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DRONE AWAY BOMBS, PHOTOGRAPHS, PIZZAS, HEARTS, AND HEADACHES. By D. Damon Willens, James (Jim) H. Williams, Chris Proudlove, and Terry Miller

DRONE AWAY BOMBS, PHOTOGRAPHS, PIZZAS, HEARTS, AND HEADACHES By D. Damon Willens, James (Jim) H. Williams, Chris Proudlove, and Terry Miller ILLUSTRATION CREDIT: ISTOCK Drones, also known as unmanned aircraft
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DRONE AWAY BOMBS, PHOTOGRAPHS, PIZZAS, HEARTS, AND HEADACHES By D. Damon Willens, James (Jim) H. Williams, Chris Proudlove, and Terry Miller ILLUSTRATION CREDIT: ISTOCK Drones, also known as unmanned aircraft systems (UAS) or unmanned aerial vehicles (UAVs), have become the subject of tremendous media interest, controversy, and misunderstanding. They are already making a significant impact through commercial applications in a wide range of industries and are touching the lives of more people every day. Several industry sectors, including agriculture, energy, and construction, have identified unique applications for drones. This expanding commercial use, together with potential humanitarian benefits (e.g., third world medicine delivery or search and rescue missions), will likely win over many of the naysayers. The use of drones as a way to manage risk in many industrial and commercial settings is just beginning. Fitted with highly efficient and smart payloads, UAVs can be the ultimate business tool, combining performance with safety. By replacing people on high ladders or rooftops, or eliminating the need for workers to be high above ground with electric cables or smoke stacks, UAVs can perform tasks with a level of safety far beyond traditional methods. Investment in the sector is flowing from venture capitalists, angel investors, and numerous large companies. The Teal Group, an aerospace and defense analyst, estimates that the drone industry will be worth $93 billion by Industry observers expect the gap in investment, technology, and functionality to close between large military-grade drones and small commercial UAS over the next five years. Privacy and safety, however, are emerging as the two chief concerns that the drone industry needs to address with government officials and the public. While the diverse benefits of drone operation are clear, managing and insuring against risk will be crucial to success for UAV manufacturers and operators. Regulation As part of a system-wide Federal Aviation Administration (FAA) modernization effort, Congress passed the FAA Modernization and Reform Act of 2012 (FMRA), which authorized the FAA to create a plan to incorporate UAVs into the national airspace. 2 Pursuant to Section 336 of the FMRA, the FAA is arguably not authorized to implement further regulations affecting hobby or recreational use of small drones if the operation is conducted pursuant to a community-based set of safety guidelines and within the programming of a nationwide community-based organization ; the aircraft weighs less than 55 pounds; the operation does not interfere with manned aircraft; and the operator gives prior notice to the air traffic control tower and airport operator of any operation within five miles of the airport. 3 However, in December 2015, the FAA chose to use its safety authority to institute a new rule requiring registration of all consumer drones and hobby aircraft to help address the growing number of unsafe drone operations in the United States. The rule required all operators of drones weighing more than 250 grams (approximately one-half pound) to register and mark all their drones with their registration number. 4 In August 2016, after a long and controversial rulemaking process in which the FAA received more than 4,600 public comments, the FAA introduced an extensive set of new regulations for use of small drones. 5 Commonly referred to as the part 107 rule, the FAA created a new remote pilot certificate (RPC) that allows commercial operations of small UAS (suas) under 55 pounds. 6 To mitigate risk, the rule limits suas to daylight and civil twilight operations with appropriate collision lighting, confined areas of operation, and visual-line-of-sight operations. The rule also implements airspace restrictions, remote pilot certification, visual observer requirements, and operational limits in order to maintain the safety of the national airspace system (NAS). 7 A waiver mechanism allows individual operations to deviate from many of the operational restrictions of this rule if the FAA finds that the proposed operation can safely be conducted under the terms of a certificate of waiver. 8 After some initial glitches, the technical aspects of implementing the new RPC and educating the UAS community about part 107 seem to have been mostly successful. In an effort to improve the access to airspace near airports for commercial drone operations, the FAA released maps that establish a grid of acceptable altitudes and locations for safe drone operations near some of the smaller airports in the country. 