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Legal Issues Related to Implementation and Operation of SMS for Airports (2018)

Chapter: III. THEMATIC LEGAL AND PRACTICAL ISSUES PRESENTED BY SMS

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Suggested Citation:"III. THEMATIC LEGAL AND PRACTICAL ISSUES PRESENTED BY SMS." National Academies of Sciences, Engineering, and Medicine. 2018. Legal Issues Related to Implementation and Operation of SMS for Airports. Washington, DC: The National Academies Press. doi: 10.17226/25328.
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Suggested Citation:"III. THEMATIC LEGAL AND PRACTICAL ISSUES PRESENTED BY SMS." National Academies of Sciences, Engineering, and Medicine. 2018. Legal Issues Related to Implementation and Operation of SMS for Airports. Washington, DC: The National Academies Press. doi: 10.17226/25328.
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Suggested Citation:"III. THEMATIC LEGAL AND PRACTICAL ISSUES PRESENTED BY SMS." National Academies of Sciences, Engineering, and Medicine. 2018. Legal Issues Related to Implementation and Operation of SMS for Airports. Washington, DC: The National Academies Press. doi: 10.17226/25328.
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Suggested Citation:"III. THEMATIC LEGAL AND PRACTICAL ISSUES PRESENTED BY SMS." National Academies of Sciences, Engineering, and Medicine. 2018. Legal Issues Related to Implementation and Operation of SMS for Airports. Washington, DC: The National Academies Press. doi: 10.17226/25328.
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Suggested Citation:"III. THEMATIC LEGAL AND PRACTICAL ISSUES PRESENTED BY SMS." National Academies of Sciences, Engineering, and Medicine. 2018. Legal Issues Related to Implementation and Operation of SMS for Airports. Washington, DC: The National Academies Press. doi: 10.17226/25328.
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Suggested Citation:"III. THEMATIC LEGAL AND PRACTICAL ISSUES PRESENTED BY SMS." National Academies of Sciences, Engineering, and Medicine. 2018. Legal Issues Related to Implementation and Operation of SMS for Airports. Washington, DC: The National Academies Press. doi: 10.17226/25328.
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Suggested Citation:"III. THEMATIC LEGAL AND PRACTICAL ISSUES PRESENTED BY SMS." National Academies of Sciences, Engineering, and Medicine. 2018. Legal Issues Related to Implementation and Operation of SMS for Airports. Washington, DC: The National Academies Press. doi: 10.17226/25328.
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Suggested Citation:"III. THEMATIC LEGAL AND PRACTICAL ISSUES PRESENTED BY SMS." National Academies of Sciences, Engineering, and Medicine. 2018. Legal Issues Related to Implementation and Operation of SMS for Airports. Washington, DC: The National Academies Press. doi: 10.17226/25328.
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Suggested Citation:"III. THEMATIC LEGAL AND PRACTICAL ISSUES PRESENTED BY SMS." National Academies of Sciences, Engineering, and Medicine. 2018. Legal Issues Related to Implementation and Operation of SMS for Airports. Washington, DC: The National Academies Press. doi: 10.17226/25328.
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10 upon the relationship between labor and manage- ment at tenant organizations.78 It is difficult to determine the exact form these various requirements will take in any final rule. Nevertheless, because all of these requirements are, at least in part, integral to the overall implementa- tion of SMS, it is likely that these requirements will all appear in some fashion in a final rule. Regardless of the precise parameters of these requirements in a final rule, the thematic legal implications (if not the specific consequences for individual airports) can be reasonably identified now. III. THEMATIC LEGAL AND PRACTICAL ISSUES PRESENTED BY SMS As discussed below, many of the potential legal issues will be shaped by the particular airport spon- sor and applicable state and local laws, as well as the sponsor’s administrative structure and legal status and governance. Nonetheless, there are the- matic legal issues that are likely to be presented by any implementation of SMS, with or without a final rule.79 The broad legal challenges that airport spon- sors will face in implementing SMS as presented in this Legal Research Digest were identified by reviewing previous literature on the topic (including ACRP publications specifically mentioned above), comments from sponsors participating in the pilot programs, comments and questions submitted dur- ing the formal rulemaking process, articles and commentary in professional industry publications, and discussions held at various industry confer- ences and seminars. This section begins by discussing the potentially expanded scope of liability for both sponsors and accountable executives. Next, it examines the new types of data collection contemplated by SMS imple- mentation and the potential legal consequences of those changes. Then, it discusses the impact that SMS implementation may have on airport sponsors’ 78 The training requirement also represents a small foray by FAA into the arena of worker safety, an area already heavily regulated by other state and federal enti- ties. The proposed SMS rule does not purport to strictly mandate more traditional worker safety regulations (e.g., working hours, personal protective equipment), but the risk of conflict between those regulations and an SMS pro- gram exists, at least theoretically. 79 It is important to note that some airport sponsors— including most of those that are included in the survey in this Legal Research Digest—have elected to implement all or some elements of SMS in the absence of a final rule from the FAA. These voluntary actions allow us to evalu- ate the implications of the key elements of SMS for airport sponsors even before knowing the precise parameters of a final FAA rule. the FAA will include some airside facilities or areas that are not presently regulated under Part 139, it is likely that the SMS requirements will trigger additional enforcement obligations and will change the existing regulatory relationship between airport sponsors and tenants. e. Training The proposed rule would “require a [sponsor] to establish processes and procedures to foster a safety culture,” which, in the NPRM, included “for- mal safety training to all employees with access to the airfield.”73 FAA noted that, during the earlier pilot studies, it proceeded under the premise that the SMS training requirement would apply only to airport employees.74 However, FAA stated in the NPRM that it believed greater benefits would be realized if the training requirement were extended to all employees (airport and non-airport) with access to the movement and non-movement areas and formally proposed that extended requirement, but invited comment on the practical implications of that approach.75 In response to comments that the NPRM training requirement would be “cum- bersome, time-consuming, and excessively costly,” FAA proposed in the SNPRM to refine the training requirement to offer a two-pronged approach: “(i) comprehensive SMS training specific to the indi- vidual’s role and responsibility in implementation and maintenance of the SMS; and (ii) hazard awareness and reporting awareness orientation for all other individuals with access to the movement and non-movement areas.”76 This approach would essentially require different tiers of training for different individuals depending on their roles, but would still require some training for non-airport employees that have access to the movement and non-movement areas.77 Any training requirement that imposes on the airport sponsor the obligation to train non-sponsor employees would have labor, human resources, and related legal implications for the sponsor that would be magnified depending 73 Safety Management System for Certificated Airports, 75 Fed. Reg. at 62,016. 74 Id. 75 Id. 76 Safety Management System for Certificated Airports, 81 Fed. Reg. at 45,876. 77 Id. (explaining that for “persons with access to the movement and non-movement areas . . . a certificate holder could develop a brochure or white paper for inclusion in the employee’s indoctrination package, or add a reference to hazard identification and reporting to existing training programs such as security or driver training.”).

