Canada Gazette

These proposed Regulations Amending the Canadian Aviation Regulations (Parts I, IV, V and VII) will introduce requirements for holders of certain certificates issued under the Canadian Aviation Regulations (CARs) to appoint accountable executives and to institute safety management systems (SMS) in their organizations. Changes to various regulations and standards necessary to implement these requirements are also part of this proposal.

These proposed amendments are the first steps in initiating a new regulatory approach for Transport Canada that will strengthen our partnerships with industry and assist us in meeting the safety challenges posed by new technology and increased global interconnectedness. The Department intends to introduce requirements for all holders of operational or similar types of certificates which are issued pursuant to the CARs to appoint accountable executives and to institute safety management systems. These current proposals will be followed by requirements for holders of other, similar certificates as the regulatory proposals specific to their individual operating environments mature.

The proposed additions to Part I General Provisions will introduce changes applicable to all Parts of the CARs. Two new subparts within Part I will be created. Proposed Subpart 106 Accountable Executive will specify the certificate holders who must appoint an accountable executive and the conditions applicable to all accountable executive appointees. Proposed Subpart 107 Safety Management System Requirements will specify the certificate holders who must institute a safety management system and the conditions applicable to all safety management systems required under this subpart.

The proposed amendments to Part IV Personnel Licensing and Training, Part V Airworthiness and Part VII Commercial Air Services will introduce changes, specific to organizations certified under these Parts, which are necessary for the appointment of an accountable executive or the implementation of a safety management system.

The two concepts, "accountable executive" and "safety management systems," are necessary components of the proactive regulatory approach being instituted by Transport Canada. This new approach anticipates the need for aviation organizations to adapt to new technology and increased global interconnectedness in the twenty-first century while maintaining the high level of safety of the civil aviation system. As aviation traffic increases both in Canada and globally, regulatory authorities face the challenge of improving already high levels of aviation safety by reducing the number of accidents which occur annually. Transport Canada has identified in Flight 2005: A Civil Aviation Safety Framework for Canada the principal adjustments that are needed in pursuit of this challenge. Cornerstones of implementing these adjustments are the concepts of accountable executive and safety management systems.

It is generally accepted by experts in the field of organizational safety that most accidents are the result of a sequence of decisions where a human is only the last link in a chain that led to the accident. The term "organizational accident" was coined to acknowledge that most of the links in the accident chain are under the control of an organization. Therefore, making a system safer requires action by the organization. Transport Canada has identified two components as necessary to initiate such action: firstly, a clearly identifiable individual must be designated as responsible for corporate decisions affecting aviation safety and compliance with the CARs, i.e. an accountable executive; secondly, a systems approach to safety management must be instituted.

An "accountable executive" will be a person with financial and executive control over an entity that is the holder of a certificate issued in accordance with the provisions of the Canadian Aviation Regulations. The appointment of an accountable executive is intended to ensure the organization is represented by a person who has sufficient authority to ensure compliance with the CARs and who recognizes his or her responsibility for the organization's compliance.

A safety management system is a "systematic, explicit and comprehensive process for managing safety risks" (see footnote 1) which is woven into the fabric of an organization and becomes part of the way people do their jobs. Within the organization it will still be individuals making choices, but the purpose of SMS is to set up a process to lead these individuals to recognize the potential impact of their choices upon the safety of operations even when the choice appears to be removed from operational outcomes or to have little or no impact upon them. The proposed SMS will make everyone accountable for safety in the areas for which they have responsibility. This accountability will be integrated with their accountability for their own technical or operational responsibilities. The aim is to break down communication barriers between different areas of an organization and to establish links between such areas of responsibility as marketing, maintenance, and operations to facilitate the recognition that a decision in any part has an impact on all other parts and may create an unintended safety hazard.

Safety management systems are based on the fact that there will always be hazards and risks; therefore, proactive management is needed to identify and control these threats to safety before they lead to mishaps. The expected result of this initiative is the fostering of stronger safety cultures within the civil aviation industry and, as a consequence, the improvement of safety practices.

Part I of the CARs contains definitions affecting more than one part of the CARs and administrative provisions applicable to all parts of the CARs.

The provisions for accountable executives and safety management systems proposed for Part I represent elements of these concepts which will be common to all operational activities governed by the CARs. Each activity may also be subject to specific requirements which take into account the individual circumstances of the environment within which that activity takes place. These specific requirements will be presented in the part of the CARs where the relevant requirements for the individual activity may be found.

The proposed amendments to Part I will introduce two new subparts, Subpart 106 Accountable Executive and Subpart 107 Safety Management System Requirements, as well as an amendment to the definition of "principal" in section 103.12 Definition of "Principal."

Subpart 106 Accountable Executive will apply to an applicant for or a holder of one of the following:

(a) a flight training unit operator certificate issued under section 406.11 Issuance or Amendment of a Flight Training Unit Operator Certificate;

(b) an approved manufacturer certificate issued under section 561.03 Manufacturer Certificate — Application, Issuance and Amendment;

(c) an approved maintenance organization (AMO) certificate issued under section 573.02 Entitlement to and Scope of Certificate; and

(d) an air operator certificate issued under section 702.07 of Subpart 702 Aerial Work, section 703.07 of Subpart 703 Air Taxi Operations, section 704.07 of Subpart 704 Commuter Operations or section 705.07 of Subpart 705 Airline Operations.

Proposed Subpart 106 will require the holder of a certificate as referred to in section 106.01 to appoint a person as accountable executive to be responsible for operations or activities authorized under the certificate and accountable on his or her behalf for meeting the requirements of these Regulations. The certificate holder will be required to notify the Minister of the name of the person who has been appointed as the accountable executive. An accountable executive must have control of the financial and human resources that are necessary for the activities and operations authorized to be conducted under the certificate. Within 30 days after the day of the appointment of an accountable executive, an applicant for a certificate or a certificate holder must ensure that the accountable executive submits to the Minister a signed statement accepting the responsibilities of their position. The accountable executive's responsibility and accountability will not be affected by the appointment of a person responsible for maintenance as required in Subpart 573, a person responsible for the maintenance control system as required in Subpart 406 or Subpart 706, or a maintenance manager or an operations manager as required under Subpart 702, Subpart 703, Subpart 704 or Subpart 705.

Subpart 107 Safety Management System Requirements will apply to an applicant for or a holder of one of the following:

(a) an approved maintenance organization certificate issued under section 573.02 authorizing the holder to carry out maintenance on an aircraft operated under Subpart 705 Airline Operations; or

A safety management system established under proposed Subpart 107 must correspond to the size, nature and complexity of the operations, activities, hazards and risks associated with the operations of the holder of a certificate. It will be defined in section 101.01 of the CARs as "a documented process for managing risks that integrates operations and technical systems with the management of financial and human resources to ensure aviation safety or the safety of the public." Section 107.03 Safety Management System will provide that an SMS must include

Proposed section 107.02 Establishing a Safety Management System will require the applicant for or holder of a certificate referred to in section 107.01 to establish, maintain and adhere to a safety management system.

As well, a proposed amendment to existing section 103.12 Definition of "Principal" will add references to "accountable executive" to this definition. Section 103.12 of the CARs defines the term "principal" for the purposes of subsection 6.71(1) and paragraph 7.1(1)(c) of the Aeronautics Act. "Principals" are persons who occupy vital positions and are responsible for key elements within their respective aviation organizations. The Minister is given broad discretion in exercising his authority regarding decisions involving the performance of individuals defined as "principals." The Minister has the authority to refuse to issue or to amend a Canadian aviation document if, in his opinion, the aviation record of any principal of the applicant warrants such a refusal. He or she also has the authority to decide to suspend, cancel or refuse to renew a Canadian aviation document on the same grounds. The "accountable executive" will occupy a vital position and be responsible for key elements within the organization and, therefore, should be included with other principals with respect to Ministerial discretion.

Proposed changes to the Schedule Designated Provisions, which is attached to Subpart 103 Administration and Compliance, will make corrections to allow for the renumbering of existing provisions and will introduce maximum penalties which may be assessed for non-compliance with new sections proposed in this amendment to the CARs.

Part IV of the CARs deals with the personnel licensing and training rules which apply to all aircraft operations, both commercial and private. Subpart 406 Flight Training Units contains the requirements which must be met by any organization providing a flight training service and using any of an aeroplane, a helicopter, a glider, a balloon, a gyroplane or an ultra-light aeroplane.

