June 21, 2016

FAA Drone Rules Could Kill Innovation

Yesterday, the Federal Aviation Administration (FAA) released its first operational set of rules for commercial drones. FAA Administrator Michael Huerta contends this new rule is an example of the agency’s “careful and deliberate approach” to regulating drones. That’s an understatement.

In fact, this rule is overdue by almost 9 months. But this is just the most recent delay. In fact, ever since the passage of the 2012 FAA Modernization and Reform Act the FAA has missed numerous deadlines set by the reform bill. Now that we see the initial rule governing commercial operations of drones, also referred to as unmanned aerial/aircraft systems/vehicles (UAS/V), one wonders why the FAA took so long. Considering the clear lack of detailed consideration the agency took in assessing the costs and benefits of its chosen path, the long delay is almost mind-boggling.

Last year, I co-authored a public interest comment responding to the initial proposed rules for UASs. In those comments, we addressed many of the concerns relating to the inadequate cost-benefit calculation concluded by the FAA. For instance, the agency failed to consider whether the common law and tort liability statutes would be sufficient mechanisms for resolving concerns surrounding operator negligence, defective UAS design, and other safety concerns. As a result of what amounts to an inadequate cost-benefit analysis—which are required under Executive Order 12866§1(a)—the FAA ultimately failed to account for the many potential benefits of alternative rules. The end result? Innovators, entrepreneurs, industry, American consumers, and the economy will all undoubtedly suffer.

While I applaud the FAA for ultimately deciding against the inclusion of external load restrictions, the rules are innovation killers across the board. Some of the major concerns with the rules, as my co-authors and I originally pointed out in the aforementioned comments from April 2015, are as follows:

  1. Restricts UAS operations beyond visual-line-of-sight (BVLOS);
  2. Fails to permit the use of automated “sense-and-avoid” technology;
  3. Restricts operations to daylight-only; and
  4. Prohibits operations “over any persons not directly participating in the operation, not under a covered structure, and not inside a covered stationary vehicle.”

These are just a handful of the most onerous provisions of the new rules. Unfortunately, they are also the core elements that deal a deathblow to some of the most impactful innovations in UAS usage, such as drone delivery services. If not for these elements, such developments could be just over the horizon. Now, it seems as though countries like Germany and Canada will continue to lead in the deployment of commercial UAS technology. That’s a shame for all of us.

There are three primary ingredients to ensuring the safe and effective deployment of UAVs: (1) education, (2) self-regulation, and (3) government oversight. The FAA can and should play the lead role in oversight, but the regulations, as promulgated, essentially amount to an ex ante ban on innovation in this nascent market. Many other countries, most notably in Europe, have already made significant headway incorporating this technology into the commercial sector and will likely continue to take the lead—especially if the FAA presumes to embrace restrictions on BVLOS and non-operator overflight.

A Congressional Research Service report from September 2015 trumpets many of the same concerns related to these rules. It notes, in part, that although the FAA is “understandably concerned” about safety relating to “sense-and-avoid” technologies, the restriction on such an operation “would limit the range of UAS and prevent the deployment of more sophisticated UAS that could operate over longer distances.” It goes on:

“Sense-and-avoid” technologies under development could overcome the current limitations through use of radar and electronic systems. … Google and a Bellevue, WA, company are separately working on small, lightweight versions of [automatic dependent surveillance-broadcast] and radar scanning, two sense-and-avoid technologies that would be more appropriate for drone use. Such technologies could allow UAVs to fly in congested airspace, potentially broadening their commercial applications.

Other countries understand the benefits associated with incorporating these types of technologies as means of achieving safe and effective BVLOS operations. Indeed, the European Parliament, also in September 2015, overwhelmingly passed a motion which “stresses the importance of ‘out-of-sight’ flights for the development of the sector,” and even went so far as to state “that European legislation should favour this modus operandi.”

Part of the value associated with clearly established regulations is the proliferation of certainty in the marketplace. The FAA’s new UAS rule does provide certainty: that such onerous and ill-considered rules will catalyze investment in innovative drone developments outside the United States. Unless the FAA revises its rules, the rest of the world will lead in UAS deployment. Until then, American manufacturers, consumers, and entrepreneurs will suffer the consequences.