11 unreasonably great risk of causing damage or injury, and the identified risk is not mitigated. In such cases, the gen- eral legal standard is whether a reasonable person would have mitigated the identified risk. If a reasonable person, as determined by the fact finder (generally, a jury) would have undertaken steps to mitigate the identified risk, then the party that failed to mitigate such a risk (the defendant) will generally be found liable to the person injured (the plaintiff).80 Case law throughout the United States has established that “an airport proprietor has the common law duty of a landowner for conditions on the premises, including conditions on the airfield.”81 Historically, courts have found that that duty does not typically extend to the premises that an airport sponsor leases to other parties, and have generally determined that airport sponsors do not have a duty to maintain or care for the property of a ten- ant.82 Moreover, an airport sponsor’s duty to miti- gate hazards, and subsequent liability for injuries as a result of those hazards, is usually limited to those hazards and risks that are sufficiently or rea- sonably foreseeable.83 More recent decisions have called this general standard into question, however. One widely cited state appellate court held that an airport sponsor has a “nondelegable duty to ensure a safe work- place” and is therefore liable for an independent contractor’s injuries that occurred on the terminal ramp.84 In Afoa, an employee of a ground services contractor, which was permitted to do business on the airport but had no contractual arrangement 80 DavID y. bannarD, aIrPort CooPeratIve reSearCh Pro- graM legal reSearCh DIgeSt 19: legal ISSueS relateD to DeveloPIng Safety ManageMent SySteMS anD Safety rISk ManageMent at u.S. aIrPortS 21-22 (2013) (internal cita- tions omitted). 81 JoDI howICk, aIrPort CooPeratIve reSearCh PrograM, legal reSearCh DIgeSt 33: overvIew of aIrPort DutIeS anD StanDarDS of Care In aIrfIelD aCCIDent CaSeS 8 (2017); see also Ins. Co. of N. Am. v. City of New Haven, 574 F. Supp. 373 (D. Conn. 1983). 82 See howICk, supra note 81, at 10 n.41 (citing Wash- burn v. Lawrence Cnty. Bd. of Comm’rs, 1:10-CV-464, 2012 WL 12887672, at *5 (S.D. Ohio July 24, 2012), aff’d, 720 F.3d 347 (6th Cir. 2013) (determining that the propri- etor had no duty to repair a T-hangar door that fell and injured the plaintiff)). 83 See howICk, supra note 81, at 10 (discussing judicial analysis of foreseeability of criminal acts and airport pro- prietor liability for same). 84 Afoa v. Port of Seattle, 393 P.3d 802, 806 (Wash. Ct. App. 2017), review granted, 189 Wash.2d 1015 (Wash. Oct. 5, 2017); see also City of El Paso v. Viel, 523 S.W.3d 876 (Tex. App. 2017) (holding that evidence raised a factual issue as to whether proprietor could be liable for injuries suffered by plaintiff employee of lessee caused by mal- functioning overhead door on property leased from proprietor). existing contractual relationships and governance documents. Each of these subsections also touches on the practical considerations raised by SMS imple- mentation and how they may implicate the legal issues at hand. It should be noted that it is not the focus of this Legal Research Digest to re-examine in detail all of the potential legal issues associated with SMS, which have been thoroughly addressed in previous publications. Nor does this publication analyze the particulars of individual state laws. This section relies on previous ACRP publications as noted above and summarizes the important and relevant points from those publications to place the survey results of this Legal Research Digest in context. A. Fundamental Shift in Legal Responsibility The implementation of SMS will fundamentally change the responsibility and role of airport spon- sors. While not a singular legal issue, SMS as pre- sented in the proposed rule will impose ultimate responsibility for safety programs at an airport on the sponsor, but many other entities (e.g., FAA, air- lines, and other airport tenants) will continue to have their own safety-related responsibilities at the airport as well. As opposed to the status quo, where separate entities largely are responsible for safety within their own spheres of influence, this shift in responsibility ripples throughout the individual legal issues presented by SMS implementation and is the impetus for much of the discussion presented in this Legal Research Digest. B. Liability and SMS Liability is perhaps the broadest category of potential legal issues associated with the implemen- tation of SMS at airports. Airport sponsors and their accountable executives who implement SMS may see an increased risk of liability in tort (specifically, negligence) cases. Essentially, SMS implementation may expand the scope of an airport sponsor’s duty to identify and mitigate hazards in the non-movement areas and as a product of the SRM process. How- ever, governmental immunity statutes may operate to shield both sponsors and individuals from tort suits under some circumstances. 1. Existing Negligence Liability for Airport Sponsors Bannard succinctly summarizes the relevant legal principles of negligence liability as follows: Generally speaking, liability for negligence arises when a party owes others a duty to conform to a standard of con- duct for the protection of others from unreasonable risk, and that party breaches that duty, resulting in injury or damage to another. In addition, negligence has been found where a risk has been identified and where there is an

