[House Hearing, 115 Congress] [From the U.S. Government Publishing Office] THE NEED TO REFORM THE FEDERAL AVIATION ADMINISTRATION AND AIR TRAFFIC CONTROL TO BUILD A 21ST-CENTURY AVIATION SYSTEM FOR AMERICA ======================================================================= (115-15) HEARING BEFORE THE COMMITTEE ON TRANSPORTATION AND INFRASTRUCTURE HOUSE OF REPRESENTATIVES ONE HUNDRED FIFTEENTH CONGRESS FIRST SESSION __________ MAY 17, 2017 __________ Printed for the use of the Committee on Transportation and Infrastructure [GRAPHIC NOT AVAILABLE IN TIFF FORMAT] Available online at: http://www.gpo.gov/fdsys/browse/ committee.action?chamber=house&committee=transportation __________ U.S. GOVERNMENT PUBLISHING OFFICE 25-482 PDF WASHINGTON : 2018 ---------------------------------------------------------------------------------------- For sale by the Superintendent of Documents, U.S. Government Publishing Office, http://bookstore.gpo.gov. For more information, contact the GPO Customer Contact Center, U.S. Government Publishing Office. Phone 202-512-1800, or 866-512-1800 (toll-free). E-mail, [email protected]. COMMITTEE ON TRANSPORTATION AND INFRASTRUCTURE BILL SHUSTER, Pennsylvania, Chairman DON YOUNG, Alaska PETER A. DeFAZIO, Oregon JOHN J. DUNCAN, Jr., Tennessee, ELEANOR HOLMES NORTON, District of Vice Chair Columbia FRANK A. LoBIONDO, New Jersey JERROLD NADLER, New York SAM GRAVES, Missouri EDDIE BERNICE JOHNSON, Texas DUNCAN HUNTER, California ELIJAH E. CUMMINGS, Maryland ERIC A. ``RICK'' CRAWFORD, Arkansas RICK LARSEN, Washington LOU BARLETTA, Pennsylvania MICHAEL E. CAPUANO, Massachusetts BLAKE FARENTHOLD, Texas GRACE F. NAPOLITANO, California BOB GIBBS, Ohio DANIEL LIPINSKI, Illinois DANIEL WEBSTER, Florida STEVE COHEN, Tennessee JEFF DENHAM, California ALBIO SIRES, New Jersey THOMAS MASSIE, Kentucky JOHN GARAMENDI, California MARK MEADOWS, North Carolina HENRY C. ``HANK'' JOHNSON, Jr., SCOTT PERRY, Pennsylvania Georgia RODNEY DAVIS, Illinois ANDRE CARSON, Indiana MARK SANFORD, South Carolina RICHARD M. NOLAN, Minnesota ROB WOODALL, Georgia DINA TITUS, Nevada TODD ROKITA, Indiana SEAN PATRICK MALONEY, New York JOHN KATKO, New York ELIZABETH H. ESTY, Connecticut, BRIAN BABIN, Texas Vice Ranking Member GARRET GRAVES, Louisiana LOIS FRANKEL, Florida BARBARA COMSTOCK, Virginia CHERI BUSTOS, Illinois DAVID ROUZER, North Carolina JARED HUFFMAN, California MIKE BOST, Illinois JULIA BROWNLEY, California RANDY K. WEBER, Sr., Texas FREDERICA S. WILSON, Florida DOUG LaMALFA, California DONALD M. PAYNE, Jr., New Jersey BRUCE WESTERMAN, Arkansas ALAN S. LOWENTHAL, California LLOYD SMUCKER, Pennsylvania BRENDA L. LAWRENCE, Michigan PAUL MITCHELL, Michigan MARK DeSAULNIER, California JOHN J. FASO, New York A. DREW FERGUSON IV, Georgia BRIAN J. MAST, Florida JASON LEWIS, Minnesota CONTENTS Page Summary of Subject Matter........................................ v TESTIMONY Hon. Calvin Scovel III, Inspector General, U.S. Department of Transportation................................................. 10 Joseph W. Brown, President, Hartzell Propeller, Inc.............. 10 Robert W. Poole, Jr., Director of Transportation Policy, Reason Foundation..................................................... 10 Paul M. Rinaldi, President, National Air Traffic Controllers Association.................................................... 10 Dorothy Robyn, Independent Policy Analyst........................ 10 PREPARED STATEMENTS SUBMITTED BY WITNESSES Hon. Calvin Scovel III........................................... 70 Joseph W. Brown.................................................. 90 Robert W. Poole, Jr.............................................. 97 Paul M. Rinaldi.................................................. 105 Dorothy Robyn.................................................... 116 SUBMISSIONS FOR THE RECORD Hon. Bill Shuster, a Representative in Congress from the State of Pennsylvania, submission of the following: Letter of May 4, 2017, from Hon. James N. Mattis, Secretary of Defense, to Hon. John McCain, Chairman, Senate Committee on Armed Services.......................................... 40 Letter of February 10. 2016, from Ronald P. Brower, Corporate Secretary, NetJets Inc., et al., to Mr. Shuster............ 126 Press release, ``SWAPA Urges House Passage of AIRR Act,'' February 25, 2016.......................................... 127 Press release, ``Allied Pilots Association endorses AIRR Act,'' March 3, 2016....................................... 129 Letter to members of the National Air Traffic Controllers Association (NATCA) from Paul Rinaldi, President, NATCA, et al......................................................... 131 Hon. Calvin Scovel III, Inspector General, U.S. Department of Transportation, responses to questions for the record from Hon. Bill Shuster, a Representative in Congress from the State of Pennsylvania, and Hon. Frank A. LoBiondo, a Representative in Congress from the State of New Jersey.......................... 88 Hon. Rick Larsen, a Representative in Congress from the State of Washington, submission of the following: Written statement from the Professional Aviation Safety Specialists................................................ 133 Written statement from the National Business Aviation Association................................................ 140 Hon. Peter A. DeFazio, a Representative in Congress from the State of Oregon, submission of article, ``Inspectors Say a Major Canadian Airline Disaster is `Likely,' '' by Carl Meyer, National Observer, April 3, 2017............................... 147 ADDITIONS TO THE RECORD Written statement from the Helicopter Association International.. 151 Written statement from Jeff Martin, Executive Vice President Operations, JetBlue Airways.................................... 154 Letter of May 24, 2017, from Gerald L. Dillingham, Ph.D., Director, Physical Infrastructure Issues, U.S. Government Accountability Office, to Hon. Bill Shuster, Chairman, House Committee on Transportation and Infrastructure................. 159 Letter of June 1, 2017, from Stephen L. Johnson, Executive Vice President, Corporate Affairs, American Airlines, to Hon. Bill Shuster, Chairman, House Committee on Transportation and Infrastructure................................................. 164 Letter of June 1, 2017, from Steve Morrissey, Vice President, Regulatory and Policy, United Airlines, to Hon. Bill Shuster, Chairman, House Committee on Transportation and Infrastructure. 165 [GRAPHICS NOT AVAILABLE IN TIFF FORMAT] THE NEED TO REFORM THE FEDERAL AVIATION ADMINISTRATION AND AIR TRAFFIC CONTROL TO BUILD A 21ST-CENTURY AVIATION SYSTEM FOR AMERICA ---------- WEDNESDAY, MAY 17, 2017 House of Representatives, Committee on Transportation and Infrastructure, Washington, DC. The committee met, pursuant to notice, at 10:04 a.m. in room 2167, Rayburn House Office Building, Hon. Bill Shuster (Chairman of the committee) presiding. Mr. Shuster. The committee will come to order. I now recognize Mr. LoBiondo for a motion. Mr. LoBiondo. Pursuant to rule 1(a)1 of the rules, Committee on Transportation and Infrastructure, I move that the chairman be authorized to declare recess during today's hearing. Mr. Shuster. The question is on the motion. All those in favor, signify by saying aye. All those opposed, signify by saying nay. In the opinion of the Chair, the ayes have it, and the motion is agreed to. I want to thank everybody for being here today. This is an important hearing we are having here today and talking about some, what I consider to be, extremely important legislation. And I believe everybody on the committee, both sides of the aisle, believe that the reauthorization of the FAA, reforming it to making it a better system for all Americans, is extremely important to all of us. The way America travels, moves goods, and conducts business today depends on an efficient transportation network. And in order to remain competitive, we need a 21st-century infrastructure with modern, 21st-century technology. This is especially true of our aviation system, but the fact is the FAA's infrastructure is increasingly obsolete, and its technology is still cemented in the last century. And to just quote my colleague, my esteemed colleague from Oregon, in a hearing we had not too long ago, he said that ``The FAA is the only agency of Government worse at procurement than the Pentagon.'' Congress has tried to reform it. It didn't stick. We have got to try something different to get it to be more agile, to give us the 21st-century equipment and software we need. Then there is the issue of the actual sort of shape of the FAA bureaucracy. Congress, back in 1986, gave the FAA the license to reform personnel practices to deal with some of the mid-level management bulge and to streamline the agencies and decisionmaking process, but that didn't take either. And he goes on to propose a 21st-century, constitutionally chartered corporation in order to accomplish these goals and make it self-funding, self-sufficient, and not subject to appropriations or shutdowns or anything else that a Congress might imagine. Now, I think that we can see by that statement, and I think as we talk here today, we agree there is a problem. There is a solution at hand. It is just the forum that we are going to debate vigorously on what we think is the best outcome. But as a result, over these past 30 years, the shocking amount of taxpayer dollars that we have wasted over the last 3\1/2\ decades, over $50 billion, and that is why this is one of my highest priorities this year is a comprehensive FAA reform and reauthorization bill. So far this year we have held reauthorization hearings looking at air transportation, manufacturing, airports, and new entrants and innovations. Today we will focus on the need for air traffic control reform, divesting the high-tech service, 24/7 service business, from Government and shifting it to an independent, not-for-profit entity. It is appropriate we are holding this hearing during Infrastructure Week. No other single infrastructure reform has as much potential to improve travel for the average American flyer or to ensure our hard-earned leadership in aviation. Although our aviation system is safe, the FAA's structure and how air traffic is managed have been broken for decades. The decisions we make in the FAA reauthorization bill this year will either move us toward a 21st-century aviation system America needs or doom us to repeating the failures of the past over and over again. Everyone should be reminded of what happens if we choose the status quo. It means our system will be subject to more budget constraints, sequestration, and threats of Government shutdowns. Sequestration isn't gone. In 2013, sequestration led to furloughs and reduced operations, controller hiring and training suffered, and the FAA bureaucrats tried to shut down contract towers. Fiscal constraints continue to be tight--so is the Federal budget--and that is not going to change anytime soon, and it may get worse. We continue to rely on the unstable, dysfunctional annual appropriations cycle. We have had no stand-alone transportation appropriations bill since 2006, and over that time period Congress has passed 42 continuing resolutions to keep Government doors open. The FAA also relies on authorizing legislation, and it took Congress 23 short-term extensions over 5 years before it passed the previous long-term FAA authorization bill. Under these conditions, the FAA bureaucracy has been trying to undertake a high-tech modernization of air traffic control systems for over three decades. It is not working, and it is never going to work. Sadly, in today's digital age, our controllers still manage planes with paper strips, which of course I have brought a few to remind people of that. And if anybody hasn't been in a control tower, they ought to go into a control tower and see it. Some argue that the latest attempt to modernize--NextGen-- is showing some signs of progress, but we all know any progress is incremental at best, and only in locations where the FAA partnered with the private sector. And let's remember, the name ``NextGen'' was really just a rebranding of the FAA's ongoing, failed efforts to modernize the system. ``NextGen'' is just a marketing term, not an actual technology or innovation, but it sounds catchier, so Congress will fund it year after year. But the bottom line is there should be far more progress by now. Money has never been the problem. Congress has provided more than $7.4 billion for NextGen since 2004. Results are the problem. According to the FAA's own calculations, the return on the taxpayers' $7.4 billion investment has only been about $2 billion in benefits. And we have still got a long way to go. According to the DOT inspector general in 2014, the projected initial cost for NextGen was $40 billion, but they have said it could double or triple and be delayed another decade. Over the years, the FAA has described NextGen as a transformation of America's air transportation network. They also said it will forever redefine how we manage the system. But in 2015, the National Research Council confirmed what was already becoming painfully clear. According to the NRC, the original version of NextGen is not what was being implemented. It is not broadly transformational, and it is not a fundamental change in the way the FAA handles air traffic. Only in the Federal Government would such a dismal record be considered a success. While the FAA continues to fall behind, the rest of the world is moving on, with new technologies, without the United States involvement. Nothing less than America's leadership is at stake in an industry that we pioneered and have led since Kitty Hawk. Some have proposed targeting reforms to fix the FAA's problems, but that is an approach we have already tried many, many times, starting in the 1980s. Since 1995, Congress has passed various reforms to allow the FAA to run more like a business. Procurement reform in 1995 for the FAA to develop a more flexible acquisition management system. Additional reforms in 1995 exempt the FAA from most Federal personnel rules and allowed the FAA to implement more flexible rules for hiring, training, compensating, and assigning personnel. Procurement reforms in 1996 developed a cost accounting system. Additional personnel reforms in 1996 allowed FAA to negotiate pay. Organizational reforms in 2000 to establish a COO position. Additional reforms to allow greater pay so the FAA could recruit good candidates, particularly for a COO position. Additional reform in 2000 by the Executive order to create the Air Traffic Organization. Organizational reforms in 2003 to establish the Joint Planning and Development Office to better coordinate NextGen. Reforms in 2012 to establish a chief NextGen officer. Property management reforms in 2012 to allow a better process for realignment and consolidation of facilities. All have failed to result in the FAA being run more like a business. The FAA has always performed like a massive bureaucracy and will continue to. It is the only DOT agency that serves as both transportation service provider and safety regulator. Regulating itself is an inherent conflict of interest, and separating the two functions is simply good Government. It is time for reform that is truly transformational. Real change can be difficult--we have learned that over the years--but the broader lesson over the last several decades is that the true risk lies in doing nothing. Last year's bill that passed out of committee will serve as a framework for new legislation, but we are open to change. We want to talk to people and get their ideas, and that is what we hope to hear today. As we continue to move forward, our air traffic control reform proposal will be based on the following principles. Create an independent, not-for-profit corporation to provide air traffic services. Fund the new service provider by fees assessed for air traffic service. Free the new service provider from governmental dysfunction, political interference, and the uncertainty of the Federal budget process. Create a governance structure that is right-sized and balanced, and a board with sole fiduciary responsibility to the organization. And I need to repeat that: fiduciary responsibility. That is a legal term. If you are on a board of directors in the United States, and you have the fiduciary responsibility, it is not to who appointed you to the board; it is to the board. It is to that organization is who you are responsible for, and that is the law. That is just not some pie in the sky. People can be removed and be prosecuted if they are not doing their fiduciary responsibilities. Ensure connectivity, access to the airspace, and the continuity of air services for general aviation, small and rural communities, and airports that serve them. And let me for the record remind people, I am from a rural district. I have one very small airport. I doubt I have more than a handful of people that work for the airline industry, but I have several hundred GA pilots. So if anybody thinks that I want to harm the GA or rural communities, they just don't know who I am and where I am from because I am committed to make sure what we do protects small and rural communities and protects the GA community. The GA community is over a $1 billion industry. Why in the world would I want to harm an industry that produces so much good for this country? We want to ensure full access to airspace and air services to support our armed services and their national security mission. Free the air traffic control business from the FAA's bureaucratic procurement process and the appropriations cycle. End the Federal Government's decades long pattern of costly, delayed, and failed management of modernization. Give the new service provider the ability to access financial markets, leverage private funding for multiyear capital projects needed to modernize the system. Allow the FAA to focus on its safety mission and certification mission. Ensure continued oversight of the air traffic services by the FAA, DOT, and Congress. And, of course, lots of people are out there saying that that is not what we are going to do, but let me be clear: the FAA, the Department of Transportation, and Congress will still maintain vigorous oversight to the airspace of this country and ultimately allow all users of the system, including airline passengers and the general public, to realize the significant benefits of a modern air traffic control system, including decreases in delays, flight times, and congestion. Previous efforts to reform the FAA and modernize the system teach us that the only way to realize these benefits is to get the Government out of the way. As President Ronald Reagan said, ``Government is not the solution to the problem; Government is the problem.'' And we see all over the world people turning to the private sector, whether it is Europe or it is Asia, Australia, New Zealand, Canada, look around the world. Countries, governments are looking to partner with the private sector because they see they do it better. Since the introduction of the AIRR Act [Aviation Innovation, Reform, and Reauthorization Act] over a year ago, this has been an ongoing process of education and discussion. We have held over 130 meetings with stakeholders, including both supporters and opponents of the AIRR Act. We have had numerous meetings with Members of the House, the Senate, the White House, and other committees. These meetings have been extremely productive and given us new ideas to improve the legislation. As I said, I want to hear the same thing from today's witnesses. What are your ideas that we can build upon on the principles that I have outlined? We have also gone to Canada to see their system firsthand, and we will go again with more Members. And I would encourage any Member that wishes to go on May 25, Thursday, in the afternoon, we will be heading up to Canada and coming back on May 26 to, again, go up there not so we can imitate their system but to learn from the lessons of their system, to learn to help to fix our own broken structure. Over 60 countries have followed this kind of reform, and it has worked in each case. Opponents of reform either ignore the evidence or must believe we are less capable than the other 60 countries, and for me that is a bit outrageous. We are the United States of America. We can do this. We can do this better than anybody else. So it is time for us to take a look and to move forward. Air traffic control is not inherently a governmental function. It is a 24/7 technology service. For those who worry that the system is too complex, I would say this. The most complex thing in the airspace is not the air traffic control system; it is the airplane. It is the people at Boeing and Airbus and Cessna and the people that build these aircraft. That is the most complicated thing in the system. And the FAA already oversees those highly sophisticated private sector aircraft manufacturing, maintenance, and flight operations at arm's-length. We don't build airplanes today; the Government doesn't, and that is the most complex thing in the system. Overseeing air traffic control is not going to be more complicated than anything else the FAA already does. This transformational reform will fix our obsolete and dysfunctional air traffic control structure, move beyond the wasteful, inefficient status quo, and benefit all of the users of the system. Ultimately, reform will give the American flyer a safe, efficient, aviation system, using 21st-century technology to ensure more on-time departures, more direct routes, using less fuel, which will be better for the environment, and less wasted time on the tarmac. Ladies and gentlemen, again, I thank the witnesses for being here. And with that, I will yield to the ranking member for an opening statement. Mr. DeFazio. Thank you, Mr. Chairman. Jim would have been proud. That is the longest opening statement since former chairman Jim Oberstar, but you only did it in one language. So we could have--we could add a simultaneous translation perhaps. Thanks for the time, Mr. Chairman. First off, I spent about over an hour with Dr. Dillingham from the GAO, who I would say is the foremost expert and the longest term critic of the FAA, its procurement process, and movement toward a 21st-century system. And I am not aware that any other member of the committee has spent that time with him, and he has not been invited to testify. He has a different story to tell today, and he thinks it will be a mistake--and I am paraphrasing--but we are now on the cusp of a 21st-century system that will be the envy of the world. And he and other experts--MITRE Corporation, others--say a massive change now, where you cleave the FAA into parts, you leave the most vital thing to our manufacturers' certification, subject to appropriations, sequestration, and shutdowns. You leave the most vital thing that is important to the American public, which is safety and oversight of safety, subject to sequestration, shutdowns, and political meddling. The only thing that gets moved is the ATO, and the ATO would be moved and essentially effectively controlled by the airlines. I note the airlines aren't here today, perhaps because they haven't looked so great recently in public, and I would also note that the airlines themselves have had outages 36 times, major outages, 36 times since 2015. I am not aware that the national air traffic control system has had a major disruption, with the exception of deliberate sabotage by a contractor who knew how to get the system and the backup system. But the airlines, on their own, with no sabotage, have managed to melt down their dispatch and their reservation systems 36 times, stranding millions of people, so they can do it better. Right? That is an interesting question. So I think that members of this committee that want to be educated on this should take--and maybe we can invite them in here and spend that hour with Dr. Dillingham and hear the story of how things have changed and the progress we are making and the potential for disruption at this point in time. In terms of funding, the FAA is currently projected over the next decade to be 97 percent self-funded. Unfortunately, the way our colleagues around here and the budget process works, despite the fact they are self-funded, they can be sequestered or shut down. That is a simple, simple fix. Take it off budget; make it into a trust-funded program. They are raising the revenues. That is a simple fix. No, we are going to cleave it in half, put vital functions over here, still subject to sequestration and shutdown, and take this one part and put it over here and say somehow they are going to self-fund. Now, the question of course is, how are they going to self- fund? The airlines have told me time and time again they hate the ticket tax, they hate the ticket tax. They say, ``That is our money.'' I say, ``No, it is not your money. I buy a ticket, I pay the tax, the tax goes to the Government. It is not your money.'' They say, ``No, no. That affects the price of the ticket, and competition and everything else. It is a horrible thing.'' So if they do away with the ticket tax, there goes 70 percent of the revenues. What are they going to put in its place? It is going to be a per operation charge, or something. We don't know. Congress will have no say over this. Now, there will be a board, if I could have that slide, and a construct which is--we will show here--for the person running the slides, if you could put up this slide, please. And this is the new construct. Anything that affects competition will go through this