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Jason Dickstein

Mr. Dickstein is the President of the Washington Aviation Group, a Washington, DC-based aviation law firm. He represents several aviation trade associations, including the Aviation Suppliers Association, the Aircraft Electronics Association, the Aircraft Fleet Recycling Association and the Modification and Replacement Parts Association.
Jason Dickstein has written 326 posts for MARPA

Copa Airlines Golf Tournament – Help Copa Give Back

Copa Airlines is sponsoring a golf tournament on February 17-19 to raise money for five Panamanian charities.

  • National Association of Chemotherapy Patients (supporting cancer patients in Panama)
  • Centro de Alcance Positivo por mi Barrio 24 de Diciembre (a USAID cooperative effort to support troubled youth)
  • Parroquia de Fatima (which feeds 650 hungry people in Panama City every day)
  • Nutrehogar (preventing malnutrition of children from the most impoverished communities in Panama)
  • CEPACEI (providing kindergarten programs in Tocumen)

For five years, Copa’s aim with this golf tournament has been to support the battle against cancer, to support the less fortunate, and to promote education.

Those of you who were at the MARPA Conference last month heard Ahmad Zamany’s comments in support of the PMA community.  Ahmad is Copa’s Vice President of Technical Operations and he has been a vocal supporter of PMAs – extolling their reliability improvements, and publicly announcing his airline’s refusal to sign any leasing agreement that would seek to prevent his airline from using FAA-PMA parts.

Copa has been a leader in the aviation community – this is a great opportunity to partner with Copa in its efforts to make the world a better place (not to mention the marketing opportunities for those who seek to do business in South and Central America).

Please contact Wendy Ross (office +5072 38 1850, cell +5076480-464o3, or email wross@copaair.com) for further details on how you can participate in the tournament as a golfer or join as a sponsor (or both).

 

Don’t Panic: Why the Election Results Should Not Undermine Aviation Business

I have been watching the election results here in China (I am in China for an MRO & Aftermarket Conference in Shanghai). Before the election results began to roll-in, I flipped through the Chinese language channels and passed a news station that had a graphic of Donald Trump with a collection of speech bubbles. Every speech bubble was filled with the word “China” in English. I could not understand the newscasters, who spoke in Chinese, but it was clear that they were expressing concern over what a Trump victory could mean for China. This sentiment, in different forms, has been expressed to me by colleagues from both Asia and Europe, who wonder what President Trump could mean for international business.

This is a legitimate concern. CNN reported that trade was one of the three most important ‘exit poll’ issues that people think Donald Trump will be able to address as President (along with immigration and terrorism). As a candidate, President-elect Trump has expressed his desire to “tear-up” a number of international agreements, including NAFTA and the (as-yet unimplemented) Trans-Pacific Partnership.

But for our industry – for aviation – the level of concern should be a little different. International transactions involving aircraft and their parts are generally governed by the Agreement on Trade in Civil Aircraft (ATCA). No one is talking about eliminating this agreement.  Part of the reason that this agreement is likely to be safety from the new Administration’s ‘red pen’ is because the US has always enjoyed a favorable aerospace trade balance.

ATCA expresses that aircraft and their parts will cross international borders free of tariffs.  They will also pass free of technical barriers to trade (that is, technical regulations and standards will be non-discriminatory, will remain focused on safety, and will not create unnecessary obstacles to aviation trade).

So the agreements like NAFTA and TPP that permit free trade in goods are unnecessary to most of the aviation industry because so many aircraft parts are already insulated from the limits that NAFTA and TPP would proscribe for other goods.

There are parts that fall outside of the scope of the ATCA. You can see a discussion of these parts here.  Some of these parts may still be subject to tariffs; and tariffs on these parts could have been lowered or eliminated by agreements like NAFTA and TPP.  Repudiation of such agreements could lead to continuation or implementation of tariffs on these parts.  But most aircraft parts remain within the tariff-protected category of ATCA.

