BIS Recommends New Export Screening Steps

July 10, 2024 by Leave a comment

Today, the Department of Commerce’s Bureau of Industry and Security (BIS) has published new guidance reminding the export community about the dangers of divergence of goods to Russia.  This new BIS guidance outlines additional recommendations for screening transactions.

High Priority List (Including Aircraft Parts)

BIS has identified a list of 50 Common High Priority List (CHPL) items.  These are items that Russia has been procuring to support its weapons programs.  For this reason, these 50 items have been identified as special focus items for scrutiny to avoid divergence of shipments to Russia.  This list includes aircraft parts (particularly those subject to HTSUS 8807.30), bearings (particularly those subject to HTSUS Heading 8482) and certain instruments and appliances subject to HTSUS Heading 9014. Exporters should be sure to look at the full list to get an idea of the full scope of this CHPL list.

The CHPL list is meant to drive a heightened scrutiny of certain transactions, to ensure that they cannot be diverted to Russia.  BIS expects that exporters will ensure compliance for every export, but has asked for extra diligence in the scrutiny applied to transaction in the 50 CHPL articles.

Additional Screening Recommendations

BIS has recommended that for CHPL items, exporters screen the transaction parties against the Trade Integrity Project (TIP) website.

The TIP website includes a list of companies that have exported certain materials into Russia.  TIP was developed by the UK-based Open-Source Centre for monitoring trade with Russia. The TIP website specifically focuses on trade in CHPL items, and displays entities that have shipped CHPL items to Russia since 2023. It is based on publicly available trade data. TIP does not reflect all exports into Russia, and it may not include some companies that have exported aircraft parts into Russia.  The TIP website is meant to support export diligence investigations, but it should not be your only resource.

We have recommended Import Genius as another good resource for identifying companies that have exported goods to Russia; but we have also warned that this is also a starting point for scrutiny; we have heard about U.S. companies who are falsely listed as the source of goods by the actual exporters, so it is important to check out the data you find. Using Import Genius is NOT part of the latest BIS screening recommendation.

If you discover that the partner in question has been selling to Russia, then this may reflect a red flag that needs to be cleared before the transaction can be completed. For example, if you are selling to a distributor who is on the TIP list, but they ask you to drop ship the goods directly to a legal end user in a place like the UK (particularly if you get a signed end-use-statement from the end user validating the compliance elements), then this might be sufficient to clear a red flag that would otherwise casts a shadow over other transactions.

BIS Warning Letters

BIS is issuing two different types of letters to warn companies about their business partners who may be violating US export laws:

  • Red Flag Letters
  • Is Informed Letters

If BIS believes that one of your partners may have violated the export laws (such as by illegally diverting goods to Russia) then BIS may send you a “red flag” letter. A “red flag” letter informs you of the BIS suspicions, and imposes on your company an additional burden to clear the red flag before continuing to do business with the partner. A company that receives a “red flag” letter should conduct additional due diligence to resolve and overcome the red flag identified by BIS before filling an order from the identified partner.

BIS may inform you that a license is required for export, reexport or transfer of items to a specified end-user because BIS has determined that there is an unacceptable risk of diversion (e.g. because of a threat of diversion to a military end user in a restricted country). This is known as an “Is Informed” letter. When you receive this sort of communication, then you are typically required to comply with the restriction (if the communication is oral then it will usually be followed by a written communication within two days). In most cases, this means that you will need a license for the transaction, and it may cancel prior licenses. From an enforcement perspective, non-compliance with an “is informed letter” is treated the same as non-compliance with any other license requirement under the regulations and may be subject to penalties.

If you receive a “red flag” letter or an “is informed” letter than you should coordinate your actions with an export attorney.

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UK and EU Ink Aviation Manufacturing Deal, Formalizing Acceptance of New Parts

May 17, 2021 by Leave a comment

Today, the UK CAA and EU’s EASA signed a Technical Implementation Procedure (TIP).

The purpose of the TIP is to establish the rules for UK and EU acceptance of articles and products produced under the production authority of the other authority. There are correlative agreements regarding design approvals issued by each authority, and the acceptance of each by the other.

