[House Hearing, 114 Congress]
[From the U.S. Government Publishing Office]


 OPPORTUNITY RISING: THE FAA'S NEW REGULATORY FRAMEWORK FOR COMMERCIAL 
                            DRONE OPERATIONS

=======================================================================

                                HEARING

                               BEFORE THE

       SUBCOMMITTEE ON INVESTIGATIONS, OVERSIGHT AND REGULATIONS

                                 OF THE

                      COMMITTEE ON SMALL BUSINESS
                             UNITED STATES
                        HOUSE OF REPRESENTATIVES

                    ONE HUNDRED FOURTEENTH CONGRESS

                             SECOND SESSION

                               __________

                              HEARING HELD
                           SEPTEMBER 27, 2016

                               __________

[GRAPHIC NOT AVAILABLE IN TIFF FORMAT] 
                               

            Small Business Committee Document Number 114-073
              Available via the GPO Website: www.fdsys.gov
              
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                   U.S. GOVERNMENT PUBLISHING OFFICE
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                   HOUSE COMMITTEE ON SMALL BUSINESS

                      STEVE CHABOT, Ohio, Chairman
                            STEVE KING, Iowa
                      BLAINE LUETKEMEYER, Missouri
                        RICHARD HANNA, New York
                         TIM HUELSKAMP, Kansas
                         CHRIS GIBSON, New York
                          DAVE BRAT, Virginia
             AUMUA AMATA COLEMAN RADEWAGEN, American Samoa
                        STEVE KNIGHT, California
                        CARLOS CURBELO, Florida
                         CRESENT HARDY, Nevada
                         WARREN DAVIDSON, Ohio
               NYDIA VELAZQUEZ, New York, Ranking Member
                         YVETTE CLARK, New York
                          JUDY CHU, California
                        JANICE HAHN, California
                     DONALD PAYNE, JR., New Jersey
                          GRACE MENG, New York
                       BRENDA LAWRENCE, Michigan
                       ALMA ADAMS, North Carolina
                      SETH MOULTON, Massachusetts

                   Kevin Fitzpatrick, Staff Director
                       Jan Oliver, Chief Counsel
                Adam Minehardt, Minority Staff Director
                            
                            
                            C O N T E N T S

                           OPENING STATEMENTS

                                                                   Page
Hon. Cresent Hardy...............................................     1
Hon. Alma Adams..................................................     2

                               WITNESSES

Mr. Gabriel Dobbs, Vice President, Business Development and 
  Policy, Kespry Inc., Menlo Park, CA, testifying on behalf of 
  the Small UAV Coalition........................................     4
Mr. Brian Wynne, President & CEO, Association for Unmanned 
  Vehicle Systems International, Arlington, VA...................     6
Mr. Jonathan H. Daniels, President, Praxis Aerospace Concepts 
  International, Inc., Henderson, NV.............................     7
Ms. Lisa Ellman, Partner, Hogan Lovells US LLP, Washington, DC...     9

                                APPENDIX

Prepared Statements:
    Mr. Gabriel Dobbs, Vice President, Business Development and 
      Policy, Kespry Inc., Menlo Park, CA, testifying on behalf 
      of the Small UAV Coalition.................................    25
    Mr. Brian Wynne, President & CEO, Association for Unmanned 
      Vehicle Systems International, Arlington, VA...............    32
    Mr. Jonathan H. Daniels, President, Praxis Aerospace Concepts 
      International, Inc., Henderson, NV.........................    36
    Ms. Lisa Ellman, Partner, Hogan Lovells US LLP, Washington, 
      DC.........................................................    45
Questions for the Record:
    None.
Answers for the Record:
    None.
Additional Material for the Record:
    DJI..........................................................    52
    NAMIC (National Association of Mutual Insurance Companies)...    53

 
 OPPORTUNITY RISING: THE FAA'S NEW REGULATORY FRAMEWORK FOR COMMERCIAL 
                            DRONE OPERATIONS

                              ----------                              


                      TUESDAY, SEPTEMBER 27, 2016

                  House of Representatives,
               Committee on Small Business,
     Subcommittee on Investigations, Oversight and 
                                        Regulations
                                                    Washington, DC.
    The Subcommittee met, pursuant to call, at 11:00 a.m., in 
Room 2360, Rayburn House Office Building. Hon. Crescent Hardy 
[chairman of the Subcommittee] presiding.
    Present: Representatives Hardy, Hanna, Davidson, Velazquez, 
and Adams.
    Chairman HARDY. Good morning. I would like to call this 
hearing to order.
    We are bearing witness to the next great aviation 
renaissance. Advances in technology have cleared the way for a 
reality that, only a short time ago, was merely a dream. From 
the delivery of goods to the survey of land, unmanned aircraft 
systems, otherwise known as UAS or drones, are poised to change 
how we do business. And with the initial report indicating that 
the overwhelming majority of companies operating UAS for 
commercial purposes have 10 employees or less, this industry 
will truly be a small business industry.
    Our airspace, however, is not alone in its experiencing of 
the shifting environment. The office charged with overseeing 
our civil aviation industry, the Federal Aviation 
Administration, is racing to keep pace with the progress being 
made, on the ground and in the air, by small businesses across 
the country. As the FAA moves forward in an effort to fully 
integrate UAS into the national airspace system, the safety of 
those in the air and on the ground, and privacy concerns that 
many citizens hold dear, must be balanced with the needs of 
this industry. This balance must be achieved for economic 
possibilities and efficiencies to become a reality.
    In my home state of Nevada, which is one of the six FAA 
selected UAS test sites, businesses are taking steps to 
innovate and test their ideas for commercial application. 
However, and I saw this in my district, a lack of guidance from 
the FAA regarding our skies was prohibiting companies from 
taking much needed next steps.
    To address some of the uncertainty and provide a time 
framework for the future, FAA took a major step forward by 
finalizing the rules for civil operation of small UAS this 
summer. Located within Section 14 of the Code of Federal 
Regulations, the new rule created Part 107 and includes 
requirements and some flexibilities for operators of small 
unmanned aircraft, those that weigh less than 55 pounds.
    Today, the Subcommittee will hear from industry 
participants on how the rules are impacting their businesses 
and their future plans now that we are approximately a month 
into the implementation of Part 107. I am looking forward to 
hearing of the new rule and how it is allowing businesses in 
the unmanned aircraft industry to make important strides needed 
in this sector to continue growing and innovating at a rapid 
pace.
    I appreciate all the witnesses for being here today. I look 
forward to your testimonies.
    I now turn the time over to the ranking member for her 
remarks.
    Ms. ADAMS. Thank you, Mr. Chairman, for holding this 
important meeting. Madam Ranking Velazquez, thank you for being 
here as well.
    As we have progressed further into the 21st Century, 
technology has become increasingly more sophisticated. This 
development has brought new opportunities to the United States 
and the global economy, which provides exciting new pathways on 
the road to innovation.
    At the forefront of this innovation is the commercial use 
of drones in civilian life, drones which have been mainly used 
in military intervention are now becoming commonplace within 
our lives. Civilian drone use offers aerial information and 
transportation services that are time and cost efficient and 
useful in a variety of markets. In fact, some companies seek to 
utilize drone technology for deliveries of consumer goods, 
while others like real estate professionals use them for 
marketing purposes. Drone technology has the potential to 
change our lives, and as with any new development, there must 
be more discussions of just how much of an impact they will 
have. Civilians have, and will continue to have, more and more 
usages for drones in their daily lives for personal and 
commercial use. But most importantly, small businesses have a 
particular interest in drone technology because they are not 
only users of these drones, but also manufacturers.
    These interests have now pushed this issue to the forefront 
of importance and relevance. The Federal Aviation 
Administration regulations appear to be beneficial not only for 
our overall economy, but also for small firms. The FAA 
estimates that more than 7,000 businesses will obtain drone 
permits within 3 years.
    Today's hearing gives us the opportunity to learn more 
about the final regulations and how they will impact small 
businesses. I look forward to hearing the insights of our 
witnesses, and I thank you all for being here today on the 
lasting implications of drone technology on our economy.
    Thank you very much. I yield back the balance of my time, 
Mr. Chair.
    Chairman HARDY. First of all, I would like to explain how 
we work around here. If the Committee members have an opening 
statement, I would ask that they submit it for the record.
    I would like to take a moment to explain the timing on the 
lights. You will each have 5 minutes. It will begin green, and 
as your time gets down to 1 minute it will turn yellow. And at 
the end of 5 minutes it will turn red and we would appreciate 
you trying to keep within those guidelines if you can.
    Now I would like to introduce our witnesses here today. 
First, I would like to introduce our first witness, Mr. Gabriel 
Dobbs. He is the vice president of Business Development and 
Policy for Kespry in Menlo Park, California, and is working to 
help customers use the Kespry UAS to collect and analyze data. 
At Kespry, Mr. Dobbs works with civil aviation agencies around 
the world to craft policy for the next generation of UAS. In 
2014, he secured the first section of the 333 exemption for 
drone operations in construction in the United States. Mr. 
Dobbs was recently selected for Forbes 30 under 30 list of 
having an impact on law and policy in the United States. Mr. 
Dobbs has earned his law degree and master's degree from 
Stanford University. Prior to Kespry, he worked with Google, 
23andMe and SpaceX in various roles. Thank you for being here. 
Thank you for bringing a sample of your product.
    Our next witness is Mr. Brian Wynne. Mr. Wynne is the 
president and CEO of Association for Unmanned Vehicle Systems 
International (AUVSI). AUVSI is the largest trade association 
representing the unmanned systems in the robotics industry. Mr. 
Wynne has significant transportation and technology experience. 
He has served in the executive position at the Electric Drive 
Transportation Association, the Intelligent Transportation 
Society of America, and the Association for Automatic 
Identification and Mobility. Mr. Wynne holds a bachelor's 
degree from the University of Scranton, and a master's degree 
from John Hopkins University. Thank you for being here.
    Next, we have Mr. Jonathan Daniels. Our third witness is 
the president of Praxis Aerospace Concepts International, Inc., 
in Henderson, Nevada. Praxis is a service-disabled, veteran-
owned small business that provides practical solutions for 
multi-modal-ground, air, sea, and industrial-robotics and 
unmanned systems. As president of Praxis, Mr. Daniels leads the 
design and management of Aerodrome LLC, the ``teaching 
airport'' that provides technical education and training to 
future and current aviation professionals. Mr. Daniels has 
served in the U.S. Army for 23 years and is a retired officer. 
He holds a bachelor of science from Excelsior College, and a 
master's degree from Kaplan University, and a graduate 
certificate in strategic studies from the U.S. Army War 
College. Mr. Daniels, thank you for your service.
    With that, I would like to turn the time over to Ms. Adams 
for our next witness.
    Ms. ADAMS. Thank you, Mr. Chair.
    It is my pleasure to introduce Lisa Ellman. Ms. Ellman is a 
partner at Hogan Lovells where she co-chairs the firm's 
unmanned aircraft systems practice, a group dedicated to 
helping businesses succeed in the dynamic UAS market. Prior to 
entering private practice, Ms. Ellman held top-level positions 
in the Obama Administration and the U.S. Department of Justice. 
Most recently, she led DOJ's effort to develop policy that 
would govern the use of UAS in the United States and 
represented the DOJ in the Federal interagency process 
considering UAS-related policy issues. She holds a joint J.D./
M.P.P. from the University of Chicago, and a B.A. from the 
University of Michigan. Welcome, Ms. Ellman.
    Chairman HARDY. Thank you all for being here again.
    Mr. Dobbs, we will begin with you. You have 5 minutes.

