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.

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.

As you are aware, this is my first appearance before you as Administrator of the FAA. I appreciate the support of the Senate in moving my confirmation forward. We have a great number of challenges and opportunities ahead, and Isincerely hope to enjoy 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, in order to continue to support near-term progress. 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 0.6 percent above the FY 2012 enacted level. This request will enable us to run the agency on a day-to-day basis and maintain and support our air traffic control and air navigation systems.

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 allows the FAA to meet the challenge of both maintaining the capacity and the safety of the current system while keeping our comprehensive modernization and transformation efforts moving forward.

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 7 percent from2012. Nonetheless, 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 the Passenger Facility Charge 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 in the current fiscal year. The cuts required by the sequester have forced us to slash contract expenses and furlough 47,000 of our employees. With employees working fewer hours, we will have less efficient air traffic operations and less time for safety inspectors to certify new aircraft for the market.

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.

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

As you are aware, this is my first appearance before you as Administrator of the FAA. I appreciate the work of this committee and of the full Senate in moving my confirmation forward. We have a great number of challenges and opportunities ahead, and I look forward to enhancing our productive working relationship.

The FAAs number one priority is safety. Its our mission, and we focus on it 24 hours a day.

First let me briefly address the Boeing 787. The company has redesigned the internal battery components and conducted extensive testing. This includes limited test flightswithout passengersusing the redesigned battery prototype. The FAA is reviewing these test reports and analysis to make sure that the 787s new battery system ensures the safety of the aircraft and its passengers.

Turning to broader safety considerations, while aviation safety encompasses many technical issues, we cannot overlook the role of human beings in aviation and how they interact with sophisticated technology.

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 increasing the required hours of experience a pilot must have before operating the controls of any airline flight. We are also finalizing a rule that requires more realistic training so that flight crews can better handle rare but serious scenarios.

The best way to enhance safety across the board is to improve the safety culture of an organization. Part of this effort involves self-reporting by our own employees on safety issues.

We have put programs in place for air traffic controllers and aviation technicians to report a problem, or even a mistake they may have made and not fear retribution. This makes the system even safer.

We are taking many other actions to enhance safety across the board including promoting safety management systems and sharing more data between industry and the FAA. By analyzing this data, we are able to identify trends and hazards across the airspace system and mitigate issues before something happens.

As you know, we are in a very uncertain and unpredictable fiscal environment.

The sequester is requiring the FAA to make significant cuts in services and investments. These cuts will impact air traffic control, NextGen implementation, and our certification services.

We are exercising all options to reduce costs a hiring freeze; cutting contracts; cutting travel and other items not related to day-to-day operations.

One of our largest contracts is the Federal Contract Tower Program. We have notified 149 airports across the country that federal funding for their air traffic control towers will end in mid-June. These airports have lower activity levels, and together, these contract towers handle less than 3 percent of the commercial operations nationally and less than 1 percent of the passengers. Communities still have the option to keep their tower open if they are able to provide the funding, and the FAA stands ready to help with that transition.

I want to emphasize that as we undergo the difficult process of implementing the deep cuts required by the sequester, we refuse to sacrifice safetyeven if this means less efficient operations.

In addition to contract towers, large facilities will also be affected. To reach the figure we need to cut from our payrollwhich is our largest operating costwe have to furlough 47,000 of our employees for up to 11 days between now and September.

The furloughs will reduce controller work hours at all airports with towers, but also at radar facilities across the country. Again, safety is our number one concern. We will only allow the amount of air traffic that we can handle safely to take off and land. This means travelers should expect delays. Today we are meeting with air carriers to go over specific operational impacts related to the furloughs facility by facility.

Furthermore, our aviation safety inspectors will have to focus their attention on the most pressing priorities and will devote their time to overseeing current activities to ensure continued operational safety of the existing fleet. These activities will take precedence over new projects.

Our overarching principle in making these difficult decisions is to maintain safety and offer the best air traffic services to the largest number of people both now and in the future.

It is my hope, and the hope of everyone at the Department of Transportation that our leaders 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.

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 predictability that reauthorization provided was very welcome. It allowed us to invest with greater certainty in the future of our aviation system. We're grateful for your efforts on this, and we have been working very diligently in the past year to implement the provisions of reauthorization.

