The Federal Aviation Administration and SkyPan International in Chicago have settled a civil suit that was closely watched by the nascent commercial drone industry. The government agency said the privately held company flew its drones over New York City and Chicago from 2012 to 2014, violating its rules which barred drone operators from flying over densely populated areas without special government permission to do so. At the time, the FAA did not allow for commercial drone flights and didn't offer an exemption process yet.

The FAA originally sought a $1.9 million penalty from SkyPan in October 2015, representing the largest fine ever sought by the agency against a domestic drone operator. SkyPan, which was founded in 1988, provides aerial photography and data to real estate developers to help them with planning, sales presentations, and more.

The settlement has SkyPan agreeing to pay a much lower penalty of $200,000 to the FAA over three years, and creating public service announcements that promote safe use of drones and cooperation with the FAA within the industry this year. If SkyPan commits any violation of current FAA rules in the next year, it will pay $150,000 more. And if it fails to deliver those PSAs or adhere to other terms of the settlement, it will also pay $150,000 more.

SkyPan In a press statement, Skypan International did not admit to guilt but said it wanted to settle in order to avoid delays in other areas of its business. The company statement says SkyPan attained a so-called "333 exemption" from the FAA to fly drones for commercial purposes as soon as it could, in 2015.

The FAA-SkyPan settlement follows a case in Seattle  last week where the city charged and a jury convicted a man, Paul M. Skinner, of reckless endangerment after he crashed a 2 lb. drone into a building during the June 2015 Pride Parade there. The drone hit a woman in the head, and she suffered a concussion. Skinner is facing up to one year in jail and a $5,000 fine with sentencing scheduled for Feb. 24th.