Transcripts For CSPAN3 Hearing Considers FAA And Air Traffic Control Reforms 20170519

The motion is agreed to. I want to thank everything being being here today and talking about exextremely important i believe reforming it, make it a better system treemly if it depends on an efficient. We need nod earn 241st vench si but it is increasingly absleet. Just to quote him we had not too long ago. Congress has tried to reform it. It didnt fix. Then theres the shape of the bureaucracy. To deal with some of the midlevel management. But that didnt take either. He beon in order to ffrm and not subject to appropriations are thousand dollar downs that everybody degree there is a problem. Its you the form with it to reokay. The if dv we wasted over 50 million any so far we looked at air transportation, air frakt risment today well focus ton if die vesting the it was nechl and shifting it to an indepen dit for profit we can. No oers have is to to improve travel our hardhearne relationship inoff right. It has bp sbroeken for kids. It will identity doom us to rewe peting if and over. She quest ration isnt it lead to reduced operation, chbl i trooed to shut down contract ares. Not going to change mu time soon and it whached the annual apropuation tyke l. Over that time Period Congress massed 42 continuous resolutions to keep the oar open. It before they passed i dont remember. Testimony of air traffic flom sadly in todays paper strips which i have got a few to be from from tur and is nchl we all know any progress enkre mep it will nm mental. Lets peb name sz nex general was failed efforts to no, maam it money has never been the problem. Congress provided more than 7. 4 billion. Results of the problem, according to the faas own calculation invested has only been about 2 billion in benefits. The projected initial cost was 40 billion. It could double or triple and be delayed another decade. They also said it will forever redefine how we manage the system. In 2015 the National Research council confirmed what was already becoming painfully clear. The original version of next gen is not broadly transformational. Only in the federal government with such a dismal records be considered a success. Its an approach we have already tried many times additional reforms in 1995 exempt the faa from federal personal rules and allowed more flexible rules for hiring and assigning personnel. Reforms developed to me gauche jit additional reform in 2000 be tree yacht air traffic coordination. Reforms in 2012 to report next jen all have failed to toll to the f ark a being run more lj a if testimony it is the only akblen si that serves as trons farm moigs per are if it is too many for nrm fnchts fchl the true rest k. But we are open to chak. We want that talk to people abdomen get their ideas. Thats what we hope to hear today. Air Traffic Control proposal will create a not for proffer corporation. Fund the new Service Provider. Free the new Service Provider from governmental dysfunction, political interference and the uncertainty of the federal budget to process. Create a structure that is right sized and balanced i need to repeat fiduciary responsibility. If you you have fi dish area responsibili fiduciary, thats the pie in the sky. Access to the air space. Let me for the record remind people, i am from a rural district. I have one very small airport. I doubt i have more than a handful of people that work for the Airline Industry. I have several hundred ga pilots. If anybody thinks i want to harm the ga or Rural Communities they dont know who i am and where im from. I am committed to make sure what we do protects small and Rural Communities and protects the ga community. The ga community is over a billion dollars industry. Why would i want to harm an industry that produces so much good for this country . We want to ensure to support our Armed Services and their Nation National security mission. Free from the bureaucratic and the apropuations site and failed management. Give ability to access and Leverage Private funding need today modernize the mission. Ensure continued oversight by the d. O. T. And congress. Lots of people thats why they will still maintain vig uorous oversight. To realize the significant benefits of modern air Traffic Control system. Previous letter chases is to fete president it of the way. We see all over the world people tushing to the private sector whether it is europe, asia, canada, look around the world. Countries are looking to partner with the private sector because they see they do it better. Well go up to learn from the lessons and learn to help our own broken structure. Over 60 countries are followed this kind of reform. Opponents either ignore to evidence or must believe we are less capable. It is a bit outrageous. We can do it better than anybody else. It is time to take a look and move forward. It is a 24 7 technology service. For those who worry that the system is too complex i would say this, the most complex thing is not the air Traffic Control system, its the airplane. Its the people that build these aircrafts. They already oversee how maintenance and that flight information is. We dont build airplanes today. The government does. Overseeing air Traffic Control is not going to be more complicated than anything else they already do. Ultimately when it is safe efficient aviation to ensure more on time departures using less fuel which will be better for the environment and less waist waste of time on the tarmac. Ill yield to other members. Thats the longest Opening Statement since jim overstar. You only did it in one language. Thanks for the time. First off, i have spent over an hour with the foremost expert and longest termed critic and Movement Towards the 21st century system. Im not aware that any other member has spent that time and he has not been invited to testify. He has a different story to tell it today. He thinks it will be mistake and im paraphrasing. A massive change will into parts. It is subject to apropuations, she que leave the most important thing to the American Public i know the airlines arent here today and i would also note the airlines themselves have had t outages 36 times since 2015. Im not aware the national air Traffic Control system has had a major disruption who had to get the system and back up system. The airlines on their owns have managed to melt down their dispatch 36 times stranding million of people so they can do it better, right . I think maybe we should invite them in here and hear the story of how things changed and progress we are making and potential for disripuption at ts point in time. Unfortunately the way our colleagues are here and the budget process works they can be sequestered or shut down. Its a simple simple fix. Well put it over here and take this one part and put it over here and say its not your money that effects the price of ticket and competition and everything else. If they do away with ticket tax there goes 70 of revenues. What will they put in its place . We dont know. Congress will have no say over this. There will be a board, if i could have that slide if you could put this slide up, please. Anything that effects competition will go through this process. The secretary will have established consultants or her office who will advise secretary of limited period of time. If the word bis agrdisagree the court. Congress will have nothing to say about who people or the American People are charged for running that system. Now, we have heard other things here that are, you know, interesting construct. We are way behind because we dont use adsb. Can we get a slide . Okay. This is the oceanic air space. Youll notice that the vast majority of the plains are in oceanic control by u. K. And canada. We have one aircraft for every 51 in the air over the United States of america. Now go to the second slide. Oh, by the way yeah, go to the second slide. Now, see all of that yellow . Thats the u. S. That will be totally adsb satellite based in 2020 with an exception. The airlines have been given permission from the faa for exceptions because many of their older planes do not have modern enough gps systems to use the adsb. They have petitioned they have more years before those plains would be able to use the system. So we are being criticized because we wont pay a bunch of money but we are going to put my fear is there were disruptions in canada and Great Britain and a bail out and, you know, they every system that has all of the others in the world have gone to governmentbased corporations or government controlled corporations. They theres only two countries that have gone the other way. Mine have done studies. There will be a period of d disruptio disruptions. N they are on furlough because to Super Congress the people over here who have to certify it cant work. It does not make sense to me. The chairman talked to me about the reforms. It is who i think has made tremendous strides compared to anyone else in recent history. They failed because congress failed to say that the trolls and the secretary couldnt meddle. The propoeszed reforms cant go forward because they took control as they do over too many things and they ended up with a system you know, thats the way it happened. It is whose proposals because they are not be subject to meddling by the secretary of transportation and her staff. Put it off. It is already raising the revenue. Well figure out a different way to raise revenue and by the way, forget about safety. Forget about certification. After thoughts over there in the government not funded by any stable source. I invited a witness today. His family has been involved and wont have a chance to sell that today. It is both in that industry and as a pilot. To talk about what he sees as a pilot, a ga pilot and things we have done that are extraordinary for ga pilots that would be at risk in a new system. Why would the commercial Airlines Give a darn about all of the ga airports and new approaches because it costs money. Its not in their interest. They dont use them. They dont care. Well hear from him. I think his testimony will be a little more compelling than a couple more think tank people well hear from again and again and again. Mr. Pool is here for the, so thats what we have before us, mr. Chairman. I do think there are things we could agree upon. I do not believe privatizing the ato is the answer. Thank you. I thank the gentleman. You almost equalled my Opening Statement. Youre too much short. This hearing will be about it has to be about knocking things that just arent true. The what he puts up on his chart, its not my proposal. I dont know whose proposal it is. Its not mine. Let me just start off to undermine the whole thing, start at the very very top. It says in his chart if they decide to increase passenger aviation taxes they cannot increase taxes. They dont under law they cannot do that. The corporation decides to change let me finish with that. We are going to have a debate i think. The only person that can raise taxes is the United States congress. So thats patently false. Also they desietded to change safety procedures. That cant happen. I dont know whose chart this is. Its certainly not my chart. You might want to call that fake news . I dont want to go there. And one other point, he said congress failed. He is absolutely right. He is making my case. We have to take it out and stopping the way they operate. Its crazy. Again, im concerned he is taking it all out. Will there be any oversight in his new idea of how to run it . This chart, the chart he put up there, thats not my chart. I have to be very clear on that. If i could rebut for one minute. You certainly can. And secondly, im not proposing im proposing to give the faa administrator that authority free of omb and secretarial interference and we would give them a budget that is free from she quest congress could intervene if they felt the reforms werent warranted. Unlike their privatized system. Thank you, mr. Chairman. Well now go to our witnesses. I would like to welcome, again, our panel. I believe everybody has testified before us before at least one occasion or it may be a few. First the Inspector General of the department of transportation has been here men times. Joseph w. Brown, the president of propeller corp. I believe you testified in 2014, so this is your second time here. Mr. Robert pool, director of transportation policy at the Research Foundation who has been thinking deeply about this subject for many years. The president of the national air Traffic Controllers association has been before us before. And the independent policy analyst and former Clinton Administration official, who, again, has been through the wars on this many, many times. We appreciate you being back here to look at your insight. I ask you that our witnesses full statements be included in the record. Without objection so ordered. Since your written testimony has been made part of the record. The committee request your limit your oral testimony to five minutes. With that, you may record. Thank you for inviting me to testify on the efforts to implement reforms and modernize the National Air Space system. My testimony will focus on the past and on going work regarding the efforts to implement various agency wide reforms, as well as its progress and challenges with can you pull the mic a little closer to you . Sorry. Dont be afraid of it. My office does not make policy recommendations. I will also discuss how other countries have structured their Aviation Systems and highlight key factors that policy makers may wish to consider in evaluating faas structure. Over the last two decades, faa has made several reforms in response to mandates to improve operations, cost effectiveness and management. These include establishing new Employee Compensation systems, as well as Acquisition Management system. And undertaken reorganizations to improve the agencys efficiency and reduce expenses. In addition, faa achieved more than 2 billion in cost savings over a 13year period by out sourcing Flight Service stations. Despite this progress, faa reforms have not achieved their intended cost or productivity out comes. Instead, budgets have increased with a 35 increase in faas total budget after adjusting for inflation between fiscal years 1996 and 2015. In addition, faas Productivity Initiative has not yielded improvements. In part because faa did not establish measurable productive and cost goals or metrics. Faas reforms have also fallen short in improving its ability to deliver technology on time and within budget. This is due to longstanding management weaknesses, such as over ambitious plans, unreliable cost and schedule estimates, unstable requirements and ineffective contract management. For example, faa has made progress with its six next gen transformational program. Such as installing the ground system. However, faa has not determined when the programs will start delivering benefits or how theyll improve air traffic flow or productivity. They currently estimate the six projects at 5. 7 billion. Their total cost and completion dates remain unknown. In part because their requirements continue to evolve. Furthermore, weaknesses with internal controls and oversight problems have hindered faas contract management, which we found in our reviews of sole source, service support, and Small Business set aside contracts. To its credit, faa has worked with the industry to identify and launch some of the highest priority next gen capabilities. For example, a key priority is performance based navigation or pbn, which allows more fuel Efficient Aircraft routes and reduces airport congestion. Faa fully deployed these procedures at the Northern California metroplex in 2015, well ahead of schedule. Faa has also deployed new technologies at some airports to enhance controller pilot Data Communications and runway operations. Yet, many risks remain to complete these and other next gen priorities and full benefits for users remain years away. Key challenges include addressing noise concerns, resolving avionics issues and integrating complex on board system and controller technologies. As congress consider the faas structure, other nations may offer a comparison. At the request of this committee, we review the aviations system of canada, france, the United Kingdom and germany. All four have separated their oversight functions which remain government controlled from the air Traffic Controlled functions. Air Traffic Control has been commercialized, their time, into air navigation Service Providers via various organizational structure. These providers finance their operations through user fees and may finance their infrastructure with longterm bonds and other debt instruments. They also embark on smaller modernization efforts and roll them out incrementally using a variety of methods such as modifying commercial off the shelf products. Yet, any discussion, on next gen structure should consider our nations unique characteristics, as you know, the u. S. Runs the busiest and most complex Aviation System in the world, with more operations each year than the other four nations combined. Safety, financing and labor issues will also be key questions. Ultimately safely will oversee the top, regardless of what the future looks like, it will be vital to provide safe system. This concludes my statement, mr. Chairman. I look forward to answering questions you or the committee may have, mr. Chairman. Thank you. And with that, mr. Brown, you may proceed. Chairman, Ranking Member, members of this committee. You can bring your mic closer. Get right up close to it so we can hear you better. Is this better . Better. I like to thank you for inviting me here today. My name is joe brown and i come today as a businessman and a pilot. I represent an 100yearold Aviation Business whose roots trace to the wright brothers. We do business out of a 4,000 foot runway that takes us all over the country to our customers in texas, florida, georgia, and minnesota and everywhere in between. Our business depends and their business depend on the amazing infrastructure that the citizens of this country have put into the National Air Space. We also depend on another thing, which is the incredible freedom to fly that we enjoy in this country and because of those things weve made a market in this country like no other for aviation and were very grateful for that and deeply invested. As a pilot, 400 to 500 hours a year, my office is the cockpit. When i fly, i find a modern system, highfunctioning system. Ive seen it evolve over time right before my eyes. I find controllers that do the job well. I find easy access and powerful technology. Smartphone and get my proposed route back before i get to the airport in a text. When i take off. I have gps Navigation Systems on board that allow me to fly point to point all over this country, a couple of months ago i took off out of dfw and got cleared direct burlington, vermont 1,300 miles away. While im flying i have the veil of safety, giving me traffic call outs and separation queues and weather in my route of flight. When i come in from landing, i can pick from 3,000 precision approaches brought to me by next gen feature. Its called was. Including at my home airport which i depend on in foul weather days. So the bottom line for me is, next gen is working. It works for me every day and its getting stronger all the time. From a technology standpoint, i believe were on the right track. Its proper to ask in modernization where should we go next . Many are arguing that what we should do is spend the next five to seven years focusing on structure and the governance of our air traffic organization. I dont like that risk profile. I dont think we should be distracted. As a businessman, i think that what we will find is that we will raise more questions than we can answer, questions that dont have clear answers and questions that will burn up precious time trying to answer, like how will we assure equity among users and how will we finance this organization and what