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Treasury Makes It Easier to Comply, When Exporting

PMA manufacturers who are exporting their parts from the U.S. need to ensure that they remain in compliance with the U.S. export regulations.  In addition to the BIS and DDTC regulations that apply to aircraft parts, exporters also need to remain in compliance with Treasury Department regulations.

Some of those Treasury Department regulations include lists of people and entities that you ought not to do business with.  Every agency has multiple lists that you need to examine, but Treasury is doing something to consolidate its lists and make it easier to review them. This consolidation should make it easier to search to ensure compliance, whether you are searching on line or using a computer program to automatically research your business partners.

The Treasury Department office with jurisdiction over export programs is the Office of Foreign Asset Control (OFAC).  OFAC has a list of Specially Designated Nationals (SDNs) as well as other (non-SDN) sanctions lists. OFAC is now offering all of its non-SDN sanctions lists in a consolidated set of data files called the Consolidated Sanctions List. This consolidated list will include the following:

  • Non-SDN Palestinian Legislative Council List
  • Part 561 List
  • Non-SDN Iran Sanctions Act List
  • Foreign Sanctions Evaders List
  • Sectoral Sanctions Identifications List

OFAC announced that it plans to discontinue some of these lists as separate lists, so they will only be available as part of the consolidated list.

Persons seeking to check whether there are OFAC sanctions that might apply to their transaction should be sure to check their export business partners (by personal name and company name) against the Specially Designated Nationals List and the Consolidated Sanctions List.

One can also use the Sanctions List Search which consolidates both lists into a single searchable database. This tool is useful because it can automatically search for names that are close (bot not exact matches) and can be set to find matches with different levels of confidence (which will then be reviewed by a human to assess whether they actually match).

Exporters should also check the details of their transaction (including destination country) against the Sanctions Programs and Country Information page, which list sanctions programs based on country and on certain other criteria.

FAA Publishes Designee Management Policy for Public Comment – All Manufacturers Need to Review and Comment

Do you rely on a Designated Engineering Representative (DER) to approve data for your business? Do you use DMIRs for issuing 8130-3 tags?  If you do, then you know how critical designees can be to the parts approval process.  Often, though, designees are required by the FAA to do things that the FAA employees themselves are not permitted to do, like require paperwork that is not required by law or regulation (this can be a violation of the Paperwork Reduction Act), or impose standards of conduct that are not required by law or regulation (this can be a violation of the Administrative Procedures Act). When this happens, the designee has no choice but to obey the instructions from the FAA-Advisor … even if they would be illegal if undertaken by the FAA’s employees.

Want to make sure that designees are not used to do things that FAA employees can’t do (by law)?  The be sure to take the time to offer comments to the FAA Designee Management Policy that is now out for comment.  The FAA has issued for public comment a draft change to the guidance document affecting designees.  Although only parts are changed, it is a potential opportunity to comment on the entire document.

The original guidance is called “Order 8000.95, Designee Management Policy.” It was first issued in April of 2014.

This guidance document provides a wide variety of guidance on how to manage FAA designees. It has not and does not appear to cancel FAA Order 8100.8 (Designee Management Handbook), although some of the guidance appears to address some of the same issues as that guidance (failure to cancel 8100.8 might have been an oversight).

As a practical matter, designees (who are the people most directly affected by this guidance) will not be able to write comments that are critical to this guidance. This is because designees can be terminated for cause or without cause, at the discretion of the FAA. So the FAA can terminate a designee for exercising his or her First Amendment freedoms (as long as they come up with any other pretext for the action, including a termination ‘not for cause’). Designees are well aware of this and they regularly self-censor their comments because of the chilling effect that the FAA’s discretionary termination power has had. In some cases, designees have contacted me because they know that I will protect their anonymity.

The real-world issue us that designees rely on their designation from the FAA to ply their trade. If they are terminated (for-cause or not-for-cause) then they cannot simply be a designee for someone else. They need to choose a entirely different career path. So the process for reviewing designee termination is very important. And both the current policy and the draft policy are woefully inadequate, because they offer no standards for review, so the FAA employees are able to rubber stamp any termination decision on review. Honest review depends 100% on the personal integrity of the reviewing personnel – and there is no formal training for the employees who act as reviewers in that process (by comparison, state court judges typically attend judicial training).

