Lynnel Reyes writes:

While many people are anxiously awaiting the day for companies such as Amazon, Walmart, and Google to provide packaged delivery services by way of drones, other companies are taking drone transportation one step further.

EHang, Inc. debuted a passenger-carrying drone at the 2016 Consumer Electronics Show in Las Vegas earlier this year. The drone is self-automated and can transport up to one person at a time to their desired destination with a flight time of up to approximately 25 minutes. Earlier this month, EHang announced it expects to begin testing the passenger-carrying drone in Nevada later this year.

However, as we discussed in an earlier article regarding drone deliveries, do not expect to see drone package deliveries, let alone passenger-carrying drones, any time soon. Not only are there technological challenges to overcome before passenger carrying drones become a reality, but there are also legal issues that must be overcome.

The FAA recently released its Part 107 regulations regarding the commercial use of drones. Although the Part 107 regulations provide clarity to drone commercial use, the regulations only pertain to drones weighing 55 pounds or less. In contrast, the passenger-carrying drones far surpass a weight of 55 pounds. Moreover, 55 pounds and heavier drone operations cannot be waived via a certificate of waiver under Part 107 regulations. § 107.205. So, until the FAA provides additional regulations for heavier drones, those companies must traverse the usual legal channels such as registering their aircraft under 14 C.F.R. Part 47 or proving aircraft worthiness.

Also, Part 107 established a flight restriction of no more than 400 feet above ground or 400 feet above the uppermost point of any structure.  Passenger-carrying drones have not yet been tested, therefore, the altitude requirements necessary for flight at optimal conditions for these drones is unknown.

Flying taxi

Part 107 also addresses licensing for drone operators, which are now called “remote pilots.” Currently, it is unnecessary for a person “manipulating the flight controls” of a drone to have authorization to operate one, so long as the remote pilot in command (RPC) is directly supervising that person and the RPC has the ability to immediately take direct control of the flight of the drone. § 107.12. But if the drone is self-automated, then who needs the authorization as the “remote pilot” to operate the drone?  Would the passenger in the drone need to obtain a remote pilot authorization? If so, how would the FAA implement this type of authorization program?

Additionally, the FAA will need to reconsider 49 U.S.C. §  41713(b) of The Airline Deregulation Act of 1978, which preempts states from enacting and enforcing laws regarding “price, route, or service of an air carrier that may provide air transportation…” Under the current law, the federal government would have to regulate air transportation in each locality where passenger-carrying drones would fly. This would create a massive task for the federal government to mandate transportation in every locality with the clearance to operate these types of drones. This creates a scenario in which state law might be better suited to handle the intricacies of local transportation regulations for transportation that occurs entirely within that state. The federal government will be forced to address the issue of preemption concerning local flight rules if passenger-carrying drones become a reality.

Notwithstanding Part 107 regulation questions or The Airline Deregulation Act of 1978, there are still privacy issues and looming safety concerns regarding drones in general. Thus, while the idea of passenger-carrying drones sounds enticing, we will have to wait for the outcome of testing results, technological advances, legislation, and even possible litigation before passenger-carrying drones are cleared for take-off.


Lynnel Reyes is a summer associate in the firm’s Las Vegas office.

 

Fox

On May 24, 2016, we published an article discussing the National Telecommunications and Information Administration (“NTIA”) issuance of Best Practices for privacy and other issues surrounding drone use. Attached as an Appendix to those Best Practices is a list of guidelines for neighborly drone use intended to be a quick and easy reference guide for recreational drone operators. It goes without saying that for recreational users it is worth reviewing, and is reproduced in its entirety below:

Drones are useful. New, fairly cheap drones are easy to use. But just because they are cheap and simple to fly doesn’t mean the pictures and video they take can’t harm other people. The FAA and partner organizations have put safety guidance online at http://knowbeforeyoufly.org. But even safe flight might not respect other people’s privacy. These are voluntary guidelines. No one is forcing you to obey them. Privacy is hard to define, but it is important. There is a balance between your rights as a drone user and other people’s rights to privacy. That balance isn’t easy to find. You should follow the detailed “UAS Privacy Best Practices”, on which these guidelines are based, especially if you fly drones often, or use them commercially. The overarching principle should be peaceful issue resolution.
  1. If you can, tell other people you’ll be taking pictures or video of them before you do.
  2. If you think someone has a reasonable expectation of privacy, don’t violate that privacy by taking pictures, video, or otherwise gathering sensitive data, unless you’ve got a very good reason.
  3. Don’t fly over other people’s private property without permission if you can easily avoid doing so.
  4. Don’t gather personal data for no reason, and don’t keep it for longer than you think you have to.
  5. If you keep sensitive data about other people, secure it against loss or theft.
  6. If someone asks you to delete personal data about him or her that you’ve gathered, do so, unless you’ve got a good reason not to.
  7. If anyone raises privacy, security, or safety concerns with you, try and listen to what they have to say, as long as they’re polite and reasonable about it.
  8. Don’t harass people with your drone.

