The Federal Aviation Administration has heavily regulated the use of drones, including how they might be employed on a commercial basis.

On this episode of Industry Focus: Energy & Industrials, host Sarah Priestley is joined by Motley Fool contributor Daniel Kline to run down the existing rules and how the federal agency is looking at changing them. This includes examining what hurdles the drone industry has to overcome as well as the path the technology will have as it expands beyond hobbyist use.

A full transcript follows the video.

This video was recorded on May 24, 2018.

Sarah Priestley: The whole reason that we're doing this today is because you've been closely tracking a lot of the behind-the-scenes goings-on with the regulation, and the Federal Aviation Administration, the FAA, has announced something new for us to talk about. The industry is heavily, heavily regulated, things like needing a remote pilot license from the FAA to use some of these drones. What other current regulations affect usage?

Dan Kline: Basically, right now, drones aren't legal, except for, as you said, you need a pilot license, the drone itself has to be under 55 pounds, you need to be within line of sight of the drone, which dramatically limits its usefulness. Though, when you're talking something that has to be piloted, and I'm holding my hands like I'm carrying one of those controllers, if you can't see it, it's gone. So, that's more practical at this point. You're also not allowed to fly it near aircraft or near people.

Priestley: That seems sensible.

Kline: Well, it suggests, I could have your burrito delivered to a remote location where you could then go pick it up. It seems a lot less efficient than just driving to Chipotle. Then, they can only fly during daylight and below 400 feet.

These rules were created basically with them saying, "We're going to have a hard line on this so nobody gets hurt, and then we're going to take proposals for how we push these standards." It's a lot like the autonomous driving market, where we know it's coming, we know there will be all of these crazy drone applications, but we need to set a framework for what they're going to be. So, let's start from, you pretty much can't use a drone, except in very controlled circumstances.

Priestley: And what are the key things that we need to overcome if we're going to make it a competitive market?

Kline: Have you ever been driving in a car and you see a helicopter and it's not a weather copter? Your brain goes to, "I wonder what's going wrong."

Priestley: Police.

Kline: Yeah, is that police? Is that the army? If there are drones buzzing above your head, you are going to think something is up. You have to figure out the parameters for making this common. At first, it's not going to be commercial, city usage. It's going to be in warehouses, in fields. Then, you're going to build out the pipeline for, nobody gets scared when a bus drives by, so, how are you going to identify what the drones are? How are you going to explain, yep, at 02:00 in the morning, is that legal? Or is it only during daylight hours? Well, that's not going to work for pizza delivery.

So, really, this is building, it's a new method of transport, and you have to figure it out. I mean, helicopters are rare. That's why they surprise us when they're there. Nobody thinks twice when a plane flies overhead. You have to figure out how you get this from, "Oh, my God, is that a drone?" to, "Oh, OK, a drone."

Priestley: So, increasing comfort. And then, also, as you mentioned, the line of sight thing will be a huge deal. Right now, that's a big limiter.

Kline: Ultimately, these drones are not going to be piloted. Certainly, some of the agricultural uses, some of the security uses, could have a human that can take control or move it. But, when you're talking delivery or inventory or some of these other things, these are going to be automated. They're going to be GPS-based and programmed.

So, you also have to figure out, how's that going to work? If, theoretically, Amazon is delivering to my door, are they dropping it via balloon? Are they literally knocking on my door? And then, could someone just walk up and snap it in half? They have to figure out all sorts of parameters for this.

Again, it's really funny to think you could put a parachute on a bag of tacos and drop them. That's not going to work! [laughs] So, there's a whole lot to figure out from a practical, from a legal, and from a comfort and safety point of view.

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Daniel B. Kline has no position in any of the stocks mentioned. Sarah Priestley has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Amazon and Chipotle Mexican Grill. The Motley Fool has a disclosure policy.