The FAA’s failure to have effective standards actually undermines the FAA’s own interests. One example arises in the context of designee termination. The lack of effective standards means that individual FAA employees can cause the termination of a designee for any reason, including a reason that would have been considered to be illegal if it was used to terminate an employee, as long as the party who initiates the termination offers a pretextual reason. There is no formal inquiry into such pretext – it is taken at face value – and the VERY short time period for presenting a defense means that it is tough to be effective in assembling a defense: the full appeal including all supporting evidence must be submitted within 15 days – while the designee is given the charges, he or she has no opportunity to review the FAA’s underlying evidence. In comparison, the appeals panel has 45 days to consider the appeal and then another 15 days to notify the designee of their decision for a total of 60 days. We have seen evidence that FAA inspectors will use this period to gather more evidence to refute the defense and bolster the ‘prosecution’ so clearly the FAA is not bound to any sort of deadline for presenting its own case.

There is plenty that could be improved in the designee management process.

This is a great opportunity to help the FAA to better manage the designee community using effective processes that ensure fairness for everyone. MARPA members should strongly consider reviewing and commenting on this draft guidance.

Comments are dues to the FAA by January 7. Please send comments to MARPA, as well, so we can sure that our comments reflect your concerns.

Comments Due: 01/07/2015
How to Comment: Deliver comments by mail or hand to:
Susan Hill
1625 K Street NW
Suite 300
Washington DC, 20006Email comments to: Susan.ctr.hill@faa.gov
Email CommentsFax comments to:
(202) 223-4615, Attn: Susan Hill

UPDATE:

My comment on the cancellation of FAA Order 8100.8 failed to take into account FAA Notice 8000.372.  That Notice directs all AIR manufacturing personnel who oversee designees to stop using Order 8100.8 and being using 8000.95 on a schedule.  The schedule reflects the implementation of the Designee Management System (DMS) in those offices.

Under that schedule, all MIDOs with designee management responsibilities should have transitioned to Order 8000.95 during the summer (of 2014).  So Order 8000.95 will have supplanted 8100.8 for MIDOS (but not necessarily for ACOs and FSDOs).  This means that DMIRs and DAR-Fs have transitioned.  But DERs should still be under 8100.8 until they are formally transitioned (at which time they will fall under the instructions of 8000.95).

Special thanks to William Denihan for pointing this out!

Be sure to Request the Referenced Service Bulletin in Airworthiness Directives!

Have you ever been frustrated to learn that an AD went out that references a service bulletin, and (too late!) you later learned that the service bulletin made disparaging remarks or provided inappropriate directions about your company or your parts?

How do you prevent this situation?  You need to get a copy of the service bulletin that is cross referenced by the AD, and review it before the AD rule becomes final.  But sometimes no one will provide the service bulletin to you!

That just shouldn’t be the case.  If an AD might indirectly affect you because of the cross referenced service bulletin, then you should be entitled to review the service bulletin before it becomes part of a regulation.

The U.S. government agrees!!

The U.S. Office of the Federal Register has published a new rule designed to make government rules more transparent.  It accomplishes this by addressing incorporation-by-reference.

What is Incorporation-by-Reference?

Incorporation-by-Reference (or IBR) is the term for regulations that make reference to some other document that is not published in the rule. Historically, incorporation-by-reference came about because it cost money to print the Federal Register, and wasting a lot of pages on a standard that could easily be obtained outside of the Federal Register. But today, most people access the regulations and the Federal Register on line, so there is not as much of a burden associated with publishing such documents. Incorporation-by-reference can be an issue for the public because when an incorporated document is merely technically available – but it is not really available – then this can make it difficult or impossible for an affected person to comply with the regulation (and can make it impossible for the affected person to even know that (s)he is subject to the regulation).

In short, unavailable-but-incorporated documents can reflect secret regulations that are impossible to comply with.

With this in mind, the Administrative Conference of the US began to study what could be done to update the rules to reflect modern technology. This ultimately led to the Office of the Federal Register looking into potential changes to the rules on incorporation-by-reference.

Some Problems with Incorporation-by-Reference

The aviation industry faces many challenges related to incorporation-by-reference. An issue that can be very important to MARPA’s members is the availability of referenced documents in Airworthiness Directives(ADs), like service bulletins.  Service bulletin language can affect PMA parts, and can even disparage PMA parts in ways that are inappropriate.

Timely availability to the PMA community of these service bulletins can be a serious issue.  It is typical for the FAA’s incorporation-by-reference statement to insist that the incorporated service bulletins be obtained either from the FAA office or from the OEM who published the document. In order to test this system, I emailed an FAA office and an OEM who were described as the sources of a service bulletin (the Federal Register listed the emails and listed this as an acceptable way to make contact). The FAA response was that I should go to the OEM. The OEM response was to ask me why I wanted the service bulletin. When I responded that the service bulletin was incorporated by reference in a proposed AD, and I wanted a copy of the service bulletin to determine whether the trade association needed to file comments on behalf of the membership, I received no further communication from the OEM.  They just stopped responding to me.