A year later, however, we again face fiscal uncertainty and unpredictability. The sequester is looming, and massive budget cuts are set to go into effect just two days from now.

I want to make a clear distinction about how sequestration differs from previous government shutdowns that have been caused by failure to pass a budget, or by the temporary lapse in our authorization in July 2011.

First, almost all of our FAA accounts would be affected. Therefore, this would affect almost all of our employees.

We are looking at all options to reduce costs. We're looking at a hiring freeze, and at cutting contracts and travel and other items not related to day-to-day operations. But, to reach the large figure we need to cut, we have little choice but to make up the rest through furloughing employees. This is not something that we take lightly.

Unlike a government shutdown, under the sequester, almost all of our employees would be affected, even what we would traditionally call "essential personnel." The vast majority of our employees, including "essential workers" would have to be furloughed.

Under sequestration our flexibility is very limited because we must cut proportionately from all affected accounts. We can't move money around and we have limited flexibility to choose what it is that we're able to cut.

Now a very large portion of the DOT's budget is exempt from the sequester. What this means is that the FAA will take more than 60 percent of the sequester cuts for all of the DOT, even though our agency makes up only about 20 percent of the department's budget. Now, within the FAA, the airport grant program also is exempt from the sequester. So this again limits the choices we have on where to cut the money.

Finally, we have a very short time frame to make the bulk of these massive cuts - about six months. And that means the cuts would need to be deeper to have the same effect as if we could spread them out.

It is my hope, and the hope of everyone at the Department of Transportation that our leaders can work together to rally around the improvements that we need for our nation's air transportation system. We hope that we can continue to support the programs that we've all acknowledged were so important just one year ago.

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

Let me say that with regard to the Boeing 787, we are working around the clock to conduct a comprehensive review of the critical systems of the aircraft, including the design, manufacture and assembly of the Dreamliner. As part of that review, we are working closely on a data-driven process to identify the cause of the recent battery issues and the mitigations for them.

I appreciate the expression of confidence in the FAA's actions from House T&I Committee Chairman Shuster and from Ranking Member Rahall, as well as from Subcommittee Chairman LoBiondo and Ranking Member Larsen. We all had a productive briefing just a couple of weeks ago.

Last week, we met with senior executives from Boeing to discuss the status of ongoing work to address the 787 battery issues. We will carefully analyze Boeing's proposal to address these issues. But the safety of the flying public is our top priority and we won't allow the 787 to return to commercial service until we're confident that any proposed solution has addressed the battery failure risks.

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 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 realistic training so that flight crews can better handle rare but serious scenarios.

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 month, we requested proposals to host six test sites across the country to test unmanned aircraft systems.

We need to better understand operational issues to safely integrate unmanned aircraft into our airspace. We need to explore pilot training. We need to make sure that unmanned aircraft sense and avoid other aircraft. And if an unmanned aircraft loses the link to its ground-based pilot, we need to make sure it operates safely.

In addition, we are requesting comments from the public about how to address privacy concerns with these test sites. Each site operator will be required to obey all laws protecting an individual's right to privacy.

Collaboration
To bring NextGen to fruition we need to collaborate across the FAA and across the industry. Reauthorization asked us to do this, and we have made great strides in collaborative efforts on many fronts.

We have worked with our labor unions to lay the foundation for NextGen with the En Route Automation Modernization, or ERAM. The collaboration has been exceptional. We are now using this new computer system to guide airplanes at high altitudes in nearly half of our centers across the nation.

Chairman LoBiondo, as you know, a lot of the research that propels NextGen takes place in Atlantic City. The William J. Hughes Technical Center plays a key role in fostering NextGen and we appreciate your support.

We are collaborating with industry, and as a result of the work we are doing with our many partners, we are producing satellite-based navigation procedures much more quickly. We are using these NextGen procedures right now to reduce the miles that aircraft must fly; to create more direct routes; and to reduce fuel burn and cut greenhouse gas emissions.

Right here in metro Washington, D.C. airlines have started using these NextGen procedures to fly into Dulles and Reagan National. We estimate they will save $2.3 million in fuel per year.

