Drone Wars: Municipal Regulation Awaken

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The Federal Aviation Administration (FAA) predicts that by 2020, 30,000 drones, or small unmanned aircraft (sUAS), could be occupying U.S. airspace at any given moment. In response to privacy concerns related to this increase in drone use, numerous state and local governments have enacted legislation to regulate drone use. But, can municipalities regulate drones in a manner consistent with federal law?

Federal Preemption

Under the U.S. Constitution, federal laws are the “supreme law of the land,” and the federal government has exclusive sovereignty of U.S. airspace. Additionally, the FAA Modernization and Reform Act of 2012 required the FAA to adopt regulations for the use of drones by September 2015. Finally, in December, FAA regulations require hobbyists to register their drones no later than February 19, 2016. We discuss these requirements here.

Many courts have held that state and local regulation of traditional aircraft in the areas of safety and operations are preempted. Yet, neither the FAA nor the courts have addressed whether state and local laws regarding drones are preempted.

Further, drones often operate in nonnavigable airspace (airspace below 1,000 feet). Some legal scholars argue that the FAA’s authority over navigable airspace may not allow federal law to preempt state and local drone regulations within nonnavigable airspace.

State and Local Regulation of Drones

In response to the lack of a clear federal regulatory scheme, state and local governments throughout the United States have enacted legislation regulating drone use. Wisconsin has followed suit. Under Wis. Stat. § 942.10, “[w]hoever uses a drone… with the intent to photograph, record, or otherwise observe another individual in a place or location where the individual has a reasonable expectation of privacy is guilty of Class A misdemeanor.” Law enforcement officers may use a drone to gather evidence or other information in a criminal investigation from or at a place or location where an individual has a reasonable expectation of privacy if a search warrant is obtained. Also, the City of Green Bay recently passed an ordinance banning drones from operating at special events.

On December 17, 2015, the Chief Counsel of the FAA released a fact sheet on state and local regulation of drones. The FAA advises local municipalities to consult with the FAA before enacting regulations that restrict drone flight altitude, flight paths; ban operation; regulate any navigable airspace; or mandate equipment or training for drone related to aviation safety.

The FAA advises that laws traditionally related to the local police power, such as land use, zoning, privacy, trespass, and law enforcement operations, are not generally subject to federal regulation. The FAA specifically states that local governments may restrict citizens from using drones for voyeurism.  Further, the Seventh Circuit in Hoagland v. Town of Clear Lake, Indiana upheld a town’s zoning ordinance regulating aircraft landing strips, pads, and spaces. Thus, municipalities may regulate drones to protect its citizens’ privacy and may enact zoning ordinances to regulate drones, such as where drones be launched or landed.

Unfortunately, courts or future FAA regulations may be our only hope for clarity on local regulation. We will update this blog with any further developments on drone regulation. If you have questions about municipal drone regulation, please contact any of Stafford Rosenbaum’s Government Law team members.

This publication does not constitute legal advice, and the reader should consult legal counsel to determine how this information applies to any specific situation.

Attorney Holly Wilson assisted with this article. 

Preemption principles applied to dismiss Wisconsin Fair Dealership Law claim

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          In a recent decision of the U.S. District Court for the Eastern District of Wisconsin, the court held that an arbitration panel’s finding that federal securities laws preempt the application of the Wisconsin Fair Dealership Law (WFDL) could be made by the panel “without [panel members] taking leave of their senses.”  The ruling provides an example of another potential avenue for grantors to challenge the application of WFDL when federal law supports termination of the parties’ relationship.

          The petitioner, Renard, was an independent financial advisor who had entered a franchise agreement with Ameriprise Financial Services, Inc. (“Ameriprise”).  Ameriprise alleged that it terminated its agreement with Renard in June, 2011, shortly after determining that Renard had engaged in practices that violated federal securities laws.  Ameriprise then sought to collect the unpaid balance on promissory notes due from Renard; when payment was not forthcoming, Ameriprise filed for arbitration with Financial Industry Regulatory Authority (“FINRA”) Dispute Resolution.  The arbitration panel found Renard liable for damages of approximately $450,000, and dismissed his claims that Ameriprise violated the WFDL by failing to provide notice and an opportunity to cure as required by the WFDL.

          Renard filed suit seeking to vacate the panel’s award, to the extent that it dismissed petitioner’s counterclaims in the arbitration. The scope of the court’s review of the panel’s award, however, was limited.  Under both federal and state law, an arbitration award can be vacated only in specified, limited circumstances. Among the arguments made by Renard was that the arbitrators exceeded their powers by disregarding Wisconsin law in dismissing petitioner’s WFDL claims.

         Ameriprise responded that it had the right to immediately terminate Renard based on his alleged violations of federal securities laws, because federal law preempts any notice requirements of the WFDL and Ameriprise could be liable for Renard’s violations of  federal securities laws.  Renard’s expert testified that Ameriprise was required to comply with WFDL notice requirements “unless … doing so would be in violation of federal statute.”  The court found that based on the evidence and arguments presented, the arbitrators could have agreed with Ameriprise’s interpretation of the WFDL, and thus did not exceed their authority in dismissing the WFDL claims.

(Paul J. Renard v. Ameriprise Financial Services, Case No. 13-CV-555-JPS (E.D. Wis., 3/6/14).)