Thank you, Margaret (Jenny), for that introduction. It is great to be here, and to see so many familiar faces.

I appreciate the opportunity to talk with you about how much weve accomplished with the roll-out of NextGen. It is crucial to the future of our aviation system, and it is happening with input from important constituents like you.

The road to success is often marked by twists and turns. The budget battles continue, and have thrown us a curveball.

Im sure you are well aware of the challenges we faced earlier this spring when furloughs caused flight delays. Weve been given a reprieve from furloughs for the remainder of this fiscal year, and 149 lower activity towers will be kept open through September.

But make no mistake. This ability to move funds from the Airport Improvement Program is not a long-term solution. This is a short-term fix that has only resolved the furlough issue through September.

And, we still need to make more cuts from our budget before September 30. This means we will continue our significant reductions to contracts, training, and travel. Beyond this fiscal year, many uncertainties remain.

We will, however, continue to move forward with our mission of providing a safe and efficient aviation system. It would be easier to carry out our goals with a clear long-term fiscal solution. The sequestration law and continuing resolutions year after year make it more challenging for the continuity of NextGen programs. We ask that Congress find a sustainable long-term solution. We all hope that the sequester is dealt with soon otherwise, even more cuts may be needed next year.

But, we remain committed to implementing the 21^st century aviation system that NextGen brings. And, we do this while integrating components into the airspace that were unheard of just a few decades ago, mainly unmanned systems and commercial space launches.

While weve had to shift some of our priorities and alter some of our deployment timeframes in the wake of budget constraints, were fully committed to delivering the NextGen capabilities weve outlined over the last several years.

With NextGen, a truly more efficient system is evolving for operators, travelers, and other users of the aviation system. We began a short time ago in 2007 with a budget of less than $130 million, and today, our NextGen budget remains around $1 billion per year. This significant expansion represents the increasing urgency to modernize our system.

Just as important as proper funding is effective collaboration. Industry and government must always work together. Working in concert is what truly makes it possible. It cant be done by government alone, and it cant be done by industry alone. Crucial to our success is input from stakeholders such as RTCA.

Its easy to say that we need collaboration, but what is a real example of working together? A great example is the data communications testing we are doing now in Memphis and Newark. In partnership with operators, we are testing data comm in anticipation of a roll out for surface operations in 2016, and for en route operations in 2019. As you know, this will help decrease the amount of voice communications between controllers and pilots, reducing the potential for errors. These tests in Newark and Memphis will help us determine where risks might be in the system, and make improvements before the full program is implemented.

Progress also continues with ADS-B, which supports more precise surveillance, and contributes to reducing delays. Currently, roughly 550 ADS-B ground radio stations have been deployed throughout the U.S. In 2014, the entire U.S. will be covered by over 700 ground radio stations. As even more aircraft equip with ADS-B, we will be able to more fully realize its benefits throughout the National Airspace.

Another cornerstone of NextGen is Performance-Based Navigation. It allows for satellite-based navigation routes and procedures that use GPS to provide precise location information.

PBN routes and instrument procedures enable aircraft to fly more direct paths, providing efficiency and capacity gains. Theres less need for pilot-controller voice communications, reducing the potential for errors. And, PBN helps reduce fuel burn and emissions through more continuous climbs and descents.

Another area where were making strides is the expansion of the use of equivalent lateral spacing operations, or ELSO. The precision of NextGen navigation means we can safely allow jets to take off on headings that are slightly closer together. This incremental change has been used in Atlanta, and were seeing an increase of 8 to 12 departures per hour. We estimate that this saved customers 700,000 minutes, or 1.3 years, of waiting in line to take-off in Atlanta last year. Its better for the environment too, because aircraft spend less time on the ground with their engines running. So were burning less fuel and decreasing pollution.

We want other major airports to be able to use ELSO, so we are changing our air traffic control handbook, which sets the standards that controllers use to ensure safety and properly separate aircraft. We estimate this change could save airlines about $20 million per year at Atlanta alone.

We also plan to release the NextGen Implementation Plan within the month. We wanted to make sure that everything in the plan lines up with the Presidents 2014 budget. It will be available online this year, as were trying to reduce printing costs.

While we maintain the biggest airspace in the world, we cannot be fully successful without working hand-in-hand with our foreign counterparts. On the international front, we continue our outreach with many foreign partners and maintain a close relationship with ICAO in an effort to promote global harmonization. Our successes will go no further than our borders without close contact and partnership with other countries. It is crucial that we continue together toward the goal of seamless global operations.

The Global Air Navigation Plan, endorsed by the ICAO Air Navigation Conference last year, provides a framework for countries to improve air traffic capacity according to their own needs and resources. We will revisit this modernization concept at the ICAO Assembly later this year, as we move toward global harmonization and integration.

So, as you can see, we continue to make great strides here at home, and on the international front. And, another great step forward is the fact that we recently named a new Deputy Administrator. Im so pleased to have Michael Whitaker on board with us.

Mike is no stranger to many of you, having served in many aviation capacities in industry and regulatory circles. His perspective will be valued and important in our decision-making processes. Hell also serve as our Chief NextGen Officer, a crucial position in the agency.

My only concern with bringing him on board is that we both share the same first name. This will no doubt be confusing to staff at the FAA. But, as a sign of collaboration, weve worked out a deal. Weve decided that hell be Mike, and Ill remain Michael. I know hell be a great addition to our team.

Thank you, again, for your invitation to speak with you today.

Sequester and Budget Update

Good morning and thank you, Bill, for that update. Thank you all for coming today. And special thanks to Representative LoBiondo and Deputy Secretary Porcari for their continued support of NextGen.

