ISE20/15-16

• Civilian use of drones^{1Legend symbol denoting Drone in this article refers to small unmanned aircraft which are light in design, equipped with camera or video recording device, and driven by battery sufficient for up to 30 minutes flight.} (i.e. unmanned aircraft) has been growing by leaps and bounds in recent years, due to fast-developing technology and declining costs. Global sales of civilian drones are thus forecast to triple from 2015 to hit US$5 billion (HK$39 billion) by 2017.^{2Legend symbol denoting According to Goldman Sachs Investment Research, the global civilian drone market was worth US$1.5 billion (HK$11.7 billion) in 2015, and is projected to triple to US$5 billion (HK$39 billion) by 2017.} Despite the huge potential business applications of drones, one of the challenges facing regulatory authorities around the world is to strike a balance between embracing technological innovation on the one hand, and safeguarding public safety and privacy on the other.
• In Hong Kong, there are some 5 000 drones^{3Legend symbol denoting See Hong Kong Business, July 2015.} deployed for recreation or commercial uses such as aerial photographing, surveying and mapping, and gas pipes inspection. Under the existing civil aviation rules, drones weighed less than 7 kg can be operated for recreation without permission, but they need to meet certain safety requirements.^{4Legend symbol denoting Drone weighed below 7 kg is free from most provisions of the Air Navigation Order 1995. But drones are not allowed to fly above 300 feet, within 500 metres from aerodromes, over or within 50 metres of any person, vessel, vehicle or structure not under the control of the drone operators. Reckless or negligent operation endangering any person or property is liable to prosecution.} However, use of drones for business purpose requires prior permission from the Government, regardless of the drone weight. Between 2013 and 2015, 84 out of 111 permit applications were approved.
• In April 2016, in response to the concerns of the Legislative Council over the safety issue arising from drones, the Government indicated that it was "reviewing the regulatory policies" of drones, with regard to "development of regulatory requirements of overseas aviation authorities". As both the United States ("US") and Singapore have recently modified their regulatory regimes in 2012-2016, this issue of Essentials reviews briefly the regulatory developments in these two places.

Recent global trends in drone use

• Wide-ranging business applications: Equipped with technologies such as global positioning system, high-resolution camera or thermal sensors, drones can perform some tasks in an innovative and cost-effective manner. Some of these innovative applications include (a) crop monitoring in agriculture; (b) site and layout planning in construction; (c) oil and gas exploration in mining; (d) repair and maintenance of public utilities; (e) goods delivery in logistics; (f) aerial photography for media and entertainment; and (g) search and rescue.
• Potential economic benefits: Innovative use of drones is thus deemed to have a potential to increase and improve the productivity of many business sectors. According to a study by the US Consumer Electronics Association in 2015, the overall economic benefits brought by the drone industry and its applications could reach US$82 billion (HK$640 billion) during 2015-2025 and create over 100 000 jobs.
• Risks and threats: However, increased number of drones in operation can also bring certain risks. They include threats to public safety, as reckless drone operators may fly close to airports, aircraft or high-rise buildings, causing casualties and damage of property. Indeed reports of unsafe operation in the US have surged by four times to 1 200 in 2015. There are also threats to sensitive facilities like military installations, prisons, stadiums and key government buildings as enforcement action against intruders is difficult without ready means of identification. Moreover, there are also privacy protection issues, as drones with cameras and sensors can gather a huge amount of data along the flights, no matter deliberately or accidentally, resulting in collateral intrusion of privacy.
• Absence of common regulatory regime: Regulatory bodies around the world are yet to come up with common regulatory standards for drones. Only about one-third of the 191 Members of the International Civil Aviation Organization ("ICAO")^{5Legend symbol denoting The International Civil Aviation Organization ("ICAO") is a specialized United Nations agency, established in 1944 to manage the administration and governance of the Convention on International Civil Aviation (Chicago Convention). ICAO works with the Member States and industry groups to reach consensus on international civil aviation standards and recommended practices and policies in support of a safe, efficient, secure, economically sustainable and environmentally responsible civil aviation sector.} have set up a regulatory regime for drones, but these regimes are not harmonized. This situation is likely to linger for some time, as ICAO is still working on voluntary standards and recommended practices about drones. Initial proposals of ICAO will only be available by 2018 at the earliest.

