Amazon Drone Delivery – 3 Major Legal Problems with Amazon Prime Air


I’m going to briefly discuss some of the background to this drone delivery buzz, why privacy won’t be an issue to drone delivery, what really is going on, and then dive into the three major legal problems with Amazon Prime Air becoming a reality for Americans.

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Brief Background on the Drone Delivery Craze

 

Drone delivery has been all over the news with Amazon being the first to announce the projected use of drones to make deliveries. Others have followed the trend and announced deliveries such as the drone burrito delivery, the drone pizza delivery, etc.

 
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In 2015, Dave Vos, the former head of Google’s Project Wing, said to an audience, “Our goal is to have commercial business up and running in 2017[.]”  Fedex, UPS, DHL, Walmart, and everyone including your grandma’s dog has announced they are interested in drone delivery. Then, as if we hadn’t enough drone delivery buzz, Amazon published on December 14, 2016 a video showing their first customer delivery using a drone.

 

amazon-prime-air-drone-deliveryDrone delivery is really a small portion of the drone market, but thanks to Amazon, it is the “face” of the commercial drone industry. This has gone a long way to clean up a lot of the public stigma about the drone industry. On the topic of drones, people tend to think of Amazon delivery, not predator drones. Kudos to you Amazon for changing that.

 

The idea of drone deliveries in general is not only just delivering potato chips but also for more legitimate humanitarian purposes. A great example of this is the company Matternet, which partnered with UNICEF to do drone delivery in Malawi with the end goal of developing low-cost delivery of blood samples from children to be tested so medical drugs can be given to them when needed and in time. Drones – they can save money, time, and lives.

 

 

………and it isn’t because of one of the most frequently raised issues – privacy.

 

Privacy –Frequently Raised, but not a Legal Barrier.

I don’t think privacy issues are going to be a problem because of 3 reasons:

 

(1) In the terms of service that no one will read, language will be used to the effect that says it’s cool with the property owner to have the drone descend over their house and drop off the package.

(2) Missy Cummings, a professor of mechanical engineering and director of the Humans and Autonomy Lab at Duke University, provided one potential solution of drone delivery companies and other companies partnering for delivery points. “Perhaps Starbucks could be your intermediary point.”

(3) Amazon’s patent on drone docking stations (attached to light polls or cell towers) won’t have property/privacy issues because that will all be taken care of in a contract agreement with the cell tower and power companies.

But let’s get back to Amazon. Is Amazon drone delivery really going to happen here in the U.S.?

 

Most of the News is of Operations Either Overseas or in Rural Areas

Most of what you have seen in the news is either in other countries or in rural areas of the U.S.

Most of the operations were completed in rural/non-urban areas.

 

Amazon’s latest marketing efforts show a drone delivery to a person who happened to be living next door (~ 765 yards) to Amazon’s Cambridge, England facility. That’s great if you live near a test site –  in another country. The drone deliveries overseas ….really don’t matter to us in the U.S. because we have different laws here.

 

Up until August 29, 2016,  we only had the Section 333 exemption process, the public certificate of waiver or authorization (which is statutorily prohibits commercial operations), or the airworthiness certificate process coupled with a certificate of waiver or authorization – all three are difficult to operate under in reality and only two allow commercial operations. Thankfully, Part 107 went into effect on August 29, 2016 and is far less restrictive than the previous three options. This is why you might have noticed that after August 29th, the drone delivery announcements and the accompanying photos in the U.S. have started to look closer to what we envision a drone delivery should look like.

 

 

Three Major Legal Problems With Amazon Prime Air Becoming a Reality for Americans.

 

Problem 1: FAA’s Part 107 Drone Regulations

These are the newly-created drone regulations that went into effect on August 29th.

 

Part 107 does NOT allow air carrier operations. “‘[A]ir carrier’ means a citizen of the United States undertaking by any means, directly or indirectly, to provide air transportation.”[1] “‘[A]ir transportation’ means foreign air transportation, interstate air transportation, or the transportation of mail by aircraft.”[2]  In other words, Fedex, UPS, DHL, USPS, or anyone crossing state or national borders cannot operate under Part 107. Bummer.

 

So Amazon can get around that by not carrying mail or crossing state or national borders.

