ASA Argues 8130-3 Tags Before the DC Circuit

ASA appeared in court this morning to argue that the FAA’s new MAG-based documentation requirements violate US law and should be enjoined.  This is an important case for distributors whose parts sales have been impacted by the MAG.

The three judge panel consisted of Judge Tatel, Judge Millet and Judge Williams. Most judges are pretty smart, but these are three of the top jurists in the country.

We tried to focus the written briefs on the simple legal issues, but the underlying issues – those that involve questions like “just what is an 8130-3 tag, anyway,” and “why is the government doing this”? – are very complicated. Copies of our written briefs are available here:

As you might expect from three very smart judges, they wanted to know what the case was really all about.  This was difficult because the case is limited to the record on appeal and the FAA’s official ‘record’ was very sparse.  Last summer, ASA had tried to supplement the record with additional facts (affidavits from our members), but the FAA opposed our efforts (they standard approach is to limit the appeal to the record, so the court denied our efforts to supplement the record, but did take the member affidavits into account in analyzing our motion for a stay).  So we found ourselves having to describe a set of facts that were not well-documented in the record (and a lawyer is not supposed to testify as to new facts).

We did our best to try to explain how documentation works in the industry and when parts might enter a system without an 8130-3 tag, but with other indicia of airworthiness.

Questioning ran long this morning, as the judges tried to understand how 8130-3 tags work, and when (if ever) a part is allowed to enter a repair station without an 8130-3 tag.  The FAA’s attorney did not help matters by suggesting that parts without 8130-3 tags “lack provenance,” but we were able to explain that parts can be identified using other means and that the FAA has endorsed the use of other means of identification in AC 20-62E.

The Court was very much focused on FAA Notice 8900.380.  This is the Notice that reminds repair stations that they can inspect a part that doesn’t have an 8130-3 tag.  ARSA has put together an excellent checklist for that sort of inspection.  But even that FAA Notice 8900.380 appears to fall short, as some FAA inspectors have suggested that the Notice does not remedy the MAG requirement for a left-side signatures (“release must be documented on an FAA Form 8130-3 as a new part”).  So we have run into a problem with the Notice (which was supposed to at least provide a temporary solution) being ignored by the FAA’s own inspectors (who would not permit their repair station charges to adopt the terms of the Notice.

Judge Williams closed out the argument by suggesting the Europeans “snookered the US.”

The next step in the case is for ASA to wait for the opinion from the Court. There is no specific timetable for an opinion but often opinions are issued about 60-90 days after argument.  ASA remains engaged with the FAA in an effort to resolve some of the underlying issues in a way that allows airworthy parts to be accepted and used

An audio recording of the oral argument is available on line; you can hear the lawyers but unfortunately the Judges are difficult to hear on the recording (this is unfortunate indeed as their questioning demonstrated a keen thought process for each).

 

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Update on MAG issue and ASA Efforts

What is the Issue?

The latest revision of the Maintenance Annex Guidance [“MAG”] creates a new system in which existing industry documentation (which is acceptable under current EU and US regulations) becomes unacceptable within US repair stations. It is objectionable because it imposes new documentation standards that do not exist in either US or European regulations, and in doing so creates a documentation requirement for aircraft parts that will render worthless significant portions of existing aircraft parts inventories.

Under current US standards, no documentation is required in order to receive an aircraft part into a repair station’s inventory. See, e.g., FAA Chief Counsel’s Opinion Letter (August 6, 2009) (stating “there is no Federal Aviation regulation that requires traceability of an aircraft part to its origin” and explaining that parts may be found airworthy based on documentation, markings, or inspection and testing).  The repair station may install the part as long as it confirms that the article will return the product to a condition “at least equal to its original or properly altered condition.” 14 C.F.R. § 43.13.

The European system is a bit different. The European system distinguishes parts into six different categories, but for purposes of this analysis only two are relevant.

The first is serviceable parts – those in a satisfactory condition. Serviceable parts must be accompanied by the European manufacturer’s document known as the EASA Form One, or an equivalent document. EASA 145.A.42(a)(1).  EASA has recognized that the FAA 8130-3 tag is an equivalent document for receipt purposes (when signed on the left side).  EASA AMC M.A.501(a) ¶ (5)(a) (documents under the terms of a bilateral agreement); Technical Implementation Procedures for Airworthiness and Environmental Certification Between the FAA and EASA, ¶ 5.1.10 (Rev. 5 Sept. 15, 2015) (the bilateral agreement).

Because there are many articles produced by US manufacturers that do not bear 8130-3 tags, a ‘safety valve’ provision allows European repair stations to accept articles without such documentation.

There is a second provision in the EASA regulations that permits “unserviceable parts” to enter into a repair station without documentation when they are intended to be maintained. EASA 145.A.42(a)(2).  The European definition of “unserviceable” includes articles that are missing “necessary information to determine the airworthiness status or eligibility for installation.” EASA M.A.504(a)(3).  Thus, any new aircraft part that is missing an EASA Form One or 8130-3 (whichever is appropriate) is deemed unserviceable and can enter a repair station without documentation. Such an article may then be inspected to serviceable condition and installed if it passes inspection. See, e.g., EASA AMC M.A.501(a) (Installation); EASA AMC M.A.613(a) (Component certificate of release to service).  It cannot be treated as serviceable until it undergoes that inspection.

