Legal Issues Related to Implementation and Operation of SMS for Airports (2018)

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26 encouragement of voluntary implementation, the continued delay on issuance of a final rule is imped- ing SMS development. Second, sponsors have a strong awareness of potential legal issues associated with SMS implementation, and this awareness is helpful in reducing uncertainty. Part of the reason that sponsors have been hesitant to implement SMS dur- ing the pendency of the FAA rulemaking process is that they are cognizant of the potential legal risks associated with SMS implementation. Most spon- sors understand the possible issues on a hypotheti- cal level, particularly those dealing with potential liability and data protection. In general, those spon- sors that had a better understanding of their poten- tial legal exposure (e.g., what type of hazard reporting data would be susceptible to public records requests and the scope of the sponsor’s governmen- tal immunity) tend to be further along in their implementation—largely because they have con- cluded that applicable state laws provide sufficient protections from potential liability. Sponsors that are hesitant to implement SMS because of the pos- sibility of legal liability need to perform a legal review of their state laws to determine the scope of their exposure before they begin revisions of opera- tions, governance documents, and contracts. It is likely that even in the worst-case scenario of a pre- scriptive SMS rule that involves all of the potential legal issues identified above, state laws will provide at least some protections, and sponsors can prepare their SMS documents and policies to conform to those protections. Third, although the data are somewhat lim- ited, airport sponsors have encountered rela- tively few legal issues in their initial or partial implementation of SMS. Relatively few airport sponsors reported encountering significant legal issues as they begin to implement SMS. Open records requests have not been a serious concern, and did not appear to be specifically linked to SMS- mandated data collection. Lawsuits have been rare, and did not significantly involve SMS-mandated responsibilities or data. Aside from the overall regu- latory uncertainty, sponsors reported that their big- gest concern involved mandatory reporting from tenants, an issue that sponsors have reportedly solved through revisions to ordinances or rules and regulations, if not explicit lease terms. Considered together with the second conclusion above, this should be encouraging to sponsors considering vol- untary implementation of SMS. Not only have implementing sponsors encountered few issues, but they have been able to mitigate or remedy those that have appeared. uncertainty as it relates to the sponsor’s safety cul- ture. The establishment and maintenance of a strong safety culture was identified by interview participants as a common theme in successful imple- mentation of SMS, but interview participants also reported this to be heavily influenced by the absence of a final rule. Interview participants identified this issue as one that can significantly impede SMS implementation, including the necessary legal and approval processes needed within an organization. Interview participants identified the long-running rulemaking process as being a significant impedi- ment to SMS implementation not only because they lacked a concrete standard to follow, but also because, without such a rule, they lacked leverage with superiors to advocate for implementation of critical aspects of SMS in the face of legal risks or provide a basis for a change in the safety culture. Even where interview participants identified their sponsor organizations as having a strong safety culture with an administration that sup- ported implementing SMS, they indicated that key pieces of SMS implementation were being delayed in the absence of a final rule. These interview par- ticipants noted that it was difficult to justify taking action on certain aspects of SMS that could be rela- tively controversial when there was a chance that it would not be required under the final rule. In addi- tion, because the rulemaking process has continued for nearly a decade, many sponsors also reported staff turnover that has eroded or changed their safety culture and made implementation particu- larly difficult.147 VI. CONCLUSIONS, RECOMMENDATIONS, AND AREAS FOR FURTHER STUDY Because many of the survey respondents have declined to implement certain key elements of SMS, it is somewhat difficult to draw conclusions on the prevalence of specific legal issues from the results of this survey. Nonetheless, there are several infer- ences and recommendations that are supported by the results. First and foremost, airport sponsors almost universally cited the absence of an SMS rule as a hindrance to their implementation efforts. This appears to be true even where the sponsor’s administration is supportive of implementation and at airports that have near-full implementation. Some sponsors have nonetheless implemented some elements of SMS with success and have experienced limited legal issues. However, even with its 147 One interview participant described this experience as “SMS whiplash.”

27 reluctant to comply with a rule that does not yet exist, but in the case of SMS, there are relatively few reasons for sponsors to not at least conduct pre- liminary work. Even if sponsors do not take practi- cal steps to implement (e.g., creation of a confidential hazard reporting system or drafting of an SMS man- ual), sponsors need to understand the specific parameters of their own legal situations in order to implement in a timely manner once the final rule is ultimately released. Sponsors have also found that implementation on their own schedule (rather than a potentially expedited schedule that FAA appears to contemplate) has allowed the sponsor to adapt to lessons learned in early stages of implementation. At this time, additional study on the legal issues associated with implementation of SMS would likely prove to be premature. If and when a final rule is published and sponsors begin to take mandatory steps to implement SMS, this survey could be repeated to capture any new or additional legal issues faced by sponsors. Fourth, several airport sponsors have already seen initial benefits from implement- ing SMS. In particular, some sponsors have seen a reduction in insurance premiums and deductibles from implementing SMS—not increases as some have feared. Even where sponsors have not seen a quantitative change in their insurance rates, spon- sors reported positive trends when they actively involved their insurance companies in their imple- mentation efforts. To that end, sponsors that have not yet engaged their insurance companies on the topic of SMS may wish to consider doing so, regard- less of their stage of implementation. Finally, one overarching conclusion is that sponsors have benefited from preparing for implementation despite the absence of a final FAA rule. Although the rulemaking process has been lengthy and the upcoming time line is still unclear, there have been no indications that FAA will abandon its plan to issue a final rule. It is under- standable that any regulated entity would be

ACKNOWLEDGMENTS This study was performed under the overall guidance of the ACRP Project Committee 11-01. The Committee was chaired by DAVID Y. BANNARD, Foley & Lardner, LLP, Boston, Massachusetts. Mem- bers are ROD C. BORDEN, Columbus, Ohio; JAY HINKEL, City of Wichita, Kansas; CLYDE OTIS, Post, Polak, Goodsell, and Strauchler P.A., Roseland, New Jersey; DANIEL S. REIMER, Denver Inter- national Airport, Denver, Colorado; and ELIZABETH SMITHERS, Charlotte Douglas International Airport, Charlotte, North Carolina. DAPHNE A. FULLER provides liaison with the Federal Aviation Administration, TOM DEVINE pro- vides liaison with Airports Council International—North America, ROBERT J. SHEA provides liaison with the Transportation Research Board, and MARCI A. GREENBERGER represents the ACRP staff.

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