FAA

  • NAFA Administrator posted an article
    Does the FAA Aircraft Registry Recognize a “mailbox rule”? see more

    NAFA member, Scott McCreary, Vice President at McAfee & Taft, discusses the "mailbox rule" and the FAA Aircraft Registry.

    Many people are aware of the old common law concept known as the "mailbox rule", whereby placing a document in the mail is considered under certain circumstances as tantamount to delivering or filing the document under applicable law. Unfortunately, some practitioners try to apply the mailbox rule generally to documents filed with the Federal Aviation Administration Aircraft Registry (“FAA”). Although it is true documents can be mailed to the FAA, 14 CFR § 49.19 confirms a conveyance (i.e. document that is recordable with the FAA) is considered filed for recordation with the FAA upon the date and at the time it is received by the FAA, not when placed in the mail. Likewise although a document may not be recorded by the FAA for days or even weeks after it has been filed/received, pursuant to 49 USC 44108 perfection relates back to the date and time of receipt by the FAA.  Thus the FAA filing stamp placed on the document denoting the date and time the document is received is controlling for purposes of perfection under the 49 USC Section 40101, et seq., as amended (“Act”).

    One limited exception to the foregoing is highlighted in a 1966 opinion (“1966 Opinion”) from FAA Associate General Counsel, Regulations and Codification Division, dealing with the filing of a bill of sale and AC Form 8050-1 Aircraft Registration Application (“Application”). Under 14 CFR § 47.31(c), an applicant for registration of an aircraft last previously registered in the United States must carry the second copy of the Application from the new owner in the aircraft as temporary authority to operate the aircraft within the United States. This temporary authority is valid for a period of up to 90 days after the date of the Application pending the FAA processing the documents and issuing a new certificate of aircraft registration in the name of the new owner. Before operating under this temporary authority, the applicant must comply with 14 CFR § 47.31(a) by “submitting” to the FAA an Application, evidence of ownership, and the applicable filing fee. In the 1966 Opinion, the FAA determined that for the limited purpose of operating an aircraft on a copy of the Application, for purposes of 14 CFR § 47.31(a) submission is satisfied by depositing the documents in the mail (the “FAA Mailbox Rule”).

    It should be noted the FAA did not determine the FAA Mailbox Rule applies to all documents/conveyances filed for recordation with the FAA. Simply mailing documents to the FAA by itself does not perfect rights created by the conveyances that are filed and recorded with the FAA under 49 USC 44108. The documents/conveyances must be received and recorded by the FAA, and the perfection relates back to the time of receipt by the FAA, not mailing. As such parties mailing documents to the FAA run obvious risk that other documents/conveyances may be received by, and considered filed with, the FAA before the mailed documents. Also at the time the 1966 Opinion was issued, the primary method of filing documents with the FAA was by mail. There has always been a presumption the use of an express courier services would be treated as placing the documents in the “mail”, but until recently the FAA has not confirmed the same. 

    Pursuant to COVID 19 the FAA modified its normal procedures for accepting documents. The FAA now accepts documents properly submitted by email. Furthermore, prior to COVID 19 parties could submit documents directly through the FAA Public Documents Room and obtain immediate file stamp copies of the documents. The FAA modified this procedure and documents are no longer filed directly, but placed in a filing bin outside the FAA Public Documents Room and picked up and processed throughout the day. In both instances the FAA has confirmed the documents are not officially filed/received until file stamped.

    Expanding on the 1966 Opinion, the Office of the Aeronautical Center Counsel, Central Regional Counsel of the FAA issued a new legal interpretation in June 2020 to Allison McGrew of McAfee & Taft. The new opinion confirms: (i) the completed copy of the Application becomes effective as temporary authority to operate an aircraft within the United States upon the submission or delivery of the Application, evidence of ownership and applicable filing fee to the FAA Registry; and (ii) consistent with the 1966 Opinion, provided the requirements of 14 CFR §47.31(a) are met, the copy of the Application becomes effective at the time the Application is sent via Priority Courier, sent via email, or delivered to the FAA via the FAA’s modified paper filing procedures. The new opinion is limited in scope to temporary authority to operate an unregistered aircraft under 14 CFR §47.31.

    This article was originally published by McAfee & Taft on August 10, 2020.

  • NAFA Administrator posted an article
    NAFA Webinar: FAA Registry Update: What's New? see more

    FAA Registry Update: What's New?

    Meet our Moderator and Panelists:

    Ford von Weise, Director & Head, Global Aircraft Finance, Citi Private Bank

    Debbie Mercer-Erwin, President, Wright Brothers Aircraft Title

    Scott McCreary, Shareholder, McAfee & Taft

    This NAFA webinar originally aired on November 10, 2020. 

  • NAFA Administrator posted an article
    NAFA Webinar: FAA Aircraft Registry: What Is Its Purpose? see more

    FAA Aircraft Registry: What Is Its Purpose?

    Meet our Moderator and Panelists:

    Ford von Weise, Director & Head, Global Aircraft Finance, Citi Private Bank

    Debbie Mercer-Erwin, President, Wright Brothers Aircraft Title

    Scott McCreary, Shareholder, McAfee & Taft

    This NAFA webinar originally aired on November 10, 2020. 

