An 8130-3 With a Distributor’s Address in Block 4

Recently, a non-US buyer asked whether a distributor can release an article as “New” even though the distributor is not the PAH of the article.  The non-US buyer explained that the distributor’s address was found in block 4, where the production approval holder’s address is often found.  The non-US buyer explained that the 8130-3 tag accompanying the article was issued by an FAA DAR.

The FAA has the ability to delegate certain powers to designees.1 FAA DARs are persons who are delegated the FAA power to review evidence, come to a conclusion that an article is manufactured under FAA part 21, meets FAA-approved design requirements, and is currently airworthy.2  The DAR documents the finding by issuing an 8130-3 tag.  This procedure is usually limited to new parts, except where an importing nation has agreed to accept used parts under an FAA 8130-3.

When the FAA DAR performs this task, the FAA DAR is acting on behalf of the FAA (the distributor is merely the applicant) and is subject to FAA reporting obligations and FAA oversight.  The FAA DAR must follow the FAA’s rules for issuing 8130-3 tags (this can impose additional limits; for example many DARs are only allowed to issue 8130-3 tags at the locations of accredited distributors).  It is important to recognize that the distributor is not issuing the tag – the FAA is issuing it through the FAA DAR.

FAA Order 8130.21H directs the FAA DAR to list the “full name and physical address (no post office box numbers) of the organization or facility for which the form is being issued.”3  This is the applicant.  The FAA DAR is typically required to list the distributor’s location in block 4.4

In recent years, the FAA has increased pressure on the industry to voluntarily use 8130-3 tags to identify their articles as airworthy.  This has caused more distributors to rely on FAA DARs as a source of 8130-3 tags.  8130-3 tags issued at a distributor’s facility have been around for decades, but the focus in recent years on 8130-3 tags has made it increasingly common to see 8130-3 tags with a distributor’s address in block 4.

 

ENDNOTES

(1) 49 U.S.C. § 44702(d); 14 C.F.R. § 183.1 et seq.
(2) E.g. 14 C.F.R. § 21.331 (explaining the standards for obtaining export 8130-3 tags).
(3) Procedures for Completion and Use of the Authorized Release Certificate, FAA Form 8130-3, Airworthiness Approval Tag, FAA Order 8130.21H change 1 paras. 2-8(d), 3-6(d), 4-5(d) (Jan. 11, 2016).
(4) See Id.at Appendix A, Figure A-5 (showing a sample 8130-3 tag issued at a distributor’s facility).

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!

Expediting Export: MT Controlled License Exceptions

We often write in this space about various export license exceptions that can help distributors better service their customers–particularly customers in AOG situations when waiting for an export license approval simply isn’t an option.

In just the past couple weeks, we have had several members ask questions related to the export of avionics controlled for Missile Technology reasons (MT).  Generally, articles controlled for reason MT are not eligible for export license exceptions.  Part 740 (License Exceptions) of the Export Administration Regulations explains that “[y]ou may not use any License Exception if any one or more of the following apply: . . . The item is controlled for missile technology (MT) reasons . . . .” (15 C.F.R. § 740.2(a)(5)(i)).  Generally, then, it is not possible to use export license exceptions to export articles controlled for MT reasons; many businesses simply have a blanket prohibition against using license exceptions for MT articles to avoid running afoul of this restriction.  Obviously this is not compatible with AOG service.

However, the restriction on use of license exceptions for MT-controlled articles then goes on to carve out several specific ECCNs; exceptions to the restriction on exceptions, if you will.  It is this carve-out that can serve to benefit distributors dealing in navigation and avionics equipment.

After stating that items controlled for MT reasons are not eligible for any license exception, 15 C.F.R. § 740.2(a)(5)(i) goes on to offer the following allowances:

“the items described in ECCNs 6A008, 7A001, 7A002, 7A004, 7A101, 7A102, 7A103, 7A104, 7A105, 7B001, 7D001, 7D002, 7D003, 7D101, 7D102, 7E003, 7E101 or 9A515, may be exported as part of a spacecraft, manned aircraft, land vehicle or marine vehicle or in quantities appropriate for replacement parts for such applications under §740.9(a)(4) (License Exception TMP for kits consisting of replacement parts), §740.10 (License Exception RPL), §740.13 (License Exception TSU), or §740.15(b) (License Exception AVS for equipment and spare parts for permanent use on a vessel, aircraft or spacecraft).”

