NERA Economist Conducts Economic Evaluation Regarding Remote Identification of Unmanned Aircraft Systems

The Situation

The Federal Aviation Administration (FAA) provided Notice of Proposed Rulemaking (NPRM) with respect to its proposed Remote Identification of Unmanned Aircraft Systems (UAS) (Remote ID Proposal or Proposal). The NPRM must be in compliance with Executive Order 13563 (2011), which, among other things, requires the FAA to propose or adopt a regulation only after a reasoned determination that its benefits justify the costs; tailor its regulations to impose the least burden on society; and, in choosing among alternative regulatory approaches, select those approaches that maximize net benefits.

NERA's Role

DJI Technology Inc. retained a NERA team led by Managing Director Dr. Christian Dippon to conduct an economic evaluation of the FAA’s proposal and benchmark findings relative to the standard that reportedly applies to the FAA. Specifically, DJI requested an independent assessment of the FAA’s statement that “over a 10-year period of analysis this proposed rule would result in net present value costs of about $582 million” and that it “will result in several important benefits and enhancements to support the safe integration of expanded UAS operations in the airspace of the United States.” 

The Result

Based on the analyses provided in an expert report, the FAA significantly understated the societal burdens of its proposed Remote ID rule and failed to adequately demonstrate the material societal benefits. The costs of the Remote ID Proposal range from $4.4 billion to $5.6 billion, which is more than nine times the $582 million estimated by the FAA.

The FAA should revise its Remote ID Proposal by making standard drone usage subject to either an Internet or broadcast requirement. With this revision, UAS users have the choice of sending their remote ID elements via the Internet to a remote ID USS or broadcasting the same information over the local airwaves. This adjustment is Pareto optimal because it minimizes societal costs and does not materially affect the Remote ID Proposal’s measurable benefits.