The proposed amendments to Part IV Subpart 406 Flight Training Units will include a new section 406.19 Duties of Certificate Holder and Accountable Executive which makes the holder of an operator certificate at a flight training unit that operates an aeroplane or a helicopter responsible for appointing a person responsible for the maintenance control system. This section establishes that the certificate holder must ensure that the person responsible for the maintenance control system

The certificate holder must authorize the person responsible for the maintenance control system to remove aircraft from operation because of non-compliance with the CARs or because of a risk to aviation safety or to the safety of the public.

The certificate holder at the flight training unit must ensure that corrective actions are taken in respect of any findings resulting from a quality assurance program established under proposed new section 406.47 Quality Assurance Program.

Proposed section 406.19 Duties of Certificate Holder and Accountable Executive provides that the Minister shall conduct an interview of the person appointed to be responsible for the maintenance control system to assess his or her knowledge of the required topics set out in subsection 426.36(4) of the standards. The person appointed to be responsible for the maintenance control system must be notified of the results of the interview with the Minister and, if applicable, be informed of any deficiencies in the knowledge of the required topics within 10 days after the interview. The knowledge requirements found in subsection 426.36(4) of the standards do not apply for a person responsible for the maintenance control system who held that position on January 1, 1997, or for the holder of an aircraft maintenance engineer (AME) licence.

The certificate holder must ensure that no person is appointed to be responsible for the maintenance control system or remains responsible for the maintenance control system if that person has a record of conviction for an offence under section 7.3 of the Act or for two or more offences under any of sections 605.84 to 605.86 of the CARs not arising from a single occurrence.

The duties above which are assigned to the certificate holder must be carried out by the accountable executive who has been appointed under section 106.02.

Section 406.36 Person Responsible for Maintenance Control System is to be modified to set forth the duties and responsibilities of the person responsible for the maintenance control system. If the flight training unit certificate holder also holds an approved maintenance organization (AMO) certificate issued under section 573.02, the person appointed as person responsible for the maintenance control system for the flight training unit must also be appointed as the person responsible for maintenance for the approved maintenance organization. Proposals for section 406.36 will also include requirements that, when a finding resulting from a quality assurance program is reported, the person responsible for the maintenance control system must determine if any corrective action is required and, if so, what that action should be and carry it out; keep a record of the determination and the reason for it; and, if the management functions for the quality assurance program have been assigned to another person, communicate each determination regarding a corrective action to that person. The person responsible for the maintenance control system must also notify the accountable executive of any systemic deficiency and of the corrective action taken. Section 406.36 will contain authority for the person responsible for the maintenance control system to assign the management functions for the entire quality assurance program or for specific maintenance control activities to another person and the criteria which must be met by the assigned person. As well, the assignment and the scope of the assigned functions must be described in the maintenance control manual (MCM) of the flight training unit. The responsibility of the person responsible for the maintenance control system is not affected by the assignment of management functions to another person.

Existing section 406.47 Evaluation Program will be replaced by a new section 406.47 Quality Assurance Program. The proposed new section and its accompanying standard will differ in detail rather than in substance from their existing counterparts. The new section will require that the holder of an operator certificate in respect of a flight training unit that operates an aeroplane or a helicopter must establish and maintain a quality assurance program that is under the sole control of the person appointed to be responsible for the maintenance control system or of the person to whom the management functions for the program have been assigned. This quality assurance program must meet the requirements of the standards. The details of frequency, reporting relationships and treatment of findings for the internal audits may be found in the proposed new section.

Part V of the CARs deals with the regulations applicable to manufacturing and maintenance of aeronautical products, whether used in commercial or private operations. The proposed changes introducing the accountable executive and safety management system concepts to Part V will be applicable to approved maintenance organizations (AMOs).

Proposed changes to Part V Airworthiness will introduce into Subpart 73 Approved Maintenance Organizations the necessary changes to specify duties of a certificate holder, including the responsibility of that individual to appoint a person responsible for maintenance and the duties of that appointee. Proposed amendments to section 573.09 Quality Assurance Program and its associated standard will consolidate and clarify provisions which currently exist primarily in the standard. A proposed new division, Safety Management System, will contain the criteria which the safety management system (SMS) and the person managing it must satisfy.

Current section 573.03 Person Responsible for Maintenance is to be replaced by new section 573.03 Duties of Certificate Holder and Accountable Executive and current section 573.04 Assignment of Management Functions, by new section 573.04 Person Responsible for Maintenance. The certificate holder will be required to appoint a person responsible for maintenance. The person responsible for maintenance at the AMO will be required to have qualifications with respect to his or her knowledge, competence and experience as set out in Standard 573 — Approved Maintenance Organizations. The experience requirements do not apply in the case of an AMO certificate in respect of which a rating in the aircraft, avionics, instrument, engine or propeller category has not been issued if the accountable executive can demonstrate to the Minister by means of a risk assessment that lesser experience is appropriate to the scope of work performed by the AMO and will not affect aviation safety or the safety of the public. The requirements for an interview with the Minister, the provisions with respect to the results of that interview, and the waivers of knowledge requirements for individuals who were responsible for maintenance on January 1, 1997, or who hold an aircraft maintenance engineer (AME) licence are the same as those which apply to persons responsible for the maintenance control system at flight training units (see above).

The certificate holder must ensure that no person is appointed to be responsible for maintenance or remains responsible for maintenance if that person has been convicted of an offence under section 7.3 of the Act or of two or more offences under any of sections 571.10 and 571.11 not arising from a single occurrence.

The person responsible for maintenance must have the financial and human resources necessary to ensure that the holder of the AMO certificate meets the requirements of these Regulations. He or she must determine what, if any, corrective actions are to be taken in respect of any findings resulting from the quality assurance program or the safety management system. The responsibility of the person responsible for maintenance is not affected by the assignment of management functions to another person.

The certificate holder must ensure that the person managing the safety management system performs the duties set out in section 573.32.

The duties above which are assigned to the certificate holder must be carried out by the accountable executive who has been appointed under section 106.02.

Proposed amendments to section 573.09 Quality Assurance Program and associated standard 573.09 will require the establishment and maintenance of a quality assurance program consisting of provisions for sampling maintenance processes to evaluate the AMO's ability to perform its maintenance in a safe manner. An independent audit will be required within 12 months after the day on which the AMO certificate is issued. Subsequent audits must be conducted at intervals set out in the maintenance policy manual (MPM) for the AMO. A system must be established to record audit findings, corrective actions and follow-up actions. These records must be retained for the greater of two audit cycles or two years. Other proposed amendments relate to the need for communication of the audit findings to the person responsible for maintenance or to an appointed delegate. As well, the person responsible for maintenance must ensure that records relating to findings from the quality assurance program are distributed to the appropriate manager for corrective action and follow-up in accordance with the policies and procedures specified in the MPM.

A new Division II Safety Management System will specify that a safety management system required in respect of an applicant for, or a holder of, an AMO certificate authorizing the holder to perform maintenance on an aircraft operated under Subpart 705 Airline Operations must meet the requirements of Subpart 107 and section 573.31 and must be under the management of the person responsible for maintenance.

Proposed new section 573.31 Components of the Safety Management System will provide that the SMS must include a safety management plan that includes

(a) a safety policy that the accountable executive has approved and communicated to all employees;

(b) the roles and responsibilities of personnel assigned duties under the safety management system or the quality assurance program;

(c) a policy for internal reporting of a hazard, an incident or an accident, including the conditions under which immunity from disciplinary action will be granted;

(a) training requirements for the person responsible for maintenance and for personnel assigned duties under the safety management system;

(b) procedures for reporting a hazard, an incident or an accident to the appropriate manager;

(d) procedures for analyzing data obtained under the above item and during the required audits and for taking corrective actions;

(e) procedures for making progress reports to the accountable executive at intervals determined by the accountable executive and other reports as needed in urgent cases; and

The components of the safety management system must be set out in the approved maintenance organization certificate holder's maintenance policy manual (MPM).