12 practice, potential plaintiffs could seek to hold the sponsor liable for any safety-related accidents in areas that they do not directly control.89 Notwith- standing such potential liability, the terms of any specific lease may limit the sponsor’s authority to enter the premises, control the tenant’s behavior, or otherwise mitigate hazards.90 Revisions to lease terms may be necessary to fully implement SMS within tenant leaseholds.91 Second, under common law in some jurisdictions, “the lack of knowledge of a risk, and thus failure to mitigate it, could be a defense” to claims of negli- gence in the absence of SMS.92 The proposed SMS rule would mandate that sponsors undertake an SRM process (including for the non-movement area as discussed above) that “is intended to identify oth- erwise unknown risks, quantify the potential impact of such risks, and seek to mitigate otherwise unac- ceptable risks.”93 The concern, then, is that “[b]y being on notice of these risks . . . an airport operator arguably has a new or increased duty to persons lawfully at the airport (including, for example, even though common law generally would not impose any safety obligations. 89 bannarD, supra note 80, at 24. See also Afoa, 393 P.3d 802; Viel, 523 S.W.3d. 90 bannarD, 876 supra note 80, at 24. 91 In addition, these leases commonly contain provi- sions that require the tenant to indemnify the lessor for incidents that occur in the leased area. The effect of SMS on these indemnity clauses is an untested area of the law and one that is highly state-specific. As a general matter, such clauses would seem to contravene SMS principles which state that the airport sponsor is intended to be pri- marily responsible for safety. There has been considerable discussion in comments on the NPRM and SNPRM whether it is desirable or even permissible for a sponsor to require indemnification that would have the practical effect of transferring SMS-related liability to the tenant. And, if indemnification is permissible, could such indem- nification extend not only to any damages but also to the supervision and enforcement of safety requirements. These issues would likely be litigated under state law, and FAA, for its part, has stated that the SMS rule is not intended to “create or modify state tort liability law or cre- ate a private right of action under federal or state law.” Safety Management System for Certificated Airports, 81 Fed. Reg. at 45,884. FAA’s statement notwithstanding, whether the SMS rule actually changes state law remains an open question of state law, and will remain unsettled until the SMS rule is finalized and the first lawsuits are decided. 92 bannarD, supra note 80, at 22. For example, in one Texas case, an airport proprietor escaped liability for inju- ries that occurred because of a defective escalator because the proprietor had “had no actual or constructive knowl- edge of the condition that caused [plaintiff ’s] injuries.” Hunnicutt v. Dallas/Fort Worth Int’l Airport Bd., 2009 Tex. App. LEXIS 5952, at *6 (Tex. App. July 30, 2009). 93 bannarD, supra note 80, at 22. with the airport sponsor (the Port of Seattle), was severely injured in a vehicle accident on the ramp. The Port argued that it should not be liable for the employee’s injuries because it had no duty to the employee. The Washington Supreme Court dis- agreed, as summarized by the Court of Appeals in later proceedings: [T]he Supreme Court recognized that not every licensor or jobsite owner takes on a common law duty to maintain a safe workplace anytime it requires on-site workers to com- ply with safety rules and regulations: “But where a licensor undertakes to control worker safety in a large, complex work site like Sea-Tac Airport and is in the best position to control safety, there is a duty to maintain safe common work areas within the scope of retained control.”85 The facts and procedural posture of the Afoa liti- gation are complex and incomplete—it has already produced one opinion from the Washington Supreme Court and is likely to generate another—but it should be viewed as an example of the potential lia- bility that could flow from increased sponsor safety responsibilities as discussed below. 2. Potential Changes to Sponsor Liability Under SMS The implementation of SMS has the potential to change sponsors’ negligence liability in several ways. Broadly speaking, establishing an airport SMS may impose an increased duty on sponsors by (1) expanding the physical scope of their responsibil- ity beyond existing state common-law obligations, (2) mandating a process to identify and mitigate hazards, and (3) formalizing the sponsor’s standard of care through the approved and/or accepted SMS Manual and other SMS documentation. First, absent SMS, the general common-law rule of negligence liability would typically dictate that a tenant, not the lessor (e.g., the airport sponsor), is responsible for maintaining a leased premises in a safe condition and therefore would bear the liability for injuries that occur on those premises.86 The pro- posed SMS rule would expand a sponsor’s SMS responsibility to the non-movement areas of the air- port, regardless of lease arrangements with ten- ant.87 This principle would contravene common law negligence rules by imposing affirmative obligations on the landlord with respect to the leased areas.88 In 85 Afoa, 393 P.3d at 811 (emphasis omitted). 86 bannarD, supra note 80, at 21; see also Washburn, 720 F.3d at 351 (“In Ohio, a commercial lessor’s liability is governed by traditional common law principles of prem- ises liability.”). 87 Safety Management System for Certificated Airports, 81 Fed. Reg. at 45,881. 88 For example, airport sponsors would be obligated to undertake an SRM process for the non-movement area,