MARPA Action

MARPA filed comments on the Advance Notice for this proposal and offered a number of suggestions in 2012. MARPA also participated in face-to-face meetings with the government to discuss ways to improve the current system.

The result was a new rule that clarifies obligations related to regulations that incorporate standards by reference.

What Changes Should You Expect?

It is important that incorporated material be available in proposed rules so that the public can comment on the proposed rule with full knowledge fo the proposed rule’s impact. Under the new standards (1 C.F.R. 51.5(a)), the preamble to a proposed rule must :

  1. Discuss the agency’s efforts to make the IBR materials reasonably available to interested parties, and
  2. Summarize the material it proposes to incorporate by reference in the preamble.

When the agency is ready to publish a final rule with an IBR, the agency must do the following (1 C.F.R. 51.5(b)):

  1. Ask for permission from the Office of the Federal Register to accomplish an IBR,
  2. Explain in the preamble to the final rule how interested parties can get a copy of the IBRed materials (it must be “reasonably available”), and
  3. Ensure a copy of the IBRed publication is on file at the Office of the Federal Register.

An important feature of the regulations is the requirement to discuss availability to “interested parties.” This is an expansion of the traditional language, which merely required availability to “the class of persons affected by the publication.” Interested persons should include persons who are indirectly affected (like those whose PMA parts MIGHT be affected in the case of an airworthiness directive) in addition to class of persons directly affected by the publication (which is generally operators).

The regulations continue to explain that IBR is limited to the edition that is incorporated. So if a subsequent revision of a service bulletin comes out, only the version that was approved by the Office of the Federal Register is the version that is IBRed (and not subsequent versions). 1 C.F.R. 51.1(f).

One sad omission was that the new rule does not define “reasonably available.”  The Office of Federal Register was worried that a definition might be inappropriate, so they were hesitant to offer a definition, and instead they have left it to a case-by-case analysis as defined by each agency.  But it seems certain that if you make a reasonable effort to obtain an IBRed service bulletin using the mechanism in the Federal Register, and you are denied, then you may have a claim that the service bulletin was not reasonably available.

While we did not get every change we requested, this nonetheless represents a good start on the process of providing better transparency in the situations of incorporation-by-reference.

Draft Policy Concerning § 33.83 Engine Surveys Due Next Week

We previously wrote in this space about a new Draft Policy Statement issued by the FAA concerning the vibration surveys and engine surveys required under section 33.83 of the Federal Aviation Regulations.  The draft guidance attempts to more narrowly address the FAA’s concerns about full engine test for type certificate applicants.

MARPA plans to provide comments on this Draft Policy Statement to the FAA and has sent a draft of our comments to the MARPA Technical Committee for review.  If any of our members wish to review our draft comments to provide their feedback we would love to hear from you.  Please email Ryan Aggergaard at ryan@washingtonaviation.com if there are particular issues in the draft statement you believe should be addressed so that we can incorporate our members’ concerns.

MARPA also encourages our members to file their own comments on the Draft Policy Statement.  Comments are due to the FAA by November 21, 2014.  Comments should be emailed to Dorina Mihail at dorina.mihail@faa.gov. Comments can also be mailed to her at:

Federal Aviation Administration
Engine and Propeller Directorate
Standards Staff, ANW-111
12 New England Executive Park
Burlington, MA 01803

MARPA looks forward to your comments.

New Guidance: Casting and Proof of Structure

The FAA has released two new advisory circulars that may affect the PMA community.  Both advisory circulars are issued by the Transport Aircraft Directorate and apply to Part 25 aircraft (and parts thereof).

  • Casting Factors, AC 25.621-1: This AC provides guidance for meeting the requirements of 14 C.F.R. 25.621.
    • This regulation imposes limits and restrictions on casting, and also requires a design approval applicant/holder to have control over the operations of a vendor casting facility.
    • The intention of both the regulation and the AC is to drive greater levels of consistency into casting (or to mitigate inconsistencies).
    • Discusses a means of qualifying a casting process

 

  • Proof of Structure, AC 25.307-1: This AC provides guidance for meeting the requirements of 14 C.F.R. 25.307.
    • This regulation is for the demonstration of compliance for each critical loading condition.
    • The AC provides a list of factors that should be considered in deciding the need for and the extent of testing, including the load levels to be achieved.
    • The AC states that there are four certification approaches to choose from (and provides guidance on each one):
      • Analysis supported by new strength testing of the structure to limit and ultimate load.
      • Analysis validated by previous test evidence and supported with additional limited testing.
      • Analysis supported by previous test evidence.
      • Test only.