borrowing risk can it take. What about new market entrance, how do they fit into the picture. That doesnt even address whether the people are better served by the structure after we transfer so much National Wealth to it. Because im a business guy, i get to evaluate a lot of companies and ive bought several. We have a simple framework when were looking at an investment. We say what are its strengths. Can they be leveraged, do they differentiate it in the business were trying to do. What are its weaknesses and do we understand them and can we fix them. When both of those things are true, we buy that company. If we elevate strengths and reduce weaknesses. Well create value. The ato presents exactly that risk profile, enormous strengths, world class systems and very specific weaknesses that we can address. The conclusion ive drawn is that we should not spend 5 to 7 years distracted by change, knowing the things take longer and cost more with the hope that at the end this restructuring journey will deliver a big pay off. Whats next, i think, that we should stay on track with the technology plans that the next Gen Advisory Committee and faa agreed to. The stake holders are already aligned and the technology in the field works and theres more technology coming. Lets keep tuning and strengthening the collaboration thats been driving so much process. Even overseers recognize the Advisory Committee is having impact. Its been run by airline executives. Clearly its setting the priorities. Lets expand on the technologies that are already deployed, for example, data com is in the field today at 55 powers in the country well be delivering en Route Services by 2019. Next gen is deployed and Getting Better all the time. Lets tackle specific weaknesses that we have in the system like the way we finance faa and ato and the way we give them mechanisms for doing longterm Capital Investment and planning. Lets work on the infrastructure. There are a number of ways private Public Partnerships could put these guys in better buildings in the next five to seven years we can have them all in better buildings. I encourage us to take a different path to think about options that are fixing the fixables, thank you for the time today. I look forward to questions. Thank you very much, mr. Brown. Mr. Pool, you may proceed. Thank you, mr. Chairman. As some of you know, ive been researching the subject for close to four decades. Most recently ive been part of two working groups, one for the business round table and one for the eno center. Both groups have concluded that we have major fundamental funding and structural problems and corporatization of the ato is the best conclusion. Thats the conclusion that the Advisory Counsel reached unanimously in the 2014 report that called for corporatizing the ato. The focus this morning is on the issue of governance, they recommended a Nonprofit Organization in which customers and other stake holders govern. This is basically user call up, except for the edition can you pull the mic closer. That thing moves, i think. Pull the whole box towards you. All right. Please, thank you. The structure proposed is a user coop with the addition of other stake holders. The governors model that was proposed in last years bill as recommended by the r. T. And eno was intended to be adaptation of canadas nonprofit steakeholde corporation. Running in the best interest of all the stakeholders. But the boards from last year has been described misleadingly as given control over the air space to the major airlines. This, of course, has led to serious concerns from general aviation groups, people in small towns and small airports and rural legislatures. But in a nonprofit user coop, there are no shareholders. Every board member has equal vote with any others so even if there were airlines on it, which there wont be. They would only have a small minority of the members and they could easily be out voted by other members, all votes are equal, its not Like Corporation where you have preferred shareholders. This model is consistent with International Aviation law and with global best practices. And the proposal did not originate with the airlines. I would like to set the record straight. The business Round Table Group began in 2011. Made an initial presentation in the spring of 2012. We got a pretty cool, if not negative reception at that point. No one wanted to restart the battles that had raged over this issue in previous decades. Everything changed in the spring of 2013, thanks to the sequester. Controller furloughs, closed faa threatened cloche yerof 189 contractatories got everybodys attention. In response they all requested new conversations with the brt working great. In may 2013, all three groups in the Conference Room at business round table agreed that a an air Traffic Control corporation taking converting the ato into Corporation Self funded and out of the federal budget was the best approach. After this happen, that fall, they briefed chairman schuster on the proposal. This is not coming from the airlines. Brt group included a former faa administrator. Former chief operating officer of the ato. Two former senior officials and several consultants. Our governing model, as i said, was patterned, their stake holder board represents airlines, general aviation, unions and the government, plus four other private citizens selected by the stake holder members, no board member can hold any paid position in an Aviation Organization. Its a system that really works. And of their four airlines seats elected by airlines, two are from major airlines, retired people, one is from an air tour company and one is from a Regional Airline serving the far north. The u. S. Is larger and has a much larger general Aviation Community. Jaa should have more than one seat. Since theyre so vital, airports definitely are a stake holder that should be electing a board seat as well. I think in terms of the Regional Airlines and Cargo Airlines should be defined as stake holders in addition to, perhaps, two seats from the major carriers. My written testimony gives one example of proposed 15 member stake holder board. Let me close with concerns of small airports. Having airports and Regional Airlines as stake holder is part of the answer. Congress needs to deal with the fears about loss of control towers and small airports and worries that the somehow service might be dropped in rural areas. Congress could specify that any airport meeting a reasonable benefit cost test should be assured of getting Tower Services, which is the standard today. Second, faa would be in charge of aviation safety and no changes in procedure or equipment could happen, but they might be proposed by the corporation, would have to pass muster with the faa could not be done unilaterally. Third, ato inadequate funding today gives airports the short end of the stuck. There has been a moratorium on contract towers since 2014. Small airports are losing today in what they need because of faas on going budget problems. Self funded corporation would mean improvements from small airports thanks number one to predictable user fee revenues and a financed Capital Improvement for facilities. Secondly, corporation would likely implement Remote Tower Technology that would increase the benefits from having a tower because of better surveillance, reduce the cost, the benefit cost ratio would be higher, this would be a boom for small airports, not a detriment. That concludes my testimony and ill be happy to deal with questions. Thank you, very much. Morning chairman and members of the committee, thank you for the opportunity to testify. Microphone. The whole box. There you go. How about that . We currently run the most efficient, most diverse air space system in the world. Contributes 1. 5 trillion to Gross Domestic Product and provides over 12 million jobs. Its unique, unequal and unrivalled by any country. This is due in large part to the impeccable work the men and women that i represent do every day. The members guide approximately 70,000 flights per day and ensuring over 900 million passengers arrive safely at their destination every year. The United States Aviation System is considered the gold. Standard in Aviation Community. But that status is at risk. Unstable, unpredictable funding and status quo threatens it. We need a stable, reliable, predictable funding stream to operate the Current System and allow for growth in the United States Aviation System. Although theyre calling for change. We cannot support any proposal without fully reviewing all its details. Thats not only its not only that we oppose the status quo, which is very much broken. We also oppose any system that would put apc in a forprofit model. In order for them to consider support of any proposal must meet our four Core Principles of reform. First, any new system must keep the safety and efficiency of the National Air Space in top priority. Second, any reform must protect our members employment relationship. This must maintain members pay, retirement system, health care system, as well as their work rules and contract. Third, any reform system must have a stable, predictable funding stream adequately enough to support air Traffic Control services, growth, new users, staffing, hiring, training, longterm modernization projects. Also this reform must provide a Stable Funding stream through transition period. Fourth, any reform must maintain dynamic, diverse, Aviation System that continues to provide services to all segments of the Aviation Community and to all airports across america. I cannot emphasize enough how important it is to continue to provide services both large and small, new and old, big city to rural america. The United States has a vibrant journal Aviation Community that relies on us. Rural, americas economy, success is tied to access the National Air Space system. Last year, naka supported the air act of 2016. Because it met these four principles. While we do not believe there is only one solution to the problem, we will be all proposals using the same standard. Please dont take this as a need for stable predictable funding as to mean the appropriators have not done their jobs. It stems from lack of regular order weve been experiencing for years now. Its led to many threats of shutdown and our current staffing shortage. Were at a 28 year low of certified controllers. We have approximately thousa3,0 eligible to control at this time. We take pride in our role with partnering with the faa and developing and implementing important monetization projects. That successfully worked on many over the years, unfortunately all have been impacted by uncertainty of funding. If you look at fy 2018 as we approached april 28th of this year. They shifted in its focus from next gen to shutdown. We received a one week funding extension followed by a five month funding bill. Were elated over the nunding bill, five months is no way to plan for the future. Congress needs to pass an fa reauthorization bill that provides stable, reliable, predictable funding, congress should exempt the faa employees from indiscriminate funding cuts. Otherwise well see reduced capacity and suspension of key next gen programs. I want to thank you for calling this hearing. We must remain focused as we try to expand and modernize the National Air Space system. Thank you. Thank you. With that, you may proceed. Thank you. Chairman, Ranking Member, members of the committee. I appreciate being here this morning. I am a policy wonk and im a democrat. I testified before some of you during the five years i spent in the obama administration, first as the deputy under secretary of defense for installations and environment and then as the gsa public buildings commissioner following the scandal at gsa. Previously i spent eight years on president clintons White House Economic Team where during his second term i was the point person on aviation, policy focus i maintained after leaving the white house first at berkings and then as an economic consultant. The first point i want to make this morning is corporatization of the air Traffic Control system is not a radical idea. Nor is it a republican idea. The Clinton Administration tried unsuccessfully to do this in 1995 with its proposal to create a self supporting Government Corporation usats, which would be run by ceo and a board and regulated at arms length by the faa. At the time, only, four countries had corporatized their air Traffic Control system. Now, more than 60 other countries have done so. The second point i want to make is that the rationale for usats applies no less today than it did in 1995. Let me briefly restate it, one, air Traffic Control is not an inherently governmental funding. It is not inherently governmental. Keeping planes safely separated is complex and safety critical, but it is a purely operational process that follows wellestablished rules, like running an airline or manufacturing a boeing 787, air Traffic Control can be performed by a nongovernmental entity, as long as it is subject to oversight by faa safety regulators whose job inherently governmental. Two, precisely because of the operational nature of the air Traffic Control system, the federal government is poorly suited to running it. The consensus of countless blue ribbon commissions and expert reports is that air Traffic Management is a 24 7, Technology Intensive service, business, trapped in a Regulatory Agency that is constrained by federal budget rules, burdened by a flawed funding mechanism and micro managed by congress and office of management and budget. Is it a monopoly, yes, at least for now. But the telephone system was a monopoly for many years and we didnt have the government operate that. The final rationale, the current arrangement is flawed on safety grounds. This is important. Echoing Safety Experts worldwide, the International Civil Aviation Organization has long called for the air Traffic Control regulator to be independent of the operation it regulates in order to avoid conflicts of interest. Were one of the only industrial nations in which the same agency both regulates and operates the air Traffic Control system. In sum, 22 years after usats was dead on arrival, when it get to congress, the International Aviation community treats air Traffic Control as a commercial, Service Business and most countries have spun it off as an autotonmous selfsupporting entity to give it the agility the Business Needs and to provide the necessary separation from the safety regulator. The u. S. Have gone from failed innovator to laggard. The current proposal, the air act, differs from usats in one important way. It was a Government Corporation. Because that was the only model that existed in 1995. Canada, which came along short a short time later, has shown us a better approach for the reasons youve heard and that well discuss further this morning. Had they existed in 1995, i strongly suspect that it, rather than new zealands Government Corporation, the best model at the time, would have been the prototype for the Clinton Administration proposal. In closing, let me say that i have listened long and hard to the arguments made by opponents of the chairmans proposal, particularly democrats. I look forward to discussing these criticisms this morning. But i think it is a mistake to view this proposal as itological has one Committee Member characterized it last year. I believe in robust role and i think the federal government gets far too little credit for its accomplishments. But i also believe that the federal government has often excelled by recognizing where the involvement is necessary and where it is not to achieving its objectives. And sometime id like to tell you about privatized military housing as the greatest quality of life program the department of defense has ever implemented. Thats not itlology, thats good government. Thank you, very much. Well start with questions. Id like to ask the members to stick to find minutes. If we need to take to a second round, ill be more than happy indulge. First question i have, mr. Brown, i really appreciate you being here. Its the second time youve testified for this committee and you and i sat down on a couple of occasions to talk about your concerns generally. And of all the witnesses i feel like im a Kindred Spirit with you. I was a Business Owner myself. I know what you do every day, getting up and making sure youre meeting the bills and making sure your operations are functioning in a world that youve got to deal with an agency like the faa can be challenging. As a Business Owner, from 19 would you allow your businesses to grow a budget, your operational budget 95 over a 10 or 15year period. While at the same time the cost of Service Increases 75 and all the while youre losing customers. Would that be something that you would tolerate as a Business Owner. Of course not id be very concerned about that. I think youre absolutely on the mark. When you look at the business, you look at the leverage. How can you make it stronger. The weaknesses and can you change them. And so i would say, on that Business Model when youre in the business world, that works. But when youre dealing with the federal government, that weakness is part, theres not a way we can change this. Weve tried for 30 years to change it and the only way to do is, i believe. Is separation. I also i dont want to speak for mr. Defazio he believes separation looks different than i do. I appreciate you being here and laying out. The thing were really up against here is trying to change something thats not been able to be changed for 35 years. Thats the real challenge we face here and have to address. Thank you so much for being here. Appreciate that. I would like to ask mr. Rinaldi, i bought the paper strips here. These are the paper strips, the dc area tray com for one day, this is what we use. Can you talk to me a little bit about the paper strips, why do we use them and whats the most modern towers, i think we have the most modern towers you can throw up on the screen there. Those are paper strips that we stuff all day long in our towers and as we move the control of an airplane from position to position, we pass the strip to controller to controller. We have tried and were actually in the process one more time, and this is another reason why an interruption in funding can be a problem. We are working right now with the agency and with litos on a new program that would move to that 100 electronic as other countries around the world are using electronic. It is an efficiency thing. If you look at our new towers in San Francisco is that San Francisco. Thats San Francisco right there, on a foggy day, which happens a lot in San Francisco. And ground stops the controller is moving paper around. That little work area because just to keep some type of order of how the airports are going to come out. Could they put up the las vegas tower, too . Thats las vegas right there. These are both brand new faa facilities. Theyre the most modern. Well, theyre the newest facilities. They were actually supposed to have an electronic flight strip program in them. Because of reduced funding, we were never able to make it on time. Were using paper now, which is still very safe. Were losing some efficiencies. But we would like to get to an electronic flight strip program as they use around the world. The thing that tipped me off that thats the most modernatory you have. Show us the nav canada. Can you tell us what they do . As you can see the controller has a good line of site. Heads not down looking at paper. All the information is in front of him. And he has a good line of sight. Its definitely more efficient. Can i ask one further question, would you say that the london air space is most or least complex air space system in the world . I would say that around london heathrow. Is that what youre talking about . I would say its complex. Extremely complex. What system are they using. Theyre using the canada flight strip program. Thank you very much. I yield to mr. Defazio. Mr. Brown, i