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October 31, 2005

Administrator Assesses Civil Penalty Against Flight School For Operating Aircraft Past Deadlines For AD Compliance

A recent civil penalty case discusses the FAA's position regarding an aircraft owner or operator's responsibility with respect to the airworthiness of an aircraft subject to recurring airworthiness directives ("AD's"). In In the Matter of: Ace Pilot Training, the FAA filed a complaint alleging that Ace operated a Mooney M20C and two Piper PA-28's when certain AD's had not been completed in violation of FAR 39.3(prohibiting operation of aircraft when ADs are incomplete) and FAR 91.13(a)(prohibiting careless or reckless operation of an aircraft). The FAA sought a $30,000 civil for the alleged violations. Ace's defense was that the repair station to which it delegated the maintenance of the aircraft was responsible for AD compliance and any violation for failure to comply.

At the hearing, the adminstrative law judge ("ALJ") found that Ace had violated FAR 39.3 in one instance, but the ALJ dismissed the other claimed violations on the ground that Ace did not have actual knowledge that it was about to operate the aircraft past the deadlines for the ADs. The ALJ also held that the FAA had not proven that Ace violated FAR 91.13(a).

The FAA then appealed to the Administrator, who decides civil penalty appeals. (Yes, to most people this appears to be a conflict of interest, but that is a discussion for another day.) The Administrator determined that "Ace had a responsibility, independent of the repair station’s responsibility, to know when the ADs were due and to ensure that they were completed on time" and "that, absent extraordinary circumstances, operating an aircraft out of compliance with an AD not only violates the regulation requiring compliance with ADs, but also violates the regulation prohibiting careless or reckless operation."

In discussing the owner's responsibility, the Administrator stated that "Ace had a responsibility, independent of the repair station’s responsibility, to know when its ADs were due and to make sure they were completed on time and were properly recorded," basing this upon the mandate in FAR 91.403(a) that the owner or operator is "primarily responsible" for maintaining the aircraft in an airworthy condition. Although the owner or operator doesn't have to do the work, the owner or operator must check and maintain the aircraft's records to ensure that the work has been completed and properly logged. The Administrator went on to note that it is not an unfair burden to require owners and operators to know which ADs apply to their aircraft and to bear primary responsibility for timely AD compliance because the "AD's are publicly available, free of charge, on the FAA Internet website."

With respect to the FAR 91.13(a) violations, the Administrator relied upon existing precedent which holds that absent extraordinary circumstances, careless or reckless operation of an aircraft follows as a residual violation once the FAA establishes operation of an unairworthy aircraft. She then concluded that Ace acted in a careless or reckless manner because its failure to comply with the AD's jeopardized the safety of both its student pilots and others. The Adminstrator also increased the ALJ's $500.00 civil penalty up to an $8,000 civil penalty.

Although this seems like it bestows an onerous burden upon aircraft owners and operators who are not maintenance savvy, the case is consistent with FAA enforcement cases that place the burden of aircraft airworthiness squarely on the shoulders of the aircraft owner or operator. Interestingly, it appears to be inconsistent with the case law within some states holding that an aircraft owner or operator can delegate maintenance of an aircraft to a non-owner. Unfortunately, these "delegable duty" cases typically arise within the context of aircraft accident cases, which do not have any precedential weight in enforcement actions. Thus, although an aircraft owner or operator may be able to delegate their duty to maintain the aircraft in an airworthy condition to a third-party, and thereby potentially avoid liability in the context of a civil lawsuit, the delegable duty defense will not help in an FAA enforcement action. Like it or not, from the FAA's perspective the owner and operator of an aircraft will continue to be the first and last stop for airworthiness issues.

Posted by Greg

October 28, 2005

Is It A Violation To Fly Into Known Icing Conditions?

With the arrival of winter and colder temperatures, you can bet that most of your flight service station briefings over the next several months will include the perennial "AIRMET ‘X’ for occasional light to moderate rime and mixed icing in clouds and precipitation." Thus, it is a good time to review a recent National Transportation Safety Board ("NTSB") decision relating to flight into known icing conditions and the FAA’s position regarding such operations. For more information, please read my latest article here.

Posted by Greg

October 27, 2005

FAA Publishes Correction to Second-In-Command Rating Rule

You would think that the FAA would proof-read documents before it sends them to be published in the Federal Register. However, it doesn't appear that the Second-In-Command rule amendment to FAR 61.55 was thoroughly proofed before it was published. The FAA today published a Correction to the rule. According to the FAA it is correcting errors in the rule and cross references and other minor errors in the pre-existing regulations that were inadvertently carried over. The corrections are not substantive and are effective September 6, 2005 as if included in the original final rule.

