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US Regulation of Commercial Uses of Drones

The drone industry is growing at a significant pace and is expected to contribute $82 billion to the U.S. economy within the next ten years. Sales of drones for commercial operations are predicted to increase from 600,000 in 2016 to approximately 2.7 million by 2020. Drones have broad applicability for a wide range of industries, including energy and public utilities, agriculture, real estate, insurance, moviemaking, photography, and videography. The slow progress of creating a comprehensive regulatory scheme for commercial uses of drones is delaying more extensive deployment of drones in the U.S. economy. This article discusses current U.S. regulation of commercial uses of drones, pending Federal Aviation Administration ("FAA") initiatives to facilitate more extensive drone deployment, federal preemption, and problems relating to recreational drone operations. We conclude by identifying some legal issues companies should consider before initiating drone operations.

FAA Regulation of Commercial Uses of Drones

There are many legal restrictions on commercial uses of drones, also known as unmanned aircraft systems ("UAS") or unmanned aerial vehicles ("UAV"), in the United States. Until August 2016, entities that wanted to participate in commercial drone operations had to petition the FAA for a so-called Section 333 exemption or an individual approval for specific operations. The FAA reviewed each Section 333 exemption petition on a case-by-case basis and could take months to issue an approval. On August 29, 2016, the FAA's Small UAS Rule, known as Part 107, went into effect and changed the regulatory scheme for commercial drone operations.1 Part 107 generally authorizes the commercial use of drones that weigh less than 55 pounds and do not fly faster than 100 miles per hour, but subject to significant conditions and limitations. Drones must:

  • remain within 400 feet of the ground (or higher, if the drone remains within 400 feet of a structure);
  • operate during daylight hours;
  • only operate when there is at least 3 miles of visibility from the control station;
  • not be flown over people;
  • operate in Class G airspace absent special authorization;
  • remain within the visual line of sight of the operator at all times; and
  • not carry hazardous materials.

In order to pilot the drone, the operator must hold a Remote Pilot Airman Certificate and pass a Transportation Security Administration background check. In order to receive a Remote Pilot Airman Certificate, the applicant must pay a $150 fee, pass the initial aeronautical knowledge test (a two-hour, 60-question test) with a minimum score of 70 percent, and complete the FAA Airman Certificate and/or Rating Application. Foreign-registered drones may operate in compliance with Part 107, but the remote pilot must hold an FAA-issued Remote Pilot Airman Certificate.

If proposed drone operations fall outside the scope of Part 107, the operator must apply to the FAA for a special exemption or waiver and be able to demonstrate that it can conduct the proposed operations safely. Entities can apply for a waiver that allows operations:

  • outside daylight hours;
  • beyond the visual line of sight of the drone operator;
  • over people; or
  • in areas where drones are not usually permitted.

Under the Obama administration, the FAA was drafting new regulations to permit the operation of drones over people without the need for a waiver. It remains uncertain whether such regulations will be issued under the Trump administration. The FAA convened a Drone Advisory Committee, including members from across the aviation and drone sectors, to advise on the best way to handle issues surrounding this new technology. While there have not been specific regulations implemented regarding cybersecurity or privacy issues, entities engaged in drone operations should exercise caution not to violate others' privacy rights and ensure that the drone has proper security mechanisms, such as a password-protected Wi-Fi signal.

State and Local Drone Laws and Federal Preemption

Depending on the entity's location, legal advice may also be needed regarding compliance with state and local laws affecting drone operations. Whether the FAA has exclusive legal authority to regulate drones that would preempt State and local governments from adopting their own laws and regulations is an unresolved legal issue. The FAA, in Part 107, not only avoided asserting exclusive jurisdiction over drones, but actually encouraged state and local regulation of drones in specific respects, such as to address privacy issues arising from drone operations.2

The preemption issue will likely be addressed through legislation and the courts. On May 25, 2017, a bipartisan group of senators introduced the "Drone Federalism Act of 2017" to "preserve State, local and tribal authorities and private property rights with respect to unmanned aircraft systems."3 This bill would require the FAA to define the scope of federal preemption, limiting it to "the extent necessary to ensure the safety and efficiency of the national airspace system for interstate commerce."4 Drone industry stakeholders are concerned about the emergence of a patchwork quilt of potentially inconsistent state and local drone laws across the country.

