Basic the only thing that the government has said on the use of rockets one way or another, is that your rocket can't be a weapon, can't be propelled by nuclear power and can't carry any radio active, toxic chemical, or biologically hazardous materials. And if there is large explosives on board it you need to have an operating license. All rockets are supposed to be supervised by someone that is over the age of 19.

Along with the restrictions there are rewards. The "X prize" is a reward for the first person that can launch himself and 2 other to an altitude of 100 km (and return safely) and then do it again replacing less than 10% of the non-propellant mass.