Drones

The National Academies of Sciences, Engineering, and Medicine has released an amazing new report focused on, “Assessing the Risks of Integrating Unmanned Aircraft Systems (UAS) into the National Airspace System.” In what the Wall Street Journal rightly refers to as an “unusually strongly worded report,” the group of experts assembled by the National Academies call for a sea change in regulatory attitudes and policies toward regulation of Unmanned Aircraft Systems (or “drones”) and the nation’s airspace more generally.

The report uses the term “conservative” or “overly conservative” more than a dozen times to describe the Federal Aviation Administration’s (FAA) problematic current approach toward drones. They point out that the agency has “a culture with a near-zero tolerance for risk,” and that the agency needs to adjust that culture to take into account “the various ways in which this new technology may reduce risk and save lives.” (Ch. S, p.2) The report continues on to say that:

The committee concluded that “fear of making a mistake” drives a risk culture at the FAA that is too often overly conservative, particularly with regard to UAS technologies, which do not pose a direct threat to human life in the same way as technologies used in manned aircraft. An overly conservative attitude can take many forms. For example, FAA risk avoidance behavior is often rewarded, even when it is excessively risk averse, and rewarded behavior is repeated behavior. Balanced risk decisions can be discounted, and FAA staff may conclude that allowing new risk could endanger their careers even when that risk is so minimal that it does not exceed established safety standards.  The committee concluded that a better measure for the FAA to apply is to ask the question, “Can we make UAS as safe as other background risks that people experience daily?” As the committee notes, we do not ground airplanes because birds fly in the airspace, although we know birds can and do bring down aircraft.

[. . . ]

In many cases, the focus has been on “What might go wrong?” instead of a holistic risk picture: “What is the net risk/benefit?” Closely related to this is what the committee considers to be paralysis wherein ever more data are often requested to address every element of uncertainty in a new technology. Flight experience cannot be gained to generate these data due to overconservatism that limits approvals of these flights. Ultimately, the status quo is seen as safe. There is too little recognition that new technologies brought into the airspace by UAS could improve the safety of manned aircraft operations, or may mitigate, if not eliminate, some nonaviation risks. (p. S-2)

Importantly, the report makes it clear that the problem here is not just that “an overly conservative risk culture that overestimates the severity and the likelihood of UAS risk can be a significant barrier to introduction and development of these technologies,” but, more profoundly, the report highlights how,  “Avoiding risk entirely by setting the safety target too high creates imbalanced risk decisions and can degrade overall safety and quality of life.” (p. 3-6,7) In other words, we should want a more open and common sense-oriented approach to drones, not only to encourage more life-enriching innovation, but also because it could actually make us safer as a result.

No Reward without Some Risk

What the National Academies report is really saying here is that there can be no reward without some risk.  This is something I have spent a great deal of time writing about in my last book, a recent book chapter, and various other essays and journal articles over the past 25 years.  As I noted in my last book, “living in constant fear of worst-case scenarios—and premising public policy on them—means that best-case scenarios will never come about.”  If we want a wealthier, healthier, and safer society, we must embrace change and risk-taking to get us there.

This is exactly what that National Academies report is getting at when they note that the FAA”s “overly conservative culture prevents safety beneficial operations from entering the airspace. The focus is on what might go wrong. More dialogue on potential benefits is needed to develop a holistic risk picture that addresses the question, What is the net risk/benefit?” (p. 3-10)

In other words, all safety regulation involves trade-offs, and if (to paraphrase a classic Hardin cartoon you’ll see to your right) we consider every potential risk except the risk of avoiding all risks, the result will be not only a decline in short-term innovation, but also a corresponding decline in safety and overall living standards over time.

Countless risk scholars have studied this process and come to the same conclusion. “We could virtually end all risk of failure by simply declaring a moratorium on innovation, change, and progress,” notes engineering historian Henry Petroski. But the costs to society of doing so would be catastrophic, of course. “The history of the human race would be dreary indeed if none of our forebears had ever been willing to accept risk in return for potential achievement,” observed H.L. Lewis, an expert on technological risk trade-offs.

The most important book ever written on this topic was Aaron Wildavsky’s 1988 masterpiece, Searching for Safety. Wildavsky warned of the dangers of “trial without error” reasoning and contrasted it with the trial-and-error method of evaluating risk and seeking wise solutions to it. Wildavsky argued that real wisdom is born of experience and that we can learn how to be wealthier and healthier as individuals and a society only by first being willing to embrace uncertainty and even occasional failure. As he put it:

The direct implication of trial without error is obvious: If you can do nothing without knowing first how it will turn out, you cannot do anything at all. An indirect implication of trial without error is that if trying new things is made more costly, there will be fewer departures from past practice; this very lack of change may itself be dangerous in forgoing chances to reduce existing hazards. . . . Existing hazards will continue to cause harm if we fail to reduce them by taking advantage of the opportunity to benefit from repeated trials.

