FAA enforcement cases tend to focus on the front-line employees, usually pilots or mechanics, who allegedly violate federal aviation regulations. Occasionally other certified airmen, such as aircraft dispatchers, parachute riggers or air traffic controllers at contract towers, face enforcement action.
To some extent, this focus on the airman’s individual responsibility makes sense because these pilots or mechanics are the ones who, for example, deviate from an ATC clearance or improperly release an aircraft for return to service. These airmen make the ultimate decisions that result in the allegations of regulatory violations. If enforcement action is to have not only a punitive purpose but also some deterrence value, the focus on the person who supposedly engaged in the inappropriate conduct makes sense. This is not to say that the actual cases that the FAA prosecutes make sense, and if you’ve been reading my columns lately, you will surely have noticed that I frequently take issue with the FAA’s enforcement actions. My point here is that in theory the enforcement focus on the individual who violates a rule makes sense from a regulatory perspective.
In addition to enforcement cases against individuals, sometimes the FAA takes enforcement action against aviation corporate entities, such as airlines, repair stations or aircraft manufacturers, usually for record-keeping violations or where there’s a pattern of violations that appears to involve management. This would include, for example, repeated operation of aircraft where one or more airworthiness directives has not been complied with. Some of these enforcement cases cite thousands of alleged regulatory violations, usually because each flight operated in noncompliance is a separate violation, subject to a separate penalty. Some of the major cases seek millions of dollars in civil penalties.
For smaller operators, the FAA sometimes seeks emergency suspension or revocation of the company’s operating certificate. And, yes, I know, the difference in regulatory sanction for small and large operators is a sore point for many, especially Part 135 operators and small Part 145 repair stations. Many alphabet groups have noted that the FAA will shut down a small Part 135 operation for the same types of violation for which it merely fines a Part 121 air carrier. And even if those civil penalty letters the FAA sends out are initially in the millions of dollars (amounts that would effectively shut down many a small operator), the truth is that most often the agency settles for significantly less than the initial amount it trumpets in its press releases. The DOT Inspector General has written many a scathing report on how often cases are settled for pennies on the dollar. Be that as it may, the difference in enforcement penalties for large and small operators is not the focus of this article.
Time To Expand Accountability
So, while I see the FAA institute cases against front-line workers and corporate entities, I can’t remember ever seeing the agency bring a case against the CEO of an airline or repair station. How is that? Why is that? I got to thinking about this as I was reading several articles about the decision of the Commodity Futures Trading Commission (CFTC) to bring a case in federal district court in Manhattan for civil fines against the former CEO of MF Global, Jon Corzine, for, among other things, “knowingly inducing” violations by the firm’s employees. MF Global is one of those hedge funds that made some spectacularly bad investment bets and went bankrupt, losing tons of money for its customers. Corzine is the former governor and Senator from New Jersey.
What brought the federal hammer down on Corzine was the decision by a lower-level employee to cover the company’s debts (more than a billion dollars) with segregated customer funds, a big no-no in that industry. While Corzine as CEO is not accused of ordering the use of customer funds to cover the debts, he is accused of “failing to supervise diligently” the activities of company employees, in addition to “knowingly inducing” the violations. Specifically, he is accused of instructing a subordinate to cover the company’s debts, when he knew the only way she could accomplish that was by improperly transferring money from customer funds. So even though Corzine is never accused of specifically ordering the transfer from customer funds, the CFTC is prosecuting him for creating an atmosphere for the violation to occur.
There are some parallels between what happened at MF Global and what I see happen in the aviation industry. One area I am particularly familiar with both as a former airline employee and as an NTSB member investigating aviation accidents involves management setting schedules for aircraft maintenance tasks that are impossible to accomplish properly in the time allotted. Management knows this when it sets the schedule. And mechanics know that the only way to get all the work done is to fudge the paperwork. Fudging the paperwork can sometimes be construed as falsification of records, which carries major FAA penalties, as well as potential criminal penalties.
I am not saying a mechanic who falsifies paperwork is not responsible for that conduct and should not be held accountable. But why shouldn’t the manager or managers, and ultimately the CEO, who creates the untenable situation for the workers be held accountable too? Why aren’t these situations comparable to Corzine’s at MF Global? And when the FAA prosecutes companies for repeated failures to comply with airworthiness directives or violating pilot flight and duty or rest requirements, why isn’t the company head held responsible, not just the corporate entity?
Of course, we don’t know yet what the jury will determine in Corzine’s case. But I think a lot of aviation managers and company CEOs would think a little more carefully about the situation their actions put employees in, if they themselves were subject to FAA civil penalties for “failing to properly supervise” or “inducing” violations of the federal aviation regulations. It wouldn’t hurt the cause of aviation safety for the buck genuinely to stop at the CEO’s desk.