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Drug Testing Refusal Cases: Worthy of Appeal?

by Greg Reigel 1. March 2010 00:00
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If you work in a safety-sensitive position for an employer subject to Department of Transportation drug and alcohol testing requirements (e.g. Part 121 and 135 carriers, as well as maintenance providers who maintain aircraft on behalf of those carriers, or operators who conduct non-stop sightseeing flights for compensation or hire under FAR 91.147), you have likely been asked at some point during your employment to submit to a drug or alcohol test. You are also probably aware of the severe consequences imposed upon a safety-sensitive employee for failure to submit to a test when requested (termination of employment, revocation of the employee's airman certificates, to name a few).

However, what happens when the employee believes he or she is complying with a request but the employer regards the employee's conduct as a refusal? Well, when the FAA initiates a revocation action, the employee will, unfortunately, have to defend his or her rights. But an airman/employee in that situation isn't without hope, as we see in a recent National Transportation Safety Board ("NTSB") case.

The Case

In Administrator v. Rojas, the NTSB affirmed an administrative law judge's ("ALJ") dismissal of an emergency order revoking all of an airman's certificates for allegedly refusing to submit to a drug test. The FAA's revocation order alleged that the airman, a pilot for Pinnacle Airlines, refused to submit to a drug test in violation of FAR Part 121, App. I (previously defining refusal to submit to a drug test, but now replaced by 49 C.F.R. Part 40), FAR 67.107(b)2 (a refusal to submit to a drug or alcohol test is considered "substance abuse", a disqualifying medical condition) and 49 C.F.R. § 40.191(a)(1) (defining "refusal" to submit to a drug test). As a result, the FAA issued an emergency order revoking all of the airman's certificates. The airman then appealed the FAA's order to the NTSB for a hearing before an ALJ.

The Hearing Before The ALJ

At the hearing, the FAA presented evidence in support of its allegations that the airman had been selected for a random drug test, was notified of the drug test and then refused to submit to the drug test. The airman presented evidence that the airline employee who allegedly notified him of the drug test never received training relating to drug-testing and, in fact, after notifying the airman of his selection for testing then told the airman that he did not need to submit to the test until a later time.

At the conclusion of the hearing, the ALJ determined that the airman's evidence was more credible. He specifically found that although the airman did not take the drug test, he did not lack the qualifications to hold an ATP or first-class medical certificate as alleged by the FAA. Further, he credited witness testimony that the airline employee withdrew her request for a drug test, and did not notify the airman that she would consider his statement concerning the lack of sufficient time to complete the test to be a refusal. Of course, the FAA then appealed the ALJ's decision to the full Board.

The Appeal To The NTSB

On appeal, the FAA argued that the ALJ's decision was contrary to the weight of the evidence, and that his conclusions of law were wrong. The FAA took the position that the airman's intentions were irrelevant. According to the FAA, when presented with a request to submit to a drug test, you either take or you don't. Since the evidence presented by the FAA showed that the airman did not take the test, the FAA argued that the airman refused the test.

The Board initially observed that much of the ALJ's decision was based upon his credibility determinations and that "resolution of a credibility determination, unless made in an arbitrary or capricious manner or unless clearly erroneous, is within the exclusive province of the law judge." It went on to note that it could not withhold deference to an ALJ's credibility findings simply because other evidence in the record could have been given greater weight by the ALJ.

Next, the Board stated that "cases concerning refusals to submit to drug tests involve fact-specific inquiries." It then held that, based upon the evidence credited by the ALJ, it could not find that the airman's conduct constituted a refusal. The Board further concluded that the ALJ's credibility determinations were not arbitrary, capricious, or contrary to the weight of the evidence, despite the FAA's attempts to re-argue facts that the ALJ had clearly discounted.

Conclusion

This case highlights the merit of appealing a revocation order based upon an alleged refusal to submit to drug-testing. Given the appropriate facts, as were present in this case, it is possible to have the FAA's order dismissed, if the airman can persuade the ALJ that he or she did not refuse to submit to the drug test. Unfortunately, this isn't always possible. However, if the airman is successful, this case demonstrates that the Board should defer to the ALJ's decision if/when the FAA appeals.

For more information regarding aviation law, safety and security, e-mail Greg at greigel@aerolegalservices.com or visit his website at www.aerolegalservices.com.

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Greg Reigel

Off-Shore Aircraft Registration

by Jeremy Cox 1. March 2010 00:00
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In the maritime world, a ship is said to be "flying a flag of convenience" if it is registered in a foreign country "for purposes of reducing operating costs or avoiding government regulations." The country of registration determines the laws under which the ship is required to operate under and also that which are to be applied in any relevant maritime legal cases that might come about.