The problem with the MAG is that it closes the safety valve that allows acceptance of new parts without an 8130-3 or EASA Form One. It does this by establishing two different categories that are inconsistent with the “serviceable/ unserviceable” categories established under European law. The two categories are “new” and “used.” Under existing European law, a new part without the correct documentation can be received as unserviceable, and subsequently inspected to serviceable condition, but under the MAG, a new part is required to have an 8130-3 or EASA Form One. There is no exception under the MAG for new parts without the designated documentation – they are simply excluded.

So How Does this Affect Members?

Actual implementation has already shown that the language of the MAG is being enforced by FAA field inspectors as mandatory even though there is no regulatory basis under US or EU law for such enforcement. Thus, the real implementation has been that all US repair stations with EASA credentials are required to have a written manual (known as a Supplement) requiring them to exclude new parts without 8130-3 documents or EASA Form One documents – even though both US and EU regulations permit acceptance of these new parts.

This is starting to have a real world effect that will be expanded with the October 1, 2016 implementation.  Distributors are finding that parts that they could sell with manufacture’s trace (or other reasonable trace) are no longer “good enough.” Repair stations are starting to demand 8130-3 tags on everything (including parts that are not eligible for 8130-3 tags).

What is ASA Doing About It?

ASA continues to work with the FAA to achieve a solution.  FAA management recognizes that this is a potential problem, and they have been optimistic about finding a solution.

Our first efforts were to find a way to “grandfather” existing aircraft parts inventories.  FAA supported this solution, but EASA opposed it.

We have also asked for guidance explaining that repair stations can apply US standards to parts destined for US registered aircraft, but early implementers have shown that this idea is not consistent with what FAA inspectors are requesting so it is likely to be ineffective.  In addition, it creates a logistical problem for component repair stations who may not know the ultimate destination of the components on which they are working.

We are now looking at new ways to obtain 8130-3 tags for good inventory.  This will not be a 100% solution to the impediment created by the documentation requirements, but it should help preserve the value of some inventories.  We expect to continue discussions of this proposal with the FAA, next week.

On the legal front, we continue to pursue a halt to the MAG documentation requirements.  This would not affect the EASA regulations – they still apply where appropriate – but to the extent that the MAG imposes additional standards that would be enforced by the FAA, we have asked the DC Circuit Court to issue a “Stay” that would prevent the FAA-enforcement of these new documentation requirements.

Today, as part of this effort, we filed this Motion for a Stay.  We would like to thank the many ASA members who worked with us to develop  affidavits explaining the factual situation of 8130- 3tags and aircraft parts inventories.

MAG Threatens to Prevent Parts from Entering Repair Stations

FAA and the European Aviation Safety Agency (EASA) have been discussing new ways to document and transfer aircraft articles across international borders.  This ends up affecting the rest of the world, because it sets standards for how both of those authorities will operate that they then incorporate into their other international relationships.

Some issues have arisen in the industry that find their roots in the FAA-EASA Maintenance Annex Guidance (MAG).  This MAG document is meant to reflect the working procedures for shared maintenance oversight between FAA and EASA.  In theory, it should not add any new legal requirements – those are supposed to already exist in the regulations.  But in practice, the MAG has recently evolved into a document that is setting new legal standards that do not exist in the regulations of either FAA or EASA.  Because inspectors for the two authorities are requiring compliance to the MAG, it is important to review it and understand what new standards are included in that document.

The MAG changes are motivated in part by a recent change in US law that has permitted US production approval holders (PAHs) to issue their own 8130-3 tags for their articles.  This is found at 14 C.F.R. 21.137(o).  Those who take advantage of this option would no longer need to rely on the legal fiction of designees.  This was meant to ease the process of creating 8130-3 tags, which have recently been viewed by the FAA as an administrative matter that merely documents a finding of airworthiness that is made whether the tag is created or not.  This change also helps to harmonize with EASA, which has permitted European manufacturers to issue EASA Form One since EASA’s inception.

Although this new privilege should permit more manufacturers to issue 8130- 3 tags, thus creating a wider pool of articles documented with 8130-3 tags, the fact remains that many existing aircraft articles do not bear EASA Form One or 8130-3 tags.  Real-world implementation hurdles have mean that manufacturers needed some time before they could start issuing the tags.  In addition, there is a huge quantity of existing articles in distributors’, air carriers’, and repair stations’ inventories.  Many of those existing articles do not bear EASA Form One or 8130-3 tags.

The industry has struggled for the last twenty years to obtain these documents, or in the alternative to find ways to receive aircraft articles into inventory without these magic documents. In many cases, the easiest path has been to find a way to determine airworthiness without the Form One or 8130-3 documentation – this is a path that remains legal under United States law because we have no general documentation requirements for articles under the FAA regulations.

Historically, repair stations with EASA 145 credentials have taken advantage of the EASA regulatory clause that permits articles to enter the repair station’s systems when they are unserviceable (EASA 145.A.42(a)(2)).  The definition of unserviceable includes articles with inadequate documentation (M.A. 504(a)(3)):

M.A.504 Control of unserviceable components

(a) A component shall be considered unserviceable in any one of the following circumstances:

3. absence of the necessary information to determine the airworthiness status or eligibility for installation;

These articles are not required to have any specific documentation and could enter a repair station undocumented.  The repair station would then perform an analysis / inspection of the article to confirm its airworthiness (such as an inspection to a serviceable condition – an inspection is defined as a species of maintenance under both the EASA system and the FAA system).  Repair stations could therefore receive new articles without a Form One or an 8130-3, so long as the repair station independently evaluated airworthiness of the article.

