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.
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).
Pacific’s case says that Specific Intent is required. A further comment by Del Balzo regarding the 1980 interpretation in support of his decision follows:
“The 1980 interpretation indicates that: (1) Section 21.303(a) contains an intent requirement; (2) it is intent at the time of production that matters. The interpretation does not however discuss the meaning of the intent requirement. Instead, the interpretation left that issue for another day. Though the reasonably likely standard urged by the Complainant (FAA) is not inconsistent with the 1980 interpretation, it does not afford sufficient protection to producers of parts that have legitimate markets other than type-certificated products. As noted above, substantial certainty is a more balanced standard, and it too is consistent with the 1980 interpretation.”
Pacific Sky sold some parts that did not have PMA approval. However, it maintained that in accord with the statement mentioned above it did not have the specific intent to sell or distribute the parts to people who were going to install them on type-certificated aircraft or products. In this case, before the ALJ, it argued, that the FAA had to prove its intent to sell the part to people who would put them on such certificated aircraft or prove that it had actual knowledge of this fact. On the other hand, the FAA maintained that it need only prove that a reasonable person would find it reasonably likely that the parts would be installed on type-certificated products. This would be much easier to prove since it is subjective rather than having the intent requirement, which is specific and requires more facts to prove. So, the stage was set for some time to come to argue this particular issue.
Therefore, for this reason, the ALJ who heard the case the first time found that Pacific had to have specific intent and the FAA admitted that it was not prepared to prove that and it had no evidence to present on that issue. Pacific won the case at this point. Since it won, it later requested its attorney fees in accord with the EAJA statute.
The award of attorney fees are decided initially by the ALJ first hearing the case and usually heard on appeal by the FAA Administrator.
David Hinson, Administrator of the FAA at that time, decided in favor of his people on the issue and reversed Pacific’s award of fees.
Why this ruling is important?
Today, many aircraft are old and parts are difficult to obtain from a factory that may no longer exist. In order to keep a fleet going without a source for parts, many owners and operators use an exception to FAR 21.303(a) in order to manufacture their own parts for their own aircraft. Air carriers do this routinely for a lot of reasons not the least of which is the cost of the part from the original producer or a PMA source. The alternative would be to spend much time and money to acquire a PMA for the part. Since some operators know how to manufacture the part they could provide this knowledge and assistance to anyone out there who needed similar parts for his or her aircraft. But would this be an unapproved part? So long as the owner of an aircraft enlists the aid of someone who is knowledgeable and provides the part or a drawing of it to him and/or provides the material to make it … and more importantly, can participate or supervise its construction, it becomes an approved part under FAR 21.303(b)2. Any one of these factors can allow use of the parts.
FAR 21.303(a) includes this exception to the basic rule … 21.303(b) parts produced by an owner or operator for maintaining or altering his own aircraft….
This exception harks back to a time when owners and operators had to be prepared to fix their own aircraft with home-made parts that they made or participated in making themselves. But it is now a no-no in accord with the FAR to sell or otherwise distribute these parts without having a PMA from the FAA even though the part is identical in all respects. Some have said that this may well be less about safety and more to favor aircraft manufacturers who are looking to protect their turf and pocketbook.
Keep in mind that in order for this route to an approved part to work you must be involved in its creation in some way and you must be prepared to prove it.
A further step
Suppose your mechanic makes and assists you with the fabrication of your part and says to you … I just finished making the same part for myself and here it is. Would it be a suitable part for you to use as an approved part that was made by you pursuant to FAR 21.303(b)2? Further, you inspected the part, determined that it was built to your standard by comparing it with your factory part. You, of course, paid the man for his help.
Obviously, this is different from Pacific’s case. But in this scene the hypothetical part maker would, like Pacific, be charged with violating FAR 21.303(a). But he could say … ”I did not make this part with the intent to sell it for installation on another person’s aircraft. I made it for my own aircraft.” Would this aid in the argument with the FAA and or would it simply be a matter of when the part was made … would this be a no-brainer?
A third example
In 1997 a sale of a non-PMA’d alternator for installation on a Piper Super Cub caused the seller to be charged with a violation of the same FAR 21.303(a). A notice of Civil Penalty was issued. The seller had included sample copies of pages from FAA Form 337s that showed his alternator and its regulator had been previously approved for installation on type-certificated products (namely the PA-18).
The seller told his buyers that his alternator was not covered by any STC for any certificated aircraft and that it was only for amateur built (experimental) aircraft.
Another detail that seemed important in this case was the fact that the seller did not include any 337s with his shipment. But he had previously sent potential purchasers copies, prior to their buying the product, for information-only purposes. (Why should this have made a difference?) Apparently the FAA inspectors were suggesting that the purchasers were going to “doctor” a copy of a 337 so that it would appear that it applied to this purchaser. This was not found to have been the case however.
A key point
A previously approved Form 337 however, can be used as acceptable data to provide technical support for field approval of a major repair or alteration, such as this non-PMA approved alternator. Hmmmm, does this not open several avenues around the non-PMA dilemma?
Many observers, including FAA inspectors, would maintain that field approval of the non-PMA’d alternator on the PA-18 approves it for this type-certificated aircraft series.
Agreed? Comments to email@example.com
Stephen P. Prentice is an attorney whose practice involves FAA-NTSB issues. He has an Airframe and Powerplant certificate and is an ATP rated pilot. He worked with Western Airlines and the Allison Division of GMC in Latin America, servicing commercial and military overhaul activities and is a USAF veteran. E-mail: firstname.lastname@example.org