 

Here is where things start to get limiting under Part 107 for drone delivery:

  • The drone must be within line of sight of the pilot in command[3] (The farther the drone can fly, the greater the economic impact).
  • A Part 107 remote pilot is needed that must be able to command the aircraft. Fully autonomous drones where a person isn’t in command won’t work.[4]
  • The remote pilot can only operate one drone at a time unless they have a Part 107 waiver.[5] In other words, no swarms, unless you have a waiver. This is an important point. A Flexport article rightly pointed out that costs will be lowered when swarms are implemented. “It’s not a stretch to think that a truck releasing a swarm of 25 delivery drones could be up to 25 times more efficient than a driver making those same drops.”
  • The drones cannot be operated from a moving vehicle to transport another person’s property for compensation or hire.[6] You’ll have to stop the delivery van.
  • The drone cannot be operated over a non-participating person or a moving vehicle.[7] This is going to be hard to figure out because people and cars are constantly moving all over the place in residential areas and cities. If you want to fly at night, say 2 AM, to get around the people problem, you’ll need a Part 107 night waiver. Either way, you’ll need a waiver.
  • The drones cannot be operated in Class B, C, D, or E at the surface airspace without an authorization or waiver.[8]

 

Following up on the last point, where are the customers? Near cities.

 

What is near cities? Airports….everywhere.

 

Let’s just pull some data from Arizona’s Amazon fulfillment distribution centers. Taxjar’s blog listed five address in Arizona (but it really is only four buildings).

  • #PHX3 – 6835 W. Buckeye Rd. Phoenix, AZ, 85043 – Maricopa County
  • #PHX5 – 16920 W. Commerce Dr. Goodyear, AZ, 85338 – Maricopa County
  • #PHX6 – 4750 W. Mohave St. Phoenix, AZ, 85043 – Maricopa County
  • #PHX7 – 800 N. 75th Ave Phoenix, AZ, 85043 – Maricopa County

 

I took these addresses and plugged them into the sectional map (green stars with green arrows) which shows us all the airspace in the Phoenix area. Calm down. I made it easy for you. I used to say to my flight students when I was flight instructing that these maps were like a form of job security. I marked out the areas where the drones cannot fly under Part 107 in red, unless they have an authorization or waiver.

drone-delivery-amazon-fullfilment-center-arizona

Two of the fulfillment centers are in controlled airspace and would require an authorization or waiver to just take off.

 

In short, under Part 107, Amazon has a host of regulatory problems they need to conquer just with the FAA to have cost saving operations, but Part 107 isn’t the only way to make a drone operation legal. There is also the Section 333 exemption process.

 

Problem 2: FAA’s Section 333 Exemption for Commercial Drone Operations

Part 107 doesn’t allow a beyond visual line of sight waiver for carrying other people’s property. However, while Section 333 of the FAA Modernization and Reform Act of 2012 was only line of sight, the FAA Reauthorization of 2016 has a provision which allows the FAA to grant 333’s for beyond visual line of sight operations (BVLOS). This is important because the farther the drone can fly, the greater the potential economic impact.

 

The reason why a drone delivery exemption  won’t be happening anytime soon is (1) there has been no 333 exemption for BVLOS granted to date, and  (2) all the 333 exemptions granted to date require the drone to be flown by a pilot with a sport certificate or higher and the drone must stay at least 500ft away from all non-participating people and property. It is hard to do package delivery in an urban or residential environment when you need to stay 500ft away from everything.

 

A new 333 exemption will need to be created by Amazon if they go this route. This will take some time.

 

Problem 3: States, Counties, Cities, & Towns All Regulating Drones – Death by a Thousand Papercuts

 

I see the people who want drone delivery falling into three categories: (1) those that value immediately possessing the item more than paying a high price, (2) those that don’t have any other choice (there is no next best alternative or the alternative is outside of their purchasing power), or (3) those that value the item now but not more than a high price.

 

A. Those that Value Immediately Possessing the Item More than Paying a High Price (Early Adopters)

 

There are some areas that are not price sensitive such as:

(1) Those that need delicate, limited, expensive, rare types of medicine immediately because the alternative is injury or death.

(2) Critical pieces of an operation. For example, a large piece of machinery broke down and there are many people (that the company is paying) just sitting around waiting for replacement parts. How much is it per hour to have the machinery NOT running?

(3) The rich guy down by the remote lake wants an anniversary gift, that he forgot to buy, for his wife right now. Maybe this should be in the (1) category because it’s kind of life and death.

Drones provide a great solution for the above categories because these people are interested more in  decreased time than decreased costs.

 

B. Those That do not Have any Other Choice (There is no Next Best Alternative or it is Outside of Their Purchasing Power)

In other situations, the drone might be the only feasible solution due to weather, disaster, lack of infrastructure, etc. (Think hurricane relief or Alaska bush pilots flying supplies into remote villages). If you are delivering to remote areas, you look at things differently. Flexport’s article discussing Matternet’s drone operations in Lesotho explained:

As Raptopoulos of Matternet points out, Google and Amazon’s plans ignore drones’ best feature: they can go where there are no roads.

