DEPARTMENT OF JUSTICE PROPOSED REPORT ON H.R. 4836 -- LAND REMOTE SENSING COMMERCIALIZATION ACT OF 1984

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP86B00338R000200290017-3
• Release Decision: RIFPUB
• Original Classification: K
• Document Page Count: 15
• Document Creation Date: December 21, 2016
• Document Release Date: September 11, 2008
• Sequence Number: 17
• Publication Date: March 27, 1984
• Content Type: MEMO

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EXECUTI. - OFFICE OF THE PRESIDENT
OFFICE OF MANAGEMENT AND BUDGET
WASHINGTON. D.C. 20503
March 27, 1984
LEGISLATIVE REFERRAL MEMORANDUM
Legislative Liaison Officer
Department of Commerce 'Central Intelligence Agency
National Security Council Department of Transportatic
Office of Science and Technology
Department of the Interior
Federal Communications Commission
General Services Administration
Department of State
Department of Agriculture
National Aeronautics & Space Administration
SUBJECT: Department of Justice proposed report on ~ p .
U u 4836 -- Land Remote Sensing Commercia~. "IV
'
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4"A 1"'~
D q, ' of'
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/W?
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 -- Tuesday, April 10, 1984. Oral comments acceptable.
Questions should be referred to William Maxwell (395-3890),
ffi
ce
the legislative analyst in this o
Ja e tC Rrlr? /fc$Y
Assistant Director for
Legislative Reference
Enclosures
cc: Scott Gudes Tim Sprehe
Mike Horowitz Frank Seidl
Dan Taft
Jeff Struthers
Bill Hughes
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U. S. Department 'Justice
Office of Legislative Affairs
Washington, D.C. 20530
Office of the Assistant Attorney General
Honorable James H. Scheuer
Chairman, Subcommittee on Natural Resources,
Agriculture Research and Environment
Committee on Science and Technology ?
House of Representatives
'Washington, D.C. 20515
Dear Mr. Chairman:
This is in response to,
H.R. ?u4836quthe thRemotee
Department of Justice on ^the Act'). The Department of
Commercialization Act of 1984
Justice does not object to enactmenof this legislation if
amended as suggested herein.
1. Summary of the Bill
The bill provides for the transfer to the ate sector of
the responsibility for operating
erformed by the 'Landsat" system
satellites, a function now p
operated by the National Oceanic and Atmospheric
Administration. Title I toecobill states mmercializetthoset is the
policy of the United States
remote-sensing functions that lend tGovernment's hemselves torrivate sector
development. Section 103(c). data must, however,
acquire adisSectione10land 3(a)remote-sensing
be preserved.
In general terms, Title II of the bill provides for the
Secretary of Commerce to
currenttLandsat systeme pTitletlll
operate the Government's provisions designed to assure
ccontontiainuns
continued certaiavailn interim iof the data through private sector operation of new privately-owned land remote-sensing systems
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after the "practical demise' of the space segment of the
Landsat system. Title IV sets the conditions under which
private operators of future land remote-sensing systems will be
licensed. Title V provides for continued federal research and
development. Title VI requires that in all circumstances users
are to have "non-discriminatory" access to the data as defined
in Section 104(3). 1/ Although by its express terms the bill
applies only to the land remote-sensing system, and not to the
meteorological system, Title VII specifically prohibits sale of
the Government's meteorological system.
Specifically, the contract for operation of the Landsat
system provided for in Title II will be awarded on a
competitive basis. Section 201(b). The Government will
continue to own the data marketed by the operator. Section
202(a). Such sales may continue after the "practical demise'
of the space segment of the Landsat system. Section 202(b).
The contractor may use and replace elements of the system at
its own expense. Section 210(c). The1Secretary of Commerce
shall award the contract on the basis of financial return to
the Government, technical competence, ability to satisfy all
conditions of the sale, marketing ability, absence of conflicts
of interest affecting access to the data, and ability of the
contractor to effect a smooth transition from Government to
private operation and "such other factors as he shall deem
appropriate." Section 203(b).
