FAA Publishes SMS Rule for Manufacturers and an Expanded List of Operators

Distributors may soon see some changes in their aviation manufacturers as well as their operator-customers, as the FAA will publish its Safety Management Systems (“SMS”) Notice of Proposed Rulemaking (“NPRM”) in tomorrow’s Federal Register.

This long-awaited proposed rule has been scaled back from the original scope (manufactures and maintenance organizations) and only appears to apply to:

• Passenger-carrying operations (including those under 14 C.F.R. § 91.147, Part 121 and Part 135)
• Type Certificate (TC) holders whose TCs are under production
• Production Certificate holders

There will be an exception for production certificates that are based purely on a supplemental type certificate (STC), and not on any type certificate.

The proposal would also make many small changes to the existing Part 5 (SMS) standards.

The NPRM is published pursant to the Congressionally-mandated obligation for aviation manufacturers to establish SMS programs (Public Law 116-260 (Dec. 27, 2020)). That law required application of SMS requirements to “manufacturers that hold both a type certificate and a production certificate issued pursuant to section 44704 of title 49, United States Code, where the United States is the State of Design and State of Manufacture.” Id. at § 102(a)(1). So it applies to those who produce aircraft, engines and propellers, but on its face it does not apply to those who produce aircraft parts (which are typically produced under PMA or TSOA). Because it also applies to operators, ASA members may eventually feel that they are squeezed between two sets of business partners who are under SMS regulations.

The proposed rule would require SMS-holders to share hazard information with the relevant interfacing entities who, to the best of their knowledge, could address the hazard. An example in the NPRM has an aircraft manufacturer disseminating hazard information to its parts suppliers and software suppliers. Distributors should be wary of this provision, as it could ultimately mean that distributors may face a flow-down of SMS requirement from their business partners.

Because we anticipate such SMS-related commercial pressures on our members, as well as anticipating members who may want to voluntarily adopt SMS, ASA continues to monitor implementation of SMS programs around the world.