Aviation Law Association QLD Branch Meeting - 16 April 2010
Director of Aviation Safety John McCormick
Address to Aviation Law Association QLD Branch Meeting
16 April 2010
I would like thank Tony Pyne for the invitation to speak to you this evening.
As you know, aviation law is a dynamic area because aviation is a dynamic industry. I would like to briefly outline for you some of the key drivers of change in aviation that I see affecting the aviation industry and aviation law in the future.
I have just returned from the International Civil Aviation Organization's (ICAO) High Level Safety Conference in Montreal.
At that conference it was made very clear to me that compliance with ICAO Standards and Recommended Practices has been, and will continue to be, a cornerstone of international civil aviation safety.
However it was also clear that ICAO believes that international civil aviation faces challenges in sustaining an approach to the management of safety based exclusively on compliance with prescriptive requirement.
Where appropriate, a prescriptive-based approach has to be complemented by a performance-based approach. An initial example of this performance-based approach is the implementation of Safety Management Systems (SMS) within the aviation industry.
Such an approach has now been extended by ICAO to member States through the State Safety Program, which we are currently in the process of developing in Australia.
An effective State Safety Program is essential, because ICAO is planning to adopt a continuous monitoring approach to these State Safety Programs as part of its Universal Safety Oversight Audit Program.
This continuous monitoring approach is to include the development and implementation of an on-line reporting and data management system that will allow ICAO to monitor the safety oversight capabilities of States on an ongoing basis. This will allow ICAO to have a clear, accurate and up-to-date profile of States' safety oversight systems. The continuous monitoring approach will become the primary means by which ICAO will assess the performance of States in terms of their respective Safety Programs.
A key point for us to consider in looking at SMS and Australia's own State Safety Program is how we collect, analyse and use data.
As highlighted by ICAO, both SMS and State Safety Programs need constant in-flows of relevant safety data to measure the extent to which the activities contemplated by these systems meet their objectives. Neither system will function without a steady flow of safety current, accurate and meaningful data. Of course, the identification of such 'relevant' data, and the way in which this data is interpreted and analysed are critical elements in this process—and issues in respect of which ICAO and participants in the Conference recognise further work will need to be done.
The High Level Safety Conference reinforced my belief that, for CASA to be an effective regulator, it needs to be more of a data-driven organisation.
A key point of discussion at the conference on the use of data revolved around the protection of sources of information.
While there was general agreement that the disclosure of accident investigation information for the purposes of a criminal prosecution warrants a high level of protection, it was recognised that the disclosure of information for other purposes may warrant a different approach. The relevant ICAO standard on Aircraft Accident and Incident Investigation—paragraph 5.12 of Annex 13 to the Chicago Convention, does not establish a protection regime that is necessarily appropriate for the varying nature of accident investigation information or for the very different purposes for which that information might be disclosed.
Disclosure under standard 5.12 is only allowed if the appropriate authority for the administration of justice ('the justice authority') determines that the need for the disclosure outweighs the adverse domestic and international impact such information may have on the investigation or any future investigation ('the balancing test').
While the balancing test allows flexibility in considering the nature of accident investigation information and the purpose of its disclosure, a problem with this regime is that the Annexes do not provide sufficient guidance to facilitate implementation. Attachment E to Annex 13 explains the principles behind the need for protection but it does not provide guidance on steps which may be taken for the effective administration of the balancing test in a variety of situations. Moreover, while paragraph 5.12 relates specifically to information derived from accident and incident investigation under the cover of Annex 13, Attachment E to that Annex—which is technically limited to the subject matter of that Annex—purports to extend to the use and application of a much wider-range of information.
There is no shortage of safety data available in international civil aviation. The key issue is to ensure that a steady flow of relevant safety data continues by protecting such data from inappropriate use. Here, of course, the crucial questions must be what constitutes 'inappropriate use' and who decides whether, and in what cases, a particular use is appropriate or inappropriate. Whether the latter question can and should be answered only by judicial authorities is another important question—and one that Australia raised in well-received Working Paper we presented at the Conference.