This TIP will be important because it affects parts transactions involving third parties. For example, if a US-based distributor has Airbus parts in its US inventory, and those parts were produced under (and tagged under) the authority of EASA, then the sale of those parts for installation on a UK-registered aircraft will be subject to the UK-EASA TIP.

Under the Agreement, the importing authority will expect the following documentation to accompany aircraft parts:

  • For import into the EASA system: an Authorized Release Certificate (CAA Form 1) issued by an authorized UK CAA production organization approval holder [in other words, a UK CAA Form 1 properly signed on the left side]
  • For import into the UK CAA system: an Authorized Release Certificate (EASA Form 1) issued by (a) a production organization approval holder authorized to engage in such activity by an EASA Member State, or (b) a production organization approval holder authorized to engage in such activity by EASA [in other words, an EASA Form 1 properly signed on the left side]

One interesting point is a requirement that instructions for continued airworthiness and other maintenance manuals must be provided for articles to be acceptable for import into each authority. The language specifically states:

“The following documentation will be provided as a condition of acceptance of the civil aeronautical product being imported … ICA and maintenance manuals which include airworthiness limitation sections”

Technical Implementation Procedures for Airworthiness and Environmental Certification Between The Civil Aviation Authority of the United Kingdom And The European Union Aviation Safety Agency, section 6.5.1 (May 17, 2021)

The TIP does not address maintained parts. The authorities are expected to conclude a separate set of procedures for acceptance of maintenance.

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PMA Parts Exported to Europe

January 6, 2016 by Leave a comment

An ASA member asked for information about how to export, to the EU, subcomponents of PMA components. This sort of question arises when the PMA-ed component is made up of subcomponents and there may be a market for the individual subcomponents, such as when they are required as replacement parts.[1]  It is important to bear in mind that FAA regulations require that when any component parts, or replacement articles, of the PMA article leaves the PMA manufacturer’s facility as ‘FAA approved,’ then that component part or replacement article must be identified with (a) the manufacturer’s part number and (b) the manufacturer’s name, trademark, symbol, or other FAA approved manufacturer’s identification. This identification may be something other than a marking where the design approved by the FAA does not include a marking requirements for that subcomponent.

Generally speaking, EASA 145 organizations may accept PMA replacement and modification parts[2] when accompanied by an FAA Form 8130-3 with appropriate certifying statements.[3] The appropriate certifying statements are described in the Technical Implementation Procedures (TIP).

The TIP explain that EASA directly accepts PMA approvals without further showing, for modification and/or replacement parts intended to be installed on EASA-certified/validated products.[4] Additional requirements that apply to PMAs exported from the US to the EU are also described in the TIP.

Subcomponents of PMA parts would be included as replacement or modification parts produced under a PMA approval, so the EASA acceptance of the PMA approval would be sufficient to permit import into EASA of the subcomponents, as long as they meet the other requirements for PMA parts.

In all cases of PMA parts and their subcomponents, the part must fit into one of these three categories:

  • The PMA part is not a critical component.[5] The vast majority of PMA parts are not critical components.
  • The PMA part is a critical component and it conforms to design data obtained under a licensing agreement from the TC or STC holder;[6] or
  • The PMA part is a critical component and the PMA holder holds an EASA STC that incorporates the PMA part.[7]

Parts are required to be accompanied by an FAA-signed 8130-3 tag.[8] The remarks block of the 8130-3 tag should[9] be annotated with language that reflects the category into which the part falls:

  • If the PMA part is not a critical component, then the text should state: “This PMA part is not a critical component.”[10] Remember, the vast majority of PMA parts are not critical components.
  • If the PMA part is a critical component and it conforms to design data obtained under a licensing agreement from the TC or STC holder, then the text should state: “Produced under licensing agreement from the holder of [INSERT TC or STC NUMBER].”[11]
  • If the PMA part is a critical component and the PMA holder holds an EASA STC that incorporates the PMA part, then the text should state: “Produced by the holder of the EASA STC number [INSERT THE FULL REFERENCE OF THE EASA STC INCORPORATING THE PMA]”;[12] or

The word used repeatedly in association with the remarks block annotation is “should” and not “shall.” The permissive “should” is used in both the header language[13] and the subparagraphs identifying the specific recommended text.[14] Typically, required items are described with the imperative “shall”[15] while the term “should” typically describes recommended actions that are not required. As a practical matter; however, European customers often treat this TIP language as if the “shoulds” were mandatory and not merely permissive.