The responsibilities of the person managing the SMS are set out in proposed section 573.32 Person Managing the Safety Management System. These responsibilities are to

(a) establish and maintain a reporting system to ensure the timely collection of information related to hazards, incidents and accidents that may adversely affect safety;

(c) investigate, analyze and identify the cause or probable cause of all hazards, incidents and accidents identified under the SMS;

(d) establish and maintain a safety data system to monitor and analyze trends in hazards, incidents and accidents;

(e) monitor and evaluate the results of corrective actions with respect to hazards, incidents and accidents;

(f) monitor the concerns of the civil aviation industry in respect of safety and their perceived effect on the AMO;

(g) determine the adequacy of the training required for the person responsible for maintenance and for personnel assigned duties under the safety management system; and

(h) report to the person responsible for maintenance, or their delegate, the hazards, incidents and accidents identified under the SMS or as a result of an audit of the quality assurance program.

Part VII Commercial Air Services of the Canadian Aviation Regulations encompasses the operating and flight rules which apply specifically to aircraft operated commercially in aerial work or air transport operations. Subpart 700 General contains regulations applied to commercial aircraft operations in general, while Subparts 701 Foreign Air Operations, 702 Aerial Work, 703 Air Taxi Operations, 704 Commuter Operations and 705 Airline Operations apply individually to specific types of commercial operations or to aircraft differentiated by weight category, number of engines, passenger seating configuration, and engine power type. Subpart 706 Aircraft Maintenance Requirements for Air Operators contains provisions which establish aircraft maintenance practices and procedures to be followed by all commercial air operators holding an air operator certificate under Part VII. These provisions apply in addition to those which are established under Part V Airworthiness and are applicable to all Canadian aircraft.

Proposed changes throughout Part VII will introduce the concepts of the accountable executive and safety management systems to air operators.

Proposed new section 700.09 Duties of Certificate Holder and Accountable Executive will require the holder of an air operator certificate under Subpart 702, Subpart 703, Subpart 704 or Subpart 705 to appoint an operations manager and, where the holder of the air operator certificate does not also hold an AMO certificate, a maintenance manager. The operations manager and the maintenance manager must meet the requirements of the relevant sections of the Commercial Air Services Standards. Both the operations manager and the maintenance manager must be provided with the financial and human resources necessary to ensure that the holder of the air operator certificate meets the requirements of these Regulations. The maintenance manager must be the person responsible for the maintenance control system whom the air operator is required to appoint in accordance with Subpart 706. Also, the certificate holder must authorize the maintenance manager to remove aircraft from operation where the removal is justified because of non-compliance with the Regulations or because of a risk to aviation safety or the safety of the public. The holder of an air operator certificate issued under section 705.07 must ensure that the operations manager performs the duties referred to in subsections 705.03(1) and (2). If the air operator holds both an air operator certificate under section 705.07 and an AMO certificate under section 573.02, he or she must ensure that the person responsible for maintenance performs the duties related to findings resulting from a quality assurance program as outlined in proposed new section 705.04 Holder of More Than One Certificate.

A certificate holder in the case of the above four subparts must ensure that corrective actions are taken in respect of any findings from a quality assurance program established in accordance with Subpart 706. In addition, a certificate holder under Subpart 705 must ensure that corrective actions are taken in respect of any findings from a safety management system. The certificate holder will be required to conduct reviews of the SMS to determine its effectiveness.

The above duties which are assigned to the certificate holder must be carried out by the accountable executive who has been appointed under section 106.02.

Further provisions for the operations manager are contained in Subpart 705. Also, a proposed new Division X – Safety Management System in Subpart 705 will set forth the requirement to establish, maintain and adhere to a safety management system and the criteria which that SMS and the person managing it must satisfy.

Under section 705.03 Operations Manager, the operations manager will be required to manage the activities of the air operator in accordance with the company operations manual established under section 705.134 Requirements Relating to Company Operations Manual. Subject to the provisions of proposed new section 705.04 Holder of More Than One Certificate (see below), where a finding from a safety management system or from a quality assurance program is reported, the operations manager must determine what, if any, corrective actions are required; direct the carrying out of the actions; and keep a record of any determination and the reason for it. The operations manager may assign the management functions for the safety management system or for specific duties to another person if the assignment and the scope of the assigned functions are described in the air operator's company operations manual. The operations manager must communicate each decision regarding a corrective action to any person assigned management functions for the safety management system or for specific duties. The responsibility of the operations manager is not affected by the assignment to another person of management functions. Finally, the operations manager must notify the accountable executive of any systemic deficiency and of the corrective action taken.

Proposed new section 705.04 Holder of More Than One Certificate will provide that if the holder of an air operator certificate issued under section 705.07 also holds an AMO certificate issued under section 573.02, the person responsible for maintenance shall, where a finding resulting from a quality assurance program is reported to them,

(a) determine what, if any, corrective actions are required and carry out those actions;

(c) communicate any determination regarding a corrective action to any person to whom management functions have been assigned under section 573.04; and

(d) notify the accountable executive of any systemic deficiency and of the corrective action taken.

In existing section 705.07 Issuance or Amendment of Air Operator Certificate, a requirement for a safety management system will replace the existing requirement for a flight safety program to be in place for an applicant for an air operator certificate to demonstrate to the Minister that he or she meets the requirements for the certificate to be issued or amended. In the same section, a requirement will be added that the applicant must also demonstrate to the Minister that there is an air operator emergency response plan that has the components set out in the Commercial Air Service Standards in place for the applicant to satisfy the requirements for the certificate to be issued or amended.

A proposed new Division X – Safety Management System in Subpart 705 will introduce the requirement for an applicant for or holder of an air operator certificate to establish, maintain and adhere to a safety management system that meets the requirements of Subpart 107 and new section 705.152 Components of the Safety Management System. This safety management system must be under the management of the operations manager. It must cover the maintenance control activities performed under Subpart 706. The new division will include sections related to the components of the safety management system, the responsibilities of the person managing the safety management system and provisions for a holder of more than one certificate.

The components of the safety management system as proposed in new section 705.152 will be the same as those contained in proposed section 573.31 Components of the Safety Management System as detailed earlier in this Regulatory Impact Analysis Statement (RIAS) in the discussion of the provisions for Part V. Similarly, the responsibilities of the person appointed to manage the safety management system in an operation under Subpart 705 as set forth in proposed section 705.153 Person Managing the Safety Management System will be the same as those proposed for the person appointed to manage the SMS under proposed section 573.32 as discussed earlier.

Another new section, 705.154 Holder of More Than One Certificate, to be included in Subpart 705 will provide that, where the certificate holder has both an air operator certificate issued under section 705.07 and an AMO certificate issued under section 573.02, the air operator shall adhere to the requirements of the safety management system referred to in section 573.30 when performing maintenance control activities under Subpart 706.

In Subpart 706, section 706.03 Person Responsible for Maintenance Control System will be amended to include a requirement for the air operator to ensure the person responsible for the maintenance control system performs the auditing duties in respect of the quality assurance program as given in section 706.07 Quality Assurance Program.

Existing section 706.07 Evaluation Program will be replaced by proposed section 706.07 Quality Assurance Program. The provisions of the existing section with its accompanying standard will be replaced by provisions consistent with those which address requirements for quality assurance programs in Part V. In general, the provisions in the replacement sections differ in detail rather than in substance from those in the existing section and its accompanying standard. A proposed new section 706.15 Safety Management System will contain provisions specific to the SMS required of air operators under Subpart 705.

The proposed amendments to section 706.07 will provide that the air operator must establish and maintain a quality assurance program that is under the sole control of the person responsible for the maintenance control system who has been appointed by the certificate holder and that meets the requirements of the Commercial Air Services Standards. The person responsible for the maintenance control system must distribute the records relating to the findings resulting from the quality assurance program to the appropriate manager for corrective action and follow-up in accordance with the policies and procedures specified in the MCM. He or she must establish an audit system in respect of the quality assurance program that includes the following:

(a) an initial audit within 12 months after the day on which the air operator certificate is issued;

(d) checklists of all activities controlled by the MCM and the maintenance schedules;

(e) procedures for ensuring that each finding from an audit is communicated to him or her and to any additional person to whom management functions have been assigned;

(f) follow-up procedures for ensuring that corrective actions are effective; and

(g) a system for recording findings from audits, corrective actions and follow-ups.

The records of findings, corrective actions and follow-ups must be kept for the greater of two audit cycles or two years.