Probably the biggest concern is not a legal issue, nor an issue of how the new Administration will pursue trade agreements with the US trading partners; rather the most significant issue will be the psychological fall-out of unrelated trade issues.  If the US imposes restrictions on the import of unrelated Chinese goods, then this could adversely affect the desire of Chinese buyers to purchase aircraft parts from America.  While this may not be a limit directly related to the regulatory policies of the new Administration, it reflects a real-world concern; but we can address this real world concern with real-world remedies.

The best way to address these concerns is to reach out to your trading partners – let them each know that you remain committed to the relationship – and let them know that you are going to work to ensure that your government remains open to your business relationships.  Let them know that the new Administration will likely have significant affects on US policy; but it is less likely to affect aviation.  In fact, the FAA Administrator serves a five-year term in order to better insulate the FAA Administrator from political concerns that might interfere with the FAA’s safety focus.  Unlike the Assistant Administrators, who are political appointees, the FAA official in charge of safety regulations (and the bilateral agreements which affect trade) is a member of the Senior Executive Service.  She is not subject to summary dismissal by the President.  Because of this, the  Trump Administration will be unlikely to immediately affect the FAA’s senior leadership that impact the way that the FAA handles international aircraft parts transactions.  So ‘business as usual’ is a very real possibility.

MARPA will do its part, as well. We will continue to work with the US Commerce Department on policies that advance the interests of the community of FAA-approved aircraft parts producers.  We will also continue to work with the FAA leadership on the technical and safety issues that can affect trade in civil aircraft parts.  And we will continue to let our trading partners know that PMA parts are safe, FAA-approved components that can be trusted to keep aviation safe.

In the immortal words of Douglas Adams, “Don’t panic.”

New Required Language for Exports

A new regulation has changed the destination control statement (“DCS”) that is required on all exports of PMA aircraft parts.

PMA aircraft parts are typically exported under the jurisdiction of the Commerce Department’s Bureau of Industry and Security (BIS).  If you export aircraft parts, then the BIS regulations require a DCS.  These regulations have been changed to harmonize the DCS to the same language as the ITAR DCS.

Te DCS is placed on each export control document that accompanies an export shipment. The export control documents that are required to show this statement include the invoice, the bill of lading, the air waybill, and any other export control document that accompanies the shipment from its point of origin in the United States to the ultimate consignee or end-user abroad.

This is sometimes known as the ‘non-diversion statement’ because the current version includes language stating that “diversion contrary to U.S. law is prohibited.” The purpose of the DCS was to alert parties outside the United States that the item is subject to the US export regulations.

The rules have always held that compliance with the comparable ITAR requirement was an acceptable means of compliance where the shipment included both ITAR and EAR-controlled articles. The comparable ITAR requirement requires slightly different language. Many people nonetheless found the different language in each regulation to be confusing.

The Commerce Department has changed their DCS language to harmonize it with the ITAR-required-language. This is meant to make compliance easier. Starting on the implementation date of the rule (November 15, 2016), exporters of articles subject to BIS jurisdiction (those with ECCNs) should use the following destination control statement on all exports:

“These items are controlled by the U.S. Government and authorized for export only to the country of ultimate destination for use by the ultimate consignee or end-user(s) herein identified. They may not be resold, transferred, or otherwise disposed of, to any other country or to any person other than the authorized ultimate consignee or end-user(s), either in their original form or after being incorporated into other items, without first obtaining approval from the U.S. government or as otherwise authorized by U.S. law and regulations”

In addition, the DCS should show the Export Commodity Classification Number (ECCN) for any 9×515 or ‘600 series’ (nx6nn) items being exported.

There are exceptions to this DCS requirement for EAR 99 exports and also for exports under license exceptions BAG (baggage) and GFT (gift parcels and humanitarian donations), but typically these do not apply to exports of PMA aircraft parts.