Reauthorization laid out a vision to address the future needs of our nation's aviation system. These needs have not gone away. It's important for us to work together to protect the great contribution that civil aviation makes to our economy.

Aviation is our largest export industry. It strengthens our balance of trade. It adds $1.3 trillion to the economy and it provides 10 million jobs.

I look forward to working with you. And I sincerely hope that we can work together to make sure that America continues to operate the largest and safest aviation system in the world.

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

It's not something we are doing alone. It's a public-private partnership that will enhance the safety of our aviation system and lay the groundwork for the United States to continue to operate the safest aviation system in the world.

I've made it a priority to step up our collaboration with our stakeholders externally to increase the focus on NextGen and to bring benefits to the traveling public now.

The FAA has a long history of engaging with industry to develop consensus around policy, programs and regulatory decisions.

We have worked closely with industry partners, such as RTCA, and have incorporated important advice from that organization in our NextGen planning. We've also established a broad-based panel - the NextGen Advisory Committee-to provide guidance and recommendations on how to equip for NextGen and how to measure our success.

We value the advice of the Joint Planning and Development Office, which handles interagency coordination and long-term planning for NextGen. And we work with the experts at the Institute Management Council, which oversees the NextGen Institute. As always, we work with airlines that are enthusiastic about our pilot programs and help us to gain valuable NextGen data.

Let me share a few examples of our partnerships for NextGen and the progress we are making around the country.

In Seattle, Washington, as part of the Greener Skies initiative, we are partnering with Alaska Airlines, the Port of Seattle and the Boeing Company.

We have created new NextGen approaches for airlines flying into Seattle Tacoma International Airport. These flight tracks are shorter, more fuel efficient and environmentally friendly. That's a lot of hard work by all of our partners, and thanks to that, we reached a milestone this summer. For the first time,Alaska Airlines is flying customers into SeaTac using these new NextGen approaches.

In fact, these procedures will help all equipped airlines flying into SeaTac to significantly cut total fuel consumption annually, reduce carbon emissions and deliver other important benefits.

And in addition to our partnerships, we have also taken steps to change the way we do business and improve the efficiency of our internal workflow.

The results are apparent in our work tackling the problem of congested airspace over busy metropolitan areas around the country.

The old way of doing business was to improve air traffic procedures at one airport, separate from the others. But we've taken a different approach. We are looking at metro areas as a whole and bringing all our stakeholders to the table - airports, airlines, our air traffic controllers and federal agencies. We are working together to improve air traffic flow around all of the airports in a metroplex. We are creating new and more direct routes that will relieve congestion and improve safety and efficiency.

By changing the way we approach the problem, we are improving our airspace in three years. Under our old way of doing business, these changes would have taken five to 10 years.

We're seeing great progress in Houston, Atlanta, Charlotte, California, north Texas and right here in metropolitan Washington, D.C. And more regions will follow.

We have learned lessons from the past regarding our large acquisition programs and we have developed best practices moving forward.

We have elevated and strengthened our NextGen organization, and we have created a new Program Management Organization specifically focused on implementing major technology programs, such as ERAM - which is our En Route Automation Modernization program. This will strengthen and improve the coordination among NextGen initiatives, ushering them from the drawing board to live operation.

This new approach, as well as our improved working relationship with our unions, is already showing results. ERAM already is operating at nine en route centers around the country. We plan to use it at a total of 20 centers. And now five centers are using ERAM as the primary technology to direct air traffic. This sets the stage for taking advantage of more NextGen capabilities throughout the air traffic control system.

This is truly an exciting time in aviation history.

NextGen is fundamental to ensuring that we continue to operate the world's safest air transportation system for many years to come. It will allow us to deliver more on-time and more fuel-efficient flights.

It's a better way of doing business - for the FAA, the airlines, the airports and the traveling public. Thank you very much for the opportunity to appear before you today. This concludes my testimony and I am happy to take any questions you may have.

Chairman Petri, Congressman Costello, Members of the Subcommittee:

Thank you for the opportunity to speak with you today about the status of the Federal Aviation Administration's (FAA) contract tower program. Since its inception in 1982, this program has been part of how FAA delivers safe and cost-effective air traffic control management to the users of the national airspace system (NAS). There is a general consensus that the program has been successful and it has created measurable efficiencies in the system for both commercial and general aviation operators, while delivering safety benefits to the traveling public. The FAA, the users of the system and the IG are confident that the contract controllers are competent and maintain the highest degree of safety.