13 whether the airport has an SMS.” It also carefully explained that “[t]he FAA intends an SMS would assist in uncovering and mitigating these unsafe conditions or actions” and that it “does not intend the proposed airport SMS rule to create or change state tort liability law.”97 Regardless of the agency’s intentions, the proposed rule does carry the poten- tial to shape elements of tort liability for airport sponsors. 3. Individual Personal Liability and the Accountable Executive The proposed rule requires the sponsor to desig- nate an accountable executive, who is supposed to be ultimately responsible for the implementation and maintenance of the airport’s SMS.98 Therefore, the accountable executive could be found to “owe a duty to persons who may be lawfully within the por- tions of the airport subject to SMS to ensure that the airport’s SMS effectively identifies and mitigates all unacceptable risks.”99 If an injury occurs, a plaintiff could seek to hold the accountable executive person- ally liable for negligently failing to identify or effec- tively mitigate a risk that caused their injury.100 While governmental immunity statutes could obvi- ate the risk of personal liability in many states (see below), the threat and potential burden of litigation against an individual is noteworthy.101 97 FAA Responses, supra note 47, at 29. 98 Safety Management System for Certificated Airports, 81 Fed. Reg. at 45,907. 99 bannarD, supra note 80, at 24. 100 Id. at 24-25. These cases exist even in the absence of SMS, though they are not often successful in the absence of extraordinary conduct on the part of an airport execu- tive. See, e.g., Ludwig v. Learjet, Inc., 830 F. Supp. 995, 997 (E.D. Mich. 1993) (dismissing suit against airport manager brought by airplane crash victim’s estate alleg- ing that airport manager was personally liable because he “was grossly negligent in designing, establishing, main- taining or permitting a known dangerous and offensive condition to exist”); Warren v. Provo City Corp., 838 P.2d 1125 (Utah 1992) (claim related to airplane crash filed against both airport proprietor and airport director dis- missed on grounds of insufficient notice). But see Miree v. United States, 490 F. Supp. 768 (N.D. Ga. 1980) (in air- plane crash litigation, denying defendant airport manag- er’s motion to dismiss where court determined he had a ministerial—not discretionary—duty to abate or mitigate bird hazards on the runway, which meant he was not immune from suit under Georgia law). 101 It should also be noted that sponsor officers and employees are often indemnified by airport sponsors for lawsuits that arise within the bounds of their professional purview, either by law or by policy. Government indemnifi- cation would not, however, extend in most cases to private- sector contractors or other non-governmental personnel working on the airfield, and so any mandated indemnifica- tion may not provide complete protection. airport tenants, those doing business at the airport, and travelers) to take all reasonable steps to miti- gate the identified risk.”94 The requirement that air- port sponsors be aware of, and have an affirmative obligation to address, safety risks would not contra- vene such a common-law defense but would make that defense largely unavailable for airport spon- sors who have implemented SMS as currently contemplated. Third, airport sponsors could also find themselves liable under the policies and procedures outlined in the SMS Manual and other SMS documents, par- ticularly after they are submitted to, and approved by, FAA. Sponsors would develop an SMS Manual through a process that inherently requires them to identify a variety of risks and determine which risks they may tolerate and which they should mitigate. Plaintiffs may argue that an approved SMS Manual or risk analysis represents the sponsor’s (and per- haps even the FAA’s) formalized standard of care and, if an accident results from a deviation from the approved procedures, the sponsor should be liable.95 Of course, the converse of this potential issue is that an airport sponsor may be able to mitigate its poten- tial liability by developing a robust SMS Manual and overall SMS program, securing approval from FAA, and, most importantly, rigidly adhering to its SMS program. Doing so would go a long way in dem- onstrating that the sponsor is acting reasonably, particularly where FAA as the safety regulator has formally approved those documents.96 However, agency acceptance of the SMS Manual—as currently proposed in the SNPRM—would significantly weaken both sides of this argument because it would not represent the same formalization of the stan- dard of care. Several of these concerns were raised with FAA as part of the rulemaking process before the issu- ance of the SNPRM. The agency responded by stat- ing that “[a] potentially unsafe airport condition or action poses a risk of tort liability regardless of 94 Id. While the incident in the Hunnicutt case occurred landside (not covered by the proposed rule), the principle remains applicable, with the court specifically stating that “[k]nowledge that escalator rollers will need to be repaired or replaced after use has a direct relationship to the rea- sonableness of the care exercised by [the proprietor].” Hunnicutt, 2009 Tex. App. LEXIS 5952, at *6. 95 “[A]t a basic level, a court considers evidence of what a ‘reasonable person’ would have done under the circum- stances of the case. The court also might consider evidence of the standards that people normally conform to in a given industry. Evidence of those standards might come from expert testimony concerning common practices or manuals, plans, handbooks, or guidance materials.” howICk, supra note 81, at 8 (internal citations omitted). 96 bannarD, supra note 80, at 44.