Transforming the Way the FAA Does Business

On Wednesday, the FAA sat down with industry to discussed what the next generation of the FAA will look like.  The FAA has a very ambitious plan to change the way that aerospace manufacturing operates, and to make concurrent changes to the FAA itself to reflect these new paradigms.

“What we are talking about is a transformation in the way we do business”
— FAA Executive Chris Carter

The FAA’s goal is to have a more efficient way to perform certification.  This should allows applicants (for approvals like TCs, STCs, PMAs, TSOAs, etc.) to have more control over the approval/certification schedule.  But that control will come at a price – the FAA will expect the applicants to have a greater level of accountability for the design process.

At the root of the FAA’s changes is a transformation from compliance control (in which the FAA acts as a gatekeeper, accepting industry inputs and then judging the inputs for compliance) and moving to compliance assurance model. Companies would have their own compliance assurance systems which would help ensure that the company continues to maintain compliance with each new design.  Instead of making a showing to the FAA, the company would make the showing to the resources within its own system, and then its won system would review the data and ensures continued compliance within the system. Under the compliance assurance model, instead of looking at data to assess compliance, the FAA will oversee the compliance systems of the companies.  This means that each company would have a self-correcting system and the FAA’s job would be to ensures that the systems work.

One of the challenges facing the FAA is making this scalable.  Scalable system will need to be able to fit the needs of the largest and the smallest companies, and will need to fit a range from mature businesses with robust systems to brand new market entries who do not yet have mature systems.

The FAA envisions a system that resembles a multi-lane swimming pool.  The lanes will represent new companies that need significant FAA attention, mid-life companies who need FAA support but do not demand the same attention as new companies, and to mature companies with mature systems.  The last category will be the “independent lane” and the FAA expects that there will be tremendous incentives to be in that lane, as it would permit a company to more independently pursue projects – without direct FAA involvement in certification that can slow a project down.

Chris Carter of the FAA stressed that industry needs to be a willing participant in order to make this work, because it will require industry to shoulder new burdens.  If industry is not a partner then this will not work.

The FAA expects to have headquarters units under the reorganization that have very specific roles, like ensuring that changes are properly managed.  Under the concurrent reorganization, it is expected that existing FAA field structure will be replaced with centers of excellence around the country.  Those centers will report directly to headquarters. They will feature employees from many or all of the new divisions of aircraft certification.  It is possible that PMA applicants may be directed to a center of excellence that is geographically distant from their location, but that robust communications are still expected using modern technologies.

There are many reasons for doing this, but one of them is the FAA’s awareness of the growing globalization of the market.  Other countries are entering the market.  Nations like Japan and China want to be part of the international discussions.  A recent deal among four authorities (ANAC TCCA EASA and FAA) highlights the need for other nations to join the discussion as their citizens begin to develop airframes and engines.

The FAA’s transformation is still a work in progress, but as more ideas become solidified we hope to continue to bring the industr ynews of what the next generation of the FAA will look like.

Implement Your 8130-3 Tag Privileges today!

14 C.F.R. 21.137(o) permits Production Approval Holders, like PMA companies, to issue their own 8130-3 tags for new parts (without recourse to a designee).

In order to issue 8130-3 tags, the Production Approval Holder (PAH) must develop and implement procedures addressing the selection, appointment, training, management, and removal of individuals authorized to issue 8130-3 tags.  MARPA published a compliance checklist to aid our members last Fall, and it provides suggestions about how to draft the procedures.   This was a members-only document so if you are a MARPA member and need a fresh copy of the checklist then please contact us directly.