The program has grown significantly over the years. It began as a pilot program to contract for air traffic control services for five Level I, lower activity towers that were closed as a result of the Professional Air Traffic Controllers Organization strike in 1981. The program grew to 27 towers by 1993. In 1994, Congress provided funding for a multi-year program to convert additional FAA-operated Level I towers to contract operations. The Program was further expanded by including towers at airports that never had an FAA-operated tower. Today there are 250 contract towers in the program across 49 states and territories.

As this program has developed over the years, it has been the subject of great interest and, at times, controversy. There were fears that this was the first step toward privatization of air traffic control. There were fears that contact towers would not provide the same level of safety as those staffed by federal government employees.

There were fears that cost savings would overrule safety in the execution of this program. I think the good news is this program has evolved in way to be a valuable component of how the FAA manages the NAS.

As you consider this program today, let me note a number of factors that are shaping the program.

First, the NAS is going through some significant changes. The economic downturn that hit the U.S. in 2008 had a profound impact on the general aviation system, and the airport operations where many contract towers are located. There has been a decline in commercial operations at contract towers by 13%, and an overall decrease in operations at those towers by 23%. Critically, looking forward, our forecasts do not see operational levels returning to those seen prior to the economic downturn anytime soon. So we need to make sure we are managing a program that delivers the safety and efficiency benefits to deal with this changing pattern of aviation activity.

Second, Congress has spoken in consistent support of this program, including how to find creative public-private partnerships to foster this program. In 2000, Vision-100 authorized a cost share program so some communities that had an airport that did not meet the required cost-benefit ratio to qualify as a contract tower could instead qualify for a contract tower where the costs are shared between the FAA and the community based on the cost-benefit ratio. Last year, the consolidated appropriations measure for Fiscal Year 2012 (PL 112-55) included a provision that capped the amount any community could be required to pay toward the operating costs of a contract tower in the cost share program at 20% of the total cost of the tower's operation. We agree with the Congress about the importance of the cost share program and are committed to working in an effective fashion with stakeholders to optimize how this program can contribute to our optimal management of the NAS.

Third, as the latest IG update on the status of this important program demonstrates, towers operated by individuals who do not work directly for the federal government generally function safely and cost-effectively. The program creates measurable efficiencies in the system for both commercial and general aviation operators while ensuring a high-level of safety in the NAS.

Fourth, in light of the economic realities, the FAA's ability to maximize its resources to benefit the overall needs of the NAS is extremely important. That is why we proposed in our FY 2013 budget request to recover up to 50%, rather than the 20% currently imposed, of costs for towers that are not fully cost-beneficial. The FAA is always investigating ways to operate more cost-effectively by reviewing and adjusting, as necessary, staffing levels, operating hours, and deployment of system enhancements. We welcome opportunities to safely incorporate best practices from the contract tower program into FAA tower operations.

Fifth, we are updating the cost-benefit analysis for this important public-private partnership. We last did an update of the cost-benefit analysis in 2008. We delayed a new update for a couple of years given our uncertainties about the direction of activity levels and pending legislation that might change the program. We are now moving forward, as existing operational trends appear to represent the new normal and Reauthorization has been enacted. We continue to use the same basic model for our current cost-benefit work while updating inputs including traffic changes, revision to the Department of Transportation's valuation for avoiding fatalities and injuries, and data from the FAA's maturing cost accounting system. We are discussing our approach to incorporating this new information with the U.S. Contract Tower Association to ensure that FAA is considering all pertinent factors in its calculations of individual towers. FAA is determined not to make any final decisions until we have had a full and informed discussion with interested parties.

Finally, we are undertaking a number of efforts to ensure a well-grounded longer term approach. The FAA's Aviation Safety organization is currently conducting a study to compare safety data between airports with manned control towers (federal or contract) and airports that are unmanned. This information will provide the FAA with important information about the future investment in air traffic control facilities and risk management.

We also need to make sure the contract tower program is well integrated into our NextGen endeavors. How we manage air traffic, how we use technologies, and how we organize our facilities and infrastructure will all change over time as we bring NextGen technologies into the system.

