FAA Registration is the Newest Obstacle for Startups Using Drones
Just before the holidays, the Federal Aviation Administration introduced new drone registration requirements. If you are a hobbyist operating a drone that weighs more than about a half pound, you may have to register your drone. The FAA’s new rule, which may discourage your (teenage, hobbyist) nieces and nephews from exploring innovative uses of drones, should not have a significant impact on the companies looking to incorporate drones into their businesses in the short term.
A regulated industry. The FAA — the agency that flight attendants invoke at the beginning of their safety announcements — regulates commercial operations of aircraft in the U.S. The FAA considers drones — formally called unmanned aircraft systems (UAS) — to be aircraft, and the FAA determined that no individual or entity is allowed to operate UAS for commercial purposes in the U.S. without its authorization.
The FAA is slowly integrating UAS into the National Airspace System through various advisories, outreach campaigns, strict interpretations of existing regulation, apps, and even new regulations, such as December’s registration requirements. The FAA is working on a new set of rules for small UAS (sUAS), which will make operating UAS for commercial purposes easier, but we do not expect the FAA to release these rules before summer 2016. In addition, state and local governments are getting into the act by adopting UAS laws and ordinances. All of this means that startups should track the changing regulatory landscape.
Commercial operations require exemptions. Entrepreneurs planning to operate small UAS (defined as under 55 pounds) for commercial purposes must request specific authorization from the FAA through the Section 333 exemption petition process. The Section 333 exemption petition process takes several months even if you are not trying to do anything out of the ordinary and can qualify for FAA summary review, an expedited review process.
However, as many in the 1776 community know, individuals often want to transition quickly from tinkering to starting a business, but a quick transition is not possible for entrepreneurs who envision businesses using sUAS for commercial purposes. At least for now, the lengthy Section 333 process is the only way to go.
Exemption is not a panacea. Obtaining an exemption does not mean entrepreneurs are free to do whatever they wish with sUAS. Each exemption comes with about two dozen operating requirements and a “Blanket Certification for Waiver or Authorization,” which tightens some operating requirements and imposes others. Importantly, sUAS must comply with both general FAA flight restrictions and state and local laws (meaning that investigation of the patchwork of location-specific rules prior to operations is critical).
Special conditions in our nation’s capital. The airspace around Washington, D.C. is the most restricted in the country. For 1776’s D.C.-based startups, that means no drone operations within 30 nautical miles of Reagan National airport right now. On the bright side, some are hopeful that the FAA will reduce the limit as soon as mid-January (that is, after lots of folks crash the brand new drones they got over the holidays).
Registration requirements add another layer of regulation. The registration requirements have the potential to slow drone adoption, experimentation, and development. The new requirements target “model aircraft,” which is broadly interpreted to mean a drone that is (i) flown for hobby or recreational purposes, (ii) capable of sustained flight in the atmosphere, and (iii) flown within visual line of sight of the person operating the drone.
Such a broad view of “model aircraft” means that the amateur, hobbyist, and school users — and modern equivalents of the home-brew computer clubs that gave rise to Apple and Microsoft and more — must pay a $5 “drone tax” and register their drones with the FAA. The FAA took steps to encourage registration by allowing individuals or entities operating drones for non-commercial purposes to register fleets under one registration and waiving the fee until Jan. 20. Drones under about a half pound (250 grams) are exempt.
How to register. Non-commercial users subject to the new rules must use a web portal to register their drones. Section 333 exemption holders must continue to use an older, paper-based system for the next few months. The online registration process also requires the registrant to review a summary of sUAS operational guidelines. Once registered, the owner will receive a unique identification number that must be affixed to the aircraft and maintained to ensure legibility.
Penalties for failing to register an aircraft can be steep: civil penalties up to $27,500; and criminal penalties can include fines of up to $250,000 and/or imprisonment for up to three years. Due to the regulation’s “interim status,” the FAA is accepting comments on the new rule through Jan. 15, 2016. Be sure you understand and comply with the new rule, and review the list of common drone weights, too.
In short, the new rules do not change the game for startups, and the game is the Section 333 exemption until at least summer 2016. The latest registration regulation matters for startups incorporating drones but is just one piece of a much larger regulatory puzzle.
Disclaimer: the above article is solely educational purposes and does not constitute legal advice. It should not be used as a substitute for competent legal advice from a licensed professional attorney in your state.