[House Hearing, 115 Congress]
[From the U.S. Government Publishing Office]




 
               DISRUPTER SERIES: DELIVERING TO CONSUMERS

=======================================================================

                                HEARING

                               BEFORE THE

        SUBCOMMITTEE ON DIGITAL COMMERCE AND CONSUMER PROTECTION

                                 OF THE

                    COMMITTEE ON ENERGY AND COMMERCE
                        HOUSE OF REPRESENTATIVES

                     ONE HUNDRED FIFTEENTH CONGRESS

                             FIRST SESSION

                               __________

                              MAY 23, 2017

                               __________

                           Serial No. 115-35
                           
                           
                           
 [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]                          
                           


      Printed for the use of the Committee on Energy and Commerce

                        energycommerce.house.gov
                        
                        
                            _________ 

                U.S. GOVERNMENT PUBLISHING OFFICE
                   
 26-518                  WASHINGTON : 2018                    
 
                        
                        
                    COMMITTEE ON ENERGY AND COMMERCE

                          GREG WALDEN, Oregon
                                 Chairman
JOE BARTON, Texas                    FRANK PALLONE, Jr., New Jersey
  Vice Chairman                        Ranking Member
FRED UPTON, Michigan                 BOBBY L. RUSH, Illinois
JOHN SHIMKUS, Illinois               ANNA G. ESHOO, California
TIM MURPHY, Pennsylvania             ELIOT L. ENGEL, New York
MICHAEL C. BURGESS, Texas            GENE GREEN, Texas
MARSHA BLACKBURN, Tennessee          DIANA DeGETTE, Colorado
STEVE SCALISE, Louisiana             MICHAEL F. DOYLE, Pennsylvania
ROBERT E. LATTA, Ohio                JANICE D. SCHAKOWSKY, Illinois
CATHY McMORRIS RODGERS, Washington   G.K. BUTTERFIELD, North Carolina
GREGG HARPER, Mississippi            DORIS O. MATSUI, California
LEONARD LANCE, New Jersey            KATHY CASTOR, Florida
BRETT GUTHRIE, Kentucky              JOHN P. SARBANES, Maryland
PETE OLSON, Texas                    JERRY McNERNEY, California
DAVID B. McKINLEY, West Virginia     PETER WELCH, Vermont
ADAM KINZINGER, Illinois             BEN RAY LUJAN, New Mexico
H. MORGAN GRIFFITH, Virginia         PAUL TONKO, New York
GUS M. BILIRAKIS, Florida            YVETTE D. CLARKE, New York
BILL JOHNSON, Ohio                   DAVID LOEBSACK, Iowa
BILLY LONG, Missouri                 KURT SCHRADER, Oregon
LARRY BUCSHON, Indiana               JOSEPH P. KENNEDY, III, 
BILL FLORES, Texas                       Massachusetts
SUSAN W. BROOKS, Indiana             TONY CARDENAS, California
MARKWAYNE MULLIN, Oklahoma           RAUL RUIZ, California
RICHARD HUDSON, North Carolina       SCOTT H. PETERS, California
CHRIS COLLINS, New York              DEBBIE DINGELL, Michigan
KEVIN CRAMER, North Dakota
TIM WALBERG, Michigan
MIMI WALTERS, California
RYAN A. COSTELLO, Pennsylvania
EARL L. ``BUDDY'' CARTER, Georgia

        Subcommittee on Digital Commerce and Consumer Protection

                         ROBERT E. LATTA, Ohio
                                 Chairman
                                     JANICE D. SCHAKOWSKY, Illinois
                                       Ranking Member
GREGG HARPER, Mississippi            BEN RAY LUJAN, New Mexico
  Vice Chairman                      YVETTE D. CLARKE, New York
FRED UPTON, Michigan                 TONY CARDENAS, California
MICHAEL C. BURGESS, Texas            DEBBIE DINGELL, Michigan
LEONARD LANCE, New Jersey            DORIS O. MATSUI, California
BRETT GUTHRIE, Kentucky              PETER WELCH, Vermont
DAVID B. McKINLEY, West Virgina      JOSEPH P. KENNEDY, III, 
ADAM KINZINGER, Illinois                 Massachusetts
GUS M. BILIRAKIS, Florida            GENE GREEN, Texas
LARRY BUCSHON, Indiana               FRANK PALLONE, Jr., New Jersey (ex 
MARKWAYNE MULLIN, Oklahoma               officio)
MIMI WALTERS, California
RYAN A. COSTELLO, Pennsylvania
GREG WALDEN, Oregon (ex officio)

  
                             C O N T E N T S

                              ----------                              
                                                                   Page
Hon. Robert E. Latta, a Representative in Congress from the State 
  of Ohio, opening statement.....................................     1
    Prepared statement...........................................     2
Hon. Janice D. Schakowsky, a Representative in Congress from the 
  State of Illinois, opening statement...........................     3
Hon. Joseph P. Kennedy, III, a Representative in Congress from 
  the Commonwealth of Massachusetts, opening statement...........     5
Hon. Frank Pallone, Jr., a Representative in Congress from the 
  State of New Jersey, prepared statement........................     6
Hon. Greg Walden, a Representative in Congress from the State of 
  Oregon, prepared statement.....................................    54

                               Witnesses

Bastian Lehmann, Founder and CEO, Postmates......................     7
    Prepared statement...........................................    10
Brian Wynne, President and CEO, Association for Unmanned Vehicle 
  Systems International..........................................    15
    Prepared statement...........................................    17
Harry J. Holzer, John Lafarge, Jr., S.J. Professor of Public 
  Policy, Mccourt School of Public Policy, Georgetown University.    23
    Prepared statement...........................................    25
Shyam Chidamber, Chief Evangelist and Senior Advisor, Flirtey....    29
    Prepared statement...........................................    31


               DISRUPTER SERIES: DELIVERING TO CONSUMERS

                              ----------                              


                         TUESDAY, MAY 23, 2017

                  House of Representatives,
     Subcommittee on Digital Commerce and Consumer 
                                        Protection,
                          Committee on Energy and Commerce,
                                                    Washington, DC.
    The subcommittee met, pursuant to call, at 10:15 a.m., in 
room 2322 Rayburn House Office Building, Hon. Robert Latta 
(chairman of the subcommittee) presiding.
    Members present: Representatives Latta, Harper, Lance, 
Guthrie, McKinley, Kinzinger, Bilirakis, Bucshon, Mullin, 
Walters, Costello, Schakowsky, Cardenas, Dingell, Matsui, 
Welch, Kennedy, Green, and Pallone (ex officio).
    Staff present: Mike Bloomquist, Deputy Staff Director; 
Blair Ellis, Digital Coordinator/Press Secretary; Melissa 
Froelich, Counsel, Digital Commerce and Consumer Protection; 
Adam Fromm, Director of Outreach and Coalitions; Giulia 
Giannangeli, Legislative Clerk, Digital Commerce and Consumer 
Protection/Communications and Technology; Bijan Koohmaraie, 
Counsel, Digital Commerce and Consumer Protection; Paul Nagle, 
Chief Counsel, Digital Commerce and Consumer Protection; 
Madeline Vey, Policy Coordinator, Digital Commerce and Consumer 
Protection; Everett Winnick, Director of Information 
Technology; Michelle Ash, Minority Chief Counsel, Digital 
Commerce and Consumer Protection; Jeff Carroll, Minority Staff 
Director; Lisa Goldman, Minority Counsel; Caroline Paris-Behr, 
Minority Policy Analyst; and Matt Schumacher, Minority Press 
Assistant.

OPENING STATEMENT OF HON. ROBERT E. LATTA, A REPRESENTATIVE IN 
                CONGRESS FROM THE STATE OF OHIO

    Mr. Latta. Well, good morning. I would like to call the 
Subcommittee on Digital Commerce and Consumer Protection to 
order, and the chair now recognizes himself for 5 minutes for 
an opening statement.
    Good morning, and welcome again to the Digital Commerce and 
Consumer Protection Subcommittee hearing. Today's hearing is a 
continuation of our Disrupter Series in which our subcommittee 
explores emerging technology and all the ways innovation is 
reshaping industries. The focus of our hearing this morning is 
product and package delivery, and I am excited to learn about 
the new, innovative ways businesses are interacting with 
consumers and how technology is being leveraged to deliver 
goods quickly and safely to consumers.
    The U.S. e-commerce market is projected to reach $500 
billion by 2018 and is expected to see substantial growth by 
2020. When we think of e-commerce rarely do we consider its 
physical footprint, the process of actually fulfilling the 
online order, and facilitating its delivery. However, my home 
State of Ohio has become somewhat of an e-commerce hub. Ohio 
offers favorable geographic location, a workable transportation 
network, a business-friendly regulatory framework, and skilled 
laborers. Because of these key items, Ohio is home to roughly 
760 warehouse establishments including many e-commerce 
fulfillment operations.
    In today's digital, on-demand economy, consumers have come 
to expect flexibility and quick delivery. In fact, a 2016 
survey indicates that same-day delivery is a priority for 
consumers and that consumers want to have options for where 
their deliveries go, whether that be through their office or 
some other personalized pickup point. Technologies such as 
drones and other automated couriers offer innovative approaches 
to meeting these demands. For example, drones allow fast and 
efficient delivery because they have the ability to traverse 
difficult terrain, fly over bodies of water, and avoid the 
natural traffic congestion that slows traditional delivery.
    I look forward to hearing more about the use of drones and 
other automated delivery systems from our witnesses today and 
how such technological advancements are being used to meet 
consumer demands and what the safety issues are. I also look 
forward to exploring how we as policymakers can promote 
innovation and address any regulatory barriers.
    Again I want to thank our witnesses for being with us today 
as we have this discussion today. And I have a couple minutes 
left and I recognize the vice chairman from Mississippi.
    [The prepared statement of Mr. Latta follows:]

               Prepared statement of Hon. Robert E. Latta

    Good morning and welcome to the Digital Commerce and 
Consumer Protection subcommittee hearing. Today's hearing is a 
continuation of the Disrupter Series in which our subcommittee 
explores emerging technology and all the ways innovation is 
reshaping industries. The focus of our hearing this morning is 
product and package delivery. I am excited to learn about some 
of the new innovative ways businesses are interacting with 
consumers and how technology is being leveraged to create 
faster, cheaper and more flexible delivery options.
    The U.S. e-commerce market is projected to reach $500 
billion by 2018 and is expected to see substantial growth by 
2020. When we think of e-commerce rarely do we consider its 
physical footprint- the process of actually fulfilling the 
online order and facilitating its delivery. However, my home 
state of Ohio has become somewhat of an e-commerce hub. Ohio 
offers favorable geographic location, a workable transportation 
network, a business friendly regulatory framework and skilled 
laborers. Because of these key items, Ohio is home to roughly 
760 \1\ warehouse establishments, including e-commerce 
fulfillment operations for Amazon, J.C. Penny, Home Depot and 
many more.
---------------------------------------------------------------------------
    \1\ http://www.cnbc.com/2016/04/08/this-is-why-ohio-is-becoming-
the-e-commerce-capital.html
---------------------------------------------------------------------------
    In today's digital, on-demand economy, consumers have come 
to expect flexibility and quick delivery. In fact, a 2016 
survey indicates that same-day delivery is a priority for 
consumers and that consumers want to have options for where 
their deliveries go- whether that be their office or some other 
personalized pickup point. Technology, such as drones and other 
automated couriers, offer innovative approaches to meeting 
these demands. For example, drones allow fast and efficient 
delivery because they have the ability to traverse difficult 
terrain, fly over bodies of water and avoid the natural traffic 
congestion that slows traditional delivery.
    I look forward to hearing more about the use of drones and 
other automated delivery systems from our witnesses today and 
how such technological advancements are being used to meet 
consumer demands. I also look forward to exploring how we, as 
policymakers, can promote innovation and address any regulatory 
barriers. Thank you all for joining us today for this important 
discussion.

