The use of unmanned aircraft vehicles (UAVs or drones) for both commercial and recreational purposes has grown exponentially in recent years and shows no signs of slowing down. Drones can be used for aerial photography, surveying and inspection for various industries, such as entertainment, marketing, agriculture, energy, infrastructure, farming, mining, energy, forestry, photography, defence and security, construction and real estate.

Many drones are more accessible than ever; they are relatively inexpensive, require little or no assembly, and are relatively easy to fly. This makes drones an attractive option for many businesses and industries. However, the dramatic increase in users who lack familiarity with the rules and regulations surrounding the safe operation of and permitted use of drones has led to numerous drone-related incidents. This has caught the attention of Transport Canada.

Transport Canada’s recent proposed amendments to UAV Regulations

On July 15, 2017, Transport Canada revealed proposed amendments to the UAV Regulations with significant changes for operators to address three key issues facing the industry in Canada: public safety concerns, a “lack of regulatory predictability” which impacts the development in the industry, and the administrative burden caused by the ever–increasing volume of special flight operating certificate applications.

The proposed amended regulations represent a paradigm shift in UAV regulation in Canada. In this regard, the key upshot of the amended regulations will be to change the method of regulating from one based on weight and purpose of flight to the potential risk associated with a given operation (determined based on the weight, operating environment and complexity of the operation). Below is a summary of the most notable aspects of the proposed amended regulations, along with the practical impacts to various UAV industry participants.

Notable proposed amendments

One of the most significant changes is the re-conceptualization of the risks associated with UAV operations. In the past, operational requirements were based on whether the UAV was operated for recreational or commercial purposes.

Under the new proposed amendments, the drone’s weight and physical operating environment will dictate the applicable operation requirements. In short: the heavier the drone and the closer to urban areas, the stricter the regulations. There will now be five categories of UAVs:

  • Micro: UAVs weighing 250g or less. The regulations will not change for this class of UAV, which can operate exempt from regulations (though operators must still respect relevant privacy laws and abide by rules of aviation safety).
  • Very Small: UAVs weighing 250g – 1kg. Regardless of whether the Very Small UAV is being operated in a rural area or in a built-up area, requirements to be adhered to include: pilots must be at least 14 years old; the device must be marked with pilot’s name and contact information; the pilot must pass a basic knowledge test and possess liability insurance; and the drone must fly at least: 5.5km from airports, 1.85km from heliports, and 30m from people.
  • Small – limited flight conditions: UAS weighs 1kg – 25kg. Limited flight conditions generally refer to flights conducted in rural settings. Many of the requirements are similar to the Very Small category, except that the pilot must be at least 16 years old and the device must fly at least: 5.5km from airports, 1.85km from heliports, 150m from open-air assemblies of people (such as outdoor concerts), 75m from people, vehicles, and vessels, and 1 km from buildings and houses.
  • Small – complex flight conditions: UAVs weighs 1kg – 25kg. Complex flight conditions generally refer to a populated or developed area of a locality, including a city, town or a village. With the increased risk in flight conditions, some of the operational requirements become stricter. Notably, pilots must:
    • be at least 16 years old;
    • hold a UAV pilot permit, (the testing for which has yet to be formulated or put in place);
    • possess liability insurance;
    • register and mark their UAVs with a unique identification provided by Transport Canada, operate a drone that meets Transport Canada’s design standards, and meet flight rules that are similar to manned aviation; and
    • fly at least: 150m from open-air assemblies of people unless at least 90m high, 30m from people, vehicles, vessels, and 1km from buildings and houses.
  • Large and Beyond Visual Line-of-Sight (BVLOS): UAVs weighing more than 25 kg or operates BVLOS. Any UAS weighing in excess of 25kg, operated BVLOS, or flown in air races, demonstrations, or air shows, or any other operation where the operator cannot comply with all the provisions for their weight category must apply for a special flight operations certificate (SFOC) prior to taking flight.

Changing the method of regulating UAVs to one based on size and risk associated with the type of operation highlights the underlying policy concern of protecting the safety of airspace users and those on the ground. However, it ignores the practical distinction between recreational operators (who are more likely to be casual operators or hobbyists), and commercial operators (who are likely more frequent fliers and highly trained / professional UAV pilots). With Transport Canada’s stated view that the lack of operator knowledge and experience presents the greatest safety concern (and which is why educational campaigns are promised in the months to come), it is hard to see how ignoring this distinction and allowing a potentially inexperienced and casual recreational user (who will, granted, have to comply with the pilot licencing requirements) to conduct complex operations nearer to people and buildings will mitigate Transport Canada’s safety concerns.

Under the current legislation, any drones operated for commercial or research purposes generally require an SFOC from Transport Canada before each operation1. The operation of UAVs weighing less than 35kgs for recreational purposes does not require an SFOC before flight (though certain operational requirements focused on safety must be followed).

Presently, SFOCs are required per flight operations for commercial UAVs over 25kg and recreational UAVs over 35kg; pilots conducting these types of operations do not qualify for the exemptions. Before any flight, full details of the requirements of the exemptions (which are set out in Transport Canada’s Advisory Circular (AC) 600-004, found here) should be consulted.

Exemptions to the SFOC requirement are available for operators who conduct UAV flights for research of commercial purposes (again, provided certain operational requirements are adhered to by the UAV pilot).

The two classes of exemptions are for i) UAVs weighing 1kg or less and ii) UAVs weighing between 1kg to 25kg. In order to qualify for one of the exemptions, some of the requirements pilots must meet are:

  • to operate the UAV within certain safety conditions;
  • to possess knowledge of certain aeronautical information;
  • to operate the UAV within the line of sight of the pilot and certain distances away from airports, buildings and people;
  • to complete a notification of exemption form; and
  • to maintain a minimum $100,000 liability insurance.