The MAG appears to put an end to this practice by distinguishing new parts and specifically requiring them to have specific documentation even when received under EASA 145.A.42(a)(2) – thus closing the industry’s normal safety valve for receipt of articles that typically do not bear 8130-3 tags.

FAA Solution Rejected By EASA

The FAA was open to the idea of a grandfather clause for existing inventory.  Such a grandfather clause would have extended to all articles produced before October 1, 2016 (the date by which the FAA believes many US PAHs will issue their own 8130-3 tags).  They were also open to the idea that a distributor could certify that the article existed before October 1, 2016 on the grounds that it existed in the distributor’s inventory before October 1, 2016 (the installer would still need to make a determination of airworthiness prior to installation – the distributor’s certification would merely have indicated eligibility for treatment under the grandfather clause).

Remember that distributors typically pass along documents, packaging and markings that can help the installer make his or her own determination of airworthiness. So the sole purpose of the distributor’s certification would have been to show that the article existed  before October 1, 2016 and was thus eligible for treatment under the grandfather clause.  Nothing more.

This grandfather clause has been rejected by EASA.

Unfortunately, EASA did not agree with the FAA’s interpretation of a grandfather clause.  In the FAA-EASA-Industry meeting that took place on June 17, the EASA senior representative disagreed, and insisted that the grandfather clause could only extend to parts in a repair station’s inventory by October 1, 2016.  This made the grandfather clause meaningless, because articles already in inventory no longer need to be tested under the EASA 145.A.42 receiving standard.  More importantly, it meant that existing inventory in distributor’s warehouses – inventory that in some cases was produced before EASA existed – could be precluded from entering EASA 145 repair stations in the US and in Europe.  Over a thousand US repair stations bear EASA 145 credentials, and this includes nearly all of the major MROs handling commercial transport category aircraft, so this is a very serious issue.

Disappointingly, the EASA representative admitted that he knows that European repair stations accept undocumented parts, but expressed that he could not recognize those transactions because they did not fit within the EASA ideal.  He suggested that airlines and MROs could bypass distributors and buy direct from manufacturers.  This ignores a host of real-world issues, including the fact that many necessary articles are not in active production and cannot be obtained from anywhere unless they are purchased from existing distribution inventories.  Expecting manufacturers to instantly be able to produce each part that they have ever produced in the past ‘on -demand’ in simply unrealistic.

ASA and FAA Working Toward a Solution

If taken at its face value (including the EASA interpretation), the MAG could render a huge chunk of existing inventory valueless.

We have been working with the FAA to stave off this possibility.  The FAA is taking a realistic approach to this issue.  The FAA realizes that this has both financial implications (rendering existing inventory valueless) and safety implications (certain necessary parts would become unavailable, making aircraft maintenance impossible).  Because the FAA’s primary focus is on aviation safety, they are acting to ensure that demonstrably airworthy articles can be documented appropriately, so that paperwork does not get in the way of safety.

The solutions are still being discussed and developed, but industry should expect to see changes in the way that 8130-3 tags are issued for aircraft parts.  This change needs to happen very quickly in order to make sure that good inventory is not rejected because it has the wrong paperwork.

New FAA MAG Guidance Corrects Some Problems; But Documentation Challenges Remain

Revision Six of the Maintenance Annex Guidance (MAG)  has been released.  ASA has been working with both FAA and EASA contacts to make changes to the prior revision (rev. 5), because it included unnecessary restrictions that were not based on either US-FAA or EU-EASA regulations.

Many will remember that the MAG rev. 5 language included a number of unacceptable requirements.  Unacceptable provisions included a requirement that the part number be found in the TC holder’s parts catalogue (which would have excluded many PMA and TSOA parts, as well as OEM parts issued in advance of IPC changes) as well as a requirement limiting 8130-3 tags to those issued by PAHs (discounting 8130-3 tags issued by the FAA itself through its designees).  Most of the unacceptable language has been removed and/or remedied in revision 6.  The replacement language for new parts in MAG rev. 6 looks like this:

(a) New components must be traceable to the Production Approval Holder
(PAH) and be in a satisfactory condition for installation. An authorized
release document, as detailed below, must accompany the new
component.

This language is found in sections 10(k)(1)(a) (for US-based Repair Stations) and 7(c)(1)(a) (for EU-based Repair Stations) of the appropriate Sample Supplements in the MAG.  It explicitly requires traceability, without defining what sort of traceability is acceptable.   This is a potential problem: the FAA is taking an industry term for which there is no set meaning (and about which industry experts disagree) and is trying to use it as if it were an objective standard.  They have done this in other guidance, like FAA Order 8130.21H, and it has resulted in disagreements and confusion.  The traceability requirement also belies the various FAA Chief Counsel Opinion letters which have repeatedly asserted that there is no FAA regulation that requires traceability of an aircraft part to its origin.

Repair Station Experience

At the ASA Quality Committee meeting last Fall, members with repair stations expressed that their local FAA FSDO inspectors were requiring strict compliance with the exact language of the MAG Supplement (despite the fact that the language is explicitly labelled as a sample).  Repair station representatives also explained that they were being required by their FAA inspectors to have a single receiving inspection system.  This means that all of the parts that they receive would have to meet the EASA requirements and the MAG requirements (including parts ultimately destined for installation in FAA-registered aircraft).  They would NOT be permitted to receive parts that met FAA requirements (but not EASA requirements) for installation on FAA-registered aircraft (despite the fact that the regulations still permit this).

