BILL ANALYSIS Ó AB 2724 Page 1 Date of Hearing: May 3, 2016 ASSEMBLY COMMITTEE ON PRIVACY AND CONSUMER PROTECTION Ed Chau, Chair AB 2724 (Gatto) - As Amended March 17, 2016 SUBJECT: Unmanned aircraft SUMMARY: Requires unmanned aircraft system (UAS) makers to provide safety and registration disclosures with the UAS at the point of sale, requires certain UAS to be outfitted with a "geofencing" feature, and requires UAS owners to have adequate liability insurance. Specifically, this bill: 1)Establishes the Drone Registration Omnibus Negligence Prevention Enactment (DRONE) Act. 2)Defines "unmanned aircraft" as an aircraft that is operated without the possibility of direct human intervention from within or on the aircraft; 3)Requires UAS sold in California to include in the product packaging the following information: a) A copy of Federal Aviation Administration (FAA) UAS safety regulations; and AB 2724 Page 2 b) A notice that the UAS must be registered with the FAA, if the UAS is heavy enough to be required to be registered with the FAA. 4)Requires a UAS equipped with global positioning satellite (GPS) mapping capabilities to be equipped with geofencing technological capabilities that prohibit the UAS from flying within five miles of an airport. 5)Requires the owner of a UAS to have adequate insurance against liability, including coverage for potential damages for personal bodily injuries and death, and for property damage, resulting from the operation of the UAS. 6)Exempts commercial UAS operators if they are operating under specific authorization from the FAA. EXISTING LAW: 1)Vests the FAA with the authority to regulate airspace use, management and efficiency, air traffic control, safety, navigational facilities, and aircraft noise. (49 U.S.C. Sec. 40103, 44502, and 44701-44735) 2)Requires, under the FAA Modernization and Reform Act of 2012, the FAA to safely integrate UAS operation into the national airspace system by September 30, 2015, and to develop and implement certification requirements for the operation of UAS in the national airspace system. (Public Law Number 112-095) AB 2724 Page 3 3)Requires, under FAA rules, as of February 19, 2016, federal registration of a UAS before first flight outdoors, for any UAS weighing more than 0.55 pounds (250 grams) and less than 55 pounds (approx. 25 kilos), including payloads such as on-board cameras, and requires UAS owners to be at least 13 years old to register and to provide name, home address, and email address. Upon registration, UAS owners receive a Certificate of Aircraft Registration/Proof of Ownership along with a unique identification number, which must be marked or affixed to the UAS. (14 CFR Parts 1, 45, 47, 48, 91, and 375) FISCAL EFFECT: None. This bill has been keyed nonfiscal by the Legislative Counsel. COMMENTS: 1)Purpose of this bill . This bill seeks to reduce the risk of accidents posed by UAS accidents by requiring UAS product packaging to include information about federal UAS regulations and registration, requiring UAS owners to obtain liability insurance in case of a UAS accident, and requiring UAS with GPS capability sold in California to contain geofencing technology to keep UAS from flying within five miles of an airport. This bill is author-sponsored. 2)Author's statement . According to the author, "If motorists are required to have license plates and insurance for their vehicles, drone operators should have the equivalent for their unmanned, flying objects, so that they can be properly identified, and owners can be held financially responsible, whenever injuries, interference, or property damage occurs." AB 2724 Page 4 3)What are UAS? The FAA defines a UAS as an unmanned aircraft system and all of the associated support equipment, control stations, data links, telemetry, and communications and navigation equipment necessary to operate the unmanned aircraft. More commonly referred to as a drone, a UAS is flown either by a pilot via a ground control system or autonomously through use of an on-board computer. 4)Proliferation of recreational UAS and new FAA registration rules . UAS are widely available to the public. Retail UAS devices outfitted with cameras now range from roughly $300 to $1,500. The FAA estimates that nearly one million UAS were sold during the December 2015 holiday season. In anticipation of the influx of UAS in the skies, the FAA issued new rules in 2015 requiring any UAS weighing between half a pound and 55 pounds to be registered with the FAA by February 19, 2016. The new FAA registration rules apply only to "model aircraft," i.e., recreational UAS. According to FAA Commissioner Michael Huerta, who led a March 2016 panel on the future of UAS at the SXSW "South by Southwest" event in Austin, Texas, the FAA now has more than 400,000 UAS registrants, which surpasses the 320,000 piloted airplanes currently registered with the FAA. Upon registration, the FAA issues a unique identifier, which must be affixed to the UAS in a "readily accessible and visible manner." The unique identifier can then be used to look up the UAS owner in the event of an accident, for example. This bill would require manufacturers who make recreational UAS for sale in this state to include in the product packaging AB 2724 Page 5 a copy of the FAA safety regulations that apply to UAS and a notice of the FAA owner registration requirement if the UAS meets the registration requirements. As noted above, the FAA currently requires recreational drones between half a pound and 55 pounds to be registered before they are flown for the first time. Unfortunately, UAS registration is not yet widespread. While the FAA touts that nearly half a million consumers have registered their UAS, industry data shows nearly one million recreational UAS were sold during the December 2015 holiday season alone, which means that less than half of all UAS flown in the U.S. are currently registered. The author contends this bill is necessary to ensure that consumers are aware of their legal obligation to register their UAS with the FAA before first flight and to help consumers properly register and operate their UAS safely. 