As you know, we have had an extremely busy year. Were working on many important projects, but at the same time, were dealing with the sequester and all that it entails.

We have had to make sizeable budget cuts that affect our operations and our future.

As the Deputy Secretary said, the sequester is not over. But, Congress gave us the financial flexibility to avoid the furloughs for the remainder of this fiscal year through September 30. We were able to transfer $253 million from the airport grant program which was exempt from the sequester.

With this flexibility, we are also able to keep open the 149 low activity contract towers through September. And were putting $10 million towards NextGen, to reduce cuts and delays in core programs; and $11 million to maintain equipment and infrastructure that is so necessary for the system.

Metroplex

As part of this flexibility, we are able to restart the Metroplex work that had been put on hold. As you know these projects are highly collaborative and must include our operational air traffic control personnel. Furloughs under the sequester required us to recall air traffic controllers and managers back to their duty stations.

Last week, we started the coordination efforts to get these air traffic controllers back on the Metroplex work. They are experts in their airspace, and we will restart the collaborative process with airlines and the many other stakeholders who are all working to improve congested airspace over busy cities. We are able to do this in seven Metroplex cities where the work will continue, including: Washington, D.C., Northern Texas, Charlotte, Northern and Southern California, Houston and Atlanta.

Sequester not over

Keep in mind however, that the sequester is still in place and that the FAA must still cut a total of $637 million from our budget by Sept. 30.

Weve also cut our spare parts inventory, which may increase restoration time during outages and reduce system efficiency. And as an interim measure, were not training new air traffic controllers or technicians to maintain and operate new technologies, which has led to a shut down of a large part of the FAA Academy in Oklahoma City.

NextGen under sequester

Because the sequester is designed to last ten years, we have conducted an initial assessment of how a long term sequester would impact our current NextGen Implementation Plan. Today, we have seven programs in the implementation phase. These programs are current contract commitments that will deliver new capabilities for all phases of flight by 2018.

The budget profile even under sequester would provide the capital funding required to meet most of those commitments. But, to make this happen we must have the operations funds to maintain our active workforce participation in key activities like procedures design, onsite testing, and training. And, if we are not able to keep the workforce engagement, we simply will not be able to meet all of our current commitments and the associated timelines.

Mike Whitaker

Nonetheless, there are bright spots. And we are delighted that the President has appointed Mike Whitaker to be the Deputy Administrator of the FAA. Mike has more than 20 years of experience in the airline industry and he will be the Chief NextGen Officer. Hell be in charge of everything NextGen and will be doing these reports from now on with all of you. He just came on board yesterday, and Im looking forward to a very productive relationship. Please join me in welcoming Mike. Hell be leading our NextGen efforts, focused on delivering benefits now, and will be taking over as the NAC's Designated Federal Official going forward. He may need a few more days to get fully immersed in all our acronyms, but Im confident that in working with all of you, he will make a difference. Please join me in welcoming Mike.

Jim Crites

I would also like to congratulate Jim Crites, Executive Vice President for Operations at Dallas Fort Worth Airport. Jim has received this years White House Champions of Change award in the category of Transportation Technology Solutions.

Jim has demonstrated a powerful personal and professional commitment to the advancement of NextGen. He has been an effective, vocal advocate, and he has actively participated in the testing and demonstration of key NextGen technologies and programs. As a champion of collaboration, he has brought representatives of various communities to the table when necessary to collaborate on NextGen planning and implementation, and to overcome challenges.

Please join me in congratulating Jim Crites.

City Pairs

Now, I would like to talk about some of the work the FAA has been doing as a result of our collaboration here at the NextGen Advisory Committee.

As you know, Congress has asked us to measure NextGen performance in the context of key city pairs. This was part of reauthorization.

Last summer we asked for your help in identifying these city pairs and we received your suggestions in February. I am pleased to say that the FAA accepts those recommendations for 25 city pairs. We are going to begin to report the benefits we realize between these cities as part of our metrics web page and the NextGen Performance Snapshots.

Also, we plan to release the NextGen Implementation Plan within the month. We wanted to make sure that everything in the plan lines up with the Presidents 2014 budget. It will be available online this year. Were trying to reduce printing costs.

Controller Handbook

Despite the difficulties of the sequester, we are making progress on important work that the NAC has helped to guide and that will make our airspace safer and more efficient.

We are updating our air traffic control handbook, which sets the standards that controllers use to ensure safety and properly separate aircraft. It was published long before the use of performance based navigation, and weve identified 15 updates that would allow air traffic controllers to take full advantage of the benefits of NextGen. While these changes are complicated, we are determined to publish many this year.

ELSO

For example, were going to expand the use of equivalent lateral spacing operations, or ELSO. Youll hear more about this later today. The precision of NextGen navigation means we can safely allow jets to take off on headings that are slightly closer together. This small change has been used in Atlanta and were seeing an increase of 8 to 12 planes departing per hour. Last year we estimate that this saved customers 700,000 minutes of waiting, or 1.3 years of waiting in line to take-off in Atlanta. Its better for the environment too. All those jets spend less time on the ground with their engines running. So were burning less fuel and decreasing pollution. ELSO saved the airlines $20 million last year in Atlanta alone. We want other major airports to be able to use ELSO, so we are changing the handbook.

Closely spaced parallel operations

Were also working very diligently to increase the number of aircraft that can land at an airport each hour, while maintaining safety. That is why we have put so much effort into closely spaced parallel operations and will change the controller handbook to make these operations more common.