In closing, I think we all recognize we live in challenging times and are dealing with a dynamic aviation system. Taking a static view of equipment and services that are in a given place at a given time will not deliver the system the traveling public requires. As new technologies emerge and are integrated into the system, the needs of the NAS, including those of contract towers, may change in order to take the best advantage of safety and efficiency opportunities.

"One size fits all" never has, and never will, be an effective way to make safety and efficiency decisions that affect the NAS and the travelling public. FAA is the guardian of a system that has achieved a safety level that is envied around the world. We remain committed to the contract tower program as an important component of how we deliver safety and efficiency in the NAS. While fiscal realities must play a role in aviation investments, the FAA will not tolerate any degradation in safety, and we recognize that Congress and the traveling public share that view.

Thank you for this opportunity to speak before you. I am happy to answer any questions you might have at this time.

Thank you, Chairman Rockefeller, Ranking Member Hutchison and members of the committee. It's an honor to appear before you today as President Obama's nominee for Administrator of the Federal Aviation Administration.

I am humbled by this nomination and the opportunity to serve our nation. I'd like to thank Secretary LaHood for his leadership and support, and also recognize my family who is with me today - my wife Ann and my son Matthew.

At the Federal Aviation Administration we operate the largest and safest aviation system in the world. The safety of the traveling public is our number one priority and our mission. We are constantly working to identify and address potential risks long before there is a problem. We have achieved a greater level of collaboration with our workforce and are always enhancing our safety culture.

Congress has helped in our efforts by passing the FAA reauthorization earlier this year. I want to thank the members of this committee for their role in this major accomplishment. The reauthorization gives the dedicated employees of the FAA greater financial guidance and it gives greater stability to our programs.

All of this is vital to keeping the economic engine of civil aviation at full capacity. It helps expand on the 10 million jobs and 1.3 trillion dollars that civil aviation already contributes to the American economy each year. Thank you again.

Now, I would like to share a little about my background with you today.

I have spent my entire career in transportation with rewarding professional experiences in both the public and private sectors. I held senior policy positions at the U.S. Department of Transportation under President Clinton. There, I gained valuable insight into the day-to-day operations of many federal agencies, including the FAA.

Later, I was a managing director for transportation with the Salt Lake Olympic Committee. This experience taught me that an immovable deadline can be extremely powerful in motivating and in focusing a team toward a common objective.

More recently, in the private sector, I led a large transportation technology services company. I managed the operations of a global organization and a diverse and technical workforce, to ensure that we met our financial targets. I came to develop a great appreciation for the benefits of mission-focused partnerships between government and business.

Two years ago I returned to the federal government, where I have had the opportunity to serve as Deputy Administrator of the FAA, and now, as Acting Administrator. I am honored that President Obama has nominated me to lead this great agency.

In the last two years I have focused on positioning the FAA to deliver NextGen - the Next Generation Air Transportation System. We recently established a new organization within the agency to focus on implementing major technology programs. This will improve the coordination among NextGen initiatives, helping us usher them from the drawing board to live operation.

What we do over the next several years is going to determine the course of aviation in this country for decades to come. That is why it is critical that the FAA work closely with Congress, other government agencies, all the components of the aviation industry, and the communities they serve, as we lay the foundation for the future.

NextGen is the total transformation of the way we handle air traffic here and around the world. We are moving from radar to satellites, from radios to data messages and from airways that zig-zag the country to more direct routes. We need public-private collaboration to create this new way of doing business.

NextGen means enhanced safety, greater access to airports, a smaller impact on the environment and more predictable schedules for travelers. And we're already seeing these benefits in metro areas around the country now.

As we move forward, I have asked my senior leadership to focus on three main areas this year. First, we need to make the safest aviation system in the world even safer and smarter. Second, we need to realize even more benefits from NextGen today. And third, we need to make sure that we empower our 48,000 FAA employees to embrace innovation and to work efficiently.

Mr. Chairman, I am honored by the trust the President has placed in me as his nominee. If confirmed, I pledge to continue to enhance the safety of our system for the traveling public and to guide the FAA through the many challenges that lie ahead.