Obviously this is very useful for navigation equipment and avionics exporters.

A quick perusal of the ECCNs listed reveals that many of them control articles such as accelerometers, angular rate sensors, gyros, and nav instruments.

Note, however, that ECCN 7A003, dealing with certain inertial measurement units and systems, is NOT included in the carve out, and therefore not eligible for any export license exception.

License exceptions RPL and AVS are particularly valuable exceptions for the aviation industry, and we spend time discussing them in depth during ASA workshops. If you have determined your MT-controlled article fits one of the above-mentioned ECCNs, you should be sure you understand the requirements of each of those exceptions before you use them.  When you are sure of your ECCN and your use of the appropriate license exception, your company will be able to rapidly service your AOG customers’ needs.

Finally, always remember to consult an export compliance attorney if you have questions.

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.

SUP Program Guidance Revision Comment Window Closing Soon

Earlier this year the FAA released Draft FAA Order  8120.16A – Suspected Unapproved Parts Program intended to replace the previous SUP program guidance, Order 8120.16 – Processing Reports of Suspected Unapproved Parts.  ASA is reviewing the draft to determine if the revised guidance may have an affect on ASA members.

The primary changes made by the draft Order include transferring policy responsibility for the SUP program from AFS-300 to AIR-100, and clarifying the responsibility for initiating, investigating, and closing a SUP case.  Other minor changes include changing the title of the Order, moving definitions to an appendix, removing definitions that are already defined by the FAA regulations, and moving the “Objectives and Responsibilities” section to its own chapter.

ASA members are encouraged to review the draft Order to make sure there are no surprises or inadvertent changes that might adversely affect member companies or the SUP program.  Comments are due August 17, 2015, so we encourage anyone who identifies noteworthy issues to contact us quickly so we can file comments and work with the FAA to address your concerns.

Email your comments to Ryan Aggergaard at ryan@washingtonaviation.com.

Accreditation Alert! DRAFT AC 00-56B is out for comment!

The FAA has released for public comment AC 00-56B, which is the draft revision to the Voluntary Industry Distributor Accreditation Program (current version is AC 00-56A).

This draft FAA advisory circular (AC) describes a system for accrediting aircraft parts distributors based on compliance to a standard and certification of that compliance by FAA-acceptable accreditation organizations.  ASA has been part of this program since the beginning, and is an important FAA partner in the mission to improve aviation safety through effective management systems.

The FAA has strongly endorsed participation in the AC 00-56 program.  FAA is revising this AC to reflect the changes in regulatory requirements and industry practices since the last revision.

ASA met with its Quality Assurance Committee (QAC) on December 5 to review and examine this proposed change.  The QAC was generally supportive of the draft AC, and spent its time examining ways to further improve the document.  ASA is in the process of developing comments based on that QAC meeting.  Those comments will address subjects like these:

  • A transition mechanism for ensuring that industry has time to come into compliance with the new standards
  • Firming up an accurate description of the the relationship between the accreditation organization and the quality system standard holder
  • Firming up an accurate description of the the relationship between the accreditation organization and the FAA
  • Clarifying the definition of distributor
  • Clarifying the definition of Distributor Accreditation
  • Clarifying the definition of Quality System
  • Clarifying the definition of Traceability so it is consistent with current industry connotations
  • Using terminology that is consistent with other FAA guidance
  • Ensuring that FAA audit expectations are adequately described
  • Ensuring that FAA requirements for auditors adequately reflect current industry best practices
  • Clarifying the FAA’s changes in the quality system elements
  • Ensuring that citations to statutes and standards are correct
  • Updating the documentation matrix to reflect current standards and also to reflect the current global nature of the AC 00-56 program

The documentation matrix was subject to significant discussion, and the QAC worked on a proposal to further strengthen the matrix in order to support both current and future industry ‘best practices.’