FAA headquarters has said that these are misinterpretations by the field offices and that they reflect unintended consequences; but when pressed about how they plan to remedy this, the FAA Headquarters representatives could only  suggest that we bring these situations to their attention on a case-by-case basis.  They had no plans to remedy these “unintended consequences.”

In light of this experience, ASA members should expect that most repair stations will be pressured by the FAA to strictly comply with the MAG language as if it were a regulation.  This means that the normal protections of the law may not apply to your transactions, and an appeal to the regulations may fall upon deaf ears!  If you encounter a repair station customer that has been pressured to limit their receiving inspection system in a manner that is more narrow than required by the regulations, then please talk to ASA and we will put you in touch with the right people at the FAA.

A New Source of 8130-3 tags

Last Fall, the FAA promulgated a new rule that permits production approval holders to issue their own 8130-3 tags. The MAG changes are meant to reflect this new privilege.  There are a lot of problems with this:

  1. The 8130-3 privilege was an option – not a requirement – so many manufacturers might choose not to issue 8130-3 tags (and this makes it difficult for distributors to economically and conveniently obtain those forms).
  2. While the EU has agreed to accept manufacturer’s 8130-3 tags, all of the other the US bilateral agreements require FAA 8130-3 tags.  This means that other trading partners might reject manufacturer 8130-3 tags as unacceptable.  When ASA met with the Civil Aviation Administration of China (CAAC) in March, CAAC expressed reservations about manufacturer 8130-3 tags and reminded us that the China-US bilateral agreement did not authorize acceptance based on manufacturer 8130-3 tags.
  3. The MAG rev. 5 language failed to adequately address the significant existing inventory that was not documented according to the new standards.
  4. Even if the other hurdles had not existed, the governments did not permit enough time to ramp-up 8130-3 tag issuance in order to meet the new demand imposed by the MAG revision.

The limits and burdens associated with this privilege have cause some manufacturers to decide that they are not going to issue these tags.  Large manufacturers like Boeing have said that they feel more comfortable sticking with their ODA program as a source of 8130-3 tags.  Smaller manufacturers fear that their local MIDO inspectors may impede them from issuing 8130-3 tags, and plan to stick with issuing their traditional commercial certificates of conformity.

The reason this new source of 8130-3 tags is important is because it was supposed to be a driving force behind the MAG rev. 5 changes.  And the fact that some manufacturers will not issue manufacturer-8130-3 tags on components means that the the FAA and EASA are operating under false assumptions as they manipulate the receiving requirements of repair stations.

Existing Inventory Problem – Grandfather Clause Failure

A significant disappointment in all of this is that the FAA and EASA recognized the need for a grandfather clause for existing inventory, but they failed to create a grandfather clause with enough breadth to reflect the realities of existing inventory.

In recognition of the fact that the new manufacturer-based 8130-3 tag-privilege was supposed to remedy a past lack of 8130-3 tags, the FAA and EASA agreed upon a grandfather clause that would apply to parts produced before October 1, 2016.  The grandfather clause was meant to apply to demonstrably airworthy parts without 8130-3 tags, that were produced before the October 1 date.  In order to take advantage of the grandfather clause, the parts were supposed to bear (1) evidence of airworthiness and (2) evidence of manufacturer before October 1.

Evidence of airworthiness is well understood and necessary in the industry. But the new grandfather clause requirement is that the evidence must consist of “a document or statement (containing the same technical information as an FAA Form 8130-3) issued by the PAH or supplier with direct ship authority.”  So common documents that would be excluded might include (but not be limited to):

  • Airline trace for new surplus parts (not issued by the PAH);
  • OEM C of C (typically does not contain all of the technical information contained in an FAA Form 8130-3);
  • OEM inventory list for a lot purchase (typically does not contain all of the technical information contained in an FAA Form 8130-3);
  • Spec 106 Form from the OEM-authorized distributor (even if it includes all of the technical information contained in an FAA Form 8130-3, it was not dated by the PAH).

This creates an initial challenge but there is some good news.  In an earlier publication of the guidance, found in FAA Notice 8900.360, the PAH documentation needed to have been dated prior to October 1, 2016.  This meant that undated PAH documentation was not usable.  This has been changed in the new version of the language.  This is important because it means that a distributor who possesses adequate evidence of airworthiness (meeting the guidance of the MAG) can produce their own evidence of manufacturer before October 1 by specifying that the article was released before October 1.

We wish that the FAA had been explicit that this was meant to ‘fix’ 8900.360, because we fear that some people will not realize that the later language of MAG rev. 6 was meant to be a remedy to incorrect language in the earlier Notice.  Based on our discussions with the FAA, the change in the date language was explicitly intended to remedy the earlier flaw in the Notice 8900.360 language.  Today, anyone ought to be able to look at a calendar, see that the date is before October 1, and certify that an existing article was manufactured by that date.  And distributors ought to be able to do this for their entire inventories by flagging those parts received by September 30, 2016 (a secure flag in the electronic inventory system ought to be adequate to serve as a basis for a distributor’s C of C that states that the part was received before October 1, 2016 and was therefore released prior to October 1, 2016).

More Unintended Consequences?

An interesting effect of this is that the United States may be somewhat increasing the US trade deficit in the near future.

