License Issues for Distributors of Explosive Materials

We often receive questions from distributors about their obligations to comply with regulations beyond those of the FAA or industry standards specifically addressing the aerospace distribution community. In many of these cases, distributors may not be perfectly clear on how to comply with certain regulations, or that those regulations even exist. Some examples of these scenarios include export licensing requirements, export reporting requirements, and hazmat or dangerous goods shipping requirements.

Recently, we have received a number of questions regarding regulatory requirements surrounding explosives regulated by the Bureau of Alcohol, Tobacco, Firearms, and Explosives (ATF).  Some people are not even aware that regulated explosive materials are present in a variety of aircraft parts or that they may be handling these parts or that the ATF imposes license and permit requirements on a wide range of people who handle such explosives. It is therefore important to understand what ATF licensing obligations apply when distributors are handling explosive materials.

In general, anyone who imports, manufactures, or deals in explosive materials must obtain a license from the ATF. Because “dealing” under the regulation means distributing explosive materials at wholesale or retail the license requirement casts an extremely wide net that encompasses any type of sales model.

The ATF explosives license is obtained by applying to the ATF using forms ATF F 5400.13, ATF F 5400.28 to identify employees authorized to possess explosive materials as applicable, and submitting the appropriate fee. Each license is valid for three years.

So where do regulated explosives appear in aircraft parts? Frequently explosives will appear in safety apparatus.  Fire suppression systems may contain explosive actuators (or “squibs”); similarly, emergency escape systems like door slides may also contain explosive squibs. Other articles that may contain explosives include the flares or other signaling devices found in survival kits. These explosives may be present in certain assemblies and components, so it is important to identify and ship them properly once they have been identified.

Although regulated explosive materials generally required the distributor to have a license in order to deal in those products, certain aviation articles may be exempted from the regulations. These exemptions are typically sought by the manufacturer of a particular article and when granted are specific to the article by part number. One common example of articles often subject to exemption is signaling devices.

Unfortunately, the ATF does not offer a searchable database of issued exemptions, but instead recommend that manufacturers provide a copy of the exemption with their exempted products. As a matter of practice, however, this is not always done, whether because the manufacturer is unaware that they are permitted to do provide the exemption, are unaware that the exemption follows the product, or even possibly for competitive reasons.  The net result is that some distributors may be handling exempt materials as though they were subject to the ATF licensing requirements. When dealing with exempt materials it is important to remember that it is the article itself that is exempted, and the exemption is not limited only to the manufacturer, so everyone can take advantage of the product’s exemption.

Finally, it is important to remember that the ATF licensing regime is separate from DOT hazmat shipping regulations.  An explosive article can be exempt from the ATF licensing provisions but still be regulated as a class one explosive for the purposes of hazmat shipping. It is always necessary to ensure compliance to each applicable regulatory regime, and that separate regulatory regimes are not necessarily consistent.

Overlapping regulatory regimes—ATF, DOT, FAA, BIS, DDTC, OFAC—can become quite confusing.  When in doubt about your licensing and compliance regulations always remember to consult an attorney who can help you make sense of these conflicting regimes and develop systems to help your business ensure ongoing compliance.

If you have questions about your compliance obligations be sure to visit us while you are at the ASA conference in Las Vegas, June 26-28!

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ICA Guidance Open for Comment

The FAA has released for comment two guidance documents pertaining to Instructions for Continued Airworthiness (ICA): Draft FAA Order 8110.54B and Draft Advisory Circular 20-ICA. ICA availability is an issue that has a direct effect on repair stations and distributors, and ASA has done a significant amount of work to ensure that ICA are available and accurate in accordance with the Federal Aviation Regulations.

Draft Order 8110.54B is guidance directed at FAA personnel and persons responsible for administering the requirements for ICA.  Among other changes, the draft reorganizes the Order to reflect material moved to AC 20-ICA (below), and importantly incorporates guidance implementing the FAA’s Policy Statement PS-AIR-21.50.01, Type Design Approval Holder Inappropriate Restrictions on the Use and Availability of Instructions for Continued Airworthiness.  ASA has been supportive of the FAA in the adoption that Policy Statement that is intended to protect the industry from anti-competitive ICA restrictions.

Draft AC 20-ICA is a new Advisory Circular that removes industry-specific guidance from the internal FAA Order and places it in a stand-alone AC.  This effort is similar to the FAA’s actions in revising other Orders, which are directed to FAA employees, and removing guidance that is actually intended to be directed outward toward industry and properly placing it in an Advisory Circular.  Like Draft Order 8110.54B, the draft AC implements the FAA policy on ICA established in the Policy Statement.  The proposed AC provides guidance to design approval holders (DAH) and design approval applicants for developing and distributing ICA.

