I AM ENCLOSING THE GUIDANCE LETTER WE RECENTLY RECEIVED FROM JIM MCINTYRE, DIRECTOR OF THE OFFICE OF MANAGEMENT AND BUDGET, WITH RESPECT TO THE TRANSITION PLAN FOR LAND REMOTE SENSING FROM SPACE.

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP10M02313R000703980025-7
• Release Decision: RIPPUB
• Original Classification: K
• Document Page Count: 7
• Document Creation Date: December 23, 2016
• Document Release Date: July 9, 2012
• Sequence Number: 25
• Publication Date: October 3, 1980
• Content Type: LETTER

TO
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EXECUTIVE SECRETARIAT (0/DCI)
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SUSPENSE DATE: 10 October
Remarks: To 3 & jr: Please develop coordinated
response for DCT!s. signature.
To 5: This irr,the letter you forecast at the
26 September Staff Meeting.
3437 (4-78)
cr a
6 Oct 80
Oat,
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Dear Stan,
THE SECRETARY OF COMMERCE
Washington. D.C. 20230
OCT 3 1980
1-\Aecurive lit:gutty
LTO -
I am enclosing the guidance letter we recently received from
Jim McIntyre, Director of the Office of Management and Budget,
with respect to the Transition Plan for Land Remote Sensing
from Space. The letter reviews many of the major policy
issues discussed in the Transition Plan and states that, in
the view of OMB, most of the decisions on these issues should
be made in the context of the 1982 budget process.
The letter raises a number of policy issues of national
importance that warrant your attention. I believe we must
first resolve these critical policy issues and then implement
them through the budget process.
I would appreciate receiving promptly your views on the issues
raised in the OMB letter. Upon receiving them, I will prepare
a final response to OMB and recommend a process to determine
the future of the Landsat program.
Secretary of Commerce
Enclosure
Honorable .Stansfield Turner
Director of Central Intelligence
Washington, D.C. 20505
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..? EXECUTIVE OFFICE OF THE PRESIDENT
fk-sYl-ji) C1710E OF MANAGEMENT AND stnbcurr
WASHINGTON. D.C. 7.12503
SE? 1 6 1980
Honorable Philip M. Klutznick
Secretary of Commerce
Washington, D.C. 20230
Dear Mr. Secretary:
This letter provides our comments on the "Transition Plan for Civil
Operational Land Remote Sensing from Space" and outlines what we believe
should be the next steps undertaken to move forward with Administration
policy commitments for satellite-based land remote sensing. The views in
this letter reflect not only this Office's position, but also those of
Dr. Frank Press.
Although we may share different views on the issues, your Department is to
be commended for its analysis of the complex policy and technical issues
discussed in the Plan. We appreciate the amount of effort, under tight time
constraints, which has been devoted to this effort by your Department and
representatives from the other interested agencies.
The path we have embarked on to transfer government-developed technology
from the R&D phase to an "operational" status and ultimately private sector
ownership is an area where we have little experience. Land remote sensing
from space is considered by many to have great economic potential, but, as
articulated in4your Plan, the user community is limited, and, as yet,
reluctant to share fully in the system's costs. Furthermore, it comes at a
time when the President and Congress are pressing for fiscal restraint. In
summary, we appreciate the rationale behind the resource allocations
proposed in your Plan but must state that our decision to provide increased
funding for this program will be dependent on thorough programmatic
justification and the willingness of the users to share in the costs.
Given the uncertainties over the launch date and configuration of LANDSAT 0
and D', and the budgetary and legislative implications of the options
Available, we believe that most decisions should be made in the context of
the 1982 budget process. We, however, do have initial guidance on how we
should proceed with resolving the issues and moving forward and what
additional analysis we believe is necessary.
4.
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NOAA Recommendation #1: Continuity of Data in the 1980s
a. Operations2nd_transfers.--The LANDSAT D ground segment should be
upgraded to providiscribed performance standards and additional
spacecraft (two) should be procured to provide data continuity. The
National Aeronautics and Space Administration (NASA) would _transfer
responsibility to NOAA for the LANDSAT D space and ground segments
after the LANDSAT D system meets initial performance standards, and
the Department of the Interior (DOI) subsequently would transfer
archiving and dissemination functions to NOAA.
b. Manalement.--Authorizing legislation would be requested for NOAA to:
T1T manage the satellite system until it is transferred to another
entity, and (2) regulate and provide financial assistance to the
private owner. The interagency Program Board and Advisory Committee
? would be established.
