Boeing’s Battery Fires Illustrate The Perils Of Self-Regulation

Airline manufacturer Boeing’s newest plane, the 787 Dreamliner, is grounded around the world due to concerns over the lithium battery on which it relies. On January 7, a battery caught fire inside a parked Dreamliner in Japan, raising concerns that similar problems may be prevalent in the new planes.

The Federal Aviation Administration, the airline industry’s regulator, relied heavily on data provided by Boeing showing that the lithium batteries “featured redundant safeguards that were essentially foolproof,” the Wall Street Journal reported this morning. And though the airline industry is safer today that it has ever been, the FAA is increasingly relying on airline manufacturers to regulate themselves because it has “neither the budget nor the expertise” to test battery systems and other aircraft features itself:

Such reliance on manufacturers in certifying new planes is the standard approach for the agency, which today oversees the safest airline fleet in history. But barely days after vouching for the jet’s safety, the FAA’s about-face is focusing renewed attention on how cutting-edge aircraft are brought into service. [...]

The aircraft-approval process has long been a give-and-take between manufacturer and regulator, with the two sides collaborating and sharing information. Compared with the industry, the FAA has neither the budget nor the expertise to do extensive testing on its own. Instead, it often designates company teams to do the bulk of the work, with FAA participation and oversight.

Lithium-ion batteries have never before been used in aircraft, but when Boeing developed its new system for use in the Dreamliner, it ultimately “had the lead in certifying the safety and reliability of the batteries,” the Journal reported. After 200,000 hours testing, the system received final approval from the FAA, which never re-evaluated its 2007 decision to approve the battery’s use. And so, last week, Boeing debuted an aircraft featuring never-before-used technology that it seemingly developed, certified, and regulated itself, with the FAA performing only in an “oversight” role.

The FAA isn’t alone. Allowing industries to self-regulate has become an increasingly common practice in an era of crunched budgets and shrinking staff sizes at enforcement agencies. The Department of Energy has considered outsourcing fracking regulations to the natural gas industry, even as concerns about the environmental implications of the practice continue to mount. The U.S. Department of Agriculture has tested food safety reforms that would shift much of the responsibility for regulating poultry to manufacturers. Trial runs of the program found far higher rates of defects in approved poultry products than there were in samples reviewed by government regulators.

In the financial industry, regulatory agencies can’t afford to fill their staffs or enforce regulations, a problem that played an extensive role in the collapse of the housing market. With less oversight and more responsibility, banks rubber-stamped mortgage applications and foreclosure documents, committing fraud, abusing homeowners, and bringing the American economy to the brink of collapse in the process. Lack of oversight and regulation also played an extensive role in interest rate-rigging and money laundering scandals at large banks.

Some responsibility for regulation will inevitably fall to private companies, no matter how well-funded, staffed, and trained regulatory agencies are. But the concerns that have emerged with the Dreamliner are yet another indication that our regulatory agencies need to be fully-funded, and that leaving too much of the regulatory responsibility to private companies is a recipe for disaster for consumers.