Policy in the Age

of Drone Fever November 13, 2017

Lisa Ellman

Hogan Lovells and Commercial Drone Alliance

@Leelellman

Dawn of the Drones

• Drone Basics

• Year in Review

• Drone Security

• Challenges to Adoption

• Next Steps

What is a Drone? • A vehicle that navigates in the air from point A to point B that is remotely

controlled or flown autonomously and it shares what it sees with humans on the ground or other machines

• Drones vary in size, shape, type but have similar components

• Platform/hardware (fixed wing/multi-rotor) • Communications • Intelligence • Sensors • Power • Mobility source

Commercial Drone Applications and

Industries

• Delivery

• Energy

• Insurance

• Construction

• Mining

• Newsgathering

• Research

• Inspection

• Oil and Gas

• Real Estate

• Infrastructure • Mapping • Humanitarian Aid • Film-making • Railroad Monitoring • Surveying • Entertainment • Agriculture • Monitoring • Aerial Photography

• Public Safety • Sports • Telecommunications • Research and Development • Advertising • Education • Chemical Manufacturing • Environment • Graphic Design • Transportation

Drones for Entertainment

State of the Industry

Key Findings

• Teal Group Corp study estimated civil UAS as a $2.6B market in 2016, quadrupling to $10.9B by 2025

• PwC report estimated the global market value of UAS-powered solutions at over $127B

• FAA projected 11 million commercial drones to be sold in the U.S. by 2020 • FAA Aerospace Forecast for fiscal years 2016 to 2036 projected sales of small UAS to increase

from 2.5 million in 2016 to 7 million in 2020

• FAA reported the number of registered drone owners has exceeded the number of registered manned aircraft

Finnegan, Philip. World Civil Unmanned Aerial Systems: Market Profile & Forecast. Teal Group Corporation, 2016. Michal Mazur et al., Clarity From Above: PwC Global Report on the Commercial Applications of Drone Technology, May 2016. Cheryl Miner et al, Final Rulemaking Regulatory Evaluation: Small Unmanned Aircraft Systems, 14 CFR Part 107, U.S. Department of Transportation, Federal Aviation Administration, June 2016.

But…development of rules and regulations have fallen behind existing and future drone technology

POLICY INNOVATION

Dawn of the Drones Drone Basics

Year in Review

Drone Security

Challenges to Adoption

Next Steps

Year(s) in Review

• UAS Registration System Implementation

• NTIA Industry Privacy Best Practices Adopted

• Congressional Extension of FAA Reauthorization Act

• Long-Awaited/Anticipated Part 107 Took Effect

• Working Groups established: Drone Advisory Committee, Unmanned Aircraft Safety Team

• UTM Program continues testing phases

• State and Local Municipalities Passed Legislation

• And more….

Dawn of the Drones Drone Basics

A Year in Review

Drone Security

Challenges to Adoption

Next Steps

• National security agencies raised security as important policy issue, in addition to safety / privacy

• Remote ID and counter-drone threat mitigation are two US government workstreams

• Counter Drone Technology “Taking Off”

• June 2017: First-ever Domestic Drone Security Summit between industry and government

• October 2017: UAS Tracking and ID ARC presented recommendations to FAA

• Administration pushing legislation to enable use of counter-drone threat mitigation technology by gov’t

2017: Year of Drone Security

• What is a “Rogue UAS?”

• Recent High Profile Incidents Involving Rogue UAS

• Counter-UAS Technology Applications

• Counter-UAS Methods

• Fictitious Amusement Park Scenario

• Legal Issues Raised by Interfering With (Countering) UAS

• What Are the Risks of Deploying Counter-UAS Technology?

• How Should the Legal Issues and Risks Be Addressed?

Drone Security and Counter-Drone Technology

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Hogan Lovells

• UAS operated to harass or stalk individuals

• UAS that are hazardous to people/property on ground

• UAS interfering with manned aircraft

• UAS operations that invade privacy or create nuisance

• UAS operations involving spying on a company or misappropriation of company proprietary information or trade secrets

• UAS operated in an area where it is not supposed to be

Examples of a “Rogue UAS”

• UAS crashing on White House lawn

• UAS with radioactive material landing on Japan Prime Minister's rooftop

• UAS flying within 6 feet of German Chancellor

• Smugglers using UAS to fly drugs and other contraband into prisons

• Suspected UAS collision with airliner at Heathrow Airport

• Collision of UAS with Army helicopter in NY

• UAS crashing into Ferris wheel in Seattle, WA

• UAS crashing into stands at Petco Park during San Diego Padres MLB game

Recent High-Profile Incidents Involving Rogue UAS

• Airports

• Sensitive Government Facilities

• Sensitive Commercial and Industrial Facilities

• Prisons

• Sporting Events / Large Public Gatherings

• VIP Protection

• Amusement Parks

Possible Counter-UAS Technology Applications

Hogan Lovells

• Case brought in federal court in the Western District of Kentucky.