Let’s say that we have two identical parts that were both produced by the same US production approval holder.  One of them was sold to a new parts distributor in the United States and it bore a standard Certificate of Conformity (which does not include all of the same technical information as an 8130-3 tag).  The other one was sold to a new parts distributor in Europe and it bore an export 8130-3 tag.  Now, a US repair station needs that part.  Existing inventory held by new parts distributors in the United States may not bear the right documentation to receive it under the MAG.  Even if the part is needed for a US-registered aircraft, FAA FSDO norms of requiring repair stations to apply the MAG to all received parts would preclude the part from entering the repair station’s system.  The new parts distributor in Europe, with the export 8130-3 tag on the part, will be the only one who can make the sale to the US repair station!

The FAA’s role is to protect aviation safety.  They do not have responsibility for protecting US competitiveness.  But this change appears to do nothing to enhance safety.  It does not address any known safety issue – it merely adds de facto documentation requirements that appear to circumvent the formalities of the Paperwork Reduction Act.  It is a little shocking that the FAA continues to publish documents that chip-away at US competitiveness without doing anything to enhance safety.

So What Does it All Mean?

EASA has approved about 1480 repair stations in the United States.  That is a very significant chunk of the US domestic repair station market, and it probably represents a substantially high percentage of the commercial aircraft repair market in the US.  This means that a substantial percentage of the commercial aviation repair stations in the US will be affected by this guidance (approaching all of them).  For US distributors, it is important to understand how to navigate through this.

If you have repair station customers that have written their manuals and supplements to require EASA-documentation for all parts received – including those destined for installation on US-registered aircraft – then you should counsel the repair station to revisit its procedures.  But for component repair stations who may not always know the final installation destination of the components on which they work, they may be stuck with applying EASA documentation standards.  Because the FAA is enforcing these EASA standards, the 8130-3 tag (and the EASA Form One) now become a transaction requirement in the commercial aviation market – including for purely domestic transactions where the FAA inspector has insisted on a single receiving system.

US distributors should be particularly aggressive in seeking out 8130-3 tags for inventory.  For inventory without 8130-3 tags, distributors need to ensure that they have access to a DAR (and also a back-up DAR) in order to ensure that they will be able to obtain 8130-3 tags as necessary.  If there are not enough DARs in your area, then please let ASA know so we can bring this fact to the attention of FAA Headquarters.

Due to commercial norms, non-US distributors typically obtain export 8130-3 tags when they receive parts from the United States.  This may give those distributors an advantage over their US counterparts who find it difficult to obtain 8130-3 tags for existing inventory.  Non-US distributors should take advantage of this while they can!

Finally, let us know what you think the effect of this guidance will be.  Will you be able to sell you inventory or does this threaten to devalue or block your inventory?  We would like to hear from the members about the real-world effects in order to judge our next steps.

FAA Delays MAG rev. 5 Provisions to Permit 8130-3 Revisions

As many of you know, the FAA issued a revision (rev # 5) to the US-EU Maintenance Annex Guidance (“MAG”) last September.  This revision was met with much resistance in the aviation community because it seemed to impose new documentation requirement that did not exist in either FAA or EASA regulations.  This could have become a problem for the ASA community because it would have imposed new documentation requirements that could have severely affected the value of existing inventories.

ASA has been working with FAA and EASA (as well as other trade association) to revise some of the language of the MAG.  Late in 2015, we reported some success when the FAA and EASA issued a letter to ARSA verifying that parts released by the production approval holder before April 1, 2016 would be ‘grandfathered,’ and would not be subject to the new documentation requirements.  In response to this decision, ASA has been advising members to record all parts in their inventories as of midnight on March 31, 2016.  A simple flag in the parts inventory should be enough to meet this requirement, and should serve as evidence that the part was produced and released by the PAH before that point.

Working Toward MAG rev. 6.

But the core problem remained – the ‘sample supplement’ in the MAG still had language about acceptance of components that was inconsistent with both regulatory requirements and normal industry practice.

We have been working with FAA and EASA personnel to develop new language for the component acceptance section of the ‘sample supplement’ in the MAG.  The authorities have been both responsive and receptive to our proposals to revise the MAG language.

The revision five language included requirements not found in either set of regulations, so we worked with both authorities to develop replacement language that would be published in a MAG rev. 6.  This language is more consistent with regulatory requirements, and it also supports the changes that permit Production Approval Holders to issue their own 8130-3 tags under 14 CFR 21.137(o) [this change was one of the drivers for some of the new requirements].

The draft language would still accept PAH 8130-3 tags that are issued under the new authority, but it would also reopen the standards to permit acceptance of DAR 8130-3 tag, and other forms of FAA-issues 8130-3 tags.  It would also remove unnecessary provisions, like linkage to the OEM IPC, which would only inhibit transactions (reliance on the IPCs would inhibit transactions in third-party approved parts like those produced under TSOA or PMA, and it would also inhibit transaction in replacement OEM parts where the IPC has not yet been updated to reflect the new part number).

Postponement

But getting such a change approved through both authorities takes time.  In order to buy some more time, the FAA plans to postpone by six months the parts receiving inspection provisions of the MAG.  This was announced earlier today in an internal FAA email (as reported by ARSA).  The text of the email reads like this:

From: Logan, Cindy (FAA)
Sent: Friday, April 01, 2016 7:23 AM
To: 9-AWA-AFS-300-Maintenance (FAA)
Subject: FYI from the AFS-300 Management Team — April 1, 2016 >> FAA Notice 8900.336 FAA Form 8130-3 requirements <<

Good Morning Everyone…

This email is provided as interim notification.