We are working on improvements to staggered approaches for runways that are very close together closer than 2,500 feet. About 17 of our busiest 35 airports have runways this close together.

You cant do simultaneous operations on these runways, but we can still safely lower the separation standard for aircraft that are coming into these close runways.

This is because our entire airspace system has undergone extensive advances over the years. We have the ability to collect and analyze better radar data. Our aircraft have better avionics, and we have more effective training for both pilots and controllers. Technology across the board has improved to such an extent that we are extremely confident that we can operate aircraft at a closer proximity to one another and still be just as safe.

These reduced separation standards of three miles down to one-and-a-half nautical miles for staggered approaches have already been approved for specific runways at eight airports right now. They are: Boston, Newark, St. Louis, Cleveland, Seattle, Memphis, Philadelphia and San Francisco. Before airports can use these new separation standards, the FAA must first train the controllers.

These changes will help the entire air space system by safely increasing capacity at major hubs when the weather prohibits visual approaches. It will decrease the ripple of delays that spreads across the system when one hub is experiencing weather conditions.

Conclusion

We have a lot of good work going on at the FAA and a very dedicated workforce. Ive really enjoyed working with everyone on the NAC over the past few years. Thank you very much for all of the work you are doing and your dedication to NextGen and to improving flight today and for future generations.

Now Id like to introduce Pam Whitley, who is Acting Assistant Administrator for NextGen. Shell introduce the next agenda item which is on the NextGen performance snapshots website. We established this website a year ago to report NextGen specific metrics and to publish NextGen success stories.

Among the feature articles in this issue include:

• how to be a noise-friendly neighbor (p.10)
• a look at FAAs avgas initiative (p.13)
• whether electric aircraft are in our future (p.18)

The issues Checklist (p.17) and Vertically Speaking (p.30) departments outline some simple ways pilots can fly more environmentally friendly, while Nuts, Bolts, and Electrons (p.26) looks at workplace safety practices in the hangar.

The link to the online edition is: http://www.faa.gov/news/safety_briefing/.

The FAA looks forward to working with the Kingdom to enhance our aviation cooperation in the Caribbean, said FAA Administrator Michael Huerta.

The Kingdom of the Netherlands is pleased to join the Federal Aviation Administration to promote the air safety of the Dutch Caribbean. The Kingdom of the Netherlands and the United States share values, history and a commitment to safety, in the air, on the land or sea. This agreement strengthens our cooperation to the benefit of the Caribbean, the United States and Europe, said Ambassador Rudolf Bekink.

The United States is responsible for providing air traffic flow services in the San Juan Flight Information Region which is adjacent to the Kingdom of the Netherlands airspace. This agreement will promote cooperation between the two nations to include coordination of traffic flows between U.S. controlled airspace and the airspace controlled by Sint Maarten and the Caribbean part of the Kingdom of the Netherlands. It also provides for the FAA to work directly with the authorities in the Caribbean parts of the Kingdom to facilitate the installation and maintenance of FAA air navigation equipment and facilities as needed, to provide technical assistance, and for the exchange of information on the regulation and oversight of aviation safety.

Remarks as Prepared for Delivery

Thanks, Marion [Blakey]. Last fall when I spoke at your suppliers conference you had the countdown to sequestration clock. Our government set up that clock, with the belief that it would never count down to the very end. But here we are. You know better than most, the recent fix is just a Band-Aid. The FAA needs a long-term solution that will give us the financial certainty we need as we proceed with modernization.

Let me say plainly, the FAA remains committed to safely accelerating the benefits of technology into the public domain including unmanned aircraft and NextGen. And if we j-u-s-t set aside this s-m-a-l-l issue of funding for a moment, were very well positioned to deliver on these commitments.

To begin with, we have a collaborative relationship with our unions.

We have industry cooperation through the NextGen Institute and its Management Council, as well as the NextGen Advisory Committee.

We have a structure and leadership in place that supports timelier implementation. We elevated the NextGen office to reflect that its a priority. And on June 3^rd, our new Deputy Administrator, Michael Whitaker, will be joining us, and he will serve as our Chief NextGen Officer.

And through more integrated offices like the Program Management Organization and the UAS Integration Office, were able to better manage the necessary collaboration across the agency.

And again, just putting aside for a moment this l-i-t-t-l-e thing called the sequester, we have the full support of the DOT, the White House and the Congress for both NextGen and the safe integration of unmanned aircraft.

Weve made great progress on both fronts. Weve authorized government agencies to use unmanned aircraft for public purposes including border patrol, firefighting and disaster relief. Weve issued special airworthiness certificates to companies like Raytheon, AAI corporation, General Atomics, Boeing and others, for the purposes of research, development, testing and training.

But as we proceed, we still need to address many issues including pilot training and making sure that an unmanned vehicle can sense and avoid other aircraft. Also, if it loses its link to the ground-based pilot, an unmanned aircraft still needs to operate safely. And we have a role, in conjunction with other government agencies, to address the privacy concerns of the public.

Operational research is our next step and in February, we issued a request for proposals to host six sites across the country to test the use of unmanned aircraft.

Theres a lot of interest we have 25 candidates, all of them are public organizations across 24 different states. In choosing sites, were going to consider the geographic and climatic diversity and the location of ground infrastructure and research needs. And we plan to consult with NASA and the Department of Defense. We hope to make selections by the end of this calendar year, and our goal is to have the first test site operational within six months following the site announcements.

Were also making great progress with NextGen. Were moving from primarily ground-based to satellite-based operations and an air-ground communication system that relies on data exchange as well as voice. In doing so, flying will be more efficient and more environmentally friendly.

