Randall Clague of XCOR reports on sci.space.policy:

The AST/AVR turf war is over. Patti Grace Smith and Nick Sabitini [sic] have jointly published a Notice in the Federal Register, 68 FR 59977, that divides up the pie very evenly. Launch vehicles are AST, airplanes are AVR, and hybrid vehicles - those which share characteristics of launch vehicles and aircraft - are both. The dividing line is clear and unambiguous, is the same as what AST pre-announced at Space Access in April, and is trajectory dependent.

What this means is that the same vehicle can be an experimental aircraft on Monday, a launch vehicle on Tuesday, and an experimental aircraft again on Wednesday. Which it is depends on how you fly it. If you fly it so it meets the definition of a suborbital rocket, it's a launch vehicle, and you need a launch license. If you fly it so it doesn't meet the definition, it's an experimental aircraft, and you need a pink slip.

This is good news for pretty much everyone. Flight test paperwork is a whole lot easier, but when we need to start charging for flights, we can - we just have to get a launch license. This is WAAAY easier than the equivalent route for airplanes, which is type certification. AST and AVR did a really good job on this compromise.

Patti Grace Smith is the head of the FAA-AST office that regulates space launch, and Nick Sabatini is the Associate Administrator in charge of the FAA-AVR. This is good news. If Randall is interpreting it correctly (I haven't had the time to go look at the notice yet, myself) it means that Burt can continue to do his test flights as an airplane until he actually decides to light his rocket, at which point he'll still have to get a launch license, but this further clarifies things. It implies to me that the agency is attempting to align itself with the congressional intent expressed in the recently introduced legislation, though it hasn't yet become law.

I'll have more thoughts later, after I've had time to read and digest the notice.

Excellent news! It looks like the way is being cleared for the sub-orbital guys.

Quoth Rand,

"If Randall is interpreting it correctly it means that Burt can continue to do his test flights as an airplane until he actually decides to light his rocket, at which point he'll still have to get a launch license."

It's even more friendly than that, though that's vehicle dependent. If SpaceShipOne's thrust is much less than its drop weight, it can fly under rocket power and still not meet the definition of a suborbital vehicle. If it's able to do that (I don't know SpaceShipOne's thrust or weight), Scaled can do a fair bit of powered flight test under their experimental certificate.