Unmanned Aircraft Systems: FAA Should Improve Drone-Related Cost Information and Consider Options to Recover Costs

UAS have the potential to provide significant social and economic benefits in the United States. FAA is tasked with safely integrating UAS into the national airspace. As the UAS sector grows, so do demands on FAA's staffing and other resources to develop, oversee, and enforce rules and systems needed to safely integrate UAS into the national airspace.

The FAA Reauthorization Act of 2018 provides for GAO to review issues related to establishing fee mechanisms for FAA to recover its costs related to UAS. This report discusses, among other things, 1) FAA efforts to track the costs of current and planned activities related to UAS and 2) key considerations and options for designing user fee mechanisms that could recover FAA's costs. GAO reviewed FAA documents and financial data for fiscal years 2017 through 2019 and industry reports on drone integration funding. GAO interviewed a non-generalizable sample of 22 UAS industry stakeholders, selected based on participation in FAA advisory groups or prior GAO knowledge to achieve a range of perspectives. GAO reviewed its guidance on designing effective fee mechanisms and OMB instructions to agencies about implementing user fees.

The Federal Aviation Administration (FAA) has undertaken actions to integrate unmanned aircraft systems (UAS or “drones”) into the national airspace and has developed plans to allow for increasingly complex operations, including operations over people and beyond visual-line-of-sight and—eventually—passenger operations (see figure). However, FAA efforts to track related costs may result in incomplete information. FAA established a means of tracking the costs associated with some UAS-activities in certain offices, but many, if not all, FAA offices are doing work related to both manned aviation and UAS. FAA officials stated that they do not know or plan to assess the extent to which staff who split their time between UAS-activities and other responsibilities are tracking those costs. Furthermore, FAA's future costs to conduct oversight and provide air navigation services are largely unknown due to the changing nature of the industry and its early stage of development. Ensuring that information on UAS-related costs is complete and reliable now could put FAA in a better position to identify those costs as they evolve and possibly expand in the future.

The extent to which FAA should recover costs for its UAS-related activities, and what fees are appropriate, are policy decisions for the administration and Congress. Accordingly, this report does not recommend any specific fee mechanism. Nonetheless, planning and consideration of policy goals, using available guidance on user fee design, could better position FAA to inform future decision-making on these issues as it proceeds with UAS integration. Since 2015, FAA has collected a registration fee from UAS operators, but most of FAA's UAS costs are not related to registration or covered by this fee. A stakeholder group established by FAA identified potential fee mechanisms and concluded in 2018 that the aviation industry, FAA, and Congress should identify revenue streams to help fund FAA's UAS activities. Further, GAO guidance and Office of Management and Budget instructions provide a framework, including information requirements, for designing effective user fees. FAA officials said that they have not considered user fee mechanisms as part of their planning because they have been awaiting this report to inform their decision-making. By using available guidance as part of its planning, FAA could incorporate steps, such as identifying costs and beneficiaries, which would benefit future fee design considerations.

GAO is recommending that FAA (1) implement a process to ensure UAS-related cost information is complete and (2) use available guidance on effective fee design to incorporate steps, as part of UAS integration planning, that will inform future fee design considerations. FAA concurred with the recommendations.

The emergence of unmanned aircraft systems (UAS)—commonly  referred to as “drones”—has potential to provide significant social and  economic benefits in the United States. In 2019, the Federal Aviation  Administration (FAA) forecasted that by 2023, the commercial small UAS  fleet (those UAS operated in connection with a business) will nearly triple  from 277,000 to 835,000 and the recreational fleet (those UAS operated  for personal interest and enjoyment) will increase from 1.25 million to 1.39  million. Beginning with the FAA Modernization and Reform Act of 2012,  FAA has been required to take actions to safely integrate UAS into the  national airspace. As the UAS sector grows, so could demands on FAA’s  staffing and other resources required to develop, oversee, and implement  the rules and systems needed for safe integration, such as air navigation  services to manage UAS traffic. There is concern from aviation industry  groups, however, that current funding levels for UAS integration efforts  could (1) impede the swift integration of UAS into the national airspace  and (2) erode resources available for FAA’s activities related to manned  aviation. FAA’s operations are funded, in large part, by the Airport and  Airway Trust Fund, which receives revenues from taxes and fees on  airline tickets, aviation fuel, and cargo shipments paid by manned aircraft users. Currently, there is no comparable mechanism, other than a $5  registration fee, to collect revenue from UAS users to cover FAA’s UAS- related activities.

The FAA Reauthorization Act of 2018 included a provision for us to  review, among other things, issues related to establishing fee  mechanisms for FAA to recover the costs of the regulation and safety  oversight of UAS and the provision of air navigation services to UAS. We  briefed your staff on our interim findings in April 2019 and subsequently  provided a correspondence on these issues in May 2019. This report  discusses:  regulatory and oversight activities and air navigation services FAA has  undertaken or planned for the safe integration of UAS into the national  airspace;

FAA’s efforts to track the costs of its current and planned activities  related to UAS; and  key considerations and options for designing user fees that could  recover FAA’s costs for UAS regulation, oversight, and air navigation  services.

In prior work, we have focused on small UAS (those weighing less than  55 pounds). The scope of this report, however, is broader and includes  FAA activities and costs related to all civilian UAS, regardless of size.  While other federal agencies, including the National Aeronautics and  Space Administration (NASA) and the Departments of Defense and  Homeland Security, have roles in integrating UAS into the national  airspace, this report focuses only on FAA’s role in UAS integration.  Further, state and local governments and industry stakeholders have a  role in developing and managing systems related to UAS and incur  related costs, but these costs were beyond the scope of this review.  Additionally, as the Congressional Research Service has reported, the  issue of aviation user fees, including questions of the extent to which fees  should be based on FAA’s costs for specific services and who should pay  for FAA aviation services, is a complex and contentious one. The scope of this report is focused on potential mechanisms to recover the costs of  FAA’s activities related to UAS only; we have previously reported on  proposals to alter the existing funding structure for manned aviation.

To describe regulatory and oversight activities and air navigation services  FAA has undertaken or planned for the safe integration of UAS into the  national airspace, we reviewed FAA documents and plans for UAS  integration including the Integration of Civil Unmanned Aircraft Systems  (UAS) in the National Airspace System (NAS) Roadmap, Implementation  Plan for Integration of Unmanned Aircraft Systems into the National  Airspace System, and Unmanned Aircraft System (UAS) Traffic  Management (UTM) Concept of Operations, among others. In addition,  we consulted prior GAO work on UAS integration.

To examine FAA’s efforts to track the costs of its current and planned  activities related to UAS, we analyzed FAA financial data on obligations  related to UAS for fiscal years 2017 through 2019. To determine the  reliability of these data, we reviewed the data to identify obvious errors  and missing data and interviewed appropriate FAA officials about related  internal controls and procedures and the limitations of the data. We found  these data sufficiently reliable for the purpose of providing information  about what is known about FAA’s current costs related to UAS activities.  We also reviewed FAA appropriations and related conference reports,  FAA budget justification documents, and FAA cost-accounting methods  and supporting documents. To assess FAA’s efforts to track the costs of  current and planned activities for UAS, including the costs for specific  UAS activities and services, we reviewed FAA’s method for tracking the  costs of UAS activities in the context of federal financial-accounting  standards, and Office of Management and Budget (OMB) instructions to  agencies for financial reporting.

To identify key considerations and options for designing fee mechanisms  that could recover FAA’s costs for UAS regulation, oversight, and air  navigation services, we interviewed FAA officials and industry  stakeholders to get their opinions on key UAS integration activities, FAA’s  costs related to UAS integration, and potential funding mechanisms. More  specifically, we interviewed representatives from a non-generalizable  sample of 22 UAS industry stakeholder groups selected based on their  participation in a task group of FAA’s Drone Advisory Committee that was  tasked with making recommendations related to funding FAA’s UAS  drone integration efforts (Task Group 3), or based on recommendations  from industry stakeholders, or UAS and aviation stakeholders who were  previously identified in GAO work. More information about stakeholder  selection and a full list of the stakeholders we interviewed is included in  appendix I. We also reviewed the interim and final reports of FAA’s Drone  Advisory Committee’s Task Group 3, which was tasked with making  recommendations related to funding the integration of UAS into the  National Airspace System. We compared FAA’s efforts to identify key  considerations and options for developing fee mechanisms to GAO’s  guidance on user fee design, OMB’s instructions to agencies on user  fees, and standards for internal control in the federal government  related to identifying and responding to change.

