Over the next several years, UAV/UAS (more commonly known as “drone”) technology will play a significant role in the growth and evolution of commerce in our region, as well as nationally, and globally. Bousquet Holstein’s UAV/UAS practice group was formed to work alongside our clients to help them successfully navigate the legal and regulatory environment while seeking out opportunities for commercial use of unmanned aircraft systems and UAVs. Our UAV/UAS practice group will support our clients with FAA registration, compliance, contract negotiation, and risk assessment relating to the commercial use of UAVs.
The Upstate Revitalization Initiative (URI) funding will soon become available to applicants seeking to start or grow businesses in the UAS industry. However, state and local incentives received by private sector businesses can have unanticipated tax consequences that should be carefully considered early in the application process. For applicants seeking URI funding and other incentives, the business and tax attorneys in this practice group will be available to assist with tax planning, entity structuring and capitalization, and ongoing operations tailored to the unique aspects of the UAS/UAV industry.
If you would like to discuss the exciting and fast-paced UAS industry, and better understand how the commercial use of UAVs may create opportunities for your business – or even if you own a personal UAV and want to learn about your registration requirements – please do not hesitate to contact one of our UAS/UAV practice group members.
What does UAS and UAV stand for and what is it?
The terms UAS and UAV are acronyms for Unmanned Aircraft System(s) and Unmanned Aerial Vehicle(s), respectively. UAS refers to all unmanned aircraft (UA) as well as any and all associated equipment, controls, data, telemetry, communications and navigation equipment, etc., used to control and operate UA. UAVs are a more common technical term used in the industry to describe unmanned aircraft. UAVs are the actual vehicles flown within a fully operating UAS. It is important to understand that UAVs are considered “aircraft” in the same sense as normal manually operated vehicles and therefore are under the regulatory control of the FAA.
Why “UAS” or “UAV” and not “Drone”?
While smaller UAVs (ranging from one-half pound to 55 pounds) are more commonly referred to as “drones,” that term is typically frowned upon in the industry as it is often confused with military UAS operations and is an inaccurate reflection of the technology and coordination of highly sophisticated equipment and systems. UAS and UAV the typical industry standard reference.
What is the FAA’s role?
The Federal Aviation Administration (FAA) has jurisdiction over all navigable airspace (National Airspace System, a/k/a “NAS”) in the United States. The FAA is responsible for regulating all aircraft – whether manned or unmanned. – are subject to FAA rules and regulations.
The FAA establishes the rules for operation of all aircraft within the NAS, including smaller aircraft such as model aircraft being flown for hobby or recreational purposes weighing less than 55 pounds. Congress passed Section 333 of the FAA Modernization and Reform Act of 2012 (FMRA) to allow for the FAA to grant exemptions from its rules and regulations, specifically for those individuals or businesses wishing to utilize small UAVs (under 55 pounds) for commercial or hobby purposes.
More information on FAA rules for public (governmental) UAS operation can be found at: http://www.faa.gov/uas/public_operations/
Do I need approval from the FAA to fly a model aircraft for recreation or hobby?
No, but you must be registered with the FAA if your model UAV weighs more than one-half pound. Hobbyists only need to register once, but must prominently display their registration information on all UAVs they may operate. The FAA has additional guidance for hobbyists directing them only to fly UAVs a sufficient distance from populated areas and full scale aircraft, keeping UAVs within the visual line of sight of the operator at all times, maintaining a weight of 55 lbs. or less unless otherwise properly certified, and not using the units for business purposes unless subject to a proper Section 333 Exemption. There are a number of other additional altitude and operating restrictions that must be followed subject to liability and steep monetary penalties if caught.
More information on FAA rules for civil (non-governmental) UAS operation can be found at:http://www.faa.gov/uas/civil_operations/
More information on FAA registration for UAS can be found at: http://www.faa.gov/news/press_releases/news_story.cfm?newsId=19856
Can I operate small UAVs (55lbs. or less) for business and/or commercial use?