The draft is open for public comment through January 4, 2015.  Comments should be delivered to

Robert McDonald
1625 K Street NW
Suite 300
Washington, DC 20006

Comments can also be emailed to Robert.CTR.McDonald@faa.gov or faxed to (202) 223-4615, Attn: Robert McDonald.

Please also send a copy of your comments to ASA, so that we can be sure that your views are reflected in the Association’s comments.

Changes to Export License Exceptions Demand Caution by Industry

Subtle changes to the export license exceptions that are frequently used by the aviation industry could harm your business if you do not ensure continued compliance with the standards as they are evolving.

Many parties in the aviation industry have noticed and used the license exception for servicing and replacement of parts and equipment.  This exception is known as the “RPL” exception, because that is the code used in the electronic export information filing to indicate use of the exception.  This exception generally applies to articles that would require an export license, and it permits those articles to be exported without a license when they have been brought into the US for servicing and are then exported to their original owners (the transaction must also meet certain other criteria).  It is therefore highly useful to U.S. repair stations that are servicing parts for non-U.S. customers, and also to U.S. distributors that manage repairs for non-US customers.

The old scope clause read like this:

(1) Scope. The provisions of this paragraph (b) authorize the export and reexport of items that were returned to the United States for servicing and the replacement of defective or unacceptable U.S.-origin commodities and software.  15 CFR 740.10(b)(1) (2013).

The new scope clause reads like this:

(1) The provisions of this paragraph (b) authorize the export and reexport to any destination, except for 9×515 or “600 series” items to destinations identified in Country Group D:5 (see Supplement No. 1 to this part) or otherwise prohibited under the EAR, of commodities and software that were sent to the United States or to a foreign party for servicing and replacement of commodities and software “subject to the EAR” (see Sec.  734.2(a) of the EAR) that are defective or that an end user or ultimate consignee has found unacceptable.  Corrections and Clarifications to the Export Administration  Regulations; Correction, 79 Fed. Reg. 48660-48661 (August 18, 2014); 15 CFR 740.10(b)(1) (effective August 18, 2014).

This new text confirms certain limitations on the use of the RPL exception.  It may not be used for article bearing ECCN 9×515 or any “600 series” ECCN if the article is destined for Group D:5 country.

The new text also adds the detail that if the article is not defective, then the end-user or ultimate consignee must have found the article to be unacceptable.  Articles that are not defective may be overhauled or tested to confirm their airworthiness – this may be accomplished by a non-U.S. distributor.  The term “ultimate consignee” is defined in 15 C.F.R. 748.5(e):

(e) Ultimate consignee. The principal party in interest located abroad who receives the exported or reexported items. The ultimate consignee is not a forwarding agent or other intermediary, but may be the end-user.

When the non-U.S. distributor is the party that determined the need for servicing of a non-defective article, the non-US distributor must remain the ultimate consignee in the transaction.  When might the non-U.S. distributor become something other than the ultimate consignee?  When the unit is sold to a third party and the US person holding the serviced unit is directed to drop ship it to the third party buyer.   In any other unlicensed transaction, this should be fine (assuming no other laws are implicated by the transaction), but in an RPL transaction, this can cause a problem if the conditions of RPL are no longer met by the transaction model.  To clarify, if a non-defective unit is sent to the US for servicing (like calibration, or confirmation of airworthiness), then the person who found it unacceptable (the one who found it in need of servicing) must remain either the end user or the ultimate consignee.  If that person was a non-U.S. distributor, then the non-U.S. distributor must remain as the ultimate consignee to continue to meet the requirements of RPL.

Remember, RPL is an exception – you always have the option of obtaining a license for the export.  And luckily, most civil aviation articles exported from the U.S. do not require export licenses from BIS.

Are Freight Costs for Rotor Blades About to Change?

In mid-December the Commodity Classification Standards Board (CCSB) issued a Notice of Proposed Amendment to the National Motor Freight Classification.  Specifically, the proposed amendment seeks to reclassify helicopter rotor blades and leading edge coverings, and make clarifications regarding aircraft propeller blades.  Those distributors that sell and ship rotorcraft blades and leading edge coverings may wish to review the proposed amendment to determine the potential cost effects of the proposed reclassifications.