We conducted this performance audit from December 2018 to December  2019 in accordance with generally accepted government auditing  standards. Those standards require that we plan and perform the audit to  obtain sufficient, appropriate evidence to provide a reasonable basis for  our findings and conclusions based on our audit objectives. We believe  that the evidence obtained provides a reasonable basis for our findings  and conclusions based on our audit objectives.

Historically, unmanned aircraft have been known by many names  including: “drones,” remotely piloted vehicles, unmanned aerial vehicles,  and models. Today, the term UAS is generally used to emphasize the fact  that separate system components are required to support airborne  operations without a pilot onboard the aircraft.

Recreational users have flown UAS—largely model aircraft—for years  with minimal FAA interaction. Increasingly though, more technically  advanced UAS are being used in a variety of ways by different types of  users. Certain industries are interested in expanding the allowable uses  for UAS, such as expanding use of UAS in controlled airspace.  Expanding allowable uses would likely require more FAA involvement and  regulatory action. UAS operators generally fall into the following  categories:

Recreational users operate UAS primarily for recreational or  educational purposes, such as operating UAS to take photographs or  video for personal use. To operate UAS recreationally, a user must  obtain a certificate of registration from the FAA. The certification  constitutes registration for all unmanned aircraft owned by the  individual and operated recreationally.

Commercial users operate UAS in connection with a business.

Examples of commercial uses include: selling photos or videos taken  from UAS (such as wedding or real estate photography); conducting  mapping or land surveys; or conducting factory or equipment  inspections. Commercial users must register each UAS used for  commercial purposes with the FAA.

Public safety/government users operate UAS in a variety of ways to  support key activities of their mission. For example, firefighters use  UAS to help put out fires and the Department of the Interior uses UAS  to survey national parks. Public safety and government users must  either register each UAS or receive an FAA certificate of authorization  to function as a public aircraft operator.

FAA Roles and Responsibilities Related to UAS

FAA is the primary agency responsible for facilitating the safe integration  of UAS into the national airspace. All airspace is regulated, and FAA’s  rules regarding access to the airspace apply to the entire national- airspace system, from the ground up, though there are different rules for  different types of airspace. As UAS increasingly enter and operate within  the national airspace system—a complex network of airports, aircraft, air- traffic-control facilities, employees, and pilots—it is FAA’s responsibility to  plan for and oversee the integration of UAS into both low-altitude airspace  (below 400 feet) and, eventually, higher altitude airspace that will be  shared with other aircraft. According to FAA’s Fiscal Year 2019  Implementation Plan, the ultimate goal of integration is for UAS to operate  harmoniously with manned aircraft, in the same airspace, while ensuring  the safety of people and property both in the air and on the ground.

Within FAA’s Office of Aviation Safety, the UAS Integration Office is  responsible for facilitating the safe, efficient, and timely integration of UAS  into the national airspace system; aligning UAS international activities  with foreign civil-aviation authorities; supporting standards and policy  development related to UAS projects; and providing strategic planning  and support for continuous UAS research and development. The Office  was established in fiscal year 2017 and, in fiscal year 2018, had 39 full- time equivalent employees. Other offices within FAA coordinate with the  UAS Integration Office on UAS-related activities. For example, FAA’s  Office of Rulemaking (also under the Office of Aviation Safety) oversees  the rulemaking process, including issuing notices of proposed rulemaking  and administering the public comment process, in addition to providing  general rule information on published regulatory documents. Other offices  are also involved in the development of proposed rules, certification of  aircraft, compliance and enforcement, and other activities related to UAS  integration according to their subject-matter expertise. For example, the  Flight Standards Service is responsible for setting standards for  unmanned aircraft, and the Aircraft Certification Service is responsible for  certifying new UAS designs and approving UAS for advanced operations.

Additionally, the Air Traffic Organization is responsible for providing data  and information to facilitate the operation of approved UAS near airports.  Figure 1 shows FAA offices that are involved in UAS integration efforts.

FAA’s activities are primarily funded through revenues to the Airport and  Airway Trust Fund (Trust Fund), which is funded through a variety of  excise taxes paid by users of manned aircraft as well as interest revenue  accrued on the balance of the Trust Fund. These excise taxes are  levied on the purchase of airline tickets and aviation fuel, as well as the  shipment of cargo, though, as we have previously found, they are  generally not closely linked to FAA’s costs for the services received. Trust  fund revenues are available to FAA subject to appropriations. In addition  to these revenues, a portion of FAA’s funding is often appropriated from  general revenues.

The Trust Fund provides funding for FAA’s three capital accounts:  1.  the Facilities and Equipment account, which funds technological  improvements to the air-traffic-control system, including the  modernization of the air-traffic-control system called the Next  Generation Air Transportation System (NextGen);  2.  the Research, Engineering, and Development account, which funds  research on issues related to aviation safety, mobility, and NextGen  technologies; and  3.  the Airport Improvement Program, which provides grants for airport  planning and development.

The Trust Fund also provides much of the funding for FAA’s Operations  account, which funds the operation of the air traffic control system and the  UAS Integration Office, among other activities.

In general, a user fee is related to some voluntary transaction or request  for government goods or services above and beyond what is normally  available to the public, such as entrance into national parks, a request  that a public agency permit an applicant to practice law or run a broadcast  station, or the purchase of maps or other government publications. User  fees are normally related to the cost of the goods or services provided.  User fees’ designs can vary widely. We have previously reported that the  way user fees are set and collected can affect the extent to which the  goals of implementing user fees—equity, efficiency, revenue adequacy,  and minimal administrative burden—are achieved.

In 2017 the Drone Advisory Committee (DAC)—an industry stakeholder  group established by FAA to provide advice on key UAS integration  issues—created Task Group 3 to make recommendations related to  funding the integration of UAS into the national airspace system. The  group completed an interim report on short-term funding options in July  2017 and a final report on longer-term funding options in March 2018.  The final report identifies various funding mechanisms for further study  and recommends that industry, the FAA, and Congress work together to  identify long-term funding sources for FAA’s UAS activities. In 2019, the  FAA reconvened the DAC and plans to continue to form task groups to  study emerging issues in the UAS industry, though no new task groups  have been formed related to UAS funding.

FAA Has Undertaken and Planned Activities to Incrementally Expand the Use and Types of UAS in the National Airspace System

FAA has leveraged its existing regulatory and oversight framework for  UAS integration, with the goal of allowing UAS operators to achieve  increasingly complex operational capabilities. For example, FAA is  applying existing regulations and standards developed for manned  aviation to allow for more complex UAS operations. FAA has also initiated  rulemaking efforts to allow operations of small UAS at night and over  people in certain conditions and has identified additional areas for  potential future UAS integration activities. For some capabilities, FAA has  also identified a need for research and development, including for  systems that would enable UAS to detect and avoid other aircraft and  hazards. To help address these needs, FAA has established programs to  draw on private industry’s resources and state and local governments,  including the provision of air navigation services. Longer term, however,  the extent of activities needed to carry out FAA’s statutory role in the  operation, oversight, and enforcement of established rules and systems  related to UAS is still unclear.

FAA Has Leveraged Existing Manned Aviation Regulatory and Oversight Framework for UAS Integration

According to FAA officials, just as the ultimate vision for UAS integration  is for manned and unmanned aircraft to operate in the same airspace,  FAA’s overarching strategy is to integrate UAS into its existing regulatory  structure. This strategy is based in an incremental, risk-based approach  to developing rules, policies, and procedures for UAS and leverages  standards and regulations established for manned aviation as well as  existing FAA resources such as rulemaking, flight standards, and aircraft  certification personnel.

