September 23, 2014

Federal Aviation Administration Interpretation of the Special Rule for Model Aircraft

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As part of the FAA Modernization and Reform Act of 2012 (FMRA),1 Congress ordered the Federal Aviation Administration (FAA) to integrate unmanned aircraft systems (UASs)—sometimes referred to as drones—into the National Airspace System by September 2015. As part of that effort, the FAA is currently accepting comments on its “Interpretation of the Special Rule for Model Aircraft” (Section 336 of the FMRA) and the FAA’s enforcement authority over model aircraft as affirmed by the statute.2

The Technology Policy Program of the Mercatus Center at George Mason University is dedicated to advancing knowledge of the impact of regulation on society. As part of its mission, the program conducts careful and independent analyses employing contemporary economic scholarship to assess rulemaking proposals from the perspective of the public interest. Therefore, this comment on the FAA’s “Interpretation of the Special Rule for Model Aircraft” does not represent the views of any particular affected party or special interest group but is designed to assist the administration as it carries out Congress’s mandate to safely integrate UASs into the National Airspace System.

In this brief comment, we discuss the need for the agency to conduct a thorough review of the benefits and costs associated with this rule. We argue this is essential because airspace is poised to become a major platform for innovation if the agency strikes the right balance between safety and innovation. To achieve that goal, we stress the need for flexibility and humility in interpreting older standards, such as “line of sight” restrictions, as well as increasingly archaic “noncommercial” vs. “commercial” distinctions or “hobbyists” vs. “professional” designations.

We also highlight the growing tension between the agency’s current regulatory approach and the First Amendment rights of the public to engage in peaceful, information-gathering activities using these technologies. Finally, we close by noting the important role that voluntary self-regulation and codes of conduct already play in governing proper use of these technologies. We also argue that other “bottom-up” remedies are available and should be used before the agency imposes additional restrictions on this dynamic, rapidly evolving space.


Before addressing the substance of the rule at issue here, we wish to remind the agency that it is required to conduct a formal benefit-cost analysis (BCA) of any “significant regulatory action” it undertakes.3 As defined by Executive Order 12866, a “significant regulatory action” includes rules or guidelines that “have an annual effect on the economy of $100 million or more or adversely affect in a material way the economy, a sector of the economy, productivity, competition, jobs, the environment, public health or safety, or state, local or tribal government or communities.”4 A “significant regulatory action” can also include regulatory actions that “raise novel legal or policy issues.”5

Although the exact economic ramifications of integrating commercial drones into the national airspace is uncertain, there have been numerous assessments of the potential impact this technology would have on the US economy. The Association for Unmanned Vehicle Systems International (AUVSI), for example, estimates that between 2015 and 2025, the integration of unmanned aerial systems into the national airspace “is expected to contribute $82.1 billion to the nation’s economy by agriculture, public safety, and other activities.” These benefits run the gamut from over 100,000 new high-paying ($40,000 or more per year) jobs created in aerospace manufacturing to almost 850,000 job years worked over that period.6

The FAA has not yet undertaken a comprehensive benefit-cost analysis of the rule in question. Such an analysis would help determine how new regulations in this space could affect the market for this evolving class of technologies as well as how these technologies might impact the broader economy or other important values. This is particularly true as the distinction between model aircraft and other types of unmanned aircraft systems is rapidly blurring.

The agency may believe that the matter under review is merely an interpretative exercise requiring no formal BCA review at this time. Nonetheless, as noted below, the agency’s “Interpretation” could indeed result in the sort of significant economic impacts and novel legal issues contemplated by Executive Order 12866. Consequently, the agency should not avoid formal BCA but instead take this opportunity to consider the ramifications of its actions in this matter.7

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