     STATEMENTS OF GABRIEL DOBBS, VICE PRESIDENT, BUSINESS 
  DEVELOPMENT AND POLICY,KESPRY INC.; BRIAN WYNNE,PRESIDENT & 
  CEO,ASSOCIATION FOR UNMANNED VEHICLE SYSTEMS INTERNATIONAL; 
   JONATHAN H. DANIELS; PRESIDENT, PRAXIS AEROSPACE CONCEPTS 
 INTERNATIONAL, INC.; LISA ELLMAN, PARTNER,HOGAN LOVELLS US LLP

                   STATEMENT OF GABRIEL DOBBS

    Mr. DOBBS. Thank you.
    Chairman Hardy, Ranking Member Adams, and distinguished 
members of the Subcommittee, thank you for the opportunity to 
testify today on behalf of Kespry and the Small UAV Coalition. 
This is both an exciting and critical time for the commercial 
unmanned aerial systems (UAS) industry, and I appreciate the 
opportunity to discuss Part 107, particularly as it impacts 
small businesses like Kespry.
    I would also like to thank the Small UAV Coalition, the 
first group of its kind focused solely on commercial drone 
operations, for its leadership in working with policymakers and 
regulators to develop a robust, yet flexible framework that 
will no longer be built around exemptions and exceptions. 
Thanks to its hard work, this industry is now ``open for 
business.''
    Like many small businesses across the country, Kespry was 
started on the floor of an apartment by a few college graduates 
passionate about the promise of drone technology and its 
potential to have meaningful impact on businesses around the 
world. Today, Kespry has been in business for over 3 years. We 
have customers operating drones in every state, generating 
millions in revenue. We now employ over 60 people and continue 
to grow aggressively. Kespry is a ``made in America'' business. 
We design and manufacture our fully integrated drone systems 
entirely in the United States.
    Kespry's mission is to create technology that significantly 
advances the effectiveness, efficiency, and safety of workers 
in the real world. This can mean everything from creating a 3D 
model of hard-to-reach areas of construction, to inventory 
management, to identifying damage on structures faster to help 
homeowners and businesses get back on their feet after a major 
storm.
    The drone industry, particularly the commercial sector, 
also represents a largely untapped market that stands to add 
billions of dollars to our economy. One recent report estimated 
that the commercial drone segment will grow to a $21 billion 
industry within 5 years. This growth will allow American 
companies of all sizes, including small businesses, to create 
countless high-paying, highly-skilled jobs, but none of this is 
possible without Part 107 and subsequent rulemakings that open 
the skies to commercial drones while maintaining the highest 
safety standards.
    Two years ago, the drone revolution was just beginning and 
the FAA had devoted very limited resources to small UAS. 
Operators had to ask the Secretary of Transportation for 
permission to ignore certain federal regulations on the books 
relating to aircraft, since these regulations treated a small 
drone the same as a Boeing 777.
    In late 2014, the first so-called Section 333 exemptions 
were granted. However, the many conditions and limitations on 
the FAA's exemption authority were commercially impractical and 
significantly limited the growth of the small UAS industry, 
leading many companies to conduct operations in other countries 
where regulatory advances had been made more quickly.
    Kespry worked with partners from the Small UAV Coalition to 
help the FAA create a rule that put robust safety precautions 
in place for small commercial operations, while eliminating 
many of the categorical restrictions in the proposed rule that 
would have been economically impractical with no material 
impact on safety.
    From the moment it went into effect on August 29th, Part 
107 was a huge improvement over the Section 333 process. First, 
commercial operators no longer need to petition for the FAA 
approval if they plan to operate within the scope of the rule. 
Second, the FAA no longer requires UAS pilots to have manned 
aircraft flying experience, which has little correlation to the 
skills required to safely operate UAS.
    While Part 107 is a solid first step towards a 
comprehensive regulatory framework for commercial drone 
operations, there are several key components that the FAA must 
address expeditiously or American companies will lose out to 
foreign competitors eager to invest in this developing 
technology.
    As urged by the Small UAV Coalition, Part 107 allows 
operators to seek a waiver from several regulatory limitations, 
perhaps most notably to operate at night, directly over people, 
and beyond the visual line of sight. These elements are 
critical to the successful and widespread integration of 
commercial drones into the national airspace that will help 
create tens of thousands of jobs. Time will tell whether the 
waiver process will be more efficient and flexible than the 
Section 333 exemption process.
    While we appreciate that Part 107 allows for such waivers, 
the FAA's next phase of regulations must provide for even more 
efficient approval of these type of operations. Technology 
already exists that ensures safe beyond visual line of sight 
operations and eliminates the need for operators to seek 
waivers on a case-by-case basis, a burdensome endeavor for both 
companies, especially small businesses and the FAA.
    Equally as critical to realizing the full potential of 
commercial drone applications is the ability to safely operate 
UAS over populated areas. The FAA has announced its intention 
to publish a proposed rule for operations over people for 
public comment before the end of the year. We hope that the FAA 
will act expeditiously to finalize this rulemaking and that the 
proposed rule will recognize that very light UAVs pose the 
least risk and therefore could be permitted to operate over 
people under certain circumstances without compromising safety. 
A micro UAS classification would create an even more efficient 
regulatory framework, further reducing the burden on small UAS 
operators without creating any significant safety concerns.
    As you can see, the commercial drone industry standards to 
deliver major economic and consumer benefits that will allow 
businesses of all sizes to thrive. Part 107 is a positive first 
step in developing a comprehensive regulatory framework for 
small commercial drone operations. It is also proof that it is 
possible to boost opportunities for American innovation and 
manufacturing without being overly prescriptive and hindering 
industry's ability to compete.
    Thank you for the opportunity to appear before you today.
    Chairman HARDY. Thank you, Mr. Dobbs.
    Mr. Wynne?

                    STATEMENT OF BRIAN WYNNE

    Mr. WYNNE. Thank you, Mr. Chairman, Madam Ranking Member 
Adams. It is a pleasure to be here before the Committee today 
on behalf of the Association for Unmanned Vehicle Systems 
International, the largest not-for-profit organization serving 
the unmanned systems and robotics community. We have more than 
7,500 members, including many small businesses that support and 
supply this innovation industry.
    From inspecting pipelines to surveying bridges, to filming 
movies, UAS helps save time, save money, and most importantly, 
save lives. It is no wonder why thousands of businesses, small 
and large, have already embraced this technology. We now have 
initial regulations governing civil and commercial UAS 
operations, which means even more businesses are cleared for 
takeoff. While these regulations have been in effect for less 
than a month, there is strong evidence that the commercial UAS 
market is poised for significant growth, particularly among 
small businesses. Let me explain.
    On August 29th, the Federal Aviation Administration 
implemented the small UAS rule. The rule established a 
flexible, risk-based approach to regulating UAS. This new 
regulatory framework helps reduce many barriers to low risk, 
civil, and commercial UAS operations, allowing businesses to 
harness the tremendous potential of UAS.
    It is clear that businesses are eager to take off. On the 
first day that the rule went into effect, more than 3,300 
people had already signed up to take the aeronautical knowledge 
test, a requirement under the new rule. Of the more than 
530,000 people who have registered their UAS with the FAA since 
last December, about 20,000 have indicated that they are 
commercial operators. The FAA expects that more than 600,000 
UAS could be flying for commercial use over the next year.
    Even before the rule, thousands of businesses had received 
approval to fly under Section 333 of the 2012 FAA 
Reauthorization Act. The FAA started granting these exemptions 
in September 2014 and approved more than 5,500 by the time the 
rule took effect. These exemptions provide a window into how 
the commercial market is taking shape. AUVSI found that more 
than 5,200 distinct businesses received approval to fly, the 
vast majority of which were small businesses. Over 90 percent 
earn less than 1 million annually and have fewer than 10 
employees. For example, one of these businesses is Las Vegas-
based Verascan. It provides imaging, mapping, and surveying 
services to Nevada's agriculture, mining, construction, and oil 
and gas industries. Recently, it provided aerial survey data to 
assist in the construction of the I-11 Boulder City bypass, 
part of a proposed highway link between Phoenix and Las Vegas.
    This is just one of many businesses around the country 
taking advantage of this emerging technology. AUVSI projects 
that the expansion of UAS technology will create more than 
100,000 jobs and generate more than 82 billion in economic 
activity in the first decade following integration. After 
witnessing the growth of the industry over the last few years 
and now with the small UAS rule in effect, I am confident those 
numbers will go even higher.
    In addition to the implementation of the small rule, 
Congress passed, and the president signed, an FAA extension 
which will advance UAS research, expand commercial operations, 
and enhance the safety of the airspace for all aircraft, manned 
and unmanned. While this measure will provide some short-term 
stability through September 27th, it is critical that Congress 
pass a long-term bill next year that will set the industry and 
the country on a glide path to reap all of the benefits of UAS. 
The extension is a good start but there is still a lot of work 
to be done.
    Government and industry collaboration is critical for 
keeping up with the pace of our industry's innovations. Key 
stakeholders in the industry and government have successfully 
fostered a working relationship that has led to a more flexible 
and nimble approach to regulating UAS. At the same time, small 
businesses have led the charge in adopting the technology. We 
are hopeful that the sustained efforts of all parties will help 
pave the way for a true, holistic plan for full UAS integration 
that includes beyond line of sight operations, flights over 
people, access to higher altitudes, and platforms above 55 
pounds.
    I look forward to the opportunity to answer your questions, 
and thank you for the opportunity.
    Chairman HARDY. Thank you, Mr. Wynne.
    Mr. Daniels?

