The FAA is currently developing rules governing the commercial operation of what it calls unmanned aerial systems. Right now it has asserted jurisdiction over all commercial unmanned flights, at any height, whether for operational purposes or for research and development. Ten feet up, in the middle of your 50 acre field, the FAA asserts its jurisdiction. I'm not sure if this includes indoor flights or not. The FAA is currently working on permanent rules, and the temporary rules greatly limit such flights.
What is the proper role for government in the regulation of unmanned aerial vehicles? This is going to be a very important area of law which is being shaped right now.
Update: http://aynrandlexicon.com/lexicon/pollution.html briefly mentions "air-space rights" as a place where "appropriate and objective laws" were defined. http://www.criminalgovernment.com/docs/aynrand.html is more in-depth, but it's about radio use of airwaves, not use by aircraft.
Update: Two interesting proposed uses are delivering packages (UPS/FedEx are interested), and aerial surveillance (Google has bought something capable of doing this, though they, incredibly, claim it is not for mapping). But that's just two obvious uses, which have already been made public. If I could dream of some of the non-obvious ones, I'd be working on building a prototype and/or getting a patent, not talking about them on the Internet.
But a relevant line of questioning would be: If FedEx gets to market first, do they own the airspace? Do they have to share it with UPS, who gets there 6 months later? Or am I thinking about it all wrong, and the use of the airspace below 10 or 20 feet should be owned by the owner of the property directly below? What about the airspace less than 10 or 20 feet above rights of way?
What is the proper role for government in the regulation of unmanned aerial vehicles?
I see two issues in the full context of this question:
The first issue is well answered, in principle, in Ayn Rand's writings. For a broad overview of the purpose and proper functions of a proper government, refer to the topic of "Government" in The Ayn Rand Lexicon. Regarding unmanned airborne vehicles, government should have no role unless there is an objectively proved infringement of someone's individual rights. This doesn't meaning waiting until some injury or property damage occurs; an imminent threat of injury or damage would be enough ("threat" here meaning something more imminent than merely someone casually saying to someone else, "I'm going to fly my little radio plane over your house and drop little bombs on you.")
The second issue is more complicated, potentially involving expansion of governmental infringements of individual rights, which Objectivists would want to oppose rather than assist. It also depends on exactly what "regulation" means, why it allegely would be needed, and whether or not "commercial operation of unmanned aerial systems" is intended to apply to toys such as small airplanes flying in the air but controlled by a string held by a person (technology dating back to at least 50 years ago), or small radio-controlled airplanes or helicopters, or police surveillance aircraft such as the new portable flying platforms equipped with video cameras, small enough to fit into a car trunk when not in use. Unmanned airborne vehicles, even relatively small ones, can certainly cause damage, injury or death to innocent victims if the vehicles fall out of the sky at the wrong time and place. To the extent that any of these could endanger others' individual rights, government would have a legitimate role in intervening, though not in the form of "prior restraint" regulation. In general, the only proper role for Objectivists would be to oppose the expansion of regulatory governmental bureaucracy.
A similar kind of issue arises in regard to safety standards for commercial activities of any kind. This is discussed in Capitalism: The Unknown Ideal, Chap. 9. Here is a sampling:
... "protective" legislation falls in the category of preventive law. Businessmen are being subjected to governmental coercion prior to the commission of any crime. In a free economy, the government may step in only when a fraud has been perpetrated, or a demonstrable damage has been done to a consumer; in such cases the only protection required is that of criminal law [and civil liability]....
A proper governmental role in aviation most likely would involve eventual dismantling of most of today's FAA and the vast system of regulations which it promulgates.
Update: Air-Space Rights
In the comments, the questioner asks about the relation between property rights and "air-space rights." An update to the question cites a brief mention of "air-space rights" by Ayn Rand in the topic of "Pollution" in The Ayn Rand Lexicon. Surely what Ayn Rand was generally endorsing in regard to "air-space rights" was not the specific enforcement mechanism, i.e., the FAA, but only the principle that air-space rights should be regarded as a form of property, privately owned. The updated question also cites another article by Ayn Rand, "The Property Status of Airwaves" (published in CUI as well as available on-line), which explicitly upholds the principle of "airwaves" as a form of property that ought to be privately owned (i.e., the right to transmit radio signals in a given frequency channel in a given geographical area, with "radio" understood to include TV, Internet, cell phone, etc.). The endorsement of property status for airwaves is not an endorsement of the FCC, however. Ayn Rand explicitly expressed disapproval of government agencies such as the FTC and FCC, which probably would also include the FAA. She mentioned it in her article, "The Question of Scholarships," published in VOR. (There are some excerpts from that article in the Lexicon, but those excerpts don't include the passage where she expresses disapproval of the FTC and FCC.)
There is also an informative article on "Air Rights" in Wikipedia (including an English translation of the Latin expression which the questioner mentioned in the comments). Air-space rights, as I understand them, mean two things: (a) a land owner does not own the entire airspace above his land, from the ground on up, without limit; and (b) it would be reasonable to establish specific, separate property rights for the use of specific regions or "lanes" of airspace for aircraft travel. This does not mean, however, that today's FAA would be the appropriate form of government for upholding and protecting such property rights. The FAA's powers today extend far beyond designating and upholding airway lanes. The question of the exact form of government to protect individual rights is a topic for the field of law to work out, under the broad guidance of the political and philosophical principles that Objectivism has identified.