  • NAFA Administrator posted an article
    FAA Prohibits Use of Registered Agent’s Address for US Registered Owner of Aircraft see more

    NAFA member, Scott McCreary, Vice President at McAfee & Taft, shares information from the FAA.

    Aircraft registered with the FAA Aircraft Registry must be registered in the name of the actual owner of the aircraft (which is not always the operator), and the owner/applicant for registration must provide its physical address/location on the AC Form 8050-1, Aircraft Registration Application ("Application"). In a recent interpretation, the Federal Aviation Administration Aeronautical Center Central Region Counsel ("ACCRC") has confirmed that the address of the "registered agent" of the owner/applicant is not the address of the actual owner/applicant for purposes of registering the aircraft with the FAA Aircraft Registry. The ACCRC has determined that a registered agent’s address is not the mailing address of the owner/applicant, and the registered agent’s address is not the physical address of the owner/applicant for registration.

    The ACCRC further concluded that if the owner/applicant's correct physical address is not provided the Application is not completed in accordance with 14 C.F.R. §47.31(b)(1). In addition, 14 C.F.R. §47.45 requires the registered owner’s physical address be provided to the FAA following any change of address where a new mailing address is not also the physical address of the registered owner.

    Parties should take care to provide the correct physical address or location of the owner/applicant when registering aircraft with the FAA Aircraft Registry. Failure to provide the correct physical address or location may cause the Application to be rejected or the aircraft registration to otherwise not comply with Federal Aviation Regulations.

    This article was originally published by McAfee & Taft on April 10, 2019.

  • NAFA Administrator posted an article
    Lease Agreements! But Wait, There's More! see more

    NAFA member, Air Law Office, P.A., shares two more steps you should consider regarding your aircraft lease agreement.

    You’ve set up your operational structure for your “large civil aircraft” and you have your Part 91 lease in place, what now?  Whether you have purchased a new-to-you aircraft, or you are changing up your operational structure, you’ve found a new lessee to use your aircraft on a Part 91 basis, there are 2 more steps that you have to take.  Many owners and lessees think that the work is finished once the lease agreement is signed, but they are wrong.  The FAA requires that 2 separate copies of the lease agreement must be sent to 2 separate offices of the FAA before the aircraft flies under the new lease agreement.

    First, under FAR §91.23 within 24 hours of execution, a signed copy of the lease agreement shall be mailed to the FAA Aircraft Registration Branch (AFS-750), Attn: Technical Section, P.O. Box 25724, Oklahoma City, OK 73125.  Note: filing the lease agreement with Registry to satisfy this truth-in-leasing requirement does not constitute filing under 14 CFR part 47 or 49 to register the aircraft, or to record for public notice.

    Second, again under FAR §91.23, the lessee must notify the FSDO closest to the aircraft’s departure airport at least 48 hours prior to the first flight under the lease agreement.  This notice can be in-person, via telephone, via fax or via email, depending on the requirements of that FSDO.  The notice must include the identity of the departure airport and the proposed time of the departure of said first flight.

    The Bottom Line:  Be sure to send a copy of the executed lease to Oklahoma City, send a copy to the appropriate FSDO and be sure to carry a copy on-board the aircraft during all applicable operations!  Check in with your legal team ASAP to be sure you are in compliance!  Remember, this article is intended to inform you about issues that you should discuss with your financial and/or legal team and is not intended as legal advice or opinion, you should not act on any information contained in this (or any other) article without directly consulting legal counsel.

    This article was originally published by Air Law Office, P.A. on August 14, 2020.

  • NAFA Administrator posted an article
    GAO Report: FAA Needs to Better Prevent, Detect, and Respond to Fraud and Abuse Risks in Aircraft Re see more

    NAFA member, Scott McCreary, Vice President at McAfee & Taft, shares the GAO Report.

    Today the U.S Government Accountability Office issued its long awaited report regarding the audit of the FAA Aircraft Registry. The report, titled "Aviation: FAA Needs to Better Prevent, Detect, and Respond to Fraud and Abuse Risks in Aircraft Registration" and can be found at www.gao.gov/products/GAO-20-164. The audit was extensive and ultimately provides the following recommendations:

    1. The Administrator of FAA should conduct and document a risk assessment that considers inherent and residual fraud and abuse risks that may enable criminal, national security, or safety risks. (Recommendation 1)
    2. The Administrator of FAA should determine impact, likelihood, and risk tolerance as part of a risk assessment. (Recommendation 2)
    3. The Administrator of FAA should develop a strategy that outlines specific actions to address analyzed risks, including periodic assessments to evaluate continuing effectiveness of the risk response. (Recommendation 3)
    4. The Administrator of FAA should collect and record information on individual registrants, initially including name, address, date of birth, and driver's license or pilot's license, or both, with subsequent PII elements informed by the risk assessment, once completed. (Recommendation 4)
    5. The Administrator of FAA should collect and record information on legal entities not traded publicly—on each individual and entity that owns more than 25 percent of the aircraft; for individuals: name, date of birth, physical address, and driver's license or pilot's license, or both; and for entities: name, physical address, state of residence, and taxpayer identification number. (Recommendation 5)
    6. The Administrator of FAA should verify aircraft registration applicants' and dealers' eligibility and information. (Recommendation 6)
    7. The Administrator of FAA should increase aircraft registration and dealer fees to ensure the fees are sufficient to cover the costs of FAA efforts to collect and verify applicant information while keeping pace with inflation. (Recommendation 7)
    8. The Administrator of FAA should ensure, as part of aircraft registry IT modernization, that information currently collected in ancillary files or in PDF format on (1) owners and related individuals and entities with potentially significant responsibilities for aircraft ownership (e.g., beneficial owners, trustors, trustees, beneficiaries, stockholders, directors, and managers) and (2) declarations of international operations is recorded in an electronic format that facilitates data analytics by FAA and its stakeholders. (Recommendation 8)
    9. The Administrator of FAA should link information on owners and related individuals and entities with significant responsibilities for aircraft ownership through a common identifier. (Recommendation 9)
    10. The Administrator of FAA should, as part of IT modernization, develop an approach to check OFAC sanctions data on owners and related individuals and entities with potentially significant responsibilities for aircraft ownership for coordination with OFAC and to flag sanctioned individuals and entities across aircraft registration and dealer systems. (Recommendation 10)
    11. The Administrator of FAA should use data collected as part of IT modernization as well as current data sources to identify and analyze patterns of activity indicative of fraud or abuse, based on information from declarations of international operations, postal addresses, sanctions listings, and other sources, and information on dealers, noncitizen corporations, and individuals and entities with significant responsibilities for aircraft ownership. (Recommendation 11)
    12. The Administrator of FAA should develop and implement risk-based mitigation actions to address potential fraud and abuse identified through data analyses. (Recommendation 12)
    13. The Administrator of FAA should develop mechanisms, including regulations if necessary, for dealer suspension and revocation. (Recommendation 13)
    14. The Administrator of FAA, in coordination with relevant law-enforcement agencies, should enhance coordination within the Aircraft Registry Task Force through collaborative mechanisms such as written agreements and use of liaison positions. (Recommendation 14)
    15. The Administrator of FAA, in coordination with relevant law-enforcement agencies, should develop a mechanism to provide declarations of international operations for law-enforcement purposes. (Recommendation 15)

    If implemented, these changes will clearly affect many individuals and companies that own and operate aircraft. The lawyers in the McAfee & Taft Aviation Group will continue to provide updates as the industry digests this information.

    This article was originally published by McAfee & Taft on March 25, 2020.

  • NAFA Administrator posted an article
    NAFA Webinar: Bringing Title and Registration Into the 21st Century see more

    The FAA is updating and modernizing its title and registration system in accordance with the GAO report, but how much do you know about what changes are actually being made and how those changes might affect your business operations, costs, and registration systems. 

    What issues might arise from a newer, more modern electronic filing system and digital signatures?  What is the difference between digital and electronic signatures, and what position is the FAA taking on this in the modernization process.  

    And what about GATS?  What is it and how does it fit into the new modernization system? 

    Watch our webinar to learn more about everything that is happening to bring Title and Registration Procedures into the 21st Century.   

     

    Meet our Moderator and Panelists:

    Ford von Weise, Director & Head - Global Aircraft Finance & Aircraft Advisory Services, Citi Private Bank (Moderator)

    Scott McCreary, Shareholder, Director, McAfee & Taft

    Debbie Mercer-Erwin, President of Wright Brothers Aircraft Title 

    Jeff Towers, VP & General Counsel for TVPX

    Ed Kammerer, Shareholder for Greenberg Traurig, LLP 

     

    Webinar slides can be viewed here.This NAFA webinar originally aired on November 10, 2020.

  • NAFA Administrator posted an article
    FAA Aircraft Registry Reaffirms its Position on Digital v. Electronic Signatures. see more

    NAFA member, Scott McCreary, Vice President at McAfee & Taft, discusses the FAA's Aircraft Registry's position on digital versus electronic signatures.

    The United States Federal Aviation Administration (FAA) issued a Memorandum to the FAA Public Documents Room on September 9, 2019, reiterating the position that it would accept documents with digital signatures, but not accept documents executed with only the electronic signature methodology.  The Memorandum provides that “An electronic signature is a method of signing a document whereas a digital signature is the encryption/decryption technology of which an electronic signature is built. The digital signature secures the data associated with an electronically signed document.”

    The Memorandum confirms that in the past the FAA Aircraft Registry (Registry) may have unknowingly accepted documents with merely electronic signatures. The most common electronic signatures filed with the Registry were produced with DocuSign or Adobe, but the Memorandum confirms both programs have a digital signature option that could be utilized.

    By way of background, in May of 2016 the FAA issued a Notice of Policy Clarification for Acceptance of Documents With Digital Signatures (81 FR 23384). The Policy Clarification confirms that the Registry will accept printed duplicates of electronic documents that display legible, digital signatures that are filed in compliance with Parts 47 and 49 of the FAA Regulations (14 CFR parts 47 & 49). The Policy Clarification is clear that only digital signatures, as compared to the broader classification of electronic signatures, are acceptable. The Registry expands on the distinction between digital signatures and electronic signatures in its AFS-750 Change Bulletin 16-03, which further references FAA Order 1370.104, Digital Signature Policy.

