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North Dakota awaits uptick in drone activity, business as start date for federal regulations nears

New rules are often met with grumbling, but federal regulations for small unmanned aircraft systems effective in August are eagerly awaited by North Dakota leaders and businesses.

The regulations, which ease access to airspace and pilot credentials for many, are expected to bring industry growth with their implementation. North Dakota, which has forged a reputation as a hub for unmanned activity, is looking for a piece of that pie.

The rules apply to unmanned aircraft, also known as drones, weighing 55 pounds or less, but local industry members see those regulations paving the way for larger, more lucrative ventures in the state.

"In the next couple of years, the nation's public will see UAS as a tool and not so much as the privacy issues we've dealt with in the past," said Terry Sando, director of UAS sector development for the Grand Forks Region Economic Development Corporation. "Once it becomes a tool, and they see it flying in the airspace, it'll pave the way for larger systems to follow quickly after that."

Before larger unmanned aircraft can regularly take to the skies, their smaller cousins are predicted to deliver an economic boon in the form of new companies, more work for established UAS firms and more businesses looking to contract or integrate the technology into their operations.

Until the new regulations are in place, operating drones for commercial purposes remains prohibited without an exemption from the Federal Aviation Administration.

The agency has granted more 5,500 exemptions since 2014 through a petition process that often took months and required piles of paperwork to complete.

"And those were the people who were willing to go through all of that paperwork and the legal aspects," Sando said. "Take that times 10 probably and you're going to get a feel for where that initial August flow will go to."

Gaining confidence

The June 21 debut of the rules, known collectively as Part 107, has inspired a confidence of sorts, lending an expanded legitimacy an industry many have watched slowly make progress under a cautious FAA, which is charged with safely integrating drones into national airspace.

The confidence will likely translate to an increase in interest and investment in the local unmanned aircraft services and businesses, members say.

At the Grand Sky aviation and business park, which is currently under construction on Grand Forks Air Force Base, an uptick in activity is expected.

"I don't see how a widening of any part of the industry would not benefit Grand Sky in some way," said Thomas Swoyer Jr., president of Grand Sky Development Co.

Grand Sky is home to two tenants, Northrop Grumman Corp. and General Atomics Aeronautical Systems, both of which manufacture large unmanned aircraft.

Attracting tenants with similarly hefty aircraft is a focus of Swoyer's, but he noted the park also could be used by companies looking to potentially integrate drones into their daily operations for test flights.

Those companies include insurance, utility, energy and agriculture giants with significant infrastructure and land to monitor or inspect.

Gene Payson, president of online drone retail site Troy Built Models, thinks the appearance of new regulations sets some of those companies at ease when it comes to using the aircraft.

Large companies have purchase unmanned aircraft with intentions to use them for tasks such as infrastructure inspection, Payson said, only to have attorneys halt flights.

"The lawyers say, 'Nope, can't use them. It's a liability. If that thing goes flying off and hits one of the workers, we're going to get sued. I don't want you to fly it,'" he said.

The federal regulations will likely curb some of the concern, but Payson predicted companies such as those in the energy and agricultural sectors will seek out contractors who can safely perform flight operations rather than attempt to bring the technology in-house right away.

"They're not going for the lowest price, they're going for the best because they're all scared," he said.

Contracting for flight services also means companies wouldn't have to invest in equipment and training for employees.

Growing competition

Established firms continue to jockey for position in the evolving market, but they'll have more company come August.

Doug McDonald, special operations director for Unmanned Applications Institute International in Grand Forks, predicted smaller "boutique businesses" will pop up, the result of recreational users commercializing their hobby. An example could be one-person firms that will offer aerial photography services.

"I think you're going to see a one-two punch with more established businesses embracing new technology and hobbyists spreading their wings—no pun intended," he said.

Under Part 107, commercial users of drones need to follow rules such as not flying higher than 400 feet in the air or directly over people.

The rules also do make becoming a pilot easier. A commercial license won't be required, rather individuals will take an aeronautical knowledge test to receive a remote pilot certificate.

A cost of $150, the price also makes entry into the industry easier for those looking to start companies or find jobs.

"I think for existing drone companies, it gives us the opportunity to bring on more operators at a reduced cost," McDonald said.

New firms will have to contend with others that have been operating under commercial exemptions for months or even years.

For some companies such as SkySkopes in Grand Forks, tackling larger missions and attracting larger clients is the goal as competition creeps into the region, though CEO Matt Dunlevy also sees the potential for collaboration as new firms appear.

"These new permissions are going to redefine the market, but in a way that will mean more overall growth," he said.

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