This article is from the Model Rockets FAQ, by Wolfram von Kiparski with numerous contributions by others.
There is some good news and some bad news concerning rules and
regulations relating to consumer rocketry. On the positive side, you
can now buy up to G power motors in most states. Also, some states, such
as New Jersey, have recently relaxed restrictions on model rockets.
There is a menacing down side as well, though. California still has some
of the most restrictive regulations in the country. The ATF and DOT have
both become quite interested in high power rocketry and have begun
enforcing shipping and explosives regulations. Read the current
regulatory summary in Part 1 of this FAQ.