I would like to thank this Committee again for its consideration of my nomination, and I look forward to continuing a close working relationship. I am pleased to answer any questions you may have.

Thank you for inviting us here today to update the Subcommittee on the Federal Aviation Administration's (FAA's) progress in implementing the safety enhancement initiatives in the Airline Safety and Federal Aviation Administration Extension Act of 2010 (Act), and other operational issues related to air traffic management.

First, we would like to begin with our progress on the initiatives in the 2010 Act. Over the past three years, the aviation industry, as with many other industries, has faced some tough economic challenges. During this period, we have remained vigilant in our oversight responsibilities to ensure that we continue to have the safest aviation system in the world, while also advancing aviation for the future. The provisions in the 2010 Act helped facilitate several of these major advancements, such as new flight, duty and rest requirements for pilots, and issuing a proposal to require air carriers to implement safety management systems. Although some of the provisions have taken longer than Congress anticipated under the provisions of the Act, we have made significant strides in accomplishing many of the objectives and I am here today to outline this progress for you.

The first area we would like to highlight for you is on pilot fatigue, which was identified as a top priority in the FAA's 2009 call to action. The FAA completed the final rule, which uses the latest fatigue science to address cumulative fatigue and how flight schedules affect the body's 24-hour clock in calculating appropriate duty periods for pilots. Flight duty periods under the new rule are more comprehensive and include flight-related activities such as time spent in training in an aircraft simulator, and standing by on-call for flights at an airport. These duties are part of the workday, contribute to fatigue, and must be counted as part of the core job of flying the airplane. We also took into account that off-duty activities, such as playing golf or commuting, have an impact on fatigue. To address this, the final rule establishes new fitness for duty requirements that serve as a reminder to both airlines and pilots of their professional responsibilities to ensure that rest periods are used for what they are intended--to rest.

In regard to commuting, the National Academy of Sciences (NAS) completed its study on pilot commuting in July 2011. The work by the NAS represents the most recent effort to determine whether there is a link between commuting and safety. The NAS panel identified neither a correlation between pilot commuting and safety nor a unique risk to aviation safety. However, the NAS also indicated that it was unable to find enough data to appropriately determine the relationship between commuting and safety. Based on the NAS study, and the National Transportation Safety Board's recommendation for the FAA to address commuting, the Department of Transportation Inspector General has recommended that we survey the data in order to conduct a proper analysis on what impact commuting may have on fatigue. We have committed to reviewing the available data and reporting to the Inspector General this fall on whether a further data collection effort would be warranted.

The next area we would like to address for you is our progress on developing requirements for air carriers to implement safety management systems. The FAA met the statutory deadline in the 2010 Act and issued a rulemaking proposal on October 29, 2010. It was published in the Federal Register on November 5, 2010 and the comment period closed March 7, 2011. The FAA and industry recognize SMS as a holistic approach to safety that allows for trend spotting to help identify possible safety problems and correct them before they lead to accidents or incidents. We know that SMS is not a substitute for FAA oversight, inspection, and audits of air carriers to ensure compliance with existing regulations and will continue to ensure our responsibilities in these areas are met. SMS would allow us, however, to take a more proactive approach to focus on risk prediction and mitigation strategies in order to tailor our oversight resources in a more effective manner.

In the areas of pilot qualification and training requirements, the FAA has initiated two rulemaking projects to address the pilot training and experience requirements highlighted in the 2010 Act. The first rulemaking project, Qualification, Service, and Use of Crewmembers and Aircraft Dispatchers, is a comprehensive proposal that would revise the current qualification and training requirements for pilots, flight attendants and aircraft dispatchers. We first proposed this revision in 2009, one month prior to the Continental Flight 3407 accident. The FAA received over 3,000 pages of comments in response to this proposal. Following the accident, the National Transportation Safety Board issued several recommendations related to training requirements for air carrier pilots. The 2010 Act mandated some additional training requirements as well. In order to fully consider the comments, address many of the NTSB's recommendations resulting from the accident of Flight 3407, and incorporate the mandates of the Act, the FAA issued a supplemental proposal to permit interested parties to comment on the new requirements. The supplemental proposal was issued on May 20, 2011 and the comment period closed on September 19, 2011. The FAA is actively reviewing the comments to develop a final rule that addresses these training enhancements.