9 However, the FAA has struggled to timely process and respond to the thousands of requests for waivers pursuant to part 107, although it is moving forward with plans to implement a streamlined online approval process soon. 10 Also, there are still many issues concerning proper interpretation of various operational limitations set forth in the rule, such as the sections prohibiting flight over people and beyond visual line of sight. 11 No doubt these issues will be resolved eventually, although perhaps not fast enough for those commercial operators who seek immediate clarity as to what they can and cannot do with their UAVs. At the same time that it implemented the UAS regulations set forth in part 107, the FAA codified the previous recreational and model aircraft guidance into 14 C.F.R This rule provides that suas need not be operated pursuant to part 107 if the operation satisfies the following requirements (which are very similar to the prior FAA guidelines and the FAA s interpretations of those guidelines ): (1) the 47 TIP The world of drone law, technology, and insurance continues to be an evolving and everchanging area that shows no signs of slowing. operator follows a communitybased set of safety guidelines and [operates] within the programming of a nationwide community-based organization ; (2) the aircraft weighs less than 55 pounds; (3) the operation does not interfere with D. Damon Willens is a partner and chair of the Aviation and Unmanned Aircraft Systems (UAS) practice group at Anderson, McPharlin & Conners LLP in Los Angeles, where he advises clients on matters related to federal, state, and local UAS laws; risk management for UAS operations; and litigation of drone-related lawsuits and administrative actions. He is a commercial pilot and holder of a part 107 remote pilot certificate. James (Jim) H. Williams is the founder and president of JHW Unmanned Solutions LLC in Reston, Virginia. He consults and advises clients in all manner of issues related to UAS. Previously, he was manager of the FAA s UAS Integration Office, acting as the single agency focal point for all UAS activities. Chris Proudlove is senior vice president and manager of the Northeast Regional Office and Complex Risks for Global Aerospace based in Parsippany, New Jersey, and has led the development team for Global s UAS underwriting strategy and product development, worldwide. He is widely respected as an industry expert on UAS insurance, risk management, and safety. Terry Miller is president of Transport Risk Management Inc. and Unmanned Risk Management in Conifer, Colorado. Transport Risk is a pioneer in the field of UAS insurance and has developed many unique systems, including an innovative aircraft registration system and insurance quote submission and policy management systems. They may be reached, respectively, at and manned aircraft; (4) the UAS does not operate more than 400 feet above ground level; and (5) the operator gives prior notice to the air traffic control tower and airport operator of any operation within five miles of the airport. 12 The regulations do not define nationwide community-based organization, but the FAA has stated that one such organization is the Academy of Model Aeronautics (AMA). 13 Presumably, this means that at the present time, if a recreational suas operator follows the AMA guidelines and otherwise meets the requirements of part 101, such operator will be following federal regulations (though perhaps not state and local regulations, which have their own problems). On the other hand, technology always seems to be ahead of the ability of government to enact appropriate regulations. For example, the AMA safety guidelines do not allow hand-catching, a process by which the UAV operator catches the UAV in certain environments (such as high winds or uneven terrain) where it would be more difficult to land on the ground. 14 Yet DJI s 300-gram (0.66-pound) Spark is specifically designed to be launched and landed from the palm of the hand. 15 Is everyone using a Spark thus violating part 101 requirements for recreational drone operations? These are the types of very specific and complex questions that make operator compliance with the regulations somewhat problematic. In the meantime, 2016 and 2017 have seen a huge increase in media attention to small drones, from alleged collisions and near misses, to interference with police and firefighting operations, to accidents in which small drones went out of control and struck a bystander. Some drone users characterize this attention as hysteria. For example, one of the alleged drone collisions widely reported in the media was actually a bird strike. 16 Other near misses allegedly involved consumer drones flying at 20,000 to 50,000 feet (unlikely for consumer drones, although military drones regularly operate at those altitudes). 17 Certainly some of the reports are true, although it seems that any speck in the windshield of an airliner is now often reported by the pilot as a drone sighting or near miss. 18 However, the FAA admitted that [e]very investigation has found the reported collisions were either birds, impact with other items such as wires and posts, or structural failure not related to colliding with an unmanned aircraft. 