Letter from the Chair

March 2007 PDF

2002

• Award of Excellence
• Aviation Insurance
• Michigan Act No. 318, Public Acts of 2002
• Clarification of Aviation Fuel Taxation for International Flights
• Legislation Passes Affecting Aviation in Michigan

Award of Excellence

The Aviation Law Section of the State Bar of Michigan has received an Award of Excellence bestowed by the Michigan Aeronautics Commission in recognition of the educational programs and publications sponsored by the Aviation Law Section. The Award was presented on September 11, 2002 in Sault Ste. Marie, Michigan at the 50th Annual Fall Conference of the Michigan Association of Airport Executives. Eric S. Richards and Donald C. Frank accepted the award on behalf of the Aviation Law Section. Messrs. Richards and Frank are both founding members and past Chairs of the Aviation Law Section.

Thanks to Clifford G. Maine of Miller, Johnson, Snell & Cummiskey, PLC for the write-up.

Award of Excellence

The Aviation Law Section of the State Bar of Michigan has received an Award of Excellence bestowed by the Michigan Aeronautics Commission in recognition of the educational programs and publications sponsored by the Aviation Law Section. The Award was presented on September 11, 2002 in Sault Ste Marie, Michigan at the 50th Annual Fall Conference of the Michigan Association of Airport Executives. Eric S. Richards and Donald C. Frank accepted the award on behalf of the Aviation Law Section. Messrs. Richards and Frank are both founding members and past Chairs of the Aviation Law Section. (Chair-elect Gerry Padilla planned to attend, but his plans were thwarted by a bad alternator on his Mooney.)

Aviation Insurance

Insurance costs and availability have been thought by many to have caused significant problems for flight schools. Some have even blamed insurance costs and availability for putting many flight schools out of business in recent years. The Michigan Aeronautics Commission's General Aviation Advisory Committee has now had a task force appointed to look into the aviation insurance situation in Michigan and make recommendations for consideration by the Commission.

Lowell E. Kraft, a Michigan Aeronautics Commission member since 1993 and chair of the General Aviation Advisory Committee, has appointed our section's founding Chairperson, Donald C. Frank, to head the Insurance Task Force.

The Task Force is considering any possible ways that flight schools and rental operations in Michigan can be helped with the cost and availability of insurance. As part of that effort, Don Frank has asked that any section members that have any expertise in this area or suggestions contact him with their thoughts. Don says any suggestions to help flight schools and rental operations lower the cost of their insurance, increase availability of insurance for flight schools, or reduce the cost of financing the insurance premiums would be welcomed.

If you have any suggestions or you can help with this effort, Don Frank can be contacted at: PrattFrank@cs.com, or call: (517) 340-0000.

The annual meeting is at the Grand Rapids Amway Center, Friday, 9/27/02 from 10:45 to 11:45 a.m. Nominations for OFFICERS and COUNCIL MEMBERS will be solicited. Please don't hesitate to volunteer.

Submitted by: CLIFFORD G. MAINE (MILLER, JOHNSON, SNELL & CUMMISKEY, PLC)

Michigan Act No. 318, Public Acts of 2002

This new Michigan law requires felony background checks for flight school students and pilots seeking new ratings. The law is effective as of May 1, 2002.

The law provides as a condition of enrollment of an applicant in a flight school, the flight school shall request from the Criminal Records Division of the Department of State Police a criminal history check and criminal records check through the Federal Bureau of Investigation on the applicant and, before enrolling the applicant, shall have received from the Department of State Police a report described above.

The Act further provides that the criminal history record information received from the Criminal Records Division of the Department of State Police shall be used by the flight school only for the purpose of evaluating an applicants qualifications for enrollment in the position for which he or she has applied.

This law obviously has implications for all pilots, flight schools and instructors.

Submitted by: CLIFFORD G. MAINE (MILLER, JOHNSON, SNELL & CUMMISKEY, PLC)

Clarification of Aviation Fuel Taxation for International Flights

The IRS has clarified in Rev. Rul. 2002-50 the type of flight when an aircraft of a domestic airline is considered engaged in foreign trade it is thus exempt from aviation fuel taxes. Even though the ruling applies to domestic airlines and does not consider the application of this aviation fuel excise tax exemption to charter flights, the ruling provides a good review of the applicable rules for identifying uninterrupted international air transportation under Internal Revenue Code 4262(c)(3).

Submitted by: CLIFFORD G. MAINE (MILLER, JOHNSON, SNELL & CUMMISKEY, PLC)

Legislation Passes Affecting Aviation in Michigan

The Michigan Aeronautics Code has been amended by new law which takes effect May 15, 2002. (See Act 35 of Public Acts of 2002—Enrolled Senate Bill No. 541). The Bill updates Michigan Aeronautics Code in several areas and reinstates the garage-keeper lien for aeronautical garage keepers. The laws highlights are as follows:

• In 1998 the Garage Keeper Lien Act was amended by the Legislature and inadvertently repealed language allowing for aeronautical garage keepers to have liens. Under the new law, a "garage keeper" is defined as a person who for hire or reward publically offered to store, maintain, keep or repair aircraft or any accessory used in the operation of aircraft.

• The Bill abolishes the common law garage keepers lien and establishes this lien as the sole one available to aviation garage keepers.

• The Bill states that a lien for labor and material furnished in making repairs upon an aircraft would have priority against all other liens upon the aircraft unless the prior lien holder paid the garage keeper the amount of the lien or the amounts provided for in the Act relating to the size of the aircraft which vary between $5,000 for a single engine 150 hp aircraft to $100,000 in the case of a turboprop or turbojet aircraft. There are additional provisions for the aviation garage keeper to file a lien with the Federal Aviation Administration and for the garage keeper to sell the aircraft at public auction.

• The Bill provides for aeronautical facility licensing as previously provided with the deletion of specific requirements, including expiration dates and fees. Instead the Bill would require that each certificate of approval of an aeronautical facility be registered annually and authorize the MDOT to establish a reasonable fee in accordance with rules and regulations.

• The Bill provides new definitions for terms such as "accident," "in-flight," "taxi," and others.

• Ultralights are prohibited from operating in a manner which would create a hazard to other people or property, including dropping an object from the ultralight and creating a collision hazard with other aircraft. Additional restrictions include no operation of ultralights between sunrise and sunset, or over any congested area of a city, town or open assembly of people.

• The various other provisions of the Bill relate to aircraft and airport operations and importantly provide specific penalties (fines or imprisonment) for noncompliance.

The Bill provides some much needed update of the aeronautics code (i.e., the Garage Keeper Lien Act) and with the obvious increased use of ultralights the new ultralight regulations are timely. All people with an interest in aviation should familiarize themselves with the new requirements of the Act.