DEPARTMENT OF COMMERCE PROPOSED REPORT ON H.R. 5155 -- LAND REMOTE SENSING COMMERCIALIZATION ACT OF 1984 -- AS PASSED BY THE HOUSE ON APRIL 9, 1984.

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP05T02051R000200270004-6
• Release Decision: RIPPUB
• Original Classification: K
• Document Page Count: 21
• Document Creation Date: December 22, 2016
• Document Release Date: November 28, 2011
• Sequence Number: 4
• Publication Date: April 19, 1984
• Content Type: MEMO

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STAT
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GENERAL COUNSEL OF THE
UNITED STATES DEPARTMENT OF COMMERCE
Washington. D.C. 20230
Hc'ncrable JG^es H. Scheuer
Chairman, Subcommittee on Natural.
Resc:urces, Agriculture Research
and the Environment
U.S. =o?-,se of Representatives
r:ashington, D. C. 20515
Dear :r.- Chairman:
This will respond to your request for the views of this
' Department on legislation currently pending before your
Committee -
"sTo establish a system to promote the use of land
remote-sensing satellite data, and for other purposes."
Although your request was in regard to H.R. 4836, a bill then
under consideration by the Subcommittee, our response will be
in reference to H.R. 5155, a bill subsequently introduced.
Our response--is on behalf of the Admin.' stration, and incorm
porates the views of all other interes..zd agencies.
The goal of H.R. 5155''is to provide for the orderly transi-
tion of United States civil land remote sensing activities
from the public sector to the private sector in a manner
which preserves both continuity of land remote sensing data
and the technological leadership-of the United States in the
civil land remote sensing field.
Title I- of the bill provides for the marketing, by a govern-
ment contractor, of data generated by the present (Landsat)
system. Under the terms of title II, the government would
retain ownership of the Landsat system and all data generated..
by it, while the contractor would be entitled to a portion of
the revenue from sales of the data. Under title II,-.the
covern:nent may contract for the operation of-.the system as
'Well, If the Secretary of Commerce (the Secretary) determines
u at t e purposes of the Act will be served thereby.
e --= of the bill provides for the Secretary to contract
v;_th a --rivate sector party for the provision of the capabil-
ty c_ cro^uc'_ng remote sensing data in certain quantities
and at a certain minimum level of quality for a period of six
year!. The contract may provide for a payment by the Secretary
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to cover the capital costs of achieving such a capability,
bit may not provide for any guaranteed data purchases by the
cov eren All data generated by the contract operator must
be available for sale on a nondiscriminatory basis.
Title iV of the bill grants to the Secretary authority to
_ssze '?_censes for the operation of remote sensing systems.
tle V of the bill provides for a continuing federal role ;n
_ sea=ch: and development in the field of remote sensing..
c= the bill states federal policy regarding nondis-
;._natc=-v dissemination of data" provides for archiving of
data by'tae Secretary, and contains a number of miscellaneous
:.rot isions.
The Ac,=nistrat; on supports H.R._ 5155, with certain technical
changes, as. an appropriate framework for achieving the
commercialization of civil land remote sensing from space as
soon as ressible, while maintaining the U.S. lead-in land
rer.ote sensing, with the private sector making the major
financial investment.
^e Department is now in the process of carrying out what we
believe to be the most thorough and exhaustive effort to date
to deter-..pine the "next steps" in the Landsat program that
most. facilitate the transfer of land remote sensing operations
to the private sector. We have issued a .Request For Proposals
("P, FP") for deployment of a follow-on system and the transfer
of the current system to the private sector. Seven responses
have been received and are being evaluated by a Source
Evaluation Board established for this purpose.: The Board
expects to submit recommendations to the Secretary in June,
1924.
the vies: of the Administration., it would be extremely
_n=crtunate if the work cf the Board and the respondents to
were to be discarded or repeated. This would result
s _icant and costly delays in the commercialization
=rocess. Therefore, our principal concerns lie with. any
=ov =ions of the bill which may or would invalidate: the RFP.
