Alliance Policy Memorandum - Commercial Drone Integration 1.5

POLICY MEMORANDUM To: Trump Transition Team From: Commercial Drone Alliance Re: Commercial Drone Integration Date: January 5, 2017 Overview: President-elect Donald Trump is taking office at a critical and exciting time. His new Administration will have the opportunity to build our economy, create jobs, unleash the innovation of entrepreneurs and move our country forward now by removing bureaucratic red tape and rapidly integrating Unmanned Aircraft Systems (“UAS” or so-called “drones”) into our National Airspace System (“NAS”).

UAS are the future of transportation and information technology. Recent innovations have transformed what used to be considered toys into powerful tools that provide substantial safety and efficiency benefits to commercial industry, educational institutions, humanitarian NGOs, and the public. Once properly enabled, the integration of UAS into our nation’s NAS will save countless lives and have a significant economic impact here in the United States.

The UAS revolution is an economic boom in the making. A recent PricewaterhouseCoopers 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 the numbers are, they are built on the assumption that our regulatory frameworks keep pace.

This growing industry therefore represents a significant and timely opportunity for the President-elect, as he seeks to follow through on campaign promises to create jobs across the country. The new Administration can enable the success of this new market in the United States by accelerating current efforts to integrate drones into our NAS. As is so often the case, technology has moved more quickly than policymaking—and UAS integration efforts have lagged behind the pace of innovation in the United States. While there has been progress over the last year, the United States has fallen behind much of the international community and many companies, small and large, have been forced to move their UAS operations and testing abroad.

Under the current legal framework, commercial drones fly under the oversight of the FAA. This past August, Part 107 of the Federal Aviation Regulations at long last took effect. For the first time ever, the rules broadly authorize commercial drone flights without requiring a special license from the FAA. This was a significant and critical step forward. However, much more needs to be done to realize the full potential of drone technology.

The Trump Administration can move quickly to design and implement a sensible UAS regulatory framework that promotes innovation while protecting the public interest, in order to maintain our nation’s competitive edge, fully exploit the incredible public interest benefits of this technology, and move into the next generation of unmanned flight.

President-elect Trump’s domestic UAS policy agenda will create well paid and highly skilled jobs in the field of robotics that will benefit other industries such as energy, construction, mining and more. His UAS agenda, properly implemented, will enable the American public to take advantage of the lifesaving and efficiency benefits of drones in a way that addresses safety, security, and privacy concerns.

The Commercial Drone Alliance is thrilled to work with the Trump Administration to further these goals. To assist you in this effort, we include here: 1) broad goals relating to UAS integration; 2) specific policy proposals designed to enable these goals; 3) general talking points around UAS integration; and 4) background information on domestic UAS industry and policy development.

For questions or support at any time, please contact Commercial Drone Alliance Co-Executive Directors Lisa Ellman (lellman@commercialdronealliance.org, (202) 297-2650) and Gretchen West (gwest@commercialdronealliance.org, (650) 670-2814).

Trump Administration Goals: 1. Create jobs and build our nation’s economy by positioning the U.S. industry as a global market leader in UAS technology and end-use development and application.

2. Promote UAS innovation in a way that wins the public’s trust and promotes its safety, privacy, and security interests.

3. Implement a risk-based approach to regulation and accelerate the safe deployment of lowrisk UAS flights that benefit the public.

4. Expand collaborative research and development efforts to enable technological innovation that will make UAS safer, privacy-protective, and more secure.

Trump Administration Policy Proposals: 1. Remove Regulatory Barriers to Enable the Growth of the Commercial Drone Market. The current regulatory framework needlessly limits safe UAS operations, and impedes the economic potential of the UAS marketplace. 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, 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. But all of these are currently prohibited under the rules without special waivers from the FAA, which are burdensome and costly for industry. Moreover, package delivery with UAS beyond visual line of sight is not allowed at all under Part 107, even with a waiver—causing many companies to move their delivery operations abroad, where regulatory frameworks offer more flexibility.

As the FAA itself recently admitted, the waiver process is limping along. After 76 waivers were issued the day Part 107 went into effect August 29th, we have seen a total of 219 waivers granted, with a long line waiting in a queue. The waiver process must be streamlined. Waivers themselves must also offer substantive relief for companies seeking to enable real-world UAS operations. And the federal government must implement additional rulemakings quickly for flights over people, beyond line of sight and at night that expand the current operating envelope safely. Moreover, the federal government must implement a rule this year that operationalizes UAS package delivery here in the United States.

