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It was the case that everyone in the drone industry was watching, in which the Federal Aviation Administration (FAA), insisted it has the right to regulate drones—even RC toy aircraft—in the national airspace. This week, the National Transportation Safety Board (NTSB) agreed. It's a ruling that means the FAA can indeed fine operators of model aircraft and drones for flying recklessly. But the future of drones in American airspace, including the Obama administration's ban on commercial use of unmanned aerial vehicles, is still up in the air.

The FAA case began with aerial videographer Raphael Pirker. In October 2011, he was paid by the University of Virginia's medical school to fly his camera-mounted Ritewing Zephyr II glider around campus. The resulting aerial video (above) caught the attention of the FAA, which in 2013 fined him $10,000 for, among other things, flouting a ban on commercial drone flights.

Pirker challenged the penalty, and in March, NTSB judge Patrick Geraghty agreed, dismissing the case against him. In his ruling, Geraghty laid into the FAA for trying to rule via its own internal guidelines and for using an overly broad definition of the word "aircraft" to assert its power. Accepting the FAA's definition, Geraghty wrote, could give the agency authority over "paper aircraft, or a toy balsa wood glider."

Undaunted, the FAA took its case to the full NTSB, which ruled this week that the administration could enforce safety rules on drones and RC planes. According to NTSB, the FAA has authority over any aircraft, manned or unmanned, large or small.

Martin Laksman

"An aircraft is 'any' 'device' that is 'used for flight.' We acknowledge the definitions are as broad as they are clear, but they are clear nonetheless," NTSB wrote, adding regulations for kites, rockets, and moored balloons already exist.

While this decision is bad news for Pirker, it isn't necessarily a death knell for drone innovation. His attorneys put out a statement arguing that the NTSB judgment, while disappointing for Pirker, is "narrowly limited to whether unmanned aircraft systems are subject to an aviation safety regulation concerning reckless operation… The more significant question of whether the safe operation of drones for business purposes is prohibited by any law was not addressed in the decision, and is currently pending before the D.C. Circuit in other cases."

Michael Toscano, president and CEO of Association for Unmanned Vehicle Systems International, tells PM that the NTSB's limited ruling will put even more pressure on the FAA to come up with good regulations for commercial use of small unmanned aerial vehicles. There is such a proposed rule, but it's sitting with the Office of Management and Budget, and it will take up to year before taking effect. In the meantime, FAA has been dealing with commercial drones by handing out ban exemptions on a case-by-case basis. (In Canada, the United Kingdom, and Australia, one can get a business license to fly a drone. Not so in the U.S.)

This ad-hoc arrangement is no way to govern a growing industry, though. Toscano argues that unmanned aircraft users want clear legal guidelines, not murky bans and limited exemptions.

"This is one of the few industries that wants to be regulated," he says.

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