• Meredith shot down a UAS flown by Boggs over Meredith’s land.

• Boggs sought monetary recovery for damages to his UAS, and a declaratory judgment that a landowner is not permitted to shoot down a UAS operating in the navigable airspace in the U.S.

• Boggs claimed the U.S. navigable airspace immediately above a landowner’s property is not owned by the landowner.

– Thus a UAS flight over the land cannot constitute a trespass.

• U.S. Supreme Court has never addressed this issue, although it did address a related issue in U.S. v. Causby in 1946.

Real Life Example: Boggs v. Meredith

Real Life Example: Boggs v. Meredith (cont’d)

• The Boggs case was ultimately dismissed on procedural grounds (lack of jurisdiction) before the court ever reached the merits of the case, however it still provides a preview of future court cases that will likely create new law regarding:

– Landowner’s property rights in the airspace immediately above the land

– UAS operator’s right to operate in the navigable airspace immediately above another’s land

– FAA’s exclusive sovereignty over the navigable airspace in the U.S.

• Amusement Park in Louisa County, Virginia

• Park operated by “Louisa Amusement” (fictitious name)

• Recreational UAS operator thinks it would be fun to fly near ferris wheel with a camera-equipped UAS and take photos or videos

• To ensure safety and security of park visitors, and to protect sensitive proprietary information, Louisa Amusement seeks to prevent anyone from operating a UAS over its park property

• Louisa Amusement decides to use Counter-UAS technology to prevent UAS operations over the park property

Fictitious Amusement Park Scenario

• Possible counter-UAS methods: – Destroy or disable the UAS;

– Create an electronic “shield” preventing the UAS from operating within a protective “bubble” over the park;

– Take over control of the UAS by electronically hacking into the UAS’s command and control link or its navigation system and forcing it to fly away from the protected area.

Fictitious Amusement Park Scenario (cont’d)

• Potential criminal liability under Federal Law

– A drone is considered an “aircraft” under FMRA of 2012 and the Federal Aviation Regulations

– Under 18 U.S.C § 32 - Destruction of aircraft or aircraft facilities, destroying or disabling an aircraft is a Federal crime punishable by up to a 20-year prison sentence.

• Potential criminal liability under Virginia state statutes

– For example, in Virginia, intentionally damaging property is a Class 1 misdemeanor or a Class 6 felony depending on the value of the property (VA. Code Annot. Sec. 18.2-137(A); 18.2-1347(B).

Legal Issues Raised by Destroying or Disabling the UAS

• Potential criminal liability under local ordinances – For example, under Louisa County, Virginia - Code of Ordinances Sec. 54-9, breaking,

injuring, defacing, destroying or preventing the operation of a vehicle constitutes a Class 1 misdemeanor

• Potential civil liability for damages under Virginia common law – For example, civil liability for the tort of conversion of personal property by depriving the

owner of his possession or use of his personal property

– Potential civil liability for personal injury or property damage in the event that someone is injured or property is damaged on account of the counter-UAS activity

Legal Issues Raised by Destroying or Disabling the UAS (cont’d)

• Federal law makes it illegal to interfere with wireless communications (47 U.S.C. §§ 301, 302a(b), 333).

• Most counter-UAS technology that involves the use of a radio transmitting device to interfere with the UAS’s wireless communications would be illegal under Federal law, and could give rise to civil and criminal liability.

• For example, using a device to interfere with a UAS’s radio communications, GPS link, Wi-Fi, or Bluetooth connection would be illegal.

Legal Issues Raised by Hacking into UAS Command and Control Link

• In addition to potential violations of Federal law, use of a transmitter jammer might be a felony under Virginia’s Computer Crimes Act (Va. Code §18.2-152.1 et al.).

• Potential felonies under the Virginia Computer Crimes Act include: – Computer fraud;

– Computer trespass;

– Computer invasion of privacy; and

– Computer as instrument of forgery.

Legal Issues Raised by Hacking into UAS Command and Control Link (cont’d)

• Possible violation of Federal, state, and local laws and exposure to government prosecution

• Possible exposure to a civil tort action for damages incurred by the UAS operator

• What if the technology does not work? – Possible breach of contract by the designer, manufacturer, or maintainer of the technology

• What if the technology works, but its use causes an accident injuring persons or property? – Product liability exposure

– Operator negligence liability exposure

– Harm to the park that was supposed to be protected or persons working at the park

What Are the Risks of Deploying Counter-UAS Technology?

Disney World Flight Restrictions

Current Limitations – Federal

FAA Reauthorization – Amusement Parks and Security:

Current Limitations – Federal

• Laws need to be passed at both the Federal and State level to authorize the appropriate and safe use of Counter-UAS technology in narrowly defined circumstances.