process. The board makes a decision about a new approach, a new route, new fees. All that goes through this process and then goes to the Secretary. The Secretary will have established a large, new office of consultants within his, or at this point her, office who will advise the Secretary, he will have a limited period of time, and if the Secretary and the board disagree, they go to court. Now that is a great way to deal with new approaches, funding, and a whole bunch of other things. Congress will have nothing to say about what people or the American people are charged for running this system. When the ticket tax goes away, what happens to the AIP [Airport Improvement Program]? What happens to safety? What happens to certification? We had testimony from a gentleman in here who has an intriguing new model to serve small and mid-sized cities. And he said his biggest problem is certification, and he said people are good at the FAA. There aren't enough of them doing certification. They don't have enough funding. Well, is this new enlightened board going to generously fund that also? We have assurances, ``Don't worry about those things.'' You can put that down now. Now, we have heard other things here that are, you know, an interesting construct, which is we are way behind because we don't use ADS-B [automatic dependent surveillance-broadcast]. If I could have the first slide, please. Can we get a slide? OK. This is the oceanic airspace, and you will notice that a vast majority of the planes are in oceanic control by U.K. and Canada. So they are using ADS-B. Makes sense. Now, we are not. Currently, airlines pay, to have satellite-based navigation, a fee in this low part of the chart. There aren't that many because people do the loop to the north. So, in fact, you know, we have--NAV CANADA has one aircraft in continental airspace for every aircraft in oceanic airspace. We have 1 aircraft in oceanic airspace for every 51 in the air over the United States of America. Now go to the second slide. Oh, by the way--yes, go to the second slide. Now, see all that yellow? That is the U.S. That is going to be totally ADS-B, satellite-based, in 2020, with an exception. The airlines have petitioned and been given permission from the FAA for exceptions because many of their older planes do not have modern enough GPS systems to use the new ADS-B. The airlines, again, have petitioned that they have a number more years before those planes would be able to use the ADS-B system--not the FAA, the airlines themselves. Now, Canada is going to continue to have a radar-based system because they don't have much domestic traffic. And so we are being criticized because we won't pay a bunch of money for the few planes that use our oceanic airspace, but we are going to put, you know, 100 times that many plans under ADS-B in 2020. Now, here is my fear. My fear is there were disruptions in Canada, there were disruptions in Great Britain, including the bankruptcy of the system, and a bailout, and, you know, every system that has transit, and all the others in the world have gone to Government-based corporations or Government-controlled corporations. And there are only two countries that have gone the other way. And MITRE has done studies; others have done studies. There will be a period of disruption, particularly when you are cleaving the agency in half, and the certification people over here who have to certify the new approaches, who have to certify the new equipment, oh, they are on furlough because the stupid Congress did another shutdown or sequestration. Oh, but the ATO is up and running. Well, you can't use those new approaches because the people over here who have to certify it can't work. Now, splitting this agency in half does not make sense to me. Now, the chairman talked about the failed reforms. I sat down with the FAA Administrator, who also has not been invited to testify before this committee on this subject, who I think has made tremendous strides and brought the agency way under control compared to anyone else in recent history. And he said, well, they failed because Congress failed to say that the trolls at OMB and the Secretary couldn't meddle. So the proposed reforms didn't go forward because OMB took control, as they do over too many things, and then the Secretary messed with it and they ended up with a system--I know, Mr. Poole, you find this amazing, you know, but, you know, that is the way it happened, and these did not go forward. So, simply, you can just say we are going to give authority to reform procurement, we are going to give authority to reform personnel, to the head of the FAA whose proposals will not be subject to OMB because they are now self-funding, and will not be subject to meddling by the Secretary of Transportation and her staff. That would be a significant way to get there. Put it off budget. It is already raising the revenue it needs, but, no, we are going to have a new corporation that is going to figure out a different way to raise revenue, and, oh, by the way, forget about safety, forget about certification. They are afterthoughts over there in the Government, not funded by any stable source. I have invited a witness today, and I hope people listen carefully, Joe Brown. He is the president of Hartzell Propeller. His family has been involved in the aviation business since the Wright Brothers, actually. It is an interesting story, but he won't have a chance to tell that today because I want him to focus on his experience, both in that industry and as a pilot, and to talk about what he sees as the things that are at risk as a pilot, a GA pilot in this country, and things that we have done that are extraordinary for GA pilots that would be at risk in a new system because, why would the commercial airlines give a darn about all those GA airports and all those new, improved approaches and updating those, because that costs money and that is not in their interest. They don't use them. They don't care. So we will hear from him, and I think his testimony is going to be a little more compelling than a couple of think- tank people that we are going to hear from yet again and again and again. But we haven't heard from the FAA Administrator, we haven't heard from Dr. Dillingham, but Ms. Robyn is here for the second or third time, and Mr. Poole for the umpteenth time from his wonderful rightwing think-tank. So that is what we have before us, Mr. Chairman. I do think there are things we could agree upon, but, you know, I do not believe that privatizing the ATO is the answer. Thank you. Mr. Shuster. Well, I thank the gentleman. You almost equaled my opening statement. You were 2 minutes short. But, look, this hearing is going to be about--it has to be about knocking down things that just aren't true. What Mr. DeFazio puts up on his chart, it is not my proposal. I don't know whose proposal it is. It may be Mr. DeFazio's proposal, but it is not mine. And let me just start off. To undermine the whole thing, start at the very, very top. It says on his chart if they decide to increase passenger aviation taxes, they cannot--they cannot--this new entity cannot increase taxes. They don't-- under law, they cannot do that. Second, it says the corporation decides to change--let me finish with that. Mr. DeFazio. Are we having a debate, or are we having a hearing? Mr. Shuster. Well, we are going to have a debate, I think. The only person that can raise taxes is the United States Congress. So that is patently false. The second thing at the top is the corporation decides to change ATC safety procedures. That can't happen. They have to come back to the regulator, to the FAA. So, again, I don't know whose chart this is. It is certainly not my chart. So as we move forward, I hope folks---- Mr. Young. You might want to call that fake news. Mr. Shuster. I don't want to go there. I don't want to go there. And just one other point that the gentleman said, Congress--he said Congress and OMB failed. He is absolutely right. He is making my case. We have to take this out of the Congress, out of the OMB, stopping the way they operate. It is crazy. But, again, I am concerned that he is taking it all out. Will there be any oversight in his new idea of how to run it? But, again, this chart, the chart that he put up there, that is not my chart. So, ladies and gentlemen, I have got to be very clear on that. Mr. DeFazio. Mr. Chairman, if I could rebut for 1 minute. Mr. Shuster. You certainly can. Mr. DeFazio. Thank you, Mr. Chairman. They can set user fees. User fees I consider to be taxes. I consider the ticket tax to be a user fee, but we can argue semantics over that. But they are going to determine how the system is funded, which is tantamount to taxation without review by the Ways and Means Committee or Congress. And, secondly, I am not proposing--I am proposing to give the FAA Administrator that authority free of OMB and secretarial interference, and also we would give them a budget that is free from sequestration and shutdowns through their own funding mechanism. Congress would set the funding, if it needs to be adjusted. Congress could intervene if they felt the reforms weren't warranted, unlike in your privatized system. Thank you, Mr. Chairman. Mr. Shuster. I thank the gentleman, and we will now go to our witnesses. I would like to welcome again our panel. I believe everybody has testified before us before on at least one occasion, or maybe a few. First, the Honorable Calvin Scovel III, the inspector general of the United States Department of Transportation. He has been here many times. Joseph W. Brown, the president of Hartzell Propeller, Incorporated. I believe you testified in 2014, so this is your second time here. Mr. Robert Poole, director of transportation policy at the Reason Foundation, who has been thinking deeply about this subject for many years. Mr. Paul Rinaldi, the president of the National Air Traffic Controllers Association, who has been before us before. And Dorothy Robyn, the independent policy analyst and former Clinton administration official, who, again, has been through the wars on this many, many times, and we appreciate you being back here to look at your insights. So, again, I look forward to hearing your testimony. I ask unanimous consent that our witnesses' full statements be included in the record. And without objection, so ordered. Since your written testimony has been made part of the record, the committee would request that you limit your oral testimony to 5 minutes. And with that, Mr. Scovel, you may proceed. TESTIMONY OF HON. CALVIN SCOVEL III, INSPECTOR GENERAL, U.S. DEPARTMENT OF TRANSPORTATION; JOSEPH W. BROWN, PRESIDENT, HARTZELL PROPELLER, INC.; ROBERT W. POOLE, JR., DIRECTOR OF TRANSPORTATION POLICY, REASON FOUNDATION; PAUL M. RINALDI, PRESIDENT, NATIONAL AIR TRAFFIC CONTROLLERS ASSOCIATION; AND DOROTHY ROBYN, INDEPENDENT POLICY ANALYST Mr. Scovel. Chairman Shuster, Ranking Member DeFazio, members of the committee, thank you for inviting me to testify on FAA's efforts to implement reforms and modernize the National Airspace System. My testimony today will focus on OIG's past and ongoing work regarding FAA's efforts to implement various agencywide reforms, as well as its progress and challenges with NextGen. Mr. Shuster. Can you pull the mic a little closer to you? Mr. Scovel. Yes, sir. Mr. Shuster. Don't be afraid of it. Mr. Scovel. While my office does not make policy recommendations, I will also discuss how other countries have structured their aviation systems and highlight key factors that policymakers may wish to consider in evaluating FAA's structure. Over the last two decades, FAA has made several reforms in response to congressional mandates to improve operations, cost effectiveness, and management. These include establishing new employee compensation systems, as well as an acquisition management system. FAA has also undertaken multiple reorganizations to improve the agency's efficiency and reduce expenses. In addition, FAA achieved more than $2 billion in cost savings over a 13-year period by outsourcing flight service stations. Despite this progress, FAA's reforms have not achieved their intended cost or productivity outcomes. Instead, budgets have increased, with a 35-percent increase in FAA's total budget after adjusting for inflation between fiscal years 1996 and 2015. In addition, FAA's productivity initiatives for its air traffic controller workforce have not yielded improvements, in part because FAA did not establish measurable productivity and cost goals or metrics. FAA's reforms have also fallen short in improving its ability to deliver key NextGen technologies on time and within budget. This is due to longstanding management weaknesses, such as overambitious plans, unreliable cost and schedule estimates, unstable requirements, and ineffective contract management. For example, FAA has made progress with its six NextGen transformational programs, such as installing the ground system for ADS-B. However, FAA has not determined when the programs will start delivering benefits or how they will improve the flow of air traffic or controller productivity. Although FAA currently estimates the six projects at $5.7 billion, their total costs and completion dates remain unknown, in part because their requirements continue to evolve. Furthermore, weaknesses with internal controls and oversight problems have hindered FAA's contract management, which we found in our reviews of sole source, service support, and small business set-aside contracts. To its credit, FAA has worked with industry to identify and launch some of the highest priority NextGen capabilities. For example, a key priority is performance-based navigation, or PBN, which allows more fuel- efficient aircraft routes and reduces airport congestion. FAA fully deployed these procedures at the northern California metroplex in 2015, well ahead of schedule. FAA has also deployed new technologies at some airports to enhance controller-to-pilot data communications and runway operations, yet many risks remain to complete these and other NextGen priorities, and full benefits for users remain years away. Key challenges include addressing community noise concerns with PBN routes, resolving avionics issues, and integrating complex, onboard systems and controller technologies. As Congress, the administration, and stakeholders consider FAA's structure, other nations may offer a helpful comparison. At the request of this committee, we reviewed the aviation systems of Canada, France, the United Kingdom, and Germany. All four have separated their safety and oversight functions, which remain Government-controlled, from the air traffic control functions. Air traffic control has been commercialized--their term-- into air navigation service providers via various organizational structures. These providers finance their operations through user fees, and may finance their infrastructure and modernization efforts with long-term bonds and other debt instruments. They also embark on smaller modernization efforts and roll them out incrementally using a variety of methods, such as modifying commercial off-the-shelf products. Yet, any discussion on FAA's structure should consider our Nation's unique characteristics. As you know, the U.S. runs the busiest and most complex aviation system in the world, with more operations each year than the other four nations combined. Safety, financing, and labor issues will also be key questions. Ultimately, safety will remain the top priority in overseeing our National Airspace System. Regardless of what the future looks like, strong controls and oversight will be vital to maintain a safe, innovative transportation system. This concludes my statement, Mr. Chairman. I look forward to answering questions you or the committee may have. Mr. Shuster. Thank you, Mr. Scovel. And with that, Mr. Brown, you may proceed. Mr. Brown. Chairman Shuster, Ranking Member DeFazio, members of this committee---- Mr. Shuster. You can bring your mic closer. Get right up close to it because then we can hear you better. We want to make sure---- Mr. Brown. Is this better? Mr. Shuster. Better. Mr. Brown. Chairman Shuster, Ranking Member DeFazio, and members of the committee, I would like to thank you for inviting me here today. My name is Joe Brown, and I come today as a businessman and a pilot. I also represent a company called Hartzell Propeller, a 100-year-old aviation business whose roots trace to the Wright Brothers. Located in rural Ohio, we do our business out of a 4,000- foot runway that takes us all over this country to our customers, in Texas and Florida and Georgia and Minnesota, and everywhere in between. Because our customers build airplanes, they are around airports. Our business depends, and their business depends, on the amazing infrastructure that the citizens of this country have put into the national airspace. And we also depend on another thing, which is the incredible freedom to fly that we enjoy in this country. And because of those things, we have made a market in this country like no other for aviation, and we are very grateful for that and deeply invested. Now, as a pilot, 400 to 500 hours a year my office is the cockpit. And when I fly, I find a modern system, a high- functioning system, and I have seen it evolve over time right before my eyes. I find controllers that do their job well. I find easy access and powerful technology. I can file a flight plan from my smartphone and get my proposed route, back before I get to the airport, in a text. When I take off, I have GPS navigation systems on board that allow me to fly point-to-point all over this country. A couple of months ago, I took off out of the Dallas/Fort Worth metro area and got cleared direct to Burlington, Vermont, 1,300 miles ahead. And while I am flying, I have the veil of safety brought to you by ADS-B which is, in fact, deployed, giving me traffic callouts and separation cues and weather in my route of flight. And when I come in for landing, I can pick from 3,000 precision approaches brought to me by a NextGen feature called WAAS [Wide Area Augmentation System], including at my home airport, which I value tremendously on foul weather days. So the bottom line for me is, NextGen is working. It works for me every day, and it is getting stronger all the time. And from a technology standpoint, I believe we are on the right track. It is proper to ask in modernization, where should we go next? Many are arguing that what we should do is spend the next 5 to 7 years focusing on the structure and the governance of our Air Traffic Organization. I don't like that risk profile. I don't think we should be distracted. As a businessman, I think that what we will find is that we will raise more questions than we can answer, questions that don't have clear answers, and questions that will burn up precious time trying to answer, like how will we assure equity among users, and how will we finance this organization, and what borrowing risk can it take. And what about new market entrants; how do they fit into this picture? And that doesn't even address whether the people are better served by the structure after we transfer so much national wealth to it. Because I am a business guy, I get to evaluate a lot of companies, and I have bought several. And we have a simple framework when we are looking at an investment. We say, what are its strengths? Can they be leveraged? Do they differentiate it in the business we are trying to do? And what are its weaknesses, and do we understand those weaknesses, and can we fix them? And when both of those things are true, we buy that company because we know if we elevate strengths and reduce weaknesses that we will create value. And in my calculus, the ATO presents exactly that risk profile--enormous strengths, world-class systems, and very specific weaknesses that we can address. The conclusion I have drawn is that we should not spend 5 to 7 years distracted by change, knowing that things take longer and cost more, with the hope that at the end this restructuring journey will deliver a big payoff. What is next? I think that we should stay on track with the technology plans that the NextGen Advisory Committee and the FAA have agreed to. The stakeholders are already aligned, and the technology that is in the field works, and there is more technology coming. Let's keep tuning and strengthening the collaboration that has been driving so much progress. Even Government overseers recognize that the NextGen Advisory Committee is having impact, and it has been run by an airline executive, so clearly the strongest voice is setting the priorities. Let's expand on the technologies that are already deployed. For example, DataComm is in the field today at 55 towers in the country and will be delivering en route services to aircraft by 2019. NextGen is deployed and getting better all the time, but let's tackle specific weaknesses that we have in the system, like the way we finance the FAA and the ATO, and the way we give them mechanisms for doing long-term capital planning and investment. And, finally, let's work on that ATC infrastructure. There are a number of ways that private-public partnerships could put these guys in better buildings. In the next 5 to 7 years, we could have them all in better buildings. I encourage us to take a different path to think about options that are fixing the fixable and elevating strengths. Thank you for the time today. I look forward to questions. Mr. Shuster. Thank you very much, Mr. Brown. Mr. Poole, you may proceed. Mr. Poole. Good morning, Mr. Chairman, Ranking Member DeFazio. As some of you know, I have been researching this subject for close to four decades. Most recently, I have been part of two working groups, one for the Business Roundtable and the other for the Eno Center. Both groups have concluded that we have major fundamental funding and structural problems and that corporatization of the ATO is the best solution. That was also the conclusion that the FAA Management Advisory Council reached unanimously in their 2014 report that called for corporatizing the ATO. My focus this morning is primarily on the issue of governance. The Business Roundtable group recommended a nonprofit corporation in which customers and other stakeholders govern. This is basically a user co-op, except for the addition of other stakeholders---- Mr. Shuster. Can you pull that mic a little closer to you? Mr. Poole [continuing]. Users. Mr. Shuster. That thing moves, I think. Pull the whole box towards you. Mr. Poole. All right. Mr. Shuster. Please. Thank you. Mr. Poole. The structure proposed is basically a user co-op with the addition of other stakeholders. And the governance model that was proposed in last year's bill, as recommended by BRT [Business Roundtable] and Eno, was intended to be a U.S. adaptation of NAV CANADA's nonprofit, stakeholder-governed corporation, running in the best interests of all the stakeholders. But the stakeholder board from last year has been described misleadingly as giving control over the airspace to the major airlines. This, of course, has led to serious concerns from general aviation groups, people in small towns with small airports, and rural legislators. But in a nonprofit, user co-op, there are no shareholders. Every board member has an equal vote with any others, so even if there were airlines on it, which there won't be, they would only have a small minority of the members, and they could easily be outvoted by other members because all votes are equal. It is not like in a corporation where you have preferred shareholders. Now, this model is consistent with international aviation law, with ICAO [International Civil Aviation Organization] principles, and with global best practices. And the proposal did not originate with the airlines. I would like to set the record straight on that. The Business Roundtable group began in 2011, made an initial presentation to A4A [Airlines for America] in the spring of 2012. We got a pretty cool, if not negative, reception at that point. No one wanted to restart the battles that had raged over this issue in previous decades. Everything changed in the spring of 2013, thanks to the sequester. Controller furloughs, a closed FAA Academy, threatened closure of 189 contract towers, got everybody's attention. In response, A4A, NATCA [National Air Traffic Controllers Association], and AOPA [Aircraft Owners and Pilots Association] all requested new conversations with the BRT working group. And, in May 2013, all three groups in the conference room at Business Roundtable agreed that an air traffic control corporation--converting the ATO into a corporation, self-funded and out of the Federal budget, was the best approach. After this happened, that fall, Governor Engler and several others briefed Chairman Shuster on the proposal. This was not coming from the airlines. The BRT group included a former FAA Administrator, a former Chief Operating Officer of the ATO, two former senior officials of U.S. DOT, and several consultants. Our governing model, as I said, was patterned after NAV CANADA's. Their stakeholder board represents airlines, general aviation, unions, and the Government, plus four other private citizens selected by the stakeholder members. No board member at NAV CANADA can hold any paid position in an aviation organization. It is a system that really works. And of four seats elected by airlines, two are from major airlines, retired people. One is from an air tour company, and one is from a regional airline serving the Far North. Now, the U.S. is larger and has a much larger general aviation community. GA, as a key stakeholder, should have more