19 On the other hand, there are legitimate safety concerns given the increasing number of drones and the lack of any clear standards for operation and flight experience. In part as a result of extensive media exposure, states and municipalities throughout the country are increasingly passing drone-related restrictions, including total drone bans, which are creating a patchwork of complex and inconsistent laws. 20 Today, this patchwork of conflicting federal, state, and local laws, regulations, and guidelines make it difficult for anyone to know what is and what is not legal. According to data from the National Conference of State Legislatures, 38 states are considering or have passed a drone law during the 2017 legislative year. 21 And as the FAA has now finalized its drone regulations, there is a very strong argument that the state and local rules conflict with the federal rules. Federal preemption issues loom large on the horizon in this regard. Case in point: in October 2015, the City of Los Angeles passed an ordinance that makes it a misdemeanor to operate a UAS for recreational purposes within five miles of an airport without prior express authorization of the 48 airport tower. 22 However, 14 C.F.R requires noncommercial suas operators merely to notify the airport of drone operations, not obtain express authorization. How does one reconcile an v. Causby, 26 the Supreme Court analyzed the airspace rights of landowners. Causby was a chicken farmer in North Carolina who lived near a small airport. During World War II, the Army took AS THE FAA HAS NOW FINALIZED ITS DRONE REGULATIONS, THERE IS A VERY STRONG ARGUMENT THAT THE STATE AND LOCAL RULES CONFLICT WITH THE FEDERAL RULES. be seen. 31 The FAA recognizes that protection from intrusive drone operations is a significant issue and has asked its Drone Advisory Committee (a federal advisory committee managed by RTCA Inc.) to make recommendations on how to create a solution to the conflicting interests of the states and the federal government in this area. 32 For its part, the FAA published a fact sheet suggesting that it will seek to protect its preemption rights in the face of increasing state and local legislation. As this fact sheet notes: FAA rule requiring that drone operators notify a nearby airport control tower with a city ordinance requiring drone operators to obtain express authorization from that same tower? And as a practical matter, how will a drone user obtain express authorization from the tower? These questions have not yet been answered, but one alleged violator, Arvel Chappell III, challenged the ordinance on preemption grounds, and the City dismissed the charges and refiled only on the issue of whether Chappell was careless and reckless. 23 In 2016, the California legislature passed bills that, had they not been vetoed by Governor Jerry Brown, would have imposed significant restrictions on consumer drones, including operational restrictions, mandatory insurance requirements, and criminalization of acts involving potential trespass, nuisance, and invasion of privacy, which have traditionally been civil tort matters. 24 In February 2017, a virtually identical bill was introduced and is again working its way through the legislature. 25 From a legal perspective, the resolution of these conflicting laws may depend on whether the FAA s authority over navigable airspace preempts state and local authority over land use. In United States over the airport, and large military planes began flying over Causby s chicken coops at all hours of the day and night. The planes scared Causby s chickens, who flew into the walls of the coop and died. 27 Causby sued for damages, arguing that this was a taking under the Fifth Amendment. While finding in favor of Causby, the Supreme Court held that a landowner owns at least as much of the space above the ground as he can occupy or use in connection with the land. 28 If the government or any other party intrudes into that space, such intrusions should be treated in the same category as invasions of the surface. 29 In Causby, the altitude at which planes flew over the farm was 83 feet. 30 But the decision is silent on whether the FAA s ability to regulate the airspace is limited (as opposed to merely providing a framework for circumstances in which such regulation would be a compensable taking of the property under it). Causby did not say the property owner had any right to prevent the use. Thus, what altitude for operating a drone would represent a taking of a property owner s ability to enjoy use of his or her property? How this ambiguity will be resolved and by whom, under what authority, remains to Substantial air safety issues are raised when state or local governments attempt to regulate the operation or flight of aircraft. If one or two municipalities enacted ordinances regulating UAS in the navigable airspace and a significant number of municipalities followed suit, fractionalized control of the navigable airspace could result. In turn, this patchwork quilt of differing restrictions could severely limit the flexibility of FAA in controlling the airspace and flight patterns, and ensuring safety and an efficient air traffic flow. A navigable airspace free from inconsistent state and local restrictions is essential to the maintenance of a safe and sound air transportation system. 