Commercial Drones Face Sky-High Regulatory Barriers

The widespread adoption of commercial unmanned aircraft systems—commonly called “drones”—should be right around the corner. But overcautious, burdensome regulation threatens to hold it back.

To maximize this technology’s social benefits, regulators should adopt a pro-innovation approach with respect to UASs. Unfortunately, the Federal Aviation Administration appears to remain mired in stifling bureaucracy. Unless the FAA shakes out of its torpor, Congress should consider action to ensure commercial UAS services are not killed in the cradle by overzealous regulators.

Last month, the FAA raised the ire of the tech community by issuing a request for comments that included what appeared to be the agency’s latest legal arguments for outlawing commercial UAS flights—using its model aircraft regulatory authority to prohibit commercial UAS operations—like Amazon’s proposed Prime Air delivery service.

This latest request likely came in response to a March ruling by an administrative law judge at the National Transportation Safety Board that found the FAA in violation of the Administrative Procedure Act for failing to solicit public comments before issuing its rule prohibiting UASs. The APA violation meant the FAA had to go back to the drawing board and work within the prescribed rulemaking framework. It has not lost any meaningful authority to ban UAS operations.

The FAA’s recent record does not inspire confidence. This is a problem that must be resolved before the UAS market can develop in the United States.

There are two primary regulatory hurdles facing entrepreneurs interested in commercial UAS opportunities.

First, the FAA’s right-of-way rules suggest the FAA could ban any UAS slightly more advanced than a hobbyist’s remote controlled airplane. The rules state that “vigilance shall be maintained by each person operating an aircraft so as to see and avoid other aircraft.” The FAA has argued that “there would be no [UAS] flights in civil airspace” if the “see-and-avoid” requirements were strictly enforced against UAS operators. The most promising commercial UAS functions rely on optical systems and sensors for automated direction. Yet, the agency has concluded that onboard cameras and sensors “may not be considered as the sole mitigation in see and avoid” requirements.

Second, there is no process for certifying commercial UAS operations. Given the “see-and-avoid” requirements, currently the only way for private UAS owners to obtain certified operating permission is through the FAA’s Certificate of Waiver or Authorization (COA), which FAA is currently only issuing to UAS operators in its experimental category. In addition, 14 CFR § 91.319(a)(2) explicitly prohibits experimental COA holders from “[c]arrying persons or property for compensation or hire.”

Similarly, an experimental COA only applies to a specific operation. In effect, this makes it impossible to develop anything approaching a UAS logistics network, foreclosing the testing of most commercial UAS business models.

In its 2012 FAA reauthorization, Congress ordered the agency to “provide for the safe integration of civil unmanned aircraft systems into the national airspace system as soon as practicable, but not later than September 30, 2015.” However, in late June, the Department of Transportation’s Office of Inspector General issued a scathing audit report that found the FAA’s airspace integration progress is going so poorly that the agency will not only miss its September 2015 integration deadline, but that “it is uncertain when and if full integration of UAS into the [National Airspace System] will occur.”

So, what can be done to allow entrepreneurial UAS experimentation and innovation? Given the FAA’s apparent inability to develop its Congressionally mandated safety and privacy regulatory frameworks for UAS integration, Congress should consider more dramatic action.

The FAA is primarily a safety regulator. As such, it has a strong incentive to act in an overcautious manner regarding air traffic management. One possible solution is to spin off the FAA’s Air Traffic Organization into an independent entity, as most developed nations have done with their air navigation service providers in recent years. The Reason Foundation’s Bob Poole has developed a plan to do just this, and it will likely be considered by Congress in the forthcoming FAA reauthorization debate.

To be sure, serious safety, tort liability, and privacy concerns remain. (See this regulatory filing from scholars at the Mercatus Center at George Mason University for some good pro-market suggestions on UAS privacy policy.) But the current airspace integration morass appears primarily political, rather than technical.

The status quo simply is not working. UAS entrepreneurs should push for major structural reforms to the U.S. aviation regulatory regime if they wish to see the market flourish anytime soon.