The Electronic Records/Signature Law (ESIGN) turns 18

The Electronic Signatures in Global and National Commerce Act (ESIGN) was signed into law on June 30, 2000.  That makes the law 18 years old on Sunday.  If there was any justice in the world, we’d all be buying the law a cigar and allowing it to vote.

ESIGN established a general rule of validity for electronic records, electronic contracts, and electronic signatures.  Prior to the law, many courts had refused to recognize electronic signatures and they questioned electronic records.

ESIGN applies to transactions “in interstate commerce,” which is a term of art meaning that the transaction is open to being regulated by Congress under the Interstate Commerce Clause of the Constitution (most transactions, today, are subject to the Interstate Commerce Clause of the Constitution).  Generally, it explains that when records and agreements are required to be in writing, an electronic version of them counts as a “writing.”

ESIGN also applies to federal and state government agencies.  They are forbidden from adopting record-keeping rules that would “impose unreasonable costs on the acceptance and use of electronic records.”  The law explains that if an agency wants to require paper records (to the exclusion of electronic), then the agency needs to show “there is a compelling governmental interest relating to law enforcement or national security for imposing such requirement.”

Eighteen years after the law was enacted, the aviation industry still struggles with full implementation of the law.  Even though it is clear that aviation records can be recorded and transmitted electronically, the aviation industry remains wedded to paper.  Nowhere is this more clear than with respect to parts documentation.  While distributors are now more comfortable reducing paper 8130-3 tags, and paper material certifications to electronic format for archival storage, transactional records remains stubbornly rooted to a paper paradigm.

One reason for this paper paradigm is because most aircraft parts are unserialized, and therefore it can be difficult to uniquely tie an electronic record to a particular (unserialized) part. A paper record, on the other hand, can be literally, physically, connected to the part to which it applies.  In a world in which we deal with so many different parts coming and going through our warehouses, paper records provide a level of comfort that we are connecting the uniquely correct record to the uniquely correct part.

The FAA has repeatedly said  that commercial documentation paradigms (like back-to-birth traceability) are not required by FAA regulations.  They have specifically stated that there is no Federal Aviation regulation that requires traceability of an aircraft part to its origin, and the FAA does not require back-to-birth records even for life-limited parts.  The FAA has explained that a part may be identified as having been released by a manufacturer as an airworthy part using  “a shipping document, a manufacturer’s certificate of conformance or material certification, or an FAA Airworthiness Approval Tag, Form 8130-3,”  but that in the absence of such documentation, “the part may be submitted for inspection and testing to determine conformity.”

Despite the best efforts of the FAA’s lawyers, the industry remains stubbornly rooted to a paperwork paradigm.  There are many commercial reasons for this, but one important pseudo-regulatory reason is that FAA inspectors frequently insist that the manuals for FAA certificate holders feature documentation requirements.  Once these requirements are published in the manuals, then these FAA-approved manuals drive the documentation requirements which are flowed-down throughout the industry.  And because these documentation requirements are not directly tied to FAA regulations, there is no opportunity to apply the ESIGN mandates and protections to them.

Through recent conversations with both the FAA and EASA, we are starting to see a new understanding of the value of several important paperwork paradigms:

  • limiting documentation ‘requirements’ only to those that are actually valuable to safety;
  • making acceptable safety information more readily available through available (and trusted) industry channels; and
  • permitting greater reliance on electronic information where availability of such data supports safety.

This is likely to be related to the greater reliance of the rest of the world on electronic data (a reliance that was facilitated by ESIGN), but it is also related to the fact that senior decision-makers in the FAA and EASA are more comfortable with electronic records than were their predecessors (again, a comfort that was facilitated by the impact of ESIGN on other parts of the world of data).  And they are also thinking more critically about what information supports safety (and should be encouraged) and what information does not support safety (and therefore becomes unnecessary to the FAA’s mission).


Some FAA DARs Told to Require Back-to-Birth as an 8130-3 Tag Prerequisite?

Several ASA members have contacted us to say that some of the FAA DARs in their area have been told that they cannot issue 8130-3 tags for aircraft parts without full back-to-birth traceability.

One member asked whether this policy is in the Federal Aviation Regulations and also whether the FAA can enforce such a policy. The short answers to those questions are (1) No, this policy is not embodied in the regulations and it contradicts existing FAA policy, and (2) Yes, the local office has the ability (but not the legal right), to nonetheless enforce such a policy.

In 1992, the FAA Chief Counsel’s Office issued a FAA Chief Counsel’s Letter addressing this subject. See FAA Chief Counsel’s Interpretation 1992-36. It explained that the FAA has not imposed any traceability obligation on aircraft parts. It also clarified that this is true for life-limited parts – the only direct regulatory documentation obligation imposed on installers of life-limited parts is a record of current life status, which comes from the operator’s part 91 obligations (the requirement for back-to-birth traceability is a commercial requirement imposed by the industry). See 14 C.F.R. 91.4127(a)(2)(ii).

DARs are currently required to follow FAA Order 8130.21G when they issue 8130-3 tags. This guidance limits 8130-3 tags only to those parts produced under FAA production approval. Thus, DARs should verify that that part was produced under FAA production approval. But it is usually possible to do this without a complete audit trail back to the original manufacturer.  Other FAA guidance makes it clear that you can use markings, or commercial documents like air carrier verifications of source as a means of ascertaining that the part is what it purports to be.

Several of the persons complaining about the new policy have stated that this policy is only enforced in South Florida. 8130-3 guidance is issued by FAA Headquarters in Washington, DC. A local FAA office does not have the legal authority to issue alternative guidance that contradicts national policy and that applies only in that locale and in no other locale.  If a local office does issue such alternative guidance, then this raises a difficult situation for DARs. While we might like to think that DARs can ignore an “illegal order,” the reality is that DARs would do so at their own peril. A local office has the discretion to terminate a DAR’s privileges at will, and if they use a pretext to justify that termination, the Federal Courts have said that the validity of that pretext is not subject to legal review because of the discretion given to the FAA by Congress. See Steenholdt v. FAA, 314 F.3d 633 (D.C. Cir. 2003).  Thus, as a practical matter, if a local office issues alternative policies that contradict national policy, DARs must follow the alternative policy or risk losing their privileges and their livelihood. So even though the local office may not legally change the policy for issuing, an illegal change in policy can be readily implemented through the DAR cadre.

This is a bad time for unusual limits on 8130-3 tags. The President has announced a plan to double US exports over the next five years and ASA has been working with the International Trade Administration to try to help make this a reality through education and opportunity.

The FAA has also signed BASAs that make 8130-3 tags a prerequisite for export.  The BASAs take 8130-3 tags that once were optional and make them requirements in order to engage in export transactions.  Local limits on the issuance of 8130-3 tags that go beyond national policy threaten our trade balance, and also threaten American jobs at a time of already high unemployment.

Because of the FAA’s discretion to terminate a DAR for any reason, DARs are practically unable to fight against bad or illegal policies, even when they are being used as pawns to implement those policies. Therefore, it often falls on trade associations like ASA to address these concerns.

If the rumors are true, then this situation is a very serious one. ASA has asked its affected members to further investigate and find out if the limits on 8130-3 tags have been merely misinterpreted.  Anything that anyone in the industry could provide us, such as FAA training materials, FAA memos, or even FAA emails explaining this new policy, would be very useful in permitting ASA to address this concern with the FAA.

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