Opportunities in Iran Extended Indefinitely

July 17, 2015 by Leave a comment

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.

Filed under Uncategorized Tagged with , , ,

Are Freight Costs for Rotor Blades About to Change?

January 9, 2014 by Leave a comment

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.

Filed under Uncategorized Tagged with , , , , , , , ,

Comments Filed at Home and Abroad

July 6, 2013 by Leave a comment

ASA continues to work diligently to promote and promote and protect its members’ interests both at home and abroad. In the past month ASA has filed comments on a proposed rule change by NASA, as well as a Notice of Proposed Amendment with EASA.

On June 17, ASA filed comments with NASA regarding the proposed definition of “counterfeit goods” detailed in the proposed “NASA FAR Supplement Regulatory Review No. 1.”  The issue of counterfeit goods in aerospace and received a significant amount of attention in recent years.  As we have explained previously, efforts by Congress and the Administration to curtail the presence of counterfeit parts in the supply chain has the potential to impose significant burdens on distributors.

One way to mitigate that burden is to ensure that everyone has a clear understanding of what is—and more importantly, what is not—a counterfeit good.  ASA is working hard on multiple fronts to ensure that the definition of a counterfeit part remains concise, narrow, and legally accurate, to avoid imposing unnecessary and unhelpful burdens on the industry.

ASA also offered comments on EASA’s recent Part 145 NPA.  The objective of the sweeping NPA is to incorporate SMS principles into Part 145, and the proposed changes have the potential to touch not only repair stations, but also distributors and manufacturers.  ASA made numerous suggestions related to the various proposals in the hopes of assisting EASA in order to assist in a more gradual incorporation of these changes, as well as to address proposals that appeared to fall outside the scope of SMS.

ASA looks forward to working with these agencies to craft regulations that promote safety and benefit the industry.

 

Filed under Uncategorized Tagged with , , , , ,

Policy Glitch Inhibits Manufacturing DARs from Issuing 8130-3 Tags

March 29, 2012 by Leave a comment

A number of ASA members have contacted us recently to tell us that their FAA Designated Airworthiness Representatives who hold MIDO-based privileges (DAR-Fs) have been restricted from issuing 8130-3 tags for parts held by distributors.

The issue concerns a recent change to FAA Order 8100.8 (the “D” revision).  It appears that there was a clerical error in the revision that is having an effect on safety in air commerce, by restricting the ability of DARs to issue 8130-3 tags where they are needed. We have asked the FAA to examine this issue and to work with us to correct it.

Background

It is very common for distributors to obtain aircraft parts that bear indicia of airworthiness, but that do not bear an 8130-3 tag.

One of the ways that distributors support the FAA’s desire to promote the common use of the 8130-3 tag is by actively obtaining 8130-3 tags for parts that do not bear such tags.  These tags are issued to parts by FAA DARs following inspection and document review.  The inspection and document review confirms that the part meets the appropriate FAA airworthiness standards and is eligible for an 8130-3 tag.

The availability of the 8130-3 tag has become very important to the industry for a number of reasons.  One reason is because many Part 119 air carriers have provisions written-into their FAA-approved and/or FAA-accepted manuals that require the 8130-3 tag as a condition of their receiving inspection.  Such air carriers often cannot accept a part without an 8130-3 tag (even if it bears other indicia of airworthiness) without violating the requirements of their own manuals.

Over the past decade, the FAA has established policies that permit Manufacturing DARs (DAR-Fs) and Maintenance DARs (DAR-Ts) to examine a part and its documentation, and where a finding of airworthiness can be made based on this examination, to issue an 8130-3 tag to document that finding.

Originally, these DAR functions were performed under function code 8 for DAR-Fs and function code 23 for DAR-Ts.[1]  Although DAR-F functions are normally limited to PAH facilities, the FAA made a special exception that permitted DAR-Fs to issue 8130-3 tags for aircraft parts at independent distributor  facilities (NOT at the PAH facility).  When this privilege was first issued, the FAA highlighted the fact that this was an exception to the normal rule (under which DAR-Fs usually work exclusively at PAH facilities).[2]

Later, the FAA recognized that the function of issuing domestic 8130-3 tags and the function of issuing export 8130-3 tags required the same skills and the FAA merged the authority for DARs to issue both domestic and export 8130-3 tags under  one function code for each type of DAR.  This lead to both forms of 8130-3 tags being issued under function code 20 for DAR-Fs and function code 32 for DAR-Ts (these function codes had previously been limited only to export tag privileges).

