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September 29, 2005

Aircraft Salesman Pleads Guilty To Purchasing Annual Inspection Sign-Offs When No Inspections Were Performed

According to the FAA Office of Inspector General, the owner of Carlsbad Aircraft Sales, Inc. in Carlsbad, California has pled guilty to a charge of conspiracy to make false statements or writings. Apparently the salesman admitted that he made payments of $100 - $200 each to an unindicted co-conspirator (who holds an FAA Inspection Authorization) in order to obtain annual inspection sign-offs on eight aircraft when in fact the inspections were never performed. According to the OIG, the inspection is ongoing and being conducted jointly with the FBI.

Seems strange to me that the IA was not indicted at the same time. However, unless he was working with the government in its investigation, I would guess that his indictment should be coming. For those aircraft owners who would like to cut corners on an annual inspection to save cost or avoid the down-time, this case is a good example of what can happen if you knowingly attempt to circumvent federal requirements. Although it appears more blatantly criminal given the complete absence of any annual inspections being performed, aircraft owners should be aware that the government will prosecute knowing attempts to circumvent regulatory requirements, especially when written documentation such as logbooks or applications are involved.

Aside from the criminal nature of the conduct, this doesn't even address the obvious safety issues and risks involved with such conduct. By purchasing the sign-offs, the salesman was clearly placing persons and property at risk for injury or damage from a mechanical failure that would otherwise have been caught by a proper annual inspection. At the end of the day, compliance, though more expensive, is definitely the better approach and in reality, is cheaper in the long run.

You can read a brief reference to this case on the FAA OIG's website here.

Posted by Greg

September 28, 2005

FAA Publishes New AC 90-100 Compliance Table

As of yesterday, the FAA's new AC 90-100 Compliance Table is available on the FAA website. The table lists the RNAV systems for RNAV Q-Routes, Type A and/or Type B RNAV procedures that meet the performance requirements contained in AC 90-100. You can view/download the table here.

Posted by Greg

U.S. Court Of Appeals For Federal Circuit Affirms Dismissal Of D.C. Heliport Operator's Takings Claim Against United States

In Air Pegasus of D.C. v. United States the U.S. Court of Appeals for the Federal Circuit has affirmed the U.S. Court of Federal Claims' dismissal of a lawsuit alleging that the post-9/11 NOTAMS prohibiting flight operations over the D.C. area constituted a compensable taking of property. Air Pegasus operated the South Capitol Street heliport in Washington D.C. from February, 1992 through September, 2002. Although it did not own or operate any helicopters, it provided services and maintenance to other helicopte operators. Following the 9/11 terrorist attacks, the FAA issued NOTAMS that effectively prohibited most, if not all, of the helicopter operations in the D.C. airspace. As a result of the NOTAMS, Air Pegasus' business was adversely affected and forced to close.

Subsequently, Air Pegasus filed a lawsuit against the United States alleging that "the various NOTAMs issued by the FAA after September 11, 2001, resulted in a regulatory taking of its heliport business located at 1724 South Capitol Street, S.E., Washington, D.C." because "[t]he NOTAMs had the immediate and intended effect of shutting down virtually all air traffic at the Heliport . . . [which,] in turn, made it economically nonviable to continue to operate the business under the Lease" and that as a result "the economic value of [its] business and its leasehold interest in the Property ha[d] been destroyed."

The U.S. Court of Federal Claims dismissed the action on summary judgment holding that Air Pegasus voluntarily chose to operate a business in a highly regulated industry, and that the government has a pre-existing servitude over the navigable airspace. The court further found that Air Pegasus did not have a property right in the public navigable airspace above its leased premises and "[a]s a result, the court concluded that 'although the FAA’s regulatory activity may have had an adverse impact on [Air Pegasus’s] heliport business,' there was not a taking of any cognizable property interest of Air Pegasus."

The Court of Appeals affirmed the Federal Claims Court holding that because Air Pegasus did not actually own or operate any helicopters, its economic injury not the result of the government taking Air Pegasus’s property, but was the result of the government’s purported taking of other people’s property, which cannot form the basis for a viable takings claim. The Court went on to note that since a private party does not have a private property right in the navigable airspace of the United States, "Air Pegasus does not have a cognizable property interest in its alleged right to access the navigable airspace from the South Capitol Street Heliport."

