On June 27, a massive ransomware attack now known as “Petya” spread across the globe in a similar fashion to the WannaCry cyberattack in May. In an Alert today, Fox Chief Privacy Officer and Partner Mark McCreary breaks down what we know about the attack, how to address it if your organization falls victim to it, and how to minimize the risks of future attacks:

Petya Cyberattack ScreenshotYesterday’s worldwide cyberattack once again exploited a vulnerability that has been known to experts for many months. These attacks are sure to continue and the best defense is knowledge. Awareness of how malware works and employee training to avoid the human error that may trigger an infection can prevent your organization from becoming a victim.

This latest ransomware variant, referred to as “Petya,” is similar in many respects to the “WannaCry” ransomware that affected hundreds of thousands of computers in mid-May, using the same Eternal Blue exploit to infect computers. The purpose of this Alert is to provide you some information believed or known at this time.

How Is a Computer Infected?

Experts believe the Petya malware is delivered in a Word document attached to an email. Once initiated by opening the Microsoft Word document, an unprotected computer becomes infected and the entire hard drive on that computer is encrypted by the program. This is notably different from WannaCry, which encrypted only files.

Once Petya is initiated, it begins seeking other unprotected computers in the same network to infect. It is not necessary to open the infected Microsoft Word document on each computer. An infection can occur by the malware spreading through a network environment.

To read Mark’s full discussion of the Petya attack, please visit the Fox Rothschild website.

Mark also notes that “I continue to stress to clients that in addition to hardening your IT resources, the absolute best thing your business can do is train employees how to detect and avoid malware and phishing.  In-person, annual privacy and security training is the best way to accomplish this.”

Come Senators, Congressmen
Please heed the call
Don’t stand in the doorway
Don’t block up the hall
For he that gets hurt
Will be he who has stalled
There’s a battle outside
And it is ragin’
It’ll soon shake your windows
And rattle your walls
For the times they are a-changin’

Bob Dylan – “The Times, They Are A-Changin”

Unless this is your first visit to our blog (and if it is, welcome), you know that we have addressed the tension between the federal government vs. state and local governments regarding regulating drones on several occasions. Because the landscape continues to change, this topic is a hot button issue.

Although the boundaries of federal vs state and local government authority to regulate drone operations remains unclear, state and local governments continue to assert authority to regulate drone operations. Over the last few years, drone operations have increased significantly, and drone operations are expected to increase dramatically over the next few years.

In addition to the Drone Federalism Act recently introduced in the U.S. Senate, a bill was recently introduced in the U.S. House of Representatives titled “Drone Innovation Act of 2017”. Similar to the Drone Federalism Act, the Drone Innovation Act seeks to address the manner in which state, tribal, and local governments can regulate drone operations.

Here are the key points of the Drone Innovation Act (the following is only a summary of the highlights):

No later than six months after enactment, the Secretary of Transportation is required to publish a civil unmanned aircraft local operation policy framework (after consultation with state, local and tribal officials, as well as other stakeholders)

The policy framework shall:

“(1) provide guidelines to aid States, local, and Tribal governments in harmonizing and, to the degree possible, standardizing reasonable time, manner, and place limitations and other restrictions on operations of civil and small unmanned aircraft that are local in nature;

(2) take into account the economic and non-economic benefits, such as civic or educational uses, of small or civil unmanned aircraft operations;

(3) provide guidelines to aid States, local, and Tribal governments in creating an environment that is hospitable to innovation and fosters the rapid integration of unmanned aircraft into the national airspace system; and

(4) aid States, local, and Tribal governments in adopting technologies, such as unmanned traffic management systems, that will enable notification to operators regarding reasonable time, manner, and place limitations on operations of civil and small unmanned aircraft that are local in nature.”

When preparing the policy framework and any future regulations or standards related to unmanned aircraft, the Secretary of Transportation is required to define “the scope of preemptive effect”. The Act requires that any such regulations or standards “be limited to the extent necessary to ensure the safety and efficiency of the national airspace system for interstate commerce, and shall preserve the legitimate interests of State, local, and Tribal governments, including–

(1) protecting public safety;

(2) protecting personal privacy;

(3) protecting property rights;

(4) managing land use; and

(5) restricting nuisances and noise pollution.”

