BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                    AB 2724


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          ASSEMBLY THIRD READING


          AB  
          2724 (Gatto)


          As Amended  May 5, 2016


          Majority vote


           ------------------------------------------------------------------ 
          |Committee       |Votes|Ayes                  |Noes                |
          |                |     |                      |                    |
          |                |     |                      |                    |
          |                |     |                      |                    |
          |----------------+-----+----------------------+--------------------|
          |Privacy         |10-0 |Chau, Wilk, Calderon, |                    |
          |                |     |Chang, Cooper,        |                    |
          |                |     |Dababneh, Gatto,      |                    |
          |                |     |Gordon, Low, Olsen    |                    |
          |                |     |                      |                    |
          |                |     |                      |                    |
           ------------------------------------------------------------------ 


          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)Requires UAS sold in California to include in the product  
            packaging the following information:








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             a)   A copy of Federal Aviation Administration (FAA) UAS  
               safety regulations; and
             b)   A notice that the UAS must be registered with the FAA.


          3)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.
          4)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.


          5)Contains a severability clause and exempts commercial UAS  
            operators if they are operating under FAA permission.


          FISCAL EFFECT:  None.  This bill has been keyed non-fiscal 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 units to contain a geofencing function to keep UAS from  
            flying within five miles of an airport.  This bill is  
            author-sponsored.
          2)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  








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            $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.  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). 


          3)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  
            into areas such as airport runways, government properties, and  
            in the vicinity of natural disasters.  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. 


          4)Liability insurance requirement.  This bill 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 personal injury and damages that may be caused by  
            operating their UAS.  However, the question of how much  








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            protection is "adequate" remains open. 


          5)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  
            Certificate of Authorization (COA) in order to operate in in  
            "navigable airspace," which is generally above 500 feet.  This  
            bill would exempt from its provisions any UAS flown pursuant  
            to a COA issued by the FAA or future FAA regulations.  


          6)The federal preemption issue.  Once the FAA has finished  
            promulgating regulations governing the commercial deployment  
            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.  This bill contains a  
            severability provision, so that if one section is preempted  
            the other sections remain in force.




          Analysis Prepared by:                                             
                          Jennie Bretschneider / P. & C.P. / (916)  
                          319-2200                                         
          FN: 0002878














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