dont think you quite got a chance to respond mr. Schusters question, would you like to expand on your answer there . Yes, i would. The way that ive been thinking about this, as a businessman, i think that National Air Space is a fundamental economic driver in our country. Our country is more aviation centric than any other place in the world. You can see see that with the system and the number of pilots. The way i think about this whole, what is the value return on the level of investment that we make in our ato and our air spaces what industry have we created in this country what are the returns on that industry. So what i think is when you have a question like that sent to somebody like me, i immediately go to the larger and very very significant economic value of an industry that exists uniquely in country. Were the market leader. Of aircraft production. Engine production of every type and stripe. We have the best avionic manufacturers in the world. Thats generating an enormous return in tax revenues and jobs. I think you have to put the economic in the bucket before you ask a question thats just yes or no in my opinion. Im sure youre familiar with the 2002 collision between dhl and a russian passenger aircraft. Under the ages of sky dive, the swiss Government Corporation, what caused that. That was caused between lack of communication between ansp. Wasnt there one person on duty who had multiple tasks. It was an issue with the controls also. Right a little problem with cut back and work force under the private corporation. But they have kept safety oversight separate, is that correct . That is correct. When is the last time weve had an error due to error. Very long time and i dont like to talk about it. You must have said 20 times, during your testimony and your answer, funding stability, sequestration, furloughs, talking about the new our much more sophisticated flight strips which couldipt great other aspects of the system and have much more capability than the status model used by nac canada that was offered to us a decade ago here and they didnt think it made it up with all the new capabilities of next gen. I think you said there, you werent saying i dont think it will work. You said were worried about delays an reduced funding, did you not. Thats correct. I have no doubt well be able to develop our own system. It really comes from were working collaboratively with the manufacturer with the faa. It comes from a lack of funding or funding on certainty as we move forward. Will you agree thats a significant problem . I would. Funding is a significant problem as you have pointed out. However, i will also say that there are other issues that can bear in addition to funding. If i think about it, funding, sequestration, shutdowns, that all has to do with congress. So if we had the faa with its current funding sources, 97 projected over the next ten years, just a few efficiencies would get us to 100 selffunding without metalling. Would that solve your concerns . Like i said we believe the status quo is unacceptable and we would not locate a for profit model. We would hold our core let me just interrupt. Quickly, mr. Brown. When we had, you know, last hearing one of the many mr. Pool been to, he said, if there was a problem in atc became insolvent, customers would have to pay more. And then the question, of course, becomes, if it then fails, whos responsible. Who would be responsible for the atc failed in this country. Thats one of my risk calculus when i think about this problem. The day the assets move from the Public Sector into the private sector, we moved the essence of the system and the people with it. Theres no way we can spend one day without that system healthy and full functioning and thriving. And so all the financial risk regardless of where that monopoly too big to fail is my concerned. I think ive heard that before. Thank the gentleman, with that. Thank you, mr. Chairman. Over three years ago, mr. Larson and i directed the faa and the next Gen Advisory Committee to come up with four capabilities that could provide nearterm benefits giving the constrained federal budget that we work with. These priorities were supposed to be the lowhanging fruit, the things the faa could get done and prove to the industry that they can deliver the benefits. I think im now hearing you say that for many of the nat priorities, full implementation of all capabilities and the realization of those benefits remain years away. So the question for you is, why are the nak priorities are the easy things taking six to seven years to implement . Thank you, sir. Youre right. The four priorities have been the focus for effort for both industry and faa. Perhaps, unbeknownst at the time, were certainly not fully appreciated at the time there were significant risk to each of them whether were talking about pbn, or multiple runway operations, each of those presented its own problems in bringing them to fruition. I would say right now were at the point where the time frame of 2019, perhaps, when data com and the en route environment begins to be implemented through 2021 will be what we in my office are calling a pivot point of the realization of benefits from these four nak priorities. So with this pivot point, i mean, whats your assessment if we dont make this . I mean does this ripple out for how long or can you talk about that a little bit. Sure. We dont know. Yeah, faa has had problems. Its no secret making completion deadlines before honoring representations to congress and programs. Faa together with the nac have a working group thats bird dogging it as closely as they possibly can. The problems that are outlined in my written statement are significant. They may yet derail the program to some extent, the choice, at that point, is to continue to press forward. So it may go on beyond 2020, 2021. At this point, we dont know. Would it be okay if i added something to that . Yes. One of the things i dont think is getting fair discussion in the modernization effort that were in is that first you have to invent and deploy the technology which has generally been the faas purpose. But the User Community has to equip and in many cases change equipment to experience the benefits. Thats exactly where we are right now. And thats why theres an Inflection Point coming up. We have that fully employed on a daily basis but only a percentage of the aircraft flying enjoy the benefits because theyre not adsb compliant. Where we are right now is the faa has done a lot of heavy lifting and the users have to equip. In the next several years thats why its going to flow into the system. Id like to yield my time. I think the gentleman i just want to point out, we continue to come back to this argument that and not an argument, but the facts are, its the congress and its omb and the political process that causes these big big part of these problems along with bureaucracy. Taking an agency out of government and going into failing and going bankrupt. If everybody recalls 9 11, we injected 15 billion into the Airline Industry. To prop them up. We had to have an Aviation Industry. Im not willing to sit here and say this agency is going to fall, i dont believe it is. Most of the money can be provided by the users. If you look at the model that weve been looking at canada, they did not require the federal government of canada to inject money. The british did, the british for profit and mr. Rinaldi said, i had no intent. I would oppose going for profit organization. I think that, again, using this as too big to fail, we faced that in 2001. There are models out there that we can look at and learn from to make sure theyre set up in a proper form. The most important thing, i keep hearing agreement over and over again, its the bureaucracy and omb and congress, the starts and stops will cause these problems. I recognize mr. Larson. Thank you, mr. Chairman. I would like to ask the written statement of pass to be entered into the record, mr. Chairman . Can you announce consent . Yes. Thank you very much. So for mr. Rinaldi, youre a member of the Advisory Counsel; is that correct . I am. March 15 is mac, issued a letter calling for reforms that would not require splitting up the faa and you signed the letter along with the members of the macs recommendation or how should we read that . I do. As i said, there are many ways to fix this problem. We dont think theres just one. Just so you do know, that that letter was circulated. I did offer edits and it was not incorporated into it. But i do support that letter that we need stable predictable funding and flexibility in our budgets. And you argued there are different ways to achieve that goal. Absolutely. We heard in some comments today that the air Traffic Control system is safe, but its broken. I fly 2,306 qualified air miles one way on United Airlines and back again for my commute. Can this system be safe and broken or should i drive . It is safe, of course. And thats certainly it seems to me its fundamental argument going on here, we have to go to privatization because the system is broken that actually controls the air space. If its broken, i dont know how it could be safe and how so would support the privatization argument, however, if it cant be safe and broken, it would seem to under mine the whole argument for privatization. I could characterize the system it currently safe. And the record shows that. For a number of years now no commercial aviation fatal accidents. As far as broken, i would take issue with that characterization. I would say modernization has been lagging far behind where it should be, its not broken. Well, thats good to hear. Ill cancel my car rental. Mr. Brown, i just want to explore a separate issue with you. Its tied, because were trying to get an authorization bill done and i think largely its bipartisan support on a lot of issues, including with differences around the edges, uas, incorporation into air space, certification reforms, seems to me all of these are being held up by this debate to be or not to be question with regards to privatizing aircraft control system. Can you talk about why certification is important, why some of these other issues is important that we move forward on, but yet were we are seldom getting them done because were continuing the debate over and over on privatization. Im happy to do that. I would say that congress has been incredibly supportive of the idea of facilitating approved ways to market through certification. We have had great support and friends in Congress Come to our aid to try to make our United States Aviation Industry as strong as possible and thats been matched with very good appropriation support, as well. So the thing is, we all tend to agree that there are opportunities and we tend to line up behind them. Whats troubling when they get stopped in mid stride because they cant get into the regulatory basis. What that means to me is when we cant go to market in the ways reforms allow us to do, somebody else is gaining on our heels. At the end of the day, i also care about extending competitive advantage. If you create uncertainty, customers have no idea whether they want to invest now or later an they err on the side of later. So for me there is something about keeping certification up and running and manifesting the reforms we all agree to. I thought that would be the answer. It just is that this main point is were not working on a privatization bill weir working on a faa reauthorization bill has many moving parts, many of which we agree on, democrats and republicans and yet its being those are being held up by this one debate. It seems to me we can move forward on the things we agree on moving forward. So i yield back. Thank you. Thank you, gentlemen. Now recognizing chairman young. Thank you for having this hearing. This is an interesting one. But you know my interest in my state that 80 of our communities are not connected by highways. We have in that area of aviation, we have 700 airstrips, more than any state in the union. We have 8,000 pilots and 10,000 per capita as far as aircraft. And my interest in general aviation and the chairman and i have discussed this before. And as long as alaska is taken care of and their need for general aviation and not being run by the larger airline s i will be interested in what were doing. And it means a lot to me. Some of you havent been there. I think you did fly on alaska, did you not . For two years . I had a chance to spend a few weeks up there flying around the back country. Did you have any trouble with air Traffic Controllers . I did not. I think they are some of the best. Did canada system file for bankruptcy . Not that im aware, sir. Are you sure . Im curious about that. That concerns me. I would suggest, mr. Chairman, my interest i think we may be addressing the one spot the best part of the faa is the air Traffic Controllers. But the faa itself, the management is not in good shape. I dont know how you change that. I think maybe we ought to spend our time studying the regulations that they pass. I dont know if the last time i checked a book about that big of regulations why the faa doesnt work. I have a classic example in alaska where they came down with a regulation where a village that does not have navigation or onsite weather reporter or any modern technology, air traffic can come in and because its perfectly clear, aircraft can come in but cannot land because they dont have someone on the ground to tell them what the weather is. Thats a regulation. So im interested in seeing what we can do about revamping the whole faa, but not the air Traffic Controller so much but the system they have is badly manage. If we can do that im willing to listen to a lot of things you suggest. Appreciate the gentleman saying that. And thats what were after and the gentleman kboez maybe i should say the gentleman is guilty because you have been here since 1973 Abraham Lincoln and i flew airplanes. You know better than anybody else they have not worked. They failed every single time. Some in this room might say 25 years ago there were four or five layers of management at the faa. Today there are nine or ten. Thats what we do across the system. We say we are going to reform something, we put a couple more layers in there. We never take the system down. And rebuild it. Thats what you do with a failed system. You take it out and say youre going to the Something Different and we have ability to look around the world and say who is working and what is not working. Mr. Brown you made a great point. Something i believe in and part of my passion for this is to get the certification right. We are the leaders in the world and invented aviation but when you cant go to market with your products because of the certification process, the competition is nipping at your heels. If we dont fix certification they are going to take big chunks out of the back of your leg and cause you problems. The certification is critical to the reform im putting forward. When you look at what the Miter Corporation said in their report, first of all they interviewed six of the different caa around the world and was unanimous stating the separation of caa from air Traffic Control was worth it. An increase in focus by the regulator and the ansp the focus on safety by the regulator and the ansp in improved efficiency. Thats what im talking about here. If you separate them, you make the faa focus on their core mission and that safety and that certification, now theyre running this Big Organization and doing a lousy job of it. When i point my finger at the faa as my mother always told me there is Three Fingers pointing back. Congress, omb, the administration. This is an opportunity to take it out and let it function like it has been around the world and getting certification right is paramount to what im trying to accomplish in this reform. With that i yield to ms. Norton. Thank you very much. Mr. Chairman, if i may say so, especially under my colleagues on the other side, structural reform has always proved very difficult almost all the Structural Reforms that have been made in the United States have been made by democrats and theyre not calling for structural reform as we just have tone with the Affordable Health care act. I have a question mr. Poole, it is a question that is arising issue and one that i have requested a hearing on that has do with airplane noise. When i say a rising issue i mean all over the United States. In my own jurisdiction and i represent the people of the nations capital. But so much so across the nation that we formed quiet skies coalition, a Bipartisan Coalition to respond to issues that by the way next general is just left out there, on the ground, people are complaining. And of course as a result of those complaints, ive been able to have the faa come to see me. Ive asked for a hearing by this committee. And i would like to get some responses about how this private corporation might respond to an issue likewise, who would my constituents and the constituents of my colleagues call if they have noise complaints . My understanding is that this would still be the faa as a safety regulator that would have to approve procedures or deny new procedures. If procedures are changed so that noise goes up, it would be the faa to say yes or no or how to modify it. It is not the corporations discretion do those things. I can answer that question also. Yes, sir. But it will not take from my time, i hope. If there is a noise issue or flight patterns change there is a need for process and need for major actions that the faa will continue to have. Let me dispel the notion, this organization is not going to control the airspace, its going to operate in the airspace with the faa over it. So they have to go through this federal process by need the faa sets up a review process and approves significant air space changes. Theyre going to have to go to the faa, conduct a review and any action taken will have to again be approved through the faa. Once again, this is not given away willynilly, the air space. Not only will we own the air space we will have oversight over the air space. I thank the chairman for his response. And ive never heard of anything so bureaucratic in my life. In fact i cant understand why we could leave one part of this operation under government control and take the other part even though both are vital to all we do in the skies. Ive never heard of efficiency being and by the way i hope my time wasnt taken because the chairman had an intervention which i think was appropriate. I dont understand how you could bifurcate the system. Expect it to be more efficient, expect it to be more safe. Let me take an element on the table, i will do it by asking mr. Rinaldi, have you received any assurances from any of the proponents of this bill concerning collective bargaining, pensions, other workers right . Because otherwise i see a fresh controversy on top of the many controversies this bill has already given us. Thank you for the question, maam. At this time there is no bill in front of us. Theres nothing i can compare it to. In the 2016 air act there was a Strong Language that gave us a fair bargaining process and that was in there. And also, a pro bust transition period that would allow us to keep everything we have and to keep the work force whole. And i take it you would insist on that in any change. Absolutely. Thats bullet number two of reform. I gave you an extra 30 seconds. Since i took some of your time. Thats okay. I yield back. And with that, mr. Barletta. Mr. Rinaldi you are one of the foremost experts on air Traffic Safety in the world. Would you support a proposal that jeopardized safety . Absolutely not. Thats our core principle. Would you support a proposal that jeopardized National Security . Absolutely not. Would you support a proposal that weak pd our ability to modernize the Aviation System. Absolutely not. Did you support the air act last year . I did. Yes. Some have suggested that it is a give away of assets. We understand