Stakes Are High for Domestic Drone Industry

Matt Grosack, Daily Business Review

This is a very exciting time for the small but ever growing fraternity of “drone lawyers.”

With the recent proliferation of advanced and inexpensive unmanned aerial systems—UAS, better known as drones—federal and state regulators such as the Federal Aviation Administration are scrambling to keep up with a rapidly innovating industry.

The previous two months alone have been a whirlwind in commercial drone law with new legal developments on an almost weekly basis.

However, even with domestic developments coming at a feverish pace, the U.S. drone industry may suffer from competition overseas as Canada, Europe and Australia embrace drone regulations that encourage innovation with reduced restrictions on commercial use.

The FAA’s position is a difficult one—ensure the safety of the world’s largest and busiest national airspace while also creating a regulatory framework liberal enough to keep drone innovators and operators stateside. With other countries willing to take risks and open their skies to drone innovators, the FAA may be feeling the pressure to quickly to achieve that goal.

This flurry of activity should come as no surprise: The nascent drone industry is ripe with economic opportunity and potential. According to an economic report by the Association for Unmanned Vehicle Systems International—a proponent for commercial drone use — the drone industry will be an $82 billion industry in 10 years, generating more than 100,000 new, high-paying technical jobs.

While the FAA stands by its policy of cautious integration, the report estimates that the U.S. economy leaks $27 million in economic impact for every day that rulemaking is delayed. What does this mean for the U.S. economy as a whole? The economic stakes are high and time is of the essence for a regulatory framework.

Regulatory Limbo

South Florida’s economy should also be concerned with the existing regulatory limbo. With drone manufacturers (including Coral Springs’ UrbanDrones), drone program and operating system developers (including Miami’s Animusoft), and multiple other businesses seeing the advantage of drone technology, the drone industry now represents an important segment of the start-up revolution that has been taking hold in South Florida.

Miami’s public sector is also pushing the drone agenda with Miami-Dade County Commissioner Juan C. Zapata leading an effort to create a drone and robotics hub near the Miami Executive Airport. Likewise, Miami Dade College is investing in drones and plans to offer a comprehensive drone educational curriculum once the school receives the requisite FAA approval. In short, South Florida is invested in drones. However, the current regulatory uncertainty is essentially a “no-fly” mandate for many commercial drone operators who would otherwise be contributing to their local economies and advancing the drone industry.

So what needs to be done to move things along? Quite a lot, unfortunately. The FAA is under congressional mandate to “develop a comprehensive plan to safely accelerate the integration of civil unmanned aircraft into the national airspace” by September of this year according to the FAA Modernization and Reform Act of 2012.

Not Totally Bleak

While most legal experts anticipate that the FAA will not meet Congress’ deadline due to lack of funding and the requisite staffing, the outlook is not totally bleak. In February, the FAA released its small UAS Notice of Proposed Rulemaking, or NPRM, which represents the agency’s long-awaited first pass at a regulatory framework permitting the routine use of drones in the national airspace. Among other requirements, the newly proposed rules would allow drones under 55 pounds to be used commercially during daylight hours so long as the drone remains in its operator’s direct line-of-sight.

Despite this apparent progress, some commercial drone proponents find these proposed rules too onerous and unfriendly to innovation. For example, even to test or use drones under the requirements of the NPRM, existing FAA rules require commercial operators to petition the FAA for an exemption from the existing domestic ban on commercial drone use. An operator must then apply for and obtain a separate certificate of authorization to inform the relevant air traffic control authority of each commercial use. While the FAA is diverting more manpower and funding toward expediting the application process, the backlog of applicants is exponentially increasing with the market demand, and applicants routinely wait months for FAA approval.

Sharp criticism of FAA’s delays and policies from the drone industry has prompted a quick reaction. Just two months after the NPRM, the FAA introduced its Pathfinder Program which allows certain companies (including CNN and drone startup PrecisionHawk) to experiment with drones beyond visual line-of-sight.

As of April, the FAA is also streamlining the legal requirements for commercial drone use by: offering summary grant procedures for Section 333 exemptions, offering “blanket” COA approval to existing Section 333 exemption holders who comply with certain safety protocols and relaxing the certification requirements for commercial drone pilots. While these are welcome overtures from the drone industry’s perspective, many still believe that the FAA is not doing enough to stay competitive with more liberal rules abroad.

‘Gap Filler’

Legislators in Washington seem to share this concern. Last month, Sens. Cory Booker, D-New Jersey, and John Hoeven, D-North Dakota, introduced the Commercial UAS Modernization Act—a regulatory “gap filler” for commercial use and testing of small drones pending finalized rules from the FAA. Though not a substantial departure from the operating restrictions in the NPRM, the legislation would further simplify the commercial use application process. Generally speaking, operators would be able to use and test drones commercially so long as they carry general liability insurance and pass an “initial aeronautical knowledge test” at one of the FAA’s six drone testing facilities.

The proposed legislation is just a recent example of the call for more liberalized domestic drone policies—a development the drone industry argues is essential for a strong domestic presence. With the attractiveness of commercial drone use and testing abroad and the FAA’s looming September deadline, the next few months may prove to be equally chaotic (and exciting) for the developing field of drone law.
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