14 their employment.105 Accordingly, although SMS theoretically has the potential to increase both an airport sponsor’s and an accountable executive’s liability, practically they may be shielded from most or all liability by applicable state law. These statutes vary widely in their scope and applicabil- ity, but can be effective tools for an airport sponsor to avoid or limit liability.106 A complete analysis of state governmental immu- nity statutes as they apply to airport sponsors gen- erally is beyond the scope of this Legal Research Digest, but has been thoroughly catalogued in Legal Research Digest 24.107 However, it is important to note that despite their usually broad facial lan- guage, the potential application of governmental immunity statutes in the SMS context is unclear because of the unique regulatory posture and new sponsor role as the entity primarily responsible for safety on the airfield. For instance, in some jurisdic- tions, the immunity statutes make distinctions between the protections associated with an entity’s governmental functions and its proprietary func- tions, which are defined by state law.108 Thus, depending on the individual state, the contents of the final rule, and the specific roles assumed by air- port sponsors in implementing SMS, different levels of protection may apply. C. Collection and Protection of Safety Data and Documents As public entities, most Part 139 airport opera- tors are subject to state freedom of information laws. As a general matter, these laws tend to provide that a broad range of government information is open to the public unless it falls within some statutory 105 See, e.g., Colo. rev. Stat. § 24-10-118(2)(a) (2017) (“A public employee shall be immune from liability in any claim for injury . . . which lies in tort or could lie in tort . . . which arises out of an act or omission of such employee occurring during the performance of his duties and within the scope of his employment . . . [with certain excep- tions].”) In addition, some statutes require the public entity to pay for the legal defense of its employees should they be sued, as well as judgments levied against them. Id. § 24-10-110 (2017). 106 See, e.g., Comair, Inc. v. Lexington-Fayette Urban Cnty. Airport Corp., 295 S.W.3d 91 (Ky. 2009) (holding that public entity airport sponsor was immune from wrongful death suit following aircraft crash that killed 49 people). 107 Seay law, supra note 104. 108 See id. at 10. “For example, the State of Ohio’s code is a typical example in which a statute specifically delin- eates between the two, allowing recovery for injury related to proprietary functions but placing further limits on recovery for injuries related to governmental functions.” Id. (citing ohIo rev. CoDe ann. § 2744.02 (2014)). FAA has stated that it “does not propose [the accountable executive] would have personal liability to the FAA (through either certificate action or civil penalty) and does not intend this individual would have personal liability to any third party.”102 The agency’s statement, however, begs the question of tort liability. The fact that the agency will not itself hold the accountable executive personally liable under FAA regulatory authority says nothing about liability to third parties under state tort law. The FAA has no authority over state tort law and, not- withstanding its intent to not hold the accountable executive liable to the agency, the agency’s state- ments are immaterial for purposes of state law. 4. Governmental Immunity Under State Law Government immunity statutes exist in most if not all states and, as a general principle, provide public entities with immunity from suit for tort liability under certain circumstances.103 Because almost all Part 139 airports are owned and oper- ated by public entities, they are often protected from most tort suits under these statutes. Even in instances where a public entity is not strictly immune from tort suits, those statutes often have procedural steps that would not otherwise apply to a suit against a private party, may have much shorter statutes of limitations, and sometimes have caps on the amount of damages that may be recoverable.104 In addition, the protections afforded by these statutes sometimes extend to individuals employed by the entity acting within the scope of 102 FAA Responses, supra note 47, at 30 (emphasis added). 103 See, e.g., Colo. rev. Stat. § 24-10-106(1) (2017) (“A public entity shall be immune from liability in all claims for injury which lie in tort or could lie in tort regardless of whether that may be the type of action or the form of relief chosen by the claimant except as provided otherwise in this section.”); okla. Stat. tit. 51, § 152.1.A (2018) (“The State of Oklahoma does hereby adopt the doctrine of sov- ereign immunity. The state, its political subdivisions, and all of their employees acting within the scope of their employment, whether performing governmental or pro- prietary functions, shall be immune from liability for torts.”). 104 Seay law Int’l, aIrPort CooPeratIve reSearCh Pro- graM, legal reSearCh DIgeSt 24: SovereIgn IMMunIty for PublIC aIrPort oPeratIonS 8-9 (2016). “An interesting twist to caps on damages is the applicability of insurance policies to claims. In as many as 14 jurisdictions, legisla- tion allows governmental entities, including airports, to purchase insurance to cover losses to which they may become liable. Generally, the authorizing legislation lim- its damages to the maximum amount available under the insurance policy. Purchase of the insurance will ordinarily not constitute a waiver of immunity.” Id. at 11.

15 information has a wide variety of potential legal consequences for airport sponsors. First, the availability of hazard and incident reports could be a valuable source of information for potential plaintiffs (or aggressive counsel seeking clients) prior to or during litigation against the air- port sponsor. Regular requests to the airport spon- sor by an industrious attorney or potential litigant could yield information that would form the basis of a lawsuit against the airport sponsor. After an acci- dent or incident at an airport, potential plaintiffs could seek information about what the sponsor knew (or should have known) regarding when the hazard was reported and whether there was any follow-up to remedy the situation, which relates directly to the negligence liability issues discussed above.114 The U.S. Government Accountability Office (GAO) published a report on safety risk manage- ment in June 2014 and interviewed airport repre- sentatives as part of that investigation. The GAO provided an illustrative example of this potential issue as described by an airport representative: An airport representative we met with indicated that if a hole less than 3 inches deep is noted through a reporting system implemented under SMS, the airport may postpone that repair until a later time as it is within the maximum depth allowed under the regulations and the risk is accept- able. Additionally, it would not likely negatively impact the operations of a large aircraft on the runway. However, it could pose a hazard for smaller general aviation aircraft. If the airport does not make that repair and the hole factors into an accident involving a general aviation aircraft, the extent of the airport’s responsibility and legal liability is uncertain and may become the subject of a lawsuit.115 Once the sponsor is engaged in litigation, some of this information could be available to the plaintiffs in discovery, though certain privileges might apply to prevent its use.116 to a person in planning an attack on critical infrastructure but that does not simply provide the general location of such infrastructure.” Colo. rev. Stat. § 24-72-204(2)(VIII) (A) (2017). 