In December 2022, the FAA Aircraft Registry announced that only Federal employees and contractors could access ancillary documents because of concerns regarding the inadvertent release of proprietary data and personally identifiable information (PII). These privacy concerns fall under the Trade Secrets Act (18 U.S.C. 1905), which prohibits disclosure of proprietary data, and the Privacy Act (5 U.S.C. 552a(b)), prohibiting disclosure of sensitive PII.
Law firms, title companies and others use the Registry to access ancillary documents and examine FAA records. These documents typically include previously filed statements supporting registration, powers of attorney, legal name change and merger and trust documents.
Without quick and efficient access to ancillary files, the time and effort for retrieving necessary documents significantly increases, as does the possibility that filed documents may be rejected. In addition, December always marks a busy time for aircraft registry and closings.
The fallout from the restricted access is yet to be measured but will add to the existing Registry backlog. This article will discuss the background of the FAA’s move to deny access, the effects on lenders and others in the aviation industry and measures to move forward.
Background
Congress passed The Coronavirus Aid, Relief and Economic Security Act (CARES Act) on March 25, 2020, to provide economic assistance for American workers, families, small businesses and industries. The programs aimed to address issues related to the COVID-19 pandemic, and the Consolidated Appropriations Act continued many of these programs by adding new phases, allocations and guidance.
Through this program, the government recognized and mandated that the aviation industry upgrade the Aircraft Registry. In addition, after auditing the FAA, the Government Accountability Office determined that the FAA also needed to upgrade the existing systems to maintain digital records for aircraft registered on the Registry appropriately.
To comply with the FAA system upgrades, the FAA is designing an entirely new online system enabling people to access documents outside the Registry’s Public Documents Room. This will include filing and accessing documents remotely to move toward an online documentation system and process.
As the FAA looked into the information they would be providing the public in the new system, they decided much of the ancillary documents included PII, such as trust documents, statements of support of registration, power of attorney, etc. They felt the public shouldn’t be able to access this PII information online. Therefore, the FAA announced in December that federal employees and contractors could only access the files.
What is the fallout?
Because of the restricted access to ancillary documents, many lenders, attorneys, title officers, market monitoring services and others in the aviation industry now face a significant delay in obtaining documents and an increase in their workload.
Ancillary documents help professionals make decisions regarding leasing, lending, buying and selling. The delay in obtaining ancillary documentation will undoubtedly slow the aircraft transaction process, negatively impacting the industry.
The restricted access to ancillary files impacts aircraft transactions, potentially including:
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Delaying aircraft closings
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Rejections in aircraft registrations
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Incorrect filings or the grounding of aircraft and refiling efforts
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Cleaning up of incorrect filed documentation
This restriction also impacts market intelligence services for business aviation research purposes, which rely on registration and ownership information to help lenders, buyers, sellers and more make decisions on risk, purchasing decisions, valuations, etc., for business and commercial aircraft.
Measures to end the restriction
Initially, NAFA, GAMA, MBAA and others discussed with the FAA whether the information in the ancillary documents should fall under the protection of PII since this information has been previously available to the public for decades. Additionally, most people know or should know that information in the Registry is open to the public and do not disclose PII in the documentation.
When the restriction was enacted, law firms and title companies stopped asking for the ancillary documents because it added a significant amount of time and could amount to hundreds of documents a day. They didn’t have the bandwidth to submit requests for information (RFI) and still close transactions on a timely basis. This drop in RFIs may have been misleading to the FAA, making it appear that transactions were proceeding efficiently and as normal and, thus no need for the FAA to reverse their decision or provide practical alternatives to obtaining the ancillary documents.
With the help of NAFA, GAMA, MBAA and others, who met with the FAA to discuss this new challenge, it came to light that the actual number of requests for information to retrieve the necessary documentation would be in the thousands each day in the hopes the FAA would reverse its restricted access.
As a partial solution, the FAA updated the policy to allow users of the Public Documents Room to review the Inquiry Screen and other applicable screens related to the ancillary document. These screens provided a very limited, unofficial summary of the ancillary document requested. However, you can no longer download or review document images for ancillary files.
“This change will certainly be helpful in some instances as Inquiry Screen often provides a very short summary of the information in the ancillary documents,” Scott McCreary, Vice President at McAfee & Taft, said. “For instance, it may reflect that a limited liability company is member-managed, but it won't allow the person reviewing the record to confirm what entity or person is acting as the member.”
If parties need more information, the Registry will allow users of the Public Documents room to make specific requests. The FAA will conduct a thorough review and edit any sensitive information the aircraft registrant may have inadvertently submitted to the FAA before providing the records if any request is made without the statement from the record owner. Finally, the parties may also submit a Freedom of Information Act (FOIA) request for this information. Unfortunately, the Registry is not responding to the request for information in a reasonable timeframe; many requests have been outstanding for months.
Conclusion
The FAA's restriction to accessing ancillary files in December 2022 has not shown its full effects, but it has undoubtedly significantly slowed aircraft transactions. NAFA, GAMA and aviation industry leaders are collaborating in a concentrated effort to work with the FAA to resolve the issues. The FAA has shown a willingness to meet the PII issue and the industry's issues. Still, anyone going into an aircraft transaction should be aware of the restriction and any changes in the ongoing situation.
Sources:
https://home.treasury.gov/policy-issues/coronavirus/about-the-cares-act