_- addit on,'it is essential that agency missions currently-
__- cr dependent rcn remote sensinc not be adversely
..:e _ec:s_at
.-~a_ concerns a__ set =ort1 as follows. Additional
_-ca,_ c: .meats are en closed.
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Recui=ed Marketing. Section 2.01(a) of the bill may require
the Secretary to contract for the marketing of data generated
by the current Landsat system.
The 7,d nistration is not opposed in principle to the concept
of pr---le-sector marketing of Landsat data, and the RFP
e-ccu=aced bidders to take over the operation of the Landsat
system and the -marketing of data generated by the system.
cw e:er, there was no requirement in the RFP that a bidder do
se. Thus, if the successful bidder in the RFP process does
nde=take to market the data, an additional procurement
action .-ay be required for the marketing component.
T :e Aaninistration is opposed to section 201 (a) as currently
drafted since it could pose a danger to the execution of a
contract awarded as a result of the RFP process. Because the
RAP did not require that respondents bid on the marketing of
L andsat data, companies that were interested primarily in the
marketing component likely chose not to submit a proposal.
If title II were enacted in its present form, these companies
-- as well as unsuccessful bidders -- may seek to invalidate
the-'results of the RFP on the ground that it did not fully
compl y. with the requirements of title II. Such efforts could
delav~ i^pleme; tation of the title III contract. A delay in
implementation would in turn assure significant gaps. in the
data stream upon the demise of Landsat a result to be
avoided at all costs.
The Adrinistration.is thus opposed to the apparent require-
ment of section 201(a) that a marketing procurement be
undertaken. We would support a provision which grants the
Secretary discretion in determining whether to carry out such
a procurement. We would also support alternative provisions
(1) recuiring further marketing efforts if, upon conclusion
of the P.FP process, it becomes apparent that such effort
would be in the national interest, or (2) permitting the
combination of the two procurements by the Secretary in a
anr_Y_ ccnsistent with. that adopted by the RFP.
Term of the Title III Contract. Section 302 of the bill
:.=ovides that the contract* entered into by the Secretary
cancer Title III shall reasonably assure the provision of
sensing data for a period of six years, terminating
c- ` yea a=te= the expiration of this six-year period.
ie t:.e length of the contract :will 'depend on a number of
terms and conditions, it is our opinion that the six-year
==r. cc ccntempla ted by the bill may be overly restrictive . A
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more likely period for successful conversion to full commer-
cial c-eration would be approximately eight years rather than
six. The eight-year period would not include the time prior
to the launch of the first commercial satellite, which is.
likely to be two-to-four years. Thus, while the term of the
contract described in Title III should be negotiable rather
being set for a prescribed period of time, we would
_efer the outer limit to be at least eight years rather than
Six.
Lte to Landsat Data. Section 202:(a) of the bill provides
.a z t -Ie to any and all data generated by the Laridsat
s?: ster. shall re-main with the government, while providing that
the Title iI contractor be entitled to revenues from the sale
of copies of data from the system: The RFP offered bidders
the cpportunity to-bid on. the entire current Landsat system,
including both the space and ground segments.
If a bidder were to propose assumption of.both ownership and
operation of the system, acceptance of this proposal would
apparently be prohibited by the legislation as currently
s=a=ted. The recuirement that the government retain title
may also create copyright problems, inasmuch as the marketing
contractor will undoubtedly insist on the right to restrict
redistribution and sale by data purchasers.
r. -
We therefore suggest that the bill permit a transfer of title
upon a determination by the Secretary that this would be in
the national interest. If this recommendation is not adopted,
we strongly suggest the addition of appropriate copyright
provisions.
Capitalization Costs. Section 302(b)(4) of the bill provides
that the contract entered into by the Secretary under Title III
of the bill may provide for a payment by the Secretary to
cover a portion of the capital cost of providing remote
sens_n capability. This payment may also be made in install-
:-._: is cased on progress over the life of the contract.
there will be costs associated with developing the
capability recuired by the Title III contract, -ae are not
ca_su=_cac t_*.at a capital payment (or payments, as the case-
,..- b_; = s t e crly acceptable financial arrangement. It may.
financial vehicles, such as loans or loan
=ee may be more advantageous to the government. The
t =_., ;,,_d therefore permit the Secretary greater discretion
`_cp; ng the _ i *+ancial structure of the contract.
