Be Proactive About Crafting a Company Drone Policy

Since the Federal Aviation Administration (FAA) published its commercial drone regulations in late 2016, it has become clear that they serve only as a starting point to understanding the technical limitations of drone usage. The guidelines do not account for the myriad of issues related to establishing a drone policy tailored to construction projects. 

Contractors that are passive about implementing a company drone policy likely will make rushed and uneducated decisions when a subcontractor, project owner or design professional insists on the use of a drone at a project site. In contrast, companies that are proactive in implementing a carefully crafted drone policy will be in the best position to appropriately manage their risks.

Interplay Between FAA and OSHA Regulations 
Contractors must consider how the FAA’s regulations will relate to the other laws and regulations that already govern construction projects, such as the Occupational Safety and Health Act of 1970. Construction firms should plan to operate drones in an OSHA-compliant environment while awaiting more specific guidance (anticipated soon from OSHA).

As an illustration, the FAA regulations prohibit drone flight directly above any person who is not operating the aircraft. When a contractor decides to use a drone to perform an inspection on a construction site, the contractor will need to ensure there are no personnel flyovers. This regulation will likely dovetail with OSHA requirements related to barricades for the protection of employees. A construction company may need to provide barricades, erect signage and use sufficient spotters to effectively block any space below or near the path of the drone flight. In addition, the safety supervisor should ensure that warning and danger signs are posted in the OSHA-required shapes and colors, and posted for the duration of the dangerous condition. 

Invasion of Privacy and Preemption of State Laws
Prior to the development of drones, minimal attention was given to the permissible use of photographs or videos on project sites outside of project owner requirements related to photos, such as camera permits on industrial projects or “no pictures” or “no publicity” clauses in other contracts. But given the mobility of drones, contractors now must consider several questions: 
  • Will a contractor risk liability if a subcontractor permitted to use a drone on the project site committed an invasion of privacy? 
  • Does the contract’s indemnity clause require the subcontractor to provide a defense to the contractor against such claims? 
  • Is a disclaimer of liability permissible under the jurisdiction’s law?   
Approximately 30 states implemented drone laws between 2013 and 2015, prior to the FAA releasing its 2016 regulations. Due to the fact that many of the state drone laws deal with privacy issues, and the FAA appears to regulate drone operation, companies must consider whether the FAA regulations preempt the state laws or if the new federal regulations will only preempt provisions dealing with drone operation and not privacy.

Insurance
General liability policies ordinarily provide coverage for bodily injury, property damage, and for personal and advertising injury. Such policies exclude any liability arising out of the use of aircraft, for which a separate policy is available. Of significance, insurance companies decided not to include drones within the definition of “aircraft.” Instead, insurers issue endorsements relating to “unmanned aircraft.” The first set of endorsements exclude any liability arising out of unmanned aircraft. The second set of endorsements permit coverage for unmanned aircraft, but limit the coverage to scheduled unmanned aircraft and to scheduled uses of that equipment.  

Given the new endorsements, contractors must consider whether their current insurance portfolio covers their intended use of drones. Further, if the contractor contemplates the use of drones, it is imperative that the insured obtains the proper endorsements to its policy, and that the use of drones is restricted to the types and uses set forth in the endorsement providing drone coverage.

Documentation
The FAA regulations require drone operators to be properly certified, as well as limit when, where and how drones are used. In the event of an accident that injures a third party or creates property damage, the contractor’s attorney will want as much support as possible to establish that the contractor used the drone in accordance with any applicable laws. Accordingly, the contractor should consider logging the flight plan, the certification of the drone operator, the identity of any spotters, the purpose or task of each drone flight and the steps taken to ensure the contractor complied with the FAA requirements. 

Consider logging this same information for a subcontractor’s drone usage so that the contractor can demonstrate that its subcontractors also complied with the law, or that it didn’t sanction any deviations from the law. In addition, the subcontract agreement should bind the subcontractor to compliance with the contractor’s drone program.

Intellectual Property Rights and Evidence Concerns
Any drone video recordings or pictures may constitute intellectual property. It is common for contractors to be unconcerned with an owner’s attempts to keep or obtain all of the rights to the intellectual property on a project. This mode of thinking stems from the idea that intellectual property is limited to project drawings and designs. Contractors should consider a different approach when the subject matter in dispute is its own drone recordings.

Contractors should consult an attorney familiar with this area of law to best determine their obligation to keep or destroy copies of drone video recordings. In some cases, evidence laws may require the contractor to retain and eventually turn over recordings to an opposing party if the drone footage contains potential evidence in a dispute. When there are no concerns about disputes or potential litigation, a different set of rules may apply. The contractor needs to be aware of its obligations in this regard to avoid any unintended negative repercussions from destroying evidence in a civil matter.

Construction firms should expect the drone compliance topic to develop rapidly, as other agencies may provide supplementary rules to address the impact of unmanned aircraft on the areas they regulate. It is important for contractors and their attorneys to stay up to speed on current developments to ensure that they are managing their risks effectively. 


Brian R. Gaudet is a director in the construction and surety and litigation sections at Coats Rose, P.C., Houston. David S. Lynch is a director and Courtney M. Lynch is a clerk. For more information, visit coatsrose.com.