    The Policy Clarification goes on to provide that "A legible and acceptable digital signature will have, at minimum, the following components: (1) Shows the name of the signer and is applied in a manner to execute or validate the document; (2) Includes the typed or printed name of the signer below or adjacent to the signature when the signature uses a digitized or scanned version of the signer’s hand scribed signature or the name is in a cursive font; (3) Shows the signer’s corporate, managerial, or partnership title as part of or adjacent to the digital signature when the signer is signing on behalf of an organization or legal entity; (4) Shows evidence of authentication of the signer’s identity such as the text ‘‘digitally signed by’’ along with the software provider’s seal/watermark, date and time of execution; or, have an authentication code or key identifying the software provider; and (5) Has a font, size and color density that is clearly legible and reproducible when reviewed, copied and scanned into a black on white format."

    Prior to the Policy Clarification, the Registry would only accept originally, ink signed documents. The use of digital signatures has certainly been a great benefit to the industry and very helpful for closing aircraft transactions which require filings with the Registry.

    It is often difficult to determine if a document has been digitally executed, and different programs (such as DocuSign and Adobe) identify digitally executed signatures differently. Parties should be careful to make certain any documents filed with the Registry are ink signed originals or digitally executed in compliance with the Registry requirements.

    This article was originally published by McAfee & Taft on September 9, 2019.

     

     

  • NAFA Administrator posted an article
    The GAO Report Affects Dealers Too see more

    NAFA member, Debbie Mercer-Erwin, President of Wright Brothers Aircraft Title, discusses the latest report from the Government Accountability Office (GAO) regarding the FAA Registry practices.

    The much-awaited report from the Government Accountability Office (GAO) regarding Federal Aviation Administration (FAA) Registry practices was released in March, and the title is telling: “FAA Needs to Better Prevent, Detect, and Respond to Fraud and Abuse Risks in Aircraft Registration”.

    The FAA is responsible for issuing aircraft registration to individuals and entities meeting certain requirements: US citizenship, permanent/physical address, completed application, and bill of sale, among others. 

    They are also permitted to issue dealer certificates, or licenses, in support of aviation commerce – the same requirements apply, with the addition of substantial engagement in manufacturing or selling of aircraft.

    The main purpose is to allow manufacturers and dealers to conduct test flights for prospective buyers. To this effect, dealers can obtain more than one certificate, as well as use a certificate for any aircraft they own. The license is also generally valid for a dealer’s agent, employee, or prospective buyer.

    In 2018, approximately 71,000 registration applications and nearly 10,000 dealer certifications were processed at the FAA. Registering an aircraft for a 3-year period brings a $5 application fee, while a 1-year dealer license is $10 (plus $2 for additional certificates).

    At such a low amount – that in fact hasn’t changed since 1964 – FAA operating costs associated with processing applications aren’t even covered. This has left US taxpayers funding the Registry for decades. 

    Likewise, there has been nothing left over, or even earmarked, to enable the FAA to increase vetting of registrants, which is a top priority in the GAO’s report. Specifically, the report was based on analysis of FAA Registry function and ability to handle fraud and abuse risks in aircraft registrations, including dealer certificates.

    It’s well known that the FAA has generally relied on self-certification of registration applicants’ eligibility, requiring limited personally identifiable information (PII) that typically isn’t verified – the GAO’s report covers this factor in full, saying that the FAA’s focus on the completion of required documents limits their ability “to prevent fraud and abuse in aircraft registrations, which has enabled aircraft-related criminal, national security, or safety risks”.

    The GAO also discovered that the FAA does not routinely consider data from the Office of Foreign Assets Control (OFAC) in the application process – which discounts individuals or entities who are currently under sanctions.

    Similar happens with dealer certificates – the FAA does not verify identity, check for prior violations, or enforce requirements. In fact, FAA regulations do not contain any “enforcement mechanisms to ensure continued dealer eligibility once approved or at the time of renewal”.

    Because of these issues, as the GAO analysis discovered, fraud can occur. In one case, discovered years after the scheme had been enacted, a broker used falsified registration applications and bills of sale (with forged signatures for over 20 aircraft) to acquire $3 million from a bank.

    The broker wanted to save his failing aircraft sales company, and essentially pledged 22 aircraft he didn’t own as collateral to do so. This person was also a licensed dealer who even renewed his certificate while implementing the scheme. Unfortunately, the FAA’s application process didn’t catch the fraud, and resulted in some of the rightful aircraft owners being temporarily grounded.

    What does all of this mean for dealers though? In the end, the GAO made fifteen recommendations to the FAA. While they are all pertinent to the issues GAO discovered, a handful will affect dealers directly.

    To begin, collecting and recording information on individuals and legal entities not traded publicly (including each individual and entity that owns more than 25% of an aircraft), with subsequent PII elements possibly required (see Recommendations 4 & 5).

    Further, Recommendation 6 says the FAA “should verify aircraft registration applicants’ and dealers’ eligibility and information”.

    As stated above, PII elements are currently limited and not verified by the FAA, but with these recommendations, would be verified and possibly increased based on an initial risk assessment – requiring more documentation (and time) to obtain a license, but reducing the risks associated with limited review of ownership information.

    Recommendation 7 is also a huge factor in future dealer certifications, calling for increased registration and dealer fees to cover the cost of collection and verification efforts. 

    The FAA readily agreed to the GAO recommendations, having already begun massive modernization efforts under the Civil Aviation Registry Electronic Services (CARES) Initiative to increase efficiency and security.

    CARES is scheduled for completion by October of 2021 and is widely expected to streamline and automate the aircraft registration process, along with dealer certification, by making FAA records electronically, and publicly, available. 