On June 24, the FAA published additional guidance  (Policy Number AIR100-16-110-GM16) to assist industry in using this new rule.  Some key points raised in this new guidance include:

  • Some or all of these required procedures may already be in place for persons performing inspections, issuing or causing C of Cs to be issued, or performing other functions relating to the PAH’s compliance with 14 CFR §§ 21.146(c), 21.316(c) and 21.616(c).  The PAH can rely on the existing procedures as the basis for issuing the 8130-3 tags, as long as they are tied together consistent with 21.137(o).
  • The PAH may select any individual to sign an 8130-3 on its behalf. These individuals may be inspectors, persons who currently issue certificates of conformity (C of C) to be issued or other person designated by the PAH to issue the form for the PAH.
  • Looking for training? A PAH may, but is not required to, use designee qualifications and training as a guide for authorizing individuals to sign 8130-3 tags.  A PAH retains flexibility to choose how it intends to train the selected individual(s).
  • If 8130-3 tags are used for export, the 21.137(o) authorized representatives must be trained on:

a. 14 CFR part 21, subpart L,
b. Applicable bilateral agreements,
c. Advisory Circular 21-2, Special Requirements of Importing Countries, Appendix 2, and
d. Chapters 1, 2, and 4 of FAA Order 8130.21, Procedures for Completion and Use of the Authorized Release Certificate, FAA Form 8130-3, Airworthiness Approval Tag.
e. The training must include potential differences in how the forms are issued for domestic vs. export use.

  • Have existing DMIRS or other designees?  A PAH implementing § 21.137(o) may retain its existing designees with functions related to 8130-3 tags until April 1, 2018 (by or before April 1, 2018, the FAA expects such designees to become redundant).
  • How do you implement? You may implement § 21.137(o) procedures without prior approval from the Manufacturing Inspection District Office.  The changes are subject to normal FAA review, like any other change to a PAH’s quality system.

The revisions to the Maintenance Annex Guidance are requiring repair stations to increase their need for 8130-3 tags so it is important for PMA manufacturers to implement 21.137(o) programs to make those tags available.

If you are having problems implementing 8130-3 tag procedures because the local FAA office is not cooperating, then please  let MARPA know so we can assist you.

DRAFT Materials Advisory Circular – Extension of the Comment Period

Many of our members have been communicating with us about their concerns over the proposed Materials AC. We had previously asked the PMA community to send us their comments and concerns so we could assemble them into a single missive to deliver to the FAA.

We’ve heard from a number of you that the large volume of material and the highly technical nature of the proposed AC has made it slow going to put together your comments.  With this in mind, MARPA asked the FAA last week for a extension of time to file comments on this draft.

We received the answer today, granting that extension.

Dear Mr. Ryan Aggergaard,

This e-mail is in response to your request to grant a 90 day extension to comment on the FAA public draft Advisory Circular 33.15-3, titled “Parts Manufacturer Approval (PMA) Metallic Part Material Compliance Using Comparative Test and Analysis Method for Turbine Engines or Auxiliary Power Units”.

The FAA will consider comments after the comment period has closed if it is possible to do so without incurring expense or delay.

We have determined there will be no incurring expense or delay, and will grant the MARPA members and the MARPA Technical Committee an extension from July 20, 2016, to October 18, 2016.

Please feel free to contact us if you have any questions or concerns.

Sincerely,

Judith Watson

Please do not wait until October to review this AC and develop your comments.  The earlier you can provide your comments and concerns to the FAA (and to MARPA), the better able we will be to address them in a positive and productive way with the FAA.

EASA is Moving

By Monday, the European Aviation Safety Agency (EASA) will have a new location. The new location is closer to the main Koln train station (same side of the river). As of June 6, 2016 EASA will be operating from their new Headquarters located at:

Konrad-Adenauer-Ufer 3
D-50668 Cologne, Germany

The post-office box as well as all telephone numbers remain the same:

Postfach 10 12 53
D-50452 Cologne, Germany

Tel: +49 221 8999 000
Email: info@easa.europa.eu

GECAS Says it has No Safety or Technical Issues with PMA

GECAS’ Gilberto Peralta turned some heads at CCMA yesterday when he said that he sees no safety or technical issues with PMAs.  He explained that his only objections to PMAs are commercial.

Peralta is the GECAS General Manager for Latin America and the Caribbean.  ALTA representatives confirmed that GECAS is the most significant leasing company in South America.  Peralta was part of the CCMA panel discussing the technical and commercial aspects of PMA parts.

