Greg Reigel

  • Tracey Cheek posted an article
    ADS-B Compliance: The Potential Consequences Of Violating Rule Airspace see more

    NAFA member, Greg Reigel, Partner with Shackelford, Bowen, McKinley & Norton, LLP., discusses ADS-B Compliance and Rule Airspace.

    As most aircraft operators know, or should know, aircraft must now be equipped with ADS-B Out in order to fly in most airspace within the U.S.  Although it is possible to take advantage of limited waivers or exceptions, generally speaking ADS-B Out is required for operations in “Rule Airspace.”

    In connection with this requirement, the FAA recently updated Order 2150.3C – FAA’s Compliance and Enforcement Program to explain potential sanctions for aircraft operations that do not comply with the ADS-B Out mandate.  Specifically, Chapter 9 of the Order now identifies the FAA’s sanction policy/guidance for ADS-B related violations.

    It is important to understand that the FAA will be taking these violations seriously. For example, if the FAA believes an airman is transmitting inaccurate ADS-B Out or transponder information with the intent to deceive, or is operating an aircraft without an activated transponder or ADS-B Out transmission (except as provided in 14 C.F.R. §91.225(f)) for purposes of evading detection, it will revoke that airman’s certificates.

    The sanction for other violations are not as severe, but are nonetheless significant.  The FAA characterizes the severity of the violation based upon levels of 1, 2 or 3, with Severity Level 3 being the most serious. And depending upon whether the FAA views the violation as careless or reckless/intentional, the sanction range could vary from low to maximum.

    The FAA evaluates violations based upon impact on safety.  “Technical Noncompliance” involves violations where serious injury, death, or severe damage could not realistically occur as a result of the violation conduct, even if theoretically possible. A violation with a “Potential Effect on Safety”  occurs in a situation where serious injury, death, or severe damage could realistically result, but under the facts and circumstances would not often occur. Finally, a violation falls into the “Likely Effect on Safety” category where serious injury, death, or severe damage may occur more often as a result of the violation conduct.

    When the operator fails to comply with ADS-B Out performance or broadcast requirements due to technical noncompliance, the violation is considered Severity Level 1. If the failure to comply with ADS-B Out performance or broadcast requirements has a possible effect on safety then the violation is Severity Level 2. And, not surprisingly, when the failure to comply with ADS-B Out performance or broadcast requirements has a likely effect on safety then it is a Severity Level 3 violation.

    The specific sanction will also depend upon the type of violator.  If the violation is by an individual certificate holder, the airman will likely be facing suspension of his or her certificates.  An individual acting as an airman or a business entity will face a monetary civil penalty. In the case of a business, the amount will vary depending upon the size and revenue of the entity.

    So, depending upon the circumstances, an individual certificate holder could face a suspension of his or her certificates for 20 -60 days, 60 -120 days, 90 -150 days, or 150 -270 days, depending upon whether the violation is in the low, medium, high, or maximum range, respectively. Other individuals and businesses could face civil penalties ranging from $100 to $34,174 per violation, depending upon the nature of the violator and how the FAA categorizes the violation.

    In the event of multiple violations arising from the same act or omission, the FAA may give special consideration if the violation was careless, as opposed to reckless/intentional violations which receive no special consideration.  For an individual certificate holder the suspension could be anywhere from 30 -90 days, 90 -150 days, or 120 -180 days, depending upon whether the violation is Severity Level 1, 2 or 3, respectively. And an individual acting as an airman could be assessed a civil penalty in the amount of $5,000 -$10,000, $7,500 -$15,000, or $10,000 -$20,000, again depending upon whether the violation is Severity Level 1, 2, or 3, respectively.

    For other individuals, the civil penalty could range anywhere from $50,000 to $200,000.  And business violators could be assessed civil penalties ranging from $50,000 to $600,000 depending upon the nature and size of the business, as well as the Severity Level of the violation.

    Conclusion

    Order 2150.3C provides the FAA inspectors and attorneys with a checklist for determining sanction in any given case involving an ADS-B violation.  Unfortunately, when a case gets to the point where the FAA is determining sanction, the actual calculations and method for arriving at the final assessed civil penalty is usually withheld.

    However, it is important to understand that the facts and circumstances involved in any given case have an impact on both how the sanction is calculated as well as the amount of the civil penalty assessed.  If you find yourself defending against an alleged violation of Rule Airspace, knowing this information can help you defend yourself and, hopefully, successfully resolve the matter.

    This article was originally published by Shackelford, Bowen, McKinley & Norton, LLP. on February 3, 2020.

  • Tracey Cheek posted an article
    The Flight Department Company Trap see more

    NAFA member, Greg Reigel, Partner with Shackelford, Bowen, McKinley & Norton, LLP., discusses regulatory issues with owning or operating aircraft.