SFOCs have been a significant administrative burden for many commercial drone operators. Not only have commercial operators had to absorb the costs of the SFOC process, Transport Canada has struggled to complete the approval in a timely manner. When a business requires an SFOC, these operational delays and lack of predictability have led to a diminished ability to plan operations and pursue opportunities. The proposed amendments would streamline this process for commercial operators, using UAVs weighing less than 25kg, who will operate on their own schedule so long as their pilots have a valid license.

Under the proposed regulations, SFOCs will still be required for operations involving 1) Large UAVs or BVLOS, 2) UAVs participating in air races or shows and 3) for operations where the operator cannot comply with the restrictions applicable to their weight and operation type category.

The proposed amendments require that all drone pilots must pass an aviation knowledge test, which will vary in content based on the riskiness of the operation and weight of the drone to be utilized. Transport Canada states in the proposed amendments that there will be tests each category of weight and flight condition; the precise knowledge requirements and testing mechanisms are expected to be provided by Transport Canada in the near future.

Under the proposed amendments, operators of Very Small to Large UAVs must have a minimum of $100,000 of liability insurance, which must include public liability. At present, no liability insurance is required for recreational users. Under most homeowner insurance policies, drones are considered to be aircraft and as such are not covered; additional insurance will need to be purchased by operators.

Insurance companies offering, or contemplating offering, UAV insurance will be well-served to keep abreast of the continuing changes to the relations, as each aspect of the changes which are expected to respond to safety concerns vary the likely operational risks.

Transport Canada will bear the primary authority to enforce the new regulations, but will also authorize Canadian law enforcement pursuant to section 4.3 of the Aeronautics Act (such as the Royal Canadian Mounted Police, and potentially provinces, territories and municipalities) to issue administrative monetary penalties for violations of the regulations by UAV users. It is also likely that after the regulations come into force, education programs and enforcement campaigns will be administered by Transport Canada. Presently, fines for breaches of the regulations range from $1,000 - $5,000 for individuals and $5,000 to $25,000 for businesses, depending on the severity of the offence (and are not expected to change with the new regulations).

Practical impacts of the proposed amendments

The proposed amendments impact all participants in the UAV industry: recreational operators, commercial operators and manufacturers.

Overall, the proposed amendments will reduce administrative burdens on UAV operators but costs will be increased for most industry participants due to more rigorous compliance requirements and the UAV insurance industry will become more vibrant.

As part of the Regulatory Impact Analysis Statement, which introduced the proposed amendments, Transport Canada estimated costs to participants in the industry as part of its assessment of the overall suitability of the proposed regulations, as follows:

  • Very Small UAVs (between 250g and 1kg) for all pilots conducting limited operations: $50 initially, and $15 annually for insurance;
  • Small UAVs (between 1kg and 25kg) for all pilots conducting limited operations: $50 initially, and $15 annually for insurance;
  • Small UAVs (between 1kg and 25kg) for recreational pilots conducting complex operations: $195 initially, and $15 annually for insurance;
  • Small UAVs (between 1kg and 2kg) for businesses conducting complex operations: $256 initially (if the business is already SFOC complaint, and $848 if it is not);
  • For manufacturers seeking to create products compliant with Transport Canada’s specifications: approximately $1,067.

i) Recreational operators

The proposed amendments raise the barrier to entry for Canadians seeking to use smaller drones by instituting minimum age requirements based on the weight of the UAV being operated, requiring a pilot knowledge test be completed and that a pilot to hold insurance. The limited exception to these requirements is for pilots flying UAVs under 250g. On the positive side, recreational users will have more flexibility in where they fly their drones, as they can now be closer to buildings and people with very small drones.

Commercial pilots who operate very small drones (weighing between 250g and 1kg) can expect to enjoy a reprieve from the administrative burden of the SFOC process, and can take the skies legally upon completion of the necessary pilot licencing requirements and obtaining insurance. A lessening of the required paperwork and approvals, and a more streamlined process to conduct a flight will allow businesses (big and small) to conduct operations with Very Small UAVs with less overall planning and scheduling. Further, by reducing the delay and uncertainty currently associated with the SFOC approval process, businesses can start and plan their work faster and legally.

Commercial pilots operating Small UAVs (weight category of 1kg to 25 kg) will have a tougher time under the new regulations. If the commercial operations require flying near any buildings then additional operational requirements are triggered, including the necessity of operating UAVs which are compliant with Transport Canada’s specifications. Few UAVs currently available on the market have made Transport Canada’s approved list (which can be found here). For commercial operators (for example, operators flying any of the increasingly popular UAVs manufactured by DJI), may force them to invest in new, Transport Canada approved hardware. Small companies using Small UAVs will find this requirement to be yet another obstacle.

For manufacturers, the proposed amendments are unclear and ill-defined on the required certification and design standards to be imposed when manufacturing drones for commercial uses.

Manufacturers will need to continue to ensure compliance with the industry standards and the regulations in order to support their businesses (a requirement which exists in any event of the proposed regulations). The proposed regulations will require manufacturers to, among other things, prepare a compliance matrix that demonstrates the industry standards and that the manufacturer meets those standards.

The regulation of UAVs in Canada is still evolving as Transport Canada attempts to strike a balance between innovation and safety. The proposed changes are open to the public to comment on and provide feedback until October 13, 2017. If you are interested in learning more about how the regulations will impact your business or acquisition and financing drones, please contact a member of our Aviation team.