The National Motor Freight Classification is a voluntary standard that assigns classes based on a product’s transportation characteristics, and provides a comparison of those products when they are shipped via motor carrier.  The transportation characteristics of a product are determined based on its dimensions, density, ease of handling, and potential liability due to damage or other factors.  Products once classified are assigned a class name (e.g., Class 50; Class 100; Class 300) with higher class names generally having a greater cost to ship.

The provisions pertaining to leading edge coverings and rotor blades were initially developed in the 1950s.  Leading edges were assigned item number 12110 and rotor blades 12130, and freight classes 70 and 100, respectively.  In the intervening years, technological advances in manufacturing and materials have resulted in leading edges and blades becoming longer and less dense.  The effect of these advances is that the original freight classes assigned to the item numbers no longer accurately reflect the shipping characteristics of leading edges and blades of increasing length.

The proposed amendment suggests that as edges and blades grow longer and less dense, the costs of handling, practicalities of stowing, and potential liability due to damage increases, and therefore items of increasing length should be assigned differing freight classes to reflect the varying transportation characteristics.  The amendment therefore makes two proposals:  First, it would cancel item number 12110 pertaining to leading edges and redefine item 12130 to include both rotor blades and leading edges.  This is due to the understanding that leading edges and rotor blades have similar transport characteristics.

Second, the amendment would assign different freight classes to blades of increased lengths as follows:

Greatest Dimension Proposed Class
Exceeding 288 inches 300
Exceeding 192 inches but not exceeding 288 inches 175
Exceeding 96 inches but not exceeding 192 inches 100
Not exceeding 96 inches 92.5

These proposed classes greatly exceed the current freight classes assigned to leading edges and blades, and as such have the potential to substantially increase transportation costs.  It should also be noted that the proposed classes exceed the class suggested by CCSB’s own density guidelines.

A final element of the proposal would also specifically exclude rotor blades and edges from category 12280 pertaining to aircraft propeller blades to avoid confusion or ambiguity.

Persons with information regarding the transportation characteristics of rotor blades and leading edge coverings are invited to submit a written statement to CCSB prior to their meeting on Tuesday, January 28, 2014.  Information regarding this proposal may be found at CCSB Docket 2014-1.  Distributors should take the opportunity to review the docket and data therein to determine what potential effects such reclassifications would have on their shipping and transportation costs, as well as to determine if the proposed classes are reasonable based on the transport characteristics of the articles.

EASA Takes Another Step Toward Formal Recognition of Accreditation

Europe has taken the next step towards formal recognition of the distributor accreditation program.

On December 10th, the European Aviation Safety Agency (EASA) issued its Comment Response Document (CRD) for “Control of suppliers of components and materials used in maintenance.”  This CRD contains the comments received on the Notice of Proposed Amendment (NPA) for the Supplier Control rule.

This changes would require EASA 145 organizations to have a method for assuring the satisfactory condition of the aircraft parts that they receive, and would recommend receiving inspection and supplier control as methods to achieve that end.  Related guidance explains that reliance on accredited distributors (explicitly including ASA-100 accredited distributors) would be a satisfactory way to meet the supplier control element.  A complete discussion of the proposal can be found in an earlier blog post on the NPA.

This is not yet law in Europe.  The next step will be for the European Commission to issue an amendment that features the regulatory changes, and then EASA would issue a Decision that adopts the changes to the advisory/guidance materials.

Do You Have to Issue a New 8130-3 When You Split a Bulk Shipment?

When you split a bulk shipment, do you need a new 8130-3 or can you simply rely on a copy of the 8130-3 tag associated with the bulk shipment?

WHAT IS SPLITTING A BULK SHIPMENT ALL ABOUT?

It frequently happens in the industry that a shipment of multiple units is shipped against a single 8130-3 tag.  For example, a lot of 1000 fasteners might have a single 8130-3 tag.  It would not make commercial sense for each fastener in the lot to have its own 8130-3 tag.