Drones are a uniquely transformative technology in the commercial and private sectors. Indeed, greater operational flexibility, lower capital requirements, and lower operating costs allow drones to enrich people’s daily lives by providing innovative services, safer infrastructure, recreational uses, and greater economic activity. The assimilation of this technology into everyday life, however, raises concerns for privacy, civil rights, and civil liberties.

In recent years drone popularity has soared. According to the FAA there are about 5,600 drones registered for commercial purposes and roughly 450,000 hobbyists who have registered at least one drone. This popularity has put pressure on the drone industry and privacy advocates to reach agreement on guidelines governing drone use.

Seeking to promote the responsible use of drone technology in a way that does not diminish rights and freedoms, President Obama, on February 15, 2015, issued the Presidential Memorandum, “Promoting Economic Competitiveness While Safeguarding Privacy, Civil Rights, and Civil Liberties in Domestic Use of Unmanned Aircraft Systems.”

That memo directed the National Telecommunications and Information Administration (“NTIA”) to establish a multi-stakeholder engagement process—including stakeholders from the private sector—to develop and communicate Best Practices for privacy, accountability, and transparency issues regarding commercial and private drone use in the National Airspace System. And so, on May 18, 2016, the stakeholders came to consensus and issued a document on Best Practices for privacy and other issues surrounding drone use.[1]

Best Practices

The purpose of that document was to outline and describe voluntary Best Practices that drone operators could take to advance drone privacy, transparency, and accountability for the private and commercial use of drones. These Best Practices may be implemented by drone operators in a variety of ways depending on their circumstances and technology uses, and evolving privacy expectations. Yet these Best Practices do not—and are not meant to—create a legal standard of care by which the activities of any particular drone operator should be judged. Nor are the Best Practices intended to serve as a template for future statutory or regulatory obligations—doing so would make these standards mandatory (not voluntary) and could therefore raise First Amendment concerns.

At its core, the Best Practices call for drone users to notify other individuals of drone use and data collecting activities; practice caution when it comes to collecting and storing the data of specific individuals; restrict use and sharing of that data; implement measures to ensure security of covered data[2]; and comply with laws on the use of drones.

These Best Practices focus on data collected via drones, which includes both commercial and non-commercial drones; they do not apply to news gatherers and news reporting organizations or to safety and rescue missions and other emergency response efforts.

In any event, here are the Best Practices in their entirety:

  1. Inform Others of Your Use of Drones
  • (a) Where practicable, drone operators should make a reasonable effort—what qualifies as a practicable and reasonable effort to provide prior notice will depend on operators’ circumstances and the context of the drone operation—to provide prior notice to individuals of the general timeframe and area that they may anticipate a drone intentionally collecting covered data.
  • (b) When a drone operator anticipates that drone use may result in collection of covered data, the operator should provide a privacy policy for such data appropriate to the size and complexity of the operator, or incorporate such a policy into an existing privacy policy. The privacy policy should be in place no later than the time of collection and made publicly available. The policy should include, as practicable:
    • (1) the purposes for which the drone will collect covered data;
    • (2) the kinds of covered data the drone will collect;
    • (3) information regarding any data retention and de-identification practices;
    • (4) examples of the types of any entities with whom covered data will be shared;
    • (5) information on how to submit privacy and security complaints or concerns; and
    • (6) information describing practices in responding to law enforcement requests.
  1. Show Care When Operating Drones or Collecting and Storing Covered Data
  • (a) In the absence of a compelling need to do otherwise, or consent of the data subjects,[3] drone operators should avoid using a drone for the specific purpose of intentionally collecting covered data where the operator knows the data subject has a reasonable expectation of privacy.
  • (b) In the absence of a compelling need to do otherwise, or consent of the data subjects, drone operators should avoid using a drone for the specific purpose of persistent and continuous collection of covered data about individuals.
  • (c) Where it will not impede the purpose for which the drone is used or conflict with FAA guidelines, drone operators should make a reasonable effort to minimize drone operations over or within private property without consent of the property owner or without appropriate legal authority.
  • (d) Drone operators should make a reasonable effort to avoid knowingly retaining covered data longer than reasonably necessary to fulfill a purpose as outlined in § 1(b). With the consent of the data subject, or in exceptional circumstances (such as legal disputes or safety incidents), such data may be held for a longer period.
  • (e) Drone operators should establish a process, appropriate to the size and complexity of the operator, for receiving privacy or security concerns, including requests to delete, de-identify, or obfuscate the data subject’s covered data. Commercial operators should make this process easily accessible to the public, such as by placing points of contact on a company website.