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Guaranteed data purchases. Section 3102 (b) (6) of the bill
prohibits guaranteed data purchases by the federal government.
while the RFP made it clear that the government would not
enter into an exclusive data purchase arrangement with any
contractor, and would not necessarily agree to a proposal
requiring guaranteed purchases, it is nevertheless the view
of the Administration that this restriction is not in:the
interests of the government. It may be that some minimal
1e-:e? of guaranteed purchases may recommend itself as an
cpb=c,pr_ate means of commpensating a contractor over the life
c= the contract. if so, we do not wish to preclude adoption
cf such- a contract term.
Rebates: Section 303(b) requires that at least 5 percent of
the price of data sold to the government be rebated to the
Treasury. This provision unduly restricts flexibility of the
bidder in structuring his bid. While rebates in connection
with government purchases may be perfectly acceptable, it is
not in the government's interest to require this arrangement.
Such ay requirement will only narrow the range of choices
avai l'be to the Secretary in selecting the best deal for the
Government.
Reporting. Section 502(d) of the bill provides for'
joint preparation and transmittal to the Congress by. the
Administrators of NOAA and NASA of a renort containing, among
other things, a unified national plan for remote sensing
research and development applied to the earth and its atmosphere.-
our experience with such joint reporting is that it works
poorly, at best. We would recommend that the requirement for
a joint report be deleted. -??
Frequency allocation. Section 605 of the bill encourages
the allocation of government and other civil radio frequencies
tc license holders by the Secretary and the Federal Communi-
cations Commission. We recommend that section 605 be amended
arc e_lv to reflect the primary responsibility of the Federal
Ccm.unications Commission for the assignment of frequencies
to nongovernmental users, and the primary responsibility of
t e Department of Com.-nerce, through the National Telecommuni.-?'
cations and Information Administration, for the. allocation of
governmental frequencies.
-ions noted above, and with further technical
c _- as noted in the attached .:uteri alb, the Administration
.rc~ y supports E.R. 5:55.
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j?:e have been advised by the Office of-Management and Budget
that there would be no objection to the submission of this
report from the standpoint of the Administration's program.
Sincerely,
=-. 1Y;arcTu lies
::e era_ Cc`nsel
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Technical Comments - S. 2292
lines 18 - 23:
Strike this subsection and insert the following:
11(5) "United States private entity" means any
citizen of the United States, any nongovernmental
entity, or any consortium of (i) nongovernmental
entities, or (ii) governmental and nongovernmental
entities. In the case of an entity or consortium,
the term means an entity or consortium the majority
of whose assets is owned by citizens of the United
States, the majority of whose personnel is comprised
of citizens of the United States, which (in the case
of a consortium) is administered by a central,
responsible person or entity designated by the`
consortium, and whose principal place of business:is
in the United States."
NOTE: The definition has been enlarged to include
individual citizens, since the prohibitions of title
IV must apply to individuals as well. The idea of a
central; responsible management entity for consortia
has been transposed from section 402(b), because it
is definitional in nature.
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cace 6," line 3 - -Dace 7, line 6:
Strike this section in its entirety.
1;OTE: The various components of this section are
either unnecessary or undesirable.
Subsection (a) to a large extent restates existing
law. In addition, however; paragraphs (1) and (2) may
be interpreted as imposing upon the Secretary a
higher duty with respect to the disposition of
Landsat 4 and Landsat D' than the government has
already undertaken pursuant to international agree-
ment. The meaning of paragraph=k3) is unclear, but
probably restates existing law.
Subsection (b), the purpose of which is- evidently to-
protect the title III operator, is unnecessary. The
.::e~oranda currently in effect may by their own terms
be extended. The government will not extend its
obligations under the memoranda beyond its ability to-
=u=fill them, which will terminate upon the practical
c= the system. These memoranda are binding
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only upon the government and cannot bind subsequent
private sector operators of remote sensing systems.
Subsection (c) provides that the government may
continue to contract out the operation of the current
s:?ster. This provision restates existing law.