In aviation there are a multitude of reasons why you might choose to register your aircraft off-shore under the flag of a foreign country. Some of these include:

Complete Anonymity, i.e. if you suffer from celebrity notoriety; or you are a powerful corporate leader who relies on discreet and untracked movement within the territory of your competitors; or simply for personal reasons requiring anonymity. When your aircraft has been registered off-shore your privacy protection begins. If a journalist, corporate competitor or other interested party seeks the registered owner of your aircraft; their search will end with the contact details of your registered agent or trustee, and not with you.

Sales Tax or other Tax Avoidance, i.e. generally speaking, it is fairly simple for you to avoid a multitude of forms of taxation that are normally associated with the ownership and operation of a private or business aircraft, by registering it off-shore. Neutral Nationality Registration, i.e. this issue has become very prominent since we have moved into the new age of terrorism and unrest. By registering off-shore, you can fly internationally without instant recognition as being from the U.S.A.

Most foreign registries require that the registrant be a citizen of that country. The United States is the same: A U.S. citizen by definition of 14 Code of Federal Regulations (CFR) section 47.2 can be an individual, or partnership where each individual is a U.S. citizen, or a corporation organized under the laws of the United States, state, territory, or possession of the United States of which the president and at least two-thirds of the board of directors are U.S. citizens and 75 percent of the voting interest is owned or controlled by U.S. citizens. A resident alien is considered to be a corporation other than classified as a U.S. citizen, lawfully organized and doing business under the laws of the United States or of any state thereof, if the aircraft is based and used primarily in the United States; or a government entity (federal, state, or local). How then do these off-shore registries allow a foreigner to register with them? This is allowed by the employment of a native 'Trustee' or 'Agent' who acts on-behalf for the foreign ownership entity, under the auspices of a formal 'Trust Agreement.' In all cases there are annual fees that are payable to the agent. The U.S.A. aircraft registration branch is the only authority that I know of, that does not charge any annual registration fees.

Internationally, the most popular off-shore countries of registration are Bermuda, the United States of America, and now the relatively new player: the Isle of Mann. The "M" Registration was first introduced in 2007 by the government of this small island tax-haven which is located in the North Sea between England and Northern Ireland; it is probably better known for its T.T. motorcycle racing history rather than for its aviation industry.

Even though the aircraft eligible for entry onto the "M" or "Manx" registration must all be Type Certificated by the European Aviation Safety Agency (EASA), the Isle of Mann has chosen to more closely mimic the Federal Aviation Regulations of the United States rather than the bureaucratic tangles and inconsistencies that are normally found within the rules established by the European Aviation Authorities. Interestingly though, no non-resident islander can register any aircraft that is non-turbine powered and below 12,500 lbs MGTOW, or in the case of Helicopters, a non-twin-turbine powered machine.

Since a convenient loophole in the Value Added Tax (VAT) Regulations was recently exorcised by the European Union from the Danish Ministry of Taxations' rolls, whereby a 'flat-tax' was charged for an aircraft run through their tax-registration system, instead of the normal 25% or so, being charged like everyone else. The Isle of Man registry has quickly taken the lead largely because of its zero tax ratings for both corporations and inheritances, and depending on an aircraft owner's tax domicile, the Manx government provides a pathway for owners to either significantly reduce or even eliminate the VAT charge on their aircraft purchase.

By the beginning of November, 2009 almost 180 business jets and turbo-props had already been enrolled onto the Manx aircraft register. I am certain that this number shall continue climbing at a high rate. How do you or your company handle the Registration of you aircraft? Please click on the link below which states "Reply to this Article", your thoughts and comments would be very much appreciated. Be funny, be inspired, but most importantly of all, please be nice.

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I've Had an Aircraft Accident: What Do I Do?

by Darryl Abbey 1. March 2010 00:00
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Most pilots will go through their entire flying lives without ever having an accident or incident involving an aircraft. That is a wonderful testament to the quality of pilots flying in America today as well as the quality of the aircraft which they operate. Most pilots work very hard at maintaining the skills necessary to avoid aircraft accidents. That includes proper initial and recurrent training, adequate and effective aircraft maintenance programs and, depending on the type of aircraft and type of operations, participation in a Safety Management Systems or a full ISBAO program as commitment to safety of flight.

However, we are all vulnerable to the whims of fate or development of a fault tree that leads to something which we try our best to avoid: an accident. The cause might be a sudden downdraft or cross-wind burst just prior to landing, an unexpected runway incursion, a slight depression in the taxiway or a catastrophic systems failure. There are possibilities lurking out there that, try our best, we may not be able to foresee or overcome.

