FAA Releases New Commercial Drone Regulations, Section 333 Exemption Holders Get "Grandfathered" Compliance Status

Today, the Federal Aviation Administration (“FAA”) announced the finalization of its long-awaited Final Rule governing routine commercial operation of unmanned aircraft systems weighing 55 lbs. or less.  The new 14 C.F.R. Part 107 will become effective 60 days from the date of its publication in the Federal Register, which is likely to happen this week or next.

Below is an explanation of how the new Part 107 will affect entities that have already received a Section 333 exemption, followed by a summary of the new operational requirements and restrictions:
 
Section 333 Exemption Holders Get Best of Both Worlds: “Grandfathered” Compliance Status and the Option to Take Advantage of the New Rules
 
In the Final Rule, the FAA was careful to protect Section 333 exempt entities from the burden of complying with an additional layer of regulations.  Instead, Section 333 exemption holders will be “grandfathered” into compliance, as explained by the FAA below:
 
“The FAA clarifies that current section 333 exemptions that apply to small UAS are excluded from part 107. The FAA has already considered each of these individual operations when it considered their section 333 exemption requests and concluded that these operations do not pose a safety or national security risk.
 
The FAA recognizes, however, that there may be certain instances where part 107 is less restrictive than a section 333 exemption. Therefore, under this rule, a section 333 exemption holder may choose to operate in accordance with part 107 instead of operating under the section 333 exemption. This approach will provide section 333 exemption holders time to obtain a remote pilot certificate and transition to part 107. Operations that would not otherwise fall under part 107 may not take advantage of this option. For example, an operation with a section 333 exemption that does not fall under part 107, such as an operation of a UAS weighing more than 55 pounds, would not have the option of operating in accordance with part 107 rather than with its section 333 exemption.
 
Additionally, when section 333 exemptions come up for renewal, the FAA will consider whether renewal is necessary for those exemptions whose operations are within the operational scope of part 107, which also includes those operations that qualify for a waiver under part 107. The purpose of part 107 is to continue the FAA’s process of integrating UAS into the NAS. If a section 333 exemption is within the operational scope of part 107, there may be no need for the agency to renew an exemption under section 333. Because the FAA’s renewal considerations will be tied to the outstanding section 333 exemptions’ expiration dates, a 3-year transition period is not necessary. This will not affect those section 333 exemptions that are outside of the operational scope of part 107 or where a part 107 waiver would not be considered.”  
(Final Rule, Pages 83-84.)
 
Thus, for Section 333 exemption holders, the result is the best of both worlds.  On the one hand, Section 333 exempt entities are not required to modify their current commercial drone operations to comply with the new regulations.  On the other hand, if a Section 333 exempt entity identifies an opportunity to perform certain operations under less stringent restrictions promulgated in the new Part 107, it may “choose to operate in accordance with part 107 instead of operating under the section 333 exemption.”
 
Here is the FAA’s Summary of the new operational limitations, Pilot in Command and certification responsibilities, and aircraft requirements:
 
 
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Congressional Stalemate Persists over Air Traffic Control Privatization as FAA Reauthorization Deadline Approaches

The integration of cutting-edge aviation technology such as commercial drones and the modernization of our national airspace system are just a couple of the pressing aviation issues hanging in the balance this summer as Congress seeks common ground on FAA Reauthorization legislation.  

With the July 15, 2016 expiration of the current Federal Aviation Administration (FAA) authorization legislation rapidly approaching, congressional disagreement over a plan to privatize Air Traffic Control is preventing bicameral endorsement of a path forward.  
 
On April 19, 2016, the Senate passed its Federal Aviation Administration (FAA) Reauthorization legislation by an overwhelming margin of 95-3 (initially introduced as S. 2658 and later merged into H.R. 636). The Senate’s FAA legislation would reauthorize FAA programs through September 2017, and would focus billions of dollars and government resources on some of the most pressing aviation issues including the promotion of widespread commercial drone operations, bolstering airport security, and adding new safety systems in private aircraft. However, the Senate’s FAA Reauthorization legislation is arguably more notable for what it would not do than for what it would do. 
 
