BILL ANALYSIS                                                                                                                                                                                                    Ó



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       Date of Hearing:  April 9, 2013

          ASSEMBLY COMMITTEE ON JOBS, ECONOMIC DEVELOPMENT AND THE ECONOMY
                                 Jose Medina, Chair
                      AB 737 (Fox) - As Amended:  April 3, 2013
        
       SUBJECT  :  Governor's Office of Business and Economic Development:  
       unmanned aircraft systems: test sites  

        SUMMARY  :  Requires the Governor's Office of Business and Economic  
       Development (GO-Biz) to prepare and submit a proposal for an unmanned  
       aircraft test site to the Federal Aviation Administration (FAA) on or  
       before May 6, 2013.  Specifically,  this bill :  

       1)Finds and declares, among other things, that:

          a)   California has sustained significant jobs losses in the  
            aerospace manufacturing subsector with payrolls dropping 65.9%  
            between 1990 and 2012, as compared to 34.6% decrease in the rest  
            of the U.S.  2010 employment in the aerospace industry totaled  
            109,700 jobs paying $10.7 billion in wages.

          b)   Federal Aviation and the Modernization and Reform Act of 2012  
            calls for the designation of six test sites within the U.S.  The  
            expanded use of unmanned vehicle systems has the potential of  
            creating 100,000 jobs.

          c)   California has the potential for a successful proposal based  
            in its highly developed aerospace industry, skilled workforce,  
            network of education and research institutions, and a tradition  
            of innovation and entrepreneurship.  The development of a  
            coordinated proposal can only be achieved by bringing the  
            necessary stakeholders together.

       2)Requires GO-Biz to prepare and submit a proposal by May 6, 2013 to  
         establish a FAA designation in California.

       3)Authorizes GO-Biz to consult during its application preparation with  
         the Governor's State Military Council and other relevant entities  
         including, but not limited to: the Office of Planning and Research;  
         the Military Department; Department of Veteran's Affairs; Employment  
         Development Department; Department of Transportation;  
         representatives of the aerospace industry; all other applicants for  
         a California-based test site; local governments; and, education and  
         training entities.








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       4)Requires GO-Biz to coordinate with any local government that submits  
         a proposal to establish a test site to the FAA.

       5)Includes an urgency clause.

        EXISTING LAW  establishes GO-Biz within the Governor's Office for the  
       purpose of serving as the lead state entity for economic strategy and  
       marketing of California on issues relating to business development,  
       private sector investment, and economic growth.  GO-Biz also serves as  
       the administrative oversight for the California Business Investment  
       Service and the Office of the Small Business Advocate.

        FISCAL EFFECT  :   Unknown

        COMMENTS  :    

        1)Framing the Policy Issues  :  The FAA has announced the designation of  
         six national test sites for unmanned aircraft systems.  Two,  
         potentially competing, applications have already been submitted.  As  
         California is home to a large segment of the national aerospace  
         industry, a federal test site ensures the continued relevance of  
         this important industry sector in the state.  Failing to receive a  
         designation would support the development of competing aerospace  
         innovation centers within the state.

         This bill calls on GO-Biz, as the state's economic development  
         leader, to prepare and submit a third application which successfully  
         brings key stakeholders together and increases California's chances  
         in receiving one of the six test sites.  The analysis provides  
         greater detail on the federal test site mandate and how unmanned  
         aircraft systems could affect the California economy.
          
       2)Federal Aviation Administration Modernization and Reform Act of  
         2012  :  On February 14, 2012, President Obama signed the Federal  
         Aviation Administration Modernization and Reform Act of 2012, which  
         mandates the integration of civil unmanned aircraft systems (UAS)  
         into the national airspace.  Prior to this act, unmanned aircraft  
         systems were strictly regulated and effectively banned from civilian  
         usage. 