    Mr. Harper. Thank you, Mr. Chairman, for calling today's 
hearing, the latest in the subcommittee's Disrupter Series, to 
examine the development and implementation of innovative 
delivery services for businesses and consumers. One aspect we 
will focus on is the potential commercial application of 
product delivery systems via unmanned aerial aircraft systems, 
also referred to as UAS or drones, and how to ensure the safe 
integration of these services into the national airspace 
system.
    In May of 2015, Mississippi State University, which is in 
my congressional district, and the Alliance for Systems Safety 
of Unmanned Aircraft Systems through Research Excellence, or 
ASSURE for short, was selected by the Federal Aviation 
Administration to be the lead for the National Center of 
Excellence for Unmanned Aircraft Systems.
    Mississippi State University's ASSURE is a consortium of 
academic institutions along with government and industry 
partners tasked with identifying and researching issues 
critical to the safe integration of UAS into the national 
airspace system, and developing policy recommendations on the 
expanding use of unmanned aircraft.
    Although only 2 years old, ASSURE's UAS research is already 
influencing the FAA's thoughts regarding small UAS flight 
operation over people and property. Additionally, ASSURE is 
engaged in an aggressive research program to support beyond 
visual line of sight operations. Safety concerns regarding 
flights over populated areas and beyond visual line of sight 
must be resolved before safe and routine UAS delivery services 
are part of our daily lives. And a successful business case can 
be made after that for continued investment in this innovative 
idea.
    The ASSURE UAS air to ground collision study released in 
April is challenging previous perceptions regarding human 
injury in the event of a small UAS impact. This project will be 
continuing as a second phase starting in June, testing numerous 
types of UAS and increasing the human impact component of the 
research. I think it is crucial that we continue that.
    I am pleased to have this hearing and look forward to 
hearing what the witnesses have to say, and with that I yield 
back.
    Mr. Latta. Thank you very much. The gentleman yields back. 
I yield back the balance of my time, and the chair now 
recognizes for her opening statement the gentlelady from 
Illinois, the ranking member of the subcommittee.

       OPENING STATEMENT OF HON. JANICE D. SCHAKOWSKY, A 
     REPRESENTATIVE IN CONGRESS FROM THE STATE OF ILLINOIS

    Ms. Schakowsky. Thank you, Mr. Chairman. Many consumers 
today like to have their purchases delivered directly to their 
homes. The rise in online shopping and mobile purchases has 
meant more business for the post office delivery workers, 
couriers, truckers, and anyone else involved in moving goods 
from the warehouse to the doorstep.
    Given the rise in home delivery, it is no surprise that 
companies are involved in this space. Today we will hear about 
a few of those innovations, specifically drones and delivery 
robots. I have no shortage of basic questions about the 
technologies.
    How does the delivery robot know when to cross the street? 
How worried should I be about these things running into me? One 
of my staffers saw this cooler-looking object with a flag on it 
next to him, and it startled him, on the sidewalk. And 
researchers and firms will continue to work through 
technological challenges as they work to improve automation. 
Meanwhile, Congress needs to work through the policy changes 
that technologies like this represent.
    This is yet another hearing in our Disrupter Series, and 
disruption can be good or bad depending on how you like the 
current system and what it is being replaced with. In past 
hearings we have weighed concerns about safety, privacy, and 
other protections. One topic that I don't think we hit on 
enough is the impact on our workforce.
    It is a simple reality disruptive technologies like 
automation will disrupt some American livelihoods. How would we 
adjust if in a few years we no longer need delivery workers? 
This is not a hypothetical question. Today there are many 
workers without college degrees who used to have good jobs with 
decent income but now struggle with long periods of 
unemployment and lower earning potential. The American economy 
as a whole might be growing, but Americans in certain sectors 
feel like they are falling further and further behind.
    How do we address this? Clearly, blocking the adoption of 
new technology cannot be a long-term strategy or solution. We 
need to look carefully at our education system. Are today's 
students acquiring skills that will be still useful as 
automation progresses? For Americans currently in the 
workforce, how do we assist worker when their existing skills 
fit fewer and fewer available jobs?
    We need a robust system of assistance and job training to 
ensure that Americans can maintain a decent standard of living. 
We must also ensure that protections keep up with new 
technology. Old safeguards don't go out the window when a new 
technology appears. Workers deserve dignity whether they work 
in conventional delivery or work on automated delivery systems. 
That means fair wages, a safe workplace, and the right to 
collective bargaining.
    Consumers need assurances of privacy, safety, and fairness 
whether they are buying a product in a store and ordering home 
delivery by a drone or via mobile app. The challenge of 
adapting to technological changes is by no means unique to the 
delivery sector, but automation and delivery advances, I 
believe now is the time to wrestle with difficult policy 
questions. As the Subcommittee on Digital Commerce and Consumer 
Protection, our job is not to just marvel at cool new stuff, 
though it can be fun to see what is being developed, we must 
get beyond the novelty factor and determine the real policy 
issues at play and legislate accordingly.
    I look forward to hearing our witnesses' perspectives on 
development and consumer delivery. I hope that you can provide 
some insight as we determine how federal policy keeps up with 
the latest technology, and I yield back.
    Mr. Latta. Thank you very much. The gentlelady yields back. 
The chairman of the full committee, the gentleman from Oregon, 
will not be making an opening statement. Is there anyone on our 
side that would like to claim his time? If not, the chair would 
then recognize the gentleman from Massachusetts for 5 minutes.

      OPENING STATEMENT OF HON. JOSEPH P. KENNEDY, III, A 
      REPRESENTATIVE IN CONGRESS FROM THE COMMONWEALTH OF 
                         MASSACHUSETTS

    Mr. Kennedy. Thank you, Mr. Chairman, and I want to thank 
the ranking member Ms. Schakowsky as well for their continued 
commitment to this series and for encouraging this 
conversation. To the witnesses today, I greatly appreciate you 
taking the time to join us and I hope you will bear with us as 
we attempt to keep up with the rapid pace with which you 
innovate. Thank you for being here.
    Technology is in its infancy and provides a rare 
opportunity for bipartisan agreement in supporting its growth 
and your companies. And with increased funding for our 
scientists and investments in STEM education, we can ensure 
that this critical R&D continues and ultimately consumers 
benefit in ways that we have yet to even imagine. That future 
is as bright as it is exciting.
    But greater AI, machine learning, and automation can bring 
with it significant dislocation in our labor markets and with 
that job loss, as with it comes greater social responsibility 
to those who are left behind. That is part of the conversation 
that we need to be having in this subcommittee. As Congress 
defends our small businesses and traditional industries, we 
need to prepare for a future where drones may replace 
deliverymen, where computers replace cashiers, where even apps 
may replace doctors. And that is why we have to extend STEM 
education into every single school regardless of ZIP Code, why 
we need to begin investing in workforce programs for all ages, 
today not tomorrow.
    But balancing our proud history and our bright future will 
require vigilance and engagement at all levels of government 
and the private sector and I would greatly appreciate hearing 
from our witnesses about how we prepare our working families 
for the role in which you view federal policy and helping to 
strike this balance in encouraging you to innovate and solve 
challenges that we have yet to even design or yet to imagine, 
while ensuring that we remain and retain a talented, dedicated, 
educated workforce that in fact is going to power that growth 
to begin with.
    And with that I would reserve the balance of my time or 
yield it to the ranking member of the full committee if he is 
ready for it.
    Mr. Latta. Thank you very much. The ranking member of the 
full committee is recognized.

OPENING STATEMENT OF HON. FRANK PALLONE, JR., A REPRESENTATIVE 
            IN CONGRESS FROM THE STATE OF NEW JERSEY

    Mr. Pallone. Thank you, Mr. Chairman. I don't know if I can 
put this all in, in the time allotted, but if not I will just 
ask you to include it in the record.
    This hearing will explore the new and innovative ways 
consumers will receive goods in the future and in some cases 
right now. Today, 2-day delivery of a package is commonplace 
and now we are seeing on-demand delivery in under an hour. 
These deliveries are not just being carried out by people, but 
now also by robots, and in the future drones.
    As I have stated at past hearings regarding new 
technologies, privacy, data security, and cybersecurity must be 
baked into the devices and the software. We only need to look 
to the front pages to see that cyber attacks such as Russian 
hacking have become an everyday occurrence. Creators and 
manufacturers of internet-connected technology must take 
responsibility for mitigating this problem.
    This committee has had more than ten hearings as part of 
the Disrupter Series. These hearings have given members a taste 
of the latest technologies that are changing how our economy 
works, and this exposure is important. However, I am hoping at 
today's hearing we can begin to discuss how these disruptions 
affect the American worker.
    While no one is advocating for slowing down innovation and 
in fact we are continually pushing for more innovation, we 
should not forget that these new disrupters can bring 
challenges. As policymakers we should acknowledge that some of 
the ways industries mechanize and automate can also cause job 
loss or wage loss, so while the national economy benefits 
individual workers may suffer.
    Disruption is nothing new. While the agriculture sector has 
become vastly more productive, it now is a smaller percentage 
of the overall workforce. And as this committee is well aware, 
the total number of manufacturing jobs has shrunk, in part, due 
to automation. The automation we are discussing today could, 
for example, have an impact on truck drivers and delivery 
services.
    Economists have studied long haul truck driver jobs and 
believe these jobs are at risk as driving becomes more 
automated. And today, 1.7 million people are employed driving 
these routes. They are good wage jobs that will be displaced, 
and this hearing is mostly focused on short distance delivery 
services, which employs over one million workers, so some of 
these jobs are surely at risk too.
    And finally, I don't want to be an alarmist and in fact I 
believe we as a society can meet the challenge, but we need to 
be thinking about the potential job impacts now so we can 
prepare for the future. We need to revisit whether our 
education systems are preparing the next generation for the 
shifting workplace, we need to ensure that retraining programs 
are effective, and we need to invest more in research and 
development to ensure that the United States continues to lead 
the world in innovation.
    It is time we try to plan ahead instead of letting 
ourselves be caught off guard when it is too late. And I yield 
back.
    Mr. Latta. Thank you very much. The gentleman yields back 
and that will conclude the member opening statements. The chair 
would like to remind all members that pursuant to the committee 
rules, all members' opening statements will be made part of the 
record.
    Again I want to thank all of our witnesses for being with 
us today and taking time to testify before our subcommittee. 
Today's witnesses will have the opportunity to give opening 
statements followed by a round of questions from our members.
    Our witness panel for today's hearing will include Mr. 
Bastian Lehmann, founder and CEO of Postmates; Mr. Brian Wynne, 
president and CEO at Association for Unmanned Vehicle Systems 
International; Dr. Harry Holzer is a John LaFarge Jr., S.J. 
Professor of Public Policy at the McCourt School of Public 
Policy at Georgetown University; and Mr. Shyam Chidamber, Chief 
Evangelist and Senior Advisor at Flirtey.
    We appreciate you all being here with us today. And we will 
begin the panel discussion today with Mr. Lehmann and you will 
be recognized for 5 minutes to give your opening statement. And 
just pull that mic right up to you and thanks for being here 
with us today.