This change happened as the FAA was issuing new regulations that eliminated an  earlier restriction on non-manufacturers obtaining “class III” export 8130-3 tags.  While the restriction existed, distributors obtained “class III” export 8130-3 tags under an exemption from the regulations, which is why earlier versions of Order 8100.8 made reference to an exemption.[3]

While the exemption still technically exists, it was made moot by the 2009 recodification of Part 21, which eliminated the bar against non-manufacturers obtaining “class III” export 8130-3 tags (and also eliminated the class distinctions, as well).  This change permitted distributors to apply directly to the FAA (through DARs) for export 8130-3 tags.  Now, distributors are permitted to apply for both domestic and export 8130-3 tags and they no longer need an exemption.

What they do need, however, is a function code that authorizes DARs to be able to review parts held by distributors, make a finding of airworthiness where appropriate, and document this finding by issuing an 8130- 3tag.

The Details of the Change

Recent changes to FAA Order 8100.8D are being interpreted to preclude Manufacturing DARs (DAR-Fs) from issuing 8130-3 tags for demonstrably airworthy parts that are located at the facilities of distributors.

The reason for the change appears to be based on the reorganization of the functions codes.  We are not aware of any policy change that motivates this change in the language … it appears that the change is a clerical error.

The recently-replaced FAA Order 8100.8 C read:

20 Issue original/recurrent export airworthiness approval under the provisions of

14 CFR Part 21, subpart L, for articles manufactured in accordance with 14 CFR part 21. Individual DARs must be employed by an applicant who is the PAH of the articles being exported, and/or when the applicant meets the provisions of Note 2 below.

NOTE 1: DARs may be full-time, part-time, or contract employees of a PAH.

NOTE 2: This authorization includes export airworthiness approvals for articles located at a non-PAH distributor operating under an exemption to § 21.323(b)(2).

Now however, the description of function code 20 in 8100.8D, Table 15-2 states:

20 Issue original/recurrent export airworthiness approvals for articles manufactured in accordance with 14 CFR part 21. Individual DARs must be employed by an applicant who is the PAH of the articles being exported. DARs may be full-time, part-time, or contract employees of a PAH.

The language about function code 20 being the appropriate function code to use (when a manufacturing DAR examines an aircraft part at a distributor facility and issues the 8130- tag for that part) has been removed.  In fact, the new language (with the note removed) seems to imply that a manufacturing DAR cannot issue an 8130-3 tag at a distributor facility.

This appears to be an error of omission.  We are not aware of any policy decision by the FAA that would support this change, so it appears clear that this was a simple clerical error.  In order to correct this clerical error, we recommend that additional language be added to the description of function code 20.  In light of the fact that recent FAA policy has been to permit all distributors to apply for 8130-3 tags, not just AC 00-56 accredited distributors  (making the exemption moot), it would be appropriate to broaden the language of the prior note (to remove the reference to the exemption).  Such broader language would also be consistent with current industry practice (in which certain DAR-Fs support the distribution community and also with the current regulations (14 C.F.R. § 21.327 now permits any person to apply for an export approval).

ASA filed a petition with the FAA on March 5th, seeking to have this issue corrected.  We recommended that the FAA first issue a deviation memo and then subsequently issue an 8100.8D Change One document that incorporates all of the deviation memoranda intended to be incorporated (including also the February 28, 2012 deviation memo on the use of Form 8110-14).

[1] See, e.g., Procedures for Completion and Use of the AUthorized Release Certificate, FAA Form 8130-3, Airworthiness Approval Tag, FAA Notice 8130.70 (June 15, 2001) (permitting the issuance of 8130- 3 tags for airworthy parts located at independent distributor facilities).

[2] Id. at ¶ 5(b) NOTE (stating that “in order to ensure adequate DAR resources to support the activities authorized under this notice, these domestic airworthiness approvals may be issued by either manufacturing or maintenance DARs”).

[3] E.g. Designee Management Handbook, 8100.8C Chg 1 ¶ 1407(a)(10) (Feb. 15, 2008).

Filed under Uncategorized Tagged with , , , , , , , , ,

EASA Developing New Guidance to Recognize Distributor Accreditation

November 17, 2011 by 2 Comments

I have just returned from a meeting in Germany at the EASA Headquarters.  The purpose of the meeting was to discuss European programs for ensuring appropriate oversight of distributors.  This is part of an EASA rulemaking task that we’ve been supporting for much of this year.

In earlier meetings, proposals had been floated that would have created new and onerous obligations, requiring 145 organizations to audit and provide direct oversight to the quality systems of distributors.  This would have affected 145 organizations around the world, because of the significant number of EASA-145-accepted repair stations outside of Europe. One of our goals in this meeting was to redirect the group’s efforts to the acceptance of a program that woul dnot create new auditing obligations that yielded no new benefits.  We raised the point that there are good, existing systems out there (like AC 00-56A).

The group agreed that the proposal was getting too onerous, and so the group developed some new guidance to replace it that will recognize the existing systems used to provide oversight to distributor quality systems.  The new guidance will encourage participation in the existing systems and permit companies that are ‘doing the right things’ to continue operating the way that they operate today.