         The act mandates that six test sites be established in order to  
         develop and enhance the technologies needed to achieve a safe and  
         routine operation of civil unmanned aircraft systems in the national  
         airspace system.  As described by the FAA, the purpose of the test  








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         site program is to:

          a)   Address both civil and public unmanned aircraft systems;

          b)   Designate safe airspace for integrated manned and unmanned  
            flight operations in the national airspace system;

          c)   Develop certification standards and air traffic requirements  
            for unmanned flight operations at test ranges;

          d)   Coordinate with and leverage the resources of the National  
            Aeronautics and Space Administration and the Department of  
            Defense;

          e)   Ensure that the program is coordinated with the Next  
            Generation Air Transportation System; and 

          f)   Provide verification of the safety of unmanned aircraft  
            systems and related navigation procedures before integration into  
            the national airspace system.

         The FAA has received 50 bids representing 38 states, including two  
         from California, for one of the six test site designations. 

        3)Testing Site Application Timeline  : The application process is  
         composed of seven volumes regarding different requirements of the  
         application, with the last volume due on Monday, May 6, 2013.  


























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            ------------------------------------------------------------ 
           |   FAA Unmanned Aircraft Systems Testing Site Application   |
           |                          Schedule                          |
            ------------------------------------------------------------ 
           |------------------------------+------------------------------|
           |       Scheduled Event        |           Date Due           |
           |------------------------------+------------------------------|
           |Screening Information Request |Released Thursday, February   |
           |released by the FAA,          |14, 2013                      |
           |outlining the testing site    |                              |
           |requirements and application  |                              |
           |process                       |                              |
           |------------------------------+------------------------------|
           |Volume I: Identification of   |Due Wednesday, March 6, 2013  |
           |Applicant                     |                              |
           |------------------------------+------------------------------|
           |Volume II: Screening          |Due Thursday March 28, 2013   |
           |Information Request           |                              |
           |Compliance                    |                              |
           |------------------------------+------------------------------|
           |Volume III: Ground            |Due Thursday, April 11, 2013  |
           |Infrastructure, Research      |                              |
           |Objectives and Airspace Use   |                              |
           |------------------------------+------------------------------|
           |Volume IV: Safety             |Due Thursday March 28, 2013   |
           |------------------------------+------------------------------|
           |Volume V: Experience          |Due Thursday, March 28, 2013  |
           |------------------------------+------------------------------|
           |Volume VI: Risk Consideration |Due Thursday March 28, 2013   |
           |- Planned Team Composition    |                              |
           |and Capability                |                              |
           |------------------------------+------------------------------|
           |Volume VII -  Economic Impact |Due Monday, May 6, 2013       |
           |------------------------------+------------------------------|
           |Release of FAA developed      |Scheduled for Tuesday, June   |
           |privacy strategy              |11, 2013                      |
           |------------------------------+------------------------------|
           |Issuance of Other Transaction |Scheduled for Tuesday,        |
           |Agreements designating the 6  |December 31, 2013             |
           |test site selections          |                              |
            ------------------------------------------------------------- 

        4)Evolution of the Civilian UAS Market  : While the military is at the  
         forefront of adopting drone technology, rapid enhancements in recent  








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         technology have brought to light the utility of civilian drone  
         usage.  Important civilian applications for drones include:

          --------------------------------------------------------------- 
         | Wildfire mapping           |  Weather monitoring            |
         |-----------------------------+---------------------------------|
         | Agricultural monitoring    |  Aerial imaging/mapping        |
         |-----------------------------+---------------------------------|
         | Disaster management        |  Freight transportation        |
         |-----------------------------+---------------------------------|
         | Thermal infrared power     |  Environmental monitoring      |
         |  line surveys               |                                 |
         |-----------------------------+---------------------------------|
         | Law enforcement            |  Oil and gas exploration       |
         |-----------------------------+---------------------------------|
         | Telecommunications         |  Television news coverage,     |
         |                             |  sporting event coverage,       |
         |                             |moviemaking                      |
         |                             |                                 |
          --------------------------------------------------------------- 

         The primary market for civilian UAS usage is agricultural  
         monitoring.  UAS technology is especially suited for precision  
         agriculture.  A variety of imaging technologies can be used to scan  
         for plant health problems, track growth rates and hydration, and  
         detect pests. UAS technology can also be used for selective  
         application of pesticides, simultaneously increasing the efficiency  
         of pesticide usage and decreasing environmental impact. UAS  
         technology is already widely used in Japan.