To organize and track UAS integration activities across the agency, FAA  has published internal annual-implementation plans for fiscal years 2017– 2019. FAA adjusts the plans annually to reflect changes in policy. These  plans describe the range of objectives related to expanding the use and  types of UAS in the national airspace that FAA has identified and its plan  for achieving these objectives. For instance, the implementation plan  includes identification of the steps needed to achieve each operational  capability, including development of related regulations, policies, and  standards.

In recent years, FAA has implemented regulations that allow for routine  UAS operations of gradually increasing risk and complexity. To date, FAA  has established requirements for aircraft and operator registration as well  as regulations to allow for limited operations of small UAS, including the  June 2016 Small UAS rulemaking (commonly called Part 107), which  established conditions under which small UAS operators are allowed to  routinely fly for largely commercial purposes (see fig. 2).

Additionally, for those operations not allowed under established  regulations, FAA may grant waivers on a case-by-case basis. According  to FAA, nearly 14,000 requests for waivers were received as of  December 2018, with just over 2,000 of those requests approved. The  Flight Standards Service has issued waivers for some UAS operators— including commercial and government users—to operate beyond-visual- line-of-sight or at night for purposes including inspection of hurricane  damage and aerial photography. As FAA develops and implements  regulations for more and more complex operations, fewer types of  operations will require these waivers.

Since issuance of the Part 107 rule, FAA has continued its efforts to  increasingly allow for routine operations (that is, operations within  established regulations that do not require waivers) of more types of UAS  (including large UAS) under more conditions, as well as more complex  UAS operations. Figure 3 illustrates some of the ongoing and potential  future operational capabilities included in FAA’s phased approach for  UAS integration, which are detailed below.

FAA’s current efforts to allow for more complex UAS operations include  the following ongoing rulemaking efforts:

Operation of small unmanned aircraft systems over people: FAA  issued a proposed rule in February 2019 to expand the operations  permitted under the Part 107 rulemaking to allow operations over  people and at night in certain conditions.

Safe and secure operations of UAS advance notice of proposed  rulemaking: FAA released this advance notice in February 2019 to  seek public comment on whether FAA should promulgate new  rulemaking related to, for instance, additional operating and  performance requirements for UAS.

Remote identification of unmanned aircraft systems (UAS): Both  FAA and stakeholders have identified the ability for FAA, law  enforcement agencies, and other UAS users to remotely identify UAS  while in flight as foundational to most other rules and system  development. FAA currently expects to issue a proposed rulemaking  on remote identification in December 2019. With respect to the  operation of UAS over people rulemaking, FAA expressly stated that it  does not intend to finalize proposed rules in that area until it has  issued a final rule on remote identification.

In its internal Fiscal Year 2019 Implementation Plan, FAA identified a  variety of new types of operations that could be enabled in the next few  years. Examples include:

Beyond visual-line-of-sight operations: Future integration efforts in  this area could allow for low-altitude UAS operations beyond-visual- line-of-sight, such as infrastructure and agricultural inspections  primarily below 400 feet.

Small-cargo delivery operations: Future integration efforts in this  area could allow for delivery of small cargo by networks of small UAS  flying at low altitudes in rural and urban areas predominantly below  400 feet. Currently, FAA certifies some UAS operators to enable them  to conduct cargo delivery operations under existing air carrier  certification regulations.

Urban air-mobility passenger operations: Future integration efforts  in this area could allow for on-demand, highly automated, passenger  air transportation services within and around a metropolitan  environment with no pilot physically in the cockpit of the aircraft.  These operations are expected to use UAS weighing thousands of  pounds that would fly at higher altitudes (500-5,000 feet). UAS  operators are currently developing UAS for future passenger transport  operations both in the United States and abroad.

Large cargo and inspection operations: Future integration efforts in  this area could allow for cargo and inspection operations using  significantly larger UAS (up to tens of thousands of pounds) operating  in controlled airspace at higher altitudes. These UAS are expected to  operate similarly to large commercial manned aircraft. These larger  UAS may allow the transportation of larger volumes of cargo or  execution of inspections over a longer range. Currently, FAA has  approved—on a case-by-case basis—limited experimental operation  of large UAS to conduct inspections by waiver.

FAA’s annual UAS implementation plans reflect the ever-changing nature  of the UAS industry, the regulatory environment, and concerns identified  by stakeholders from within and outside of government related to public  safety and national security. According to FAA, as UAS technology and  the industry continue to evolve, additional operational capabilities and  associated integration needs will be identified. FAA expects efforts to  allow increasingly complex operations to build on lessons learned and  technology improvements gained from preceding integration efforts. Until  new regulations can be issued for these operations, FAA plans to extend  and adjust existing safety standards and requirements—originally  designed for manned aircraft—to UAS through waivers and exemptions.  For example, in April 2019, FAA awarded the first air carrier certification  to a UAS delivery company, Wing Aviation. This certification—under  existing regulations for manned air carriers—allows the company to begin  commercial package delivery in Blacksburg, Virginia.

FAA Aims To Leverage Both Federal and Non- Federal Resources for the Research and Development of UAS Systems and Technologies

As discussed in its internal implementation plan, FAA has identified  research and development needed to inform the safe expansion of UAS  operational capabilities. According to FAA officials, this research focuses  on the assessment of risks that UAS integration poses to the national  airspace as well as the characteristics required for technology and  systems to sufficiently mitigate these risks to achieve the safe  implementation of more complex UAS operations. Such systems and  technology would enable, for example, detection and avoidance of other  aircraft and hazards, reliable navigation capability, and reliable data  linkage between the UAS aircraft and the operator for controlling the  flight.

To that end, FAA coordinates UAS-related research activities being  conducted by FAA, other government agencies, and FAA’s partners in  industry and academia. For example, FAA has coordinated with NASA to  develop a traffic management concept for UAS. Additionally, FAA has  implemented two programs—the Test Sites program and Integration Pilot  Program—to leverage private industry resources and state and local  governments to conduct research and development activities needed to  achieve full UAS integration.

Test Sites Program: FAA authorized seven test site locations  between 2013 and 2016 as directed by statute, at which industry  stakeholders can test UAS technologies to further UAS integration.  According to a test site participant, these sites have been used, for  example, to test technologies such as vertical take-off and landing  technology for large UAS, which may be relevant for large-cargo and  passenger operations.

Integration Pilot Program: This pilot was established in 2017 to  enable testing of UAS integration technologies in state, local, and  tribal jurisdictions. Through this program, for example, the North  Carolina Department of Transportation has partnered with private  industry to provide UAS medical-package delivery services (such as  the transport of medical test samples). The program’s objectives  include:  testing and evaluating models of state, local, and tribal  government involvement in the development and enforcement of  federal UAS regulations, encouraging the development and testing of new UAS concepts of  informing further FAA regulation of UAS.

As these research efforts make headway, FAA plans to leverage the  results to develop a system to provide UAS traffic management services.  As stated in FAA’s Fiscal Year 2019 Implementation Plan, on any given  day, 60,000 commercial aircraft fly through the national airspace into the  30 biggest airports in the United States and—given current trends—the  same number of UAS flights could originate from just one delivery  fulfilment center in a major city in a single day. According to FAA, in order  to fully integrate commercial UAS into the national airspace, a traffic- management ecosystem complementary to—but separate from—FAA’s  air-traffic-management system for manned aviation will likely be needed  to control access and flight operations in low-altitude airspace. FAA has  identified capabilities required for low-altitude UAS air navigation. One  system—the Low Altitude Authorization and Notification Capability  (LAANC)—has been implemented, while a UAS traffic management  system is still under development. According to FAA and stakeholders we  spoke to, LAANC was the first step towards a UAS traffic management  system.