As in new section 573.09 Quality Assurance Program in Part V, section 706.07 will provide that duties related to the quality assurance program that involve specific tasks or activities within the certificate holder's activities must be fulfilled by persons who are not responsible for carrying out those tasks or functions. As noted above, the proposed changes to 706.07 do not represent changes in substance from existing section 706.07 and its accompanying standard.

Proposed new section 706.15 Safety Management System will specify that the holder of an air operator certificate issued under 705.07 shall adhere to the SMS referred to in Subpart 705 with respect to all maintenance control activities carried out under this subpart.

Additional details of the new provisions are set forth in the proposed Regulations accompanying this Regulatory Impact Analysis Statement.

These proposed Regulations Amending the Canadian Aviation Regulations represent a significant change in regulatory approach for Transport Canada's Civil Aviation Program. They build upon the work of leading safety experts and international bodies, such as the International Civil Aviation Organization (ICAO), which have been advocating that greater attention be paid to managing safety at the organizational level. Also, they acknowledge that achieving the Department's mission of developing and administering policies, regulations and programs for a safe, efficient and environmentally responsible transportation system is a shared responsibility between the regulator and the regulatees. These changing roles and consequential shifting responsibilities have necessitated an overhaul and modernizing of the legislative and regulatory framework. The consequences of not acknowledging the need for addressing these changing roles and responsibilities would leave Canadian civil aviation facing an increased risk of incidents and accidents intrinsic in today's environment of rapid technological changes and increased globalization without appropriate regulatory support to alleviate the risk. There is no alternative to regulatory action which will accomplish the necessary changes.

A preliminary scan of this initiative has been done in accordance with the criteria of Transport Canada's Strategic Environmental Assessment Policy Statement – March 2001. It is concluded from the preliminary scan that a detailed analysis is not necessary. Further assessments or studies regarding environmental effects of this initiative are not likely to yield a different determination.

Throughout the development of the aviation regulations and standards the Department of Transport applies risk management concepts. Where there are risk implications the analysis of these proposed amendments has led to the conclusion that the imputed risk is acceptable in light of the expected benefits.

The proposed new requirement for an accountable executive to be designated and to acknowledge, in writing, his or her acceptance of the responsibilities of this position is unlikely to impose any immediate costs upon the aviation industry.

The concept of the accountable executive is intended to support the creation and nurturing of a safety culture within an organization by emphasizing the responsibility of a senior manager for such a culture and its results. The dissemination of the concept throughout civil aviation is one of the foundations of the implementation of safety management systems in aviation industry organizations and, thereby, will be a major contributor to the maintenance and enhancement of civil aviation safety.

Since there will need to be no establishment of any new position for the accountable executive but rather the acknowledgement in writing of responsibilities congruent with existing senior positions, there will be no additional cost to the industry or to the Canadian economy from the proposed introduction of the accountable executive concept. The benefits in terms of supported and increased aviation safety are unquantifiable but are expected to be positive.

The proposed addition of "accountable executive" to the definition of "principal" in section 103.12 Definition of "Principal" is expected to have a neutral benefit-cost impact. The discretion which the Minister has with respect to principals is rarely exercised and is exercised only under conditions where there are clear implications for aviation safety.

Because of the range in size and complexity of the organizations to which the proposed introduction of safety management systems will apply, an average or mid-point cost estimate is unlikely to represent any existing organization's costs. Also, many of these organizations have already instituted some or all components which are closely similar to those which will be required under these proposals. Therefore, cost estimates have not been attempted for the implementation of safety management systems. However, the experience of Air Transat, as presented at the 2004 Canadian Aviation Safety Seminar by Captain Michael R. Dilollo, Director of Flight Safety at Air Transat, where a safety management system was voluntarily initiated in 2002, demonstrates that the benefits from such a system are likely to outweigh the costs for the organization over time.

The proposed amendments to Part V and Part VII deal with specific provisions which differ in detail rather than in essentials from many procedures already in place in well-managed organizations. Some costs are likely to be incurred in individual organizations by setting up new systems. However, individual organizations can expect to benefit from the reduced occurrence of incidents and accidents along with the costs which such events generate.

The overall improvement of aviation safety resulting from the interaction of many organizations where there is an SMS will generate benefits for aviation safety and the safety of the public as a whole. The prevention of one accident such as that involving Air Canada's CL-600 (Regional Jet) at Fredericton, New Brunswick, in 1997, can preserve an aircraft valued at over $29 million in 1998 Canadian dollars as well as protect passengers and crew from injury. The magnitude of possible benefits associated with prevention or reduction in the likelihood of less catastrophic events can be evaluated using the cost of incidents such as an in-flight shutdown of an engine which has been estimated to cost over $700,000 Canadian. (see footnote 2) There were 104 incidents of engine failure or shut down as a precautionary measure involving Canadian-registered aircraft reported to the Transportation Safety Board of Canada in 2003. Other potentially costly incidents include flight cancellations (over $70,000 Canadian per event) or one-hour flight delays (over $14,000 Canadian per event). Prevention of such events or reduction in the likelihood of their occurrence would benefit the organizations concerned and the industry as a whole by generating substantial savings. The introduction of an SMS requirement into the aviation environment is expected to have a positive net benefit-cost impact.

The cumulative impact of the proposed introduction of the concepts of accountable executive and safety management systems into the CARs and, thus, into the operating environment of Canadian civil aviation is expected to produce a beneficial consequence for aviation safety and the safety of the public as a whole. This positive result is anticipated to outweigh any costs associated with their introduction. Therefore, the net benefit-cost impact will be positive and will justify these proposed amendments.

These proposed amendments to the CARs have been extensively consulted and discussed through the Canadian Aviation Regulation Advisory Council. Starting with the meeting of the Maintenance and Manufacturing Technical Committee (Part V) in February 2000 at which the concept of "accountable executive" was introduced to the committee members, meetings of the Personnel Licensing and Training Technical Committee (Part IV), the Maintenance and Manufacturing Technical Committee and the Commercial Air Service Operations (CASO) Technical Committee (Part VII) were held over the period from 2000 to 2003. In addition, members of the General Technical Committee (Part I) were briefed on the status of the safety management system proposals at their meeting of October 22, 2002, and discussed the proposals for the introduction of requirements for accountable executives and for safety management systems at their meeting of April 3, 2003. Because of the extensive consultation, for ease of reference, lists of active members of the above Technical Committees have been attached as appendices to this Regulatory Impact Analysis Statement rather than being incorporated within the text. At various stages concern was expressed by stakeholders that there appeared to be inconsistencies among the proposals for different Parts of the CARs. These concerns were addressed by the insertion of generic proposals in Part I, although recognition that a safety management system must be commensurate with the size, nature and complexity of the operations, activities, hazards and risks of the operation is also included in the proposal.

The proposed amendments were presented at the Civil Aviation Regulatory Committee (CARC), composed of senior managers within the Civil Aviation Directorate of Transport Canada, at meetings in 2000, 2001, 2002 and 2003. The members of CARC approved the proposals, after consideration of dissents.

The Air Canada Pilots Association (ACPA) dissented to the introduction of the safety management system requirements on the grounds that the proposal did not include a non-punitive reporting system to encourage employees to readily report hazards and deficiencies they encounter on the job. As well, they were concerned that there was no provision to ensure that a company will involve its employees in the development and implementation of SMS. The use of the term "proactive" throughout the proposal presented at CARC was cited as addressing ACPA's concern by promoting a co-operative reporting safety culture where both employer and employee can participate equally in the development of a successful SMS. In addition, the proposed amendments have been revised to include a requirement for the safety management system internal reporting policy to specify conditions under which immunity from disciplinary action will be granted.

The Air Transport Association of Canada (ATAC) objected to the requirement for flight training units to identify an accountable executive. The principle of accountable executive had already been accepted within the SMS framework by members of various Technical Committees. The objection to this specific introduction of the principle was rejected.

As well as the customary CARAC consultation process, safety management systems were the focus of the 2004 Canadian Aviation Safety Seminar which was attended by nearly 400 delegates from industry and government. Workshops on the implementation of SMS were well attended. A featured speaker at a plenary meeting of all the delegates held on Wednesday, April 21, 2004, was Captain Michael R. Dilollo, Director of Flight Safety at Air Transat, who discussed Air Transat's experience with developing and implementing SMS. Captain Dilollo emphasized the benefits in terms of cost savings which Air Transat was experiencing from SMS.

