In a late-2014 legal opinion, the FAA claimed its authority to deny the issuance of a certificate of airworthiness (“C of A”) to an aircraft located outside the United States in cases where it determines that the issuance of such presents an undue burden to the agency. Specifically, the FAA suggested that it may invoke the “undue burden” test to deny the issuance of a C of A to an aircraft registered to a U.S. bank, but located on foreign soil. The agency’s test is derived from FAR 21.325, which states that “if the FAA finds no undue burden in administering the applicable [statutes and regulations], an export airworthiness approval may be issued for a product or article located outside of the United States.”
Even in cases where the owner or purchaser of an aircraft utilizes the services of a Designated Airworthiness Representative (“DAR”), the FAA claims that due to its oversight responsibilities involving DARs, the use of a DAR does not eliminate the “undue burden” to the agency and a C of A may still be properly denied. Clearly, this is a troubling development in the already complex maze of aircraft transactions which include an import or export of the subject airplane. Engaging experienced legal counsel early in the process will help to avoid the many pitfalls inherent in these types of transactions.