The second rulemaking proposal would substantially raise the qualification requirements for first officers (sometimes referred to as "co-pilots") who fly for U.S. passenger and cargo airlines, consistent with the mandate in the 2010 Act. The proposed rule would require first officers to hold an Airline Transport Pilot (ATP) certificate, requiring 1,500 hours of pilot flight time in most cases. Currently, these pilots are required to have a commercial pilot certificate, which requires only 250 hours of flight time. Some other highlights of the proposed rule include requiring pilots to have a minimum of 1,000 flight hours as a pilot in air carrier operations that require an ATP prior to serving as a captain for a U.S. airline; enhanced training requirements for an ATP certificate, including 50 hours of multi-engine flight experience; and completion of a new FAA-approved training program.

In the 2010 Act, Congress clearly acknowledged that the measurement of experience in determining when an individual may be ready to serve is not limited solely to the number of hours flown. Rather, education and other commercial flying experience must also be considered. Consistent with the requirements of the 2010 Act, this proposal also allows pilots with fewer than 1,500 hours of flight time to apply for an ATP certificate with restricted privileges. As proposed, this certificate would only be issued to graduates of a four-year baccalaureate aviation degree program with 1,000 hours of flight time, provided they have obtained a commercial pilot certificate and instrument rating from a pilot school affiliated with the university or college. Former military pilots with 750 hours of flight time may also qualify for this restricted ATP certificate. Pilots with this restricted certificate would only be able to serve as first officers for U.S. airlines. They could not use it to serve as a captain in any commercial flying operation that requires an ATP, nor use it to teach other pilots. Pilots seeking a restricted ATP would be tested to the same standard required for full ATP certificates, and they would be required to have the equivalent minimum instrument time and night time flight hours as a full ATP certificate would require. The comment period for this proposed rulemaking closes April 30, 2012, and we will work diligently to develop a final rule that addresses the safety initiatives required in the 2010 Act.

Finally, we would like to address two areas of the 2010 Act that have presented some additional challenges for the FAA. The first concerns the area of pilot professionalism. We, and industry, recognize the need to continuously improve professional standards to improve flightdeck discipline. On September 15, 2010, the FAA established an Aviation Rulemaking Committee to develop recommendations on appropriate leadership training and professional development requirements for pilots. That group of experts delivered its recommendations in November 2010, and the FAA has considered them in developing a rule to address the mentoring mandate in the 2010 Act. We have not met the statutory deadline for this proposal because it has been difficult to draft a proposal that appropriately balances effectiveness and resulting benefits, with regulatory burden and cost, as we are required to do.

The second area concerns the requirements in the 2010 Act for the FAA to develop a centralized database of pilot records, which would include a pilot's training and experience history. While we have several major milestones in place and anticipate the database proof-of-concept by August 2012, there are many technical challenges. Some of these challenges include defining requirements for the records to be reported, and integrating thousands of records kept on all forms of media, from paper to microfiche to various automated records.

These initiatives are very complicated, and in some cases, very expensive. As the rulemakings progress, we are constantly evaluating how these provisions may best be leveraged to improve safety, while ensuring that the aggregate costs to society are not greater than these benefits as we are required to do. We remain committed to addressing these safety enhancements while continuing with our daily oversight responsibilities, and satisfying the requirements recently set forth in the FAA Modernization and Reform Act of 2012. In the 2012 Act, we have identified approximately 20 required rulemakings, and up to as many as 10 additional projects that will likely result in rulemaking, in addition to the 2010 Act's rulemaking requirements. Meeting the intent of Congress as anticipated under these Acts, while complying with our other requirements in conducting rulemaking, may present some challenges. However, as we have demonstrated with the provisions of the 2010 Act, our dedicated safety-minded aviation professionals will continue to aggressively work on these issues, while they also continue to perform inspections, analyze data, look for areas for improvement, and work with air carriers to enhance aviation safety.

We would also like to address the advancements we have made within our air traffic safety programs. The FAA has embraced a culture change in air traffic safety. As catastrophic events become extremely rare, the new approach focuses on risk, system design and the management of behavioral choices rather than forensics.

