Control Compliance, Control your Business
Compliance with regulations is much more than risk management. In this article, we will discuss the pros and cons of working in a regulated industry, the framework of FAA regulations, the importance of knowing how you are in compliance with the rules, the impact that knowledge can have on your business, and techniques for maintaining a mutually-respectful working relationship with the FAA.
Working in a regulated industry is more challenging than most who start in this business understand or realize when they get started. Much of corporate America is regulated at some level or another, so to be clear, when I say a “regulated industry,” I’m not talking about being regulated by OSHA, the IRS, or state and county regulations, although those regulating agencies can be trying. For our purposes, I’m talking about being regulated and subject to oversight by the FAA. Working within the boundaries of the FAA regulations as a business is significantly more complex, with deep FAA involvement in nearly every aspect of our businesses.
Through the years, I have spent thousands of hours integrating the structure and intent of the FAA regulations into the various businesses I have worked in to ensure compliance and thus business sustainability. Over and over again, the main theme that seems to distill its way to the top is the need to be the best you can at understanding the compliance obligations specific to your business, and designing a structure and processes for your organization that meets those requirements efficiently.
The real theme of this month’s article is how to gain and maintain control of your business with purposeful compliance, rather than allowing the FAA to dictate and drive your business through its required oversight.
Know what business you are in
If your business serves corporate aviation, you are likely in one of three main areas, or any combination of the three.
1. Maintenance
2. Operations/transport
3. Manufacturing
When we delve into the regulatory structure later, we will begin to see the regulations themselves are also split up into these three main areas of focus. This correlation is further evidence that we are truly in a deeply regulated business segment. For example, each major profit center of your business has rules written to establish boundaries and guidelines that you must stay within in order to continue in business.
I’ll be the first to say that the rules themselves are imperfect. I know of many examples that show intent to regulate integrity — like cases where the rule is a result of something that was done illegally and the rule makers mistakenly believe that by writing the rule they will make people honest. Obviously, that doesn’t work, but unfortunately, it is just part of being in aviation.
For the most part, the rules are well laid out and easy to understand. I will start with the best advice I remember receiving about learning the rules and regulations of the FAA: don’t try to memorize the rules themselves. Just learn where the rules that apply to you and your business are located and how to find the answers you are looking for quickly. Remember that in many cases, the rule is general, and often associated with another rule, and you will need to put some effort to it in order to understand how the rule effects your business.
Know the Regulations – FAA Regulatory Structure
The Aviation Act of 1958 is the basis of our current regulatory structure. It is an act of congress and is law. The regulations were created to establish boundaries that allow us to operate within the law, as long as we are in compliance with the regulations. There were indeed rules before the act of 1958 (they were called the Civil Air Regulations), but the Act of 1958 organized a new and completely independent FAA, and along with that the rules were restructured and rewritten. Frankly, there hasn’t been a significant change to the regulations since then. For as long as I have been in this business, there have not been any attempts to make major changes to the regulations and all changes that have been incorporated have taken years to get into place. The good news is that once you learn the regulations, very little changes very quickly. It’s relatively easy to stay on top of your specific requirements.
The current Federal Aviation Regulations (FARs) fall under the over-arching structure of the Code of Federal Regulations (CFR), which include volumes of federal regulations on all topics which are broken up into sections called Titles. The Aviation portion of those CFRs are found in what is referred to as Title 14 – Aeronautics and Space. The aviation regulations are more extensive than most of us realize and most everyone feels overwhelmed when first introduced to these rules. However, the various parts that apply to our day-to-day function as an industry are not as extensive. I have listed what I personally consider to be the pertinent rules for those of us in the business aviation sector. I will first show them organized as structured in Title 14 CFR. Again, these are only those I believe to be pertinent to our day-to-day function. From my perspective, these are the rules that, as a participant in any leadership role in any business aviation organization, you should make yourself familiar with and learn how they work in your business. At least know where to find them and why you might need to review them.
Here are the pertinent rules, organized as in Title 14 CFR:
Chapter 1, Volume 1
Subchapter A — Definitions
Part 1– Definitions and Abbreviations
Subchapter C — Aircraft
Part 21 – Certification Procedures for Products and Parts
Part 23 – Airworthiness Standards; Normal, Utility, Acrobatic and Commuter Category Airplanes
Part 25 – Airworthiness Standards: Transport Category Airplanes
Part 27 – Airworthiness Standards: Normal Category Rotorcraft
Part 33 – Airworthiness Standards: Aircraft Engines
Part 35 – Airworthiness Standards: Propellers
Part 39 – Airworthiness Directives
Part 43 – Maintenance, Preventive Maintenance, Rebuilding and Alteration
Part 45 – Identification and Registration Marking
Part 47 – Aircraft Registration
Chapter 1, Volume 2
Subchapter D — Airmen
Part 61 – Certification: Pilots, Flight Instructors and Ground Instructors
Part 65 – Certification: Airmen Other Than Flight Crewmembers
Subchapter F — Air Traffic And General Operating Rules
Part 91– General Operating And Flight Rules
Chapter 1, Volume 3
Subchapter G — Air Carriers And Operators For Compensation Or Hire: Certification and Operations
Part 120 – Drug And Alcohol Testing Program
Part 121 – Operating Requirements: Domestic, Flag and Supplemental Operations
Part 135 – Operating Requirements: Commuter and On Demand Operations and Rules Governing Persons On Board Such Aircraft
Subchapter H — Schools And Other Certificated Agencies
Part 145 – Repair Stations
Subchapter K — Administrative Regulations
Part 183 – Representatives of the Administrator
Trying to make sense of the government’s organization of the rules themselves as they are structured in Title 14 CFR’s didn’t serve me well when I was trying to learn where to find what I needed. For some, organizing them differently will make more sense. Below I am sharing how I personally organize the rules in my head. Maybe it will help you, too.