Under Title III, the Secretary is to award a contract, on a
competitive basis, to a private party that will offer for a
period of six years the "capability of generating data of a
quality at least equal to the quality of multi-spectral scanner
data and of selling and delivering such data to the United
States Government" in quantities equal to the annual volume of
federal usage during fiscal year 1983. Section 302. The
Government may contract to prepay to the operator a portion of
the capital cost of the system, Section 302(b)(4). but shall
not guarantee any data purchases by the United n eaStatesvernment,
Government. Section 302(b)(6).
unlike other buyers, will recover a rebate of at least five
percent on any purchases of data. Section 303(b). The bases
for the award of the contract are: (1) the cost to the
1/ According to Section 104(3)(A), the term
"non-discriminatory basis" means:
without preference, bias, or any other special
arrangement regarding delivery, format, financing,
or technical considerations which would favor one
buyer or class of buyers over another.
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Government of providing the capability; (2) the technical and
financial qualifications of the contractor; (3) the
contractor's ability to develop the private market for land
remote-sensing data; (4) the contractor's ability to supplement
the basic system and maintain United States leadership in the
industry; (5) the contractor's ability to be licensed under
Title IV of the Act; (6) the reliability of the contractor; (7)
the contractor's ability to effect a smooth transition to Title
III of the Act; (8) the size of the royalty or rebate to the
Sectlonfactors
United States GoverCee deems and a(other
302(c).
Secretary of Commer appropriate. The licensing provisions in Title IV authorize the
Secretary of Commerce to license qualified private parties,
consortia of private parties, or consortia of federal agencies
and private parties wishing to operate their own land
remote-sensing systems. Section 403. Licensees must operate
any system under the following conditions: (1) operation must
preserve and promote United States national security; (2) data
must be available to all potential users on a
non-discriminatory basis; (3) the system shall be administered
by a central entity (in the case of a consortium); (4) the
lic-ense shall not protect the holder from 'fair competition"
from other licensees; (5) before terminating its operations,
the licensee shall dispose of any orbiting satellites in a
manner acceptable to the President; (6) the licensee shall make
any data available to the Secretary of Commerce for archiving
purposes; and (7) the licensee shall provide the Secretary of
Commerce with notice of "value-added' activities and a plan for
compliance with the non-discrimination requirement. Section
402(b). The Secretary determines the term of any license and
has 120 days to approve any application, except that pending
issues and actions to resolve them may extend the period.
Section 403.
Licenses may be revoked for non-compliance with all Title
IV conditions. Section 401. The Secretary may also revoke,
suspend, or modify a license upon written notice that there has
been substantial failure to comply with any provision of the
Act, any regulations, any terms, conditions, or restrictions of
the license, or any international obligation or national
security concern. Section 403(e). Upon request, the applicant
or licensee is entitled to an agency hearing and decision by
the Secretary on the record, subject to judicial review under
the Administrative Procedures Act. Section 403(f).
Regulations can be issued after public notice and hearings.
Section 404. The Secretary can monitor remote-sensing
satellite systems and 'value-added" activities by inspections
and, space-related
of business records
after notice and
ground segment -3-
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hearing,2/ impose civil penalties of $10,000 per day for each
violation. Section 405. The Secretary has the power to
subpoena materials, documents, records, and testimony under
oath, and tinsviolationcof.thecActs. So ectionr405(d)a or likely
to be used
II. Discussion
The determination to commercialize the land remote-sensing
system raises difficult issues. A private firm would choose to
operate the system only if it believed it could derive
sufficient revenues from buyers of land remote-sensing data to
more than offset its costs. Thus, if'the initial fixed costs
of investing in the system were very high, high prices would
have to be paid by data useVeLtOmake commercialization
these
feasible. Since users pay very little at present
data, it is not at all clear.whether the market would be able
to support a private Landsat system absent large continuing
Government subsidies. 3/ Even assuming, however, that
potential users valued Landsat data highly, the system operator
could sustain profitable prices only if it could encrypt the
data and thereby prevent satellite signal piracy.