He explained that GECAS’ standard lease agreement excludes PMAs, and therefore he expects that the lease terms will control the use of PMAs.  He explained that the reason for this term is because of a fear that air carriers will not accept a leased aircraft with installed PMAs. Several operators in the audience suggested that their only impediment to accepting PMAs is the anti-PMA lease terms.  David Linebaugh of Delta, who was also part of the same panel, suggested that this is a chicken-and-the-egg situation, in which operators and lessors blame one another for erecting walls against PMA when they really all just need to get out of the way of progress.

The audience asked Peralta whether GECAS would accept use of PMAs during the term of the lease if those PMA parts were removed and replaced in pars manufacture under a production certificate (“OEM” parts).  Peralta explained “I don’t know what you do with the the aircraft during the lease term,” and expressed that his concern was only with the condition of the aircraft at the time of return.  He added that he would expect the lessee to take responsibility for such PMA part failures.  Mike Garcia of HEICO, who was also part of the panel, explained that HEICO offers a generous warranty to support its parts (so operator liability should not be an issue); but he also noted that HEICO has never experienced an airworthiness directive or service bulletin on any of its articles.

FAA Deputy Associate Administrator John Hickey was also on hand as part of the same panel.  He noted that the FAA has issued a very small number of airworthiness directives against PMA parts,  but that the FAA issues “two hundred, three hundred, even four hundred ADs per year” against PC holders products and articles.  He noted that the PMA community has an excellent safety record, and that the FAA has rigorous design approval and production approval processes intended to ensure that FAA approved designs – and the parts created under them – remain compliant with the FAA’s regulatory safety standards.

New Trade Secret Law and Whistleblower Protection – How to Protect Your Business

Yesterday, we wrote about the new trade secret law, which provides a federal cause of action for trade secret infringement.  The new law, known as the Defend Trade Secrets Act of 2016 (DTSA), is identified as Public Law 114-153.

It is very normal for aerospace manufacturers to have (or at least claim) trade secrets, and to seek to protect them through agreements with their employees.  Such agreements often include confidentiality clauses.  They may address trade secrets like product design functions, as well as trade secrets like customer lists and financial data.  Provisions of the new law will impose some affirmative burdens on employers, and if you fail to meet those obligations then you could undermine your company’s intellectual property rights.

WHISTLE BLOWER PROTECTION

The DTSA provides whistleblower protection to certain employees who disclose trade secrets to the Government (including in a court filing).  The whistleblower immunity applies if the employee discloses a trade secret, but does so in one of these contexts:

  • A confidential disclosure to a Federal, State, or local government official, either directly or indirectly, or to an attorney (but only for the purpose of reporting or investigating a suspected violation of law); or
  • A disclosure made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal.

NEW NOTICE REQUIREMENTS

But there is an even more important clause for employers to understand.  There is an additional clause in the law that requires employers to provide notice of the whistle blower immunity.  This clause says:

(3) NOTICE.—

(A) IN GENERAL.—An employer shall provide notice of the immunity set forth in this subsection in any contract or agreement with an employee that governs the use of a trade secret or other confidential information.

(B) POLICY DOCUMENT.—An employer shall be considered to be in compliance with the notice requirement in subparagraph (A) if the employer provides a cross-reference to a policy document provided to the employee that sets forth the employer’s reporting policy for a suspected violation of law.

(C) NON-COMPLIANCE.—If an employer does not comply with the notice requirement in subparagraph (A), the employer may not be awarded exemplary damages or attorney fees under subparagraph (C) or (D) of section 1836(b)(3) in an action against an employee to whom notice was not provided.

(D) APPLICABILITY.—This paragraph shall apply to contracts and agreements that are entered into or updated after the date of enactment of this subsection.

(4) EMPLOYEE DEFINED.—For purposes of this subsection, the term ‘employee’ includes any individual performing work as a contractor or consultant for an employer.