We have put in place an Air Traffic Management System that will provide more insight into the types of events that occur in the National Airspace System that could affect safety. The goal is to identify and mitigate risks early before an accident occurs. It is important to look at precursors because they provide a window into how the safety system is working and they help identify risks.

One area we have targeted is occurrence reporting within the FAA Air Traffic Organization. Occurrence reporting, which is now mandatory, emphasizes the responsibility of all FAA employees involved with air traffic services to report suspected unsafe air traffic occurrences. This gives the organization an opportunity to collect safety information to determine why adverse safety events happen and to develop interventions based on quantifiable data. The objective is to collect enough information to identify system risks, make long term corrections and prevent adverse safety events. We have made reporting this information easier by establishing a common software platform for all facilities which will also facilitate analysis now that it is in a digital format.

To collect and analyze this information, in 2010, the Air Traffic Organization began tracking losses of separation electronically, which include those errors commonly referred to as operational errors or pilot deviations. The tool that enables this new collection of data is known as the Traffic Analysis and Review Program (TARP) and is installed at all terminal radar facilities. TARP is an analytical tool available to local facilities and quality assurance staff to facilitate the detection of trends and development of corrective action. Quality assurance staff has also begun centralized processing of TARP alerts collected from over 20 facilities. These facilities are capable of collecting alerts 24 hours a day, 7 days a week, and we are adding new facilities operating at this level every month. Our goal is to be able to process alerts from all facilities by September 2012.

Another tool that has had an impact on our cultural change is our Air Traffic Safety Action Program (ATSAP). ATSAP is a confidential, non-punitive reporting program that empowers FAA employees to play a direct role in safety. Using this tool, we have seen an increase in safety reporting that has produced a wealth of information to help the FAA identify potential risks in the system and take swift action to address them.

The FAA is also continuing efforts to improve safety on the nation's airport runways. The FAA is working with all stakeholders on innovative programs and techniques to reduce the number and severity of surface incidents. Some of the runway incursion prevention actions include the deployment of technology, better communication and instructions such as line-up-and- wait, explicit taxi instructions for runway crossings, and deploying local runway safety action teams throughout the country. These efforts have contributed to a reduction in total runway incursions from 1,009 runway incursions in FY 2008 to 954 in FY 2011.

As the results of these programs have demonstrated, we have embraced the necessary cultural changes to allow us to identify and mitigate risks early. We remain committed to empowering our employees to be proactive and providing them with the tools they need to play a direct role in the safety of the National Airspace System.

Chairman Petri, Congressman Costello, Members of the Subcommittee, this concludes our prepared remarks. We would be happy to answer any questions that you might have.

Our $15.2 billion budget is a fiscally responsible investment. It supports our mission to deliver the safest and most efficient aviation system for the traveling public. This budget allows us to maintain appropriate staffing for air traffic control, to keep pace with safety inspections and to continue critical investments in both airport infrastructure and in NextGen technologies.

We are always striving to make our system safer. The FAA has made important advancements in improving safety, such as the new flight, duty and rest requirements for pilots that we announced last December. And we are working toward a final rule that requires air carriers to implement safety management systems.

We aim to improve cost efficiency, and we are tightening our belt internally at the FAA. We had to make hard choices in this year's budget about how to maximize benefits. For example, we are focusing our airport grants on smaller airports.

We thank Congress for our four-year reauthorization, which will continue vital safety programs, create jobs, and support NextGen. The FAA forecasts that air traffic will nearly double in the next 20 years. And to handle this growth, we need to transform our aviation system through NextGen. We are moving from the ground-based navigation and surveillance system of the last century to the satellite-based system of the 21^st century. The FY 2013 budget request includes $1 billion towards these efforts. At the same time, the budget maintains our existing infrastructure, which must perform flawlessly every day while we pursue this transformation.

NextGen will deliver more on-time and fuel-efficient flights and continue to ensure that we operate the safest air transportation system in the world. It's is a better way of doing business - for the FAA, the airlines, the airports and the traveling public. These improvements are vital to expanding on the 10 million jobs that civil aviation creates and the 1.3 trillion dollars the sector contributes to the U.S. economy.

I thank you for your support of America's aviation system, and for keeping this vital economic engine running at full throttle.