    The goals: allow submission of electronic applications and forms, improve controls, automate registration processes, and improve online data availability – which will expand FAA’s ability to secure against fraud, and make it easier to perform cross-agency checks. 

    Stemming from the FAA Reauthorization Act of 2018 (check out our highlights), and followed by the Office of the Inspector General (OIG) report on implementing the update, the Registry is well on its way. 

    It is always important, however, to hire a company that knows the ins and outs of the FAA system to avoid errors in closing that could take time and money to correct – and it is especially so now. There are plenty of questions surrounding the accomplishment of all these efforts and recommendations, including: 

    How much ownership information is going to be made public, or government-access only? How much will registration and dealer certification fees increase to appropriately cover operation costs? Will FAA be tasked with more oversight and enforcement, and if so, how much time will that add to the registration process, and closing times? 

    Ultimately, the changes ahead will modernize the FAA’s Registry, helping to bring the aviation industry up to date in technology, efficiency, and security. There is still work to do, but we remain confident that every entity involved in this endeavor will fulfill expectations.  

    The FAA has not officially responded to the GAO’s report, but they have updated their website regarding the CARES Initiative.

    This article was originally published by Wright Brothers Aircraft Title on June 16, 2020.

  • NAFA Administrator posted an article
    Filing Aircraft Registration Documents With The FAA Registry During The COVID-19 Pandemic: What You see more

    NAFA member, Greg Reigel, Partner with Shackelford, Bowen, McKinley & Norton, LLP, discusses filing documents with the FAA Registry during the COVID-19 Pandemic.

    In another instance of a “new-normal” resulting from COVID-19, the window at the FAA Registry, where real-time filing of aircraft registration documents used to occur, has closed.  Although the FAA Registry is still open (for now), it has implemented new procedures for filing of aircraft registration documents.  Three options are now available for recording documents:

    Document Drop Bins.

    The FAA has placed two bins outside the Public Documents room.   One bin will be marked “Priority” and one bin will be for “Normal” processing (i.e. not priority).  The FAA will retrieve documents from the Priority Bin every hour. It will retrieve documents submitted for normal processing twice a day.

    Documents are filed when they are placed in one of the bins. However, will not be possible to obtain an immediate filing time for the documents as was the case in the past.  Actual filing times will only be available after the documents are indexed in, scanned and available for viewing online.  It is presently unclear how long that process will take.

    E-Mail Filing To An Electronic Portal.

    The FAA has a new e-mail filing process available subject to a number of limitations. Submitted documents must be digitally signed (i.e. Docusign, Adobe Sign, etc.) and each document must be 20 pages or less. Only one aircraft may be submitted in each e-mail and filing fees must be pre-paid at Pay.gov.

    After submission, FAA will send an e-mail acknowledging receipt.  However, documents will be processed during normal business hours with filing times available the same as when documents are filed via the bins.

    Filing Via Mail.

    As has always been the case, documents can still be filed via U.S. Mail, FedEx and UPS. And similar to the bin and e-mail filing, actual filing times will only be available once the documents are processed and in the FAA Registry’s system.

    These new processes will also impact timing for receiving a “fly-wire” and for receiving Form 135 needed to accomplish International Registry filings.  But it is unclear how much longer it will take to receive these back from the FAA.

    Conclusion.

    The good news:  The FAA Registry is still open and processing aircraft registration documents (for now). The bad news:  These updated procedures will result in some delays in closing transactions, and a little less certainty regarding when documents were actually “filed” by the FAA. For example, in a transaction transferring risk of loss at the time of filing, that could present a problem.

    Parties to aircraft transactions should review their documents to determine whether they are consistent with the new procedures. If they aren’t, parties should amend as needed.

    This article was originally published by Shackelford, Bowen, McKinley & Norton, LLP. on March 23, 2020.

  • NAFA Administrator posted an article
    Overview of the GAO Report on FAA see more

    In March of 2020, at the request of Congressmen Stephen Lynch and Peter King with the Subcommittee on National Security and the Committee on Oversight and Reform, the GAO released its long-awaited report on the FAA Registry’s ability to handle fraud and abuse risks in aircraft registrations.  As the title of the report clearly implies, the GAO found that the FAA Needs to Better Prevent, Detect, and Respond to Fraud and Abuse Risks in Aircraft Registration.  

    More specifically, however, the report found that the FAA needs to better review and vet the actual owners of aircraft.  As we all know, the FAA currently takes filed documents at face value, and records them if they meet certain requirements as set by the FAA itself.  While the rest of the industry has been subject to more and more demands to Know Your Customer, and to adhere to KYC and OFAC guidelines, the FAA has remained immune.  This report suggests that it is time for the FAA itself to do more due diligence and better vet the entities registering aircraft on its registry.

    There is also a clear need to allow law enforcement agencies more access to the data contained in the FAA registry.  Currently, registration information is mostly provided in .pdf format which is not easily searchable or accessible.  Many law enforcement agencies expressed frustration with an inability to have easy access to this information, and the report outlines opportunities for the FAA to be a center point to house data that could help law enforcement agencies to not only have better access to information, but to potentially allow for better cross-agency coordination to crack down on illegal activity involving the registration and use of general aviation aircraft.  

