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-RDP86B00338R000200290014-6
• Release Decision: RIPPUB
• Original Classification: K
• Document Page Count: 22
• Document Creation Date: December 21, 2016
• Document Release Date: September 11, 2008
• Sequence Number: 14
• Publication Date: April 19, 1984
• Content Type: MEMO

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EXECUTIVE OFFICE OF THE PRESIDENT
OFFICE OF MANAGEMENT AND BUDGET
WASHINGTON, D.G. 20503
LEGISLATIVE REFERRAL MEMORANDUM $.4& ;,,L J
/I,.
Legislative Liaison Officer
National Security Council
Office of Science & Technology
Policy
Department of the Interior
Federal Communications Commission
General Services Administration
Department of State
64,0 l . 7 /a' 2ell
s
Department of Agriculture ;0 6C d
Natip al Aeronautics & Space
ministration 2,,,4W ,,,,&u1d
entral Intelligence Agency
Department of Transportation
Department of Defense
SUBJECT: Department of Commerce Drooosed report on H.R. 5155 --
Land Remote Sensing Commercialization Act of 1984 --
as passed by the House on April 9, 1984. (House
Report 98-647)
(We do not plan, at this time, to clear other reports
April 19, 1984
on H.R. 5155 or H.R. 4836.)
The Office of Management and Budget requests the views of your
agency on the above subject before advising on its relationship
to the program of the President, in accordance with OMB Circular
A-19.
A response to this request for your views is needed no later than
COB -- Thursday, April 26, 1984. Oral comments acceptable.
Questions should be referred to William A. Maxwell (395-3890),
the legislative analyst in this offices.
James
AssistfintPDirect
Legislative Refe
Enclosures
cc: Scott Gudes
Mike Horowitz
Tim Sprehe
Frank Seidl
Dan Taft
Jeff Struthers
Bill Hughes
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1 May 1984
Legislative Division, OLL
The following comments are provided relative
to the copy of the Department of Commerce draft
comments on HR 5155 that you provided me on 30
April.
Strongly agree with you that we need to see
the revised draft of HR 5155 since the current
Commerce text citations do not correlate with
our copy. Also one part of the Commerce comments
seems to be missing (see the reference on page
9 of their technical comments to an attachment).
Therefore it is difficult and at times impossible
to follow and understand all the DoC recommended
changes.
Nevertheless, do have two points that need
to be made relative to Intelligence Community
interests:
a) On page 5 of their covering memorandum,
Commerce recommends deletion of the
section 302(b)(6) guaranteed data purchase
provision by the Federal Government. This
is a Commerce view -- not the view of user
agencies who might be required by 0MB to
pay for these guaranteed purchases.
Therefore strongly recommend retention of
the HR 5155 prohibition against a guaranteed
data purchase level.
b) We should continue to push for insertion
of a supplementary clarification into HR 5155
that the non-discriminatory provision does
not apply to any special arrangements made
to satisfy Federal rnvernment requirements.
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'Lin OF C',
?~ F
_._ ~nss
GENERAL COUNSEL OF THE
UNITED STATES DEPARTMENT OF COMMERCE
Washington, D.C. 20230
Honorable Jir.es H. Scheuer
Chairman, Subcommittee on Natural.
Resources, Agriculture Research
and the Environment
U.S. =c,-,se of Representatives
"cashing-'-on, D.C.
Dear :r. Chairman:
20515
This will
respond to your request for the views of this
Department
on legislation currently pending before your
Committee - -
"To 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 incor-
porates the views of all other interes..ad agencies.
The coal 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 :- 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
covernr,.ent may contract for the operation of the system as
,:ell, if the Secretary of Commerce (the Secretary) determines.
that the purposes of the Act will be served thereby.
Title cf the bill provides for the Secretary to contract
with a ^_ivate sector party for the provision of the capabil-
ity cf :,roducing remote sensing data in certain quantities
and at_ certain minimum level of quality for a period of six
years. The contract may provide for a payment by the Secretary
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to cover the capital costs of achieving such a capability,
but may not provide for any guaranteed data purchases by the
cover-, ant. 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 '_icenselfor the c:eration of remote sensing systems.