The questionable outlook for commercialization is further
clouded by Sections 103(b). 402(b)(2), and 601(a), which
require that all potential users be granted access on a
"non-discriminatory" basis. It may be that only a system of
discriminatory pricing -- under which different users are
charged different prices according to the value they pllaceton-
the data, and thus the price they are willing to pay for --
would yield sufficient revenues to cover costs and make
2/ We assume that the reference to Title 5 is to the formal
notice and hearing procedures of the Administrative Procedure
Act, 5 U.S.C. S 551 et seq. Express reference to the
apparently relevant
the provisions
precise Title 5 (5
or
should be made,
3/ It is not clear that total demand for land remote-sensing
data is sufficient for full commercialization of the land
remote-sensing system. See Report of National Oceanic and
Atmospheric Administration in Response to P.L. 97-324 (January.
1983); The National Academy of Public Administration, Space
Remote Sensing and the Private Sector: An Essay (March, 1983).
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commercialization attractive. 4/ Under such a system, revenues
derived from customers willing pay higher
the Government. As
substitute for the subsidy now provcompetitive advantage to theme,
described below, a subsidy gives
initial operator. This suggests that, in order to maximize the
likelihood of successful commercialization without a4836ernment
subsidy and with some prrequirement pothatithenprices charged for
be modified to omit any If foreign policy
data necessarily be "non-discriminatory."
considerations require that foreign governments' concerns about
the availability of td be a catodtheseedataeonnequal
that foreign governments given access
terms could be added. 5/
We also wish to point out that, assuming the aggregate
social benefits of operating Landsat exceed the costs, and that
commercialization is fe=ivate,hathe ndstransfer
inefficientlynrestrict
private
system from public to
the usage of remote-sensing data. Economic welfare iss pay at
maximized when a good is sold to all buyers willing
4/ For a good description of price discriminattionain, The
"decreasing cost" industries, see generally order for
Economics of Regulation 123-58 (1970). ator
oppeerrs of
discriminatory pricing to be effective, the _ systtheem re
--the
would have to be able to prevent arbitrage
data by customers charged a low price to customers charged a
high price. Arbitrage might be such preventreedsalbyesnfore
The bill, in
contractual clauses prohibiting
Section 603, authorizes hdiconditions on sales o scriminatory pricingf data,
although the bill prohibits 5/ Under such a "most-favored nation' clause, be
due
foreign government users would due
the terms afforded domestic purchasers
overnments would befcharged,
to commercialization, foreign g reently
phf prices after thedemise
UniteddStatesaGovernment
pay for the the data governments.
explicitly subsidized private sales to foreign gove for If the treatment of foreign
datausers
soldprivate
underrtheesame termsgn
policy concerns, they could
as domestic users. It is, of course, possible that foreign
governments might request preferential tUnitednStates
politically influential private
ofspecial
federaltreatment
Government agreement tsuch
subsidieswtoltheoLandsat
again, require the payment
operator. _5_
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least marginal cost -- the cost of supplying one more unit of
the good. If the marginal cost of supplying remote-sensing
data is extremely low, the socially optimal use of these data
is assured by charging a correspondingly low price for them --
as the Government may be doing at present. If, under private
ownership, higher prices were charged (to ensure that total
revenues covered total operating costs), some current users who
value the data at an amount equal to or greater than marginal
cost -- but at less hathe privately charged price -- would
be inefficiently deprived
Particularly notable in light of these principles is the
language of Section 104(3)(B) stating. that sales will be deemed
to be on a 'non-discriminatory basis' only if:
(1) any offer to sell or deliver data is advertised
in advance and is equally available to all
prospective buyers; (ii)?the systeqi policy, not
established or charged any price,
or other term or condition in a manner which gives
one class of buyer de facto favored access to data;
and (111) in a case where a system operator offers
volume discounts, such discounts are no greater than
the demonstrable reductions in the cost of such
sales. The sale of data 'on a non-discriminatory
basis' does not preclude the system operator
offering discounts other than volume discounts to
the eanentsuch cofnthisrparagraph inconsistent
with any other provision
This language raises in precise terms the possibility of rate
the bill's
of return regulation that most troubles us. First,
proposed regulatory structure in Title IV to enforce Section
104(3)(B) and other conditions confirms
Second, thererisenonbasisefor
regulation may
the proposed degree of regulation.