When this logic takes the form of public policy prescriptions, it is referred to as the “precautionary principle,” which generally holds that, because new ideas or technologies could pose some theoretical danger or risk in the future, public policies should control or limit the development of such innovations until their creators can prove that they won’t cause any harms.

Again, if we adopt that attitude, human safety actually suffers because it holds back beneficial experiments aimed at improving the human condition. As the great economic historian Joel Mokyr argues, “technological progress requires above all tolerance toward the unfamiliar and the eccentric.” But the regulatory status quo all too often rejects “the unfamiliar and the eccentric” out of an abundance of caution. While usually well-intentioned, that sort of status quo thinking holds back new and better was of doing old things better, or doing all new things. The end result is that real health and safety advances are ignored or forgone.

How Status Quo Thinking at the FAA Results in Less Safety

This is equally true for air safety and FAA regulation of drones. “Ultimately, the status quo is seen as safe,” the National Acadamies report notes. “There is too little recognition that new technologies brought into the airspace by UAS could improve the safety of manned aircraft operations, or may mitigate, if not eliminate, some nonaviation risks.” The example of the life-saving potential of drones have already been well-documented.

Drones have already been used to monitor fires, help with search-and-rescue missions for missing people or animals, assist life guards by dropping life vests to drowning people, deliver medicines to remote areas, and help with disaster monitoring and recovery efforts. But that really just scratches the surface in terms of their potential.

Some people scoff at the idea of drones being used to deliver small packages to our offices or homes. But consider how many of those packages are delivered by human-operated vehicles that are far more likely to be involved in dangerous traffic accidents on our over-crowded roadways. If drones were used to make some of those deliveries, we might be able to save a lot of lives. Or how about an elderly person stuck at home during storm, only to realize they are out of some essential good or medicine that is a long drive away. Are we better off having them (or someone else) get behind the wheel to drive and get it, or might a drone be able to deliver it more safely?

The authors of the National Academies report understand this, as they made clear when they concluded that, “operation of UAS has many advantages and may improve the quality of life for people around the world. Avoiding risk entirely by setting the safety target too high creates imbalanced risk decisions and can degrade overall safety and quality of life.” (Ch. 3, p. 5-6)

Reform Ideas: Use the “Innovator’s Presumption” & “Sunsetting Imperative”

Given that reality, the National Academies report makes several sensible reform recommendations aimed at countering the FAA’s hyper-conservatism and bias for the broken regulatory status quo. I won’t go through them all, but I think they are an excellent set of reforms that deserve to be taken seriously.

I do, however, want to highly recommend everyone take a close look at this one outstanding recommendation in Chapter 3, which is aimed at keep things moving and making sure that status quo thinking doesn’t freeze beneficial new forms of airspace innovation. Specifically, the National Academies report recommends that:

The FAA should meet requests for certifications or operations approvals with an initial response of “How can we approve this?” Where the FAA employs internal boards of executives throughout the agency to provide input on decisions, final responsibility and authority and accountability for the decision should rest with the executive overseeing such boards. A time limit should be placed on responses from each member of the board, and any “No” vote should be accompanied with a clearly articulated rationale and suggestion for how that “No” vote could be made a “Yes.” (Ch. 3, p. 8)

I absolutely love this reform idea because it essentially combines elements of two general innovation policy reform ideas that I discussed in my recent essay, “Converting Permissionless Innovation into Public Policy: 3 Reforms.” In that piece, I proposed the idea of instituting an “Innovator’s Presumption” that would read: “Any person or party (including a regulatory authority) who opposes a new technology or service shall have the burden to demonstrate that such proposal is inconsistent with the public interest.” I also proposed a so-called “Sunsetting Imperative” that would read: “Any existing or newly imposed technology regulation should include a provision sunsetting the law or regulation within two years.”

The National Academies report recommendation above basically embodies the spirit of both the Innovator’s Presumption and the Sunsetting Imperative. It puts the burden of proof on opponents of change and then creates a sort of shot clock to keep things moving.