If you would like further information, you can review the Correction or contact John D. Lynch, Certification and General Aviation Operations Branch, AFS-840, General Aviation and Commercial Division, Flight Standards Service, Federal Aviation Administration, 800 Independence Avenue, SW., Washington, DC 20591; telephone (202) 267-3844 or via e-mail at: john.d.lynch@faa.gov.

Posted by Greg

October 25, 2005

FAA Publishes Proposed Wet Lease Policy Guidance

The FAA today published a Notice requesting comments on proposed policy guidance regarding permissible/impermissible "wet-lease" commercial arrangements. According to the FAA, the proposed policy guidance identifies "those commercial arrangements that would be considered to be unlawful wet lease arrangements under these regulations as well as those that would be permissible." The FAA is also seeking comment on its proposed treatement of certain "other" commercial arrangements that are not illegal wet leases, but may still result "in the air carrier impermissibly ceding operational control of flight to non-certificated entities."

This guidance is intended to clarify the FAA's position regarding business arrangements betwee on-demand air carriers and owners of aircraft operated by the air carrier to ensure that the air carrier maintains operational control over all operations conducted pursuant to the air carrier's certificate. It comes in the wake of the Darby case and others in which the FAA determined that the holder of the air carrier certificate had surrendered operational control to non-certificated operators. At the end of the Notice, the FAA then advises air carriers to review their leasing and business arrangements with aircraft owners to ensure compliance with the regulations and to make sure they have sufficient controls in place to answer the following questions:

1. What is the actual location of each aircraft listed on the carrier's operations specifications?

2. Who has the carrier authorized to fly the aircraft?

3. Does the carrier have mechanisms in place to prevent unauthorized use of the aircraft?

4. Who or what is being transported on the aircraft?

5. Is a given flight for compensation or hire?

6. If the flight is for compensation or hire, are the crewmembers properly certificated and trained?

7. Are the crewmembers loyal to the air carrier (as opposed to the aircraft owner or some other entity) so that they will adhere to the carrier's instructions not to fly or to delay a flight or to divert a flight?

8. What procedures and mechanisms are in place so that the carrier can fulfill its duty to ensure that the aircraft is airworthy and meets all of the carrier's maintenance programs?

The Notice does a good job of describing the background of the situation, setting forth the FAA's position regarding these issues and even includes examples of arrangements the FAA considers to be impermissible wet-leases. The Notice doesn't come as a suprise nor does it include any views or interpretations that the FAA hasn't held for quite some time. However, it does provide some clarification on the issues. Hopefully the guidance will assist certificate holders in reviewing existing, as well as structuring prospective, leasing and business arrangements with aircraft owners.

Comments are due no later than November 25, 2005. If you would like further information, please contact Kent Stephens, Aviation Safety Inspector, Air Transportation Division, Flight Standards Service, Room 831, 800 Independence Avenue, SW., Washington, DC 20591, telephone: (202) 267-8166.

Posted by Greg

October 14, 2005

Draft AC On Aircraft Noise Certification Documentation Available For Comment

The FAA today published a Notice regarding the availability of a proposed advisory circular entitled "Guidance On Aircraft Noise Certification Documentation For International Flights." The proposed AC responds to the International Civil Aviation Organization (ICAO) adoption of three acceptable options for managing noise certification documents. The AC contains guidance on aircraft noise certification documentation operators may choose to carry on board the aircraft for international flights to respond to requests by foreign authorities or airports. It also contains a suggested document format for operators to present noise certification documentation.

The FAA is encouraging U.S. operators flying outside the United States to carry a single page document on board the aircraft that contains the required noise certification documentation. However, this is not mandatory. Rather, carrying the AC's suggested form on the aircraft is voluntary for U.S. operators help them to readily provide the necessary noise certification information to foreign authorities upon request.

Apparently some U.S. operators have been detained at foreign airports because of questions about the noise status of their airplanes. The confusion and apparent disagreements about what various countries expected operators to have available prompted the FAA to provide clarification of noise certification documents for international flights. Fortunately, rather than requiring a regulatory change mandating carriage of noise certification documents, the FAA decided to issue a less burdensome AC.

Comments to the proposed AC are due on or before December 13, 2005. If you would like further information on the proposed AC you can contact Laurette Fisher, Office of Environment and Energy (AEE-100), Federal Aviation Administration, 800 Independence Avenue, SW., Washington, DC 20591; telephone (202) 267-3561; facsimile (202) 267-5594. A copy of the proposed AC is available online here.