The Act requires the Secretary of Transportation to “abide by and be guided by” several “fundamental principles”. It also requires the Secretary to establish a pilot (I assume no pun intended) program and enter into agreements with a predetermined number of state, local, or tribal governments to provide technical assistance in regulating drones. Within 18 months after the pilot program is established, the Secretary is required to provide a report on best practices for state, local and tribal governments to regulate drones.

The Act prohibits the Secretary from prescribing regulations or standards for drones that authorize the operation of drones less than 200 feet above ground level “where there is a reasonable expectation of privacy without permission of the property owner”.

Moreover, it expressly states that the following causes of action are not preempted: “personal injury, wrongful death, property damage, inverse condemnation, trespass, nuisance or other injury based on negligence, strict liability, products liability, failure to warn, or any other legal theory of liability under any maritime law, or any Federal, State, or Tribal common law or statutory theory”.

The prohibition on preemption of those causes of action is tempered by the following language: “no cause of action, claim or remedy may be made solely because of the transit of an unmanned aircraft through airspace local in nature over private property in the absence of proof that such transit substantially interfered with the owner or lessee’s use or enjoyment of the property or repeatedly transited the airspace local in nature above the owner’s property”.

The Secretary is prohibited from issuing any rule or regulation that would impede the authority of state, local, or tribal governments to define private property rights as it applies to drones that operate at an altitude less than 200 feet.

State or local governments may not “unreasonably or substantially impede” a drone from reaching navigable airspace. Per the Act, unreasonably or substantially impeding includes:

“(1) outright bans on overflights of the entirety of the lateral boundaries of a State or local government’s jurisdiction;

(2) excessively large prohibitions on overflights of areas of local significance such that access to airspace is so impeded as to make flight within the lateral boundaries of a State or local government’s jurisdiction nearly impossible; and

(3) a combination of restrictions intended to unreasonably impede or having the practical effect of unreasonably impeding the ability of a civil unmanned aircraft from reaching the navigable airspace.”

Finally, nothing in the Act may be construed to affect: manned aircraft operations or the authority of the FAA with respect to the same; the FAA’s right to take emergency action; the FAA’s right to pursue enforcement actions against drone operators; or the right of first responders to access airspace in the event of an emergency.

The Drone Innovation Act is not the first attempt by Congress to address the issue of federal vs. state (including tribal and local) government authority to regulate drone operations. The Act appears to recognize the need to avoid having a checkerboard of varying laws and regulations from locality to locality. Whether the final version of any Congressional act defining federal vs. state authority over drone operations includes this theme remains to be seen.

Powered by developments in aviation, sensing, and software technology, the drone industry is projected to be one of the fastest growing industries, with sales expected to top $12 billion by 2021.[2] Within the next decade, the commercial drone industry alone is expected to generate more than $82 billion and could provide 100,000 new jobs.[3]

The unprecedented growth of the drone and unmanned aerial systems (“UAS”) industry has not waited for governmental regulation to catch up. Now, federal, state, and municipal governments are struggling with how to regulate UAS use. Regulation of UAS by both federal and state governments has led to issues relating to federal and state preemption, with both authorities continuing to assert that they possess the authority to regulate drones. For instance, the U.S. Senate recently introduced the Drone Federalism Act of 2017.

Illinois is another State that has recently has taken its first steps to lay the groundwork for UAS regulation and the future use of drones in the State.

Freedom from Drone Surveillance Act

Presently, the only statute in Illinois expressly addressing drone use is the Freedom from Drone Surveillance Act (the “Act”).[4] The Act provides generally that law enforcement agencies cannot use drones to gather information.[5] However, the Act allows for the use of drones by a law enforcement agency in the following limited circumstances:

  1. to counter a high risk of a terrorist attack if the United States Secretary of Homeland Security determines that credible intelligence indicates there is that risk;
  2. if a law enforcement agency first obtains a search warrant based on probable cause, provided the warrant is limited to 45 days;
  3. if a law enforcement agency possesses reasonable suspicion that swift action is needed to prevent imminent harm to life, or to forestall the imminent escape of a suspect or destruction of evidence; provided, however, the use of the drone is limited to a period of 48 hours;
  4. if a law enforcement agency is attempting to locate a missing person, and is not also undertaking a criminal investigation;
  5. if a law enforcement agency is using a drone solely for crime scene and traffic crash scene photography; provided, however, the use of a drone on private property requires a search warrant based on probably cause or lawful consent to search; and
  6. if a law enforcement agency is using a drone during a disaster or public health emergency.[6]