In our view, the basic starting premise should be that protection should be to a level commensurate with the nature of the data each source generates, and that such protection should not interfere unduly with the administration justice or the operation of a State's legal system. Beyond this, however, important consideration needs to be given to the extent to which other important safety-related interests might be served by the disclosure and use of otherwise 'protected' data.
Determining the sensitivity of information should involve considering and balancing the significance of two factors – the nature of the information, and the purpose for which it is proposed to be disclosed.
These issues will undoubtedly continue to generate considerable discussion and debate. The Conference has recommended that a special working group be established to consider their implications, and the matter will surely arise again at the forthcoming ICAO Assembly later this year in Montreal (28 September to 10 October). As you will appreciate, the issues involved in this are fundamentally, if by no means exclusively, 'legal', and the importance of ensuring that lawyers actively participate as members of the proposed working group has been recognised.
Outcome Based or Prescriptive Regulation
As I mentioned earlier, the prescriptive-based approach to aviation safety has to be complemented by a performance-based, or outcomes-based approach. It is a policy of the Civil Aviation Safety Authority that, in the process of legislative development:
'Wherever possible, the regulations must be drafted to specify the safety outcome required, unless, in the interests of safety, and to address known or likely safety risks, more prescriptive requirements need to be specified'
These same considerations can usefully be taken into account in determining whether an outcome-based or prescriptive approach to the interpretation and application of safety regulations should be adopted, where the legislation allows for such discretion.
In deciding whether to adopt an Outcome-Based or Prescriptive Approach (or some combination of these) in such circumstances—there are 5 Factors that can and should be considered:
- The nature and complexity of the activity and the outcome;
- The stability (or instability) of the operational environment;
- The willingness and ability of the regulated organisation to take responsibility for their conduct with good judgement and necessary expertise;
- The willingness and ability of the regulator to exercise corresponding measures of expertise and good judgement; and
- A sufficient level of trust between the regulator and the regulated organisation.
These principles are adapted from the work of Professor John Braithwaite, of the Australian National University and highly-regarded expert on regulatory theory and its practical application.
Let me touch briefly on these five factors:
Firstly, consider the nature and complexity of the regulated activity and the outcome to be achieved.
Generally, the more complex the activity and the more variable an acceptable outcome might be, the more amenable that situation may be to the specification of an outcome-based expectation or obligation.
For example, the contents of particular provisions of the operations manual of a large, dynamic and sophisticated air transport operation involving the use of several different types of aircraft – should be more outcome-based.
Secondly, consider the stability of the operational environment in which the relevant activities will be carried out.
The greater the frequency and rapidity with which critical features of the operational environment may change, the more amenable that situation may be to an outcome-based requirement or or obligation.
For example, in assessing the acceptability of procedures for refuelling with passengers on board for an international charter operator that commonly flies into remote locations with extreme weather conditions, it is more likely that an outcome-based rather than a specific prescriptive requirement will conduce to optimal safety results.
Thirdly, consider the willingness and ability of the organisation to take responsibility for its conduct with good judgement and professional expertise.
Because outcome based obligations require organisations to understand and implement the open-framed requirements by which they will be bound, it is essential that the regulator be confident that they have both the ability and the willingness to do so responsibly.
We must ask ourselves, is this an operator that has consistently demonstrated a high-level of commitment to safety, meeting and exceeding regulatory requirements? Or is this an operator known to seek only to meet minimum requirements, and perhaps to 'creatively' approach its regulatory obligations with a view to minimising their safety-orientated efforts? Are they able (and willing) to devise and refine their own conduct, in response to – and in anticipation of – important safety-related considerations?
To the extent the regulator cannot be confident about these things, there will be a greater need for a more prescriptive approach – specifying in detail, what it is the operator must do, or refrain from doing.
Fourthly, consider also the ability and willingness of the regulatory authority to demonstrate a corresponding level of expertise, integrity and judgement.