Regulatory regime for drones in the United States

• In spite of a fast growing market, the US had been rather restrictive in civilian drone operation before 2012, mainly because of rigid aviation rules. While civilian drone operation was confined to mainly research and training activities, operators of civilian drones were still required to obtain permission from the Federal Aviation Administration ("FAA") on a case-by-case basis.
• In 2012, the US Congress passed the FAA Modernization and Reform Act 2012, laying down the regulatory roadmap for small drones weighed less than 25 kg.^{6Legend symbol denoting The law reaffirms that all drones including those for hobby use are aircraft and therefore must be registered according to established rules. As an interim measure, the law also empowers FAA to introduce a temporary channel for seeking exemption for all non-recreational uses of drones before full regulation for drones is implemented. The interim arrangement will remain in force until August 2016 when new rules are implemented.} FAA issued the proposed rules for small drones for non-recreation use for consultation in early 2015 and subsequently released the final rules in June 2016.
• In December 2015 and before the release of the final rules, FAA announced that a mandatory registration and marking system, one of the proposed rules, would be implemented immediately for protection of public interests. The web-based registration system covers all drones regardless of their uses, and is a precondition for all drone operations. FAA believes that the system can (a) promote accountable and responsible use of drones; (b) enable law enforcement agencies to quickly identify drones involved in incidents or accidents; and (c) educate drones owners and operators who are new to aviation activities. The insurance sector also considered the registration and marking system as a "necessary condition" for providing insurance protection for drone operations.
• The key features of the registration system are below:
  
  

  (a)	Registration threshold: Drones weighed over 250 g7Legend symbol denoting A FAA taskforce estimated that the chance of fatality of drones weighed 250 g or less on the ground was one in 20 million flight hours. However, FAA considered that the estimate only served for the purpose of registration and should not been seen as a validation itself. but under 25 kg at takeoff are regarded as small drones. They must be registered via a newly set up online system;
  (b)	Required information: For recreation use, drones owners need to submit their names, address and email address. For non-recreation use, owners need to provide additional information on aircraft manufacturer, model name and serial number;
  (c)	Eligibility for registration: All applicants must be US citizens aged at least 13 or companies based in the US. Foreign drones can only be flown with authorization by FAA;
  (d)	Marking of drones: A successful applicant will receive a Certificate or Aircraft Registration, with a registration number valid for three years. The number must be visibly displayed on the drones;
  (e)	Access to the register database: While the register database is available to FAA and law enforcement agencies, the public can also search the register database by registration number, though no individual name and residential address will be shown; and
  (f)	Fee and penalty: Registration cost for each drone is about US$5 (HK$39). Failure to register or mark the drones could result in a fine up to US$250,000 (HK$1.95 million) or imprisonment up to three years.

