PMA or Bogus Part?

A Look at FAR 21.303(a): The Legacy of Administrator vs. Pacific Sky Supply Inc.

Back in 1995 an obscure case that started before 1980, was supported on appeal by FAA acting Administrator, Joe Del Balzo. He heard the FAA appeal of a decision that gave judgment to Pacific Sky captioned above, a civil penalty enforcement action. I and others believe that this case set the stage for a continuing controversy with the FAA over the necessity for the costly and time-consuming process involved with parts manufacturing approval (PMA) that continues to this day. The issue had never been finally decided before the Pacific case, and may not be final to this day.

The case involved the violation of FAR 21.303(a), production of parts for type-certificated products without having obtained a PMA from the FAA, for those parts. The FAA wanted to collect a hefty civil penalty (fine) from Pacific. The case was heard initially by an Administrative Law Judge (ALJ) Robert L. Barton, and he entered judgment for Pacific and later awarded $87,724 attorney fees and costs finding that the case was not substantially justified. The case was appealed by the FAA and the appeal was heard by acting Administrator Joe Del Balzo, who remanded the case back to the ALJ for further decision. The ALJ then re-entered judgment for Pacific.

The FAA and Pacific both appealed the award of fees and it was reversed by the new Administrator David Hinson. The judgment entered in Pacific’s favor could not be touched and it still stands. Pacific did lose its petition for fees however. It paid no civil penalty on the underlying charges since that case was dismissed. However, Hinson still denied attorney fees to Pacific Sky which are provided for under the Equal Access to Justice (EAJA) statute. A further appeal to the 9th Circuit Court of Appeals sustained the Administrator’s denial of fees.

The issue
Pacific prevailed in the earlier ALJ hearing when the FAA alleged that it was not prepared to go forward with the case because it had no evidence of intent to sell the parts for use on a type-certificated product, which the judge said was required. Judgment was entered for Pacific by the ALJ. This decision was as stated, upheld on the appeal to acting Administrator Del Balzo.

The FAA and Pacific both appealed the granting of fees ALJ to the new FAA Administrator, David Hinson. He sided with the FAA and reversed the award of fees citing his substantially justified finding with other special circumstances. A discussion of special circumstances in the denial of fees under the EAJA will be left for another day but it is interesting how the Administrator used it to deny Pacific’s fees saying that special circumstances make the award of attorney fees unjust.

During this petition for fees argument the Administrator discussed the merits of the case and found that FAA was substantially justified in bringing the case against Pacific and thus he denied the award of fees. (He would probably have reversed the decision of the ALJ in the initial case if he could … but that was not before him since the case was now dismissed. He did talk about it in the course of finding that the case was substantially justified however.)

During the initial case workup, various pleadings and letters were exchanged between the parties that related to the parts in question. This now gets to the merits of the case. In 1980 an FAA regional attorney sent a letter to Pacific Sky’s attorney containing a regulatory interpretation of 14 CFR 21.303(a) … “no person may produce a modification or replacement part for sale for installation on a type-certificated product unless it is produced pursuant to a Parts Manufacturer Approval … (FAR 21.303(a))

The 1980 interpretation
The FAA’s attorney stated that it was the FAA’s position that the above is interpreted to mean the following: “A person who produces a modification or replacement part that is intended to be installed on a type-certificated product must hold a FAA-PMA approval. If the part is not produced with that intent, but subsequently installed in a type-certificated product, the producer is not subject to FAR 21.303(a)” (emphasis by this writer).

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