                STATEMENT OF JONATHAN H. DANIELS

    Mr. DANIELS. Good morning, Chairman Hardy, Ranking Member 
Adams, and members of the Committee. Thank you for hosting this 
hearing and for your invitation to provide testimony.
    My name is Jonathan Daniels, and I am honored to be here 
today. I am the cofounder and CEO of Praxis Aerospace Concepts 
International, a service-disabled, veteran-owned small business 
headquartered in Henderson, Nevada.
    I cofounded PACI in 2011 with four amazing female veterans, 
all of whom had experience in aviation and operations, unmanned 
systems, and military intelligence. We had known each other for 
years and maintained our connection throughout multiple 
organizational changes and combat deployments. We decided to 
take the same skillsets and experience that we had used in the 
military and create a company that would be at the leading edge 
of very disruptive commercial technology: robotics.
    We are best known for our activities involving civil 
unmanned aircraft systems, which has included flight as public 
aircraft, under Section 333 and within Part 107, as well as our 
work with several FAA UAS test sites and industry standards 
organizations. Praxis Aerospace was a proud participant in 
NASA's UAS Traffic Management demonstration of 22 simultaneous 
test flights at seven different locations conducted in April 
2016. Praxis Aerospace is a proud partner with the Clark County 
Fire Department and currently assists the department in 
managing its Public Safety Blanket COA. We work cooperatively 
with the City of Boulder City, home to the Eldorado Droneport, 
the world's first public airport dedicated to UAS, and we are 
currently building a prototype cargo small UAS in our Nevada 
facilities as part of a collaborative effort between Local 
Motors, Inc. and a little company known as Airbus.
    First, I want to say that I have a great relationship with 
the FAA that dates back a decade to the early days of the 
Unmanned Aircraft Program Office. I am very thankful and 
appreciative for the work that they do. After spending years 
attempting to coordinate flights within European airspace, in 
and outside of the European Union, I find the FAA to be 
responsive, accommodating, and very open-minded.
    As an industry, we hoped for a regulatory structure for UAS 
that would be affordable for users and safe for communities on 
the ground and in the sky. Many of our peers and competitors 
have publicly derided the FAA for their perceived inertia and 
misunderstandings. I did not then, and do not now, share their 
views. I am grateful for the crawl-walk-run process and its 
preservation of the safety of the national airspace system.
    The FAA release of Part 107 effectively opened the skies 
and lowered barriers for entry of civil UAS. The rules brought 
clarity to an industry described by many as ``the Wild West.''
    One of the changes out of the Notice of Proposed Rulemaking 
was the removal of military competency. We have found that the 
statement by the FAA that says that there was no consistent 
standard even though there were various different training 
methods throughout the Armed Services was correct but not 
complete.
    In 2009, the Chairmen of the Joint Chiefs of Staff issued 
Instruction 3255 for Joint Unmanned Minimum Training Standards 
which provided that consistent standard. We feel by leaving 
that military competency we have disadvantaged the more than 
3,000 enlisted unmanned aircraft pilots who are trained by the 
Army and Marine Corps and thus allowing them not to immediately 
enter the field.
    Looking at safety and equipment, one of the challenges we 
have continuing forward relates down to repairmen. The focus 
has been on pilots, and Part 107 very heavily has knowledge and 
questions about the piloting and not necessarily maintenance. 
There is a vast difference between a 40-year experienced AMA 
pilot who has built and developed the aircraft themselves to 
someone who took a $150 test and bought a $200 airframe at a 
local big box store. We found as we look at continuously 
operations and expanding the operations to beyond visual line 
of sight, operations over people, at night, and altitude, will 
have to have a higher level and standard to continue their 
worthiness.
    The approval and implementation of Part 107 was definitely 
a watershed moment for UAS within the United States, and the 
new rules provide a substantial foundation for small businesses 
to use as an entry point into the multi-million dollar UAS 
industry. Part 107 should be viewed as an outstanding success.
    We look forward to another 10 years of collaboration with 
the FAA. As with any new technology, there are growing pains 
for all stakeholders and we, at PACI, are patient enough to 
accept that. We are appreciative of the FAA for not conceding 
the safety of our National Airspace System to the pressure of 
large corporations and their lobbyists.
    Thank you, and I look forward to your questions.
    Chairman HARDY. Thank you, Mr. Daniels.
    Ms. Ellman?

