Waves of Regulation Hit the Drone Industry

by Cozen O'Connor
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Cozen O'Connor

This edition of the Cozen O’Connor Drone Report discusses the unmanned aircraft systems (UAS)/drone-related provisions of the recently introduced FAA reauthorization bills, a recent FAA chief counsel’s legal interpretation regarding drone operations near private heliports, the Department of the Interior’s data-sharing initiative to prevent unauthorized drone operations over wildfires, the Drone I.D. Rulemaking Committee’s recent meetings, a recent judicial proceeding on the GoPro drone case, President Trump’s offer to sell drones to India as part of the joint “Prosperity Through Partnership” initiative measure between the United States and India, and the latest state regulations and legislation regarding drones.

Regulatory

Federal Aviation Administration

FAA Grants First Part 107 Waiver for Drone Operations over People for Closed-Set Filming to CNN

The FAA granted CNN Aerial Imagery and Reporting (CNN AIR) a Part 107 waiver to conduct drone operations over people who are participating in filming activities on a closed set. The FAA has now granted four waivers pertaining to 14 C.F.R. § 107.39, but this is the first time the FAA has granted such a waiver for closed-set filming. In response to receiving this waiver, the Senior Director of National Newsgathering Technology and CNN AIR Greg Agvent stated that the company is “grateful for the opportunity to work with the FAA to move UAS forward for newsgatherers and filmmakers, and for the commercial UAS industry at large.”

Newly Established Drone I.D. Rulemaking Committee Initiates Official Meetings

The UAS Identification and Tracking Aviation Rulemaking Committee (ARC), established by the FAA in May 2017, held its first meeting June 21-23, 2017, and the second meeting was scheduled for July 18-19, 2017. The ARC consists of stakeholders from both the public and private sectors and is tasked with helping to create standards to remotely identify and track drones in-flight. During its first meeting, the ARC discussed the applicability of current regulations to drone identification and tracking, air traffic management issues for drones, and what authority local governments have with respect to drones. Additional meetings will be held as necessary to allow the ARC to develop identification and tracking solutions to be implemented at federal, state, and local levels.

The FAA Chief Counsel Issued a Legal Interpretation Regarding Drone Operations near Private Heliports

The FAA’s Office of the Chief Counsel provided a legal interpretation on whether a private heliport owner has the right to deny drone operations that are in compliance with Part 107 on a neighboring parcel of land. The interpretation stated that although “[a]irport owners or owners having off-airport land use or zoning authority may be able to regulate ground-based hazards to aviation in the vicinity of the airport,” a private heliport owner could not ban drone operations over or near the heliport. However, the FAA clarified that the drone operator would need to comply with all Part 107 requirements and emphasized compliance with 14 C.F.R. § 107.43, which states that drone operations may not be conducted “in a manner that interferes with operations and traffic patterns at any airport, heliport, or seaplane base.” The drone operator must also yield the right of way to all manned aircraft, including helicopters, and not create a collision hazard by flying too close to other aircraft.

Department of the Interior

Unauthorized Drone Operations over Wildfires Prompt Department of the Interior Sharing Initiative as a Preventative Measure

The Department of the Interior (DOI) issued a release stating that it would strengthen recent initiatives to prevent recreational drones from interfering with federal, state, and local wildfire-fighting activities. The DOI’s expanded oversight of such operations is being implemented through the use of location data-sharing available through the Geoplatform ArcGIS Online Organization. The program is called “Current Wildland Fires” and is intended to address critical public and firefighter safety issues. The new program also implements a public awareness campaign and a specific protocol for drone intrusions. According to DOI, the number of drone intrusions at wildfire-fighting sites between 2014 and 2016 increased from two to more than 12. The 2016 season saw an unprecedented jump to 42 reported drone intrusions at such sites. When asked about the new program, Mark Bathrick of DOI’s Office of Aviation Services stated: “[a]s the 2017 wildland fire season gets underway, this improved service should greatly reduce the incidents of drone incursions on wildfires and enhance the safety of our firefighters and the communities they work so hard to protect.” The drone intrusions on wildfires in 2016 forced fire suppression aviators to take evasive action to avoid dangerous and potentially deadly collisions with drones.

Congressional Action Impacting Drones

House and Senate FAA Reauthorization Bills Could Significantly Increase the Regulatory Burden on Drone Operations

The U.S. Senate and House of Representatives have both released the latest markups on their FAA reauthorization bills, which include a number of drone-related provisions. The Senate bill, titled the “Federal Aviation Administration Reauthorization Act of 2017” (S. 1405), includes drone provisions on increasing privacy regulations, safety standards, and addressing technological advances. The bill’s provisions include a requirement for operators of drones for commercial purposes to have a privacy policy statement, a mandate that drone manufacturers issue a statement of compliance with safety standards for small UAS, and the creation of a test site program to “facilitate the safe integration of unmanned aircraft systems into the national airspace system.” It also tasks the Government Accountability Office (GAO) with submitting a report to Congress that analyzes how drones are being used to help transport illegal drugs internationally into the United States and the use of drones for surveillance on potential border security weaknesses that provide international drug smuggling opportunities.