  STATEMENTS OF BASTIAN LEHMANN, FOUNDER AND CEO, POSTMATES; 
   BRIAN WYNNE, PRESIDENT AND CEO, ASSOCIATION FOR UNMANNED 
 VEHICLE SYSTEMS INTERNATIONAL; HARRY J. HOLZER, JOHN LAFARGE, 
JR., S.J. PROFESSOR OF PUBLIC POLICY, MCCOURT SCHOOL OF PUBLIC 
  POLICY, GEORGETOWN UNIVERSITY; AND, SHYAM CHIDAMBER, CHIEF 
             EVANGELIST AND SENIOR ADVISOR, FLIRTEY

                  STATEMENT OF BASTIAN LEHMANN

    Mr. Lehmann. Chairman Latta, Ranking Member Schakowsky, and 
distinguished members of the Subcommittee of Digital Commerce 
and Consumer Protection, let me begin by stating that our 
thoughts and prayers are with the people of Manchester in the 
U.K. this morning.
    As a co-founder and CEO of Postmates, we recognize the 
power of global networks to overcome intolerance and power 
opportunity, so it is a pleasure to join you and my 
distinguished co-panelists this morning for a discussion on how 
cutting edge technologies and innovation are transforming 
traditional logistics and delivery networks.
    While advances made by on-demand platforms has certainly 
disrupted traditional models of how products and goods move 
across the country, it is important to start our discussion 
with an overview of how the nation's leading on-demand 
logistics provider, Postmates, the company I co-founded just 6 
years ago, is disrupting the rate and pace at which commerce is 
flowing in your own backyards and districts.
    When Postmates is described as a leader in on-demand 
delivery, we quite literally mean that. Through the tap of a 
button on your phone, the platform enables anyone to get 
anything from their neighborhoods delivered to their doorsteps 
in just a couple of minutes. Where some logistics companies try 
to build a warehouse outside of a city and funnel goods into 
it, we believe in a simple philosophy. Our cities, our towns, 
our communities, they are our warehouses. They are home to 
unique talents and creative expertise that craft and curate 
high quality products, food, and merchandise that power our 
economies.
    We aim to understand the inventory available in each given 
town, index each of its product offerings, and connect you 
directly to that experience by having a fleet of couriers, 
which we refer to as Postmates, deliver this inventory. We 
allow you to find and order from any restaurant or store in 
your city.
    That means in addition to delivering prepared food, the 
platform is also empowering everyone from public school 
teachers ordering supplies to their classrooms to helping 
families of the elderly ensure groceries or medicines are 
delivered to their doorsteps. And with over 65,000 active 
Postmates across 45 major metropolitan markets covering 200 
U.S. cities, our platform facilitates more than two million 
deliveries per month. This year alone we are on track to 
facilitate $1 billion worth of total goods sold on the 
Postmates platform. And since we started the platform, our 
Postmates have earned over $300 million in income.
    But this is just the beginning. The total sales of food and 
groceries last year in the United States alone was nearly $1.4 
trillion, but less than 1.5 percent of that was sold online or 
through cell phones. That includes ourselves, our competitors, 
even big pizza delivery companies.
    With over 10,000 merchants throughout the country from 
major brands like Chipotle, Apple, and Starbucks to local 
pharmacies and corner bakeries, Postmates is able to strike 
both local and national partnerships that continue to power 
sales throughout local economies. That is the power of 
Postmates and the on-demand economy. With each delivery we 
generate critical sales for merchants in the towns each of you 
represent.
    But that story of economic empowerment is also told through 
the lens of flexibility we offer our fleet of Postmates making 
each delivery. Currently, an independent contractor-based model 
provides on-demand platforms like Postmates and the couriers 
themselves optimal flexibility. By empowering our Postmates to 
control how and when they offer their service on our platform, 
we enable students to supplement their income between classes, 
aspiring entrepreneurs to save capital for new business 
opportunities, or parents to earn a little extra by completing 
deliveries after dropping their kids at school or soccer 
practice. All told, these sales and earnings are broadening the 
tax base which are being reinvested right back into our 
communities.
    So we started asking ourselves a key question. Can we 
expand this base of earnings all while continuing to rev the 
engines of economic impact in your districts? How can we do 
right by our couriers in helping them earn higher incomes, and 
how can we manage the on-demand logistics in particular dense 
urban and suburban populations? One such way led us to an 
experiment with what I like to refer to as sidewalk class 
robotics.
    As pointed out in a recent piece in the Harvard Business 
Review, executives have to cut through a lot of hype around 
automation and ``leaders need a clear-eyed way to think about 
how these technologies will specifically affect their 
organizations.'' The right question isn't which jobs are going 
to be replaced, but rather what work will be refined, and how. 
And this does not need to be a terrifying exercise that evokes 
imagery of Terminator or a world where an entire labor force 
gets displaced.
    So we started looking at the trend lines to begin with a 
clear-eyed assessment of our landscape. We have people who use 
cars, bikes, scooters, motorcycles, or walk to complete a 
delivery and each have a different strength and suitability for 
different deliveries.
    But we also noticed that in particular dense or crowded 
clusters of downtown neighborhoods, the distance between 
popular delivery zones and popular restaurants or stores could 
often be quite short. While the Postmates platform is ready and 
equipped to make deliveries, sometimes these short distance 
stretches aren't as financially advantageous to our couriers 
when compared to longer distance deliveries, and tips are often 
based on the distance traveled.
    One way to ensure the continuity of short distance 
deliveries while reserving our hardworking Postmates for longer 
distance deliveries has been experiencing with robots. Through 
partnerships with robotic companies on both the east and west 
coasts, we have started to be able to measure how robots may be 
able to optimize delivery times when compared to current 
numbers. Most importantly, we can focus our fleet of Postmates 
to complete deliveries that are likely to connect them to 
incomes at a much higher rate.
    Our thesis is then that with both human hand and robotic 
operators on the ground, commerce can move at even higher rates 
with more functional ways to make deliveries in each city. In 
the long term, this could ultimately help drive down the 
overall costs of delivery as the supply of couriers increases. 
We at Postmates do not see a role in which robotics will be the 
ultimately delivery mechanism, instead taking these incremental 
and responsible steps to test automation without shortchanging 
our human workforce provides us with three tangible gains.
    Mr. Latta. Pardon me, Mr. Lehmann. If you could just, we 
are running over right now on your time. If you want to just 
wrap up real quick we would appreciate that. Thank you.
    Mr. Lehmann. Absolutely. As I said, we don't believe that 
just robots will be doing deliveries in the future, but we also 
agree that if that happens we have to be aware of a future in 
where we invest into STEM education, where we and Congress 
should and must work to advance a budget which prioritizes 
improving STEM teaching, expanding access to rigorous STEM 
courses, addresses bias for underrepresented students in STEM, 
and revitalizing apprenticeship programs in this country to 
skill up workers no matter their age.
    [The statement of Mr. Lehmann follows:]
    
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    Mr. Latta. Thank you very much. And Mr. Wynne, you are now 
recognized for 5 minutes for your opening statement. Thanks 
very much.

                    STATEMENT OF BRIAN WYNNE

    Mr. Wynne. Chairman Latta, Ranking Member Schakowsky, and 
members of the subcommittee, thank you very much for the 
opportunity to participate in today's hearing to discuss 
innovative delivery systems. I am speaking on behalf of the 
Association for Unmanned Vehicle Systems International which 
represents unmanned systems in all domains. Today I will be 
focusing my remarks on unmanned aircraft systems, or UAS.
    From inspecting pipelines to news gathering to mapping 
flood zones, UAS help us save time, save money, and, most 
importantly, save lives. It is no wonder why thousands of 
businesses, small and large, have already embraced this 
technology and many more are considering integrating it into 
their future operations, including for delivery.
    The FAA implemented the small UAS rule, also known as Part 
107, last August. It was the result of years of collaboration 
between industry and government that established a flexible, 
risk-based approach to regulating UAS. These regulations have 
been in effect for more than 8 months and there is strong 
evidence the commercial UAS market is poised for significant 
growth. As of this month, there are more than 120,000 UAS 
registrations with the FAA, the vast majority of which are 
hobbyists; of those, 62,000 platforms have been registered for 
commercial use. The FAA expects more than 400,000 UAS could be 
flying for commercial purposes over the next 5 years, a more 
than six-fold increase from today.
    An economic analysis by AUVSI projects that the expansion 
of UAS technology will create more than 100,000 jobs and 
generate more than $82 billion to the economy in the first 
decade following full integration into the national airspace. 
After witnessing the growth of the industry over the last few 
years, under the right conditions we believe these numbers 
could go higher.
    Many of our members are exploring ways UAS can transport 
goods such as household items, medical supplies, food, maybe 
even people in the not-too-distant future. Companies such as 
Amazon, Google, and UPS are among the major players who hope to 
eventually launch UAS delivery services. Several companies are 
already testing the delivery capabilities of UAS both 
domestically and abroad, including at Mississippi State, sir.
    We are at the dawn of a new American renaissance in 
technology, one that deserves government attention and support. 
In the past, government invested heavily in physical 
infrastructure, from the nation's air traffic control system to 
the Interstate Highway System, which ultimately had a 
tremendous impact on commerce. The benefits, however, did not 
stop there. Over time, the safety, security, and efficiency 
gains we achieved as a nation have vastly outweighed those 
costs, and the unmanned systems industry will be no different.
    We need a new national imperative in unmanned systems that, 
like the air traffic control system and the Interstate Highway 
System before it, create greater capacity, reduce road 
congestion, fulfill consumer demands, and facilitate the future 
of commerce. Industry is bringing the technology; government 
needs to do more to support it and advance innovations such as 
delivery services.
    The vital prerequisite for advancing UAS is an 
appropriately funded FAA that can meet the IT, employment, and 
staffing needs required for the future. The FAA needs, first 
and foremost, to automate its UAS procedures. Automation will 
also be important beyond Part 107 for more complex operations 
such as delivery services. Many of its important management 
tools and processes which facilitate safer and more seamless 
UAS operations currently operate by manual data input or 
processing. The FAA also needs more employees who are dedicated 
to future UAS rulemakings to move us beyond the current 
regulations.
    Industry is not relying on the FAA and government alone to 
advance UAS. It is currently shouldering many of the R&D costs 
to spur innovation, finding solutions to make UAS fly higher 
and further more safely and efficiently. Industry has also been 
a close partner with government in advancing a UAS traffic 
management system known as UTM and in developing standards for 
remotely identifying operators and owners of UAS.
    The UAS industry is primed for incredible growth thanks to 
industry representatives and government regulators nurturing 
innovation that helps business be competitive in the 
marketplace. We hope that these efforts can be sustained and 
that we continue to reach new historic milestones in 
integrating this technology into the national airspace and pave 
the way for regular and widespread UAS deliveries.
    Thank you again for the opportunity. I look forward to 
questions from the panel.
    [The statement of Mr. Wynne follows:]
    
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    Mr. Latta. Thank you very much. And Dr. Holzer, you are 
recognized for 5 minutes.

