Alliance Letter on OMB Interim Guidance Implementing Executive Order on Reducing Regulation

February 9, 2017 Mr. Mark Sandy Acting Director Office of Management and Budget 725 17th Street, NW Washington, D.C. 20503 Re:

Commercial Drone Alliance Comments on OMB Interim Guidance Implementing Executive Order on Reducing Regulation and Controlling Regulatory Costs

Dear Mr. Sandy: On behalf of its members, the Commercial Drone Alliance (Alliance) would like to thank the Trump Administration for its focus on removing regulatory burdens and bureaucratic red tape. This goal is incredibly important for the growth of the commercial drone industry in the United States. As requested, the Commercial Drone Alliance here provides formal comments on OMB’s Interim Guidance implementing the Administration’s recent Executive Order on Reducing Regulation and Controlling Regulatory Costs (EO).

While the Alliance is supportive of the goals and spirit of the EO and the interim guidance implementing it, we worry that the EO has unintended negative consequences on the growth of our industry. New rules are necessary to remove existing regulatory barriers around commercial drone use. As drafted, the EO could actually damage the commercial drone industry’s ability to take off in the United States.

We therefore suggest here a way forward to enable the Administration to meet its goal of enhanced economic growth and job creation by encouraging the Federal Aviation Administration (FAA) to implement regulations that fulfill the Administration’s goal of removing regulatory burdens overall. Specifically, we urge OMB to promulgate additional guidance to the FAA clarifying that every new regulation issued that further integrates drones into the National Airspace System (NAS) qualifies as a “deregulatory action” for purposes of implementing the EO. The general goal is to encourage the FAA to implement regulations that repeal aspects of the Federal Aviation Regulations that hold the drone industry back in ways that are nonsensical.

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Background: The Commercial Drone Alliance and the Commercial Drone Industry The Commercial Drone Alliance is an industry-led, 501(c) (6) non-profit association that is dedicated to supporting commercial drone industry market growth. The Alliance brings together commercial drone end-users, manufacturers, insurance providers, investors, service providers, and vertical markets including oil and gas, precision agriculture, construction, security, communications technology, infrastructure, newsgathering, filmmaking, and more. The Alliance aims to educate and collaborate with lawmakers at all levels of government on the benefits of commercial drones, technologies that enable safe flight, and continued growth of the commercial drone industry.

President Donald Trump has taken office at a critical and exciting time for the commercial drone industry. His new Administration is blessed with the opportunity to build our economy, create jobs, unleash the innovation of entrepreneurs and move our country forward now by rapidly integrating commercial drones into our NAS. Once properly enabled, the integration of drones into our NAS will save countless lives and have a significant economic impact here in the United States. A recent Pricewaterhouse-Coopers report estimated the global market value of UAS-powered solutions at over $127 billion. The FAA has projected there will be 11 million commercial drones sold here in the U.S. by 2020, just 3 years from now.

But as big and exciting as these numbers are, they are built on the assumption that our federal regulatory frameworks keep pace. Under the law, even very small drones are considered aircraft for the purposes of FAA regulation. This means that, without new rules repealing the Federal Aviation Regulations1 as applied to drones, the same rules that govern large manned aircraft – including airworthiness certification, pilot certification, “see and avoid” and more – apply to the operation of commercial drones. This leads to absurd results in practice, and has created a situation where innovation has suffered and many companies have been forced to shift their business overseas.

Over the last several years, the industry has worked patiently with regulators to craft rules that enable the integration of drones into the NAS in a way that is safe and secure. Just this past August, Part 107 of the Federal Aviation Regulations for the first time broadly authorized commercial drone use in the United States. Part 107 in effect removes regulatory burdens imposed by the Federal Aviation Regulations on drone use, and replaces them with lesser regulatory burdens. This was a significant and critical step forward. However, the current rules are still riddled with nonsensical regulatory roadblocks that make it impossible for companies in the United States to realize the full potential of drone technology.