ADS-B means well have more precise aircraft surveillance, and we can significantly reduce delays. We expect to complete the installation of about 700 ADS-B ground radio stations by early 2014.

The FAA is working with the airlines, the Port of Seattle, and Boeing Corporation on the Greener Skies over Seattle initiative. At Seattle-Tacoma airport, we added new satellite-based procedures, including the expanded use of Optimized Profile Descents, or OPDs. Alaska Airlines estimates that Greener Skies procedures will cut fuel consumption by 2.1 million gallons annually and reduce carbon emissions by 22,000 metric tons, which is the equivalent of taking 4,100 cars off the road every year. The OPDs are also quieter as aircraft descend at reduced power settings.

Our efforts in Seattle are providing a template for rolling out these benefits throughout the country, and theyre supporting our metroplex efforts, through which were making better use of congested airspace around the nations busiest metropolitan areas, further reducing fuel consumption and decreasing aviations carbon footprint on the environment.

For example, last August, flights approaching the Washington DC area started using satellite-based routes and immediately began saving fuel and emissions. For the airlines, these new routes will save $2.3 million in fuel costs in the first year of operation. We estimate that about 60,000 flights are using these new procedures into Dulles each year. At National, about 57,000 flights are flying the new routes each year.

As you know, we recently started work on Data Communications trials. Data Comm supplements todays analog voice-only air-to-ground communications system with a digital message system. By sending and receiving digital instructions to and from pilots, well be able to increase overall system efficiency, while reducing the likelihood of hearback and readback errors. We plan to start initial operations of Data Comm in equipped control towers beginning in 2016 and in all high-altitude control centers in 2019.

We have trials underway in Memphis and Newark that are coming along well, and were learning some important lessons, particularly as it relates to controller-pilot interoperability. These lessons alert us to the improvements we need to make before deployment.

These NextGen tools and procedures are changing the way we fly. By 2020, were projecting that NextGen will provide $38 billion in savings from NextGen. We also project a 41 percent reduction in delays compared to what would happen if we did nothing, a reduction of 16 million metric tons in carbon emissions, and a 1.6 billion gallon cumulative reduction of fuel use[1].

These benefits help make the case for NextGen. They help make the business case for why airspace users should equip with NextGen avionics and as we all know thats the other key piece of the puzzle. The FAA is working with several air carriers like Jet Blue, UPS, US Airways and others, to document the benefits of equipage. For instance, Jet Blue equipped 35 of its aircraft with ADS-B. Through an arrangement with them, the FAA will have access to data from flights off the East Coast where ADS-B Out will allow more efficient operations.

As part of another pilot program, the FAA approved avionics developed by ACSS to equip 20 US Airways Airbus A330 aircraft with ADS-B In, which we dont mandate, but it provides pilots with a cockpit display showing the location of other aircraft. This enhances flight safety, and allows the equipped plane to take advantage of more advanced procedures that save time and fuel.

All of this is great news, and if we could just put the sequester aside, wed be in great shape. But unfortunately, Congress hasnt put it aside. They gave us the flexibility to cancel the employee furloughs for the remainder of the year, but the sequester continues, and we still have to cut $637 million. Yes, we were able to transfer $253 million from a source previously off limits the airport grant program. But we still have to cut $384 million from other areas by September 30. This means we have to maintain cuts in areas like staffing, hiring, awards, contracts, training, and travel.

Weve cut our spare parts inventory, which may increase restoration time during outages and reduce system efficiency. We may have to postpone technology and procedural deployments that were slated for completion this year. Components of our ADS-B trials with Jet Blue may be delayed. And our ability to train and certify people to maintain and operate new technologies is limited.

Looking ahead to FY2014, the budget situation is still very uncertain. Congress has taken care of this situation until the end of the fiscal year, but two more things have to be dealt with. First, unless the sequester is permanently fixed, it will last for ten years. Congress must cancel it and give us the funding certainty that will enable us to properly plan our future activities as an agency.

Second, we need an appropriations act for FY14. Weve been running on a continuing resolution for FY13. Under this situation, its hard to have a thoughtful discussion about how to move forward. The Presidents budget requests $15.6 billion for the FAA. This budget would support our critical safety programs, modernize our aviation infrastructure, and strike a balance between maintaining current infrastructure while deploying key NextGen programs to support the growth and changes in aviation. It does all this at funding levels that are $351 million lower than FY 2012.

But unless these two things are dealt with, were looking at a very uncertain fiscal environment.

In closing, I hope the sequester is resolved as quickly as possible. If it remains in effect, the FAA may be required to cut even more next year than we did this year. Because of the financial uncertainty, we can hope for the best, but we have to plan for the worst. This is not a sustainable course of action, and its no way to run a government.

Thank you.

[1] Published in the soon-to-be-released 2013 NextGen Implementation Plan. The NextGen Office is using these numbers now, and provided them for this speech.

Remarks as Prepared for Delivery

Thanks, Paul [Rinaldi]. I want to thank you and Trish for your leadership, as we deal with the challenges with respect to the sequester. We appreciate the strong partnership we have with NATCA and I very much look forward to continuing to work together in the days and months, and years ahead.

I also want to acknowledge and thank everyone here for the great job that you do. NATCA represents many of our employees. Its not just air traffic controllers. Its architects and engineers, as well as staff support, technical, and flight procedure specialists. Due to your efforts, and those of your colleagues throughout the agency, we at the FAA can proudly say we run the safest, most efficient air traffic system in the world. Our intention is to keep it that way.