  1. Limit the Use and Sharing of Covered Data
  • (a) Drone operators should not use covered data for the following purposes without consent: employment eligibility, promotion, or retention; credit eligibility; or health care treatment eligibility other than when expressly permitted by and subject to the requirements of a sector-specific regulatory framework.
  • (b) Drone operators should make a reasonable effort to avoid using or sharing covered data for any purpose that is not included in the privacy policy covering drone data.
  • (c) If publicly disclosing covered data is not necessary to fulfill the purpose for which the drone is used, drone operators should avoid knowingly publicly disclosing data collected via drone until the operator has undertaken a reasonable effort to obfuscate or de-identify covered data —unless the data subjects provide consent to the disclosure.
  • (d) Drone operators should make a reasonable effort to avoid using or sharing covered data for marketing purposes unless the data subject provides consent to the use or disclosure. There is no restriction on the use or sharing of aggregated covered data as an input (e.g., statistical information) for broader marketing campaigns.
  1. Secure Covered Data
  • (a) Drone operators should take measures to manage security risks of covered data by implementing a program that contains reasonable administrative, technical, and physical safeguards appropriate to the operator’s size and complexity, the nature and scope of its activities, and the sensitivity of the covered data.
  • (b) Examples of appropriate administrative, technical, and physical safeguards include those described in guidance from the Federal Trade Commission, the National Institute of Standards and Technology Cybersecurity Framework, and the International Organization for Standardization’s 27001 standard for information security management.
  • (c) For example, drone operators engaging in commercial activity should consider taking the following actions to secure covered data:
    • Having a written security policy with respect to the collection, use, storage, and dissemination of covered data appropriate to the size and complexity of the operator and the sensitivity of the data collected and retained.
    • Making a reasonable effort to regularly monitor systems for breach and data security risks.
    • Making a reasonable effort to provide security training to employees with access to covered data.
    • Making a reasonable effort to permit only authorized individuals to access covered data.
  1. Monitor and Comply with Evolving Federal, State, and Local Drone Laws
  • Drone operators should ensure compliance with evolving applicable laws and regulations and drone operators’ own privacy and security policies through appropriate internal processes.

These Best Practices are at present voluntary, however, they may end up as rules that commercial and non-commercial drone operators will have to follow in the future. Indeed, the U.S. Senate has asked the NTIA for a set of privacy guidelines that could serve as the basis for further federal legislation. See FAA Reauthorization Act of 2016, Sec. 2101. With all the news stories about irresponsible individuals using drones for illegal activities or violating people’s privacy, the existence of these Best Practices could be legal fodder for anyone who wants to prosecute you or your company for drone activities. Do yourself or your company a favor, take the initiative and start applying these guidelines today.

Endnotes:

[1] The stakeholders that support this Best Practices document include: Amazon, AUVSI, Center for Democracy and Technology, Consumer Technology Association, CTIA, Future of Privacy Forum, New America’s Open Technology Institute, PrecisionHawk, X (Formerly Google [x]), Small UAV Coalition, Online Trust Association, News Media Coalition, Newspaper Association of America, National Association of Broadcasters, Radio Television Digital News Association, Digital Content Next, Software & Information Industry Association, NetChoice.

[2] “Covered data” means information collected by a drone that identifies a particular person. If data collected by a drone likely will not be linked to an individual’s name or other personally identifiable information, or if the data is altered so that a specific person is not recognizable, it is not covered data.

[3] The term “data subjects” refers to the individuals about whom covered data is collected.

Today, FAA Administrator Michael Huerta (“Huerta”) announced plans to make it easier for students to fly drones as part of their coursework. Huerta first recognized the uncertainty surrounding when a drone is a model aircraft operated for “hobby or recreation.” That uncertainty, Huerta noted, left a number of questions on the use of model aircraft by students and faculty in connection with participation in coursework at educational institutions.

As part of Huerta’s announcement, the FAA released an Interpretation Memorandum (“Memo”) that specifically addressed two key issues: (1) the use of drones for “hobby or recreational purposes” at educational institutions and community-sponsored events (e.g., demonstrations at schools, boy or girl scout meetings, science clubs, etc.) and (2) student and faculty use of drones in furtherance of receiving and providing instruction at educational institutions. Essentially, the FAA sought to clarify the applicability of Section 336 of the FAA Modernization and Reform Act of 2012 (“FMRA”) in the educational context.

