BILL ANALYSIS                                                                                                                                                                                                    Ó





                             SENATE JUDICIARY COMMITTEE
                         Senator Hannah-Beth Jackson, Chair
                             2015-2016  Regular Session


          AB 2724 (Gatto)
          Version: June 1, 2016
          Hearing Date: June 28, 2016
          Fiscal: No
          Urgency: No
          TH   


                                        SUBJECT
                                           
                                  Unmanned Aircraft

                                      DESCRIPTION  

          This bill requires manufacturers of unmanned aircraft to provide  
          copies of federal safety regulations and information pertaining  
          to federal registration requirements with any unmanned aircraft  
          sold or offered for sale in this state, and requires unmanned  
          aircraft equipped with global positioning satellite mapping  
          capabilities to also be equipped with geofencing technological  
          capabilities that prohibit the unmanned aircraft from flying  
          within any area prohibited by law, whether local, state, or  
          federal.  This bill, commencing on January 1, 2020, requires the  
          owner of an unmanned aircraft to procure adequate protection  
          against liability imposed by law, as specified, and exempts  
          specified commercial operators from the above requirements.

           (This analysis reflects amendments to be offered by the author  
                                    in committee)

                                      BACKGROUND  

          The development of small unmanned aircraft systems - known  
          variously as "unmanned aerial vehicles," "remote piloted  
          aircraft," or simply "drones" - promises to transform the way  
          Californians interact with each other and their environment.   
          Just a few decades ago, small aircraft of this type were the  
          exclusive domain of hobbyists.  Within the last decade or so,  
          the public has become familiar with the military's use of  
          unmanned aircraft to accomplish certain mission objectives.   









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          However, in December 2013 when Amazon.com, FedEx, and UPS  
          announced their plans to integrate unmanned aircraft into their  
          logistics and delivery services, the possibility of widespread  
          commercial adoption of this technology became clear.

          At present, the use of unmanned aerial vehicles in the skies  
          over California is restricted.  Congress effectively closed the  
          national airspace to commercial drone flights in the Federal  
          Aviation Administration (FAA) Modernization and Reform Act of  
          2012.<1>  That Act established a framework for safely  
          integrating unmanned aircraft into the national airspace no  
          later than September 30, 2015.  The Act does, however, permit  
          certain commercial unmanned aircraft operations to take place  
          before the integration framework is implemented.  Section 333 of  
          the Act authorizes the Secretary of Transportation to establish  
          special interim requirements for the operation of these aircraft  
          by designated operators, provided the aircraft and their  
          operators meet certain minimum standards and have applied for a  
          commercial use exemption.  To date, several thousand commercial  
          operators have applied for, and received, permission to fly  
          commercial drones, including film production companies,  
          construction, surveying, and inspection companies, and real  
          estate firms.  Recent regulations announced by the FAA on June  
          21, 2016, could further open the skies to commercial drone  
          operations through a streamlined commercial exemption and  
          authorization process.  The Act also sets out a separate interim  
          operation exemption for "public unmanned aircraft," allowing  
          public agencies like police departments to operate drones upon  
          application, provided the aircraft and their operators meet  
          certain minimum standards.<2>

          Unlike commercial drone operations, flying an unmanned aircraft  
          "strictly for hobby or recreational use" is allowed today so  
          ---------------------------
          <1> H.R.658, 112th Congress (2011-2012).  In general, the FAA is  
          tasked with regulating aircraft operations conducted in the  
          national airspace under 49 U.S.C. Sec. 40103.  This authority  
          extends to unmanned aircraft operations, which, by definition,  
          are considered to be "aircraft."  (See 49 U.S.C. Sec.  
          40102(a)(6), which defines an "aircraft" as "any contrivance  
          invented, used, or designed to navigate, or fly in, the air.")

          <2> See Section 334 of the FAA Modernization and Reform Act of  
          2012.