Moreover, except as provided by one of the exceptions above, a law enforcement agency may not acquire information from or direct the acquisition of information through the use of a drone owned by a private third party.[7] If a court finds by a preponderance of the evidence that a law enforcement agency used a drone to gather information in violation of the Act, then the information is presumed to be inadmissible in any judicial or administrative proceeding.[8]

The Illinois Unmanned Aerial System Oversight Task Force

On August 18, 2015, Public Act 99-392 became effective, creating the Unmanned Aerial System Oversight Task Force (the “Task Force”). The mission of the Task Force was “to study and make recommendations for the operation, usage, and regulation of Unmanned Aerial Systems.”[9] On June 30, 2016, the Task Force submitted its recommendations to the Governor and General Assembly, which struck a balance between safety, deference to federal oversight, and allowing commercial use of UAS to become a considerable economic driver in Illinois.[10]

The Task Force found that UAS operations should generally be permitted if they do not cause a safety hazard, do not infringe on the privacy or property rights of others, and if performed in accordance with applicable FAA rules and regulations.[11] Any legislative action relating to UAS was recommended to be flexible to adapt State-level oversight to the changing UAS regulatory landscape at the federal level.[12]

To this end, the Task Force found that statutes currently exist that address individual concerns, such as privacy and property rights.[13] For instance, statutes and ordinances exist regarding voyeurism, harassment, stalking, disorderly conduct, public nuisance, reckless endangerment, and recording of individuals in locations where there exists a reasonable expectation of privacy.[14] As such, the Task Force found no reason to create numerous new laws or amend existing statutes related to acts committed by UAS.[15] Rather, it was recommended that the General Assembly consider a global “extension of oneself” clause that would serve to link the operator with the UAS.[16]

The increased use of drones also raises questions regarding the balance between federal and state regulation. Importantly, the Task Force analyzed the topic of preemption at length.[17] With regard to federal preemption, the Task Force determined that any State-level oversight relative to UAS operations should complement and not conflict with FAA rules and regulations.[18] As to State preemption, the Task Force recommended that the General Assembly enact State-level preemption regarding UAS oversight in Illinois.[19] The Task Force reasoned that a patchwork of local ordinances would lead to confusion and would place an increased burden on UAS operators and the UAS industry.[20] In addition, a patchwork of local ordinances would negatively impact commercial and public operators that operate UAS in multiple locations throughout the State and across municipal boundaries.[21]

The Task Force also focused on the potential commercial use of UAS in Illinois.[22] Finding the commercial use of UAS is heavily regulated at the federal level, the Task Force noted that commercial use should generally not be subjected to additional operating restrictions provided operations are performed safely and in accordance with the FAA.[23] The Task Force determined that UAS can develop into an economic driver for the State, by enhancing employee efficiency and productivity, through retail sales revenues, and also by creating or sustaining jobs in UAS design, development, manufacturing, distribution, retail, and professional commercial operators.[24]

City of Chicago

Chicago was the first major American city to approve a comprehensive set of drone regulations.[25] The regulations appear to balance protecting public safety while at the same time encouraging innovation and technology.[26] The ordinance provides that it is unlawful to operate a drone in the City unless it is registered with the Department of Aviation.[27] Registration is valid for one (1) year and costs an annual fee of $50.[28] In addition, the owner of a drone must maintain a liability insurance policy that insures the owner, lessee, and operator of the aircraft.[29] The insurance policy must name the City of Chicago as an additional insured.[30] A drone must also have a valid identification tag issued by the Department of Aviation affixed to it.[31]

Under the ordinance, it is unlawful for a person to operate a drone in City airspace: for the purpose of conducting surveillance, unless permitted by law; within five (5) miles of an airport; that is equipped with a firearm or other weapon; with intent to use the small unmanned aircraft to cause harm to persons or property; within one-quarter mile of an open air assembly unit, school, hospital, or place of worship; at any altitude higher than four hundred (400) feet above ground level; outside the line of sight of the operator; while under the influence of alcohol or drugs; whenever weather conditions would impair the operator’s ability to do so safely; or between the hours of 8:00 p.m. and 8:00 a.m.[32] Any person who violates the ordinance will be fined not less than $500.00 nor more than $5,000.00 for each offense, or may be incarcerated for a term not to exceed 180 days, or both.[33]

Favorable regulations relating to drone use could result in great economic potential for the future use of drones in Illinois, a notion that the Task Force seemed to understand. The Task Force’s recommendations balance the competing interests of public safety and commercial use. It is still too early to tell if the General Assembly will heed the Task Force’s advice. However, practitioners and businesses operating in Illinois should be on look-out for legislative and regulatory changes in this burgeoning area of the law. In addition, continue to visit Fox Rothschild’s blog for updates on how such changes will affect the general landscape of UAS regulations.