Drone teacher

Hobbyist Use of Drones to Conduct Demonstrations

As a matter of background, Section 336(a) of the FMRA provides special rules for model aircraft. Those rules require, among other things, that the aircraft be: (1) flown strictly for hobby or recreational use; (2) limited to not more than 55 pounds and; (3) operated in accordance with a community-based standards of safety guidelines and within the programming of a nationwide community-based organization. Importantly, for an operation to qualify as a “model aircraft” operation and be subject to Section 336 above, depends on whether the drone operation is for “hobby or recreational” purposes.

Accordingly, the FAA clarified that a person may operate a drone for “hobby or recreation” in accordance with Section 336 at educational institutions and community-sponsored events provided that the person is (1) not compensated, or (2) any compensation received is neither directly nor incidentally related to that person’s operation of the aircraft at such events.

In substance, the FAA interpreted “hobby or recreational” use to include operation of drones to conduct demonstrations at accredited educational institutions or at other community-sponsored events subject to the above requirements being met. This is important because now a model aircraft hobbyist or enthusiast lawfully may fly drones at such institutions or events to promote the use of drones and encourage student interest in aviation as a hobby or for recreational purposes.

Student Operation of Model Aircraft for Educational Purposes

Next, the FAA considered whether a student’s course work of learning how to operate and use a drone constitutes a hobby or recreational activity within the meaning of Section 336’s definition of model aircraft. The FAA found that “the use of [drones] by students at accredited educational institutions as a component of science, technology and aviation-related educational curricula or other coursework such as television and film production or the arts more closely reflects and embodies the purposes of “hobby or recreational” use of model aircraft and is consistent with the intent of Section 336.”

Therefore, the FAA concluded that student use of drones at such institutions as a component of their educational curricula, or other coursework, is “hobby or recreational use” within the meaning of the FMRA. Note that the student still must comply with all other elements required for lawful model aircraft operations pursuant to Section 336, that is, not receiving any form of compensation directly or incidentally to his or her operation of the model aircraft.

Faculty Use of Model Aircraft

Respecting faculty, the FAA found that because a faculty member engaging in the operation of a drone is being compensated for his or her teaching or research activity, they would not be engaging in a “hobby or recreational activity.” Accordingly, the faculty member may not rely on Section 336’s concept of “hobby or recreational use” to either operate a drone or direct student drone operations in connection with such research.

Nevertheless, the FAA found that a faculty member teaching a course that uses drones as a component of that course may provide limited assistance (e.g., the faculty member steps-in to regain control in the event the student begins to lose control, to terminate the flight, etc.) to students operating drones as part of that course without changing the character of the student’s operation as a hobby or recreational activity or requiring FAA authorization for the faculty member to operate.

This “de minimis” limited instructor participation would apply to courses at educational institutions where the operation of the drone is secondary to the design and construction of the aircraft, such that the primary purpose of the course is not operating a drone. The FAA illustrates this limited circumstance with two examples.

The first example involves an instructor teaching an engineering course in which construction and operation of drones are one part of the curriculum. In this scenario, the instructor would be able to conduct limited drone operations as described above. Students would fly drones to test the validity of design or construction methods to show mastery of the principles of the course. But the faculty member’s drone operation would be secondary to the purpose of instructing engineering courses.

43948741_s

Conversely, this limited circumstance would not apply to a course related to drone flight instruction. In this scenario, the student’s primary purpose for taking the course is to learn to fly a drone. Flight would be expected to be demonstrated on a regular basis. Indeed, the faculty member’s drone operation is closely tied to his or her purpose of instructing how to fly a drone. Similar to student operations, these faculty operations must also abide by the provisions of Section 336.

Students and faculty members who wish to operate drones outside of these parameters above must seek FAA authorization. Currently, there are three ways to lawfully conduct drone operations in the U.S.: (1) as public aircraft operations pursuant to the requirements of the public aircraft statute and under a Certificate of Waiver or Authorization (COA) from the FAA; (2) as limited commercial operations by type certificated drone, provided the operator obtains a COA from the FAA; or (3) pursuant to a Section 333 of the FMRA grant of exemption provided the operator obtains a COA from the FAA.

Schools and students will no longer need a Section 333 exemption or any other authorization to fly provided they follow the rules for model aircraft and operate within the parameters described above. Further, faculty will be able to use drones in connection with helping their students with certain types of courses as set forth above. Schools and universities are incubators for tomorrow’s great ideas. The FAA’s interpretation is going to be a significant shot in the arm for innovation.

