Regulatory delegation at the FAA

Earlier posts have focused on the role of inadequate regulatory oversight as part of the tragedy of the Boeing 737 MAX (link, link). (Also of interest is an earlier discussion of the "quiet power" through which business achieves its goals in legislation and agency rules (link).) Reporting in the New York Times this week by Natalie Kitroeff and David Gelles provides a smoking gun for the idea of regulatory capture by industry over the regulatory agency established to ensure its safe operations (link). The article quotes a former attorney in the FAA office of chief counsel:

“The reauthorization act mandated regulatory capture,” said Doug Anderson, a former attorney in the agency’s office of chief counsel who reviewed the legislation. “It set the F.A.A. up for being totally deferential to the industry.”

Based on exhaustive investigative journalism, Kitroeff and Gelles provide a detailed account of the lobbying strategy and efforts by Boeing and the aircraft manufacturing industry group that led to the incorporation of industry-favored language into the FAA Reauthorization Act of 2018, and it is a profoundly discouraging account for anyone interested in the idea that the public good should drive legislation. The new paragraphs introduced into the final legislation stipulate full implementation of the philosophy of regulatory delegation and establish an industry-centered group empowered to oversee the agency's performance and to make recommendations about FAA employees' compensation. "Now, the agency, at the outset of the development process, has to hand over responsibility for certifying almost every aspect of new planes." Under the new legislation the FAA is forbidden from taking back control of the certification process for a new aircraft without a full investigation or inspection justifying such an action.

As the article notes, the 737 MAX was certified under the old rules. The new rules give the FAA even less oversight powers and responsibilities for the certification of new aircraft and major redesigns of existing aircraft. And the fact that the MCAS system was never fully reviewed by the FAA, based on assurances of its safety from Boeing, reduces even further our confidence in the effectiveness of the FAA process. From the article:

The F.A.A. never fully analyzed the automated system known as MCAS, while Boeing played down its risks. Late in the plane’s development, Boeing made the system more aggressive, changes that were not submitted in a safety assessment to the agency.

Boeing, the Aerospace Industries Association, and the General Aviation Manufacturers Association exercised influence on the 2018 legislation through a variety of mechanisms. Legislators and lobbyists alike were guided by a report on regulation authored by Boeing itself. Executives and lobbyists exercised their ability to influence powerful senators and members of Congress through person-to-person interactions. And elected representatives from both parties favored "less regulation" as a way of supporting the economic interests of businesses in their states. For example:

They also helped persuade Senator Maria Cantwell, Democrat of Washington State, where Boeing has its manufacturing hub, to introduce language that requires the F.A.A. to relinquish control of many parts of the certification process.

And, of course, it is important not to forget about the "revolving door" from industry to government to lobbying firm. Ali Bahrami was an FAA official who subsequently became a lobbyist for the aerospace industry; Stephen Dixon is a former executive of Delta Airlines who now serves as Administrator of the FAA; and in 2007 former FAA Administrator Marion Blakey became CEO of the Aerospace Industries Association, the industry's chief advocacy and lobbying group (link). It is hard to envision neutral, objective judgment in ensuring the safety of the public from such appointments.

Boeing and its allies found a receptive audience in the head of the House transportation committee, Bill Shuster, a Pennsylvania Republican staunchly in favor of deregulation, and his aide working on the legislation, Holly Woodruff Lyons.

These kinds of influence on legislation and agency action provide crystal-clear illustrations of the mechanisms cited by Pepper Culpepper in Quiet Politics and Business Power: Corporate Control in Europe and Japan explaining the political influence of business. Here is my description of his views in an earlier post:

Culpepper unpacks the political advantage residing with business elites and managers in terms of acknowledged expertise about the intricacies of corporate organization, an ability to frame the issues for policy makers and journalists, and ready access to rule-writing committees and task forces. These factors give elite business managers positional advantage, from which they can exert a great deal of influence on how an issue is formulated when it comes into the forum of public policy formation.

It seems abundantly clear that the "regulatory delegation" movement and its underlying effort to reduce regulatory burden on industry have gone too far in the case of aviation; and the same seems true in other industries such as the nuclear industry. The much harder question is organizational: what form of regulatory oversight would permit a regulatory industry to genuinely enhance the safety of the regulated industry and protect the public from unnecessary hazards? Even if we could take the anti-regulation ideology that has governed much public discourse since the Reagan years out of the picture, there are the continuing issues of expertise, funding, and industry power of resistance that make effective regulation a huge challenge.