The Continued Growth of Drones in the Energy Sector

by Blank Rome LLP

The energy industry continues to see a marked growth in the use of drones as they provide cost efficient and time-saving services. For example, drones are being utilized as a tool to accurately inspect oil and gas pipelines, survey large property sites and power lines, and monitor oil wells. The oil and gas industry is also using drones for inspection and surveillance of drilling rigs in offshore operations. And, drones can also be used to check pipelines to identify pipe failures or detect methane leaks, conduct integrity surveys of power and utility industry cables and towers, or inspect onshore and offshore wind turbine farms.

More recently, energy companies used drones to support emergency response efforts in Texas in the wake of Hurricane Harvey. Several drones provided critical aerial inspections to identify risks in areas that were inaccessible due to flooding, downed utility lines, or hazardous conditions. However, even as the benefits and advantages of drones in the energy sector have become more apparent, flying drones in or near the disaster areas without proper authorization may put operators at legal risk. Operators must therefore be cognizant of applicable drone laws, in particular as the domestic legal framework governing drones remains complex and developing.

The Federal Aviation Administration (“FAA”) regulates small commercial drones, those weighing less than 55 pounds, under 14 CFR part 107 (“Part 107”). Part 107 provides parameters under which operators may fly their drones, and limits flight operations to those within line of sight, not over people, and during daylight hours (among other limitations). Notably, Part 107 includes the option to apply for waivers to deviate from certain operating rules, including flying over people or going beyond visual line of sight (“BVLOS”). The ability for drones to operate BVLOS is widely considered the most important next step in expanding capabilities for inspections of pipelines and infrastructure—inspections currently being done with the assistance of manned aircraft. Thus, until the FAA implements new regulations that permit BVLOS, the industry is unable to reach its full potential with drones. In support, the FAA has announced that a regulation on flight over people will be published February 28, 2018, although any rulemaking action on BVLOS remains elusive and yet-to-be announced.

Adding to the operational complexities, drone operators must also be cognizant of the patchwork of state and local ordinances that attempt to regulate drone operations. Even though the FAA has maintained it has broad authority to regulate navigable airspace, and consistently purports to regulate drone operations in that airspace, they have stopped short of formally asserting that FAA regulations preempt state and local drones laws. Such a declaration would provide the clarity for drone operators to rely one set of regulations. But, the FAA is currently leaving the preemption question to the courts.

The FAA is now getting that judicial support. This month, a federal court confirmed the FAA’s federal authority over drones in the national airspace and struck down a local drone ordinance as in conflict with federal law, and thus preempted. Singer v. City of Newton, No. 17-100071-WGY, 2017 WL 4176477 (D. Mass. Sept. 21, 2017). While not the panacea the industry is seeking, this decision is a significant next step in confirming the FAA’s preemptive authority over local drone regulations.

Overall, the benefits of drones in the energy sector are more apparent than ever. Moreover, the global drone market for the energy industry is estimated to continue to grow as operations become safer and more cost effective. However, the primary restraint to the energy industry drone market remains the developing regulatory framework. Therefore, energy industry stakeholders interested in utilizing drones should continue to monitor regulatory developments and consult counsel prior to any operations to ensure compliance with the complex regulations and laws, including Part 107 and other applicable laws, as well as attendant issues related to insurance, liability, and potential Part 107 waivers.

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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