While Federal Aviation Administration (FAA) rules may be top of mind for Unmanned Aircraft Systems (UAS or drones) users and manufacturers, if you’re launching a drone business the chances are your drones are going to be communicating by radio. That is why it is also critically important to pay attention to the Federal Communications Commission’s (FCC) authority to regulate issues impacting radio waves and UAS. Here are five things that every drone manufacturer should know about the FCC.
1. Understand FAA vs. FCC Certification
As part of the FAA’s mandate to ensure the safety of the National Airspace System, the FAA plays a leading role in regulating how aircraft, including UAS, are built and operated. For example, Part 107 of the FAA rules regulates the operation of drones that weigh less than 55 pounds. Manufacturers can also avail themselves of the FAA’s type certification, which is an approval process for the design of the aircraft and all component parts.
Drone manufacturers would be remiss, however, to overlook the FCC’s equipment authorization process in their early planning. The FCC’s equipment authorization process is intended to ensure that radiofrequency (RF) devices operate in a manner that minimizes the risk of harmful interference to radio services. The FCC’s equipment authorization process involves scrutiny of, among other things, radiofrequency emissions and absorption limits.
Many drones have transmitters that the FCC classifies as “intentional radiators,” meaning the transmitters intentionally generate and emit radiofrequency energy. These transmitters can emit radiofrequency energy both from the command and control of the drone and also from the video feed that is transmitted back to the user. Because these transmitters are classified as intentional radiators, a drone manufacturer must complete the FCC’s rigorous certification process before offering them for sale with drones. Certification is obtained from an FCC-approved Telecommunications Certification Body that evaluates relevant documentation and test data for the equipment.
2. Limitations on Marketing RF Devices—Including Drones—Prior to Equipment Authorization
The FCC generally prohibits the marketing of RF devices unless the device has been properly certified, identified, and labeled. The FCC defines “marketing” broadly to include the “sale or lease, or offering for sale or lease, including advertising for sale or lease, or importation, shipment or distribution for the purpose of selling or leasing or offering for sale or lease.” 47 C.F.R. § 2.803(a). As a result, a drone manufacturer is generally prohibited from selling, leasing, advertising, importing, shipping, or distributing drones prior to obtaining the applicable FCC approvals. The restriction on marketing means that you should think about FCC equipment authorization before you create a sizzle reel of incredible first-person shots and post it on YouTube.
FCC rules provide certain exceptions from these marketing prohibitions. Included in these exceptions are conditional sales between manufacturers and wholesalers or retailers. This exception includes agreements to produce new devices manufactured in accordance with designated specifications. For this exception to apply, delivery of the devices must be contingent upon the manufacturer’s compliance with the certification process discussed above as well as certain technical requirements. Last December the FCC proposed a rule that would expand this exception to include conditional sales of RF devices to consumers prior to equipment authorization, but the FCC has not yet adopted this proposal.
Another exception permits the sale of RF devices to business, commercial, industrial, scientific or medical entities so long as the devices are still in the conceptual, developmental, design, or pre-production stage. Under this exception the manufacturer must advise the buyer in writing that the equipment must be certified and comply with technical requirements prior to delivery.
3. FCC Rules Permit Experimentation and Testing of Drones Prior to Equipment Authorization
FCC rules generally permit the operation of an RF device for experimentation and testing purposes prior to equipment authorization if the device is designed to operate solely under Part 15, Part 18, or Part 95 of the FCC rules. These rules are of particular importance to drone manufacturers because many drones operate under Part 15, which authorizes RF device operation without a radio station license. These devices can be operated prior to equipment authorization for “[e]valuation of performance and determination of customer acceptability, during developmental, design, or pre-production states” so long as they are “either rendered inoperable or retrieved at the conclusion of such operation.” 47 C.F.R. § 2.805(d). These devices can also be operated for demonstrations at a trade show or exhibition. FCC rules include a labeling requirement for devices operating outside of the manufacturer’s facilities prior to equipment authorization.
4. Considerations for Selling Drones to the Federal Government—and the Difference Between Selling to the Feds and Selling to State and Local Governments.
Drone manufactures should also think through the differences in the laws for selling devices to the general public versus the federal government. FCC restrictions on the marketing of RF devices prior to equipment authorization do not apply to manufacturers that are selling RF devices to the federal government. As a result, drone manufacturers are permitted to sell drones to the federal government prior to equipment authorization. This exception, however, does not apply to sales to state and local governments. A drone manufacturer that sells a drone to the Department of Homeland Security, for example, is not permitted to sell a drone to a local police department unless the manufacturer has completed the FCC’s equipment authorization process.
Drone manufacturers should be aware of increased federal scrutiny of the procurement of devices produced by Chinese companies. For example, there was a proposal for the most recent National Defense Authorization Act that would have prohibited the Department of Defense from operating or acquiring commercial off-the-shelf UAS manufactured or assembled by certain entities viewed to pose national security risks, such as entities “subject to influence or control” by the People’s Republic of China. While this proposal was not adopted, this issue will likely arise again. Manufacturers should remain cognizant of these evolving concerns about foreign-made UAS and components.
5. Drone Manufacturers are Subject to Substantial Fines for Violating FCC Equipment Authorization and Marketing Rules
Failure to comply with FCC equipment authorization and marketing rules can result in significant monetary penalties. In the most significant example to date, in 2020 the FCC issued a $2.8M fine against the retail site HobbyKing for advertising and selling 65 different models of audio/video transmitters for use with drones without seeking equipment authorization. The FCC determined that the devices at issue were capable of operating outside of amateur bands and were thus subject to the equipment authorization rules. The FCC also determined that three of the models that HobbyKing marketed exceeded FCC limits on power levels and could have interfered with FAA terminal doppler weather radar. The HobbyKing proceeding came on the heels of the FCC’s 2017 consent decree with the drone manufacturer Lumenier Holdco for its failure to comply with FCC equipment authorization and marketing rules. The consent decree required Lumenier Holdco to pay a $180,000 penalty.
During the course of the HobbyKing enforcement proceeding the FCC issued an Enforcement Advisory warning that drone video transmitters are radio transmitters that must comply with the FCC’s equipment authorization rules in order to be marketed. The Advisory made clear that penalties for violations of these rules can be substantial, and these penalties have increased since the Advisory was issued. Currently, FCC rules provide for up to $20,731 per day for marketing violations and up to $155,485 for an ongoing violation. It is clear that the FCC is looking closely at UAS and that a drone manufacturer can face significant legal exposure for failing to comply with FCC rules. It is also a useful reminder that manufacturers need to think about spectrum both for command and control and for any “payload” transmitters that the drone may use to send images or other data back to the operator.
These examples illustrate that the FCC—and not just the FAA—plays a significant role in regulating UAS and components arising out of its responsibility to manage the airwaves and authorize RF equipment.