    [Senate Hearing 114-635]
    [From the U.S. Government Publishing Office]

                                                            S. Hrg. 114-635

                    UP IN THE AIR: EXAMINING THE COMMERCIAL
                       APPLICATIONS OF UNMANNED AIRCRAFT
                              FOR SMALL BUSINESSES

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

                                    HEARING

                                   BEFORE THE

                          COMMITTEE ON SMALL BUSINESS
                              AND ENTREPRENEURSHIP
                              UNITED STATES SENATE

                        ONE HUNDRED FOURTEENTH CONGRESS

                                 SECOND SESSION

                                   __________

                                 MARCH 10, 2016

                                   __________

        Printed for the Committee on Small Business and Entrepreneurship

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             Available via the World Wide Web: http://www.fdsys.gov

                                       ______

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                COMMITTEE ON SMALL BUSINESS AND ENTREPRENEURSHIP

                        ONE HUNDRED FOURTEENTH CONGRESS

                                  ----------
                       DAVID VITTER, Louisiana, Chairman
                 JEANNE SHAHEEN, New Hampshire, Ranking Member
    JAMES E. RISCH, Idaho                MARIA CANTWELL, Washington
    MARCO RUBIO, Florida                 BENJAMIN L. CARDIN, Maryland
    RAND PAUL, Kentucky                  HEIDI HEITKAMP, North Dakota
    TIM SCOTT, South Carolina            EDWARD J. MARKEY, Massachusetts
    DEB FISCHER, Nebraska                CORY A. BOOKER, New Jersey
    CORY GARDNER, Colorado               CHRISTOPHER A. COONS, Delaware
    JONI ERNST, Iowa                     MAZIE K. HIRONO, Hawaii
    KELLY AYOTTE, New Hampshire          GARY C. PETERS, Michigan
    MICHAEL B. ENZI, Wyoming
                    Meredith West, Republican Staff Director
                   Robert Diznoff, Democratic Staff Director

                                C O N T E N T S

                                  ----------

                               Opening Statements

                                                                       Page

    Vitter, Hon. David, Chairman, and a U.S. Senator from Louisiana..     1
    Booker, Hon. Cory A., a U.S. Senator from New Jersey.............     3
    Shaheen, Hon. Jeanne, a U.S. Senator from New Hampshire..........    73

                                   Witnesses
                                    Panel 1

    Wynne, Brian, President and CEO, Association for Unmanned Vehicle
      Systems International, Arlington, VA...........................     5
    Canoll, Tim, President, Air Line Pilots Association,
      International, Washington, DC..................................    13
    Dourado, Eli, Director, Technology Policy Program, Mercatus
      Center, George Mason University, Arlington, VA.................    34

                                    Panel 2

    Vaneck, Thomas W., Vice President, Disruptive Technologies,
      Physical Sciences Inc., Andover, MA............................    58
    McNeal, Gregory S., JD/PhD, Professor of Law, Pepperdine
      University, Co-Founder, AirMap.................................    64

              Alphabetical Listing and Appendix Material Submitted

    Booker, Hon. Cory A.
        Opening statement............................................     3
    Canoll, Tim
        Testimony....................................................    13
        Prepared statement...........................................    15
    Dourado, Eli
        Testimony....................................................    34
        Prepared statement...........................................    36
        Responses to Questions Submitted by Senators Fischer,
          Heitkamp, and Scott........................................    90
    McNeal, Gregory S.
        Testimony....................................................    64
        Prepared statement...........................................    66
    Motion Picture Association of America
        Statement Dated March 10, 2016...............................    84
    Shaheen, Hon. Jeanne
        Testimony....................................................    73
        Prepared statement...........................................    74
    Vaneck, Thomas W.
        Testimony....................................................    58
        Prepared statement...........................................    60
    Vitter, Hon. David
        Opening statement............................................     1
    Wynne, Brian
        Testimony....................................................     5
        Prepared statement...........................................     7
        Responses to Questions Submitted by Senators Fischer and
          Heitkamp...................................................    85

                          UP IN THE AIR: EXAMINING THE
                      COMMERCIAL APPLICATIONS OF UNMANNED
                         AIRCRAFT FOR SMALL BUSINESSES

                                  ----------

                            THURSDAY, MARCH 10, 2016

                          United States Senate,
                            Committee on Small Business
                                          and Entrepreneurship,
                                                        Washington, DC.
        The Committee met, pursuant to notice, at 10:04 a.m., in
    Room 428A, Russell Senate Office Building, Hon. David Vitter,
    Chairman of the Committee, presiding.
        Present: Senators Vitter, Risch, Gardner, Ernst, Ayotte,
    Shaheen, Cantwell, Heitkamp, Markey, and Booker.

     OPENING STATEMENT OF HON. DAVID VITTER, CHAIRMAN, AND A U.S.
                         SENATOR FROM LOUISIANA

        Chairman Vitter. Good morning, everyone, and welcome.
        Thanks for joining us today for the Senate Small Business
    and Entrepreneurship Committee's hearing to examine the
    commercial applications of unmanned aircraft systems, or UAS,
    by small businesses. We are going to be hearing from one panel
    of industry experts and one panel of small businesses, and I
    want to thank all of our witnesses for being here today and
    really contributing a lot. We appreciate it.
        The purpose of this hearing is really twofold. First, to
    highlight the need to integrate UAS into the national airspace
    in a way that fundamentally ensures safety as the top priority.
    I have raised significant concerns about the safe operation of
    this technology and it is crucial that the Federal Aviation
    Administration, the FAA, develops regulations to promote a
    culture of safety and compliance for the growing number of UAS
    users.
        But the second purpose of the hearing is to also recognize
    that while the FAA has certainly taken an extended period of
    time to develop these regulations, it risks sacrificing not
    only safety, but the proper development of this technology for
    the benefit of the economy and for consumers. The FAA's failure
    to meet regulatory deadlines has limited the growth of the
    commercial drone industry. I am hopeful that today's
    conversation will bring us closer to finding that right balance
    between the safe integration of drones in the national airspace
    and moving forward with economic development, not stifling
    small business innovation and utilization.
        The potential of UAS's economic contribution certainly
    cannot be ignored, and it is not at all surprising that our
    nation's entrepreneurs have made quick work of learning to
    benefit from this technology. In recent years, UAS have
    developed into useful and major tools for many small
    businesses. They are used in all sorts of applications across
    many industries, including agriculture, real estate,
    construction, film and TV, telecommunications, to name just a
    few.
        The Association for Unmanned Vehicle Systems International
    recently issued a report and it concluded that precision
    agriculture is one of the most promising commercial markets for
    UAS. The report estimated that once FAA regulations are
    finalized, the UAS industry expects to produce over 100,000
    total U.S. jobs and $82 billion in economic impact within a
    decade.
        In the meantime, drones are prohibited for commercial
    purposes and the FAA has granted exemptions only on a case-by-
    case basis, and that is one of the major issues and hurdles,
    slow-ups, we are going to talk about today. It seems to me
    case-by-case analysis is not the best way to proceed for
    safety's sake, and it is certainly not the most efficient way
    to engage a growing industry, and the FAA needs to update its
    exemption process to be sure we cover safety and so that small
    businesses are taken care of in a timely way. The current
    process is simply unacceptable and leaves too many small
    businesses out to dry.
        The silver lining lies within the simmering growth of the
    industry. In 2014 alone, the companies that were granted
    exemptions are estimated to have contributed nearly $500
    billion in revenue and represented over 600,000 jobs. And of
    the first 1,000 commercial UAS exemptions, small businesses
    made up about 95 percent of them.
        I know that our entrepreneurs and small business owners
    want to follow the rules and use UAS for low-risk activities.
    But under the current circumstances, they face unnecessary
    barriers that prevent growth. The last thing our economy needs
    is unnecessary obstructions to small business growth, which is
    responsible for a huge part of sustaining jobs for hard working
    Americans.
        And I also say the other reality of the current state of
    affairs is that, quite frankly, you have a lot of folks,
    including small businesses, that simply are not going to
    comply. It is not practical and not sustainable, and that
    brings up real safety issues if you have a culture of a pretty
    wide open common non-compliance.
        In light of these realities, I have authored the Micro
    Drone Safety and Innovation Act. This bill would establish a
    micro classification for UAS that weigh 4.4 pounds or less in
    order to prioritize safety while promoting open innovation. The
    bill calls for strict safety requirements that fall in line
    with proposed regulations from the FAA. It is my belief that we
    can help maintain our country's competitive advantage while
    encouraging a culture of safety and compliance for UAS users.
        Now, let us get to today's conversation. I am extremely
    interested to hear from our witnesses about their experience
    with FAA's current process and what they expect when proposed
    regulations are finalized. I also hope our expert panelists
    will inform us of the impact UAS integration will have on our
    economy, how it has made a difference in their work, ways we
    can emphasize safety in our country's air space. And, of
    course, I would welcome any comments about my legislation,
    which we are introducing this week.
        Again, I want to thank everyone for being here today and I
    look forward to the discussion.
        And now, I will turn to Senator Booker, who will offer an
    opening statement in Senator Shaheen's absence.
        Senator.