Transport Canada has developed a proactive, flexible enforcement policy to approach the evolving safety framework introduced with the proposed safety management system. Transport Canada will not compromise safety, nor ignore any contraventions of the Regulations, but will encourage the development of a safety culture as an essential element of the SMS framework. When a certificate holder governed by an SMS allegedly commits a contravention that is not deliberate, a delay in the completion of Transport Canada's investigation process will allow the operator enough time to develop proposed corrective measures and an action plan that will adequately address the deficiencies that led to the contravention. In cases where either the corrective measures or the systems in place to address the event are not considered appropriate by Transport Canada, officials will continue to interact with the certificate holder to find a satisfactory resolution that will prevent further enforcement action.

Transport Canada will retain the authority to enforce the proposed amendments to the Canadian Aviation Regulations through the assessment of monetary penalties imposed under sections 7.6 to 8.2 of the Aeronautics Act, through the suspension or cancellation of a Canadian aviation document or through judicial action introduced by way of summary conviction as per section 7.3 of the Aeronautics Act in extreme cases where a satisfactory resolution cannot be arrived at.

Chief, Regulatory Affairs, AARBH, Safety and Security, Transport Canada, Place de Ville, Tower C, Ottawa, Ontario K1A 0N8, (613) 993-7284 or 1-800-305-2059 (general inquiries), (613) 990-1198 (facsimile), www.tc.gc.ca (Internet address).

Active Members of Canadian Aviation Regulation
Advisory Council (CARAC) General Technical
Committee (Part I)

Active Members of Canadian Aviation Regulation
Advisory Council (CARAC) Personnel Licensing and Training
Technical Committee (Part IV)

Active Members of Canadian Aviation Regulation
Advisory Council (CARAC) Maintenance and Manufacturing
Technical Committee (Part V)

Active Members of Canadian Aviation Regulation
Advisory Council (CARAC) Commercial Air Service Operations Technical Committee (Part VII)

Notice is hereby given that the Governor in Council proposes, pursuant to section 4.9 (see footnote a) and subsections 6.71(1)(see footnote b) and 7.6(1)(see footnote c) of the Aeronautics Act, to make the annexed Regulations Amending the Canadian Aviation Regulations (Parts I, IV, V and VII).

Interested persons may make representations concerning the proposed Regulations to the Minister of Transport within 30 days after the date of publication of this notice. All such representations must be in writing and cite the Canada Gazette, Part I, and the date of publication of this notice, and be sent to the Chief, Regulatory Affairs (AARBH), Civil Aviation, Safety and Security Group, Department of Transport, Place de Ville, Tower C, 330 Sparks Street, Ottawa, Ontario K1A 0N8 (general inquiries - tel.: (613) 993-7284 or 1-800-305-2059; fax: (613) 990-1198; Internet address: http://www.tc.gc.ca).

Persons making representations should identify any of those representations the disclosure of which should be refused under the Access to Information Act, in particular under sections 19 and 20 of that Act, and should indicate the reasons why and the period during which the representations should not be disclosed. They should also identify any representations for which there is consent to disclosure for the purposes of that Act.

REGULATIONS AMENDING THE CANADIAN AVIATION REGULATIONS (PARTS I, IV, V AND VII)

1. Subsection 101.01(1) of the Canadian Aviation Regulations(see footnote 4) is amended by adding the following in alphabetical order:

"safety management system" means a documented process for managing risks that integrates operations and technical systems with the management of financial and human resources to ensure aviation safety or the safety of the public; (système de gestion de la sécurité)

2. Part I of Schedule II to Subpart 3 of Part I of the Regulations is amended by adding the following after the reference "Section 103.03":

3. (1) Subpart 6 of Part IV of Schedule II to Subpart 3 of Part I of the Regulations is amended by adding the following after the reference "Subsection 406.05(2)":

(2) The reference "Subsection 406.36(1)" in column I of Subpart 6 of Part IV of Schedule II to Subpart 3 of Part I of the Regulations and the corresponding amounts in column II are repealed.

(3) The references "Subsection 406.47(1)" and "Subsection 406.47(2)" in column I of Subpart 6 of Part IV of Schedule II to Subpart 3 of Part I of the Regulations and the corresponding amounts in column II are replaced by the following:

4. (1) The references "Subsection 573.03(1)" and "Subsection 573.03(2)" in column I of Subpart 73 of Part V of Schedule II to Subpart 3 of Part I of the Regulations and the corresponding amounts in column II are replaced by the following:

(2) Subpart 73 of Part V of Schedule II to Subpart 3 of Part I of the Regulations is amended by adding the following after the reference "Subsection 573.03(3)":

(3) The reference "Section 573.09" in column I of Subpart 73 of Part V of Schedule II to Subpart 3 of Part I of the Regulations and the corresponding amounts in column II are replaced by the following:

5. Part VII of Schedule II to Subpart 3 of Part I of the Regulations is amended by adding the following after the reference "Section 700.08":

6. (1) The references "Subsection 706.07(1)" and "Subsection 706.07(2)" in column I of Subpart 6 of Part VII of Schedule II to Subpart 3 of Part I of the Regulations and the corresponding amounts in column II are replaced by the following:

(2) Subpart 6 of Part VII of Schedule II to Subpart 3 of Part I of the Regulations is amended by adding the following after the reference "Section 706.14":

7. (1) Paragraph 103.12(a) of the Regulations is amended by striking out the word "and" at the end of subparagraph (i), by adding the word "and" at the end of subparagraph (ii) and by adding the following after subparagraph (ii):

(2) Paragraph 103.12(c) of the Regulations is amended by striking out the word "and" at the end of subparagraph (i), by adding the word "and" at the end of subparagraph (ii) and by adding the following after subparagraph (ii):

(3) Paragraph 103.12(e) of the Regulations is amended by striking out the word "and" at the end of subparagraph (ii), by adding the word "and" at the end of subparagraph (iii) and by adding the following after subparagraph (iii):

(4) Paragraph 103.12(f) of the Regulations is amended by striking out the word "and" at the end of subparagraph (i), by adding the word "and" at the end of subparagraph (ii) and by adding the following after subparagraph (ii):

8. The Regulations are amended by adding the following after section 105.01:

(d) an air operator certificate issued under section 702.07, 703.07, 704.07 or 705.07.

106.02 (1) The applicant for, or the holder of, a certificate referred to in section 106.01 shall

(a) appoint an individual as accountable executive to be responsible for operations or activities authorized under the certificate and accountable on their behalf for meeting the requirements of these Regulations;

(c) ensure that the accountable executive submits to the Minister a signed statement that they accept the responsibilities of their position within 30 days after their appointment.

(2) No person shall be appointed under subsection (1) unless they have control of the financial and human resources that are necessary for the activities and operations authorized under the certificate.

106.03 The responsibility and accountability of the accountable executive appointed under subsection 106.02(1) are not affected by the existence of

(a) a person responsible for the maintenance control system appointed under paragraph 406.19(1)(a) or 706.03(1)(a);

(b) a person responsible for maintenance appointed under paragraph 573.03(1)(a);

(d) a maintenance manager referred to in section 702.07, 703.07, 704.07 or 705.07.

107.01 This Subpart applies to an applicant for, or a holder of, one of the following certificates:

(a) an approved maintenance organization (AMO) certificate issued under section 573.02 authorizing the holder to perform maintenance on an aircraft operated under Subpart 5 of Part VII; or

107.02 The applicant for, or the holder of, a certificate referred to in section 107.01 shall establish, maintain and adhere to a safety management system.

(b) a process for setting goals for the improvement of aviation safety and for measuring the attainment of those goals;

(d) a process for ensuring that personnel are trained and competent to perform their duties;

(e) a process for internal reporting and analyzing of hazards, incidents and accidents and for taking corrective actions to prevent their recurrence;

(f) a document containing all safety management system processes and a process for making personnel aware of their responsibilities with respect to them;

(g) a process for conducting periodic reviews or audits of the safety management system and reviews or audits for cause; and

(h) any additional requirements for the safety management system that are prescribed under these Regulations.