than one seat. Since small airports are so vital, airports definitely are a stakeholder that should be electing a board seat as well. And I think in terms of the airlines, regional airlines and cargo airlines should be defined as stakeholders in addition to perhaps two seats from the major carriers. My written testimony gives one example of a proposed 15-member stakeholder board. Let me close with the concerns of small airports. Having airports and regional airlines as stakeholder is part of the answer, but Congress needs to deal with the fears about loss of control towers at small airports and worries that somehow service might be dropped in rural areas. First of all, Congress could specify that any airport meeting a reasonable benefit-cost test should be assured of getting tower services, which is the standard today. Second, FAA would be in charge of aviation safety, and no changes in procedures or equipment could happen without its OK. They might be proposed by the corporation, but would have to pass muster with the FAA, and could not be done unilaterally. Third, ATO's inadequate funding today gives airports the short end of the stick. There has been a moratorium on contract towers since fiscal year 2014. So small airports are losing today, not getting what they need, because of FAA's ongoing budget problems. A self-funded corporation would mean improvements for small airports, thanks, number one, to predictable user fee revenues and a financed capital improvement program for facilities. Secondly, a corporation would very likely implement remote tower technology that would increase the benefits from having a tower because of better surveillance, and reduce the costs; therefore, the benefit-cost ratio would be higher, and more small airports would qualify. This would be a boon for small airports, not a detriment. That concludes my testimony, and I will be happy to deal with questions. Mr. Shuster. Thank you very much, Mr. Poole. And with that, Mr. Rinaldi, you may proceed. Thank you. Mr. Rinaldi. Good morning, Chairman Shuster, members of the committee. Thank you for the opportunity to testify---- Mr. Shuster. Microphone. Mr. Rinaldi [continuing]. In front of you today. Mr. Shuster. Slide that whole thing towards you, the whole box. There you go. Mr. Rinaldi. How about that? We currently run the largest, safest, most efficient, most complex, most diverse airspace system in the world. It contributes $1.5 trillion to our gross domestic product and provides over 12 million American jobs. Our National Airspace System is unique, unequalled, and unrivaled by any country. This is due, in large part, to the impeccable work the men and women that I represent do every day. NATCA members guide approximately 70,000 flights per day in the United States, ensuring over 900 million passengers arrive safely at their destination every year. The United States airspace system is considered the gold standard in the aviation community, but that status is at risk. Unstable, unpredictable funding and the status quo threaten it. We need a stable, reliable, predictable funding stream to operate our current system and allow for growth in the United States aviation system. Although NATCA is calling for change, we cannot support any proposal without fully reviewing all its details. It is not only that we oppose the status quo, which is very much broken, we also oppose any system that would put ATC in a for-profit model. In order for NATCA to consider support of any proposal, it must meet our four core principles of reform. First, any new system must keep the safety and the efficiency of the National Airspace System the top priority. Second, any reform must protect our members' employment relationship. This must maintain our members' pay, benefits, retirement system, healthcare system, as well as their work rules and our contract. Third, any reform system must have a stable, predictable funding stream, adequately enough to support air traffic control services, growth, new users, staffing, hiring, training, long-term modernization projects. Also, this reform must provide a stable funding stream through the transition period. Fourth, any reform must maintain a dynamic, diverse aviation system that continues to provide services to all segments of the aviation community and to all airports across America. I cannot emphasize enough how important it is to continue to provide services to many of the diverse users in the National Airspace System. Both large and small, new and old, big city to rural America, the United States has a vibrant, general aviation community that relies upon us. Rural America's economic success is tied to access to the National Airspace System. Last year, NATCA supported the AIRR Act of 2016 because it met these four core principles. While we do not believe there is only one solution to the problems, we will carefully review all proposals using the same standard. Please don't take NATCA's position as a need for stable, predictable funding as to mean the appropriators have not done their job. The appropriators in both chambers of Congress on both sides of the aisles have done their job well. The problem stems from lack of regular order we have been experiencing for over 10 years now. This lack of regular order has led to stop-and-go funding, many threats of shutdown, and our current staffing shortage. We are at a 28-year low of fully certified controllers. We have 10,532 certified controllers; approximately 3,000 are eligible to retire at this time. In addition, unstable funding has prevented on-time implementation of NextGen modernization projects. NATCA takes pride in our role in partnering with the FAA in developing and implementing important modernization projects. We have successfully worked on many over the years. Unfortunately, all have been impacted by uncertainty of funding. If you just look at fiscal year 2018, as we approached April 28 of this year, the FAA shifted its focus from NextGen to shutdown. We then received a 1-week funding extension, followed by a 5-month funding bill. While we are elated over the funding bill, 5 months is certainly no way to plan for the future in aviation. Congress needs to pass an FAA reauthorization bill that provides stable, reliable, predictable funding. Congress should exempt the FAA employees from indiscriminate sequester cuts. Otherwise, we will see a hiring freeze, reduced staffing, furloughs, delays, reduced capacity, and suspension of key NextGen programs. I want to thank you for calling this hearing. We must all remain vigilant and focused on the horizon as we try to expand and modernize the National Airspace System. Thank you. Mr. Shuster. Thank you, Mr. Rinaldi. And with that, Ms. Robyn, you may proceed. Ms. Robyn. Thank you, Chairman Shuster, Ranking Member DeFazio, members of the committee. I appreciate being here this morning. I am a policy wonk, and I am a Democrat. I testified before some of you during the 5 years I spent in the Obama administration, first as the Deputy Under Secretary of Defense for Installations and Environment, and then as the GSA Public Buildings Commissioner following the scandal at GSA. Previously, I spent 8 years on President Clinton's White House economic team, where during his second term I was the point person on aviation and air traffic control, among other issues, a policy focus I maintained after leaving the White House, first at Brookings and then as an economic consultant. The first point I want to make this morning is that corporatization of the air traffic control system is not a radical idea, nor is it a Republican idea. The Clinton administration tried unsuccessfully to do this in 1995 with its proposal to create a self-supporting Government corporation, USATS, which would be run by a CEO and a board and regulated at arm's-length by the FAA. At the time, only four countries had corporatized their air traffic control system. Now more than 60 other countries have done so. The second point I want to make is that the rationale for USATS applies no less today than it did in 1995. Let me briefly restate it. One, air traffic control is not an inherently governmental function. To repeat, it is not inherently governmental. Keeping planes safely separated is complex and safety-critical, but it is a purely operational process that follows well-established rules. Like running an airline or manufacturing a Boeing 787, air traffic control can be performed by a nongovernmental entity as long as it is subject to oversight by FAA safety regulators whose job is inherently governmental. Two, precisely because of the operational nature of the air traffic control system, the Federal Government is poorly suited to running it. The consensus of countless blue ribbon commissions and expert reports is that air traffic management is a 24/7 technology-intensive service business trapped in a regulatory agency that is constrained by Federal budget rules, burdened by a flawed funding mechanism, and micromanaged by Congress and the Office of Management and Budget. Is it a monopoly? Yes. At least for now. But the telephone system was a monopoly for many years, and we didn't have the Government operate that. My final--the final rationale for USATS, the current arrangement is flawed on safety grounds. This is important. Echoing safety experts worldwide, ICAO, the International Civil Aviation Organization, has long called for the air traffic control regulator to be independent of the operation it regulates in order to avoid conflicts of interest. We are one of the only industrial nations in which the same agency both regulates and operates the air traffic control system. In sum, 22 years after USATS was dead on arrival when it got to Congress, the international aviation community treats air traffic control as a commercial service business, and most countries have spun it off as an autonomous self-supporting entity, both to give it the agility that a business needs and to provide the necessary separation from the safety regulator. The U.S. has gone from failed innovator to laggard. The current proposal, the AIRR Act, differs from USATS in one important way. USATS was a Government corporation because that was the only model that existed in 1995. NAV CANADA, which came along a short time later, has shown us a better approach for the reasons you have heard and that we will discuss further this morning. Had NAV CANADA existed in 1995, I strongly suspect that it, rather than New Zealand's Government corporation--the best model at the time--would have been the prototype for the Clinton administration's USATS proposal. In closing, let me say that I have listened long and hard to the arguments made by opponents of the chairman's proposal, particularly Democrats. I look forward to discussing these criticisms this morning, but I think it is a mistake to view this proposal as ideological, as one committee member characterized it last year. I believe in a robust Federal role in many areas, and I think the Federal Government gets far too little credit for its accomplishments. But I also believe that the Federal Government has often excelled by recognizing where its direct involvement is necessary, and where it is not, to achieving its objectives. And sometime I would like to tell you about privatized military family housing as the greatest quality of life program the Defense Department has ever implemented. That is not ideology; that is good Government. Thank you. Mr. Shuster. Thank you very much, Ms. Robyn. We are going to start with questions. I would ask all Members to stick to 5 minutes. If we need to go to a second round, I will be more than happy to indulge. First question I have to Mr. Brown. Mr. Brown, I really appreciate you being here. It is the second time you have testified before this committee, and you and I have sat down I think on a couple of occasions to talk privately about your concerns in the industry and in general. And of all the witnesses there, I feel like I am a kindred spirit with you. I was a business owner myself, so I know what you do every day, getting up, making sure you are meeting the bills, making sure your operations are functioning. And, again, in a world that you have got to deal with an agency like the FAA sometimes can be challenging. But as a business owner, would you allow your businesses to grow a budget, your operational budget, 95 percent over a 10- or 15-year period, while at the same time the cost of service increases 75 percent and all the while you are losing customers? Would that be something that you would tolerate as a business owner? Mr. Brown. Of course not. I would be very concerned about that if I was a business owner. Mr. Shuster. Absolutely. And I would, too. And I think you are absolutely on the mark. When you look at a business, you look at the strengths, what can you leverage, how can you make it stronger, and the weaknesses, and can you change them. And so I would say on that business model, when you are in the business world, that works. But when you are dealing with the Federal Government, that weaknesses part, there is not a way we can change this. We have tried for 30 years to change it, and the only way to do it, I believe, is separation. I also--I don't want to speak for Mr. DeFazio, but he believes separation, but looks different than I do. So, again, I really appreciate you being here. I appreciate you laying out. But the thing we are really up against here is trying to change something that has not been able to be changed for 35 years, and that is the real challenge we face here and we have to address. But thank you so much for being here. I appreciate that. I would like to ask Mr. Rinaldi, I brought the paper strips here today that I was introduced to by Mr. Rinaldi. These are the paper strips of the DC area TRACOM [Terminal Radar Approach Control] for 1 day. This is what we use. And, Mr. Rinaldi, could you talk to me a little bit about the paper strips? Why do we use them, and what is our most modern towers? I think we have our most modern towers we can throw up on the screen there. Mr. Rinaldi. Well, those are paper strips that we stuff all day long in our towers across the country and move--as we move the control of an airplane from position to position, we pass the strip to controller to controller. We have tried, and we are actually in the process one more time--and this is another reason why an interruption in funding could be a problem--we are working right now with the agency and with Leidos on a new program that would actually move that to 100 percent electronic as other countries around the world are using electronic. It is an efficiency thing. If you look at our new towers in San Francisco---- Mr. Shuster. Is that San Francisco? Mr. Rinaldi. That is San Francisco right there on a foggy day, which happens a lot in San Francisco, and ground stops. The controller is actually just moving paper around that little work area because--just to keep some type of order of how the airplanes are going to come out. Mr. Shuster. And can they put up the Las Vegas tower, too? Mr. Rinaldi. That is the first--yes, that is Las Vegas right there. These are both brandnew FAA facilities. They are-- -- Mr. Shuster. They are the most modern. Mr. Rinaldi. Well, they are the newest facilities. They were actually supposed to have an electronic flight strip program in them. The problem is, because of reduced funding, we were never able to make it on time. So we are using paper now, which is still very safe. We are just losing some efficiencies. Mr. Shuster. Right. Mr. Rinaldi. But we would like to get to an electronic flight strip program as they use around the world. Mr. Shuster. And the thing that tipped me off that this is the most modern tower you have is that is a plastic container they are putting them in, not a wooden crate. So they have advanced to plastics, so that is pretty impressive. But show us the NAV CANADA tower. That is--can you talk a little bit about what NAV CANADA does? Mr. Rinaldi. Well, as you can see, the controller has a good line of sight, head is not down looking at paper. All the information is in front of them, and it is definitely more efficient. Mr. Shuster. And can I ask you one further question? Would you say that the London airspace is the most or least complex airspace in the world? Mr. Rinaldi. I would say that--around London Heathrow; is that what you are talking about? Mr. Shuster. Yes. Mr. Rinaldi. London Heathrow Airport, I would say it is a very busy, complex airspace---- Mr. Shuster. Extremely complex. And what system are they using? Mr. Rinaldi. They are using the NAV CANADA flight strip program. Mr. Shuster. NAV CANADA. OK. All right. I thank you very much for that, and I yield to Mr. DeFazio. Mr. Rinaldi. Thank you. Mr. DeFazio. Thank you, Mr. Chairman. Mr. Brown, I don't think you quite got a chance to respond to Mr. Shuster's question. Would you like to expand on your answer there? Mr. Brown. Yes, I would. The way that I have been thinking about this is as a businessman, and I think the national airspace is a fundamental economic driver in our country. Our country is more aviation centric than any other country in the world. You can see that in the traffic patterns, in the utilization, in the number of pilots. And the way I think about this whole, what is the value of return on the level of investment that we make in our ATO and our airspaces, what industry have we created in this country? What are the returns on that industry? So what I think is that when you have a question like that sent to somebody like me, I immediately go to the larger and very, very significant economic value of an industry that exists uniquely in this country. We are the market leader in aircraft production of every type and stripe. We are the market leader in engine production of every type and stripe. We have the best avionics manufacturers in the world, and that is generating an enormous public return in tax revenues and jobs. So I think you have to put all of the economic value in the bucket before you ask a question that is just yes or no, in my opinion. Mr. DeFazio. Thank you. Mr. Rinaldi, I am sure you are familiar with the 2002 collision between DHL and a Russian passenger aircraft under the aegis of Skyguide, the Swiss Government corporation. What caused that? Mr. Rinaldi. That was caused between lack of communication between ANSPs. Mr. DeFazio. And wasn't there one person on duty who had multiple tasks because---- Mr. Rinaldi. It was a fatigue issue with the controllers also. Mr. DeFazio. Right. So a little bit problem with cutbacks in the controller workforce under the private corporation. Oh, but they have kept safety oversight separate; is that correct, from the Government corporation? Mr. Rinaldi. That is correct. Mr. DeFazio. Yes. Mr. Rinaldi. That is correct. Mr. DeFazio. When is the last time we had an air-to-air collision here due to a controller error? Mr. Rinaldi. A very long time, and I don't like to talk about it. Mr. DeFazio. Right. So you must have said at least 20 times during your testimony and your answer--funding, stability, sequestration, furloughs, talking about the new--our much more sophisticated electronic flight strips, which are going to integrate other aspects of the system and have much more capability than the much more static model used by NAV CANADA that actually was offered to the FAA a decade ago here, and they didn't think it made it up with all the new capabilities of NextGen. And I think you said there--you weren't saying, ``I don't think it will work.'' You said, ``We are worried about delays and reduced funding,'' did you not? Mr. Rinaldi. That is correct. I have no doubt we will be able to develop our own system. It really comes from we are working collaboratively with the manufacturer, along with the FAA. It really comes from a lack of funding or funding uncertainty as we move forward. Mr. DeFazio. So, Mr. Scovel, would you agree that that is a significant problem? Mr. Scovel. I would, Mr. DeFazio. Funding is a significant problem, as you and Mr. Rinaldi have pointed out. However, I would also say that there are other issues to bear in addition to funding. Mr. DeFazio. That is fine. But, and so, let's see, if I think about it, funding, sequestration, shutdowns, that all has to do with Congress. So if we had the FAA with its current funding sources, 97 percent projected over the next 10 years, so just a few efficiencies would get us to 100 percent self- funded without meddling, exempt them from sequestration and shutdowns, would that solve many of your concerns? I am not saying all, but would that solve many of your concerns, Mr. Rinaldi? Mr. Rinaldi. Yes. As I said in my opening statement, we don't believe there is one answer to the problems here, but we do believe the status quo is unacceptable, and we would not look at a for-profit model. But we would look at anything that was proposed and just hold our core principles against what---- Mr. DeFazio. Well, let me just interrupt. Quickly, Mr. Brown, when we had, you know, our last hearing, one of the many Mr. Poole has been to, he said if there was a problem and ATC became insolvent, customers would have to pay more. And then the question, of course, becomes, if it then fails, who is responsible? Who would be responsible if the ATC failed financially in this country? Mr. Brown. Now, that is one of my risk calculus when I think about this problem. The day the assets move out of the public sector and into the private sector, we have moved the essence of the system and the people with it. And there is no way we can spend 1 day without that system full functioning and healthy and thriving. And so all the financial risk accrues to the people regardless of where that monopoly reports. Mr. DeFazio. So too big to fail. Mr. Brown. Too big to fail is my concern. Mr. DeFazio. I think I have heard that before. Thank you. Mr. Shuster. I thank the gentleman. With that, Mr. LoBiondo. Mr. LoBiondo. Thank you, Mr. Chairman. Mr. Scovel, for you, over 3 years ago, Mr. Larsen and I directed the FAA and the NextGen Advisory Committee to come up with four capabilities that could provide near-term benefits, given the constrained Federal budget that we work with. These priorities were supposed to be the low-hanging fruit, the things the FAA could get done and prove to the industry that they can deliver the benefits. I think I am now hearing you say that for many of the NAC priorities full implementation of all capabilities and a realization of those benefits remain years away. So the question for you, Mr. Scovel, is: why are the NAC priorities or the easy things taking 6 to 7 years to implement? Mr. Scovel. Thank you, sir. You are right. The four NAC priorities have been the focus of effort for both industry and FAA. Perhaps unbeknownst at the time, or certainly not fully appreciated at the time, there were significant risks to each of them, whether we are talking about PBN, DataComm, surface operations, or multiple runway operations. Each of those presented its own problems in bringing them to fruition. I would say that right now we are at the point where the timeframe of 2019 is perhaps when DataComm in the en route environment will begin to be implemented, through maybe 2021 will be what we in my office are calling a pivot point for the realization of benefits from these four NAC priorities. Mr. LoBiondo. So with this pivot point, I mean, what is your assessment if we don't make this? I mean, does this ripple out for how long, or can you talk about that a little bit? Mr. Scovel. Sure. We don't know. Yes, FAA has had problems, it is no secret, making completion deadlines before, honoring representations to Congress and the Secretary as to where they are in different programs. FAA, together with the NAC, have an implementation program and a working group that is birddogging it as closely as they possibly can. However, the problems that are outlined in my written statement are significant. They may yet derail the program to some extent. The choice, at that point, is to continue to press forward. So it may go on beyond 2020, 2021, but at this point we don't know. Mr. Brown. Congressman, would it be OK if I added something to that? Mr. LoBiondo. Yes. Mr. Brown. One of the things that I don't think is getting fair discussion in the modernization effort that we are in is that first you have to invent and deploy the technology, which has generally been the FAA's purpose. But then the user community has to equip, and in many cases change equipment to experience the benefits. And that is exactly where we are right now, and that is why there is an inflection point coming up. We have ADS-B fully deployed on a nationwide basis in terms of the ground structure, but only a percentage of the aircraft flying enjoy the benefits because they are not ADS-B compliant. Likewise, that will be true of DataComm and other technologies. So where we are right now is the FAA has done a lot of heavy lifting, and the users have to equip. And in the next several years, that is why the transformative change is going to flow into the system. Mr. LoBiondo. I would like to yield my time to Mr. Shuster. Mr. Shuster. I thank the gentleman. I just want to point out we continue to come back to this argument that--and not an argument, but the facts are it is the Congress and it is OMB and the political process that causes a big part of these problems, along with the bureaucracy. So taking an agency out of Government, and already going right to failing and going bankrupt, if everybody recalls, on 9/11 we injected I think it was $15 billion into the airline industry to prop them up. We had to have an aviation industry. So