     OPENING STATEMENT OF HON. CORY A. BOOKER, A U.S. SENATOR FROM
                               NEW JERSEY

        Senator Booker. Senator Vitter, I want to thank you very
    much. It is very good that you are holding this hearing. I want
    to thank the folks that are here today.
        I get really excited about the future and the possibility
    for us to innovate as a country. We have expanded our economy
    in every generation because of American innovation, leading the
    globe. We are the net global exporters of innovation, of ideas,
    of new technology, and we need to stay on that cutting edge.
        And, what frustrates me and worries me right now is when it
    comes to UAS and drone technology, it is now literally taking
    off across the globe but being stifled right here at home. We
    are the country that invented flight. We are the nation that
    led the world into the skies. But now for this incredible
    technology, we have a regulatory regime that is undermining
    innovation at home and spawning it in other places. If during
    the time of Wilbur and Orville Wright we had this kind of
    regulatory regime, we would not be flying planes today the way
    we are.
        And, so, this is something we need to create an environment
    where we can explore, where we can innovate, where we can lead
    again, and I am very frustrated that in this area that has such
    profound potential, some of which Senator Vitter touched on,
    which, really, to me, is just the tip of the iceberg in terms
    of the transformational opportunities it holds for our economy.
        And, this is not just our economy. It is not just dollars
    and cents. As a former mayor who saw the power of first
    responders, it can improve our search and rescue activities,
    and it can improve our ability to provide humanitarian aid,
    critical medicines. We should be making sure that we are doing
    this responsibly. We should make sure that we emphasize safety.
    But, we should do everything we can to let loose the reins of
    innovation and ideas.
        There is an unbelievably clear economic case. This should
    be bringing left and right together when it comes to issues of
    economic growth. The Senator gave a tremendous amount of data
    and statistics. Already, UAS accounted for $500 billion in
    revenue and represented over 600,000 jobs in the United States.
    And for me, it could bring efficiencies across industries, and,
    again, even more compelling to me is it can save lives.
        In order to reap the major social and economic benefits of
    this technology, we must have regulations that keep pace with
    innovation. That is one of the frustrating things in my two
    years as a Senator, is that the increasing pace of innovation
    and change, we are just not keeping up as a government, just
    not creating an atmosphere in which we can really maintain our
    competitive edge globally.
        I am very proud to be working in a bipartisan manner with
    Senator Hoeven, who comes from a State very similar to New
    Jersey, and I am working with him. We have introduced already
    the Commercial UAS Modernization Act, which aims to unleash
    commercial UAS and actually provide businesses with some of the
    stable footing to make investments prior to the FAA's long
    overdue rulemaking.
        I look forward to working on, with him and others, to
    advance this exciting technology as we move forward with the
    FAA reauthorization later this month. There is an urgency here,
    though. I really do feel an urgency, because every single day
    that we have a restrictive, overburdensome, unnecessary
    regulatory environment, we allow other nations to outpace us,
    we allow people to move past us, we allow lives that could be
    saved to be put in peril, and we undermine, again, our global
    dominance when it comes to innovation, when it comes to
    entrepreneurship, when it comes to expanding the horizons of
    the world.
        Thank you.
        Chairman Vitter. Thank you, Senator.
        As we always do, we will invite any other member of the
    committee to submit opening statements for the record, but we
    always like to get right to our witnesses and hear from them
    and be able to interact with them.
        I am going to introduce our first panel, and then,
    unfortunately, I am going to have to excuse myself because I
    need to be in the Judiciary Committee, and Senator Ayotte will
    take over the gavel. But, let me introduce our first panel of
    industry experts.
        First is Mr. Brian Wynne. Mr. Wynne is President and CEO of
    the largest association representing the unmanned systems and
    robotics industries. AUVSI is the world's largest nonprofit
    organization dedicated to the advancement of unmanned systems
    and represents more than 7,500 members from 60 allied countries
    and 2,700 organizations involved in the fields of government,
    industry, and academia.
        After that, we will hear from Captain Tim Canoll. Captain
    Canoll is the President of ALPA, which represents more than
    52,000 professional airline pilots who fly for 31 airlines in
    the U.S. and Canada. ALPA serves as the largest non-
    governmental aviation safety organization in the world and has
    worked closely with both government and industry on the
    integration of unmanned aircraft to the national aviation
    system.
        And rounding out our first panel is Mr. Eli Dourado. Mr.
    Dourado specializes in internet governance, intellectual
    property, crypto-currency, internet security, and the economics
    of technology. His popular writing has appeared in the New York
    Times, the Washington Post, Foreign Policy, the Guardian, and
    Wired, among many other outlets.
        Welcome to all of you, and as I hand the gavel over to
    Senator Ayotte, I will invite Mr. Wynne to begin.

        STATEMENT OF BRIAN WYNNE, PRESIDENT AND CHIEF EXECUTIVE
           OFFICER, ASSOCIATION FOR UNMANNED VEHICLE SYSTEMS
                      INTERNATIONAL, ARLINGTON, VA

        Mr. Wynne. Thank you, Mr. Chairman, and thank you, Senator
    Booker, Senator Ayotte. It is a pleasure to be here on behalf
    of the Association for Unmanned Vehicle Systems International,
    the world's largest not-for-profit organization devoted
    exclusively to advancing the unmanned systems and robotics
    community.
        UAS increase human potential, allowing us to execute
    dangerous or difficult tasks safely and efficiently. From
    inspecting pipelines to filming movies, the applications of UAS
    are virtually limitless.
        The UAS industry is also poised to be one of the fastest
    growing in American history. Our economic impact study found
    that, during the first decade following UAS integration into
    the airspace, the industry will create more than 100,000 jobs
    and provide more than $82 billion in economic impact, and that
    is just in our community alone. That does not count the value-
    added, some of the statistics that you were describing, Senator
    Booker, to the other communities that will be benefiting from
    the technology. Under the right regulatory environment, there
    is no question these numbers could go even higher.
        For years, AUVSI has been urging the FAA to use all
    available means to establish a regulatory framework, starting
    with finalizing the small UAS rule. As we wait, American
    businesses are left sitting on the sidelines or operating under
    an onerous exemption process.
        In May 2014, the FAA announced it would consider granting
    exemptions for certain low-risk commercial UAS applications
    under Section 333 of the 2012 FAA Modernization and Reform Act.
    Since then, the FAA has granted more than 3,700 exemptions, the
    vast majority of which are going to small businesses. For
    example, Louisiana-based LandBros Aerial is a start-up founded
    by two brothers in 2014 who use small quad copters to capture
    aerial images for the construction industry.
        While some businesses are flying, this current system of
    case-by-case approvals is not a long-term solution and in many
    cases serves as a deterrent. Policies governing the 333
    exemption process are more onerous than those contemplated in
    the proposed small rule. For instance, Section 333 exemptions
    typically require approved UAS operators to hold at least a
    sport pilot certificate, which requires a minimum of 20 hours
    of training in a manned aircraft and costs thousands of dollars
    to obtain. Under the proposed rule, however, commercial UAS
    operators will more appropriately be required to pass an
    aeronautical knowledge exam every two years in order to fly.
        Additionally, access to some airspace is more complicated
    under the exemption process. Currently, approvals automatically
    allow commercial operators to fly up to 200 feet. Under the
    proposed rule, commercial operators would be allowed to fly up
    to 500 feet.
        In addition to the bureaucratic nature of the exemption
    process, the patchwork of state and local laws under
    consideration in many jurisdictions will create additional
    hurdles for small business. Any operator flying in multiple
    states may encounter and need to comply with different laws and
    regulations governing commercial UAS operations. The U.S. Code
    clearly states, and I quote, ``The United States government has
    exclusive sovereignty of airspace of the United States,''
    unquote.
        In December 2015, the FAA asserted its authority and
    cautioned states and municipalities against enacting
    conflicting UAS legislation. The FAA was right to do so, but
    until the agency finalizes the regulatory framework for small
    UAS, states and municipalities will continue to fill the void.
        In addition to helping the industry thrive, finalizing the
    small UAS rule will provide the necessary tools and training to
    create a culture of safety. As more commercial operators are
    certificated, they will join the longstanding aviation
    community, which I have been a part of for more than 25 years
    as an instrument-rated general aviation pilot.
        Safety is essential for all users. That is why AUVSI, in
    partnership with the Academy of Model Aeronautics and the FAA,
    developed a ``Know Before You Fly'' campaign to educate
    newcomers to UAS about where they should and should not fly. I
    am pleased to note that ALPA is also a supporter of that
    campaign.
        While it is vital that the FAA finalize the small UAS rule,
    Congress also needs to pass an FAA reauthorization. This is
    critical for accelerating and expanding the commercial use of
    UAS and the most immediate way to encourage additional
    collaborative innovation between industry and government.
        UAS technology is developing rapidly, much faster than our
    country's capacity to develop the necessary regulations. We
    need to make sure the FAA adopts the proper framework to keep
    up with this technology and is sufficiently resourced to do so.
        Thank you again for the opportunity to testify this
    morning. I look forward to your questions.
        [The prepared statement of Mr. Wynne follows:]

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Senator Ayotte [presiding]. Thank you, Mr. Wynne.
        I would like to now call on Captain Tim Canoll, who is the
    President of the Air Line Pilots Association. Thank you, Mr.
    Canoll.

      STATEMENT OF CAPTAIN TIM CANOLL, PRESIDENT, AIR LINE PILOTS
               ASSOCIATION, INTERNATIONAL, WASHINGTON, DC

        Mr. Canoll. Thank you, Senator Ayotte, Senator Booker, and
    to the committee for the opportunity to testify today.
        The Air Line Pilots Association, International, has long
    stood in strong support of safely integrating unmanned aircraft
    systems, or UAS, into the national airspace. We recognize that
    UAS can perform specialized tasks efficiently and safely. ALPA
    applauds the entrepreneurs who are identifying new uses for UAS
    to help advance small business and the national economy. We
    also commend the members of Congress who have expressed an
    interest in UAS.
        In this context, our support for innovation and growth,
    ALPA's greatest concern will always be safety. The U.S.
    airspace is the most dynamic on the planet. It is also the
    safest. We cannot rush UAS integration process. That must begin
    and end with making certain that the high level of aviation
    safety that exists today continues tomorrow.
        We know that unsafe situations involving UAS are occurring
    right now. Each month, the FAA receives more than 100 reports
    of UAS sightings from pilots and others. In Louisiana, for
    example, the air traffic control tower reported that an
    airliner on final approach to Baton Rouge Metropolitan Airport
    observed a UAS at 500 feet just one mile from the runway. In
    Manchester, New Hampshire, the air traffic control tower
    received a report from an airliner of a UAS hovering at 2,800
    feet about 7.5 miles northeast of the airport on the arrival
    path.
        While it is almost certain that these events involved
    recreational rather than commercial UAS operators, they
    demonstrate the need for UAS pilot education and enhanced
    safety.
        For airline pilots like me, UAS often literally appear out
    of the blue. They are much smaller than other aircraft and they
    move more slowly than airliners. As a result of this
    difference, UAS are extremely difficult to see in flight. While
    the FAA is making progress, it needs to address all UAS uses
    with a full regulatory safety framework.
        ALPA's near-term action plan contains four parts.
    Education. Anyone flying UAS, no matter the size, should
    understand the aircraft and the airspace and the other aircraft
    that share it. ALPA maintains that commercially operated UAS
    should be flown by pilots who have the necessary knowledge. All
    U.S. transportation forms, be they marine, rail, road, or air,
    require commercial licenses for commercial operations. UAS
    should be no different. Where our resources exist, such as the
    ``Know Before You Fly'' campaign, not every UAS owner makes the
    effort to learn about the safety regulations. We urge the FAA
    to do more to reach out to small businesses and other users
    regarding UAS safety.
        Registration. ALPA is pleased that more than 342,000 UAS
    owners have already registered with the FAA. While we applaud
    the civil and criminal penalties for those who do not register,
    ALPA maintains that point-of-sale registration is essential.
        Technology. If UAS operate in airspace intended for
    airliners, or if they could end up there, airline pilots need
    to be able to see them on their cockpit displays and
    controllers need to see them on their radar scopes. The UAS
    must also be equipped with active technologies to avoid a
    collision with manned aircraft. The FAA should identify
    resources to develop UAS-centric collision avoidance
    technologies in fiscal year 2016 and adopt them in fiscal year
    2017.
        In addition, if regulations restrict UAS from operating in
    a location, the UAS must have technology that cannot be
    overridden to prevent it from flying there. The FAA must also
    continue to evaluate technologies to identify UAS and operator
    location.
        Penalties and enforcement. ALPA calls for the full
    enforcement of civil and criminal penalties regarding UAS. If
    the FAA intends to rely on first responders to ensure
    compliance, it must do more to inform local, state, and
    national law enforcement about their responsibilities and
    authority.
        Let me close by underscoring that the UAS safety in the
    national airspace is serious business, not only for small
    business, but for every airline passenger and cargo shipper.
    This registered UAS, for example, which is in the
    classification of MicroUAS because it is under 4.4 pounds, can
    fly as high as 6,600 feet for 15 minutes. It could easily end
    up in the airspace I occupy when landing at Baton Rouge or
    Manchester, or any airport, for that matter.
        With ALPA's plan and Congress providing the FAA with a
    long-term stable source of funding through a full
    reauthorization, small businesses can capitalize on the
    opportunities offered by UAS while maintaining our industry's
    extraordinary level of safety.
        Thank you for the opportunity to comment.
        [The prepared statement of Mr. Canoll follows:]

     [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Senator Ayotte. Thank you, Captain Canoll.
        I want to now call on Mr. Eli Dourado, the Director of
    Technology Policy Program at the Mercatus Center at the George
    Mason University.
        Mr. Dourado.