2. Encourage Innovation in Infrastructure Development. As part of the President-elect’s infrastructure package, the government should provide tax incentives for construction and infrastructure companies that use new technologies such as UAS. These technologies can improve processes, reduce costs and provide additional jobs in the United States. In addition, the infrastructure package should support NASA and the private sector’s Unmanned Traffic Management efforts to develop “highways in the sky” for UAS. 3. Enable Micro-Drone Flight. The federal government must promote a reasonable risk-based approach to UAS regulation that will enable and enhance the safety of commercial, educational, and humanitarian operations. In particular, the federal government should enable a new category of “micro-UAS” to fly freely under a separate regulatory regime, subject to certain risk-based safety and operational restrictions. This step would enhance innovation while relieving the FAA of the burden of licensing extremely low-risk operations, allowing the agency to focus limited resources on more challenging UAS integration efforts.

4. Incentivize Technology that Makes UAS Safer. The federal government must incentivize technological innovation that will make UAS safer, privacy-protective, and more secure. The “operations over people” rule that the FAA will soon release must allow companies to flexibly meet performance standards. Indeed, collision avoidance technology and other technologies to promote responsible use will help us solve many of the public policy challenges that we face.

The federal government must ensure the United States is the beacon of UAS innovation by partnering with academia and industry and removing regulatory barriers to research and development.

5. Advance the Development of a UAS Traffic Management System. In order to properly facilitate UAS integration alongside manned aircraft, over structures and people, and near other UAS, the federal government must enable industry to develop next-generation “highways in the sky.” The federal government must enhance and highlight the efforts of NASA, FAA, and their industry partners to ensure the safe, secure and efficient use of the airspace, and make an Unmanned Aircraft Traffic Management System operational.

6. Prioritize UAS Spectrum Issues. To enable cargo delivery and other innovative UAS uses, the industry needs a set of common radio frequencies dedicated to ensuring safe and efficient flight. Geolocation and collision avoidance technologies will remain important components of any system. But spectrum dedicated to the tracking, telemetry and command of UAS will allow for safer, less intrusive and more efficient flights. While existing wireless communications networks may support some UAS communications needs, allocating spectrum for tracking, telemetry and command would help organize and expedite the flow of air traffic and would remain capable of dynamically altering traffic flow in response to public safety or national security emergencies. Moreover, communication needs should be viewed holistically with spectrum dedicated to automated smart transportation, allowing low-altitude UAS to coordinate with each other and with ground vehicles.

7. Jumpstart Counter-UAS Technology Policy Process. As the UAS market has grown, so has the market grown around counter-UAS technology. Companies are excited to use UAS, but many (especially critical infrastructure facilities) also want to keep “rogue,” or unauthorized, UAS from flying over their airspace. The current legal framework around these issues is unclear. Security issues are paramount to the success of the industry. The federal government should engage industry on these issues now, and jumpstart this policy process.

8. Streamline Policymaking Through Coordinated Government Approach. The Trump Administration must promote a “whole of government” approach to integration in order to enable the broader infrastructure for this industry to succeed. NASA is tackling critical issues through its Unmanned Aircraft Traffic Management efforts. The Federal Communications Commission (FCC) is considering spectrum issues. The National Telecommunications and Information Administration (NTIA) facilitated a multi-stakeholder process to devise voluntary best practices for privacy. The White House recently hosted an innovation event around drone technology. The next Administration must keep this momentum for innovation going, and streamline policymaking activity among government agencies to find solutions that enable commercial drone integration safely, broadly, and in a timely way.

9. Enhance Industry-Government Collaboration. To properly capitalize on the possibilities ahead, innovators and policymakers must work more closely together. Innovators must help policymakers understand what is possible with the technology, while policymakers must create rules of the road that offer the best returns from drone technology that will benefit everyone – while protecting Americans’ safety and privacy. We have seen great progress from the FAA in recent years. Just this fall, the first meeting of the Drone Advisory Committee was convened, bringing together both large and small companies with policymakers to craft solutions for challenges facing the industry. But still, challenges remain. There needs to be greater government-industry collaboration at the working level. And the government must make it easier for companies to participate in the regulatory process.

Trump Administration Talking Points:

We are right now witnessing the birth of one of the most exciting technology sectors since the computer, or even the mobile phone. Drones, also known as UAS, represent a huge opportunity for existing businesses, and a white space for completely new businesses.