These are the kind of reforms we need to make sure status quo thinking at regulatory agencies doesn’t hold back life-enriching and life-saving innovations. It’s time for a change in the ways business is done at the FAA to make sure that regulations are timely, effective, and in line with common sense. Sadly, as the new National Academies report makes clear, today’s illogical policies governing airspace innovation are having counter-productive results that hurt society.

By Brent Skorup and Melody Calkins

Tech-optimists predict that drones and small aircraft may soon crowd US skies. An FAA administrator predicted that by 2020 tens of thousands of drones would be in US airspace at any one time. Further, over a dozen companies, including Uber, are building vertical takeoff and landing (VTOL) aircraft that could one day shuttle people point-to-point in urban areas. Today, low-altitude airspace use is episodic (helicopters, ultralights, drones) and with such light use, the low-altitude airspace is shared on an ad hoc basis with little air traffic management. Coordinating thousands of aircraft in low-altitude flight, however, demands a new regulatory framework.

Why not auction off low-altitude airspace for exclusive use?

There are two basic paradigms for resource use: open access and exclusive ownership. Most high-altitude airspace is lightly used and the open access regime works tolerably well because there are a small number of players (airline operators and the government) and fixed routes. Similarly, Class G airspace—which varies by geography but is generally the airspace from the surface to 700 feet above ground—is uncontrolled and virtually open access.

Valuable resources vary immensely in their character–taxi medallions, real estate, radio spectrum, intellectual property, water–and a resource use paradigm, once selected requires iteration and modification to ensure productive use. “The trick,” Prof. Richard Epstein notes, “is to pick the right initial point to reduce the stress on making these further adjustments.” If indeed dozens of operators will be vying for variable drone and VTOL routes in hundreds of local markets, exclusive use models could create more social benefits and output than open access and regulatory management. NASA is exploring complex coordination systems in this airspace but, rather than agency permissions, lawmakers should consider using property rights and the price mechanism.

The initial allocation of airspace could be determined by auction. An agency, probably the FAA, would:

  1. Identify and define geographic parcels of Class G airspace;
  2. Auction off the parcels to any party (private corporations, local governments, non-commercial stakeholders, or individual users) for a term of years with an expectation of renewal; and
  3. Permit the sale, combination, and subleasing of those parcels

The likely alternative scenario—regulatory allocation and management of airspace–derives from historical precedent in aviation and spectrum policy:

  1. First movers and the politically powerful acquire de facto control of low-altitude airspace,
  2. Incumbents and regulators exclude and inhibit newcomers and innovators,
  3. The rent-seeking and resource waste becomes unendurable for lawmakers, and
  4. Market-based reforms are slowly and haphazardly introduced.

For instance, after demand for commercial flights took off in the 1960s, a command-and-control quota system was created for crowded Northeast airports. Takeoff and landing rights, called “slots,” were assigned to early airlines but regulators did not allow airlines to sell those rights. The anticompetitive concentration and hoarding of airport slots at terminals is still being slowly unraveled by Congress and the FAA to this day. There’s a similar story for government assignment of spectrum over decades, as explained in Thomas Hazlett’s excellent new book, The Political Spectrum.

The benefit of an auction, plus secondary markets, is that the resource is generally put to its highest-valued use. Secondary markets and subleasing also permit latecomers and innovators to gain resource access despite lacking an initial assignment and political power. Further, exclusive use rights would also provide VTOL operators (and passengers) the added assurance that routes would be “clear” of potential collisions. (A more regulatory regime might provide that assurance but likely via complex restrictions on airspace use.) Airspace rights would be a new cost for operators but exclusive use means operators can economize on complex sensors, other safety devices, and lobbying costs. Operators would also possess an asset to sublease and monetize.

Another bonus (from the government’s point of view) is that the sale of Class G airspace can provide government revenue. Revenue would be slight at first but could prove lucrative once there’s substantial commercial interest. The Federal government, for instance, auctions off its usage rights for grazing, oil and gas retrieval, radio spectrum, mineral extraction, and timber harvesting. Spectrum auctions alone have raised over $100 billion for the Treasury since they began in 1994.

Dominos pizza droneJust three days ago I penned another installment in my ongoing series about the growing phenomenon of “global innovation arbitrage” — or the idea that “innovators can, and increasingly will, move to those countries and continents that provide a legal and regulatory environment more hospitable to entrepreneurial activity.” And now it’s already time for another entry in the series!

