An administrative law judge ("ALJ") recently affirmed the FAA's assessment of a $4,400 civil penalty against a Part 135 operator for violations of FAR 135.251(a) (now codified at FAR 120.35(a)) and 135.255(b) (now codified at FAR 120.39(a)). In FAA v. M & R Helicopters, Inc. the FAA alleged that an M & R employee performed safety-sensitive tasks for M & R when he was not included in M & R's random pool for required drug and alcohol testing nor had he set up his own drug and alcohol testing program. Although the employee was also employed by Air Methods, Inc. ("Air Methods") and belonged to Air Methods' drug and alcohol testing program, Air Methods forbade its employees from performing any outside maintenance for other operators. M & R denied the allegations and appealed.
At the hearing before the ALJ, it was undisputed that the employee was not covered by M & R's or his own drug and alcohol testing program. However, M & R argued that since the employee was covered by Air Methods' drug and alcohol testing program, another one of his employers, this satisfied the requirements under the FARs. The ALJ initially observed that the definition of "employer" requires "an individual performing a safety sensitive function for an employer to be covered either by the employer's screening program or the program of the contractor (in this case, Air Methods) when the individual is performing work for the employer within the scope of his employment for the contractor."
Since the employee was not authorized under his employment with Air Methods to perform outside maintenance, he had been working outside the scope of his employment with Air Methods. As a result, the ALJ concluded that absent membership either in the employee's own drug and alcohol testing program or M & R's program, the employee was prohibited by the drug and alcohol testing regulations from performing his work for M & R because he was not covered by an authorized drug or alcohol testing program. Consequently, the ALJ assessed a $4,400 civil penalty against M & R.
This case highlights the need for operators subject to drug and alcohol testing requirements to ensure their employees are subject to a program that will cover their work before they perform any safety sensitive functions for the operator. Failure to comply with these requirements may result in significant civil penalties or certificate action. If you are unclear about the requirements contact me to discuss before you do something that could cause you problems with the FAA.
When the FAA receives notice and evidence to show that a certificate holder (mechanic, repair station, air carrier, pilot etc.) may have violated one or more of the Federal Aviation Regulations ("FARs"), in most cases an FAA aviation safety inspector will send the alleged violator a letter of investigation ("LOI") advising that the FAA is investigating an alleged violation of the FARs. Whether you should respond to an LOI and, if so, how you should respond are two of the most common questions raised by recipients of an LOI.
What The LOI Tells The Recipient
The LOI typically starts out by telling the recipient that the FAA is investigating "an occurrence which involved your operation" or "an incident that occurred" or "maintenance performed on N12345 on such and such a date." In drug and alcohol abatement cases, the LOI will state "we inspected [your facility's] drug and alcohol testing programs to determine compliance with 49 CFR part 40 and 14 CFR part 120. As a result of this inspection, the following apparent violations were discovered…."
After explaining the operation or conduct involved, the LOI advises that the FAA believes the operation or conduct is "contrary to Federal Aviation Regulations." However, the LOI will not tell the recipient what specific FAR(s) the FAA believes the recipient violated. FAA inspectors are specifically advised that the regulations(s) violated should not be listed in the LOI. Since the LOI is intended to advise the recipient of the subject matter of the investigation sufficiently to allow the recipient an opportunity to respond to the facts giving rise to the investigation, the FAA does not want its inspectors citing to specific regulations prematurely.
Next, the LOI specifically states that it is informing the recipient that the matter is under investigation by the FAA and it invites the recipient to discuss the matter with the inspector, submit evidence or statements, or both. For a written statement, the LOI requests that the statement includes all pertinent facts and mitigating circumstances that the recipient believes may have a bearing on the operation or conduct that is under investigation. The LOI requests that the recipient submits any response to the LOI within 10 days of receipt of the LOI. Finally, the LOI usually states that "[i]f we do not hear from you within the specified time, our report will be processed without the benefit of your statement."
The FAA sends the LOI by regular mail and either certified mail, return-receipt requested, or registered mail to the recipient's current address of record in order to establish proof that the recipient was notified of the investigation. If the LOI is returned or undeliverable (because it is addressed incorrectly or the recipient has moved and left no forwarding address), then the FAA inspector is required to correct the address or try to obtain a new address and resend the LOI. An FAA inspector may also deliver the letter in person.
Now, if you are thinking that simply dodging the mail might make the situation go away, unfortunately that isn't the case. If the intended recipient refuses or simply does not pick up the certified letter or registered letter, but the regular mail is not returned, whether the recipient opens it or not, then the FAA presumes, as will the NTSB, that the intended recipient received the LOI. (This is consistent with FARs §§ 61.60 and 65.21 that require airmen to keep the FAA informed of their permanent mailing address by providing the FAA with a new permanent mailing address within 30 days.)
Options For Responding To An LOI
If you receive an LOI, you must determine whether you are going to respond and, if you are, what you should say in your response. Frequently certificate holders believe they have to respond, especially since the LOI seems to imply that a response is required within 10 days. However, that belief isn't correct. No response is actually required. But that doesn't mean you shouldn't respond.