Under the proposal, there would be a new EASA 145.A.42(a), and the other elements of EASA 145.A.42 would be incremented.  The new section will clarify that EASA-145 organizations and other 145 organizations subject to EASA jurisdiction shall establish procedures for the acceptance of components and material.  EASA feels that existing regulations, like 145.A.65, already imply a requirement for such procedures; this addition merely clarifies the requiremetn for 145 organizations.

The proposal also adds advisory guidance describing common industry methods for ensuring that the distributors from whom a 145 organization purchases will have adequate quality systems in place.

The result would be that AMC 145.A.42 would look like this (note that the new text is in green):

145.A.42 Acceptance of Components (to be proposed)

(a) The organization shall establish procedures for the acceptance of components and material.

(b) All components shall be classified and appropriately segregated into the following
categories:

1. Components which are in a satisfactory condition, released on an EASA Form 1 or equivalent and marked in accordance with Part-21 Subpart Q.

2. Unserviceable components which shall be maintained in accordance with this section.

3. Unsalvageable components which are classified in accordance with 145.A.42(d).

4. Standard parts used on an aircraft, engine, propeller or other aircraft component when specified in the manufacturer’s illustrated parts catalogue and/or the maintenance data.

5. Material both raw and consumable used in the course of maintenance when the organisation is satisfied that the material meets the required specification and has appropriate traceability. All material must be accompanied by documentation clearly relating to the particular material and containing a conformity to specification statement plus both the manufacturing and supplier source.

(c) Prior to installation of a component, the organisation shall ensure that the particular component is eligible to be fitted when different modification and/or airworthiness directive standards may be applicable.

(d) The organisation may fabricate a restricted range of parts to be used in the course of undergoing work within its own facilities provided procedures are identified in the exposition.

(e) Components which have reached their certified life limit or contain a non-repairable defect shall be classified as unsalvageable and shall not be permitted to re-enter the component supply system unless certified life limits have been extended or a repair solution has been approved according to Part-21.

In addition, the new proposal would include advisory and guidance material designed to support and guide the efforts of 145 organizations.  The existing AMCs for 145.A.42 would be renumbered to reflect and be consistent with the renumbering of the regulation.

AMC 145.A.42 (a) (to be proposed)

The procedures for the acceptance of components should have the objective to ensure that the supplied components or material are in satisfactory condition and meet the organization requirements. These procedures may be based upon:

a)    incoming inspections which includes:

1) physical inspection of those components, parts or material that can be satisfactorily inspected on receipt;

2) review of accompanying documentation and data, which should be acceptable in accordance with 145.A.42(b)

b)    supplier evaluation and control

The point of this new guidance is to make it clear that supplier evaluation supports the 145 organization’s receiving inspection elements by providing a greater level of trust in the documentation that accompanies the parts, which in trun permits the 145 organization to comfortably rely on that documentation.

The most interesting part of this guidance is found in the draft Guidance Material (GM).  This GM defines supplier evaluation and control as consisting of audits to check certain elements.  Those elements were drafted to be consistent both with FAA AC 00-56A and also with JAA TGL 46, which was issued by the now-defunct Joint Aviation Authorities to encourage  the use of accredited distributors.

GM 145.A.42 (a) Supplier evaluation and control (to be proposed)

(a)  The following elements may be checked for the evaluation and control of a supplier’s quality system, as appropriate to ensure that the component is in satisfactory condition:

  1. Availability of appropriate up to date regulations, specifications and standards.
  2. Standards and procedures for training of personnel and competency assessment.
  3. Procedures for shelf-life control.
  4. Procedures for handling of electrostatic sensitive devices.
  5. Procedures for identifying the source from which components and material were received.
  6. Purchasing procedures identifying documentation to accompany components for subsequent use by approved Part 145 maintenance organizations.
  7. Procedures for incoming inspection of components and materials.
  8. Procedures for measuring equipment control that provides for appropriate storage, usage and calibration when such equipment is required.
  9. Procedures to ensure appropriate storage conditions for components and materials that are adequate to protect the components and materials from damage and/or deterioration in accordance with manufacturers’ recommendations and relevant standards.
  10. Procedures for adequate packing and shipping of components and materials for grating protection from damage and deterioration, including procedures for proper shipping of dangerous goods. (e.g. ICAO and ATA specifications)
  11. Procedure for detecting and reporting of suspected unapproved components.
  12. Procedure for handling of unsalvageable components in accordance with applicable regulations and standards.
  13. Procedures for batch splitting or redistribution of lots and handling of the related documents.
  14. Procedure to notify purchasers of any components that have been shipped and later been identified to not conform to the applicable technical data or standard.
  15. Procedure for recall control to ensure that components and materials shipped can be traced and recalled if necessary.
  16. Procedure for monitoring the effectiveness of the distributor’s quality system.

