Jetrader - Spring 2015 - 29

Legal

The Sweet
Sound of
the Drone
By Don Mitchell, Partner, Smith, Gambrell & Russell, LLP

Are UAVs the next untapped investment market? UAV's,
or unmanned aerial vehicles (also called drones), are
generating increased interest as the next "big thing" for
aerospace investment. Beyond military and law enforcement applications, UAVs can be put to all types of beneficial commercial uses including surveying, mapping, crop
dusting, pipeline and power line surveillance, real estate
marketing and filming for the entertainment industry.
Commercial UAVs, as we presently know them, generally
cost a fraction of a commercial jet or helicopter. Assetbased lending aside, the technology behind UAVs may be
one of the key drivers of future investment opportunities.
Indeed, Flightglobal reported that the value of the small
UAV market will exceed US$8.4 billion by 2019, with commercial usage being dominant.
In addition to their use where manned aircraft cannot
fly, they may also begin replacing manned aircraft for
certain missions. If a UAV can perform the function of a
piloted aircraft at a fraction of the cost and without risk
of safety to a crew, what is the disincentive to using them?
For now, the primary disincentive in the United States
may be regulatory uncertainty. The UAV industry is progressing at a faster pace than the regulators, causing
UAV operators to fly in a hazy environment. Recent highprofile incidents, including a hobbyist flying and then
crashing a UAV in Manhattan, have raised safety and
privacy concerns among U.S. federal and state regulators,
prompting the U.S. Federal Aviation Administration to
hold up a caution flag.
Model aircraft fall within the FAA's regulatory oversight
and for now, model aircraft have the clearest regulations.
Model aircraft are UAVs flown for recreational purposes.
As early as 1981, the FAA recommended voluntary operating standards for model aircraft operators to minimize
risks of damage and injury to people on the ground and
aircraft flying nearby. These guidelines, further updated
in 2007, were generally written into law in the 2012 FAA
Modernization and Reform Act1. The provisions aimed at
model aircraft are written as exemptions from regulation.
Recreational model aircraft operations are exempted when,
among other things, the operations do not interfere with
manned aircraft, prior notice is given to airports where
operations are conducted within five miles, the aircraft
weighs 55 pounds or less and visual line of sight is maintained. The Act requires the FAA to "fill the hole" and
develop regulations and a framework governing the overall
use of all private and public UAVs by 30, September 2015.
If the aircraft is not a "model aircraft" operated for
recreational purposes, it is then subject to FAA regulation. However, the FAA doesn't yet have comprehensive
regulations for non-recreational UAV operations.2
Perhaps to respond to rising UAV operations (and as an
implied show of force), the FAA issued an "Interpretation
of the Special Rule for Model Aircraft"3 in June 2014. In it,
the FAA clearly states that the 2012 law does not prohibit
them from passing rules addressing the use of airspace for
safety or security reasons, including those affecting model
Jetrader * Spring 2015 29

Jetrader - Spring 2015

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