To do so, Ive stressed three priorities for the FAA. Youve heard me talk about them. The first is to make aviation safer and smarter. Were doing it through a more sophisticated safety data and analysis process. Because of your ATSAP reports, weve made nearly 200 safety corrections to the system since the program began five years ago.

Through voluntary safety reporting, along with automated data gathering toolslike CEDAR, weve collected close to a million safety-related reports from all sources.

Now were exchanging information with the airlines and the National Transportation Safety Board through the ASIAS program. Through the Confidential Information Sharing Program, or CISP, weve already exchanged over 8,700 safety reports with 12 airline partners. Through these partnerships with labor and industry, we will continue to identify, and more importantly, fix more safety issues than any single program could.

Because of these efforts, and many others, we took home this years prestigious IHS Janes ATC Award for our proactive safety management system. Our win shows how far weve come in reaching the next level of safety and shows why we play a lead role in global aviation.

The second priority youve heard me talk about is to accelerate the benefits of technology into the public domain. And the third priority is to empower you, our employees. You know the system best and we need your full engagement.

These last two areas have gone hand in hand when it comes to air traffic modernization. Through collaboration with all of you at NATCA, and with your subject matter expertise, weve made great progress with the implementation of ERAM and those lessons learned are being applied to TAMR as well.Were also making great progress with Performance-based Navigation procedures and other programs as part of our transition to NextGen.

Take ERAM. Weve benefited by having a national user team led by a labor and management counterpart from each of our en route centers. And through the ERAM Steering Committee meetings, centers that have successfully deployed ERAM have passed on the lessons learned to the centers whose deployments are coming up. Personally, I think its a great process, and with it, weve come a long way in the past 16 months. To date, we have 11 out of 20 en route centers using ERAM on a daily basis, and another five have reached initial operating capability.

Were also seeing the benefits of FAA-NATCA teamwork in our metroplex initiatives, through which were making better use of congested airspace around the nations busiest metropolitan areas, reducing fuel consumption and lessening aviations carbon footprint on the environment.

For example, last August, flights approaching the Washington DC area started using satellite routes and immediately began saving fuel and emissions. For the airlines, these new routes will save $2.3 million in fuel costs in the first year of operation. We estimate that about 60,000 flights are using these new procedures into Dulles each year. At National, about 57,000 flights are flying the new routes each year.

And through Performance Based Navigation, were deconflicting traffic at busy adjacent airports like Chicagos OHare and Midway. Over the past two years, weve made better use of this congested airspace by publishing a satellite-based procedure used by RNP-equipped aircraft when theyre flying into Midway. This procedure has allowed OHare to improve its arrival rate by eight to 12 aircraft per hour when the ceilings are low. Thats huge. And aircraft flying into Midway travel fewer miles and save fuel, also very important.

Were also continuing to make progress with our Data Communications trials in Memphis and Newark airports. As part of the Memphis trial, weve moved from using the tool for cleared as filed procedures to processing amended routes for flights. By sending and receive digital instructions to and from pilots, well be able to increase overall system efficiency, while reducing the likelihood of hearback and readback errors.

These are just some examples of how the collaborative process is helping to implement NextGen. And how NextGen is helping to deliver more on-time flights, reduce fuel burn and reduce greenhouse gas emissions.

This is an approach that works. And when you have the kind of professional and constructive relationship we have, you need to keep it going. Im personally very committed to it.

But as you all know, things arent perfect when we look to the future. The sequester poses a major challenge to the entire agency, including to the collaborative efforts that have been so instrumental to our modernization. It challenges our effort to deliver greater benefits to the flying public as soon as we would like.

As air traffic delays mounted last month, the nation saw exactly why the sequester, as designed, is flawed public policy and Congress decided to give us the financial flexibility to cancel the furloughs for the remainder of the fiscal year. With this flexibility, were also able to keep the 149 low activity towers open through September 30. And were putting $10 million towards NextGen, to reduce cuts and delays in core programs; and $11 million to maintain equipment and infrastructure that is so necessary for the system.

But the fix is just a Band-Aid. It only lasts until the end of the fiscal year. It doesnt address the long term fiscal challenge we have. Although the furloughs have been cancelled, the sequester continues and we still have to cut $637 million. Yes, we were able to transfer $253 million from a source previously off limits, the airport grant program. But we still have to cut $384 million from other areas by September 30. This means we have to maintain cuts in areas like staffing, hiring, awards, contracts, training, and travel.

Weve also cut our spare parts inventory, which may increase restoration time during outages and reduce system efficiency. We may have to postpone technology and procedural deployments that were slated for completion this year. And with the Academy shut down, were not conducting trainings and getting people certified to maintain and operate new technologies.

Looking ahead to FY2014, the budget situation is still very uncertain. President Obama has proposed a workable solution to our nations budget challenge and the FAAs 2014 budget request of $15.6 billion is part of that. This budget request supports our critical safety programs, modernizes our aviation infrastructure, and strikes a balance between maintaining current infrastructure while deploying key NextGen programs to support the growth and changes in aviation. It does all this at funding levels that are $351 million lower than FY 2012. This is a 2.2 percent decrease, which is part of the Presidents effort to reduce the deficit.

Whats going to happen between now and the first of October? We dont know. Congress has taken care of this situation until the end of the fiscal year, but two more things have to be dealt with. First, unless the sequester is permanently fixed, it will last for ten years. Congress must cancel it and give us the funding certainty that will enable us to properly plan our future activities as an agency.

Second, we need an appropriations act for FY14. Weve been running on a continuing resolution for FY13. Under this situation, its hard to have a thoughtful discussion about how to move forward. Unless all of these things are dealt with, were going to be dealing with a very uncertain environment.