    STATEMENT OF ELI DOURADO, DIRECTOR, TECHNOLOGY POLICY PROGRAM,
        MERCATUS CENTER, GEORGE MASON UNIVERSITY, ARLINGTON, VA

        Mr. Dourado. Thank you, Senator Ayotte and Senator Booker,
    for the opportunity to come here and testify and comment on
    commercial applications of unmanned aircraft for small
    businesses.
        My name is Eli Dourado, and I am a Research Fellow at the
    Mercatus Center at George Mason University, where I study the
    regulation of emerging technologies and direct Mercatus'
    Technology Policy Program.
        We are at an exciting point in the history of unmanned
    aircraft. I think of drones as occupying a similar position now
    as the internet did in the 1980s. As members of this committee
    know, until 1989, use of the internet for commercial purposes
    was generally prohibited. The removal of that prohibition
    resulted in an explosion of innovation, much of it completely
    unanticipated, that has persisted until today.
        As with the internet in 1989, commercial use of drones is
    highly restricted, but will soon become generally available,
    and as with the internet in 1989, we have only the vaguest idea
    of how drones will be used in daily life in the future. That
    vague picture does include some applications that we already
    understand--using drones for photography and inspecting
    equipment, for evaluating the health of crops, for transporting
    goods with a high value-to-weight ratio. The improvements in
    logistics generated by unmanned aircraft will allow new
    business models, doing for local and small businesses what the
    shipping container and services like UPS and FedEx did for
    global trade.
        But, I want to stress that what are likely to be the most
    important applications of unmanned aerial systems remain
    unknown, just as the most important internet applications were
    unknown when the internet first became commercialized.
        We must, to the maximum extent possible, treat airspace
    with a very light regulatory touch. A regime of permissionless
    innovation in which there is a default position of innovation
    allowed will allow us to reap the greatest gains from unmanned
    systems. I urge every member of this committee to set aside the
    fearmongering that accompanies every new technology and embrace
    the possibilities for innovation and economic growth that
    commercial drones provide.
        To be sure, permissionless innovation is a much more
    controversial proposition for the physical world of commercial
    drones than for abstract information on the internet. What if a
    drone collides with a passenger jet and takes down everybody on
    board? Fortunately, the best evidence shows that commercial
    drones do not pose a serious risk to the airspace.
        To evaluate the danger that drones might pose to
    traditional aviation, my Mercatus colleague Sam Hammond and I
    examined 25 years' worth of wildlife strike data from the FAA.
    This dataset provides an excellent lens through which to view
    the possible danger that drones create for other aircraft.
        U.S. national airspace is home to an estimated ten billion
    birds, and the FAA has reported over 160,000 wildlife strikes
    since 1990. Of those 160,000, only 12 strikes have resulted in
    human fatalities, and of those 12, only one incident involved a
    commercial flight and that incident involved not a bird, but a
    pair of white tailed deer loitering on a runway.
        We estimate that a drone is likely to collide with other
    aircraft about once every 374,000 years of continuous
    operation, and using statistical analysis on the risk that
    birds of different weight pose to humans onboard aircraft, we
    estimate that a two kilogram, or 4.4 pound, drone will cause an
    injury to a human passenger every 187 million years of
    operation. This is well within the realm of acceptable risk.
        Given that drones pose little risk to the airspace, the
    FAA's proposed drone regulations do not adequately protect the
    need for experimentation and innovation. For example, in its
    proposed regulations, the FAA does not allow drones to carry
    external loads. This means that operators may be prohibited
    from delivering items that do not fit within the drone's
    fuselage.
        The FAA does not allow operators to exercise their see and
    avoid responsibilities through technological means, such as
    onboard cameras. This limits drone operations to the operator's
    line of sight, which will needlessly cripple drones' ability to
    operate over longer distances.
        The FAA will not allow drones to operate outside the hours
    of sunrise and sunset.
        The FAA has said that no one will be allowed to transport
    property for compensation via drone without filing for an Air
    Carrier Operating Certificate. This may be prohibitively
    expensive for companies that wish to create small local
    delivery services using drones.
        The FAA has proposed a one drone per operator rule. This
    rule drastically raises the cost for small businesses of
    operating multiple drones.
        Finally, the FAA has so far prohibited drone operation over
    populated areas. Some of the most promising applications of
    drones, such as local delivery services that improve the
    logistical capabilities of small businesses, may only make
    sense in populated areas. This prohibition will simply rule out
    those business opportunities.
        As this committee considers how best to prepare for a
    future in which drones create new opportunities for small
    business, I urge you to insist upon a light touch regulatory
    environment for commercial drones.
        Thank you for your interest in this issue and for the
    opportunity to testify.
        [The prepared statement of Mr. Dourado follows:]