– What those circumstances are should be the focus of a healthy public policy debate.

• Industry “best practices” for use of Counter-UAS technology need to be developed.

• Appropriate insurance products for Counter-UAS technology need to be developed by the insurance industry, and appropriate insurance coverage should be obtained by all operators of the technology.

– Users of Counter-UAS technology should consult their insurance broker.

• Any deployment of Counter-UAS technology should be preceded by a thorough safety and legal review.

How Should the Legal Issues and Risks Be Addressed?

• Utilize counter-drone technology to detect, identify and track rogue drones – Mitigation of threat is currently illegal; but passive use is likely lawful

• Develop “Drone Toolkit” for employees that describes what to do in case of rogue drone event – Include evidence-gathering techniques to enable regulators and law enforcement

to identify later what laws and regulations the operator may have been violating – Outline federal, state and local laws that restrict UAS use – Include contact information for local FAA Regional Operation Center

• Once available, apply for “fixed site” designation to limit or prohibit UAS use above property under Section 2209 of FMRA 2016 Extension Act – Amusement parks explicitly authorized to do so

What to do now?

Dawn of the Drones Drone Basics

A Year in Review

Drone Security

Challenges to Adoption

Next Steps

Regulatory Environment A New Administration State Legislation Privacy Public Perception

Challenges to Adoption

History of Regulations • FAA Modernization and Reform Act of 2012

– Passed after 5 years and 23 extensions

– First time Congress included language to safely integrate drones

– Outlined significant milestones for FAA to accomplish

• FMRA Extension Act of 2016

• Current FMRA extended

• Small UAS Rulemaking and Part 107

– Section 333 petitions

– Part 107 waivers

• UAS? UAV?

Drone? RPAS?

• The FAA currently classifies drone operations in the national airspace system (NAS) in three categories:

– Public Aircraft

– Model Aircraft

– Civil (commercial) Aircraft

• Classification is not based on the type of drone, but rather, who the operator is, and for what purpose the drone is being operated.

• Because each category is subject to different regulatory requirements, understanding which category a drone operation falls into is important.

How Are Drone Operations Categorized?

• Model Aircraft: Section 336 of 2012 FMRA

• Is flown “strictly for hobby or recreational use”

• Is operated in accordance with a community-based set of safety guidelines

• Weighs under 55 pounds unless otherwise properly certified

• Is flown within Visual Line of Sight (VLOS)

• Is operated in a manner that does not interfere with and gives way to manned aircraft

• Operator provides advance notice to the airport operator and airport air traffic control tower (if there is a tower) if to be operated within 5 miles of an airport

Model (Hobbyist) Aircraft

• For small UAS (vehicle 55 lbs or less including payload), replaces certain existing FAA regulations that would impede commercial UAS operations

• Flights allowed up to 400’ AGL or, if within a 400’ radius of a structure, 400’ above the highest point on structure

• Remote pilot airman certificate requires passing aeronautical knowledge exam; no pilots license required

• Includes waiver process to allow expanded operations beyond what is permitted under Part 107

• Key limitations include:

– Visual line of sight (VLOS) operations only

– Operations in Class B, C, D and E airspace need ATC approval

– Night flights prohibited

– Flights over people other than flight crew prohibited

– Allows for drone delivery within VLOS only

Civil Drones: Part 107

As of October 12, 2017, the FAA has granted a total of 1,294 waivers:

• 1,114 waivers authorizing night flights

• 130 airspace waivers

• 19 waivers authorizing a single person to operate multiple drones simultaneously

• 16 Waivers from the operating limitations

• 7 waivers from the visual line of sight requirement

• 4 waivers authorizing drone operations from a moving vehicle

• 4 waivers authorizing flights over people

Summary of Part 107 Waivers Granted

• Part 107 prohibits flying over a person unless that person is either:

– directly participating in the small UAS operation; or

– is located under a covered structure that would protect the person from a falling UA (a non-moving vehicle qualifies as a covered structure).

• The prohibition on flights over people is waivable

• The FAA clarified that the term “over” refers to UA flights directly over any part of a person.

• No 500’ buffer requirement from unsheltered non-participants like under a Section 333 exemption.

• No minimum stand-off distances from non-participants.

Key issues: Flights Over People

• Part 107 prohibits nighttime operations, but operations may be conducted during civil twilight if the UA has anti-collision lighting visible for at least 3 statute miles.

– Civil twilight = 30 mins before official sunrise and 30 mins after official sunset

– Flights during civil twilight currently permitted under Section 333 exemptions

• The prohibition on nighttime operations in Part 107 is waivable

Key Issues: Nighttime Operations

• Part 107 prohibits the simultaneous operation of multiple UA by the same person

• The prohibition on operating multiple UA is waivable

• Waiver can be based on data establishing the safety or maturity of simultaneous-operation technology

Key Issues: One Pilot Operating Multiple Aircraft

• Part 107 allows very limited operations involving the transport of property for compensation.

