Remarks as prepared for Delivery

Thank you, George.  I’m happy to be back here today.

I spoke at this conference two years ago.  At that time, I had barely been at the agency six months – I joined in June of 2013. 

It has been an extraordinary couple years since then – both in Commercial Space and at the FAA.

The year before I joined FAA, there were only three licensed launches in the U.S.  Since then, this industry has completed 50 operations. 

FAA has also driven a lot of change of the past few years.

When I joined, my primary responsibility – what I was hired for, principally – was NextGen.  NextGen, as many of you know, is a huge infrastructure project to modernize the nation’s airspace system.

• NextGen is what I spoke about when I was here two years ago.
• We’ve made a lot of progress on that in the last couple years, and I will talk a bit about that today.

But part of my role at FAA is to lead efforts to integrate new users into our airspace.  This includes commercial space operators.  President Obama strongly believes that commercial space transportation is vital to America’s future. 

Integrating new users also includes unmanned aircraft – what we refer to as UAS, and more commonly known as “drones.”  There has certainly been a lot of activity in this area over the past two years.  I will draw some parallels between Commercial Space and the integration of UAS.

So let me begin by talking about some important changes – or shifts in emphasis – that have taken place at the FAA over the last few years, and how that impacts our approach to integrating new users in the airspace.

There are really two shifts I want to talk about – and they are related. 

• One is the migration to a risk-based decision making approach to ensuring safety.  And how that approach leads us to look for performance-based standards rather than prescriptive regulations.
• The second is an increased focus on including stakeholders in the regulatory process – not through the traditional and sometimes long rulemaking process, but through more nimble means that better allow us to keep pace with innovation.

The theme with both of these shifts is that we want to apply the right amount of regulation to ensure public safety, but not unnecessarily interfere with innovation.  That is the balance we are trying to strike.

 First, risk-based Decision Making.  As you know, traditionally aviation regulations grew out of accident investigations.

• It was a forensic approach to regulation.
• An accident would happen – an investigation would ensue, and we would find the various causes of the accident.
• I say causes because invariably there would be a series of causes that lined up in an unfortunate but perfect way to result in an accident.
• Then we would issue regulations to mitigate safety risk – new training, changes of procedures, or equipment changes, or perhaps other changes based on insights into human factors.

And unfortunately, if you go back 20 years or so, there were plenty of commercial accidents to work with to find safety improvements.

As time passed, though – through technology improvements and a concerted effort between FAA and the airline industry – the commercial accident rate was reduced to a very low level.

So with that good news, and few or no commercial accidents to investigate in a given year, our approach to safety shifted to analyzing data.

• We have a huge amount of data in the airline industry. And we were able to create more data by encouraging voluntary disclosure of operational anomalies – without fear of reprisal in most cases.
• Now we rely on this data to find anomalies or unsafe conditions, and go to the root causes of potential accidents before they happen.

There are many manifestations of this new approach to improving safety.  The Safety Management Systems which are now mandated at airlines and airports are a good example.

Another example is the new compliance philosophy Administrator Huerta announced last fall in a speech to the Aero Club here in Washington.

• The new Compliance Philosophy is a significant change at FAA, and recognizes that punitive enforcement action against airmen or operators sometimes is not the right tool.  Sometimes it is!  But not always.
• Instead we are focused on the goal, which is to find problems in the National Airspace System, and find them before they result in an incident or accident.
• To accomplish this, we must maintain an open and transparent exchange of information and data between the FAA and industry. 
• This approach recognizes the importance of operators voluntarily complying with the regulations, but it also recognizes that sometimes even the best operators make honest mistakes.
• We still have to address these mistakes; unintentional errors also threaten safety. 
• But we want to use the most appropriate tool for the problem, and monitor the situation to ensure it doesn’t recur.

The new Compliance Philosophy makes it clear that compliance is the primary goal.  Enforcement is still available as a tool when necessary, but the focus is on compliance.

As I said, this is a big change for the agency.  But this approach is also critical to integrating new technologies into the system.