This past month, a FAA committee tasked with providing recommendations on a regulatory framework for the classification and operation of micro unmanned aircraft systems (“UAS” or “drones”), submitted its official report to the FAA.

The Micro UAS Aviation Rulemaking Committee (“ARC”) was directed to develop “recommendations for a performance-based standard that would allow for micro UAS to be operated over people who are not directly participating in the operation of the UAS.” On April 6, the FAA accepted those recommendations. Moreover, the FAA has already started the process of developing a notice of proposed rulemaking based on the ARC’s recommendations.

Drone cartoon over people

While trying to balance the twin goals of ensuring safety and encouraging innovation, the ARC identified four small UAS categories defined primarily by level of risk of injury posed by operations over people. For each category, the ARC recommended a risk threshold that is based on either weight or an impact energy equivalent.

Category 1 includes small drones weighing .55 lbs (250 grams) or less, including accessories and payload (e.g., cameras). The ARC considers the level of risk of injury posed by this category of UAS to be very low. Consequently, the ARC recommended that no performance standards and no operational restrictions beyond those imposed by the proposed part 107 of Chapter 14 of the Code of Federal Regulations (“part 107”) are necessary.

Based on the risk that a UAS could strike a person on the ground causing serious injury, the standards and restrictions in categories 2, 3, and 4 are “scaled up” to mitigate the increased risks.

Category 2 includes drones that weigh more than .55 lbs (250 grams) but still present a 1% or less chance of serious injury to a person in the event of impact. Depending on its design characteristics and operating instructions, a 4 to 5 pound drone would qualify. On the other hand, category 3 and 4 drones would have a 30% or lower chance of causing a serious injury upon impact with a person.

The ARC recommended that category 2 drones must, among other things, be operated at a minimum distance of 20 feet above people’s heads, or 10 feet laterally away from people. Even with these minimum distance requirements, the small UAS must always maintain a safe distance from people so as not to create an “undue hazard” to those people.

striking a person

laying on ground

 

 

 

 

 

Under the ARC’s recommendations, category 3 operational restrictions “do not allow flight over crowds or dense gatherings of people.” But category 4 differs because it allows sustained flight over crowds or dense gatherings of people beyond what is permitted in category 3. Since an increased number of people on the ground may be subjected to overhead flight of longer duration, category 4 prescribes additional standards and restrictions for drone operations over people that present the same level of risk of serious injury as category 3 (i.e. 30% or less).

Accordingly, the ARC recommends that category 4 drones (1) require the drone operator to have a risk mitigation plan in place for conducting sustained operations over people and (2) take into account materials and components of the drones to determine if the materials pose additional potential risk of collateral serious injury to people on the ground, in addition to injury caused by initial impact.

In each case, extensive testing would be required to determine that the drone meets the weight or impact energy threshold for its category. Additionally, to demonstrate that a small UAS qualifies for categories 2, 3, or 4 operations over people, the manufacturer of the drone must: (1) declare that the small drone meets industry consensus standards applicable to the category; (2) submit that declaration to the FAA in a form and manner acceptable to the FAA; (3) label the product or product retail packaging in accordance with industry consensus standards;[1] and (4) provide an operating manual to the operator that includes operator instructions for flight over people. Lastly, drone operators would be responsible for knowing what category of operations his or her drone qualifies for, and what operational limitations he or she must follow.

The ARC’s recommendations illustrate an effort by drone manufacturers to put drones on the path to everyday commercial and recreational use in populated areas by lessening the operational restrictions and requirements set forth by the FAA in the proposed rules in part 107 announced in February, 2015. But hurdles remain, including creating tests to determine which drones meet the various thresholds of the performance standards. As noted above, the FAA will use the information in the ARC’s report to develop a flexible, performance-based proposed rule and the public will have the opportunity to comment.

flight in beach

It is difficult to predict how long it will take for the FAA to work out the details or how long before companies manufacture drones which meet the standards enumerated above. But what is clear is that this is progress and the application of the ARC’s recommendations would allow businesses to use drones for many commercial applications. Indeed, the FAA’s ban on flying drones over crowds or in towns and cities could soon be modified further.

[1] For category 1 operations over people, the ARC recommended that the manufacturer of the drone be required to: (1) label the retail product packaging of the small UAS with either the actual weight of the small unmanned aircraft or a general statement that the small UAS weighs .55 lbs (250 grams) or less; or (2) declare that the small unmanned aircraft weighs .55 lbs (250 grams) or less and submit that declaration to the FAA in a form and manner acceptable to the FAA.