       [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Senator Ayotte. Thank you, Mr. Dourado.
        I want to thank all of you for being here. I chair the
    Aviation Subcommittee in the Commerce Committee, and this has
    been an issue that we are very interested in addressing and, in
    fact, just yesterday dropped a draft of the FAA reauthorization
    that includes in it some, I think, some important ways to
    integrate unmanned aircraft systems into our national airspace
    system, and I want to thank Senator Booker, because he has been
    very focused on this issue and making sure that we continue to
    reform our framework for handling UAS to spur innovation while
    also we need to make sure that we protect safety and privacy.
    So, I really appreciate your leadership on this issue, and we
    were able to incorporate several of your ideas, and I am sure
    there is more that we can do as we move forward with the FAA
    reauthorization.
        So, I wanted to ask all of you if you have had a chance yet
    to review our draft that has been proposed legislation, or if
    you are still analyzing it, and what your thoughts are.
        Mr. Wynne. I will go first. We are still analyzing it,
    Senator. Thank you very much. But, we were very pleased, and I
    put out a statement yesterday saying we were pleased to see
    that--I mean, there are many things in the bill. But, the
    pieces that we, in particular, have been asking for from
    AUVSI's perspective, the unmanned systems community's
    perspective, we believe are there, and we are speaking
    specifically of a risk-based technology neutral regulatory
    framework, addressing of UTM, for example, unmanned aircraft
    systems traffic management, as an opportunity, trying to pull
    together the research that is going on in disparate areas of
    the government into a more concentrated effort so that we can
    increase the collaboration with industry and get the most for
    the taxpayers' dollar.
        So, we think it is a really good initiative and we urge you
    to move forward with that.
        Senator Ayotte. Yeah. I mean, one of the things that I am
    concerned about is that there are some really terrific
    technologies that I have seen, including crash avoidance
    technology that is being developed, and we need to have
    opportunities to continue to spur that innovation, because you
    can incorporate the safety concerns with some of the
    technological developments.
        Captain, I wanted to get your thoughts.
        Mr. Canoll. Thanks, Senator. We are still reviewing the
    bill, but our initial view is we view this as a safety forward
    bill and we are very pleased that it is out.
        Senator Ayotte. Good.
        Mr. Canoll. We are very encouraged by what we have read so
    far, and particularly the commitment to doing all the safety
    initiatives, or starting the way down the road on a lot of
    these safety initiatives, and it is particularly the UAS. We
    think there is some good information there, as well. So, we
    will continue to review----
        Senator Ayotte. Great. Well, we appreciate it, and I know
    that it just came out, so you are still continuing to review
    the details. But, this is something we want to address. We are
    worried that delaying on it really will continue to keep these
    issues outstanding for UAS in terms of the innovation piece,
    because as Mr. Dourado has pointed out, the framework currently
    in place is not workable on innovation, but also a lot of
    safety issues. So, working on both.
        Mr. Dourado, do you have any comments?
        Mr. Dourado. Yes. Thank you, Senator. I have reviewed the
    bill very, very briefly. I was gratified to see that it is
    extending the 333 exemption process and also making clear that
    the FAA does have authority to extend authorization for beyond
    line of sight and outside the hours of sunrise and sunset.
        I would note that in addition to the 333 process, there is
    a 332 process that the FAA has avoided, and even their current
    proposed commercial rules that were due last September,
    Congress had ordered them to be done under Section 332 and the
    FAA is promulgating those--continues to promulgate those only
    under Section 333. So, asking the FAA to move forward more
    quickly on 332 authorization would be important, in my view, as
    well.
        Senator Ayotte. Okay. Thank you for the feedback. I
    appreciate it very much.
        One of the things that, you know, I have been hearing, and
    I know that Senator Booker raised this, is that we hear that
    other countries are ahead of us in providing a regulatory
    environment for UAS innovation. So, that is one of the
    priorities, I think, that we have, obviously, ensuring that we
    are protecting safety at the same time. So, can you tell me--
    Mr. Wynne, can you comment on where other countries are vis-a-
    vis the United States of America, and, you know, what
    opportunities we have if we can move forward with the right
    framework here.
        Mr. Wynne. Well, ultimately, we do want global
    harmonization of rules. That will be particularly important for
    larger platforms that are going to travel across international
    borders, of course, and so far, these are the kinds of
    platforms that are getting the vast majority of the attention.
    But, we have many different types of platforms that we need to
    be thinking about, and that is why we are talking about a
    regulatory framework. Some of our platforms are enormous and
    fly above 60,000 feet for days on end, for example, and may be
    able to deliver the internet to the Third World in a much more
    efficient manner than trying to use wires.
        So, there is a lot of different innovation that is going to
    go on here. I, too, am very concerned about competitiveness. We
    watch this issue very, very carefully. There are clearly
    anecdotes--there are anecdotal places around the world where
    there is less regulation or they have moved forward with
    regulation a little bit faster than we have.
        I think if we can move forward with the same kind of
    cadence that we saw with the registration process, which AUVSI
    participated in--both Captain Canoll and I were there with
    Secretary Fox when that was announced, and we urged the FAA to
    move very, very quickly, and they did. If we can increase the
    pace of regulation, I think we can catch back up, and this is
    the largest market for unmanned systems, so I like our chances
    of remaining competitive.
        Senator Ayotte. Does anyone else want to comment on that
    issue?
        Mr. Dourado. I would like to, Senator. I think that Canada
    is governing circles around us right now. In Canada, up to a 25
    kilogram drone you can fly without any special authorization
    for commercial purposes if you simply notify Transport Canada
    of your intention to do so. So, you simply give them notice
    that you are operating within a certain range of exemptions and
    you can operate. So, it is a much more simplified, pro-
    innovation stance from the Canadian government.
        Mr. Canoll. The only thing I would add, Senator, is our
    members are seeing--are reporting and encountering the same
    problems at other high-density population centers around the
    globe as they do in the United States. In the low-density
    population areas, like Canada, we do not see it as much because
    they are just not as prevalent and the aircraft operations are
    far fewer. So, we do see problems in London, Paris, around the
    globe.
        Senator Ayotte. Thank you.
        I would like to call on Senator Booker.
        Senator Booker. So, a perfect--first of all, Senator
    Ayotte, I am grateful for your kind words and I just think that
    for the record I want to say that yesterday morning was a
    perfect metaphor for the United States versus the rest of the
    world. As I was running past you on the Mall, I was the United
    States, slow, sluggish, barely moving off the ground----
        [Laughter.]
        You were obviously the innovative countries around the
    globe, because you flew past me at a speed----
        [Laughter.]
        Senator Ayotte. Okay, but in fairness, he had what looked
    like a heavy backpack on his back, which I did not.
        Senator Booker. So, the backpack is empty just so I get
    people to assume that I am running so slow for a reason.
        [Laughter.]
        So, I have outed myself, but please understand that. It was
    a very humiliating moment for me yesterday. I did not want to
    be seen, and I was outed by my fellow Senator.
        Gentlemen, I am grateful for you being here, and I actually
    do not think there is much, Captain Canoll, which as a New
    Jerseyan, which has an incredibly great Italian community, to
    let your name be one vowel short of one of my favorite
    desserts.
        [Laughter.]
        I am very, very grateful that you are here, and I actually
    do not think there is any--there is much conflict between what
    you are saying. I think all the panelists here believe that we
    should be a nation that makes sure that we are safe. And, the
    Air Line Pilots Association, I work with quite a bit, and just
    revere the men and women that do--many of them former military
    people who have made a tremendous sacrifice and commitment to
    our country. So, I am just grateful for everybody being here.
        I just want to dive in real quick. First of all, Mr.
    Dourado, what you said is one of the most important points in
    my understanding of the cycle of innovation, is that we
    routinely underestimate the impact, the economic impact, when
    we have a new innovation. We really never see the true
    potential of that impact. Everybody wants to start talking
    about what this new innovation can do, but nobody gets, from
    the automobile to the television to--if you look at the things
    that were said in those early technologies, they had no clue
    about how transformative they would be and how much economic
    growth would be.
        So, your metaphor in comparing this to the internet, to me,
    is spot-on, and not an exaggeration. Am I right?
        Mr. Dourado. Yes, Senator, and I would note even Paul
    Krugman, who is a great economist, as late as 1998 was
    predicting that the internet would have no more economic impact
    than the fax machine.
        Senator Booker. Right.
        Mr. Dourado. And, it is not--you know, he is a great
    economist, deserved of his Nobel Prize, and he even as late as
    1998 was unable to see everything that the internet would be
    able to provide, so----
        Senator Booker. You are a braver man than me. I would never
    smack talk a Nobel Prize winner----
        [Laughter.]
        So, let us just go where you are right now. I think Captain
    Canoll said it clearly, that other European high-density
    airports are seeing the same problems, not more. They have
    better regulatory regimes for innovation. They are not seeing
    an increased problem. They are seeing basically the same
    problems we are having.
        Mr. Canoll. I am not sure if the statistics would prove
    that out, because we are not sharing information as much as we
    should. That is a great point, that we should be looking across
    other regulatory agencies to gather their information and do
    some comparison.
        Senator Booker. Right, and so that is a really good point
    and I think that is important. We should collect data. As you
    agree, data is important.
        But, what I really want to jump into is even what the other
    countries are doing so much better than us, and even in our FAA
    legislation we just introduced, is we are burdening businesses
    with multiple--each and every different use case, they are
    going to have to run to the government to get yet another
    exception, while what other countries are doing, and it is not
    just Canada--which we should speak nicely about because I hear
    Trudeau is close by--but it is not just Canada. It is France,
    dense country, big cities. They are doing one time going to the
    government, creating a use case. But they are not creating the
    differentiations we are between weight. Is that not so much
    easier and still allows us to have the kind of governmental
    scrutiny on safety that we want?
        And, in the last minute that I have, I would like, Mr.
    Wynne, Mr. Dourado to comment, please.
        Mr. Wynne. Well, I completely agree, Senator, and it is
    clear. I started--I stopped trying to figure out what new
    applications for this technology a long time ago and I started
    trying to think of how it would not be utilized and what
    segments of the U.S. economy would not benefit from unmanned
    systems.
        And, again, we are talking about all manner of things. Some
    of them can be created on 3-D printers very, very rapidly. So,
    we need to have a system that allows for us to move forward
    with that. But, at the same time, we are integrating into an
    airspace which has a very low margin of safety----
        Senator Booker. So, if I may interrupt----
        Mr. Wynne. Please.
        Senator Booker [continuing]. Because I have got 20 seconds
    left, and the Chairman is very rough. So, real quick. Why do we
    have to have multiple check-ins for every new case use as
    opposed to other countries which do it once, far less
    burdensome, far less systems, and far less restriction to small
    businesses?
        Mr. Dourado. I think that is a great question, Senator, and
    I would like to see more done on an ex post basis. So,
    obviously, there will be accidents occasionally with unmanned
    systems, but we can handle them the same way we handle car
    accidents, with cases potentially being litigated in court
    rather than with ex ante precautionary regulation. So, I would
    like to see us moving more towards that ex ante dispute
    resolution mechanism rather than ex pose--or, I am sorry, ex
    post dispute resolution mechanism rather than ex ante
    prohibitions and regulatory prohibitions.
        Senator Booker. Thank you. Thank you very much.
        Thank you, Chairman.
        Senator Ayotte. Thank you, Senator Booker.
        Senator Heitkamp.
        Senator Heitkamp. Thank you, Madam Chairwoman. It is good
    to see you here.
        I think many people on this panel understand the
    contribution that North Dakota is making to this entire
    industry. In fact, the New York Times, I think, called us the
    Silicon Valley of unmanned systems because we have that perfect
    marriage of an airbase that has a number of these systems based
    out of that airbase, a university that basically is one of the
    great aviation universities in the country, and a community
    that is wholly embracing and supporting, along with our
    extended use lease, building out these technologies. So, this
    is a very important industry potential for the State of North
    Dakota.
        But, we also know how important it can be to precision
    agriculture, how important it can be to monitoring
    infrastructure, whether it is a pipeline leak or whether it is
    a power line failure. So, we see these uses in only that big of
    a lens.
        But, I want to confirm what Mr. Dourado said about Canada.
    I recently met with a researcher from UND. She was researching
    wildlife, could have done it in North Dakota, ended up going to
    Canada because she was using unmanned aircraft to do the
    monitoring and it was much easier to get the permissions and
    the authorizations in Canada.
        And, so, we need to remember that it is not just building
    out this technology of the platform, but we are also losing the
    innovation of the utilization of this platform for all of these
    other uses, and so we have got to catch up.
        With that said, there has been a lot of focus today on
    safety, which obviously has to be job one. I asked what the
    FAA's resistance is, why do we wait and wait and wait for
    integration, and I think that no one wants to be the person who
    authorizes something that leads to a catastrophe, and so there
    is a natural pulling back or inability to kind of think about
    it more broadly.
        But, I want to talk about another challenge with this
    technology and that is privacy. You know, we had the very high
    profile case of somebody who shot down a remotely piloted
    aircraft or an unmanned aircraft. Obviously, I think that if
    they shot it down, it probably was flying lower than what the
    person who owned it was saying it was flying. But, we have got
    to not only catch up in terms of the regulatory world, but the
    legal world in terms of who owns the airspace, what is an
    appropriate distance for this aircraft, and how do we make the
    world comfortable, and certainly in the United States, my
    farmers and ranchers comfortable with this utilization.
        Where do you see that? I guess I would ask Mr. Dourado,
    where do you see the privacy implications evolving to the point
    where this technology will be more accepted?
        Mr. Dourado. Well, Senator, I think that the privacy issues
    are different in degree than the privacy issues we have seen in
    the past, but they are not different in kind. So, there were
    privacy concerns when cameras first became available. There is
    a famous law review article in 1890 from the Harvard Law Review
    on the right to privacy and fearmongering about cameras, and
    now we all have cameras and we somehow get along.
        But, it is an important--privacy is an important issue, and
    I think it will be resolved through court cases. The Supreme
    Court in 1946 issued a very important ruling when regular
    aviation was taking off establishing the property rights----
        Senator Heitkamp. To airspace.
        Mr. Dourado. To airspace, saying that you could not
    interfere with the use of a property. So, I think that applying
    that same precedent from 1946, which was very flexible, to the
    modern world, as long as you are not interfering with a
    person's use of their property, then you are not interfering.
    And that could be interpreted to include privacy harms, as
    well. It already exists under the law.
        Senator Heitkamp. I think we are going to have a really
    hard time with that kind of vague definition of what is
    airspace ownership. You know, obviously, if someone believes
    that they have a commercial right to privacy in terms of what
    they are growing, in terms of what they are raising, and
    someone thinks, no, I am the USDA and I am going to fly--I
    mean, I am going to test what is happening on the ground, and I
    am going to tell you what your crop looks like, that is a
    problem for a lot of ranchers and farmers.
        And, so, what I am suggesting is that we need to broaden
    the dialogue here beyond safety, and we need to talk about how
    we manage this new technology in that privacy space. And, I
    think that is something that we have not done all that well.
        In North Dakota, one of the things that we have been able
    to do is put together a committee that not only talks about
    when should you be able to basically deploy this resource, but
    what do you do with the data afterwards, and the for instance
    is, we send one up to monitor traffic out of the hockey arena,
    which is a big deal. I know you guys do not believe that, but
    it is a big deal.
        [Laughter.]
        Monitor traffic out of the hockey arena and then you do not
    need that information, so that information gets deleted out of
    the system and not stored. And, so, those are the challenging
    questions that are being asked in terms of data collection and
    in terms of information, and I think we need to have a broader
    discussion beyond safety about how this resource is used in
    America to protect the privacy rights of landowners, but also
    not irrationally restricting utilization of the resource.
        So, I am out of time, but----
        Senator Risch [presiding]. Senator Ernst, you are up.
        Senator Ernst. Thank you, Mr. Chair.
        I would just like to echo--and, first, thank you for being
    here today. I do appreciate it. And, this is a topic that is
    very interesting and we do need further discussions on. And, I
    would agree with some of the comments that are made already,
    especially as it applies to agriculture in a state like Iowa or
    North Dakota, it is a great tool for our farmers to use if they
    are doing that precision-type agriculture and monitoring, and
    it does eventually save on labor costs, and it makes our
    environment that much the better because we are targeting
    specific weeds in specific areas, not entire fields.
        So, I think there is a lot of great application that we can
    find from these systems, but I wanted to echo the privacy
    concerns that we have, as well, because even in the rural
    areas, it may be a great tool for farming, but you certainly do
    not want somebody else's remotely piloted aircraft or drone
    flying overhead taking pictures of your family as they are in
    the backyard or whatever other methods are being done out
    there. So, those are some concerns.
        Much of Iowa is rural farm ground. I mean, it goes without
    saying. Just like so many of our states, it is so rural. Many
    of these UAS are being operated for agricultural purposes, far
    from the nearest town let alone from the nearest airport. So,
    what do we do to ensure that we are not overburdening some of
    the folks that are utilizing this technology in those types of
    areas? Any thoughts on that?
        Mr. Canoll. Well, Senator, I think there are a couple of
    areas that we can make advances. The technology exists today,
    it is just not fully deployed by the manufacturers--I know they
    are working on getting it into the platforms--called geo-
    fencing. So, if it is truly a platform used only for
    agriculture, a very low altitude surveillance, then we have to
    find a way to geo-fence that vehicle from stumbling or
    trundling into airspace. It probably has the capability if it
    is a vehicle strong enough to carry a camera like this one to
    fly very high, 6,000, 7,000 feet.
        So, that technological platform has to be restricted from
    ever operating there, and then we can really mitigate the risk
    to the national airspace and to airliners, for example, or
    general aviation, which we have a very large portion in this
    country, largest general aviation operations in the world by
    far that operate not near airports, they are just puddle
    jumping around, and they have a risk to running into one of
    these vehicles, as well. So, I think technology is the most
    profound way to protect it.
        Senator Ernst. Okay. Any other thoughts, gentlemen?
        Mr. Wynne. Well, Senator, agriculture is probably the
    lion's share of the numbers in our forecast because it is low-
    risk flying. In many respects, it is rural, as you say, and it
    is away from people and it is away from other aircraft for the
    most part, unless it is aerial applicators, and we are in a
    very robust discussion with them. So, I think agriculture is
    where we actually expected this technology to take hold very,
    very rapidly, and it is. There is no question that many of the
    exemptions that have been granted by the FAA are for
    agricultural applications.
        Interestingly, it is still early, and because we have not
    gotten to scale yet, because we are flying under exemption,
    agriculture being a low-margin business, it is probably not
    going to take off in the early stages as quickly as we thought.
    But, meanwhile, there are many other applications where we have
    seen tremendous adoption and uptake for the technology.
        The sooner we have got more people flying under rules, the
    sooner we will have datasets, and in aviation, we use datasets
    to figure out what is equivalent level of safety. No question,
    we are going to have the occasional conflict, and that is a bad
    thing in the airspace. But, we will learn from that, as Mr.
    Dourado has pointed out, and I like agriculture because it
    offers us a very low-risk profile, and again, we are looking
    for a regulatory framework that is risk based, because if it is
    technology based, we will never keep up with it from a
    regulatory point of view.
        Mr. Dourado. Senator, I would add that Japan is doing very
    interesting things with drone-based agriculture, and so I think
    that looking to their example and seeing how they are handling
    these issues is also very useful.
        Senator Ernst. Very good. And, I know the FAA has been very
    slow about getting these rules and regulations in place. But,
    if you are an average Iowa farmer, how do you know what those
    rules are, or how are you notified that you need to be
    registering your unmanned aerial system? How do you know that?
    How are they going to know? Is there some sort of registry that
    takes place when they purchase a system?
        Mr. Wynne. A very robust effort. As I said, our ``Know
    Before You Fly'' campaign is pointing people at the resources
    that they need. There are over 80 supporters of that campaign,
    and increasingly, we are reaching out to our colleagues, the
    American Farm Bureau Federation, et cetera, to get information
    in their channels so that it is readily available, not
    complicated information.
        Senator Ernst. Okay.
        Mr. Canoll. Essentially, when you purchase it, you open it
    up, there it is. The information is presented.
        Senator Ernst. Okay. Good. Thank you very much, gentlemen.
        Thank you, Mr. Chair.
        Senator Risch. Thank you, Senator Ernst.
        Senator Markey.
        Senator Markey. Thank you, Mr. Chairman, very much.
        Senator Ernst has put her finger on it. It is the best of
    technologies and the worst of technologies simultaneously.
    There is a Dickensian quality to this technology. It can enable
    and ennoble farmers and Homeland Security officials to protect
    our country, but it can also be used to fly drones over
    people's backyards and photograph children or families in very
    sensitive situations, and we need rules in order to make sure
    that it is clearly understood what these drones can be used
    for. But, we also have to have clear rules in terms of where
    these drones can be flown.
        So, there have been several recent drone sightings near
    airports in Massachusetts, and I am becoming increasingly
    concerned about the threat of a drone colliding with a plane.
    It only takes one drone to fly into the path of one passenger
    plane in order to create one of the worst disasters in American
    aviation history.
        On New Year's Day, a commercial plane spotted a drone
    flying 800 feet in the air nearly one mile from Logan Airport.
    Just days earlier, another drone was reported two miles from
    Logan's runways, also flying at about 800 feet in the air. Last
    month, I sent a letter to the FAA to find out what concrete
    steps the FAA is taking to prevent and respond to drones flying
    in sensitive airspaces.
        Captain Canoll, can you lay out for the committee what the
    dangers are, from your perspective, if we do not have real
    rules and these drones continue to insinuate themselves into
    the airspace of commercial aircraft.
        Mr. Canoll. Yes, Senator. The biggest problem is, and it
    was mentioned in the opening remarks, that we have had a lot of
    wildlife bird strikes. Aircraft are pretty rugged things. I
    have hit many birds in my operations, both when I was flying in
    the Navy and in commercial aircraft. Aircraft pretty much can
    sustain it.
        But, there is a big difference between a bird and a drone
    with a heavy, lithium metal battery, motors, cabling. That is
    going to--this will do significant damage to an aircraft if it
    hits it. A quarter can destroy a jet engine if it goes down the
    intake--destroy it. So, we have both the threat of that and
    then the proliferation, which is an issue for us, as we have
    seen these hundreds of thousands sold in this last holiday
    season.
        So, I think it is important to note, though, that my
    members who are flying around reporting these sightings, we all
    firmly believe that it is not the commercial operator or even
    the serious hobbyist that we are running into. This is the
    hobbyist or the non-commercial operator who really does not
    know what they are doing. So, we need to enhance enforcement.
    We need to enhance enforcement.
        Senator Markey. And, so, what is the area that you think
    should be built around an airport, like LaGuardia or Newark or
    Boston----
        Mr. Canoll. I think----
        Senator Markey [continuing]. Where the air traffic is just
    absolutely massive? How wide a radius should be created?
        Mr. Canoll. The FAA has established five miles, and that is
    a good place to start----
        Senator Markey. But it is not being enforced, is that
    what----
        Mr. Canoll. Well, the problem is, it is hard to enforce it
    because someone can walk into that area with a drone this size
    and just take off and start flying----
        Senator Markey. Yeah.
        Mr. Canoll [continuing]. And you do not know it is there
    until you have had a couple of near misses.
        Senator Markey. And, to what do you attribute the lack of
    enforcement? Is it that the local officials, the state
    officials, the federal officials are not properly signaling to
    all these new drone owners that there is a penalty they have to
    pay?
        Mr. Canoll. I think there is--yes, I think there is a
    coordination issue through the FAA to the law enforcement
    agencies. The other thing I think that we could think about
    from a technology standpoint is we have the ``Know Before You
    Fly'' campaign, and it is presented, as we told Senator Ernst
    before, is you open up the box. You see this pamphlet there
    that you should go to this website and look at it.
        The technology exists to make it so, just like when you
    open up a version of Microsoft Office, you have to enter a key
    code before it will operate. We could do that with our
    recreational drones so that you have to go pass an online test
    which informs you that you cannot operate within five miles of
    an airport, enter that key code before the vehicle will turn
    on.
        Senator Markey. And, I agree with you. We need standards
    and the FAA has to put in place policies that will prevent and
    respond to these new risks and to do so in a way that all new
    drone operators--we are going to have ten million of these, 15,
    20 million of these, and they will be--a lot of them will be in
    major metropolitan areas with so many planes, that without
    clear standards, a catastrophe is just going to happen. There
    are just no two ways about it, like you are saying.
        Thank you, Mr. Chairman, very much.
        Senator Risch. Thank you, Senator Markey.
        Thank you to the panel for taking the time to come visit
    with us today. This is certainly a critical issue that I am
    sure, as with a lot of things with technology, it is in its
    infancy and we are going to learn a lot, and as we move
    forward, hopefully, we will get a lot better at doing this,
    just as we have with the camera, as was mentioned earlier. So,
    thank you so much again. Thank you for coming.
        We will now move to our second panel.
        [Pause.]
        Gentlemen, thank you so much for joining us today. We are
    going to hear from each of you, and I am going to introduce
    both of you and then go from one to the other.
        For the committee, for the witnesses and everyone else, as
    usual around here, we are on a short string. We have a vote
    that starts in 28 minutes, so we will try to be, as usual,
    efficient, but certainly as thorough as we can be.
        Dr. Thomas Vaneck is the Vice President of Disruptive
    Technologies for Physical Sciences Inc. As a small business,
    PSI has been at the forefront of drone technology development
    for years, working on both military and civilian commercial
    applications. Dr. Vaneck leads a team of technologists focused
    on the development and application of multipurpose small
    unmanned aircraft systems called InstantEye.
        Our last witness is Dr. Gregory McNeal. Dr. McNeal is an
    expert on drones and topics related to technology law and
    policy. He is a nationally recognized commentator for Forbes
    and a frequent keynote speaker at industry events and academic
    conferences related to drones, technology, law, and public
    policy.
        So, we will give you each about five minutes to address the
    committee, and then I have no doubt we will have deep and
    probing questions for you.
        So, starting with Dr. Vaneck, if you would, please.