that taxpayers have paid for them in fuel, ticket and cargo taxes. If a new entity would have to buy them wont the same people play twice . Thats correct, congressman. They have been paid for by aviation excise taxes over the years. And all were talking were not talking about selling the system or giving it away were talking about transforming it into a better organizational model. That would be insulated from the travails of the federal budget and able to operate as it should be, like a business, paid for by its customers. Doctor, as a Public Policy expert what is your response to such an allegation. The assets should be transferred at no cost. It has been handled different ways in the canadian model. Ways in the canadian model. There was some payment for it. I can certainly see the argument that bob makes. I mean, i think if that were the only debate, i think then we would be making Real Progress if we could agree on everything except what the dollar price on the assets is. Thank you. Thank you, mr. Chairman. Thank you mr. Barletta. Thank you, mr. Chairman. I take the train home every weekend. Its safe or broken. But i dont expect you to say anything. I have my issue is i have problems when we get compared to canada big problems. Can you speak more directly into the mike . I didnt quite hear you. Like youre going to kiss it. I have a problem when we are compared to canada. It reminds me of the argument with the health bill. They have a great Health System, we dont. Canada only has 40 million people. We have 350 million people. Its a lot easier to set up a Health System for a country that only has 40 million people. I have some fears regarding this. They have 40 towers. We have 500 towers. Obviously can you assure me that if we go this route, that were not too large to fail . I also have a concern regarding the airlines. I think the airlines are getting so big that its very difficult to manage. And i raised that issue the other day when we had a hearing here. Can you assure me that my fears are wrong . That this big effort i am wrong about it . Ill start with commissioner or mr. Brown. I love flying in canada. And i love the country of canada. I dont dislike the country of canada. Exactly. But i dont think the comparison of our National Air Space and Management System to canada is anything other than an exercise in gleaning some observations. But its not proper to directly compare. I mean, for sure in our system were driving a much more substantial portion of our economy out of the aviation sector and the air space that supports it. I mean, we have ten times more pilots, 50,000 flights a day. Its a wholly different organization. So for me when i think about canada, i believe they made a choice that they thought suited their purposes with the role of aviation in its infrastructure, but were faced with entirely different objectives here. And as far as im concerned, the system that weve been living in has done a masterful job of adjudicating all of the interests of stake holders, all the interests of our expansive country and our needs. So i can applaud things they have done in their country but also what weve done in our country. I would take one exception to something that was said. She characterized our system as a laggard. That is just false. We have the technology in our system today that no other country can rival. We lead in the nextgen initiatives. So im pretty proud of where we are. By the way, i know it because i fly it. Its not a mystery and its not a theory. Thank you. Mr. Poole, can you answer . First of all, canadas system is the second largest in the world in terms of flight operations. Its the best comparer we have. But their model has worked we are nine times bigger. Extremely well for 20 years. Its not too big to fail and neither would ours be. If you go to the credit markets, people who finance revenue bonds, they give Investment Grade ratings to the brits, the germans, the australians, the canadians because they have a revenue stream that you can basically bank on. And so neither have declared bankruptcy. Both were hit hard by 9 11. Because of the north atlantic traffic. Nats was brand new and got additional investment from their two main owners, the British Government and the airline group. Navcanada raised their rates somewhat, maybe i think 10 or 15 for a couple of years. And built up their reserve fund. Since then they have a substantial reserve fund in case of another serious downturn they can work through. Can you i got 30 seconds left. Sure. As you know, my office looked at the air Traffic Control organizations for the other four countries. And we were told by officials in those organizations that they consider part of their Borrowing Authority to be leverageable or to be recognized by private lenders because ultimately, should something drastic go wrong, the government would step in behind them. Im not representing that that would be the case here. Thats your policy call to make. Im simply relaying what officials for other air Traffic Control organizations have told us about their systems. Those four countries were on the hook . Is that what youre saying . Conceivably, they may be. The policy calls for their legislatures in the executive branch. Thank you, mr. Chairman. Thank you. Now recognize mr. Meadows for questions. Thank you, mr. Chairman. Mr. Poole, let me follow up a little bit on what you were just talking about in terms of the canadian system versus the air Traffic Control system here in the United States. Because there are people that would say, well, were ten times the size of that in canada. So as you look at that larger size, lets talk about scaleability. Is there any way that you can look at the scaleability of the canadian model versus what we would employ here and make some conclusions . Sure, sure. First of all, we already have the scale. Were not talking about building from scratch. We already have the scale, facilities and technology. What you are talking about is because of what we already have in place we can make better we can transition to a different governance model and different funding model and that will hopefully lead to a culture that can implement things faster than the Inspector General reports for 25 years have said continually fail to manage programs properly. They take far longer than they were scheduled. Navcanada has a superb track record on that. If you scale up navcanadas annual Capital Investment to our size, and say what would we be investing if we had their system, theyre accomplishing all their modernization for half of what we spend on Capital Investment. Hold on. Let me make sure i understand that. Theyre actually improving their system for half of the cost were spending . Yes, sir. Demonstrated fact. Would you agree with that . I saw you shaking your head yes on a lot of the things he was saying. Dont ever play poker, by the way, but go ahead. Wouldnt dream of it. No, and if i was shaking my head, it wasnt necessarily to agree or to assent. My office quite frankly hasnt examined that part of navcanadas operations. We dont know the degree to which their Capital Improvement program might compare against ours scaled up. All right. So when will nextgen be completed, mr. Scovel . This is not your first rodeo nor mine. So at what point will nextgen be completed . Because we continue to allocate unbelievable sums of money and i hear at best ambiguous dates of when it will be completed. So what does the Inspector Generals office say . Let me first say the faas estimate is 2030 at a cost of 36 billion between government and private city. But would you agree this has been one of the few times that we can see that even under this best case scenario, we continue to exceed an unlimited budget . I would have to say we dont know. We dont know what the total cost might be, nor do we know what the completion date will be. Its important to note, though, that but do you not see why that would be a problem for someone who is a fiscal hawk like me when we continue to allocate money with no end in sight . Absolutely. Mr. Brown, im confused because you seem like a business guy. Are you a business guy . I would certainly think so. All right. As a business guy and im one too, are you suggesting we need more federal control . Im suggesting that we have a system thats delivered in thats not what i asked. Great answer to a question i didnt ask. Are you suggesting that we need more federal control . Im suggesting our control is proper. All right. So lets talk about general certification. Something you probably know and its one of my sweet spots being from north carolina. Would you say we need more federal control in the certification process . I think what we have is proper. So you dont want it to be more streamlined . But thats not the same as reducing control. Thats about as official si. Well, it is. It is about regulation. So at some point you have to transfer that. Let me go and let me tell you where im concerned. Weve got nextgen that may or may not get done by 2030. We continue to spend billions of dollars. In fact, i have stake holders who continue to implement it from a stake holders standpoint and from a federal government standpoint, were lagging behind. We have moneys that have been allocated for nextgen that are pilfered over to maintain legacy Computer Systems with the faa. I have under Good Authority that were doing that. As were looking at why would you suggest that the federal government can do something more efficiently than perhaps private stake holders . Can the federal government run your business better than you do . I would hope not. I would hope not either. So why would you suggest that they can do that here . Well, because were talking about a range of interests here thats much larger than my business. I mean, my business i get to pick my product, i get to pick my customers, i get to decide what i think the Value Proposition is. I get course corrected by and its efficient that way, right . Yeah. So what if we had stake holders who were making the same exact decisions youre making with some parameters out there. Wouldnt you think that would be more efficient . You have outlined my top concern which is if this organization picks their customers and picks their service level, and product the chairman has said that cant happen. We have an air space that is available to everyone. Gentlemans time has expired. Mr. Brown, you can finish if you wish. I believe ive made my point. The thing about this enterprise, one of the things im concerned with is its a coalition of stake holders with a shared purpose to serve their own ends. The thing i like about the federal role in our air space today it is adjudicates an enormous variety of needs. Weather its the alaskan pilot, or whether its my business in iowa or air traffic in texas, they all have a seat at the table. This has been demonstrated in this room. My time is expired. Thank the gentleman. Recognize mr. Johnson for questions. Thank you, mr. Chairman. I think im probably like most americans and what we really want out of the air Traffic Control system is safety. Safe operation. And mr. Scovel, in your testimony you stated since 1958, the faa has overseen the safe operation of the busiest and most complex air traffic system in the world. And you stated during your testimony that thereve been no commercial aviation accidents over the past few years. Do you believe, sir, that the americancontrolled air space is the safest air space in the world . I havent looked at all the others, sir, but i would say its definitely safe. Were in the golden era of aviation safety right now. Were in the golden era and i think mr. Rinaldi, you mentioned that we are the Gold Standard of air Traffic Control in the world. Did you not . We are, sir. The largest, safest, most efficient. And mr. Brown, you fly you put in 500 hours a year, minimum flight time, and you are strongly committed to the concept that our air space is safe and that the operations that make it safe are up to par and you are its joyful to fly under that system. I agree. And most pilots will tell you its one of the most amazing experiences you can have and its something the government does extremely well. Now, mr. Poole, you would not disagree with that, would you . Not at all. We have a safe air Traffic Control system. Right. But were paying a price. Im going to get to that in a second. Were safe. And weve been safe since 1958 under faa control. And the argument is being made that we need to change that. Mr. Brown, i think i heard from both you and mr. Rinaldi the concept of if it aint broke, dont fix it. And mr. Scovel, i heard you in terms of there have been some faa reforms that have not achieved the expected outcomes in the areas of personnel, acquisition, and organizational reforms. But those failures dont lead you to the conclusion that the air Traffic Control system should be privatized. Correct . Not respectfully, i dont believe thats my call to make. The congress and the administration are the policy makers, the decision makers. Im trying to present information for your consideration in making those decisions. Thank you. And mr. Poole, you are an advocate for privatizization. You are a advocate to turn the air Traffic Control system over to the free markets. Your website for the Reason Foundation states that the Reason Foundation is committed to advancing the values of individual freedom and choice, limited government and marketfriendly policies. So im assuming that you would be of the mind as stated by the chair of the committee that government is the problem and not the solution and so therefore you want to take the federal government or the faa out of this equation which has been so safe for americans since may i respond . At least 1958. And ms. Robin, you agree with him. And you say that first of all, the air Traffic Control system can be performed can be run more effectively by a nongovernmental entity. And you also say that government is poorly suited to run the air Traffic Control system. Yes. Despite the comments that weve heard from mr. Scovel, mr. Brown, and mr. Rinaldi and the clear fact that we havent had i mean, our air space is safe. But you say that could i respond, please . You say it could be done better. Why do you say that . Because if we wanted to have the safest system possible we dont have it now . It would keep if we wanted to we dont have the safest system now . If you wanted to have perfect safety, you would let me ask you this question. Isnt it a fact that we have the safest air Traffic Control system in the world right now . We have a system that is operated and regulated by the same entity. That is it a good one . Isnt it a good one, though . The gentlemans time has expired. But if the gentleman allows the witness to hold on one second. If you want i will allow her to finish answering your question. Its up to you. Please respond. If we wanted to have zero accidents, we would have the air Traffic Control system keep all planes on the runway. You would have no planes in the air. That would guarantee perfect safety. Thats obviously not what you want. You want a system that contributes to the economy while being safe. Thats not the kind of system gentleman, the agreement was the time expired. Thank you for answering the question. I recognize mr. Woodall for five minutes. Thank you. Ill pick up where he left off with ms. Robin. I appreciate your written testimony because i think so often as perhaps your exasperation shows speak into the mike. We are speak directly into the mike. After you have given that advice to every member of the panel you would have thought i would have internalized that, mr. Chairman. I cant pull the box closer. I cant pull the chair closer. Ms. Robin, i want you to help me with the language to talk about this issue. Because it does seem when we talk about change so often, we end up with its mr. Webers big head that i cant get past. I cant move both the microphone. Mr. Weber, can i thank you. Its just between me and ms. Robin here were working on. Its a visible mr. Chairman, do i get equal time . Its a physical manifestation of your head. Its not an ego issue. Its physical. Help me with the language about how we talk about this. Ive been to see the navcanada operation. And thinking of scaleability, it does seem like the successes theyve had, we could have in exponential fashion. Its not as if this is the chairmans idea or the president s idea. This is something that policy wonks have been talking about for decades. Help me create this conversation in a language i sit on the budget committee. I hear my friend mr. Defazio say if only we could fund the system better and deal with sequestration and get congress to work better, yeah, those are the kind of issues weve been working on for three or four decades and we only finished the budget process on time four times in 40 years. So help me talk about this in a nonpartisan way. The faa does two very different things. It regulates all aspects of aviation and that is an inherently governmental activity. You cannot write a contract that makes it possible for the private sector to carry that out. It requires judgment calls that the private sector cant make. It also operates the air Traffic Control system. There is nothing government that is not inherently governmental. That is operational. That is no different than when gsa goes to the private sector and has them build a building. It is not an inherently governmental activity. The idea that, yes, the safety, the regulatory part of the faa needs help. That part needs help. I agree with mr. Brown. The idea, though, that in order to fix that, you dont spin off the nongovernmental part. Thats illogical to me. Thats exactly what you want to do. Spin off the noninherently governmental part so that the government can stick to its knitting. Stick to the regulatory function. Lets talk about that for a moment. I agree with mr. Brown, the american taxpayer and flying public has invested an amazing amount of time and treasure into building what is the busiest air space on the planet. So when we talk about changing that from a governmental function to a well, i dont know anybody who talks about a private function, but a cooperative function. Tell me what that looks like. Well so we in the Clinton Administration proposed moving it to a Government Corporation. Because that was the only model that existed. And its not and the problem with that model that model works very well in many parts of the world. But in this country, governmental Government Corporations are politicized. And they cannot function as businesses. And so navcanada has come up with a model that takes it out of government altogether and that is appropriate. It works in theory and more important, its worked in practice beautifully. The business folks that i talk with back home often prefer the devil they know to the devil they dont know. Yes. And i can only imagine the strain it puts a private operator under to say were going to yank the pendulum back and forth with the political winds. But it was the conclusion of the Clinton Administration that the best way to avoid the political winds in this space was this spinoff proposal . Yes. Yes, absolutely. Yes. This was something proposed early on that came out of a blue ribbon commission. One of many that has looked at this issue and we proposed it in 1995. It was dead on arrival on capitol hill. Mr. Chairman, i think mr. Brown was right when he talked about all of the amazing economic developments and successes that have been the product of our second to none air space system. I hope that we can follow this pattern to keep the politics out and move us on to best in world space. Youre absolutely right. Again, as i said earlier, theres no way i want to mess up, screw up the Economic Impact that the Aviation Industry across the board. So with that, yield to mr. Carson for five minutes. Thank you, chairman. Brown, it seems the faa is already in the process of implementing much of the nextgen infrastructure youre calling for. Weve