Monday, August 07, 2017

The Waning of Canada’s Prominence as a Commercial UAV Regulatory Frontrunner

         By Kathryn McCulloch
Graphic c/o Twitter.
Canada's space industry is not the only sector hobbled by rules and regulations.
As outlined below, the rules governing the commercial operations of unmanned aerial vehicles (UAVs), will also require flexibility for Canadian companies to be able to effectively compete in the international market.
The real secret to appropriate regulations seems to include exceptions for hobbyists and developers... 

Once a leader in the regulation of commercial operations of unmanned aerial vehicles (UAVs), Canada is no longer at the forefront of an emerging paradigm shift.


In short, the initially permissive approach to allowing commercial UAV users to operate in Canada has given way to an administratively-intense regulatory regime, allowing other countries to make advances in commercial regulations that allow companies to more swiftly (and economically) take to the skies.

The Initial Permissiveness of Canadian Regulation of UAVs
UAVs have been regulated in Canada (albeit sparsely) since at least 1996. [1] The only entrenched requirement was that non-piloted aircraft must be operated in accordance with a special flight operating certificate (SFOC). In 2003, a nomenclature change of the “non-piloted aircraft” was made to “unmanned aerial vehicles.” [2]
Then and during the 2000s, UAVs were permitted to operate for commercial purposes, subject to obtaining an SFOC which sets out the general parameters (and limitations) of the flight. Regulation remained at a minimum; coupled with Canada’s vast and relatively uncluttered airscape, the growth of the industry began. 
In 2006, Transport Canada initiated a review of Canadian aviation legislation in order to determine how the existing aviation regulatory framework could accommodate aircraft without pilots and recommend a regulatory framework specific to UAV operations. [3] 
By 2007, recommendations for the core concepts behind regulations and standards of a UAV regulatory framework were formulated. [4] The approach was to ensure UAV regulations and users were integrated with other airspace users and to avoid the creation of a new set of regulations dedicated to UAVs. [5]
Of particular note is that during this time, commercial operations of UAVs were consistently allowed (of course, subject to meeting certain requirements in order to obtain an SFOC). 
In a further move which made operations for commercial users more practicable, Transport Canada released exemptions to the requirements to hold an SFOC in 2014. [6]

Evolution of US Regulation of UAVs
Unlike the regulatory landscape in Canada for commercial UAV operations, the US’s early drone regulatory scheme was formidably restrictive; civilians could not use UAVs for commercial purposes without a ‘Section 333’ exemption, which was an expensive and protracted process. 
Additionally, pilots required a manned aircraft pilot’s licence to operate a UAV. Companies (most notably, Amazon) favoured conducting drone operations in Canada given the permissive structure and the ability to conduct commercial operations. Whereas in the US, models submitted to approval by the Federal Aviation Administration (FAA) were often rendered obsolete before the company could even obtain the approval for the UAV operation. 
In response, the FAA enacted guidelines for the “non-hobbyist small unmanned aircraft” lifting the earlier near-ban on commercial uses in 2016: the now well-known “Part 107.” [7]
Part 107 came into force in August 2016. Commercial operators of UAVs under 55lbs were no longer required to obtain an operating certificate, like the Canadian SFOC, before taking flight (though other operational requirements for the use of UAVs, knowledge and licencing requirements for pilots and other criteria still need to be observed). If an operator wishes to conduct an operation other than as provided for in the rules, Part 107 provides for a streamlined application process for a commercial operator to obtain waivers of any of the requirements (including the visual-line-of-sight requirements), provided they can demonstrate that the operation will be conducted safely. [8]
Part 107 significantly reduces the administration costs and burden for commercial operations of UAVs in the US. Part 107 and the waiver process have been lauded and commercial flight for small UAVs and registration of drones has since skyrocketed in the US.

Tightening of Requirements on Canadian UAV Operators
Meanwhile, in Canada, SFOC applications continue to flood Transport Canada, drowning staff and increasing wait times far in excess of the 20 day service standard aspired to by Transport Canada.
Some Canadian users are reporting delays of up to three months, delays which stand to cripple a business looking to use UAVs as a resource. For a business seeking to test products and/or services or develop UAV infrastructure, the delay and uncertainty is enough to avoid Canadian airspace. Additionally, safety concerns being raised nationally and internationally seek a tightening of the regulations applicable to UAV flight. 
Canada’s regulators have answered the call. Transport Canada’s recently proposed amendments tighten the requirements and increase compliance costs for virtually all operations, and aim in part at combating to slow SFOC issuance process. [9]
In fact, the recently proposed amendments will do away with the requirement to obtain an SFOC, except for the more risky UAV operations. Will this be enough to hearten Canadian entrepreneurs seeking to (legally) incorporate UAVs into their business? Will it be enough to encourage the foreign investment and corporations back into Canada?
Only time will tell.
Kathryn McCulloch.

Kathryn McCulloch is a licenced Canadian aircraft pilot and a drone regulatory and aviation lawyer at Dentons Canada LLP, based in Toronto.

[1] Supplement to the Canada Gazette, Part II, Vol. 130, No. 20, SOR/96-433, section 602.41 of the Canadian Aviation Regulations, February 10, 1996 [paperback only].
[2] Regulations Amending the Canadian Aviation Regulations (Parts I, II and VI), Regulations under the Canadian Aeronautics Act, SOR/2003-271, Canada Gazette, Part II, Vol. 137, No. 17, SOR/2003-271, section 602.41 of the Canadian Aviation Regulations, July 24, 2003 [paperback only].
[3] Terms of Reference, Unmanned Air Vehicle (UAV) Systems Program Design Working Group, RDIMS No. 5705889, published June 29, 2010.
[4] UAV Systems, Program Design Working Group, Phase 1 Final Report, dated March 2012, page 5.
[5] UAV Systems, page 9.
[6] These exemptions were recently revised by amendments to the controlling Advisor Circular, AC 600-004, issued by Transport Canada on December 22, 2016.
[7] Part 107, Operation and Certification of Small Unmanned Aircraft Systems, Federal Aviation Administration, United States Department of Transportation, June 21, 2016 [effective August 2016].
[8] Fact Sheet – Small Unmanned Aircraft Regulations (Part 107), Federal Aviation Administration, published June 21, 2016.
[9] Consultation and public feedba
ck on the revised regulatory framework is open to the Canadian public until October 13, 2017.

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