[2] BI Intelligence, The Drones Report: Market forecasts, regulatory barriers, top vendors, and leading commercial applications, June 10, 2016, available at http://www.businessinsider.com/uav-or-commercial-drone-market-forecast-2015-2

[3] The White House, Fact Sheet: New Commitments to Accelerate the Safe Integration of Unmanned Aircraft Systems, August 2, 2016, available at https://www.whitehouse.gov/the-press-office/2016/08/02/fact-sheet-new-commitments-accelerate-safe-integration-unmanned-aircraft

[4] 725 ILCS 167/1, et. seq.

[5] 725 ILCS 167/10.

[6] Id. at § 15.

[7] Id. at § 40.

[8] Id. at § 30.

[9] 20 ILCS 5065/15(a).

[10] Illinois Unmanned Aerial System Oversight Task Force, UAS Recommendations Report, June 30, 2016, available at http://www.idot.illinois.gov/Assets/uploads/files/Transportation-System/Reports/Aero/IUASOTF/UAS%20Recommendations%20Report-IUASOTF-2016-06-30.pdf.

[11] Id.

[12] Id.

[13] Id.

[14] Id.

[15] Id.

[16] Id.

[17] Id.

[18] Id.

[19] Id.

[20] Id.

[21] Id.

[22] Id.

[23] Id.

[24] Id.

[25] Justin Peters, SLATE, Chicago Becomes the First Big City to Enact Drone Regulations, Nails Them, Nov. 20, 2015, available at http://www.slate.com/blogs/future_tense/2015/11/20/chicago_enacts_drone_regulations_that_are_really_good.html.

[26] Id.

[27] Chicago Municipal Code, 9-121-020(a).

[28] Id. at 9-121-030(a).

[29] Id. at 9-121-040(a).

[30] Id. at 9-121-040(b).

[31] Id. at 9-121-050(a).

[32] Id. at 9-121-060(a).

[33] Id. at 9-121-070.

With the Trump Administration’s focus on jobs and building the economy, it makes perfect sense that it would explore opportunities in one of the fastest growing industries right now: drones.  In what may be the first direct outreach to the drone industry, President Trump is scheduled to meet with leaders of several drone companies to discuss the growing industry and the regulatory landscape. According to a White House spokesman, President Trump will see “demonstrations of how these technologies will contribute to the 21st century economy and how the government can ensure that their safe adoption leads to the best possible outcomes for the American worker and American businesses.”

U.S. based companies Kespry, AirMap, Airspace and PrecisionHawk are expected to be in attendance, among others. These companies focus on drone software for such things as mapping and analysis as well as drone security.

The White House, Washington, D.C.
Copyright: pigprox / 123RF Stock Photo

Also of note is that this meeting comes a day after the first meeting of the Remote Identification Aviation Rulemaking Committee of the Federal Aviation Administration, which is scheduled to meet on June 21, 2017. This Committee is tasked with creating new standards for remotely identifying and tracking drones. In addition to helping law enforcement with security concerns, remote identification could provide the starting point for an air traffic management system for drones.  This could then pave the way for expanded operation of drones, including beyond line of sight, among other expansions that could allow for things like drone delivery.

This increase in activity by the administration in the area of drone technology coupled with the recent announcement of privatization of air traffic control, helps foster the conclusion that expanded operation or additional waivers for commercial use could be coming faster than people anticipate.  This administration appears ready to address ways to help the industry grow.  We will follow up with any significant developments from these meetings.


Jonathan Ash is a partner in the firm’s Labor & Employment Department, resident in its Princeton office.

The challenge presented by having federal, state and local authorities all attempting to regulate drones is a topic we have addressed on this blog and in other publications (see links below). Unfortunately, a solution to that challenge remains elusive.

State and local authorities continue to assert that they possess the authority to regulate drones. That position, coupled with the current state of the federal regulatory process , has now been further complicated by the introduction of the Drone Federalism Act of 2017 (“Drone Federalism Act” or “Act”) also known as S. 1272, which was recently introduced in the U.S. Senate by Senator Feinstein.