Federal versus State

It was the best of times, it was the worst of times…”

– Charles Dickens, A Tale of Two Cities

The quote above aptly describes the present legal landscape surrounding drones. Drone technology and popularity continues to skyrocket. But as numerous state and local laws regulating drones conflict with both the FAA’s contention that it controls the airspace and the FAA’s desire to establish a single national policy for drones, the legal and regulatory framework in the U.S. remains murky.

The FAA’s authority to regulate airspace, noise control, and safety is not questioned. Indeed, any attempt by states to regulate those aviation subfields will be deemed preempted. Despite this, many argue that “the FAA’s authority over safety still leaves a lot of room for states to act, and they have.” Furthermore, whether that authority extends to issues like privacy is questionable.

This is a world of action, and not for moping and droning in.”

– Charles Dickens

State and local governments have enacted hundreds of statutes and ordinances that seek to regulate drones. Those statutes and ordinances have created a patchwork of varying laws and regulations affecting drone operations.

 “I only ask to be free. The butterflies are free.”

– Charles Dickens, Bleak House

In an effort to clarify the responsibilities of federal, state, and local governments with respect to the regulation of drones, Senator John Thune recently introduced “Federal Aviation Administration Reauthorization Act of 2016” (the “FRA”) in the U.S. Senate.

Section 2142(a) of the FRA would establish a federal preemption for state and local laws relating to the design, manufacture, testing, licensing, registration, certification, operation, or maintenance of a drone, including airspace, altitude, flight paths, equipment or technology requirements, purpose of operations, and pilot, operator, and observer qualifications, training, and certification.

However, under Section 2142(b), state or local laws (including common law causes of action) relating to nuisance, voyeurism, harassment, reckless endangerment, wrongful death, personal injury, property damage, or other illegal acts arising from the use of drones would not be preempted if they are not specifically related to the use of a drone.

Express preemption occurs when Congress has explicitly stated that state law will be preempted by the enactment of federal law or regulation. The FRA is a bold and important proposal because only two other instances of express preemption exist regarding aviation: (1) Congress has expressly asserted “exclusive sovereignty of airspace of the United States,” and has placed “exclusive authority for regulating the airspace above the United States with the [FAA]” and (2) Under the Airline Deregulation Act of 1978, Congress prohibited states from enacting laws “related to a price, route, or service of an air carrier that may provide air transportation.”

Charles Dickens 1

“‘Do you spell it with a ‘V’ or a ‘W,’ inquired the judge? That depends upon the taste and fancy of the speller, my Lord.”

– Charles Dickens, The Pickwick Papers

The FRA is Congress’ attempt to establish a single national policy for drones by explicitly granting the FAA supremacy over all laws seeking to regulate drone operations. But many argue that it “would also block local governments from adopting measures prohibiting encroachment on private property.”

The patchwork of laws whereby federal, state, and local governments all seek to regulate drone operations creates a Byzantine scheme that only inhibits the growth of the drone industry. It is unnecessary for state or local governments to enact drone specific legislation, as existing state or local laws already cover the areas delineated in Section 2142(b) of the FRA.

The FAA recently granted a string of Section 333 exemptions signifying the agency’s cautious but continuing effort to loosen regulations on the commercial drone industry. In short, the FAA now permits the operation of any small unmanned aircraft system (“sUAS”) that it has previously approved.

For example, on March 17, 2016, the FAA granted a Section 333 exemption to Brim Aviation (“Brim”) for, among other things, aerial data collection and close-set motion picture and television filming, and production. In that exemption, the FAA referred to a “List of Approved UAS under Section 333” at regulatory docket FAA-2007-3330 at www.regulations.gov.

Brim proposed to use a sUAS on that list. But the FAA did not limit the exemption to only that particular sUAS. Rather, the FAA went a step further, authorizing Brim under the conditions and limitations section “to use any aircraft identified on the List…when weighing less than 55 pounds including payload” while its exemption is valid.

Drone

Whether drone businesses holding previously granted exemptions will be able to take advantage of the expanded list of approved aircraft without applying for an amendment to their existing Section 333 exemption is unclear. Drone businesses operating under Section 333 exemptions granted previously, however, will likely be barred from conducting operations based on the “List.” So, for drone businesses that received exemptions prior to these changes or those with currently pending Section 333 petitions, we recommend submitting a request to the FAA for amendment to reflect the revised conditions and limitations.

Previously, commercial drone operators applying for Section 333 exemptions had to describe in detail the specifics of the sUAS it intended to operate. Further, the FAA limited the exemptions to only the specific sUAS stated in the petition for exemption. A commercial drone operator had to file an amendment to their Section 333 exemption if it wanted to alter its exemption by adding a different type of drone. Under the FAA’s new posture, a drone business will only be required to file an amendment if it wants to operate a drone that has not been previously been approved.