My previous column focused on driverless car innovation moving overseas, and earlier installments discussed genetic testingdrones, and the sharing economy. Now another drone-related example has come to my attention, this time from New Zealand. According to the New Zealand Herald:

Aerial pizza delivery may sound futuristic but Domino’s has been given the green light to test New Zealand pizza delivery via drones. The fast food chain has partnered with drone business Flirtey to launch the first commercial drone delivery service in the world, starting later this year.

Importantly, according to the story, “If it is successful the company plans to extend the delivery method to six other markets – Australia, Belgium, France, The Netherlands, Japan and Germany.” That’s right, America is not on the list. In other words, a popular American pizza delivery chain is looking overseas to find the freedom to experiment with new delivery methods. And the reason they are doing so is because of the seemingly endless bureaucratic foot-dragging by federal regulators at the FAA. Continue reading →

This article originally appeared at techfreedom.org.

TechFreedom has sued the Federal Aviation Administration (“FAA”) to overturn the agency’s recently adopted “interim” drone regulations, which require that drones that weigh over 250 grams be registered for a $5 fee.

Whether or or not requiring drone registration is a wise policy, the rules the FAA rushed out before Christmas are unlawful,” said Berin Szoka, President of TechFreedom. “They exceed the authority Congress has given the FAA. Moreover, the agency illegally bypassed the most basic transparency requirement in administrative law: that it provide an opportunity for the affected public to comment on its regulations. That means the FAA could not fully consider the real-world complexities of regulating drones. Thus, the FAA’s rules could lead to a host of unintended consequences.”

The notice-and-comment rulemaking process serves an important role in ensuring that regulation doesn’t do more harm than good,” said Tom Struble, Policy Counsel at TechFreedom. “It ensures that the agency is exposed to viewpoints from all the relevant stakeholders, and it forces the agency to weigh competing considerations before issuing a rule. The holiday rush did not justify the FAA bypassing standard notice-and-comment rulemaking, and the paltry cost-benefit analysis contained in the IFR does not pass muster. The D.C. Circuit should set aside these interim rules and force the FAA to go back to the drawing board.”

See TechFreedom’s petition for review here.

DroneToday, the U.S. Department of Transportation and the Federal Aviation Administration (FAA) announced that it will soon require Unmanned Aircraft Systems (UAS) or private drones, used for both personal and commercial purposes, to be registered in a national database. To facilitate this process, the agencies announced the creation of a new federal task force that will develop recommendations for a UAS registration process. Rules are to be published by November 20th (presumably to cover new devices sold before Christmas).

Here are some quick initial reactions on the proposed registration rules: Continue reading →

Today, Eli Dourado, Ryan Hagemann and I filed comments with the Federal Aviation Administration (FAA) in its proceeding on the “Operation and Certification of Small Unmanned Aircraft Systems” (i.e. small private drones). In this filing, we begin by arguing that just as “permissionless innovation” has been the primary driver of entrepreneurialism and economic growth in many sectors of the economy over the past decade, that same model can and should guide policy decisions in other sectors, including the nation’s airspace. “While safety-related considerations can merit some precautionary policies,” we argue, “it is important that those regulations leave ample space for unpredictable innovation opportunities.”

We continue on in our filing to note that  “while the FAA’s NPRM is accompanied by a regulatory evaluation that includes benefit-cost analysis, the analysis does not meet the standard required by Executive Order 12866. In particular, it fails to consider all costs and benefits of available regulatory alternatives.” After that, we itemize the good and the bad of the FAA propose with an eye toward how the agency can maximize innovation opportunities. We conclude by noting:

 The FAA must carefully consider the potential effect of UASs on the US economy. If it does not, innovation and technological advancement in the commercial UAS space will find a home elsewhere in the world. Many of the most innovative UAS advances are already happening abroad, not in the United States. If the United States is to be a leader in the development of UAS technologies, the FAA must open the American skies to innovation.

You can read our entire 9-page filing here. Continue reading →

Yesterday afternoon, the Federal Aviation Administration (FAA) finally released its much-delayed rules for private drone operations. As The Wall Street Journal points out, the rules “are about four years behind schedule,” but now the agency is asking for expedited public comments over the next 60 days on the whopping 200-page order. (You have to love the irony in that!) I’m still going through all the details in the FAA’s new order — and here’s a summary of what the major provisions — but here are some high-level thoughts about what the agency has proposed.

Opening the Skies…

  • The good news is that, after a long delay, the FAA is finally taking some baby steps toward freeing up the market for private drone operations.
  • Innovators will no longer have to operate entirely outside the law in a sort of drone black market. There’s now a path to legal operation. Specifically, small unmanned aircraft systems (UAS) operators (for drones under 55 lbs.) will be able to go through a formal certification process and, after passing a test, get to operate their systems.