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          long as the operator pilots the craft in accordance with  
          specific safety rules.<3>  As a result, private citizens are  
          piloting most of the drones one sees in California today.  The  
          Modernization and Reform Act's safety rules include a  
          requirement to operate these recreational aircraft "in  
          accordance with a community-based set of safety guidelines," but  
          the lack of more comprehensive rules establishing clear  
          boundaries for when, where, and how these craft are to be  
          operated has raised several concerns.  (Alwyn Scott, Americans  
          OK With Police Drones - Private Ownership, Not So Much: Poll  
           [as of June 23, 2016].)  Indeed,  
          polling shows just how far this concern has permeated into the  
          general public.  According to Reuters, "[s]ome 73 percent of  
          respondents to [an online poll] said they want regulations for  
          the lightweight, remote-control planes," and "forty-two percent  
          went as far as to oppose private ownership of drones, suggesting  
          they prefer restricting them to officials or experts trained in  
          safe operation."  (Id.)  Even though drone technology is in its  
          infancy, there have already been disputes between landowners who  
          have used these machines to traverse traditional boundaries,  
          including a New Jersey man who shot an aerial drone from the sky  
          when it entered above his land.  (See Steve Beck, New Jersey Man  
          Accused of Shooting Down Neighbor's Remote Control Drone  
           [as of June  
          23, 2016].)

          This bill responds to these concerns and others by requiring  
          drone manufacturers to provide safety and registration  
          information with drones sold in California.  This bill also,  
          beginning in 2020, requires hobbyist and non-commercial drone  
          operators to obtain adequate protection against liability  
          resulting from the operation of a drone, such as insurance, in  
          order to fly a drone in California.  Finally, this bill requires  
          manufacturers who equip drones with global positioning satellite  
          mapping capabilities to also equip them with geofencing  
          technological capabilities that prohibit the aircraft from  
          flying in areas prohibited by local, state, or federal law.

                                CHANGES TO EXISTING LAW
                             ---------------------------
          <3> See Section 336 of the FAA Modernization and Reform Act of  
          2012.









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           Existing federal law  provides that the Federal Aviation  
          Administration shall regulate aircraft operations conducted in  
          the national airspace, including unmanned aircraft operations.   
          (49 U.S.C. Sec. 40103; 49 U.S.C. Sec. 40102(a)(6).)

           Existing federal regulations  require the registration of  
          unmanned aircraft used exclusively as model aircraft weighing  
          less than 55 pounds.  (14 C.F.R. Part 48.)

           This bill  requires a person who manufactures an unmanned  
          aircraft for sale in this state to include with the unmanned  
          aircraft both of the following:
           a copy of Federal Aviation Administration safety regulations  
            applicable to unmanned aircraft; and
           if the unmanned aircraft is required to be registered with the  
            Federal Aviation Administration, a notification of that  
            requirement.

           This bill  requires an unmanned aircraft equipped with global  
          positioning satellite mapping capabilities to also be equipped  
          with geofencing technological capabilities that prohibit the  
          unmanned aircraft from flying within any area prohibited by law,  
          whether local, state, or federal.

           This bill  , commencing on January 1, 2020, requires the owner of  
          an unmanned aircraft to procure adequate protection against  
          liability imposed by law on owners of unmanned aircraft,  
          including the payment of damages for personal bodily injuries  
          and death, and for property damage, resulting from the operation  
          of the unmanned aircraft.  This bill specifies that the amount  
          of liability protection required shall be set by the Department  
          of Transportation.

           This bill  specifies that it does not apply to an unmanned  
          aircraft operated pursuant to a current commercial operator  
          exemption issued pursuant to Section 333 of the Federal Aviation  
          Modernization and Reform Act of 2012 (Public Law 112-95 (Feb.  
          12, 2014) 126 Stat. 11, 75-76) or other commercial operator  
          authorization granted by the Federal Aviation Administration.
          
                                        COMMENT
           
           1.Stated need for the bill  








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          The author writes:

            While California has been lucky enough to spare a fatal drone  
            accident to date, other accidents are on the rise.  In October  
            2015, 647 residents in West Hollywood went without power after  
            a hobbyist drone flew into an electrical line.  In September  
            2015, in Pasadena, a falling drone cut and bruised an 11-month  
            old baby in a stroller during an outdoor moving screening.   
            During the 2015 North Fire, five drones prevented firefighters  
            from dispatching helicopters with water buckets for twenty  
            minutes over a wildfire that roared onto a Los Angeles-area  
            freeway.  Some of the other numerous drone crashes include one  
            into the stands at the 2015 U.S. Open, one onto a moving car  
            in Canada, and one in the UK that left a toddler blind in one  
            eye.