Here they are organized how I choose to organize them in order to better remember where to find things:
Build Them
How to Build Aircraft and Parts
Part 21 – Certification Procedures for Products and Parts
Part 23 – Airworthiness Standards; Normal, Utility, Acrobatic and Commuter Category Airplanes
Part 25 – Airworthiness Standards: Transport Category Airplanes
Part 27 – Airworthiness Standards: Normal Category Rotorcraft
Part 33 – Airworthiness Standards: Aircraft Engines
Part 35 – Airworthiness Standards: Propellers
Fly Them
Who Can Operate Aircraft?
Part 61 – Certification: Pilots, Flight Instructors, And Ground Instructors
How Can Aircraft be Operated?
Part 91– General Operating and Flight Rules
Part 135 – Operating Requirements: Commuter and On Demand Operations and Rules Governing Persons On Board Such Aircraft
Part 121 – Operating Requirements: Domestic, Flag and Supplemental Operations
Fix Them
Who Can Maintain Aircraft?
Part 65 – Certification: Airmen Other Than Flight Crewmembers
Part 145 – Repair Stations
How to Maintain Aircraft
Part 39 – Airworthiness Directives
Part 43 – Maintenance, Preventive Maintenance, Rebuilding and Alteration
Part 45 – Identification and Registration Marking
Part 47 – Aircraft Registration
Other Stuff I need every now and then
Miscellaneous
Part 1– Definitions and Abbreviations
Part 120 – Drug And Alcohol Testing Program
Part 183 – Representatives of the Administrator
In the end, you will need to wrap your own mind around the rules. This is how I do it and it has served me well.
Know how you comply with the rules applicable to your organization — Eliminate your fear of the FAA
As I mentioned before, anyone leading an organization in almost any capacity should be able to find the rules that apply to their business. However, I have found that this is likely the largest “opportunity” we have as an industry — meaning that nobody does it. The fact is that most CEOs, presidents, vice presidents, managers, and even some supervisors don’t remember or never learned much about the regulations. This is great for the quality control managers who are driven by their ego, but it is unbalanced and costs this industry millions of dollars in inefficiencies. One of the most frightening moments a senior-level manager could have is to find themselves in a position where they need to address a serious FAA issue and they must rely solely on one or two people in the organization to bring them up to speed on the rules and how the organization came into the predicament.
It all starts with knowing where to find the rules with which your organization must be in compliance — but that’s not all. Knowing where to find the rules doesn’t solve the problem. The organization must know how it is in compliance with the applicable rules and how it ensures ongoing compliance. As an air agency (a repair station or an air carrier), in order to be awarded a certificate from the FAA, they must have completed what is called a compliance letter and had it included in their package as submitted for approval. Unfortunately, for most that is just a checkbox and once the certificate is issued, they lose sight of it.
I have lost count of the number of times that I have been called and asked how to interpret a rule by a client in a throw down with the FAA. The most common situation is this: an FAA inspector who is zealous and anxious to make a name for themself within the FAA walks into a company and begins telling the quality manager all of the problems the organization has. The inspector points out failures in processes and procedures, saying “you should to it this way” or “you can’t do it that way.” Because the organization doesn’t know specifically how they are in compliance with the rules, and are not confident in their knowledge of the rules. The FAA advice and demands stack up and the quality manager is often overwhelmed and succumbs to the “authority” of the FAA, rather than talking through and making the FAA understand the compliance position for that business. Worse than that, once the organization makes all of the changes and has satisfied one zealous inspector, that inspector is reassigned and a new zealous inspector comes to visit. The cycle starts all over again. This is a huge problem for our industry. I know many of you are nodding your heads right now. You’ve been there.