                   STATEMENT OF HARRY HOLZER

    Mr. Holzer. Chairman Latta, Ranking Member Schakowsky and 
committee members, thank you for inviting me today to share my 
thoughts on the new digital technologies and how they affect 
the labor market and the economy. I will tell you up front that 
I know nothing about drones, so I defer completely to my other 
colleagues at the table. But I know a little bit about labor 
markets and technology and that is mostly what I will focus on.
    So I would like to make five broad points today. Point 
number 1, employment in trucking, courier services, and 
warehousing has actually been growing quite rapidly recently 
and relatively good jobs are being created, all of this because 
of growing e-commerce. A hundred thousand jobs were created 
just in the past year in these sectors. I believe that trend 
will continue for years to come as e-commerce spreads. Since 
the loss of delivery jobs associated with drones or even 
autonomous vehicles remains at least somewhat speculative in 
terms of its timing and magnitudes, I don't expect the 
employment gains in these sectors to disappear anytime soon.
    Point number 2, broadly, disruptive technologies tend to 
raise our labor market productivity and therefore our living 
standards. Given how flat productivity growth has been in 
recent years in the overall economy, the development of 
technologies that enhance productivity should be welcomed. And 
I will say very clearly it is difficult if not impossible to 
have strong earnings growth over time for our workers if 
productivity growth remains so weak.
    Point number 3, periodically we have these panics in the 
U.S. and elsewhere over mass displacements in unemployment 
associated with new technologies--remember the Luddites in 
Britain in the 19th century? But maybe more relevant for us, 
there was a large automation scare in the U.S. in the late '50s 
and early '60s because of fear that computers would take 
everyone's jobs. These fears are almost always overblown.
    New jobs are created when automation causes others to 
disappear, and workers with skills that complement the new 
technologies actually face a better labor market for their 
skills. And what are these complementary skills? Of course, 
technicians and engineers, but almost anyone with creative 
skills or social and communicative skills, those workers all do 
better. Of course, some workers are substitutes for technology, 
not complements; they do worse.
    Therefore, point number 4, many millions of workers in the 
U.S. and especially less educated men have been hurt by digital 
technologies in the past 4 decades in manufacturing and in 
other industries as well, either when they are directly 
displaced by these technologies or because the labor market 
overall has grown less hospitable to them. Those displaced by 
technologies often experience lengthy unemployment, and when 
they become re-employed on average they take jobs with wages 25 
percent lower, and that is on average.
    But more broadly, the real earnings of men with only high 
school diplomas or less have stagnated or even fallen over the 
past 4 decades, again depending on how you measure that and 
they have fallen behind in real terms relatively of every other 
major group in the labor force. And in response to these 
stagnating and declining wages, millions of prime-age men have 
left the workforce and that is terrible problem because their 
disappearance in the workforce hurts themselves, their families 
and communities, and the U.S. economy overall.
    Therefore, point number 5, a range of important policies 
should be adopted and strengthened to help workers. The ones 
hurt by the new technologies, help them make adjustments in 
this new labor market. We need policies to ensure that workers 
share in whatever productivity growth is generated by these new 
technologies over time. And I think of those technologies 
broadly as falling into three buckets.
    From my point of view, the most important is education and 
workforce development in addition to STEM education, other 
kinds of education in the K-12 years--critical thinking, 
communication skills, et cetera--but really helping more people 
get the post-secondary credentials that the labor market finds 
valuable. We need a lot more help there.
    Secondly, I think it is very important to maintain a robust 
system of unemployment insurance, but perhaps one with some 
reforms to encourage workers to build new skills and get jobs 
more rapidly and as soon as possible. I also believe it is 
important to talk more about wage insurance where displaced 
workers if they take new jobs at lower wages have part of their 
wage loss compensated, and we can talk about that.
    And finally, the third bucket, we need to ensure that 
workers share in the productivity gains generated. That 
includes protections for the right to collectively bargain in 
the private and public sectors as well as limits on anti-
competitive practices by employers such as the growth of 
noncompete clauses in their contracts with worker, and happy to 
discuss all of this further. Thank you very much.
    [The statement of Mr. Holzer follows:]
    
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    Mr. Latta. Well, thank you very much. And Mr. Chidamber, 
you are recognized for 5 minutes for your opening statement. 
Thank you very much for being here.
    Could you--there we go.

                  STATEMENT OF SHYAM CHIDAMBER

    Mr. Chidamber. All right, let me begin again if I don't 
mind. Thank you, Chairman Latta. And thank you, members of the 
committee, to invite me to this hearing. My name is Shyam 
Chidamber. I am a senior advisor and chief evangelist at 
Flirtey, a leading drone delivery service company.
    In my allotted time I would like to do two things: give you 
a very brief history of our remarkable company and share with 
you our perspective on drone technology and where it is going. 
Flirtey is a startup company that has its roots in Sydney, 
Australia. In 2013, we began testing textbook delivery at the 
University of Sydney. Our goal was for students to place the 
orders using a smart phone app and receive their books within 
minutes at their current GPS location anywhere on campus.
    We are now an American company headquartered in Reno, 
Nevada. We were chosen by Y-Combinator, the famous Silicon 
Valley business incubator; have collaborated at NASA; the 
University of Reno; Virginia Tech; The Johns Hopkins Medical 
Center. We have been funded by venture capitalists like Menlo 
Park Venture, Qualcomm Ventures, and several others. About a 
quarter of our workforce are U.S. veterans and we employ young 
graduates from engineering schools who want to change the world 
through innovation.
    Over the last 24 months we have achieved several major 
milestones in U.S. aviation history. Here are a few. In July 
2015, we made the first FAA approved drone delivery on U.S. 
soil. We delivered essential medicines to patients at a free 
medical clinic in southwestern Virginia in collaboration with 
NASA Langley, which our CEO Matthew Sweeny referred to as our 
Kitty Hawk Moment.
    In June 2016, we conducted the first Ever Ship to Shore to 
Ship transport of medical supplies, simulating the 
applicability of drones to emergency medical situations in the 
aftermath of a natural disaster. Appropriately enough, this was 
conducted in Cape May, New Jersey, a few miles from the 
bullseye of Hurricane Sandy.
    I have a short video to play. If we can play that I think 
you will appreciate the small example.
    [Video shown.]
    Mr. Chidamber. Hopefully that gives you a little idea.
    In 2016, we made the first FAA approved delivery to a 
suburban home in Reno, Nevada. Partnering with 7-Eleven, we 
delivered over-the-counter medicine, food, and drinks to 
wonderstruck customers. Most of all we are delighted that our 
historic drone delivery in Wise, Virginia, has been recognized 
by the Smithsonian Air and Space Museum with an exhibit that 
will be opening soon. We are a genuine American success story.
    Most people are no doubt familiar with the military 
applications of drone technology. But I am here to suggest to 
you that drones are a game changing commercial and civilian 
technology, one I believe can save lives and enhance 
lifestyles. Let me share two examples.
    Imagine an elderly woman who lives by herself homebound 
during a snowstorm. She finds to her dismay that she just ran 
out of her insulin medication. The snowstorm has raged all 
night, her driveway is not clear, and the roads are impassable. 
She can pull out her cell phone and order her insulin refill 
from a pharmacy and have it delivered by a Flirtey drone that 
takes off from the pharmacy, flies using GPS and hovers close 
to her front stoop and delivers a packet of lifesaving insulin. 
As Doc says in Back to the Future, ``Roads? Where we are going 
we don't need roads.''
    Think of the handyman who fixes roofs for a living. Instead 
of climbing a rickety ladder placed against a mossy gutter, he 
pilots a drone over your roof, takes vivid HD pictures that you 
can both see on an iPad. It is quick, easy, efficient, safe, 
and more reliable. You have firsthand proof of the damage of 
your roof, the handyman has to carry less hazard insurance, he 
can inspect more roofs, and earn more money.
    Mr. Latta. Pardon me, if you could also wrap up. We are 
over about a minute on your time there.
    Mr. Chidamber. Sure.
    Mr. Latta. Thank you.
    Mr. Chidamber. This future has been made possible by 
simultaneous advances in multiple technologies--GPS, batteries, 
avionics, materials, smart phones, 3-D printing, just to name a 
few. The age of fast, efficient, safe, low cost, last mile 
delivery using drones is at hand. There are some technical 
challenges in drone design, battery capacity, and safety 
systems that remain but these are being addressed. It is only a 
question of time before we solve them.
    So we at Flirtey ask you to imagine a future where in the 
event of a natural disaster like Hurricane Katrina, drones 
deliver urgent medical supplies, food, and water to those in 
need. Imagine a future where you can order anything you like 
online and have it reliably delivered to you within a few 
minutes if not a few hours. Imagine a future where you can 
order food and have it delivered directly to your location 
within minutes. That future is at hand. Thank you.
    [The statement of Mr. Chidamber follows:]
    