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Senate Bill Approves Package Delivery by Drone

On April 19, 2016, the full Senate of the United States passed the “Federal Aviation Administration Reauthorization Act of 2016” (“FAA Act”), which had been previously passed by the full House of Representatives in February, 2016.  The FAA Act contains several notable provisions, the first of which, Section 2142, regarding federal preemption of local drone regulations, was approved by the Senate Commerce, Science and Transportation Committee on March 17, 2016, and reported in this publication on March 31.  

The FAA Act, as finally approved by the Senate, devotes substantial additional space to unmanned aircraft systems (“UAS”), and, most notably for this purpose, Section 2141, “Carriage of Property by Small Unmanned Aircraft Systems for Compensation or Hire.”  (Section 2141 will be codified in the main body of the legislation at Section 44812.)  That provision was clearly authored by Amazon, which has made considerable noise about the capability of UAS to deliver its products expeditiously and at low cost.  The FAA Act gives the Secretary of Transportation two years to issue a final rule authorizing the carrying of property by operations of small UAS within the United States.  
 
The requirement for the contents of the final rule is, however, clearly specified in the Act.  
 
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Senate Version of Federal Aviation Administration Reauthorization Preempts Local Drone Regulations

On March 17, 2016, the Commerce, Science and Transportation Committee of the United States Senate approved amendments to the most recent funding legislation for the Federal Aviation Administration (“FAA”), the FAA Reauthorization Act of 2016, that, among other things, appear to preempt to preempt local and state efforts to regulate the operation of unmanned aircraft systems (“UAS” or “drones”).  

Federal preemption is the displacement of state and local laws which seek to govern some aspect of a responsibility that Congress views as assigned by the Constitution exclusively to the federal government.  Preemption by statute is not uncommon in legislation dealing with transportation, and its relationship to interstate commerce.  For example, the Airline Deregulation Act of 1978, 49 U.S.C. § 41713, specifically “preempts” local attempts to control “prices, routes and service” of commercial air carriers by local operators or jurisdictions.  Similarly, the Airport Noise and Capacity Act of 1990, 49 U.S.C. § 47521, et seq. (“ANCA”) preempts local efforts to establish airport noise or access restrictions.  The Senate’s current amendments, however, appear, at the same time, broader in scope, and more constrained by exceptions than previous legislative efforts.  They also hit closer to home for the average American concerned about the impact on daily life of the proliferation of UAS for all uses, including, but not limited to, the delivery of packages.  
 
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Congress Seeks to End Run Federal Aviation Administration on Drone Rules

Apparently impatient with the Federal Aviation Administration’s (“FAA”) slow progress in developing rules governing the commercial operation of unmanned aerial vehicles (“UAV” or “drones”), Senators Cory Booker (D-NJ) and John Hoeven (R-ND) introduced in Congress legislation to expedite implementation of rules governing the commercial operation of drones.  

Supported by a host of interest groups, ranging from the Association for Unmanned Vehicle Systems International to the National Association of Broadcasters and Information Technology and Innovation Foundation, the stated purpose of the “Commercial UAS Modernization Act,” S.1314 (“Act”) is to amend the FAA Modernization and Reform Act of 2012 (Pub. L. 112-95), to create an interim rule providing basic guidelines for commercial use and testing of small UAS during the period within which FAA finalizes rules governing the operation of commercial UAS.  The Bill allows any person to “operate a small unmanned aircraft for commercial purposes without an airworthiness certificate within the United States, subject to the requirements under subsection (b) and the operating restrictions under subsection (c) during the period beginning on the date of the enactment of this Act and ending on the effective date of a final rule based on the Notice of Proposed Rulemaking Operation and Certification of Small Unmanned Aircraft Systems (80 Fed. Reg. 9544, February 23, 2015).” The Bill’s general requirements include: (1) liability insurance; (2) registration/certification under section 3(a) of the Act; and (3) the operator’s passing of an “aeronautical knowledge test,” Act, subsection (b)(3)(A), as prescribed by FAA in its February 2015 notice.  
 
The permission granted under the proposed legislation is not without limits, however.  
 
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California State Lawmakers Move to Regulate Drones

California legislators are taking advantage of the continuing absence of federal regulation of unmanned aircraft systems (“UAS” or “drones”), and the provisions of the FAA Modernization and Reform Act of 2012, Pub.L. 112-95 (“FMRA”), allowing state and local governments to regulate drone operation in the absence of federal regulation.  Between the start of the new California legislative session, through February 27, 2015, the last day for Bills to be submitted, legislators introduced five Bills.  The most comprehensive of these is AB37, introduced by Assemblymember Campos, and referred to the Assembly Committee of Public Safety, Civil Procedure and Privacy.