LAANC: Through 2017 and 2018, FAA established technical and  regulatory requirements for private partners to provide LAANC  services, which enable UAS to access controlled airspace near  approved airports. After deploying a system prototype in November  2017, FAA launched LAANC in April 2018 and then expanded the  program to include additional partners in October 2018. Under  LAANC, FAA provides data on temporary flight restrictions, notices,  and airspace maps of participating facilities through a UAS data  exchange. Private companies that have been approved by FAA to  provide UAS air navigation services (called UAS service suppliers)  develop and maintain—with private funding—automated applications  or portals. Approved service suppliers provide differing services, with  varying infrastructure and associated costs to provide the service. For  example, some suppliers provide LAANC services to UAS operators  among the general public, while others process applications for  airspace access only for certain UAS operators. Prior to operating in  controlled airspace near airports, UAS operators use these  applications or portals to apply for airspace authorizations. These  requests are checked against the data provided through the UAS data  exchange, and if approved, UAS operators receive authorization to fly  in the area—within minutes, in some cases. LAANC services were  previously available only to commercial operators, but in July 2019,  LAANC access was extended to recreational operators.

UAS traffic management capability: In 2013, NASA began  developing a concept of operations for a UAS traffic management  system, which is the proposed system for providing UAS air  navigation services in low-altitude airspace. As envisioned by FAA,  these services will be separate, but complementary, to those provided  by the Air Traffic Control system used for manned aviation. FAA  established a pilot program in 2017 to develop and demonstrate early  versions of UAS traffic management operations. Much like LAANC,  the component applications and infrastructure supporting the traffic  management system would be almost entirely developed, owned, and  operated by private UAS service suppliers; only the Flight Information  Management System—a data exchange gateway—is planned to be  built and operated by FAA. The current UAS Traffic Management  Concept of Operations envisions that UAS operators will share the  timing and destination of a planned flight through a UAS service  supplier. FAA envisions that these service suppliers will provide  near real-time advisories to affected UAS operators regarding traffic  (aircraft in the area), weather and winds, and other hazards pertinent  to low-altitude flight (such as cranes or power-line construction or  local UAS restrictions). Figure 4 illustrates the UAS traffic  management system as outlined in the concept of operations. FAA  has not identified an implementation date for the traffic management  system. Rather, FAA proposes a “spiral development,” in which low  complexity operations would be implemented first, with higher  complexity operations and requirements built in incrementally. FAA  intends to allow each new development to gradually mature the UAS  traffic management system to ultimately support the full range of UAS  operations at low altitude. Among other FAA activities, remote  identification rules will be key to implementation of traffic management  capabilities.

FAA’s Role Will Likely Evolve as UAS Integration Progresses

Once FAA has developed the foundational UAS rules and systems such  that operational capabilities of UAS integration have been substantially  achieved, the specific nature of FAA’s role in the operation, oversight, and  enforcement of established rules and systems depends on the nature of  the established regulations and systems. FAA’s mission to ensure the  safety of the national airspace, however, makes it clear that FAA will  continue to play a role in each of these areas, given its responsibility for  maintaining the safety of the national airspace. For example, FAA will  need to continue conducting oversight to ensure compliance with  established regulations, policies, and standards to maintain the safety of  the national airspace, but the precise nature of the oversight needed in  the future will depend on the regulations and systems established.

We recently found that local law enforcement agencies may be unclear  about their role in UAS enforcement and that most FAA inspectors and  local law enforcement agencies GAO met with said that officers may not  know how to respond to UAS incidents or what information to share with  FAA. Similarly, a recent industry task force commissioned to address  the issue of unauthorized UAS near airports found that the role of state  and local law enforcement in addressing that threat is unclear, and  recommended that federal agencies clearly define related roles,  responsibilities, and authorities. As such, FAA’s activities related to  enforcement for UAS will likely evolve as UAS become more integrated in  the national airspace. Further, according to our interviews with  stakeholders, facilities designated for the take-off and landing of UAS for  the transport of passengers and cargo as well as other infrastructure to  support UAS air navigation services may be needed. FAA’s role in  operating or overseeing this infrastructure will likely hinge on the nature of  the infrastructure. For example, while FAA’s Office of Airports has  responsibility for airport safety and inspections as well as establishing  standards for airport design, construction, and operation, the extent to  which this type of oversight will be needed for infrastructure to facilitate  drone operations is not yet known.

FAA Tracks Some Current UAS-Related Costs but Does Not Have a Process to Ensure Cost Information Is Complete

FAA Allocates Appropriated Funds for UAS Activities Based on Congressional Direction

FAA receives annual appropriations in four accounts, and since 2016,  conference reports accompanying appropriations have directed FAA to  allocate some funding from these accounts specifically for UAS-related  activities. Table 1 depicts appropriations FAA has allocated to UAS- related activities from these four accounts since 2016 at the direction of  Congress. FAA allocates portions of its appropriations for the UAS  Integration Office and some other UAS-specific activities based on  congressional direction, but FAA may obligate funding that has not  specifically been allocated for UAS activities to support UAS activities as  well. The vast majority of FAA’s appropriation comes from the Airport and  Airway Trust Fund (which is funded through revenues of taxes and fees  on manned aviation airline tickets, aviation fuel, and cargo shipments),  including all of the appropriations for the facilities and equipment;  research, engineering, and development; and grants-in-aid for airports  accounts. In fiscal year 2018, about 92 percent of FAA’s approximately  $17 billion in total funding was appropriated from the Trust Fund. The  remainder of FAA’s funding is appropriated from general revenues.

For fiscal year 2018, in accordance with congressional direction, FAA  allocated a total of $104.8 million for UAS-related activities and, according  to FAA financial data, obligated approximately $69.7 million for these  activities. Table 2 provides an overview of the UAS-related activities for  which FAA determined it had obligated funds in fiscal year 2018; a more  detailed list of UAS-related activities for which FAA identified fiscal year  2018 obligations is provided in appendix 2. Individual activities may be  funded through more than one account, depending on their scope.  According to officials, and as discussed below, FAA staff outside of the  Office of Aviation Safety and Air Traffic Organization may not consistently  track their UAS-related obligations. As such, the obligation amounts  identified in table 2 may be incomplete and may not represent FAA’s total  fiscal year 2018 UAS costs.

Within the categories above, specific examples of activities funded in  fiscal year 2018 include:

About $3.7 million from both the Operations ($2.07 million) and  Facilities and Equipment ($1.65 million) accounts for the development  of LAANC systems and requirements.

Of the about $33 million obligated by the Office of Aviation Safety in  fiscal year 2018 for UAS-related activities, about $28 million was  obligated by the UAS Integration Office and $166,000 by the Office of  Rulemaking. $4.5 million obligated under facilities and equipment for the  development of a UAS traffic management system and the associated  Flight Information Management System.

FAA Efforts to Track UAS Costs May Result in Incomplete Data

Since 2017, FAA has been tracking costs associated with many of its  UAS activities including time spent by staff as well as other costs, as  shown in table 2. A December 2017 internal memorandum instructed FAA  offices to track UAS-related activities and costs using project codes.  According to FAA officials, the codes are used to identify travel,  procurement, time and attendance, and costs related to special events,  among other UAS-related activities. The effort was intended to address  the administration’s and Congress’ interest in greater cost visibility.  According to FAA officials, the project codes to track UAS costs have  been implemented in the Office of Aviation Safety—including the UAS  Integration Office, Flight Standards Service, and Office of Rulemaking— and staff within the Air Traffic Organization (not including air traffic  controllers). According to FAA officials and as demonstrated by the  obligations shown in Table 2, the Office of Aviation Safety and the Air  Traffic Organization represent the majority of UAS costs for fiscal year  2018 within the Operations account. In addition, according to FAA,  because Conference Reports have outlined how activities in the  Research, Engineering and Development and Facilities and Equipment  accounts should be funded by line item, FAA is able to track these costs  without using the project code method.