33 Specifically, the FAA asserts that it maintains authority over [o]perational UAS restrictions on flight altitude, flight paths; operational bans; any regulation of the navigable airspace. 34 However, the FAA also explains in the fact sheet that there are areas where state and local governments have authority to act without the risk of preemption, including land use, zoning, privacy, trespass, and law enforcement operation. 35 In the meantime, local governments have not been 49 shy about enacting their own local laws (some of which recognize the preemption issues, and others that appear to ignore them completely) while waiting for the FAA to take an official position on any specific local law. 36 The FAA has not yet become involved in any of the increasing number of challenges to state and local ordinances, but one would expect the FAA to do so eventually if it is truly committed to exercising its authority over drone operations. Several pending court cases may provide some short-term clarity to these issues. In Singer v. City of Newton, 37 a recreational suas user has challenged a Massachusetts ordinance prohibiting UAS flights over private property at or below 400 feet without the property owner s permission 38 on a number of grounds, including federal preemption. Singer argues that Newton s prohibition against flight below 400 feet combined with the FAA s prohibition on flight above 400 feet effectively creates a drone ban. 39 That case has been briefed and oral argument was held on June 13, The ruling is pending. In May 2017, the D.C. Circuit Court of Appeals in Taylor v. Huerta 40 invalidated the recreational use drone registration requirement set forth in 14 C.F.R. part 48. The case involved a recreational drone user near Washington, D.C., John Taylor, who objected to the FAA s implementation of the December 2015 drone registration requirement. A peripheral issue was whether the FAA had the authority to prohibit recreational drone use in a new 30-mile radius Washington, D.C., Flight Restricted Zone. In effect, this flight restricted zone precluded any recreational drone use whatsoever, including users flying their toy drone in their own backyard, within the affected area. The main argument made by Taylor, which was validated by the court, was that Congress in enacting Section 336 of the FMRA expressly prohibited the FAA from promulgat[ing] any rule or regulation regarding a model aircraft. 41 The intent of Congress was to keep the status quo with regard to model aircraft, and the court held that by imposing a registration requirement on recreational drone users, the FAA clearly violated the plain wording of the statute. The FAA s arguments that the registration rule was necessary for public safety and that the statute did not prohibit a registration rule did not impress the court. It is important to note, however, that none of the other requirements for recreational drone users, such as the requirement to safely operate according to a community-based set of safety standards (including avoiding manned aircraft, no flight over people, contacting air traffic control when near an airport) were discussed or changed in this decision. The court specifically refused to rule on the validity of the flight restricted zone because the challenge was untimely. 42 Taylor has another case pending in the same court challenging the recreational operating rules themselves, which case has been briefed and is awaiting oral argument. In that case, Taylor makes additional arguments, including that model aircraft are not aircraft subject to the full weight of the FAA s regulatory powers, and that the regulations are vague and ambiguous because the statute fails to define the community-based safety standards that recreational drone users are required to follow. 43 This case has greater potential to shake up the current drone regulatory MANY IN THE UAS INDUSTRY ARE LOOKING TO INSURANCE CARRIERS TO BE THE DRIVING FORCE AND ULTIMATE ARBITER OF THE VARIOUS RISK MANAGEMENT INITIATIVES CURRENTLY IN DEVELOPMENT. structure concerning drone use, especially if the court determines that small UAVs are not aircraft. Regardless of the litigation over its recent regulations, the FAA is still given the authority to use its catch-all careless and reckless provisions to punish unsafe drone operators. There can be little doubt that these laws and regulations will continue to remain in flux in the near future as federal, state, and local authorities seek to ensure safety and privacy while the number of drones using our airspace increases exponentially. Insurance and Risk Management Issues Many companies have been manufacturing military-grade drones for decades. However, the
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