The rise of Unmanned Aerial Vehicles (“UAV”), also known as drones, is well-documented. In fact, the global market for non-military drones has recently been estimated as a $2.5 billion industry that is growing at approximately 15 to 20 percent annually. See Clay Dillow, Get Ready for ‘Drone Nation,’ Fortune, Oct. 27, 2014. Companies large and small are heavily investing in drone technology and generating business capabilities based on their potential.
While some of the most highly publicized forays into drone usage include Fortune 500 shipping companies – such as Amazon investigating the potential use of drones for their delivery service – less publicized industries are ripe for drone operation. These industries include agriculture, construction, energy, and mining. Id. All of which are industries in which it is easy to imagine the benefits of aerial data.
In fact, the Association for Unmanned Vehicle Systems International predicts that eventually 80 percent of the commercial drone market will relate to agriculture. See Christopher Doering, Growing Use of Drones Poised to Transform Agriculture, USA Today, Mar. 23, 2014. This is because a drone’s ability to assist farmers in identifying and analyzing insect problems, watering issues, crop yield, missing cattle, and fertilizing make for a natural union with the industry.
While some farmers may purchase and operate their own drones, it is expected that specialized companies will fill this demand. One such company is goFarm LLC (“goFarm”), a Michigan-based agri-data business – one of the few companies authorized by the Federal Aviation Administration to legally operate commercial drones in this arena. GoFarm performs field surveys by drones operating at low altitudes that collect imagery in visible and non-visible bands to determine health of crops. By analyzing hundreds or thousands of images, goFarm performs detailed assessments of the condition of entire fields and individual plants.
Whether such data is collected by end-user farmers or by specialized third-party companies such as goFarm, all individuals and companies involved need to be cognizant that with great opportunity also comes risk.
Beyond, the obvious risks of property damage that could result from wayward drones, many jurisdictions have, or are in the process of, passing legislation aimed at addressing privacy concerns. The most recent example of such legislation comes out of Florida. On May 14, 2015, Florida Governor Rick Scott signed a drone privacy bill into law. This bill establishes a private right of action for people photographed in their homes by drones without their consent. Some speculate that this legislation will trigger a wave of litigation. See Carolina Bolado, New Fla. Drone Privacy Law Could Trigger Litigation Wave, Law360, May 15, 2015.
Legislation similar to that passed in Florida creates substantial risk to drone based companies, even those operating in rural locations typically associated with industries such as agriculture and mining. GoFarm’s Chief Technology Officer, Eric Silberg, explains that “when conducting their assessments, in order to ensure adequate coverage, inevitably pictures are taken of the areas directly surrounding the field goFarm operators are contracted to assess. These pictures may include property that does not belong to goFarm’s customer, even if the drone never flies over land not belonging to the customer. This extraneous data is removed during the analysis process, and is not available in any product.” While companies utilizing drones for photographic purposes will need to alter their operations to comply with any local rules and regulations, inadvertent photographs could result in litigation exposure.
In order to protect themselves from privacy related claims, as well as other liability exposures, companies utilizing drones need to assess their insurance portfolios to ensure adequate coverage. In particular, companies need to analyze the breadth of their liability policies, including the language of any potentially applicable exclusion contained therein – such as exclusions associated with aviation risk. This analysis should be conducted with the help of an experienced insurance broker and/or insurance coverage counsel.
In the event that the company’s liability policies are deemed not broad enough to cover its contemplated operations, the company should investigate purchasing UAV coverage. Given the relative infancy of the drone market, insurance companies are developing and releasing new products associated with drone activity at a breakneck speed. Consequently, coverages and pricing will likely vary across carriers. Risk managers should speak with their insurance experts to ensure that an appropriate and cost-effective insurance solution is identified and implemented.
USCIS has announced that it will suspend premium processing for all H-1B extension petitions between May 26, 2015, and July 27, 2015. It will use this time to implement the Employment Authorization for Certain H-4 Spouses and ensure that these applications for work authorization will be adjudicated in a timely manner.
Premium processing allows certain petitions and applications to be expedited. A decision or Request for Evidence (“RFE”) must be issued within 15 calendar days of filing the premium processing request. For this service, USCIS requires a $1,225 filing fee to be included with the petition.
USCIS will continue to process cases filed using premium processing prior to May 26, 2015. If an H-1B extension is filed under premium processing before May 26, 2015, but a decision is not issued within the 15-day period, USCIS will refund the premium processing fee. All other petitions are still eligible for premium processing.