While FAA has started tracking UAS-related costs for some offices, FAA  does not know the extent to which UAS costs are tracked throughout the  agency, resulting in data that may be incomplete. Many—if not all—FAA  offices are doing work related to both manned aviation and UAS, but FAA  officials stated that they do not know or plan to assess the extent to which  staff in other offices—such as the Office of the Chief Counsel—that spend  time on both UAS-activities and other responsibilities are using the project  codes to track their UAS-activities. FAA officials stated that, because the  bulk of the UAS-related work is being conducted within the Office of  Aviation Safety and the Air Traffic Organization, it is not a priority to try to  identify the time spent by other offices working on UAS-related activities,  which they believe would be time consuming. However, with no way to  assess the extent to which the project codes have been implemented,  FAA is unable to tell whether it has met the intent of using the codes:  greater visibility into UAS-related costs. For instance, FAA does not  currently have visibility via the project codes into time spent on UAS  activities outside of the Office of Aviation Safety and the Air Traffic  Organization.

According to OMB instructions to agencies on financial-reporting  requirements and standards for federal financial accounting, agencies  should report the full cost of each program—to include both direct and  indirect costs and the costs of identifiable supporting services provided by  other offices within the agency. Further, federal standards for internal  control note that agencies should use quality information—that is, data  that are complete and accurate—to achieve objectives, make informed  decisions, and manage risks. With no assurance that the project codes  are resulting in information that is complete, FAA risks making decisions  based on information that is unreliable for the purpose of understanding  the full costs of its UAS activities. Efforts to track costs need not be overly  complex: federal financial-accounting standards note that agencies  should consider the precision desired and needed in cost information and  the practicality of data collection and processing, among other  considerations, when designing cost-accounting processes. For example,  FAA could build on its existing project codes for UAS-related activities by  monitoring the extent to which the project codes have been used agency- wide. Alternatively, FAA may identify other methods of accounting for  UAS-related costs, if there are some costs not easily tracked using the  project codes. Further, indirect costs associated with FAA management  and facilities could be assigned to the UAS mission based on more  complete information on the direct costs identified through use of the  project codes.

Additionally, as discussed below, many of FAA’s future costs related to  UAS are unknown. Ensuring the project code information is complete and accurate now could put FAA in a better position to identify those costs as  they are realized in the future. Further, federal standards for internal  control state that management should identify, analyze, and respond to  significant changes that could affect an agency’s ability to report reliable  information and achieve objectives—such as a change in mission that  influences costs. Without reliable information on FAA’s UAS-related  costs, the administration and FAA may be less equipped to make  informed policy decisions regarding resources needed as UAS become  further integrated into the national airspace and as UAS oversight  becomes an increasing part of FAA’s mission.

FAA’s Future Costs Are Unknown Due to the Evolving Nature of the Industry

Because the UAS industry, as well as key systems and technological  developments, continue to evolve, it is too early to know what costs  related to UAS that FAA is likely to incur in the future . This holds true for  future operational costs as well as the costs to develop future systems  and regulations and indirect costs. According to FAA and stakeholders  we spoke to, in addition to costs to continue regulatory activities and  safety oversight, FAA’s future costs will depend on the extent of FAA’s  involvement in the everyday operation and oversight of systems, such as  those related to UAS traffic management, and the extent to which FAA  becomes a provider of UAS-related services. Examples of how FAA’s  costs could evolve and possibly expand in each of these areas include:

Regulatory development costs: Current costs for activities such as  the development of new UAS regulations by the UAS Integration  Office could change as UAS become more integrated into the national  airspace. As previously discussed, the industry is changing rapidly  and new uses for UAS are being developed, uses that will require  additional FAA regulation and oversight. FAA cannot know the extent  to which additional rulemaking activities will be required for UAS  technologies and uses that the industry has not yet contemplated or  developed. Costs to develop regulations involve input from offices  across FAA, such as the Office of the Chief Counsel, where FAA  officials are unsure if staff are consistently using the project codes to  track their costs for UAS-related activities. As such, FAA may not  have visibility into the extent to which these UAS-related costs may  change over time.

Safety oversight costs: As part of its safety mandate, FAA is  responsible for enforcing compliance with established regulations for  both manned aircraft and UAS. Several offices within FAA have a role  in UAS compliance and enforcement, including the Flight Standards  Service and the Office of Security and Hazardous Materials Safety. As  we have recently reported, while FAA has sole responsibility for  enforcement of UAS regulations, the agency has focused on engaging  and educating law enforcement and public safety agencies at all  levels—federal, state, and local—and, to a lesser extent, conducting  surveillance to ensure compliance with UAS regulations. While local  law enforcement agencies may often be in the best position to deter  or respond to UAS incidents, they may not have information on how to  respond or what information to share with FAA. According to FAA  officials, the Office of Security and Hazardous Materials Safety is one  of the offices in which FAA officials do not know if staff are tracking  their activities and costs related to UAS through use of the project  codes discussed above. Given the uncertainty about the division of  responsibilities between federal, state, and local law enforcement, it is  unclear how costs for safety oversight and enforcement will evolve  and possibly expand in the future.

Provision and oversight of UAS services and facilities: FAA will  eventually incur costs related to providing air navigation and other  services to UAS operators, oversight of UAS service providers, and  potential infrastructure, but the extent of FAA’s eventual role in the  provision of these services and related oversight is not yet  understood, in part, because the industry is still evolving and it is  unclear what FAA services will be provided in the future. Some  stakeholders believe that an increased industry role in providing air  navigation services could keep FAA’s costs for these activities  relatively low. For example, the UAS Traffic Management Concept of  Operations envisions that leveraging private entities to provide a  variety of UAS traffic management services will reduce the  infrastructure and manpower burden on FAA and, thus, reduce  associated costs.

FAA envisions that the Flight Information Management System—a  system through which FAA can provide directives and enable  information exchange between UAS service suppliers, UAS operators,  and FAA—is the component of the UAS traffic management system  that FAA will build and manage. FAA has not yet estimated the costs  of developing or implementing this system because, according to FAA  officials, the agency is still many steps away from developing the core  infrastructure and regulatory requirements. As UAS integration  progresses and as more UAS are operating in the same airspace as  manned aircraft, additional solutions may be needed to manage UAS  traffic at higher altitudes, which will also incur costs. For instance,  FAA anticipates that air traffic controllers will have a role in de- conflicting manned aircraft and unmanned aircraft and could provide  air-traffic-control services to UAS in controlled airspace. FAA officials  stated it will be necessary to collect data on the direct and indirect  costs of UAS for air-traffic-control services in the future. According to  FAA, a new air-traffic-control-cost-allocation study is underway, but  FAA does not currently have the information on UAS operations that  would be necessary to assign air traffic control costs to UAS users.

Beyond system development, once traffic management systems are  designed and operational, FAA will incur costs related to its role in  overseeing providers of UAS traffic management services as well as  operating and maintaining the Flight Information Management  System. FAA currently provides UAS operators with services related  to registration, aircraft certification, and waivers for operation that fall  outside existing regulations, but those services may change  depending on future rulemaking. When it becomes clearer what  services FAA will likely provide and how it will provide those services,  FAA will be better positioned to estimate its costs to inform its budget  requests and plan for the future, as it has done for systems that have  already been implemented. For example, FAA has estimated future  costs associated with the LAANC program, which was implemented in  2018. FAA anticipates obligating approximately $35.64 million from  the facilities and equipment account and $26.6 million from the  operations account to further develop and operate the LAANC system  from fiscal years 2019 through 2023, as shown in table 3.

Indirect Costs: In addition to direct costs related to rulemaking,  oversight, and provision of services, FAA will continue to incur indirect  costs such as those associated with the operation and maintenance of  FAA facilities and systems. FAA officials said they do not plan to  conduct analysis through which they could allocate indirect costs for  UAS, because FAA’s appropriations and funding structure do not  require them to track costs in this way. However, as previously  discussed, OMB instructions to agencies on financial-reporting  requirements state that agencies should report the full cost of each  program including indirect costs.

