Is the FAA Limiting Drone Innovation?

from fortune.com

The aircraft regulatory agency’s delays on making rules for commercial drones is forcing businesses to wait. And wait.

In the winter of 2013, Scott Pham had finished teaching his fall semester on drone journalism—a new journalistic method of reporting and photographing stories by using unmanned aircraft—at the University of Missouri. While gearing up for the spring, the federal government sent a letter that disrupted his plans.

“The letter was quite vague,” Pham recalled. “It said something like—your actions ‘may be’ in violation of our regulations.”

The letter came from the Federal Aviation Administration (FAA)—the U.S. regulatory agency that ensures safe passage of manned and unmanned aircrafts.

In drones, Pham found the perfect reporting tool. One of his students flew a drone along the Missouri River and collected visual evidence on how oil and gas companies used the water for drilling operations without paying any money to the government.

“We chose environment and agricultural stories because we thought, for safety and regulatory reasons, we wanted to avoid stories that would require us to fly over cities and populated areas,” Pham said.

That didn’t seem to make a difference to the FAA. Pham called up the local FAA regulator in Missouri and explained to him the value that drones could add to journalism. The regulator was unmoved. “He told me in no uncertain terms ‘we want you to stop flying,” Pham said. “Do not fly.”

The university initially vowed to support him, says Pham. “There was a moment where they were very combative. They were like—‘we are going to bring this to the Supreme Court.’”

Pham was in the process of applying for the future grants to run the program further. A few weeks later, the university turned a cold shoulder on him. They asked him to remove drones from the classroom, which meant teaching it without flying any machines. He refused to comply with their request and the university finally shuttered the program. Later, also following a directive from the FAA, the University of Nebraska-Lincoln also ended its drone-reporting classes.

In a statement to Fortune, an FAA spokesperson explained that since universities are public entities, they are required to apply for a Certificate of Authorization (COA) before launching a drone journalism program. Pham says he didn’t pursue a COA because the process took months, and that the students weren’t flying drones for commercial reasons, but for research.

A year later, Bill Allen, an assistant professor at Missouri’s School of Journalism, replaced Pham. Allen revised the program and opened it up to students of others fields of study, including geology, geography and conservation biology. “There really is no official Missouri drone journalism program right now,” Allen said. “We are staying inside, continuing to find ways to teach our students without flying drones outside.”

In the past four years, the FAA has fired off letters to individuals and organizations operating what it calls “suspected commercial Unmanned Aerial System (UAS) operations.” First the FAA issues a verbal warning; then it sends a letter. Users who continue to fly receive “cease and desist” letter.

The FAA is choosing to go after anyone using drones to make a profit, though that remains somewhat difficult to prove. Hobbyists are permitted to fly drones for pleasure. Then there are certain air-traffic rules: as an on-ground pilot, you cannot fly above 500 feet, or lose sight of your flight.

These guidelines are hard to follow. In 2012, Congress asked the FAA to bring the drones under the legal canopy of national airspace by 2015. In the meantime, pilots who want to fly commercial drones are required to seek approval from the FAA.

Since then, regulators have been deluged with petitions. Hollywood filmmakers, farmers, real estate agencies, power line and oil rig inspection companies have sought permission to operate drones. After Amazon announced its plan in late 2013 to use drones for package delivery on CBS’s 60 Minutes, the company sought clearance from the FAA to test its bots outdoors. The request is still pending but it gave drone lobbyists enough leverage to criticize the FAA for limiting innovation with “slow law-making.”

“Manufacturers are starting to get anxious about migrating a lot of this technology into the commercial sector,” says Ben Gielow, a lobbyist at Association for Unmanned Vehicle Systems International (AUVSI)—a Washington D.C. based drone advocacy group. “The commercial market is expected to outstrip the military demand within the next decade.”

Lockheed Martin, one of Gielow’s clients, has already bought two drone startups and it is eyeing other companies that monitor weather and natural disasters, aerial imaging and satellite communications.

According to AUVSI, the FAA clearance to commercial drones could contribute $82 billion to the economy and the creation of 100,000 jobs in the U.S. by 2025. And any further delay, Gielow told me, would result in the loss of $27 million per day.

So what’s the hold up? A spokesperson for the regulator told Fortune that the agency has made “significant progress toward that goal, even as it dealt with disruptions due to sequestration and a three-week government shutdown.” Then there are technical issues to work through: the spokesperson said, the agency is developing a mechanism through which manned and unmanned aircrafts can communicate to avoid collisions.

“This is an exciting new technology,” the FAA said in statement. “People want to see what it can do—and what they can do with it. Detect and Avoid and Command and Control are two key integration-related research areas that must be addressed before routine beyond-line-of sight operations will be authorized to fly.”

But the Department of Transportation doesn’t buy the FAA timetable. In an audit report published on June 26th, the Department of Transportation doubts that the FAA will meet the September 2015 deadline. The auditor suggests that the FAA wasn’t “effectively collecting and analyzing” the drone safety data in order to pinpoint risks. That flaw existed because the agency has neither developed a process that ensures all drone safety incidents are “reported and tracked” nor does it share that data with the U.S. Department of Defense, which, according to the auditor, is the largest user of drones.

With the regulatory uncertainty, many operators are brushing aside the commercial prohibition and flying for money. Every other day, newspapers report on commercial uses from weddings being filmed with drones to gas pipeline inspection to smuggling of marijuana in a South California prison.

Until recently, the agency viewed the option of slapping a hefty fine on violators as a potent weapon but that too has been neutralized in the court. As a result, the FAA is caught between public criticism and legal ordeals.

Brendan Schulman, who tweets as @dronelaws, is America’s best-known drone lawyer. The 40-year-old native of New Jersey has been flying model aircrafts since he was in his teens. Schulman entered the conference room of his Midtown Manhattan office with a plastic drone tucked under his arm.

Schulman defended the most important case in the drone history. In 2010, the FAA slapped a $10,000 fine on Raphael Pirker, an Austrian drone photographer, who flew a remote-controlled aircraft to record a promotional film for the University of Virginia. As Pirker put up the raw footage on You Tube, the FAA sent a letter, accusing him of reckless flying, premised on the notion that his aircraft was used commercially and therefore subject to the airspace regulations.

When Schulman read about it in newspapers he contacted Pirker, whom he knew through hobby circles, and offered his legal help. “He was flying a five-pound aircraft with a camera in the front,” Schulman said. “He didn’t hurt anybody or damage any property. So we took on the case and defended it primarily on the basis that there is no actual regulation concerning model aircrafts people now call drones.”

The judge agreed with Schulman and in March 2014 quashed the fine. Since Schulman won the precedent setting case, the FAA appealed to the National Transportation Safety Board. But the federal court’s decision managed to ease the atmosphere, opening the doors for real estate firms, architects, wedding planners, ad agencies and others to use this technology for business.

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