8130-3 Changes: FAA and ASA Need Your Comments

Don’t forget to file your comments on the FAA proposal that would permit manufacturers to issue 8130-3 tags without recourse to FAA designees.

At first blush, this proposal seems innocuous but upon deeper inspection it appears to disadvantage small businesses in a way that adversely impacts competition in the marketplace.

The proposed rule itself is hopelessly contradictory.  The rule proposes that any production approval holder who intends to issue an “authorized release document” must have procedures in their quality system to do so.  But it fails to actually permit someone to issue the 8130-3.  As you will see from this analysis, this appears to be a flaw with both primary and secondary effects, and the most important of those effects is that the rule change could negatively impact competition between small and large competitors.

The first issue with the proposed rule is that it permits the public to do something that has been specifically reserved to the FAA, and it fails to amend the regulations in order to permit this action.

The term “authorized release document” is not currently defined in the regulations.  The FAA has issued Order 8130.21H, which is entitled “Procedures for Completion & Use of the Authorized Release Certificate, FAA Form 8130-3, Airworthiness Approval Tag.”  This document makes it clear that the 8130-3 tag is the Authorized Release Certificate.  So the referent in this case clearly appears to the 8130-3 tag.  But this tag has two names: “Authorized Release Certificate,” and “Airworthiness Approval Tag.”  And the latter name has regulatory connotations.

Airworthiness approval means a document issued by the FAA for an aircraft, aircraft engine, propeller, or article which certifies that the aircraft, aircraft engine, propeller, or article conforms to its approved design and is in a condition for safe operation;

The current regulations specify that an airworthiness approval is a document issued by the FAA.  The proposed change fails to change the definition to permit non-FAA entities to issue the 8130-3 tag.

The tag has been used by non-FAA entities in the context of an approval for return to service, which is delineated by a right-hand signature, but the regulations for “approval for return to service” are found in Part 43 and no change to part 43 has been proposed, either.

This first problem is not insurmountable.  It is simply a matter of removing the ambiguity by changing the appropriate regulations.  For example, Subpart L, which provides the rules for export airworthiness approvals, could be amended in order to address airworthiness approvals generally.  The US could also drop the “export” and “domestic” distinctions among 8130-3 tags and simply have one uniform airworthiness tag (as most other nations already do) – this distinction impedes US exports without offering any real safety benefit.  Once subpart L was designated for rules for all 8130-3 tags, then it would be easy to include appropriate permissions and limitations in the regulations.  But the fact that the FAA has not removed this ambiguity may be a symptom of some of the other problems with this proposal.

The second problem with the proposal strikes at the heart of the issue.  The proposal would unbalance the competitive playing field in the United States by providing a benefit to larger manufacturers who engage in their own distribution – a benefit that would not be shared by the small businesses with whom they compete.

Currently, manufacturers and distributors both export aircraft parts from the United States.  It is a curious feature of the aircraft parts distribution system that both “manufacturer-authorized” and independent distributors are able to thrive in the system.  In recent years, large manufacturers have purchased distribution companies and find themselves directly in competition with independent distributors.

Currently, both manufacturers and distributors are required to obtain 8130-3 tags from the FAA or from FAA designees (although the US regulations do not “require” 8130-3 tags, our bilateral agreements with other nations have made these tags a de facto requirement for export).  The proposal would allow manufacturers to issue their own 8130-3 tags without recourse to designees.

Designees have a cost, whether the company hires them as full time employees or uses them on a consultant-DAR basis (a function that can cost $75-$300 for a single tag).  By eliminating the need for manufacturers to hire designees (or maintain the function under their Organization Designation Authorization [ODA]), the FAA is eliminating a cost.  Bravo!  But by failing to eliminate this cost for all US competitors, particularly for distributors, the FAA has created an unbalanced playing field in which the largest companies shed costs while their small business continue to shoulder this cost burden.  The difference in cost of doing business is certain to have an anti-competitive effect on the marketplace, which appears to infringe the principles of Executive Order 12866.  It also fails to be reflected in the NPRM analysis, which violates the Regulatory Flexibility Act requirement for such analysis.

One way to mitigate this effect would be to have a mechanism for permitting distributors to NPRM that lead to the export airworthiness approval, the FAA had expressly proposed that for parts and components (then defined as class III parts), all exporters should be able to self-certify their airworthiness qualities.  The FAA added the ability for manufacturers to apply for the 8130-3 tag in the final rule to facilitate export, because one manufacturer wrote during the comment period that such availability might be beneficial in the future.  It was only later interpretations in guidance and in the bilateral airworthiness agreements that changed this original intent, such that FAA-issued 8130-3 tags became the norm.

Nay-sayers will claim that permitting distributors to issue their own 8130-3 tags opens the barn doors too wide.  The response to this is simple – permit issue of 8130-3s by distributors with effective quality systems whose documentation systems support airworthiness.  What sort of quality systems would be adequate?  Well, the FAA already has their AC 00-56A Distributor Accreditation system and this can be used as the basis for determining what quality system elements are necessary to support distributor-issue of 8130-3 tags.  Distributors ought to be able to issue 8130-3 tags for new parts produced by production approval holders.  An effective documentation system would permit the auditing of such actions by the FAA or by the FAA-recognized accreditation entities.  Likewise, distributors ought to be able to issue 8130-3 tags for parts with overhaul tags (following a concurrent inspection by an A&P mechanic to confirm that the part has not suffered damage or degradation since being released from the overhaul) although it would be up to the importing nation to determine whether the overhaul work would be considered acceptable under their system.

The proposed rule starts off in the right direction by proposing to eliminate FAA involvement in a process that originally was not intended to need FAA involvement (issuing the 8130-3 tag for parts), that often does not involve foreign regulatory authorities in corollary foreign operations, and that could reasonably be performed by the public without direct FAA involvement.  Handing this function back to the public could eliminate trade barriers that the US has imposed on itself, and could also facilitate domestic transactions where the 8130-3 tag has also become a norm.  But as-written, the proposal would seriously unbalance the competitive playing field in a way that would favor large manufacturing businesses over small distribution business.  This would violate the spirit of both the Regulatory Flexibility Act as well as Executive Order 12866.

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About Jason Dickstein
Mr. Dickstein is the President of the Washington Aviation Group, a Washington, DC-based aviation law firm. He represents several aviation trade associations, including the Aviation Suppliers Association, the Aircraft Electronics Association, the Aircraft Fleet Recycling Association and the Modification and Replacement Parts Association.

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