Such limiting regulations would preclude drone use for highly-touted applications like pipeline inspection and large-scale crop monitoring. Beyond that, last week’s ruling in favor of the FAA means that drones of all sizes will be covered under the regulations. Photography drones weighing less than five pounds, such as the now ubiquitous DJI Phantom series quadrotor, will likely be regulated the same way as much larger, gas-powered drones like Boeing’s 40-pound ScanEagle, which is used by militaries and private industry for sophisticated missions.

The news is a setback for those hoping that, based on a prior NTSB ruling finding against the FAA, small drones weighing less than 10 lbs. (including DJI’s Phantom and 3D Robotics IRIS) would not be held to the same standards as other aircraft the FAA regulates.

The idea that small drones might not be regulated as “aircraft” by FAA definition stems from a case in which a drone operator named Raphael Pirker was fined $10,000 by the FAA for using a small, styrofoam drone to gather footage for a University of Virginia Medical School advertisement, a service for which he charged a fee. While the transaction ran afoul of the FAA’s near-universal ban on using drones for commercial gain in the U.S., the FAA chose to cite Pirker for flying recklessly. An NTSB judge threw out the case in March on grounds that the FAA had not previously regulated model RC aircraft like the one flown by Pirker and had no grounds to do so now. Pirker’s flight also took place before the passing of the 2012 FAA reauthorization bill by Congress, which mandated the FAA to safely integrate unmanned aircraft into the national airspace. (A draft rule on more sweeping drone regulations is expected before the end of the year.)

The Pirker ruling led many to believe that small drones wouldn’t be regulated the same way as larger small drones—unmanned aerial systems typically defined as those weighing less than 55 pounds. But the FAA has since taken action to clarify its own rules toward small drones, and last week’s overturning of the Pirker decision further solidifies is position as the authority that will regulate all unmanned aerial systems as the commercial drone industry attempts to take off. It’s also another shot across the bow to those attempting to fly under the FAA’s radar as they use drones to commercial ends.

“A lot of people like to insinuate that there’s a grey area with the law: ‘What I’m doing doesn’t break any FAA rules because I’m not charging for my flight,’” says Patrick Egan, an editor at sUAS News and drone industry advocate. “These are the shadows that people like to hide in. With the NTSB ruling, the gray areas had some light thrown on them.”

Coupled with the rumors trickling out of the government concerning the proposed regulations, the ruling has proven troubling for many in the industry. Those who thought that small UAS might not be regulated by the FAA, or that they would be regulated different from larger, more complicated, and potentially more dangerous drones are facing a regulatory future in which very small drones and larger drones are treated alike.

“Where do you draw the line in terms of which UAS are regulated and which are not?” says John McGraw, an aerospace industry consultant and former FAA flight standards official. “The NTSB hasn’t said, but it has affirmed that the FAA has pretty broad authority to draw that line.”

Reports leaked to the Journal suggest that it may not draw much of a line at all. According to its report, the FAA’s proposed regulations plan to place all drones weighing less than 55 pounds under one set of rules, require that all drones remain within line of sight of the operator (and below 400 feet), and require pilots to have dozens of flying hours in manned aircraft before being certified to fly commercial drones. Advocates for the commercial drone industry have pushed back against every last one of these requirements, and many hoping to launch drone-related enterprises may have to reevaluate their business cases.

But such rules would also likely require a change in FAA structure and mission, which could be difficult given the agency’s current funding and manpower.

“After rules are issued, people are going to gravitate toward compliance with the law,” Egan says. “They’ll want to build businesses. But the FAA has a problem right now. It’s a double-edged sword with the NTSB ruling. You want to regulate toys? Well, now you’re regulating toys. If that’s going to be your deal, you’re going to have to evolve into being some kind of consumer safety organization and get down to the Toys ‘R’ Us level. I don’t know how they’re going to do that.”

Of course, the NTSB ruling doesn’t require the FAA to regulate every single aircraft, large or small, that takes to the airspace. However, it does give the agency the leeway to do so. If the proposed rules that leaked to the Journal this weekend are in fact a real barometer of the agency’s thinking, it suggests that the FAA will indeed have the power to regulate small drones the same as large ones and may do so. But how that will carry through to the practice of enforcement is yet another matter for the FAA to determine, and in that light the NTSB decision could have more symbolic than practical impact.

“[The ruling] just reaffirms what the FAA thinks was its authority all along,” McGraw says. “It’s not a shift in position for them. And it’s not their intent to regulate paper airplanes.”