Compliance

This noteworthy change expands the options available to commercial drone operators when assessing, based on their intended uses, which drone operates best. Other changes to Section 333 exemptions recently granted relate to drone operations over and near people; greater specificity as to participating and nonparticipating persons and the operating conditions applicable to such persons; addressing drone operations near but not over persons directly participating in the intended purpose of the drone operation; and, addressing the loss of GPS signal and the loss of the command or control link with the drone.

Whether these changes reflect a broader policy shift that will apply to all future exemptions is not clear. But these changes do represent a promising incremental development that may create new opportunities for drone businesses to expand their efforts to explore and use drones throughout their operations.

NYCDFF Logo

The 2nd Annual New York City Drone Film Festival will be held from March 4th – March 6th 2016. The three-day event will feature a dynamic slate of interactive panel discussions, guest speakers, screenings of nominated films, and the annual awards ceremony. The festival will return to the Directors Guild of America Theater for the second year in a row.

“Just as drones have become more technically advanced and integrated into society, the NYC Drone Film Festival has experienced a year of tremendous growth,” said Festival Founder and Director Randy Scott Slavin. “We’ve expanded from a one-night event to a three-day happening. We’re holding interactive panels and seminars highlighting the influence of drones around the world. And we’ve expanded our award categories from nine to eleven. The 2016 festival is going to be bigger and bolder in every way.”

The #NYCDFF is the world’s first event exclusively dedicated to celebrating the art of drone cinematography. In its inaugural year it received over 150 submissions from 19 countries. The event sold out in five days, attracted 31 sponsors across 10 different industries, including headline sponsor NBC News, and received over 270 million media impressions. The festival offers an international platform for filmmakers from every corner of the globe to exhibit their work in front of industry professionals and the drone cinema fan community.

Drone Film

NYCDFF 2016 SCHEDULE:

March 5th – NYCDFF SEMINARS & FESTIVAL – All events at Directors Guild of America Theater

I love drone

March 6th – DAY OF DRONES at the Liberty Science Center (222 Jersey City Blvd, Jersey City, 07305)

  • 9am -5:30pm – NYCDFF program (Playing throughout the day)
  • 12pm – 5pm – Drone Battling Expo
  • 12pm – 5pm – Invitational Drone Racing Expo with FPV Addiction
#NYCDFF
#NYCDFF

 

Hoping to “move U.S. aviation into the modern era,” Congressmen Bill Shuster (R-PA) and Frank LoBiondo (R-NJ), both part of the House Committee on Transportation and Infrastructure (“Committee”), recently introduced a Bill entitled the Aviation Innovation, Reform, and Reauthorization (“AIRR”) Act. That legislation would do several things, including establishing an independent not-for-profit corporation outside of the federal government to provide U.S. air traffic control services, and giving the FAA more tools for the safe integration of drones.

A few days after the AIRR Act was introduced, Congressman Rodney Davis (R-IL) presented an amendment to that bill that would create a separate “micro-UAS” classification for drones that weigh less than 4.4 pounds, including payload. Recently, the Committee approved the Bill, which includes that Amendment. So, it will continue through the rulemaking process toward Congress.

AIRR Act Bill

Currently, to fly a commercial drone in U.S. airspace, the FAA requires businesses to apply for a special exemption (commonly known as a Section 333 Exemption) and certification. Additionally, the FAA mandates that the individual operating the commercial drone must hold either an airline transport, commercial, private, recreational, or sport pilot license, and meet other requirements. Congressman Davis’ Amendment to the legislation would exempt commercial “micro-UAS” from all these requirements.

For example, the most popular drone submitted to the FAA for exemption, the DJI Phantom 3, weighs about 2.82 pounds. In contrast, the larger and heavier DJI Inspire weighs 6.47 pounds and would not qualify under the “micro-UAS” classification. Ratifying this amendment would allow a sector of recreational and commercial drone growth to endure without over burdening the industry, and still allow for the regulation of heavier drones that could cause more damage if something were to go awry.

Drone Classification

While “micro-UAS” would be exempt from many of the regulatory requirements unique to commercial drone use, it would still be required to follow certain rules applicable to all drones. More specifically, to qualify for that exemption, a “micro-UAS” must be operated:

  • below 400 feet above ground level;
  • at an airspeed of not greater than 40 knots;
  • within the visual line of sight of the operator;
  • during daylight; and
  • at least 4 statute miles from the geographic center of a tower-controlled airport or airport denoted on a current FAA-published aeronautical chart, except that a micro UAS may be operated closer than 5 statute miles to the airport if the operator –
    1. provides prior notice to the airport operator; and
    2. receives, for a tower-controlled airport, prior approval from the air traffic control facility located at the airport.