As discussed, FAA’s efforts to track costs related to UAS activities may  result in incomplete data, and as the UAS industry evolves and becomes  more integrated, tracking costs may become even more complex.  Generally, FAA officials stated that differentiating between costs related  to UAS and manned aviation will not be necessary as UAS become  further integrated into the national airspace and FAA’s mission because  the agency does not track costs in this way for any other mission areas.  However, as discussed later in this report, there is widespread consensus  among manned and unmanned aviation industry stakeholders that UAS  costs should be borne by the UAS industry rather than the manned  aviation industry, and policy makers may opt to recover these costs  through user fees or some other mechanism in the future. As discussed  below, should FAA and Congress decide that certain fee mechanisms  should be pursued, a reliable accounting of total program cost—including  indirect costs—is important to setting effective fees, as our prior work  related to designing user fees has shown.

Planning and Consideration of Policy Goals Are Key to Designing UAS Fee Mechanisms

Considerations for Determining How to Set and Collect Fees

In the tasking statement to the Drone Advisory Committee’s Task Group  3, FAA asked the committee to recommend options for funding the  activities and services required by both government and industry to safely  integrate UAS into the national airspace system. The Task Group  concluded in its final report that the aviation industry, FAA, and Congress  should coordinate to identify one or more revenue streams that are  separate and segregated from the Airport and Airway Trust Fund to help  fund FAA’s UAS-related activities. The Task Group also identified five  different fee mechanisms through which FAA could recover some of the  costs of its activities from UAS users, a topic we discuss in this section.

The extent to which costs are recovered from UAS users and the  methods by which costs are recovered are policy decisions for the  administration and Congress. Since 2015, FAA has used one fee  mechanism—a $5 registration fee, the same as the fee to register a  manned aircraft—to recover some of the costs associated with  administering the UAS registration requirement. Most of FAA’s UAS- related costs are in areas unrelated to UAS registration. As such, policy  makers may, at some point, consider additional ways to recover the costs  of UAS activities, including implementing user fees for additional services  and activities, subject to congressional authority to implement fees and  use resulting revenue.

Our prior work on designing user fees, combined with policies established  by the Office of Management and Budget, can provide a framework for  designing user fees that reduce the burden on taxpayers to finance FAA’s  UAS activities, which benefit specific users. The goals of establishing  user fees—efficiency, equity, revenue adequacy, and reducing  administrative burden—can be in conflict with each other and necessitate  trade-offs depending on policy priorities. Table 4 describes these goals.

Our prior work illustrates that four key design elements—namely how fees  are (1) set, (2) collected, (3) used, and (4) reviewed—require careful  consideration and planning to achieve the desired goals. Based on the  prospective nature of user fees to recover FAA’s UAS-related costs, we  will focus on how user fees are set and collected. It is important to note  that given the tradeoffs involved in establishing user fees, different users  and stakeholders may have varying perspectives and opinions on what  would be an appropriate fee structure. As these are policy decisions, this  report does not recommend any specific fee mechanism. Instead, the  considerations and examples we present are intended to inform decision- making by laying out issues to take into account when designing user  fees. As discussed in our User Fee Design Guide, determining how UAS  user fees should be set and collected involves a number of steps. These  steps include:  identifying the costs associated with each activity and which costs  should be recovered,  identifying the beneficiaries of each activity, determining how to set fees for various types of beneficiaries, determining how fees should be collected, and determining when it is appropriate to begin collecting fees.

OMB instructions on designing user fees state that user fees should be  sufficient to recover the full cost of providing each service or resource,  including indirect costs, except to the extent that agencies determine that  exceptions should be made. Identifying the full costs of providing a UAS  service or resource—such as providing access to maps and air-traffic  management services like LAANC—could enable policy makers to  determine, consistent with their policy goals, which of those costs should  be recovered through user fees.

Identify the costs of each activity: Our prior work has found that, to  set fees so that total collections cover the intended share of program  costs, a reliable accounting of total program cost is important. As  previously discussed, while the costs of some current regulatory and  operational activities related to UAS are known, some current and  most future costs are unclear. Recognizing that generating and  maintaining reliable cost data can be expensive, OMB instructions  note that program cost should be determined or estimated from the  best available records of the agency. Accordingly, policy makers could  opt to implement fees to recover the estimated costs of each activity  as regulations, services, and systems are established, and adjust fees  periodically based on actual costs.

Determine which costs to recover: The next step is to determine  the extent of the costs for each activity that should be recovered  through user fees based on policy goals. For example, as discussed,  many of FAA’s current costs relate to the “setup” or integration of UAS  into the national airspace, including the costs to develop and  promulgate UAS operational rules. Policy makers may or may not  decide to recover these current costs from future users. For example,  policy makers may decide not to recover these costs based on the  idea that the goal of promulgating UAS-related regulations may be  related to the general safety of the airspace, rather than providing  benefits to specific users. Additionally, some stakeholders we  interviewed stated that the costs of startup activities (like rulemaking)  and safety oversight activities (like enforcing existing regulations)  should not be recovered through user fees because these activities  are core government functions. Rather, these stakeholders advocated  funding such activities through appropriations from general revenues.  However, as we have discussed in prior work, fees have frequently  been used to support agencies’ regulatory programs. For example,  fees assessed by financial regulatory agencies and the Nuclear  Regulatory Commission on their respective regulated industries are  used to support those agencies’ regulatory activities.

Our prior work has found that the extent to which a program is funded by  user fees should generally be guided by who primarily benefits from the  program, though the extent to which a program benefits specific users or  the general public is not usually clear cut. The beneficiaries of FAA’s  UAS-related activities will include both direct users (UAS operators) as  well as indirect beneficiaries such as the general public. Direct  beneficiaries will accrue benefits from their use of UAS, whether  recreational, governmental, or commercial. In contrast, indirect  beneficiaries would benefit from maintaining a safe national airspace  system and preventing disruption of commercial flights and other manned  aviation. Policy makers may decide that, to account for benefits to those  who don’t directly engage in UAS activities, a percentage of FAA’s UAS- related costs should be funded with general revenues. For instance, as  the Congressional Research Service has reported, there has been  general acceptance that appropriations to the FAA from general revenues  account for the public benefits of FAA’s regulation of the national  airspace. Additionally, while the manned aviation industry will benefit  from regulations and oversight that reduce the potential for disruption in  the airspace caused by UAS, UAS operators benefit from the regulation  and safety oversight of the manned aviation industry as well. Policy  makers may choose to account for these benefits in any number of  different ways, depending on the perceived extent of the benefit enjoyed  by each group.

Direct beneficiaries—including recreational, commercial, and  governmental UAS operators—will benefit in different ways based on both  the type of user and the type of use or activities they engage in. For  example, recreational users may experience the joy and excitement of  flying UAS, but are not authorized to accrue any economic benefits. In  contrast, commercial users are operating UAS with the explicit goal of  earning revenue or benefiting business interests in some other way as a  result of their UAS operations.

Determine How to Set Fees for Beneficiaries/Users

As outlined in our prior work, policy makers may set fees for different  types of users and activities based on a variety of factors including (1)  costs imposed on the system by each user or type of use, (2) the extent  of benefits received by different types of users, (3) the ability of each user  to pay, and (4) identified policy goals. Figure 5 presents a simplified,  hypothetical example of setting fees for various activities and users.

The following examples illustrate how these various factors could play  out:

Policy makers may set fees to recover the costs imposed by UAS  users requiring air navigation services—for example, those  operating in controlled airspace (such as around airports) or in  high traffic areas.

Policy makers may set fees to account for the different costs  imposed by providing different UAS users access to air traffic  services, such as charging per flight for air navigation services or  basing the fee on distance traveled in controlled airspace.

Policy makers may decide that recreational UAS users should pay  lower fees than commercial users because they may generally  impose fewer costs on FAA.

Policy makers may set fees for some services that account for the  extent of the benefit received, such as charging for air navigation  services based on value of cargo or number of passengers  transported.