The benefits of UAS for commercial, educational, and humanitarian purposes are substantial. Whether for search and rescue, disaster response, precision agriculture, gathering news, inspecting pipelines, delivering medicine to rural locations, or anything in between—the potential applications for UAS are limited only by our nation’s collective imagination.

Once broadly enabled, UAS technology will bring incredible benefits to the daily lives of U.S. citizens, including cheaper goods, innovative services, safer infrastructure and greater economic activity.

To enable safe UAS flight, the United States needs a sensible regulatory framework that accounts for safety, privacy and security concerns. There is too much bureaucratic red tape in our current system.

The federal government must work diligently to find creative solutions to enable innovation in a way that maintains a safe and efficient airspace.

Technology has the potential to solve many of the policy concerns we have with domestic use of UAS. We must promote and encourage innovation in the private sector that perfects geo-fencing, collision avoidance, counter-UAV and communication technology that can make UAS safer and more secure.

APPENDIX: BACKGROUND ON DOMESTIC UAS INDUSTRY AND POLICY Part 1: Growth of UAS Market As mentioned above, the UAS industry is growing exponentially. A recent PricewaterhouseCoopers report estimated the global market value of UAS-powered solutions at over $127 billion.

The industry’s reach is vast. Market verticals seeking to use UAS technology include precision agriculture, infrastructure inspection, oil and gas, disaster response, security, filmmaking, real estate, aerial photography, mapping and surveying, insurance, auditing, newsgathering, powerline inspection, pipeline inspection, package delivery, communications technology and more.

Moreover, this cause is important to Main Street as well as Wall Street. The ability to use UAS has breathed new life into resource-constrained small businesses of all kinds. UAS make dangerous tasks safer, and expensive tasks cheaper. Small-town realtors are now able to market and sell homes using unique aerial shots from UAS. Farmers can detect and mitigate disease in their crops with pinpoint precision from the air, making their products healthier, more consistent and more profitable, while also saving precious time and resources – without having to rely on more expensive manned aircraft. And small businesses of all kinds are being formed around the technology, including UAS service providers, manufacturers, technology developers, and more.

Part 2: UAS Safety and Operations In many ways, if we were to start over, it would make better sense to create a new regulatory framework that is focused on ensuring safety and preventing actual harm from very small vehicles that resemble

toys and gadgets more than manned aircraft. The FAA does an excellent job of implementing its statutory mandate: keeping our NAS safe and secure. But as it is today, the government has essentially bolted the new small UAS regulations onto the old manned aviation regulatory structure. Meanwhile, a 5 pound UAS has almost nothing in common with a large manned aircraft. With some creativity, we should have drafted a different set of rules for UAS and other small vehicles that do not cite and relate back to manned aircraft regulations – rules that then require companies to overcome legal barriers in order to obtain relief from those same manned aircraft regulations. It would be a cleaner approach, while still ensuring our safety, and we would not have the absurd results that burden industry with little benefit.

But, we are where we are. Here is a rundown of legislative and regulatory activity over the last four years: 1) Legislative Mandate. In February 2012, Congress passed legislation that mandated the federal government to safety integrate UAS into the NAS. The bill included several milestones for the FAA to meet on its way to safe integration, most of which were missed. While six UAS test sites have been set up across the country, they were not allotted funding and thus have struggled to be effective.

2) Current Regulatory Framework. Under the current regulatory framework, whether a UAS flight in the U.S. is legal depends on the intent of the flight: a flight for hobbyist or recreational purposes is generally legal under a certain set of guidelines, while that same flight for commercial purposes falls under a more involved set of rules. In August 2016, Part 107 (the FAA’s small UAS rule) went into effect – for the first time ever, broadly authorizing commercial UAS operations here in the United States. The operational restrictions under Part 107 are quite strict; UAS must remain within visual line of sight, and cannot be flown over people or at night.

Public agencies are able to fly UAS under a separate public license from the FAA. 3) UAS Flights Over People. The Office of Information and Regulatory Affairs (OIRA) at the White House is currently reviewing the FAA’s “operations over people” small UAS rule, and we expect to see a proposed rule released before the Trump Administration takes over. The rule is expected to be quite conservative. It will be important for the FAA to finalize a common sense rule that allows flexibly for safe flights over people.

4) UAS Registration. Last holiday season, the Department of Transportation (DOT) instituted an online registration requirement for all UAS operators, whether hobbyist or commercial. This requirement came about after a UAS landed on the White House lawn, and it was reported that hobbyists were hampering firefighting efforts in California and flying in the vicinity of manned aircraft. The registration requirement enhances the FAA’s ability to educate the public about airspace rules, and enforce current laws that outlaw reckless flight.