Posted by Greg

October 13, 2005

FAA Publishes List Of States From Which It Will Accept Aircraft Mechanic/Artisan Liens

The FAA today published a Notice in the Federal Register adding Idaho and Utah to the list of the states from which it will accept and record aircraft mechanic/artisan liens. The full list includes the following 35 out of the 50 states:

Alaska, Arizona, Arkansas, California (General Aviation Only), Connecticut, Florida, Georgia, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Massachusetts, Michigan, Minnesota, Missouri, Nebraska, Nevada, New Jersey, New Mexico, North Dakota, Ohio, Oklahoma, Oregon, Rhode Island, South Carolina, South Dakota, Tennessee, Texas, Utah, Virgin Islands, Virginia, Washington, and Wyoming.

If you would like more information regarding the FAA's acceptance and recording of aircraft mechanic/artisan liens you can contact Joseph R. Standell, Aeronautical Center Counsel, Aeronautical Center (AMC-7), Federal Aviation Administration, 6500 S. MacArthur, Oklahoma City, OK 73169. Telephone (405) 954-3296. You can also read my article on mechanic's liens in Minnesota here.

Posted by Greg

October 12, 2005

NTSB Issues Weather Training Safety Recommendations

The NTSB today released Safety Recommendations A-05-024 through A-05-029 suggesting that the FAA implement additional training, testing and education relating to weather and control of aircraft in IMC. The recommendations are the result of a study, Risk Factors Associated with Weather-Related General Aviation Accidents, conducted by the NTSB "to better understand the risk factors associated with accidents that occur in weather conditions characterized by IMC or poor visibility". Apparently over the last 20 years, about two-thirds of all general aviation accidents that occured in instrument meteorological conditions (IMC) were fatal. This rate is much higher than the overall fatality rate for GA accidents.

The specific recommendations include:

Add a specific requirement for all pilots who do not receive weather-related recurrent training, that the biennial flight review include the following: recognition of critical weather situations from the ground and in flight, procurement and use of aeronautical weather reports and forecasts, determination of fuel requirements, and planning for alternatives if the intended flight cannot be completed or delays are encountered. (A-05-024)

For pilots holding a private, commercial, or airline transport pilot certificate in the airplane category who do not receive recurrent instrument training, add a specific requirement that the biennial flight review include a demonstration of control and maneuvering of an airplane solely by reference to instruments, including straight and level flight, constant airspeed climbs and descents, turns to a heading, and recovery from unusual flight attitudes. (A-05-025)

Establish a minimum number of weather-related questions that must be answered correctly in order to pass Federal Aviation Administration airman knowledge tests. (A-05-026)

Develop a means to identify pilots whose overall performance history indicates that they are at future risk of accident involvement, and develop a program to reduce risk for those pilots. (A-05-027)

Determine optimal information presentation methods and delivery systems for flight service station weather information briefings, including the possibility of supplementing or replacing some portions of the current standard weather briefing with graphical data. (A-05-028)

Revise guidance materials associated with pilot weather briefings to include guidance for pilots in the use of Internet, satellite, and other data sources for obtaining weather information suitable for meeting the intent of 14 Code of Federal Regulations Part 91.103 and subsequently inform the aviation community about this change. (A-05-029)

Of course these are only recommendations and the FAA is not required to accept or implement these recommendations. However, in light of the results of the NTSB's study explained in the recommendations, and the minimal burden associated with some of these recommendations, it would appear prudent for the FAA to give these recommendations serious consideration.

Posted by Greg

October 11, 2005

IRS Issues Revenue Ruling Regarding Taxation On Air Transportation Activities

On September 26, 2005, the IRS issued Revenue Ruling 2005-64 which "describes the circumstances in which losses incurred by an individual who provides air transportation through a passthrough entity can qualify as passive losses under section 469 of the Code. In addition, this ruling describes the applicability of section 4261 to the amounts paid for the air transportation services." The ruling analyzes two separate fact patterns and the resulting interaction of these two sections of the code under each scenario.

The ruling holds that an "S" corporation's lease of an aircraft, without a pilot or maintenance crew, to a related "C" corporation for the "C" corporation's use in meeting its air transportation needs was a rental activity and, therefore, subject to the IRC Sec. 469 passive activity loss limitations. However, it was not subject to IRC Sec. 4261 excise tax on air transportation.