been told that 2020 deadlines will be met. As a pilot, sir, can you tell us about the Nextgen Technology that is already online and how you are using it. And do you believe we need to recognize the systems . Great question, i was just thinking about this a month or so ago. I took off from ohio population 20,000 heading to albany, georgia. With a manufacturer that is a Global Leader and big exporter. I flew point to point because of gps navigation. I had en route weather around the way. I had precision to the numbers. Now, these two towns in the grand scheme of things grand scheme of our National Air Space have been treated to their resources to build two Global Leaders in their space and they have the Airport Infrastructure to thrive. And i look at that as a perfect example of how government in this case is working for the economy because without that kind of infrastructure and the technology thats driving the flying to and from those places, i dont think those businesses would be located in those towns and frankly i think thats a victory for the people. Thank you, sir. Lastly this is a general question im concerned that as introduced this new private air Traffic Control panel does not include one of the largest users of the u. S. Air space, the d. O. D. Id like to hear from any of the witnesses their view on how this will impact the close coordination that currently takes space and takes place and what impact it will be to our National Security. Ill answer that. And let me start by saying although i spent three years in the pentagon, air Traffic Control was not part of my portfolio. I did, however, work closely with the people in the air force who have the daytoday liaison with the faa. I worked with them on issues of interference of Wind Turbines and military longrange radar. The department of defense has huge equities in the National Air Space system. They manage 15 of the National Air Space and have 15,000 aircraft. Which is more than the Airline Industry put together. They depend heavily as a user on the air Traffic Control system. And they support the spinoff of the air Traffic Control system and there is a letter from secretary mattis to senator mccain stating that. It has to be done carefully so as to protect the arrangements that are currently in place. Its complicated, but bottom line is that it is this is not inconsistent with National Security. Sure. Yes, sir . This is an issue that has come up in every one of the 60 countries that has cor corporatized their system. Australia has a joint project between the Australian Military and the air service to modernize the software. That is being developed and used jointly, side by side civilian and military controllers. In the uk working together. This is pretty much a routine function now, this military and in fact theres an annual conference on military air Traffic Control is cosponsored by the air Traffic Control association in conjunction with the National Conference each year. So this is an issue as dorothy said, it needs to be handled very carefully to ensure all the procedures are incorporated. But its not a problem anywhere in the world, that im aware of. Thank you, mr. Chairman. I yield back. I thank the gentleman and appreciate the gentlemans question. I want to offer a letter from secretary of defense mattis. Some said the d. O. D. Is in opposition to this. Well, this letter does not say that. Any suggestion of that is false. He has indicated his support for removing service out of the faa. In a letter he wrote to senator mccain he requested that. So i want to offer that into the record. And with that, mr. Rokita. I thank the chairman for holding this hearing and the witnesses for their testimony. Starting with you, mr. Brown, knowing youre a private pilot and members of gamma and active in the aopa and so on and so forth and that you fly 400 hours a year which is four times the general aviation pilot you know the system. Do you believe that general aviation pilots have a right to access airports of any size of any not only do i believe that, i experience it. Yeah. On a daily basis. Talk into the microphone, please. Thank you. Should they be denied access to an airport . No. Not on principle. Can you talk about the dangerous that would pose to the aviation ecosystem that were all a part of if that were to happen . That is an existential threat to the business. Access is everything to the pilot that buys equipment i make and the airplanes they fly. Right. And every one of those pilots pays into the system, right . Yes. How . Through the fuel tax. Yeah. And its more than adequate for what we use of the system, right . Yes. And its not bureaucratic and theres no bureaucracy associated with it. Right. And its not that we want to fly into International Airports every day or cause problems, but the right is we have a right to do that because we paid into the system and sometimes like your customers you may need to access an airport like that. Correct. So what are the dangers of a board made up of all members or some members of the ecosystem where, you know, Board Governance suggests that you can have control of a board with as little as 30 of the seats . What danger does that pose to general aviation then . If this was all board controlled in terms of access. One concern i have is that on such a board you have centers of gravity that would begin to overwhelm minority voices of any sort and preclude the arrivals of new assets in our economy. Absolutely. Which make this point that we have its good to have a Disinterested Party in this. Or a referee or umpire to decide these issues like we have in the faa. Or if the members of this witness table who propose who agree with the chairmans proposal here would really want privatization. If they would propose a plan that actually does that. Because right now, the proposal isnt the air act and who knows what were going to see here when this language is produced doesnt do that. I used to be the secretary of state of indiana. I know about privatizing government assets. We received 3. 8 billion when we leased indiana toll road with governor mitch daniels. What we didnt do is give away a monopoly. We didnt take the toll road and give it to an Interested Party or a board made up of interested parties. We put it out for bid. So if we really want to privatize something which is apparently the proposal here, why arent we talking about Something Like that . We didnt give the indiana toll road to the truckers and say, oh, im sure youll take care of the cars too. And im sure you wont limit access to the on and off ramps that exist along the indiana toll road. E spshlly when you truckers want to get steel to or from one of those mills up in northwest indiana. Because it wouldnt work. It doesnt make sense. Just like this board made up of interested stake holders, to use congressman meadows term for it, wont work either. Mr. Rinaldi, if i can paraphrase your testimony, it seems like a lot of it was focused on funding and sequester and Government Shutdown and the fits and starts that go along with that and i completely agree with you. You also heard Ranking Member defazio say it was accurate that 90 of faa funding is on its own. Its not from the general fund. There was a suggestion that one way to solve this and the problems you bring up in your testimony is to take it off budget. Im not here to necessarily say thats the right answer or that i support it but isnt that an answer . You said theres certainly more than one answer to this problem. Absolutely. That is a legitimate answer. So we could take care of all that by taking this off budget. 97 of the funding isnt coming from the general fund anyway. Yes. Right. Thats a good answer. Chairman, my time has expired. I thank the gentleman. Where am i . Ms. Frankel is recognized for five minutes. Ill just start off being a little snarky. You know, we put a businessman in charge of the country and all i can say is omg about that. And every agency with every agency would like to be exempted from sequestration and i have a solution for that which is to privatize those of us who are not doing our job. All right, so, enough for the humor. Listen, i happen i am not a mean person, but just in the issue of transparency and first out of all, i want to thank you all. Not to impugn anyones integrity, but we have a list of different organizations or people who are for the privatization, who are against it. Different airlines are for, some are against. Consumer groups for and against. Could you just tell me here, anybody, do any of you consult with any of these and get paid to consult with any organizations or discuss employment with them . Those of you who are in the Public Sector included. Okay. Just wave your hand if its no. No. No. Okay. All right, thanks. So im trying to simplify this which is probably not a smart thing to do. But im trying to understand. It sounds to me like there are a number of reasons, those of you who are would support a change in the system. One has to do with the consistency in the funding. Is that correct . Thats the i know the air Traffic Controllers did really emphasize that. Then i think the other another issue was trying to move more efficiently towards a more modern safety technology. Is that one of them . And then i think one of the issues was not having having the regulators separated from the operators. Is there another issue there that im missing . There is another big issue. Okay. Which one is that . That is the Organizational Culture of faa which gets into the procurement problems, the chronically over budget, late delivery of things. Not getting productivity out of new technology in the way that it should be done. Okay. Thats a big problem. All right. Good. Thank you. I dont know why that skipped my mind, but thats the one i had my next question about. Okay. Which is, what kinds of things do you think this new organization could do that the government is not able to do . I mean, what will you be skipping and would there be what would be the potential unintended consequences . I would like those who are for this movement to give us your opinion on that. Ill start. I mean, one thing would be to be able to hire and pay the best talent from private industry as Program Managers and as expert engineers and software people. There are good people in the faa but they are hamstrung in a system that has a lot of basically career lifers who are happy to be in a process thats very time consuming and that has numerous people who can say no at many points along the way, drags out the process and if you have people who are not performing well, its very difficult to get rid of Civil Servants. Does anyone want to defend the honor of the Civil Servants . I will be happy to. Yes, go ahead. As i said in my Opening Statement, we have by far the best aviation professionals in the world working for the faa. Aside from the funding stream, one of the things we would also like to see fixed is something that Ranking Member defazio also brings up is the procurement requirement process and the multiagency oversight which puts us into a bureaucratic laden process of requirements and procurement and it delays our process of implementing new technology. I would guess that that bureaucracy which can drive everybody crazy probably got there in part because of abuses im going to guess to try to avoid that. I think every time we have a hearing, theres more oversight that goes into it so it selffulfills itself every time of something that is not working right within government. I only have 15 seconds. The contract towers, what happens to them . Well, we represent 94 of those towers and the members that work there. Its important to keep service open to all facilities across the country, all airports and to continue to have a very diverse system whether it is a big city or rural america. Thank you. Mr. Chair, i yield back. I thank you. Ms. Frankel, im not familiar with all those new tech words on the computer. Omg, does that mean oh man hes good . With that, i yield to mr. Westerman. Thank you, mr. Chairman and thank you for your leadership on this important issue. Ive had the opportunity to visit some control towers and the first thing id like to say is that we have some amazing men and women working in our Traffic Control towers doing an excellent job and we have an air Traffic Control system that works. The proof is in the pudding. You can see it working every day. Im relatively new to congress and am new to this committee, but i have a unique background having been a professional engineer for 25 years. Much of my work involved analyzing processes and technologies in helping my clients stay on the cutting edge. Ive seen organizations that failed to even em Abrasion Technology and they went out of business. To be successful in business you are to embrace new technology and have to implement it properly. Now, atc is not going to go out of business regardless of the technology it embraces or implements because, quite frankly, it is too critical to fail. And its been said in this meeting today if it aint broke, dont fix it. However, i believe this isnt a question of a broken atc, an atc that doesnt work, or even an atc that refuses to embrace new technology. This is a question of how to operate the safest and most efficient system in the world so our Airline Passengers and general aviators get the maximum benefits. Im studying our existing system and visiting installations and learning as much as i can about the latest technology. I can confidently say even though Technology May be embraced, its not being as successfully implemented as well in the u. S. As it is relative to other systems. Im from a rural district. Ive got one contractmanned tower in my district. Theres lots of general aviation and lots of Aerospace Manufacturing located at the rural airports in my district. Mr. Brown even mentioned airports like these in his testimony. Im thinking of an airport i visited just a few weeks ago in mena, arkansas, that has a lot of Aerospace Manufacturing there. Its in the mountains and its not the radar cant see it. They had a tower a radio tower that got blown down in a tornado a few years ago that still hasnt been fixed. So if youre trying to take off from mena, you have to pull out on the taxi and call up the air Traffic Control on your cell phone and try to get clearance to take off. But its they still found a way to make it work. But the point is, the last thing i want heard is rural airports are to Service Rural america. I want to see it improved. And mr. Rinaldi, some of the opponents of atc reform claim that new Service Providers would be able to deny access to sovereign air space and small communities and small general aviation airports. From the perspective of those actually providing air Traffic Control, how do you respond to those claims . Thank you, sir. Thank you for the question. Air Traffic Controllers have a very simple philosophy when it comes to providing service to all users. Its first come, first served. When a general aviation aircraft enters into our air space or if its a commercial airline its to expedite their process as safely as possible. We look at all uses of the system. Ms. Robyn, i want to say i appreciate your testimony and in a number of hearings a the have been held by this aviation subcommittee leading up to this, weve heard some inflammatory rhetoric in order to scare small communities about the future of their commercial air service. Ive got two eas airports, one in my hometown. Two of them in my district as well as numerous smaller ones. So af vested interest in making sure this is not the case. Do you think a more innovative provider will provide more options to more communities such as the usage of remote towers . Which ive seen some. Its amazing technology. I do. Yes. And i think thats critical. I dont understand this assumption that some are making that this entity, a corporatized entity would somehow be a threat to small communities and rural airports. Air Traffic Control is a network. The nature of networks is that the bigger they are, the lower the cost is. Its relatively inexpensive to add a node to their airport particularly if you can use a Technology Like remote towers. This has been an argument the small communities argument has been made. It was made in opposition to airline deregulation. It was made in opposition to trucking deregulation. It is part of the playbook of people who oppose change. All of those changes, i would argue, have been very, very good for our economy. Small communities, i do not see any reason that they would be hurt by this. It is not in the airlines interest or in the controllers interest, it is not in governments interest. It is not the stake holders interest to have that happen. Thank you. Mr. Lipinski is recognized for five minutes. Thank you, mr. Chairman. Its very important that i have talked with the chairman and he he has always continued to ask me to have an open mind on this. And i have. I think its going to be very important to see the text of the bill to have a better understanding of what exactly is in there. Ms. Norton had spoke earlier about concerns about about noise around airports, and thats a major concern that i have at Midway Airport in my district, ohare not too far away. And as the patterns flying in and out of those airports has changed in recent years, theres been a lot of constituents of mine who have had a lot of complaints. And we have gotten the faa now to be more they say they are going to do a better job of listening and paying attention to what some of these issues may be. My concern, ive a great concern moving ahead what exactly the rules are going to be in the future if we did have a atc moved under a corporation. The chairman says that nepa would still be would still apply, but i have concerns about what exactly is going to happen. Is the faa is the Corporation Going to propose the patterns and then the faa has to have to then have their say on that and improve them or not approve them and thats a concern that i have. Mr. Rinaldi, i dont know if you have any the bill that we had last year, do you know anything about what that would have done . Well, the regulatory and certification process would have stayed within the faa, so it would it would still be the ultimately the faa overseeing noise complaints and new procedures. Would they have the authority, then would they just be a back and forth with the corporation over it . The corporation proposed and the faa then have to approve or how would that work . Hypothetically, its hard to answer that question right now. But i will tell you while were moving forward with metroplex and pbn in many cities, the faa is going out and doing joint Community Meetings along with the users and the stake holders to explain what we are trying to accomplish in making the skies greener, safer, with less noise. But keep in mind as the Technology Makes it to be more precise on approaches, there are certainly winners and losers when it comes to noise, thats a fact and a true fact. Obviously my concern is to make sure that my constituents, those who are going to be all around the country, those are going to be impacted by these changes are going to be able to have a say. And right now their say is through us here in congress to the faa and i want to make sure that that occurs. But i want to move on to another question before i run out of time. Im concerned that some of the estimates for the timeline for a new atc corporation are nearly a decade, we heard earlier five to seven years. And my concern is about air Traffic Controller hiring. Will this not will there be troubling lack of accountability and transparency as this occurs and make atc hiring and staffing difficult if not almost impossible to do during this transition period, mr. Rinaldi . One of the things we would really have to see in the bill is a very robust transition period where we still have we would seek a stable, predictable funding stream so we could continue to hire and accomplish goals of the agency