Against this backdrop, I want to thank everyone for their patience and professionalism as we continue to deal with what is an extremely difficult fiscal issue. I hope the sequester is resolved as quickly as possible. If it remains in effect, the FAA may be required to cut even more next year than we did this year. While we can hope for the best, because of the financial uncertainty, we have to plan for the worst. As you and I both know, thats not a sustainable course of action and its no way to run a government. In either case, the FAA remains committed to working closely with NATCA as we face the challenges ahead.

Chairman LoBiondo, Ranking Member Larsen, and Members of the Subcommittee: A year ago, Congress reauthorized the Federal Aviation Administration after four and a half years of uncertainty and stop-gap measures. The biggest benefit of reauthorization was that it would provide predictability and allow us to invest with greater certainty in the future. So were grateful for your effort on this, and we have been working very diligently in the past year to implement the provisions of reauthorization.

Safety

As we move forward, the number one mission of the FAA is safety. That will always be our priority.

In the last few years, Congress has given us much guidance on how to advance aviation safety. And we have accomplished a great deal. The FAA overhauled flight and duty rules to guarantee that airline pilots have the opportunity to get the rest they need to operate safely. And we are raising the required number of hours of experience before a pilot can operate the controls of any airline flight. We are also finalizing a rule that will require more rigorous and training so that flight crews can better handle rare but serious scenarios.

We are also improving our safety culture at the FAA and throughout the industry by voluntarily reporting hazards before they become a problem, and by adopting safety management systems. Internally, we created the Aviation Safety Whistleblower Investigation Office. One of the cornerstones of our safety culture is to ensure that employees can provide information without fear of reprisal.

Technology

While we are enhancing the safety of the system that we know today, we are also working to deliver the benefits of new technology to create the aviation system of tomorrow, through NextGen.

We are working to safely integrate Unmanned Aircraft Systems into our airspace. Earlier this year as directed by Congress in the reauthorization we requested proposals to host six sites across the country to test unmanned aircraft systems. This is a matter of significant public interest. We need to better understand operational issues to safely integrate these aircraft into our airspace. We need to explore pilot training and make sure that unmanned aircraft sense and avoid other aircraft. And, if they lose the link to their ground-based pilot, these aircraft need to operate safely.

Collaboration

If we are going to continue to move aviation forward, and remain a world leader, we need to collaborate across the FAA, as well as with other government agencies, and also with industry. Reauthorization asked us to do this, and we have made great strides in collaborative efforts.

Chairman LoBiondo, as you know, Atlantic City is a leader in NextGen research. The William J. Hughes Technical Center plays a key role in fostering NextGen, and we appreciate your support.

We have worked with our labor unions, industry, airports and others to address the problem of congested airspace over busy metropolitan areas. We are producing satellite-based procedures much more quickly. And were using these NextGen procedures right now to reduce the miles that aircraft must fly; to create more direct routes, cut delays; and to reduce fuel burn and cut greenhouse gas emissions.

We are pleased that the President has announced his intent to appoint Michael Whitaker as Deputy Administrator of the FAA. Mr. Whitaker is a veteran of the airline industry and would serve as the FAAs Chief NextGen Officer, responsible for fostering the transformation of our nations airspace.

The FAA has an initial set of NextGen metrics available on our website, and we expect to publish additional performance metrics in the coming months. Our NextGen Performance Snapshots show that NextGen is happening now.

For example in Chicago, we have been able to reduce delays at OHare International Airport in bad weather thanks to NextGen. OHare and nearby Midway International have overlapping airspace at times. We made better use of this congested airspace in the past two years with a satellite-based procedure that aircraft use when flying into Midway. This procedure has allowed OHare to improve its arrival rate by eight to 12 aircraft per hour when its rainy or foggy and the ceilings are low. And aircraft flying into Midway travel fewer miles and save fuel. This is one of the many positive effects of NextGen and the type of improvement that reauthorization supports.

The reauthorization laid out a vision to address the future needs of our nations aviation system. And these needs have not gone away. Its important for us to work together to protect the great contribution that civil aviation makes to our economy of $1.3 trillion and 10 million jobs.

As you know, we are again facing fiscal uncertainty and unpredictability. The sequester is requiring the FAA to make sizeable budget cuts that affect our operations and our future. While we are grateful that Congress found a temporary solution to the FAA furloughs, this stop-gap measure does not end the sequester.

We will not enjoy the benefits or the stability that reauthorization provides until we end the sequester and find a sensible long-term solution.

I sincerely hope that we can work together to ensure that America continues to operate the safest and most efficient aviation system in the world.

Mr. Chairman, this concludes my prepared remarks. I would be pleased to answer any questions you may have.

Thank you, George (Nield). It is a pleasure to be here to speak at todays event.

Commercial space transportation is an important, and growing, part of our aviation system. And, the innovation seen in this industry today parallels the challenges, imagination and courage of the early pioneers of flight over 100 years ago.

Space transportation has come a long way since John F. Kennedy first noted more than 50 years ago that the United States was not built by those who waited and rested and wished to look behind them. This country was conquered by those who moved forward, and so will space. Exploration and travel into space has certainly come a long way since those early days.

The partnership we have government and industry working together plays a significant part in this forward motion. This cooperation allows us to hear one anothers viewpoints, but also to outline any challenges we may foresee. Putting these issues out in the open helps to move us forward.

And, the impressive development in space transportation is due in large part to the efforts of many in this room.
I would like to take a moment to recognize a few who have made a big difference.

