The commercial drone industry continues to expand its constituency and it is forecasted by the government to generate more than $82 billion for the economy within the next decade. The days when drones were mainly a military tool are long gone, with the pilotless aircrafts now used widely in industries like hospitality, media, agriculture, construction, real estate and many more.
Yet using a drone for your business, or as a hobby, means complying with requirements which are in constant flux or that you may not know about. At the top of this list is a sometimes little-known-fact that if the drone weighs more than 0.55 pounds, it needs to be registered. Once registered, owners must comply with operating rules. A failure to abide by such rules could lead to civil or criminal penalties. Indeed, in October 2015 the Federal Aviation Administration (FAA) proposed a $1.9 million civil penalty against SkyPan International, Inc. because the company had allegedly conducted 65 unauthorized aerial photography flights in New York and Chicago during the span of two-and-a -half years. Of those flights, 43 were purportedly in highly restricted airspace and the FAA noted the aircraft lacked required airworthiness certificates and effective registrations.
Expanding Definition of “Commercial Use” of Drones
Many hobbyists are beginning to run into trouble with the expansive definition that the FAA has been using for commercial use. Significantly, the FAA’s interpretation of “commercial” drone use is turning out to be much broader than what drone users might think. Essentially, if a person or business derives revenue directly or indirectly from drone use, they should be wary of having that drone use classified as “commercial.”
To enforce this broad interpretation of “commercial” drone use, the FAA has been issuing warning letters to those not in compliance. In a warning letter issued in March 2015, an FAA representative warned a Tampa-based drone hobbyist that his flights constituted “commercial” use because he posted a video of one of his flights on YouTube (News - Alert), which generated revenue from advertisement. The FAA warned the hobbyist that if he did not stop, he could be subject to fines and sanctions. In another instance, an Oklahoma realty firm received a warning from the FAA for using a drone for aerial photography and survey for real estate deals. A Texas combustion equipment service and inspection company also received a warning for using a drone to conduct flare and stack inspections. Lastly, an Oklahoma video production company was issued a warning letter for using a drone for aerial photography purposes such as filming commercials for car dealerships. The list goes on.
Given the thrust of these letters and the FAA’s broad interpretation of “commercial” drone use, other “commercial” uses that would require FAA compliance become apparent. These uses would include aerial photography, inspections, and surveys within the construction and real estate industries, as well as aerial photography for hotels, cruises, weddings, and other events, to name a few.
An Evolving Regulatory Landscape
The regulatory landscape for “commercial” drone use has changed from what existed just last year, and it will change again within the next few months. Indeed, on June 21, 2016 the FAA announced new guidance (which takes effect in late August) for commercial drone operation as set forth in the Code of Federal Regulations at Part 107. Such guidance (which is on par with best practices) clarifies how, when and where non-hobbyists may pilot their drones. They even define the type of remote pilot certificate an individual must possess and explain the FAA knowledge test required to obtain such a certificate. In addition, the TSA will be conducting security background checks prior to the would-be pilot receiving a certificate.
Generally, in order to fly a drone weighing between 0.55 and 55 pounds for “commercial” use, a person must register online with the FAA and comply with the new Part 107 guidance on operating limitations when using the drone. This applies to both private businesses and governmental entities. If a person wishes to have more operational leeway and operate outside of the Part 107 limitations, they may apply for a Section 333 grant of exemption. Those who already have Section 333 exemptions from the previous regulatory framework may either continue to operate under their Section 333 exemption or apply through the new process explained above. The FAA will continue to issue new regulations and guidance which will allow an increasing variety of non-hobby drone use. Outside of the FAA, the Commerce Department’s National Telecommunications and Information Administration is creating a framework to enhance both transparency and privacy within the “commercial” drone sphere.
Drones can be invaluable resources for businesses, but the broad scope of “commercial” drone use is something businesses and individuals should be aware of before attempting to operate one. More importantly, staying abreast of the ever-changing legal landscape of “commercial” drone use may prevent future fines and penalties. In short, if your business uses or is thinking about using a drone, or if you are unsure whether your use might be deemed “commercial,” you should consider contacting an attorney.
This article is for general information purposes and is not intended to be and should not be taken as legal advice.
About the Authors
Franklin Homer is a Senior Counsel in Greenspoon Marder’s Regulatory Compliance and Defense Practice Group where he assists clients in navigating heavily regulated industries and, similar to this article, reads up on and shares potential areas of concern that are growing.
Justin Jaggars is a law clerk with Greenspoon Marder since May 2015. He just graduated from Vanderbilt University Law School in May 2016.