107.04 A safety management system shall correspond to the size, nature and complexity of the operations, activities, hazards and risks associated with the operations of the holder of a certificate referred to in section 107.01.

(2) Any reference in this Subpart to the personnel licensing standards is a reference to Standard 426 – Personnel Licensing and Training – Flight Training Units.

10. The reference "[406.14 to 406.20 reserved]" after section 406.13 of the Regulations is replaced by the following:

11. Subpart 6 of Part IV of the Regulations is amended by adding the following after the heading "DIVISION III — PERSONNEL":

406.19 (1) The holder of an operator certificate issued in respect of a flight training unit that operates an aeroplane or a helicopter shall

(b) subject to subsection (4), ensure that the person responsible for the maintenance control system meets the competence requirements set out in subsection 426.36(1) of the personnel licensing standards;

(c) ensure that the person responsible for the maintenance control system demonstrates a knowledge of the topics set out in subsection 426.36(4) of the personnel licensing standards within 30 days after their appointment;

(d) ensure that the person responsible for the maintenance control system performs the duties referred to in subsections 406.36(1) and 406.47(2) and (3);

(e) provide the person responsible for the maintenance control system with the financial and human resources necessary to ensure that the holder of the flight training unit operator certificate meets the requirements of these Regulations;

(f) authorize the person responsible for the maintenance control system to remove aircraft from operation, if the removal is justified because of non-compliance with the requirements of these Regulations or because of a risk to aviation safety or the safety of the public; and

(g) ensure that corrective actions are taken in respect of any findings resulting from a quality assurance program established under section 406.47.

(2) The Minister shall conduct an interview with the person appointed under paragraph (1)(a) to assess their knowledge of the topics referred to in paragraph (1)(c).

(3) The Minister shall notify the person appointed under paragraph (1)(a) of the results of the assessment and identify any deficiencies in their knowledge of the topics within ten days after the interview.

(4) The knowledge requirements referred to in paragraph (1)(c) do not apply in respect of

(a) a person responsible for the maintenance control system who held that position on January 1, 1997; or

(5) The holder of a flight training unit operator certificate shall ensure that no person is appointed to be responsible for the maintenance control system or remains responsible for the system if, at the time of their appointment or during their tenure, they have a record of conviction for

(b) two or more offences under any of sections 605.84 to 605.86 not arising from a single occurrence.

(6) The duties referred to in subsections (1) and (5) shall be carried out by the accountable executive appointed under paragraph 106.02(1)(a) in respect of the flight training unit.

Appointment of Accountable Executive as Person Responsible for Maintenance Control System

406.20 An accountable executive may appoint themselves as the person responsible for the maintenance control system if they meet the requirements of paragraph 406.19(1)(b) and subsection 406.19(5).

406.36 (1) The person responsible for the maintenance control system appointed under paragraph 406.19(1)(a) shall, where a finding resulting from a quality assurance program established in accordance with subsection 406.47(1) is reported to them,

(a) determine what, if any, corrective actions are required and carry out those actions;

(b) keep a record of any determination made under paragraph (a) and the reason for it;

(c) if management functions have been assigned to another person under subsection (2) or (3) communicate any determination regarding a corrective action to that person; and

(d) notify the accountable executive of any systemic deficiency and of the corrective action taken.

(2) The person responsible for the maintenance control system may assign the management functions for the entire quality assurance program established under section 406.47, including the authority to remove aircraft from operation under paragraph 406.19(1)(f), to another person, if

(a) that person meets the requirements set out in paragraphs 406.19(1)(b) and (c) and subsection 406.19(5); and

(b) the assignment and its scope are described in the maintenance control manual (MCM) of a flight training unit that operates an aeroplane or a helicopter.

(3) The person responsible for the maintenance control system may assign the management functions for specific maintenance control activities, including the authority to remove aircraft from operation under paragraph 406.19(1)(f), to another person if the assignment and its scope are described in the MCM of a flight training unit that operates an aeroplane or a helicopter.

(4) The responsibility of the person responsible for the maintenance control system is not affected by the assignment to another person of management functions under subsection (2) or (3).

(5) If a flight training unit that operates an aeroplane or a helicopter is also the holder of an approved maintenance organization (AMO) certificate issued under section 573.02, the person responsible for the maintenance control system at the flight training unit shall

(a) be the person responsible for maintenance at the AMO appointed under section 573.03; and

(b) meet the requirements referred to in paragraph 406.19(1)(b), subsection 406.19(5) and paragraph 573.03(1)(c).

13. Section 406.47 of the Regulations and the heading before it are replaced by the following:

406.47 (1) The holder of an operator certificate issued in respect of a flight training unit that operates an aeroplane or a helicopter shall, in order to ensure that its maintenance control system and all of the included maintenance schedules continue to be effective and to comply with these Regulations, establish and maintain a quality assurance program that

(i) the person responsible for the maintenance control system appointed under paragraph 406.19(1)(a), or

(ii) the person to whom the management functions for the program have been assigned under subsection 406.36(2); and

(b) meets the requirements of section 426.47 of the personnel licensing standards.

(2) The person responsible for the maintenance control system shall ensure that records relating to the findings resulting from the quality assurance program are distributed to the appropriate manager for corrective action and follow-up in accordance with the policies and procedures specified in the maintenance control manual (MCM).

(3) The person responsible for the maintenance control system shall establish an audit system in respect of a quality assurance program that consists of the following:

(a) an initial audit within 12 months after the date on which the flight training unit operator certificate is issued;

(c) a record of each occurrence of compliance or non-compliance with the MCM found during an audit referred to in paragraph (a) or (b);

(d) procedures for ensuring that each finding of an audit is communicated to them and, if management functions have been assigned to another person under subsection 406.36(2) or (3), to that person;

(e) follow-up procedures for ensuring that corrective actions are effective; and

(f) a system for recording the findings of initial and periodic audits, corrective actions and follow-ups.

(4) The records required under paragraph (3)(f) shall be retained for the greater of

(5) If a flight training unit that operates an aeroplane or a helicopter is also the holder of an approved maintenance organization (AMO) certificate issued under section 573.02, the person responsible for the quality assurance program of the flight training unit under paragraph (1)(a) shall be the person responsible for the quality assurance program of the AMO.

14. Part V of the Regulations are amended by adding the following after the heading "SUBPART 73 — APPROVED MAINTENANCE ORGANIZATIONS":

(2) The AMO certificate shall specify, in accordance with the criteria specified in section 573.02 of Standard 573 — Approved Maintenance Organizations, any category in which ratings have been issued and shall list the aeronautical products that the AMO is authorized to maintain or the maintenance services that the AMO is authorized to perform.

16. The heading before section 573.03 and sections 573.03 and 573.04 of the Regulations are replaced by the following:

573.03 (1) The holder of an approved maintenance organization (AMO) certificate shall

(b) ensure that the person responsible for maintenance meets the requirement set out in subsection 573.04(1);

(c) subject to subsection (4), ensure that the person responsible for maintenance meets the competence, knowledge and experience requirements set out in subsection 573.04(1) of Standard 573 — Approved Maintenance Organizations;

(d) ensure that the person responsible for maintenance demonstrates knowledge of the topics specified in subsection 573.04(5) of Standard 573 — Approved Maintenance Organizations within 30 days after their appointment;

(e) ensure that the person responsible for maintenance performs the duties referred to in subsections 573.04(2) and (3) and 573.09(2) and (3);

(f) provide the person responsible for maintenance with the financial and human resources necessary to ensure that the holder of the AMO certificate meets the requirements of these Regulations;

(g) ensure that corrective actions are taken in respect of any findings resulting from a quality assurance program established under subsection 573.09(1) or a safety management system referred to in section 573.30; and

(h) conduct reviews of the safety management system to determine its effectiveness.

(2) The Minister shall conduct an interview with the person appointed under paragraph (1)(a) to assess their knowledge of the topics referred to in paragraph (1)(d).

(4) The knowledge requirements set out in paragraph (1)(c) do not apply in respect of

(a) a person responsible for maintenance who held that position on January 1, 1997; or

(5) The experience requirements set out in paragraph 573.04(1)(a) of Standard 573 — Approved Maintenance Organizations do not apply in the case of an AMO certificate in respect of which a rating in the aircraft, avionics, instrument, engine or propeller category has not been issued, if the accountable executive can demonstrate to the Minister by means of a risk assessment that the lesser experience is appropriate to the scope of work performed by the AMO and will not affect aviation safety or the safety of the public.