6/ This inefficiency probably would exist to some extent
whether the land remote-sensing industry became competitive or
monopolistic. If several competitors
could roficompetition
the market -- as H.R. 4836 apparently assumes
would somewhat constrain prices (and incidentally, limit the
use of price discrimination). Nevertheless, price probably
would not reach the very low level of marginal cost, and some
would-be users would be denied access to the data.
equal to or
notwithstanding their willingness to pay
exceeding marginal cost. -6-
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Unless the provision of satellite data involvesta natural
e is no
monopoly, or there is soeother Mofrlandfremote!sensing
economic rationale for regulation
satellite systems at all. Moreover the existence of
natural monopoly would not necessarily j laguntion
Rate of return and other forms of ift1egulatory costs do not
are economically justifiable only
outweigh regulatory benefits. 7/ Public availability of
under
prices, s, as egwell as the extn~iivbeeusedctoeshuteoffnany Pnrice
Title IV that could apparently
discrimination possibilities and increase theecosts oftaorateln
regulatory process, would discodynamic rnarea such as land
addition, in a technologically eatiuc may lanually
remote-sensing, the static nature of regulon
cause more damage by retarding innovation than would be caused
by allowing a temporary monopolist to set prices without
constraints. 8/
Title IV of the Act, furthermore, equiremed literally,
provides for a panoply of regulatory L
ustifiable generally where market failures
7/ Regulation is j
result in inefficient levels of Prdomeoductioon forms of of goods and
andtion.
services or no production at all.
however, have counter-productivetendencies. foateffaseeand and
rate of return regulation reduces
emphasizes service competition at the expense of pricenteed on
competition. Since a "normal" rate of return is guara
service expenditures that are includedninnaeregulated firm's
rate base, the regulated company has aive
'overinvest' in services, with little regardsto cost. Inth the
addition, regulation consumes significant regulating
regulated firm in supporting rate requests and the renc in sorting out the large volume of data submitted with
ty rate requests. A rate. regulatory process can also
its
these
provide a licensee with incentives for inefficiency in
investments and operations, and for rigidity in its rate
Noll.
structures and service offerings.
Regulation in Theory and Practice: An Overview, inrey Fromm
(ed.), Studies in Public Regulation
Regulation and Its Reform 36-59 (1982).
from foreign
8/ There are currently prospects for competition launched and operated systems.
(e.g.. French and Japanese) enterprises, and may
These systems may not be profit-making may,
involve significant , senteancompetitivelcheckTonythe exercise of
nevertheless, repepra United States firm.
monopoly power by -7-
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well beyond considerations of price and non-discriminatory r access. "Value-addee~a=ctofiCommerce underpSectiont402(b)(7).
proposed to the Secretary
are subject to imposition by the Secretary of terms,
conditions, or restrictlonWeLSdof theSection
Secre~aryain Section
to the full enforcement hOearing, adjudicatory, and
405. 9/ Investigatory ject
,
administrative penalty powers are all centerediinvtheeSecretary
of Commerce. Unlimited rule-making
Secretary. Section 404. In short, a comprehensive new
regulatory agency would be created within the Department of
Commerce to regulate lcosts every of aspect
implementing operations,
Not ns.
Nonly nly would transactional
pricing sales, or developing new value added services skyrocet
as each change had to be presented to the Secretary, but
assuring would thatattend
innovation would be elays
a technology
newt
administrative ve process, virtual
would lag in implementation, that better and cheaper data for
users would be slower a marketed, tTheseuregulatory
commercialization would benefits of such an
costs would outweigh, in our view, any
extensive regulatory scheme. While we recognize the importance
of assuring compliance with our international obligations, IV
achievement of this goal does not justify
and can be assured by other means.
