Are drone operators prepared for the risks?

November 16, 2016

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On June 21, 2016, the Federal Aviation Administration released the much-anticipated final rules for commercial use of small unmanned aircraft systems, those under 55 pounds. Compliance with the new rules is critical for commercial drone operators, but is only one aspect of a complete risk management program a company should have in place as it begins commercial drone operations.

FAA Rule Compliance

The rules — Part 107 of the FAA Regulations — were initially proposed in late February 2015 and became effective August 29, 2016. Companies wishing to use small drones as part of their business no longer need to apply for the more onerous Section 333 exemptions for routine use as long as their operations comply with the new rules. The new rules allow use of any small drone for commercial purposes as long as operations meet the following criteria:

  • The UAS must weigh less than 55 pounds.
  • Only visual line-of-sight operations are allowed.
  • No flight will be permissible over people who are not involved in the sUAS operation.
  • Only fair-weather flying is allowed.
  • Daylight-only operation is allowed, unless sUAS is equipped with anti-collision lighting, then twilight operations, 30 minutes before sunrise and after sunset, are allowed.
  • The maximum ground speed is 100 mph.
  • The maximum altitude is 400 feet above ground level, unless within 400 feet of a structure.
  • Operations within Class G airspaces are allowed without Air Traffic Control permission. However, operations in Class B, C, D and E airspaces require ATC permission.
  • Pre-flight inspection of sUAS is required.

Drone operators must comply with these requirements. However, most of them can be waived, if it can be shown that safe operation is possible, by seeking a Part 107 waiver — which is easier to obtain thanks to an easily accessible online portal. Companies may continue to operate under any Section 333 exemption or Certificate of Authorization provided by the FAA until they expire. A company will have to analyze whether it is more advantageous to operate under the new rules or under their current exemption.

Companies that hope to engage in Beyond Visual Line-of-Sight operations can find some relief in the new rules. Part 107 contains two major accommodations that make it easier to come close to BVLOS operations. First, the pilot can “daisy-chain” operations. In other words, a remote pilot-in-command can hand off the controls to another pilot as long as a visual line-of-sight is maintained by each of the pilots. At that point, battery life will truly be the only limitation to the length of operation.

Part 107 also allows for operation of sUAS from a moving vehicle in sparsely populated areas. For industries with extended rights-of-way where inspections could greatly benefit with sUAS — such as those in the railroad or utility industry — moving-vehicle operations could replicate BVLOS-type activities.

Finally, the rules establish a “remote pilot-in-command” position requiring a person operating a sUAS to either hold a remote pilot airman certificate with a sUAS rating or be under the direct supervision of someone who possesses one. To qualify for one, a person must complete knowledge testing or training provided by the FAA, be vetted by the TSA and be at least 16 years of age. Although airworthiness certification is not required for sUAS operation, the remote pilot-in-command must, as stated above, conduct a pre-flight check of the sUAS to ensure it is in good condition for safe operation.

Risk Management Program

Companies using sUAS need to be aware of significant risk management issues that could impact business. While compliance with the new FAA rules is critical, companies need to think more broadly about their risk profile when initiating drone operations. For example, companies need to ensure that they have appropriate insurance for drone operations. Most Commercial General Liability policies carry aviation exclusions which would not cover accidents related to drone use. Companies also need to create policies and procedures consistent with the new rules that incorporate safety and employment considerations. The new rules have qualification requirements for pilots, so companies need to set up detailed training and education programs for sUAS operators. Also, record creation, maintenance records and document destruction policies need to be carefully developed.

Companies operating drones often enter into partnerships with companies that have pilots or drones available for commercial use. It is important to ensure that vendor/partner agreements contain clear provisions related to sUAS operations, including FAA compliance obligations, pilot qualification provisions and clear procedures for obtaining third-party approvals and safety considerations. A good contract will include insurance requirements as well as strong indemnity language that protects the business. Also, while the company must comply with the FAA regulations, there are many state and municipal laws with both registration and operational rules of which the company must be aware.

When Something Goes Wrong

While a robust risk management program can prevent a lot of problems, accidents can still happen. A company needs to be aware of the potential civil liability related to drone use. Drones can be lost or collide with other property and cause personal injuries. While many incidents will be low exposure, catastrophic injuries and events can occur. Companies also need to be aware of privacy and data breach issues in order to fully protect themselves. And, in the unfortunate event that something bad does occur, the company needs a detailed incident response plan in place to quickly communicate the event and investigate it thoroughly and quickly before evidence is lost. Having an incident response plan in place can go a long way to mitigate damages should something go wrong and help develop case strategy in the event litigation ensues. 


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