    Businesses and individuals face many regulatory issues in connection with owning or operating an aircraft. Aircraft owners or operators who are unfamiliar with the limitations imposed by the applicable regulations may unnecessarily expose themselves to liability for non-compliance.

    For example, aircraft owners or operators commonly attempt to shield their liability by creating some form of business entity that is a subsidiary of the “real” operating company to own the aircraft.  Or, rather than forming a subsidiary, they create a business entity to own the aircraft that is solely owned by the individual who really wants to use the aircraft.

    In either scenario, the aircraft is the sole substantive asset of the company, and the business entity is used to maintain and fly the aircraft for the benefit of the parent company or individual owner of the business entity. By structuring the ownership and operation of the aircraft in this manner, the aircraft owner and/or operator has just fallen into the “flight department company trap.”

    I recently presented a continuing legal education program on this very topic for Lawline.  In my presentation, I discussed the various rules and regulations promulgated by the Federal Aviation Administration that have a significant impact on how businesses or individuals are permitted to utilize private aircraft, as well as how to identify the flight department company trap, understand the consequences of creating a flight department company, and available alternatives to avoid falling into the trap and legally conduct private aircraft operations.

    If you would like to learn more, you can view a short clip from the CLE here. Otherwise, you can find other posts discussing this topic here on The Pre-Flight Brief or on our Aviation Law Articles page.  And, of course, if you have specific questions or would like to discuss this topic further, please feel free to contact me.

    This article was originally published by Shackelford, Bowen, McKinley & Norton, LLP. on October 18, 2019.

  • Tracey Cheek posted an article
    Insurance Will Not Cover An Unqualified Pilot in Command see more

    NAFA member, Greg Reigel, Partner at Shackelford, Bowen, McKinley & Norton, LLP, discusses aircraft insurance coverage regarding an unqualified pilot in command. 

    If you buy insurance to cover the aircraft you own or fly, you want to make sure the policy covers you and your aircraft if you ever have a problem. It is important to understand that your insurance policy is a contract between you and your insurer. That contract has terms and conditions that spell out the rights and responsibilities of both you the aircraft owner and/or pilot and the insurer.

    As you may be aware, if an aircraft owner and/or pilot does not comply with the requirements of the insurance contract, the insurer can deny coverage. This can sometimes lead to arguments between the insurance company and the insured aircraft owner or pilot.

    This was the situation in one recent case in which the insurance company denied coverage to an aircraft owner whose aircraft was destroyed during an emergency landing. In Hund v. Nat’l Union Fire Ins. Co. of Pittsburgh (D. Kan., 2019), the aircraft owner was flying his aircraft along with another pilot. During the flight the aircraft’s engine experienced a loss of power and the other pilot—who was piloting the plane at the time—told the aircraft owner “your airplane,” at which point the aircraft owner assumed the role of pilot in command and attempted to restart the engine. Unfortunately, the aircraft owner was unable to restart the engine and was forced to perform the emergency landing that resulted in the destruction of the aircraft. After the accident, the aircraft owner submitted a claim to his insurer for the value of his aircraft.

    In determining whether to pay the claim, the insurer looked to the insurance policy which addressed coverage for both the aircraft owner as a named insured, and for other pilots operating the aircraft. The policy conditioned coverage on compliance with the policy’s “Pilots Endorsement” which required, unsurprisingly, that the pilot in command have a valid FAA pilot certificate, a current and valid FAA medical certificate, if required, and a current and valid flight review.

    Unfortunately, neither the aircraft owner nor the other pilot satisfied these conditions: The aircraft owner possessed a current flight review, but not a current medical certificate; the other pilot did not have a current flight review. Although these facts were undisputed, the aircraft owner argued that 14 C.F.R. § 91.3(b) suspended the policy requirements during an in-flight emergency, which he and the other pilot faced during the emergency landing.

    14 C.F.R. § 91.3(b) provides that “[i]n an in-flight emergency requiring immediate action, the pilot in command may deviate from any rule of this part to the extent required to meet that emergency.” Specifically, the aircraft owner argued that § 91.3(b)’s emergency rule was in effect when he assumed control from the other pilot, and the emergency rules “suspended all other rules” except to do what is necessary to respond to the emergency. The insurer didn’t agree, and neither did the Court when the aircraft owner sued his insurer for denying his claim.

    The Court initially observed that Section 91.3(b) allows a pilot in command to “deviate from any rule of this part to the extent required to meet that emergency.” It then concluded that Section 91.3(b) applied only to the rules in Part 91, and not the regulations governing pilot qualifications in 14 C.F.R. Part 61.

    Makes sense to me. Certainly, the aircraft owner’s argument was creative. But I agree that the plain language of the insurance policy and the regulations are inconsistent with that argument.

    The moral of the story? If you are going to act as pilot in command, make sure you satisfy both the applicable regulations, as well as the requirements of any insurance policy covering the aircraft you are flying.