Subcomponents of PMA parts generally ought to follow the same documentation rules as the complete PMA parts, because the FAA approval basis for the subcomponents is still the PMA. Thus, there should be some marking on the 8130-3 tag that is consistent with the design approval holder’s designation. Again, most PMA parts are non-critical and the subcomponents of those parts will also be non-critical.

A very small amount of PMA parts are critical. If the subcomponent is also a critical component, then the language about licensing agreement or the language about an EASA STC number should be included on the 8130-3 tag.

In those very rare cases where the PMA is a critical component but the subcomponent replacement part is not a critical component, there is some ambiguity about how to categorize the part for purposes of identifying the remark-block annotation. When exporting such non-critical PMA subcomponents to the EU, it is unclear whether the annotation should be based on the classification of the PMA itself, because the documentation required by category is based on “the PMA part” (and it is unclear from the text whether this means the top-level assembly or the subcomponent).[16] The most reasonable interpretation of this language is that when the subcomponent itself is not a critical component, then the non-critical language should be used on the 8130-3 tag; however because of the vagueness in the existing language, there is room for the FAA and/or EASA to interpret this position in a different way in the future.

In most cases, though, subcomponents will belong to non-critical PMA parts, so their categorization will remain non-critical at the subcomponent level.

There is one additional documentation requirement for subcomponents of PMA articles; FAA Order 8130.21H explains that the remarks block must reference the fact that the article is a subcomponent of a PMA part:

“When used for an export for a new subcomponent of a PMA/TSO authorization article higher assembly, complete FAA Form 8130-3 with the subcomponent information, and enter a statement in Block 12 indicating the part or article is a subcomponent of a PMA or TSO authorization (for example, “This part is a subcomponent of a PMA/TSO authorization”). (Refer to appendix A, figure A-15, to this order.)”[17]

The parts must be appropriately marked.[18] This means marked in accordance with the TIP.[19] The TIP requires all replacement and modification parts to be marked in accordance with EASA Part 21; however EASA Part 21 does not intend that all parts be marked. The requirements that are applicable to PMA parts are those that apply to all replacement and modification parts, which is that they are marked in the in a manner identified by the applicable design data.[20] Guidance material clarifies EASA’s intent with respect to this provision by explaining that

“It is not the intent of 21.A.804(a)(1) to introduce an obligation for a production organization (manufacturer) to mark new parts or appliances with information which is not identified by the design approval holder. Therefore, the physical marking of parts and appliances is only required when established by the design approval (TC, STC, ETSO, repair, change) holder.”[21]

PMA parts are specifically exempt from the EPA marking requirement;[22] but they are required to be marked in accordance with their approved designs. This means that so long as the complete PMA part is marked in accordance with FAA-approved design requirements, the fact that the subcomponent does not bear the marking (because the marking should be elsewhere) is not a bar to export of the part from the US to the EU. This is consistent with rules that apply to parts manufactured under production certificates, where those parts do not need to be specifically marked unless they are required to be marked according to the approved design.

[1] The PMA holder is permitted to Identify any portion of the PMA article (e.g., sub-assemblies, component parts, or replacement articles) that leave the manufacturer’s facility as FAA approved, so these subcomponents are approved parts. 14 C.F.R. § 21.316(e).

[2] The term “replacement and modification parts” is interpreted as it is used in the Technical Implementation Procedures (TIP).

[3] Agreement between the United States of America and the European Union on Cooperation in the Regulation of Civil Aviation Safety, Annex 1, page CE/USA/Annex 1/Appendix/en 44 (English Version).

[4] Technical Implementation Procedures for Airworthiness and Environmental Certification, para. 2.8.2(a) (rev. 5; Sept 15, 2015).