4
OMB Comment/Reaction
Recommendation j1 a.--We appreciate NOAA's and the user community's desire
To?hivi a system wFich meets high performance standards. Before we can
concur with such a proposal, we need more detailed programmatic
justification, other than stated assertions, of users' perceived needs.
Such justification should document what the additional benefits are and
why the additional system improvements are worth the added costs. The
justification also should provide_an analysis of to what extent the
incremental costs would be recove-f.ed fully from users. Since there is
very large cost for each additional satellite, as part of the 1982 budget
review process your Department and the user agencies must document the
losses and gains, respectively, in as quantifiable a manner as possible,
which would occur from different levels of LANDSAT performance and
satellite coverage.
The proposed sequence for the transfer of LANDSAT operations from NASA to
NOAA seems reasonable if the Federal Government continues to operate and
manage the LANDSAT system during this decade. We believe that before
this strate6 is finalized, the possibility of having the private sector
take over the system in the near future from NASA should be pursued
further over the next few months and analyzed in the context of the
institutional approach options and data continuity commitment.
Recommendation #1 b.--Regardless of the institutional approach selected,
reguTating iiitFoTity should be kept to the minimum essential to protect
the public and national security interest. The charter for the
interagency Program Board and Advisory Committee should be finalized and
implemented as soon as possible.
NOAA Recommendation #2: Initiation of aFully Operational System in 1989
A 1989 goal for a fully operational system (using new sensors, and maybe
spacecraft that meet a broad range of user needs) should be established.
Operational system characteristics based on user needs, projected levels
of demand, costs', pricing policies, and expected Federal financial
4 assistance would be developed in consultation with the user community in
1981. NASA would move forward with the necessary R8,0 work as soon as
possible to achieve the 1989 goal.
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OMB Comment/Reaction
We concur that we should begin the necessary studies for determining valid
user data requirements and market demand at projected service costs. The
timing for moving to a future, advanced operational system shou121 depend
upon the willingness of the Federal user agencies, State and local
governments, and the private sector (domestic and foreign) to invest, not
technology-push. Until the private sector is willing to provide a
significant share, if not most of the investment required, a future, more
advanced operational system should be deferred beyond 1989.
NOAA Recommendation #3: Pricing Policies and Federal Financing
a. Priciu policx.--Prices charged system users (direct reception and data
products) would be raised on a phased basis at levels initially designed
to encourage potential users to invest and to reduce the use of
competing methods of data collection. Initial price increases would
become effective in FY 1983 as a result of preliminary pricing studies.
Prices for FY 1984 and after would be established after contracted
market studies initiated in FY 1982.
b. Federal financini.--NASA would continue to budget for the R&D costs
Ti.e.,?Sensorripacecraft R&D and., prototype launch). The Department of
Commerce (NOAA) would budget for the "core" operational system costs,
not covered by revenues, meeting common needs of the majority of users
and costs for any special system capability would be budgeted by user
agencies desiring them.
OMB Comment/Reaction
Recommendation #3 a.--We concur that longer-term, non-Federal market
'EerieToTirtenT "Feeds to be taken into consideration in the data pricing policy.
At the same time though, the maximum market value of the data products
should be charged to the extent possible. A market strategy that sets the
price at a level all potential users find acceptable is too artificially
low. For FY 1983 tne prices should be raised so that they are closer to
competing methods of data collection and for FY 1984 and beyond the
additional benefits and uniqueness of land remote satellite sensing data
should be factored into the prices as market studies are completed. At a
minimum, serious consideration should be given to establishing FY 1983/84
prices for non-Federal users at a level that will recover at least the
annual recurring costs for operations. The goal we should press for is
total cost recovery over the next 10 years.
?
