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.

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Repair Station Rule to Require Recertification

Many in the industry have been weighing-in on the FAA proposed rule concerning repair stations.  Many people feel that the proposed rule would increase costs without achieving correlative safety benefits.  This is bad for repair stations and it is bad for those distributors and air carriers who rely on repair stations.

There are many details to the proposal that have caused concern in the industry.  One of those is that the rule would require recertification of repair stations, without achieving any safety benefit.

The proposed rule would require that certificated repair stations surrender their existing certificates and have them replaced with new certificates under the new regulatory scheme.  This seems like a tremendous burden on the industry, and it appears to be entirely unnecessary.  This burden is important to repair stations, but it is also important to distributors and air carriers who rely on repair stations as business partners.

There are statutory standards that apply to modification of certificates.  44 US 44709 explains that the FAA may modify a certificate if the modification is required by (a) safety in air commerce or air transportation and (b) the public interest.  The language of the statute refers to orders of the Administrator, but this language may preclude regulatory changes that are inconsistent with the standards that apply to orders.

The proposed rule admits that the potential benefits of the rule are difficult to quantify, and it explains that that the potential benefits are as follows:

(1) Giving the FAA authority to

(a) deny a repair station certificate to an applicant whose past performance resulted in a revocation, and

(b) revoke all FAA issued certificates held by any person who makes fraudulent or intentionally false entries or records;

(2) defining what operations specifications are and providing a well-defined process for both industry and the FAA to amend them; and

(3) updating the ratings system.”  77 Fed. Reg. 30072.

Based on the FAA’s list of reasons for this change, there appears to be no safety justification for the recertification requirement.

None of the three stated benefits of the rule require the administrative burden of revoking or sun-setting existing repair station certificates.  Each one could be accomplished through a less onerous method.  Therefore revocation and replacement of existing certificates is unnecessary.

Drug Testing Reg Flex Analysis – Deadline for Comments is Approaching

The FAA has notice that is open for comment concerning the regulatory flexibility act analysis for the drug testing rule.  This is the rule that extended the repair station contractor testing rules to all repair stations providing subcontracted services to air carriers, as well as those providing direct maintenance services to air carriers (limited, of course, to those performing “safety-sensitive” functions).  The paucity of support for the cost-benefit analysis, and the failure to provide an honest regulatory flexibility assessment,has been disheartening to anyone who enjoys good government .  The public should be holding the FAA accountable for compliance to the legal requirements for rule making.

The Regulatory Flexibility Act of 1980, 5 U.S.C. §§ 601-12 (RFA) requires that agencies conduct a regulatory flexibility analysis or summary “at the time of the publication of general notice of proposed rulemaking for the rule.” 5 U.S.C. § 603.

In its 2002 Notice of Proposed Rulemaking (NPRM), the FAA proposed to amend the definition of “employee” in existing drug and alcohol testing regulations to cover contractors and subcontractors performing safety-sensitive functions “at any tier.” 67 Fed. Reg. 9366, 9377 (Feb. 28, 2002). It then issued a supplemental NPRM in 2004, containing identical regulatory language and soliciting industry feedback. The resulting final rule in 2006 summarily concluded that the changes would not have a “significant impact on a substantial number of small entities,” seemingly removing the need for a full regulatory flexibility analysis. 75 Fed. Reg. 1666, 1674 (Jan. 10, 2006).

After the Aeronautical Repair Station Association (ARSA) challenged the change for failure to assess the impact on small businesses, the U.S. Court of Appeals for the District of Columbia ordered the FAA to conduct the analysis required under the RFA, paying attention to both contractors and subcontractors. ARSA v. FAA, 494 F.3d 161, 178 (D.C. Cir 2007). To date, even though it is becoming increasingly clear that small businesses will bear the bulk of the rule’s impact, the FAA’s efforts to account for the impact on small businesses of covering contractors at any tier appears to be failing to meet the basic requirements of the RFA.

In the past, the FAA has been accused of being strong on aviation safety but weak on procedural controls that meet minimum due process standards.  This regulatory flexibility analysis on the drug testing rule a great opportunity for the FAA to demonstrate that they are taking their legal obligations seriously, and that they are not going to “pencil-whip” the RFA analysis for this rule.

In order to ensure full compliance with the Regulatory Flexibility Act and to be able to fully understand the impact of the new drug and alcohol rule, it is important for the FAA to conduct a full, thorough Final Regulatory Flexibility Analysis as required by the RFA. Because the FAA still has not completed an accurate Initial Regulatory Flexibility Analysis, however, some additional issues should be discussed in the final version.

Specifically, the FAA must first clearly articulate the purpose and objectives of expanding the drug and alcohol rule to subcontractors at all tiers. Only after it fully explains the benefits of the rule can these benefits be weighed against the impact on small businesses as required by the RFA.

Additionally, although the FAA has provided detailed cost data, it must collect more information to fully contextualize these costs before it can assess the full economic impact of the rule on small businesses. This section should include a comparison of costs to average subcontractor profit margins.

Most importantly, the FAA must identify, explain, and weigh the various alternative means of achieving the goals of this rule, complete with cost estimates for each. Options to adopt performance standards and to take no action should be included among these alternatives.

Overall, we feel that the the FAA should pay close attention to the requirements of the RFA and heed the advice of the Small Business Administration Guide in the future to avoid the costly uncertainty that this inadequate analysis has caused.

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