FAA Regulation of Recreational Uses of Drones

The rapid expansion in the number of recreational drone users has raised significant safety concerns about intrusions into controlled airspace and interference with other aircraft as well as persons and structures on the ground. In December 2015, the FAA adopted a rule requiring small drone owners who conduct operations for recreational purposes to register their drones with the FAA.5 On May 19, 2017, the United States Court of Appeals for the District of Columbia held that this rule "directly violates" Section 336(a)6 of the FAA Modernization and Reform Act, which prohibited the FAA from "promulgat[ing] any rule or regulation regarding a model aircraft."7 The court found that drones constitute "model aircraft" and thus must not be made subject to FAA regulation.8 FAA argued that notwithstanding Section 336(a), it could impose the registration requirements pursuant to its general congressional mandate to "improve aviation safety," but the court found that Section 336(a) controlled, thereby barring the recreational drone registration rule.9

Issues for Companies to Consider Before Commencing Drone Use

Companies looking to use drones should consider whether to operate the drones themselves or hire an outside contractor do so on their behalf. If a company wants to conduct drone operations itself, it will need an employee to obtain a Remote Pilot Airman Certificate. The company also will need to purchase insurance coverage and ensure that it can conduct drone operations in a safe and compliant manner. By conducting drone operations itself, the company may reduce costs by eliminating the need to hire a contractor and avoid the delay involved in getting contractor operations established, but may increase its potential liability for its drone operations. Alternatively, companies can contract in for drone services, which can be preferable or even necessary, particularly for more complex operations. The benefits of using an outside contractor include the ability to access a range of drone devices and the most up-to-date technology operated by a licensed, insured, experienced pilot, and to limit the company's liability.

Any company interested in using drones should consult an attorney who is knowledgeable about the increasingly complex laws and regulations applicable to drones before initiating operations. Most entities are well-versed in the regulations that apply to their core business operations; however, most have not had to deal with specialized aviation laws and regulations governing commercial drone use. In addition, drone operations may introduce into the business new and unfamiliar forms of risk and potential liability. The advice of a drone attorney on licensing and compliance issues is critical because this is an emerging area of the law. For those entities using outside contractors, a drone attorney can also help to draft a contract that limits the company's potential liability arising from its use of drones.

Conclusion

Increasingly, a consensus view is emerging that the benefits of drones used for commercial purposes exceed the risks and uncertainties surrounding this new technology. Unfortunately, a federal regulatory scheme to permit safe and orderly drone deployment has been slower to develop, but companies are working within the constraints of the current regulatory system to tap the enormous potential of drones to transform how many industries operate.


  1. Operation and Certification of Small Unmanned Aircraft Systems, Final Rule, 81 Fed. Reg. 42,063 (June 28, 2016), codified at 14 C.F.R. Part 107.
  2. Id. at 42, 194.
  3. S. 1272, 115th Cong. (2017).
  4. Id.
  5. Registration and Marking Requirements for Small Unmanned Aircraft, 80 Fed. Reg. 78,594 (Dec. 16, 2015) (drone owners must provide the FAA with their names, addresses, e-mail address, any additional information the FAA requests, and a $5 registration fee).
  6. This section states that the FAA “may not promulgate any rule or regulation regarding a model aircraft.” Pub. L. No. 112-95, § 336(a), 126 Stat. 11, 77 (2012) (codified at 49 U.S.C. § 40101 note).
  7. Taylor v. Huerta, No. 15-1495 at 3 (D.C. filed May 19, 2017).
  8. Id. at 2.
  9. Id. at 8.