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.