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Buchalter Wins Historic Grant of Exemption for Client Picture Factory, Inc.'s Drone Filming and Photography Operations - First Ever in Midwest

In a landmark decision for film and production companies, the Midwest of the United States, and the unmanned aircraft systems industry, Buchalter Nemer’s Aviation and Aerospace Practice Group made history last week when it secured a Grant of Exemption issued by the Federal Aviation Administration authorizing film and production company Picture Factory, Inc. to operate camera-mounted drones for the purpose of aerial filming and photography.  Picture Factory, Inc. is the first production company in the Midwest to receive a Grant of Exemption allowing commercial filming operations using drones in U.S. airspace.

“We’re proud to offer yet another cutting-edge way to give our clients unique perspectives and moving camera shots from places otherwise impossible to reach,” said Craig Peterschmidt, co-founder of Picture Factory.
 
The FAA’s Grant of Exemption was issued in response to Picture Factory’s Petition for Exemption under Section 333 of the FAA Modernization and Reform Act of 2012, which provides a procedure for expedited authorization of commercial operations using unmanned aircraft systems weighing no more than 55 pounds.  Picture Factory was represented by attorney Paul Fraidenburgh in Buchalter’s Orange County, California office.  Mr. Fraidenburgh has gained a national reputation for his representation of clients in the unmanned aircraft systems industry.  The Wall Street Journal, Los Angeles Times, and several other publications have quoted Mr. Fraidenburgh on the topic of unmanned aircraft systems, and his clients are among the most cutting-edge aerial filmmakers and aviation companies in the world.  He can be reached at (949) 224-6247 or pfraidenburgh@buchalter.com.
 

FAA Releases Proposed Rules for Commercial Drones; White House Launches Drone Privacy Policy

On February 15, 2015, the Federal Aviation Administration published its highly anticipated Notice of Proposed Rulemaking (NPRM) on the Operation and Certification of Small Unmanned Aircraft Systems (applicable to UAS weighing 55 lbs. and less).  The proposed rules would add a new Part 107 to Title 14 Code of Federal Regulations to allow for routine civil operation of small UAS in the National Airspace System (NAS).  Although a lengthy comment and revision period is expected to delay finalization of the regulations for another 18-24 months, Section 333 of the FAA Modernization and Reform Act of 2012 will continue to provide a procedure for expedited authorization of commercial small UAS operations in the interim.  The final Part 107 will serve as the foundation for a multi-billion dollar UAS industry in the United States. 

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Unmanned Aircraft Systems Video Blog

Paul Fraidenburgh discusses unmanned aircraft systems and Petitions for Exemption under Section 333 of the FAA Modernization and Reform Act of 2012.  Watch Here.

FAA Reports Increasing Conflict Between Drones and Civil Aviation

The Federal Aviation Administration (“FAA”) reports that close calls between conventional aircraft and unmanned aircraft systems (“UAS” or “drones”) have increased during 2014 to more than 40 per month over earlier reports of 10 such incidents in the months of March and April.  Some of these incidents have occurred in the busy airspace surrounding Los Angeles, California, Washington, D.C., and John F. Kennedy Airport in New York.  Some of these conflicts have arisen because untrained operators of recreational drones are unaware of FAA’s guidelines governing such use.  Those guidelines ask, among other things, that “hobby” drones stay away from civil aviation, below 400 feet AGL, and at least 5 miles from airports.  However, as FAA prepares to release its highly anticipated Notice of Proposed Rulemaking for small unmanned aircraft systems, the focus is not on hobbyists, but on commercial operators.