       STATEMENT OF THOMAS W. VANECK, VICE PRESIDENT, DISRUPTIVE
           TECHNOLOGIES, PHYSICAL SCIENCES INC., ANDOVER, MA

        Mr. Vaneck. Distinguished members of the committee, thank
    you so much for giving me the opportunity to testify today
    about our experience in commercial UAS development and
    operations and working with the FAA.
        At Physical Sciences, a small business, I have the
    privilege of leading a group of talented technologists focused
    on the development and applications of the multipurpose small
    unmanned aircraft system we call InstantEye, and I have
    actually brought InstantEye with me so you can see the size.
        While at first we solely supported the military, today our
    customers include not only the military, but also law
    enforcement, first responders, and a growing list of commercial
    users. Working with military, we broke new ground to push the
    technology to those most in need of it, the individual
    warfighter. This required significant innovation to make the
    system easy to operate, extremely rugged, adaptable to mission
    needs, and low cost. We also created a two-day program of
    instruction to train operators in the use of the system,
    including emergency procedures, and how to service and maintain
    the equipment.
        Much of the technology developed and experience gained
    during this SBIR-supported product development effort has
    successfully been transitioned to the commercial sector. Today,
    supporting commercial customers is one of our greatest growth
    areas. As we expand into these markets, we work closely with
    the FAA to obtain the necessary certifications to conduct
    commercial operations.
        Teamed with a commercial customer in the power and gas
    industry, we applied for and received a Special Airworthiness
    Certificate for InstantEye so we could test its efficacy as an
    inspection tool. We and others have applied for and have been
    granted Section 333 exemptions allowing InstantEye to be used
    for commercial operations. Today, our systems are used to
    inspect power lines, pipelines, wind turbines, solar arrays,
    endangered species habitats, and many others. The list grows
    weekly.
        The process used by the FAA for both the Special
    Airworthiness Certificate and the 333 exemption was to take
    regulations developed for manned aircraft and apply them to our
    unmanned system. When regulations did not quite fit, we applied
    for and were granted exemptions, which kept the safety intent
    of the rule but modified its implementation so that it made
    sense for our small UAS. While the process was tedious, it was
    always apparent that the FAA wanted us to succeed. They also
    did not want to do anything that would break the system. Safety
    always came first.
        We understand that today the FAA is seeking to develop
    rules that are specific to UAS and their operations instead of
    continuing the approach of taking existing manned aircraft
    regulations and modifying them through exemptions. We applaud
    these efforts.
        We firmly believe that, for this process to move quickly
    and to ensure that safety is not compromised, it needs to be a
    collaborative effort between the FAA and the UAS industry. Over
    the last 90 years, the FAA and its predecessor organizations
    have created an airspace architecture that is today the safest
    it has ever been. That experience will be invaluable as we
    enter this next era in aviation.
        Equally important is the knowledge and experience of the
    UAS industry. We know our systems and their limitations. We are
    forever finding new applications for the technology. And we can
    use this knowledge to help suggest regulations that are
    appropriate for this industry, maintain safety, and allow it to
    grow and thrive.
        We also believe in developing UAS regulations, one size
    does not fit all. Rules and operator requirements must be
    appropriate for the system being used and operations being
    conducted. An approach based on the engineering risk model will
    likely be the most successful methodology. Evaluating risk
    encompasses a number of items, including failure analysis,
    probability of injury, probability of property damage, et
    cetera. This will allow us to collect combinations of system
    type and intended commercial activity into groups which we can
    apply safety requirements to and ultimately derive rules.
        Lower-risk activities will require fewer rules on the
    operator and the system, while higher-risk operations will
    require the operator to have greater demonstrated skills and
    the system to have additional capabilities to ensure that an
    equivalent level of safety is met.
        Not only does this approach build on the existing FAA rule
    architecture for manned aircraft--a sport pilot flying a sport
    aircraft does not have to have the same rule burden as does an
    airline transport pilot flying a commercial airliner--it will
    also drive innovation. Clear rules, thoughtfully developed and
    applied, will allow healthy competition by virtue of a level
    playing field and will encourage creative companies to invent
    innovative solutions that both adhere to the rules and also
    create a better mousetrap.
        In summary, the commercial UAS industry represents an
    immense opportunity for our country. It is creating jobs. It is
    driving innovation. And each day we discover yet another
    application for the technology. To realize its full potential
    and to ensure that the United States is a world leader in this
    area will require a close collaboration between the FAA and the
    UAS industry. The rules and operator requirements that are put
    in place must ensure safety and protect privacy to garner
    public trust. This is essential for success.
        Mr. Chairman, members of the committee, thank you for your
    time.
        [The prepared statement of Mr. Vaneck follows:]

      [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Senator Risch. Thank you, Dr. Vaneck.
        Dr. McNeal.