(b)  Suppliers certified to officially recognize standards that have a quality system that includes the elements specified in (a) may be acceptable; such standards include:

  1. EN/AS9120 and listed in the OASIS database
  2. ASA-100
  3. EASO 2012
  4. FAA AC00-56

Note that this GM provides a list of elements that one should expect in a distributor’s quality system.  The list of elements is consistent with the list of quality system elements found in AC 00-56A.

The GM also specifies that certain standards (standards for which EASA had data to confirm) are considered to meet the  quality system elements  of the Guidance, and that therefore distributors accredited/certified to those standards would be considered to be acceptable under the guidance.  AC 00-56 was published by the FAA, but the AC 00-56 list has become an international list of companies around the world that have adopted the quality system elements of the Advisory Circular.  By endorsing AC 00-56, the European guidance would permit the continued reliance on the FAA AC 00-56 accreditation list.  This list has become an important tool in the evaluation of potential suppliers.  European recognition permits companies selling to European 145 organizations to continue doing what they are doing if they are doing the ‘right’ thing, and it provides very clear guidance on expectations for distribution companies that have not yet implemented effective quality systems.

The group also felt that an additional GM is necessary – one that clarifies an obligation to specify the documentation required for receipt at the time tat the part is ordered.  One of the motivations for this was data among the 145 organizations in the group suggesting that one of the most significant reasons for rejecting a component in Europe is because the documention was not correct or did not meet the 145.a.42 requirements.  The group felt that there is a lesser likelihood of getting the wrong documentation when the buyer specifies the documentation expectations.  This should help European Part 145 organizations better communicate their regulatory documentation requirements to sellers.

GM to 145.A.42 (b) (to be proposed): The part-145 organization should ensure that when they order components or material they specify the required documentation in accordance with 145.A.42 (b).

The new rule and guidance still have to go through internal EASA coordination and review.  If the draft survives that coordination process, then it is possible that it could be issued to the public for comment in the Spring of 2012.

Filed under Uncategorized Tagged with , , , , , , , , , ,

How Will EASA SMS Rules Affect DIstributors?

July 28, 2011 by Leave a comment

The European Aviation Safety Agency (EASA) has formally begun the process of implementing Safety Management System (SMS) regulations.  Because past practice has been for certificate holders to “flow-down” a portion of their regulatory obligations to distributors, SMS and the manner in which it is implemented internationally remains an important issue for distributors.

EASA issued the Terms of Reference (TOR) for task number MDM.055 on July 18, 2011. This task anticipates the creation of adequate rules and guidance material to permit EASA to implement a set of SMS rules.

The Terms of Reference do not specifically explain to whom the SMS rules created under this project would apply – they merely mention some of the parties to whom ICAO has recommended apply it. This is a more important omission than some people may understand, and it provides EASA with the ability to dynamically change the scope of application as necessary during the course of the rulemaking project without amending the TOR. Under current ICAO recommendations, SMS should apply to air carriers, repair stations, manufacturers and airports. In the United States, the FAA made the decision to create two different SMS rules – one for airports, and then a second one for air carriers that is intended to be later applied to repair stations and manufacturers. EASA has said that it is amending COMMISSION REGULATION (EC) No 2042/2003 of 20 November 2003. This regulation applies to design and production organizations as well as maintenance organizations (but not to air carriers). EASA is clearly leaving itself open to any reasonable implementation strategy.

The final shape of SMS rules in EASA will be important to distributors who do business with both Europe and other parts of the world, because the data requirements of SMS could lead to reporting requirements from distributors to their SMS-compliant customers.

EASA intends for the internal EASA task group to do the following , as part of this task:

  • Review the existing rules and advisory guidance;
  • Adopt provisions for application for, and processing of, alternative means of compliance, to support standardization;
  • Implement management systems requirements to support compliance with the relevant ICAO standards on SMS;
  • Implement in the SMS standards new guidance on human factors for maintenance;

This SMS project will be worked internally within EASA, although EASA has reserved to itself the right to call informal meetings with industry or National Aviation Authorities for additional feedback. This internal project mechanism is consistent with the process recently used by Japan to create its SMS rules for repair stations (they offered the proposed rules for notice and comment but did not otherwise seek input from the international community). It is different from the FAA’s approach in the United States … the FAA formed an Aviation Rulemaking Committee (ARC) made up of industry and FAA and took advice from the ARC on how to formulate the air carrier SMS rules.

EASA has a very aggressive timetable set for the SMS project. They expect to issue a Notice of Proposed Amendment (NPA) to seek public comment in the second quarter of 2012.

Filed under Uncategorized Tagged with , , , , , , , ,

Newer posts →