Policy makers may decide to allocate a larger share of FAA’s  UAS-related indirect costs to commercial users, based on their  ability to pay and the monetary benefits they receive.

Policy makers may decide that public safety agencies  (government users), such as local police departments, should be  exempt from fees or pay reduced fees because their use of UAS  may provide a public benefit.

Policy makers may seek to increase safety by reducing or  eliminating fees for certain services in order to reduce the  probability that users may not comply with requirements to avoid  paying an associated fee. This determination would require  balancing the potential revenue associated with the fee against (1)  the potential costs of ensuring compliance with operational  requirements and fees through enforcement activities and (2) the  safety risks associated with the portion of operators who may try  to avoid fees through not complying with operational  requirements.

Most stakeholders we spoke to agreed that UAS users should pay a fee  when they receive a service from FAA but that fees should be related to  the costs incurred by use. In discussing whether distinctions should be  made in setting fees based on factors like commercial or recreational  status, cargo or passenger flights, size and weight of the aircraft, and  intended use of airspace, most stakeholders agreed that fees should be  charged based on these distinctions only insofar as they are associated  with different costs imposed on UAS-related systems or FAA. Based on  the evolving nature of the industry, it is unclear whether distinctions like  those above would be related to differences in costs imposed on FAA.

Some other countries have implemented user fees to recover the costs  associated with UAS-integration and air navigation services, though  integration is still in progress. For example, Transport Canada (the  Canadian agency responsible for developing transportation regulations,  policies, and programs) has established a regulatory structure requiring  UAS pilot certification and UAS registration. It set fees to recover  Transport Canada’s costs for administering those requirements: $5  Canadian dollars (CAD) for registration (similar to FAA’s registration  requirement), $10 CAD for a basic pilot certification, and $25 CAD for  certification to perform advanced operations, such as flying in controlled  airspace. NAV CANADA (Canada’s private, non-profit air navigation  service provider) is in the process of establishing a LAANC-like service  through a third-party but has not yet determined whether or how NAV  CANADA may seek to recover these costs. In another example, officials  told us that the Swiss Federal Office of Civil Aviation is required to  recover its costs, so their general philosophy will be to charge a fee  whenever costs are incurred. The regulatory structure is still under  development, but the office currently charges UAS users for the time  required to issue waivers for UAS operations. For example:

For certain operations, such as those within visual-line-of-sight and  not over people, no authorization is required, and thus no fee is  required.

For advanced operations—such as those beyond visual line of sight  or over people—fees are charged based on the time required to  conduct analysis and risk assessment up to a maximum of 5000  Swiss Francs.

Policy makers can identify opportunities to collect fees based on the  characteristics and requirements of relevant aviation navigation and other  systems as these systems are developed. OMB instructions to agencies  related to user fees state that fees should be collected prior to or at the  time a service is provided unless agencies are legally authorized to  collect fees after the service has been provided. Our prior work has  found that collecting fees at the time a service is provided may reduce the  administrative burden. Here, for example, the UAS traffic management  system may include points in the process when users are required to  obtain an FAA authorization or notify FAA or UAS traffic-management  service providers of operation requirements. Those points may provide an  opportunity for fee collection. Similarly, as FAA does for current UAS  registration fees, online systems for other services could provide an  opportunity for FAA to collect fees associated with those activities.  Alternatively, fees could be collected through a third party to reduce the  administrative burden on FAA. For example, if UAS passengers are  subject to fees, flight operators could collect those fees on behalf of FAA,  as occurs with current passenger excise taxes for manned aviation.  Similarly, UAS service suppliers could collect fees from UAS operators on  behalf of FAA for air navigation services.

Decisions about when to implement user fees depend on both practical  and policy considerations. For example, user fees could be put in place  as soon as FAA implements each UAS-related regulation, service, or  system—that is, once FAA’s costs related to a given activity can be  estimated and beneficiaries identified. Alternatively, policy makers may  decide not to implement user fees, or to implement some fees but not  others, for a period of time in order to allow the nascent UAS industry to  develop and to increase commercial viability. FAA’s tasking statement for  Task Group 3 noted that one option is to consider the UAS industry an  “infant industry” in need of special protections, in which case FAA could  need to ask Congress for additional appropriations from the general fund  to support UAS-related activities in the interim. Our prior work notes that  while it may advance a particular policy goal to, for example, waive fees  for a nascent industry for a period of time, such provisions might create  unfair competitive advantages among users or industries.

In discussing what level of system development should be achieved prior  to imposing fees, stakeholders we spoke to had a wide range of divergent  opinions, including the following:

Some fees, like the existing registration fee, can be imposed now—as  users are receiving value and FAA is incurring costs—and adjusted as  the industry develops.

Designing fees for UAS should take place only after the infrastructure  and regulatory environments have been established.

FAA and other policy makers should start considering user fees and  an accompanying cost accounting and allocation system as soon as  possible, but implementation should wait until a UAS traffic  management system has been implemented.

Fees for FAA services should be implemented when commercial  operations over people and beyond-visual-line-of-sight are routine  (that is, when advanced, revenue-generating UAS operations are  being conducted without need for a waiver).

Industry Stakeholders Have Identified Options for Fee Mechanisms to Recover FAA’s Costs

The Drone Advisory Committee’s Task Group 3 concluded that funding  for integration efforts would be shared across government and industry  and that user fee mechanisms should be considered to recover FAA’s  costs related to a range of activities including rulemaking, development of  policies and standards, and research and development. While the task  group did not make a specific recommendation on a particular fee  mechanism, its final report identified five possible fee mechanisms with  the intention of providing policy makers with ideas:

Filing and licensing fees: Similar to the already-implemented UAS  registration fee, FAA could impose fees to recover the costs of other  FAA services such as reviewing applications for waivers and  certifications.

Point-of-sale-tax: Legislation could be passed to impose a federal  tax on UAS and ensure that the proceeds are used to offset the costs  of FAA’s UAS-related activities.

Business use fee or tax: A business use or transaction tax could  be imposed on the purchase of a UAS-related service: Commercial  businesses that use UAS on behalf of a customer or as part of their  customer service could be responsible for a “pay as you go” model  fee for use of the airspace, which would be added to the invoice. This  concept could include, for example, fees for passengers using urban  air-mobility services or fees for the transport of cargo by UAS, similar  to the existing excise taxes that fund the Airport and Airway Trust  Fund for manned aviation.

Airspace access fee: FAA could recover some or all of the costs  associated with UAS traffic management services by requiring that  UAS operators filing flight plans or other requests to operate UAS pay  a fee to FAA. For instance, the report proposes that operators could  remit a fee online when they request access to airspace near airports  using LAANC.

Auction or lease of airspace: FAA could recover costs or receive  revenue for use of a public resource (navigable airspace) by  conducting auctions to grant a license to UAS traffic management  service suppliers, similar to granting radio spectrum licenses, which  have been used or proposed to address overcrowding of spectrum  and have resulted in significant revenue. Stakeholders noted that  there is not currently a problem with capacity of the national airspace  with respect to the operation of UAS and that there is no need for  auctions of airspace on the basis of scarcity.

According to FAA, each of these options would generally require  additional authority from Congress to enable FAA to collect and use  revenue. The Task Group 3 report and most stakeholders we spoke to  (many of whom participated in the Task Group) agreed that the fee  mechanisms identified generally covered the range of potential options  and stated that it is too early to know which fee mechanisms would be  appropriate to recover the costs of any one activity. Nonetheless,  stakeholders described their overall impressions of how each mechanism  could work, including the following considerations:  If fees are burdensome for casual users, fees could lead to non- compliance with requirements.

Fees that rely on self-reporting by users might be difficult to enforce or  might create a disincentive for users to operate within the system (that  is, operators might find ways to operate without FAA’s knowledge to  avoid paying a fee), an outcome that could decrease compliance with  rules meant to increase safety.