Judge Newman dissented, providing a detailed analysis which concludes that "[t]he Court of Federal Claims and my colleagues appear to have been diverted by the government's concentration on the concept of who "owns" the air, thus ignoring the effect of the government action on the heliport leasehold. The result negates the basic rights and protections secured by the Fifth Amendment, and places the financial burden of emergency government action for national security, on the property owner whose property became valueless. Precedent makes clear that Air Pegasus indeed possessed a compensable property interest in Fifth Amendment terms."



Posted by Greg

September 26, 2005

Privileges And Limitations Of A Commercial Pilot Certificate

Many people, both pilot and non-pilot alike, think that if a pilot has a commercial pilot certificate he or she can get paid for flying. However, the commercial pilot certificate alone does not grant the privilege of receiving compensation for flying under all circumstances. Commercial pilots must be clear on both the privileges and limitations of their airman certificate. For a general overview of these privileges and limitations and the FAR's that govern, please read my latest article on the subject here.

Posted by Greg

September 21, 2005

FAA Releases Proposed AC On Voluntary Disclosure Reporting Program-Hazardous Materials

The FAA released a Draft Advisory Circular AC-121-XX concerning the voluntary hazardous material (HAZMAT) disclosure reporting program. The proposed AC provides guidance for operators when reporting to FAA instances of noncompliance through the voluntary disclosure reporting program. Part 135 operators who carry HAZMAT would be subject to the provisions of this proposed AC. The voluntary disclosure reporting program discussed in the proposed AC applies to violations of 49 CFR part 175, which cover certain reporting, training, acceptance, loading, unloading, handling and stowage requirements, but it does not apply to violations of 49 CFR parts 171, 172, and 173.

According to the FAA, it believes that aviation safety is well served by incentives for operators to identify and correct their own instances of noncompliance and to invest their resources in efforts to prevent a recurrence. Further, the FAA believes that the policy of forgoing civil penalty actions when an operator detects a violation, discloses the violation to the FAA, and takes prompt corrective action to ensure the violation does not recur is designed to encourage compliance with the regulations, foster safe operating practices, and promote the development of internal evaluation programs.

Under this program, voluntary disclosure of covered instances of non-compliance in accordance with the terms of the proposed AC would result in the FAA issuing a letter of correction, rather than it initiating a civil penalty action. Although the case would then be closed upon the issuance of the letter of correction by the FAA, the case could be reopened if the operator failed to complete the comprehensive fix required by the letter of correction. If that happened, the FAA could then initiate legal enforcement action.

The voluntary disclosure program as proposed would consist of six steps: (1) The operator would make the initial notification to the HAZMAT Branch Manager of an apparent violation; (2) The HAZMAT Branch Manager would respond to the initial notification and request a written report from the operator; (3) The operator would provide a written report to the HAZMAT Branch Manager; (4) The HAZMAT Branch Manager would evaluate the operator's written report; (5) The HAZMAT Branch Manager would review the proposed Comprehensive Fix the operator submitted with the written report and concur or recommend changes; (6) The operator carries out its Comprehensive Fix and conducts a subsequent audit; and (7) The HAZMAT Branch Manager makes a final assessment.

Operators who carry hazardous materials should review the proposed AC in further detail. Upon further review, if you would like additional information, or to submit comments, you may email either bill.wilkening@faa.gov, or angela.surratt@faa.gov.

Posted by Greg

September 20, 2005

U.S. House Passes Katrina Volunteer Protection Act of 2005

In the aftermath of Hurricane Katrina, the U.S. House of Representatives last week passed the Katrina Volunteer Protection Act of 2005. The bill, H.R. 3736, would protect volunteers who provide aid, medical treatment and rescue assistance from liability arising from injury and property damage. This would include charity flight organizations and their volunteers who have been conating aircraft and other assets, as well as flying relief missions. The Bill is an effort to encourage use of aircraft and other assets, rather than rejecting offers and donations because the degree of liability for using those assets is unclear under current law. After the House passed the Bill, it was sent to the Senate where it is currently awaiting consideration.

Posted by Greg

September 19, 2005

Aircraft Insurer Did Not Act In Bad Faith When It Sued Renter Pilot For Damage To Rental Aircraft

In a recent decision, McKinley v. XL Specialty Insurance Company, the California Court of Appeals held that an insurer did not act in bad faith when it asserted a subrogation claim against the pilot who rented and damaged an aircraft owned by its insured, since the pilot was not insured under the policy for the damage caused by the pilot.