If enacted, the Drone Federalism Act will amend Section 336 of the FAA Modernization and Reform Act and will provide states broad rights to regulate drone operations. It requires the FAA Administrator to not only define the preemptive effect of federal regulations regarding unmanned aircraft operations, but it also requires the Administrator to: “preserve, to the greatest extent practicable, legitimate interests of State, local, and tribal governments, including— (A) protecting public safety; (B) protecting personal privacy; (C) protecting property rights; (D) managing land use; and (E) restricting nuisances and noise pollution.”

The Drone Federalism Act also requires the Administrator, when enacting regulations or standards regarding drones, to “ensure that the authority of a State, local, or tribal government to issue reasonable restrictions on the time, manner, and place of operation of a civil unmanned aircraft system that is operated below 200 feet above ground level or within 200 feet of a structure is not preempted.”

The Act specifically states that “reasonable restrictions” include:

  • Limitations on speed
  • Prohibitions or limitations on operations in the vicinity of schools, parks, roadways, bridges, or other public or private property;
  • Restrictions on operations at certain times of the day or week or on specific occasions such as during parades or sporting events;

  • Prohibitions on operations while the operator is under the influence of drugs or alcohol;

  • Prohibitions on careless or reckless operations; and

  • Other prohibitions that protect public safety, personal privacy, or property rights, or that manage land use or restrict noise pollution.

58499289 – no drone, multicopter prohibited symbol. not fly zone. sign indicating the prohibition or rule. warning and forbidden. flat design. vector illustration. easy to use and edit.

If enacted, the Act will only lead to a further patchwork of state and local laws, making compliance for drone operators exceedingly difficult. We have addressed some of those concerns in other writings.

While a solution to the patchwork of laws is necessary, the Drone Federalism Act does not solve that problem. Rather, it only exacerbates the problem.

Recently, several members of my Firm and I had the opportunity to speak on a panel at the New York City Drone Film Festival (“NYCDFF”) regarding legal issues and drones. Thanks to the excellent moderation of Randy Slavin, the founder of the NYCDFF, we had the opportunity to discuss several legal issues. While the presentation was directed to attendees of the NYCDFF, the discussion encompassed a fairly wide breadth of legal issues.  Among the issues discussed are the current state of drone regulations, first amendment issues, liability issues, intellectual property, drone cinematography, releases, and insurance issues. I recommend anyone who is interested to watch the video of the panel presentation. Also, if you are not familiar with the NYCDFF, I highly recommend checking it out.

 

On March 18, Fox attorneys Mark Connot, Brian Rothery, Christopher Beall and Imraan Farukhi participated in a panel discussion entitled “Up in the Air: 2017 Drone Law Update” as part of the Third Annual New York City Drone Film Festival. The festival is “the world’s first event exclusively dedicated to celebrating the art of drone cinematography,” and offers an international platform for filmmakers from around the world to exhibit their work for the drone community and the film industry.

The discussion covered current laws, First Amendment issues, rights clearances for filmmakers licenses their footage and more. We invite you to watch the full 45-minute discussion, available on YouTube and below, and to find out more about this annual event.

Recently I had the opportunity to speak to a college class regarding public perception and policy regarding drones and other autonomous vehicles. In preparing for my presentation, I realized several things that I already knew, but had not really thought about it.

In considering how best to provide an overview of how quickly technology is adapted once people understand its capabilities, it dawned on me that today’s college students have only known a world with smart phones. The first iPhone was introduced in June of 2007, when most college students were in elementary school.

In contrasting the public’s quick adoption of smartphones with the public’s far slower openness to drone technology, I asked the students to ponder how successful the iPhone would have been if only a handful of apps were available for the first few years after the iPhone’s introduction. In essence, even if smart phones were capable of supporting millions of varied applications, if the apps themselves were unavailable, the success of smart phones would have been in peril.

Okay, you say, I get that this is public perception, but how does it relate to policy? Until the public recognizes a tangible benefit from technology, it tends to be apprehensive of the technology.

In the early 20th century, cities passed laws that matched the speed limit to the pace of horse-drawn wagons, or no more than 5 miles per hour. In England, some small towns required the driver to notify the constable, who would then walk in front of the car waving two red warning flags.

In 1900, there were 8,000 automobiles in the United States. By 1920, that number had grown to 8,000,000. A large part of the increase is due to lowered production costs as a result of Henry Ford’s assembly line, but another factor was the public’s increasing understanding of the fact that automobiles could have a positive impact on their lives.

