- Associated Press - Friday, December 25, 2015

FARGO, N.D. (AP) - The fledgling drone business is awash with commercial operators who don’t comply with federal regulations or interpret them the wrong way, according to the CEO of an unmanned aircraft-related company.

“And that’s scary,” said Stuart Rudolph, president and CEO of SmartC2, which offers software that helps commercial drone flights follow Federal Aviation Administration rules, warns pilots of airspace restriction, and keeps track of maintenance and assorted costs.

“All the people I have been talking with out there, the corporations, are all scratching their heads and they are trying to figure how to implement drone technology,” said Rudolph, who has written a 10-page guide on issues facing drone operators. “The question is, how do I do it, and how do I do it legally to minimize my risk.”

Business is picking up for drone lawyers, too. Enrico Schaefer, a Traverse City, Michigan-based attorney who represents technology companies, said he expects drone law to eventually take up 50 percent of his business.

“It just became clear that this was something we needed to get involved in, so we just kind of gravitated toward it,” Schaefer said. “You’ve got the federal regulatory side and then you’ve got all the intellectual property issues.”

The FAA has said it is receiving more than 100 reports per month about drones flying near manned aircraft; drones and model airplanes are prohibited from flying higher than 400 feet or within 5 miles of an airport.

The agency considers drones that are used commercially to be aircraft and therefore are subject to the same regulations as manned planes. Companies that want to own unmanned aircraft need a licensed pilot, an aircraft worthiness certificate, a flight plan, federal approval to fly and a flight log. The FAA also announced earlier this month that all drones will have to be registered with the government.

Manned pilots currently understand the reporting and accountability factors more than drone pilots, Rudolph said.

“It’s a huge paradigm shift in what’s taking place,” he said. “There has to be a solution that brings together the manned mentality to the unmanned and allow it to take place. God forbid something bad happens, at least you know they had a process and they had operational procedures.”

And then there’s insurance, which is required for commercial drones. But the concept is so new that even the National Association of Insurance Commissioners, which is currently headed by North Dakota Insurance Commissioner Adam Hamm, hasn’t had the demand to set up a regulatory working group.

“Not yet,” Hamm said. “But it has been discussed.”

Rudolph and Janet Ahlgren, SmartC2’s chief operating officer, said there is no data on how often drones crash on average, which has turned underwriting into a guessing game.

“They’re kind of speculating on it,” Ahlgren said, adding that insurers will not deal with drone operators who fly illegally.

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