Plaintiff McKinley rented a plane from Todd Aero for the purpose of receiving advanced flight instruction. While McKinley was flying the aircraft, it was damaged during a gear-up landing. Todd Aero’s insurer, XL Specialty Insurance Company, paid approximately $41,000.00 to repair the aircraft and XL Specialty then brought a subrogation action in the name of Todd Aero against McKinley to recover the amount it paid. The subrogation action was referred to judicial arbitration where the arbitrator ultimately concluded that McKinley was not at fault for the damage to Todd Aero's aircraft.

McKinley then sued XL for bad faith, claiming that XL shouldn't have sued her in subrogation because she was an insured under Todd Aero’s policy. The trial court dismissed McKinley's action finding that McKinley was not covered under the XL Specialty policy for the damage to the Todd Aero aircraft. As a result, XL Specialty could sue her in subrogation and she could not maintain an action for bad faith against XL Specialty for having done so."

The Court of Appeals analyzed the XL Specialty insurance policy and determined that McKinley was not an insured under the policy´s physical damage coverages policy provisions upon which it based its payment for Todd Aero's loss. The Court noted that "Todd Aero’s claim for damage under the policy is a first-party property damage claim (to pay for physical damages to its own aircraft), and not a third-party liability claim (to pay for property damage to a third party’s property caused by the aircraft). Because McKinley was only an insured under the third-party liability coverage portion of the policy, which did not apply to Todd Aero´s first-party claim to XL Specialty, McKinley could not maintain her bad faith action against XL Specialty.

The Court went on to explain that "[i]f an equipment rental company has an insurance policy that provides third-party liability/property damage coverage to an equipment renter, the renter cannot transform that policy into one providing first-party physical damage coverage; otherwise, the renter could wreck the rented equipment and claim coverage for that damage under the liability/property damage coverage." The Court concluded that, "[i]n the end, an insurer who has paid a claim for damage to rented equipment cannot be said to have acted in bad faith in seeking subrogation from a renter reasonably believed to have caused that damage."

Posted by Greg

September 16, 2005

FAA Publishes Final Rule On False and Misleading Statements Regarding Aircraft Products And Parts

The FAA today published a Final Rule regarding False and Misleading Statements Regarding Aircraft Products, Parts, Appliances and Materials. The final rule amends existing FAA regulations to create additional rules banning certain false or misleading statements about type-certificated products, and products, parts, appliances and materials that may be used on type-certificated products. According to the FAA, the final rule will "help prevent people from representing that these items are suitable for use on type-certificated products when in fact they may not be" and is "intended to provide assurance that aircraft owners and operators, and persons who maintain aircraft, have factual information on which to determine whether a product, part, appliance or material may be used in a given type-certificated product application."

The final rule is the result of the FAA's determination that "the installation of products, parts, appliances and materials that are mistakenly believed to be airworthy or suitable for installation on type-certificated products creates an unacceptable risk to aviation safety." It believes that the final rule will improve safety because it: (1) Fills gaps in the legal and regulatory structure by extending the prohibition on fraudulent or intentionally false statements beyond those now covered by parts 21 and 43; (2) Creates a new standard to determine what constitutes "misleading;" and (3) Provides a means for the FAA to investigate possible violations.

The final rule is "applicable to any person who makes a record that is conveyed to another person when there is an associated potential for compensation if the record relates to a type-certificated product or a product, part, appliance or material that may be used on a type- certificated product." However, it does not apply to experimental or military aircraft that are not otherwise type certificated. A "record" is defined broadly to mean "any writing, drawing, map, recording, tape, film, photograph or other documentary material by which information is preserved or conveyed in any format, including, but not limited to, paper, microfilm, identification plates, stamped marks, bar codes or electronic format, and can either be separate from, attached to or inscribed on any product, part, appliance or material." The final rule prohibits the making of false or intentionally misleading statements in records produced in connection with sales transactions and in advertisements.

Under the rule, an intentionally false statement consists of (1) a false representation, (2) in reference to a material fact, (3) made with knowledge of its falsity. A fraudulent statement consists of these three elements, plus (4) it was made with the intent to deceive, and (5) action was taken in reliance upon the representation. Thus, the FAA considers "intentionally false" and "fraudulent" statements to be two separate categories. A misleading statement requires: (1) A material representation or omission; (2) That is likely to mislead the consumer; and (3) The consumer is acting reasonably under the circumstances.