            The potential for more catastrophic accidents is also looming.  
            Between December 2013 and September 12, 2015, the Center for  
            the Study of the Drone collected records of 921 incidents  
            involving drones and manned aircraft in the national airspace.  
             158 incidents were classified as instances in which a drone  
            came within 200 feet or less, 28 of which required a pilot to  
            maneuver the aircraft to avoid a collision with a drone. . . 

            Fortunately, technology exists 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.  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.

            To deal with the growing number of hobbyist operators,  
            effective December 21, 2015, the FAA requires registration of  
            any drone weighing more than 0.55 lbs.  The $5, internet-based  
            registration process requires only an email address and a  
            physical address, and upon completion, operators affix the  
            given registration number to their drone(s).  There are no  
            safety course requirements.  The registration process serves  
            only to tie the drone to the operator in the event an accident  
            occurs and the drone is recovered.
            This bill, to be known as the "Drone Registration Omnibus  








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            Negligence Prevention Enactment," implements several measures  
            to promote safety during drone operation, [including the  
            following:]
                 requires manufacturers to include in the packaging a  
               copy of the FAA safety regulations;
                 requires manufacturers to include in the packaging  
               information on how to register the drone with the FAA;
                 requires drones equipped with GPS mapping capabilities  
               to also be equipped with "geofencing" technological  
               capabilities; and
                 by January 1, 2020, requires drone owners to purchase  
               liability insurance for damages caused by the operation of  
               the drone, including damages for property damage, personal  
               bodily injury and death.

           1.Tools to prevent dangerous drone use  

          As noted in the Background, polling indicates that the majority  
          of Americans are concerned about the lack of sufficient  
          regulation governing the use of drones.  While the Federal  
          Aviation Administration (FAA) has made some progress toward  
          regulating the safe use of commercial drones, non-commercial use  
          - particularly by drone hobbyists - remain largely unregulated  
          and uncontrolled.  This bill would implement specific  
          requirements designed to acquaint non-commercial drone users  
          with federal safety standards and registration requirements.  It  
          would require manufacturers who sell drones in California to  
          provide purchasers with copies of FAA safety regulations and  
          guidelines, as well as information on how to register their  
          drone with the FAA, at the point when a drone is received by a  
          purchaser.  Including these materials with drones sold in  
          California will likely help educate consumers about potential  
          risks associated with drones, and how to avoid those risks by  
          following basic safety guidelines.  Additionally, these  
          materials will ensure that consumers are aware of their  
          responsibility to register their drones with the FAA, and may  
          even help drive compliance with this requirement.

          This bill would also require non-commercial drone users to  
          obtain adequate protection against liability, at a level set by  
          the Department of Transportation, to cover losses associated  
          with their use of drones.  Like with automobiles, requirements  
          to maintain financial responsibility ensure that individuals who  
          are harmed by another's use of a drone are able to recover  








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          compensation for their injuries.  However, recognizing that  
          there may be insufficient data to appropriately price risk  
          associated with non-commercial drone use, this bill delays the  
          enactment of its liability protection mandate until 2020.

          Additionally, this bill requires manufacturers who sell drones  
          in California equipped with Global Positioning System (GPS)  
          receivers to also equip their products with "geofencing"  
          technology.  Geofencing refers broadly to a technology that  
          prevents a GPS-equipped vehicle from entering into areas  
          pre-designated as off limits or out of bounds.  This  
          technological solution ensures that drone users are not able to  
          inadvertently or intentionally pilot their craft into, for  
          example, restricted airspace over an airport or military  
          facility.

          Together, these requirements will help ensure that  
          non-commercial drone users have access to educational materials  
          regarding the safe use of drones, that they cannot fly into  
          areas that have been restricted to drone pilots under local,  
          state, or federal law, and that, should an accident occur,  
          sufficient financial resources will be available to ensure that  
          injured parties are properly compensated for their losses.