 

5756268 - illustration of a ford model t.

In other words, both decreased cost as well as the recognition of a tangible benefit resulted in the public embracing new technology. The public’s newfound perception of automobiles as positive, rather than negative, then helped to shape policy, such as increasing the 5 mph speed limit, enacting gasoline taxes to fund roads, creating parking lots, etc.

As noted above, once the public embraces new technology, it is adopted quickly and the technology itself evolves rapidly.  Orville Wright piloted the first powered airplane in 1903. That first flight lasted 12 seconds and the aircraft flew a mere 120 feet.  Orville lived to see Chuck Yeager break the sound barrier in 1947. Likewise, Charles Lindbergh flew across the Atlantic in 1927 and he was present at Cape Canaveral when Neil Armstrong, Buzz Aldrin and Michael Collins climbed into the rocket that would take them to the moon.

If the public had not embraced automobiles and airplanes, those industries would not have enjoyed the success they have, at least not in the timeframe in which it occurred. Without roads and other infrastructure, the public’s eagerness to embrace automobiles would have been stymied. Without airports and regulations to ensure safe flights, as well as the ability to fly long distances, airlines would have struggled to succeed.

Until the FAA permits beyond visual line of sight (“BVLOS”) operation of drones, the public has no idea of the capabilities of drones and the myriad of ways in which their lives will be positively impacted by drones. However, when BVLOS is permitted, I predict the public will quickly comprehend the significant positive impact of drones and embrace the technology.

When will I be able to fly beyond visual line of sight? When will I be able to operate a drone over people?

In the world of drone law (and in the world of drones in general), hardly a week, or even a day, passes without one or both of those questions being asked.

The drone industry welcomed the long-awaited drone regulations of Part 107, which became effective in August of 2016. However, that only whetted our appetite for more.

The current presidential administration’s public pronouncements regarding scaling back government regulations creates a concern within the commercial drone industry. Contrary to most industries, in the commercial drone industry more regulations are necessary for the drone industry to advance. Targeted regulations that permit and define the parameters of beyond visual line of sight operations, flights over people, and nighttime operations will enable the drone industry to reach its potential.

62815354 - drone regulations banner in wood type

Recently the Small UAV Coalition sent a letter to the new Director of the Office of Management and Budget requesting a limited waiver from the moratorium on new regulations. The Small UAV Coalition has a diverse membership that have all have a keen interest in the commercial use of drones, inclduing AirMap, Amazon Prime Air, Google[x], Intel, Kespry, PrecisionHawk, Verizon Ventures, Aerware, AGI, Flirtey, Fresh Air Educators, T-Mobile, and WalMart.

In that letter, the Small UAV Coalition noted that there are currently three pending rulemaking actions regarding drone operations:

  • Notice of Proposed Rulemaking, Operation of Small Unmanned aircraft Over People
  • Final Rule, Operation of Small Unmanned Aircraft Over People
  • Notice of Proposed Rulemaking, Expanded Operations

Part 107 includes a provision for the FAA to grant waivers that would permit drone operations over people and beyond visual line of sight. However, since Part 107 became effective in August of 2016, the FAA has only granted one waiver to permit operations over people and only four waivers to operate beyond visual line of sight.

As is the case with most technology, regulations pace far behind what is needed for the technology to evolve and thrive. The technology exists, but without regulations permitting its use, it cannot be utilized.

As the Small UAV Coalition noted in its letter, without regulations that permit beyond visual line of sight, operations over people, and nighttime operations, the commercial UAS industry in the United States risks stalling and falling behind other countries, such as those in the European Union, China, and Australia.

With the rapid expansion of the drone industry, the FAA has granted more than 4,200 special permits for companies wanting to utilize drones to advance innovations in their businesses.[1] According to the Association for Unmanned Vehicle Systems International, companies representing more than 600,000 jobs and $500 billion in economic impact were among the first 1,000 exemptions granted.[2] One such innovation is already being seen and tested in the area of real property inspections. The use of drones for real property inspections is transforming industries like insurance and telecommunications.