Currently, FDA regulates cosmetics to ensure they are not adulterated or misbranded, but does not have the authority to order cosmetic recalls or require adverse event reporting. Senators Dianne Feinstein (D-CA) and Susan Collins (R-ME) seek to change that.
On April 20, 2015, they introduced the Personal Care Products Safety Act (S.1014). The Act, if passed, would modify Chapter VI of the Federal Food, Drug, and Cosmetic Act (FDCA) to strengthen FDA’s oversight of, and regulatory authority over, cosmetic products.
Title I of the Act (“Cosmetic Safety”) gives FDA authority to order cosmetic recalls, as well as require manufacturers to:
Report adverse events,
Label ingredients not appropriate for children,
Post complete label information (including ingredients and product warnings) online, and
Register their facilities with FDA.
In addition to this significant new authority over manufacturers, the Act also requires FDA to work with industry and consumer groups to annually select and review at least 5 ingredients or non-functional constituents.
The first 5 ingredients, if the law is passed, will be:
Title II of the Act (“Fees Related to Cosmetic Safety”) outlines the costs associated with enforcement of the new standards. With an annual implementation cost estimated at $20.6 million, it is to be funded by annual fees from all registered owners or operators of cosmetic facilities engaged in manufacturing or processing in the United States.
The Act has wide industry support, including the Personal Care Products Council (a 600+ member company trade association), large cosmetics manufacturers, and consumer groups. Since it was introduced, it has gained two co-sponsors, Senators Barbara Boxer (D-CA) and Amy Klobuchar (D-MN).
The Act is consistent with FDA’s current priorities related to cosmetics. Two of these priorities have been reporting of adverse events (with the majority of issues seen in hair care products), and maintaining a distinct line between over-the-counter drugs and cosmetics, because cosmetics need not currently undergo the additional scrutiny that OTC drugs must.
More information on the Personal Care Products Safety Act can be found in Senator Feinstein’s statement upon its introduction.
On April 1, the president signed Executive Order 13694, which created a new sanctions regime for fighting cyberattacks. This creates opportunities for companies that are facing or may face cyberattacks. The Executive Order provides additional tools for victims of cyberattacks to punish the perpetrators by working with the government. The Executive Order creates framework to allow the government to take action in response to attacks on private companies and take all measures necessary to punish co-conspirators. The Executive Order also creates several issues that individuals and companies with international dealings should consider taking into consideration to avoid potential liability.
The Executive Order grants the Secretary of the Treasury authority to “block” the assets of anyone who conducts or aids “cyber-enabled activities . . . reasonably likely to result in, or have materially contributed to, a significant threat to the national security, foreign policy, or economic health or financial stability of the United States . . . .” The Executive Order also grants the power to sanction any individual or entity that gives support to, assists in anyway, or sponsors such a cyber-attacker. The U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) will work in coordination with other U.S. government agencies to identify individuals and entities that engage in prohibited cyber activities and designate them for sanctions. Persons designated under this Executive Order will be added to OFAC’s list of Specially Designated Nationals and Blocked Persons (SDN List). U.S. persons are prohibited from engaging in most all transactions with designated individuals and entities named on the SDN List or entities owned by such designated persons. Additionally, designated persons sanctioned under the Executive Order will be blocked from entering the United States.
Given the growing nature of cyberattacks and the Executive Order’s potentially broad reach, individuals and companies with international business should consider taking steps to ensure their business partners do not meet the criteria of cyberattackers. For example, payments from persons designated as cyberattackers will be blocked by U.S. financial institutions and U.S. persons that engage in transactions with such persons could be subject to substantial penalties. Accordingly, U.S. businesses engaged in international transactions should consider updating their compliance programs and screening procedures to ensure they are not dealing with any persons designated on the SDN List, or that are owned 50 percent or more by such designated persons.
The Executive Order represents a turning point for the administration. It signals that the administration will take a more active role in fighting attacks that are often diffuse and difficult to investigate. Barnes & Thornburg has worked with the government to track down hackers who have levied corporate cyberattacks. In light of the Executive Order, there can be little doubt that the government will redouble its efforts to help victim companies, presenting opportunities for companies to work with the government in its efforts to track down and stop the perpetrators. This is good news for fighting cyberattacks.