                    STATEMENT OF LISA ELLMAN

    Ms. ELLMAN. Chairman Hardy, Ranking Member Adams, and 
members of your Committee, thank you so much for inviting me 
here today.
    I am here today with a unique understanding of UAS 
integration as I have worked on these issues from both the 
private sector side--I now lead the UAS practice group at Hogan 
Lovells--as well as lead the Commercial Drone Alliance, as well 
as the Federal Government side. I worked on innovation issues 
at the White House and previously ran UAS policy development at 
DOJ.
    We are at an exciting time for innovation. Previously 
considered toys, UAS have emerged as essential tools for 
industry. They make tasks from disaster response to farming to 
infrastructure inspection safer and more efficient, enhancing 
American productivity.
    But as is often the case, technology moves more quickly 
than policymaking, and we all understand that, and drones are 
no different. And to really ensure the success of this industry 
and to balance that with a consideration for the public good, 
we need rules that enable innovation while maintaining safety 
and privacy and security.
    With the proper regulatory framework in place, the economic 
benefits the drone market will provide are significant. A 
recent PricewaterhouseCoopers report estimates the global 
market value of UAS-powered solutions at over $127 billion. 
That is significant. And just here in our country it has been 
estimated that the domestic drone industry will create more 
than 100,000 new jobs over the next decade. And the FAA 
recently estimated that by 2020, just 4 years from now, there 
will have been 11 million commercial drones sold in our 
country.
    Now, it is important to note the critical role that small 
businesses have played in the growth of the UAS industry. Small 
business itself is the engine driving commercial UAS adoption 
here in the United States. And UAS are also helping resource-
constrained small business and other industries. They make 
dangerous tasks safer and expensive tasks cheaper. Now local 
news broadcasters who cannot otherwise afford helicopters, for 
example, can now inexpensively obtain aerial footage for major 
news events, and farmers can detect and mitigate disease in 
their crops, making their products healthier for all of us and 
more profitable for them, lowering the cost for the consumer.
    For all of these reasons, the broad integration of 
commercial drones into the national airspace is an exciting 
opportunity, and this summer, as you have heard about, the U.S. 
took some critical steps forward. At the end of August, Part 
107 went into effect and businesses are now, for the first time 
ever, broadly authorized to fly small drones in the United 
States for commercial purposes. And the floodgates are now 
open. Since the end of August, a few weeks ago, almost 7,000 
remote pilot certificate exams were taken, and almost 15,000 
applications have been submitted.
    Other executive branch agencies have been engaged as well. 
The White House recently held a first of its kind workshop on 
commercial UAS where commitments were made to move the industry 
forward. Industry and nonprofits recently agreed on a set of 
privacy best practices as part of a process facilitated by the 
National Telecommunications and Information Administration at 
the Department of Commerce, and NASA has focused on moving its 
unmanned traffic management efforts forward designing 
``highways in the sky.'' But challenges and government-imposed 
roadblocks to this industry remain, and Congress can play an 
important role in clearing these roadblocks, whether through 
next year's FAA reauthorization process or by other means.
    A few things are critical to small businesses if we expect 
to keep America competitive in the global UAS industry. First, 
the waiver process. We have talked a bit about the process for 
obtaining waivers under this new rule to fly beyond visual line 
of sight, over people, or at night. It must be streamlined and 
timely. The Part 107 waiver itself, the substance of the relief 
that is granted, must also provide the actual ability for 
companies to be able to fly drones in the real world for their 
intended purpose. And we need additional rulemakings that 
broadly authorize safe flights above people beyond visual line 
of sight and at night, and we need to see these rules develop 
quickly. We also need enhanced government and industry 
collaboration. The recently convened DAC, Drone Aviation 
Committee, was a good step forward, but policymakers and 
innovators must work more closely together at the working level 
especially. We call this ``polivation.'' And we must support a 
whole of government approach that enables the broader 
infrastructure for this industry to succeed. This includes 
support for NASA, FCC, and others whose work is critical to the 
success of this industry.
    And finally, Congress must continue to support Small 
Business Administration programs that assist women and 
minority-owned small businesses. Two colleagues and I recently 
founded the Women of Commercial Drones Organization to bring 
gender diversity to the growing drones industry and continued 
support for programs like these SBA programs is critical.
    If we do this right, the opportunities for our country will 
be great. We have made excellent progress in recent months and 
it is important that we continue that momentum. And the 
industry needs to do its part as well. But if we all tackle 
these issues properly together, we will soon regard commercial 
drones as we do the phones that we carry and rely on every day. 
Tools that make us more efficient, more productive, safer, and 
more connected. I look forward to that day. Thank you.
    Chairman HARDY. Thank you, Ms. Ellman.
    The Committee will now have 5 minutes each to ask their 
questions, and I will begin with myself. This is for all the 
witnesses here today.
    Has the FAA's final rule struck the right balance between 
ensuring safe operations and allowing this growing industry and 
its participants to operate and innovate properly? We will 
start with you, Ms. Ellman, on the left.
    Ms. ELLMAN. Sure. Well, I think it is a great first start. 
Of course, it authorizes very low risk operations. So vehicles 
under 55 pounds, flights within visual line of sight, away from 
populated areas or not over people during daytime hours, and it 
was a critical first start to broadly authorize very low risk 
operations here in the national airspace. And as we have seen, 
the floodgates have truly opened and let's just say it is a 
huge improvement over the Section 333 exemption process which 
was having to ask permission every time a company wanted to be 
able to fly. That process was burdensome. Some applications 
remained in the queue for over a year. Some never even got 
relief. And so it is great that we now have this rule that 
broadly authorizes commercial operations. And it is an 
excellent first step and the FAA did a great job in that realm.
    But to be honest, I think it remains to be seen whether it 
struck the right balance because I think that the waiver 
process that was baked into the rule is a critical part of it 
in order to enable real world operations. And I work with 
several companies who have applied for waivers, who have 
received waivers, who are getting waivers. But frankly, the 
process needs to be streamlined and friendly to consumers. It 
cannot be a replication of the Section 333 exemption process. 
It needs to move at the speed of industry.
    And second of all, the substance of what is actually the 
relief that companies are actually getting needs to allow for 
real world operations that are safe. And the FAA needs to 
actually incentivize safety mitigations and innovations that 
make drone flights safer. For example, putting padding on your 
drone or propeller guards for drones, or parachutes. Hardware 
and software that is out there that can actually make drones 
safer, we need to incentivize rather than merely looking in 
terms of risk analysis, merely looking at one factor such as 
kinetic energy, which is, of course, important, but just one 
aspect of the risk analysis.
    So I think that the FAA has done--this has moved forward. 
It is excellent news, but I think we have a lot more work to 
do.
    Chairman HARDY. Thank you, Mr. Daniels. Do you care to 
comment?
    Mr. DANIELS. I do. By delineating the difference between 
Part 101 hobbyists and Part 107 remote pilots, I think we very 
much have a simple structure. It is obviously based on a 
century's worth of aviation knowledge and best practice.
    We learned a lot of things about that and that was codified 
within those rules. Part 107 established the basic operational 
restrictions that we have in Part 103, which has been very 
successful for ultralight aircraft. In fact, Part 107 is in 
some ways more permissive because with the written test you are 
now allowed to do commercial operations which you cannot do 
with ultralights. But it is a very similar restriction as far 
as airspace and operations and whether you can go over people 
or not.
    The side piece of that is we talked about the safety 
aspect. I briefly mentioned the ``Wild West'' concept and our 
desire for a regulatory structure that would allow that use 
without being burdensome and onerous. We have got that in Part 
107. I think it is very easy to use and it does provide some 
level of safety, but I think we need some definite clear 
enforcement on the grounds of the black market UAS service 
providers. We have a problem with misfeasance and malfeasance. 
We have people who are providing their own, you know, they are 
providing services that would normally be legal except for 
maybe they registered an aircraft recreationally and not 
commercially, and they just do not understand what they are 
doing, right or wrong.
    The other part is that we have the malfeasance, the ones 
who know what the regulations are supposed to be, they know 
what they are supposed to do, and they choose not to do that. 
They do not get their license, they do not register their 
airframes, they do not provide the insurance, and I think that 
is a little bit of a safety risk, and I think that is part of 
that challenge that we are looking for on this balance of how 
successful is Part 107 going to be. We need to look at that. 
You can search YouTube right now and find some promotional 
videos by giant companies that are clearly in violation of Part 
107 and it just trickles down from there.
    Chairman HARDY. Mr. Wynne?
    Mr. WYNNE. I like the balance, Mr. Chairman. The rule 
itself is very conservative. The flying that is permitted is 
very, very low risk, but the waiver process, we are just at the 
very beginning of that. The waiver process allows for us to 
make safety cases for more complex operations and the 
mitigations that are required to do that. So I think that is 
going to generate data, and data is really, really important in 
the safety arena, of course. So I think it is a good balance.
    Chairman HARDY. Mr. Dobbs, anything else to add?
    Mr. DOBBS. Yeah. I think that you have seen just in the 
first month of the rule with the number of applications made 
for remote pilot certificates exceeding those made in the 
previous year and a half of Section 333 exemptions, so you see 
this is a much more workable process while still ensuring 
safety in operations. It does remain to be seen how well the 
waiver process works. So we are looking forward to seeing how 
the data pans out over the next few months.
    Chairman HARDY. Thank you. My time is expired. One question 
and my time expired.
    I will turn the time over to Ms. Adams.
    Ms. ADAMS. Thank you, Mr. Chair.
    Ms. Ellman, you mentioned the need for Congress to continue 
its support of SBA programs that assist women and minority-
owned business firms. Is there anything that we can do to 
improve inclusion and diversity, not only in the drone industry 
but the business community at large?
    Ms. ELLMAN. Ranking Member Adams, thank you so much for 
that question. Absolutely.
    As we have talked about today, the commercial drone 
development and sales are on the rise, but unfortunately, the 
number of women in leadership positions, whether in the drone 
industry or more generally in technology is not.
    Diversity is an important issue, not only for our own 
industry but also for the business community generally. Of this 
year's Fortune 500 list, women held only 4.2 percent of CEO 
positions in America's 500 largest companies, and aviation in 
particular, some numbers I saw from the last few years 
suggested that women pilots represented somewhere around 6 
percent of the total pilot population.
    Diversity of critical not only for the individuals who are 
seeking employment, but it also helps businesses to succeed in 
all industries, including the commercial drone industry, will 
benefit once we have more women and minorities in leadership 
positions. It is healthy and beneficial for any organization to 
hear different viewpoints at the top.
    So my own view is that long-term effort must start at the 
elementary school and middle school level. STEM efforts need to 
focus on programs getting young girls interested in these 
subjects, and as increasing numbers of women go down the path 
of engineering and technology, it is the job of our country's 
leaders all working together to work with industry and with all 
of us to foster and to develop this growth.
    We can help establish formal mentorship programs for women 
to help navigate technology and engineering careers, and we can 
continue to support minority-owned small businesses as we are 
today.
    Ms. ADAMS. Thank you. The commercial drones organization 
that you have cofounded, can you speak a little bit about that?
    Ms. ELLMAN. Sure. So a few amazing colleagues and I 
recently founded the Women of Commercial Drones. We 
participated in many of the drone shows, and we looked around 
frankly and we realized just how male dominated the field is. 
Of course, this is typical in Silicon Valley. And so 
recognizing this, we founded this Women of Commercial Drones 
organization. The purpose of this organization is really to 
encourage and mentor women and young girls at an early age to 
become a part of this new and growing drone industry and help 
women to succeed and grow as leaders in this industry.
    The great news is that we have been contacted by literally 
hundreds of women who want to get involved, and we hope to 
really be able to encourage women to be bold in pursuit of 
their careers in this market. Our industry will be better off 
once we are more diverse.
    Ms. ADAMS. Thank you. UAS operations are relatively new, 
meaning few aviation insurance carriers offer coverage or have 
only begun recently to do so. One study found that two-thirds 
of businesses operate without commercial liability. So Ms. 
Ellman, do you think that the clarity that the new rules bring 
to the industry will improve the availability of insurance?
    Ms. ELLMAN. I do. Absolutely. Insurers have been in an 
interesting spot, right, because they are essentially 
policymakers in addition to UAS users. They have also suffered 
from regulatory uncertainty in that they have not understood 
how to assign and value risk. They have all been guessing 
essentially. But now that we have the rule in place and they 
have some guidance on what is authorized and what we can 
expect, I definitely expect to see more insurers entering this 
market. And I do think that we will see more businesses 
adopting drone insurance. Just as good business practice, I am 
seeing more and more customers and end-users requiring it.
    As well, FAA resources are limited and regulators do not 
have the time or energy to go after every illegal flight that 
happens. We have heard about this from others. Civil liability 
in case of an accident is what they are going to worry about, 
and for many of these small companies, one accident can mean 
their whole business is at stake. So yes, I do think we will 
see more availability, and as a result, more companies get 
insurance.
    Ms. ADAMS. Thank you.
    Mr. Wynne, your association predicted similar growth if FAA 