From a basic courtesy standpoint, it seems appropriate to respond to a letter asking for a response. After all, no one likes to have their requests ignored. However, sending a response to an LOI that tries to explain the situation or otherwise "make it go away" very rarely ends well for the certificate holder. Oftentimes the certificate holder's response includes admissions that help the FAA and can later be used against the certificate holder.
Should you send a response to the LOI? Yes, if for no other reason than to acknowledge that you received the LOI and, of course, to show a proper compliance attitude. But, do you say anything more than that in your response? The lawyerly answer to that question is: it depends.
Sometimes it makes sense to simply acknowledge receipt of the letter, advise that you don't have anything to add, and offer to respond to any specific questions or requests the inspector may have. After all, by the time the LOI is sent the inspector has usually conducted some investigation and discovered enough evidence to determine that a violation may have occurred. So why disclose anything that could add to the case?
On the other hand, in some situations it may make sense to provide a more detailed explanation in your response to the LOI. For example, if it is a case of mistaken identity or you have evidence that clearly proves the inspector is wrong, then submitting that information in response to the LOI very well may force the inspector to close the investigation.
Whether, and how, you respond to an LOI are strategic decisions. Since you are already in the FAA's sights, consult with an aviation attorney before sending a response that tries to explain or address the allegations in the LOI. With the assistance of an aviation attorney you can prepare a response that may mitigate damage, minimize investigation, and that will avoid providing admissions or other evidence that could later be used against you. And, at a minimum, an aviation attorney can run interference between you and the FAA.
The LOI is just the beginning of the enforcement process. And although your response to an LOI may not prevent the FAA from pursuing an enforcement action, how you respond to the LOI can potentially have a significant impact on the outcome of the case. Make sure you respond wisely.
As you may know, the FAA publishes Advisory Circular 00-46 to provide guidance for compliance with the Aviation Safety Reporting Program ("ASRP"). Under the ASRP, if an airman files an ASRP form (also somewhat inappropriately referred to as the "NASA form" since NASA is only the administrator of the ASRP) within the time required, any sanction that may be imposed in a subsequent enforcement action can be waived. The program does not affect an actual finding of violation against the airman. Rather, it simply provides a waiver of any sanction the FAA might seek to impose for the violation.
The sanction waiver will be available provided that (1) the violation was inadvertent and not deliberate; (2) the violation did not involve a criminal offense, accident, or action found at 49 U.S.C. 44709; (3) the person has not been found in any prior FAA enforcement action to have committed a regulatory violation for the past 5 years; and (4) the conduct of the airman giving rise to the violation did not exhibit incompetence or lack of qualification.
Recently the FAA updated this advisory circular to Advisory Circular 00-46E. The revised advisory circular changes the language governing when an ASRP report must be filed. Under earlier guidance, the report had to be filed within 10 days of the incident or occurrence. However, under the revised advisory circular to take advantage of the program a person must prove "that, within 10 days after the violation, or the date when the person became aware or should have been aware of the violation, he or she completed and delivered or mailed a written report of the incident or occurrence to NASA."
This new language appears to be less restrictive and will hopefully extend the availability of the program to factual situations that, by their nature, were previously precluded from participation (e.g. discovery of a mechanic's error well after the 10 day period has ended). However, it is unclear how strict the FAA or the NTSB will interpret the new language. Although I am cautiously optimistic, we'll have to wait and see.
In a recent opinion issued by the National Transportation Safety Board ("NTSB"), the Board affirmed the findings of violations issued by an administrative law judge ("ALJ"). The case, Administrator v. Haddock arose following the crash of an experimental helicopter operated by an airman shortly after his purchase of the helicopter. After investigating the accident, the FAA issued an order alleging that the airman had not properly registered the helicopter and, at the time of the accident, the helicopter did not comply with its experimental operating limitations because it did not have a current condition inspection. According to the order, the airman's operation of the helicopter violated FARs 91.403(a) (owner or operator responsible for maintaining aircraft in an airworthy condition), 91.13(a) (prohibiting operation of an aircraft in a careless or reckless manner), and 47.3(b) (prohibiting operation of an aircraft unless registered or using temporary registration). The airman appealed the order to the NTSB and requested a hearing before an ALJ.
After a hearing, the ALJ determined that the prior owner of the helicopter had used the wrong language to indicate he had completed the required condition inspection and thus the ALJ found that the helicopter was not airworthy at the time of the accident. However, the ALJ did not make a specific finding as to whether the airman had relied upon the prior owner's verbal statements to him regarding the condition inspection and the airworthiness of the helicopter. The ALJ also found that the airman hadn't produced any documentation to show that the aircraft registration had actually been submitted to the FAA Registry prior to the accident flight. But the ALJ did reduce the sanction from 90 days to 60 days based upon evidence that the airman had apparently made a “substantial attempt” to register the aircraft.