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    Mr. Latta. Well, thank you very much. And again, thank you 
to all of our witnesses for your testimony today. We will 
proceed to the question and answer portion of the hearing. I 
will begin the questions by recognizing myself for 5 minutes.
    And Mr. Wynne, in your testimony you touched on how 
commercial drones offer societal and economic benefits. Would 
you please explain the benefits and how commercial drone use 
provides them?
    Mr. Wynne. Well, we are starting today under Part 107 
regulations with largely vertical infrastructure inspections. 
That is because under the rule we have to keep drones within 
visual line of sight. That is offering tremendous safety 
benefits right away in industries such as cell towers, the 
mobile cellular industry cell tower inspections and wind tower 
inspections and so forth. People used to climb up on these 
towers. Now they don't have to. They can execute their jobs 
with this technology standing on the ground. Lots of different 
public safety applications for the search and rescue is very 
large among them, et cetera.
    As we get permission to fly having demonstrated the safety 
of the technology in use in the national airspace system, as we 
have the ability to fly more complex operations, we will be 
able to do more things and create even greater value. And that 
is a progressive process. I think we have picked probably the 
most challenging and most complex operation of all, delivery of 
something in a congested airspace in an urban area, for 
example, but we will get there.
    Mr. Latta. Let me ask you if I can follow up with you, when 
you are talking about the visual line of sight how far are you 
talking then that you are in that visual line of sight, the 
distance?
    Mr. Wynne. Well, with my eyes or yours, sir? It depends on 
the size of the drone if I am not wearing my glasses.
    Mr. Latta. Or binoculars.
    Mr. Wynne. We have to keep the drones under 400 feet, or 
400 feet vertical of whatever it is we are inspecting either 
laterally or above the structure, so we will call it under 400 
feet.
    Mr. Latta. All right. Well, thank you very much.
    Mr. Lehmann, if I could turn to you, could you explain how 
your platform Postmates chooses to complete deliveries? And one 
of the things, or some of the questions, the technology we 
talked about a little bit earlier about being able to cross the 
street when it gets to its delivery point, if you could kind of 
go into that, explain how that all works and functions?
    Mr. Lehmann. Yes. There we go, sorry for that. First of 
all, our humans probably do it just like we all do, so they 
watch the traffic lights. And maybe it is surprising to hear, 
but the sidewalk class robots do it in a very similar way. They 
are equipped with sensors, ultrasonic sensors, LiDAR sensors. 
They can be connected to the smart grid of a city, but by the 
sensors alone they are able to read traffic lights. They see 
humans walking on the street, they see other objects, and they 
behave accordingly. They travel at roughly 4 miles an hour.
    Mr. Latta. And how many do you have out right now that you 
are testing?
    Mr. Lehmann. There are a few dozen that we are testing with 
on the east coast and on the west coast, and slightly more on 
the west coast. We are partnering, in total, with four 
companies and we are working on our own solution in-house as 
well.
    Mr. Latta. Thank you.
    Mr. Chidamber, if I can turn to you, in your testimony you 
mentioned about Flirtey's FFA approved delivery of medicine to 
a clinic in Virginia. Would you explain again how the medicine 
delivery for your FAA approved drone was made? Again, was that 
line of sight or how did you get that to that delivery?
    Mr. Chidamber. Yes. We did do the line of sight kind of 
delivery at Wise, Virginia. It was under controlled conditions 
obviously. There was complete line of sight during the time of 
travel. The Flirtey drone took off from Lonesome Pine Airport, 
which is a small county airport, and the medical camp was in a 
fairgrounds which is about a mile and a half away. So there is 
a clear line of sight standing on top of the roof to see the 
entire flight as it progressed, so there was somebody watching 
the drone the entire time.
    Mr. Latta. And so as you said it was, you say, about a mile 
and a half that----
    Mr. Chidamber. Yes.
    Mr. Latta. OK, and then also how high did the drone go 
then?
    Mr. Chidamber. It is about 3-400 feet.
    Mr. Latta. Three to four hundred feet.
    Mr. Chidamber. Yes, exactly.
    Mr. Latta. Well, thank you very much. And I will yield back 
the balance of my time and will recognize the gentlelady from 
Illinois, the ranking member of the subcommittee, for 5 
minutes.
    Ms. Schakowsky. Thank you so much. As we have heard from 
our witnesses today, automated delivery has the potential to 
create new jobs for some people. For example, it is likely 
there will be more jobs for people who work in engineering and 
customer service, and new business opportunities could be 
created if delivery services become cheaper and faster and more 
widely accessible.
    But with automation as with other shifts in the job market 
there are winners and losers. So Dr. Holzer, you wrote in your 
testimony and you said it today that millions of workers have 
already been hurt by technological change in the past 4 
decades. I wonder if you could expand on that a little bit.
    Mr. Holzer. In the last 4 decades we have had two very 
powerful forces affecting the U.S. labor market, technology as 
well as globalization. On average, the technology has done more 
to substitute for less educated workers especially in old 
fashioned production jobs on assembly lines as well as clerical 
workers in offices. And since that is a fairly routine kind of 
work historically done by less educated workers, the machines 
could do that more efficiently in globalization as well.
    But this has been a good period for people that have post-
secondary education. As I said before, anyone with 
communication skills, problem solving skills, et cetera, comes 
out better in this process. The other thing to remember is that 
as you suggested all of these technologies lower costs, 
therefore lower prices to consumers. They have more money to 
spend. They spend more sometimes in those sectors and elsewhere 
and new jobs get created that way as well. But there is no 
guarantee that everybody's wages will go up instead of down. It 
is usually a mix.
    Ms. Schakowsky. Let me ask you a real-world question. Will 
workers who have gone to community colleges or universities be 
affected differently than those who have not? Are we going to 
have to expand educational opportunities?
    Mr. Holzer. No one knows for sure, but our best guess is 
that it will because artificial intelligence will enable these 
machines to do more and more. Not just the routine work on 
assembly lines, but work that professionals have done, 
everything from finance and accounting to law and medicine.
    So it will likely expand up the ladder. What happens is 
that we will need to invest more in training people in those 
complementary skills that the machines don't do. And so in all 
these sectors there will have to be adjustments made and 
students will have to invest in different kinds of education 
than they did in the past.
    Ms. Schakowsky. Let me ask you about geography a little 
bit. Some experts have pointed out that the benefits of 
technological change accrue disproportionately on our country's 
coasts; meanwhile, jobs in rural areas and Middle America are 
being lost to automation. I am wondering if you have done new 
research on that.
    Mr. Holzer. I have. I would put it slightly differently. I 
think that workers in large metropolitan areas, even those 
internally like Chicago and Cincinnati, have done very well. 
When they have lost manufacturing jobs or similar, they have 
often gained in health jobs, education jobs, et cetera. I think 
it is more in the smaller metro areas and smaller towns--
Allentown, Pennsylvania; Dayton, Ohio; places like that--that 
you haven't seen the new jobs replace the ones that have been 
lost.
    So there we have two choices. Number one, we can help 
workers relocate from those locations to where the jobs are, 
but not everybody is going to relocate; and number two, there 
are things we can probably do to help generate more economic 
activity in those locations. And I think we should be thinking 
about some of those kinds of strategies.
    Ms. Schakowsky. Well, that is really where I wanted to go. 
How can we help assure that new opportunities are created by 
automation and that they are accessible to all workers across 
the country?
    Mr. Holzer. So as I indicated in my comments I see three 
broad strategies here essentially: education, unemployment 
insurance/wage insurance, and also making sure the workers 
share. When you are talking about these smaller towns in rural 
areas internally, jobs aren't there at all. But even here, e-
commerce for instance has the potential to bring more jobs to 
those areas, right. People can do coding and other kinds of e-
commerce work even when the physical product and locations 
aren't there, or warehouses and trucking if these products are 
going to be delivered to these smaller towns in rural areas at 
least on the short term.
    Before the drones and the autonomous vehicles there can be 
some new job creation there as well. So I think we need to 
think creatively about what kinds of jobs can be encouraged in 
some of these locations and at what kinds of wages, again while 
we help people have the mobility, some of them, to move to 
where the job growth is.
    Ms. Schakowsky. Thank you very much. I yield back.
    Mr. Latta. Thank you very much. The gentlelady yields back 
and the chair now recognizes the gentleman from Mississippi, 
the vice chairman of the subcommittee, for 5 minutes.
    Mr. Harper. Thank you, Mr. Chairman, and thanks to each of 
you being here today on this very important and interesting 
topic.
    And Mr. Wynne, it is good to have you back. The last time 
that you testified during the subcommittee's hearing on the 
evolving use of drones, we talked about the UAS Center of 
Excellence, its research, and FAA's road map for integrating 
UAS in the national airspace system. Following up on that 
discussion, what areas of research do you believe that the 
ASSURE program should be focusing on to more rapidly implement 
routine UAS package delivery system?
    Mr. Wynne. The ASSURE program is very broad in its scope 
doing a lot of different work that is really important to get 
to more complex operations. I think that one of the biggest 
challenges we need to solve is detect and avoid technologies. 
Pilots today, myself included, if we are not in the clouds, it 
is our responsibility to see and avoid other aircraft. That is 
harder to do when you are not on the aircraft.
    So we are developing technologies for see and avoid, well 
clear standards, et cetera, et cetera, all of that work is 
being led by the Center of Excellence. It is being distributed 
through some of the best minds in the country and a lot of 
collaboration going on. So I would choose that as probably one 
of the seminal technologies that is being developed today.
    Mr. Harper. OK. And obviously those that are flying private 
aircraft, commercial, they have to know that something is in 
that space, and then I guess the drones themselves need to be 
able to realize that they are both in the same zone; is that 
what you are referring to?
    Mr. Wynne. That is exactly right, sir. We are talking about 
smalls, today under 55 pounds, small UAS. Ultimately, there 
will be aircraft of all sizes and there are aircraft of all 
sizes already that fly in all areas of the airspace. So, there 
are different kinds of rules above 18,000 feet in Class A 
airspace than we would need below 400 feet where there is very 
little traffic.
    But the drones themselves need to be able to automatically 
adjust to one another and they need to be able to adjust to 
anything not performing in the system, or not participating in 
the system such as an EMS helicopter or potentially an air 
applicator for agricultural purposes.
    Mr. Harper. We certainly know that the drone delivery 
business idea is not just limited to the United States and we 
have been advised that the ASSURE program has been contacted by 
other countries asking for information on its research. How 
important is regulatory, cross-border harmonization to the 
drone delivery business?
    Mr. Wynne. It is very important. The UTM system, unmanned 
aircraft system traffic management that ultimately we are 
developing and I think the United States has, through NASA and 
the FAA, has been leading on, ICAO, the International Civil 
Aviation authority or organization in Montreal, recently 
launched an initiative with NASA. They recognize many member 
states. The ICAO recognized that they don't want to do this all 
themselves. So I think U.S. leadership is going to be critical 
in getting this done, but clearly there will be contributions 
from all over the world. This is a global phenomenon, this 
technology, but I think we are now in a place where we can 
lead.
    Mr. Harper. Mr. Chidamber, do you see differences between 
how the United States treats commercial drone delivery and how 
drone deliveries are treated in other countries, and with that 
is the U.S. ahead or behind other countries in the drone 
marketplace?
    Mr. Chidamber. On the regulation side, I think the FAA has 
been slower than their equivalent authorities in other parts of 
the world. I am thinking particularly of New Zealand where we 
actually deliver Domino's Pizza in New Zealand, in Auckland, 
actually. Approvals came faster. It was based on risk 
assessment. Not just the aircraft, but who is running the 
aircraft, what controls are there and so on.
     So a risk-based analysis of approvals is probably what we 
would require and I think the FAA is heading in that direction. 
We would like to see them go faster towards that goal and I 
think we will get there.
    Mr. Harper. And you think the risk assessment is key to 
this?
    Mr. Chidamber. Absolutely, yes. I think the threat from 
perhaps a hobbyist is greater than a legitimate operator who is 
running a business and making deliveries for medicine or pizza 
or whatever it might be. That person is going to be carrying 
insurance, it is their brand. They have got to protect all of 
that.
    So a legitimate business which is operating under the 
confines of the rules of the land are going to be quite 
cognizant of all of these things and safety is a big issue for 
them.
    Mr. Harper. Thank you very much. My time has expired. I 
yield back.
    Mr. Latta. The gentleman yields back. The chair now 
recognizes the gentleman from Texas for 5 minutes.
    Mr. Green. Thank you, Mr. Chairman. I didn't know I was 
coming up that quick. I want to thank both Chairman Latta and 
Ranking Member Schakowsky for having this hearing today.
    Ensuring the safety of our constituents has and will 
continue to be our top priority. Although automation technology 
has potential for massive benefits to society including the 
disabled and elderly, like all groundbreaking technology there 
are risks to some parts of society that need to be considered 
and I look forward to talking about this with our experts.
    Automated delivery of goods has been talked about as a way 
to help mitigate the last mile problem, the inefficiency of 
carrier trucks delivering goods short distances and individual 
consumers. However, in cities like I represent in Houston, part 
of which I represent, distance frequently can be quite long. My 
first question I would like to ask the panel, do you see this 
affecting the use of automated delivery technology and if so, 
how? Any response? No?
    Mr. Lehmann. I can take it. From Postmates' perspective we 
believe that the short range deliveries are what we can conquer 
first and where we can experiment first with our delivery 
robots. They are predominantly designed for sidewalks.
    Mr. Green. OK. Dr. Holzer, in your testimony you talk about 
how disruptive technology has the potential to affect the labor 
market, especially the trucking and delivery courier industry. 
I would like to ask the whole panel their thoughts about what 
industries would be disrupted by this technology and where they 
see new labor trends developing as a result.
    And let me just say, in the Houston area I have watched in 
the last 4 years Amazon come in and build a huge warehouse near 
our intercontinental airport because of air transport, but they 
still have to get those packages out. And how would that 
disrupt these labor trends? It seems like it would just expand 
it unless they send out those drones from their warehouse, 
using Amazon as an example.
    Mr. Lehmann. I think there are two trends that are 
important to distinguish here. On the one side you have clearly 
a company like Amazon that gets more sophisticated with their 
delivery infrastructure and they want to optimize for their hub 
and spoke model that works very well for them, centralized 
warehouses, fast delivery from these warehouses into 
metropolitan areas.
    But I believe it is important to recognize and I would like 
the panel to recognize that there are companies out there that 
specifically work on providing local retailers with 
technologies to compete with these sorts of infrastructure. 
Postmates for example allows local retailers to offer Amazon-
like services and deliveries right from their retail stores.
    So we are envisioning a role that is a lot more 
decentralized where you have a thriving local community. It is 
a different approach than that of Amazon, but we believe in 
thriving local economies and we believe in a healthy local 
economy in communities.
    Mr. Chidamber. May I add to that?
    Mr. Green. Yes.
    Mr. Chidamber. I completely agree with that statement, 
because a small business area with a drone delivery capability 
can compete more effectively with the large chains. So there is 
a whole competitiveness issue here that new technology brings 
to small players in the market.