Ruined house after powerful earthquake disaster
Copyright: Baloncici / 123RF Stock Photo

State Farm was the first insurer in the United States to receive Federal Aviation Administration (“FAA”) permission to test Unmanned Aircraft Systems (“UAS”) for commercial use.[3] Insurance giants American International Group Inc. (“AIG”), United Services Automobile Association (“USAA”), and Allstate followed suit, each receiving approval from the FAA to use UAS to conduct property inspections in the United States.[4] Using UAS for property inspections allows State Farm, AIG, USAA, and Allstate to inspect areas that are difficult or dangerous for humans to inspect, such as wind farms, condemned buildings, damaged roofs and collapsed buildings.[5] The insurance companies hope that drone technology will allow them to utilize UAS as remote insurance inspectors, allowing them to inspect properties more safely, quickly and easily. In addition, Allstate believes that “[d]rones used in the claims process could provide faster payments to customers, especially in an area where widespread damage occurs quickly.”[6]

However, the FAA limits how State Farm, AIG, USAA, and Allstate can use UAS in their operations.[7] For example, the insurance companies can fly drones over private or controlled-access property only with the permission from the owner or other authorized party.[8] Therefore, the insurance companies need to have permission from all landowners they fly over.[9] In addition, flights must take place away from airports and most urban areas and must be during the daytime.[10] Such restrictions will certainly make it more difficult for insurance companies to use drone technology to its full potential. The restrictions, however, strike a balance between the commercial use of drones and the FAA’s concerns regarding privacy and safety.

Similarly, telecommunications firms hope to be able to utilize UAS to inspect more dangerous or difficult inspections.[11] To achieve this,

Panorama with two telecommunications towers against sea and sky
Copyright: altomedia / 123RF Stock Photo

Aerialtronics joined efforts with Neurala and NVIDIA to demonstrate a UAS system that can visually inspect a cell tower and recognize the equipment mounted on the mast.[12] In the near future, such a system will be able to automate the documentation of assets and assess the mechanical functionality and condition of the cell tower to identify rust and other defects.[13] In a recent blog posting, John Donovan, the chief strategy officer for AT&T, wrote about his excitement for the future of AT&T and drone technology.[14] AT&T recently launched the trial phase of its national drone program, which is currently using drones to perform aerial inspections of its cell towers.[15]

Looking forward, AT&T hopes to use Flying Cell on Wings to provide LTE coverage at large events and rapid disaster response.[16] In this way, AT&T will be able to provide coverage when cell towers are usually clogged by increased traffic.[17] The future use of drones is also expected to expand beyond the insurance and telecommunications industries. Drones will likely be used by governments and companies to safely inspect bridges, buildings, wind turbines and other infrastructure.[18]

Our UAS team at Fox will continue to monitor the use of drones in property inspections and the restrictions placed on such usage by the FAA.

[1] Bart Jansen, USA Today, Insurers adopt drones for airborne inspections, Mar. 21, 2016, available at http://www.usatoday.com/story/news/2016/03/31/insurers-adopt-drones-airborne-inspections/82434322/ [hereinafter “Jansen”].

[2] Id.

[3] State Farm, State Farm Cleared for Takeoff: FAA okays insurer to test damage-assessing drones, Mar. 16, 2015, available at https://www.statefarm.com/about-us/newsroom/2015/03/16/cleared-for-takeoff.

[4] Leslie Scism & Jack Nicas, The Wall Street Journal, Insurers Get Approval to Use Drones: AIG, State Farm and USAA will be able to use the unmanned aircraft to do inspections, Apr. 8, 2015, available at http://www.wsj.com/articles/aig-receives-faa-approval-for-drone-use-1428499777 [hereinafter “Scism & Nicas”]; Cameron Graham, Technology Advice, 3 Companies Using Drones to Improve Inspections, June 23, 2015, available at http://technologyadvice.com/blog/information-technology/companies-using-drones-for-inspections/ [hereinafter “Graham”].

[5] Id.

[6] Graham.

[7] Scism & Nicas.

[8] Id.

[9] Id.

[10] Id.

[11] Jansen.

[12] Drone Business.center, Intelligent Drone Will Automate Inspections, Oct. 4, 2016, available at https://dronebusiness.center/intelligent-drone-automate-inspection-12525/?utm_source=Drone+Business+Center&utm_campaign=78d7db7320-dbc_10081610_7_2016&utm_medium=email&utm_term=0_5c60558777-78d7db7320-124566457 [hereinafter “Drone Business.center”].

[13] Id.

[14] John Donovan, Drones Taking Our Network to New Heights, July 13, 2016, available at http://about.att.com/innovationblog/drones_new_heights.

[15] Id.

[16] Id.

[17] Id.

[18] Drone Business.center.