while its still under control and if it was going to a notforprofit federally chartered company at the same time. That it would be a robust transition period in continue ton hire and accomplish the goals of the agency while enhancing the safety of the system at the same time continuing to hire, train, and modernize the system. The control of the academy for training air Traffic Controllers, who would have that control . I believe in the air act of 2016 that was left up to the transition on who would actually still control the faa academy in oklahoma city. So that was not laid out in there . I dont believe it was. To be determined for further on. All right. Thank you very much. Its something that i look forward to seeing with the bill and the details and look forward to maybe having another hearing at that point. But thank the chairman, i yield back. Thank you to the gentleman. With the that, recognize mr. Smucker. Thank you, mr. Chairman. Id like to pick up where my friend mr. Westerman left off to further clarify some of the issues that he raised. One is there seems to be some confusion in the debate about the what we call the use of air space and who will and wont be making decisions about that. And, in fact, i believe that some are perhaps incorrectly conflating airline Service Business decisions and the provision of providing the atcs services. Mr. Rinaldi, you specifically addressed that by saying that you simply provide the services to whoever shows up in the airspace, essentially. But i guess id like to further clarify that. Mr. Poole, maybe ill ask you. Could you please clarify to me that the new entity thats being proposed will simply provide those atc services to any entity wishing to receive those services . Ill put it a slightly different way. Will this atc entity decide where airlines fly . Absolutely not, congressman. Airlines will decide where they want to fly and presumably the system will accommodate any desires that they have of where to fly. This of course includes air taxis, regionals as well as major carriers. Were not privatizing the airspace. We would only be privatizing or corporatizing the provision of the air Traffic Services as well as facilities and new technology. But all of the safety regulation and ownership of the airspace remains with the federal government in the form of the faa, thats very, very clear cut. Thank you. I appreciate the clarification. Mr. Poole, ill ask you another question. The district that i represent in pennsylvania includes three smaller airports, no Major International or domestic airport in the district, but each of these small airports serve a county and are critically important to their economic drivers in the county and so theres concerns have been raised and im just want to ask you directly about any potential impact of this system on the smaller airports. You know, i have one in particular in the Chester County district that has an application in for a control tower. Right. And its just an example, but i guess i want to hear again, i want to be sure, do you think we will see under this program an improvement for small airports and, if so, how would that work. I do think there will an improvement. One thing because of faa funding limitations. We have this new contract tower so thats been going on since fiscal 14. The only way that could be lifted today is if there were a significant budget increase for faa or they cut out some other funding for other things like nextgen and so forth that nobody would really want to see. The best hope, i think, for small airports and expanding the reach of control towers is a betterfunded organization that is also one that adopts new technology that increases benefits and reduces costs so that the contract tower benefit cost ratio can be higher for small airports that might not qualify today with conventional several hundredfoottall structure but would easily afford a contract tower and actually get Better Service from it. Thank you. One quick question, mr. Brown put asserted that nongovernmental air Service Provider would somehow be outside of democrat oversight i think is what you said. I just want to point just a few weeks ago we had executives here from united, american, southwest, and alaska who were sitting right here in this room where you are and were getting grilled by folks up here. Congress oversees the entire aviation sector including regulating private businesses. So id like to hear why you believe a regulated provider would be outside of democratic oversight . Its my understanding that this would be empowered as a business that can effectively decide what it invests in, how much it borrows, what technologies it picks, maybe what but still with congressional oversight . Well, are we going to have a committee for how they spend their money and how they informs and where they deploy papis and vassis and where they put up the next data come tower . Because if we are, why would we carve it out . Thank you. I yield back my time. I thank the gentleman. Thats what we have today, United States congress its called, and its not functioning well and thats what were trying to get away from so it can operate more like you operate. You have an extremely successful business, but you decide that based on business decisions, not based on whether bill shuster wants a tower or doesnt want a tower. So with that i yield to whos mr. Duncan. Im sorry. No. Not mr. Duncan. I dont know who mr. Payne. Mr. Payne is recognized, im sorry. Thank you, mr. Chairman. You know, listening to all this testimony and the different opinions, the american taxpayers have invested more than 50 billion in air Traffic Control system in just the last 20 years. Under the chairmans proposal to privatize atc last year, the federal government would have handed over atc assets worth billions of dollars to a private Corporation Free of charge. In the if the atc corporation was to hit financial or operational zults and needed to be taken over by the government, its my understanding per the takings clause of the constitution, that congress would have to pay to reacquire the atc assets. We would have to pay for what we gave away for free. This . Thanks. As i mentioned earlier, i dont believe its my role as Inspector General to express an opinion on purely policy call like that. However, to your point about valuation of assets specifically, our work has led our duty each year to audit the departments Financial Statements to include faas Financial Statements has shown us that the net book value of faa assets that might reasonably be considered for transfer to a Nongovernmental Agency at the end of the last fy amounted to 13. 7 billion. Ideally or probably a lesser figure than that would be actually transferred if the congress and the administration were to agree to take air Traffic Control out of government, then but nonetheless, thats a policy decision for you to consider. A valuation of those assets in any event whether its with the request or requirement that the new entity pay back the government, an accurate valuation is still going to be required because potential lenders and borrowers are going to want to see what the value of clot ral is that theyre putting up their money against. Thank you. Mr. Brown . I think people are trying to solve problems here and i frankly respect the dialogue. Im not a status quo guy. I actually think there are real opportunities to improve the management of the faa eni have found very often in the certification side theyre willing to listen. But among the things im concerned about besides equity in the system is whether the logic makes sense in the risk reward profile. This is a real question to me. Im just asking it as a business guy. Im here because i make my living selling products into aviation. But the lineup im concerned about is if we ensure the workforce that the future is as they need it to be for the purposes of serving their interest and we underwrite the risk of this enterprise, more surely than anything else, i know that to be true, when we were perhaps joined in litigation with this enterprise when its challenged on things it does. And when we give up our assets, some 20 billion to do it and empower a monopoly, when i look at that enterprise, i want to report to the people. It served us well for 50 years it will serve us well in the future. So i wrote in my testimony this is a question of principle for me. Its not a question of challenging other members objectives or motivations. Its an honest disagreement about the policy play here. Okay. Thank you. Mr. Poole . Well, in the hypothetical event of a bankruptcy, which i guess is what you were talking about as a possibility, and you have a liquidation in a bankruptcy in which case a takings clause thing i dont think would apply. Creditors would be the ones dealing with the bankruptcy situation and they would potentially be in a position to look for a different operator to take over and restart the system. But if the government if there were no takers, if the government had to step back in takers . The the any effect of your scenario is we transfer 20 billion to a company who makes bad bets and they end up owned by the bank of new york. Thats a bad outcome. Those might be the credit providers. They might be the credit providers. Mr. Rinaldi, in your testimony you know, you talked about the concern for for your membership. Anytime anythings streamlined, if you think that you benefit and things are going to stay the same under that scenario, i got a bridge to sell you too. But could you answer, answer the question . Oh, im sorry. What was the question . What bridge do you want to sell me . Well, thats not thats not that question. The original question that i asked that i laid out. But my time has expired, i guess you werent listening. I was listening, i just i thank the gentleman. There are limits to all infrastructure, technologically and human and because of that were take a fiveminute break. The committee will come to order i now recognize the member of the full committee mr. Duncan for five minutes. Thank you, mr. Chairman and as some people here will recall mr. Poole and i i think others i chaired the aviation subcommittee for six dreerz e years from 1995 until 2001 and speaker gingrich asked me to holt the first hearings on the proposed air Traffic Control corporation. Ms. Robin i think will remember that and at that point i think almost everybody maybe with the people on board that were not in favor of this proposal at the time. But im sorry that i didnt get to hear mr. Rinaldi and ms. Robins testimonies because i had other meetings, but i do want to say to mr. Brown that i was impressed by your testimony and i can assure you that i think your people will tell you that general aviation has not had a stronger supporter than i have been and im sure the chairman will do Everything Possible to make sure the general aviations concerns are heard loud and clear in any proposal that wednesday up with in this regard. But youve been with us several times before and you know that ive had concerns for a long time about the some of these costs and the delays and so forth. And so then i noticed in your testimony you say however, faye has not fully identified the total costs, the number of segments, i their capabilities or completion squed ulz for any of the six programs. In addition, faa has not determined when the transformational programs will start delivering benefits or how they will improve air traffic flow or productivity. These cost things concern me and you told me in response to questions that i asked at a 2014 hearing you stated, quote, we are probably looking years beyond 2025 perhaps another ten even and we are probably also looking at total expenditures in an order or magnitude two to three times that of the initial 40 billion estimate to achieve the original plan. Im wondering, do you stand by those statements that you made in 2014 or whats the whats the situation now . And then you also you heard mr. Brown basically say that everythings going pretty good. Thanks, mr. Duncan. As part of the introduction you mentioned your long service on the committee. I still wear with pride the label that you gave me at probably my very first appearance before the committee where you said youre the committees hired skeptic, so i appreciate that. And my staff does too because that fits our role. You and i have been around for a long time. Yes we have. I do stand by those numbers and what i meant to convey by that was the uncertainty of the numbers at that pint. Numbers appear to have changed a little bit recently because faas estimates have come to 36 billion completion date thereabouts 2030 or so. But still the uncertainty remains. Because at least for the six transformational programs that have commonly taken the title of nextgen, faa segmenttation practices in managing those acquisitions have led have not led to any kind of clear understanding as to total costs or ultimate completion date. So were still very much in an uncertain environment with regard to those programs. Its clear whats happened over time, though, is that those programs have become part of a more general and rolling implementation of modernization efforts to be sure. Faa to its credit has worked much more closely with industry over the last couple years to get their priorities down, and faa has been working hard to execute on those. So i do want to be fair certainly to the agency when i say that. But, cost and completion date still much uncertain. All right. Ms. Ramon, you said that youre original proposal when you worked ton was dead on arrival. Is that what do you think is why do you think that was and where do you think we are now . Whats tell me what you think is different now. I think it was it was dead on arrival because it it frankly imposed additional financial burden on the user. At the time more of the funding of the air Traffic Control system came from the general fund as opposed to ticket taxes. We, the Clinton Administration, our highest priority was balancing the budget and so our proposal entailed a bill for the users that was unacceptable. So i think for i think for the Airline Industry, that was a problem. I think for house House Democrats it was much of what you you hear today. It was a an opposition to to something that was seen as not privatization but Something Like that. I think this is a great debate. I think were making progress. Were arguing over the value of the assets that get transferred. I mean, you know, were there are proposals to create a Government Corporation. Admittedly it would have the regulatory function as part of it, which is, i think, highly flawed, but think weve advanced the debate. Well my times gone by so quickly, just quickly id like to ask mr. Brown, theres they tell me some 60 countries that have done some form of privatization and we visited them in new zealand and certain other countries. Have you talked to some of the general achation people in some of these other countries . I know general aviation is very small in many of those countries. Yeah. Have you visited or looked into that any . I have. And i think those countries made choices they thought were sensible for their taxpayers and their public interests and, frankly, for the scale and scope of their aviation industries, which are quite, quite small. And so, you know, my Reference Point in many of those countries is that general aviation is already a minuscule part of the economy. People dont fly, they dont have the freedom to fly, they dont create pilots, they dont build airplanes. So in my mind theyre taking a function that isnt critical to their economy and theyre outsourcing it. In my mind, in our country what we do with our National Airspace is in fact an economic engine and a critical one and i think it works pretty darn well and thats where the origin of my interest and my point of view come from. All right. Thank you very much purchase chairman. Thank the gentleman. Ms. Tight is is recognized for five minutes. Thank you mr. Chairman. Its interesting what ms. Robin said her bill was dead on arrival because Airlines Wanted today but they didnt want to pay for it. Now that theyre getting it free seem to be all in didnt seem to be dead on arrival, i find that interesting. But the question i want to ask is to mr. Poole. I want to go back. We hear a lot about the assets, lets talk about the people who were involved. You, mr. Poole, and the Reason Foundation and your Donor Network have been talking for decades about privatizing all aspects of government, not just the faa. In fact in 2010 you wrote a piece for downsizing the government dog that was a product of the Cato Institute and you talked about the need to privatize and commercialize air traffic system back then. One of the major arguments that you made was the cost of running the system and in particular you went into extensive detail about the history of air Traffic Controllers and the cost of salary and benefits to those professionals who operate the system. You noted that twothirds of the faas operational expenses are due to what you called the high cost of labor. Youve gone on to reference the efficiency of canada where they have downsized system, shrunk the system i think was the term and cut down on the number of towers. So considering all that you have written on this issue, and now we have this bill before us, i want you to walk me through exactly how youre going to address the high cost of labor as you make this system more efficient. Well, thank you for letting me clarify. What weve seen in countries such as germany and canada and others that have corporatetized their systems is not downsizing the controller workforce. In canada in particular the need was to increase the controller workforce this was low because of many, many years of underfunding by transport canada. The downsizing that could take place is in the middle management ranks. The bureaucracy. Theres so many layers and convoluted that it extracts a high cost out of the users. Whether theyre paying aviation user taxes or direct user fees. Thats where the need for looking at that cost is. Its in the middle management ranks of the bureaucracy. Not in the daytoday controller workforce, that is undersized for the task at hand today. We, as paul rinaldi has said, were at a low point of certified professional controllers today and thats partly because of the shutdown of the Training Academy that was out of commission for nearly a year and the Selection Process that has been now partly overturned, thanks to congress. So we do have problems, but its not its not because its not controllers, its the bureaucracy. I wish that reassured me, but when you talk about efficiency and cutting costs and high costs of labor and benefits and controllers are part of that system, i dont know that i believe thats where youre going to stop is at socalled middle management. But id asked mr. Rinaldi hes sitting there next to you, he represents these folks, its not just you a number of conservative Media Outlets keep talking about high labor costs, high labor costs, lets get more computers lets have fewer people. So i would ask you mr. Rinaldi decide what assurances do you have that once your members are under the contriefl private system thats dominated by representatives for Profit Companies who are looking to run the system as keenly as possible because its about their bottom line. You heard they didnt want to pay for it before but theyre getting it free now, how do you know your members are going to be protected once this current contract is over . Thank you, madam. Congresswoman. Great question. First of all we have nothing in front of us to actually compare to see exactly what type of workers protections would be in the new language. So anything i would say would be speculating. But i will tell you we are highly trained, highly skilled, highly efficient workforce and we keep hearing about canada, we keep hearing about the United States. Well, we run roughly 10 10 times the amount of traffic they do in canada