The airman appealed the ALJ's decision and the Board remanded the case back to the ALJ for more detailed findings on certain issues. The ALJ obliged, and issued an order again affirming the findings of violations, but providing further explanation regarding most of the issues with which the Board was concerned. The airman then appealed the ALJ's order on remand back to the Board.
On appeal, the airman argued that the ALJ erred in determining the helicopter was not properly registered at the time of the accident. He also contended that the ALJ improperly concluded he was responsible for operating the helicopter when it was in an unairworthy condition because the prior owner had, in fact, completed a condition inspection before the accident and he had reasonably relied upon the prior owner's verbal statements to that effect.
With respect to the registration issue, the Board first noted that the ALJ had not addressed its question concerning the paperwork required to register an aircraft pursuant to FAR 47.3(b). However, rather than remanding to the ALJ a second time, the Board relied upon the ALJ's credibility finding in favor of the two FAA inspectors who testified at the hearing to support the Board's own conclusion regarding the documentation required under FAR 47.3(b).
Since one of the inspectors opined the helicopter was not registered to the airman until he sent the registration to the FAA, sometime after the accident, the Board considered that opinion to be an interpretation of FAR 47.3(b) to which it must defer. When it combined that interpretation with the inspector's testimony, which the ALJ found more credible and to which the Board also had to defer, the Board agreed that the pink copy of the application for registration needed to be present in the aircraft on the date of the accident in order for the airman to have complied with the requirements of FAR 47.3(b). As a result, based upon the inspector's testimony that the pink slip was not in the cockpit at the time of the accident, the Board concluded that the helicopter had not been properly registered.
With respect to the airworthiness issue, the Board rejected the airman's defense based upon the doctrine of reasonable reliance. Since the prior owner was neither the airman's copilot nor crew member, as required by that defense, the airman, as owner and operator of the helicopter, had a duty to ensure that the helicopter complied with its type certificate and was in a safe condition for operation.
The Board found that the airman could have "reviewed the maintenance log and compared it with the requirements of the experimental operating limitations applicable to the aircraft, which explicitly provide the language necessary to indicate the aircraft underwent a satisfactory condition inspection." If he had done so, the Board reasoned, he would have discovered that the prior owner had not used the language to properly document a condition inspection. The Board concluded that the airman's reliance upon the prior owner's statements that the helicopter was airworthy was not reasonable under the circumstances and did not excuse his violations of FARs 91.403(a) and 91.13(a).
This decision highlights the responsibility pilots have for confirming the airworthiness of their aircraft before they fly. If pilots, or aircraft buyers, are going to trust representations by others, as the airman did in this case, they will also need to take reasonable steps to confirm those representations. Similarly, aircraft owners need to comply with the requirements of the aircraft registration regulations on a timely basis to ensure proper registration of their aircraft while they are flying. Although the requirements are simple and straightforward, they need to be met to avoid the consequences suffered by the airman in this case.
In an August 11, 2011 Legal Interpretation, the FAA discussed regulation of aircraft wet and dry leases. Under a dry lease of an aircraft the lessor provides the aircraft and the lessee supplies his or her own flight crew, retains operational control of the flight and may operate under FAR Part 91. Under a wet lease, the lessor provides both the aircraft and the crew and retains operational control of the flight, but the lessor is usually required to hold an operating certificate because the FAA considers it to be providing air transportation.
According to the Interpretation, "[a] key consideration in differentiating a dry lease from a wet lease is whether the aircraft and flight crew are obtained separately, or provided together as a package." For example, if the evidence shows that the parties are "acting in concert" to furnish an aircraft and crew, then the FAA would likely consider the arrangement a wet lease. However, whether an aircraft lease is a dry or wet lease is determined on a case-by-case basis.
The Interpretation goes on to state that the regulations do not limit the number of lessees that may lease an aircraft, nor do they establish hourly requirements for aircraft leases. Those issues are "contractual terms negotiated by the owner and the lessee." Additionally, a lessee may hire the same management company that is used by the owner, provided that the other facts and circumstances do not show that the arrangement is "merely a wet lease in disguise."
The interpretation also notes that a lessee may contract with the same flight crew that is contracted for by the aircraft owner. But again, only so long as the other evidence does not suggest that the arrangement is really a wet lease. The Interpretation states "[g]enerally the FAA would consider an arrangement where a person leases an aircraft from its owner, and secures the flight crew from another source to be a dry lease. If the aircraft and flight crew are provided as a package, the lease would be a wet-lease."
Finally, the Interpretation indicates that the FAA "does not have specific requirements regarding collection of payment for the flight crew. However, the method of payment may serve as indicia of whether the parties have entered into a wet- or dry-lease agreement."
If you enter into aircraft lease arrangements, you should become familiar with this Interpretation. However, the Interpretation only provides a general outline of how the FAA will review such arrangements. Since the "devil is in the detail," having an aviation attorney review the particular circumstances for each situation and then draft or review an appropriate written lease agreement can protect aircraft lessors, aircraft lessees, and the pilots who operate the aircraft, from FAA enforcement.