Another key point that any Objectivist would surely challenge is why any new laws would be needed specifically for unmanned aircraft, given that we already have "air-space rights" as an established concept, along with protection of the individual rights of others, including their own property rights. (If the individual rights of others aren't being protected adequately today for any reason, i.e., all individual rights, not merely protection from any alleged hazards potentially posed by aircraft of any kind, then that deficiency ought to be rectified, as well.) Wouldn't the same principles apply to unmanned as well as manned aircraft? If the questioner can provide examples of unmanned aircraft being proposed for commercial use today, and how they might differ in any way essential to their legal status, perhaps the need (if any) for new laws would become more readily apparent. (By "laws" I mean statutes enacted by legislatures, or legal precedents set by court rulings, but not the kinds of "rules and regulations" adopted by regulatory agencies in the executive branch of government. We have far too many of the latter already.) The original wording of the question suggested that the FAA is simply telling everyone to "stop!" -- while the bureaucratic regulators sort out what they want to grant or deny permission to do, as bureaucrats do far too often today.
Update: Principles vs. Applications
In the comments, the questioner remarks:
My question was ... about what are the proper regulations. Yes, it "is a topic for the field of law to work out, under the broad guidance of the political and philosophical principles that Objectivism has identified". I was hoping to get an answer from someone interested in outlining how we would do so.This formulation isn't entirely clear to me. If the questioner is looking for an outline of a worked-out answer, one would need legal experts in that field (persons very familiar with both law and aviation) to work out such an answer. If the questioner is looking for broad principles, then the main principles that I have been offering can be summarized as follows:
Regarding your opposition to the role of the executive branch in the formation of regulations....
Principled opposition to "regulation" in general, of any kind, whether executive, legislative or judicial, is based on the principle of individual rights. If the questioner is looking for ready-made answers to specific questions about the details of how this applies to air-space rights and unmanned aircraft, I can only reiterate what I've already stated -- basically, it would be a discussion for a different forum. Objectivist Answers is generally best suited for discussions of Objectivist principles, insofar as the principles have been identified by Ayn Rand and other leading intellectuals whom she endorsed. I, for one, am not equipped to engage in a detailed application discussion calling for far greater knowledge of law, air-space rights, and the technology of unmanned aircraft than I possess.
Also, the main problem (in principle) with executive regulations is that it makes it far too easy for a rapidly accelerating regulatory burden to explode into what should have been free markets. If the questioner would like a more extensive and detailed essay about this, the best that I can offer is the Objectivist references I've already cited, which the questioner evidently already considers not sufficiently detailed and definitive as to the final application of Objectivist principles in specific fields. Perhaps the questioner himself will someday offer such an application analysis of his own, particularly if he has a background in the field of law. My hope for the Objectivist Answers website and similar discussions is at least to achieve a better consensus about what the proper principles are, recognizing that additional intellectual effort is always needed to apply the principles appropriately to specific developments and trends.
Update: Airway Lanes as Property
A further update to the question mentions two possible uses of unmanned aircraft and asks about how the airspace for unmanned flights would be owned or otherwise regulated or managed. Speaking entirely as an amateur in both the legal field of airspace rights and the technological field of aviation, I find the similarity to airwave rights discussed by Ayn Rand in CUI (Chap. 10) to be quite striking. I would expect, absent greater knowledge of the applicable law and technological issues, that airspace for aircraft could be handled in much the same way that Ayn Rand describes for airwaves. In CUI Chapter 10, she writes:
It is the proper task of the government to protect individual rights and, as part of it, to formulate the laws by which these rights are to be implemented and adjudicated. It is the government's responsibility to define the application of individual rights to a given sphere of activity -- to define (i.e., to identify), not to create, invent, donate, or expropriate. The question of defining the proper application of property rights has arisen frequently, in the wake of major scientific discoveries or inventions, such as the question of oil rights, vertical space rights, etc. In most cases, the American government was guided by the proper principle: it sought to protect all the individual rights involved, not to abrogate them.
The rest of the article explains how this could apply to airwaves and how the U.S. government has failed to follow the proper principle in that area. (The article doesn't specifically mention the FAA, and I don't see the reference to "vertical space rights" as an endorsement of all of the FAA's current powers, extending to airport operations, requirements for aircraft features and equipment, its total domination over all flying vehicles of any kind, etc.) The CUI article advocates establishing a system of private property for airwaves, just as we have for land and other forms of property. I see no reason (so far) why airspace "lanes" for flying vehicles could not be established as a form of property in essentially the same manner, although I am not prepared at present to offer additional details of such a process myself without studying both existing airspace law and aviation technology in greater depth. Such a study would need to begin with the details of both existing airspace law and aviation technology, then identify how those details integrate (or not) with Ayn Rand's view of airwaves as a form of property. (Nor would I insist that airway lane ownership necessarily must follow Ayn Rand's exact model for airwave ownership, in disregard of any valid reasons for differences.)
The questioner also asks about how original ownership of property such as land, airwaves or airway lanes would be established. The CUI article (Chap. 10) describes how it worked in regard to land in 1862, and how it might work in more modern times where the relative number of buyers is far greater than the number of available property units.
One possible complication would be hazards posed to very large, fast flying manned jetliners by much smaller, slower moving vehicles in the same airway lanes. However, that issue exists already in regard to helicopters, although I am not familiar with how it is handled today (perhaps by keeping the jeliners and the helicopters at different cruising altitudes). A similar approach might be appropriate for smaller, slower moving vehicles, too, or it might be handled on the basis of allocated airway lane usage (lane-by-lane rather than by altitude alone). I would expect it to be determined over time on a lane-by-lane basis according to the choices of the lane owners, not necessarily by governmentally mandated "regulations" or government-imposed standards. But I would need greater understanding of the technology of lane determination to understand how feasible it really is to allocate airway lanes both horizontally and verticaly.
I certainly agree with the questioner that there is no justification for prohibiting unmanned aircraft owned and/or operated by a land owner (or his agents) from operating entirely above a person's own land at very low altitudes, out of conflict with other established airway lanes allocated to other owners.