The “micro-UAS” exemption appears to heed the call of many FAA critics calling for less regulatory red tape for small drones operating below a certain weight and posing no serious safety issues. While the AIRR Act’s  ideas about privatizing air traffic control may not ultimately be passed, the thought-provoking idea about the “micro-UAS” exemption deserves a second look.

The “micro-UAS” exemption would make life easier for many businesses using smaller drones. However, the legislation “doesn’t really change the regulatory landscape in a way that would allow for the drone delivery fleets Google and Amazon are eager to build.” As the bill continues to make its way through the committee process, we will monitor and provide updates.

As drone technology continues to rapidly evolve it has unleashed numerous commercial growth opportunities for businesses; however, along with those opportunities come a myriad of complex liability and coverage issues related to insuring the use of commercial drones ranging from privacy to personal injury.

For commercial drones and ancillary business activities, the following general types of insurance coverage should be considered: (1) liability, (2) personal injury, (3) privacy torts, (4) property, and (5) workers’ compensation.

Any company flying drones as part of its business model faces a wide range of risks which can cause serious damage or injury to persons and property, as well as damage to the drone itself. Insurance policies are essentially contracts and typically contain a specific exclusion for claims related to the use of “aircraft.” Whether a drone constitutes an aircraft in this context is an unsettled issue and that uncertainty echoes throughout the realm of drone insurance.

Drone Insurance property damage

The FAA has indicated that it considers drones as aircraft for purposes of applying aviation related statutes and regulations. The term “aircraft” is defined under federal law as “any contrivance invented, used, or designed to navigate, or fly in, the air,” and under federal aviation regulations as “a device that is used or intended to be used for flight in the air.” The FAA contends that both definitions are broad enough to encompass drones. Moreover, regardless of the FAA’s view as to whether drones are considered aircraft for regulatory purposes, such is not necessarily binding when interpreting an insurance contract.

As a result of the FAA’s position that drones are aircraft, insurance companies are expected to aggressively apply the aircraft exclusion to avoid coverage. However, it can be argued that the aircraft exclusion should be interpreted narrowly with the policy construed in favor of coverage because the aircraft exclusion was originally intended to apply only to manned aircraft and not drones.

Until the FAA clarifies what constitutes a commercial drone and whether it falls within the definition of aircraft, uncertainty will remain. Moreover, insurance companies will likely revise the definition of aircraft in their policies to include drone operations within the exclusion from coverage for aircraft.

Due to the uncertainty concerning the aircraft exclusion as it may apply to drones, many insurance companies have begun offering drone-specific insurance policies. For example, American International Group, Inc. has created insurance products covering some of the risks confronted by businesses operating drones.

Businesses are also confronted with the risk of privacy tort litigation such as trespassing and harassment. Those businesses must assess and evaluate their insurance policies to determine whether it covers privacy tort liability. In addition to aircraft or drone exclusions discussed above, since privacy torts typically have an intent element to them, certain exclusions found in commercial general liability policies barring coverage for intentional conduct may also be implicated. Whether it applies depends on the nature of the particular claim.

Furthermore, although drone specific policies typically cover claims for damage or injury to persons and/or property, such policies may not cover privacy-related torts. Therefore, businesses should work closely with their insurance agent and insurance company to confirm coverage for operations involving drones.

Most insurance policies also include what is generally known as an illegal acts exclusion. Those exclusions are typically held to only apply to intentional violations of the law, versus negligent violations. In any event, the fact that a violation of the law can potentially exclude insurance coverage for drone operations is all the more reason to ensure that your drone operations are fully compliant with federal and state law.

As part of the analysis of coverage, businesses should also review their workers’ compensation insurance and any professional liability insurance to confirm that coverage for claims is not excluded when drone operations are involved.

Insurance

Even businesses that do not operate drones themselves can be affected by drone related exclusions. Businesses that retain another company that operates drones might be sued as a result of that company’s drone operations. Thus, not only should those businesses review their own insurance policies to confirm coverage exists for drone operations, but they should also require that they be included as an additional insured under the drone operator’s insurance policy to protect against potential litigation.

As regulatory hurdles are cleared, the drone industry is poised for takeoff. However, commercial drone operators need to protect their businesses from the risks and potential liabilities that come with this growing industry. To address that need, businesses must evaluate and assess their existing insurance policies to determine whether drones are covered, and if not, pursue coverage solutions offered by insurance companies that are specifically designed for the exposure faced by commercial drone operators.