FAA: Beware Bad Actors!

Regulation of Part 145 repair stations remains a high priority for the FAA. Last week, the FAA finished its latest rulemaking on the subject and published a final rule (http://www.regulations.gov/#!documentDetail;D=FAA-2006-26408-0415) with several significant changes of which repair stations should be aware.

Bad Actor Provisions

One significant change involves new “bad actor” provisions which allow the FAA to deny an application for a repair station certificate under § 145.51(e) if the applicant has had or is in the process of having a repair station certificate revoked, or if the new repair station will be controlled / managed by an individual who “materially contributed to the circumstances” causing a repair station certificate to be revoked.

As part of the implementation of this provision, the FAA will maintain a database of blacklisted individuals.  The list, however, will not be made public.  Instead, the FAA has stated that it will answer specific inquiries regarding whether a named individual has been disqualified.

It’s critical to note that the FAA views the restrictions on new repair stations being controlled or managed by disqualified persons as a continuing and ongoing requirement.  In other words, the repair station has a continuing duty not to associate with key personnel that have been disqualified under § 145.519(e).

The potential risks for a repair station failing to comply with the new bad actor provisions are significant.  For that reason, it will be a good idea for repair stations to begin inquiring with the FAA as to whether individuals that it intends to place in positions of control or management (whether during initial certification or sometime thereafter), have been found to be disqualified under §145.51(e).

FAA Acceptance of a Surrendered Certificate

This new rule is intended to address a loophole that allowed certificate holders to avoid FAA enforcement actions by the FAA by voluntarily surrendering their repair station certificate.  Under the old rule, once it was surrendered, there was no longer any certificate against which to take, and the investigation would stop without any findings of violation.

Under the new rule, any attempt to surrender a certificate is without effect until formally accepted by the FAA. As a result, the FAA can wait until after its enforcement action is completed before accepting the certificate back.

Falsification of Records

The FAA also added a new § 145.12 that prohibits fraudulent or intentionally false entries or omissions in applications, records, or reports made under the repair station rules.  This new rule is significant because it allows the FAA to revoke or suspend a repair station certificate directly, as well as going after the individuals involved in the misconduct.

With this change, it’s possible that a wrongful act by a single individual could result in the closing of an entire certificated entity.  From the FAA’s perspective, the threat of having a repair station certificate revoked provides a powerful motivator for ensuring accurate records.  As explained by the FAA in the final rule, “if repair station officials know that one consequence of falsifying records is the loss of the repair station certificate, they may be motivated to produce accurate and truthful records.”

Proper recordkeeping undoubtedly plays a critical role in aviation safety and is an important function of every repair station.  That being said, the new rule seems to discount the fact that even with proper oversight, training, and other operational safeguards, it may not be possible to prevent every bad actor from committing wrongful acts.  To the extent the wrongful acts of a single person could lead to the closure of an entire repair station, the consequences of the new rules seem a bit draconian and unfair.

The new bad actor and record falsification rules send a strong message that the FAA will continue to hold the repair station certificate holder and its management accountable for the actions of all its employees.  There are steps a repair station can and should take to mitigate liability under the new rules.  The most obvious is to ensure its employees understand and follow FAR recordkeeping requirements.  Doing so will require a robust quality assurance system that not only monitors compliance at all levels of operation, but one that also screens out potentially bad actors from the outset.

(Originally posted August 20, 2014)

This entry was posted in General. Bookmark the permalink.

Leave a Reply