           2.Opposition concerns  

          A coalition of insurance organizations opposed to this bill  
          write:

            AB 2724 would require all owners to procure insurance against  
            liability in order to operate a drone in the state.  The  
            evolution of drone technology represents exciting  
            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  
            risk 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  








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            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.

          Recognizing these concerns, the author agreed to a series of  
          amendments in the Senate Transportation and Housing Committee  
          that would delay the enactment of this bill's protection against  
          liability provision until 2020, and that would enlist the  
          Department of Transportation to set liability protection amounts  
          adequate to cover anticipated losses and claims associated with  
          recreational drone use.  The Committee has not received an  
          indication as to whether these recent amendments will satisfy  
          the concerns raised by these organizations.


           Support  :  California Association of Highway Patrolmen; Peace  
          Officers Research Association of California; San Diego County  
          Regional Airport Authority

           Opposition  :  American Insurance Association; Association of  
          California Insurance Companies; 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

                                        HISTORY
           
           Source  :  Author

           Related Pending Legislation  :

          SB 807 (Gaines, 2016) would provide public entities and public  
          employees with immunity from civil liability for any damage to  
          an unmanned aircraft system if the damage was caused while the  
          public entity or public employee was providing, and the unmanned  
          aircraft system was interfering with, the operation, support, or  
          enabling of specified emergency services.  This bill provides  
          similar immunity to emergency responders employed by private  
          entities or who are unpaid volunteers when those emergency  
          responders act within the scope of authority provided by a  








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          public entity or a public employee.  This bill is pending in the  
          Assembly Judiciary Committee.

          SB 868 (Jackson, 2016) enacts the State Remote Piloted Aircraft  
          Act, which creates a regulatory framework that allows for the  
          deployment of drone technology under specified restrictions.   
          The bill, among other things, limits drone use near critical  
          infrastructure, heliports, and airports, without permission,  
          limits drone use over state parks, wildlife refuges, the State  
          Capitol, or other designated safety areas, without a permit or  
          permission, prohibits the weaponization of drones, and prohibits  
          the reckless operation of drones and drone interference with  
          manned aircraft.  This bill is pending in the Assembly Privacy  
          and Consumer Protection Committee.

          AB 56 (Quirk, 2015) prohibits law enforcement agencies from  
          using an unmanned aircraft system, obtaining an unmanned  
          aircraft system from another public agency by contract, loan, or  
          other arrangement, or using information obtained from an  
          unmanned aircraft system used by another public agency, unless  
          certain requirements are met.  To use an unmanned aircraft  
          system, among other things, law enforcement agencies would be  
          required to develop and make available to the public a policy on  
          the use of the system, as well as comply with specified laws and  
          the unmanned aircraft system policy developed by the law  
          enforcement agency.  This bill prohibits a law enforcement  
          agency from using an unmanned aircraft system to surveil private  
          property unless, among other things, the law enforcement agency  
          obtains a search warrant, and would require images, footage, or  
          data obtained through the use of an unmanned aircraft system  
          under these provisions to be permanently destroyed within one  
          year, except as specified.  This bill is on the Senate inactive  
          file.
          AB 1820 (Quirk, 2016) prohibits a law enforcement agency from  
          using an unmanned aircraft system, obtaining an unmanned  
          aircraft system from another public agency, or using information  
          obtained from an unmanned aircraft system, except as  
          specifically authorized.  A law enforcement agency would be  
          authorized to use an unmanned aircraft system if it, among other  
          things, develops a policy on the use of unmanned aircraft  
          systems that meets specified requirements.  The bill would  
          prohibit a law enforcement agency from using an unmanned  
          aircraft system to surveil private property, unless the law  
          enforcement agency obtains a search warrant or express  








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          permission to search the property, or an exigent circumstance  
          exists.  This bill is pending in the Senate Judiciary Committee.

          AB 2320 (Calderon, 2016) places several restrictions on the use  
          of unmanned aircraft systems, including using such systems to  
          violate protective orders, to view the scene of an emergency in  
          a way that impedes police officers, firefighters, emergency  
          medical, or other emergency personnel, or military personnel in  
          the performance of their emergency duties, or to stalk another  
          person by willfully, maliciously, and repeatedly following or  
          willfully and maliciously harassing another person.  This bill  
          is pending in the Senate Appropriations Committee.