developed favorable drone regulations. So do you believe the 
final rule goes far enough to allow for this kind of job 
growth?
    Mr. WYNNE. Not this rule, no. But the good news is there 
are additional rules that are in process and the waiver process 
itself will, I think, allow for us to extend value. But I think 
there is a tremendous amount of value that gets unlocked under 
these rules for inspection of vertical infrastructure for 
flying over farming and things like that. There is just a very 
long list of things that can be done under Part 107.
    Additionally, we need, you know, the broadcasters have been 
mentioned. There are others that need the ability to fly over 
people. That rulemaking has already gotten started and the good 
news is that we have pathfinder programs that have been 
underway sort of point at where we need to be in order to prove 
the safety cases for beyond visual line of sight operations, et 
cetera. There are also very large platforms that will also be 
allowed to fly ultimately, and in some instances, that rule 
making is easier because when you get into the flight levels 
above 18,000 feet, we do not like deviation. So it will be more 
predictable.
    Ms. ADAMS. Thank you, sir. I am out of time.
    Mr. Chair, I yield back.
    Chairman HARDY. Thank you, Ms. Adams.
    I would like to turn the time now over to the chairman over 
Contracting and the Workforce, Mr. Hanna.
    Mr. HANNA. Aviation does not love you sometimes, too; 
right? It is a two-way street.
    I am a pilot, and I have Griffiss Air Force Base, which you 
know is one of the six. And I think it is a great opportunity. 
I mean, you have all laid that out quite well. I am a little 
surprised, Mr. Daniels, for everyone to be so positive about 
the FAA because frankly, most people are not. And the idea that 
they originally thought you had to have a pilot's license for 
this or that Japan has had these larger, much larger for 
agriculture and other purposes, for 20 years, we are way behind 
the eight-ball. And a lot of it is our inability to deal with 
regulation in a timely fashion and an emphasis on safety is 
appropriate, but frankly, not always practical.
    The line of sight issue, the night issue, the fact that I 
can own 10,000 acres and I cannot go over 400 feet and I have 
to see this thing is silly on its face, and I will be blunt. So 
I want to talk about something.
    Like agriculture, it is just a tremendous opportunity. One 
of the largest hazards to pilots today are ag crop people, 
people who fly and spray have one of the highest illness rates 
of any profession, and yet we have this opportunity to have 
larger drones over big areas and isolate the amount that we 
spray and limit the amount. You know all this.
    So I want to ask you, because I have watched the FAA. I 
have been here 6 years, and I have watched this process move I 
think for some things at a snail's pace. One of them is the 
idea of agriculture. So line of sight makes not a lot of sense 
to me, and I understand that over populated areas. But line of 
sight and elevation of 400 feet for, you know, that may be an 
appropriate elevation. I would like to give anyone who wants to 
talk about it an opportunity to either agree with me or 
disagree with me or see what you would like to see differently, 
because I think that is something that someone could do that is 
elementary and could be done very quickly and without a lot of 
problem.
    Mr. Dobbs?
    Mr. DOBBS. Thank you. Yes. We actually agree with you. We 
are very happy that Part 107 is finally in effect and it really 
opened things up for the industry, but there is still a lot of 
work to be done. There are technological solutions to flying 
beyond line of sight. On the drone that I brought in today, 
there is technology for sense and avoid that allows drones to 
avoid obstacles that are unexpected. There is also technology, 
including geofencing, which keeps the drone on a particular 
parcel of property below a particular elevation. So there are 
all these kind of technological solutions to ensure safety in 
operations. And we have also seen overseas risk-based 
regulation where we do not treat a 2-ounce drone the same way 
we treat a 50-pound gas-powered drone. And we would like to see 
in future rulemakings that are now under consideration micro 
UAS classification and looking at both the weight of a drone 
and the operational----
    Mr. HANNA. My son owns about 20 of those.
    Mr. DOBBS. That is right. Yeah. And they----
    Mr. HANNA. There is no permanence there.
    Mr. DOBBS. They do not pose real risk. Obviously, smaller 
drones in more remote areas pose a very different risk than a 
larger drone flying over a crowd of people at a sporting event 
or something like that.
    Mr. HANNA. My point is that, I mean, the FAA in an effort 
to be safe, and I get that and everybody does, and that is 
their job, but it should not mean that they drag the process 
out in a way that guarantees that they never have a problem 
that comes back to them.
    Mr. DOBBS. And we agree. And we are very hopeful that with 
the FAA reauthorization next year that Congress will help push 
for some new rules and that simultaneously, the FAA will be 
going through the rulemaking at a little bit of a quicker pace.
    Mr. HANNA. But the permit process for agriculture ought to 
be much different than the rest of it and it is not, the 
exemption. So, I mean, you ought to be able to----
    Mr. DOBBS. Yeah. We absolutely agree. So Part 107 does 
allow for operations over less populated areas more easily than 
it does near airports and in large cities. But there is not 
that risk-based classification system yet that differentiates 
between drones of different sizes and in remote areas versus 
more populated areas.
    Mr. HANNA. Thank you. My time has expired.
    Chairman HARDY. Thank you, Mr. Hanna.
    I would like to turn the time over to the ranking member on 
Small Business, Ms. Velazquez.
    Ms. VELAZQUEZ. Thank you, Mr. Chairman.
    Mr. Dobbs, some countries have already solved some of the 
airspace integration problems that the FAA is addressing in 
these rules. Do the new regulations allow us to solve these 
issues at the same pace as other countries?
    Mr. DOBBS. Thank you for the question. The new rule, Part 
107, is a great step forward and has opened the skies for some 
use cases, but there are still many, including operations at 
night, beyond line of sight, operations over people, that are 
restricted under the new rule. So there is still work to be 
done and we are hopeful that new rulemakings will help solve 
this along with perhaps some new rules as part of the FAA 
reauthorization next year.
    Overseas, we do see risk-based systems that take into 
account where the drone is operating, what the use case is, and 
what the size and weight of the drone is that better address 
these safety questions.
    Ms. VELAZQUEZ. And are those steps that those countries are 
taking in terms of addressing the issue of integration, would 
you think that these are the type of steps that you would like 
to see happen here?
    Mr. DOBBS. Absolutely. We see in many European countries, 
and Australia and Canada, there are weight-based 
classifications for drones, so drones under about 4-1/2 pounds, 
which our new drone is built to be under that weight, are 
treated differently than larger drones, and there are different 
weight classifications and different safety standards for 
things like beyond line of sight flights. So we would like to 
see those come to the United States as well.
    Ms. VELAZQUEZ. Thank you.
    Ms. Ellman, you noted in your testimony that with the new 
regulatory certainty, additional funding dollars will be 
flowing into the industry. Has the industry suffered from a 
lack of access to capital?
    Ms. ELLMAN. Yes. Thank you for this question.
    Over the past several years, investors have started to 
invest more money into the drone market, but in the first 
quarter of this year we did see corporate activity dipped, but 
because in addition to the murkiness of the regulatory 
environment, investors were also concerned with public 
perception and privacy issues. This is something that our 
industry is confronting, and it is very important that we do. 
But with Part 107, investor skepticism has really declined and 
funders are looking to aggressively fund more companies in the 
drone market and this is a great thing. And with this increased 
regulatory certainty, it was a huge step forward, investors 
understand the market is really going to grow, and quickly, and 
they are also more knowledgeable about the industry as a whole. 
And so they can make smart decisions. So I do expect we will 
see more mergers and acquisitions and investors in money 
flowing into the industry helping many of these small 
businesses that have thus far suffered as a lack of result of 
the regulatory certainty, but funders will understand that now 
is really the time to get in.
    Ms. VELAZQUEZ. If there is anything that you think that 
Congress can do to spur investment into the industry.
    Ms. ELLMAN. Yeah. Absolutely. I mean, I think a lot of what 
we have talked about here, because so much of the investment 
money held back because of regulatory and policy issues is 
really supporting this whole of government approach to 
integration, providing funding, providing regulatory oversight 
so we can make sure we are meeting our deadlines and quickly, 
enabling the broader infrastructure for this industry to 
succeed. So we have talked about the NASA, UTM--unmanned 
traffic management--efforts, designing highways in the sky. The 
FCC spectrum issues is another example. They are critical where 
we need to consider. In order to be able to have beyond visual 
line of sight flights and cargo flights, we need this 
infrastructure.
    So Congress can also support state and various state 
efforts that promote commercial drone innovation and growth, 
and use your funding, oversight, and bully pulpit functions. 
This hearing is a great example to ask all relevant agencies to 
engage with the industry now with a focus on finding solutions 
that can enable commercial UAS integration safely and broadly 
and in an expeditious way.
    Ms. VELAZQUEZ. Thank you, Mr. Chairman. I yield back.
    Chairman HARDY. Thank you. I turn the time over to Mr. 
Davidson.
    Mr. DAVIDSON. Thank you, Mr. Chairman. Thank you all for 
coming here and talking about an important and emerging market 
in the United States and around the world. I appreciate your 
perspectives, and I want to ask a little bit more about some of 
the testimony.
    So Mr. Wynne, in your testimony you describe a new 
regulatory framework as a flexible, risk-based approach to 
regulating UAS. For those of us who are not familiar with how 
the FAA currently crafts its regulations, what is different 
about how the FAA is regulating unmanned aircraft?
    Mr. WYNNE. That is a great question. Like Congressman 
Hardy, I, too, am a pilot, and there are probably others in the 
room. And the FAA is very control-oriented when it comes down 
to the smallest parts that go into an aircraft. And when you 
are flying, and we all fly, that is important.
    With unmanned aircraft, that certification process, for 
example, will become very burdensome. This technology iterates 
very, very quickly, and in fact, we are advancing the 
technology and making it safer all the time. So when we say 
risk-based and flexible, what we are actually doing is creating 
an environment that allows for the safety to continue to 
improve at the speed of technology rather than constraining it 
by a regulatory process.
    Mr. DAVIDSON. Thank you.
    Ms. Ellman, from your perspective, what are the most 
pressing safety, privacy, and security issues that must be 
addressed in the regulatory environment that you referenced?
    Ms. ELLMAN. Well, I think we are well on our way. In terms 
of safety issues, of course, what the federal government really 
cares about is--what the FAA really cares about on safety 
issues is, is a drone going to fall out of the sky or fly away 
at any time? And the key is that there is innovation and new 
technologies that make drones a whole lot safer, and the new 
regulations should really incorporate these new technologies as 
it is considering its additional rulemakings on, for example, 
beyond visual line of sight flight, night flights, that kind of 
thing.
    Security issues, of course, there is a lot of talk about 
counter UAV technologies. As drones become more ubiquitous, 
people are worried about is a drone flying over my backyard? 
Companies are worried about whether drones are flying in their 
vicinity. Prisons, we have heard a lot about this. And so, of 
course, that is another area where actually the policy has very 
much lagged behind the technology. We have technology that can 
detect, identify, and track unwanted or unauthorized drones, 
but the question is what can you do with it? And it is unclear 
at a policy and legal level as well.
    And, of course, the privacy issues, this is what the 
American public is most focused on. Are the privacy issues 
about is a drone spying on me in my backyard? There are a whole 
long list of privacy laws and rules that are technology neutral 
that do protect us already. But, you know, the White House 
released a presidential memorandum on UAS privacy issues, and 
as part of that required the NTIA (National Telecommunications 
and Information Administration) at the Department of Commerce, 
to convene a group of industry and stakeholders, as well as 
privacy advocates. And just this May we all came to consensus 
around a set of best practices around privacy, transparency, 
and accountability related to the private and commercial use of 
UAS. And so with that in place, our next task is simply to 
educate the UAS community, educate the public. There are laws 
and rules in place that already protect them, and we do not 
necessarily need duplicative efforts.
    Mr. DAVIDSON. Thank you.
    Mr. Dobbs, could you highlight some of the safety features 
that are designed, common practice now and what sort of gaps 
are out there in the R&D world?
    Mr. DOBBS. Absolutely. Thank you for the question.
    So first of all, it is pretty common practice to have 
geofencing whenever you fly a drone. And that makes sure that 
your drone stays in the area, both vertically and horizontally, 
that you intend to operate in. So that is a critical piece to 
make sure that drones are not operating in too congested 
airspace.
    The next generation of technology includes sense and avoid. 
So that is something that Kespry has built into our drone. We 
use a laser to scan for potential obstacles, which is critical 
for unexpected trees or structures or even other drones 
operating in more congested airspace. In the future, we have 
been working with NASA on UTM. NASA has led this effort on 
unmanned traffic management in creating this highway in the sky 
so that drones can talk to each other, and for full integration 
into the airspace, actually talk to other manned aircraft. So 
those are some of the critical technology developments that are 
being worked on now.
    Mr. DAVIDSON. Thank you.
    And Mr. Daniels, similar question. What kind of things are 
opportunities or threats to your business as you develop?
    Mr. DANIELS. Well, I think that is part of the challenge is 
that when we talk about expanding out into agriculture and 
beyond visual line of sight and that technology, you have a lot 
of export compliance and ITAR regulations that limit that as 
well, agriculture being one of them. Even though we have 
recently opened up to nonmilitary unmanned aircraft as a 
special categorization, that becomes an additional part of the 
challenge. And those are things the FAA has no control over and 
cannot mandate. So I think part of that is as we expand that 
technology, we find those gaps, either we cannot apply the 
military technology we do have or we have to create new ones 
outside that.
    Mr. DAVIDSON. Thank you.
    Mr. Chairman, I yield back my time.
    Chairman HARDY. Thank you.
    We still have some time and I would like to ask a number of 
questions, so we will go through one more time.