• New technologies inevitably generate challenges that we had not envisioned when the process began.
• We need data to understand that.  And we need a collaborative and open dialogue with industry to understand that.

The second shift you will see at the agency is a focus on stakeholder engagement, and here the example I will use is NextGen.  We have made quite a bit of progress with NextGen over the last few years.  We’ve reached a point where the foundational phase of NextGen is nearly complete.

• We have replaced the automation systems in our 20 high altitude air traffic control centers, as well as most of our approach facilities.
• We have completed the installation of the ADS-B ground stations, the network of satellite-based GPS that replaces radar for primary surveillance.
• And we have incorporated the ADS-B feed into the Air Traffic Control Centers.

But NextGen is a very complex project – often referred to as a system-of-systems – and as we deploy the capabilities of NextGen – as we move past the installation of the foundational technologies and into capabilities – we must have intensive input from the users of the system to ensure effective deployment.

• So in 2013, we formally reached out to the aviation industry through the NextGen Advisory Committee and asked them to help us prioritize NextGen improvements so we could deliver the greatest benefit in the near term.  We asked for their engagement in setting schedules and milestones to deploy these NextGen improvements.
• This  structured engagement does a number of things:
• It ensures the successful deployment of the new complex air traffic technologies and procedures, including getting the users to actually adopt these innovations.
• It provides assistance in resolving technical issues that arise in complex deployments.
• It helps get industry buy-in for the approach and the schedule for the deployment.
• And, it educates industry, which helps them articulate the benefits they receive.
  
• We have seen a lot of success with this approach.
• One example of that success is our outreach to industry to ensure that the users of the system will be fully equipped with ADS-B technology by 2020, in order to ensure NextGen stays on schedule.
• We now have confirmation from all the major airlines that their fleets will be equipped by 2020, and we are working closely with GA to ensure that fleet is equipped as well.
  
• The industry engagement model has been one of the keys to our success in moving NextGen forward.

So what does all this have to do with Commercial Space?

• This same philosophy of industry engagement drives our work in integrating new users into the airspace.
• That engagement happens at events like this, but also through the efforts of the Commercial Space Transportation Advisory Committee; the Commercial Space Industry Day held at the FAA’s Command Center; working through groups like the RTCA; and operational demos with companies like Space X, which I’ll talk about in a moment.
• In other words, if you have thoughts or ideas on how we can go about safely integrating Commercial Space operations into the airspace, we need to hear about them.

But of course Commercial Space is not the only new user we are working to integrate.  The proliferation of drones, both recreational and commercial, has exceeded anyone’s expectations.

• There are now nearly as many drone users registered in the United States as there are traditional civilian aircraft.
• It’s hard to think of any other industry that’s experienced the phenomenal growth of unmanned aircraft during the past couple of years.
• Safely integrating all unmanned aircraft operations – both commercial and hobbyist–into the national airspace system is one of our top priorities.
• But again we also want to encourage innovation.  Safe integration and fostering innovation must go hand in hand.

Here again, we are using these two tools – risk-based decision making and intense industry engagement – to achieve this integration.

For example, last year we put out a very elegant – elegant as far as rules go – proposed rule governing operations of small UAS – those under 55 lbs. 

• It is a simple rule that defines when and where the aircraft can be operated, and those rules of operation provide the safety envelope. 
• The rule does not specify how the aircraft must be equipped or designed, other than an ability to operate within certain parameters.

We received over 4500 comments on the rule, and the final rule should be out this spring.

Likewise, we have relied on intense industry engagement to allow this sector to continue innovating while reducing risk to people and property.

One of the risks we were seeing was drones operating near airports and aircraft.  The majority of those incidents we believe are the result of operators not realizing that they are part of our shared airspace.

When you open a gift box with a new drone, you have just become a pilot and part of a complex air system.  Thus, our focus has been on educating users. 

To accomplish that, we initiated a process to require registration.

• Registration gives us an excellent opportunity to educate new airspace users, who may have little or no experience with aviation.
• It also helps instill in them the safety culture traditional aviation has relied on for more than a century.