    This article was originally published by Shackelford, Bowen, McKinley & Norton, LLP, on April 1, 2019.

  • Tracey Cheek posted an article
    Does The “As-Is” Language In An Aircraft Purchase Agreement Make A Difference? see more

    NAFA member, Greg Reigel, Partner at Shackelford, Bowen, McKinley & Norton, LLP., discusses the "As-Is" Language in Aircraft Purchase Agreements.

    It isn’t uncommon in aircraft purchase agreements to see language stating the parties are agreeing that the aircraft is being purchased “as-is” or “as-is, where-is.” Oftentimes the agreement will go on to also say that the seller is not making, nor is the buyer relying upon, any representations or warranties regarding the condition of the aircraft. And it may also specifically state that the buyer is only relying upon its own investigation and evaluation of the aircraft. But what does this really mean?

    Well, from the seller’s perspective, the seller wants to sell the aircraft without having to worry that the buyer will claim at a later time that the aircraft has a problem for which the seller is responsible. So, the seller does not want to represent that the aircraft is in any particular condition (e.g. airworthy). When the deal closes, the aircraft is sold to the seller in its existing condition without any promises by the seller about that condition.

    Here is an example of how this works: If the first annual inspection of the aircraft after the sale reveals that the aircraft is not in compliance with an airworthiness directive (“AD”) that was applicable to the aircraft at the time of the sale, the buyer could claim that the aircraft was not airworthy at the time of the sale and demand that the seller pay the cost of complying with the AD. But if the purchase agreement has “as is” language, then the chances of the buyer being able to actually force the seller to pay are low.

    Not only does this “as-is” language protect the seller, but it also protects other parties involved in the sale transaction such as seller’s aircraft broker. A recent case provides a nice explanation of the legal basis for this result.

    Red River Aircraft Leasing, LLC v. Jetbrokers, Inc. involved the sale of a Socata TBM 700 where the aircraft owner/seller was represented by an aircraft broker. The buyer and seller entered into an aircraft purchase agreement that included not only “as-is, where-is” language, but it also provided that the buyer was accepting the aircraft solely based upon buyer’s own investigation of the aircraft.

    During the buyer’s pre-purchase inspection of the aircraft, the buyer discovered certain damage to the aircraft. However, the buyer accepted delivery of the aircraft in spite of the damage based upon alleged representations by the broker that the damage was repairable. After closing the buyer learned that certain parts were not repairable. Rather than sue the aircraft seller, presumably because the buyer recognized the legal impact of the “as-is” language in the purchase agreement with the seller, the buyer instead sued the aircraft broker alleging that the broker negligently misrepresented the aircraft.

    In order to succeed on a claim of negligent misrepresentation under Texas law (the law applicable to the transaction), the buyer was required to show (1) a representation made by the broker; (2) the representation conveyed false information to buyer; (3) the broker did not exercise reasonable care or competence in obtaining or communicating the information; and (4) the buyer suffers pecuniary loss by justifiably relying on the representation.

    In response to the buyer’s claim, the broker argued that the “as-is” language in the purchase agreement waived the buyer’s right to be able to prove that it justifiably relied upon any alleged representations by the broker. The buyer primarily argued that the purchase agreement language did not apply because the broker was not a party to the agreement. But the Court disagreed with the buyer.

    The Court found that

    the purchase agreement contains clear language evincing Red River’s intent to be bound by a pledge to rely solely on its own investigation. And, because it appears that the parties transacted at arm’s length and were of relatively equal bargaining power and sophistication, the court concludes that the language in the purchase agreement conclusively negates the reliance element of Red River’s negligent misrepresentation claim.

    So, even though the broker was not a party to the purchase agreement, the Court still held that the buyer was bound by the statements/obligations to which the buyer agreed in the purchase agreement, even with respect to third-parties. As a result, the Court granted the broker’s summary judgment motion and dismissed the buyer’s claims against it.

    Conclusion

    “As-is” language will continue to be common in aircraft purchase agreements. Aircraft sellers and those working with them will certainly want to include and enjoy the benefit from this language. Conversely, aircraft buyers need to be aware of the scope and impact of “as-is” disclaimer language in an aircraft purchase agreement. If a buyer is unhappy with the condition of the purchased aircraft, the presence of this language in the purchase agreement will significantly limit the buyer’s remedies and recourse.

    The information contained in this web-site is intended for the education and benefit of those visiting the Aero Legal Services site. The information should not be relied upon as advice to help you with your specific issue. Each case is unique and must be analyzed by an attorney licensed to practice in your area with respect to the particular facts and applicable current law before any advice can be given. Sending an e-mail to Aero Legal Services or Gregory J. Reigel does not create an attorney-client relationship. Advice will not be given by e-mail until an attorney-client relationship has been established.

    This article was originally published by Shackelford, Bowen, McKinley & Norton, LLP, on July 1, 2018.