ATTACK OF THE DRONES
The week of February 1, 2015

The smart way to regulate drones in America

By Matthew Bieschke

The U.S. federal government is inhibiting growth and development of the unmanned aerial systems (UAS—better known as drones) market in the United States simply by doing nothing—or, at least, not doing anything fast enough.

The Federal Aviation Administration’s progress toward the congressional mandates in the 2012 FAA Modernization and Reform Act, the legislation that requires the FAA to create comprehensive rules for drones by September of this year, has been halted at best. As a result, our researchers, journalists, manufacturers, and farmers are falling behind the rest of the world.

There is no doubt that the FAA has a difficult task. It must allow for commercial and other non-recreational UAS operations, and it is burdened with a range of constraints and challenges further complicating their activities, from insufficient funding to safety concerns. But at the end of the day, the FAA has focused on activities that don’t meet the industry’s near-term needs while failing to recognize the economic opportunities UAS can bring to the U.S.

The FAA’s role is, and should always be, that of the safety regulator.

Few can argue with the tremendous benefits UAS can bring, through both economic development and job creation, as well as social impacts and public good. UAS can save lives through search-and-rescue efforts, and they could significantly improve the quality of life for everyone by allowing for better safety inspection of roadways, bridges, rail lines, and even our own homes. Economic impacts will come at both the macro and micro levels, and they can start being realized immediately. But we find ourselves in an overly strict regulatory environment focused on the exceptions, rather than promoting innovation and economic growth.

The FAA’s role is, and should always be, that of the safety regulator. But with its conservative approach to unmanned aircraft, it has established itself as the de facto economic regulator. Today, we’re seeing today the FAA crushing the ability for U.S. companies and research organizations to innovate or perform research and development without jumping through irrelevant, expensive, and time-consuming hoops. A continued burdensome regulatory process will chase the industry out of the U.S. for a significant period of time, if not killing it forever.

One of the latest buzzwords when considering UAS policies and regulations is “risk-based.” Everyone from members of Congress to UAS companies is pleading for the FAA to adopt this approach. Instead, the administration is lumping one-pound and 55-pound UAS together, despite the fact that the two categories of devices carry very different risks. The disparity between the two is clearest when you consider the potential worst-case-scenario consequences when things go wrong—if, for example, one crashes or malfunctions and falls out of the sky. Imagine getting hit in the head with a shoe; that’s the one-pound UAS. Now imagine getting hit with fully loaded luggage.

A continued burdensome regulatory process will chase the industry out of the U.S. for a significant period of time, if not killing it forever.

Categorizing small, lightweight UAS and larger, heavier devices under a single rule is not the way to go. A better segmentation of the market is necessary and will be key for moving the industry forward across all use categories.

A one-size-fits-all approach likely will never be an acceptable solution. Beginning with the simplest and safest commercial operations will allow for UAS applications across a range of markets, from journalists covering natural disasters and other emergencies to the inspection of U.S. infrastructure (like bridges and dams) to farmers surveying their crops and livestock in real time. Perhaps most important of all, we need businesses that train people how to use their UAS safely and effectively. But as it stands, even that is prohibited under the FAA’s rules.

These activities are important and can be performed in close-proximity, low-altitude, line-of-sight operations in unpopulated areas and away from crowds. These operations could be conducted today, with off-the-shelf components and technologies with very small aircraft, and plenty of people are champing at the bit to get started.

This risk-based approach is how we can quickly and safely kickstart America’s UAS-driven economy before it’s too late.

As I proposed to the FAA last month through the UAS America Fund LLC, the most expedient way forward to common-sense regulation is for the administration to put in place a rule covering UAS that weigh three pounds or less in a lightly regulated manner. This alone would open the door to commercial operations and pave the way for a booming new sector of the U.S. economy.

This basic foundation provides the perfect starting point for safe and legal UAS operations in the U.S. It would allow the FAA to responsibly build out new rules for more complicated operations and larger aircraft, and give it the flexibility to supplement new regulations with considerations of technical advancements and additional regulatory and certification requirements as needed.

This risk-based approach is how we can quickly and safely kickstart America’s UAS-driven economy before it’s too late. This is how other countries have handled early UAS regulations. It simply makes sense, and maybe that is why the FAA struggles with such a solution.

Matthew Bieschke is Managing Partner of NEXA Capital Partners LLC, a Washington, D.C.–based investment banking and financial advisory firm working predominantly in the aerospace sector. He also serves as President of the UAS America Fund, which provides private-sector financing to benefit the emerging commercial UAS sector of the U.S. aerospace industry.

Illustration by Max Fleishman