(6) The holder of an AMO certificate shall ensure that no person is appointed to be responsible for maintenance or remains responsible for maintenance if, at the time of their appointment or during their tenure, they have a record of conviction for

(b) two or more offences under any of sections 571.10 and 571.11 not arising from a single occurrence.

(7) The duties referred to in subsections (1) and (6) shall be carried out by the accountable executive appointed under paragraph 106.02(1)(a) in respect of the AMO.

(8) The holder of a certificate referred to in subsection (1) shall ensure that the person managing the safety management system who is referred to in section 573.32 performs the duties set out in that section.

573.04 (1) The person responsible for maintenance shall, within 30 days after their appointment under paragraph 573.03(1)(a), submit to the Minister a signed statement that they accept the responsibilities of their position.

(2) The person responsible for maintenance shall manage the activities of the approved maintenance organization (AMO) in accordance with the policies set out in the maintenance policy manual (MPM) established under section 573.10.

(3) The person responsible for maintenance shall, where a finding resulting from a quality assurance program established under subsection 573.09(1) or a safety management system referred to in section 573.30 is reported to them,

(a) determine what, if any, corrective actions are required and carry out those actions;

(b) keep a record of any determination made under paragraph (a) and the reason for it;

(c) if management functions have been assigned to another person under subsection (4) or (5), communicate any determination regarding a corrective action to that person; and

(d) notify the accountable executive of any systemic deficiency and of the corrective action taken.

(4) The person responsible for maintenance may assign the management functions for the entire quality assurance program established under subsection 573.09(1) or for the safety management system referred to in 573.30 to another person if

(a) that person meets the requirements set out in paragraphs 573.03(1)(c) and (d) and subsection 573.03(6); and

(5) The person responsible for maintenance may assign the management functions for specific maintenance activities to another person if the assignment and its scope are described in the AMO's MPM.

(6) The responsibility of the person responsible for maintenance is not affected by the assignment to another person of management functions under subsection (4) or (5).

(7) An accountable executive may appoint themselves as the person responsible for maintenance if they meet the requirements of paragraph 573.03(1)(c) and subsection 573.03(6).

(2) No AMO certificate holder shall authorize a person to sign a maintenance release under paragraph 571.11(2)(c) unless the person has, in respect of the work being certified, demonstrated to the certificate holder levels of knowledge and experience that are appropriate and that meet the applicable criteria set out in section 573.05 of Standard 573 — Approved Maintenance Organizations.

(2) The program required by subsection (1) shall include initial training, updating and any other training necessary, within the meaning assigned to those terms in section 573.06 of Standard 573 — Approved Maintenance Organizations, to ensure continued qualification that is appropriate to the function to be performed or supervised.

573.09 (1) The holder of an approved maintenance organization (AMO) certificate shall establish and maintain a quality assurance program consisting of provisions for sampling maintenance processes to evaluate the AMO's ability to perform its maintenance in a safe manner.

(2) The person responsible for maintenance shall ensure that records relating to the findings resulting from the quality assurance program are distributed to the appropriate manager for corrective action and follow-up in accordance with the policies and procedures specified in the maintenance policy manual (MPM).

(3) The person responsible for maintenance shall establish an audit system in respect of the quality assurance program that consists of the following:

(a) an initial audit within 12 months after the date on which the AMO certificate is issued;

(d) a record of each occurrence of compliance or non- compliance with the MPM found during an audit referred to in paragraph (a) or (b);

(e) procedures for ensuring that each finding of an audit is communicated to them and, if management functions have been assigned to another person under subsection 573.04(4) or (5), to that person;

(f) follow-up procedures for ensuring that corrective actions are effective; and

(g) a system for recording the findings of initial and periodic audits, corrective actions and follow-ups.

(4) The records required under paragraph (3)(g) shall be retained for the greater of

(5) The duties related to the quality assurance program that involve specific tasks or activities within an AMO's activities shall be fulfilled by persons who are not responsible for carrying out those tasks or activities.

20. The Regulations are amended by adding the following after section 573.15:

573.30 The safety management system required under section 107.02 in respect of an applicant for, or a holder of, an approved maintenance organization (AMO) certificate authorizing the holder to perform maintenance on an aircraft operated under Subpart 5 of Part VII shall

(b) be under the person responsible for maintenance appointed under paragraph 573.03(1)(a).

573.31 (1) The safety management system shall include, among others, the following components:

(i) a safety policy that the accountable executive has approved and communicated to all employees,

(ii) the roles and responsibilities of personnel assigned duties under the quality assurance program established under subsection 573.09(1) or the safety management system,

(iii) performance goals and a means of measuring attainment of those goals,

(iv) a policy for internal reporting of a hazard, an incident or an accident, including the conditions under which immunity from disciplinary action will be granted, and

(v) a review of the safety management system to determine its effectiveness;

(b) procedures for reporting a hazard, an incident or an accident to the appropriate manager;

(d) procedures for analysing data obtained under paragraph (c) and during an audit conducted under subsection 573.09(3) and for taking corrective actions;

(f) training requirements for the person responsible for maintenance and for personnel assigned duties under the safety management system; and

(g) procedures for making progress reports to the accountable executive at intervals determined by the accountable executive and other reports as needed in urgent cases.

(2) The components specified in subsection (1) shall be set out in the approved maintenance organization (AMO) certificate holder's maintenance policy manual (MPM).

573.32 The person managing the safety management system in respect of an approved maintenance organization (AMO) shall

(a) establish and maintain a reporting system to ensure the timely collection of information related to hazards, incidents and accidents that may adversely affect safety;

(c) investigate, analyze and identify the cause or probable cause of all hazards, incidents and accidents identified under the safety management system;

(d) establish and maintain a safety data system, by either electronic or other means, to monitor and analyze trends in hazards, incidents and accidents;

(e) monitor and evaluate the results of corrective actions with respect to hazards, incidents and accidents;

(f) monitor the concerns of the civil aviation industry in respect of safety and their perceived effect on the AMO;

(g) determine the adequacy of the training required by paragraph 573.31(1)(f); and

(h) where the person responsible for maintenance has assigned the management functions for the safety management system under subsection 573.04(4) to another person, report to the person responsible for maintenance the hazards, incidents and accidents identified under the safety management system required under section 573.30 or as a result of an audit required under paragraph 573.31(1)(e).

21. The reference "[700.09 to 700.13 reserved]" after section 700.08 of the Regulations is replaced by the following:

700.09 (1) The holder of an air operator certificate issued under section 702.07, 703.07, 704.07 or 705.07, shall

(a) appoint an operations manager and, where the holder does not hold an approved maintenance organization (AMO) certificate, a maintenance manager; and

(i) section 722.07 of Standard 722 — Aerial Work of the Commercial Air Services Standards,

(ii) section 723.07 of Standard 723 — Air Taxi — Aeroplanes of the Commercial Air Services Standards,

(iii) section 723.07 of Standard 723 — Air Taxi — Helicopters of the Commercial Air Services Standards,

(iv) section 724.07 of Standard 724 — Commuter Operations — Aeroplanes of the Commercial Air Services Standards;

(v) section 724.07 of Standard 724 — Commuter Operations — Helicopters of the Commercial Air Services Standards; or

(vi) section 725.07 of Standard 725 — Airline Operations — Aeroplanes of the Commercial Air Services Standards;

(c) ensure that the maintenance manager meets the requirements of section 726.03 of Standard 726 — Air Operator Maintenance of the Commercial Air Services Standards;

(d) in the case of the holder of an air operator certificate issued under section 705.07, ensure that the operations manager performs the duties set out in subsections 705.03(1) and (2);

(e) in the case of the holder of an air operator certificate issued under section 705.07, who is also the holder of an approved maintenance organization (AMO) certificate issued under 573.02, ensure that the person responsible for maintenance performs the duties set out in section 705.04;

(f) provide the operations manager and the maintenance manager with the financial and human resources necessary to ensure that the holder of the air operator certificate meets the requirements of these Regulations;

(g) authorize the maintenance manager to remove aircraft from operation, where the removal is justified because of non-compliance with the requirements of these Regulations or because of a risk to aviation safety or the safety of the public;

(h) ensure that corrective actions are taken in respect of any findings resulting from a quality assurance program established under section 706.07 or a safety management system referred to in section 705.151; and

(i) conduct reviews of the safety management system to determine its effectiveness.

