The FAA Issues its Safety Management Proposal

The FAA Issues its Safety Management ProposalThe FAA Issues its Safety Management ProposalThe FAA Issues its Safety Management Proposal

In an almost anti-climactic move, the FAA published its long-awaited notice of proposed rulemaking (NPRM) to implement Safety Management Systems (SMS). In a surprising move, the FAA’s proposed rule does not apply SMS principles to repair stations. U.S. repair stations should not consider themselves to be free of SMS requirements, though, as we will discuss later in this column.

Proposal Omits Repair Stations

It was widely believed that the proposed rule would apply to repair stations. One reason for this is because the rule is based on a provision published by the International Civil Aviation Organization (ICAO). The ICAO provision, known as a Standard and Recommended Practice (SARP) requires governments to establish SMS requirements that apply to repair stations.

Although the pre-publication version of the proposal was a government secret, the title of the proposal as it made its way through the internal government processes was “Safety Management System (SMS) for Parts 21, 91, 135 and 145” so it was widely believed that repair stations would be included. It appears that an appeal by a group of trade associations was successful in having the repair station applicability stripped from the proposed rule.

The trade association appeal was based on the fact that the FAA SMS provisions were similar in nature to a Quality Management System (QMS) regulation that was proposed about 20 years ago. The QMS regulation was unsuccessful because of cost-benefit analysis problems (and the FAA implemented a much weaker requirement for a quality manual). The recent trade association communications suggested to the FAA that SMS would be subject to the same economic problems that caused the QMS rule to flounder. It is not known whether this is the sole motivation for the FAA to strip repair stations from the SMS proposal, but it certainly seems logical that this argument would have been persuasive.

Proposal Applies to Operators and Some Manufacturers

The FAA’s proposed rule would increase the applicability of the current rule — which currently applies to Part 121 air carriers — and would expand it to apply to all operators who carry for-hire. This will include Part 135 operators as well as certain Part 91 operators (like commercial air tour operators).

The proposed rule also applies to type certificate holders (TCH) and production certificate holders (PCH). It is important to note that this will mean that TCH/PCH businesses making aircraft engines and propellers will have SMS obligations, but those producing under TSOA and/or PMA will not have the corollary obligations.

Despite being excluded from the proposed rule, there are still a number of ways that repair stations could find themselves subject to SMS requirements, including commercial pressures, foreign regulatory requirements and self-imposed safety initiatives.

Commercial Pressures

When the SMS regulations become final, repair stations will find themselves in an industry where the manufacturers who produce the parts that get installed, and the aircraft operators who fly the aircraft into which parts are installed, are all required to have SMS programs. This creates an industry where repair stations are surrounded by business partners required to have SMS programs. This alone could result in a strong commercial pressure to adopt SMS programs that are analogous to those of the other regulated parties.

In addition, one element of SMS requires collection of safety data, and another requires communication of safety information. This means that the business partners with SMS will have an incentive to communicate in an SMS environment with the repair station in order to both collect safety data and to share safety information. In fact, the FAA is bolstering these obligations by adding new language to the proposed rule that would require SMS holders to (1) consider the system interfaces in conducting system analysis, and (2) notify interfacing persons about hazards when the interface is “best able to address or mitigate the hazard.” This implies an expectation that interfacing businesses, like repair stations, may be expected to “address or mitigate” hazards identified by those with regulated SMS programs. This creates further commercial pressure for repair stations to develop SMS interfaces and SMS processes in order to support their manufacturer and operator business partners.

Foreign Regulatory Requirements

The United States proposal created a common set of SMS regulation in a separate Part 5 and applies that Part 5 to all affected sectors. One of the dangers in this one-size-fits-all approach is that it might not really create an optimal fit between the regulations and the regulated parties. This poor fit is likely to be related to the decision to remove FAA repair stations from the applicability of the NPRM.

Other countries have found other approaches to the application of SMS to repair stations. China has announced that it is integrating SMS into the Chinese quality assurance regulations for repair stations. Calling it “QSMS,” the Chinese approach is useful because it integrates the quality and safety regulations together for repair stations, resulting in safety management provisions that are specially tailored to repair stations, and making it potentially easier to comply with the single body of regulations.

Although the FAA decided to forgo SMS for repair stations in this most recent NPRM, other aviation authorities are applying SMS to repair stations. Some, like Japan, have applied SMS to repair stations for many years while others, like the European Union, have only recently applied SMS to repair stations.

The European Union is one of the most important trading partners for the United States aviation community. Before Covid, China was identified as one of the fastest growing major aviation markets. If the major trading partners of the United States apply SMS to their repair stations, then it is possible that these jurisdictions might refuse to accept maintenance performed in the United States unless the repair station adopts an SMS. Europe could do this by naming SMS as a special condition under the BASA Maintenance Annex (which would mean that EASA-certificated repair stations in the United States would have to adopt SMS programs). Nations like China that do not have maintenance bilateral agreements with the United States would simply apply their domestic repair station rules to the U.S.-based repair stations that hold CCAR-145 certification, which would be consistent with the plain language of Chinese law.

If a significant number of U.S.-based repair stations adopt SMS because of foreign requirements, then it may cause a snowball effect in which smaller domestic repair stations without foreign certifications feel increased commercial pressure to adopt SMS programs like their competitors.

Self-Imposed Safety Initiatives

SMS is being enshrined in the regulatory systems of the world’s aviation authorities. It appears that SMS is the future of safety for the aviation industry. Past history has shown that unregulated sectors in the aviation industry who regularly interact with regulated sectors have a tendency to adopt the programs implemented by the regulated parties. For example, PMA companies in the 1990s adopted quality systems analogous to those required for TCH/PCH businesses (the regulations were later changed to impose a uniform standard of quality assurance on all FAA-regulated manufacturers). Another example exists in the world of unregulated distributors, who commonly adopt quality assurance systems under the FAA AC 00-56B program (a program that was developed based on a concatenation of air carrier, manufacturer and repair station quality practices and regulations).

Even where a business does not feel commercial pressure to adopt SMS, there will be repair stations who voluntarily adopt SMS because it represents a current “best practice.” It is very normal for repair stations to adopt good safety practices because it the “right thing to do.” This could reflect the best implementation of SMS, because it allows a repair station the flexibility to adopt a program that genuinely supports safety, without having to “check the box” on regulatory requirements.