"I don't want to be tracked everywhere," said Kenji Sugahara, who owns companies that fly drones for farmers and filmmakers and is also policy director for the Drone User Group Network. "People are very worried about their personal privacy."

Nevertheless, regulators are working on just such a requirement. The Federal Aviation Administration created an advisory panel in June of more than 70 drone industry and user representatives — including Sugahara — in a fast-track attempt to develop requirements so battery-powered aircraft can be identified in the sky. They have to finish by Sept. 30 so the FAA can begin crafting regulations.

The pace is being driven by law enforcement agencies, which won't go along with the agency's plans to begin allowing more extensive unmanned flights over people and in congested urban areas until they get assurances they can tell the difference between legitimate operators and bad actors, FAA Administrator Michael Huerta said in an interview.

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The group has already made "really, really good progress," Huerta said. While declining to discuss specifics as it hashes out details, he said one of the areas the advisory committee is working on is setting a demarcation line between smaller toys that don't pose a threat and more capable craft that could carry a bomb or be used for surveillance.

Tiny devices can be installed in a drone to broadcast its position

Breakthroughs in technology makes the discussion possible. Cheap, tiny devices can be installed in a drone to broadcast its position. Radio transmissions that drones already use for navigation can also be piggy backed.

California-based uAvionix Corp. has developed a radio transmitter as small as a dime that would provide precise drone tracking data, according to its website. China-based SZ DJI Technology Co., the world's largest civilian drone manufacturer, earlier this year said it could adapt existing radio-control signals to identify and track its devices. The same data could also be transmitted on cellular networks.

Full requirements

While the full requirements haven't been hammered out yet, the idea is to give a police officer on the ground the identity of a drone's operator, in the same way a car's license plate can be traced to its owner. At the same time, it would give the drone's location, so police or even traditional aircraft could monitor its path.

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The debate over drone tracking is critical to the growth of the commercial side of the industry and has enormous financial implications for some of the largest U.S. corporations, according to more than a dozen interviews with people familiar with the talks.

The hopes of Alphabet X's Project Wing and Amazon Prime Air to create vast drone-delivery networks depend on a new low-altitude air-traffic system to keep order among unmanned craft zipping over cities. Such a system, the outlines of which are being designed by NASA, requires that every unmanned aircraft within such an area identify itself via a radio broadcast and follow the rules.

"Amazon does not support anonymous operations" of drones in U.S. airways, with only minor exceptions such as hobbyists at designated flying fields, Sean Cassidy, director of Safety and Regulatory Affairs told a House subcommittee on April 4. Company spokeswoman Kristen Kish declined to discuss current talks because it is participating in the FAA committee.

Telecommunications giants Verizon Communications Inc. and T-Mobile US Inc. are both on the FAA's advisory committee because each stands to gain if the cellular networks are used. The panel's members include chip manufacturers Intel Corp. and Qualcomm Inc. Startups like AirMap Inc., which wants to sell data to drone users, are also involved.

Difficult to track

Under current U.S. rules, non-commercial drone users have wide latitude to fly, so long as they don't go over people or climb more than 400 feet (122 meters) above the ground. Because it's so difficult to track them, the agency has had only a handful of enforcement cases in spite of more than 1,000 reports of potential violations such as flying near airport runways.  

The FAA's ability to monitor drone flights was dealt a blow on May 19, when a U.S federal court invalidated the agency's registration system for unmanned aircraft. Both the House and Senate have pending legislation that would reinstate a drone registry.

A requirement that drones be tracked would go significantly beyond a registry — and it's opened a raft of questions about privacy, who should pay and whether a tracking system would benefit users.

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"There will be all these tensions," said John Hansman, director of the Massachusetts Institute of Technology's International Center for Air Transportation who has worked on drone issues. "There are some people who just don't want any regulation at all."

Sugahara, of the Drone User Group Network, said most of the group's 25,000 members understand the concerns of law enforcement and would agree to some type of tracking — but with limits. 

Drone operators' identities shouldn't be available beyond police or other officials with a need to know, the tracking data shouldn't be uploaded into a national system and it shouldn't provide a drone's precise location, Sugahara wrote in a white paper earlier this year. The locating beacon also should be inexpensive, as cheap as a $2 Bluetooth device, he wrote.

Precise GPS location

But under the Drone User Group Network's vision, drones would provide far less data than what most traditional aircraft broadcast, which increasingly includes a precise GPS location. It also pits the drone group against some of the requirements Amazon and Alphabet have proposed.

Hassna, the Alameda County Sheriff's deputy, said he isn't sure what the requirements should be, but there needs to be something to allow him to identify drones. He also worries about worst case scenarios: a hobbyist interfering with an air-ambulance helicopter or terrorists turning a drone into a weapon.

"Unfortunately, I've just begun to see these happening on a regular basis," he said. "I think it's going to get worse and cause a problem."