         Public safety will also be a significant market driver; however, the  
         agriculture market is estimated to be at least 10 times bigger than  
         the public safety market.  These two market segments are estimated  
         to make up roughly 90% of future civilian UAS purchases.
        
       1)Aerospace and the California Economy  :  California is the nation's  
         aerospace industry leader.  In 2010, the aerospace manufacturing  
         industry was responsible for 109,700 jobs within California,  
         predominantly in Southern California, and paid wages totaling $10.7  
         billion annually.  The aerospace industry has maintained a sizeable  
         presence within California, fueled by the presence of suppliers and  
         a pipeline of highly educated workers from in-state universities,  
         but over the last two decades this industry sector has experienced  
         significant sustained job loss.   









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        2)UAS Manufacturing and the California Economy  :  UAS integration into  
         the national airspace system is projected to begin in 2015.   
         According to a 2013 Economic Impact Report released by the  
         Association for Unmanned Vehicle Systems International, in the  
         decade following the integration date, the UAS industry will create  
         over 100,000 jobs and over $82 billion in total economic impact in  
         the U.S.  California is projected to be the lead beneficiary of this  
         growth, projecting $14.3 billion in economic impact and the creation  
         of over 18,000 jobs. 

        3)Related Legislation  : The following is a list of related legislation.

           a)   AB 1326 (Gorell and Bradford) Unmanned Aerial Vehicle  
            Manufacturing  :  This bill provides manufacturers in the unmanned  
            aerial vehicle industry (UAV) with 3 incentives: (1) an exemption  
            from the sales and use tax for manufacturing equipment; (2) a tax  
            credit for qualifying wages and new hires; and (3) an exemption  
            from the sales and use tax for construction of UAV manufacturing  
            facilities.  Status:  Scheduled to be heard by the Assembly  
            Committee on Revenue and Taxation on April 22, 2013.       

           b)   AB 1327 (Gorell and Bradford) Privacy Rights: Unmanned Aerial  
            Vehicles  :  This bill bans all public agency UAV usage except for  
            searches supported by a warrant, existence of imminent threat to  
            public safety or other time-limited emergency situations,  
            geological inspections, inspection of state parks, traffic  
            investigation, and fire-related activities. Forbids private  
            parties from using UAV surveillance in secret, and provides a  
            cause of action for affected parties.  Status: Referred to the  
            Assembly Committee on Public Safety, hearing date not yet set.     


           c)   AJR 6 (Fox) Unmanned Aircraft Systems  :  This resolution calls  
            upon the Federal Aviation Administration to consider California  
            for 1 of the 6 planned test sites for the implementation of civil  
            unmanned aircraft systems into the national airspace system.   
            Status:  Scheduled to be heard by the Assembly Committee on  
            Transportation on April 15, 2013.

           d)   SB 15 (Padilla) Aviation: Unmanned Aircraft Systems  :  This  
            bill states that it is the intention of the Legislature to  
            establish appropriate standards for the use of civil unmanned  
            aircraft systems that minimize and retain current privacy  
            standards.  Status:  Referred to the Senate Committee on Rules on  
            January 10, 2013.








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        REGISTERED SUPPORT / OPPOSITION  :   

        Support 
        
       City of Palmdale

        Opposition 
        
       None received 
        

       Analysis Prepared by  :    Toni Symonds and Zachary Hutsell / J., E.D. &  
       E. / (916) 319-2090