I am not willing to sit here and say this agency is going to fall because I don't believe it is, because most of the money can be provided by the users. And if you look at the model that we have been looking at in Canada, they have a reserve fund. They did not require the Federal Government of Canada to inject money. The British did, the British for-profit. And as Mr. Rinaldi says, I have no intent, I would not--I would oppose going for a for-profit organization. I think that, again, using this as too big to fail, we faced that in 2001, but there are models out there that we can look at and learn from to make sure that they are set up in a proper form. But the most important thing--and, again, I keep hearing agreement over and over again--it is the bureaucracy, it is OMB, it is the Congress, the starts and stops would cause these problems. With that, I recognize Mr. Larsen for questions. Mr. Larsen. Thank you, Mr. Chairman. First off, I would ask unanimous consent for the written statement of PASS [Professional Aviation Safety Specialists] and the National Business Aviation Association to be entered in the record. Mr. Chairman, unanimous consent? Mr. Shuster. Yes. [The written statements of the Professional Aviation Safety Specialists and the National Business Aviation Association are on pages 133-146.] Mr. Larsen. Thank you very much. So, for Mr. Rinaldi, you are a member of the FAA's Management Advisory Council; is that correct? Mr. Rinaldi. I am, sir. Mr. Larsen. So on March 15 of this year, the MAC, shorthand is MAC, issued a letter calling for reforms that would not require splitting up the FAA, and you signed the letter, along with other members of the MAC. So do you agree with the MAC's recommendations, or how should we read that, from your end of things? Mr. Rinaldi. I do. As I said in my opening statement, there are many ways to fix this problem. We don't think there is just one. Just so you do know, that letter was circulated. I did offer edits, and it was not incorporated into it, but I do support that letter, that we need stable, predictable funding, and flexibility in our budgets. Mr. Larsen. And there are different--and you argued there are different ways to achieve that goal. Mr. Rinaldi. Absolutely. Mr. Larsen. Yes, right. Inspector, we heard in some comments today that the air traffic control system is safe, but it is broken. I fly 2,306 qualified air miles one way on United Airlines and back again for my commute. Can the system be safe and broken, or should I drive? Mr. Scovel. It is safe, of course, and that is---- Mr. Larsen. How can it be safe if it is broken? It seems to me that there is a fundamental argument going on here that says we have to go to privatization because the system is broken that actually controls the airspace. And if it is broken, I don't know how it could be--happen to be safe, and so it would support the privatization argument. However, if it can't be safe and broken, it would seem to undermine the whole argument for privatization. Mr. Scovel. I would characterize the system currently certainly as safe, and the record shows that. For a number of years now, there have been no commercial aviation fatal accidents. As far as broken, I would take issue with that characterization. I would say certainly modernization has been lagging far behind where it should be, but it is not broken. Mr. Larsen. Well, that is good to hear. I will cancel my car rental. Mr. Brown, I just want to explore a separate issue with you, but it is tied because we are trying to get an authorization bill done. And I think largely there is bipartisan support on a lot of issues, including with differences around the edges, UAS incorporation into the airspace, certification reforms. It seems to me all of these are being held up by this debate on the ``to be or not to be'' question with regards to privatizing the air traffic control system. Can you talk a little bit, again just briefly, about why certification is important, and why some of these other issues are important that we move forward on, but yet we ourselves are lagging on getting them done because we continue this debate over and over on privatization? Mr. Brown. I am happy to do that. I would say that Congress has been incredibly supportive of the idea of facilitating improved ways to market through certification. We have had great support and friends in Congress come to our aid to try to make our United States aviation industry as strong as possible, and that has been matched with very good appropriations support as well. So the thing is is we all tend to agree that there are opportunities, and we tend to line up behind them. What is troubling is when they get stopped in mid-stride because they can't get into the regulatory basis. And what that means to me is that we are market leaders in all of our product categories in aviation, and when we can't go to market in the ways that these reforms allow us to do, well, then somebody else is gaining on our heels, and at the end of the day I always care about extending competitive advantage. Of course, the other thing that has often been a problem is that if you create uncertainty, customers have no idea whether they want to invest now or later, and they err on the side of later. So for me there is something really important about keeping the vital function of certification up and running and manifesting the reforms that we all agree to. Mr. Larsen. Well, I appreciate hearing that, and I wanted to be sure folks did hear that. I thought that would be the answer. It is just that this main point is that this is not--we are not working on a privatization bill. We are working on an FAA reauthorization bill. It has many moving parts, many of which we agree on, Democrats and Republicans, and yet it is being--those are being held up by this one debate. And it seems to me we can move forward on the things we agree on moving forward. So I yield back. Thank you. Mr. Shuster. I thank the gentleman and now recognize Chairman Young. Mr. Young. Thank you, Mr. Chairman, and thanks for having this hearing. This is a very interesting one. But you know my interest in--my interest in my State. Eighty percent of our communities are not connected by highways. We have--in that area of aviation, we have 700 airstrips, more than any State in the union, by the way. We have 8,000 pilots and 10,000 per capita as far as aircraft. And my interest in general aviation--and the chairman and I have discussed this before--and as long as Alaska is taken care of and their need for general aviation are not being run by the larger airlines, I will be somewhat interested in what we are doing. And it means a lot to me some of you haven't been--and I think, Mr. Brown, you did fly in Alaska; did you not? Mr. Brown. I sure did. Mr. Young. For, what, 2 years? Mr. Brown. I had a chance to spend a few weeks up there flying around the back country. Mr. Young. OK. And did you have any trouble with air traffic controllers? Mr. Brown. I did not. Mr. Young. That is good because---- Mr. Brown. They are few and far between. Mr. Young [continuing]. I think they are some of the best. But I would like to ask, Mr. Scovel, did Canada file--its system file for bankruptcy? Mr. Scovel. Not that I am aware, sir. Mr. Young. Are you sure? I am just curious about that because that always concerns me. I would suggest, Mr. Chairman, my interest, I think we may be addressing the one spot is--probably the best part in the FAA is the air traffic controllers. But the FAA itself, the management, is not in good shape. I don't know how you change that. I think maybe we ought to spend our time on studying the regulations that they pass. I don't know, the last time I checked there was a book about that big of regulations, why the FAA doesn't work. I have a classic example in Alaska where they came down with a regulation where a village that does not have navigation or an onsite weather reporter or any modern technology have not done so, aircraft would come in, and because--it is perfectly clear, aircraft can come in, but cannot land because they have to have someone on the ground to tell them what the weather is. That is the regulation. So I think, Mr. Chairman, I am interested in seeing what we can do about revamping the whole FAA, but not the air traffic controllers so much, but the system they have is badly managed. And if we can do that, I am willing to listen to a lot of things you have got to suggest. Mr. Shuster. Will the gentleman yield the rest of his time to me? Mr. Young. Yes. Mr. Shuster. I appreciate the gentleman saying that, and that is what we are after. And the gentleman knows, maybe I should say the gentleman is guilty because you have been here since 1973 or 1974. Mr. Young. Abraham Lincoln and I flew airplanes. Go ahead. Mr. Shuster. You were involved in every one of those reauthorizations, and you know better than anybody else---- Mr. Young. That is right. Mr. Shuster [continuing]. That they have not worked. They have failed every single time. I think there are some in this room that might say--and I won't point them out--that 25 years ago there were four or five layers of management at the FAA. Today there are 9 or 10. That is what we do across the system in Government. We say we are going to reform something and we just put a couple more layers in there. We never take the system down and rebuild it, and that is what you do when you have a failed system. You take it out, you say we are going to do something different, and, again, we have got lots of ability to look around the world to see who has worked and who hasn't worked. Mr. Brown, I think you made a very great point. Something that I believe in, and part of my passion for this is to get the certification right. We are the leaders in the world. We invented aviation. But you said something else very important. When you can't go to market with your products because of the certification process, the competition is nipping at your heels. Well, if we don't fix certification, they are not just going to nip at your heel; they are going to take big chunks out of the back of your leg and eventually they are going to cause you real problems in the marketplace. So this certification is critical--critical--to this reform that I am putting forward. And when you look at what the MITRE Corporation said in their report, first of all, they interviewed six of the different CAAs around the world, and it was unanimous stating that the separation of CAA from air traffic control provision was worth it. Among the benefits expressed are an increase in focus by the regulator and the ANSP--the focus on safety by the regulator and the ANSP and improved efficiency. That is what I am talking about here. If you separate them, you make the FAA focus on their core mission and that safety and that certification. Now they are running this big organization, and they are doing a lousy job of it. And, again, when I point my finger at the FAA, as my mother always told me, there are three fingers pointing back. And that is the Congress, OMB, the administration. This is an opportunity to take it out and let it function like it has been able to around the world. And getting certification right is absolutely paramount in what I am trying to accomplish and what we hope to be able to accomplish in this reform. And with that, I yield to Ms. Norton. Ms. Norton. Thank you very much. Mr. Chairman, if I may say so, especially under my colleagues on the other side, structural reform has always proved very difficult. Almost all the structural reforms that have been made in the United States have been made by Democrats, and they are not calling for structural reform as we have just done with the Affordable Healthcare Act. I have a question. It could be Mr. Poole, it could be Mr. Reason. It is a question that is a rising issue and one that I have requested a hearing on. It has to do with airplane noise. When I say ``a rising issue,'' I mean all over the United States. Here in my own jurisdiction--and I represent the people of the Nation's Capital--but across--so much so across the Nation that we formed a Quiet Skies Coalition, a bipartisan coalition, to respond to issues that, by the way, NextGen has just left right out there. NextGen, we are making progress in the air; on the ground, people are complaining. And, of course, as a result of those complaints, I have been able to have the FAA come to see me. I have asked for a hearing by this committee, and I would like to get some responses about how this private corporation might respond to an issue like Quiet Skies. So who would my constituents and the constituents of my colleagues call if they had noise complaints? Mr. Reason, Mr. Poole? Mr. Poole. My understanding, Congresswoman, is that this would still be the FAA as the safety regulator that would have to approve procedures or deny new procedures. And so if procedures are changed so that noise goes up in a community impact, it would be the FAA's jurisdiction to say yes or no or how to modify it. It would not be the corporation's discretion to just unilaterally do those things. Ms. Norton. Did you have---- Mr. Shuster. If the gentlelady would yield---- Ms. Norton. Yes. Mr. Shuster [continuing]. I can answer that question also. Ms. Norton. Yes, sir. Yes. Mr. Shuster. Will the gentlelady yield? Ms. Norton. Yes, sir, I will. But it will not take from my time, I hope. Mr. Shuster. Mr. Poole is absolutely correct. If there is a noise issue, or flight patterns change, there is a NEPA [National Environmental Policy Act] process and major Federal actions that the FAA will continue to have after this transaction. Again, let me dispel the notion. This organization is not going to control the airspace. It is going to operate in the airspace with the FAA control over it. And so they have to go through this Federal process by the NEPA, which is the FAA sets up a review process and approves significant airspace changes. So if there is--and especially related to metroplex's major large-scale airspace redesign projects, they are going to have to go to the FAA, conduct a NEPA review, and any action taken will have to, again, be approved through the FAA. So, once again, this is not just giving away willy-nilly, the airspace. We will still--not only will we own the airspace; we will still have oversight over the airspace. And I yield. Ms. Norton. I thank the chairman for his response. And I have never heard of anything so bureaucratic in my life. In fact, I can't understand why we could leave one part of this operation under Government control and take the other part-- even though both are vital to all we do in the skies, I have never heard of efficiency being--and, by the way, I hope my time wasn't taken because the chairman had an intervention, which I think was appropriate. So I don't understand how you could bifurcate the system, expect it to be more efficient, expect it to be more safe. Now, let me take an elephant in the room off the table. I will do it, if I may, by asking Mr. Rinaldi, have you received any assurances from any of the proponents of this bill concerning collective bargaining, pensions, other workers' rights? Because otherwise I see a fresh controversy on top of the many controversies this bill has already given us. Mr. Rinaldi? Mr. Rinaldi. Thank you for the question, Madam. At this time, there is no bill in front of us, so there is nothing I can compare it to. In the 2016 AIRR Act, there was strong language that gave us a fair bargaining process, and that was in there, and also a robust transition period that would allow us to keep everything we have and keep the workforce whole. Ms. Norton. And I take it you would insist upon that in exchange. Mr. Rinaldi. Absolutely. That is bullet number 2 of reform. Ms. Norton. Thank you very much. Mr. Shuster. I yield the gentlelady an extra 30 seconds, since I took some of your time. Ms. Norton. That is all right. With that question, I yield back. Mr. Shuster. I thank the gentlelady. And with that, Mr. Barletta is recognized for 5 minutes. Mr. Barletta. Thank you, Mr. Chairman. I would like to address some comments made by Mr. Brown. Mr. Rinaldi, you are one of the foremost experts on aviation and air traffic safety in the world. Would you support a legislative proposal that jeopardized safety? Mr. Rinaldi. Absolutely not. That is our first core principle. Mr. Barletta. Would you support a proposal that jeopardized national security? Mr. Rinaldi. Absolutely not. Mr. Barletta. Would you support a proposal that further weakened our ability to modernize the aviation system? Mr. Rinaldi. Absolutely not. Mr. Barletta. Finally, do you support the air traffic control proposal and the AIRR Act last year? Mr. Rinaldi. I did, yes. Mr. Barletta. Thank you. Mr. Poole, some have suggested that ATC reform is a giveaway of assets. We understand that taxpayers have already paid for them in fuel, ticket, and cargo taxes. If a new entity had to buy them, won't the same people pay twice? Mr. Poole. That is correct, Congressman. They have been paid for by aviation excise taxes over the years, and all we are talking--we are not talking about selling the system or giving it away. We are talking about transforming the existing Air Traffic Organization into a better organizational model that would be insulated from the travails of the Federal budget, and able to operate as it should be, like a business, paid for by its customers. Mr. Barletta. Dr. Robyn, as a public policy expert, what is your response to such an allegation? Ms. Robyn. As to the question of whether the assets should be transferred at no cost: It has been handled different ways. In the Canadian case, there was some payment for assets. I can certainly see the argument that Bob Poole makes, however. I think if that were the only debate, then we would be making real progress, if we could agree on everything except what the dollar price on the assets should be. Mr. Barletta. Thank you. Thank you, Mr. Chairman. Mr. Shuster. Thank you, Mr. Barletta. Mr. Sires is recognized. Mr. Sires. Thank you, Mr. Chairman. You know, my colleague said he takes the plane home every week. I take the train home every week, and it is safe or broken, but I don't expect you to say anything, Mr. Scovel. My issue is I have problems when we get compared to Canada. Big problems. Mr. Shuster. Mr. Sires, can you speak more directly into the mic? We didn't quite hear you. Mr. Sires. I will have to eat it if I get any closer. Mr. Shuster. Like you are going to kiss it. Mr. Sires. I have a problem when we get compared to Canada. It reminds me of the argument with the health bill. They have a great health system. We don't. Canada only has 40 million people; we have 350 million people. It is a lot easier to set up a health system for a country that only has 40 million people. I have some fears regarding this. They have 40 towers; we have 500 towers. Obviously, can you assure me that, if we go this route, that we are not too large to fail? Because I also have a concern regarding the airlines. I think the airlines are getting so big that it is very difficult to manage, and I raised that issue the other day when we had a hearing here. Can you assure me that my fears are wrong, that this big effort, I am wrong about it? Well, I will start with Mr. Brown. Mr. Brown. I love flying in Canada, and I love the country of Canada, but I do not---- Mr. Sires. Well, I don't dislike the country of Canada. Mr. Brown. Exactly. But I don't think---- Mr. Sires. I just don't want to be compared to Canada. Mr. Brown [continuing]. I don't think the comparison of our national airspace and management system to Canada is anything other than an exercise in gleaning some observations. But it is not proper to directly compare. I mean, for sure, in our system, we are driving a much more substantial portion of our economy out of the aviation sector and the airspace that supports it. I mean, we have 10 times more pilots, 50,000 flights a day. It is a wholly different organization. So for me, when I think about Canada, I believe that they made a choice that they thought suited their purposes with the role of aviation and its infrastructure, but we are faced with entirely different objectives here. And as far as I am concerned, the system that we have been living in has done a masterful job of adjudicating all of the interests of stakeholders, all of the interests of our expansive country and the States that are in it, and their needs. And so I can applaud things they have done that have worked for their country, but I also very much applaud things we have done in our country. And I would take exception to one thing Ms. Robyn said, which is she characterized our system as a laggard. That is just false. We have the technology deployed in our system today that no other country can rival. We lead in our NextGen initiative. So, you know, I am pretty proud of where we are and, by the way, I know it because I fly it. It is not a mystery, and it is not a theory. Mr. Sires. Thank you. Mr. Poole, can you answer? Mr. Poole. Yes. First of all, Canada's system is the second largest in the world in terms of flight operations. So it is the best comparator we have. You know, we are nine times bigger in terms of flight activity, but their model has worked extremely well for 20 years. It is not too big to fail, and neither would ours be. If you go to the credit markets, the people who finance revenue bonds for these, they give investment grade ratings to the Brits, the Germans, the Australians, the Canadians, because they have a dependable user fee revenue stream that you can basically bank on. And neither NATS nor NAV CANADA declared bankruptcy. Both were hit hard by 9/11 because of the North Atlantic traffic. NATS was brandnew and got an additional investment from their two main owners, the British Government and the airline group. NAV CANADA simply raised their rates somewhat, maybe I think it was 10 or 15 percent for a couple of years, and built up their reserve fund. And since then they have a substantial reserve fund, in case of another serious downturn, that they can work through without having to---- Mr. Sires. Mr. Scovel, can you just--I have got 30 seconds left. Mr. Scovel. Sure. As you know, my office looked at the air traffic control organizations for the other four countries, and we were told by officials in those organizations that they considered part of their borrowing authority to be leveragable or be recognized by private lenders because ultimately, should something drastic go wrong, the Government would step in behind them. I am not representing that that would be the case here. That is your policy call to make. I am simply relaying what officials for other air traffic control organizations have told us about their systems. Mr. Sires. Join those four countries that were on the hook; is that what you are saying? Mr. Scovel. Conceivably. They may be. There would be policy calls for their legislatures and executive branches. Mr. Sires. Thank you, Mr. Chairman. Mr. Shuster. Thank you. I now recognize Mr. Meadows for questions. Mr. Meadows. Thank you, Mr. Chairman. Mr. Poole, let me follow up a little bit on what you were just talking about in terms of the Canadian system versus the air traffic control system here in the United States because there are people that would say, well, we are 10 times the size of that in Canada. And so as you look at that larger size, let's talk about scalability. Is there any way that you can look at the scalability of the Canadian model versus what we would employ here and make some conclusions? Mr. Poole. Sure. First of all, we already have the scale. We are not talking about building from scratch an air traffic system. We already have the scale, the facilities, the technology. Mr. Meadows. So what you are saying is---- Mr. Poole. We are talking about an organizational model. Mr. Meadows [continuing]. Because of what we already have in place, that we can make better---- Mr. Poole. We can easily transition to a different governance model and a different funding model, and hopefully that will lead over time to an organizational culture that is more innovative, that can innovate and implement things faster than the large bureaucracy at FAA. The inspector general reports for 25 years have said FAA continually fails to manage programs properly. They take far longer than they were scheduled. NAV CANADA has a superb track record on that. If you scale up NAV CANADA's capital investment, annual capital investment to our size, and say what would we be investing if we had their system, they are accomplishing all their modernization for, in equivalent terms, half of what we spend on capital investment. Mr. Meadows. Hold on. Let me make sure I understand that. They are actually improving their system for half of the cost that we are spending? Mr. Poole. Yes, sir. Demonstrated fact. Mr. Meadows. Mr. Scovel, would you agree with that? Because I saw you shaking your head yes on a lot of the things he was saying. Don't ever play poker, by the way, but go ahead. [Laughter.] Mr. Scovel. Wouldn't dream of it. No, and if I was shaking my head, it wasn't necessarily to agree or to assent. My office, quite frankly, hasn't examined that part of NAV CANADA's operation. We don't know the degree to which their capital improvement program might compare against our scaled up system. Mr. Meadows. All right. So when will NextGen be completed, Mr. Scovel? We have had other--this is not your first rodeo, nor mine, so at what point will NextGen be completed? Because we continue to allocate unbelievable sums of money, and I hear at best ambiguous dates of when it will be completed. So what