Since the release of the Maintenance Annex Guidance (MAG) Change 5,  between the United States and the European Union (EU), many concerns were raised by U.S. repair stations regarding changes contained in Section B, Appendix 1, paragraph 10: “Release and Acceptance of  Components,” and the timelines established.  Industry stakeholders recommended that the MAG be aligned with the changes in part 21 set forth in Amendment 21-98, which became effective on March 29, 2016.  The alignment would allow PAHs in the U.S. to establish a process in their quality systems to issue an authorized release using FAA Form 8130-3 for new parts.  Other concerns include what provisions could be made regarding components received prior to that date.

On November 17, 2015, the FAA issued FAA Notice 8900.336, aligning the requirements of MAG CHG 5, Section B, Appendix 1, paragraph 10, with the effective date of the part 21 Amendment 21-98.  Unfortunately, implementing the changes to part 21 set forth in Amendment 21-98, i.e. 21.137(o) is taking longer than stakeholders expected. Both FAA and EASA were asked by several industry stakeholders to extend the implementation date of MAG CHG 5 requirements specified above (specifically Section B Appendix I, Paragraph 10).

To allow implementation of the privileges under 21.137(o) to the greatest extent possible, FAA and EASA agreed to extend the implementation deadline specified in FAA Notice 8900.336 from April 1, 2016 to October 1, 2016.  All other provisions of MAG CHG 5 remain in effect.

FAA Notice 8900.336 is undergoing revision and will address this change and will be issued as soon as coordination procedures are complete.

This message was sent to Principal Maintenance and Avionics inspectors and Office managers. While our list is extensive it may not touch everyone, please distribute as necessary.

Have a GREAT weekend!

Cindy Logan,
Management and Program Analyst, AFS-310

Stakeholder FeedbackOR AFS300 Group Mailbox >>9-AWA-AFS-300-MAINTENANCE@FAA.GOV

The provision referenced in the email – “Section B Appendix I, Paragraph 10” – is the section of the sample supplement that addresses acceptance of components.  The extra six months of delay will allow the FAA and EASA to publish rev. 6.  It will also allow more production approval holders to start issuing their own 8130-3 tags (a process that is delayed for some production approval holders due to the fact that other trading partners have not yet agreed to accept PAH 8130-3 tags for parts from the United States).

Conclusion

If a repair station tells you that they cannot accept your parts due to new (and unusual-seeming) documentation requirements, then ask them for the source of these requirements.  If the new requirements come from the MAG rev. 5, then it is possible that the new provisions may not be appropriate, and your repair station customer may need to change its receiving inspection criteria back to the pre-MAG requirements due to the facts that (1) MAG rev. 5 acceptance criteria have been tolled until October 1, 2016 and (2) we expect the FAA and EASA to publish MAG rev. 6 that realigns the MAG language with the regulatory requirements of both authorities, and therefore removes some of the unaligned criteria currently found in the sample supplement.  The result should be a sample supplement that achieves the goals of the authorities without imposing undue burden on the industry.

Got more questions?  ASA will have a booth at MRO Americas next week – come and join us for a chat on the trade floor.  We will be in booth 3445.

MAG rev. 6 Will Mitigate Some 8130-3 Tag Issues

We reported in December on the changes to the US-EU agreement that appeared to change the standards for documentation for both US-based repair stations and also EU-based repair stations.  As written, this had the potential to dramatically affect ASA members by changing the traceability requirements for aircraft parts and also by limiting which 8130-3 tags were eligible for use.

The change was found in the US-EU Maintenance Annex Guidance (MAG).  It arose in revision 5 which was published in September 2015.  The most important changes were found in the sample EASA Supplement and the sample FAA Supplement.  Although these were samples, many U.S.-based repair stations have reported that their local FAA inspectors are requiring them to conform to the language in the samples.  This caused problems because the sample Supplement language was inconsistent with the regulatory requirements of both the EU and the US.

Some of the problems included language that seemed to suggest that a repair station could not accept a component that was not listed in the OEM’s parts catalogue.  This would have excluded TSOA articles that were not part of the original configuration (e.g. seats defined in an STC), PMA parts, and replacement part numbers where the part number has rolled but the parts catalogue has not yet been brought up-to-date.  At the root fo this problem was a set of apparent requirements that were not found in FAA or EASA regulations or policy and instead existed only in the MAG sample Supplements.

The good news is that we’ve been working with EU and US authorities to correct the problems.  Both have clarified that the language we identified did not reflect a change in traceability policy among the authorities – rather it was intended to merely better reflect the regulatory requirements of both authorities.  They have admitted that the policy could have been more clear and they are seeking to inject greater clarity.

ASA and other trade associations brought these issues to the attention of the civil aviation authorities.  The authorities reviewed our concerns and recognized that MAG rev. 5 did not adequately reflect their intent and has been interpreted in a manner that is inconsistent with their intent.  In order to combat this misinterpretation, US and EU authorities are working together to correct the language in a MAG rev. 6 document.  Thus, the language of the MAG rev. 5 that has caused concern in the industry is being changed to clarify the EU and US intent.

I have had an opportunity to review draft MAG rev. 6 language and the language I have seen represents a dramatic improvement – one that should be acceptable to both the US and EU industries.  The version I saw was not the final version.  FAA and EASA officials are working diligently on this revision and we expect to see it earlier, rather than later.

There had been some fear that the MAG would preclude acceptance of 8130-3 tags issued by designees.  It is likely that the final language of MAG rev. 6 will recognize all appropriate 8130-3 tags.  This will likely include both 8130-3 tags issued by production approval holders (FAA-approved manufacturers) and those issued by the FAA’s designees.

