aviation Distributors and Manufacturers Association

  48. ASA Petition for Exemption • 14 CFR section 21.323 • Export Airworthiness Approvals • Class III parts • Many countries now demanding 8130-3 for such parts • Manufacturers may obtain export approvals • Distributors may not (except for domestic use) Aviation Distributors and Manufacturers Association

  49. Questions?? Aviation Distributors and Manufacturers Association

  50. Aviation Distributors and Manufacturers Association

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