     STATEMENT OF GREGORY S. McNEAL, J.D., Ph.D., PROFESSOR OF LAW
       AND PUBLIC POLICY, PEPPERDINE UNIVERSITY, AND CO-FOUNDER,
                        AIRMAP, SANTA MONICA, CA

        Mr. McNeal. Senator Risch, Senator Booker, members of the
    committee, thank you very much for the opportunity to
    participate in today's hearing on unmanned aircraft systems.
        My name is Greg McNeal. I am a professor at Pepperdine
    University, where my research focuses on unmanned aircraft. I
    served on the FAA's Aviation Rulemaking Committee for UAS
    registration, and I currently serve on the FAA's MicroUAS
    Rulemaking Committee.
        I am also the co-founder of AirMap, a small business that
    provides safety-related software to UAS manufacturers,
    operators, software developers, and key stakeholders like
    airports and universities. We provide the airspace safety map
    for the ``Know Before You Fly'' campaign and approximately 85
    percent of the non-toy, non-military UAS sold today use or will
    use our software, and more than 250 software developers use our
    SDA to integrate our safety software into their own programs
    and into their own UAS.
        From my vantage point as a professor and as a small
    business founder who works directly with UAS businesses ranging
    from one employee to 1,500 employees, I can tell you that these
    individuals are being held back, and it is not just American
    entrepreneurs. Students, educators, journalists, and volunteers
    are ready to use unmanned aircraft to save lives, generate
    significant economic activity, yet they have been held back,
    unable to operate even the smallest of devices because they
    want to use these devices for a purpose that is not strictly
    recreational or hobby.
        Every moment spent without freeing these individuals to use
    unmanned aircraft results in unavoidable deaths and injuries
    from people falling from towers, missed moments to educate
    students about technology, foregone moments of free expression,
    and lost chances to find missing people.
        Since the FAA Modernization and Reform Act of 2012, one
    thing has been clear. Only Congressional action has ensured
    individuals were able to use unmanned aircraft. In Section 332,
    Congress called for UAS operations in the Arctic, and we have
    seen those operations take place.
        In Section 333, Congress created a process for categorical
    exemptions, and we have seen those exemptions and operations
    take place pursuant to those rules, but those exemptions were
    granted on a case-by-case basis rather than categorically, as
    Congress directed.
        In Section 334, Congress directed that public safety
    officials may operate unmanned aircraft weighing 4.4 pounds and
    less, and we have seen those operations take place thanks to
    Congressional action.
        And in Section 336, Congress carved out protections for
    hobby and recreational use of unmanned aircraft weighing up to
    55 pounds, and we have seen such hobby and recreational uses
    take place.
        The trend line is clear. When Congress acts, innovation
    takes flight.
        But despite the Congressionally directed progress of 2012,
    there is more work to be done. Entrepreneurs, students and
    educators, journalists and volunteers have been left on the
    sidelines, and it appears they will continue to be left on the
    sidelines. The only way to secure the benefits of unmanned
    aircraft flight for these important constituents is to create a
    micro classification that prioritizes safety while promoting
    open innovation.
        That is why I am here today to ask Congress and the members
    here to support a MicroUAS classification that empowers those
    who have been left out of the process. The MicroUAS category
    should be focused on simple and straightforward requirements
    that are minimally burdensome and streamlined.
        Specifically, the MicroUAS category should be for
    registered devices that weigh 4.4 pounds or less, that are
    operated within line of sight of the operator, less than 400
    feet above the ground, and which provide notice to the airport
    prior to operating within five miles of that airport.
        By eliminating the distinction between recreational and
    commercial use for the smallest and safest classification of
    UAS, it cuts red tape for entrepreneurs, encourages a safety
    culture based on rules that are easy to follow. It also
    relieves the FAA from the burden of licensing and exempting
    grants for low-risk operations, allowing them to focus on
    important initiatives, like unmanned traffic management.
        Moreover, people strive for compliance when rules make
    sense. However, overly burdensome requirements, including pilot
    certification, aeronautical knowledge testing, traveling to
    test facilities, and retesting every two years will create high
    barriers for low-risk users, increasing the potential for non-
    compliance.
        A MicroUAS classification is a reform that will allow for
    operations on terms similar to those already allowed for
    recreational operators, but it would allow entrepreneurs,
    educators, and volunteers to operate unmanned aircraft by
    removing the restrictive recreational or hobbyist purpose
    limitation, focusing instead on the already accepted safety
    standards that Congress put into place in 2012.
        American entrepreneurs, students and educators, journalists
    and volunteers need the support of Congress. History has proven
    that the best way to foster innovation is for Congress to take
    action to empower innovation and protect entrepreneurs. Now is
    the time for Congress to act by creating a MicroUAS
    classification, and I am hopeful that you will be able to
    support that initiative.
        Thank you.
        [The prepared statement of Mr. McNeal follows:]

        [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Senator Risch. Gentlemen, thank you very much.
        Let me start with the questions. Mr. McNeal, do you feel
    that the--this outfit is not very good at passing corrective
    legislation. It is totally unlike the states, that if they make
    a mistake, they revisit it the next year and correct it. This
    outfit almost never does that. I cannot answer why. Do not kill
    the messenger. I am just saying that is the way it is here.
        So, the question I have for you is, can these be corrected
    by agency rule and regulation, which is obviously much more
    flexible, or does the actual Act need to be revisited?
        Mr. McNeal. Senator, that is a great question. Give
    yourself more credit. Three-thirty-two, 333, 334, and 336, I
    think the body did a pretty good job at crafting a framework.
        But, with regard to your specific question, in my written
    testimony, I suggest some language that would allow for
    Congress to create this very lightweight category, something as
    small as that, or that would fit in the palm of your hands up
    to 4.4 pounds, and then the operator could operate under that
    category, or if a more permissive category is developed by the
    FAA after some additional analysis, they would have the option
    to operate under that. So, it preserves the flexibility while
    giving Congress the ability to act on innovation.
        Senator Risch. That actually sounds like an excellent idea,
    but the question I have is could that be done by rule and
    regulation as opposed to legislation, or is the legislation
    going to have to be revisited?
        Mr. McNeal. So, I actually walked over here from--or I took
    a taxi over from the Department of Transportation, where we
    were talking about the MicroUAS category, and to put that in
    perspective, Senator, we are on a fast timeline to complete our
    recommendation by April 1. And then once that rulemaking
    process begins at the FAA, that rule, if the FAA hits every
    single deadline, simply cannot be enacted until next summer.
    Just, if you just take the timeline of 60 days of----
        Senator Risch. This coming summer or the following----
        Mr. McNeal. The following summer, Senator.
        Senator Risch. We do not move much faster up here.
        Let me ask you this. Being an attorney, I would like to get
    your take on what the state of the law is on this privacy, and
    I understand it is in a state of flux, and I understand that
    common law takes a while to develop. But, I think--I read
    stories all the time, as does everybody else. Some guy walked
    out in his backyard and saw a drone and shot it down because
    his daughter was out there doing whatever. What is the state of
    the law on that right now? Are there sideboards? Have they
    developed standards, or is this still--is there any rule of
    thumb?
        Mr. McNeal. So, I think with any new technology, there is
    obvious sort of apprehension. We can just think back ten years
    when cell phones came out, and the immediate response was,
    these devices should beep every time they take a photo because
    everyone is carrying a camera, and eventually, people got
    accustomed to the technology.
        I think with regard to the laws that are being promulgated,
    we are seeing very different laws coming up in the states. I
    think in the states, existing law really does address a lot of
    the concerns that people have, and we are starting also to see
    that industry is coming together and meeting with those state
    legislators to say, why do we not look to those existing laws
    that might need to be amended rather than creating UAS-specific
    rules. I think that is the right path forward.
        I think the challenge for this body, if it were to
    legislate in this area, is that Montana is not Philadelphia,
    right, and New York City is not Nebraska----
        Senator Risch. How well we know.
        Mr. McNeal [continuing]. And I think we really want to make
    sure that, on the privacy rules, that we do not try to over-
    legislate here in a way that would stifle innovation, that we
    entrust the states to handle those types of things under
    existing state law, Senator.
        Senator Risch. Is there any effort by the Uniform Code
    Commission to adopt something like the UCC or something like
    that that----
        Mr. McNeal. There is----
        Senator Risch [continuing]. That states can look at?
        Mr. McNeal. There is an initiative. It is not the Uniform
    Code Commission, I think it is an ALI group that is meeting to
    create a harmonized set of rules. There is also a similar group
    that is trying to create a harmonized set of rules across the
    states for a variety of the other things that we are talking
    about with regard to trespass, privacy, and nuisance, to try
    and ameliorate the concerns about a patchwork of rules and
    regulations cropping up across the states.
        Senator Risch. Thank you very much.
        Senator Gardner.
        Senator Gardner. Thank you, Mr. Chairman, and thank you to
    the witnesses for being here today and your testimony.
        I had the privilege of traveling to where I attended law
    school, the University of Colorado Law School, and a couple of
    years ago, they got a new law school, and so I went and visited
    the old law building, which was still there, and inside the old
    law library is a, I guess a UAS test and flying facility. They
    had this--it looked like a batting cage net up where they were
    flying around UAS, doing all kinds of things. It was the best
    use of a law library I think I have ever seen. At least, I wish
    they were doing that when I was studying there.
        [Laughter.]
        But, I mean, they were doing tremendous work.
        Do we have any idea--do either of you have any idea about
    how much money is right now being put toward research and
    development at various universities' engineering laboratories
    across the country on UAV systems, those kinds of things?
        Mr. McNeal. I do not know the specific dollar amount,
    Senator, but I know that many universities are looking to get
    involved in it. Actually, to tie this back to my testimony, one
    of the challenges that I face is that I want to educate my law
    students about technology, and if I were to take a drone and
    bring my students outside and start flying that drone, I would
    need to get a 333 exemption. I would need to go to flight
    school and become a pilot, all to be able to show my students
    how to use that. And if they were to use it as part of their
    education, that would be deemed non-recreational, non-hobbyist,
    not in conformity with the set of community-based guidelines,
    those students would have to go through a similar process. And,
    so, I have taken to not bothering to show them how UAS work in
    the classroom because of these prohibitions.
        And, so, I think it is Senator Peters that has an act that
    he has proposed to try and free up universities. I think that
    dovetails nicely with the MicroUAS proposal, to free up
    universities to be able to conduct this type of research, to
    help expand STEM education and even reach down into high
    schools and intermediate schools to do the same thing.
        Senator Gardner. Absolutely. And last summer in Colorado
    and across the country, we saw wildfires throughout the Western
    United States, a number of incursions between drones and
    firefighting operations. You have recommended a ceiling of 400
    feet for the MicroUAS classification, but retardant drops are
    usually made from heights of 150 to 200 feet. So, in your
    opinion, what should we be doing to make sure that the likely
    proliferation of micro drones does not further imperil that
    kind of an emergency response situation?
        Mr. McNeal. Yes, Senator. So, these devices would similarly
    be subject to the same hazard restrictions that are already in
    under my proposal, that are already in place. And, so, flight
    within a temporary flight restriction would be a violation of
    the law.
        Additionally, just to tie it back to AirMap and tell you a
    story, a year ago, AirMap started as a company believe that
    unmanned aircraft operators needed accurate and up to date
    information about airspace information, and now approximately
    85 percent of the market gets a live update about where
    temporary flight restrictions are. One of our partners, DJI,
    will geo-fence that temporary flight restriction so that you
    cannot fly into it. Another one of our partners, 3D Robotics,
    provides an alert to the operator, letting them know this is an
    area where you cannot operate.
        And, so, that gives you an idea of the pace of innovation
    when we allow the industry to act quickly in response to
    problems, perhaps to avoid the--because they see the threat of
    legislation or regulation coming, trying to stay ahead of that
    trend, whereas if we get overly prescriptive, what ends up
    happening is we slow them down because they have to meet
    regulations, instead of allowing innovation to address the
    public policy problems.
        Senator Gardner. How does that alert work that you just
    talked about? You said--how would that work to the user, the
    operator?
        Mr. McNeal. Sure. The user, upon opening their system up,
    is immediately provided accurate information about the airspace
    in which they are operating and they would get a pop-up
    notification on the screen letting them know that they are in a
    temporary flight restriction and they are unable to fly in that
    area, and it would give them the exact detailed rationale
    behind why that temporary flight restriction was there, be it
    POTUS movement or a stadium event or a wildfire or any other
    significant event.
        Senator Gardner. Thank you. Thank you, Mr. Chairman.
        Senator Risch. Thank you.
        Dr. McNeal, for those of us that are from the Western
    states--I see a few of us here, four of us here anyway--this
    fire issue has become a real issue. This last summer, we had a
    number of fires. I am sure you had the same thing in Colorado.
    And the firefighters are concerned, and they are having a lot
    of issues with the drones, because it is a natural thing if you
    are a hobbyist or what have you. You want to go out and take a
    picture of that. So, common sense is going to play a role here
    somewhere.
        Well, I have just been ignominiously chastised by the
    Ranking Member for ignoring her and not allowing her to make an
    opening statement. Unfortunately----
        Senator Gardner. Mr. Chairman, that was as much my fault as
    anybody's. I am sorry to the Ranking Member----
        Senator Risch. Well, in my defense, I did not start this
    shindig and I thought you had been here----
        [Laughter.]
        Senator Shaheen. And I did not, either.
        Senator Risch. So, in any event, Senator Shaheen for your
    deep, probing, important remarks.
        Senator Shaheen. Thank you, Senator Risch. It is so nice to
    chastise you.
        Senator Risch. Yes. It is not the first time, I might add.
        [Laughter.]