• For example, Part 107 would permit UAS carriage of building materials as part of a construction project (total weight must be <55lbs).

• Key Limitations to Carrier Operations: – Operations can only be conducted within a confined area (i.e., within VLOS of remote pilot).

– The FAA will not issue waivers to VLOS requirement for air carrier operations.

– Cannot cross state lines and de minimis volume of property only.

– Does not allow individuals or corporations, acting as “air carriers,” to engage in “air transportation” as those terms are defined in 49 U.S.C. 40102.

– No operations from a moving vehicle.

– No HAZMAT transport.

Key Issues: Drone Package Delivery

Regulatory Environment A New Administration State Legislation Privacy Public Perception

Challenges to Adoption

• WH Executive Order “Reducing Regulation and Controlling Regulatory Costs” January 30, 2017

• But…. – Commercial drone industry needs new rules to

enable economic activity

– New regs that enable additional or less restricted commercial drone operations by undoing existing regulatory requirements should qualify as a “deregulatory action” or offsetting regulation

• Drone Policy Agenda: Generally supportive of commercial drone issues; concrete steps TBD – Focus on security issues remains

The Trump Administration and Domestic Drones

Regulatory Environment A New Administration State Legislation Privacy Public Perception

Challenges to Adoption

Regulation of the airspace falls within the jurisdiction of the FAA, however many states have acted to address concerns related to UAS operations

Legislation in the States

2013 2014 2015 2016 2017 (to date)

States considered legislation

43 35 45 considered

153

38 38

States enacted

13 states enacted 16

bills

10 states enacted 11

bills

17 states enacted 23

bills

18 states enacted 32

bills

16 states Enacted 23 bills

States adopted resolutions

11 3 4 3

Essex, Amanda. Taking Off: State Unmanned Aircraft Systems Policies. National Conference of State Legislatures, 2016.

• The FAA is the designated authority to regulate U.S. airspace

• Any state or local law that conflicts with FAA regulations may be preempted

• The FAA released a fact sheet to provide guidance to state and local governments

• Congress considering preemption issues now

• Examples of laws for which consultation with the FAA is recommended

– Operational restrictions on flight altitude, flight paths, operational bans

– Mandating equipment or training related to aviation safety

– Relating to the design, manufacture, testing, licensing, registration, certification, maintenance

• Examples of laws within state and local government police power

– Traditional laws such as land use, zoning, privacy, trespass and law enforcement operations

– Requiring police to obtain a warrant prior to surveillance via drone

– Prohibitions on attaching firearms or similar weapons to drones

– Determining when a drone may not be used for voyeurism

Preemption

Regulatory Environment A New Administration State Legislation Privacy Public Perception

Challenges to Adoption

Privacy

Privacy: Strong Opposition to Drone Surveillance

Source: Kerry G. Herron, Ph.D., Hank C. Jenkins Smith, Ph.D., and Carol L. Silva, Ph.D, “US Public Perspectives on Privacy, Security, and Unmanned Aircraft Systems,” Center for Risk and Crisis Management, University of Oklahoma (March 2014)

Monitor Streets and businesses?

Enforce traffic laws?

Ground cameras

Drone cameras

24% 34%

46% 53%

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• In conjunction with the release of the FAA’s rule, a number of companies and trade associations pledged their support for voluntary privacy principles that were agreed upon by stakeholders in May 2016.

• Key elements of the best practices include:

1) guidance on a UAS privacy policy;

2) recommendation to use/retain data according to the UAS privacy policy;

3) recommendation not to violate a person’s reasonable expectation of privacy;

4) limits on public disclosure of data; and

5) guidance on how to secure data

NTIA Privacy Best Practices

Privacy Transparency Accountability

Regulatory Environment A New Administration State Legislation Privacy Public Perception

Challenges to Adoption

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Drone Basics A Year in Review Drone Security Challenges to Adoption Next Steps

Dawn of the Drones

• Remote Identification Rulemaking

Focus on security and accountability issues

• Micro UAS Rulemaking

Focus on flying closer to/over people

• Expanded UAS Operations Rulemaking

Focus on operating beyond visual line of sight (BVLOS), flights at night, and more

Coming Soon….

FAA

Working Groups

Pathfinders, PSPs

Providing data

Assist with research

NASA

Unmanned Aircraft Traffic Management Program

NUSTAR

Domestic Drone Security Summit Series

WH, DOD, DHS, DOE, DOJ working with industry

Remote ID ARC

Industry Collaboration

Policymaking Innovation

Polivation Ensuring scalability of the industry will require bringing policymaking together with innovation

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QUESTIONS?

Lisa Ellman Lisa.Ellman@hoganlovells.com

+1 202 637-6934 Twitter: @Leelellman