5) Airspace Management Issues. While the FAA is focused on designing a short-term regulatory structure, NASA is focused on aerospace innovation and designing “highways in the sky” for UAS. This is a critical effort that has suffered from lack of federal government attention and support.

6) Spectrum Needs. The United States has no spectrum dedicated to UAS tracking, telemetry or control. Nor does any globally harmonized allocation exist for these types of operations today. Achieving the type of wide-area coverage required for real-time tracking and potential redirection of UAS devices over a large geographic area will require the use of low-band spectrum, which is in especially short supply in the U.S. and around the world. The FCC and the NTIA are responsible for new spectrum allocations in the U.S. The International Telecommunication Union would need to identify a common frequency band segment to support this type of operation globally.

Part 3: Federal Government and UAS Privacy While the federal government has been particularly focused on safety issues surrounding UAS integration, the American public has been more focused on privacy issues. In towns and communities across the country, Americans have worried that they will be spied on with a UAS. In reaction to this public apprehension, on February 15, 2015 (the same day the FAA’s proposed small UAS rule was released on safety issues) the White House released a Presidential Memorandum that established privacy, transparency, accountability and civil rights and civil liberties protocols for the federal government’s own use of UAS, and stood up an NTIA-hosted multi-stakeholder process to craft voluntary best practices for privacy, transparency and accountability for commercial and private use of UAS. In May 2016, industry and civil society reached consensus around a set of privacy best practices for the industry. These best practices are strictly voluntary.

In September 2016, the Federal Trade Commission (FTC) hosted its own workshop on UAS privacy issues. Industry was very concerned that the FTC’s attempt to discuss UAS privacy issues was duplicative of work previously completed by the NTIA multi-stakeholder group, and burdensome for no good reason. The FTC has not stated what it intends to do around UAS privacy issues.

States and localities have also taken an active role proposing ordinances and legislation that would limit UAS use based on privacy concerns; these efforts are described more fully below.

Part 4: Current Federal Legislative Context As noted above, the FAA has been under significant pressure from Congress to quickly establish a regulatory framework to safely integrate drones into the NAS. The implementation of FAA’s new small rule was an important step forward, but much work remains. The next FAA reauthorization (September 2017) provides a significant legislative opportunity to move integration forward. Over the last few years, UAS issues have been debated at nearly every step of the FAA reauthorization process. Industry has been pushing for faster integration, with allowances for flying beyond the visual line of sight, at night, and above people, as well as a number of other reforms based on perceived inadequacies of the FAA’s small UAS rule. Members like Senator Booker, Senator Hoeven and Representative Blumenauer have backed legislation seeking to move innovation forward and enhance safe commercial access to low-altitude airspace.

At the same time, members of Congress have introduced and pushed legislative reforms related to UAS privacy. These reforms, championed by privacy and civil liberties advocates, would include

requirements for UAS operators to publish flight plans and data collection and sharing practices. Other ideas include data minimization rules and mechanisms to allow citizens to opt out of property surveillance.

UAS devices depend on wireless connectivity to operate, identify their location and communicate with intermediate devices and end users. The MOBILE NOW Act introduced in the last session of Congress promises to stimulate investment and innovation in the UAS sector by requiring the NTIA and the FCC to make at least 255 MHz of spectrum below 6 GHz available for mobile and fixed wireless use. Whether through a newly introduced version of MOBILE NOW or similar legislation in the 115th Congress, policymakers should ensure that the NTIA and FCC take measures to allocate ample spectrum resources for a wide variety of use cases, including UAS tracking, telemetry, and communications.

Part 5: Current State and Local Activity Across the country, states and localities have been very active in introducing and passing UAS legislation. In 2015, 45 states considered 168 bills related to UAS. Twenty states passed 26 pieces of legislation and five states adopted UAS resolutions. 2016 brought more of the same across the country.

These laws tend to focus on privacy, law enforcement uses and warrant requirements, general flight restrictions, and rules related to the use of UAS for hunting or agricultural purposes. In addition, a number of major cities have adopted ordinances, including Los Angeles and Chicago.

Part 6: International Context A number of countries have implemented UAS rules broadly authorizing commercial UAS activity. In Japan, farmers have been crop dusting with UAS for decades. Canada, the UK, New Zealand, Australia, and China, among others, have similarly authorized routine commercial UAS flights. Thus far, much of the innovative thought surrounding UAS has come from the international community.