    OPENING STATEMENT OF HON. JEANNE SHAHEEN, RANKING MEMBER, AND A
                    U.S. SENATOR FROM NEW HAMPSHIRE

        Senator Shaheen. Well, thank you very much, and I am going
    to submit my statement for the record, but I would point out a
    couple of things.
        One is that, as both of our witnesses have testified, and
    we thank you very much for being here, unmanned aviation
    presents new opportunities for innovation and for delivering
    services, but it also raises a number of new and serious safety
    concerns. And, as the discussion has pointed out, we need to
    address those safety concerns very thoughtfully and with an
    understanding of what the ramifications of that would be.
        And, I would just point out with respect to wildfires, this
    is something that has been called to our attention in New
    Hampshire, even though we are not a Western state, and I have
    introduced the Wildfire and Emergency Airspace Protection Act,
    which would make it a federal crime to knowingly operate a
    recreational drone that interferes with disaster response
    efforts. So, I do think that is a very serious issue.
        I also want to recognize Dr. Vaneck from Physical Sciences
    Inc., which is a business that is located in Massachusetts, but
    they do some of their work with drones in New Hampshire, so we
    are delighted to have PSI represented here. I had the
    opportunity to discuss with representatives of PSI the
    importance of the SBIR program and what we need to do to
    reauthorize it and, I hope, make it permanent. So, thank you
    for being here.
        [The prepared statement of Senator Shaheen follows:]

