Free Market

The FAA’s Dalliance with Federal Regulatory Waivers

This article was co-authored by Sebastian Anastasi, Tech and Innovation intern for Libertas Institute.

Drone delivery has long been viewed as a clear example of technological innovation that could greatly benefit consumers. By the 2010s, however, the FAA’s regulatory approach to overseeing drones in the airspace had fallen behind. The FAA implemented stop-gap regulations as new issues arose, but these efforts inhibited the roll-out of commercial drone operations. 

Fortunately, in 2016 the FAA began working with commercial drone operations by issuing limited waivers. The waiver program that eventually emerged is the only thing keeping the promise of delivery drones alive, even today. 

The story behind the commercial drone industry’s journey to market is a win for regulatory reform at a federal level. Examples like these offer some insight into the benefit of a federal regulatory sandbox, like the one introduced by Sen. Mike Lee this year. Capitalizing on the lessons learned through the FAA’s partnership with commercial drone operators could help regulators streamline waiver programs for other agencies in the federal government.

The FAA’s Regulatory Waiver Program and its Success

The FAA’s primary drone regulation is Part 107, which sets out a list of requirements and restrictions that drone operators must follow to fly a drone in the US. The list of rules is long, but it includes operating a drone only within the operator’s visual line of sight during the daytime (with limited exception), and the pilot must have a drone pilot certificate from the FAA. 

Unfortunately, Part 107 is written almost exclusively for recreational drone use. It assumes a pilot is operating one drone at a time using manual inputs and the human eye to navigate. Commercial drones, on the other hand, operate in fleets, often using autonomous capabilities to navigate obstacles and follow predefined flight plans.

Because of the mismatch between Part 107 and commercial drone operations, the primary regulation actually inhibits the introduction of value-added benefits like package delivery, reforestation, and other commercial uses.

In response to this clear impediment, the FAA began approving Part 107 waivers for commercial drone operations, which allow them to operate outside the confines of the Part 107 rules so long as they can demonstrate their operations are safe.

The benefits to consumers, as a result, have been numerous. 

Using this waiver, companies like Amazon and Walmart were among the first to test drone delivery in 2015 after applying for an experimental airworthiness certificate. In Florida, UPS and CVS began offering prescription delivery services for residents of a retirement community. Kroger began delivering groceries, baby supplies, and over-the-counter medications in Centerville, Ohio. Zipline partnered with Novant Health in North Carolina to carry medical supplies and personal protective equipment (PPE) to Novant’s Charlotte Medical Center. Wing Aviation, the Alphabet Inc. drone company, partnered with major companies like FedEx and Walgreens, as well as local coffee shops, bakeries, and restaurants.

Consumer response to these experimental commercial drone operations has also been impressive. In 2020, Virginia Tech conducted a survey of Virginia consumers who had used drone delivery services. The results showed an overwhelmingly positive perception of the concept.

How the FAA’s Waiver Program Created Room for a Better Regulatory Solution

One of the other benefits of a waiver program is that it allows regulators to develop better regulatory solutions in partnership with private industry. The FAA’s waiver program, for example, created an opportunity to partner with commercial drone operations to inform the efforts of a joint task force between NASA and the FAA. 

The result of this partnership was a more sustainable and technologically innovative solution called the Unmanned Aircraft Systems Traffic Management (UTM) framework. In essence, UTM would automate air traffic management by tracking airborne drones through remote ID and coordinating flights using a federated architecture of on-the-ground automated traffic controllers. 

The first successful test of UTM was in 2019, but even with a proven solution in hand, forward momentum toward implementation has been slow. In part, the FAA’s rulemaking process is holding up the regulatory change needed to make UTM possible. But the other issue sidelining UTM is the legal challenges to the FAA’s new rules. As a result, Part 107 waivers have been a useful tool to allow commercial drones to continue innovating even in light of regulatory backlog. 

Lessons learned from the FAA’s Part 107 Waiver Program

The primary lesson learned from the FAA’s waiver program is that some regulations can be waived safely to allow industries to grow and innovate. These waivers can also create room for regulators to contemplate appropriate reform, even in some of the most nuanced industries. 

Moving forward, streamlining the FAA’s Part 107 waiver program and replicating the process for a federal regulatory sandbox could be a step in the right direction for innovation and regulatory reform.