Not only does the availability of ICA directly effect repair stations, the availability of parts lists that are included as a part of the ICA is an important issue for the supplier community.

After a preliminary review these documents appear to offer very positive guidance for the aviation maintenance and distribution industries.  ASA will be reviewing both of these documents closely and offering comments and support for these policies to the FAA.  We encourage repair stations and distributors to review both documents as well.

Comments on both guidance documents must be submitted by October 6, 2015, and may be submitted to the FAA via email to 9-AVS-ICA@faa.gov.  If you have comments or observations that you feel ASA should include in its comments to the FAA, email them to Ryan Aggergaard at ryan@washingtonaviation.com so the we can include them.

ASA Wins Traceability Case

This week, ASA won an important victory in court for its members.  We used the court system to remove language from FAA Guidance that could have adversely affected the industry.

Recently, FAA published an Unapproved Parts Notice (UPN).  This is not unusual.  But what was unusual was a statement in the UPN that appeared to impose a new traceability requirement on distributors.

The UPN was published by the Scottsdale (Arizona) (Manufacturing Inspection District Office and it stated, in relevant part:

“A distributor (seller) is required to provide sufficient documentation to ensure traceability of their parts to an FAA-approved source.” [hereinafter the “legally incorrect language”]

LEGALLY INCORRECT

This statement misstated the law.  There is no FAA requirement for traceability.  The FAA Chief Counsel’s office has repeatedly stated this in numerous Chief Counsel’s opinion letters.[1]

Furthermore, no record-keeping requirement may be imposed by an agency without an OMB Control Number.[2]  Because the FAA has no requirement for traceability, the FAA has never applied for an OMB control number for a traceability requirement.  Thus, the FAA has not met the legal prerequisites for imposing such a traceability requirement.

Most importantly for our members, the FAA has not defined uniform traceability requirements for aircraft parts.  They have made traceability recommendations in the Voluntary Industry Distributor Accreditation Program of AC 00-56A, but even these recommendations fall short of the requirement established in the UPN.  Because there is no uniform traceability standard, an FAA pronouncement of a requirement for “sufficient documentation to ensure traceability of parts to an FAA-approved source” would create real problems for the industry,, as there are still many (new) legacy parts in inventories that do not have this sort of documentation because it was never required or anticipated when the parts were first manufactured.

This misstatement of the law could have a very real effect on the industry.  Many people in the industry have been wrongly told by FAA employees and others that the FAA has a traceability requirement.  The fact that the Chief Counsel’s office has repeatedly had to state that there is no such requirement[3] gives testament to the persistent recurrence of this issue.

ASA made it clear to the FAA that we do not represent Classic Aero LLC and have no relationship to Classic Aero LCC (the target of the UPN).  Our sole interest was in correcting the text that misstated the law.

The UPN specifically called out parts distributors as an affected party; and it also directed the industry to comply with the recommendations and provide the FAA with additional information concerning the referenced parts,[4] including the means used to identify the source and the action taken to remove them from service.

REQUEST FOR CORRECTION

We asked the FAA to rescind the UPN and reissue it without the legally incorrect language.  We pointed out that removing the legally incorrect language about traceability would do nothing to change the emphasis of the UPN, but it would remove an apparent order to provide documentation that was inconsistent with US law.

Unfortunately, a trade association like ASA Only has a 60 day window to appeal an order of the FAA.  The FAA was unable to provide ASA with a constructive reply within this window so we sued the FAA.

LAWSUIT

ASA filed suit against the FAA on the 60th day of its window.  The ASA Board agreed that this language set a dangerous precedent and imposed a documentation requirement that the industry could not uniformly and conclusively meet for all aircraft parts.

Soon after the suit was filed, we got a phone call from FAA Attorney Richard Saltzman.  Saltzman had done his homework and in his first call he reported that he had discussed the matter with the FAA’s subject matter experts.  And they agreed with ASA.

Not long after this, the FAA issued a replacement UPN that omitted the legally incorrect language.  ASA then rescinded its lawsuit, having gotten what we’d requested.

This is the way we like to win a case: prove to the FAA that there is a better way; and then work together to find a solution that works best for the industry.