One question that I have seen from the distribution community is whether DARs will continue to be relevant for purposes of issuing 8130-3 tags.  The answer to this is “Yes;” there appears to be no move to change current policy which permits DARs with the right function codes to issue 8130-3 tags for demonstrably airworthy parts.  The MAG applies to US-EU relations, but remember that the rest of the world is still out there, too.  Whatever change is occasioned by the MAG, it only applies to US-EU transactions and not to the other countries with which the US trades.  Most other countries still expect FAA (designee) 8130-3 tags.

Also, we still expect the authorities to recognize a ‘grandfathering’ (consistent with a joint FAA-EASA letter on this point) in which parts produced before April 1, 2016 would benefit from an exception.  The parts would need to be accompanied by documentation providing information equivalent to the 8130-3 tag (like a manufacturer’s C of C) that was issued before April 1, 2016.  We have recommended that all distributors should set a flag in their inventory system in order to be able to identify parts in their system as of 23:59 on March 31.  This will allow those distributors to later certify that the components were produced prior to the grandfathering date.  You may still encounter some commercial resistance to these components, but at least you can show that the component was produced before April 1, 2016 (because it had to have been produced before it existed in your inventory).

Other expected clarifications include a clarification that parts can be received into repair stations without 8130-3 tags if they are intended to be serviced.  This will allow repair stations to accept parts in need of repair without imposing absurd documentation requirements on them.  Distributors with as-removed parts in their inventories should continue to be able to send those parts to repair stations for overhaul.

Do you have other concerns as a consequence of MAG rev. 5?  Let us know your concerns!  The authorities have been clear that they did not intent to inhibit valid, legal and safe transactions, and they are open to clarifications in order to make sure that the industry understands their intent.

Major Changes Involving 8130-3 Tags

Any ASA member who has attended an ASA Board Meeting or an ASA Quality Assurance Committee meeting in the past three months knows that an important topic of discussion has been the recent FAA and EASA changes affecting 8130-3 tags.

Two significant changes in the regulations and policy have affected 8130-3s this Fall.  Both have the potential to impact the business models of distributors.  This post analyzes the two sets of changes and provides guidance for aircraft parts distributors who may be impacted by those changes.

International Agreements

The first significant change was published in the latest revision to the Maintenance Annex Guidance (revision 5). The United States has a Bilateral Airworthiness Safety Agreement (BASA) with the European Union (EU). The EU-BASA explains how the United States and the European Union will share safety duties and permit products and articles to be freely moved between jurisdictions.

The EU-BASA is interpreted by several guidance documents. One of those guidance documents is the Maintenance Annex Guidance (MAG). The MAG explains how the US and EU will share oversight of repair stations that hold authority from both jurisdictions. Under the MAG, repair stations in the US that hold EASA 145 acceptance will be subject to oversight by the FAA, and the FAA will assess compliance to both the US and the EU regulatory requirements.

In order to facilitate compliance to both standards, the MAG includes two sample supplements for the repair station manual (for US-based repair stations) or the Maintenance Organization Exposition (for EU-based repair stations). Repair stations are expected to adopt such supplements in order to ensure that their work will meet the requirements of both jurisdictions; however they are expected to be able to make changes to the sample supplement; in fact the guidance explains that:

“The applicant must customise [sic] the supplement to reflect the specific repair station operation and related procedures.”

Although the supplements are explicitly described as “samples,“ experience has shown that many FAA employees treat these samples as the only acceptable language (this was most recently re-confirmed by repair station personnel at the ASA Quality Assurance Committee Meeting in Dallas who continue to experience this phenomenon).  This is not a new phenomenon – many complaints were raised when the FAA had an advisory circular that featured sample language for the repair station’s Inspection Procedures Manual (IPM) – and ultimately the FAA found it necessary to cancel the IPM AC because safety inspectors were requiring adherence to the sample as if it were a legal requirement.  The net result in cases like this is that the “samples” become de facto regulations, because they are being enforced as if they were required by regulation. I won’t get into all of the Federal laws that are being violated when the FAA enforces a domestic record-keeping requirement that imposes new regulatory standards not previously found in US law.

With the Supplement “samples” being treated as if they were requirements, we find a number of requirements being imposed that are not required under US law, and a few that are not required under either US law or EU law (thus making MAG rev. 5 a source of brand new quasi-legal obligations).

The most significant elements for distributors are found in the MAG rev. 5 requirements for acceptance of new parts.  The language that applies to US based repair stations (who need the supplement to retain their EASA privileges) includes this text:

New components must be traceable to the OEM as specified in the Type Certificate (TC) holder’s Parts Catalogue and be in a satisfactory condition for installation. A release document issued by the OEM or Production Certificate (PC) holder must accompany the new component. The release document must clearly state that it is issued under the approval of the relevant AA under whose regulatory control the OEM or PC holder works.

The acceptance language that applies to standard parts provides an exception for those parts, but PMA parts enjoy no such exception which means that independent PMA parts (which are typically are not included in the type certificate holder’s parts catalogue) appear to be unacceptable (violating EASA standards and conflicting with the existing Technical Implementation Procedures).

More importantly, all new components will have to be accompanied by a “release document issued by the OEM or Production Certificate (PC) holder.”  Today, most 8130-3 tags are issued by the FAA (usually through its designees).  This provision would cause the rejection of existing FAA 8130-3 tags because they were not issued by the OEM or Production Certificate holder (instead, until now, they have always been issued by the FAA, directly or through designees).  This could have a tremendous impact on existing inventories, which would not meet the acceptance requirements described in the supplement even if they were accompanied by 8130-3 tags issued by the FAA.