Subsection (c) further provides, however, that
ownership of the system and the data must remain with
the government. This provision is directly contrary
to the terms of the Request for Proposals (RFP)
issued by the government, which permits the respon-
dents to bid on the operation and ownership of the.
-current system. If an otherwise attractive bid
contains an,element providing for the assumption of
title to the existing system, the government-would be
unable to accept this bid. As a result, the govern-
ment may be forced to accept a less satisfactory bid,
accept no bid; or repeat the procurement. Any of
these results would be undesirable.
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Pace 7, line 8:
Chance 11202" to "201" .
7,
Strike the word "shall" and insert the words "is
authorized" .
NOTE: Section 202 requires that the Secretary con-
tract out for the marketing of Landsat data. This'
requirement has two significant drawbacks:
First, if this provision is enacted, it will-require
that a new, separate procurement action be carried
out for this marketing function. This is because the
F=? does not require that bidders bid on
the- market-of Landsat data, and because we anticipate that
.f any, bidders did so. The requirement that
such a procurement be carried out-is extremely.
;::rcesome and wasteful. By the time it is completed
an the contractor cc.mences work, there will be
=_~tie - if any - life left in the system and thus
contractor's opportunities to accomplish anything
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significant will be either extremely limited or
nonexistent.
Second, there is the real possibility that enactment
of this provision will delay or prevent execution of
the title III contract,-thus raising the real possi-
bility of significant data gaps. This is because
companies who did not respond to the RFP because they
were not interested in the .operations side may bring
suit to invalidate it because they were not given an
opportunity to bid on the marketing as this provision
apparently requires. Litigation would undoubtedly
bring the execution of the title III contract tQ a
halt until the issues raised in the lawsuit were
resolved.
The undesirability of this provision cannot be
overstated.
Pace 7, line 11:
Before the word "contract", add the word "to"..
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ice 7, lines 13-14:
Strike and insert the following:
"data collected during the useful life of the Landsat
system, as determined by the Secretary. Any such
contract shall provide that --I'.
This change makes clear that the contract
governs only data collected by the Landsat system
during its useful life, and that the Secretary has
discretion to determine when the useful life of the
system terminates.
Pace 7, lines 17-18:
Strike and insert:
"able on a nondiscriminatory basis.".
1\-O -,E: This term has been defined.
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?ace
line 6:
Redesignate subsection (b) as subsection (c), and insert a
new subsedtion (b) as follows: "(b) Such contract may provide for the operation
cf, and transfer of title to, the Landsat system as
dezerm..ined by the Secretary to be appropriate and in
'"L-^e national interest.".
Pace 8, line 10-page 9, line 6:
Delete this subsection.
NOTE: Present subsection (c) creates undesirable and
unnecessary ambiguities concern~ag the role of
Congress in. reviewing the selection actions of the
Secretary. It may be read to mean that after the
Secretary awards a contract, the congress may review
that award. This is bad contracting procedure, and
will place the chill of uncertainty on the entire
process. Bidders will be reluctant to commit full
resources to a bid because they Will be-more than
usually uncertain of the outcome.
^e Secretary has the obligation to keep Congress
i:~fc= red of developments. It is also in'his interest
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to do so, since Congress will..also have the last word
on any contract, the contract being contingent-upon
monies being appropriated.
=owever, the Congress should set policy governing the
award of this contract, and the Secretary should be
granted adequate
that policy.
discretion and authority to execute
ce 9, line 8:
Change 11203" to "202" _
pace 9, line 15:
After the word "data", add:
~t and
(3) such other factors as the secretary deems
appropriate and relevant".
The Secretary should retain some degree of
discretion in the award of the title II contract. It
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would not be desirable to "lock him in" to only two
selection criteria.
Pace 11, line 9:
Strike "six" and insert "eight".
Page 12, lines 1-21:
Delete this subsection. See comments on present section
202(c).
Page 14, line S - page 16, line 23:
Strike the entire section and insert new section-.as set
out in attachment to these comments.
