ASA Petitions FAA for Extension of DAR-56 Program

Last week ASA submitted a petition to the FAA formally requesting the indefinite extension of the Limited DAR-F Program for Accredited Distributors–commonly known as the DAR-56 program–that is scheduled to expire September 30, 2017.  ASA further requested an expansion of the program to better reflect the needs of the distribution community.  You may also recall that ASA recently led an industry effort that secured the reissuance of FAA Notice 8900.380 for another year. Both of these efforts are in response to the 8130-3 tag requirements arising out of MAG 6, which put billions of dollars of distributor inventory at risk.

ASA explained in its petition to extend DAR-56 indefinitely that the facts that gave rise to the need for the DAR-56 program have not changed and that the need for the program to continue was therefore very important to distributors.  The DAR-56 program permits Limited DAR-F’s to issue 8130-3 tags for parts on the basis of specific indicia of sourcing from the PAH.

As attendees of the ASA conference heard from members, distributors have so much inventory that needs to be tagged under the DAR-56 program that it could literally take years to tag every part.  This includes vast numbers of small, low-dollar-value parts for which hiring an independent designee would be economically infeasible.  ASA therefore proposed an indefinite extension of the program with semi-annual meetings between the FAA, ASA, and interested parties to discuss the ongoing need for the program so that it can be discontinued after a permanent solution is developed.

In addition to proposing an indefinite extension of the DAR-56 program (rather than annual extensions requiring yearly petitions and discussions), ASA also recommended changes that would improve the effectiveness of the program and help distributors.

At present, the DAR-56 program permits Limited DAR-F’s to issue 8130-3 tags under the following criteria:

  1. The aircraft part was received by the distributor prior to November 1, 2016 and
  2. The aircraft part must bear specific indicia of production under 14 C.F.R. Part 21:
    1. A certificate or statement of conformity that was issued by the production approval holder (any documentation part numbers and serial numbers, if applicable, must match any part markings); or,
    2. A certificate or statement of conformity that was issued by the production approval holder’s supplier, and a verification of direct shipment authorization; or,
    3. Markings regulated under 14 C.F.R. 45.15 and describing the PAH’s name or other identification (for parts, this would typically be limited to PMA, TSOA or critical parts).

ASA recommended that the program be extended as follows:

  1. The program be expanded to include any aircraft part that was received by the distributor at any time when the distributor was accredited under the AC 00-56 program.
  2. Expand the acceptable indicia of production under an FAA production approval to include other documentation the FAA has previously recognized:
    1. For an aircraft part that was accepted into an air carrier’s inventory system as new article, and then subsequently released from that air carrier’s inventory system, a document from the air carrier identifying the part by part number, and by serial number where appropriate, and identifying the part as new (including new surplus); or
    2. A maintenance release document showing (i) that the part was inspected under 14 C.F.R. Part 43 by a person authorized to approve such work for return to service, (ii) that the part was found to be in new condition, and (iii) a part number that matches a number known to be a PAH part number, and that matches the part number on the part, where applicable.

These proposed expansions reflect the fact that the November 1, 2016 receipt date appeared wholly arbitrary and neither supported nor required by any regulatory basis, and that the two additional forms of documentation are commonly accepted in the industry under Part 21 of the regulations.  This would solve the problem of those parts that are currently still being received without tags (as they continue to be released from PAH’s who do not issue tags, or as new surplus from air carriers without tags) and those parts that currently have PAH documentation but are nonetheless excluded under the terms of the current program.

ASA appreciates the FAA’s collaborative efforts to work with us to extend the DAR-56 program as we work toward a permanent solution to the MAG 6 8130-3 tag issue.  We will keep our members updated as we hear more from the FAA.

 

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FAA Extends Policy Patching MAG Tag Challenges

Today the FAA notified ASA that it will extend for another year the MAG policy patch, Notice 8900.380, which allows repair stations to inspect and approve parts for return to service that are not accompanied by the MAG-mandated documentation. The extension technically cancels notice 8900.380 and reissues the policy as Notice 8900.429 (as opposed to literally extending 8900.380).

Although this doesn’t solve all of the problems wrought by MAG 6, it gives distributors and repair stations another year while the FAA works with EASA on a permanent solution to the documentation problems created by MAG 6.

On August 2, ASA spearheaded a petition joined by 12 other industry groups to seek an extension of the policy, which was scheduled to expire on August 26, 2017.  ASA is thankful to have the support of industry in seeking to solve the challenges of MAG 6’s 8130-3 tag requirements, and is appreciative of the FAA’s efforts to work with us.