First, I would like to thank former COMSTAC Chair, Will Trafton. As many of you know, Will served as COMSTAC chair from 2007 until last year. As chair, he pushed the committee forward as a relevant and important voice for industry on how to regulate commercial space transportation. For your leadership and service, we would like to thank you, Will.

I would also like to present our thanks to former COMSTAC Vice Chair, Chris Kunstadter. Chris served as the Vice Chair from 2009 until last year, and continues to serve as Chairman of the Business/Legal Working Group. He has provided outstanding leadership for the committee. Thank you, Chris, for your excellent guidance and advice.

Today, the growth in commercial space transportation is more and more noticeable to the American public. Last year, SpaceX completed its Commercial Orbital Transportation Services demonstration mission by launching and berthing its cargo capsule to the International Space Station. And then it safely returned with cargo intact back to Earth. This was the first time that private industry resupplied the Space Station. Since that time, SpaceX has completed two more cargo missions.

Orbital Sciences also demonstrated its launch capabilities last month for the same service, taking off from the Mid-Atlantic Regional Spaceport on Wallops Island, Virginia.

The innovations dont stop there. SpaceX has already started testing a new design to create the worlds first fully reusable launch vehicle. In Texas, SpaceX has been operating under an experimental permit from the FAA to use the Grasshopper rocket to conduct a launch and then return to a vertical position on the launch pad. These innovations might further reduce the cost of launches and create new commercial space industry opportunities.

The goal of lowering the cost for access to space is noble, not only for business, but also for science and the accessibility of space to more people. Virgin Galactic has begun powered test flights of its Space Ship Two design, in an effort to begin flying tourists from Spaceport America in New Mexico.

As with space itself, the possibilities are endless, and they are not limited to a few locations or a handful of companies. The FAA has licensed spaceports in Mojave, California, in Kodiak, Alaska, and in several other locations. There is also interest in developing other launch facilities in Florida, Texas, and Colorado, to name just a few.

XCOR Aerospace has begun advertising the capability of its Lynx spacecraft to take people and payloads on a half-hour suborbital flight. Boeing, Sierra Nevada, and SpaceX continue to work on their own designs for a commercial crew vehicle to take astronauts to the International Space Station. And Bigelow Aerospace is working toward giving spaceflight participants new destinations in orbit. These are all impressive developments.

While we have seen many developments in space transportation, a challenging road remains ahead for the FAA. We all know that we are in a very tough fiscal situation. Congress has given us the ability to move funds around to end furloughs of FAA employees, but we still have to meet significant mandated sequester cuts. We have instituted a hiring freeze and significantly cut travel, and we continue to reduce contract expenses.

The FAA Office of Commercial Space Transportation continues to experience a significant increase in the number of requests and applications for new licenses or permits. However, we have notified all of our stakeholders that actions could be delayed due to the effects of the sequester. Despite these major challenges, we remain focused on our mission at hand, which is safety.

Our activity shows our commitment to space transportation. There have been a total of over 200 commercial launches licensed since 1989 with no loss of life or serious injury or property damage to the public. The level of launch activity is increasing rapidly. In fiscal year 2012, the total number of licensed and permitted launches was three, and in fiscal year 2013, there have already been 13 licensed and permitted launches.

As this business continues to grow, we face important decisions. One of our main tasks will be the continued safe integration of commercial space operations into our airspace. Usable airspace is a limited resource, and safety considerations require the careful coordination of aviation and space activity.

We will continue to work with the broader community on commercial space transportation activity in our airspace. And, well continue to work with other nations on the potential hazards of space launches and reentries. We will also continue to manage the hazards to aircraft from reentering space debris.

We will accomplish these goals by not only working with industry partners, but also with other government agencies. |
This past year, the FAA signed a Memorandum of Understanding with NASA to cover the future licensing of commercial crew vehicles to the International Space Station. Under the terms of the MOU, the FAA will license the launch for the safety of the public, while NASA will ensure human safety on board and mission assurance.

The FAA itself cannot propose any new regulations on human spaceflight safety until 2015. However, thanks to you here at COMSTAC, we continue to prepare for the future together in multiple ways. And, you continue to inform us of potential issues that we will need to address.

In December, Congress passed a one year extension to the public-private risk sharing regime that is generally referred to as space launch indemnification. In a license, the FAA requires that a launch provider purchase insurance to cover the maximum probable loss that could result from a launch failure. In the event that third party losses exceed that, the government would seek to appropriate funds for the payment of these claims.

Although there have been no claims involving a request for Congressionally appropriated funds, the potential liability exposure of launch operators far exceeds the available private insurance coverage.

We understand that a one-year extension is challenging for industry, as it does not provide the needed long-term certainty gained from an extension of three, four, or more years. We continue to be engaged in conversations with Congress regarding the length of this indemnity clause.

Working together, we will continue to address matters of concern. This open dialogue serves us well. When industry and government join together at events like todays meeting, we are able to move forward.

Watching the space transportation industry grow is truly remarkable. And, you here in this room are at the forefront of this industrys success. We ultimately have the same goal the safety of flight and the successful integration of innovative space transportation into our airspace.

I appreciate you inviting me to be here today, and Id be happy to take any questions.

Thank you.

We cannot become complacent about safety, Huerta said. Together, we must improve the safety culture to drive the GA fatal accident rate lower.

In the short term, the group agreed to raise awareness on the importance of basic airmanship and to promote a positive safety culture. The following organizations attended the meeting and are partnering with the FAA to reach out to the many diverse facets of the general aviation community: Aircraft Electronics Association (AEA), Aircraft Owners and Pilots Association (AOPA), Experimental Aircraft Association (EAA), General Aviation Manufacturers Association (GAMA), Helicopter Association International (HAI), International Council of Air Shows (ICAS), National Agricultural Aviation Association (NAAA), National Air Transportation Association (NATA), National Business Aviation Association (NBAA), National Transportation Safety Board (NTSB) and the U.S. Parachute Association (USPA).