NOTES:' The bill currently contains no provisions
governing the "qualifications",of licensees. (The
only provision which may be so construed - dealing
with the establishment of,_a "central, reponsible
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entity" by a consortium, may be considered defini-
tional, and we have for this reason proposed moving
it to section 103(5).) Ambiguities concerning what
constitutes a "qualified" entity are thus raised, but
not resolved, by the use of this term.
Currently, the bill contains no criteria by which the
Secretary can determine whether an application should
be granted or.'denied. In.'theory, all applications
from United States parties which are in correct form
must be granted, even though it may be quite clew=
that the applicant is not "qualified", e.g.,,that it
does not have adequate financial or technical.re-
sources, or that it does not have adequate insurance
coverage, or that there is substantial evidence that
the applicant will not abide by the terms of: the
license.
we think that section 402 :can also be clarified
retarding the steps which the applicant must "agree
in advance"-to take [e.g., present section
=_.02(c)(2)], and what the licensee is required to do
the terms of the license [e.g-., present sec-
z_cns 402(b) and 402(c)(3)]
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We emphasize that the bill should set forth each
action which the government wishes a licensee to take
or'refrain from taking during the operation of his
.system. The bill should further require that each of
these steps be set forth in each license issued.
The House bill (H.R. 5155) contains expanded
provisions regarding the Secretary's regulatory and
enforcement authorities. We believe these are an
essential feature of any title IV licensing scheme.
Face 17, line 2:
After "403.", insert "(a)".
Pace 17, line 11:
Insert new subsections (b) and (c), as follows:
"(b) The provisions of this Title-shall not
apply to any activity carried out by the National
eronautics and Space Administration pursuant to its
authority under Title IV of the National Aeronautics
and Space. Act of 1958, as-..amended.
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"(c) Nothing in this section shall affect the
authority of the Federal Communications Commission to
assign radio frequencies pursuant to the Federal
Communications Act, as amended."
_ 19, line 11 - page 21, line 2:
Strike --his section and insert as follows:
"(b)(1) The Secretary shall continue to
provide storage, maintenance and access for unen-
hanced data from-civil remote land sensing systems,
including, in his discretion, such data from the..
Landsat system, the system operated pursuant to
title III of this Act, and any system licensed
pursuant to title IV of this Act.
"(2) Storage, maintenance and access shall be
undertaken only with respect to-data which the
Secretary, following established"archiving practic-
es, determines to have real or potential value to
the Nation.-
11(c) Copies of all data generated by ai
system operator under titles II, III, or IV of this
Act shall promptly be made available to-the Secre-
tary by such system operator in a form suitable for
processing for storage, access and maintenance.
The Secretary is authorized, subject to appropria-
tions therefore, to pay to, such system operator
reaonable costs for reproduction and transmittal of
such copies.
"(d) (1) Any system operator: shall have the
exclusive right to sell all data generated by such
operator for a period not to exceed ten years from
t:e daze such data are generated. During the
-.en-:ear oerioc, the Secretary shall not engage in
actipity w is infringes upon this right.
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"(2) Any'system operator may at any time
relinquish, with respect to any data generated by
such operator, his exclusive right to sell such
data. Such relinquishment shall be transmitted in
writing to the secretary.
".(e) Following the relinquishment or expira-
tion of such exclusive. right to sell data, the data
shall be in the public domain and the Secretary and
ay be distrubuted by the Secretary at prices
reflecting the reasonable costs of reproduction and
"(f) In-carrying out the function of this
section, the Secretary may use existing facilities
or may contract for the performance of such func-
tions, to the extent provided for in advance by
appropriations acts."
NOTE: The principal change effected in this re-write
is to ensure that the Secretary does not perform a
"warehousing" function for system operators at
taxpayer expense. Presently, tL: bill may be inter-
preted to require the Secretary to store all data
generated by system operators, and return it to them
upon demand, for only nominal fees. This is not a
desirable result. System operators should be respon-
sible for their own storage, maintenance and access,
until such time as their exclusive right to-the data
either expires or is relinquished.
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'ice 21, line 13:
.Strike ", such as launch services,".
-/;, - * ne s 7-5 - 21:
Ater the word "Corm-niss=on", add:
the Secretary,".
it
in consultation with
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