The regulatory authority responsible for overseeing and assessing the way in which the organisation fulfils its obligations must itself be able and willing to make competent, informed and even-handed judgments about the sufficiency and effectiveness of the means by which the operator will fulfil its obligations; and whether those obligations are, in fact, being fulfilled.
Take for example where an operator is required to have and operate in accordance with a sophisticated Safety Management System (which will invariably involve a range of 'outcome-based' elements): Is the regulator able and willing to understand and make meaningful and reasonable judgements about what is, or is not, being done?
If the regulatory authority is NOT in a position to monitor and assess an organisation's efforts to fulfil outcome-based obligations, it will be necessary – fairer and more conducive to effective safety oversight – to rely on a more prescriptive approach.
Finally, there is a need to consider whether or not a sufficient level of trust exists between the regulatory authority and a regulated organisation to allow for an outcome-based approach to the imposition and assessment of regulatory obligations.
Where provision is made for outcome-based compliance so much of the detail of what would otherwise be specified in prescriptive obligations is 'given over' to the organisation subject to those requirements, the regulatory authority must be confident that the organisation can and will effectively and meaningfully take on what amounts to a degree of 'self-regulatory' responsibility.
The corollary to this proposition, of course, is that the organisations involved in such arrangements need to be confident that the regulatory authority will be fair and reasonable in assessing the organisation's efforts to comply with broadly-framed obligations and expectations – that the regulator will not be arbitrary, capricious, pedantic or inconsistent in its assessments. In other words, operators must be confident that the regulator will not resort to inappropriately prescriptive forms of assessment and analysis, after having invited or allowed an operator to approach its obligations in an outcome or performance based manner.
This consideration, the need for mutual trust, is very closely related to the 3rd and 4th factors. It might even be identified as the most important factor. But if it is, we need to be cautious in our consideration of the difference between legitimate and tendentious claims—by regulators and the regulated alike—of a deficient display of competence and/or willingness on the other's part, to operate fairly, maturely, honestly, and responsibly under manifestly more flexible outcome-based regulatory regimes.
As a practical matter, then, when considering whether to adopt an outcome-based or more prescriptive approach to the formulation of legislative requirements and in the exercise of discretion in the performance of regulatory functions – a 'prudent mix' of the two will almost certainly be the most appropriate course.
White Paper, Regulatory Development and Implementation
A key driver for CASA and the aviation industry more broadly was the release of the Government's Aviation White Paper.
The White Paper presented CASA with some significant challenges, including a requirement to complete the process of regulatory reform by 2011.
This does not mean no progress has been made. Significant new and amended regulations have been put in place such as:
- regulations for the development of drug and alcohol management plans;
- amendments setting out the requirements for safety management systems and human factors training for regular public transport operations, and
- amendments to introduce the multi-crew pilot licence.
However CASA's efficiency as a regulator will be substantially enhanced when Australia's aviation regulations are updated to align with best practice international safety requirements.
CASA and the Office of Legislative Drafting and Publishing have formed a task-force to ensure that the delivery of these regulations happens in a timely manner. We are focused on four key areas of regulatory reform:
- maintenance; and
- flight operations.
We are looking to have new maintenance regulations made in the first half of 2010 and to complete legal drafting of the operational (passenger transport) and licensing regulations by the end of 2010.
I am confident that we are on track to meet the Government's timeframe for completion of all the regulations by the end of 2011 and this will be good news for everyone in the industry.
However, there is also the implementation of these rules to consider, and this will involve significant work to transition the industry and CASA to the new rules.
It is one thing to make the rules, but another to ensure that the industry is fully trained and educated in them prior to their commencement. This slide, for example, highlights the seminars that CASA staff are running in May on just two new rules (the transition to class D and new radio calls rules) which come into effect on 3 June this year.
CASA Change Program
It seemed to me when I started as Director of Aviation Safety that CASA, while certainly a more robust organisation that it had been in the past, needed to refocus its limited resources on the safety functions outlined in the Civil Aviation Act.
