Amazon’s ambitious proposal to use a fleet of unmanned aircraft systems to deliver packages may seem like a novelty announced years before its time, but the commercial use of unmanned aircraft systems is already here. The commercial use of unmanned aircraft systems, often referred to as unmanned aerial vehicles (“UAVs”), or drones, may be in its infancy, but it is growing rapidly. Businesses are discovering valuable applications for UAVs of various sizes, ranging from large commercial adaptations of advanced military hardware to much smaller platforms available at mall gadget stores. Uses include pipeline inspection, agricultural, aerial photography, premises surveillance, media production, telecommunications, and many other applications.

Technological innovation in this field is outpacing the development of the regulatory environment. Any company considering deploying unmanned aircraft systems should be keenly interested in the myriad of legal issues surrounding their use, including regulatory compliance issues concerning the equipment, pilots, and operating limitations, as well as tort and insurance concerns. This alert provides an overview of a fundamental topic: the scope of, and challenges to, the current FAA regulations concerning the use of unmanned aircraft systems.

The FAA Claims Comprehensive Regulatory Authority over Unmanned Aircraft Systems
The Federal Aviation Administration exercises broad regulatory authority in the field of manned aviation. In short, the FAA regulations cover aircraft airworthiness, pilot certification, and the classification and operating limitations for the National Airspace System. [1] While no one credibly questions the FAA’s regulatory authority over manned flight, there are procedural challenges to the scope of the FAA’s authority over unmanned flight. In addition to the FAA, states and municipalities are trying to stake out spheres of concurrent authority with respect to regulating the flight of unmanned aircraft systems. For example, 13 states have enacted bills that regulate drones. While most of those laws focus on public use of unmanned aircraft, Texas specifically enumerates 19 lawful uses of drones, including many commercial applications such as oil rig inspections. Tex. Gov’t Code Ann. § 423.00 (West 2014).

The FAA claims regulatory authority over unmanned aircraft systems, and notes that it first authorized their use in the National Airspace System in 1990. Since that time, the FAA has authorized limited use of the national airspace for missions it deems to be in the public interest, including firefighting, disaster relief, search and rescue, law enforcement, weather observation, and scientific research. Nevertheless, the FAA has been cautious about permitting wider operations of UAVs, including most non-governmental uses. Indeed, Congress has been pressuring the FAA to adapt more rapidly. The Federal Aviation Administration Modernization and Reform Act of 2012 mandated that the FAA integrate UAVs into domestic airspace by 2015.

The current FAA guidance suggests that it may approve public use of unmanned aircraft systems under controlled conditions for specific types of operations ranging from ground level up to 50,000 feet. The FAA guidance prohibits their use in Class B airspace, which surrounds many of the most populated urban centers. Moreover, the current FAA guidance has permitted limited non-governmental UAV operations in the past, but those approved users were usually research institutions and universities. The FAA generally did not permit any commercial use of unmanned aircraft systems.

The FAA’s restriction on commercial UAV use began to soften in July 2013 when the FAA issued its first Restricted Category Type Certificate for a civilian operator. To date, only two unmanned aircraft system models have been certified for commercial use. They are only authorized to fly in the Arctic. The FAA issued that first certificate to an energy company permitting the company to fly the two types of adapted military drones (Boeing’s Scan Eagle and Aerovironment’s Puma) in international waters off of the Alaska coast, to survey ocean ice floes and migrating whale patterns and to assist in evaluating potential Arctic oil exploration areas.

The FAA’s Legal Interpretations Concerning Unmanned Aircraft Systems are Comprehensive
In a series of guidance statements, the FAA has attempted to clarify its regulatory authority over unmanned aircraft systems and operations. Most of these statements were simply issued in releases; they were not developed pursuant to the notice and comment requirements of a formal rulemaking process for regulatory agencies.

The statements reveal the FAA’s claim of jurisdiction in the field and provide some guidance for entities seeking to operate within the FAA’s purported authority. They are as follows:

• An unmanned aircraft is an aircraft based on the unambiguous language in the FAA’s statute and regulations because it is a contrivance/device that is invented, used, and designed to fly in the air. The FAA’s position is that unmanned aircraft, regardless of whether the operation is for recreational, hobby, business, or commercial purposes, are aircraft within both the definitions found in under statutes 49 U.S.C. § 40102(a)(6) and 14 C.F.R. § 1.1.  Section 40102(a)(6) defines an aircraft as “any contrivance invented, used, or designed to navigate or fly in the air.” The FAA’s Federal Air Regulations similarly define an aircraft as “a device that is used or intended to be used for flight in the air.” 14 C.F.R. § 1.1.  The FAA also cites that Public Law 112-95, Section 331(6), (8), and (9) expressly defines the terms “small unmanned aircraft,” “unmanned aircraft,” and “unmanned aircraft system” as aircraft. Model aircraft are also defined as “aircraft” pursuant to Public Law 112-95, section 336(c).
• Unmanned aircraft are subject to FAA regulation. The FAA’s position is that all civil aircraft are subject to FAA regulation under 49 U.S.C. § 44701.
• The FAA is responsible for air safety from the ground up, including below 400 feet. The FAA’s position is that 49 U.S.C. § 40103(b)(2) grants the FAA broad authority to prescribe regulations to protect individuals and property on the ground and to prevent collisions involving aircraft.
• All unmanned aircraft system operations for commercial or business purposes are subject to FAA regulation. The FAA’s position is that any such flight requires all unmanned aircraft flights for commercial or business purposes require a certified aircraft and certified pilot in command. The FAA rejects the position that unmanned aircraft systems operations for commercial or business purposes can be operated under the special rule for model aircraft found in section 336 of Public Law 112-95.
• There is no open exception to operate unmanned aircraft for business purposes below 400 feet above ground level. Recreational use of airspace by model aircraft is covered by FAA Advisory Circular 91-57, which generally limits operations to below 400 feet above ground level and away from airports and air traffic. In 2007, the FAA clarified that AC 91-57 only applies to modelers and specifically excludes individuals or companies flying model aircraft for business purposes.
• The FAA does not certify “drone” pilots. For pilot certification purposes, the FAA does not presently recognize a separate pilot certification applicable to individuals who fly unmanned aircraft systems or separate category or type ratings for unmanned aircraft. 14 C.F.R. § 61. In the absence of any guidance, presumably most unmanned aircraft flown for commercial purposes should be piloted by a commercial pilot. Highlighting the absurdity that can occur when regulations lag behind emerging technology, any commercial drone pilot should presumably hold a Second Class Medical Certificate issued by an FAA designated medical examiner to satisfy the FAA’s current regulations.
• Challenges to the FAA’s Authority to Regulate Unmanned Aircraft Flight Have Cast Doubt on the Scope of the FAA’s Regulatory Authority.

There are challenges to the scope of the FAA’s authority. In March 2014, an Administrative Law Judge for the National Transportation Safety Board struck down a $10,000 fine levied against a drone photographer, holding that the FAA did not have jurisdiction of the photographer’s drone flight. [2] Mr. Michael Pirker was the first UAV operator that the FAA had ever fined, and they wisely chose a case that presented favorable facts supporting their authority. Mr. Pirker used a remote-controlled aircraft to film scenes for a commercial for the University of Virginia Medical School. Mr. Pirker allegedly flew his aerial vehicle into the approach path for an operating helipad at one of the university hospitals, which allegedly created a hazard to medical helicopters. Promoting a safe operating environment for aircraft is a core aspect of the FAA’s charter, so fining a drone operator allegedly directly interfering with flight operations should have been a less controversial exercise of authority by the FAA.

Nevertheless, NTSB Administrative Law Judge Patrick Geraghty dismissed the fine, holding that the policy notices the FAA used as a basis for the ban were not enforceable because they had not been written as part of a formal rulemaking process. The FAA is appealing the decision, and stated, “The FAA is appealing the decision of an NTSB Administrative Law Judge to the full National Transportation Safety Board, which has the effect of staying the decision until the Board rules. The agency is concerned that this decision could impact the safe operation of the national airspace system and the safety of people and property on the ground.”

In addition to the Pirker matter, a Texas-based nonprofit organization is petitioning the United States Court of Appeal for the District of Columbia Circuit to set aside an FAA order prohibiting the nonprofit’s use of model aircraft in search and recovery efforts. [3] The nonprofit organization used radio-control model aircraft to aid in search and rescue efforts of missing persons. They operated those model aircraft at altitudes below 400 feet above ground level and within visual line of site of the pilot. Nevertheless, in a February 21, 2014 e-mail message, an FAA official ordered the nonprofit organization to cease using the model aircraft and stated that such use of unmanned aircraft systems in the lower 48 states is illegal. The nonprofit’s petition argues that the FAA’s order violates the Administrative Procedures Act.

Although there are legal challenges to the FAA’s authority to regulate unmanned aircraft systems, companies interested in using this technology should develop a comprehensive corporate policy that takes into account the FAA’s regulatory activity–as well as that of other actors.  In an effort to address some of the procedural challenges, the FAA will likely introduce proposed rules covering unmanned aircraft systems for public comment later this year.  Interested companies may want to participate actively in that rulemaking process.

Notes:
[1] The National Airspace System categorizes the airspace above the surface of the earth into six classes of airspace and establishes different flight rules applicable to each class.