Because the bill as presently drafted would structure the
land remote-sensing industry as a pervasively regulated section 5
in
40
y
t
i
o
industry, the warrantless
desirable
be
would
nalthough it
is probably constitutional,
limit inspections to 'reasonable
predictable and guidednfederale I
452 regulatory 9 Presenc8e)) (n Weed believe, however, that Section
05
405(ee)(1), which provides for seizure authiristat is es tha subjt,ect to
in
constitutional challenge. Subsection (e)(1) the
Sthaetain
carrying out his enforcement responsibilities,
may "seize any object. record, or report where it reasonably
appears that such was used, is being used, or is likely As a
used in violation of this Act. . . .' (emphasis added).
rule, warrantless searches are permissible only where the
40amake U.S. tthat443cou455 trse mpe1jtive. See
exigencies of the situation
Coo le v. New Hampshire,
situations might involve nnrabandeorestolenloredangerousght, a
movable car containing co
articles that may never be found again. or misbranded drugs
9/ These enforcement powers do not create in the Secretary an
independent power to litigate.
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that threaten the national health and
misbranded U.sbrS.C.anded ? food 334(a) and (grounds drugs). With respect to the present bill,
we believe that legislative history specifically establishing
that the authority to make warrantless seizures of objects
(presumably hardware or software used in satellites), records
or reports is both necessary for national security or other
reasons and otherwise meets the 'exigent circumstances"
rationale would be necessary in order to sustain the
constitutionality of this provision.
Assuming that there is a legitimate federal need for
warrantless seizures, we would nevertheless recommend that, if
enacted, the language of Section 405(e) be altered to meet the
substantive requirements of the Fourth Amendment. The Supreme
Court has generally indicated that probable cause is necessary
to justify a warrantless seizure. See Coolidge v. New
Hampshire, 403 U.S. at 472-73. We are aware of no Supreme
Court case that expressly authorizes warrantless seizures based
on less than probable cause. See, e.g., Colorado v. Bannister,
449 U.S. 1, 3 (1980) (per curiam); G M Leasing Corp. v. United
States, 429 U.S. 338. 351 (1977). Although the common law
"reasonable grounds to believe' standard is the substantial
equivalent of the Fourth Amendment's "probable cause"
requirement, see Draper v. United States, 358 U.S. 307, 310 n.3
(1959), it is not clear that the "reasonably appears' language
in Subsection (e)(1) is the-equivalent of the "reasonable
al analog.
grounds to believe" standard or its constitutional
be l"probable cause." Section 405(e)(1) would have
to read: "seize any object, record or report where he has
being used, or
probable caueineviolationuof this Act.
is about to be used
Thus, as broadly as it is currently drafted, Title IV pf
the bill raises fundamental policy and legal concerns. Title
IV is subject to the interpretation that an extensive Title IV
regulatory scheme is to be imposed. If so, we oppose and recommend its deletion in substantial part.
We are also troubled about the possibility that the
contractor who contracts to make data available to the
Government during the six-year interim period will be provided,
as a result of the contract, with a significant subsidy that
will lessen the possibility of competitive entry into the
market (assuming no natural monopoly). Section 302 provides
that a party or parties contracting for the provision of data
to the Government must be capable of providing, at a minimum,
the amount of data used by the Government during fiscal year
1983. To encourage such production, Section 302 also provides
ebcapital
for a prepayment by the Government of aportionmof the
cost of providing this capability. This
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would be at least partially repaid to the Government through
the five percent minimum rebate on United States Government
data purchases, but might not be fully repaid during the
contract period. Although the contractor would have no
guarantee that the Government would purchase data, the subsidy
could allow it to provide data at a lower cost. The rebate,
then, would act as a repayment mechanism encouraging the
Government to purchase from that contractor even if others
offered data to the public on equivalent terms. Thus, that
contractor could enjoy a significant advantage over other
potential entrants. While we recognize the possible need for a
subsidy to assure that land remote-sensing data will be
available, we are concerned that such_a contract may make it
difficult, as a practical matter, for any competing systems to
be formed.
The prepayment of the subsidy, under the bill as drafted,
poses other significant problems. It Is unclear whether the
limitation on the Title III contract that it 'shall not provide
for any guaranteed data purchases by the Federal Government,
Section 302(b)(6), means that the United States Government is
free to purchase data from other sources or simply that no
minimum level of purchases from a sole licensee is
anticipated. First, if the contract is not for United States
Government requirements, then incentives to repay the initial
subsidy may be lessened. Although required to maintain
capability for six years, the contractor may find it more in
its interest to keep the subsidy and either terminate the
contract, not sell to the Government or not compete vigorously
for sales that, through rebates, reduce the start-up advantages
given by the prepayment. Sales to private users might be
substituted as the private market develops. 10/ Second, if the
contract is, in fact, a requirements contract, then it raises
the possibility that it may provide the contractor with an.
unnecessary competitive advantage continuing beyond the term of
the contract. The bill should balance generating the necessary
incentive for the provision of the Government's data needs with
the creation of undue competitive advantage.