5)The growing number of UAS incidents causing injury and damage . While California has had no fatal drone accident to date, less serious accidents are on the rise. In October 2015, 647 residents in West Hollywood went without power after a hobbyist UAS flew into a power line. In September 2015, a falling UAS in Pasadena cut and bruised the head of an 11-month old baby in a stroller during an outdoor moving screening. Also in 2015, during the North Fire in San Bernardino County, five UAS prevented firefighters from dispatching helicopters with water buckets for twenty minutes over a wildfire that leapt onto a Los Angeles-area freeway. Other incidents include drones falling into the stands at the AB 2724 Page 6 2015 U.S. Open, crashing into a moving car in Canada, and hitting a toddler in the UK that left the youth blind in one eye. Between December 2013 and September 12, 2015, the Center for the Study of the Drone collected records of 921 incidents involving drones and manned aircrafts in the national airspace. 158 incidents were classified as instances in which a drone came within 200 feet or less of an airplane, 28 of which required a pilot to maneuver the aircraft to avoid a collision with a drone. Under federal law, operators are prohibited from flying above 400 feet or within five miles of an airport. Most recently, on April 18, 2016, a drone collided with a British Airways plane as it was coming in for landing at London's Heathrow Airport - Europe's busiest. The FAA's Aerospace Forecast report projects that the number of UAS in the U.S. will increase from 2.5 million in 2016 to 7 million in 2020 (4.3 million hobbyist and 2.7 million commercial). 6)About geofencing technology . Given the increase in numbers of UAS and reports of crashes and near misses, the technology is developing to prevent drones from flying into unauthorized areas. This technology, known as "geofencing," utilizes GPS and other technologies to impose geographical limits on drone movement. By default, a drone will not fly into "geofenced" areas - it will simply stop and hover at the boundary. The technology has the potential to prevent drones from flying AB 2724 Page 7 into areas such as airport runways, government properties, and in the vicinity of natural disasters. This bill requires recreational UAS sold in California that are GPS equipped to have geofencing technology that can stop the UAS from flying within five miles of an airport. Congress is currently considering legislation that would impose a number of restrictions on all UAS use, including a proposed requirement that UAS operators pass an online test, a requirement that UAS contain certain safety features, and a new program to fund interception of UAS that fly to close to airports. At the present moment, however, airports do not have the technology to intercept UAS that fly too close. Requiring geofencing technology for GPS-enabled UAS sold in California would likely pose additional design and licensing costs for UAS makers. However, California-specific environmental and safety standards are neither unique nor insurmountable, as the auto industry meets state-specified emissions standards in order to sell cars in this state. 7)Liability insurance requirement . AB 2724 requires all owners of recreational UAS to procure "adequate protection against liability" to cover damages for personal injury and death and for property damage that may result from a UAS accident. In practice, UAS owners would either have to ensure that their current homeowner's insurance policies would cover a UAS accident, or obtain supplemental insurance to cover potential AB 2724 Page 8 personal injury and damages that may be caused by operating their UAS. However, the question of how much protection is "adequate" remains open. By way of comparison, California requires all motor vehicles to have the following minimum level of liability insurance: $15,000 for injury/death to one person $30,000 for injury/death to more than one person $5,000 for damage to property The author and the Committee may wish to consider whether this bill should specify minimum insurance coverage amounts so that UAS operators can be certain as to whether they are "adequately" insured, as required by the bill. 1)Forthcoming FAA regulation of commercial UAS . In 2012, Congress passed the FAA Modernization and Reform Act of 2012 which required the FAA to establish a framework for safely integrating commercial UAS into the national airspace no later than September 30, 2015, and authorized the FAA to establish interim requirements for the commercial operation of UAS. Under the interim rules, UAS operators must meet certain standards and apply for a commercial use exemption and an FAA AB 2724 Page 9 Certificate of Authorization (COA) in order to operate in in "navigable airspace," which is generally above 500 feet. In February 2015, the FAA proposed a new framework for commercial UAS regulations to allow the use of small UAS in the airspace from the ground up to 500 feet. If enacted, the proposed rules would limit flights to non-recreational, daylight uses and would require a commercial UAS pilot to maintain a visual line of sight with the UAS. This bill would exempt from its provisions any UAS flown pursuant to a COA issued by the FAA. The author and the Committee may wish to consider whether the bill should be amended to clarify that the exemption would apply whether the commercial operator has permission under a COA or under the forthcoming FAA regulations, which may not require each commercial operator to obtain a COA to operate. This may be accomplished as follows: On page 3, line 25, after "126 Stat. 11, 75-76" insert: or other commercial operator authorization granted by the Federal Aviation Administration. 