114 See supra notes 74-76 and accompanying text. Of course, sponsors already collect and maintain other records in compliance with Part 139 obligations. However, the breadth of the proposed hazard reporting system in SMS has the potential to create significantly more reports from a wider variety of sources. 115 u.S. gov’t aCCountabIlIty offICe, gao-14-516 avIa- tIon Safety: aDDItIonal overSIght PlannIng by faa CoulD enhanCe Safety rISk ManageMent 23 (2014); see also 14 C.F.R. § 139.305(a)(2) (2018) (regulatory standard that holes in airport pavement may not exceed 3 inches in depth). 116 See bannarD, supra note 80, at 34-39 (discussing three different privileges that could apply in the context of litigation). In a somewhat analogous situation, National Transportation Safety Board reports on accidents or exception.109 These state laws may present legal challenges for airport sponsors as they implement SMS because the data and documents that sponsors would be required to develop, collect, and maintain are likely subject to disclosure in many circum- stances. Aviation safety data are generally not spe- cifically recognized as an exception to these state disclosure statutes, but certain states may have exceptions that could be broadly interpreted to include SMS data.110 FAA has generally acknowl- edged that SMS data and documents may be subject to these laws, but has elected to avoid addressing the issue directly, stating that it “believes that air- ports are best situated to understand and comply with their state laws.”111 Subject to a specific analy- sis of a given state’s particular laws, there are a number of ways in which state open records laws could undermine the confidentiality and data collec- tion objectives of SMS. 1. Potential State Law Data Protection Concerns The proposed rule would require airport sponsors to operate and maintain a “confidential” hazard reporting system,112 which would necessarily require the sponsor to receive hazard reports and other safety data. Subject to the exact structure of a given airport sponsor’s reporting system, individual reports could contain the date, time, location, and specific details of a hazard or incident (or potential incident), and the name and affiliation of the indi- vidual submitting the report. Unless some type of exception applies, the information that airport spon- sors collect will (in whole or in part) be subject to disclosure under most state freedom of information laws.113 The possible public disclosure of this 109 See, e.g., Colo. rev. Stat. § 24-72-203(1)(a) (2017) (“All public records shall be open for inspection by any person at reasonable times, except as provided in this part 2 or as otherwise provided by law.”); nev. rev. Stat. § 239.010(1) (2017) (“Except as otherwise provided in this section and [other sections] . . . all public books and public records of a governmental entity must be open at all times during office hours to inspection by any person, and may be fully copied or an abstract or memorandum may be pre- pared from those public books and public records.”). 110 bannarD, supra note 80, at 29. 111 FAA Responses, supra note 47, at 28. 112 Safety Management System for Certificated Air- ports, 75 Fed. Reg. at 62,016. 113 It is beyond the scope of this Legal Research Digest to analyze all of the potential exceptions that could apply in these instances, but one example is the Colorado Open Records Act which provides that public entities are not required to disclose “[s]pecialized details of . . . the physical . . . assets of critical infrastructure, including the specific engineering, vulnerability, detailed design information, protective measures, emergency response plans, or sys- tem operational data of such assets that would be useful

16 to be confidential, airport sponsors have to be extremely careful about making unsupportable commitments of confidentiality. Of course, if airport sponsors cannot make commitments of confidential- ity, it is likely that the FAA will find that the SMS program does not comply with this fundamental principle of an effective SMS program.118 In addition to the confidentiality concerns with a hazard reporting system, the applicability of state freedom of information laws to the SMS Manual or the sponsor’s SMS implementation plan could present a security risk to the airport. While some states have exceptions to public disclosure that may apply to the SMS Manual and SMS implementation plan (e.g., a Massachusetts exemption for docu- ments that, if released, are “likely to jeopardize pub- lic safety”),119 there are states where no such exception exists or where any exception does not clearly extend to the SMS Manual. Some industry groups are encouraging states to modify their open records laws or to interpret existing exemptions from disclosure so that the SMS Manual can be pro- tected from public disclosure, just as are other air- port security-related documents.120 Beyond the legal consequences for the sponsor, the practical success of a sponsor’s SMS program (and the effectiveness of SMS generally) can hinge on the sponsor’s ability to successfully protect SMS data.121 As an early GAO report on the topic concluded, “data protection concerns from airport officials and others could prevent aviation stakeholders from fully embracing SMS implementation, thus hindering its effectiveness. Without assurance of protection from state Freedom of Information Act (FOIA) laws, some 118 To the extent permitted by the final rule, sponsors may also attempt to mitigate this issue by allowing anon- ymous submissions to their confidential hazard reporting systems. However, this could negatively affect the success of the overall SMS program by preventing follow-up after a report is filed. 119 MaSS. gen. lawS ch. 4, § 7(26)(n) (2018); see also nev. rev. Stat. ann. § 239C.210(1) (2017) (declaring various documents “prepared and maintained for the purpose of preventing or responding to an act of terrorism [as] confi- dential, not subject to subpoena or discovery [and] not subject to inspection by the general public”). 120 Many state and federal laws contain exemptions from disclosure for security-related documents or docu- ments the release of which would endanger public safety. Until the first challenges are brought in court, there is no law concerning whether SMS Manuals or implementation plans fit within these exemptions. The nexus between the safety components of the SMS Manual and the precise parameters of state public safety and security exemptions may not necessarily be self-evident. 