           Prior Legislation  :

          SB 142 (Jackson, 2015) would have clarified that the operation  
          of an unmanned aerial vehicle less than 350 feet above the  
          property of another, without permission or legal authority,  
          constitutes trespass.  This bill was vetoed by Governor Brown.

          SB 170 (Gaines, 2015) would have provided that a person who  
          knowingly and intentionally operates an unmanned aircraft on or  
          above the grounds of a state prison or a jail is guilty of a  
          misdemeanor, except as specified.  This bill was vetoed by  
          Governor Brown.

          SB 262 (Galgiani, 2015) would authorize law enforcement agencies  
          to use unmanned aircraft systems provided such use complies with  
          certain conditions, including: search and seizure protections in  
          the U.S. and California Constitutions; federal law applicable to  
          unmanned aircraft systems; and state law applicable to law  
          enforcement agency use of surveillance technology.  This bill  
          would also require law enforcement agencies to receive approval  
          from their local governing body prior to using unmanned aircraft  
          systems, and would restrict the use of such systems for  
          conducting surveillance of private property.  This bill is  
          pending in the Senate Judiciary Committee.

          SB 271 (Gaines, 2015) would have made it an infraction to  
          operate an unmanned aircraft on the grounds of, or less than 350  
                                                                                     feet above ground level within the airspace overlaying, a public  
          school providing instruction in kindergarten or grades 1 to 12  
          during school hours and without permission of school officials.   
          This bill would have exempted specified media and news personnel  








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          unless they receive a request from school officials to cease  
          using an unmanned aircraft above a school, and would also have  
          exempted law enforcement.  This bill was vetoed by Governor  
          Brown.

          AB 14 (Waldron, 2015) would create the Unmanned Aircraft Systems  
          Task Force, which would be required to research, develop, and  
          formulate a comprehensive policy for unmanned aircraft systems  
          in California.  The task force would be required to submit,  
          among other things, a policy draft and suggested legislation  
          pertaining to unmanned aircraft systems to the Legislature and  
          the Governor on or before January 1, 2018.  This bill is pending  
          reconsideration in the Assembly Transportation Committee.

          AB 1327 (Gorell, 2014) would have prohibited public agencies  
          from using unmanned aircraft systems, or contracting for the use  
          of these systems, with certain exceptions for law enforcement  
          agencies acting pursuant to a warrant and in certain other  
          cases, including when the use or operation of the unmanned  
          aircraft system achieves the core mission of the agency and the  
          purpose of use is unrelated to the gathering of criminal  
          intelligence.  The bill would have also required notice by  
          public agencies intending to deploy unmanned aircraft, would  
          have required images, footage, or data obtained through the use  
          of such aircraft to be permanently destroyed within one year  
          except as specified, and would have prohibited equipping  
          unmanned aircraft with weapons.  This bill was vetoed by  
          Governor Brown.

          SB 15 (Padilla, 2013) would have, among other things, required  
          law enforcement agencies to obtain search warrants when using  
          unmanned aircraft, and would have required that an application  
          for the search warrant specify the intended purpose for which  
          the unmanned aircraft would be used.  The bill would have also  
          restricted data collection by unmanned aircraft and would have  
          prohibited equipping unmanned aircraft with weapons.  This bill  
          died in the Assembly Public Safety Committee.

          AB 1524 (Waldron, 2013) would have required any entity that owns  
          or operates an unmanned aircraft to place identifying  
          information or digitally store identifying information on the  
          aircraft.  The bill would have exempted model aircraft, and  
          would have made a person or entity that violates its provisions  
          liable for a civil fine not to exceed $2,500.  This bill was set  








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          for hearing in the Assembly Transportation Committee, but the  
          hearing was cancelled at the author's request.

           Prior Vote  :

          Senate Transportation and Housing Committee (Ayes 7, Noes 2)
          Assembly Floor (Ayes 54, Noes 17)
          Assembly Privacy and Consumer Protection Committee (Ayes 10,  
          Noes 0)

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