does the inspector general's office say? Mr. Scovel. Well, let me say, first, FAA's estimate is 2030 at a cost of $36 billion split between Government and private industry. Mr. Meadows. But would you agree that this has been one of the few times that we can see that even under this best case scenario we continue to exceed an unlimited budget? Mr. Scovel. I would have to say we don't know. We don't know what the total cost might be, nor do we know what the completion date will be. It is important to note, though, that NextGen---- Mr. Meadows. Do you not see why that would be a problem for somebody who is a fiscal hawk like me, that we continue to allocate money with no end in sight? Mr. Scovel. Absolutely. Mr. Meadows. All right. Mr. Brown, let me come to you. I am a little confused because you seem like you are a business guy. Are you a business guy? Mr. Brown. I would certainly think so. Mr. Meadows. OK. Well, as a business guy--and I am one, too--are you suggesting that we need more Federal control? Mr. Brown. I am suggesting that we have a system that is delivered and---- Mr. Meadows. That is not what I asked. It is a great answer to a question I didn't ask. Are you suggesting that we need more Federal control? Mr. Brown. I am suggesting our control is proper. Mr. Meadows. All right. So let's talk about general certification, something you probably know, and it is one of my sweet spots being from North Carolina. Would you say that we need more Federal control in the certification process? Mr. Brown. I think what we have is proper. Mr. Meadows. So you don't want it to be more streamlined? Mr. Brown. But that is not the same as reducing control. That is about efficiency. Mr. Meadows. Well, it is. It is about regulation, so at some point you have to transfer that. So let me go and let me tell you where I am concerned with. We have got NextGen that may or may not get done by 2030. We continue to spend billions of dollars. In fact, I have stakeholders who continue to implement it from a stakeholder standpoint, and from a Federal Government standpoint we are lagging behind. We actually have monies that have been allocated for NextGen that get kind of pilfered over to maintain legacy computer systems under the FAA. I have under good authority that we are doing that, and so as we look at that, why would you suggest that the Federal Government can do something more efficiently than perhaps private stakeholders? Mr. Brown. You know, my calculus---- Mr. Meadows. Can the Federal Government run your business better than you do? Mr. Brown. I would hope not. Mr. Meadows. I would hope not either. So why would you suggest that they can do that here? Mr. Brown. Well, because we are talking about a range of interests here that is much larger than my business. I mean, my business, I get to pick my product, I get to pick my customers, I get to decide what I think the value proposition is, I get course corrected by---- Mr. Meadows. And it is efficient that way, right? Mr. Brown. Yes. But the point---- Mr. Meadows. So what if we had stakeholders who were making the same exact decisions that you are making with some parameters that are out there, wouldn't you think that that would be more efficient? Mr. Brown. Actually, you have outlined my top concern, which is that if this organization picks their customers and picks their service level and picks their product, they are no longer going to be---- Mr. Meadows. But the chairman has already said that that can't happen. We have an airspace that is available to everybody. Mr. Shuster. The gentleman's time has expired. Mr. Brown. Thank you for making that point. Mr. Shuster. Mr. Brown, you can finish if you wish. Mr. Brown. I believe that I have made my point, which is that the thing about this enterprise, one of the things that I am concerned with, is that it is a coalition of stakeholders with a shared purpose, which is to serve their own ends. And the thing that I like about the Federal role in our airspace today is that it adjudicates an enormous diversity of needs in this community. Whether it is the Alaskan pilot who is flying kids to school or whether it is my business in Ohio or air tractors in Olney, Texas, they all have a seat at the table. And this has been demonstrated in this room today. Mr. Meadows. Yes. My time has expired. I appreciate it. Thank you, Mr. Chairman. Mr. Shuster. I thank the gentleman. I now recognize Mr. Johnson for questions. Mr. Johnson of Georgia. Thank you, Mr. Chairman. I think I am probably like most Americans, and what we really want out of the air traffic control system is safety, safe operation. And, Mr. Scovel, in your testimony you stated that, since 1958, the FAA has overseen the safe operation of the busiest and most complex air traffic system in the world. And you stated during your testimony that there have been no commercial aviation accidents over the past few years. Do you believe, sir, that the American-controlled airspace is the safest airspace in the world? Mr. Scovel. I haven't looked at all the others, sir, but I would say it is definitely safe. We are in the golden era of aviation safety right now. Mr. Johnson of Georgia. Well, we are in the golden era, and I think, Mr. Rinaldi, you mentioned that we are the gold standard of air traffic control in the world; did you not? Mr. Rinaldi. We are, sir, the largest, safest, most efficient. Mr. Johnson of Georgia. And, Mr. Brown, you fly every-- well, you put in 500 hours a year minimum flight time, and you are strongly committed to the concept that our airspace is safe and that the operations that make it safe are up to par, and it is joyful to fly under that system. Mr. Brown. I agree. And most pilots will tell you it is one of the most amazing experiences you can have, and it is something the Government does extremely well. Mr. Johnson of Georgia. Now, Mr. Poole, you would not disagree with that; would you? Mr. Poole. No, I don't disagree at all. We have a very safe---- Mr. Johnson of Georgia. We have a safe air traffic control system. Mr. Poole. Right. But we are paying a price---- Mr. Johnson of Georgia. Well, I am going to get to that in second. Mr. Poole. OK. Mr. Johnson of Georgia. I mean, we are safe, and we have been safe since 1958 under FAA control, and the argument is being made that we need to change that. Mr. Brown, I think I heard from both you and Mr. Rinaldi the concept of if it ain't broke, don't fix it. And, Mr. Scovel, I heard you, in terms of there have been some FAA reforms that have not achieved the expected outcomes in the areas of personnel, acquisition, and organizational reforms. But those failures don't lead you to the conclusion that the air traffic control system should be privatized, correct? Mr. Scovel. Respectfully, I don't believe that is my call to make. The Congress and the administration are the policymakers, the decisionmakers. I am trying to present information for your consideration in making those decisions. Mr. Johnson of Georgia. Thank you. And, Mr. Poole, you are an advocate for privatization. You are an advocate to turn the air traffic control system over to the free markets. Your website for the Reason Foundation states that the Reason Foundation is committed to advancing the values of individual freedom and choice, limited Government, and market-friendly policies. So I am assuming that you would be of the mind, as stated by the chair of the committee, that Government is the problem and not the solution. And so, therefore, you want to take the Federal Government or the FAA out of this equation, which has been so safe for Americans---- Mr. Poole. May I respond? Mr. Johnson of Georgia [continuing]. Since at least 1958? And, Ms. Robyn, you agree with him, and you say that, first of all, the air traffic control system can be performed or can be run more effectively by a nongovernmental entity, and you also say that Government is poorly suited to run---- Ms. Robyn. Yes. Mr. Johnson of Georgia [continuing]. The air traffic control system---- Ms. Robyn. Yes. Mr. Johnson of Georgia [continuing]. Despite the comments that we have heard from Mr. Scovel, Mr. Brown, and Mr. Rinaldi, and the clear fact that we haven't had--I mean, our airspace is safe. But you say that---- Ms. Robyn. Could I respond, please? Mr. Johnson of Georgia. You say that it could be done better. Why do you say that? Ms. Robyn. If we wanted to have the safest system possible, we would keep---- Mr. Johnson of Georgia. We don't have it now? Ms. Robyn [continuing]. Keep all planes---- Mr. Johnson of Georgia. We don't have the safest---- Ms. Robyn. If we wanted to have a---- Mr. Johnson of Georgia. We don't have the safest system now? Ms. Robyn. If we wanted to have perfect safety---- Mr. Johnson of Georgia. Isn't it--OK. Well, let me ask---- Ms. Robyn [continuing]. You would leave---- Mr. Johnson of Georgia [continuing]. You this question. Isn't it a fact that we have the safest air traffic control system in the world right now? Ms. Robyn. We have a system that is operated and regulated by the same entity. That---- Mr. Johnson of Georgia. Is it a good one? Isn't it a good one, though? Mr. Shuster. The gentleman's time has expired. Ms. Robyn. That is---- Mr. Shuster. But if the gentleman wishes to allow the witness to answer---- Ms. Robyn. We are not in compliance---- Mr. Shuster [continuing]. Would you--Ms. Robyn, 1 second. The gentleman's time has expired. If you want, though, I will allow her to finish answering the question or not. It is up to you. Mr. Johnson of Georgia. Please respond. Mr. Shuster. Ms. Robyn. Ms. Robyn. If we wanted to have zero accidents, we would have the air traffic control system keep all planes on the runway. You would have no planes in the air. That would guarantee perfect safety. That is, obviously, not what you want. You want a system that contributes to the economy while being safe. We haven't---- Mr. Johnson of Georgia. That is not the kind of system that we have. Mr. Shuster. The gentleman's time has expired. Ms. Robyn, thank you very much for answering the question. With that, I recognize Mr. Woodall for 5 minutes. Mr. Woodall. Thank you, Mr. Chairman. Since my friend from Georgia and I share a county back home, I will just pick up where he left off with Ms. Robyn. I appreciate your written testimony because I think so often, as perhaps your exasperation shows, we---- Mr. Shuster. Can you speak into the mic, Mr. Woodall? Mr. Woodall [continuing]. We have a tough time talking to each other about these---- Mr. Shuster. Speak directly into the mic. We can't hear you very well. Mr. Woodall. After you have given that advice to every member of the panel, you would have thought I would have internalized that, Mr. Chairman. I cannot pull my box closer, though, as--I can pull the chair closer. Ms. Robyn, I want you to help me with the language to talk about this issue because it does seem when we talk about change so often we end up with--it is Mr. Weber's big head that I can't get past. I can't move both the microphone and--Mr. Weber, can I--thank you. [Laughter.] Mr. Woodall. It is just between me and Ms. Robyn here that we are working on it. It is a physical manifestation. Mr. Weber. Mr. Chairman, do I get equal time? Mr. Woodall. It is a physical manifestation of your head. It is not an ego issue. It is actually a physical. Help me with the language about how we talk about this, because I have been to see the NAV CANADA operation. And thinking about Mr. Poole's reference to scalability, it does seem like the successes they have had we could have in an exponential fashion. And it is not as if this is the chairman's idea or the President's idea. This is something that policy wonks have been talking about for decades. Help me create this conversation in a language--I sit on the Budget Committee. I hear my friend Mr. DeFazio say, ``Well, you know, if only we could fund the system better and deal with sequestration and get Congress to work better,'' yes, those are kind of the issues we have been working on for three or four decades, and we have only finished the budget process on time four times in 40 years. So help me talk about this in a nonpartisan way. Ms. Robyn. The FAA is two-hatted. It does two very different things. It regulates all aspects of aviation, and that is an inherently governmental activity. You cannot write a contract that makes it possible for the private sector to carry that out. It requires judgment calls that the private sector can't make. It also operates in the air traffic control system. That is not inherently governmental. That is operational. That is no different than when GSA goes to the private sector and has them build a building. It is not an inherently governmental activity. The idea that the regulatory part of the FAA needs help, I agree with Mr. Brown. The idea, though, that in order to fix that you don't spin off the nongovernmental part, that is illogical to me. That is exactly what you want to do--spin off the noninherently governmental part, so that the FAA can focus on its regulatory function. Mr. Woodall. Well, let's talk about that just for a moment because I agree with Mr. Brown. The American taxpayer, the American flying public, has invested an amazing amount of time and treasure into building what is the busiest airspace on the planet. So when we talk about changing that from a governmental function to a--well, I don't know anybody who talks about a private function. I hear them talk about a corporatized function, a cooperative function. Tell me what that looks like. Ms. Robyn. Well, so we--in the Clinton administration, we proposed a Government--we proposed moving into a Government corporation because that was the only model that existed. That model works very well in many parts of the world. But in this country, Government corporations are politicized and they cannot function effectively as businesses. And so NAV CANADA has come up with a model that takes it out of Government altogether, and that is appropriate. It works in theory and, more important, it has worked in practice beautifully. Mr. Woodall. The business folks that I talk with back home often prefer the devil they know to the devil they don't know. Ms. Robyn. Yes. Mr. Woodall. And I can only imagine the strain it puts a private operator under to say, ``We are going to yank the pendulum back and forth with the political winds.'' But it was the conclusion of the Clinton administration that the best way to avoid the political winds in this space was this spinoff proposal? Ms. Robyn. Yes. Yes, absolutely. Yes. This was something proposed early on. It came out of a blue ribbon commission, one of many that has looked at this issue, and we proposed it in 1995. It was dead on arrival on Capitol Hill. Mr. Woodall. Mr. Chairman, I think Mr. Brown was right when he talked about all of the amazing economic developments and successes that have been the product of our second-to-none airspace system. I hope that we can follow this pattern to keep the politics out and move us on to best-in-world space. Mr. Shuster. You are absolutely right. And, again, as I said earlier, there is no way I want to mess up, screw up, the economic impact that the aviation industry across the board has. So, with that, I yield to Mr. Carson for 5 minutes. Mr. Carson. Thank you, Chairman. Mr. Brown, it seems the FAA is already in the process of implementing much of the NextGen infrastructure you are calling for. We have been told that 2020 deadlines will be met. As a pilot, sir, can you tell us about the NextGen technology that is already online and how you are using it? And do you believe we need to replicate these systems through privatization? Mr. Brown. Great question. I was just thinking about this about a month ago or so. I took off from Piqua, Ohio, population 20,000, from a small airport and flew to Albany, Georgia, a small town with a very vital aviation manufacturer that is a global leader and a big exporter. I flew point to point. Because of GPS navigation, I had en route weather on the way, and I shot a WAAS approach into Albany, Georgia, precision to the numbers. Now, these two towns, in the grand scheme of things, in the grand scheme of our national airspace, have been treated to their resources to build two global leaders in their space and have the airport infrastructure to thrive. And I look at that as a perfect example of how Government in this case is working for the economy, because without that kind of infrastructure and the technology that is driving the flying to and from those places, I don't think these businesses would be located in Piqua, Ohio, or Albany, Georgia. And, frankly, I think that is a victory for the people. Mr. Carson. Thank you, sir. Lastly, this is a general question. I am very concerned that, as introduced, this new private air traffic control panel does not include one of the largest users of U.S. airspace, the DoD. I would like to hear from any of the witnesses their view on how this will impact the close coordination that currently takes space and takes place, and what impact there will be to our national security. Ms. Robyn. I will answer that, and let me start by saying that, although I spent 3 years in the Pentagon, air traffic control was not part of my portfolio. I did, however, work very closely with the people in the Air Force who have the day-to- day liaison with the FAA. I worked with them on issues of interference of wind turbines and long-range radar among other things. The Department of Defense has huge equities in the National Airspace System. DoD manages 15 percent of the national airspace. DoD has 15,000 aircraft, which is more than all U.S. commercial airlines put together. DoD depends heavily, as a user, on the air traffic control system. And they support the spinoff of the air traffic control system. There is a letter from Secretary Mattis to Senator McCain stating that while it has to be done carefully, so as to protect the arrangements that are currently in place, it is not inconsistent with national security. Mr. Carson. Sure. Yes, sir. Mr. Poole. This is an issue that has come up in every one of the 60 countries that has corporatized their system in one form or another. Australia today has a joint project between the Australian military and Airservices Australia to modernize the overall basic air traffic software. It is being developed jointly, will be used jointly, with side-by-side military and civilian controllers. There are side- by-side military controllers in NATS in the U.K. working together. This is pretty much a routine function now. And, in fact, there is an annual conference on military air traffic control that is cosponsored by the Air Traffic Control Association in conjunction with the ATCA's own national conference each year. So this is an issue. As Dorothy Robyn said, it needs to be handled very carefully to be sure that all the current procedures are incorporated, but it is not considered a problem anywhere in the world that I am aware of. Mr. Carson. Thank you, Mr. Chairman. I yield back. Mr. Shuster. I thank the gentleman. I appreciate the gentleman's question. I want to offer for the record a letter from Secretary of Defense Mattis. Some have said the DoD has come out in opposition to this. Well, this letter does not say that, and any suggestion of it is false. Secretary Mattis has indicated his support for moving ATC service out of the FAA in a letter he wrote to Senator McCain who requested that. So without objection, I want to offer this for the record. [The information follows:] [GRAPHIC NOT AVAILABLE IN TIFF FORMAT] Mr. Shuster. And with that, Mr. Rokita. Mr. Rokita. I thank the chairman. I thank the chairman for holding this hearing. I thank the witnesses for their testimony. Starting with you, Mr. Brown, knowing that you are a private pilot and a member of GAMA [General Aviation Manufacturers Association] and active in AOPA and so on and so forth, and for the record and for the committee members, knowing that you fly 400 hours per year, which is about four times the average general aviation pilot, you are familiar with the system. Do you believe that general aviation pilots have a right to access airports of any size? Mr. Brown. Not only do I believe that, I experience it. Mr. Rokita. Yes, on a daily basis. Talk into the microphone, please. Thank you. Should they be denied access to an airport? Mr. Brown. No, not on principle. Mr. Rokita. Can you talk about the danger that would pose to the aviation ecosystem that we are all a part of if that were to happen? Mr. Brown. That is an existential threat to the business. Access is everything to the pilot who buys equipment I make and airplanes they fly. Mr. Rokita. Right, and every one of those pilots pays into the system, right? Mr. Brown. Yes. Mr. Rokita. How? Mr. Brown. Through the fuel tax. Mr. Rokita. Yes, and it is more than adequate for what we use of the system, right? Mr. Brown. Yes, and it is not bureaucratic, and it is real time, and there is no bureaucracy associated with it. Mr. Rokita. Right. And it is not that we want to fly into international airports every day or cause any problems, but the fact is we have a right to do that because we paid into the system. And sometimes, like for example your customers, you may need to access an airport like that. Mr. Brown. Correct. Mr. Rokita. So what are the dangers of a board made up of some members of the ecosystem where board governance suggests that you can have control of a board with as little as 30 percent of the seats? What dangers does that pose to general aviation if this is all board controlled in terms of access? Mr. Brown. One concern I have is that on such a board, you would have centers of gravity that would begin to overwhelm minority voices of any sort and preclude the arrival of new entrants that might have a radical impact in our economy. Mr. Rokita. Absolutely, which makes the point that it is good to have a disinterested party in this or a referee or an umpire to decide these issues like we have right now in FAA, or if the members of this witness table who agree with the chairman's proposal here would really want privatization, if they would propose a plan that actually does that because right now the proposal at least in the AIRR Act, and who knows what we are going to see here when this language is produced, does not do that. I used to be the Secretary of State of Indiana. I know about privatizing Government assets. We received $3.8 billion when we leased the Indiana toll road with Governor Mitch Daniels. What we did not do is give a monopoly away. We did not take the toll road and give it to an interested party or a board made up of interested parties. We put it out for bid. So if we really want to privatize something, which is apparently the proposal here, why are we not talking about something like that? We did not give the Indiana toll road to the truckers and say, ``Oh, I am sure you will take care of the cars, too, and I am sure you will not limit access to the on and off ramps that exist along the Indiana toll road, especially when you truckers want to get steel to or from one of those mills up in northwest Indiana.'' Because it would not work. It does not make sense, just like this board made up of interested stakeholders, to use Congressman Meadows' term for it, will not work either. Mr. Rinaldi, if I can paraphrase your testimony, it seems like a lot of it was focused on funding and sequester and Government shutdown and the fits and starts that go along with that, and I completely agree with you. You also heard Ranking Member DeFazio say, and it is accurate, 97 percent of FAA funding is on its own. It is not from the general fund, and there was a suggestion made that one way to solve this and the problems you bring up in your testimony is to just take it off budget. Now, I am vice chairman of the House Budget Committee. I am not here to necessarily say that that is the right answer or that I support it, but is that not an answer? They said there is certainly more than one answer to this problem that we are talking about in this hearing today. Mr. Rinaldi. Absolutely. There is more than one answer, and that is a legitimate answer. Mr. Rokita. We could take care of all of that simply by taking this off budget. Again, 97 percent of the funding is not coming from the general fund anyway. Mr. Rinaldi. Yes. That is a good answer. Mr. Rokita. Chairman, my time has expired. Mr. Shuster. I thank the gentleman. Where am I? Ms. Frankel is recognized for 5 minutes. Ms. Frankel. Thank you. Well, I will just start off by being a little snarky. You know, we put a businessman in charge of the country, and all I can say is OMG about that, and every agency would like to be exempted from sequestration, and I have a solution for that, which is to privatize those of us who are not doing our job. All right. So enough for the humor. Listen. I am not a mean person, but just on the issue of transparency, and first I want to thank you all and not to impugn anyone's integrity, but we have a list of different organizations or people who are for the privatization, who are against it. Different airlines are for; some are for, some are against. Consumers groups are for and against. Could you just tell me here, anybody, do any of you consult with any of these and get paid or consult with any organization or are discussing employment with them? Those of you who are in the public sector included? OK. Just wave your hand. Ms. Robyn. No. Mr. Brown. No. Mr. Rinaldi. No. Ms. Frankel. OK. All right. Thanks. So I am trying to simplify this, which is probably not a smart thing to do, but I am trying to understand it. It sounds to me like there were a number of