Starting with FY 1983, prices charged to Federal user agencies should be
based on recovery of annual recurring costs for operations for their
portion of the total usage. For FY 1984 and beyond, prices to Federal users
should be increased annually so as to approach full cost recovery by
FY 1988. Federal user agencies will need to budget for required services at
these higher levels. The multi-year budget projections for NOAA and user
4agencies should reflect estimates of increased revenues and costs,
respectively.
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We believe that your Department (?OAA) initially should budget for the
"core" (as yet undefined) operational system costs and that costs for any
special system capabilities should be budgeted by user agencies desiring
them.
NOAA Recommendation #4. Institutions for Private Sector Involvement and
Financial Assistance
a. Institution.--The Administration would submit legislation to the
Zb-iigFei's-iii FY 1981 to create a for-profit private corporation with
Federal and non-Federal representatives on the Board of Directors to
own and operate the fully operational system.
b. Financial assistance.--The Department of Commerce (NOAA) would seek
luthorTirn-g- TegfiTaion which allows the Department of Treasury to
provide the appropriate capital assistance (loans, guarantees, and
bonds) and/or enter into long-term Federal data purchase guarantees at
subsidy price levels.
OMB Comment/Reaction
We have serious reservations with your recommended institutional approach.
The creation of such an entity can lead to never ending Federal subsidies.
If after reexamination, you continue to believe such an institutional
approach is most desirable, your Department and the concerned agencies
should be prepared to amplify more fully the merits during the 1982 budget
review. Likewise, in addition to developing the legislative and financial
details of your recommended new,-for-profit corporation, and pursuing
further-your private sector option we would like to have developed fully for
cur consideration during the 1982 budget review the programmatic and
tinancial implications of the following options:
1. Have the private sector assume responsibility for the
ownership/operation of the Earth Remote Satellite Sensing program in
the.immediate future. This Could involve having the corporation(s)
chosen by a competitive process take over the LANDSAT system and/or
develop its own system.
2. Maintaih4Federal management of the LANDSAT system to assure data
continuity through this decade but defer initiating the development
(except possibly for some sensor R&D) of a fully operational system
until possibly the latter part of this dec3de when the private sector is
more ready to ass:Ime responsibility of ownership/manage:oent and Federal
agencies have more experience with using LANOSAT,data products. Steps
reouired to assure eventual private sector ownership should be
explored.
NOAA Recommendation i5: Control over Data Products and Yarket Expansion
a. Data control.--Legislation which enabled tht, system owner-operator to
-fne. data orcducts and condition their dissemination on the beyment
of appropriate fees would be submitted to the Congress.
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b. Market expansion.--A tailored Federal market expansion program would be
-esta51iVrie715o train users of land remote sensing satellite data and
conduct application demonstration programs.
OMB Comment/Reaction
Great care must be exercised to assure that the owner can mariet his
' product freely without constraints that reduce the product's value unduly.
There may be a need for some market development on the part of MOAA but
. before we initiate a program along the lines outlined in your Plan, we need
.a firm understanding of what criteria will be used to determine when NnAA
should beton* involved in market development.
NOAA Recommendation #6: International Asoecti
Foreign user interests and data needs would be taken into consideration in
developing the U.S. system performance characteristics and discussions with
other countries to explore the prospects for complementarity and
compatibility among the land remote sensing satellite programs would be
continued.
OMS Comment/Reaction
We have no comments at this time.
Finally, although not highlighted in your summary of recommended g!tions,
the Plan assumes that the capabilities of your recommended upgrade
LANDSAT 0 system should he used as the baseline for planning the
operational system. Before we can concur in this recommendation,'rwe nee'
to explore fully the cost and relative benefits of other ootions..-)In 'A
particular, the cost of a syster based on MSS-level capability (not,
including TM) should be determined and used as a baseline in discaSsind
cost-benefit issues.
CZ-)
My staff'is preoared to discuss our concerns raised in this letter and worq.
with your staff to define the various options. Thank you again fnr doing
such a fire loo on the Transition Plan and we look forward to finalizing
the prodrar and policy decisions during the 19B2 budget process.
Sincerely,
(SiE=ed)
:47 If....1:71t-rr."S7
Jares T. McIntyre, Jr.
Director
4.
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