Domestic Drone Lobby Pushes Back On Restrictions, Seeks Tax Breaks

Domestic Drone Lobby Pushes For Tax Breaks

NEW YORK -- Its military counterparts overseas may bring Hellfire missiles and death, but the domestic drone industry has a different offer for the American people: jobs, jobs, jobs.

In a new report released Tuesday, the Association for Unmanned Vehicle Systems International (AUVSI) declares that if the Federal Aviation Administration unleashes drones into the American airspace, the industry has the potential to create 70,000 new jobs and $13.6 billion in economic growth in just three years.

"This is the economic impact of what I call a revolutionary-type technology," said Michael Toscano, the president and CEO of AUVSI.

But the carrot comes with a stick: Much of that job growth will happen only, the AUVSI report says, if the regulations being written by the FAA, due in 2015, are broad and permissive. The report adds that economic benefits will flow disproportionately to the states that give drone makers tax breaks and avoid restrictive local rules on drone use.

Both AUVSI, the industry-wide lobbying arm, and individual drone makers like General Atomics, manufacturer of the Predator, see a huge potential growth market in domestic drones. U.S. Customs and Border Protection already flies a fleet of 10 Predators, which cost about $20 million apiece, along the Mexican and Canadian borders.

Now, drone makers hope that local law enforcement agencies, as well as farmers who spray pesticides, will want drones of their own -- albeit probably cheaper, smaller and less scary-sounding ones than the Predator. Public safety and agriculture, the AUVSI report says, will likely account for 90 percent of the domestic market.

The drone industry's shift to the jobs pitch comes as it is taking a public bruising. Last week's filibuster launched by Sen. Rand Paul (R-Ky.) focused on the threat of the Pentagon blasting people from the sky, but it channeled fears of many on both the right and left about the more mundane, but still creepy, privacy issues that could accompany drones in U.S. skies.

States are attempting a delicate balancing act between those privacy concerns and the potential economic boon that drones represent. In California, where General Atomics is based and Northrop Grumman produces the Global Hawk surveillance drone, two state lawmakers have introduced a bill that would give tax breaks for the construction of drone manufacturing plants. But in states such as Arizona, Illinois, Maine, Texas and North Dakota, restrictions on drones are being considered.

Washington state Rep. David Taylor, a Republican from the central part of the state, has introduced a bill that would restrict when state and local law enforcement agencies could buy drones. Agencies would be required to seek legislative approval and to let the public know about their plans -- a step partially prompted by the Seattle Police Department's recent bid, scrapped over privacy concerns, to buy two miniature robot helicopters.

While noting that his bill was actually drafted months earlier, Taylor called Paul's 13-hour filibuster an "inspiration."

"It was just an incredible display of passion and set the standard, as far as I'm concerned, in terms of seeking answers from your government," he said.

Taylor described support for his bill as "incredibly bipartisan." But that doesn't mean everybody is on board. Taylor said that lobbyists for Boeing, the aerospace giant that was founded in Seattle and maintains a huge presence in the state, are pushing back hard. Boeing makes a variety of handheld drones for the military and recently tested a larger spy drone that can fly for four days without refueling.

"What they have conveyed to me is their concern that the market would be reduced," Taylor said. He thinks those concerns are unfounded and noted that nothing in his bill restricts the manufacture of drones.

Toscano, the AUVSI president, acknowledged that people have privacy concerns but chalked many of them up to "misinformation" about what these systems can do. "Some states may adopt this earlier than others, but as the technology is understood and concerns are addressed, then I think you'll see more utilization of the technology," he added.

Others, meanwhile, question the point of tax breaks for an industry that, by one estimate, already generates $1.3 billion in economic impact in the drone manufacturing hub of San Diego alone.

"State and local taxes almost never matter because they can't -- they're way too small a part of the cost structure," said Greg LeRoy, executive director of the economic development watchdog group Good Jobs First. He also noted that drone makers already receive a helping hand from the federal government in the form of massive military contracts.

The claims the industry is making for future job creation might also seem a little puzzling: Drones are, after all, unmanned aircraft. But in estimating that domestic drones will generate 100,000 jobs by 2025, the AUVSI report assumes the "creative destruction" involved in the switch from manned to unmanned aircraft -- all those cockpit jockeys thrown out of a job -- won't lead to any net job loss.

Chris Mailey, vice president of knowledge resources for AUVSI, acknowledged that "it's very easy to point to a lot of jobs that may be displaced." But he argued that drones will also create efficiencies -- when farmers spend less money to spray pesticides, for example -- that will free up money for other purchases that will spur job growth.

However many jobs are created, drone skeptics like Taylor think the public should be well-informed about who is watching from the sky.

"To me, it's a no-brainer," he said.

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