(2) The maintenance manager appointed under paragraph (1)(a) shall be the person responsible for the maintenance control system of the air operator appointed under paragraph 706.03(1)(a).

(3) The duties referred to in subsection (1) shall be carried out by the accountable executive appointed under paragraph 106.02(1)(a) in respect of the air operator.

(4) The holder of an air operator certificate issued under section 705.07 shall ensure that the person managing the safety management system referred to in section 705.153 performs the duties set out in that section.

22. The reference "[705.03 to 705.06 reserved]" after section 705.02 of the Regulations is replaced by the following:

705.03 (1) The operations manager shall manage the activities of the air operator in accordance with the company operations manual established under section 705.134.

(2) The operations manager appointed under paragraph 700.09(1)(a) shall, where a finding resulting from a quality assurance program established under section 706.07 or a safety management system referred to in section 705.151 is reported to them,

(a) determine what, if any, corrective actions are required and carry out those actions;

(b) keep a record of any determination made under paragraph (a) and the reason for it;

(c) if management functions have been assigned to another person under subsection (3) or (4), communicate any determination regarding a corrective action to that person; and

(d) notify the accountable executive of any systemic deficiency and of the corrective action taken.

(3) The operations manager may assign the management functions for the entire safety management system referred to in section 705.151 to another person if the assignment and its scope are described in the air operator's company operations manual.

(4) The operations manager may assign the management functions for specific duties to another person if the assignment and its scope are described in the air operator's company operations manual.

(5) The responsibility of the operations manager is not affected by the assignment of management functions to another person under subsection (3) or (4).

705.04 If the holder of an air operator certificate issued under section 705.07 is also the holder of an approved maintenance organization (AMO) certificate issued under section 573.02, the person responsible for maintenance appointed under paragraph 573.03(1)(a) shall, where a finding resulting from a quality assurance program established under section 706.07 is reported to them,

(a) determine what, if any, corrective actions are required and carry out those actions;

(b) keep a record of any determination made under paragraph (a) and the reason for it;

(c) if management functions have been assigned to another person under subsection 573.04(4) or (5), communicate any determination regarding a corrective action to that person; and

(d) notify the accountable executive of any systemic deficiency and of the corrective action taken.

23. (1) Paragraph 705.07(2)(c) of the Regulations is replaced by the following:

(2) Subsection 705.07(2) of the Regulations is amended by striking out the word "and" at the end of paragraph (j), adding the word "and" at the end of paragraph (k) and by adding the following after paragraph (k):

(l) an air operator emergency response plan that has the components set out in paragraph 725.07(3)(g) of Standard 725 — Airline Operations — Aeroplanes of the Commercial Air Services Standards.

24. The reference "[705.140 to 705.144 reserved]" after section 705.139 of the Regulations is replaced by the following:

705.151 The safety management system required under section 107.02 in respect of an applicant for, or a holder of, an air operator certificate shall

(b) be under the management of the operations manager appointed under paragraph 700.09(1)(a); and

705.152 (1) The safety management system shall include, among others, the following components:

(i) a safety policy that the accountable executive has approved and communicated to all employees,

(ii) the roles and responsibilities of personnel assigned duties under the quality assurance program established under section 706.07 or the safety management system,

(iii) performance goals and a means of measuring the attainment of those goals,

(iv) a policy for the internal reporting of a hazard, an incident or an accident, including the conditions under which immunity from disciplinary action will be granted, and

(v) a review of the safety management system to determine its effectiveness;

(b) procedures for reporting a hazard, an incident or an accident to the appropriate manager;

(d) procedures for analysing data obtained under paragraph (c) and during an audit conducted under subsection 706.07(3) and for taking corrective actions;

(f) training requirements for the operations manager, the maintenance manager and personnel assigned duties under the safety management system; and

(g) procedures for making progress reports to the accountable executive at intervals determined by the accountable executive and other reports as needed in urgent cases.

(2) The components specified in subsection (1) shall be set out in the air operator's company operations manual and maintenance control manual (MCM).

(a) establish and maintain a reporting system to ensure the timely collection of information related to hazards, incidents and accidents that may adversely affect safety;

(c) investigate, analyze and identify the cause or probable cause of all hazards, incidents and accidents identified under the safety management system;

(d) establish and maintain a safety data system, either by electronic or by other means, to monitor and analyze trends in hazards, incidents and accidents;

(e) monitor and evaluate the results of corrective actions with respect to hazards, incidents and accidents;

(f) monitor the concerns of the civil aviation industry in respect of safety and their perceived effect on the air operator;

(g) determine the adequacy of the training required by paragraph 705.152(1)(f); and

(h) where the operations manager has assigned the management functions for the safety management system under subsection 705.03(3) to another person, report to the operations manager, the hazards, incidents and accidents identified under the safety management system or as a result of an audit required under subsection 706.07(3).

705.154 The holder of an air operator certificate issued under section 705.07 who is also the holder of an approved maintenance organization (AMO) certificate issued under section 573.02, shall adhere to the requirements referred to in section 573.30 with respect to a safety management system when undertaking maintenance control activities under Subpart 6.

25. Subsection 706.03(1) of the Regulations is amended by striking out the word "and" at the end of paragraph (b), adding the word "and" at the end of paragraph (c) and by adding the following after paragraph (c):

(d) ensure that the person responsible for the maintenance control system performs the duties referred to subsections 706.07(2) and (3).

26. Section 706.07 of the Regulations and the heading before it are replaced by the following:

706.07 (1) An air operator shall, in order to ensure that its maintenance control system and all of the included maintenance schedules continue to be effective and to comply with these Regulations, establish and maintain a quality assurance program that

(a) is under the sole control of the person responsible for the maintenance control system appointed under paragraph 706.03(1)(a); and

(b) meets the requirements of section 726.07 of Standard 726 — Air Operator Maintenance of the Commercial Air Services Standards.

(2) The person responsible for the maintenance control system shall distribute the records relating to the findings resulting from the quality assurance program to the appropriate manager for corrective action and follow-up in accordance with the policies and procedures specified in the maintenance control manual (MCM).

(3) The person responsible for the maintenance control system shall establish an audit system in respect of the quality assurance program that consists of the following:

(a) an initial audit within 12 months after the date on which the air operator certificate is issued;

(c) a record of each occurrence of compliance or non-compliance with the MCM found during an audit referred to in paragraph (a) or (b);

(d) checklists of all activities controlled by the MCM and the maintenance schedules;

(e) procedures for ensuring that each finding of an audit is communicated to them and, if management functions have been assigned to another person under subsection 705.03(3) or (4), to that person;

(f) follow-up procedures for ensuring that corrective actions are effective; and

(g) a system for recording the findings of initial and periodic audits, corrective actions and follow-ups.

(4) The records required under paragraph (3)(g) shall be retained for the greater of

(5) The duties related to the quality assurance program that involve specific tasks or activities within an air operator's activities shall be fulfilled by persons who are not responsible for carrying out those tasks or activities.

27. The Regulations are amended by adding the following after section 706.14:

706.15 The holder of an air operator certificate issued under section 705.07 shall adhere to the requirements set out to in section 705.151 or 705.154 with respect to a safety management system with respect to all maintenance control activities performed under this subpart.

28. The Regulations is amended by replacing the expression "Chapter 573 of the Airworthiness Manual" with the expression "Standard 573—Approved Maintenance Organizations" wherever it occurs in the following provisions:

29. The headings before sections 573.01, 573.02, 573.05 to 573.13 and 573.15 of the Regulations are converted from italics to roman type to conform with the format of the new division headings enacted by these Regulations.

30. These Regulations come into force on the day on which they are registered.

Introduction to Safety Management Systems, Transport Canada, Ottawa, Ontario, Canada, TP13739, p. 1.

These costs are based on 1996 estimates by the Boeing Aircraft Corporation of US$500,000 for the in-flight shutdown of an engine, US$50,000 for a flight cancellation and US$10,000 per hour for a flight delay.

This organization was in existence at the time of the development of this initiative and participated in the original consultation of the NPAs in 1999.