The drone burned into a pile of rubble on the site as Coast Guard officials blocked off the area to investigate.
A military spokeswoman says the unmanned drone went down during a routine training flight.
In response to the crash, Kentucky Republican Senator Rand Paul says he wants to introduce a bill to limit the use of domestic drones.
"It would have to have a warrant," said the Senator, " and I'm concerned about obviously arming drones. But I don't want to say that I'm arguing against technology. For example, there's a bomb in a car, I'm very happy that we have automated robots to go up to the car and investigate the bomb, and we don't have to risk a human. Same with drones. If they can save lives, that's one thing. Arming drones, sends up pictures of the military and I don't think domestically armed drones are a good idea."
The $176-million drone that went down in Maryland was being used by the military. But smaller ones are used by law enforcement agencies across the country. They can fly low and undetected, and police say they help fight crime.