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Interview with Avionics Magazine

Aviation and aerospace attorney Paul Fraidenburgh was quoted in “Pirker v. Huerta Ruling Clears the Way to UAS Integration” published in Avionics Magazine on November 25, 2014.  The full article is available here: http://www.aviationtoday.com/av/commercial/Pirker-v-Huerta-Ruling-Clears-the-Way-to-UAS-Integration_83611.html#.VHUKG53Tncv

Pirker Reversed: NTSB Confirms FAA Has Jurisdiction Over Drones

Earlier today, in a landmark decision for the unmanned aircraft systems industry, the National Transportation Safety Board reversed the Administrative Law Judge Patrick Geraghty’s order in the Pirker case and held that unmanned aircraft systems fall squarely within the definition of “aircraft” under the Federal Aviation Regulations.  This is the most significant legal opinion issued to date on the issue of drones in the United States. 

In a twelve page opinion reversing the ALJ’s March 7, 2014 decisional order, the NTSB stated:
“This case calls upon us to ascertain a clear, reasonable definition of ‘aircraft’ for purposes of the prohibition on careless and reckless operation in 14 C.F.R. § 91.13(a). We must look no further than the clear, unambiguous plain language of 49 U.S.C. § 40102(a)(6) and 14 C.F.R. § 1.1: an ‘aircraft’ is any ‘device’ ‘used for flight in the air.’ This definition includes any aircraft, manned or unmanned, large or small. The prohibition on careless and reckless operation in § 91.13(a) applies with respect to the operation of any ‘aircraft’ other than those subject to parts 101 and 103. We therefore remand to the law judge for a full factual hearing to determine whether respondent operated the aircraft ‘in a careless or reckless manner so as to endanger the life or property of another,’ contrary to § 91.13(a).”
The Federal Aviation Administration’s success on appeal comes as no surprise to most members of the UAS industry, many of whom have already tacitly recognized the FAA’s jurisdiction over unmanned aircraft by specifically requesting regulatory exemptions to conduct commercial UAS operations under Section 333 of the FAA Modernization and Reform Act of 2012.
 
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One code to rule them all: Dronecode

Paul Fraidenburgh’s article, “One code to rule them all: Dronecode,” appeared in the October 30, 2014 issue of Computerworld. The article is available here: http://www.computerworld.com/article/2841493/one-code-to-rule-them-all-dronecode.html

Update on Developments in California Drone Law

The governor acted recently on the two bills involving use of unmanned aerial vehicles (“UAVs or “drones”) sitting on his desk, AB 1327 (Gorell) and AB 2306 (Chau). Both were discussed in some depth previously in this space. One bill was signed and the other vetoed. 

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FAA Grants Exemptions for Filming with Unmanned Aircraft Systems

In a landmark decision for the UAS (aka drone) industry and for the aviation industry as a whole, the Federal Aviation Administration announced today that it has granted 6 petitions for regulatory exemptions to operate unmanned aircraft systems for commercial filming operations.  The exemptions will allow the 6 petitioners to operate unmanned aircraft systems for closed set filming in both populated and unpopulated areas.  This highly anticipated decision paves the way not only for other filmmakers who wish to seek exemptions, but for potential future UAS operations in other industries including energy, agriculture, and telecommunications.

Recent Developments in California Drone Law

Two significant pieces of legislation proposing to limit and/or control the use of unmanned aircraft systems (“UAS” or “drone”) were passed by the California Legislature last week and now await the signature of Governor Jerry Brown.  

The first of the two bills, AB 1327 by Jeff Gorell, places certain limits on the use of drones, both by the government and private parties. For example, it bans any weaponization of drones unless specifically authorized by federal law. It also extends existing privacy and wiretapping/electronic eavesdropping protections to the private use of drones but does not prohibit their use in situations where privacy concerns are not likely to be significant, such as those circumstances consistent with the “core mission” of non-law enforcement public agencies like fire or oil spill detection. One can expect the inevitable round of litigation to flesh out the limits of such circumstances and situations where privacy concerns are not likely to be significant. 
 
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Drone Filmmaking and the Technological Power Shift

MovieMaker Magazine published an article titled “Drone Filmmaking and the Technological Power Shift” by our blog’s co-author Paul Fraidenburgh.  The full text of the article is reprinted after the jump.

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Professional Cinematography Using UAS

Paul Fraidenburgh was quoted by the Digital Cinema Society regarding the use of unmanned aircraft systems for commercial aerial filming operations. The full article is available here.

Amazon Prime Air

Amazon has announced it will use unmanned aircraft systems to deliver packages.  But how soon?  Westlaw Journal Aviation quoted Barbara Lichman and Paul Fraidenburgh today in an article entitled “The FAA’s recent notice and Amazon drone delivery.”  