The FAA and EASA have agreed to delay the implementation of MAG rev. 5 until March 29, 2016.  This was meant to permit time for manufacturers to start issuing 8130-3 tags for new parts.

8130-3 Tag Regulations

Under the new regulations, a production approval holder (PAH) will be permitted to issue its own 8130-3 tags. These tags will be known as “authorized release documents.”  This privilege will be permissive and not mandatory, so some manufacturers may choose not to issue authorized release documents.  The FAA has issued guidance that says that once a production approval holder has set up a system for issuing authorized release documents, the production approval holder will be required to surrender its ODA privileges or other designated privileges that permit issuance of an FAA 8130-3 tag.  Thus, for manufacturers, the choice of issuing 8130-3 tags under the manufacturer’s own authority or obtaining them through designees will be an ‘either-or’ choice, without the opportunity to use both systems.

The FAA implies that these documents can be used for export purposes, by explaining that when an authorized release document is issued for export purposes, the production approval holder must follow the procedures specified in § 21.331 and must comply with the responsibilities of exporters specified in § 21.335.  One of the many problems with these authorized release documents is that although they appear to now be potentially acceptable for European repair stations, our bilateral agreement with the rest of the world all require FAA-issued 8130-3 export tags.  So manufacturer’s authorized release documents would not meet the requirements of our other bilateral agreements.  In addition, the BASA Technical Implementation Procedures (TIP) with the EU anticipates that EASA can expect FAA-issued 8130-3 tags (it repeatedly uses language explaining that the FAA must certify facts on the 8130-3 tag, such as in section 5.1.6(a)(1) for TSOAed articles).

On December 17, the FAA published a correction to the final rule that explained that PAHs are permitted to start issuing 8130-3 tags as early as January 4, 2016. This is specifically intended to permit PAHs to issue 8130-3 tags to support the new requirements for 8130-3 tags that are needed for domestic repair stations that possess EASA privileges (the preamble to the rule specifically mentions MAG rev. 5 as a motivating factor for the correction).

There are already manufacturers who rely on their own certificates of conformity and do not obtain 8130-3 tags for domestic transactions.  We have spoken with manufacturers who are not sure whether they will begin issuing 8130-3 tags because of some of the problems and limits associated with the PAH-authorized release document policy; so distributors may be unable to obtain PAH authorized release documents for some parts; and will likely have extreme difficulties obtaining PAH authorized release documents for existing inventory.

How Big of an Issue is this in the United States?

According to EASA, there are 1474  valid repair stations in the US with EASA privileges (EASA Table dated Nov. 12, 2015 – this does not include ‘not valid’ and invalid EASA repair station approvals in the US).  This is about one-third of the domestic US repair stations; but as a practical matter, it is nearly all of the US repair stations that service commercial aircraft customers.  This means that most repair stations that purchase parts from ASA members will be affected by the MAG rev. 5 requirements.  Because it is easier for FAA employees to simply enforce the MAG rev. 5 sample as if it were a requirement, we should expect most of these repair stations to adopt supplements that are consistent with the language of MAG rev. 5.  This will have a very significant affect on the business of aircraft parts distribution.

What Does This Mean for Distributors?

Distributors should expect to have problems selling aircraft parts without 8130-3 tags after March 31, 2016.  This could result in devalued inventory as a consequence of the FAA’s actions (There are months yet to go before this implementation date so ASA can do little to predict, today, what the actual devaluation will be).

The authorities (FAA and EASA) have agreed that for parts released by production approval holders before April 1, 2016, those parts will not be expected to be accompanied by 8130-3 tags.  The fact that an aircraft part produced by a PAH is in a distributor’s inventory as of that date is prima facie evidence that the part was released by the production approval holder before that date.  This means that aircraft parts in a distributors inventory as of close of business on March 31, 2016 or start of business on April 1, 2016 are grandfathered from the provisions of MAG rev. 5 (although, of course, parts intended to be used on European-registered aircraft will be expected to meet the requirements of the BASA TIP).  Distributors may wish to find a way in their inventory database systems to identify all parts held as of COB March 31, 2016 in order to be able to certify that the part was released by the production approval holder before April 1, 2016.

What Can You Do to Make Things Better?

1) Communicate with your repair station customers and ask them to ensure that their EASA Supplements permit them to accept parts without 8130-3 tags (e.g. parts with a manufacturer C of C) consistent with US policy in documents like FAA AC 00-56B.  Nothing in either US or EU law should prevent them from being able to receive a demonstrably airworthy part in new condition under their FAA 145 privileges and then issuing a single release certificate for their domestic U.S. customers.

2) Communicate with your repair station customers and ask them to ensure that their EASA Supplements are consistent with EASA regulations instead of using the MAG rev. 5 language, which adds limits that are not required under EASA regulations;

3) Communicate with your repair station customers and ask them to ensure that their EASA Supplements accept all 8130-3 tags that are acceptable by European 145s under the BASA Technical Implementation Procedures;

4) Communicate with your manufacturer business partners and encourage them to release their parts with 8130- 3 tags;

5) To the greatest extent possible, obtain 8130-3 tags for parts.  Even though they are not required by law in the US, the FAA is going to impel repair stations to reject parts that do not have 8130-3 tags, which will make the 8130-3 tag a de facto requirement for selling to repair stations.

6) Share your thoughts!  ASA is eager to hear your thoughts about potential problems and solutions.

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