The final rule is effective October 17, 2005. If you would like further information regarding the final rule or the issues raised by the rule, you can contact Beverly Sharkey, Suspected Unapproved Parts Program Office (AVR-20), Federal Aviation Administration, 13873 Park Center Road, Herndon, Virginia 20171-3223; telephone (703) 668-3720, facsimile (703) 481-3002, e-mail beverly.j.sharkey@faa.gov.

Posted by Greg

September 13, 2005

FAA Seeking Answers To Funding Of Aviation Trust Fund

In a Notice published today, the FAA is providing information regarding its goals for funding the Aviation Trust Fund, as well as information regarding the FAA's ongoing operational costs and funding sources. The current taxes and fees funding the Aviation Trust Fund and which provide funding for the National Aviation System, are only authorized through September 30, 2007.

According to the FAA, its goal is that "[t]he new financing structure should generate stable and predictable revenue, maintain the appropriate levels of service, and enable FAA to make long-term investments and tie revenues raised for the system to the infrastructure and operational costs of the system." The Notice also talks about possible user fees for funding the system. But before a decision is made on that source of funding, "the FAA seeks stakeholder input in order to fully consider principles such as marginal system use, use of congested space and scarce resources, aircraft weight, distance, and other criteria. The allocation rules, of course, must be applied with transparency and would need to be validated by the user community."

The Notice states that the FAA wants to come up with a proposal for funding that "has stakeholder support". In order to try and generate that support, the FAA has made a "stakeholder package" available on its website here that "contains data packages on the Air Traffic Organization including technical background and supporting detail, Airports, Aviation Safety, and International Aviation. Also included are questions regarding: 1. Providing the Right Types of ATC Services; 2. Revisions to Current Tax System; 3. Other Funding Alternatives for Cost Recovery of ATC Services and Cost Allocation; 4. General Fund Questions; 5. Airport Related Issues; 6. Charging for Certification and Other FAA Services; 7. Lessons Learned from Other Countries."

This is your opportunity to review the FAA's information, to analyze whether its financial assumptions are accurate, to provide input regarding funding of the system in general, and to specifically address the issue of user fees. You can bet the aviation alphabet groups will give the FAA their input and feedback. You should give the FAA your input as well. If you would like further information, you can contact Robert E. Robeson, Manager, Systems and Policy Analysis Division, Office of Aviation Policy and Plans, Federal Aviation Administration, 800 Independence Avenue, SW., Washington, DC 20591.

Posted by Greg

September 12, 2005

NTSB Denies Airman's Claim That It Applies Good Cause Standard Unevenly

In a recent case, the NTSB denied an airman's request for reconsideration of its decision affirming an administrative law judge’s dismissal of the airman's appeal from the Administrator’s order of suspension. The Board originally affirmed the ALJ's determination that the airman’s appeal was filed late and held that the airman had not presented any evidence of good cause for the Board to accept the late appeal. In Administrator v. Beissel, the airman requested reconsideration of the Board's decision claiming that "the Board applies its good cause standard unevenly, ruling more often in the Administrator’s favor than in a respondent’s favor." The airman argued that Ramaprakash v. FAA and NTSB, 346 F.3d 1121 (D.C. Cir. 2003) supported his claim of uneven application of the standard.

Initially the Board noted that "the good cause standard requires that a respondent prove his failure timely to file a notice of appeal within the required time had a good cause" and that the reasons for the airman's tardiness did not constitute good cause for his late filing. It went on to specifically address the airman's claim of uneven application of the standard by stating "[t]his is a question of fact, specific to each case. Whether the Board is applying this standard uniformly to notices of appeal and appeal briefs is determined by reviewing other cases involving late filing of notices of appeal and appeal briefs, not by comparing this case with other, entirely different types of cases that also happen to use the good cause test."

Finally, the Board noted that "Ramaprakash, infra, actually supports this conclusion, as the parties and the Court analyzed the reasonableness of our action in that case based on our actions in other stale complaint cases, not based on the universe of cases in which a good cause standard was used." Although it probably seemed like a good argument for the airman to make, unfortunately, he took it out of context and made an apples to oranges comparison. The Board didn't buy it and the airman was stuck with his 180 day suspension. Once again illustrating the necessity of filing an appeal in a timely manner. Although the good cause defense is available for an untimely appeal, the cases show that this is a difficult standard to meet.

