Last week, an administrative law judge invalidated a fine against Raphael Pirker by the Federal Aviation Administration for using a small drone for a commercial purpose. I discuss the basis for the decision–in short, that the FAA implied that the type of craft Pirker was using was subject only to non-binding guidance–over at Forbes. In that post and elsewhere, I cautioned drone start ups and others to wait and see what the FAA does in response to the ruling before rushing ahead with their idea for a drone-based business. Today the FAA announced it was, in fact, appealing the decision.
How the appeal fares may depend on the way the appeals court characterizes the decision. In issuing rules, the FAA has to follow the strictures of the Administrative Procedure Act, including issuing notice and soliciting comment. The judge at one point refers to a defect in the FAA’s public notice concerning “unmanned aerial systems.” According to the judge, “Notice 07-01 does not … meet the criteria for valid legislative rulemaking,” due to defects in title (not called an “Notice of Proposed Rulemaking” or “NPRM”) and timing (not issued 30 days in advance). My understanding is that courts review procedural defects de novo under the APA. Now, if an appellate court upholds the administrative judge’s decision on this basis, then the FAA loses authority to regulate drones in general, but only until they follow the proper procedure to create valid rules.
If the basis is that the FAA misinterpreted its own rules, however–i.e., the agency was wrong to sweep the drone Pirker was operating into its definition of “aircraft”–then arguably Seminole Rock / Auer deference applies. Auer has faced its share of criticism, as my colleague Kathryn Watts explores in a forthcoming article in Georgetown Law Journal. But it remains the law of the land, and requires courts to uphold agency interpretations unless they are “plainly erroneous” or else inconsistent. I don’t see the FAA’s decision to include unmanned aircraft systems as aircraft as plainly erroneous. Otherwise, you could simply replace the pilot of a cargo plane with a robot and suddenly the plane falls outside the authority of the FAA. But the FAA’s decision could be inconsistent: As the administrative judge notes, official FAA communications repeatedly treat some categories of “model aircraft” or “modelers” separately than other UAS.
The basis of the invalidation of the fine could be a procedural defect, an inconsistent interpretation, or both. The ruling is not entirely clear. We will have to wait and see how the court reacts to the FAA’s appeal. And even if the court upholds the judgment, we should probably expect a drone NPRM from the FAA to follow. Those of you with deeper training in administrative law should feel free to jump in.
CLARIFICATION (March 13, 2014): Peter Sachs of Drone Law Journal points out that the first layer of appeal here is to a five-member panel of administrative judges. They could in theory clarify the basis of the decision (or overrule it) before the case heads to an Article III court. Thanks, Peter!