reasons, those of you who would support a change in the system. One has to do with a consistency in the funding; is that correct? I know the air traffic controllers did really emphasize that. Then I think another issue was trying to move more efficiently towards a more modern safety technology. Is that one of them? And then I think one of the issues was having the regulators separated from the operators. That was it. Is there another issue there that I am missing? Mr. Poole. Well, there is another big issue. Ms. Frankel. OK. Which is that? Mr. Poole. And that is the organizational culture of FAA, which gets into the procurement problems, chronically over budget, late delivery of things, not getting productivity out of new technology in the way that it should be done. Ms. Frankel. OK. Mr. Poole. That is a big problem. Ms. Frankel. Good. Thank you. I do not know why that skipped my mind, but that is the one I had my next question about. OK? What kinds of things do you think this new organization could do that the Government is not able to do? I mean, what will you be skipping? And what would be the potential unintended consequences? I would like those who are for this movement to give us your opinions on that. Mr. Poole. Well, I will start. I mean, one thing would be to be able to hire and pay the best talent from private industry as program managers and as expert engineers and software people. There are good people in the FAA, but they are hamstrung in a system that has a lot of basically career lifers who are happy to be in a process that is very time-consuming and that has numerous people who can say no at many points along the way, that drags out the process, and if you have people who are not performing well, it is very difficult to get rid of civil servants. Ms. Frankel. Does anyone want to defend the honor of the civil servants? Mr. Rinaldi. I will be happy to. Ms. Frankel. Yes, go ahead. Mr. Rinaldi. As I said in my opening statement, we have by far the best aviation professionals in the world working for the FAA. Aside from the funding stream, one of the things we would also like to see fixed is something that Ranking Member DeFazio also brings up is the procurement requirement process and the multi-agency oversight, which then puts us into a bureaucratic laden process of requirements and procurement, and it delays our process of implementing new technology. Ms. Frankel. I would guess that that bureaucracy, which can drive everybody crazy, was probably gotten, in part, there because of abuses I am going to guess and to try to avoid that, right? Mr. Rinaldi. I think every time we have a hearing there is more oversight that goes into it. So it kind of self-fulfills itself every time we have a hearing of something that is not working right within Government. Ms. Frankel. I only have 15 seconds. The contract towers, what happens to them? Mr. Rinaldi. Well, we represent 94 of those contract towers and the members that work there. It is very important to us to keep service open to all facilities across the country, all airports, and to continue to have a very diverse system, whether it is big city or rural America. Ms. Frankel. Thank you, Mr. Chair. I yield back. Mr. Shuster. I thank you, Ms. Frankel. Ms. Frankel, I am not familiar with all of the new words on the computer. OMG, does that mean ``oh, man, he's good''? With that I yield to Mr. Westerman. Mr. Westerman. Thank you, Mr. Chairman, and thank you for your leadership on this important issue. I have had the opportunity to visit some control towers, and the first thing I would like to say is to acknowledge that we have some amazing men and women that are working in our air traffic control towers, doing an excellent job. And we have an air traffic control system that works. The proof is in the pudding. You can see it working every day. I am relatively new to Congress, and I am new to this committee, but I have a unique background having practiced as a professional engineer for nearly 25 years. Much of my work involved analyzing processes and technologies and helping my clients stay on the cutting edge. I have seen organizations that failed to even embrace technology, and they usually went out of business. I have seen organizations that embraced but failed to implement technology, and they usually went out of business. To be successful in business, you have to not only embrace new technology, but you have to implement it properly. Now, ATC is not going to go out of business regardless of the technology it embraces or implements because, quite frankly, it is too critical to fail. And it has been said, and it has been said in this meeting today, ``if it ain't broke, don't fix it.'' However, I believe this is not a question of a broken ATC, an ATC that does not work, or even an ATC that refuses to embrace new technology. This is a question of how to implement the best technology and operate the safest and most efficient system in the world so that our airline passengers and general aviators get the maximum benefits. I am studying our existing systems. I am visiting installations and learning as much as I can about the latest technology. I can confidently say that even though technology may be embraced, it is not being successfully implemented as well in the U.S. as it is relative to other systems. I am from a rural district. I have got one contract-manned tower in my district. There is lots of general aviation and lots of aerospace manufacturing located at the rural airports in my district. Mr. Brown even mentioned airports like these in his testimony. I am thinking of an airport I visited just a few weeks ago in Mena, Arkansas, that has a lot of aerospace manufacturing there. It is in the mountains, and the radar cannot see it. They had a radio tower that got blown down in a tornado a few years ago that still has not been fixed. So if you are trying to take off from Mena, you have to pull out on the taxi and call up the air traffic control on your cell phone and try to get clearance to take off, but they still found a way to make it work. But the point is the last thing I want to hurt is rural airports or service to rural America. I want to see it improved. Mr. Rinaldi, some of the opponents of ATC reform claim that new service providers would be able to deny access to sovereign airspace in a small community and general aviation airports. From the perspective of those actually providing air traffic control, how do you respond to those claims? Mr. Rinaldi. Thank you, sir. Thank you for the question. Air traffic controllers have a very simple philosophy when it comes to providing service to all users. It is first come, first serve, and when a general aviation aircraft enters into our airspace or whether it is a commercial airline, it is to expedite their process as safely as possible. And so we provide service to all users of the system. Mr. Westerman. Ms. Robyn, I first want to say I appreciate your testimony. I have been in a number of hearings that have been held by the Aviation Subcommittee leading up to this. We have heard some pretty inflammatory rhetoric intended to scare small communities about the future of their commercial air service. I have got two EAS [Essential Air Service] airports, one of them in my hometown, but two of them in my district, as well as numerous smaller ones. So I have a vested interest in making sure this is not the case. Do you think a more innovative and agile ATC provider will ultimately provide more options to more communities, such as the usage of remote towers? I have seen some of those, and it is amazing technology. Ms. Robyn. I do, yes, and I think that is critical. I do not understand this assumption that some are making that this entity, a corporatized entity, would somehow be a threat to small communities and rural airports. Air traffic control is a network. The nature of networks is that the bigger they are, the lower the cost. It is relatively inexpensive to add a node to that network, particularly if you can go to newer technology like remote towers. This small communities argument has been made. It was made in opposition to airline deregulation. It was made in opposition to trucking deregulation. It is part of the playbook of people who oppose change. All of those changes, I would argue, have been very, very good for our economy. Small communities, I do not see any reason that they would be hurt by this. It is not in the airlines' interest or certainly not in the controllers' interest; it is not in Government's interest; it is not in the stakeholders' interest to have that happen. Mr. Westerman. Thank you. Mr. Shuster. Thank you. Mr. Lipinski is recognized for 5 minutes. Mr. Lipinski. Thank you, Mr. Chairman. I think it is very important, and I have talked with the chairman, and he has always and continues to have an open mind on this, and I think it is going to be very important to see the text of the bill to have a better understanding of what exactly is in there. Ms. Norton spoke earlier about concerns about noise around airports, and that is a major concern that I have. I have Midway International Airport in my district, O'Hare not too far away. As the patterns flying in and out of those airports has changed in recent years, there have been a lot of constituents of mine who had a lot of complaints, and we have gotten the FAA now say they are going to do a better job of listening and paying attention to what some of these issues may be. I have a great concern moving ahead about what exactly the rules are going to be in the future if we did have an ATC moved under a corporation. The chairman says that NEPA would still apply, but I have concerns about what exactly is going to happen to the FAA. Is the corporation going to propose the patterns and then the FAA has to then have their say on that, approve them or not approve them? That is a concern that I have. Mr. Rinaldi, I do not know if you have any. The bill that we had last year, do you know anything about what that would have done? Mr. Rinaldi. Well, the regulatory and certification process would have stayed within the FAA. So it would still be ultimately the FAA overseeing noise complaints and new procedures. Mr. Lipinski. Would they have the authority then or would there just be a back-and-forth with the corporation over it? The corporation propose and the FAA then have to approve or how would that work? Mr. Rinaldi. Hypothetically, it is hard to answer that question right now, but I will tell you while we are moving forward with metroplex and PBN in many cities, the FAA is going out and doing joint community meetings along with the users and the stakeholders to explain what we are trying to accomplish in making the skies greener, safer with less noise. But keep in mind as the technology makes it to be more precise on approaches, there are certainly winners and losers when it comes to noise. That is a fact, and that is a true fact. Mr. Lipinski. Obviously, my concern is to make sure that my constituents and all around the country, those who are going to be impacted by these changes, are going to be able to have a say, and right now their say is through us here in Congress and through the FAA. I want to make sure that occurs. But I want to move on to another question before I run out of time. I am concerned that some of the estimates for the timeline for a new ATC corporation are near a decade. We heard earlier 5 to 7 years, and my concern is about air traffic controller hiring. Will there be a troubling lack of accountability and transparency as this occurs and make ATC hiring and staffing difficult, if not almost impossible, to do during this transition period, Mr. Rinaldi? Mr. Rinaldi. One of the things we would really have to see in the bill is a very robust transition period where we would seek a stable, predictable funding stream so that we can continue to hire and accomplish the goals of the agency while it is still in control and if it was going to a not-for-profit, federally chartered company at the same time, that it would be a robust transition period enhancing the safety of the system, at the same time continuing to hire, train and modernize the system. Mr. Lipinski. The control of the academy for training air traffic controllers, who would have that control? Mr. Rinaldi. I believe in the AIRR Act of 2016, that was left up to the transition on who would actually still control the FAA Academy in Oklahoma City. Mr. Lipinski. So that was not laid out there? Mr. Rinaldi. I do not believe it was. Mr. Lipinski. It is to be determined further on. All right. Thank you very much. It is something that I look forward to seeing the bill and the details, and I look forward to maybe having another hearing at that point. But I thank the chairman, and I yield back. Mr. Shuster. I thank the gentleman. With that I recognize Mr. Smucker. Mr. Smucker. Thank you, Mr. Chairman. I'd like to pick up where my friend, Mr. Westerman, left off and further clarify some of the issues that he raised. One is there seems to be some confusion in the debate about what we call ``use of airspace'' and who will and who will not be making decisions about that. In fact, I believe that some are perhaps incorrectly conflating airline service, business decisions and the provision of providing the ATC's services. Mr. Rinaldi, you specifically addressed that by saying that you simply provide the services to whoever shows up in the airspace essentially. But I guess I would like to further clarify that. Mr. Poole, maybe I will ask you. Could you please clarify to me that the new entity that is being proposed will simply provide those ATC services to any entity wishing to receive those services? And I will put it in a slightly different way. Will this ATC entity decide where airlines fly? Mr. Poole. Absolutely not, Congressman. Airlines will decide where they want to fly, and presumably the system will accommodate any desires that they have of where to fly. This, of course, includes air taxis, regionals as well as major carriers. We are not privatizing the airspace. We would only be privatizing or corporatizing the provision of the air traffic services, including the financing of new facilities and new technology. But all of the safety regulation and ownership of the airspace remains with the Federal Government in the form of the FAA. That is very, very clear-cut. Mr. Smucker. Thank you. I appreciate the clarification. Mr. Poole, I will ask you another question. The district that I represent in Pennsylvania includes three smaller airports, no major international or domestic airport in the district, but each of these smaller airports serve a county and are critically important. They are economic drivers in the county, and so concerns have been raised. I just want to ask you directly about any potential impact of this system on the smaller airports. I have one in particular, the Chester County area of my district, that has an application in for a control tower, and it is just an example. Mr. Poole. Right. Mr. Smucker. But I guess I want to hear again. I want to be sure. Do you think we will see under this program an improvement for small airports? And if so, how? Mr. Poole. I do think there will be an improvement. For one thing, because of FAA funding limitations, we have this moratorium on new contract tower approvals that has been going on since fiscal year 2014, and the only way that could be lifted today is if there were a significant budget increase for FAA or they cut out some other funding for other things like NextGen and so forth that nobody would really want to see. The best hope, I think, for small airports and expanding the reach of control towers is a better funded organization that is also one that adopts a new technology that increases benefits and reduces cost so that the contract tower benefit- cost ratio can be higher for small airports that might not qualify today with a conventional several-hundred-foot-tall structure, but could easily afford a contract tower and actually get better service from it. Mr. Smucker. Thank you. One quick question, Mr. Brown. You asserted that nongovernmental air service provider would somehow be outside of democratic oversight, and I just want to point that just a few weeks ago we had executives here from United, American, Southwest, and Alaska who were sitting right here in this room where you are and getting grilled by folks up here. Congress oversees the entire aviation sector, including regulated private businesses. So I would just like to hear. Can you explain why you believe that a regulated air traffic service provider would be outside of democratic oversight? Mr. Brown. It is my understanding that this would be empowered as a business that can effectively decide what it invests in, how much it borrows, what technologies it picks, maybe what---- Mr. Smucker. But still with congressional oversight. Mr. Brown. Well, are we going to have a committee for how they spend their money and what they invest in and where they deploy PAPIs [precision approach path indicators] and VASIs [visual approach slope indicators] and where they put up the next DataComm tower? Because if we are, why would we carve it out? Mr. Smucker. All right. Thank you. I yield back my time. Mr. Shuster. I thank the gentleman. That is what we have today, the United States Congress it is called, and it is not functioning well, and that is what we are trying to get away from so it can operate more like you, Mr. Brown, operate, which, again, you have an extremely successful business, but you decide that based on business decisions, not based on whether Bill Shuster wants a tower or does not want a tower. So with that I yield to Mr. Duncan, not I am sorry. Not Mr. Duncan. Mr. Payne is recognized. I am sorry. Mr. Payne. Thank you, Mr. Chairman. Listening to all of this testimony and the different opinions, the American taxpayer has invested more than $50 billion in air traffic control systems in just the last 20 years. Under the chairman's proposal to privatize ATC last year, the Federal Government would have handed over ATC assets worth billions of dollars to a private corporation free of charge. If the ATC corporation was to hit financial or operational difficulties and needed to be taken over by the Government, it is my understanding, per the takings clause of the Constitution, the Congress would have to pay to reacquire the ATC assets. We would have to pay for what we gave away for free. What does the panel think about this? Mr. Scovel? Mr. Scovel. Thanks. As I mentioned earlier, I do not believe it is my role, sir, as inspector general to express an opinion on a purely policy call like that. However to your point about valuation of assets specifically, our work each year to audit departments' financial statements, to include FAA's financial statements, has shown us that the net book value of FAA assets that might reasonably be considered for transfer to a nongovernmental agency at the end of the last fiscal year amounted to $13.7 billion. Ideally or probably a lesser figure than that would be actually transferred if the Congress and the administration were to agree to take air traffic control out of Government, but nonetheless, that is a policy decision for you to consider. A valuation of those assets in any event, whether it is with the request or requirement that the new entity pay back the Government, is still going to be required because potential lenders and borrowers are going to want to see what the value of collateral is that they are putting up their money against. Mr. Payne. Thank you. Mr. Brown? Mr. Brown. I think people are trying to solve problems here, and I, frankly, respect the dialogue. I am not a status quo guy. I actually think there are real opportunities to improve the management of the FAA, and I have found very often in the certification side, they are willing to listen. But among the things I am concerned about, besides equity in the system, is whether the logic makes sense in the risk- reward profile. I mean, this is a real question to me, and I am just asking it as a business guy. I am here because I make my living selling products into aviation, but the lineup that I am concerned about is if we assure the workforce that the future is as they need it to be for the purposes of serving their interests, and we underwrite the risk of this enterprise, more surely than anything else I know that to be true. When we are perhaps enjoined in litigation with this enterprise when it is challenged on things that it does and when we give up our assets, some $20 billion, to do it and empower a monopoly, when I look at that enterprise, I want it to report to the people unequivocally. It has served us well for 50 years. It will serve us well in the future, and so I wrote in my testimony this is a question of principle for me. It is not a question of challenging other members' objectives or motivations. It is an honest disagreement about the policy play here. Mr. Payne. OK. Thank you. Mr. Poole? Mr. Poole. Well, in the hypothetical event of a bankruptcy, which I guess is what you were talking about as a possibility, you have a liquidation in a bankruptcy, in which case a takings clause thing I do not think would apply. Creditors would be the ones dealing with the bankruptcy situation, and they would potentially be in a position to look for a different operator to take over and restart the system. Mr. Payne. But if there were no takers, if the Government had to step back in? Mr. Brown. Well, what if there are takers? I mean, the net effect of your scenario there is that we transfer $20 billion to a company who makes bad bets, and they end up owned by the Bank of New York. That is a bad outcome. Those might be the credit providers. Mr. Poole. They might be the credit providers. Mr. Payne. Mr. Rinaldi, in your testimony you talked about the concern for your membership. Any time anything is streamlined, if you think that your benefits and things are going to stay the same under that scenario, I have got a bridge to sell you, too. But could you answer the question? Oh, I'm sorry. Mr. Rinaldi. What was the question? What bridge do you want to sell me? Mr. Payne. That is not that question. The original question that I asked that I laid out, but my time has expired. I guess you were not listening. Mr. Rinaldi. I was listening. Mr. Shuster. I thank the gentleman. There are limits to all infrastructure, technologically and human, and because of that we are taking a 5-minute break. [Recess.] Mr. Shuster. The committee will come to order. I now recognize the vice chairman of the full committee, Mr. Duncan, for 5 minutes. Mr. Duncan. Well, thank you, Mr. Chairman. And as some people here will recall, Mr. Poole and I think others, I chaired the Aviation Subcommittee for 6 years, from 1995 until 2001, and Speaker Gingrich asked me to hold the first hearings on the proposed Air Traffic Control Corporation. Ms. Robyn, I think, will remember that. At that point I think almost everybody, maybe with the exception of Mr. Poole, was opposed to it, but Chairman Shuster has done an amazing job now and has brought some groups and people onboard that were not in favor of this proposal at the time. But I am sorry I did not get to hear Mr. Rinaldi's and Ms. Robyn's testimonies because I had other meetings, but I do want to say to Mr. Brown that I was impressed by your testimony, and I can assure you that I think your people will tell you that general aviation has not had a stronger supporter than I have been, and I am sure that the chairman will do everything possible to make sure that general aviation's concerns are heard loud and clear in any proposal that we end up with in this regard. But, Mr. Scovel, you have been with us several times before, and you know that I have had concerns for a long time about some of these costs and the delays and so forth. I noticed in your testimony, you say, ``However, FAA has not fully identified the total costs, the number of segments, their capabilities or completion schedules for any of the six programs. In addition, FAA has not determined when the transformational programs will start delivering benefits or how they will improve air traffic flow or controller productivity.'' These cost things concern me, and you told me in response to questions that I asked in a 2014 hearing, you stated, ``We are probably looking years beyond 2025, perhaps another 10 even, and we are probably also looking at the total expenditures in an order of magnitude two to three times that of the initial $40 billion estimate to achieve the original plan.'' I am wondering: Do you stand by those statements that you made in 2014 or what is the situation now? And also you heard Mr. Brown basically say that everything is going pretty good. Mr. Scovel. Thanks, Mr. Duncan. As part of your introduction, you mentioned your long service on the committee. I still wear with pride the label that you gave me at probably my very first appearance before the committee where you said, ``Mr. Scovel, you are the committee's hired skeptic.'' So I appreciate that and my staff does, too, because that fits our role. Mr. Duncan. You and I have been around for a long time. Mr. Scovel. Yes, we have. Thank you. I do stand by those numbers, and what I meant to convey when I said that was the uncertainty of the numbers at that point. The numbers appear to have changed a little bit recently because FAA's estimates have come to $36 billion, a completion date thereabouts 2030 or so, but still the uncertainty remains because at least for the six NextGen transformational programs, FAA's segmentation practices in managing those acquisitions have not led to any kind of clear