We previously wrote on the blog about the ways in which notice 8900.380 (now notice 8900.429) helps distributors with un-tagged inventory sell to repair stations by explicitly recognizing repair stations’ right to receive, inspect, and approve for return to service any article for which they are rated.

The inspection authority in the notice still recognizes the original October 1, 2016 date distinguishing between parts already in inventory, and parts received on or after that date, but as we are well beyond 2016, that should not change any procedures or outcomes:

b. Inspections. For the purposes of this notice, inspections may be performed on:
(1) New parts received before October 1, 2016, that are not accompanied by FAA Form 8130-3, a dated certificate of conformance, or similar documentation issued by a U.S. PAH or supplier with direct ship authority in accordance with the notes in the MAG CHG 6, Section B, Appendix 1, subparagraph 10k)(1)(a) and Section C, Appendix 1, subparagraph 7c)(1)(a); and
(2) New parts received on and after October 1, 2016, that are not accompanied by FAA Form 8130-3.

We encourage you to review Notice 8900.429 to re-familiarize yourself with the policy, its requirements, and its limitations.  The notice has a duration of one year and is set to expire August 9, 2018.  It is the expectation of the FAA that this policy will ultimately be incorporated into MAG 7 when that document is ultimately issued.  ASA will continue to work with industry, the FAA, and EASA to craft a permanent and workable solution to this issue.

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!

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.

Opportunities in Iran Extended Indefinitely

One of the biggest news stories this week was the announcement of the agreement between the P5+1 countries and Iran intended to prevent Iran from developing a nuclear weapon.  Naturally there has been vocal discussion from both sides of the aisle about the pros and cons of the deal; but one of the more immediate issues relevant to the distribution community is what the agreement means for distributors’ ability to continue selling civil aircraft parts to Iran.

As readers of this blog know, since November 24, 2013, the United States operated under a Joint Plan of Action (JPOA) with Iran that has permitted the export of commercial aircraft parts to Iran (when licensed by the US Treasury Department’s Office of Foreign Asset Control). Over the past two weeks that permission has been incrementally extended to allow sales to continue during the ongoing negotiations.

On July 14 the parties to the Iran talks announced that a Joint Comprehensive Plan of Action (JCPOA) had been reached. Included among the provisions is a provision that will permit the sale of commercial aircraft, parts, and services to Iran.  Annex II Section 5.1.1 states that the United States shall:

Allow for the sale of commercial passenger aircraft and related parts and services to Iran by licensing the (i) export, re-export, sale, lease or transfer to Iran of commercial passenger aircraft for exclusively civil aviation end-use, (ii) export, re-export, sale, lease or transfer to Iran of spare parts and components for commercial passenger aircraft, and (iii) provision of associated serviced, including warranty, maintenance, and repair services and safety-related inspections, for all the foregoing, provided that licensed items and services are used exclusively for commercial passenger aviation.

This provision, however, does not take effect until what is termed “Implementation Day” by the agreement.  Implementation Day occurs when the IAEA reports that Iran has implemented the nuclear-related measures required of it under the agreement, and the US and EU simultaneously take certain actions prescribed by the agreement. Based on the language of the JCPOA Implementation Day is not a hard and fast date, therefore it cannot be stated with specificity when the provision allowing the sale of commercial aircraft, parts, and services, official takes effect.

In order to bridge the gap between this week’s announcement of the JCPOA and the effectiveness of the provisions on Implementation Day, the Treasury Department has once again extended the JPOA, this time indefinitely.  The Treasury Department also again extended previously issued licenses.  The most recent Announcement from the Treasury Department states that:

Effective July 14, 2015, all specific licenses that:

(1) were issued pursuant to OFAC’s Second Amended Statement of Licensing Policy on Activities Related to the Safety of Iran’s Civil Aviation Industry, and

(2) have an expiration date on or before July 14, 2015, are hereby authorized to remain in effect according to their terms until Implementation Day.

This is further good news for those have licenses issued under the Second Amended Statement of Licensing Policy. As we have previously stated, please look carefully at your license language to ascertain whether it is extended with the JPOA extension.

This is generally good news for aircraft parts distributors.  Between the Treasury Department Announcement extending the JPOA under which companies have been permitted to sell to Iran (with the appropriate license) for the last year and a half, and the trade provision of Annex II Section 5 specifically providing for the sale of commercial aircraft, parts, and services, the Iran commercial aircraft market continues to be open for business.

As always, be sure before engaging in any export that the parties are allowed and that you have satisfied all the necessary license requirements mandated by the Treasury Department and other regulators.  When in doubt, consult an export compliance professional.

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.

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