Hopefully, you will never have to experience an event of this type; certainly not one of a catastrophic nature. The old saw of "bent metal is always better than broken bones" never rang more true. Accidents involving injury (or worse) can become extremely complex and are best dealt with by medical, legal, FAA/NTSB and or insurance professionals. It is not the intent of this article to deal with those events.

What this article is intended to address is the incident in which your aircraft is damaged, for some unforeseen or unexpected reason, and you need to interact with your insurance carrier to file a claim, get your aircraft repaired and start flying again.

Aircraft Insurance, like other types of property /casualty insurance, is based on the principle of indemnity: In exchange for the premium paid, the insurance carrier will make you whole in the event of a loss (subject to deductibles, exclusions, terms and conditions). This does not mean that your insurance carrier will pay to replace your steam gauges with the latest glass panel or "zero-time" your engine. The spirit of the insurance contract is to put you in the same condition you were in prior to the accident. The wording of you aircraft insurance policy may seem complex but, given a little effort on the part of the policy holder (a couple of hours to read the policy) and a broker or underwriter willing to answer questions, it is relatively easy to understand. Like your auto insurance policy, your aircraft insurance functions in a pretty straight forward manner.

So, what are the basic and appropriate steps you need to take in the event of an accident involving your aircraft?

If you have an accident, you need to:

1) Report the accident

As soon as possible, report the event to your broker or insurance carrier and, if the event is significant to warrant it, the FAA or NTSB. Some insurance carriers will provide you with direct reporting channels (via phone or e-mail) but, if you have an insurance broker you should contact them first if at all possible as they are your advocate in all insurance matters.

In preparation for this initial report make sure you have the important facts. Use "Who, What, Where, When and How" as a guide. You will need to provide date, time location, description of events leading to the accident, who was PIC, SIC and any passengers onboard, description of the damage to your aircraft as well as damage to any other aircraft and to any persons or property not in your aircraft (including on the ground or other in-motion or in-flight aircraft). You may have to provide additional information subsequent to the initial report but your broker and/or insurance carrier will advise you of what you should provide and to whom.

2) Capture the event and damage

If possible, take photos of the scene of the event. Carrying a disposable camera in your emergency bag on the aircraft is a good idea (remember to check periodically and replace if needed). Memorializing the physical location, the amount and scope of damage, weather conditions and other important factors on film or digital media can be a valuable resource.

Prepare a written statement. While it may be difficult to slow your mind down after an accident, it can be beneficial to prepare a personal account of what happened and how it occurred from your perspective. The most difficult part of this written statement is to remember to use only the facts as you know them. Do not speculate, guess, assume, pre-suppose or interpret. Just record the event as it unfolded to you and try to include as many facts as possible (time, weather conditions, airspeed, attitude, altitude, heading, aircraft performance, traffic, etc.). You may choose to, or be required to, share this statement with others so just stick to the facts.

3) Protect your aircraft from further damage

Depending on the location and severity of the event, you may need to wait for the FAA/NTSB, state or local or other authorities or your insurance carrier to authorize movement of you aircraft to a secure area. However, if the damage is minor, it maybe your responsibility to see that the aircraft is moved to a location where weather or other conditions will not cause or contribute to additional damage. If this is the case, make sure that the location (preferably a controlled environment) is secure but accessible to both you and your insurance claims person. In most cases, a local FBO or repair shop can provide a good, secure location until such time as you and your insurer are ready to have the repairs made.

4) Cooperate with your Insurance Carrier

Unlike the reputation of some other aspects of the insurance world, aircraft insurers, for the most part, want to work with you to ensure that your aircraft is repaired and returned to you in an efficient and timely manner. If the aircraft is deemed to be a total loss, the insurer wants to pay you, close the claim and deal with the salvage.
Like you, your insurance carrier understands that the claim will not improve with age so they want to treat you fairly, in accordance with the terms and conditions of your insurance policy, and get the repairs made or payment made as expeditiously as possible. Providing the claims adjuster with the information he or she needs to get the repairs completed and the claim settled will only get you back in the air sooner.

5) Use a repair shop that you trust

While the accident may not have occurred at your home base, you still have the ability to decide where, within reason, you want to have the repairs made.
Depending on the amount of damage, you may be able to work with your insurance carrier to ferry the aircraft to your preferred repair facility, be it the manufacturer or your home FBO. If the repairs are minor enough to have fixed locally and you choose to do so, ask around about the quality of work performed by the facility that you are considering. If there is more than one shop on the field, find the one with the best reputation and check their prices with the insurance carrier. Even if the carrier balks at the repair cost, you might find it worthwhile to contribute toward the repair if you know it will be top notch. After all, you want your ship back in the best shape you can get it.

6) Consider this a learning experience.

