



Enlarge Image SkyPan International

Cracking down on commercial use of drones without a license, the US Federal Aviation Administration has proposed a $1.9 million fine for SkyPan International, a Chicago company that for 27 years has been using the unmanned aircraft for clients in the real estate business.

"SkyPan conducted 65 unauthorized operations in some of our most congested airspace and heavily populated cities, violating airspace regulations and various operating rules," the FAA said in a statement on Tuesday, a day before FAA Deputy Administrator Michael G. Whitaker is set to testify about drones in a hearing at the US House of Representatives. "These operations were illegal and not without risk."

The company, which has 30 days to respond to the allegation, said it did nothing wrong: "SkyPan has been conducting aerial photography above private property in urban areas for 27 years in full compliance with published FAA regulations. SkyPan is fully insured and proud of its impeccable record of protecting the public's safety, security and privacy."

SkyPan uses its unmanned, remotely controlled aircraft to take photos that developers can show prospective customers or investors what a 30th-floor view of a proposed high-rise would look like, for example. Its work predates the fast growth of today's drone market as businesses embrace drones to film movies, scrutinize power plant smokestacks and monitor agriculture. Drones are popular among hobbyists, too, but it's only commercial use that the FAA forbids, unless it grants a relatively rare exemption.

SkyPan's plight demonstrates how difficult it can be to reconcile the fast pace of new technology and the more drawn-out process of government regulation. Drones bring real public safety challenges -- the risks of collision with Amazon drones delivering packages in an urban environment, for example, or of malfunction with a concert promoter's drone shooting video above the audience. But slow regulation can stifle innovations that can also benefit businesses and the public.

Even as the FAA enforces its ban on unlicensed commercial drone operations, the agency is working on rules to permit drones without business having to secure specific permission. It's released draft regulations but missed a September deadline to finalize those rules.

SkyPan CEO Mark Segal has been watching the regulatory issue closely. Indeed, he's been suggesting drone safety guidelines to the FAA since 2008, even visiting the agency's offices himself, he said in earlier interviews.

"The FAA is very slow and methodical, which for safety's sake is a very good thing," and the proposed regulations are a promising step, Segal said earlier in 2015. But he also complained that the FAA has been slow to write regulations because of "enormous employee turnover and lack of focus."

The proposed fine isn't the first time SkyPan has tangled with the FAA. In 2012, the agency sent Segal a cease-and-desist letter about his drone operations, he said in a 2014 interview.

"I responded and said in we've been in business a long time -- longer than you guys have been trying to regulate it. Everything is safe, and you're welcome to observe us." FAA inspectors did indeed come and, in Segal's account, told him, "What you're doing is not legal, but we're glad you're doing it in a safe manner."

In the next 30 days, SkyPan can appeal the proposed fine or try to negotiate a settlement, FAA spokesman Les Dorr said Wednesday. If the parties can't agree on a settlement, the FAA will refer the case to the Justice Department, which will file a case in US District Court.

"It took time to get all the necessary documentation and decide on the amount of the civil penalty," Dorr said regarding years of interaction with SkyPan. "We have to make sure the evidence will stand up in court, should the case go that far."

Update, 6:44 a.m. PT: Comment added from the FAA.