It doesn’t have to be that way. Nobody knows your business better than you do. It doesn’t take much to gain enough knowledge about the regulations that apply to your business to be head and shoulders above your FAA. Lead those conversations and oversight inspections from beginning to end. As an industry, we operate in fear — fear that they will file a violation, or that the FAA won’t work on my approvals if I don’t do what they want. There is a better way and it starts with learning what rules apply to your business and how you are in compliance with them. Learn this at all levels of the organization. My favorite question to ask when I visit a company needing help is, “why do you do it that way?” I encourage you to start asking that question daily. You will be amazed what you find out. The most common answers I get are, “that’s how we’ve always done it” and “because that is what the FAA said I had to do.” In my opinion, neither of these is a good answer.
Be confident and purposeful about your compliance — Confidence and knowledge will improve your efficiency greatly
When you know how you are in compliance as an organization, your entire personality as an organization changes, or at least it should. Something that should come with knowing how you are in compliance is the confidence to explain it to anyone, especially the FAA. When you take the time to apply the rules to your business and put efficient processes in place that align with the regulatory structure that we are all subject to, your efficiency will soar. Always remember that the FAA has no interest in your profitability. They simply need to know that you are in compliance. It is our own ignorance that has created dysfunctional relationships with the FAA. It is a classic case of the tail wagging the dog. By simply showing up to a meeting with the FAA to “learn” how to do things, we are placing them in a role that they were never intended to fill, and that they are frankly not qualified to fill. They might know the rules and how they would like for you to do things, but there are several means to an end. The FAA has no idea how to make money. That is our job. We have a much better chance of making our business profitable when we know and understand the rules (as an organization) and precisely how we comply with those rules within our processes and procedures.
Show respect and expect respect — Foster a mutually-respectful relationship with your FAA
The FAA has a job to do. We are always going to be subject to maintaining a relationship with the FAA. As in any relationship, it must be one of mutual respect in order to be able to handle the difficult times effectively.
When it comes to business, tomorrow is not here yet and the only thing we have to go on is the past. What comes with that is an uncertainty about tomorrow. I recommend that you embrace that uncertainty and look for the opportunities when change is required instead of immediately digging in your heels. For example, when the FAA has conducted a site inspection and is going over the results with you, look for opportunities to make improvements in your process based upon their findings. Don’t just do what they ask, but rather, examine their requests, come to the meeting confident in your compliance and your organization, and look for common ground in their findings. Too often we take FAA input as criticism and doing so sets the tone for the discussion. Look for ways to compromise with the FAA inspector. Any change must be an improvement for the organization. Work together to find that.
Question the inspector when they describe a finding that doesn’t make sense. Just like in any relationship, if you just lay down and take whatever the FAA is giving you, you will immediately lose their respect. That FAA inspector would likely rather you question them and work together to solve issues. The FAA inspector knows at some level that he or she doesn’t know everything about your business, and might need to be reminded … gently.
By maintaining a position of confidence in your compliance and in your organization, you will gain some level of respect from your FAA inspector. When you can find a way to embrace their ideas in whole or in part and improve your business, they will want to help and they will stop trying to drive your organization for you.
I would be remiss in not discussing dealing with FAA letters of investigation. When you find yourself in a situation where you have received what I call a “fishing letter,” also referred to as a “10-day letter” from the FAA, don’t respond to it without consulting an attorney. The letter seems very threatening, but don’t react that way. Get some help.
One of these letters is formally called a Letter of Investigation by the FAA. You will only receive one of these when the FAA has discovered something that they believe to be in violation of the regulations. There is a specific process that they must follow in order to conduct that investigation and the first step is to request your input. This is serious stuff. Immediately contact your attorney and seek advice. Find an attorney familiar with the FAA’s investigation process. I have assisted many people and organizations in this situation although I am not an attorney, and the most damaging thing you can do is just start spilling your guts to the FAA. In every case I have worked on, within the information the FAA was working from, things they discovered and collected during their inspection were misread, misunderstood and improperly interpreted by the FAA inspector. This is another example of what I have said repeatedly — the FAA does not know your business or your procedures even close to the level that you do. When they think they have found a violation, they often haven’t. An attorney can help you draft the appropriate response and walk with you through the process.
I hope that you better understand now why it is so important to have a strong working knowledge of the regulations and how they apply to your business. All levels of the organization need to have some working knowledge in order to be as efficient as possible. Making changes in your organization solely based upon the input of someone outside the organization, even if it is the FAA, will have a negative effect on the business. Step up, be honest with yourself about what you know and where you could improve, seek to gain the knowledge you need and you will be able to lead your business better.
Joe Hertzler has more than 25 years of experience in business aviation. He has earned a reputation as an efficiency expert when it comes to aircraft maintenance and is well known for his in-depth understanding of maintenance regulations and how they affect aircraft compliance. He has helped many in dealing with critical and urgent FAA interactions and often speaks on the topic of aircraft maintenance and compliance at industry events, such as the NBAA Maintenance Managers Conference, PAMA meetings and IA renewal seminars. Hertzler also serves on the National Air Transportation Association’s (NATA) Maintenance and Systems Technology committee. Contact him at JoeHertzler@gmail.com.