We would be interested in hearing from any MARPA member who is affected by one of these new advisory circulars.

FAA Issues Statistical Analysis Guidance – Are You Testing Enough Parts?

The FAA has issued a new advisory circular for statistical analysis.  This AC only applies to engine and APU parts.

The new advisory circular uses statistical analysis to arrive at correct sample sizes.  This sample size formula is introduced for persons who are trying to correlate two populations of parts.  MARPA had pointed out to the FAA that typically a PMA applicant does not correlate two different populations of parts – instead they derive the reasonable tolerances on one population of parts, and then design and produce within those tolerances.  The FAA would like PMA applicants to arrive at their appropriate sample size, test the parts being reverse-engineered, and then produce an equivalent number of pre-PMA parts to test for the same properties (and then correlate the two populations).  This is contrary to current FAA regulatory guidance, which requires the design to be approved and the  requires the production quality system to ensure that parts are all produced within the approved design parameters.  In essence, ACO engineers will now take control of the quality assurance system through the design process.

One of the problems with the AC is that it relied on statistical analysis for clinical trial sample size as the basis for assessing statistical analysis of reverse-engineering sample size.  Clinical trials for pharmaceuticals typically rely on populations of hundreds or even thousands of people.  Trying to test hundreds or thousands of parts in order to reverse-engineer them is simply not realistic.  Furthermore, the degree of part-to-part difference under modern quality assurance systems does not support such large sample sizes.
For those cases where the equations in the advisory circular give a lower number for the appropriate sample size, the FAA has also established minimum sample sizes.  The AC sets some minimum limits for the number of parts that must be tested in order to derive certain values (remember that you need that number of PC parts and also that number of reverse-engineered parts to meet the AC’s requirements):

Minimum Number of Parts to be Sampled

  • For basic material properties that are more dependent on alloy constituency than on part manufacture process – 10 approved parts from three separate lots with at least three parts per lot
  • For properties affected by how the material is processed during part manufacture such as high-cycle fatigue, low-cycle fatigue, creep, tensile strength, crack growth, etc. – 30 approved parts
  • For fatigue testing – at least 25 tested parts that are run until they crack
  • For parts exhibiting complex geometry or complex manufacturing variables, additional specimens may be required
  • For parts considered to have a high degree of criticality, greater sample sizes may be required

No statistical basis is offered for these minimum sample sizes.

The new advisory circular provides guidance for statistical analysis of sample-size despite the fact that no regulation actually requires such a broad-based sample.  The advisory circular appears to potentially change the regulations by increasing the burden on applicants.  To the extent that this is true, it is inappropriate.

Our concern is that despite warnings that this is non-mandatory guidance, this guidance may be used as if it were a regulation, with offices refusing to accept PMA applications that are otherwise valid, but that failed to use this AC as a basis for identifying sample size.

If you find that this AC effectively changes the application obligations imposed on you as a PMA applicant, STC applicant, or other FAA-approval applicant, then please contact MARPA so we can raise this concern with the appropriate personnel at the FAA.

AC 33-10 is known by its full title: Statistical Analysis Considerations for Comparative Test and Analysis Based Compliance Findings for Turbine Engine and Auxiliary Power Unit Replacement, Redesign and Repaired Parts.

Inappropriate Restrictions on the Use and Availability of ICAs

Some of you may be wondering where to find the FAA’s policy memo on design approval holder restrictions on ICA availability.  Older MARPA links to the original position of that guidance are no longer valid because it has been moved.  But it is still available if you know where to look!

Many MARPA members look for this policy memo because it clarifies that anti-competitive language in ICAs (restricting use of PMAs or third party repairs) is unacceptable to the FAA:

While not exhaustive, the FAA finds the following practices of using restrictive language in the ICA or through restrictive access or use agreements unacceptable under the provisions of 14 CFR §21.50(b) and related ICA airworthiness requirements:

1) Requiring the owner/operator to only install DAH-produced or authorized replacement parts, articles, appliances, or materials.
2) Requiring that alterations or repairs must be provided or otherwise authorized by the DAH.
3) Requiring the use of only maintenance providers or other persons authorized by the DAH to implement the ICA.
4) Establishing, or attempting to establish, any restriction on the owner/operator to disclose or provide the ICA to persons authorized by the FAA to implement the ICA.