We did not accomplish this alone.  We convened a task force of diverse stakeholders – manufacturers, retailers, tech companies, as well as existing users of the system.

• That task force, in 30 days, developed a consensus recommendation.
• 30 days later, we issued a rule requiring registration, along with a website to accomplish that.
• In the next 30 days, we had over 300,000 UAS users registered.

This is a real shift in how the FAA does business.

The innovations we’re seeing in commercial space are equally breathtaking.

• I mentioned that in 2012 there were three licensed or permitted commercial space operations.
• This year, we expect there to be 38-50 launches and reentries.  Within several years, we could see an average of one launch daily in the U.S. alone.
• Already this year we witnessed Blue Origin make history, with a second successful launch and landing of their New Shepard rocket on January 22, marking the first time that the same rocket was reused.
• This is tremendous progress.  At the FAA, we want to see it continue.  We’re doing it through:
• A combination of risk-based decision making, and
• Greater collaboration between the FAA and the commercial space industry.

Let me talk about how we are approaching this.

The FAA currently “accommodates” space operations by blocking off, or “sterilizing,” a large amount of airspace.

• This approach works today because there are so few operations and most take place from only a couple of coastal locations. 
• But as space operations increase, this has the potential to create lengthy delays or reroutes for other aircraft. 

In this regard, we're partnering with Space X and using their launch data to conduct an operational demo for a tool called the Space Data Integrator, or SDI.

• SDI will help us to safely reduce the amount of airspace we block for commercial space operations and more efficiently release the blocked airspace so it's available for other users.
• This tool will help us automate the operational procedures air traffic controllers currently use for space operations.

We hope to conduct the operational demo in the next couple of months when the Space X's Dragon spacecraft comes in for its reentry mission.

• The demo's goal is to show us how much airspace we have to block off in advance to ensure a safe operation. The tool will enable us to adapt to contingencies. For instance, if we know that a reentry is coming in off course, we can block off new airspace and release the old airspace.
• When we have launch data in real time–and we can block off less airspace–it increases our ability to enable and approve more launch operations. And the more we know about an operator's capabilities and flexibilities, the better job we can do to meet the needs of all airspace users.
• It is an important step toward integration.

As with unmanned aircraft, we need to identify the right balance of regulation so that we ensure the safety of the airspace system while facilitating the growth of this industry.We’re going to have to move from accommodation to integration, meaning that we take into account the needs of all airspace users – just as we are doing with unmanned aircraft.

As with any growing industry, we have faced significant challenges in this process.

• In 2015 there were three major accident investigations of missions slated to deliver cargo to the International Space Station. Understandably, this generated congressional concern.
• Even though the FAA is not developing commercial space regulations during the legislatively-declared "learning period," we are conducting safety oversight, and we are doing a lot of internal prep work so we're not behind the curve when operations start to accelerate.

Industry engagement will be the key to successfully accomplishing this integration.

• We've set up a Commercial Space Integration Team. Through this team, we will seek engagement and input from the commercial space industry.
• We're looking at how we can incorporate the commercial space industry into the FAA's Collaborative Decision Making process–or CDM.
• Currently with CDM, we communicate several times a day with aviation stakeholders and take their interests into account as we manage the flow of daily air traffic.
• As commercial space operations increase, we see a need to have your industry involved in the CDM process.
• And we're developing a Commercial Space Integration Roadmap that will define changes in policy, regulation, procedures and automation capabilities. The Roadmap will also define the schedule by which these changes will be made.

That's an overview of some of the changes to the approach we are taking at FAA, as we use risk-based decision making and industry collaboration to encourage innovation to safely integrate new users in the airspace.

• I want to close by referring to Administrator Huerta's speech last year–about the need for us to consider together the appropriate transition to a framework that involves performance-based standards.
• We need to have a thoughtful discussion across government and across industry about safety risk, and about the balance between innovation and regulation.
• Thank you again for inviting me to speak today.