Under the second scenario, if an "S" corporation leases an aircraft, with pilot and maintenance crew, to a related corporation for that corporation's use in meeting its air transportation needs, that activity is not considered a rental activity subject to the passive activity loss limitations, but it is subject to IRC Sec. 4261 excise tax.

Keep in mind that this revenue ruling only addresses the interaction of these two provisions of the tax code under the presented fact patterns. It does not mention or address any of the FAR's that may be applicable to the "S" corporation's lease of the aircraft (e.g. operation under Part 91 v. Part 135). Suffice it to say that the FAA would likely view the two fact patterns as quite distinctive with the first pattern subject to the operating limits/requirements of Part 91 and the second pattern subject to the more restrictive operating limits/requirements of Part 135. But, that is a discussion for another day.

Posted by Greg

October 07, 2005

Mode S Exemptions To Terminate

The FAA today published a Notice of Policy in which it indicated its intent to allow all FAA authorized exemptions to the Mode S transponder (TCAS) requirements of FAR's 121.345(c) and 135.143(c) to terminate no later than March 1, 2007 and it "seeks comments from persons currently holding an exemption from the above regulations on a proposed date for which they must comply with the equipment requirements." According to the notice, up until March 1, 2007, the FAA will continue to review on a case-by-case basis requests to extend current exemptions to that date, but it will not be granting any new exemptions after March 1, 2007. The FAA believes that the March 1, 2007 will provide affected operators with approximately 18 months to install a Mode S transponder if necessary under FAR's 121.345(c) and 135.143(c).

Comments to the Notice will be accepted until November 7, 2005. If you would like further information regarding the Notice, you can contact Ida Klepper, Office of Rulemaking, Federal Aviation Administration, 800 Independence Avenue, SW., Washington, DC 20591, (202) 267-9677, email: Ida.Klepper@faa.gov.

Posted by Greg

FAA Issues Hazmat Training Final Rule

The FAA today published its Final Rule regarding Hazmat training requirements for certain air carriers and commercial operators. According to the FAA, it "is updating its regulations because hazmat transportation and the aviation industry have changed significantly since the FAA promulgated its hazmat regulations over 25 years ago. The rule will set clear hazmat training standards and ensure uniform compliance with hazmat training requirements." The final rule also discusses the comments received to the initial NPRM and the changes to that NPRM contained in the final rule.

"The final rule establishes a two-pronged training program--one for part 121 and part 135 operators electing to transport hazmat (will-carry certificate holders), and the other for part 121 and part 135 operators electing not to transport hazmat (will-not-carry certificate holders). Will-carry certificate holders will have to conduct in-depth training for persons directly supervising or performing any of the following job functions involving items for transport on aircraft--acceptance, rejection, handling, storage incidental to transport, packaging of company materials owned or used by the certificate holder (known as COMAT), and loading...Will-not-carry certificate holders will be required to conduct training sufficient to enable the persons directly supervising or performing a TRF to identify material marked or labeled as hazmat, or material that is not marked or labeled as hazmat but possesses indicators that it might contain hazmat."

With respect to Part 145 repair stations, the final rule requires repair stations to submit a certification to the FAA that all hazmat employees are trained under the hazardous materials regulations prior to the FAA issuing a certificate and requires a repair station to notify each of its workers of the will-carry or will-not-carry status of the part 121 or part 135 operators for which the repair station works as soon as it is informed of the part 121 or part 135 operator's status and to "verify receipt of the notification and communicate this status to its employees, contractors, or subcontractors that handle or replace aircraft components or other items regulated by 49 CFR parts 171 through 180 prior to performing work for, or on behalf of the part 121 or part 135 operator."

Under the final rule, a special federal aviation regulation ("SFAR") is established that contains all current part 121 and part 135 hazmat training regulations that would be replaced by the changes contained in the final rule. The SFAR will exist for a 15 month transition period during which time certificate holders certificated on or before November 7, 2005 will be responsible for bringing their hazmat training programs into full compliance with the new regulations and, in the meantime, will be able to continue to comply with the current requirements or elect to comply with the new requirements.

The effective date for the rule is November 7, 2005 and the SFAR will expire February 7, 2007, which is also the deadline for compliance. If you would like more information on the rule you can contact Janet McLaughlin, Office of Hazardous Materials, ADG-1, Federal Aviation Administration, 800 Independence Ave., SW., Washington, DC 20591; telephone (202) 267-8434.