A point-of-sale tax (generally a percentage of the cost of the products)  on UAS would not necessarily be in proportion to the cost of services  or benefits being provided by FAA and might be complicated to  implement and administer. For example, stakeholders noted that a  point-of-sale tax would not apply to home-built or second-hand UAS  users and the tax would not be linked to actual use of the UAS (that  is, the UAS activities that might impose costs on FAA).

FAA’s Lack of Planning to Consider Possible Fee Mechanisms Could Impede Future Design of UAS User Fees

FAA officials told us that they have not yet identified or studied potential  UAS fee mechanisms or analyzed the findings included in the Task Group  3 report because they have been waiting for the results of our work to  inform their decision-making and planning. OMB instructions to agencies  related to user fees establish that—to increase efficiency of resource  allocation and reduce burden on taxpayers—agencies should recover  costs when special benefits are delivered to specific users and that  agencies must review all agency programs on a biennial basis to  determine whether fees should be assessed. Similarly, federal internal  control standards note that management should identify, analyze, and  respond to significant change—such as increasing costs related to a  change in mission like the integration of UAS to the national airspace— using a forward-looking process.

Given the evolving nature of the UAS industry, it is unclear how UAS  users and associated government activities and services fit into FAA’s  existing funding structure. As the balance of FAA’s activities gradually  shifts to include increased focus on UAS-related activities, those activities  continue to be funded by a combination of manned aviation users  (through revenue to the Airport and Airway Trust Fund) and taxpayers  (through general revenues). The revenues to the Airport and Airway Trust  Fund are from taxes on airline tickets, cargo, and fuel, but are not closely  linked to the costs to FAA of providing specific services. In 2007, FAA and  the administration proposed a new funding system that would rely more  on cost-based fees for specific manned aviation activities. This proposal,  however, was never implemented. We previously testified regarding this  proposal, noting that such fees could allow FAA to better identify funding  options that link revenues and costs and improve transparency by  showing how much is being spent on specific FAA activities, but that  achieving these goals would depend on the soundness of FAA’s cost  allocation methodology and extent to which revenues are linked to  costs.

The provision in the FAA Reauthorization Act of 2018 for GAO to conduct  this review, FAA’s tasking statement for Task Group 3, and statements  made by Task Group 3 in its final report suggest an interest among  Congress, FAA, and industry stakeholders, respectively, in considering  user fees as an option for recovering the costs of FAA’s UAS activities.  Implementation of cost-based user fees for UAS would be different from  FAA’s longstanding funding structure for manned aviation, but may not  necessitate a change in that existing structure for areas of FAA’s mission  other than UAS. Indeed, the Task Group 3 report expresses a  consensus that options for UAS funding should not be constrained by the  current traditional aviation funding structure, and any recommended  funding structure should not alter the current structure of funding for  traditional, manned aviation. As UAS integration continues to evolve, FAA  may identify ways that the current aviation funding structure can be  adjusted to recover costs related to UAS operations. For instance, FAA  officials noted that, once large UAS cargo and passenger operations have  been established, those operations could become subject to the same  excise taxes on fuel, cargo, and passengers as are manned operations.

As we have discussed, fees to recover FAA’s costs for its UAS activities  need not be assessed on a program-wide basis. That is, fees to recover  the costs of individual UAS activities can be implemented separately  either as new rules or systems are developed or as FAA reviews its  activities and identifies areas in which services to UAS users are incurring  costs that could be recovered. Further, fees based on costs to FAA  estimated as each rule or system is developed can be periodically  adjusted as needed. As explained in our User Fee Design Guide, periodic  reviews of user fees can help ensure that Congress, stakeholders, and  agencies have complete information about changing program costs and  that fees remain aligned with program costs. As UAS integration  continues, ongoing conversations between Congress, FAA, and  stakeholders may provide additional insight into how fees can be  implemented to accomplish goals.

To date, FAA has not incorporated steps into its existing UAS planning  efforts to identify potential fee mechanisms. Considering potential user  fees as part of these efforts—such as FAA’s annual UAS implementation  planning—could better position FAA to design effective user fees should  policy makers task FAA with implementing them. For instance, collecting  information on costs and beneficiaries as new UAS-related services are  developed and implemented could ensure that data needed to design  effective user fees are available. Similarly, considering ways to collect  revenue—such as through third parties or online systems—as services  and systems are being developed or adapted for UAS users, could  facilitate future implementation of fees. As an example of the type of  planning that may be needed, FAA officials said that identifying the costs  of UAS traffic management services for the purpose of setting fees would  involve (1) tracking which UAS are using the national airspace and (2)  tracking and categorizing the type of operations conducted. Incorporating  a means of collecting these data during the planning and development of  traffic management systems would be useful to future fee-design  considerations in this area. This is not to say that cost recovery  considerations should drive the development of regulations or systems at  the expense of mission goals. Rather, such planning would offer  opportunities for FAA to examine systems, policies, and regulations that  have been designed to accomplish the goals of UAS integration in order  to assess (1) how each system, policy, or regulation will affect FAA’s  costs; (2) the need for additional resources; and (3) potential options for  collecting revenue.

FAA is tasked with managing the integration of UAS into the national  airspace within the context of many competing priorities and limited  resources. Without a process to ensure information on UAS-related costs  is complete for either current or future efforts, neither FAA, nor the  administration, or Congress have reliable information about the total costs  of FAA’s UAS-related activities and therefore may lack the information  needed to effectively prioritize resources. Further, this information could  inform the design of effective user fees, should policy makers decide that  such fees are appropriate. FAA’s UAS integration-planning efforts offer an  opportunity for FAA to build the collection of relevant data, and  consideration of user fee options, into ongoing activities.

We are making the following two recommendations to the FAA:  The Administrator of the Federal Aviation Administration should develop  and implement a process to ensure that information on UAS-related costs  is complete and reliable as capabilities and related regulations evolve.  (Recommendation 1)

The Administrator of the Federal Aviation Administration, as part of UAS  integration-planning efforts, should use available guidance on effective  fee design to incorporate steps that will inform future fee-design  considerations. For example, FAA may choose to incorporate these  additional steps into its annual UAS implementation plan so that—as  existing activities are adapted for UAS users or new regulations, services,  or systems are introduced—costs and fee design options are considered.  (Recommendation 2)

We provided a draft of this report to the Department of Transportation  (DOT) for comment. In its comments, reproduced in appendix III, DOT  agreed that there are likely opportunities to better track and recover UAS- related costs and concurred with our recommendations.

We will be sending copies of this report to appropriate congressional  committees and the Secretary of Transportation. In addition, the report  will be available at no charge on the GAO website at http://www.gao.gov.

If you or your staff have any questions about this report, please contact  me at (202) 512-2834 or KrauseH@gao.gov. Contact points for our  Offices of Congressional Relations and Public Affairs may be found on  the last page of this statement. GAO staff who made key contributions to  this report are listed in appendix IV.

Appendix I: Stakeholders Contacted During the Course of This Review

Appendix II: Federal Aviation Administration Unmanned Aircraft Systems Activities and Associated Fiscal Year 2018 Obligations

Appendix III: Comments from the Department of Transportation

Appendix IV: GAO Contact and Staff Acknowledgments

Heather Krause, (202) 512-2834 or KrauseH@gao.gov.

In addition to the contact named above, the following individuals made  important contributions to this report: David Sausville, Assistant Director;  Katie Hamer, Analyst-In-Charge; Alexandra Jeszeck; Amy Abramowitz;  Camilo Flores; Richard Hung; Delwen Jones; Heather Keister; Hannah  Laufe; Susan Murphy; Joshua Ormond; Pamela Snedden; and Elizabeth  Wood.

Drones can deliver packages, help fight fires, and provide other benefits in the United States. Demands on the Federal Aviation Administration’s staff and resources are increasing as FAA works to safely integrate drones into the nation’s airspace.

The administration and Congress could choose to set user fees to help FAA recover costs. Planning and considering policy goals could help FAA inform that decision in the future.

We recommended improving drone-related cost information and using available guidance to better position FAA to potentially recover those costs with fees in the future.