121 See bannarD, supra note 80, at 29 n.296 (discussing publications recognizing importance of confidentiality in safety reporting systems). Second, the airport sponsor could be liable—or at least involved in litigation—should any of the confi- dential data be released, either deliberately (pursu- ant to state open records laws) or inadvertently. For example, suppose an airport sponsor commits to affected personnel that its hazard reporting system is confidential and actively encourages employees to submit reports. An employee might then submit a report that he believes to be confidential about an unsafe condition maintained by his employer or that could impose liability on his employer. If the sponsor is required to disclose this information in litigation or pursuant to a valid state open records request, there is a risk that the employer could retaliate against the employee, and the employee could pur- sue a cause of action not only against the employer, but also potentially against the airport sponsor for disclosure of the information and the resulting harm.117 Notwithstanding the fundamental princi- ple that safety reporting under an SMS is intended investigations are prohibited by statute from “be[ing] admitted into evidence or used in a civil action for dam- ages resulting from a matter mentioned in the report.” 49 U.S.C. § 1154(b) (2018). There have also been suggestions that similar language be included for safety planning data created by public transit agencies. See natIonal aCaDeMIeS of SCIenCeS, aDMISSIbIlIty anD PublIC avaIlabIlIty of tran- SIt Safety PlannIng reCorDS 5-6 (2018) (prepublication draft). While there have been discussions about legisla- tion that similarly would have prevented airport SMS data from being admissible in liability proceedings, there is no current indication that such legislation is imminent or even likely. No such language appears in the latest ver- sion of authorizing legislation for the FAA, and industry organizations have not prioritized such legislation given the uncertainty about when, or whether, the SMS rule will be promulgated. The Federal Rules of Evidence limit the admissibility of a variety of evidence, some of which might be tangentially related to the subject matter of SMS. For example, Rule 407 limits the admissibility of subsequent remedial measures after an injury and Rule 411 speaks to the admissibility of evidence concerning liability insurance. It would be difficult to argue that any of these rules would exclude SMS data or documents from being admissible in federal court. 117 The availability of such a claim likely depends on state law. There are a number of federal remedies in anal- ogous situations. See, e.g., 26 U.S.C. § 7431(a) (2018) (imposing liability on the United States for improper dis- closure of tax return information); Travelers Indem. Co. of America v. Portal Healthcare Sols., L.L.C., 644 F. App’x 245 (4th Cir. 2016) (holding that insurance company was required to defend software company in class-action suit alleging inadvertent disclosure of medical data to the pub- lic via the internet); Halliburton, Inc. v. Admin. Review Bd., 771 F.3d 254 (5th Cir. 2014) (holding that company’s disclosure of complainant employee’s identity and his sub- sequent workplace ostracism was illegal retaliation under the Sarbanes-Oxley Act); see also Jamie Darin Prenkert et al., Retaliatory Disclosure: When Identifying the Com- plainant Is an Adverse Action, 91 n.C. l. rev. 889 (2013).

17 While there is a colorable argument for confiden- tiality under federal law of voluntarily submitted safety data, protections from disclosure for the SMS Manual and/or SMS implementation plan are even less clear. Because the proposed rule would man- date submission of at least some SMS documents to FAA, the exception for voluntarily submitted data would not appear to apply, and those documents would most likely be subject to disclosure under the federal FOIA. Such submissions would not appear to qualify for any of the statutory FOIA exemp- tions126 and do not appear to fit the definition of sen- sitive security information that is protected from disclosure under Transportation Security Adminis- tration regulations.127 This presents another oppor- tunity for individuals to obtain these documents if for some reason they are protected from disclosure under state law. 3. Additional Considerations The requirement to design a system for confiden- tial hazard reporting may require sponsors to invest in software to facilitate the process of collection and data security and retention. The challenge in design- ing such a system is to make reporting simple but also to employ sufficient security to prevent inadver- tent disclosure of information in a manner that could undermine the effectiveness of any confidenti- ality commitment. In addition, the design of the reporting system needs also to take into consider- ation whether employees (both sponsor and non- sponsor) require any new or different technology (e.g., radios or communications systems). Beyond the technical issues, the hierarchy of the reporting system also needs to be considered (i.e., once an issue is reported, how does it get to the appropriate person or department for resolution?). 4. Prior Research on Data Protection Issues As noted earlier, Synthesis 58: Safety Reporting Systems at Airports previously surveyed a number of airports on issues they encountered with main- taining safety reporting systems, though not all in the context of implementation of SMS. The authors of Synthesis 58 specifically asked respondents about some of the legal issues identified above. The results indicated that “only three [of 34] airports reported that they had received a FOIA or sunshine law request for safety data.”128 There was no indication access to records or portions thereof that . . . are specifi- cally exempted from disclosure by state or federal statute.”) 126 See 5 U.S.C. § 552(b) (2018). 127 See 49 C.F.R. § 1520.5 (2018). 128 lanDry & bannarD, supra note 42, at 38. aviation stakeholder may choose to collect only the bare minimum of safety-related data or may choose to limit the extent to which collected information is shared among aviation stakeholders.”122 The willing- ness of employees or other parties who are advised to report safety concerns will be directly affected by whether any commitments of confidentiality are credible and whether the reporter believes that their identity will be revealed in a manner that could result in retaliation. 2. Federal Law Considerations Because the proposed rule does not mandate sub- mission of hazard or incident reports to the FAA or any other federal entity, the federal FOIA implica- tions are relatively minimal. Only if an airport spon- sor were voluntarily to submit SMS data to FAA would a statutory exemption protect federal disclo- sure of such data.123 As an illustrative example, FAA has used this exemption to implement the Aviation Safety Action Program (ASAP), which allows air- lines to voluntarily submit safety data that is spe- cifically not subject to disclosure under the federal FOIA unless FAA redacts identifying information regarding the individual submitting the report.124 The voluntary submission of data to the FAA could, in some states, give airport sponsors an argument that would protect the submitted data from disclo- sure under the applicable state law as well because of an exemption that incorporates by reference any federal statutory exemptions from disclosure.125 This is an untested theory. 122 u.S. gov’t aCCountabIlIty offICe, GAO-12-898, avIa- tIon Safety: aDDItIonal faa effortS CoulD enhanCe Safety rISk ManageMent 32 (2012). 