For the long term, Administrator Huerta called on the aviation community to install life-saving equipment (angle of attack indicators, inflatable restraints, two-axis autopilots) in older airplanes, to improve general aviation data, and to improve airman certification testing and training. To meet these goals, the general aviation community and the FAA agreed to work together to move forward as quickly as possible on three key initiatives:

Participate and invest in the General Aviation Joint Steering Committee (GAJSC): Industry participation is key to data analysis that leads to the development of voluntary safety enhancements. The group uses a data driven process modeled on the highly successful Commercial Aviation Safety Team (CAST). Sharing data through the Aviation Safety Information Analysis and Sharing (ASIAS) system and other voluntary programs will help educate and shape the safety culture of the GA community. The FAA plans to expand ASIAS to general aviation in the next few years. FAA and industry will work together to find incentives to increase voluntary reporting.

Support the overhaul of airmen testing and training standards: An industry and government working group is overhauling the standards by incorporating risk management and decision-making into flight training and testing.

Expedite the Part 23 certification process to reduce costs and install new technology in airplanes: An industry and government committee is working on streamlining certification for the installation of certain safety technologies.

>See FAA Fact Sheet-General Aviation Safety

Chairman Latham, Ranking Member Pastor, and members of the subcommittee, thank you for the opportunity to be here today to discuss the FAAs 2014 budget request.

As you are aware, this is my first appearance before you as the confirmed Administrator of the FAA. We have a great number of challenges and opportunities ahead, and I look forward to a long and effective relationship with this subcommittee.

The FAAs fiscal year 2014 budget request is $15.6 billion. The budget upholds our critical safety programs, while also deploying key NextGen benefits to our stakeholders, and modernizing our aviation infrastructure. It does this at funding levels that are $351 million lower than fiscal year 2012. This is a 2.2 percent decrease, which is part of the Presidents overall effort to reduce the deficit.

The FAAs proposed budget for 2014 assumes a long-term solution to our nations budget deficit and no sequester.

The 2014 proposed budget would allow us to maintain staffing for air traffic control and aviation safety. It would allow us to maintain capital investment in both airport infrastructure and FAA facilities and equipment, and fund research and development.

The budget requests $1 billion for NextGen, which is an increase of about 7 percent above 2012. This request would help us to continue to mitigate congestion in busy airspace above metropolitan areas. And it would help us with the continued deployment of radio transceivers that allow us to use very precise satellite-based information to control air traffic.

The FAA is requesting $9.7 billion in our Operations account. This represents an increase of just about a half a percent above the FY 2012 level. This request will enable us to run the agency on a day-to-day basis. It ensures the safe operation of the airlines and the certification of new aviation products. It would also enhance the safety of the commercial space transportation industry, and provide overall policy oversight and management of our airspace.

The Operations budget includes an additional $30 million to maintain and operate the new En Route Automation Modernization system, or ERAM, that became operational in the last two years.

ERAM is at the heart of NextGen. It helps us to advance our transition from a ground-based system of air traffic control to a satellite-based system of air traffic management.

The 2014 budget also allows the FAA to meet the dual challenge of maintaining the capacity and the safety of the current system while moving forward with our comprehensive modernization and transformation efforts.

The majority of the $2.8 billion requested for facilities and equipment is to sustain legacy areas. This includes aging infrastructure, power systems, information technology, navigational aids, and weather systems.

This years request for Research, Engineering, and Development is $166 million, a decrease of 1 percent from2012. We intend to continue critical research in NextGen and other areas such as: fire research and safety; propulsion and fuel systems; advanced materials research; alternative fuels; aging aircraft; and unmanned aircraft systems.

Our budget emphasizes cost efficiency and reflects the hard choices we must make to provide the most benefit to the flying public.As a result, we are proposing to modify the mix of funding available for airport development projects.

The budget would allow commercial service airports to increase Passenger Facility Charges from the current maximum of $4.50 to $8.00. This gives airports greater flexibility to generate more of their own revenue. And it allows us to reduce our request for the ongoing airport grants program by $450 million.

This change focuses federal resources on smaller airports that dont have the passenger volume to generate their own revenue, yet are still important to our nations air transportation network.

The Presidents 2014 budget request represents a balanced approach to achieving a long-term solution to our nations budgetary challenges. This is critical when one considers the impact of the sequester on our aviation system. The cuts required by the sequester have forced us to slash contract expenses and furlough 47,000 of our employees for up to one day every two weeks.

With 10 percent fewer hours available from each employee, there will be impacts on all FAA operations.

At air traffic facilities, this imposes limits on the amount of air traffic that we can safely allow to take off and land.

It means that our safety inspectors will work fewer hours and it will take longer to certify new aircraft for the market.

I want to emphasize that as we undergo the difficult process of implementing these deep cuts, we refuse to sacrifice safetyeven if this means less efficient operations. Since February we have publicly described the possible effects of the sequester. And over the past few weeks we have been working with our industry partners, including the airlines, to share more detailed information on the impacts we expect at our nations largest airports. We are tracking airport delays throughout the system and making adjustments where possible to minimize delays.

It is my hope that we can work together to rally around our nations air transportation system and protect the great contribution that civil aviation makes to our economy.

Mr. Chairman, this concludes my prepared remarks. I would be pleased to answer any questions you may have.