UAS Update Interview with LXBN TV

2014 has been the year of the unmanned aircraft systems (also known as drones).  Recently, we had the opportunity to sit down with LXBN TV to discuss the state of the UAS industry and what to expect in the coming months.  The interview is available here: LXBN 

FAA Weighs in on the Regulation of "Model Aircraft"

On June 25, 2014, the Federal Aviation Administration (“FAA”) published in the Federal Register, 79 Fed.Reg. 36172, its “Interpretation of the Special Rule for Model Aircraft” (“Interpretation”) established by Congress in the FAA Modernization and Reform Act of 2012, Pub.L. 112-95, § 336 (“FMRA”).  Despite its name, FAA’s interpretation goes far beyond mere definitional clarification.  It is, instead, the first step in establishing FAA’s preemptive authority over Unmanned Aircraft Systems (“UAS”) as “aircraft” utilizing the National Airspace System (“NAS”), even where the operator of an UAS chooses to denominate it a “model aircraft.” 

As a first step in asserting its regulatory authority, FAA takes the position that Congress’ rule in the FMRA is nothing new, but, instead, relies heavily on the long standing statutory and regulatory definition of model aircraft as “aircraft,” i.e., mechanisms that are “invented, used or designed to navigate or fly in the air,” 49 U.S.C. § 40102; 14 C.F.R. § 1.1.  FAA also applies its own 2007 guidelines regarding UAS operating in the NAS, which recognizes that UAS fall within the statutory and regulatory definition of “aircraft” as “devices that are used or intended to be used for flight in the air with no onboard pilot.”  72 Fed.Reg. 6689 (February 13, 2007). 

FAA’s Interpretation, however, goes far beyond the simple inclusion of “model aircraft” in the category of “aircraft.”  The Interpretation expands even further upon FMRA’s three part test defining a “model aircraft” as an “unmanned aircraft” that is: “(1) capable of sustained flight in the atmosphere; (2) flown within the visual line of sight of the person operating the aircraft; and (3) flown for hobby or recreational purposes.”  FMRA, § 336(d). 
 
With regard to FMRA’s second factor, the requirement that the model aircraft stay within the “visual line of sight” of the user, FAA interprets that requirement consistent with FMRA, § 336(c)(2) to mean that: (1) the aircraft must be visible at all times to the operator; (2) that the operator must use his or her own natural vision (including corrective lenses) and not goggles or other vision enhancing devices; and (3) people other than the operator may not be used to maintain the line of sight.  In other words, to maintain the identity as a “model aircraft,” the aircraft cannot be “remotely controlled” from a location other than that at which it is being flown.

The third factor, the definition of what constitutes “hobby or recreational use” is perhaps the thornier. 
 

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Commercial vs. Recreational Drones: Are Existing Regulations Backwards?

A problem with the regulatory philosophy towards unmanned aircraft systems is quickly coming into view.  While foreign and domestic governments are investing time and money developing strict standards for commercial drone use, the more pressing threat of recreational use has largely escaped the regulatory spotlight.

 
The Australian Transport Safety Bureau (ATSB) finalized two reports last week that shed some light on the perils of recreational drone use.  The first report describes a near collision of a passenger plane with an unmanned aerial vehicle (UAV) near Perth Airport in Western Australia.  While approaching the airport for landing, the crew “sighted a bright strobe light directly in front of the aircraft,” reports the ATSB.  The UAV tracked towards the aircraft and the pilot was forced to take evasive action, dodging the UAV by about 20 meters.  The ATSB has been unable to locate or identify the operator of the UAV, which was flying in restricted airspace at the time of the incident.
 
The second report describes another near collision with a recreational drone just three days later in the airspace over Newcastle, the second most populated city in the Australian state of New South Wales.  In that incident, the crew of a rescue helicopter spotted a UAV hovering over Hunter Stadium during an Australian football match.  The UAV tracked towards the helicopter as the helicopter began its descent.  The ATSB’s report was supplemented with a comment by Australia’s Civil Aviation Safety Authority (CASA), which explained that the UAV appeared to be a “first person view” vehicle that was transmitting a live video feed back to its operator.  In other words, the operator was watching the game.  Neither the venue nor the official broadcaster took or authorized any aerial footage of the game.  CASA noted that over 90% of complaints received about UAVs relate to incidents caused by first person view drones.
 