    I would like to begin with Mr. Daniels. In your testimony, 
you indicated that the FAA's regulatory framework should take 
into account veterans with unmanned air systems training and 
make it easier for them to obtain an unmanned aircraft operator 
certificate with small UAS rating. Can you explain why this is 
important and how the rule's initial testing requirement would 
deter veterans with relevant UAS training and experience from 
not applying for remote pilot certificates?
    Mr. DANIELS. Yes, Mr. Chairman.
    So as it sits right now, the military has been using 
unmanned aircraft for 70-plus years; right? JFK, his older 
brother was killed in an unmanned aircraft accident. We kind of 
forget that sometimes. We think this is a new industry. In the 
last 20 years, the majority of experience people have with 
operations over people, beyond visual line of sight, flying at 
night, flying at these upper altitudes, has been done by the 
military. Much like we do with military manned pilots, we have 
a military competency test that the FAA gives, and then you 
have to prove you have the knowledge, but you do not have to go 
through the exact same application process that you do as if 
you are starting out as a civilian pilot. They take recognition 
of that timeframe, that recognition, that experience.
    I think especially starting with the remote pilot 
certificate with the smalls, again, the majority of the people 
who fly small unmanned aircraft systems within the United 
States, it still is the military. The military does 1.1 billion 
hours of small unmanned aircraft flight a year, and they are 
enlisted, nonrated pilots who do not have pilot licenses and 
have to go through the normal process.
    As we go to the larger systems, beyond 55 pounds, again, we 
have thousands of military pilots who are there. If we want to 
grab that experience and get that into the workforce, again, 
taking a disadvantaged community, that being veterans, this is 
the way we have to go forward.
    Chairman HARDY. Thank you.
    Mr. Wynne, have you obtained a remote pilot certificate 
with the small UAS rating under this new rule? And if so, did 
the process go smoothly?
    Mr. WYNNE. Yes, sir, I have. The process was smooth. I am a 
Part 61 certificated pilot, so I went through that process and 
have recently been looking at what is on the knowledge-based 
test, and I think it is consistent with the kinds of skills 
that we would want all airmen to have. And the good news about 
the way they have rolled this rule out is that the concept in 
aviation of pilot in command is ``I am responsible for the safe 
conduct of my flight.'' We have added remote in front of that. 
So, but they have done away with things that are not required 
for pilots of manned aircraft, and I think that is the right 
way to go. And by the way, I completely support what Mr. 
Daniels is saying about military pilots. We have a tremendous 
reservoir of talent out there that the United States taxpayer 
has paid for that is waiting to go to work for us and large 
industries that want to take advantage of that, and we should 
make this technology and these job opportunities as accessible 
to our veterans as they are for the rest of us pilots.
    Chairman HARDY. Thank you.
    I would like to go back to Mr. Daniels. In your testimony, 
you note that Praxis Aerospace has been involved in the 
development of the Eldorado Droneport. Can you explain what a 
droneport is and how you envision them operating in the future?
    Mr. DANIELS. Thank you again.
    So the Eldorado Droneport is a public development by the 
City of Boulder City. It is 50 acres of land surrounded by 100 
acres or 100 square miles rather of city-owned land. It is 
actually working in concert with the Oneida County and Griffiss 
International Test Site. And the intent there is as we talk 
about going from nonscheduled flights to scheduled flights, 
right now the majority of unmanned aircraft flights are 
relatively impromptu and intermittent. We go out and we fly 
from a location, conduct a surveillance, conduct a survey, 
conduct an agricultural mission, whatever it is that we are 
doing, and then we leave and never fly there again. As we start 
getting larger systems, as we start getting to more scheduled 
flights, like delivery and cargo, you are going to want to have 
a location where that is done and where that is carefully 
scoped out for safety concerns--the lighting, the building 
codes around there. Additionally, we want to be able to expand 
that out. We do that with helipads now. So if you think of a 
helicopter that can land anywhere, there is a reason why we 
have helipads. Nobody wants Amazon drones coming in to do a 
delivery, a bunch of kids to come running out in the landing 
area. We need to figure out how to put that in place. What we 
are trying to do with the droneport is have a site to do that, 
again, tied in with the test sites as they are right now and 
then continuing to build forward so that as we go forward in 
the future, just like we did with Internet cafes where that was 
the place where you got your Internet and now we all have it on 
our cell phones, well, this will be the place where you learn 
how to take off and land from a droneport, and eventually it 
will be everywhere and you will not need a dedicated drone port 
for that.
    Chairman HARDY. Thank you. And I am out of time again.
    Ms. Adams?
    Ms. ADAMS. Thank you, Mr. Chair.
    Mr. Daniels, one survey conducted showed that many 
companies are unclear of the current FAA regulations, yet they 
continue to operate commercial drones anyway. The arbitrary 
decision to follow rules is troublesome as it could present a 
risk to the public safety. What can be done to avert a 
recurrence of this behavior and increase the level of public 
adherence to the regulations?
    Mr. DANIELS. Ma'am, that is a very good question and one 
that I have literally spent sleepless nights over looking at. 
The idea of arbitrary rule following, again, that is a 
misfeasance/malfeasance. Right? Some people do it by accident. 
Some people do it deliberately. But it damages the industry as 
a whole. And it is coming. When there is that thing that 
happens that draws the attention, no one is going to look at 
whether they were doing the right thing or not. No one is going 
to look at whether they are actually following the rules. They 
are going to look at it as an industry-wide failure.
    One of the things I say behind that is bring in the 
veterans because we have a lot of experience here. Another 
thing I talk about is repairmen. The whole focus for Part 107 
is on remote pilot, not on the repairmen, not on the continued 
airworthiness. For us to do the missions that Mr. Dobbs, Mr. 
Wynne talk about, we are going to need people to keep those 
aircraft in the sky, much like we need mechanics working on our 
cars right now. We need to add that in there.
    And then finally, and I have joked about it before, we need 
a 1-800-BADRONE or some measure to, you know, Crime Stoppers, 
some measure to say, look, I have been at a jobsite where a guy 
flies up to go with his little phantom drone and takes off. And 
as we talked through and said, okay, do you have your 
certificates, they immediately packed everything up and ran 
away. But we need a way to self-police and maybe escalate that 
a little more to whether it is local law enforcement or the 
FAA.
    Ms. ADAMS. Thank you.
    Are we going to fly this drone today, Mr. Dobbs?
    Mr. DOBBS. It does not fly indoors.
    Ms. ADAMS. Oh, okay. Okay.
    Mr. Daniels, let me follow up and ask you about the 
proposed rule that sought comments on whether there should be 
an inclusion of a micro drone category. Ultimately, a micro 
drone category was not included in the final rule, so how large 
of a role can we expect micro drones to play as commercial 
drone uses expand?
    Mr. DANIELS. Ma'am, that is another good question, and I 
had the opportunity to address the micro UAS ARC about this.
    My challenge with the micro drones is that at a certain 
point, until the technology gets there, we do not have the 
ability to integrate the things that we know we need for 
safety--the sense and avoid, the transponders, things that you 
will need to fly free and openly, even under Part 107 and the 
Part 107-type waivers. You just cannot get that on an airframe 
that weighs 500 grams or less. However, I see a lot of 
opportunity in public safety. I know that is one of the things 
that militaries use that will definitely transfer over where if 
you have a drone in your pocket as a fireman, you are able to 
bring that to a local situation and immediately get eyes on. 
Under the rules as they exist right now it is a fantastic use 
for micro drones. It is much less expensive than not only large 
commercial aircraft that we have right now but also some of the 
larger drones. The second piece of that is you could put one of 
these things in a box next to your fire alarm, and when the 
fire alarm goes off the box opens up, the micro drone comes out 
and can actually run up and down the halls and give you 
immediate information to feed whoever is coming to help rescue 
you, whether it is the fire department, law enforcement, it 
does not matter. You have an immediate eyes on. I see a lot of 
opportunities for micro drones.
    Ms. ADAMS. Okay.
    Mr. Wynne, we talked a little bit about security and we 
know the risk that hacking plays in security, and drones are 
just as liable to this threat as other forms of technology. So 
how likely is it that a drone hacking can or will occur?
    Mr. WYNNE. Well, I think it is likely enough that we as an 
industry have got to take measures against it. And this is one 
of the phenomenon that we in a rapidly advancing technology 
industry face, like all technology industries. The Internet has 
caused all manner of challenges with regard to privacy and 
other things and we have anti-virus software for the Internet, 
so our industry, one of the fastest-growing elements of our 
industry will be counter drone technology, for example.
    I was at a cyber conference last week in Newport News and 
listening to people across the spectrum of technology talking 
about cyber challenges. It is significant. But it is no 
different for our industry than it is for the healthcare 
industry or for any other industry. So, but that is the reason 
I was there because we need to learn across those industries.
    Ms. ADAMS. Great. Thank you very much. I yield back, Mr. 
Chair.
    Chairman HARDY. Thank you all for being here.
    But I am going to take the liberty of asking one more 
question. I will begin with you, Mr. Dobbs, and anybody else 
who would like to address it can.
    As of September 20, 2016, the FAA had received 552 waiver 
requests under Part 107 and approved 79. However, the 79 waiver 
requests that have been approved were submitted under the 
Section 333 exemption before the final rule effective date. 
Does the fact that the FAA has not approved the new waiver 
requests submitted since Part 107 went into effect give you any 
concern?
    Mr. DOBBS. That is a great question. Thank you, Chairman 
Hardy.
    Absolutely. We are concerned that the waiver process will 
be similar to the Section 333 exemption process in that it will 
take quite a bit of time for these waivers to work their way 
through the system. What we saw with Section 333 is deadlines 
being missed, and there are also many use cases after a storm 
when you need to inspect homes or track progress on a 
construction site, it is critical that these waivers be 
processed quickly or we even create a system where these 
waivers are not necessary. But it is a real concern that we are 
watching.
    Chairman HARDY. Thank you.
    Anybody else?
    Mr. WYNNE. I think as I understand it, what is happening 
now is that the UAS Integration Office inside of the FAA, which 
is exclusively devoted to this, is now pulling in resources 
from the entire FAA. It is easier for them to identify who is 
not working on UAS at this point than who is. But a lot of 
those offices are relatively new. So they made a point, Earl 
Lawrence, the head of that office made a point of explaining 
that when you put in a waiver that is not necessarily going to 
come into our office. It is going to get directed to a 
different office, and I think all of those people are trying to 
understand exactly what their roles are. But we have been 
emphasizing the importance of cadence, and yet we have to find 
that balance. I think like the 333 exemption process, it will 
accelerate over time, but will be clearer to those that are 
requesting waivers and permission to fly under certain 
circumstances, what the mitigations are they need. That will be 
communicated out to the public at large and this process will 
move quicker.
    Chairman HARDY. Thank you.
    Mr. DANIELS. Mr. Chairman, if I can add to that.
    The FAA is working with ASTM, an industry standards 
organization, specifically on addressing an alternative method 
of compliance for this that will help accelerate the waiver 
process, as well as form the guidelines for the operations over 
people, beyond visual line of sight. And they have been doing 
so for a year and a half that I have been personally involved 
and I am sure well beyond that. The idea again is you have an 
industry standard that is self-certifying, self-compliant, and 
you have to meet what is within there, much like we do with 
underlying laboratories as it is now--provide that to the FAA, 
and it makes it much easier for them to inspect it. It follows 
their formats. It follows their questions. You have everything 
in line with that. And I know the delivery date for those is 
within the next 6 months. So I see that changing and being a 
much easier process, knowing for a fact that they are building 
a standard specifically for the waivers for Part 107 now.
    Chairman HARDY. Thank you.
    Ms. Ellman?
    Ms. ELLMAN. Yeah. So one area I would talk about is in 
terms of flights over people. One thing to watch here, I know 
the FAA is requiring a lot of quantitative analysis, ballistic 
gel tests, drop tests, and this is where, you know, in addition 
to kind of all this data that is out there, it is important 
that the FAA actually consider the operational and technical 
mitigations in addition just to kinetic energy, which I think a 
lot of folks look at what is being required in the flights over 
people context and frankly, it is going to be a tall--if the 
process is as intense as it looks offhand, it is not going to 
go in any expedited way. And as the industry evolves, we really 
want to be incentivizing safety and incorporating this 
innovation and incorporating parachutes and propeller guards 
and padding for vehicles and allowing those mitigations to 
actually get broader approvals. I think what we are seeing is 
very, very narrow approvals for things that even weigh about a 
pound or so. And so I think that this is critical as we move 
forward that this has to be a scalable process, something that 
small businesses across the country are going to be able to 
meet that are operating safely. Small businesses want to 
operate in a way that is safe, and we need to be able to 
incorporate innovation so that we can actually move this 
process forward and provide real opportunities to use these 
devices.
    Chairman HARDY. Thank you. Thank you all for being here 
today. I appreciate your testimonies.
    As the FAA opens the skies to commercial drone activity, 
the new avenues of economic opportunity are opening for the 
startup and small business communities. The Subcommittee will 
monitor implementation of the Part 107 and how well the new 
regulatory framework is working for small companies. We will 
also continue to encourage the FAA to diligently move forward 
with its efforts to safely integrate UAS into the national 
airspace while addressing safety, privacy, and other concerns.
    I ask unanimous consent that all members have 5 legislative 
days in order to submit their statements and supporting 
materials for the record.
    Without objection, so ordered.
    This hearing is now adjourned.
    [Whereupon, at 12:10 p.m., the Subcommittee was adjourned.]
                            A P P E N D I X