^_tle V c-= the bill provides for a continuing federal role in
and development in the field of remote sensing.
le T:: of the bill states federal policy regarding nondis-
c= _r_natc_v dissemination of data, 'provides for archiving of
data ~y the Secretary, and contains a number of miscellaneous
provisions.
The Ad.:rinistration supports H.R._ 5155 , with certain technical
changes, as an appropriate framework for achieving the
corn a:cialization of civil land remote sensing from space as
soon as possible, while maintaining the U.S. lead 'in land
remote sensing, with the private sector making the major
financial investment.
The Department is now in the process of carrying out what we
believe to be the most thorough and exhaustive effort to date
to determine 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
(^RFP") 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.
In the view of the Adnin.stration, it would be extremely
.=crtunate if the work cf the Board and the respondents to
--he were to be discarded or repeated. This would result
- s and costly delays in the commercialization
roar .p.rincip G~2#ens--?1a..@-with..i3.Y /
ocess. Therefore,
,._ovisicns of tie bill which may.-emswauld inval5..date~..th.e. RFP.
-n addition, it is essential that agency missions currently
Cr I': n dependent =01 -71 remote sensing not be adversely
he leg_s_at_on.
ca concern= are set forth as follows. Additional
ccn..ents are enclosed.
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Recuired 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 Administration is not opposed in principle to the concept
of private-sector marketing of Landsat data, and the RFP
encouraged bidders to take over the operation of the Landsat
s%-ste- and the marketing of data generated by the system.
=cwe:-er, there was no requirement in the RFP that a bidder do
se. Thus, if the successful bidder in the RFP process does
r..ct undertake to market the data, an additional procurement
action may be required for the marketing component.'
she Administration 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
RFP did not require that respondents bid on the marketing of
Landsat 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
comply with the requirements of title II. Such efforts could
delay implementation 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 Administration. 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 RIP 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
.anise ccnsistent with that adopted by the RFP.
Tern of the Title III Contract. Section 302 of the bill
=rovides that the contract- entered into by the Secretary
under Title III shall reasonably assure the provision of
enete sensing data for a period of six years, terminating
cne vear after the expiration of this six-year period.
t~.e. length of the contract .will .depend on a number of
terms and conditions, it is our opinion that the six-year
^e: _cd contemplated by the bill may be overly restrictive.. A
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more likely period for successful conversion to full commer-
cial operation 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
than being set for a prescribed period of time, we would
prefer the outer limit to be at least eight years rather than
six.
-4-le to Landsat Data. Section 202:(a) of the bill provides
:hat t_tie to any and all data generated by the Landsat
svste-_'.-:all remain 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 opportunity 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
cperation of the system, acceptance of this proposal would
apparently be prohibited by the legislation as currently
drafted. The requirement that the government retain title
may also create copyright problems, inasmuch as the marketing
co.-.tractor will undoubtedly insist on the right to restrict
redistribution and sale by data purchasers.
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
sensing capability. This payment may also be made in install-
-ents based on progress over the life of the contract.
,,;hiie there will be costs associated with developing the
Capability required by the Title III contract, we are not
re=suacec that a capital payment (or payments, as the case
be) =__ the only acceptable financial arrangement. It may.
- L r-- - e financial vehicles, such as loans or loan
.a. a-toes, may be more advantageous to the government. The
d therefore permit the Secretary greater discretion
c - e ct_ -, -c the financial structure of the contract.
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Guaranteed data purchases. Section 302(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
^teres~s of the government. It may be that some minimal
level of guaranteed purchases may recommend itself as an
acb=cpriate means of comcensating a contractor over the life
c= the contract. If so, we do not wish to preclude adoption
c= such a contract term.