Posted by Greg

October 05, 2005

FAA Issues Draft Advisory Circulars Applicable To Airport Operators And Commercial Tenants

The FAA has issued two draft advisory circulars (AC's) that would cancel and update earlier AC's pertinent to airport operators as well as airport commercial tenants: AC 150/5190-6: Exclusive Rights At Federally Obligated Airports and AC 150/5190-7: Minimum Standards For Commercial Aeronautical Activities. The guidance contained in the draft AC's is not mandatory. However, the FAA recommends that airport operators follow the guidance to ensure compliance with applicable federal regulations and obligations.

Although the comment period for the draft AC's ended September 30, 2005, I believe that several of the aviation trade associations submitted comments to the draft AC's. Additionally, if the draft AC's are subsequently published, other affected parties will then have an opportunity to submit comments on the AC's directly to the FAA. If you would like more information on the draft AC's, you can locate the Airport District Office in your area here and then contact the appropriate office directly.

Posted by Greg

Allocation Of Expenses On A Cost-Sharing Flight

I was recently asked the question "if my aircraft consumes up to 12 gallons per hour and I charge my passenger accordingly, yet in reality the aircraft only consumed 8 gallons per hour on a cost-sharing flight, then am I legally making a profit on that flight?" My answer was "no, technically, this would not be legal."

FAR 61.113 talks about "pro-rata" sharing of expenses, meaning the total operational expenses must be divided amongst the pilot and passenger(s) with the pilot paying his or her percentage. As a practical matter, under the proposed scenario it may be difficult, although not impossible, for the FAA to determine whether 8 or 12 gallons of fuel was actually burned. However, if the pilot was ever asked by the FAA, he would need to document how he arrived at the total operational expenses and how the pro-rata calculation was made. Whether this proof is in the form of fuel or other receipts, or simply reference to the aircraft POH, will depend upon the circumstances.

The bottom line is that FAR 61.113 grants an exemption for legitimate sharing of expenses. If a pilot is making a profit on a flight and the FAA discovers that fact, the FAA will likely take the position that the pilot is receiving compensation in violation of the FAR.

Posted by Greg

October 03, 2005

Attendance At An FAA Wings Program In Lieu Of A Biennial Flight Review

I was recently discussing the issue of biennial flight reviews with a pilot and the pilot informed me that he did not need a biennial flight review ("BFR") because he had attended one of the FAA's Wings progams and he felt that satisfied the BFR requirement. When I asked him whether he had done any flying in connection with his attendance at the Wings program he said "no". Unfortunately, mere attendance at the program does not in and of itself satisfy the BFR requirement.

All pilots are or should be aware of the BFR requirements contained in FAR 61.56. This FAR requires that "no person may act as pilot in command of an aircraft unless, since the beginning of the 24th calendar month before the month in which that pilot acts as pilot in command, that person has (1) Accomplished a flight review given in an aircraft for which that pilot is rated by an authorized instructor and (2) A logbook endorsed from an authorized instructor who gave the review certifying that the person has satisfactorily completed the review." It goes on to provide several exceptions to this requirement such as passing a pilot proficiency check conducted by an examiner, an approved pilot check airman, or a U.S. Armed Force, for a pilot certificate, rating, or operating privilege or satisfactorily accomplishing one or more phases of the FAA's wings program.

Advisory Circular 61-91H describes the Wings program and sets forth the requirements for completing a particular phase in the program. In order to qualify, a pilot must attend at least one FAA-sponsored or FAA-sanctioned aviation safety seminar or industry-conducted recurrent training program and the pilot's attendance must be verified in the pilot's logbook or other proficiency record, signed by an FAA SPM, other FAA inspector, or an ASC involved in conducting the seminar. Additionally, the pilot must receive three hours of flight training as follows: one hour of flight training to include basic airplane control stalls, turns, and other maneuvers directed toward mastery of the airplane; one hour of flight training to include approaches, takeoffs, and landings, including crosswind, soft field; and short field techniques and one hour of instrument training in an airplane, FAA approved aircraft simulator or training device.

The pilot must have completed the requirements for a Wings program phase within the preceding 24 months to be exempted from the BFR requirement. If he or she hasn't, and if he or she does not qualify for any of the other exceptions, the pilot is not current. Although this seems fairly straightforward, based upon my recent experience it appears that some confusion exists regarding use of the Wings program in lieu of a BFR. Don't let this happen to you. If you intend to rely upon the Wings program to satisfy your BFR requirement, review the applicable FAR and the AC to make sure you have done all that is needed to satisfactorily complete a Wings phase.

Posted by Greg

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