Yes. The FAA has developed new rules to regulate small UAV operations and commercial use. However, the new rules have not yet been enacted. Until such time, the most effective approach used by individuals and companies is to file a petition with the FAA to request an exemption pursuant to Section 333 of the FAA Modernization and Reform Act of 2012 and also request a Certificate of Waiver or Authorization (COA). This is the process used for civil aircraft to perform commercial operations in controlled environments. The petitioning process can be somewhat complex which is why legal counsel is recommended.
Information on Section 333 and obtaining an exemption can be found online at: https://www.faa.gov/uas/legislative_programs/section_333/
What types of commercial uses are available for small UAVs?
Not only in the United States, but around the world, it is becoming clear that small UAVs are capable of unlimited applications. Some of the most effective uses of UAVs from a commercial application are:
How long does the Section 333 Exemption process take?
The FAA indicates that petitioners can expect the process to last up to 120 days after their submission before receiving a decision. The FAA made adjustments to its process to attempt to reduce approval time in early 2015. Since that time, the FAA has been able to increase its approvals at a faster pace. That being said, certain procedural changes have resulted in a faster approval time with approximately 50 applications processed weekly.
Is a small UAV operator required to have a pilot’s license?
Yes, if the UAV is used for commercial purposes. Currently, FAA-issued pilot’s licenses are required by petitioners to receive approval for a Section 333 Exemption. New FAA regulations focused directly on small UAVs will have alternative provisions for non-licensed individuals to be able to obtain certification as operators.
Will I need anything else with my Section 333 Exemption for commercial UAV use?
Yes. Commercial and public entity clients must also obtain Certificates of Waiver or Authorization (COAs). There are blanket rules of operations covered in a blanket COA issued with every Section 333 Exemption, but if a client has unique and specific requests pertaining to UAV operations, it may be necessary to obtain a COA specific to those operations.
What is a Section 333 Exemption?
As previously mentioned, the FAA is responsible for regulating all aircraft, manned or unmanned within the NAS. Section 333 of The Modernization and Reform Act of 2012 allows for exemptions to be granted for applicants to allow them to operate commercially or for some other non-governmental purpose without having to adhere to full FAA regulations. It is currently the only process available to narrow the regulations to apply to commercial use of small UAVs.
What is a Certificate of Authorization (COA)?
This is a set of additional directions and guidelines issued by the FAA pursuant to Section 333 of FRMA, providing more detailed operating procedures for a UAV to allow for an applicant to legally operate a specific UAV in a certain location for a specific purpose. There are “Public Use” COAs and “Civil Use” COAs that have separate application requirements.
More information on COAs for public (governmental) UAS operation can be found at: http://www.faa.gov/uas/public_operations/
More information on COAs for civil (non-governmental) UAS operation can be found at: http://www.faa.gov/uas/civil_operations/
Is insurance available for UAS operators?
Yes. Some insurance companies offer specific coverage for UAS operators and operations. It may be an operation that is included in an umbrella policy or it may require specific additional underwriting. However, as a newly emerging industry, there may be many insurers who may not offer specific coverage for UAS operations.
Are there other liability issues I need to consider?
Yes. If you are hiring an independent UAS operator for commercial use of UAVs, you should make sure that the operator or its company indemnifies you against any action, suits, damages, losses, costs and expenses (including, without limitation, attorneys’ and fees and costs) arising from its UAS operations. Further, you should ensure that the operator has secured the proper Section 333 Exemption and COA for your particular commercial purposes. If operating a UAV for personal or hobby use, you should be fully aware of any and all restrictions to the use of UAVs and avoid violating any of those restrictions or face significant fines. Further, any operation of UAVs requires close attention to violations of privacy, trespass, and risk of potential harm to others.
How can legal counsel assist you with regard to small UAV operations?
If you have contemplated as to whether UAVs could help enhance your business operations, or you are a hobbyist who enjoys flying UAVs, there could be a number of legal issues and considerations you may need to address. Legal counsel can be extremely helpful to ensure that you have properly prepared petitions for Section 333 Exemptions and proper COA applications. Our experience and knowledge of administrative law and procedure and our familiarity with government regulations allows us to provide clients with sound advice and guidance along a number of business and aviation related questions. In addition, as the UAS industry is subject to changing regulations, we can help navigate clients through the upcoming release of new rules. We are further prepared to assist clients with any liability issues that they may encounter through their use of UAVs, either commercially or personally.