Continue reading →

Farhad Manjoo’s latest New York Times column, “Giving the Drone Industry the Leeway to Innovate,” discusses how the Federal Aviation Administration’s (FAA) current regulatory morass continues to thwart many potentially beneficial drone innovations. I particularly appreciated this point:

But perhaps the most interesting applications for drones are the ones we can’t predict. Imposing broad limitations on drone use now would be squashing a promising new area of innovation just as it’s getting started, and before we’ve seen many of the potential uses. “In the 1980s, the Internet was good for some specific military applications, but some of the most important things haven’t really come about until the last decade,” said Michael Perry, a spokesman for DJI [maker of Phantom drones]. . . . He added, “Opening the technology to more people allows for the kind of innovation that nobody can predict.”

That is exactly right and it reflects the general notion of “permissionless innovation” that I have written about extensively here in recent years. As I summarized in a recent essay: “Permissionless innovation refers to the notion that experimentation with new technologies and business models should generally be permitted by default. Unless a compelling case can be made that a new invention or business model will bring serious harm to individuals, innovation should be allowed to continue unabated and problems, if they develop at all, can be addressed later.” Continue reading →

I suppose it was inevitable that the DRM wars would come to the world of drones. Reporting for the Wall Street Journal today, Jack Nicas notes that:

In response to the drone crash at the White House this week, the Chinese maker of the device that crashed said it is updating its drones to disable them from flying over much of Washington, D.C.SZ DJI Technology Co. of Shenzhen, China, plans to send a firmware update in the next week that, if downloaded, would prevent DJI drones from taking off within the restricted flight zone that covers much of the U.S. capital, company spokesman Michael Perry said.

Washington Post reporter Brian Fung explains what this means technologically:

The [DJI firmware] update will add a list of GPS coordinates to the drone’s computer telling it where it can and can’t go. Here’s how that system works generally: When a drone comes within five miles of an airport, Perry explained, an altitude restriction gets applied to the drone so that it doesn’t interfere with manned aircraft. Within 1.5 miles, the drone will be automatically grounded and won’t be able to fly at all, requiring the user to either pull away from the no-fly zone or personally retrieve the device from where it landed. The concept of triggering certain actions when reaching a specific geographic area is called “geofencing,” and it’s a common technology in smartphones. Since 2011, iPhone owners have been able to create reminders that alert them when they arrive at specific locations, such as the office.

This is complete overkill and it almost certainly will not work in practice. First, this is just DRM for drones, and just as DRM has failed in most other cases, it will fail here as well. If you sell somebody a drone that doesn’t work within a 15-mile radius of a major metropolitan area, they’ll be online minutes later looking for a hack to get it working properly. And you better believe they will find one. Continue reading →

FAA sealRegular readers know that I can get a little feisty when it comes to the topic of “regulatory capture,” which occurs when special interests co-opt policymakers or political bodies (regulatory agencies, in particular) to further their own ends. As I noted in my big compendium, “Regulatory Capture: What the Experts Have Found“:

While capture theory cannot explain all regulatory policies or developments, it does provide an explanation for the actions of political actors with dismaying regularity.  Because regulatory capture theory conflicts mightily with romanticized notions of “independent” regulatory agencies or “scientific” bureaucracy, it often evokes a visceral reaction and a fair bit of denialism.

Indeed, the more I highlight the problem of regulatory capture and offer concrete examples of it in practice, the more push-back I get from true believers in the idea of “independent” agencies. Even if I can get them to admit that history offers countless examples of capture in action, and that a huge number of scholars of all persuasions have documented this problem, they will continue to persist that, WE CAN DO BETTER! and that it is just a matter of having THE RIGHT PEOPLE! who will TRY HARDER!

Well, maybe. But I am a realist and a believer in historical evidence. And the evidence shows, again and again, that when Congress (a) delegates broad, ambiguous authority to regulatory agencies, (b) exercises very limited oversight over that agency, and then, worse yet, (c) allows that agency’s budget to grow without any meaningful constraint, then the situation is ripe for abuse. Specifically, where unchecked power exists, interests will look to exploit it for their own ends.

In any event, all I can do is to continue to document the problem of regulatory capture in action and try to bring it to the attention of pundits and policymakers in the hope that we can start the push for real agency oversight and reform. Today’s case in point comes from a field I have been covering here a lot over the past year: commercial drone innovation. Continue reading →