    The second point I want to make is about productivity, 
which I think the good professor on my right hand side said 
that earlier. Drones particularly can increase blue collar 
productivity and a roofer, a delivery person can make more 
deliveries per day doing those sorts of things. Their pay will 
go up. It is the productivity problem that these things will 
address and that is the important thing to remember.
    Mr. Green. OK. Thank you, Mr. Chairman. I will yield back.
    Mr. Latta. Thank you very much. The gentleman yields back 
and the chair now recognizes the gentleman from New Jersey for 
5 minutes.
    Mr. Lance. Thank you very much, Mr. Chairman, and good 
morning to the distinguished panel.
    Mr. Lehmann, you state in your testimony with more than 
65,000 active Postmates across 44 metropolitan markets covering 
300 U.S. cities, our platform facilitates more than two million 
deliveries per month. Does that mean you are currently in major 
cities or are you in rural areas as well?
    Mr. Lehmann. Both. We are in major metropolitan areas. We 
would consider Los Angeles a major metropolitan area and then 
we have suburbs that we cover as well. We are in the OC, yes.
    Mr. Lance. Are you located throughout New Jersey, the state 
I represent in Congress?
    Mr. Lehmann. We are, yes.
    Mr. Lance. Thank you.
    To Flirtey, I am interested in your testimony. I was very 
interested to hear that you conducted the first ever Shore to 
Ship to Shore transport in New Jersey, and I appreciate your 
highlighting the significance of the location considering what 
occurred in 2012 regarding Superstorm Sandy, a devastating 
event for the region of the country, part of which I represent.
    Many lost electricity for between 1 and 2 weeks. Many of 
the roads were impassable with fallen trees, power lines, and 
debris. Had this technology been available then, how do you 
think it would have helped to mitigate the prolonged hardships 
many in New Jersey and in New York and Connecticut faced?
    Mr. Chidamber. Thank you for that question. I think it 
would have been invaluable if you had drones by the shore which 
could, the roads were impassable, as you remember, to get to 
the spot, but there were first responders who were already 
there. And if there were people who required medical assistance 
and they required medication of some sort, it would be tough 
for them to get that medication bussed in or trucked in from 
somewhere. Similarly, even simple things like potassium 
permanganate to just keep the water clean or anything like 
that, those things could have been brought from a boat 
alongside, the waterway and a drone could have shipped it over.
    So a number of things like that would have been possible, 
so absolutely. I think drones would have been very, very 
helpful if you had it deployed against Sandy, and I am so sorry 
that we were not able to do it.
    Mr. Lance. Thank you. Let's hope that this type of natural 
disaster does not occur again, but obviously natural disasters 
will occur and we are always interested in advanced technology.
    Mr. Lehmann, in your testimony you mentioned sidewalk class 
robotics. Can you please explain to me at least what you mean 
by that?
    Mr. Lehmann. Literally it is I would say everything under 
the size of a refrigerator robot that is driving itself on the 
sidewalks and streets of a city.
    Mr. Lance. Thank you. This is a fascinating topic and I am 
sure that as we progress the work of the distinguished members 
of the panel will lead to greater protection and greater 
service for the American people. I yield back the balance of my 
time.
    Mr. Latta. Thank you. The gentleman yields back and the 
chair now recognizes for 5 minutes the gentleman from Vermont.
    Mr. Welch. Thank you, Mr. Chairman. I thank the panel. I 
want to ask your thoughts about privacy concerns. With all 
these drones flying around they have a mission to do, maybe a 
deliver a package, but they are also capable obviously of 
collecting data. They are also capable of taking photographs. 
They are also capable of doing things that some people may 
regard as an invasion of their personal privacy.
     Mr. Wynne, is that at all a concern in your organization?
    Mr. Wynne. Of course, sir. Everyone is in favor of privacy. 
The organization that I represent worked very, very hard in the 
NTIA process for civil liberties groups under the initiative 
from President Obama to discuss privacy to come up with 
guidelines. Those guidelines are in effect for the industry.
    I would say that in terms of delivery, the amount of data 
that is required just to conduct that operation is probably 
already, I would say creating opportunities for large chip 
manufacturers to try and figure out how to process that data. 
And so collecting additional data that is not related to the 
mission is probably less of a concern, but all of the companies 
involved are sensitive to the fact that they need to be focused 
on whatever it is that they are doing.
    Mr. Welch. So tell me, what do you think should be the 
heart of guidelines to protect privacy? And this would be from 
companies that are utilizing drones to be more productive, but 
also private individuals using drones.
    Mr. Wynne. Well, I think it pertains to the way we collect 
data in general, and I use, in that process there were many 
ubiquitous technologies that we are already looking at such as 
facial readers, license plate readers, facial recognition 
technology, et cetera, where the question is what are you doing 
with that data; how is that data stored for what length of 
time, et cetera, et cetera; how is it protected, so all of 
those questions pertain.
    As it relates to individual use of drones, clearly that is, 
I think we are focusing on trying to educate people about safe 
and responsible flight. Responsible flight means you are not 
annoying people, you are not doing things that are already 
against the law, or utilizing this technology to break the law 
that pertain to the use of any other data collection.
    Mr. Welch. OK. Mr. Lehmann, how about you? Do you see 
privacy as a legitimate concern among the public as to needing 
some regulation and guidelines that are required of folks using 
drones for otherwise legitimate purposes?
    Mr. Lehmann. Thank you for the question, Representative 
Welch. We do not use drones currently, but on the platform, on 
the Postmates platform itself, we obviously take data privacy 
very seriously. I can give you an example. The entire 
communication between you and the Postmate who would do the 
delivery on his behalf is anonymous. The data, even the phone 
numbers and the addresses of the addressee, for example, are 
disguised so that no party can see the other party's private 
information.
    Mr. Welch. OK. Dr. Holzer, or Mr. Holzer?
    Mr. Holzer. I am sorry, what question?
    Mr. Welch. Well, your thoughts on privacy. That is a 
concern that a lot of people contact a lot of us about. People 
like the opportunities that drones can provide, but it also can 
be an invasion of privacy if done improperly.
    Mr. Holzer. In all honesty I haven't thought a lot about 
the privacy implications so I will pass on that and defer to my 
colleagues.
    Mr. Welch. OK.
    Mr. Chidamber. Privacy is a legitimate concern. Most people 
don't want their privacy invaded. Drones and particularly 
companies like ours which have drone delivery services 
recognize that completely and regard the information, we keep 
it only for the purposes of flight planning and those sorts of 
things and it is completely encrypted. It is just another set 
of files on a computer which are protected by encryption 
algorithms and the usual things that go with it.
    Mr. Welch. OK, thank you very much. I yield back.
    Mr. Latta. The gentleman yields back and the chair now 
recognizes the gentleman from Kentucky for 5 minutes.
    Mr. Guthrie. Thank you. Thank you, Mr. Chairman, and I 
thank the witnesses for being here.
    There is a recently joined with Congressman Aguilar to form 
a commercial e-commerce committee or caucus, and our districts 
are centers for e-commerce. With UPS World Port next to my 
district, a lot of people in my district are involved in e-
commerce. Amazon is a big player in Kentucky as well, among 
others, so there is lots going on and it is exciting times.
    Mr. Wynne, when we talk about package delivery with 
unmanned vehicle systems, what areas of the country or where 
particularly are these being really tested or do you see them 
working? And there are actually some of them in progress right 
now and working. Where do you see most of the commercial 
testing being done and why do you think that is?
    Mr. Wynne. Well, of course there are the test centers that 
are around the country. I think, really, there are six test 
centers where some of that is being done. There is a lot of 
beyond visual line of sight being done in some of the test 
centers because they are specifically set up to not only 
conduct those missions, but also to collect the data that we 
need in order to demonstrate that this can be done safely and 
effectively.
    I think where the initial deliveries will probably occur 
will be in less risky airspace, less congested airspace. There 
are some delivery companies already that are doing last mile 
types of operations out in rural areas that save a little bit 
of wear and tear on their trucks. So it is not just from a 
warehouse to a delivery site, it might be from a truck to a 
delivery site as well.
    And again in those instances we might be out in very 
uncongested airspace where again we are able to learn in that 
environment and then ultimately bring the data that we have 
collected to the FAA and demonstrate this can be done in more 
complex airspace.
    Mr. Guthrie. That is interesting, because you do think of 
it being urban or suburban, but you could take it to parts of 
my district that have a town or a city and deliver out from 
there to--you are right. There are a lot of miles traveled to 
get to certain areas of my district that are less populated. I 
appreciate that.
    So Mr. Lehmann, when we think about delivery service do we 
think of food or product, or we talked about pharmaceuticals. 
You indicate in your testimony that your platform offers much 
more than that. Can you explain how your platform has helped 
everyone from teachers to the elderly?
    Mr. Lehmann. Thank you. It does that on both sides of the 
platform. I will give you an example. We are delivering each 
month from roughly 60,000 local merchants throughout the United 
States. Around 70 percent of the platform is prepared food, but 
you will find 30 percent of the two million deliveries across a 
wide range of retail categories--supermarkets, hardware stores, 
electronics, so customers really use the Postmates app for a 
wide range of access to goods.
    On the other hand, you have a very vibrant fleet of 
Postmates. Everyone from an artist--you can be a Postmates in a 
couple of minutes. If you had a postmates.com/fleet, you can 
sign up. As long as you pass the background check you are good 
to go. And that is how we enable additional income in this 
country.
    Mr. Guthrie. Well, thank you very much.
    And Dr. Holzer, my other role in Congress I am the chairman 
of the Subcommittee on Higher Ed and Workforce, and it is so 
interesting some of the things you are talking about. What you 
see over time is that automation has replaced routine work, but 
now when I visit companies and move forth they are using 
automation because they can't find work. So self-ordering at a 
restaurant--you just see it all the time--unmanned, a lot of 
trucking companies are interested in unmanned vehicles because 
they can't find truck drivers.
    And in areas that, maybe in restaurants it is lower income, 
but I know in one area where I am starts in the mid-40s and it 
is not like you have to go to school 2 years to get a degree. 
It is a 4- or 5-week truck driving school. So you said the 
policies need to be adopted on trainings there and that is what 
we focus on.
    What kind of things do we need to get the market working 
where we have jobs that actually pay pretty well, but we can't 
get people to get to the retraining to get into the workforce? 
It is a big question, I know, in 48 seconds.
    Mr. Holzer. OK. I think we need to make our higher ed 
institutions, and here community colleges are very important, 
make them more responsive to the labor market. As you know, 
right now many community colleges, the public institutions, if 
they get the same subsidy from the state no matter what, they 
don't really have to worry about the labor market very much.
    A lot of states are moving toward making that money more 
conditional on outcomes. I would like to make them more 
conditional on employment outcomes of the students there, along 
with some extra resources to make sure that these institutions 
for instance can cover the equipment costs, which are very 
high, and all the support services you need like the career 
counseling, labor market information, to sort of reduce the gap 
between those institutions and the jobs.
    Of course the other important strategy here is work-based 
learning like apprenticeship, and I think we can do a lot more 
to encourage, to help and assist and financially incentivize 
more employers to create apprenticeships and other modes of 
work-based learning for workers. But this way you are bringing 
the labor market and the education closer together.
    Mr. Guthrie. OK, thank you. My time has expired. I would 
love to go further, but my time has expired.
    Mr. Latta. Well, thank you very much. The gentleman's time 
has expired and the chair now recognizes the gentleman from 
California for 5 minutes.
    Mr. Cardenas. OK. Thank you for not taking some of my time 
away since Mr. Guthrie went over on his time. Thank you, Mr. 
Chairman.
    My first question is for Mr. Wynne. In your prepared 
statement you cite an economic analysis by AUVSI that projects 
that the expansion of UAS technology will create more than a 
hundred thousand jobs--it is good to hear--and generate more 
than $82 billion to the economy. Again, good news. Could you 
describe some of the types of jobs that might be created?
    Mr. Wynne. Well, let's start with the remote pilots. We 
have certificated 40,000 of those since August of last year. 
That is probably double the number of manned pilots that we 
have certificated under Part 61, so we have a lot of people 
coming to the workforce. Some of them are 4,000-hour pilots 
from the military. Some of them are people that are straight 
out of community college that are getting their training 
through community colleges. So they are out there now flying 
under Part 107. That is very, very good news.
    The design elements of the solutions that are coming to 
market through the air side alone, although we represent all 
things unmanned, are just many, many of the different 
technologies that my colleague from Flirtey mentioned are 
converging here in a very, very explosive way, a very 
positively explosively way. So there is engineering of course, 
but there is an entire market that developed in a cell phone 
arena that is worth $4 billion now for cell phone repair.
    Imagine that you know with millions of drones what kind of 
a market we are going to create for drone repair, for example, 
for more expansive platforms. So there are many, many different 
jobs out there that will essentially enable this technology 
solution going forward.
    Mr. Cardenas. Thank you. And when it comes to the pilots, 
how long is the training roughly? What kind of training 
required for them to be licensed to do this job?
    Mr. Wynne. The only requirement for flying Part 107 today 
is a knowledge-based test that is administered by the FAA. As a 
Part 61 pilot and existing pilot, there is a slightly different 
route that also involved demonstrating a certain amount of 
knowledge.
    What is happening in the marketplace is that groups that 
are standing up their own training programs to give pilots 
stick and rudder experience. Some of that is being done in our 
test centers, for example. Some of our organizations that want 
to fly over people recognize that there is additional risk 
associated with that.
    It can be done under waiver, in Part 107 under a waiver, 
but they need to bring people to the table who know what to do 
in certain circumstances where there is additional risk and how 
to mitigate that risk, so those training programs are actually 
being developed based on the operations that are required.
    And in some instances, I will take a utility company. That 
utility company might want to see additional training before 
they are going to let someone fly near and do inspections of 
one of their substations, for example. So we are in the process 
in AUVSI of getting those remote pilots together and looking at 
how do we develop that process of training pilots.
    Mr. Cardenas. OK, thank you. Well, this next question goes 
to all of you, whoever would like to answer it. Many national 
infrastructure and transportation technology achievements have 
been made possible in the past by a government investment, for 
example, Congress's $25 billion authorization to construct an 
Interstate Highway System.
    So what is the role of government investment in the 
advancement of automated technology, any kind of partnership 
going on? Our university grants, I mean can we take credit for 
something?
    Mr. Holzer. I will only talk about the employment side.
    Mr. Cardenas. OK.
    Mr. Holzer. And all of the jobs that you mentioned will 
require some new training and the jobs created actually are 
much broader. And Mr. Wynne talked about the jobs directly 
associated with this technology, but as prices and costs come 
down the entire retail sector could expand. And as I said, 
consumers will have more income to spend so they can spend that 
economy wide.
    So the whole range of jobs will require skilled workers and 
public investments. We have got to make sure those public 
investments are efficient and done well, but there is already a 
large public role in higher education and workforce 
development, and I think it was very important that that role 
continue as we make those services more effective as well.