[GRAPHIC NOT AVAILABLE IN TIFF FORMAT] 

              Prepared Statement of Gabriel Dobbs

    Chairman Hardy, Ranking Member Adams, and distinguished 
members of the Subcommittee, thank you for the opportunity to 
testify today on behalf of Kespry and the Small UAV Coalition. 
This is both an exciting and critical time for the commercial 
unmanned aerial systems (UAS) industry and I appreciate the 
opportunity to discuss Part 107, particularly as it impacts 
small businesses like Kespry. We applaud the Subcommittee's 
interest in this new framework as it underscores your 
commitment to ensure that the United States has a regulatory 
environment conducive to innovation and job creation for 
businesses of all sizes.

    I would also like to thank the Small UAV Coalition--the 
first group of its kind focused solely on commercial drone 
operations--for its leadership in working with policymakers and 
regulators to develop a robust, yet flexible framework that 
will no longer be built around exemptions and exceptions. 
Thanks to their hard work, this industry is now ``open for 
business.''

    Like many small businesses across the country, Kespry was 
started on the floor of an apartment by a few college graduates 
passionate about the promise of drone technology and its 
potential to have meaningful impact on business in America and 
around the world. Today, we have been in business for over 
three years. We have customers operating drones in every state, 
generating millions in revenue. We now employ over 60 people 
and continue to grow aggressively. Kespry is a ``made in 
America'' business. We design and manufacture our fully 
integrated drone systems entirely in the United States.

    Kespry's mission is to create technology that significantly 
advances the effectiveness, efficiency, and safety of workers 
in the real world. This can mean everything from creating a 3D 
model of hard-to-reach areas of construction, to inventory 
management, to identifying damage on structures faster to help 
homeowners and businesses get back on their feet after a major 
storm.

    In less than 30 minutes, for example, a Kespry drone can 
provide aerial imaging and mapping solutions for a 150-acre 
construction site that allow project managers to track 
progress, manage resources, and complete projects on schedule 
and under budget. It takes less than five minutes for a Kespry 
drone to survey a roof to evaluate damage and thus inform 
repairs and claims adjustments, eliminating the need for 
insurance companies to put employees and contractors at risk of 
physical injury by climbing ladders and walking on damaged 
roofs. A quarry can use a Kespry drone to accurately measure 
the volume of stockpiles in a matter of minutes, rather than 
days. We save businesses time and money, and give workers an 
invaluable tool to improve safety and automate dangerous, time-
consuming jobs.

    The drone industry, particularly the commercial sector, 
also represents a largely untapped market that stands to add 
billions of dollars to our economy. One recent report estimated 
that the drone industry as a whole could be valued at $100 
billion by 2020. The largest area of growth lies in the 
commercial segment, which is estimated to grow to a $21 billion 
industry within five years. This growth will allow American 
companies of all sizes, including small businesses, to create 
countless high-paying, highly-skilled jobs. These economic 
benefits will also permeate through other industries, from 
insurance to component manufacturers. But none of this is 
possible without Part 107 and subsequent rulemakings that open 
the skies to commercial drones while maintaining the highest 
safety standards.

    Early FAA UAS Regulations

    Two years ago, the drone revolution was just beginning and 
the FAA had devoted very limited resources to small UAS. 
Operators had to ask the Secretary of Transportation for 
permission to ignore certain federal regulations on the books 
relating to aircraft, since these regulations treated a small 
drone the same as a Boeing triple 7. An exemption was required 
from the requirement to maintain a paper flight manual on board 
the aircraft. Another one of the many regulations we requested 
exemption from required us to have a fourteen inch registration 
number or ``N Number'' on the ``tail'' of our aircraft. Since 
our aircraft had no tail, we found this difficult to comply 
with.

    In late 2014, the first so-called section 333 exemptions 
were granted. The industry celebrated this milestone, but the 
fine print on the exemption grants made it clear that this was 
not the solution we had been waiting for. The exemptions 
required two persons for any drone flight, including one person 
who held a private pilot's license and a visual observer. The 
exemption also restricted flights to at least 500 feet from all 
persons and buildings. This was commercially impractical and 
failed to acknowledge the advances in autonomous flight 
technology.

    The many conditions and limitations on the FAA's exemption 
authority significantly limited the growth of the small UAS 
industry in this country and led many companies to conduct 
operations in other countries where regulatory advances have 
been made more quickly. For example, drones have been operating 
beyond the line of visual sight--a critical element of 
commercial operations--in France since 2012. The Japanese 
government is racing to implement a regulatory framework to 
have drone delivery in place in rural areas by 2018 and in 
urban areas in time for the 2020 Tokyo Olympics. Part 107, 
provided it is implemented to expand the nature and scope of 
operations, will help ensure that the United States does not 
continue to cede ground to our global competitors who are 
aggressively embracing this rapidly developing technology and 
its corresponding economic and consumer benefits.

    Part 107 Benefits Both the Commercial Drone Industry and 
Consumers

    Kespry worked with partners from the Small UAV Coalition to 
help the FAA create a rule that put robust safety precautions 
in place for small commercial drone operations, while 
eliminating many of the categorical restrictions in the 
proposed rule that would have been economically impractical 
with no material impact on safety. While the rulemaking process 
took longer than anticipated, the FAA was receptive to industry 
input and expertise; over two-thirds of the recommendations 
made by the Small UAV Coalition in response to the Notice of 
Proposed Rulemaking (NPRM) were incorporated into the final 
rule.

    The moment it went into effect on August 29, Part 107 was a 
huge improvement over the Section 333 process, a laborious and 
lengthy for both industry and the FAA. First, commercial 
operators seeking to operate small UAVs no longer need to 
petition for FAA approval if they plan to operate within the 
scope of the rule. Second, the FAA no longer requires UAS 
pilots to have manned aircraft flying experience, which has 
little correlation to the skills required to operate a UAS. 
Instead, remote pilots must pass an aeronautical knowledge test 
to ensure they have the capability and knowledge required to 
safely and responsibly operate a drone for commercial purposes.

    Operators may fly during daylight and within the visual 
line of sight in uncontrolled airspace without obtaining any 
additional FAA approvals. Operations can be conducted up to 400 
feet above ground level, though a UAV may operate over a 
structure up to 400 feet above that structure if it remains 
within 400 feet of that structure. These parameters allow 
Kespry to conduct many of our operations much more efficiently 
than under the Section 333 regime, enabling us to expand our 
offerings and widen our customer base.

    We hope that Part 107 will allow the FAA to devote more 
resources to continued development of a regulatory framework 
that will pave the way towards critical components of 
widespread commercial drone operations that the final rule 
either does not address or permits only under limited 
circumstances.

    Beyond Part 107

    While Part 107 is a solid first step towards a 
comprehensive regulatory framework for commercial drone 
operations, there are several key components that the FAA must 
address expeditiously or United States companies will lose out 
to foreign competitors eager to invest in this developing 
technology.

    Improving the Part 107 Waiver Process

    As urged by the Small UAV Coalition, Part 107 allows 
operators to seek a waiver from several regulatory limitations, 
perhaps most notably to operate at night, directly over people, 
and beyond the visual line of sight. These elements are 
critical to the successful and widespread integration of 
commercial drones into the national airspace that will help 
create tens of thousands of jobs. The FAA has already granted 
79 waivers, the vast majority of them to allow operations at 
night. Time will tell whether the waiver process will be more 
efficient and flexible than the section 333 exemption process. 
We do not know whether the FAA's staffing and resources are 
sufficient to implement the waiver process to support the need 
for expanded operations that will save money, save time, and 
save lives.

    Operations Beyond the Visual Line of Sight and Over People

    While we appreciate that Part 107 allows for waivers to 
operate beyond the visual line of sight (BVLOS) and over 
people, the FAA's next phase of regulations must provide for 
even more efficient approval of these types of operations or 
the United States will fail to develop the robust commercial 
drone industry that other countries are actively pursuing. A 
rancher in Nevada or a farmer in North Carolina cannot fully 
benefit from drone technology if he must follow his drone in 
his truck to maintain the visual line of sight while inspecting 
his property.

    France, Poland, Sweden, Norway, and the Czech Republic are 
just a few of the countries in which beyond visual line of 
sight operations have been taking place for years with high 
levels of safety. Technology already exists that ensures safe 
beyond visual line of sight operations and eliminates the need 
for operators to seek waivers on a case by case basis, a 
burdensome endeavor for both companies--especially small 
businesses--and the FAA.

    Congress has also endorsed the need for expanded beyond 
visual line of sight operations. FAA reauthorization that 
passed the Senate 95-3 earlier this year included language that 
expressed the sense of Congress that ``beyond visual line of 
sight....operations of UAS have tremendous potential to spur 
economic growth and development through innovative applications 
of technology and to improve emergency response efforts as it 
relates to assessing damage to critical infrastructure such as 
roads, bridges, and utilities, including water and power, 
ultimately speeding response time.''

    Equally as critical to realizing the full potential of 
commercial drone applications is the ability to safely operate 
UAS over populated areas and people not directly involved in 
the operation of the UAS. The FAA has announced its intention 
to publish a proposed rule for Operations of Small Unmanned 
Aircraft Over People for public comment before the end of the 
year. The proposed rule is to be informed by an Aviation 
Rulemaking Committee report produced earlier this year by a 
task force comprised of FAA, industry and other aviation 
stakeholders. The report recommends risk-based performance 
based standards, manufacturer compliance requirements, and 
operational provisions that we hope to see incorporated into 
the proposed rule. We also hope that the proposed rule will 
recognize that very light weight, so-called micro UAVs pose the 
least risk and therefore can be permitted to operate over 
people under certain circumstances without compromising safety.

    Risk-Based Regulations: Micro UAS Classification

    Industry has been pleased to see the FAA taken an 
increasingly risk-based approach to UAS regulations, but it has 
yet to acknowledge in regulation the risk differentiation 
between very small UAS that weigh only a few pounds or less and 
a drone that pushes the 55 pound limit of vehicles subject to 
Part 107. A micro UAS classification would create an even more 
efficient regulatory framework, further reducing the burden on 
small UAS operators without creating any significant safety 
concerns.