The foregoing discussion highlights the broad competitive
issues raised by the bill. There are also more specific
definitional issues raised by the bill as currently drafted.
Section 203(b)(5) imposes as a criterion for selection as a
provider of land remote-sensing data the "absence of any
10/ Required repayment by the end of the contract period or
over a longer period might correct for this built-in
disincentive.
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conflicts-of-interest which could inhibit non-discriminatory
access to such data.' While, standing alone,
could be construed to bar the system operator from providing
'value-added" services regardless of whether it is a regulated
monopolist, the specific reference to "value-added' activities
in Sections 402(b)(7) and 405(b) may be sufficient to counter
such a narrow intepretation. Leaving to the Secretary of
Commerce the power to define 'value-added' may, however, by
implication, impose a type of public convenience and necessity
test for new services, similar to that required for facilities
such of
construction underctiAs notedf Communications
1934, 47 U.S.C. S 214.
extensive regulatory scheme is needed here.
Furthermore, Title II as whole raises serious definitional
problems. There is no specification of when the Landsat
operator's activities are to end and when the Title III
operator's activities begin. The language in Section 201(b)
concerning renewal implies a continuing contract. It is also
unclear what the source of compensation for an operator will
be -- whether this compensation will take the form of fees from
Government appropriations alone or sales to private users or
both. Our concern with competitive issues in Titles III and IV
would extend to Title II were the same operator to gain a
continued competitive advantage from its Title II
licenseaand
cop.initiativeskbyiitselfforoothers.
competitive
Additionally, the criterion in Section 402(b)(4) that no
license shall protect the holder from 'fair competition' should
be clarified, so as to fulfill two distinct and important
functions. First, specific language should be added to the
general language of Section 607, that '[t]he requirements of
this Act are in addition to, and not in lieu of, any other
' to"insure against any implicit repeal of tovi iitsrustolaws. We suggest of saw, est the following language: 'Nothing in
this Act shall be deemed to create an exemption or defense to
any action under the federal antitrust laws, as defined in
Section 1 of the Clayton Act (15 U.S.C. S 12),ordthehFederal
Trade Commission Act (15 U.S.C. S 41-58); provided,
contract entered into by the Secretary in accordance with this
Act shall not be deemed to violate such statutes.' Second,
Section 402(b)(4) should preclude an unduly restrictive
licensing process that might exclude potential entrants. The
section should specifically provide that the Secretary is not
to grant exclusive licenses, or to consider the economic
effects of entry of additional firms into the land
remote-sensing or "value-added" business. Thus, replacing the
"fair competition' language with a provision clarifying the
the antitrust clause
Secretary's powers and insertion
would more effectively serve
competition.
-11-
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ia,
Moreover, the participation ofederal
ubstantiveeandndefinitional
even with private parties, raises both s
problems. Section 406(b) limits such activities to those that
"will not compete with other United States private sector activi-
ties." However, both operational and "value-added" services of
such mixed public and private sector cosortiactivitieeeininherlntly
likely to compete with purely private sector s
remote-sensing industry. Moreover, the possibility of xed sec-
consortia may in itself distort the incentives of the private vts for to develop land remote-sensing services. potential private
entrants would be semightdentailepublicesubsidiesefor the consortium
of federal agencies g suggests that indivi-
dual which they would have to compete.
This sdual Government agency needs shoulmet d be
the private sector alone, not through Gove
rangements, so that all potential providers may have the oppor-sub tuntity to compete for any nesatticilpationein consortia appears
balance, permitting Government p
unnecessary and possibly damaging to competition.