understanding as to total cost or ultimate completion date. So we are still very much in an uncertain environment with regard to those programs and the price tags. It is clear what has happened over time though is that those programs have become part of a more general and rolling implementation of modernization efforts, to be sure. FAA, to its credit, has worked much more closely with industry over the last couple of years and the NAC to get their priorities down, and FAA has been working hard to execute on those. So I do want to be fair certainly to the agency when I say that, but cost and completion dates are still much uncertain. Mr. Duncan. All right. Ms. Robyn, you said that your original proposal when you worked on it was dead on arrival. Why do you think that was and where do you think we are now? Tell me what you think is different now. Ms. Robyn. I think it was dead on arrival because it, frankly, imposed additional financial burden on the users. At the time, more of the funding of the air traffic control system came from the general fund as opposed to ticket taxes. We, the Clinton administration, our highest priority was balancing the budget, and so our proposal entailed a bill for the users that was unacceptable. So I think for the airline industry that was a problem. I think for House Democrats it was much of what you hear today. It was an opposition to something that was seen as not privatization, but something like that. I think this is a great debate. I think we're making progress. We are arguing over the value of the assets that get transferred. You know, there are proposals to create a Government corporation. Admittedly, it would have the regulatory function as part of it, which is, I think, highly flawed, but I think we have advanced the debate. Mr. Duncan. Well, my time has gone by so quickly. Just quickly I would like to ask Mr. Brown there are, they tell me, some 60 countries that have done some form of privatization. We visited them in New Zealand and certain other countries. Have you talked to some of the general aviation people in some of these other countries? Of course, I know general aviation is very small in many of those countries. Mr. Brown. Yes. Mr. Duncan. Have you visited or looked into that any? Mr. Brown. I have, and I think those countries made choices they thought were sensible for their taxpayers and their public interest and, frankly, for the scale and scope of their aviation industries, which are quite, quite small. So my reference point in many of those countries is that general aviation is already a miniscule part of the economy. People do not fly. They do not have the freedom to fly. They do not create pilots. They do not build airplanes. And so in my mind, they are taking a function that is not critical to their economy and they are outsourcing it. In my mind, in our country what we do with our national airspace is, in fact, an economic engine and a critical one, and I think it works pretty darn well, and that is where the origin of my interest and my point of view come from. Mr. Duncan. All right. Thank you very much, Mr. Chairman. Mr. Shuster. I thank the gentleman. Ms. Titus is recognized for 5 minutes. Ms. Titus. Thank you, Mr. Chairman. It is interesting what Ms. Robyn just said. Her bill was dead on arrival because airlines wanted it but they did not want to pay for it. Now that they are getting it free, they seem to be all in and it does not seem to be dead on arrival. I find that interesting. Ms. Robyn. No. Ms. Titus. But the question I want to ask is to Mr. Poole. I want to go back. We hear a lot about the assets. Let's talk about the people who are involved. You, Mr. Poole, and the Reason Foundation and your donor network have been talking for decades about privatizing all aspects of Government, not just the FAA. In fact, in 2010, you wrote a piece for downsizinggovernment.org that was a project of the CATO Institute, and you talked about the need to privatize and commercialize the air traffic system back then. One of the major arguments that you made was the cost of running the system, and in particular, you went into extensive detail about the history of air traffic controllers and the cost of salary and benefits to those professionals who operate the system. You noted that two-thirds of the FAA's operational expenses are due to what you called the high cost of labor. You have gone on to reference the efficiency of Canada where they have downsized the system, ``shrunk the system'' I think was the term, and cut down on the number of towers. So considering all that you have written in this issue, and now we have this bill before us, I want you to walk me through exactly how you are going to address the high cost of labor as you make the system more efficient. Mr. Poole. Well, thank you for letting me clarify. What we have seen in countries such as Germany and Canada and others that have corporatized their systems is not downsizing the controller workforce. In many cases, Canada in particular, the need was to increase the controller workforce which was low because of decades or many, many years of underfunding by Transport Canada. The downsizing that could take place is in the middle management ranks, the bureaucracy, because it is so many layers and so convoluted that it extracts a high cost out of the users, whether they are paying aviation user taxes or actually direct user fees. That is where the need for looking at that cost is. It is in the middle management ranks of the bureaucracy, not in the day-to-day controller workforce that is undersized for the task at hand today. As Paul Rinaldi has said, we are at a low point of certified professional controllers today, and it is partly because of the shutdown of the training academy that was out of commission for nearly a year, and also because of some politicization of the selection process that has now been partly overturned, thanks to Congress. So we do have problems, but it is not controllers. It is the bureaucracy. Ms. Titus. I wish that reassured me, but when you talk about efficiency and cutting costs and high cost of labor and benefits and controllers are part of that system, I do not know that I believe that that is where you are going to stop, is at so-called middle management. But I would ask Mr. Rinaldi. He is sitting right there next to you. He represents these folks. It is not just you. A number of conservative media outlets keep talking about high labor costs, high labor costs. Let's get more computers. Let's have fewer people. So I would ask you, Mr. Rinaldi: Just what assurances do you have that once your members are under control of a private system that is dominated by representatives of for-profit companies who are looking to run the system as cheaply as possible because it is about their bottom line, you heard they did not want to pay for it before, but they are getting it free now. How do you know your members are going to be protected once this current contract is over? Mr. Rinaldi. Thank you, Madam Congresswoman. Great question. First of all, we have nothing in front of us to actually compare to see exactly what type of worker's protections would be in the new language. So anything I would say would be speculating. But I will tell you we are a highly trained, highly skilled, highly efficient workforce, and we keep hearing about Canada. We keep hearing about the United States. We run roughly 10 times the traffic they do in Canada, but only 5 times the amount of controllers. We are highly efficient. And I stand behind the work of the air traffic controllers in this country, and I put them against anybody else in the world because we have the best in the world. Ms. Titus. I totally agree with that, and that is why I want to be sure they are protected under any kind of new system going forward. Mr. Rinaldi. Me, too, and I am with you. Mr. Shuster. And I would just say, and I think Mr. Rinaldi said this before, under the AIRR Act from last year, we had support from the air traffic controllers as well, if I could for the record, submit letters of support from NetJets, Southwest Airlines Pilots' Association, the Allied Pilots Association, and NATCA. So I would like to submit these letters for the record. Without objection, so ordered. [Letters of support and written statements from NetJets, Southwest Airlines Pilots' Association, the Allied Pilots Association, and NATCA are on pages 126-132.] Mr. Shuster. And with that I recognize Mr. Mitchell for 5 minutes. Mr. Mitchell. Thank you, Mr. Chair, and thank you for all of the witnesses remaining for a long day. Mr. Scovel, you note in your report that FAA reform efforts have not slowed the overall cost growth or improved the productivity, and you talk about the fact that their budget between 1996 and 2015 grew by 95 percent. Also, earlier Mr. Duncan referenced that the hope is--I stress ``hope''--the $36 billion will be the cost to get NextGen up, and sometime around 2030 it may come to fruition. I am hoping to still be around in 2030. Let me ask you a question, Mr. Brown. Am I wrong, Mr. Scovel, that that accurately portrays your analysis? Mr. Scovel. Yes, it is correct. Mr. Mitchell. Mr. Brown, like you I am a private business guy. I am an aircraft owner. I have owned several aircraft. In fact, one of your props was on one of them. Thank you. If you had a business that could not tell you what it was going to cost to put out a set of products, could not tell you when they were going to get it done, but said eventually we will get there, how likely is it that you would buy that business or keep it? Mr. Brown. That would not be in the category of strong indicators for that business. Mr. Mitchell. Thank you. Mr. Brown. And it would cause me to ask a lot more questions. Mr. Mitchell. Well, let me go to the next question. We talk about the value of the assets. There has been a lot of discussion about that. Mr. Scovel, how do we, quote,``pay for the assets,'' and I use that term loosely in the case of the FAA? How do we pay for those assets that we already have? Mr. Scovel. Mostly they are funded by excise taxes on ticket sales, gas taxes from GA users. There is an infusion, as well, from the general fund. Mr. Mitchell. And, Mr. Brown, you have a lot of assets in your business, and what depreciation schedule do you use on them? Mr. Brown. Seven years on capital equipment. Mr. Mitchell. About 7 years you have fully depreciated them. Usable life on a lot of the equipment is what, 10 years? Mr. Brown. Yes. It can be longer, but yes. Mr. Mitchell. Not much longer, especially not in major capital. Mr. Scovel, what is the average age of some of the equipment that is in the FAA right now? Air traffic controllers. Mr. Scovel. The air traffic control structure is aging and getting older by the minute, obviously. The en route centers that manage high-altitude traffic, maybe 50 years on average, 25 years on average for terminal radar approach control. Mr. Mitchell. I would like someone to explain to me maybe in writing some way why we are losing our mind about, quote, ``the value of these assets'' when, in fact, in the real world outside these hallowed halls, the value of the assets is less than zero. In fact, the question is how you dispose of them if, in fact, there were a value on those and you could not use those assets because that is what we are talking about. We are talking about assets that have gone beyond the half-life yet we somehow would think we were giving it away to somebody. In fact, some of these assets we want someone to take them away. A followup question also if you can, Mr. Poole. The countries that have gone to some version of privatization, third party other than the Government running the ATC system, 60 countries or so, they all had safe, relatively safe airline or flight systems before they divested, right? Mr. Poole. Yes, they did, and the study that was done by 3 universities about a decade ago looked at I think it was 5 years before and after comparison of 10 of those countries and found that safety did not go down in any of them, and it was either the same or better following the corporatization. Mr. Mitchell. Mr. Rinaldi, same question. Have they all had safe systems as they made their transition? Mr. Rinaldi. Yes. Mr. Mitchell. Any of your cohorts around the world say, ``Oh, my God, we have gone to a third party or a privatized system and the world is now threatened?'' Mr. Rinaldi. Completely opposite. Most of them would never go back to Government structure. Mr. Mitchell. See, I have flown Canada's system. I have flown Europe's system, and I have, for better or worse, flown the system here. I have got some interesting routing we could talk about, Mr. Brown. Flying back to Detroit through Fort Wayne was an interesting route. That was quite helpful. The point is that we had a lot of discussion about bifurcating the FAA. Just because it was together when they created this thing, somehow there has been discussion that it is a terrible thing to talk about making it more efficient and separating it, like somehow it is a holy ground. It is not working well. It is costing us a ton of money. If the argument is we just throw more money at it we hope it will get better, we say in my company hope is not a plan. It is a last step before desperation. We are at desperation. One more comment, which is about the discussion about being controlled by the outside stakeholders. Big parts of my district are powered by rural electric cooperatives, lots of stakeholders, lots of interests, and those people would not give that up for the world because do you know what? It actually worries first about the customers and service and not about the politics, about what you talked to here about sequestration and all the other mess. It worries first about are we delivering the service we promised to deliver. That is my hope for ATC reform and a board that has a fiduciary interest to deliver the service at a cost we can actually manage. Thank you, sir. My time is up. You have been patient, and you rapped your gavel. I am done. Mr. Shuster. I thank the gentleman. And next is Mr. Weber is recognized for 5 minutes. Mr. Weber. Thank you, Chairman. Mr. Scovel, when you had your comments you said you had identified some longstanding management weaknesses. Can you elaborate on those? Mr. Scovel. They were. Yes, thanks for the opportunity. By management weaknesses I am referring to those in FAA's acquisition practices. We cited in our testimony overambitious planning. ADS-B and ERAM [En Route Automation Modernization] would be key examples of that. I cited in our testimony the need for stable requirements for acquisitions to be successfully executed. ERAM and the SWIM [System Wide Information Management] programs would be examples of where FAA had shortcomings in that area. Contract oversight, generally, across the board. As we have audited FAA's programs, we have found areas that needed significant improvement, all the way from incentive fees to the requirement, FAA's own requirement, for independent Government cost estimates in sole source contracting. Some FAA acquisitions personnel were not even following their own requirements. So as you can see, there have been some significant shortcomings along the line. They have affected not only the NextGen programs proper but others that are in support of other areas of air traffic control and NextGen. Mr. Weber. My first year on the committee I know you said that you had received the label of the committee's biggest skeptic. Mr. Scovel. Hired skeptic. Mr. Weber. Hired skeptic. Mr. Scovel. And if I may, I was not skeptical of the committee. I was skeptical---- Mr. Weber. I am glad you clarified that. Mr. Scovel [continuing]. Of information, of proposals, of information, with the idea of bringing data for the committee's consideration. Mr. Weber. OK. Great. How long have you been the hired skeptic? Mr. Scovel. A little over 10 years now, sir. Mr. Weber. Ten years. OK. So you have been doing this and watching this FAA for 10 years. Is that fair? Mr. Scovel. Yes, sir. Mr. Weber. You said there were some requirements for them to continue to evolve. So fix those problems you just laid out for us. What are those requirements? If they were to stay in place, how does it evolve? Mr. Scovel. If FAA were to retain responsibility for air traffic control, first, continue to consult extensively with stakeholders. Where FAA has gone off the rails, largely it is because they have not done that. Mr. Weber. And you would think that the new process that the chairman is submitting would continue to consult with stakeholders? Mr. Scovel. Well, stakeholders would play a large role in decisionmaking under a proposal as I understand how it may ultimately be. Mr. Weber. Well, they will have a board that has been discussed back and forth, but in that scenario, they would be in constant communication with the stakeholders, their businesses, the different parts of the group. Go ahead. Mr. Scovel. I am sorry. I may have misunderstood your predicate. I thought you were asking if FAA were to keep responsibility for air traffic control. Mr. Weber. Well, it was, but you are saying if they continue to be, and I am saying contrast that with what the recommendation here is, and that is that they would definitely be doing that. Go to step 2. Mr. Scovel. They do. Focus on the acquisition system because as I understand it, that's the essence of the aviation community or users' dissatisfaction right now with FAA. It is not on the safety side. We have all recognized FAA right now is in what I called earlier the golden era of aviation safety through its own efforts, industry's efforts, Congress' efforts, as well as the efforts of my office. But where dissatisfaction is arising, it is in the air traffic control modernization area. So focus on FAA's acquisition practices, the acquisition management system, which is the regulation that governs FAA's practices and needs to be updated. It needs to be revised. The workforce needs to be properly certified and trained. All of those things that I talked about earlier about planning and good requirements need managerial attention. Mr. Weber. Could be done in the new system that the chairman is proposing. Let me stop you if I may because I am running out of time. Mr. Poole, stand-alone airports, we have got a couple small ones. Well, let me do this first. Mr. Rinaldi, you said that you all represented 40 or something of those airports? Mr. Rinaldi. Ninety-four. Mr. Weber. Ninety-four. Thank you. Mr. Poole, back to you, what happens to those airports now? Mr. Poole. Well, those airports are owned by municipalities usually. They get funding from the AIP Grant Program. None of that would change. AIP would continue to be an FAA function and do that. The main criterion affecting those small airports is whether they have a tower or not, and if they have a tower and it is obsolete and needs to be replaced, how is it going to get paid for and can it be afforded? That is where I think, first of all, the legislation can spell out that everybody is entitled to a tower that meets the benefit-cost ratio, and the financing capability and openness to better technology of the corporation would very likely adopt remote towers as a more cost-effective way to be able to expand the scope of tower services to small airports that may not qualify today, but probably could with a better benefit-cost ratio. So I think there is a very bright future for small airports. Mr. Weber. OK. Thanks for elaborating. Mr. Chairman, I yield back. Mr. Shuster. I thank the gentleman. Mr. LaMalfa is recognized for 5 minutes. Mr. LaMalfa. Thank you, Mr. Chairman. Much discussion on the reform of FAA and air traffic controllers, and no doubt the controllers are doing very well with what they have to work with, but when we see the potential here for improvement with reform, I think a previous GAO report showed that reforms like we are talking about would have really no negative impact on safety. In many cases, safety improved. What we have not seen is that throwing more money at it, FAA had not really improved; if anything, even in some cases a negative effect. The potential for savings, as we have seen with the oft spoken of Canada system, shows that we can have a very positive effect on safety as well as saving money. So what I wanted to ask Mr. Poole and Ms. Robyn would be: Do we really expect that these savings that would be achieved can be actually passed down to the consumers on what they would expect for their cost? Mr. Poole. Well, that is an obviously good question to ask, and that depends really on is there a competitive airline market. If there is a competitive airline market, then lower costs are more likely to be passed on in ticket prices, for example, than if there is not a competitive market. I think there are some concerns being raised about how competitive our airline market has gotten to be in recent years. I mean, there are some things we do not have time to discuss here, things Congress could do to try to make the airline market somewhat more competitive than it has been. Mr. LaMalfa. OK. Ms. Robyn, similar? Ditto? Ms. Robyn. Yes, and I think in addition to passing savings on, I think you are trying to expand the system to allow more throughput, and you need new technology to do that. We are not at the cutting edge of that. You need new technology in order to allow for an expansion of the system. Mr. LaMalfa. For both of you again, if we were to move in this direction of ATC privatization, smaller airports, rural airports, you know, the threat of towers closing, what might be the expectations we would see for rural airports. Just in general, I know we have been touching on it here in general, but what is it going to mean for rural airports and their viability? Mr. Poole. Well, I will repeat what I said a few minutes ago. I really think that a better funded system able to do large scale capital financing, one of its priorities would be facility replacement and some degree of consolidation, but also expanding the scope. Right now, as I said, we have a moratorium on contract towers. FAA has a moratorium that is denying a couple dozen airports that are on a waiting list. Some of them have already qualified in terms of benefit-cost ratio, but there is just no funding available for FAA to do that. A well-funded system that is focused on serving its customers better and open to aggressively using new technology, like remote towers, I think, offers the best future I can imagine for small airports in this country. Mr. LaMalfa. Thank you for that. I am running out of time. I want to jump to Mr. Scovel for a second here talking about contract towers. So they are pretty important at smaller service airports and general aviation, et cetera. Up to 50 percent of civilian airports that have military operations use contract tower airports. Now, it is very important to have these operations, which is around 250 of them in the country. Would you comment please, Mr. Scovel, on the value of the contract towers to air traffic safety and efficiency in our Nation's system and the cost effectiveness of this to FAA and as well as taxpayers? Mr. Scovel. Yes. At this committee's request, we reviewed the FAA's Federal contract tower program several times, and we have concluded that generally they are as safe; they are as well respected and appreciated by users as FAA operated towers; and on average, they save or avoid for FAA $1.5 million per year in costs versus FAA operated towers. Mr. LaMalfa. Per tower? Mr. Scovel. Per tower, correct. Mr. LaMalfa. Significant. OK. Mr. Scovel. We would cite Federal contract towers as a missed opportunity for FAA. We understand that in recent years there have been funding difficulties perhaps, but well before that FAA had opportunities to pull more towers into the Federal contract tower and took a pass. It has been a decade or longer since FAA has moved any towers into the Federal contract tower program. Mr. LaMalfa. Perhaps we should move more of them. Mr. Scovel. It depends on funding. Mr. LaMalfa. Always that. Mr. Scovel. Yes, sir. Mr. LaMalfa. Thank you, Mr. Chairman. Mr. Shuster. I thank the gentleman. Mr. Perry is recognized for 5 minutes. Finally, Mr. Perry. Mr. Perry. Finally. Well, I have not been here half of the meeting. Ladies and gentlemen, thank you for your time. I had a lengthy question for Mr. Scovel about contract towers, but I think I missed half of them and Mr. LaMalfa just asking them. Suffice it to say the only thing I want to add in case it has not been added it is important to note that 47 percent of all military operations at civilian airports are at contract tower airports. I am a rotary wing guy. So you know, not too much on the low altitude and route chart. The sectional is probably more important, but that having been said, it seems to me based on at least the answer I got to hear regarding my colleague's question that you feel that they are efficient and cost effective to the FAA and to the taxpayer. Is that a fair summation, Mr. Scovel? Mr. Scovel. Yes, completely fair. Mr. Perry. OK. Thank you. And I know that is not necessarily the context of this hearing, but I think the context is, well, I will just use this. Between 1996 and 2012, the FAA's budget increased by 95 percent. Meanwhile productivity decreased substantially, and I am talking about personnel procurement and organizational reforms. Doing the same thing over and over again, while I appreciate Mr. Brown saying we can tweak this, my argument would be that we have tried and tried to it seems not great effect, and I think I am probably be kind, right? Not great effect. Let me ask you this, probably Mr. Poole and