    In the preamble to the proposed rule, the FAA put forth the 
idea of a micro UAS classification for vehicles weighing up to 
4.4 pounds, including payload, based on concepts put forth in 
other countries. Kespry and the Small UAV Coalition endorsed 
this idea, the basis for which was the belief by some at the 
FAA that a small UAS operation should be given more leeway 
where the safety risks of operating such a small vehicle are 
negligible. We were disappointed to see that despite receiving 
strong support for its micro UAS proposal, the FAA chose not to 
include it in the final rule.

    Congress has also endorsed the concept of micro UAS 
classification. FAA reauthorization bills approved earlier this 
year by the Senate and the House Transportation and 
Infrastructure Committee both included provisions directing the 
FAA to establish a micro UAS category. Unfortunately, this 
direction was stalled despite strong, bipartisan support when 
the effort to enact comprehensive, long-term FAA 
reauthorization legislation was derailed and a short-term 
extension of current FAA authorities was enacted in its place. 
While we appreciate congressional support for the concept, 
industry cannot afford to wait for Congress to again make its 
intention clear when it again works to reauthorize the FAA a 
full year from now. We urge the FAA to include a micro UAS 
classification in its forthcoming Notice of Proposed Rulemaking 
for operations over people.

    Improving Testing and Training

    Early reports from the FAA indicate that the first round of 
individuals who have taken the aeronautical knowledge test to 
obtain a remote pilot certificate have experienced a high rate 
of passage. While this is good news, there is evidence to 
suggest that these numbers will decline as more people pursue a 
certificate. Many of us in the industry have heard that the 
volume of information provided by the FAA to prepare for the 
test is not only overwhelming, but also largely focused on 
manned aviation, therefore discouraging people from signing up 
for the test. It is also a safe assumption that many of those 
who signed up to take the aeronautical knowledge test at its 
earliest availability are individuals with experience in the 
industry who have a strong foundation in the knowledge and 
skills required to pass the test. It will take time for 
realtors and other professionals who don't have this experience 
and awareness, yet stand to benefit enormously from this 
technology, to endeavor to take the test and they will likely 
not experience the same levels of success.

    Further, remote pilot applicants must take the test in 
person at a designated FAA testing center. In addition to the 
$150 test fee, this is a burdensome and costly deterrent to 
compliance. The FAA acknowledged in the preamble to Part 107 
that it may authorize online testing in the future if it can be 
conducted securely to prevent fraud and cheating. This type of 
security technology already exists and is used for testing and 
certification in other industries. The FAA should prioritize 
standing up an online testing program as soon as possible.

    Conclusion

    Thank you for holding this hearing and for the opportunity 
to testify on behalf of Kespry and the Small UAV Coalition. As 
you can see, the commercial drone industry stands to deliver 
major economic and consumer benefits that will allow businesses 
of all sizes to thrive. Part 107 is a strong and positive first 
step in developing a comprehensive regulatory framework for 
small commercial drone operations. It is also proof that it is 
possible to boost opportunities for American innovation and 
manufacturing without being overly prescriptive and hindering 
industry's ability to innovate and compete. We look forward to 
continuing to work with the FAA and Congress to ensure the 
United States develops and implements a comprehensive 
regulatory framework that allows for the safe and expedited 
integration of drones into the national airspace.
[GRAPHIC] [TIFF OMITTED] T3768.002

    Chairman Hardy and members of the subcommittee, thank you 
very much for the opportunity to participate in today's hearing 
on unmanned aircraft systems. I'm speaking on behalf of the 
Association for Unmanned Vehicle Systems International, the 
world's largest non-profit organization devoted exclusively to 
advancing the unmanned systems and robotics community. AUVSI 
has been the voice of unmanned systems for more than 40 years, 
and currently we have more than 7,500 members, including many 
small businesses that support and supply this innovative 
industry.

    Unmanned aircraft systems, or UAS, increase human 
potential, allowing us to execute dangerous or difficult tasks 
safely and efficiently. From inspecting pipelines to surveying 
bridges to filming movies, UAS help save time, save money and, 
most importantly, save lives. It is no wonder why thousands of 
businesses--small and large--have already embraced this 
technology, and many more are considering integrating it into 
their future operations.

    Today, we now have initial regulations governing civil and 
commercial UAS operations, which means even more businesses are 
cleared for takeoff. While these regulations have only been in 
effect for less than a month, there is strong evidence that the 
commercial UAS market is poised for significant growth, 
particularly among small businesses. Let me explain.

    On August 29, the Federal Aviation Administration 
implemented the small UAS rule, also known as Part 107. The 
rule was the result of years of collaboration between 
government and industry that established a flexible, risk-based 
approach to regulating UAS. This new regulatory framework helps 
reduce many barriers to low-risk civil and commercial UAS 
operations. In reducing those barriers, the rule allows 
businesses and innovators to harness the tremendous potential 
of UAS and unlock the many economic and societal benefits the 
technology offers.

    Part 107 allows anyone who follows the rules to fly for 
commercial purposes. Generally speaking, operators need to fly 
under 400 feet, within visual line of sight and only during 
daylight hours. However, recognizing the need for the rule to 
be flexible, the waiver process under Part 107 allows for 
expanded types of operations.

    It is clear that businesses are eager to take off. On the 
first day the rule went into effect, more than 3,300 people had 
already signed up to the take the aeronautical knowledge test, 
called the Unmanned Aircraft General (UAG) examination, which 
is one of the requirements under Part 107. Of the more than 
530,000 people who have registered their UAS with the FAA since 
last December, about 20,000 have indicated they are commercial 
operators. The FAA expects that more than 600,000 UAS could be 
flying for commercial use over the next year.

    Until the regulation became effective, individuals and 
companies seeking to fly UAS for commercial purposes had to 
apply for an exemption under the Section 333 provision of the 
FAA Modernization and Reform Act of 2012. The FAA started 
granting Section 333 exemptions for certain low-risk commercial 
UAS applications in September 2014. From that time until the 
day the final rule took effect last month, the FAA granted more 
than 5,500 exemptions.

    These exemptions provide a window into how the commercial 
market is taking shape, the numerous industries embracing UAS 
and the most common applications for the technology. AUVSI 
analyzed each of the FAA exemptions and found that more than 
5,200 businesses received approval to fly for commercial 
purposes. Of the businesses that received exemptions, the vast 
majority are small. Over 90 percent of these businesses make 
less than $1 million in annual revenue and have fewer than 10 
employees. Our analysis also found that UAS are being used in 
all 50 states for over 40 different types of applications, 
including aerial photography, emergency management and utility 
inspection.

    These exemptions show that a wide number of small 
businesses across a range of industry sectors are adopting the 
technology. Whether it's aiding search and rescue missions, 
advancing scientific research, responding to natural disasters, 
or helping farmers care for their crops, UAS are transforming 
the way many businesses operate. They also are creating several 
new ones--from startups focused on developing new UAS platforms 
to entrepreneurs creating new business models that offer 
specific UAS services. Other small businesses are eager to use 
UAS to improve their existing services and extend their 
capabilities.

    Let me provide some examples:

           One of these businesses is Las Vegas-based 
        Verascan, Inc., which provides imaging, mapping and 
        surveying services to Nevada's agriculture, mining, 
        construction and oil and gas industries. This past 
        year, it provided aerial survey data to assist in the 
        construction of the I-11 Highway Boulder City Bypass, 
        part of a proposed highway link between Phoenix and Las 
        Vegas.\1\
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    \1\ http://www.verascaninc.com/blogs/blog--detail/29

           Another example is North Carolina-based 
        Flyboy Aerial Photography. It was of the first 
        professional photography companies in the Triangle 
        region to use unmanned aircraft. Flyboy was founded by 
        a husband and wife team. Their passion for photography 
        and technology has led them to work closely with real 
        estate agents seeking to show aerial views of property 
        to potential buyers, as well as assist construction in 
        surveying and mapping projects more accurately.\2\
---------------------------------------------------------------------------
    \2\ http://www.flyboync.com/#!services/cuto

           Finally, Cincinnati-based Rise Above Images 
        provides aerial images for real estate agencies and 
        construction companies in Ohio. The company helps 
        attorneys and insurance agencies reconstruct and 
        analyze the scenes of accidents as well as use aerial 
        photography to help resolve land disputes.\3\
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    \3\ http://www.riseaboveimages.com/#/home

    These are, of course, just a handful of examples of small 
business currently using UAS to advance their operations and 
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services. And there are many, many more.

    An economic analysis by AUVSI projects that the expansion 
of UAS technology will create more than 100,000 jobs and 
generate more than $82 billion to the economy in the first 
decade following integration in to the national airspace. After 
witnessing the growth of the industry over the last few years 
and now with Part 107 in place, I am confident those figures 
will be even higher.

    There is no doubt that this year has been a productive one 
for UAS and, as a result, many American businesses are now able 
to fly. In addition to the implementation of the small UAS 
rule, Congress passed and the president signed an FAA extension 
measure which will advance UAS research, expand commercial 
operations and enhance the safety of the national airspace for 
all users--manned and unmanned.

    Notably, the extension calls for the creation of a 
comprehensive UAS research and development roadmap to 
coordinate industry and government R&D initiatives. The 
extension also outlines a pilot program for UAs traffic 
management (UTM) and expands the section 333 exemption process 
to allow for beyond line of sight operations.

    While this measure will provide some short-term stability 
through September 2017, it is critical that Congress pass a 
long-term bill next year that will set the industry and the 
country on a glide path to reap all of the benefits of UAS. The 
extension is a good start, but there is still much more work to 
be done.

    As was recently highlighted at the White House's Office of 
Science and Technology Policy and AUVSI Foundation's first-ever 
drone workshop, government and industry collaboration is 
critical for keeping up with the pace of our industry's 
innovations. Key stakeholders in industry and government have 
successfully fostered a working relationship that has led to a 
more flexible and nimble approach to regulating UAS, while 
small businesses have led the charge in adopting the 
technology.

    AUVSI is eager to continue this critical collaboration with 
the Department of Transportation, the FAA, Congress and other 
industry stakeholders through initiatives such as the newly-
formed Drone Advisory Committee.

    In that same spirit, we are hopeful that the sustained 
efforts of all parties will help pave the way for a true, 
holistic plan for full UAS integration that includes beyond 
line of sight operations, flights over people, access to higher 
altitudes and platforms above 55 pounds. Some of these efforts 
are already in motion. The FAA is currently reviewing the 
recommendations made by the Micro-UAS Aviation Rulemaking 
Committee regarding flights over people and a draft rule is 
expected by the end of this year.

    The UAS industry is primed for incredible growth, thanks to 
industry representatives and government regulators nurturing 
innovation that helps small businesses be more competitive in 
the marketplace than ever before. We hope that these efforts 
can be sustained and that we continue to reach new historic 
milestones in integrating this technology into the national 
airspace.

    Thank you, again, for the opportunity to speak today. I 
look forward to answering any questions the committee might 
have.
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