The Federal Aviation Administration’s (FAA) recently-announced delay in implementing a policy to address the increasing popularity and availability of drones, or Unmanned Aircraft Systems (UAS), threatens to further hinder expansion of drones beyond hobbyists to commercial uses and to drive American companies’ UAS technology R&D overseas.

The FAA Modernization and Reform Act of 2012 contains language instructing the FAA to implement regulations that will safely integrate drones into the national airspace by 2015. However, at a Congressional hearing on December 10, 2014, Department of Transportation’s Assistant Inspector General for Aviation Audits Matthew Hampton stated that the FAA would not be able to meet that goal, citing “significant technological, regulatory, and management challenges.”

This delay does not come as a complete surprise, and a number of companies have expressed their frustration with the delays, threatening to take their research and technology overseas if the regulatory hurdles for commercial usage of drones are not streamlined and codified. Amazon is the most notable and outspoken American company voicing its concerns. Amazon’s intentions to integrate drones into its “Prime Air” experimental delivery program have been loudly advertised, beginning with its grand unveiling by Steve Bezos to Charlie Rose on “60 Minutes” last November. However, Amazon’s grand plans have been hampered by its inability to test its UAS technology in the United States. On December 9, 2014, the company stated that “[w]ithout the ability to test [the use of drones] outdoors in the United States soon, we will have no choice but to divert even more of our [drone] research and development resources abroad.” In fact, it has already begun sending some of its research and testing to Cambridge, England, where regulations to obtain a license for commercial drone use are fairly simple, with over 300 already issued.

This stands in stark contrast to the approach to drones in the United States. Here, the FAA must issue regulatory exemptions before a drone can be used commercially. On December 10, 2014, the FAA granted five such exemptions to four companies, which will permit them “to perform operations for aerial surveying, construction site monitoring and oil rig flare stack inspections.” The FAA has also issued exemptions to six aerial photography and video production companies. Amazon requested its own exemption in July 2014, but as of this posting, it has yet to be awarded an exemption and filed a follow-up submission on December 7, 2014.

So far, the hypothetical threat of jobs and investment being forced offshore has not given the FAA any sense of urgency with respect to drone regulation. However, as Amazon takes more of its business elsewhere and other companies follow suit, the FAA may have little choice but to pick up its pace, or at the very least, expand and streamline its exemption criteria and process.