• FAA announced the final rules on 21 June 2016. On top of registration, the final rules also require drone operators^{8Legend symbol denoting Under the final rules announced on 21 June 2016, pilots of commercial drones must pass aeronautical tests at centres approved by FAA for the first time and every 24 months, and obtain an operator certificate with a small unmanned aircraft system rating. The pilots should be at least 16-year-old and obliged to report an accident causing serious injury or property damage to FAA within 10 days.} to comply with certain operating rules for aviation and public safety. They include maximum flying altitude and speed, minimum distance from airports, curfew on over-people and night flight, flying drones within the eyesight of operators and operator certification. In addition, the operator also needs to follow existing flying ban imposed in the airspace of Washington DC for security reasons and national parks for animal protection.
• In spite of concerns that some owners or operators of drones may deliberately not come forward for registration, the mandatory registration system seems to be well-received since its launch at end-2015, with over 400 000 drones already registered by March 2016.
• FAA is also considering more flexible and performance-based rules for flying "micro-drones", in accordance with the level of injury risk to persons on the ground. For instance, drones weighed 250 g or less at take-off will not be subject to any additional regulation when they fly over people. Yet drones over 250 g may be subject to extra regulations such as minimum distance above people, or else the manufacturer need to certify that the drone does not exceed certain impact thresholds in failure modes.
• As to the privacy issues, there is no specific Federal law addressing privacy intrusion by drones in the US. While the Privacy Act 1974 governs the collection and use of personal data by Federal agencies, each state or local authority in the US has its own regulation over privacy intrusion by individuals.

Regulatory regime for drones in Singapore

• The safety risks posed by drones are conceived to be greater in Singapore, because of its densely populated urban environment and busy airspace. In June 2015, in order to provide a legal regulatory framework for drones, the Singaporean government introduced the Unmanned Aircraft (Public Safety and Security) Act 2015 and amended the Air Navigation Order. The main features of the framework are as follows:
  
  

  (a)	Permit system: While flying drones for hobby does not need permit under normal circumstances, business usage and drones with weight over 7 kg require two separate permits granted by the Civil Aviation Authority of Singapore ("CAAS"). Firstly, an operator permit is issued to operators meeting safety requirements set by CAAS, with a validity period of one year.9Legend symbol denoting An operator permit is granted if the applicant is able to ensure safe operation of the unmanned aircraft, taking into account the applicants organizational set-up, personnel competency, safety procedures and risk assessments, and the aircraft's airworthiness. Secondly, an activity permit is issued on a case-by-case basis, considering factors such as location, nature of activity, maximum operating altitude, and mitigation measures taken to address site specific circumstances;
  (b)	No-drone zone: Drones are not allowed in some 70 security sensitive areas (e.g. military camps, prisons and power stations) which are clearly marked in a multi-purpose online map accessible to the public. Drones are also banned over special event areas declared by the Ministry of Home Affairs under the Public Order Act;
  (c)	Enforcement power: Under the amended Public Order Act, it is a criminal offence for a drone to interfere with or disrupt the conduct of an activity associated with a special event, whether in or outside the event area. In general, the Commissioner of Police is empowered to end the drone flight or to detain the drone concerned; and
  (d)	Extra permit requirement: For those operations deviating from the established rules, operators need to apply for an extra permit from the aviation authority. These unusual activities include discharging substance from the drones, taking photo of a protected area or special event, and using unapproved radio frequencies.

• The Singaporean government considers that the rules can facilitate safe and responsible operation without compromising innovative uses. Indeed, it still regards itself as a pioneer in the commercial application of drones. In October 2015, the Singapore Post completed a trial delivery of mail by a drone, which was considered to be the first in the world with logistic implications for e-commerce. Public sector agencies are also conducting 25 drone trials for the purposes of including oil spill surveillance, dengue control, and inspection of construction sites.
• On privacy protection, while there is no specific law governing drone use in Singapore, the Protection from Harassment Act 2014 provides a legal basis for investigation of any privacy breach on a case-by-case basis.

Observations

• Public and aviation safety are the primary concerns in regulation of drones in both the US and Singapore. While the US focuses more on traceability of the drone operators and owners through the registration system, Singapore places more emphasis on the permit system, listing of no flight zones and clearly defining its enforcement powers.
• Privacy issues are not directly addressed in the above regulatory framework of both the US and Singapore, as they are not within the policy portfolio of the aviation authorities. Instead, these issues are dealt with under the existing privacy laws in these two places.

Prepared by CHEUNG Chi-fai
Research Office
Information Services Division
Legislative Council Secretariat
21 June 2016
Updated on 23 June 2016