In the United States, the Federal Aviation Administration (FAA) has the sole authority to control all airspace, exclusively determining the rules and requirements for its use. Typically, in the "Uncontrolled" category of airspace, any pilot can fly any aircraft as low as he or she wants, subject to the requirement of maintaining a 500-foot (150 m) distance from people and man-made structures...
So the law says that the FAA gets to determine the rules, and the current rules that the FAA has implemented require a 500 foot distance from structures. However, it would seem that the FAA could change these regulations tomorrow without any changes having to be made to federal law.
It is 1000ft over urban areas, but police helicopters are already exempt. The reason is because they want aircraft to be high enough they can try not to crash on top of a bunch of people or into some building when they loose power (rather than a privacy issue). A helicopter can do an emergency landing with better control in a no power situation. A 4 pound UAV is going to be able to fly lower than that because it is not going to kill a bunch of people when it looses power and crashes into a school or something.
Anyone that's played GTA Vice City enough knows an RC heli could manage at least one casualty pretty easily on failure (and, just to be sure, I've personally seen enough nitro-powered chicken dances to know this is possibly a _low_ estimate).
In the United States, the Federal Aviation Administration (FAA) has the sole authority to control all airspace, exclusively determining the rules and requirements for its use. Typically, in the "Uncontrolled" category of airspace, any pilot can fly any aircraft as low as he or she wants, subject to the requirement of maintaining a 500-foot (150 m) distance from people and man-made structures...
So the law says that the FAA gets to determine the rules, and the current rules that the FAA has implemented require a 500 foot distance from structures. However, it would seem that the FAA could change these regulations tomorrow without any changes having to be made to federal law.