Once you have had an accident, affected the repairs and are ready to fly again, ask yourself, "What can I learn from this experience?"

The answer may be that you can learn many things including that you need more frequent recurrent training, better quality training or training of a different sort. It could also be that you need to pay more attention to the upkeep and maintenance of your aircraft including the quality of the work performed by your preferred shop. A good mechanic takes pride in his work
and should not be unhappy to show you what has been done and explain why. It may be his or her name that goes in the maintenance log book and they may have responsibility for the service or repair work performed but you are flying in the aircraft and, potentially, staking your life on their work so check it out.

No one wants you to have an aircraft accident or incident. If you do, however, remember that you buy insurance coverage for just such an event. Your insurance policy does have limitations and may not cover certain things after a loss (like certain types of damage excluded by the policy, diminution of value and damage within the deductible amount) and your insurer may require you to do certain things after a loss but you should view your insurance carrier as a partner in this process.

If you stay informed as to what coverage your aircraft insurance policy provides, use your insurance broker as your advocate and intermediary (part of the service for which you pay them) and stay actively involved in the process, you can help make an unfortunate situation as least painful as possible.


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Three Tips for an Effective Aircraft Evaluation

by David Wyndham 1. March 2010 00:00
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Buying on impulse often leaves you disappointed. What looked or sounded great in the moment can turn out not to be what you thought you were getting. This applies to love and fast machines. With aircraft, it then applies double!

The first tip when looking at what aircraft to acquire is to be objective. Objective means choosing criteria that can be measured. In this way you avoid the subjective trap: what was great last night can be less than desirable come morning. With objective criteria, you can compare more than two aircraft and rank order them. Be as specific as possible. Non-stop to West Palm Beach is good. Non-stop to West Palm Beach with four passengers is better. Non-stop to West Palm Beach with four passengers, IFR fuel reserves against a 25 knot headwind is best. If what you are measuring isn't in units of some kind, it's doubtful that it is objective. The joy of an aircraft used for transportation is in proportion to its utility.

Objective criteria should also be specific to the mission assigned to the aircraft. That way you can avoid over-buying - getting far too much aircraft than you really need. If you are clear about what you need, it is easier to set up your criteria. "Go anywhere, anytime" might set you up for a supersonic tilt-rotor amphibian, but can you afford that?

The second tip is to separate your criteria into desired and required criteria. Required criteria are criteria that the aircraft must meet in order to do the mission (job) assigned to it. If the aircraft does not meet the required criteria, it should not be considered any further.

Desired criteria are those that enhance or expand the capability of the aircraft to perform its mission. Generally speaking desired criteria go beyond the minimum needed for the mission, or perhaps they make accomplishing the mission easier, or faster. Once you have your aircraft that meet the required criteria, you can use the desired criteria to differentiate between them. This is helpful in rank ordering the aircraft. Here is a basic example:

Mission Criteria
Required
Desired

Range with 4 passengers (NBAA IFR Reserves 200 NM)

1,800 NM
2,100 NM

Range with 6 passengers (NBAA IFR Reserves 200 NM)

1,500 NM
2,100 NM
Passenger Seats
6
8
Hot food galley?
Microwave
Convection Oven

If you understand your mission, then you can your criteria to reflect what you need to do, and also choose desirable criteria that are meaningful. In the above example, the aircraft buyer was OK stopping for fuel on the 2,100 NM trip, but not for 1,800 NM trip with 4 passengers, of which there were quite a few.

The third tip is to prioritize before you analyze. If you group your criteria into sub groups, then you can not only rank order within those sub groups, but also prioritize which sub groups are more important. Again, this is best shown in the below example. Do you value more range over a bigger cabin?

Mission Score:
Range 60%
Cabin 15%
Payload 15%
Speed 10%

In this case, once an aircraft meets the required cabin size, an aircraft with a larger cabin has value, but not a lot. But, once an aircraft meets the required range, additional range will be greatly valued. This can be done once again after looking at the costs and supportability:

Total Score:
Mission 50%
Life Cycle Cost 35%
Product Support 15%

Here, an aircraft that costs a little more but offers more capability may be the best ranked aircraft in the group.

A big caveat: set this up before evaluating your aircraft. If you really, really want that supersonic tilt-rotor amphibian, you may ignore the fact that you really don't need to land on the water! OK, a bit of a stretch there but the warning is to set the rules first and then perform the evaluation second. What is important to have in your aircraft?

All of this can help you identify the "Best Value Aircraft." We do a lot of our work on the cost side, but we always stress that a large gain in performance at a small increase in cost may be well worth the added expense. At the end of the analysis, it is the responsibility of the decision maker (the one who writes the check) to arrive at that best value. An objective analysis should be done first.


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David Wyndham



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