FAA Questions Non-Citizen Trusts

Inexplicably, the FAA recently issued (and then lifted, temporarily) a moratorium on registration of Foreign Ownership Trusts, whereby a non-US citizen (not otherwise eligible to register an aircraft as a “United States Citizen”) could qualify as such by employing a citizen Trust to register the aircraft. Generally speaking, these Trusts are designed to vest voting authority in a U.S. citizen (including entities defined as such), thereby removing control over such matters from the non-citizen. Naturally by employing such a device the non-U.S. citizen has some, de facto, control over the Trust’s affairs, but this structure has been satisfactory to the FAA for years and not been a source of real concern until recently. In a May 13, 2010 letter to NBAA administrator Ed Bolen, however, the FAA decided to continue such registrations pending a Notice of Proposed Rulemaking (NOPA) on changing this part of the registration regulations. What prompted the change remains something of a mystery.