2)The federal preemption issue. Once the FAA has finished promulgating regulations governing the commercial deployment AB 2724 Page 10 of UAS, which is expected to occur in the next two years, a future court may find that those federal regulations preempt certain state laws, or parts thereof - such as this one, if passed - but much remains uncertain. For example, in Montalvo v. Spirit Airlines, the Ninth Circuit held in 2007 that federal law preempts state law aviation safety standards in areas in which the FAA has issued "pervasive regulations." In discussing the Montalvo case, the Ninth Circuit found that the specific FAA regulations relevant in the case were "pervasive" in that they were "specific," detail[ed]," "complete," "thorough" and "comprehensive" and that this pervasiveness evidenced Congressional intent to broadly preempt state law. The Montalvo court held that "federal law occupies the entire field of aviation safety. Congress' intent to displace state law is implicit in the pervasiveness of the federal regulations, the dominance of the federal interest in this area, and the legislative goal of establishing a single, uniform system of control over air safety." Montalvo v. Spirit Airlines, 508 F.3d 464, 473 (9th Cir. 2007) Two years later, in Martin ex rel. Heckman v. Midwest Express Holdings, Inc., the Ninth Circuit limited the scope of FAA preemption and held that state law was only preempted if the specific area covered by the plaintiff's tort claim was the subject of pervasive federal regulations. Martin ex rel. Heckman v. Midwest Express Holdings, Inc. 555 F.3d 806, 811 (9th Cir. 2009) The FAA itself recently took a more concrete position on the issue of preemption of state UAS regulation. According to a December 17, 2015, FAA white paper entitled, "State and Local Regulation of Unmanned Aircraft Systems (UAS)," the FAA stated that "[l]aws traditionally related to state and local police power - including land use, zoning, privacy, trespass, and law enforcement operations - generally are not subject to federal regulation."AB 2724 Page 11While the courts will ultimately decide whether certain state UAS laws are preempted or not, the author and the Committee may wish to consider whether a severability clause should be added to this bill in the event that one or more parts are preempted. This may be accomplished as follows: On page 3, after line 25, insert: 9595. The provisions of this part are severable. If any provision of this part or its application is held to be invalid, that invalidity shall not affect other provisions or applications that can be given effect without the invalid provision or application. 3)Arguments in support . According to the author, "The automobile industry was likely infuriated with the idea of registration and insurance requirements at the turn-of-the-century, but the industry survived, and the public has greater public safety protections in place. As technology evolves, so must our laws in order to protect our citizenry. This is a sensible measure that will increase public safety and encourage responsible drone use in California." 4)Arguments in opposition . The California Chamber of Commerce and a coalition of insurance industry associations state: "The evolution of drone technology represents exciting AB 2724 Page 12 opportunities for both businesses and hobbyists. Drones will be used for a myriad of purposes in the future. Like any innovation, these devices also offer new and unknown risk based on how they are used. Insurance will undoubtedly be one part of managing these risks and, indeed, carriers have already begun to explore how to best underwrite drones-related risks to protect the public and policyholders. "Statutorily requiring insurance for drone usage, however, is unwise as there is currently insufficient actuarial data to effectively calculate risk. Insurers must be permitted to develop the knowledge, experience, products and pricing to insure drone activities. To adequately insure such risks, insurers need the freedom to develop products and underwriting criteria for this new exposure. Without the ability to accurately underwrite, the cost of drone insurance products will be unnaturally high, deterring use and access to this developing technology." 5)Related legislation . AB 2320 (Calderon and Low) prohibits the operation of UAS in a manner that violates a protective order, constitutes stalking, interferes with emergency response personnel, or facilitates delivery of contraband into a jail or prison; and also prohibits sex offenders from using a UAS and prohibits local governments from regulating UAS. AB 2320 is pending before the Assembly Appropriations Committee. SB 868 (Jackson) proposes the State Remote Piloted Aircraft Act containing numerous provisions regulating the use of UAS. SB 868 is pending before the Senate Appropriations Committee. AB 2724 Page 13 6)Prior legislation . SB 168 (Gaines) of 2015 would have increased fines for UAS interference with firefighting activities and granted civil immunity to public entities, public employees, and unpaid volunteers, and private entities acting within the scope of delegated authority, that damage a UAS in the course of providing a variety of emergency services. SB 168 was vetoed by Governor Brown. AB 856 (Calderon), Chapter 521, Statutes of 2015, expanded the scope of the cause of action in existing law for physical invasion of privacy by making a person liable for physical invasion of privacy when the person knowingly enters "into the airspace" above the land of another person without permission. REGISTERED SUPPORT / OPPOSITION: Support California Association of Highway Patrolmen (CAHP) Peace Officers Research Association of California (PORAC) Opposition American Insurance Association California Chamber of Commerce AB 2724 Page 14 Consumer Technology Association Independent Insurance Agents and Brokers of California National Association of Mutual Insurance Companies Pacific Association of Domestic Insurance Companies Personal Insurance Federation of California Analysis Prepared by:Jennie Bretschneider / P. & C.P. / (916) 319-2200