[1] E.g. FAA Legal Interpretation Letter from Rebecca B. McPherson Assistant Chief Counsel for Regulations (July 8, 2009) (“the regulations do not require “back to birth” records in order to determine the life status of life-limited parts”); FAA Legal Interpretation Letter from Rebecca B. McPherson Assistant Chief Counsel for Regulations (Aug. 6, 2009) (“there is no Federal Aviation regulation that requires traceability of an aircraft part to its origin”); FAA Chief Counsel’s Interpretation 1992-36 (June 1, 1992) (explaining that “[a] complete audit trail to the origin is not needed for all life-limited parts”).

[2] See, 44 U.S.C. §3512 (preventing the imposition of a penalty for failure to comply with an information collection when the information collection does not comply with the requirement to display a current OMB control number); see also United States v. Hatch, 919 F.2d 1394 (1990) (finding that the Paperwork Reduction Act defense could be raised at any time in a proceding); cf. 5 C.F.R. 1320.5(c) (preventing an agency from imposing a penalty for failure to comply with a collection of information when the public is otherwise protected, as when the agency has failed to comply with the requirement to secure an OMB control number).

[3] See supra note 1.

[4] Coincidentally, this request also appears to be inconsistent with the Paperwork Reduction Act, in that it neither includes an OMB Control Number nor does it advise the respondent that compliance is voluntary.

ASA Files Repair Station Comments to Protect Members

ASA has filed comments in response to the FAA Notice of Proposed Rulemaking concerning repair stations and their ratings.  Although the ratings proposal was the centerpiece of this proposed rule, many of the proposals that caused the most concern were those unrelated to the ratings element of the proposal.

This is a proposed rule that could have a significant effect on the ASA Community.  Some of the regulatory proposals, for example, could interfere with documentation and traceability norms.

Issues addressed by the wide-ranging comments from ASA included:
<ul>
<li>Recertification</li>
<li>Certificate Surrender</li>
<li>Asset Sale</li>
<li>Ratings</li>
<li>Capabilities Lists in the Operations Specifications</li>
<li>Removing Operations Specifications from the Certificate</li>
<li>Capabilities Lists</li>
<li>Quality Systems</li>
<li>Appropriate Equipment and Tools</li>
<li>Permanent Blacklisting From the Industry under § 1051(e)</li>
<li>Entitlement to Certificate under § 1053(a)</li>
<li>Change to Part 43 Appendix B</li>
</ul>
A complete set of the ASA Comments will soon be posted to the <a title=”ASA Website” href=”http://www.aviationsuppliers.org&#8221; target=”_blank”>ASA website</a>.

ASA Can Be Found at the 2012 ACPC

Looking for ASA at the 2012 Air Carrier Purchasing Conference (ACPC)?  We’ll be there!

ASA staff will have booth at the ACPC ANF on Sunday (August 19th).  Please stop by to say “Hi!”

We will also be attending the sessions and spending time in the ACPC hospitality suite.

If you have a specific question to ask or a specific issue to discuss, then we are here for you.  Members who would like to meet with us should feel free to catch us at ACPC from Saturday to Tuesday, or send an email to Jason Dickstein to arrange a specific meeting time to get your questions answered.

ASA Participates in 2012 AP&M Expo

ASA and six of its members shared a pavilion at the 2012 AP&M Expo in London.  This trade show is a popular airline purchasing conference that is held each year in London.  Many European and Middle-Eastern air carriers attend, as well as maintenance organizations, parts distributors and others servicing the European and Middle-Eastern air carrier community.

Today was the first day of the two-day show, and it was well attended.  Each of the ASA members seemed to keep busy for the entire day talking to customers and potential business partners. ASA was able to answer quite a number of burning questions for members and other attendees who were at the show, and it also provided us with an opportunity to discuss issues like accreditation.

The ASA participating members were:

  • A.J. Levin Company
  • Aero Instruments & Avionics
  • Aircraft Inventory Management & Services
  • Global Aviation
  • International Aircraft Associates
  • Magnum AirDynamics

Each of the participating members enjoyed its own space in the pavilion, as well as access to the segregated meeting space.  The pavilion experience allowed members to have a presence on the show floor at an advantageous rate, in a large space that was attractive to conference-goers, without incurring many of the normal burdens of conference exhibition (like purchase of exhibit booth furniture and display materials, cost of shipping such furniture and display materials, etc.).

Tomorrow, during the second day of the show, ASA will speak at 12:50 in a “Meet the Experts” session.  ASA General Counsel Jason Dickstein will speak about the EASA proposed regulation and guidance material that endorses distributor accreditation.

This year’s experience was so positive for the ASA members who participated, that ASA has already booked pavilion space for next year and in fact has already received firm commitments from several members to participate again.  The 2013 pavilion space will sell-out fast – ASA members interested in participating should contact Stephanie Brown.