with only five times the amount of controllers and were highly efficient, and i stand behind the work of the air Traffic Controllers in this country and i put them against anybody else in the world because we are the best in the world. I totally agree with that and thats why i want to be sure they are protected under any kind of new system going forward. Me too, and im with you. I would just say that under i think mr. Rinaldi said this before, under the air act from last year we got support from the air Traffic Controllers as well as if i could for the record, submit letters of support from whats the first one . Net jets pilots, southwest Pilots Association, the allied Pilots Association and that, so id like to submit these letters for the record without objection. So order. And with that i recognize mr. Mitchell for five minutes. Thank you, mr. Chair, and thank you for all the witnesses remaining through a long day. You note in your report that faa Reform Efforts have not slowed the overall cost, growth, or improved the productivity. You talk about the fact that their budget debris grew by 95 , you also earlier mr. Hunter referenced that the hope is, i stress hope, the 36 billion would be the cost to get nextgen up some time around 2030, it may come to fruition. Im hoping to still be around in 2030. Let me ask you a question, mr. Brown. Am i wrong, that accurately portrays your analysis . Yes, it is correct. Mr. Brown, like you im a private business guy, im an aircraft owner, ive own several aircrafts. In fact, one of your props is on one of them. Thank you. If you had a business that couldnt tell you was going to cost to put a set of of products, couldnt tell you when they were going to get it done but said eventually well get there, how likely is it that youd buy that business or keep it . That would not be in the category of strong indicators for that business. Thank you. And it would cause me to ask a lot more questions. Let me go to the next we talk about the value of the assets, theres been a lot of discussion about that. How do we pay for the, quote, assets, i do use that term loosely in the case of the faa, how do we pay for those assets that we already have . Mostly theyre funded by taxes on ticket sales, gas taxes from ga users, theres a small infusion as well from the general fund. And mr. Brown, you have a lot of assets in your business and what depreciation schedule do you use on them . Seven years on capital equipment. About seven years, you fully depreciate them, usable life in a lot of equipment is, what, ten years . Can be longer, yeah. Not much longer especially whats the average age of some of the equipment thats in the faa right now. It is aging and getting older by the minute, obviously. The enroute centers that manage High Altitude traffic maybe 50 years on average, 25 years on average for terminal radar approach controls. Id like someone to explain to me in writing some way why were losing our mind about the value of assets. When in fact the real world outside these halls the value of the assets is less than zero, in fact the question is how do you dispose of them if in fact you couldnt use those assets because thats what were talking about. Were talking about assets that have gone beyond the halflife yet somehow we think were giving them away to somebody. In fact, some of these assets we want someone to take them away. Followup question also, if you can, mr. Poole, the countries that have gone to some version of privatization, third party other than government running their atc system, 60 countries or so they all had safe, relatively safe airline or Flight Systems before they divested, right . Yes, they did. And the study that was done by three universities about a decade ago looked at i think it was five Year Comparison of ten of those countries and found that safety didnt go down in any of them and it was either the same or better following. Mr. Rinaldi same question they all had safe systems as they made their transition . Yes. Any of your cohorts around the world say oh my god weve gone to a third party or a privatized system and the world is now threatened . Completely opposite. Most of them would never go back to government structure. Im flown the system here and canada system and other systems, ive got some interesting routing we could talk about mr. Brown. Flying back to detroit through fort wayne was an interesting route. That was quite helpful. Point is, theres a lot of discussion about bifurcating the faa. Just because it was together when they created this thing somehow theres been discussion that its a terrible thing to talk about making it more efficient separately. Like its a holy ground. Its costing us a ton of money, yet the argument is if we throw more money at it we hope it will get better. Hope is not a plan, its the last step before desperation. Were at desperation. One more comment which is about the discussion about control by the outside stakeholders. Big parts of my district are powered by Rural Electric cooperatives, lots of stakeholders, lots of interest, and those people wouldnt give that up for the world, because you know what, it actually worries first about the customers in service and not about the politics. About what you talked here about sequestration, all the other mess. It worries first are we delivering the promise we promised to deliver the thats my hope and a board that are has a fi dish area interest to deliver the cost that we can manage. Thank you, sir, my time is up. Im done. I thank the gentleman and mr. Weber is recognized for five minutes. Thank you, mr. Chairman. When you had your comments, you said you identified some longstanding management weaknesses. Can you elaborate on those . Yes, thanks for the opportunity. By management weaknesses, im referring to those in faas acquisition practices. We cited in our testimony overambitious planning, adsp and eram would be key examples of that. I cited in our testimony the need for stable requirements for acquisitions to be successfully executed. Eram and s. W. I. M. Programs would be examples of where faa had shortcomings in that area. Contract oversight, generally, across the board as we have audited faas programs we have found areas that needed significant improvement all the way from incentive fees, to the requirement faas own requirement for independent government cost estimates and sole source contracting, which some faa acquisitions personnel werent even following their own requirements. So you can see there have been some significant shortcomings along the line. Theyve affected not only the nextgen programs proper but others that are in support of areas of air Traffic Control and nextgen. My first year on the committee i know you said had you received the label the committees biggest skeptic. Hired skeptic, i think. Hired skeptic. And i wasnt skeptical of the committee, i was skeptical of information of proposals, of information with the idea of bringing data for the committees consideration. Okay, great. How long have you been the hired skeptic. Little over ten years now, sir. Ten years. Okay. So youve been doing this and watching this faa for ten years, is that fair . Yes, sir. You said there were some requirements for them to continue to evolve. So fix those problems you just laid out for us. What are those requirements . If they were to say in place, how does it evolve . If faa were to retain responsibility for air Traffic Control, first, continue to consult extensively with stakeholders, faas faa has gone off the rails largely its because they havent done that. And you would think that the new process that chairman is submitting would continue to consult with stakeholders . Well, stakeholders would be in charge under a proposal, as i understand, how it may ultimately be. Well they would have a board thats been discussed back and forth, but they would be constant in that scenario theyd be in constant communication with the stakeholders, their businesses, the different parts of the group. Go ahead. Im sorry, i may have misunderstood your predicate. I thought you were asking if faa were to keep responsibility for air traffic well, no, it was but youre saying that they need to continue and im saying contrast that with what the recommendation here is, and that is that they would definitely be doing that, go to step two. They do. Focus on the acquisition system because i understand my belief at least is thats the essence of the Aviation Community or users dissatisfaction right now with faa. Its not on the safety side as weve all recognized faa right now isnt what i called earlier the golden era of aviation safety through its own efforts, industrys efforts, congress efforts, the efforts of my office. But where we where dissatisfaction is arising its in the air Traffic Control modernization era. So focus on faas acquisition practices, the Acquisition Management system, which is the regulation that governs faas practices needs to be updated, it needs to be revised, the Workforce Needs to be properly certified and trained. All of those things that i talked about earlier about planning, requirement could be done in the new system that the chairman is proposing. Let me stop you if i may, im running out of time. Mr. Poole, standalone airports ive got a couple small ones. Well, mr. Rinaldo, did you say you all represented 40 of those airports . 94. 94. Mr. Poole, back to you, what happens to those airports now . Well, those airports are owned by municipalities, usually. They get funding from the aip, grant program. None of that would change, aip would continue to be an faa function and do that. Mean criteria in affecting those small airports is whether they have a tower or not. And if they have a tower and its obsolete and needs to be replaced, hows it going to get paid for, and can it be afforded . Thats where i think first of all the legislation can spell out that everybody is entitled to a tower that meets the benefit cost ratio, and the funding capability financing capability and openness to Better Technology of the corporation would very likely adopt remote towers as a more costeffective way to be able to expand the scope of Tower Services to small airports that may not qualify today, but could probably with a better benefit cost ratio. I think theres a very Bright Future for small airports. Thank you for elaborating. I yield back. Mr. La motha is represented for five minutes. Thank you, mr. Chairman. Much decision on the reform of faa and air Traffic Controllers and no doubt the controllers are doing very well with what they have to work with, but when we see the potential here with improvement with reform in the previous gao report showed that the reforms were like were talking about would have really no negative impact on safety, many cases safety improved. And what we havent seen is that throwing more money at it, faa had not really improved anything but even in some cases a negative effect. Potential for savings, as weve seen with, you know, offspoken canada system shows that we can have a very positive effect on safety as well as saving money. And so what i wanted to ask mr. Poole and ms. Robin would be can we really expect that these savings that would be achieved could be passed down to the consumers on what they would expect for their costs . Thats a obviously good question to ask and that depends really on is there a Competitive Airline market. If theres a Competitive Airline market, then lower costs are more likely to be passed on in ticket prices, for example, than if theres not a competitive market. And i think theres concerns being raised about how competitive our Airline Market has gotten to be in recent years and theres i mean, theres some things we dont have time to discuss here, Things Congress could do to try to make the Airline Market somewhat more competitive than it has been. Okay. Ms. Robin similar, okay. Ditto. And i think also in addition to passing savings on, i think you were trying to expand the system, allow allow more throughput and you need new technology do that. Were not at the cutting edge of that. You need new technology in order to allow the for an expansion of the system. For both of you, again, if we were to move in this direction of atc privatization, smaller airports, rural airports, you know, the threat of towers closing, what might be the expectations we would see for rural airports just in general . I know weve been touching ton here but lazy it going to mean for rural airports and their viability . Well, ill repeat what i said a few minutes ago. I think that a better funded and system able to do largescale capital financing, one of its priorities would be facility replacement and some degree of consolidation but also expanding the scope. Right now, as i say, we have a moratorium on contract tower, faa has a moratorium that is denying a couple dozen airports that are on a waiting list, some of them have already qualified in terms of benefitcost ratio, but theres just no funding available for faa to do that. A wellfunded system that is focused on serving its customers better and open to aggressively using new Technology Like remote towers, i think offers the best future i can imagine for small airports in this country. Thank you for that. Im running out of time i want to jump to mr. Skovel for a second here on talking about contract towers. Okay. So they are pretty important at Smaller Service airports and general aviation, et cetera. In that airports that have up to it was up to 50 of civilian airports that have military operations use contract tower airports. Now, its very important to have these operations which is around 250 of them in the country. Would you comment, please, mr. Scovel on the value of the contract tours to air Traffic Safety and efficiency in our nations system and the cost effectiveness to faa and, as well as to taxpayers . Yes. At this committees request we reviewed the faas federal Contract Tower Program several times and weve concluded that generally they are as safe, they are as well respected and appreciated by users as faaoperated towers. And on average they save or avoid for faa 1. 5 million per year in costs versus faaoperated towers. Per tower . Per tower, correct. Significant, okay. We would cite federal contract towers as a missed opportunity for faa. We understand in recent years there have been funding difficulties, perhaps, but well before that faa had opportunities to pull more towers into the federal contract tower and took a bass. Its been a decade or longer since faa has moved any towers into the federal contract Contract Tower Program. Perhaps we should move more then. Depends on funding. Always that. Thank you, mr. Chairman. I thank the gentleman. Mr. Perry is recognized for five minutes. Finally mr. Perry. Finally. Well i havent been here for half of the meeting. Ladies and gentlemen, thanks for your time. I had a lengthy question for mr. Scovel about contract towers but i think i missed afl of them and he was just asked one. But suffice it is to say the only thing i want to add in case it hasnt been added that its important to know the that 47 of all military operations at civilian airports are at contract tower airports, im a rotary wing guy so, you know, not much on not too much on the low altitude and route chart the sectionals probably more important. But that having been said, it seems to me based on at least the answer i got to hear from regarding my colleagues chemical weapon that you feel that they are efficient and costeffective to the faa and to the taxpayers. Is that a fair summation, mr. Scovel . Yes completely fair, thank you. And i know thats not necessarily the context of this hearing, but think the context is that well ill just use this. Between 96 and 2012 the faas budget increased by 95 , meanwhile productivity decreased substantially and were talking about personnel procurement and organizational reforms which, you know, doing the same thing over and over again, while i appreciate mr. Brown saying we can tweak this, my argument would be is that we have tried and tried to it seems not great effect, right . And i think im probably being kind, right . Not great effect. Let me ask you this, probably mr. Poole maybe and mr. Rinaldi, im really interested in the uas propagation of the United States and the utm. And im wondering in the context of what were talking about, the proposal policy model that were talking about, if either one of you could describe what you feel your organization, especially you, mr. Rinaldi, would feel needs to be in place if thats currently missing for us to come to some kind of utm. Because weve put requirements on the faa to come up with something here and there are deadlines, but i feel like were just way behind, and i want to make sure that theres not something were missing from your viewpoint. Thank you, sir. Safely integrating uav has been a monumental task. And its taken a lot of resources within the faa and certainly distracting us from working on nextgen as were working on bringing uavs and incorporating them into our system. So one of the things i would like to see is some type of user feed base for these uavs so they can pay into the Aviation Trust Fund right now and pay for the system like everyone else does pay for the system. Is there a model that you know of regarding some kind of a participation for maybe commercial users as opposed to incidental private im just curious, because its a very important concept but its a great question and i think everybodys kind of scratching their head right now because theyre not using fuel and we base most, you know, on fuel or ticket tax. And they wouldnt have either or that so we have to come one a new concept. So it might be like miles flown or Something Like that, right . Well, im really not sure how it would work out. User fee, okay. Thats an important part of the discussion. Im glad you brought it up. Mr. Poole, whats whats your input . Do you know what the Airlines Want to see in integrating . I have no idea what the airlines think about this. Okay. I do know theres a lot of interesting i think theres a possible bifurcation between the very low altitude mostly hobbyist of uass. Theres a lot of interest in some kind of nonfaa sort of private solution to this that Silicon Valley focus are talking about in cooperation with nasa. I think we need to separate that in terms of different being different from the controlled airspace in which our airliners and many private planes but there are going to be incursion has no controlled airspace whether its at air drone or thats a significant problem we need to deal with. There are incursions now in both controlled and noncontrolled airspace, which is part of the issue and i feel like that we need to get to it baugh anybody else have something to add . No, we do see a lot of incursions today and a lot of spottings that commercial airlines are seeing. And i think the sooner we can safely integrate them and come up with a process, the safer the system will be. So while i would agree with you it does divert some attention, resources, time, energy, what have you, we cant just ignore the fact. No, i would not ignore it. Thats really, really foolish. Its an emerging technology, emerging user into the system, its a very important user. I think actually to a great extent it can be an enhancement. Some of the technologies that are emerging, especially in the navigation arena itself, could be used commercially to greatly enhance. I was talking to the gentleman next to me i know my times expired, mr. Chairman, but as an aviator myself, you know, the skys unlimited, you know . Im limited on the ground when i pull out of the parking lot ive got to stay on the road over im going off road. And yet we have the same system since ive been flying for 20 or 30 years now i essentially got to take off and then go get on the highway instead of just going literally from point to point which i dont know what the savings is is estimated at going literally from point to point, but its got to be monumental over thousands