“One billion people in the world today do not have access to all-season roads,” Raptopoulos told a TED audience in 2013. “We cannot get medicine to them reliably, they cannot get critical supplies, and they cannot get their goods to market in order to create a sustainable income.”

For the Matternet team, the most interesting question was not the cost per delivery. They wanted to compare the cost of the drone network to the cost of building the roads Lesotho so badly lacks.”

 

These two above categories are elastic with price, but the third category, will be affected by the states, counties, cities, or towns creating drone law.  The first two categories might be the early adopters, but they will be the small minority of drone deliveries. Most people are near a road where a delivery truck can get to them and they most likely are not in a life or death situation.

 

C. Those That Value the Item Now but not More Than a High Price.

 

Amazon’s business model is that the drones will provide a lower cost of delivery.

 

Darryl Jenkins, who worked on the economic study outlook for the Association of Unmanned Vehicle Systems International, said in his presentation,“Amazon will be able to push the per unit cost of delivery to at least $1.00 per package causing all other competitors to either adopt or die.” This is because of the economies of scale. But here is the problem, with a greater number of drones and drones operating across the U.S., more and more non-federal drone laws will need to be complied with.

 

Most people have four layers of government applying to them. These governments might have created drone laws. For example, where I used to live on Palm Beach Island, I had four layers of drone laws that applied to me: the Federal Aviation Regulations, the State of Florida’s Freedom from Unwarranted Surveillance Act,[9] Palm Beach County’s ordinance prohibiting model airplane flights in county parks, and Palm Beach Island’s drone ordinance.

 

It isn’t super hard to track the 50 states and the federal government, but we don’t know everything going on with all the counties, cities, villages, boroughs, etc.

Also, local governments use all sorts of different terms to describe the same thing, such as unmanned aircraft, drone, model aircraft, etc. (they like to pretend they are the FAA) which further increases the times it takes to search.

 

These unknown areas are going to have to be checked into which means there is a need for a drone regulatory compliance department in Amazon which means $$$$. If the cost of compliance goes up, Amazon’s business model starts to make less and less sense.

 

Another aspect to these non-federal drone laws is that some of these laws are motivated not by the desire to decrease public risk, but to increase revenue. As a greater number of the non-federal regulators start catching on, Amazon and all the other companies interested in drone delivery start looking like revenue generators for local governments. Even if the local governments aren’t greedy, their focus on safety and protecting their citizens generally results in some type of “safety” requirement that needs to be proven before they issue a permit/license which further drives up operating costs for the companies.

 

We all understand the Amazon most likely won’t save any money at first on drone delivery, but the with more and more drone laws getting created, lobbying, compliance, monitoring, insurance, permitting, etc. will all start eating further into the cost savings which means costs savings won’t be realized for years and years down the line. At a certain point, one or two guys operating out of big delivery van starts to look like a good idea again.

 

 

Conclusion:

 

Many have written on this topic because they see the technology taking off. They see the progress in the technology that many have made and assume that drone delivery will be allowed soon. They get the “West Coast” mindset where they think if enough money and technology are thrown at the problem, it will be fixed regardless of the law. Additionally, most writing on or marketing drone delivery do not understand all the legal issues.

 

Aviation is an “East Coast” industry where the laws out of D.C. will heavily influence the business. Aviation is an extremely regulated environment. The faster the companies operating in this area realize that fact, the better off they will be so that they can actually do these types of operations.

 

Amazon still has a long way to go before drone delivery can be experienced in real life by the American public, not just as a short clip on the internet.

 

Interested in learning more about Part 107?

 

[1] 49 U.S.C. § 40102(a)(2)

[2] Id. at (a)(5).

[3] 14 CFR § 107.31.

[4] 14 CFR § 107.19.

[5] 14 CFR § 107.35.

[6] 14 CFR § 107.25.

[7] 14 CFR § 107.39

[8] 14 CFR § 107.41.

[9] F.S.S. § 934.50.

Jonathan Rupprecht

Mr. Rupprecht is an aviation attorney who focuses on drones. Read more about his background as a commercial pilot, flight instructor, Embry-Riddle Aeronautical University grad, and legal author. He has had media appearances on Forbes, Newsweek, Politico, NPR, Marketwatch, The Independent, Motherboard, and other sources. Feel free to send Jonathan a message here.

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