The House bill, titled the “21st Century Aviation Innovation, Reform, and Reauthorization Act” or the “21st Century AIRR Act” (H.R. 2997), proposes the creation of the “American Air Navigation Services Corporation,” a private, nonprofit organization that would be in charge of overseeing the country’s air traffic control system. The Corporation’s Safety Oversight and Certification Advisory Committee would be required to consult with drone operators and manufacturers to help develop safety oversight programs and address safety regulatory needs. The bill would also require the development of a plan to more fully integrate drones into the national airspace system, the establishment of risk-based permitting procedures to allow for drone operations that meet a set level of safety, and the extension of the FAA test site program in which beyond visual line of sight operations are encouraged for drones equipped with sense-and-avoid systems. The long-awaited authorization of carriage of property by drones for compensation or hire (i.e. drone package delivery) is provided for in both bills, which require the Department of Transportation’s authorization for such operations be provided within one year of either bill’s enactment.

Judicial

The U.S. District Court for the Northern District of California Hears Oral Arguments on GoPro’s Motion to Dismiss the Class Action Suit Alleging False and Misleading Statements Made to Investors Regarding Expansion into the Drone Market

On June 27, 2017, the U.S. District Court for the Northern District of California heard oral arguments regarding a Motion to Dismiss in Anton Bielousov v. GoPro, Inc. et al. The case alleges that GoPro made various false and misleading statements to investors regarding its HERO5 camera, Karma drone, and related revenue guidance. GoPro’s Motion to Dismiss claims the Private Securities Litigation Reform Act of 1995 (PSLRA), along with procedural deficiencies, prevents the investors’ complaint from moving forward. GoPro’s motion asserts that its statements to investors were “forward-looking” and protected by PSLRA’s “safe harbor” provisions. In opposition, plaintiff Bielousov argued that GoPro’s statements to investors were independently actionable regardless of whether the statements were forward-looking because GoPro failed to disclose “a presently existing risk.” That risk, according to Bielousov, included battery design defects, which prevented the GoPro drone from flying and recording as advertised. 

Executive Actions

OMB Publishes Unified Agenda Containing Plan for FAA to Issue a Notice of Proposed Rulemaking for Expanded Drone Operations

On July 20, 2017, the Office of Management and Budget (OMB) published the Trump administration’s Unified Agenda of Regulatory and Deregulatory Actions. DOT’s specific regulatory agenda includes the publication of a Notice of Proposed Rulemaking by the FAA to expand drone operations in the national airspace system (NAS) by December 2017. According to this specific entry, the “rulemaking would take a step toward the phased integration of sUAS into the NAS and would advance technology by encouraging innovation in this rapidly developing segment of the aviation industry.”

United States Offers to Sell Drones to India in Joint “Prosperity Through Partnership” Initiative

President Trump and Indian Prime Minister Narendra Modi met on June 26, 2017, to celebrate 70 years of diplomatic relations between the United States and India and to expand upon these relations through the “Prosperity Through Partnership” Initiative. Both President Trump and Prime Minister Modi pledged to deepen their countries’ relationship as major defense partners by collaborating on the advancement of defense technology. As part of this partnership, the United States offered to sell to India Sea Guardian Unmanned Aerial Systems to help strengthen India's security capabilities. According to a White House Fact Sheet, the drone sale is a part of U.S. efforts to provide India with advanced defense equipment, which also includes the sale of Apache attack helicopters and C-17 aircraft, totaling an approximately $19 billion increase in bilateral defense trade.

State Regulation of Drones

New Laws

Florida

The Unmanned Aircraft Systems Act was signed into law on June 23, 2017. The new law vests authority that has not been preempted by the federal government in the state to regulate the ownership and operation of drones. Local governments are now prohibited from enacting or enforcing ordinances and regulations related to drones. However, an exception is in place to allow local ordinances related to illegal acts arising from drone use.

Indiana

Indiana Governor Eric Holcomb signed S.B. 299 into law on April 21, 2017, and it officially went into effect on July 1, 2017. The new drone law makes “remote aerial voyeurism” a crime punishable by a year in jail and a fine up to $5,000 for the first offense. It also includes a prohibition on drone interference with public safety officials.

North Carolina

On July 25, 2017, North Carolina passed G.S. 15A-300.3 prohibiting the use of a drone near a correctional facility. The law takes effect on December 1, 2017. 

Notable Proposed Legislation

Pennsylvania

The Pennsylvania General Assembly is considering H.B. 1346, which would criminalize certain conduct related to surveillance and intrusion by a drone and would prohibit the local regulation of drones. The bill passed in the House earlier this month, and was referred to the Senate on July 14, 2017.

 

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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