Though these reports come from halfway around the world, they highlight a flaw in the Federal Aviation Administration’s (FAA) approach to the use of drones in American airspace.  The FAA subjects commercial drone users to strict regulations arising from traditional “aircraft used in commerce” standards while applying the more liberal “model aircraft” standards to recreational drone users.  (See 14 C.F.R. § 91.119 [requiring aircraft used in commerce to stay at 500 feet or more in altitude above rural areas and 1,000 feet above urban areas].)  The FAA staunchly defended this system in its appeal of the Pirker case, in which the FAA seeks to overturn the decision of an administrative law judge who ruled the FAA had no regulatory authority when it fined the operator of a drone used for commercial photography.  So does it make sense for the FAA to take a hard stance towards commercial drones and a more liberal stance towards recreational drone users?
 
Probably not.  Here’s why:
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Decision in Pirker Case Invokes Specter of Local Regulation of Unmanned Aircraft Systems

While many members of the growing community of developers, manufacturers and operators of Unmanned Aircraft Systems (“UAS”) have expressed enthusiasm at the National Transportation Safety Board Administrative Decision in the Pirker case, Administrator v. Pirker, NTSB Docket CP-217, July 18, 2013, their reaction should be tempered by the law of unintended consequences.  The outcome of the administrative action, which the Federal Aviation Administration (“FAA”) has since appealed, acknowledges not only the FAA regulation that is certain to arise as a result of the Congressional mandate contained in the FAA Modernization and Reform Act of 2012, Pub. L. 112-95, § 334 (“FMRA”), but also opens the door to unrestricted local regulation. 

Specifically, Pirker’s argument is based on the assumption that the UAS at issue is a “five-pound radio-controlled model airplane constructed of styrofoam [sic],” Motion to Dismiss, p. 1.  He does not cite, or even refer to, any operant statutory or regulatory definition of “model aircraft.”  On that basis, Pirker alleges that his operation of the “model airplane” cannot be regulated because FAA has “fallen far behind its own schedule, as well the scheduled mandated by Congress,” Motion to Dismiss, p. 1, for enacting regulations.  Pirker again fails to refer the Court to the full extent of the Congressional mandate in FMRA which effectively disposes of his fundamental argument. 
 

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FAA Pushes Back Against Advocates of Unregulated Drone Operations

The Federal Aviation Administration (“FAA”) has appealed a recent National Transportation Safety Board administrative decision, Administrator v. Pirker, NTSB Docket CP-217, July 18, 2013, in which Administrative Law Judge Patrick Geraghty ruled that FAA had no regulatory authority when it fined the operator of an Unmanned Aircraft System (“UAS”) (otherwise known as “drone”) used for commercial photography, for operating a UAS at an altitude below that approved for commercial manned aircraft.  It would do well for developers, manufacturers and operators of UAS to listen carefully to FAA’s views because the decision, while preliminary, and subject to appeal through many levels of the Federal Court system, has opened the proverbial Pandora’s Box in the relationship of manned and unmanned aircraft and their joint, or separate regulatory frameworks. 

First, it is important for the UAS community to recognize that, while Administrative Law Judge Geraghty found an absence of regulatory authority in the FAA, the Opinion did not acknowledge the seminal issue of “the federal government’s pervasive regulation of aircraft, airspace and aviation safety,” see, Montalvo v. Spirit Airlines, 508 F.3d 464, 472-74 (9th Cir. 2007).  That pervasive control arises under the Federal Aviation Act, 49 U.S.C. § 40101 in which Congress expressly granted to the Secretary of Transportation, through his/her designee, the FAA, the tasks of, among other things, “controlling the use of the navigable airspace and regulating civil and military operations in that airspace in the interest of the safety and efficiency of both . . .,” 49 U.S.C. § 40101(d)(4), as well as “encouraging and developing civil aeronautics, including new aviation technology.”  49 U.S.C. § 40101(d)(3).  That express assignment of responsibility alone gives FAA “skin in the game.” 

FAA’s response more specifically addresses what it believes to be misapprehensions about the extent of its power and authority. 
 

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