    Mr. Wynne. And I will specifically say UTM is extremely 
important, unmanned aircraft system, traffic management system. 
That is going to require, it is going to require R&D. That R&D 
is largely being done, initiated inside of NASA. It is now 
being done in conjunction with the FAA and in collaboration 
with industry.
    But that requires some investment on the part of the 
government. And it is much like when we established the air 
traffic control system in the mid-'30s and late '30s, it is 
going to require some leaning in by the government.
    Mr. Chidamber. If I may, and I have two examples. Flirtey 
was given space in the engineering lab at the University of 
Reno when we couldn't afford rent and that was possible because 
the people in the university and the people in the government 
made that possible. And now we recruit people from a graduate 
program and an undergraduate program in drone engineering from 
that very school, so we have repaid it many times over already.
    Similar situation in Virginia Tech, without Virginia Tech 
we could not have done the first drone delivery in Wise County 
in Virginia 2 years ago, and that is because Virginia Tech 
supported us, helped us; helped us in testing. It was part of 
the UAV test facilities that had been set up by the FAA and 
because of all of that we were able to do what we did and grown 
from there.
    Mr. Cardenas. Thank you, Mr. Chairman.
    Mr. Latta. Thank you very much. The gentleman's time has 
expired. The chair now recognizes the gentleman from West 
Virginia for 5 minutes.
    Mr. McKinley. Thank you, Mr. Chairman, and thank you again 
for another very interesting panel and discussion. You are 
never short of vision on where you want to take this.
    I am intrigued with it because I get, Mr. Lehmann, I can 
remember 60 years ago we used to have couriers deliver 
groceries in our small community, so it is not something new. 
It is just you are apparently doing it in a more proficient 
way. It didn't last very long, but it was an interesting 
concept to have groceries delivered 60 years ago.
    But I want to focus more on the consumer protection part of 
this. I am curious from the panel what regulations or rules are 
out there now to control what can be delivered using a drone or 
a courier for that matter? Because I am interested in liability 
with it and also for consumer protection because we have got a 
drug problem in this country that is pretty severe. Not pretty 
severe, it is severe.
    Are you able now, under your rules are you able to deliver 
products from one household to another using a courier or using 
a drone? Is there a rule on that?
    Mr. Lehmann. On the Postmates platform currently that is 
not possible. The use of the couriers is tied to a purchase in 
a retail store that we enable on our platform. But just as a 
broader question, I believe that there are many better ways to 
disguise the delivery of drugs, for example, than to do it on 
platforms that use a lot of technology where it is difficult to 
disguise the identities of everyone involved.
    Mr. McKinley. But if this is the advent of what we are 
going to see more of, do we have a role here for government on 
consumer protection to develop some standards or things that 
you cannot whether it is drugs, shipping across state lines 
that maybe would be inappropriate, weapons that could be 
shipped from it could be a retail store to a home and not being 
under control; is that possible now that that could happen that 
you could ship a weapon?
    Mr. Lehmann. Not on the Postmates platform, our terms in 
services wouldn't allow that. But we operate under the federal 
and the state laws of each of the states, municipals, and 
communities that we are operating in.
    Mr. McKinley. Are there any standards by which you ship or 
is that just something you all set? Are there standards set by 
the government about what can be shipped by courier or by a 
drone? Are there any standards out there by the government?
    Mr. Chidamber. I do not believe there are any special, I 
don't think there are any special new guidelines that have been 
issued by the government, but I think the rules that apply to 
all couriers, all other transportation mechanisms like FedEx or 
UPS, all those things still apply.
    Mr. McKinley. Let me find out more about that because I am 
curious about that. I think the concept is very interesting. It 
has been around for a long time, but with the advent of some of 
the other activities that have been going on, the bad actors 
out there, I am just concerned about it.
    Now from also a standpoint of intrusion, would drones into 
a community maybe per acre perhaps, is having access to five 
drones in an acre that is acceptable? Is that something or is 
it 20 drones per acre that come in? Where does it stop and 
where do we intrude on people's privacy of sound, because these 
things aren't necessarily quiet. So if we reach that point that 
we have this proliferation, are we starting to have a problem 
for people and their privacy in their residential area?
    Mr. Chidamber. Would you like to take that first?
    Mr. McKinley. What is the appropriate level of drone 
activity in a community? Is it 10 per acre, 1 per acre?
    Mr. Wynne. I think you are raising a very interesting 
question, sir. I don't have an answer to that question because 
we are nowhere near that level of adoption and I think it is 
appropriate that we think about that. I will tell you this, 
that you know as the driver of an electric vehicle that makes 
zero noise, which I thought was good for my neighborhood, there 
are people in the neighborhood who are concerned about me 
running over their children because they won't hear it coming. 
I haven't done that yet. I am not aware of that ever happening 
with an electric vehicle.
    And I can tell you that you know the noise that a drone 
makes is largely a function of what the quality of its 
propellers. So I look at this from the standpoint of I 
represent an industry that is dedicated to getting this 
technology into the mainstream and creating value for society 
as well as economic business, economic opportunity for that 
society, so I think you know that can't be done without it 
being done sustainably. We have to consider the kinds of 
questions that you are raising and I think it is very 
appropriate that we do that.
    Mr. McKinley. Well, thank you very much. I yield back.
    Mr. Latta. Thank you. The gentleman yields back and the 
chair now recognizes the gentleman from Florida for 5 minutes.
    Mr. Bilirakis. Thank you. Thank you, Mr. Chairman. I 
appreciate it.
    Mr. Chidamber, in your testimony you mentioned the two-
prong mission of the FAA to promote safety in air commerce and 
also to foster air commerce in the United States. So do you 
believe the FAA is fulfilling its full mission?
    Mr. Chidamber. I believe the FAA is doing remarkably well 
in its safety mission, for sure. We have the safest, most 
crowded airspace in the world, no question about that. Thanks 
to the FAA they are making sure it is the safest place on the 
planet to fly aircraft. On the part of air commerce, I think 
that has not been of equal emphasis at this point. Certainly 
with respect to unmanned air vehicles they are making clear 
steps in that direction.
    Mr. Bilirakis. What do they need to be doing, in your 
opinion?
    Mr. Chidamber. There are three basic areas where we would 
like to see speedier approvals for trials and for eventual 
dissemination of this sort of technology. We need to be able to 
fly beyond visual line of sight. We need to be able to fly over 
people. And we need to be able to have one operator control 
multiple drones. Right now those three things are not in the 
cards yet.
    So gradually we have to get there in terms of allowing for 
experimentation, proving, data gathering, and then eventual 
release of those things as a standard operating procedure. So 
those things need to happen.
    Mr. Bilirakis. OK. You also mention in your testimony that 
in June of 2016, Flirtey highlighted other benefits of its 
commercial delivery system with the delivery of medical 
supplies. Can you discuss the extent of the demonstration like 
how many deliveries in how many hours, the maximum weight they 
can handle, et cetera? If you can elaborate on that I would 
appreciate it very much. It is very interesting, yes.
    Mr. Chidamber. Sure. You are referring to the one in Cape 
May, New Jersey, I take it?
    Mr. Bilirakis. Yes, yes, yes.
    Mr. Chidamber. What was happening was there was a boat off 
on the water and from there a drone took off and landed on 
land. There was a doctor who was collecting biological samples, 
so the weight of it was not that much. We can carry up to about 
7 or 8 pounds in terms of payload, so it was well underneath 
that.
    So the drone that takes off, goes back to the boat where--
it was a simulation, mind you. So presumably on the other side 
tests can be performed, let's say, is somebody affected with 
malaria and things of that nature and you could then ship back 
medication which the doctor could then administer to the 
patient and people like that. That was the simulation that was 
done.
    There are a few things here that were significant. Dr. 
Amukele from Johns Hopkins, who conducted the medical practice 
of it, he is interested in looking at blood samples and what 
happens to blood samples if you ferry them by drone. Do they 
spoil, do they change, is it affected? And we have been doing 
tests on all of these sorts of things and we are happy to 
report that a lot of medical samples can indeed be delivered 
using drone without any detriment to their medical condition.
    Mr. Bilirakis. Well, that is good news. What other ways in 
examples could this benefit the public when natural disasters 
or terrorist attacks may happen? Give me some other examples 
how this would benefit the public.
    Mr. Chidamber. Food, medicine, water, cell phones, any 
number of things of that sort. The heartrending scenes that we 
saw from Katrina when there were signs being painted on top of 
roofs saying I need medicine, I don't have it and there is 
water everywhere, nobody can get to that person. That sort of 
stuff can be avoided. Whatever that person needs, if they are 
in contact with someone a drone can bring it over to them 
exactly where they are which is remarkable. I think we could 
have saved lives in Hurricane Katrina for sure if you had 
drones deployed there.
    Mr. Bilirakis. And you said they could carry up to 7 to 8 
pounds; is that right?
    Mr. Chidamber. Yes, and the payloads are increasing every 
day as the technology gets better.
    Mr. Bilirakis. OK, so fascinating, thank you very much. 
Well, let's see, I have 22 seconds, quickly, Mr. Chairman. Mr. 
Wynne, can you please provide us with some example of what the 
companies are doing as far as testing with regard to the 
delivery, please?
    Mr. Wynne. I mentioned that some of the delivery companies 
are already doing deliveries from their trucks in rural areas, 
so that is already happening. There are places in Africa where 
medical supplies have been delivered. I don't remember if it 
was Flirtey or not.
    Mr. Chidamber. No, it wasn't.
    Mr. Wynne. But a number of companies----
    Mr. Chidamber. It was a competitor.
    Mr. Wynne [continuing]. Have been doing that. I beg your 
pardon.
    [Laughter.]
    Mr. Chidamber. A nameless competitor.
    Mr. Wynne. I am in the unenviable position of being able to 
root for everyone to win.
    Mr. Bilirakis. It is always good to have competition to 
bring the prices down.
    Mr. Wynne. Yes, and I think right now those are the most 
obvious. Probably the one that captures my attention is that we 
have Global Hawk, which is a fairly sizeable platform that does 
early detection of hurricanes off the east coast of Africa, 36-
hour endurance that literally flies out of Wallops and for 
NOAA. So that is beyond visual line of sight and that is the 
kind of work that can be done that quite literally, the Jim 
Cantores of the world are really excited about.
    Mr. Bilirakis. Very good. Thank you, Mr. Chairman. This is 
a great hearing, I appreciate it. I yield back.
    Mr. Latta. The gentleman's time has expired and he yields 
back. The chair now recognizes the gentleman from Pennsylvania 
for 5 minutes.
    Mr. Costello. Thank you, Mr. Chairman.
    Last session in Congress I had the distinction of serving 
on the Transportation Committee, specifically the Aviation 
Subcommittee, and paid close attention to the FAA regulations 
as well as what I would say is a bit of a hands-off approach to 
UAVs. And it has been very interesting to see just how rapidly 
this sector of the economy has embraced UAVs as a delivery 
system and I think very clearly that is going to continue. It 
obviously raises questions related to jurisdiction and what 
kind of regulatory framework we need, how much more intense it 
might need to be or how light it should remain. So my questions 
relate to the waivers granted by FAA for commercial use of 
unmanned systems.
    Mr. Wynne, I would ask you, related to the waiting line for 
waivers, do you think it is still too long? Obviously you would 
like to get same-day approval, but share with me your 
experience there as well as how we might be able to streamline 
authorizations, develop best practices--which I think is 
emerging--and ensure that the FAA's designated test sites are 
used effectively.
    Mr. Wynne. We recently launched the Remote Pilots Council 
to gather those pilots that are starting to fly under Part 107, 
have been for the last 8 months. In nine cities around the 
country we met with folks. The FAA participated in all of those 
meetings which was a sign of their collaborative attitude.
    And the biggest complaint of course, and that is what 
pilots do when we get together and we complain about the FAA, 
the biggest complaint, discussion point was how long it takes 
to get a waiver. No one was surprised by that and the FAA is, I 
think, making good efforts to try and reduce those times.
    And sir, you will recall that we had the same problem with 
333 exemptions back when that was the only way to fly 
commercially, but what happened over time was the swim lanes as 
it were what was required in order to get a waiver, what was 
required to get a 333 exemption became clearer and clearer and 
that process got almost batch processed after a while.
    As I indicated in my written testimony, we really need to 
automate this process. The FAA agrees we need to automate this 
process and they are making best efforts to do that. The waiver 
process should be much faster than it is today and as we go 
forward I think we will be.
    Mr. Costello. Do you want to compare that to other 
countries? And Mr. Chidamber and anyone else, if you want to 
weigh in after Mr. Wynne sort of comparatively looks at how 
other countries address the issue.
    Mr. Wynne. Anecdotally, there are places where it is less 
restrictive in--but I think generally speaking that it not 
necessarily in urban areas or congested airspace. So I think we 
are doing fine under Part 107. I think if we have got the 
ability to get the ability to do more things under waivers and 
ultimately we can fly over people, which is the next stage in 
the regulatory process we are going to continue to lead in this 
country.
    Mr. Chidamber. I agree with Mr. Wynne completely. The FAA 
has made huge strides. When we did our first thing in 2015, we 
placed our requirements with the FAA. I think it was in 
February of 2015, it was only in June or July that we got the 
waiver. Now it is much faster, all of these things are faster.
    To address your question about how it is in other places, I 
think Australia and New Zealand are the two countries which 
have really been further ahead than everybody else in this 
matter. When we did our test with Domino's in Auckland, I think 
the waivers were gotten within 24 to 48 hours which is a lot 
faster than what it is here, but so we should get faster as 
well.
    Mr. Costello. Help me understand, Mr. Wynne, major 
companies have begun testing the capabilities of unmanned 
systems to deliver products and packages, how big would the 
products be or packages be? Look ahead 10 years, 20 years, at 
some point in time, logically, it will manifest itself to the 
maximum physical size. What do you think that looks like? What 
do you think the future holds?
    Mr. Wynne. I don't have a good way to answer that question 
because Uber Elevate just came out with a platform that you 
could get in and fly autonomously and they are wanting to 
operationalize that in 5 years, which is taking this technology 
and super-sizing it in some respects.
    But I think I backup from an economics point of view and 
say the vast majority, an astonishingly high percentage of 
packages delivered in this country are under 5 pounds. 
Congressman Price, when I was testifying before Appropriations 
Committee on Transportation last week, asked me to speak to 
congestion and capacity. We have enormous amounts of capacity 
below 400 feet, whereas we have very little capacity on the 
roads today.
    Mr. Costello. Right.
    Mr. Wynne. And with e-commerce continuing to advance there 
will be more and more trucks on the road delivering 5 pounds or 
less packages, which I think we could deliver when the airspace 
is empty at night for noise abatement reasons. So I think that 
it balances out at some point, but I think there is an enormous 
opportunity just up to 5 pounds.
    Mr. Costello. Thank you. I yield back.
    Mr. Latta. Well, thank you very much. The gentleman yields 
back the balance of his time. And seeing that there are no 
other witnesses, or members asking questions to our panel 
today, I want to thank you again for being with us today, again 
very, very insightful.
    And pursuant to committee rules, I remind all members that 
they have 10 business days to submit additional questions for 
the record and I ask that witnesses submit their response 
within 10 business days upon receipt of those questions. And, 
without objection, the subcommittee stands adjourned.
    [Whereupon, at 11:55 a.m., the subcommittee was adjourned.]
    [Material submitted for inclusion in the record follows:]

