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What are the requirements for entry in the domestic aircraft register?
The Federal Aviation Administration (FAA) handles aircraft registration functions. The FAA registry is an ‘owner’ registry, in that eligibility of aircraft for FAA registration depends on whether the owner is a US citizen. However, in certain types of leasing transactions (eg, a conditional sale contract whereby the buyer or lessee has the right or obligation to become the owner of the aircraft), the owner may be the lessee rather than the holder of legal title and in that case the lessee must qualify as a US citizen in order for the aircraft to be registered.
With respect to citizenship, a corporation or association (which includes limited liability companies (LLCs)) is a US citizen if:
- it is created or organised under the federal laws of the United States, or the laws of a state or possession of the United States;
- the president (if any, for an LLC), two-thirds of the directors (or managers for an LLC) and two-thirds of the other managing officers are US citizens; and
- at least 75% of the voting interests (usually members for an LLC) are owned or controlled by US citizens.
The Transportation Code provides for two alternative means for establishing eligibility for registration where the aircraft is owned by a corporation that does not satisfy all of the citizenship requirements:
- Voting trust – a corporation meeting the other citizenship requirements may meet the 75% US citizen voting interest if its shareholders transfer at least 75% of the aggregate right to vote shares of the corporation to an independent voting trustee who is a citizen (either an individual citizen or entity meeting all citizenship requirements) and who is not related to any other party.
- Usage – if the corporation is organised and doing business under the laws of the United State or any state (regardless of the citizenship of its officers, directors or shareholders), the aircraft may be registered with the FAA if it is based and primarily used in the United States. Under FAA guidelines, this requires that 60% or more of flight hours during each six-month period be accumulated during non-stop (except for emergencies or refuelling) flights between two points in the United States, and the actual hours be certified and reported to the FAA semiannually.
Further, a trustee that meets all of the citizenship requirements for a corporation may own (and register in its name) an aircraft in trust for the benefit of one or more other parties. Pursuant to unpublished FAA counsel opinions and now an FAA policy published on the Federal Register, the FAA has permitted a US citizen trustee to hold aircraft in trust for 100% non-citizen beneficiaries if the discretionary power to vote with respect to the aircraft in the best interests of the United States is vested solely in the trustee, even while the trustee is obligated to follow the directions of the beneficiaries in all other matters.
Mortgages and encumbrances
Is there a domestic register for aircraft mortgages, encumbrances and other interests? If so, what are the requirements and legal effects of registration?
The FAA Registry provides a central system for the recording of any conveyance, bill of sale (as to airframes only), contract of conditional sale, mortgage, lease, equipment trust, assignment of any of the above, notice of tax lien (other than federal tax lien) or of other lien, or other instrument executed for security purposes, affecting title to or any interest in:
- any aircraft registered with the FAA Registry;
- any identified engine of 550 or more rated take-off horsepower or the equivalent (which may be recorded separately or in connection with a US registered aircraft);
- any identified propeller capable of absorbing 750 or more rated take-off shaft horsepower (which may be recorded separately or in connection with a US registered aircraft); and
- any aircraft engine, propeller or appliance maintained by a US certificated air carrier for installation or use in an aircraft, engine or propeller, or any spare part for installation or use in an aircraft, engine or propeller so long as such spare part is maintained by or for such an air carrier at the locations designated in the filing.
There is no US citizenship requirement for a mortgagee, though a mortgagee must meet the aircraft registration requirements in order to register an aircraft in its name as owner if it takes the title after foreclosure.
In order to be recorded, any mortgage or other conveyance or instrument must identify all aircraft, engines and propellers by make, model, serial number and, in the case of aircraft, by US registration number. An assignment, amendment or supplement with respect to any other recorded conveyance or instrument must describe such other conveyance or instrument in enough detail to identify it, including its date, the names of the parties, the date of FAA recordation and the recorded conveyance number.
The principal effect of recordation is that each mortgage or other conveyance filed with the FAA Registry for recordation affecting the applicable aircraft, engine, propeller, appliance or spare parts will cause such conveyance or instrument to be valid against third parties without notice (with whatever priority is given by US state law). If not filed for recordation, such a mortgage or other conveyance will only be valid against the other party to such mortgage (and its heirs and devisees) and will not be valid against third persons except persons having actual notice thereof.
The United States is a signatory to and has ratified the Convention on International Interests in Mobile Equipment (the Cape Town Convention) and the Protocol thereto (the Aircraft Protocol) on matters specific to aircraft equipment. The FAA Registry’s role of filing full agreements has been preserved and the FAA Registry works in tandem with the International Registry, which was established pursuant to the Cape Town Convention and Aircraft Protocol.
What rules and procedures govern the detention of aircraft?
There are no statutory rights of detention in the United States, and there is not a general usage in the statutes of the various US states of a right of detention. However, the effect of some statutory provisions may be to allow the detention of an aircraft. The variety of circumstances that may statutorily create a right of forfeiture, a statutory lien, a right in rem or a right to detain or to use an aircraft include one or more of the following (although the rules and procedures governing the enforcement of such rights vary depending on the jurisdiction):
- Airport landing fees and charges.
- Violations of FAA regulations.
- Customs contraventions – crimes. Under US federal law, aircraft can be detained, and in some cases forfeited, for breaches of customs regulations. The most common customs law violation is the importation of illegal drugs.
- Unpaid tax – liens for unpaid US Federal taxes may be enforced through:
- levy and distraint (ie, sale of seized property); or
- a suit to foreclose its rights in the property.
A state tax lien may be enforced in accordance with procedures set forth in the relevant state statute.
- War or national emergency – during war or national emergency the United States may requisition aircraft. However, compensation is payable.
Safety and maintenance
What rules and procedures govern aircraft safety and maintenance?
The FAA has promulgated detailed regulations concerning aircraft certification, which are set forth in 14 CFR Parts 21-49.
What is the state of regulation on unmanned aerial vehicles (drones) in your jurisdiction?
Small unmanned aircraft systems (sUAS) may be operated by individuals in US airspace in accordance with FAA rules and regulations. An ‘sUAS’ is an unmanned aircraft weighing less than 55 pounds on take-off, including everything that is on board or otherwise attached to the aircraft (14 CFR 107.3). This comment is limited to civil sUAS and does not address public aircraft operations or military UAS.
The rules which apply to a given operator depend on the purpose of the individual’s operation. Until recently, the FAA applied the rules for manned aircraft to unmanned operations. Under these rules, sUAS could be operated only for recreational purposes, and were not permitted to be operated for commercial purposes unless the FAA had granted a specific exemption to the operator. Even when an exemption was granted, the FAA placed strict operational limits on the exemption holder.
The long-awaited FAA final rule on operation of sUAS was published in June 2016 and allows for commercial operation of sUAS in the national airspace under the conditions of the rule without prior approval from the FAA. The rule is codified at 14 CFR Part 107.
In addition, the rule created a new pilot certificate specific to unmanned operations (remote pilot airman certificate with an sUAS rating), which requires only that a UAS pilot pass an initial aeronautical knowledge test. The rule also requires commercial operators to register their UAS with the FAA. Initially, the FAA required model aircraft operators to register their UAS with the FAA, but the US Court of Appeals for the DC Circuit recently vacated the registration rule as it applies to hobbyists.
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