[5] Id. at para. 2.8.2(a)(1). For PMAs, a critical component is “a part identified as critical … by the exporting authority.” These are parts for which a replacement time, inspection interval, or related limit was specified in the Airworthiness Limitations Section of the Instructions for Continued Airworthiness. Id. at para. 1.6(i). Among those that are, the limitation that makes it critical will be tied to the PMA design approval.

[6] Id. at para. 2.8.2(a)(2)

[7] Id. at para. 2.8.2(a)(3); see also id. at para. 2.8.2(b) (describing the process for obtaining EASA STC).

[8] Note that the language of section 5.1.10(a) suggests that PAH 8130-3 tags, issued in accordance with 21.137(o), would not be acceptable for export to the EU because they are not signed by the FAA and therefore fail to reflect an FAA certification.

[9] The text uses the permissive phrasing “one or more of the following statements should be written in the remarks block”

[10] Technical Implementation Procedures for Airworthiness and Environmental Certification, at para. 5.1.10(b)(1)(i).

[11] Id. at para. 5.1.10(b)(1)(iii).

[12] Id. at para. 5.1.10(b)(1)(ii).

[13] Id. at para. 5.1.10(b)(1).

[14] Id. at para. 5.1.10(b)(1)(i, ii, and iii).

[15] E.g. 14 C.F.R. § 1.3(b)(1) which explains that in the FAA’s regulations, “Shall is used in an imperative sense.”

[16] E.g. Technical Implementation Procedures for Airworthiness and Environmental Certification at para. 5.1.10(b)(1).

[17] Procedures for Completion and Use of the Authorized Release Certificate, FAA Form 8130-3, Airworthiness Approval Tag, FAA Order 8130.21H, para. 4-5(l)(6) (Aug 1, 2013).

[18] Agreement between the United States of America and the European Union on Cooperation in the Regulation of Civil Aviation Safety, Annex 1, paragraph 3.5.2(d), page CE/USA/Annex 1/en 14 (English Version).

[19] Technical Implementation Procedures for Airworthiness and Environmental Certification, para. 5.1.10(a)(3) (rev. 5; Sept 15, 2015) (requiring marking); see also id. at para. 5.5.2(a) (explaining the marking requirements).

[20] EASA 21.A.804(a).

[21] EASA GM 21.A.804(a)(1) (Identification of parts and appliances).

[22] Agreement between the United States of America and the European Union on Cooperation in the Regulation of Civil Aviation Safety, Annex 1, paragraph 3.5.7, page CE/USA/Annex 1/en 15 (English Version).

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Mutual Acceptance of European and US TSOA Components is on the Horizon

July 1, 2015 by Leave a comment

The US and Europe are investigating how to accomplish mutual acceptance of TSOAs and ETSOAs. This could be a huge advance for the aviation community, that could save both industry and government resources.  It also would be great for US parts distributors handling TSOA articles, because it would make it easier to sell these articles into both markets.

The current US-EU Bilateral Airworthiness Safety Agreement (BASA) Technical Implementation Procedures (TIP) allows the FAA and EASA to each issue a TSOA/ETSOA in reliance on certain assurances by the other authority, following certain validation processes by the second authority.  The way that it works is that an authorization holder on one side of the Atlantic applies through its own airworthiness authority for the corollary approval on the other side of the Atlantic.  The application is reviewed by the first airworthiness authority and then forwarded to the second authority for validation.  Once the validation is granted, the article would be marked for both approvals.

But what if you didn’t need two approvals and two markings?  What if you could get one authorization from one authority and it was good for sales into both jurisdictions (US and EU)?

The authorities have announced a plan to mutually accept technical standard order articles from the other jurisdiction. Under this plan the validation process would no longer be necessary (saving both applicant and authority resources). This is a sign that the FAA and EASA have progressed to a point of mutual trust in the TSO authorization process.

The mutual acceptance will not happen overnight. It is part of a lengthy process that began with TSO-ETSO harmonization, and that has involved significant coordination among the authorities. But once it is complete it means that receiving inspectors and installers will have to get used to the idea that approved TSO parts are coming from both the US and Europe, without the intermediate step of validation.

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