                 Prepared statement of Hon. Greg Walden

    Consumer demand drives businesses decisions all across the 
country every single day. Consumers want everything faster, 
cheaper, and on time. This is no small feat. Finding safe, 
reliable, and efficient solutions will require the best and 
brightest minds to marry cutting-edge technology, like sidewalk 
delivery robots, with a service that families have been using 
for decades to get pizza for game night. This hearing is a 
chance to hear directly from companies building their business 
plans around delivering the best product, service, and 
experience to consumers.
    Consumer safety is also top of mind as we hear about 
delivery drones, robots, and even self-driving delivery cars. 
Companies should be taking safety into account as part of their 
brand, and there should be reasonable oversight for new 
technologies. Creating an environment for safe new technologies 
to flourish improves consumer choice.
    In this hypercompetitive global marketplace, the consumer 
is king. Regulators in Washington, D.C. do not know what the 
next unicorn startup will be. It may be in the delivery space, 
it may be in commercial trips to space. We do not know. But we 
do know that if we do not allow for companies to responsibly 
put their services to the ultimate test, the consumer, we are 
guaranteeing failure for American innovators.
    As we continue to highlight industries and promote policies 
that will boost our economy and create more jobs here at home, 
we will need to continue examining policies that may be holding 
some of these business models back. The logistics behind these 
demands are daunting for American businesses. I look forward to 
hearing from the witnesses what challenges and obstacles their 
businesses face in today's regulatory environment. I am also 
interesting in hearing from the witnesses about the competitive 
position of the U.S. marketplace in the global economy with 
respect to these emerging delivery technologies.
    The innovation agenda for this subcommittee sits on the 
cutting edge of our economy. There will be challenges, but we 
must keep our eyes on the horizon and open to the 
possibilities. Thank you all for being here.