Rebates. Section 303(b) requires:that at least 5 percent of
th- eeprice 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 a requirement will only narrow the range of choices
available to the Secretary in selecting the best deal for the
Government.
Retorting. Section 502(d) of the bill provides for'
joint preparation and transmittal to the Congress by. the
Administrators of NOAA and NASA of a report 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
to license holders by the Secretary and the Federal Communi-
caticns Commission. We recommend that section 605 be amended
=rope:ly to reflect the primary responsibility of the Federal
Ccm .un-cations Commission for the assignment of frecuencies
to ncncovernmental users, and the primary responsibility of
y De=ar tment of .Coirimerce , through the National Telecommuni- ?
cations and Information Administration, for the. allocation of
ccvernm._ntal frequencies.
=yam - - modifications noted above, and with further technical
c-- ces as noted in the attached material, the Administration
cn supports H.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,
_n-_nq _ . ::a_gu1ies
Iz
IzenEra_ Cv VilsGl
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Technical Comments - S. 2292
?ace 5, lines 18 - 23:
Strike this subsection and insert the following:
"(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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2 -
:ace 6,* line 3 - page 7, line 6:
Strike this section in its entirety.
NOTE: 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:t3) is unclear, but
probably restates existing law.
Subsection (b), the purpose of which is evidently to
protect the title III operator, is unnecessary. The
memoranda currently in effect may by their own terms
be extended. The government will not extend its
obligations under the memoranda beyond its ability to-
-a-fill them, which will terminate upon the practical
the system. These memoranda are binding
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3
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
system. This provision restates existing law.
S?.??section (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 "202" to "201"
lire 9.
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
RF? does not require that bidders bid on the market-
in; of Landsat data, and because we anticipate that
=ew, if any, bidders did so. The requirement that
such a procurement be carried out.is extremely.
burdensome and wasteful. By the time it is completed
the contractor co.-mences work, there will be
=ittle - 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 to 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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Pace 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 --".
NO 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.
Page 7, lines 17-18:
Strike and insert:
"able on a nondiscriminatory basis.".
NOTE : This term has been defined.
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Pace 8,-'line 6:
Redesignate subsection (b) as subsection (c), and insert a
new subsection (b) as follows:
"(b) Such contract may provide for the operation
cf, and transfer of title to, the Landsat system as
determined by the Secretary to be appropriate and in
the national interest.".
?ice 8, line 10-page 9,-line 6:
Delete this subsection.
NOTE: Present subsection (c) creates undesirable and
unnecessary ambiguities concern..ig 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.
Secretary has the obligation to keep Congress
info_med 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.
'However, the Congress should set policy governing the
award of this contract, and the Secretary should be
granted adecruate discretion and authority to execute
that policy.
:ace 9, line 8:
Change "203" to "202" _
Page 9, line 15:
After the word "data", add:
(3) such other factors
appropriate and relevant".
as the Secretary deems
should retain some degree of
she Secre-=r-y
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.
Page 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 5 - 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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10 -
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
cons t2tutes 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 clear
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
402(c)(2)], and what the licensee is required to do
-der the terms of the lice. se [e.g. , present sec-
icns 402(b) and 402(c)(3)).
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11 -
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.
Page 17, line 2:
After "403.", insert "(a)".
Page 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
aeronautics 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."
=--e 19, line 11 - page 21, line 2:
Strike this 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 - ata which the
Secretary, following established archiving practic-
es, determines to have real or potential value to
the Nation.
" (c) Copies of all data generated by any
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 date such data are generated. During the
ten-year period, the Secretary shall not engage in
a::_ activity which infringes upon this right.
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- 13 -
"(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
=e=lecting the reasonable costs of reproduction and
zr ar s.nittal .
"(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, th.: bill maybe 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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Pace 21, line 13:
Strike ", such as launch services,".
_=-es :5 - 21:
After ^.e word "Con-mission", add: in consultation with
the Secretary, 11.
Approved For Release 2008/09/11: CIA-RDP86B00338R000200290014-6