123 49 U.S.C. § 40123(a) (2018). This is also consistent with ICAO’s recommendations on the subject, which note that “States that have right-to-know laws shall, in the context of requests made for public disclosure, create exceptions from public disclosure to ensure the continued confidentiality of voluntarily supplied safety data and safety information.” Annex 19, supra note 7, at APP 3-3. 124 bannarD, supra note 80, at 30; FAA orDer 8000.82, DeSIgnatIon of avIatIon Safety aCtIon PrograM (aSaP) InforMatIon aS ProteCteD froM PublIC DISCloSure unDer 14 Cfr Part 193 (2003). However, there is no language that would prevent the discovery of such a report in litigation, and courts have been reluctant to apply any other privi- leges. See Michael S. Krzak, Discoverability of Airline Vol- untary Safety Programs in Civil Litigation, aMerICan bar aSSoCIatIon MaSS tortS lItIgatIon (Feb. 5, 2016), https:// www.americanbar.org/groups/litigation/committees/mass- torts/articles/2016/winter2016-0216-discoverability- airline-volunteer-safety-programs-civil-litigation.html. See also FAA orDer JO 7200.20A voluntary Safety rePortIng PrograMS (2017). 125 See, e.g., n.y. Pub. off. l. § 87(2)(a) (2018) (“Each agency shall . . . make available for public inspection and copying all records, except that such agency may deny

18 the agreements in order to facilitate implementa- tion. Whether airport sponsors can make such changes will depend in large part upon whether leases and other contracts have reopener clauses or subordination clauses that allow the sponsor to make changes unilaterally to comply with federal regulatory obligations. Even if such clauses exist, the nature and extent of any changes to lease or con- tract language are likely to be matters of negotia- tion (and potential controversy) because the precise scope of the sponsor’s obligations and the ability to delegate some or all SMS authority to the tenant are untested legal questions. The FAA has not indicated any particular concern about these contractual issues and so is unlikely to provide regulatory direc- tion with sufficient particularity to resolve any uncertainty about the scope of sponsor obligations to modify lease or contract terms. b. Employment and Labor Issues The new and increased training required by the proposed rule could change the airport sponsor’s legal relationship with its own employees as well as employees of federal agencies (e.g., TSA, FAA Air Traffic Organization, Customs and Border Protec- tion, Department of Agriculture, and others), ten- ants, licensees, and other third parties. As the requirement was refined in the SNPRM, sponsors would be required to provide training on all aspects of SMS for certain employees, and at least hazard awareness training to any individuals with access to the movement and non-movement areas. Sponsor training obligations may necessitate revisions to employee handbooks, employment contracts, and disciplinary procedures for the sponsor’s own employees. Another issue will arise in the training and hier- archy applicable to other airport workers, because many of the individuals that would be covered by such an SMS rule are not employees of the sponsor, but rather of third parties, and therefore do not have a direct employment or contractual relationship with the sponsor. From the sponsor’s perspective, the practical consequences of training these indi- viduals may be relatively minimal—FAA suggests that it could be incorporated into the airport’s badging scheme, which is likely an already estab- lished process131—but from a legal perspective, enforcement of these policies could present another challenge. An airport sponsor must be prepared to enforce safety procedures or hazard reporting poli- cies for non-sponsor employees, which may 131 Safety Management System for Certificated Air- ports, 81 Fed. Reg at 45,876. as to whether any of these requests ultimately resulted in litigation or how the requested data were used by the requesting party. D. Existing Contractual Relationships and Governing Documents Airport sponsors are parties to any number of contracts, many of which would need to be revised for implementation of SMS. These include lease agreements with tenants, contracts with service providers, employment and labor agreements, and insurance policies. In addition, airport sponsors’ internal governance documents could need revisions to address SMS implementation. 1. Contractual Relationships a. Use and Lease Agreements As discussed above, the proposed rule would charge the airport sponsor with implementing SMS within non-movement areas, which are commonly leased to third parties such as airlines or fixed-base operators. The requirement to implement SMS in the non-movement areas “may conflict with the terms of existing leases, as the landlord airport operator may have a limited ability to enter onto such property and an even more limited ability to mitigate, or cause the tenant to mitigate, unaccept- able risks that are identified through the SRM process.”129 While the proposed rule does not require airport sponsors to include any specific terms in leases with its tenants, FAA has stated that a spon- sor may choose to “establish local rules and regula- tions or negotiate lease agreement provisions to ensure its SMS program is effective and in compli- ance with the adopted regulation.”130 Because these leases may have extended terms that do not expire in the near future, sponsors implementing SMS may find it necessary to renegotiate some aspects of 129 bannarD, supra note 80, at 24. In addition to the conflicts with tenant leases, there may be conflicts with Part 121 carriers’ existing SMS responsibilities under 14 C.F.R. Part 5. Part 5 does not specifically mandate that carriers’ SMS responsibility extend to any specific area of real estate, but the regulations are drafted broadly to allow carriers flexibility in developing their own pro- grams. Thus, it is likely that an individual carrier’s SMS program, as implemented, covers some of the proposed non-movement area presently slated for sponsor SMS responsibility. 130 FAA Responses, supra note 47, at 30. Synthesis 58 reported that “[m]ore than half (60%) of the airports sur- veyed have established one or more legal mechanisms designed to require tenants and other third parties to report safety data, including one or more of the following: rules and regulations (46%), lease agreements (37%), con- tracts (23%), and municipal ordinances (7%).” lanDry & bannarD, supra note 42, at 38.

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TRB's Airport Cooperative Research Program (ACRP) Legal Research Digest 36: Legal Issues Related to Implementation and Operation of SMS for Airports provides a review of potential legal issues, an in-depth analysis of identified issues, and the benefits experienced by airports that develop and operate a Safety Management Systems (SMS).

Implementation of SMS in the airport and aviation sector has been an ongoing process since the early 2000s in the United States. As of 2018, few airports have implemented SMS and even fewer have reported legal problems with early adoption. This report relies upon data from airports that have voluntarily implemented an SMS program.

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