    The report seems to focus on increasing transparency in “Opaque Ownership Structures” for registering aircraft, which the GAO believes are at the highest risk for fraud and abuse.  Opaque Ownership Structures are legitimate business structures that are widely used by corporations and individuals to facilitate commerce as well as for asset and tax management. However, they lack transparency related to aircraft registrations and can create challenges for safety and law-enforcement investigators seeking information about beneficial owners to support timely investigations. 

    These ownership structures can include the following:  

    • shell companies, especially in cases where there is foreign ownership that is spread across jurisdictions; 
    • complex ownership and control structures involving many layers of shares registered in the name of other legal entities;
    • formal nominee shareholders and directors where the identity of the beneficial owner is undisclosed;
    • trusts and other legal arrangements that enable a separation of legal ownership and beneficial ownership of assets; 
    • use of intermediaries in forming legal entities, including professional intermediaries.  

    It is worth noting that the report specifically excludes publicly traded companies, shifting the focus of these security measures away from commercial airlines and towards the general aviation industry.  

    On pages 58-59 of the report, the GAO outlined 15 recommendations for Executive Action by the FAA.  Many of the recommended improvements to the FAA system are expected to be implemented in the FAA’s modernization project, slated to be completed by October 2021.  Generally speaking, the modernization project is expected to help streamline and automate the aircraft registration process,  and make the FAA records available to the public at all times.  The GAO report includes recommendations for using this new system to improve the FAA’s vetting process of owners registering aircraft on the FAA’s system, and using that technology to allow law enforcement officials more access to registry data.  Initial conversations with the FAA indicate they are on track to complete this project by the stated October 2021 deadline.  

    While the GAO has many recommendations to the FAA, there are still many questions to be answered.  These are the Top Issues we have identified:

    • The biggest unanswered question causing the most consternation in the industry, is the one involving transparency of ownership information.  How much transparency will there really be?  Will all aircraft ownership information be made available to the public, or only some?  Will there be sections of registry data that remain “private” and only made available to authorized government agencies?  That remains to be seen.  
    • Possibly the second largest question includes cost.  The report is clear that the $5 filing fee set in 1964 is not enough to cover even today’s operating expenses, much less the costs to modernize the system.  FAA has been talking about increasing registration costs for years, so an increase can likely be expected, but the question of how much remains to be answered.   How much will it cost to register an aircraft in the future?  
    • Time is money, so questions about increases in registration time also remain.  If FAA will be doing more vetting of its registrants, how much time will that take?   How much longer will it take to register an aircraft with the FAA?  What will this do to aircraft closing timelines?
    • Lastly, there is the issue of international operations.  The report expresses clear concern for FAA’s ability to issue Declarations of International Operations without knowledge or consent of specific law enforcement agencies.  FAA currently expedites requests for international flights on a daily basis for the general aviation community, but will they be able to do that in the future?  Or will there be a more stringent system of checks and balances required to issue Declarations of International Operations?  And how long will it take to finally have one issued?

    The FAA has yet to officially respond to the GAO’s report, but they have updated their website on the CARES Initiative to enhance and modernize the FAA registration services.  To learn more about it, you can go to their website here:  https://www.faa.gov/about/initiatives/cares/

    Furthermore, on March 30, 2020, they issued their Third Request For Information, requesting information from the industry.  To participate, click here:  https://beta.sam.gov/opp/8b7d6e20940d4d5b8b4e8e9e76a991b3/view  

    As NAFA members, it is important that we participate in any proposed changes to the FAA registration process as much as possible.  To the extent that you have time to fill out the FAA’s RFI, we encourage our members to do so. 

    NAFA will continue to monitor the proposed changes and the FAA’s eventual response and will report those to the membership.  

    The full report can be found here:  https://www.gao.gov/assets/710/705505.pdf

     

  • Tracey Cheek posted an article
    Patience Is Key for Successful Aircraft Transactions During COVID-19 see more

    NAFA member, NBAA, shares a review of their recent webinar about processing aircraft transaction documents during the COVID-19 pandemic.

    The FAA Aircraft Registration Branch continues to process aircraft transaction documents during the COVID-19 pandemic; however, the process has been slowed. In a recent NBAA News Hour webinar, experts discussed how to successfully complete aircraft transactions during these challenging times.

    VIEW THE RECORDED NBAA NEWS HOUR WEBINAR

    Peter Korns, NBAA’s senior manager of tax, operations and workforce engagement, moderated the webinar. Scott McCreary – shareholder and aviation group leader of McAfee & Taft – and Chris Younger – principal at GKG Law, P.C., – provided expert guidance.

    The FAA aircraft registry maintains information on more than 300,000 civil aircraft to facilitate aviation safety, security and commerce. The registry accepts and processes documents to register and operate aircraft in the United States, as well as to “perfect” or validate interests in an aircraft, explained Younger. The registry typically accepts filings by mail or commercial delivery services, via email or in person at the FAA Public Documents Room in Oklahoma City, OK.

    Several new, temporary policies are in place to mitigate concerns about COVID-19 exposure and ensure appropriate social-distancing practices for filers and registry employees. The Public Documents Room is currently closed for direct filing, although parties may leave documents in a nearby bin for regular pickup by registry staff. All mailed documents are subject to a 72-hour quarantine period, which means those documents will not be processed or file stamped until at least 72 hours following receipt or acceptance. Filers should be aware that due to this quarantine, the accepted date of the documents is not the same as the file stamp date.