Finally, apart from those policy concerns set forth above, we
have several reservations regarding the bceduresuctAddition di-
cial review and required administrative procedures.
several of the provisions concerning the
eosalecandodisseminatio of
data and the procedures for awarding a ion
of the land remote-sensing system are vague so as to invite initial
litigation over their meaning.
provides that before granting a license to quali-
fied S private tn sector parties, the Secretary of Commerce must deter-
mine that the applicant will comply with the Act, regulations, in-
conc cre-
rnational obligations andornmodifylaslicense issuednunder the Act
te
fory may revoke , suspend ,
for failure to commplly. Upon timely request after an adverse action,
an applicant or licensee is entitled adjudication
on the record by the Secretary. A final
is subject to judicial review under the Administrative Procedure
Act.
Under Section 606, the Secretaryits required to consult with
e
the Secretary of Defense on national obsecurity 1igations~ncThesSecretary
Secretary of State on international
of Defense and the Secretary fState theeSecretaryboflnationalec-
tively, for identifying and notiying
security concerns and international sobligations relating toacti-
vities under the Act. However, Se 6( )(l) em eps errs tteeson-
Secretary of Commerce to determine the appropriatens
ableness of conditions based on national security. or''hnternational o ~ obligations to be imposudicialnreview in Section 606.
express provision for j
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We oppose judicial review of those Secretary of Commerce deter-
minations under the Administrative Procedure Act involving national
security and compliance with international obligations.
in the national security and foreign relations areas are largely
within the authority of the Executive Branch and should not be
subjected to judicial review. We recommend that language be in-
serted to provide that to the extent the decisions of the Secre-
tary of Commerce concern national security and compliance with
international obligations, they are committed to the Secretary's
discretion and are not subject to judicial review.
Section 404 of the bill authorizes the Secrtay provides to
ohprosul-
gate appropriate regulations. Section 404(b) regulations "shall be carried out only after public notice and
hearings in accordance with the provisions of title 5,
States Code." The language of this provision is ambiguous and
may be read to require the Secretary to employ notice-and-comment,
and perhaps other, procedures for all regulations, including those
that would otherwise be exempt from the required procedures.
5 U.S.C. 4553(a),(b). This ambiguity can be removed simply by
deleting the phrase "only after public notice and hearings."
Some provisions of the bill are so vague that they invite
litigation over their construction, with the prospect of ceding
to the courts what should initially be determined bFiCongress,
and subsequently be interpreted by the Secretary. t, e
provisions relating to a contract for the operation of the exist-
system
liarte
ing land remote-sensing kelsatellite
These provisions are likely to generate
more than one bidder and a disappointed bidder wishes to prevent
an award of the contracts. The bill fails to indicate whether
t
other statutes and regulations relating to governmenttprocure en t r
are applicable to this type of contract. See, e.&.,
Disputes Act, 41 U.S.C. 3601 et se .; the Federal civil procurement
statute, 41 U.S.C. 3251 et se q., and the Federal acquisition regu-
lations promulgated thereun er.
Additionally, the provisions relating to the sale and dissem-
ination of data have been drafted without regard for the copy-
right law of Title 17. For instance, section 202 statesttiatun-
"title" to the data is retained by the United States.
clear whether the data aoocopyrightwork
can subsisttin thendata,
no
of 17 U.S.C. 3105, so that
or that the copyright is obtained by theicontractor
actoraand assigned
to the United States. In either event,
force the copyright.
Section 202 also provides that the cnrtoriissentitled tt oher
the revenues from the sale of data. A question
Thif the e billgdoesnnottaddress
the contractor is entitled to Chtitlerevenues
data to which the government has should someone else sell the
the contractor's remedy, if any,
data. Another problem is that although "digital remote-sensing
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data" is defined, the general term "data," as used in section
202, is not. By implication, the term "data," is broader than
"digital remote-sensing data" and would include copyrightable
subject matter.
For the foregoing reasons, the Department of Justice believes
that this legislation raises questions that should betheoroughly
mconsidered.
to enactment of suggested
thiselegislation.
notiobjectamended
men
The Office of Management and Budget has advised this Depart-
ment that there nofobjection
Administrationbsiprogramf this report
from the standpoint
Sincerely,
Robert A. McConnell
Assistant Attorney General
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