When a lot of parts is received by a distributor, though, distributors frequently sell the parts from such a lot in much smaller quantities.

For example, the manufacturer might sell the fasteners in lots of 1000 (and in fact might generally refuse to sell them in smaller lots).  An air carrier may only wish to purchase 10 units.  The air carrier cannot purchase them from the manufacturer (because the manufacturer sells the fasteners in lots of 1000, and expects distributors to sell the parts in smaller lots).  But a distributor might buy 1000 of the units and then sell them to air carriers in the lot size desired by the air carrier.

SO WHAT IS THE PROBLEM?

FAA Order 8130.21H suggests in paragraph 2-7(a)(1) that a “new 8130-3” is issued during lot splitting, when in fact typical lot splitting performed by post-production distribution would use a copy of the original form (rather than a newly issued form).

WHERE DID THIS COME FROM?

This is a carry-over issue from the fact that earlier revision levels had taken two different concepts related to lot splitting:

  • lot splitting by using a designee to issue a new 8130-3, which was re-characterized as a supplemental 8130-3 in the 2004 “D” revision; and,
  • lot splitting by providing a quality-assurance-controlled duplicate of the original 8130-3 tag according to FAA instructions (which replaced the designee-issuance in 2004);

Recent revision levels had merged these two into a single set of instructions.  As a consequence, section 2-7 did not read correctly, because it merged instructions for both forms of “lot-splitting” activities.

DISCUSSION OF THE ISSUE

Section 2-7 described a mechanism for splitting such bulk (or lot) shipments.  It required the party to follow procedures designed to protect the integrity of the lot and to permit auditors to be able to verify that the integrity of the lot remains intact (e.g., only the parts from the original lot are associated with the 8130-3 tag, and no other parts are sold in association with that 8130-3 tag).  It is based upon a protocol in which a distributor would make a true copy of the original 8130-3 tag, and issue a written certifying statement concerning the copy and the number of parts associated with the copy (retaining file copies for auditor review).

This mechanism represents a norm within the industry (and the FAA has successfully increased the industry’s standards by promoting certifying statements and lot-traceability paperwork).

This mechanism for splitting bulk shipments is distinguished from the situation where a FAA designee splits a lot by issuing one or more new 8130-3 tags.  This sort of procedure was described under section 10 of the “C” revision of 8130.21.  Part of the confusion might be caused by the fact that this process (issuing new 8130-3 tags) was described as “splitting bulk shipments” in that revision level.

Beginning with the “D” revision, Order 8130.21 used the term “splitting of bulk shipments” to mean the splitting by a non-designee, and used the term “supplemental Form 8130-3” to describe new 8130-3 tags issued for any purpose (including designee-splitting of bulk shipments, replacement of lost forms, etc.).

The root problem is that starting in the “G” revision level, subparagraph 2-7(a)(1) suggests that splitting of bulk shipments happens when a new FAA Form 8130-3 is issued to split the shipment.  The new tag would be a supplemental tag.  This is one way to split bulk shipments, but it is not the way that distributors split bulk shipments (due to the fact that they are unable to issue supplemental 8130-3 tags).  Instead, they follow the protocol found in 2-7(c), which was originally written for distributors.

CONCLUSION

The current language of subparagraph 2-7(a)(1) suggests that a new 8130-3 tag is issued when a distributor splits a lot.  This is not the case.  Instead, the distributor makes a copy of the original under controlled circumstances and affixes a statement about the limits of the copy.  The process is clearly described in subparagraph 2-7(c).

In order to continue to provide good guidance, we have requested that the FAA correct the language to remove any implication that a distributor must issue a new 8130-3 tag when splitting a bulk shipment.  The easiest way to do this may be to simply change 2-7(a)(1) to read as follows:

After an FAA Form 8130-3 is issued for a bulk shipment, a new FAA Form 8130-3 may be used to split bulk shipments of previously shipped new products or articles under the same procedures as found in 1-11 or a the shipment may be split under the provisions of this paragraph without issuing a new FAA Form 8130-3.

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