and millions and billions of flights, right . Commercially or otherwise. Anyhow, mr. Chairman i yield. Thank you. I thank the gentleman. And with that mr. Sanford is recognized for five minutes. Mike. There we are. I thank the chairman. I just want to bore down just for one second, i guess beginning with you mr. Rinaldi. From an air Traffic Control standpoint a blip is a blip, right . Well, not necessarily. We work all airplanes safely and efficiently. There are some heavy aircraft that you need weight turbulence separation. So each blip, you know, for lack of a better term gets treated safely and efficiently, but there are different ways to work them. Fair enough. But the wing tip vertases off a cub are going to be different than a wing tip off a 747. Thats what youre getting. But from the standpoint of management, its essentially the same, right . Yes. So i think that one of the things that ive heard particularly from the Cargo Carrier its not a fear that if you move, you know, are they going to be disproportionally impacted in that then weigh more from a Traffic Control standpoint, they dont take more time, they dont really use more stuff, but are they going to be disproportionally impacted relative to other smaller and i just love i see you shaking your head up and down, i dont know whether that means yes or no, but id love to here some of you alls thoughts on that because thats one of the things that as we go through these deliberations weve got ferret out. Yes, maam. On the pricing side, most economists would say the current approach pricing based on the ticket tax is very inefficient because it isnt correlated with the costs that users impose on the system. And so you want to go to a costbased system. What the rest of the world uses is a weight and distance charge. And they use weight because they cant fully cover their costs, typically, with just a distance charge. Thats you want to charge marginal costs but you want to cover your full cost. And weight is a way of doing that. Its called ramsey pricing, an economic term. And the cargo folks object to that. And i think theres some really important analysis to be done about just how big that weight component has to be. I think there is reason to think that the faa may overstate their fixed costs which is what requires to you have a weight component to the charge. There is a tendency for regulated utilities to overstate their fixed costs versus their marginal costs. So i think this is a really important issue and i dont think we should just blindly adopt the standard weight and distance charge. Yes, sir. Ive looked into this and in 2001 Reason Foundation study we actually had a lot of dialogue with one of the major Cargo Carriers, and they persuaded us that a strict weight distance formula would cause a significant increase in the cost share that they would pay. And we came up with an idea that said, all right, look and let me interject. Its not they pay, its we pay. Yeah. Yeah, but anyway. So what we came up with was we looked up the flight patterns by time of day, and it turned out that most of the cargo flights do not take place at the busy times of day, or at the busiest hubs at those times of day. So if you put into the pricing formula a congestion factor, that, you could basically hold the Cargo Carriers share to about what it is today without having to discard the global standard of an overall waitdistance formula. Cato does permit congestion related factors going into airport and air traffic pricing. Hardly anybody does it except the uk major airports, but that is consistent with iko charging principles and thats a way that should be definitely explored for the Cargo Airlines. I think thats fascinating in that if you look at this notion of optimizing the use of our structure in this country i think this notion of going to premium pricing based on congestion or load is going to become a bigger and bigger issue, whether its on surface transportation, air transportation, or other. I see i have 25 seconds, but it looked like you had a thought down there at the end, but maybe you didnt. I have many thoughts, sir, but not on this particular question. Thank you. Fair enough. With that i yield back, mr. Chairman. Thank the gentleman. Mr. Davis recognized for five minutes. I bet i can guess that thought. When is this going to be over . And then you have members like me that keep coming in and out. I apologize that were shuttling back and forth between two hearings today, but this is a very important one. One that i believe from many of the responses that weve heard today and many of my colleagues that it centers on whats really this debate of whats the cost of doing nothing . I mean, its already cost the taxpayers billions of dollars to see the to put towards nextgen, and were not seeing the progress that we, as america, with the air system that we have, be upgraded to be even compete on the same level with some of our some of our allies. I cant help to compare it to work thats already been done and weve discussed this today, you have, whats been done in canada, whats been done in the United Kingdom. Canadas bought twice the technology at half the cost and has done so in a third of the time. So let me start with you, mr. Rinaldi. What do you think would be the cost of us doing nothing . Yes, status quo or doing nothing is unacceptable. September will be here before we know it. We will be looking at another possible Government Shutdown and, as i said in my Opening Statement, as we lead up to a shutdown, the faa turns their attention from nextagain or uav implementation to shutdown procedures. This is happening for the last ten years it happens a couple times a year, and we lose this time and its four or five weeks leading up to it, five weeks on the back end of it, and theyre not sure what sequesters going to bring us if we get a budget and get a bill passed what type of cuts were going to have into the Aviation System. A lot of discussion about rural america. I will tell you and you remember, sir, that when the sequester hit in 2013 the faa looked at closing over 238 air Traffic Control towers. It was an interesting list. Most of them where in my district. Most of them were in rural america. Mr. Poole, do you have any comments on this . I think almost everything has been said. But the technology youre comparison with air canada is brilliant. Because they have things that we are only planning now, they have fully rolled out nationwide controller pilot data link which were looking at maybe six or eight years before we have that en route airspace. They have across the north atlantic very soon satellitebased positioning thanks to their investment in aireon. This satellitebased Global Coverage all the places that dont have radar, had is 70 of the earths service will now have radar like separation possible because nav canada and several other nasbs have invested in that and are subscribing to it and faa was unable to invest and cant figure out how to subscribe to it. So the idea that we are the Gold Standard most modern in the world is no longer true and the more the status quo continues, the less thats going to be true. Were going to be falling farther and farther behind the state of the art. Well, as we wind this hearing down, i want to make sure that we reiterate a few points. This new atc entity is not going to decide where airlines or anyone can or cannot fly, correct. Right. Can you say it a little louder in the microphone . Thats correct they will not decide anything about where airlines fly. Thank you. I want to be address some more information about the information ive seen about the motives of the board under the air act proposal. Despite the fact that the bill clearly states that two directors will appointed by the secretary of transportation to act in the public interest, some have questioned the motives of the board. Can you describe your understanding of the governance. Board and how it will actually operate . Board and how it will a operate . Board and how it will actually operate . Of board and how it will actually operate . T board and how it will actually operate . He board and how it will actually operate . Board and how it will actually operate . Board and how actually operate . Microphone . Mr. Mitchell referred to the cooperative electric cooperative thinks it is direct. And it is analogous to the cooperatives that we have in the utility industry, the agriculture insurance. And they work, right . Yes, they work beautifully. It is given that you have it is still air Traffic Control provision is still a monopoly, i think technology will change that but for the time proximate cause it is still a monopoly so you need a design that protects against any kind of monopoly abuse. And the canadian model does that by having the stakeholders on the select the Board Members and having the Board Members are fiduciaries as the chairman emphasized in his introduction. They have a fiduciary responsibility, that has been critical to nav canadas success. And quote of the day, entities like this that are already operational work beautifully, so i appreciate that. And we, as policy makers keep going. Thank you. We as policymakers dont have a lot of time here. You know, we can sit and debate whats work and whats not and mr. Rinaldi mentioned the faas got to deal with not only nextgen but Uas Technology where i once questioned an official about what canadas doing correctly. We dont have a lot of time to fix this. Todays the time to act, nows the time to act, which is why this is so important. So thank you. Thank the gentleman but we dont have much time but we do have time nor for mr. Defazio to have five minutes and me to have five minutes, because theyve called a vote. We have 12 minutes, so i will strictly enforce the fiveminute rule. Thank you, mr. Chairman. I want to point out in the d. O. D. Memo that there is a sentence that recognize the risk recognizing the dods responsibilities. Like to put in the record an article from the National Observer in canada headline inspectors say Major Canadian Airline disaster likely and they talk about the major cutbacks in the safety, which was retained by the government. And then i would move on, ms. Robine, do you remember executive order 13180 by president clinton . No . Okay. Is that one that created the ato . The one that says air Traffic Control is an inherently governmental. Yes, the date is october 7th. Ms. Robine, i dont have time thank you. Mr. Scovel, hold that up, come on. So we just kind of said oh our assets are old and someone down there said theyre not worth anything. How olds that . I think thats 13, right . That is houston, valued at 62 million. Then, of course, we have property and long island kind of valuable. Have you broken down the assets in terms of Property Values . Didnt canada they valued the system and they had to pay for it, correct . They did. Okay. And the Inspector General in canada Auditor General said they paid, this is canada, little dinky canada they paid 1. 5 billion and were proposing that nothing would be paid here and theres no value and they said it was undervalued at 2. 6. How old was their system because youre saying our systems old decrepit and wasnt worth anything. Was theirs brand new, spiffy, back then . No. So they paid for it but here we have a much larger investment were going to transfer for free and we have the problematic thing about takings. And you valued it as 13. 7 billion. Lets say, you know, how much of that would depreciate . How much of that would depreciate . No, yeah, i mean whats the land value versus building you dont know . Thats the infrastructure alone. I dont believe it involves the property value. Okay. So its quite valuable. Now lets go to small airports. Almost everybody on that side is sensitive to g. A. , they represent more rural districts, and we heard that were, you know, they will not direct where people fly. Thats correct. But this board will decide where we invest. Heres the statement of the ceo of jetblue. We also need to correct Infrastructure Improvements into the regions of the country where theyll produce the most benefits like the northeast corridor. The airlines get four seat on that board. Thats the opinion of jetblue. We heard the same thing from the former ceo of united and, oh, by the way, theres no airport representative on the board whatsoever at least as the bill was written last year. So were going to say were going to protect rural airports, were going to protect it. Now mr. Brown you talked about wes, theyre 441,000 watts did those come for free and do they have to be maintained, updated . Well, the faa, like night owls produced them one airport at a time until they arrived on my doorstep and i was amazed by them but they got paid for by the user fees and fuel taxes that fuel the system. Weve heard how much money has been wasted, except weve been investing in things like that that arent valuable except to the commercial industry. Except for jackson hole and other places, does the commercial industry use those . Anybody can use those if they have the right equipment, the problem is most of the airlines dont have the right equipment. Thats interesting. So anybody know of another country in the world that is ready to turn on a groundbased adsb system in 2020 for all their all their air traffic, anybody whos so equipped . Anybody in the world doing that, ground based domestically not over the ocean. Australia its already in operation. So weve got one and were going to be there, too. So, you know, weve heard a lot about this over the ocean stuff. You know, the you know, im not particularly concerned about the tiny fraction of over the ocean flights we control and whether or not they get free adsb, because there arent that many planes to worry about the congestion and flying closer together, whereas domestically, we may get some benefit from the system, but it still begs the question how many planes can you land at the same time at many of our airports, which has to do with airport schedules. Revenues, apparently theres an assumption that we that congress will repeal the ticket tax and i mean right now our current taxes are yielding about 14 billion a year and, you know, the ato is 11. 1. So that assumes congress is going to repeal substantial taxes, i assume. Thats correct. And then the new board will determine how to pay for the ato. Okay i see a nodding ever the head, yes. Thank you, mr. Chair. I thank the gentleman and let me start off first by saying that investment will not be directed by this new board. There will still be aip funds going out to these smaller airports around the country so thats not actually accurate. You know, one of the things that ms. Titus brought up which i think is very, very important and she was directing it to mr. Rinaldi was about the air Traffic Controllers. Let me tell you one of my biggest concerns in this proposal is that we make sure we move those highly trained, highly technical, highly skilled, Efficient Air Traffic Controllers to the new system. And if you dont do it in the right way, a third of them, i think im correct, a third of the certified controllers can retire tomorrow if theyre not happy. So for me thats something very important. I can tell you what, ive been criticized by conservative groups around this town, because they just dont get it. You have to take the qualified workforce with you. So, mr. Rinaldi, i know we talked a little bit about the count going up at nav canada, the controller count count goes up. What are your thoughts on not only the controller count, but middle management . Well, if you look at it was brought up earlier with nav canada when they were in government where they had roughly 6700, 6,800 employees, of which 2,000 were air Traffic Controllers. Now that theyre a highfunctioning not for Profit Corporation they have about 4,300 employees of which 2,000 of them are roughly air Traffic Controllers. So the controller workforce stayed the same or went up a little bit. It is the middle management that they attributed through retirement in a humane way and they just didnt backfill those positions. I call a lot of that between the middle management within the agency and the multilayers of contractors they have within the agency also. Thats one of the things thats already being, you know, privatized, but there with all these contractors within the faa headquarters. I call that delay. It actually, it stops good things from happening at the very top and its, you know, and things that are happening, trying to change at the operational level. So for those of us that arent geologists, nothing permeates up and nothing permeates down. Yeah. I understand what clay is then. And finally i want to make the point here that first of all there was someone was saying along here the restriction, the airspace would be restricted. We made it clear in air one but maybe not clear enough to make sure that this new entity will not be able to restrict airspace. Plain and simple were going to strengthen that language to make sure the general Aviation Community knows they are not going to be restricted by this new entity. Thats the faas having the Regulatory Oversight of this if thats the case to do Something Like that. Second, when we talked about nav canada in our system is ten times larger, no doubt about it, i believe because we are so big and so complex thats a reason to move to this system so that we can manage it much better. You know, were already to the scale the size to handle those greater operations. 3,000 facilities, 14,000 controllers, 6,000 technicians, 5,000 managers. We are scaled to handle this today. And then i might add, again, this is something thats very troubling to me. It should be troubling to anybody thats in the business world. We are nine to ten times larger depending on how you want to measure it to canada, we spend 25 times to 28 times more in cap x than they do. And as it was mentioned by mr. Davis, the former ceo of nav canada said he gets twice as Much Technology at half the cost three times as fast. So, again, as a Business Owner, a former Business Owner, if were spending 25 to 28 times more on cap x and were getting very little for it, thats a real problem. Thats a real problem for the american taxpayer, thats a real problem for the system if we were doing it efficiently, my goodness, how often would could drive the cost down. And as i spoke to the folks at nav canada and everybody understands in say volume business. And if we go to the system, our volume is so tremendous it will dramatically drive down the cost and well have more money out there to do things to help more communities, to do things about the efficiency, the technology, the employees. So, again, this is something weve got an opportunity and i said to the airlines when i was here lot of last time when they did something very wrong. We have an opportunity here to do something very right, and i hope we seize this opportunity because im afraid its not going to come along again. Ms. Robine i think im the first one that called you by the right name today, robine. I know youve been engaged in this for a number of years you started in the Clinton Administration and i appreciate all the value you bring here as well as mr. Poole, mr. Brown thank you so much for being here today your perspective is very valuable to us. Again, i want to reiterate. Im a g. A. Guy. Im a rural guy. Theres nothing i want to do to hurt those people that are my constituents, but i think we have something that can help the United States of america to continue for us to be the leader in aviation around the world. Again, thank you all for being here today. Appreciate your time, and i would ask unanimous consent the record remain open until such time our witnesses pride answers to any questions that may be submitted to them in writing. Is a open for 15 days and information to be included in the record of todays hearing without objection so order id like to thank the witnesses again and there are no other members, so were adjourned. Thank you