The guidance has found a permanent home in the FAA Regulatory and Guidance Library.  A copy of that guidance is also available on the MARPA website.

MARPA and FAA Talk Policy

MARPA had a very good meeting today with Mark Bouyer and Ann Azevedo of the FAA’s Engine and Propeller Directorate (EPD).

The focus of the meeting was status on EPD policy that may affect PMA manufacturers.

Azevedo explained that she has responded to the comments on the Statistics Advisory Circular (AC), and hopes to have the final draft of that guidance available to the public by September.   The Statistics AC is meant to address FAA concerns that have been recognized in practice, such as misusing statistical methods to show equivalence, and underestimating the appropriate sample sizes.

Bouyer expects the Materials AC to go out for public comment this month.  The Materials AC will identify the essential data that is necessary when a PMA applicant is trying to replace the material used in the type design.  MARPA members should watch for this one, and be prepared to offer their comments.

The FAA had published the Geometry AC for comment.  This AC is meant to enhance awareness of how reverse engineering can introduce dimensional differences in replacement parts.  MARPA Board members have expressed that the draft of this proposed guidance appeared to be very helpful to the industy.

The Burner Rig AC, which was also previously out for comment, is expected to be issued by September. It is expected to provide a method for establishing functional equivalence for certain degradation modes in parts such as oxidation, hot corrosion, erosion, etc. The AC is expected to identify existing technology as a means of compliance.

Finally, the FAA is internally reviewing AC 33.8 with a plan to update and clarify the AC. The updates are intended to make the AC easier to use.

The FAA has been very active and diligent in preparing guidance.  In the immediate future (before the Conference), MARPA members should expect to see the release version of the Statistics AC and the Burner Rig AC, and they should expect to see the Materials AC go out for comment.

MARPA Files Comments on FAA Geometry AC

MARPA recently filed comments on the FAA Engine and Propeller Directorate’s draft Advisory Circular 33-Geometry, discussing geometry and dimensional considerations for comparative test and analysis for turbine engine and APU replacement parts.  In a previous blog post we observed that AC identified a number dimensional and geometric factors that the FAA expects to be assessed in ensuring the integrity of dimensional characteristics for the purposes of showing similarity.

We requested feedback from our members describing to what extent the FAA’s expectations were reasonable and practicable, and identifying any issues with the proposed guidance on which MARPA should comment. We received several very helpful responses from our members that helped us shape our comments to the proposed AC. Among the issues members identified were:

    •  Possible confusion over availability of existing industry guidance;
    •  Apparent inconsistency with existing FAA guidance;
    •  Inaccurate implications that product testing is the only method available to collect data for lifing methods of life limited parts; and
    •  Issues regarding the specific practice of part selection for selective assembly components.

Feedback from our members is both helpful and valuable to our comments, as it helps us to identify issues that directly affect members’ businesses, and helps us to better focus our resources on those matters that are important to the PMA community.  The result is more detailed and on-point responses to the FAA to better help shape the guidance material that will ultimately be issued.

We greatly appreciate the feedback we received from our members on this Advisory Circular, and we hope that our members will continue to answers our requests for responses as additional guidance and rulemaking documents are issued.  Together we can work with the FAA to develop the best possible guidance for our industry.

Your Feedback Needed on Engine Endurance Test Draft AC

The FAA is currently seeking comments on its Draft Advisory Circular Engine Overtorque Test, Calibration Test, Endurance Test, and Teardown Inspection for Turbine Engine Certification (§§ 33.84, 33.85, 33.87, 33.93).

As the title suggests, the AC offers guidance on compliance with the engine overtorque, calibration, and endurance tests, and teardown inspection called out in Part 33 of the Federal Aviation Regulations.  Although the guidance is directed at engine manufacturers, foreign regulatory authorities, applicants for engine type design approval, and FAA designees, it also notes that parts manufacturer approvals “may require running certain endurance testing for compliance with § 33.87″ and refers to AC 33.87-2 for guidance on showing compliance by comparative test methods.

MARPA would like to know to what extent members anticipate this AC might effect them, and whether we should submit comments.  If you plan on submitting comments, or have already done so, we would would like your feedback so that we can incorporate member concerns into our comments.

Comments on the Draft AC are due next week, so if you have feedback for us please submit them to ryan@washingtonaviation.com soon!

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