This imposes an affirmative duty on employers to notify their employee of the immunity in the DTSA.  This needs to be done in the confidentiality agreement that governs the use of the trade secrets.  So if your employees each sign a confidentiality agreement (or employment agreement that includes confidentiality obligations) at the time of hiring, then this should be modified to reflect the requirements of the law.  This new language should be reflected in every contract addressing confidentiality provisions that is entered into on or after May 12, 2016 (today).

Old and existing contracts (those entered-into before May 12, 2016) do not need to be modified to reflect this new language, unless they are updated in any way.  So if you make any sort of update to a pre-existing contract that addresses confidentiality, then please make sure the modifications also include the new immunity notice language.

There is an option to publish a policy document including the appropriate notice, and then to cross reference that document in the agreements with the employees, consultants and contractors.  If you do this, then you should be specific about the revision level of the policy document, to make sure that it includes the appropriate language.

Failure to provide notice can limit the company’s ability to collect certain damages and attorneys fees, to which the company might otherwise be entitled.  Eliminating the chance of recovering attorneys fees can make a valid lawsuit economically undesirable.

APPLIES TO CONTRACTORS AND CONSULTANTS, TOO

The definition of employee for these purposes includes contractors and consultants!

So your consulting agreements and other agreements with independent contractors need to reflect this new disclosure language as well.  This may be especially important when working with contractors who normally sign a non-disclosure agreement.

 

New Trade Secrets Law Provides Useful Language for MARPA Members

The President has signed into the law the new Defend Trade Secrets Act (DTSA).  The new law provides a federal private right of action for trade secret infringement – previously, such private actions were brought under state law.

For MARPA member, there is an important safe harbor – the DTSA specifically explains that trade secret infringement is limited to obtaining information by improper means, and limits the scope of “improper means” by excluding some normal methods used by PMA applicants, like reverse engineering and independent derivation:

the term ‘improper means’—

(A) includes theft, bribery, misrepresentation, breach or inducement of a breach of a duty to maintain secrecy, or espionage through electronic or other means; and
(B) does not include reverse engineering, independent derivation, or any other lawful means of acquisition

This is a valuable restatement of the common-law safe harbor.

But MARPA members are also holders of their own trade secrets, and this change permits MARPA members to sue in federal court when their trade secrets are infringed.

The existing statutes provide a definition of trade secret that will continue to control the new private right of action:

the term “trade secret” means all forms and types of financial, business, scientific, technical, economic, or engineering information, including patterns, plans, compilations, program devices, formulas, designs, prototypes, methods, techniques, processes, procedures, programs, or codes, whether tangible or intangible, and whether or how stored, compiled, or memorialized physically, electronically, graphically, photographically, or in writing if—

(A) the owner thereof has taken reasonable measures to keep such information secret; and

(B) the information derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable through proper means by, the [public]{another person who can obtain economic value from the disclosure or use of the information};

18 U.S.C. 1839(3).  The square-bracketed [] language is the old text and the curly-bracketed language {} is the new replacement text that has been added by the new law.

This standard continues to provide important guidance to those who wish to retain their trade secrets – it is especially important to take reasonable measures to keep the information secret.  And where information cannot be kept secret, because it is already in the public domain or because it is required by law to be disclosed, then the possessor of that information may not have a trade secret, if there are no reasonable measures that may be taken to maintain secrecy.

The extent of the security measures taken by the owner of the trade secret need not be absolute, but must be reasonable under the circumstances, depending on the facts of the specific case.  The owner’s reasonable efforts can include advising employees that the information is a trade secret, limiting access to the information to those with a specific “need to know,” requiring employees or business partners to sign confidentiality agreements, and keeping secret documents secured (like in a safe).

For PMA applicants, this new law underscores the importance of documenting the processes associated with the development of PMA design data.  A PMA company that possesses that sort of development-process-documentation, and can offer it as a defense to an allegation of trade secret misappropriation, should be a more defensible position.