Posted by Greg

September 09, 2005

FAA Publishes Notice Of Florida Requirements For Aircraft Mechanic's Liens

The FAA today published a Notice of a recent Florida Court of Appeals case relating to recording and enforcement of an aircraft mechanic lien in Florida. The Notice discusses the Creston Aviation v. Textron Financial Corporation case that I discussed in my May 9, 2005 post. In that case, the court held that Federal law pertaining to recording with the FAA Aircraft Registry did not preempt a Florida statute requiring that a mechanic lien for work on an aircraft first be filed in the county where the work was performed in order to enforce the lien under Florida law. As a result of this holding, the FAA is publishing the Notice to advise "the public that recording an artisan lien with the FAA Aircraft Registry only, may be insufficient to enforce an artisan lien under Florida law."

The distinction addressed by this case is the difference between the filing requirement and the enforeceability of the lien. Federal law requires that an aircraft mechanic's lien be filed with the FAA registry. This means that for all but a few states who do not have aircraft specific lien statutes (e.g. some states without such lien statutes include Wisconsin, North Carolina, Alabama, Colorado, Delaware and Hawaii), the mechanic lien must be filed with the FAA registry in order for the lien to serve as notice to third-parties. However, the validity or enforceability of the lien is determined by state law. In Florida, in order for an aircraft mechanic lien to be enforceable, it must also be filed in the county in which the work was performed.

As I mentioned in my previous post, aircraft mechanic's liens are creatures of statute, both federal and state. You need to be aware of and comply with both requirements in order to perfect and enforce your aircraft mechanic's lien.

Posted by Greg

SIC Type Rating Compliance Deadline Extended

The FAA today published a "compliance date correction" in the federal register which extends the compliance date for the Second-in-Command rule it published on August 4, 2005. According to the FAA, the new rule's effective date remains September 6, 2005. However, in order "to give affected pilots time to prepare and file the paperwork necessary to obtain the SIC pilot type rating" the compliance date has been extended to June 6, 2006. After that date, "pilots acting as a second in command and who will be flying outside U.S. domestic airspace and landing in a foreign country must hold the appropriate SIC pilot type rating."

Although the FAA originally determined that 30 days was enough time for affected pilots to obtain the SIC type rating, after publication of the final rule and recieving comments from the airlines and trade associations the FAA determined that it was physically impossible for the pilots who need the SIC pilot type rating to prepare and file the necessary paperwork, and the FAA and its designees to process the forms and issue the ratings by September 6, 2005. I suspect this had more to do with the FAA's inability to process all of the applications within thirty days, rather than the affected pilots' abilities to prepare and file the necessary paperwork.

Although the extended compliance date gives pilots more time to obtain the SIC type rating, pilots should be aware that several foreign civil aviation authorities intend to begin enforcing the type-rating requirement within the near future. As a result, the sooner pilots receive their SIC pilot type ratings, the sooner they will be able to operate internationally unimpeded.

Posted by Greg

September 07, 2005

FAA Fines City Of Chicago For Meig's Closure

The FAA has issued what I presume to be a Notice of Proposed Civil Penalty assessing a civil penalty of $33,000.00 against the city of Chicago for its after-midnight destruction of Meigs Field. According to an article in the Chicago Sun-Times, the city was required to give the FAA 30-days notice before it closed Meigs Field and the $33,000.00 fine is $1,100.00 a day for every day the city failed to give notice. Apparently the City has not yet determined whether it will request a hearing on the proposed civil penalty or if it will simply pay the fine. Interestingly, the issue of whether the City improperly diverted federal funds for demolition of Meigs Field is still being investigated.

Personally, I am glad to see that the FAA didn't back down. Unfortunately, the civil penalty is minimal in the grand scheme of things and the City may simply pay the penalty and chock it up as a cost of doing business. I am more curious to see where the investigation ends up regarding the City's use of federal funds to demolish Meigs Field. Although the City has taken the position that its use of the funds was appropriate, I am not sure how demolition of an airport with no intent to enhance or expand existing aviation sturctures can be characterized as a legitimate use of airport improvement funds. Hopefully the FAA will cite the City for its actions and pursue civil penalties for that violation as well. If it does, I would expect the City to put up a fight given the $1,500,000.00 price tag. We will see.

Posted by Greg

September 02, 2005

FAA Disclosure Of Personal Information

If you are a pilot or you hold any other airman or medical certificates, the FAA has personal information about you. If you have had any run-ins with the FAA (e.g. enforcement actions) then the FAA has even more information about you. Did you ever wonder whether the FAA can disclose that information and, if so, how much it can disclose? If you have, then you may want to read my latest article on the topic here.

Posted by Greg

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