The investigation into the crashes of two Boeing 737 Max 8 jets has brought renewed attention to an apparent conflict of interest in the U.S. Federal Aviation Administration’s regulation of the aircraft industry.
Investigators are looking into how the FAA, which delegated parts of the 737 Max’s safety certifications to Boeing, failed to ensure that the company provided guidance to pilots about new anti-stall software that could unexpectedly take over the aircraft.
The probe will seek to determine whether Boeing or the FAA dropped the ball. Either way, the confusion is just the latest instance of a longstanding blurring of the lines between industry and oversight that has made the FAA into a case study of “regulatory capture.”
The FAA is unusual among federal agencies because it was originally established to regulate and promote an industry. This fostered the unusually cozy relationship between regulators and business that has persisted to the present, even as the agency’s official mandate became exclusively focused on safety beginning in the 1990s.
The idea of a federal regulator for aviation first took shape with the Air Commerce Act of 1926. This law empowered the secretary of Commerce to issue and enforce traffic rules, certify aircraft, improve air safety and investigate the cause of accidents.
But the language of the legislation made clear the main objective was “to encourage air commerce by attracting capital, creating appropriate laws and establishing civil airways and navigational facilities.” By the 1930s, the Bureau of Air Commerce had helped foster the rise of the aviation business.
Its success on the safety front, by contrast, left much to be desired. In 1931, a crash killed the famed football coach Knute Rockne and others. Reformers called for disentangling the promotion of aviation from its regulation.
In 1938, Congress created the Civil Aeronautics Authority, which vested both functions in a new agency housed within the Department of Commerce. Two years later, President Franklin D. Roosevelt tried to solve the problem by creating two distinct agencies. He arguably made things worse.
The first entity, the Civil Aeronautics Board, or CAB, had the job of safety rulemaking and accident investigation as well as the economic regulation of the airlines. The second, the Civil Aeronautics Administration, or CAA, had oversight of air traffic control and safety enforcement, among other things.
This was a peculiar arrangement. The reorganization meant that while the CAB could investigate crashes and promulgate rules, the enforcement of those rules fell to the CAA, which was under the direct control of the Department of Commerce, whose mandate was to represent industry interests.
Perhaps inevitably, there were more crashes and more calls for reform. In 1958, Congress consolidated the CAA and the CAB in a new creation: the Federal Aviation Agency. Yet the statute made only limited references to safety; instead, the imperative to “foster air commerce” got top billing in the charter language.
As several legal scholars have observed, this dual mandate — protecting passenger safety while promoting industry interests — didn’t harmonize. This became apparent in the FAA’s relations with another federal agency descended from the CAB: the National Transportation Safety Board. From its creation in 1967, it investigated civil aviation accidents and made recommendations to the FAA. But it had no authority to institute regulations; only the FAA could do that.
The FAA ignored NTSB recommendations in several high-profile cases. Over the course of the 1970s and 1980s, it declined to implement NTSB guidance governing lavatory smoke detectors, de-icing protocols, radar, runway lighting and other issues.
The FAA’s placement of profits before safety often proved tragic: a plane would crash — sometimes many planes — and the agency would belatedly institute the NTSB’s recommendation. The FAA’s reluctance to act until planes fell from the sky earned it an unfortunate nickname: the “tombstone agency.”
But this wasn’t really the agency’s fault: it was charged with the impossible tasks of protecting safety and profit. The deregulation of the airline industry in the late 1970s, which ushered in an era of cutthroat competition, only complicated this calculus further.
In the 1990s, the budget airline Valujet became the poster child of airline deregulation. But all was not well: Valujet had a record of minor accidents and forced landings. Yet the FAA did nothing. It even maintained that the airline was perfectly safe after a major disaster in 1996 involving a Valujet plane, which crashed in Florida, killing 110.
The disaster opened the door to reform. Sponsors of legislation passed in 1996 claimed that they abolished the dual mandate, but the reality was far more ambiguous. The law changed the FAA’s mission from “promoting” aviation to “encouraging” aviation — hardly the stuff of revolutionary change.
And while it inserted more language underscoring the FAA’s role in maintaining safety, the conference committee that drafted the final bill attached a codicil that declared the new law would not “require any changes to the FAA’s current organization or functions. Instead, the provision is intended to address any public perceptions that might exist that the promotion of air commerce by the FAA could create a conflict with its safety regulatory mandate.”
This was a cosmetic fix. Its shortcoming became obvious a few years later, when the FAA tried to implement security measures designed to prevent terrorist attacks. It sought to limit the financial burden on airports and airlines by permitting them to institute their own security arrangements. The tragic consequences of this decision became clear with the attacks of Sept. 11.
The FAA lost oversight over airport security, but it continued to delegate some responsibility for regulatory compliance to the companies under its purview. Since that time, many high-profile cases — some exposed by whistleblowers — have highlighted the degree to which the FAA maintains what the chairman of the House Transportation and Infrastructure Committee described in 2008 as a “culture of coziness” between industry and regulators that had led to “malfeasance, bordering on corruption.”
Yet that same year, the FAA began allowing Boeing and other manufacturers to certify that their systems comply with federal safety regulations. In effect, Boeing employees assumed the role that FAA regulators had once performed. This has undoubtedly lightened the regulatory load on companies, and it certainly comports with the FAA’s original mandate to encourage domestic aviation. But the recent crashes suggest that this ambition may ultimately undercut the safety of airline passengers.
Regardless of the results of the investigation into the 737 Max, it’s long past time to recognize that despite cosmetic changes to the FAA’s mandate, its long history of entanglement with the industry it purports to regulate has hamstrung its ability to regulate.
Congress should consider giving a single agency — most likely the NTSB — the power to promulgate and enforce rules. Let the FAA do the job it has always done best: the promotion of industry.
Stephen Mihm writes a column for Bloomberg.