    Fortunately, the FAA has expanded the ability to file documents by email. McCreary summarized new email filing procedures, including a requirement for documents to be digitally executed through a digital signature program, such as DocuSign. As is the case for mailing documents, an email receipt message does not constitute the date of formal filing with the FAA.

    Younger added that import and export processes can also be more complicated as a result of the COVID-19 pandemic. For example, imports from Mexico are subject to a 72-hour quarantine.

    The FAA Reauthorization Act of 2018 designated registry employees as “excepted” or “essential employees” in the event of a government shutdown or emergency furlough.

    Although it’s unclear if the legislative language is broad enough to cover the COVID-19 crisis, the experts see no signs at this time of a disruption of operations or possible closure of the registry. However, the experts caution this is a fluid situation, and there is no projected timeframe to return to normal registry and transactions procedures.

    “In business aviation, there’s always an urgency to get transactions closed,” said Younger. “Now there’s an increased tension because the process is slower to be more protective of FAA employees.”

    Aircraft transactions can still be completed, but patience is key.

    This webinar, titled “FAA Transaction Guidance During the COVID-19 Crisis,” is just one in a series of educational opportunities NBAA has planned for the coming weeks. Learn more, register for upcoming webinars and view recordings of past webinars on the NBAA News Hour site.

    This article was originally published by NBAA on April 13, 2020.

  • Tracey Cheek posted an article
    U.S. Transportation Secretary Elaine L. Chao Announces $10 Billion in Relief for America’s Airports see more

    WASHINGTON – U.S. Transportation Secretary Elaine L. Chao today announced the award of approximately $10 billion to commercial and general aviation airports from the Trump Administration's newly created Coronavirus Aid, Relief, and Economic Security (CARES) Act Airport Grant Program. The effort will provide unprecedented and immediate relief to American families, workers, and businesses.  

    “This $10 billion in emergency resources will help fund the continued operations of our nation’s airports during this crisis and save workers’ jobs,” said U.S. Transportation Secretary Elaine L. Chao. 

    In less than two weeks since the bill was signed into law, the U.S. Department of Transportation’s Federal Aviation Administration (FAA) is ready to deliver CARES Act grants to eligible airports throughout the nation. The grants will provide economic relief to airports around the country affected by the COVID-19 public health emergency.

    “Thank you to the dedicated men and women from the FAA’s Office of Airports for creating an entirely new program in record time to assist airport sponsors in desperate need of these funds,” said FAA Administrator Steve Dickson.  

    This funding will support continuing operations and replace lost revenue resulting from the sharp decline in passenger traffic and other airport business due to the COVID-19 public health emergency. The funds are available for airport capital expenditures, airport operating expenses including payroll and utilities, and airport debt payments.

    The FAA encourages airport sponsors to spend the grants funds immediately to help minimize any adverse impact from the current public health emergency. Airport sponsors should work with their local FAA Office of Airports field office on the application and grant-agreement process. 

    The CARES Act also provides funds to increase the Federal share to 100 percent for grants awarded under the fiscal year 2020 appropriations for Airport Improvement Program (AIP) and Supplemental Discretionary grants. Under normal circumstances, AIP grant recipients contribute a matching percentage of the project costs. Providing this additional funding and eliminating the local share will allow critical safety and capacity projects to continue as planned regardless of airport sponsors’ current financial circumstances.

    The FAA will use a streamlined application and grant-agreement process to make this funding immediately available for critical airport needs. The funds will be available as soon as the airport sponsor executes a grant agreement. 

    The CARES Act provides new funds distributed by various formulas for all airports that are part of the national airport system. This includes all commercial service airports, all reliever airports and some public-owned general aviation airports. 

    There is additional program information on the CARES Act website.

    This release was originally published by the U.S. Department of Transportation on April 14, 2020.

  • Tracey Cheek posted an article
    GA Fights for Public Benefit Exemptions, Accommodations see more

    NAFA member, AOPA, fights for the general aviation industry public benefit exemptions and accommodations.

    As the coronavirus pandemic alters every facet of life and how industries around the globe operate, the aviation sector is trying to find its new normal. The FAA has taken steps to address the heavily impacted operations of commercial carriers amid the COVID-19 pandemic, and now, general aviation continues to ask for the same treatment as it provides vital services to the public and economy while fighting a worldwide crisis.

    General aviation is providing vital services to the public and economy during the coronavirus pandemic, as exemplified by Michigan Seaplane flight school instructors Nick Hall and Mike Mato, who have been flying medical face shields to a Michigan hospital in a Cessna 206. AOPA and other aviation groups are requesting exemptions for GA because it is serving a critical role. Photo courtesy of Nick Hall and Mike Mato.

    In an April 1 letter to FAA Associate Administrator for Aviation Safety Ali Bahrami, AOPA and seven other industry groups urged the agency to empower the continued health of the multibillion-dollar GA industry through extensions to examinations, certifications, maintenance, and filings. GA has stepped up in many ways to help the nation deal with the COVID-19 crisis through its more than 5,000 public airports across the country, providing transportation and logistical support for needed supplies and personnel.

    While the commercial aviation sector has taken center stage as being hard hit throughout the pandemic, the vital contributions of GA often go unrecognized.