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Senator Shaheen. My question--I am going to start with you,
    Dr. Vaneck, because I wonder if you could walk us through the
    experience that PSI has had to date with getting involved in
    the commercial drone sector and how the costs and constraints
    have affected your business.
        Mr. Vaneck. Thank you. Certainly. When we first started
    getting into the commercial activities, I want to step back and
    say that, initially, we primarily focused on the military and
    we have a large number of these systems that are in theater
    supporting our military quite successfully.
        It was a logical step to take that to the commercial
    sector. We worked with several commercial companies that wanted
    to use the system for inspection. First, they wanted to
    understand, was it useful for inspection, and then if it was,
    that they wanted to actually put it into operation. We worked
    with an energy company that, through working with the FAA, we
    were able to get a special type certificate for the system that
    allowed us to operate it in the experimental category, and that
    was simply to go and look at the efficacy of using the system
    for those kinds of inspections.
        The process was tedious. The FAA applied manned rules to
    unmanned, but in our viewpoint, they could not do anything else
    because they had a rule set that worked really well. This was
    thrust on them. They had to do something. It took a long time.
    We were able to be successful in getting that type certificate,
    and the system has been used commercially by that company to do
    power line inspections.
        The 333 was a good step, not the last step, I hope, in
    getting to a point where we can now use these commercially. I
    have to say that the process that we went through was not that
    onerous. The FAA emphasized safety. It was on a case-by-case
    basis. We made our pitch to them, and were able to receive the
    333.
        It led us to believe that this risk model is the proper
    approach, and I believe that is the model that the FAA is
    proposing. I will say that categorizing both the risk and the
    type of operation, you get micro systems that will have one set
    of rules. You will have other systems that perhaps want to go
    beyond line of sight, will have a different set of rules. And
    then you will have rules for very large systems, and I think
    that is what makes sense. Thank you.
        Senator Shaheen. Can you also--maybe both of you could talk
    a little bit about the degree of training that should be
    required for drone operators, because on the previous panel--I
    missed it, but I understand that the President of the Air Line
    Pilots Association was here, and that he raised some of the
    concerns around safety and training requirements that the FAA
    is looking at. So, can you speak to that, and then perhaps----
        Mr. Vaneck. I will quickly comment on that. For our
    military customers, it is a two-day approved training course
    that they go through to fully be able to operate the system and
    maintain it. We believe that for the commercial side, anyone
    who is going to operate the system commercially should have
    some degree of training. That could be as simple as an online
    training that you would take and then pass an exam so you
    understand what the airspace is that you are going to be
    operating in and what the rule architecture is. So, we are
    fully in support of that.
        Senator Shaheen. Would you like to comment?
        Mr. McNeal. Yes, Senator. So, I do think that we should
    take a cue from other countries. I just sat through a
    presentation yesterday. The Canadians have segmented up based
    on the weight class and the risk category of the operation
    whether or not someone needs training, and at the low end of
    the spectrum, basically that 4.4 pound and below area, I think
    it would be prudent for us to not require substantial training.
        To put it in perspective, Captain Canoll--I keep wanting to
    say Captain Cannoli, Senator Booker--he put a DJI Phantom on
    the desk. My five-year-old operates that with my supervision.
    It is not a complex device. And if you think about if you were
    trying to sell your home today and you had that, or it was your
    kid's DJI and you wanted to fly up and take a picture of your
    home so you could sell your home, that would be a commercial
    operation.
        Do we expect that that person is going to go through that
    educational process? Probably not. And, so, what we end up
    having is people who are skirting the rules and not complying,
    in the same way that I could have skirted the rules and used
    the device to educate my students, but because I am a law
    professor, I felt it would probably be wrong for me to violate
    the law while educating my students. So, I do think we need to
    key it to the type of operation as opposed to having a blanket
    rule that everyone must go through some formal training.
        Senator Shaheen. Thank you both.
        Mr. McNeal. Thank you, Senator.
        Senator Shaheen. My time is up.
        Senator Risch. Yes, it is.
        Senator Booker.
        Senator Booker. I realize there is a vote coming up, Mr.
    Chairman, and I know Senator Cantwell has not had a chance to
    ask any questions, so I would defer to her.
        Senator Risch. Oh, I am sorry.
        Senator Booker. Okay. Then, I will instead continue with
    questioning. Thank you.
        So, real quick, I have a lot of concerns, as you heard in
    the last panel, about what we are doing to choke innovation and
    through overly burdensome regulation that does not seem to be
    in any way keeping pace with what other countries are doing who
    have the same safety concerns but have an ability to spawn
    innovation that has now seemed to be taking off, no pun
    intended, in other countries, but not taking off here.
        But, I actually want to shift for a second, because this is
    the Small Business Committee, and I would like to know that
    beyond the discussions of what the FAA is doing, how can other
    government agencies actually help small businesses, such as the
    SBA, foster a culture of innovation around UAS, particularly
    for these commercial users? And, I open it up for both of you.
        Mr. McNeal. I think there are a few things that can happen.
    One of the things that we struggled with as a company was just
    being able to access certain types of data and communication
    protocols at the FAA, where the FAA had an approach to allowing
    people to create innovation and participate with the National
    Airspace System in a way where they basically sort of selected
    single contractors who were the only people who could provide
    certain types of approved solutions, rather than creating
    standards to which everyone else could develop.
        So, an example of that was rather than creating standards
    for aeronautical apps that would allow individuals to provide
    information to end users, they instead created their own app,
    which did not get a lot of adoption. And, so, I think flipping
    that focus, calling on agencies to say, here are the standards
    to which we want people to create new software, or here are the
    standards around which we want people to innovate, and then
    free those individuals to innovate and then maybe they get the
    stamp of approval if they have met those broad developmental
    standards. So, that is speaking just to the software category,
    Senator.
        Senator Booker. Great. Any other thoughts?
        Mr. Vaneck. Very quickly, two quick thoughts. One is, I did
    want to go back and talk a bit about the SBIR, very briefly.
    This system would not be in existence today had it not been for
    an SBIR program that got it started. We were able to develop it
    to a point that we had larger agencies providing funding to
    continue on and actually get it into military operations.
        The other is this is an ITAR-restricted piece of equipment.
    Part of our market is going international, as well. There are
    tremendous burdens, and the rule structure is not as clear as
    it could be for us to understand how we push this technology
    out internationally. If we want to compete on the international
    stage, I have to be able to put my technology into the
    international market, and I think we need some--a look at the
    ITAR restrictions that are placed on these types of
    technologies to ensure that we are not burdening it--overly
    burdening it so it does open those markets up.
        Senator Booker. And it puts you at a competitive
    disadvantage to other companies that might be----
        Mr. Vaneck. Yes, Senator, it does.
        Senator Booker [continuing]. Other countries. And, again,
    this goes to that point about how we are really undermining
    innovation, economic growth, jobs, because we are doing things
    to our businesses and innovators that other countries are not,
    and they are not having these horrible safety disasters, and
    they are taking a focus on safety, but they are not creating
    these regulatory burdens.
        And, so, just for an example, either of you, how long does
    it take for a typical small business--not the people who--the
    individual users who crash into the White House lawn and things
    like that, but I am talking about for a business that is trying
    to use and innovate an application, how long does it take for a
    small business to apply for an exemption through the FAA? I am
    just curious, just for the record.
        Mr. McNeal. Well, worse than the exemption process,
    Senator, would be the fact that if we just decided to start
    today, it would take 120 days at the long end, but they have
    really narrowed that gap down to about 60 days, to approve the
    exemption. But, then you would have a piece of paper----
        Senator Booker. Wait----
        Mr. McNeal. You would need to learn how to fly. You would
    need to go fly a Cessna and fly for 20 hours before you could
    fly that--what is it, 200 grams--that tiny 200-gram device. You
    would need to know how to land a manned aircraft.
        Senator Booker. Right. And, right now, there is a backlog
    at the FAA----
        Mr. McNeal. There is a backlog, right, and now people--and,
    so, I think people are sitting on the sidelines, too, hoping
    that--the people that last summer were sitting, expecting that
    Congress would hit the deadline--I mean, the FAA would hit the
    deadline Congress gave them. They did not file for their
    exemption. Then they heard there would be a delay. They did not
    file for their exemption. And now, some of them are probably
    kicking themselves for having not filed the exemption. The
    regulatory process takes a long time because the agency has to
    run all of its traps.
        Senator Booker. And, let us just be clear. Right now in
    America, we are killing innovation as a result of this. We are
    killing jobs. We are undermining the life-saving potential that
    this technology could have for our own communities. And this is
    just a regulatory regime that desperately needs to be changed.
        Mr. McNeal. I one hundred percent agree, Senator.
        Senator Booker. Thank you very much.
        Senator Gardner [presiding]. Thank you, Senator Booker.
        Had I known that we were bringing some of these visuals, I
    have a Millennium Falcon drone in my office I could have
    brought here, too, so----
        [Laughter.]
        Mr. McNeal. Do not fly it commercially, Senator.
        Senator Gardner. No, no, no. After some experiences, I am
    pretty sure nobody would want me to do that.
        [Laughter.]
        I guess Senator Markey is next.
        Senator Markey. Okay. Thank you, Mr. Chairman, very much.
        PSI is a perfect example of why we have Small Business
    Innovation Research grants. It is an amazing number, just for
    Massachusetts, but there have been 20,000 SBIR grants to
    Massachusetts companies totaling $5 billion. That is the
    program that has been authorized by this committee year after
    year, and those 20,000 grants have helped to create, just to
    Massachusetts companies like PSI, and PSI, Physical Science
    Incorporated, to be distinguished from PSI, pounds per square
    inch, where Bill Belichick is the expert----
        [Laughter.]
        Notwithstanding what anyone who comes from any other state
    might believe is accurate.
        So, we thank you, Dr. Vaneck, for your incredible
    innovation at your company.
        Can I turn just for a second, then, to the privacy issues.
    Obviously, right now, there are no rules in terms of the
    gathering of information and how they can use it, how they can
    sell it, and clearly, there have to be rules. You just cannot
    allow these drones to be hovering over people's backyards and
    taking pictures. You know, it is one thing to say it is great
    for Amazon to be able to deliver a package, but what about the
    film now that is in there as they are hovering around the home?
    What is the rule for the reuse or resale of all of that
    information, especially if it is related to children in the
    family?
        So, in a way, for the purposes of public safety or the
    purposes of helping the agriculture sector to better monitor
    what is occurring, there are eyes in the sky, and that is
    great, but there is also a spies in the sky aspect to all of
    this that, clearly, we have to talk about, as well.
        And, last year, I actually introduced the Drone Aircraft
    Privacy and Transparency Act, which establishes safeguards to
    protect the privacy of individuals from the expanded use of
    drones. We need guidelines, especially with regard to
    information gathered about children in our society.
        So, could you, Dr. Vaneck, talk a little bit about how PSI
    ensures that drones are protecting the privacy of those on the
    ground.
        Mr. Vaneck. Certainly. Thank you, Senator Markey.
        Actually, the privacy concerns, I share them, as well. When
    we worked with the power and gas company, I will tell you that
    certain operations that they conducted, inspecting these power
    lines, they would only inspect from one direction, because if
    they inspected from the other direction, in the view would be a
    farm, and they knew that that farmer was very concerned about
    privacy. So, they conducted their operations so as to not to
    impinge.
        I think it actually can drive innovation. If you pull up
    Google Maps, you will see that license plates are blurred.
    Faces are blurred. Even signs on buildings, which,
    unfortunately, when I am trying to find that building make it a
    little difficult, but they are blurred.
        We have a lot of the technology already starting to be in
    place that we can apply to this as far as the video feeds and
    even other data that we collect. So, I think it can drive
    innovation. We are actually----
        Senator Markey. You think the solution to the problem lies
    in innovation itself.
        Mr. Vaneck. Yes, absolutely.
        Senator Markey. Like Google Maps.
        Mr. Vaneck. Absolutely, and I think we can begin to apply
    that. I think there needs to be rules in place that say this
    has to occur----
        Senator Markey. Yes.
        Mr. Vaneck [continuing]. And that will drive innovation. It
    will get the three guys in a garage who come up with a great
    idea that then will deploy across the entire industry.
        Senator Markey. And, so, that then basically says that the
    FAA could say that this technology, such as Google Maps, which
    blurs faces, blurs that kind of personal information, should
    then be applied here, and once it is adopted, then you have got
    a balance between the innovation and the use of the technology,
    but also in the protection of the privacy of individuals.
        Mr. Vaneck. I would say that I am not sure the FAA is the
    organization to do that----
        Senator Markey. Yes.
        Mr. Vaneck [continuing]. Because they are safety-related.
    But, I believe that there are rules that can be put in place by
    organizations to ensure that that takes places.
        Senator Markey. Yes, and I agree with you a hundred
    percent. And, again, we thank you. We are proud of having PSI
    up in Massachusetts. Thank you.
        Mr. Vaneck. Thank you.
        Senator Gardner. Thank you, Senator Markey.
        Senator Cantwell.
        Senator Cantwell. Thank you, Mr. Chairman.
        Dr. Vaneck, I wanted to ask you, NASA has been working on a
    drone transportation system to basically monitor the ability to
    fly safely on altitudes under 500 feet, and yesterday, the
    Senate introduced a FAA bill that had a pilot program on that.
    So, do you think that a traffic management system can be safely
    put in place for drones so that they can--we can get that
    network operating?
        Mr. Vaneck. I believe it can. There are already activities
    now for micro radars that are able to, not today, but very soon
    will be able to track aircraft as small as our aircraft. The
    other advantage to something like that is it can track
    individual birds around airports. You have heard from pilots of
    bird strikes. If that radar were to exist, they could alert
    pilots of individual birds.
        Of the management system, commercial airliners today have a
    system on board where the aircraft themselves talk to other
    aircraft. It is called TCAS. Those kinds of technologies will
    be available for these small aircraft, I think, in the future.
    Again, it drives innovation. We are going to have the necessity
    to have those kinds of technology in place, and we will have to
    develop the technologies to do it.
        Below a certain size limit and the operation type, it may
    not make sense, it may be too much of a burden for line of
    sight, because you have an operator and an observer who are
    keeping clear of other traffic. But, for example, beyond line
    of sight, we certainly need a technology like that.
        Senator Cantwell. Well, if you could--I mean, obviously,
    with a digitized system, everything could be monitored. I think
    my colleague, Senator Risch brought up this issue as it related
    to fire, which is a perfect example. We definitely believe that
    drones could be a huge asset in helping us track and monitor
    fire starts. At the same time, literally, we had aircraft who
    were fighting the fires having to physically suspend and set
    down because hobbyists' drones were flying in the area, and
    they could not risk the safety.
        So, that is a perfect example of the need for a traffic
    management system, if you will, and a communications system.
    Not everybody probably understood where every fire was, given
    that they were so immense across our state, anyway. So, it was
    pretty hard to go and identify and tell everybody, you know, a
    drone APB. Do not fly. We have firefighters flying their
    missions. But, so, if you had a system, you obviously could see
    that system and identify and communicate with it.
        Mr. Vaneck. Absolutely. We are actually developing
    technologies now so that this system can be used by smoke
    jumpers for fighting wildfires, for looking for hot spots using
    thermal cameras, for having just an SOS that the firefighters
    are in trouble and you can send up an SOS. Right now, it is
    humans deconflicting the airspace. We need to move that to a
    technological solution to take the human out of the loop and
    have that information both sent throughout the infrastructure
    that is fighting the fire, but to everyone else, as well, with
    geo-fencing and other things to prevent the other users from
    being in that airspace.
        Senator Cantwell. So, do you believe the FAA's 333 is
    fostering this environment of voluntarily compliance, and do
    you think that that works to achieve that goal?
        Mr. Vaneck. The--as I said, the 333 was not an onerous task
    for us. It did take a long time. It was about 160 days for us
    to receive our 333. The real issue, and it has been mentioned
    by others, having someone have to be a pilot, a manned aircraft
    pilot, to be able to operate this is a burden that is just too
    far.
        Senator Cantwell. That is not where our international
    counterparts are.
        Mr. Vaneck. That is not where our military is. Most of the
    operators that we have in the military are not pilots. They
    have other jobs to do, but this is a technology that they use
    for life saving, for other things.
        Senator Cantwell. So, are we losing ground to international
    competitors because we are not----
        Mr. Vaneck. Yes, Senator. Absolutely.
        Senator Cantwell. Well, I definitely believe that we need
    to fix and address that. We need--this is unbelievable
    applications, life saving applications, information saving
    applications. I just think about what we need to do with fire
    and fire-wise, making sure that we attack fire starts right
    away. This kind of data and information would give us a
    perspective that is just invaluable. So, I hope we can figure
    out how to move faster as the U.S. and not be left behind the
    international marketplace. Thank you.
        Senator Gardner. Thank you, Senator Cantwell.
        Senator Shaheen.
        Senator Shaheen. I just wanted to make a final comment, and
    that is, as we talk about the challenges at the FAA, one of the
    things that would help a lot to allowing them to move forward
    more expeditiously is to reauthorize the FAA so they do not
    have to worry about what is going on with their life span. And,
    just as we need to reauthorize the SBIR program, we need to
    make sure that the FAA is operating, that they know what they
    are expecting, and that this is critical. As we talk about
    innovation, we should not be doing things here in Congress that
    hinder the innovation that we need in the country.
        So, thank you both very much for your testimony.
        Senator Gardner. Thank you both for your contribution and
    testimony today. We are in the middle of a vote, so we are
    going to go ahead and conclude the hearing. Very informative
    and, obviously, important to balance the safety, the safe
    integration of unmanned aircraft into our nation's airspace
    without stifling small business growth and innovation.
        Thank you very much for being here, and this hearing is
    adjourned.
        [Whereupon, at 11:45 a.m., the committee was adjourned.]

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