Boeing’s Environmental Initiatives

On July 19, Boeing’s Vice President of Environmental, Health and Safety, Mary Armstrong, was a keynote speaker at the 2011 ASA/AFRA Conference.

Armstrong spoke at a joint session of the memberships of both the Aviation Suppliers Association (ASA) and the Aircraft Fleet Recycling Association (AFRA).  Her speech made it clear that Boeing is acting as a leader in aviation’s efforts to  achieve better environmental performance.

Boeing has been taking steps to reduce energy use, and to reduce the production of hazardous materials.  This has lead to significant measurable reductions in both areas at Boeing.  Boeing is now working on reducing the waste-to-landfill to zero.  They have already achieved this at four locations (Huntsville, Philadelphia, Salt Lake City and South Carolina.  In South Carolina, the Boeing facility has gone to 100% renewable energy, including a ten acre solar roof and using biomass for remaining energy needs.

She discussed Boeing and AFRA’s efforts at lifecycle environmental footprint reduction.  The aerospace industry has taken a cradle-to-grave approach, trying to minimize environmental footprint throughout the aircraft’s lifecycle.

Armstrong explained that for Boeing, environmental performance starts with design.  Boeing is focused on increasing the use of recycled materials in products and in tooling.  They are designing their Aerospace products to reduce or eliminate the use of hazardous materials and the generation of hazardous wastes.

They are switching to non-chromated paints and primers for their aircraft.  This is a significant change from traditional coatings that used chrome, which is a hazardous material.

Boeing is participating in a new group known as the International Aerospace Environmental Group.  This group is made of aerospace manufacturers working together to share best practices that will permit them to achieve better environmental performance.  One of their goals is to create a consistent process for suppliers to list their chemical bill of materials.  This will provide the framework against which the manufacturers can reduce their adverse environmental impact.

Armstrong explained that aviation produces about 2% of the global carbon emissions, if you take into account all of the aviation-related sources.  Therefore the industry feels compelled to focus on control and limitation of carbon growth.  The 787 and 747-8 aircraft will both be cleaner and quieter.  The 787 is designed to reduce carbon emissions by 20% and the 747-8 should reduce carbon emissions by 16%.

Boeing is testing biofuels in an effort to identify sustainable biofuels.  By sustainable, they mean crops that will not compete for water or land with food crops.  They have been engaged in test flights since 2008, and are identifying fuels that will work as well as or even better than pure Jet-A.  They are working to develop 50/50 blends and the standards for this have been recently approved by ASTM.

Boeing is also working with the FAA on the development of modern air traffic management systems.  Implementation of improvements in this area could cut 12% or more off of aviation’s carbon emission total.

Boeing wants to be an environmental leader, so the next step, which Boeing and AFRA are both taking together, is to undertake a cradle-to-cradle approach.  This means thinking about where the recycled materials from an aircraft will go, and undertaking strategies that will permit the aviation industry to recover recycled aerospace materials for use within the industry.

Boeing is working with AFRA and ASA to develop better strategies for reclaiming materials.

Armstrong praised AFRAs BMP efforts.  She explained that she expects the draft Recycling BMP to lead to an effective mechanism for improving effectiveness and efficiency in recycling of aircraft materials.

Between 2010 and 2030, the aviation industry is expected to add 33,500 new airplanes and half of these will replace existing aircraft.  In the next ten years, the industry expects a significant number of aircraft retirements, all over the world.  These older aircraft will yield to more economical and environmental aircraft, but their retirements create a recycling challenge.

Boeing is engaged in a number of pilot projects for environmental improvement.  These projects include:

  • Recycling carbon fiber, for interior components, for non-structural applications and for tooling
  • Recycling interior materials, like aircraft carpet to reduce landfill materials

Boeing is working on technologies that will permit creation of carpet tiles from recycled carpet.  There is a pilot project for testing these carpet tiles with Southwest Airlines right now.

Boeing is asking its supply base partners to adopt environmental management systems similar to ISO 14001 (although they need not be registered to ISO 14001).  Boeing expects to address environmental responsibility, in the future, as an element to consider for awarding contracts to partners.

One thing that Armstrong did not mention in her speech is that Boeing is one of the founding members of AFRA, and AFRA’s goals include a variety of environmental and recycling efforts.  Through AFRA Boeing has achieved some significant advances by publishing Best Management Practices related to aircraft materials recycling.

Boeing is expanding its understanding and expanding its collaborations in order to create new value for customers and for the environment.

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