BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                    AB 2724


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          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








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             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)  








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           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."









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           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  








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            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  








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            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  








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            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  








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            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  








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            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  








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            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."  









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            While 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  








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            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.











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           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 









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          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