The current rules authorizing commercial drone flight include strict operational restrictions. Amongst other requirements, operators can only fly within direct visual line of

1

Title

14 of the Code of Federal Regulations.

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sight, during daylight hours only, and not over people. These requirements are “waivable” under the rule, but the waiver process is cumbersome, time consuming, and limited in scope. Waivers are approved by the FAA on a case-by-case basis via a certificate of waiver from the pertinent regulations. As of the date of this letter, the FAA has only issued waivers to 318 companies.

Absent new regulations that further integrate drones into the NAS, existing regulations originally drafted for manned aircraft operation will continue to apply to commercial drones. These manned aircraft regulations, which make little, if any, sense in the context of small commercial drone operations, impose tremendous economic costs on companies, and prevent some of the most promising commercial drone use applications.

To take full advantage of the safety and efficiency benefits of drones, companies need to be able to fly in urban and suburban environments, where people are. To inspect pipelines and railroads and benefit farmers, they need to be able to fly beyond visual line of sight. To respond to disasters, they need to be able to fly at night. For the industry to truly take off, we need rulemakings from the FAA that broadly authorize these types of operations in a way that is safe.

The FAA is working on these rulemakings now, and the White House should encourage their timely release.

The EO’s Effect on the Commercial Drone Industry The Administration’s desire to remove bureaucratic red tape is commendable, and the commercial drone industry appreciates the spirit of the EO. But, as the Administration seeks to implement the EO, it is important to keep in mind that some regulations actually enable economic activity, rather than inhibit it. This is counter-intuitive, but critical in the world of commercial drones. There is therefore strong concern across the commercial drone community that the EO will inadvertently harm America’s share of this hundred billion dollar commercial drone industry and jeopardize the ability of the United States to maintain a leadership role in this evolving industry. To move forward, the industry needs regulations that enable safe flights beyond the scope of current rules. Otherwise, the industry’s growth will be halted.

The Administration Must Consider New Rules Enabling Commercial Drone Use As “Deregulatory Actions” Under EO While some regulations are overly limiting, other regulations enable economic growth and reduce the cost of entry into a commercial market. Under the current regulatory framework many of the most promising and economically powerful commercial drone uses are prohibited, or otherwise require a company to pursue a costly and time-consuming waiver from the FAA. Any new regulations that would broadly authorize commercial drone activity that is currently prohibited will produce meaningful economic savings and unleash substantial economic value for the commercial drone industry, as well as for the many vertical markets that depend on efficiencies provided by drones.

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Toward that end, the guidance promulgated by the Director to the FAA under Section 2(d) of the EO should clarify that every new regulation that enables additional or less restricted commercial drone operations under the Federal Aviation Regulations by undoing existing regulatory requirements qualifies as a “deregulatory action” or offsetting regulation under the EO. A new rule that promotes economic growth by enabling the further integration and expanded use of commercial drones in the NAS should not be treated as a “new rule” that imposes additional regulatory burdens under the EO. In addition, the guidance issued under Section 4(c) of the Executive Order should exempt waivers, exemptions, or other actions that provide relief from the requirements of either 14 CFR Part 107 or other FAA regulations that restrict drone operations, from the definition of a “regulation” or “rule.”

Regulations enabling commercial drone industry growth further the precise goals of the Administration’s EO: reducing regulation, controlling regulatory costs, and minimizing governmental imposition of private expenditures required to comply with Federal regulations.

The Administration must encourage their timely release and implementation.

Thank you for considering this request. We greatly appreciate your support in enabling future economic growth and development in the commercial drone industry.

Sincerely,

www.commercialdronealliance.org For more information, contact:

Lisa Ellman Co-Executive Director Commercial Drone Alliance P: (202) 297 2650 E: lellman@commercialdronealliance.org cc:

Gretchen West Co-Executive Director Commercial Drone Alliance P: (650) 463 4062 E: gwest@commercialdronealliance.org

Hon. Elaine Chao, Secretary, U.S. Department of Transportation Hon. Michael Huerta, Administrator, Federal Aviation Administration Earl Lawrence, Director, UAS Integration Office