Mr. Rinaldi. I am really interested in the UAS propagation in the United States and the UTM, and I am wondering in the context of what we are talking about, the proposal policy model that we are talking about, if either one of you could describe what you feel your organization, especially you, Mr. Rinaldi, would feel needs to be in place if that is currently missing for us to come to some kind of UTM. Because we have put requirements on the FAA to come up with something here and there are deadlines, but I feel like we are just way behind, and I just want to make sure that there is not something we are missing from your viewpoint. Mr. Rinaldi. Thank you, sir. Safely integrating UAVs into our airspace is a monumental task, and it has taken a lot of resources in the FAA and certainly distracting us from working on NextGen as we are working on bringing UAVs into and incorporating them into our system. So one of the things I would like to see is some type of user fee base for these UAVs so they actually can pay into the Aviation Trust Fund right now and pay for the system like everyone else does pay for the system. Mr. Perry. Is there a model that you know of regarding some kind of a participation for maybe commercial users as opposed to incidental private? I am just curious. Mr. Rinaldi. That is a great question. Mr. Perry. It is an important concept. Mr. Rinaldi. It is a great question, and I think everybody is kind of scratching their head right now because they are not using fuel, and we base mostly on fuel or ticket tax, and they would not have either of that. So we actually have to come up with a new concept. Mr. Perry. So it might be like miles flown or something like that? Mr. Rinaldi. Well, I am really not sure how it would work. Mr. Perry. It would be a user fee? Well, OK. That is an important part of the discussion. I'm glad you brought it up. Mr. Poole, what is your input? Do you know what the airlines want to see in integrating? Mr. Poole. I have no idea what the airlines think about this. Mr. Perry. OK. Mr. Poole. I do think there is a possible bifurcation between the very low altitude, mostly hobbyist uses of UAS, where there is a lot of interest in some kind of non-FAA private solution to this that Silicon Valley folks are talking about in cooperation with NASA. So I think we need to separate that in terms of being different from the controlled airspace in which our airliners and many private planes fly. Mr. Perry. But there are going to be incursions into controlled airspace whether it is an air drone or---- Mr. Poole. Yes, that is a significant problem we need to deal with. Mr. Perry. There are incursions now in both controlled and uncontrolled airspace, which is part of the issue, and I feel like we need to get to it. But does anybody else have something to add? Mr. Rinaldi. No, we do see a lot of incursions today and a lot of spottings that commercial airlines are seeing, and I think the sooner we can safely integrate them and come up with a process, the safer the system will be. Mr. Perry. So while I would agree with you it does divert some attention, resources, time, energy, what have you, you cannot just ignore the fact. Mr. Rinaldi. No, I would not ignore it. Mr. Perry. I think that is really, really foolish, right? Mr. Rinaldi. It is an emerging technology, an emerging user into the system, and it is a very important user into the system. Mr. Perry. And I think actually to a great extent it can be an enhancement. I mean, some of the technologies that are emerging, especially in the navigation arena itself, could be used commercially to greatly enhance. I was talking to the gentleman next to me and now my time has expired, Mr. Chairman, but you know, as an aviator myself, the sky is unlimited. You know, I am limited on the ground when I pull out of the parking lot. I have got to stay on the road or I am going off-road, and yet we have the same system since I have been flying for 20 or 30 years now. I essentially have got to take off and then go get on the highway instead of just going literally from point to point. I do not know what the savings is estimated at going literally from point to point, but it has got to be monumental over thousands and millions and billions of flights, commercially or otherwise. Anyway, Mr. Chairman, I yield. Thank you. Mr. Shuster. I thank the gentleman. With that, Mr. Sanford is recognized for 5 minutes. Mr. Sanford. I thank the chairman. I just want to bore down just for 1 second. I guess I will begin with you, Mr. Rinaldi. From an air traffic control standpoint, a blip is a blip, right? Mr. Rinaldi. Well, not necessarily. We work all airplanes safely and efficiently. There are some heavy aircraft that you need to weight turbulence separation. So each blip, you know, for lack of a better term, gets treated safely and efficiently, but there are different ways to work them. Mr. Sanford. Fair enough. But the wing tip vertices off of a Piper Cub is going to be very different than the wing tip vertices off a 747 in term of separation. Mr. Rinaldi. Absolutely. Mr. Sanford. That is what you are getting at, but from the standpoint of management, it is essentially the same, right? Mr. Rinaldi. Yes. Mr. Sanford. So I think that one of the things that I have heard particularly from the cargo carrier side is the fear that if you move, are they going to be disproportionately impacted in that they weigh more. From a traffic control standpoint, they do not take more time. They do not really use more stuff, but are they going to be disproportionately impacted relative to other small aircraft? And I just love it. I see you shaking your head up and down. I do not know if it means yes or no, but I would love to hear some of your all's thoughts on that because I think that is one of the things as we go through these deliberations we have really got to ferret out. Yes, ma'am. Ms. Robyn. On the pricing side, most economists would say the current approach of funding the air traffic system through the ticket tax is very inefficient because it is not correlated with the cost that users impose on the system, and so you want to go to a cost-based system. What the rest of the world uses is a weight and distance charge, and they use weight because they cannot fully cover their costs typically with just a distance charge. You want to charge marginal costs, but you want to cover your full cost, and weight is a way of doing that. It is called Ramsey pricing in economic terms, and the cargo folks object to that. And I think there is some really important analysis to be done about just how big that weight component has to be. I think there is reason to think that the FAA may overstate their fixed costs, which is what requires you to have a weight component to the charge. There is a tendency for regulated utilities to overstate their fixed costs versus their marginal costs. So I think this is a really important issue, and I do not think we should just blindly adopt the standard weight and distance charge. Mr. Sanford. Yes, sir. Mr. Poole. I have looked into this. In a 2001 Reason Foundation study, we actually had a lot of dialogue with one of the major cargo carriers, and they persuaded us that a strict weight-distance formula would cause a significant increase in the cost share that they would pay. And we came up with an idea that said, ``All right. Look at''---- Mr. Sanford. And let me interject. It is ultimately not they pay. It is we pay. Mr. Poole. Well, ultimately, yes. So what we came up with was we looked at the flight patterns by time of day, and it turned out that most of the cargo flights do not take place at the busy times of day or at the busiest hubs at those times of day. And so if you put into the pricing formula a congestion factor, that you could basically hold the cargo carriers' share to about what it is today without having to discard the global standard of an overall weight-distance formula. ICAO does permit congestion related factors going into airport and air traffic pricing. Hardly anybody does it except the U.K. major airports, Heathrow and Gatwick, but that is consistent with ICAO charging principles. And I think that is a way that should be definitely explored for the cargo airlines. Mr. Sanford. I think that is fascinating in that if you look at this notion of optimizing the use of our structure in this country, I think this notion of going to premium pricing based on congestion or load is going to become a bigger and bigger issue, whether it is on surface transportation, air transportation or other. I see I have 25 seconds, but it looked like you had a thought down there at the end, but maybe you did not. Mr. Scovel. I have many thoughts, sir, but not on this particular subject. Thank you. [Laughter.] Mr. Sanford. Fair enough. With that I yield back, Mr. Chairman. Mr. Shuster. I thank the gentleman. Mr. Davis is recognized for 5 minutes. Mr. Davis. I bet I can guess that thought: When is this going to be over? And then you have got Members like me that keep coming in and out. I apologize that we are shuttling back and forth between two different committee hearings today, but this is a very important one, one that I believe from many of the responses that we have heard today and many of my colleagues that it centers on what is really this debate of what is the cost of doing nothing. I mean, it has already cost the taxpayers billions of dollars to put towards NextGen, and we are not seeing the progress that we as America, with the air system that we have, be upgraded to even be able to compete on the same level with some of our allies. I cannot help to compare it to work that has already been done, and we discussed this today. You have, what has been done in Canada, what has been done in the United Kingdom. Canada has bought twice the technology at half the cost, and has done so in one-third of the time. So let me start with you, Mr. Rinaldi. What do you think would be the cost of doing nothing? Mr. Rinaldi. Yes, status quo or doing nothing is unacceptable. September will be here before we know it. We will be looking at another possible Government shutdown, and as I said in my opening statement, as we lead up to a shutdown, the FAA turns their attention from NextGen or from UAV implementation to shutdown procedures. For the last 10 years, this happens a couple of times a year, and we lose this time. It is 4 or 5 weeks leading up to it; 5 weeks on the back end of it, and they are not sure what sequester is going to bring us if we actually do get a budget and do get a bill passed or what type of cuts we are going to have into the aviation system. A lot of discussion about rural America. I will tell you and you remember, sir, that when sequester hit in 2013, the FAA looked at closing over 238 air traffic control towers. Mr. Davis. That was a very interesting list. It contained a lot of them in my district. Mr. Rinaldi. Most of them were in rural America, absolutely. Mr. Davis. Well, thank you. Mr. Poole, do you have any comments on this? Mr. Poole. I think almost everything has been said, but I think on technology, the comparison with NAV CANADA is brilliant because they have things that we are only planning now. They have fully rolled out nationwide controller pilot data link, while we are looking at maybe 6 or 8 years before we have that in en route airspace. They have across the North Atlantic very soon satellite- based positioning thanks to their investment in Aireon, this satellite-based global coverage. All of the places that do not have radar, which is 70 percent of the earth's surface, will now have radar-like separation possible because NAV CANADA and several other ANSPs have invested in that and are now subscribing to it, and FAA was unable to invest and cannot figure out how to subscribe to it. So the idea that we are the gold standard, the most modern in the world is no longer true, and the more the status quo continues, the less that is going to be true. We are going to be falling farther and farther behind the state of the art. Mr. Davis. Well, as we wind this hearing down, I want to make sure that we reiterate a few points. This new ATC entity is not going to decide where airlines or anyone can and cannot fly, correct? Mr. Poole. That is correct. They will not decide anything about where airlines fly. Mr. Davis. Thank you. And, Ms. Robyn, I want to address some more information that I have seen about the motives of the board under the AIRR Act proposal. Despite the fact that the bill clearly states that two directors will be appointed by the Secretary of Transportation to act in the public interest, some have questioned the motives of the board. Can you describe your understanding of the governance of the board and how it will actually operate? Ms. Robyn. Congressman Mitchell referred to the electric cooperative in his district, and it is analogous to the cooperatives we have in the utility industry, and the agriculture and insurance sectors. Mr. Davis. And they work, right? Ms. Robyn. Yes, they work beautifully. Air traffic control provision is still a monopoly. I think technology will change that, but for the time being it is still a monopoly. So you need a design that protects against any kind of monopoly abuse. And the Canadian model does that by having the stakeholders select the board members, and the board members are fiduciaries, as the chairman emphasized in his introduction. They have a fiduciary responsibility. That has been critical to NAV CANADA's success. Mr. Davis. And quote of the day, entities like this that are already operational work beautifully. So I appreciate that. And we as policymakers---- Mr. Shuster. Keep going. Mr. Davis. Thank you. We as policymakers do not have a lot of time here. You know, we can sit and debate what is working and what is not, and Mr. Rinaldi mentioned that the FAA has got to deal with not only NextGen but UAS technology, which I once questioned an official about what Canada is doing correctly. We do not have a lot of time to fix this. Today is the time to act. Now is the time to act, which is why this is so important. So thank you. Mr. Shuster. I thank the gentleman. We do not have much time, but we do have time for Mr. DeFazio to have 5 minutes and me to have 5 minutes because they have called a vote, and we have got 12 minutes and 28 seconds. So I will strictly enforce the 5-minute rule. Mr. DeFazio. OK. Thank you, Mr. Chairman. I just want to point out in the DoD memo there is a sentence, ``And recognizes the potential risks regarding DoD's national security responsibilities.'' I would like to put in the record an article from the National Observer in Canada. Headline, ``Inspectors Say a Major Canadian Airline Disaster is `Likely,' '' and they talk about the major cutbacks in the safety which was retained by the Government. And then I would move on. Ms. Robyn, do you remember Executive Order 13180 by President Clinton? [The National Observer article entitled, ``Inspectors Say a Major Canadian Airline Disaster is `Likely,' '' is on pages 147-150.] Ms. Robyn. Is that the one that created the ATO? Mr. DeFazio. The one that says air traffic control is an inherently governmental function. Ms. Robyn. Yes, the date of that is December 7th, and they were---- Mr. DeFazio. Thank you. Thank you, Ms. Robyn. I do not have time. Ms. Robyn, I do not have time. Thank you. So, Mr. Scovel, so we just kind of said, oh, our assets are old and someone down there said they are not worth anything. How old is that? I think that is 13, right? That is Houston, valued at $62 million. Then, of course, we have property in Long Island, kind of valuable. I mean, have you broken out the assets in terms of property values? In Canada they valued the system, and they had to pay for it, correct? Mr. Scovel. They did. Mr. DeFazio. OK. And the inspector general in Canada, auditor general, and this is Canada, little, dinky Canada, they paid $1.5 billion, and we are proposing that nothing would be paid here and there is no value, and they said it was undervalued at $2.6 billion. How old was their system? Because you are saying our system is old and decrepit and these guys say it is not worth anything. Was theirs brandnew, spiffy back then? Mr. Scovel. No. Mr. DeFazio. OK. So they paid for it, but here we have a much larger investment that we are going to transfer for free, and of course, we have the whole problematic thing about taking. And you valued it at $13.7 billion. How much of that would you depreciate? Mr. Scovel. How much of that would depreciate it? Mr. DeFazio. No, I mean what is land value versus building? You do not know? Mr. Scovel. That is the infrastructure alone. I do not believe it involved the property value. Mr. DeFazio. OK. So it is quite valuable. Now, let's go to small airports. Almost everybody on that side is sensitive to GA. They represent more rural districts, and we heard that they will not direct where people fly. That is correct, but this board will decide where we invest. Here is the statement of the CEO of Jet Blue. ``We also need to direct infrastructure improvements into the regions of the country that will produce the most benefits, like the Northeast Corridor.'' The airlines get four seats on that board. That is the opinion of Jet Blue. We heard the same thing from the former CEO of United and, oh, by the way, there is no airport representative on the board whatsoever, at least as the bill was written last year. So we say we are going to protect rural interests. We are going to pretend it. Now, Mr. Brown, you talked about WAAS. There are 4,421 WAAS. Did those come for free? And do they have to be maintained, updated? Mr. Brown. Well, the FAA like night owls produce them one airport at a time until they arrived on my doorstep, and I was amazed by them, but they got paid for by the user fees and fuel taxes that fueled the system. Mr. DeFazio. Yes. We heard how much money has been wasted, except we have been investing in things like that which are not valuable to the commercial industry. Except for maybe Jackson Hole and a couple other places, does the commercial industry use those? Mr. Brown. Anybody can use those if they have the right equipment. The problem is most of their airlines do not have the right equipment. Mr. DeFazio. Well, that is interesting. Does anybody know of another country in the world that is ready to turn on a ground-based ADS-B system in 2020 for all of their air traffic? Anybody who is so equipped, any other country in the world doing that, ground-based domestically, not over the ocean? Mr. Poole. Australia. It is already in operation. Mr. DeFazio. OK. So we have got one, and we are going to be there, too. So we hear a lot about this over the ocean stuff. I am not particularly concerned about the tiny fraction of over the ocean flights we control and whether or not they get free ADS-B because there are not that many planes to worry about the congestion and flying closer together, whereas domestically we may get some benefit from the system, but it still begs the question of how many planes can you land at the same time at many of our airports, which has to do with airport scheduling. Revenues, apparently there is an assumption that Congress will repeal the ticket tax. I mean, right now our current taxes are yielding about $14 billion a year, and the ATO is $11.1 billion. So that assumes Congress is going to repeal substantial taxes, I assume. That is correct, and then the new board will determine how to pay for the ATO. OK. I see a nodding of the head, yes. Thank you, Mr. Chairman. Mr. Shuster. I thank the gentleman. And let me start off first by saying that investment will not be directed by this new board. There will still be eight IP funds that will be going directly out to these small and medium-size airports around the country. So that is not actually accurate. One of the things that Ms. Titus brought up, which I think is very, very important and she was directing it to Mr. Rinaldi was about the air traffic controllers, and let me tell you one of my biggest concerns in this proposal is that we make sure we move those highly trained, highly technical, highly skilled, efficient air traffic controllers to the new system. And if you do not do them the right way, one-third of them--I think I am correct--one-third of the certified controllers can retire tomorrow if they are not happy. So for me that is something very important, and I can tell you I have been criticized by conservative groups around this town because they just do not get it. You have to take the qualified workforce with you. So, Mr. Rinaldi, I know we talked a little bit about the count going up at NAV CANADA. The controller count goes up. What are your thoughts on not only the controller count, but middle management? Mr. Rinaldi. Well, if you look at, and it was brought up earlier, NAV CANADA when they were in Government, they had roughly 6,700, 6,800 employees, of which 2,000 were air traffic controllers. Now that it is a highly functioning, not-for-profit corporation, they have about 4,300 employees, of which 2,000 of them are roughly air traffic controllers. So the controller workforce stayed the same or went up a little bit. It is the middle management that they attrited through retirements in a humane way, and they just did not backfill those positions. I call a lot of that, you know, between the middle management within the agency and the multilayers of contractors they have within the agency also, it is one of the things that is already being privatized out there with all of these contractors within FAA headquarters. I call that the ``clay.'' It actually stops good things from happening at the very top, and things that are happening trying to change at the operational level. Mr. Shuster. And so those of us that are not geologists, nothing permeates down and nothing permeates up, correct? Mr. Rinaldi. Yes. Mr. Shuster. I understand what ``clay'' is then. Mr. Rinaldi. It is 15 levels of no to get to yes. Mr. Shuster. Exactly. And then finally, I just wanted to make the point here that, first of all, something was said along here that the airspace would be restricted. We made it clear in AIRR 1 but maybe not clear enough to make sure that this new entity will not be able to restrict airspace. The plan, plain and simple, we are going to strengthen that language to make sure the general aviation community knows they are not going to be restricted by this new entity. That is the FAA having the regulatory oversight of this if that is the case to do something like that. Second, when we talk about NAV CANADA, our system is 10 times larger. No doubt about it. I believe because we are so big and so complex, that is a reason to move to the system so that we can manage it much better. You know, we are already scaled to a size to handle those greater operations, 3,000 facilities, 14,000 controllers, 6,000 technicians, 5,000 managers. We are scaled to handle this today. And then I might add, again, and this is something that is very troubling to me and it should be troubling to anybody who is in the business world, we are 9 to 10 times larger, depending on how you want to measure it, than Canada. We spend 25 times to 28 times more in CapX than they do. And as was mentioned by Mr. Davis, the former CEO of NAV CANADA said, he gets twice as much technology at half the cost three times as fast. So, again, as a business owner, a former business owner, if we are spending 25 to 28 times more in CapX and we are getting very little for it, that is a real problem. That is a real problem for the American taxpayer. That is a real problem for the system. If we were doing it efficiently, my goodness, how we could drive the costs down, and as I spoke to the folks in NAV CANADA, and I think everybody understands, this is a volume business, and if we go to the system, our volume is so tremendous it will dramatically drive down the cost, and we will have more money out there to do things to help more communities, to do things to help the efficiency, the technology, the employees. So, again, this is something we have got an opportunity, and I said to the airlines when I was here last time when they did something very wrong, we have an opportunity here to do something very right, and I hope we seize this opportunity because I am afraid it is not going to come along again. Ms. Robyn, I think I am the first one who called you the right name today. [Laughter.] Mr. Shuster. I know you have been engaged in this for a number of years. You started in the Clinton administration, and I appreciate all of the value you bring here, as well as Mr. Poole and Mr. Brown. Thank you so much for being here today. Your perspective is very valuable to us. Again, I want to reiterate. I am a GA guy. I am a rural guy. There is nothing I want to do to hurt those people who are my constituents, but I think what we have at hand here is something to help the United States of America to continue for us to be the leader in aviation around the world. So again, thank you all for being here today. I appreciate your time. And I would ask unanimous consent that the record of today's hearing remain open until such time as our witnesses have provided answers to any questions that may be submitted to them in writing. And I ask unanimous consent that the record remain open for 15 days for any additional comments or information submitted by the Members and witnesses to be included in the record of today's hearing. Without objection, so ordered. I would like to thank the witnesses again, and there are no other Members, so we are adjourned. [Whereupon, at 1:38 p.m., the committee was adjourned.] [GRAPHICS NOT AVAILABLE IN TIFF FORMAT] [all]