I believed we needed to better define the organisation's standards and procedures and provide a clearer framework for evaluating our performance. These processes are integral to CASA's ability to meet its legislated responsibilities as the regulator.
There have already been some organisational changes within CASA and a review of our documentation of procedures and practice is currently underway.
This includes a consolidation of the senior management structure, with a new Deputy Director who will focus on the development of key aspects of Australia's State Safety Program and CASA's Safety Management System, and an Associate Director who will oversee the further development of CASA's regulatory and governance policies and practices.
The robustness of any organisation depends very much on the quality of its people.
CASA has a dedicated and professional staff but, like many in the aviation industry, we have an ageing staff profile. We also have similar difficulties in attracting and retaining skilled staff who continue to be in high demand across the industry.
Technical training was identified as an issue by the International Civil Aviation Organization in its 2008 audit and this is a priority for us, with a range of new programs to enhance staff capability in areas such as leadership, regulatory skills and technical expertise.
We are in the process of putting in place comprehensive initial, on-the-job, recurrent and specialist training programs for our technical staff including increasing their awareness of aviation law. A robust regulator also needs proper legislative support. The action of the Government to improve CASA's enforcement powers across a number of areas, including consignment or carriage of dangerous goods and the oversight of foreign aircraft was very welcome.
These powers have already strengthened and improved CASA's operational oversight and surveillance of the industry as a whole and of foreign operators in particular.
As a practical matter and—as you well know—as a matter of law, however there are constraints on what CASA can achieve in the interests of safety.
Recently CASA endeavoured to take action against a New Guinea based operator, which had admitted that it had flown more than 400 unauthorised medivac flights into Australia in the past decade.
The AAT formed the view that, the history of some of the people involved notwithstanding, sufficient changes had been introduced into the operational management of the company so as to eliminate a prohibitive risk that the operator would not capable of complying with the law in the future. On that basis, the Tribunal set aside CASA's decision not to issue the operator with a Foreign Aircraft AOC, and supplanted that decision with its own that the AOC be issued.
Obviously, this was not a decision with which CASA agreed. But as you know, there is no basis on which to appeal a decision of the AAT other than on legal grounds. Having corrected its initially ambiguous decision—making it clear that the Tribunal itself decided to issue the company with an AOC (rather than 'directing' CASA to do so)—there was no legal basis on which to mount a sustainable appeal.
CASA was thus effectively obliged to produce and provide the operator with a Foreign Aircraft Air Operator's Certificate thereby giving effect to the legally binding decision by the AAT
The Tribunal did indicate that, in the circumstances, the operator should expect to be closely scrutinised by CASA—and we are doing so, solely in the interests of safety.
This case highlights the constraints under which CASA operates whereby decisions regarding aviation safety can be overturned on appeal by bodies, which, whatever qualities they may well bring to bear on their decision-making, expertise in aviation safety may not necessarily be one of them.
Like other safety regulators CASA faces a number of challenges in a changing international environment, a dynamic international and domestic industry and the need to ensure that safety related considerations are at the forefront of our thinking.
CASA is not an economic regulator, and we have no authority to allow economic or commercial implications to influence the safety-related decisions we are obliged to make. It is only after all relevant safety-related factors have been considered with due precedence, that the economic or commercial consequences of that decision might be taken into account. Where a less onerous, but equally safe, alternative is allowed by the law, CASA will certainly entertain that option. But in every case, commercial and economic considerations will be subordinated to safety-related matters.
In other words, where the interests of safety and the requirements of the civil aviation legislation allow one, and only one, correct course of action, then that is the action that must be taken. In most cases, however, satisfying the requirements of the law and safety allows for more than one response.
Where more than one course of action is equally acceptable to CASA to achieve the required safety outcomes, then those options should be considered. And as I have said, where one option is financially or commercially less onerous CASA should always opt, and allow the aviation industry to opt, for that course of action. In every case, however, the interests of safety must come first.
Aviation law is central to virtually everything CASA does, and I very much appreciate the keen interest practioners like you take in our always-challenging aviation safety environment.