    General aviation has long been vital to the nation’s transportation and economic infrastructure,” said Christopher Cooper, AOPA director of regulatory affairs. “From providing medical resources to remote locations to supporting millions of jobs and economic activity across the United States, the benefit general aviation provides to the public, especially in times of national crisis, is enormous. Having these exemptions and deviations approved by the FAA will ensure general aviation has limited delay in operations to help the fight against the COVID-19 pandemic.”

    The letter also cited a recent PricewaterhouseCoopers LLP study showing that GA contributes 1.2 million jobs and $247 billion in economic activity to the United States. The Cybersecurity and Infrastructure Security Agency (CISA), which falls under the Department of Homeland Security, has designated transportation, which includes GA, as a critical infrastructure sector. Air medical is specifically named by CISA as a critical workforce, and air medical aircraft continue to provide lifesaving missions for those in need whether stricken by COVID-19 or other health emergencies. 

    “This letter builds upon an earlier request sent to the FAA on March 17, further explaining why these extensions are justified since general aviation is, indeed, a public good. Regulations and exemptions must be found to be for the public good, and this is the rationale the FAA used to provide exemptions for air carriers and commercial operations. We believe general aviation should also be provided exemptions based on the same rationale,” said Cooper.

    Similar regulatory activity has already been enacted by the European Union Aviation Safety Agency in Europe and the Civil Aviation Authority in the United Kingdom, where comparable exemptions have been granted to both commercial and noncommercial operations in their respective countries. 

    Along with AOPA, the Air Medical Operators Association, the Experimental Aircraft Association, the General Aviation Manufacturers Association, Helicopter Association International, the National Agricultural Aviation Association, the National Air Transportation Association, and the National Business Aviation Association signed the April 1 letter.

    Requested exemptions

    AOPA and seven other GA organizations signed an April 1 letter to the FAA requesting a wide range of exemptions and deviations:

    • Extension of FAR Part 61 pilot currency requirements, including the flight review and instrument proficiency check.
    • Guidance that 709 reexaminations or paperwork inspections in person (such as logbook inspections under FAR 61.51, or maintenance record inspections under FAR 91.417) be deferred or at least be conducted electronically during the current social distancing safety protocols and directives regarding nonessential activities.
    • Extensions for certificated flight instructor certificate renewal, expiration, and endorsement periods. 
    • Extension of knowledge exam expiration period.
    • Extensions for applicants on the ability to complete practical examinations.
    • Extension for filing documents under FAR Part 13 (Subparts C, D, and G).
    • Extensions for aircraft maintenance and continuing airworthiness requirements with necessary mitigation procedures.

    This article was originally published by AOPA on April 2, 2020.

  • Tracey Cheek posted an article
    Associations Seek Exemptions to Continue Flying During COVID-19 Pandemic see more

    Washington, DC, April 3, 2020 – In an April 1 letter to FAA Associate Administrator for Aviation Safety Ali Bahrami, NBAA and other general aviation (GA) groups requested exemptions and other accommodations to ensure continuity of operations and commerce during the COVID-19 pandemic.

    Included requests for exemptions or deviations most applicable to NBAA members include:

    • Extension of 14 CFR Part 61 pilot current requirements, e.g. flight review, IPC, PIC/SIC proficiency checks;
    • Extensions for certified flight instructor certificate renewal, expiration and endorsement periods; and
    • Extensions for aircraft maintenance and continuing airworthiness requirements with necessary mitigation procedures.

    The group letter notes other aviation authorities have provided similar exemptions for commercial and noncommercial operations.

    The April 1 letter highlights the important role general aviation plays in the U.S. and global economy and the significant public benefit provided by the industry. For example, general aviation contributes 1.1 million jobs and $247 billion in economic activity to the U.S. economy and is a literal lifeline to many communities, connecting more than 5,000 public airports, compared to the 500 used by scheduled airlines.

    The Air Medical Operators Association, Aircraft Owners and Pilots Association, Experimental Aircraft Association, General Aviation Manufacturers Association, Helicopter Association International, National Agricultural Aviation Association and National Air Transportation Association also signed the April 1 letter to Mr. Bahrami. 

    Read the GA groups’ letter in its entirety

    General aviation provides extensive air medical services, which are designated by the Department of Homeland Security’s Cyber Infrastructure and Security Agency (CISA) as a critical workforce; monitors pipelines and powerlines; transports critical medical personnel; and conducts important aerial applications in agriculture and pest control programs.

    Perhaps most importantly during this crisis, general aviation airmen and aircraft conduct humanitarian flights delivering masks, ventilators and other essential items.

    Prior to signing on to this most recent letter, NBAA also sought and received exemptions for certain Part 135 training requirements in March. The FAA also worked with NBAA and other groups to issue a COVID-19-driven exemptionallowing pilots to continue to fly if their airmen medical certificate expires between March 31 and June 30. 

    “We appreciate the FAA’s cooperation and efforts to provide these exemptions and exceptions, keeping business aviation flying without compromising safety or negatively impacting the National Airspace System,” said Brian Koester, CAM, NBAA’s director of flight operations and regulations. “Business aviation plays an important role as the nation continues its work to contain COVID-19, mitigate the devastation the virus might cause and – eventually – begin nationwide recovery.”

    Review NBAA’s COVID-19 resources.

    Contact: Dan Hubbard, 202-783-9360, dhubbard@nbaa.org

    This release was originally published by NBAA on April 3, 2020.