The Emerging Market
Unmanned Aircraft Systems, commonly referred to as “drones,” have immense potential for commercial uses in the United States due to the advancement and increased affordability of UAS technology over the past decade. Though perhaps most widely known for their military applications, prototype UAS applications such as the Internet retail product delivery system televised on “60 Minutes” have demonstrated the potential for commercial UAS utilization. A recent article in “The Atlantic” magazine featured the emerging potential of UAS, citing projections that it could blossom into a multibillion-dollar industry. To date, the commercial use of UAS in the United States has been generally prohibited. Recent legislation has opened the door to the development of private UAS, however, and Gardere is well-positioned to assist clients in obtaining the necessary regulatory permits and approvals to engage in this exciting and potentially profitable field of technology.
A New Regulatory Landscape
The Federal Aviation Administration Modernization Act of 2012 directed the FAA to permit and regulate the use of UAS by private sector entities in the United States no later than Sept. 30, 2015. Prior to 2012, limited private UAS activity was permitted by the FAA for research and development purposes but commercial operation of UAS was prohibited. Implementation of the Modernization Act is now transitioning from the use of private UAS for research and development to broader commercial applications. On June 23, 2014, the FAA issued regulations specifying the conditions and requirements for private operation of UAS in the National Airspace System, and additional proposed regulations are expected to be published by the end of 2014. Regulations for the operation of aircraft in NAS are extensive and include qualified exceptions to requirements such as “see and avoid” that have previously made the use of private UAS impractical. The FAA has begun to issue permits for use of UAS on a company-by-company basis in very specific instances such as the film and utility industries.
Yes, Commercial Operations Need a Permit
Because of the potential for danger to the public from unregulated UAS operation, the FAA has been aggressive in its assertion of authority. In 2013, a $10,000 civil penalty was assessed on the unlicensed operator of a small remotely operated aircraft used to take photographs of the University of Virginia for compensation in 2011. Private UAS operators must obtain a Special Airworthiness Certificate from the FAA prior to any flight operations. Applications for a Special Airworthiness Certificate are generally viewable by the public. The information that must be provided as part of the FAA application is detailed, including such factors as the design specifications of the aircraft, its maximum speed and altitude, a description of how the UAS will be operated within the line-of-sight of its licensed pilot operator, and a description of the equipment to be used as part of the UAS, such as cameras.
State Law Issues
Use of private UAS must also comply with all applicable state laws and regulations. In 2013, Texas enacted a law setting parameters on the use of UAS for the purpose of taking pictures of persons or property. The statute makes use of UAS for purposes of capturing images permissible for a number of applications including taking pictures of public property and persons on such property and use by a number of specified industries including electric and gas utilities, licensed realtors, pipeline operators and port authorities.
The Texas statute does, however, make it a misdemeanor offense to capture, possess, disclose, distribute or display images of persons on private property outside the affirmatively approved categories of UAS operation. It also allows persons improperly photographed or videoed to bring lawsuits for civil penalties of $5,000 to $10,000 per incident. The Texas statute provides a number of defenses to prosecution, so implementation of carefully-drafted policies related to the operation of UAS and the storage and use of any images is essential to any commercial use of UAS.
Additionally, companies and individuals wanting to use drones may not be adequately insured for liabilities arising out of their use. Many policies contain “aircraft” exclusions and other language that can impair coverage.
