[Federal Register Volume 60, Number 232 (Monday, December 4, 1995)]
[Proposed Rules]
[Pages 62054-62057]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-29330]



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DEPARTMENT OF COMMERCE

National Oceanic and Atmospheric Administration

15 CFR Part 960

[Docket No. 951031259-5259-01]


Licensing of Private Remote-Sensing Space Systems

AGENCY: National Environmental Satellite, Data, and Information Service 
(NESDIS), NOAA, Commerce.

ACTION: Notice of inquiry and request for public comment.

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SUMMARY: The National Oceanic and Atmospheric Administration (NOAA) is 
considering revisions to its regulations for the licensing of private 
remote sensing space systems under Title II of the Land Remote Sensing 
Policy Act of 1992, 15 U.S.C. 5601 et seq. To promote the process, NOAA 
is using an informal Task Group, of NOAA and Commerce employees, to 
compile and consider public comment on the more significant issues 
involved in the licensing process. NOAA will use these comments to 
decide the extent to which it needs to revise its regulations and what 
issues should be addressed. Should NOAA decide that new regulations are 
necessary a proposed rule would be published to solicit public comment. 
NOAA will then circulate its final draft of proposed regulations in the 
informal rulemaking process. NOAA intends that soliciting comments on 
the issues proposed in this notice prior to the issuance of any 
proposed rule will ensure that NOAA's regulations include provisions 
advantageous to industry, as well as to Government. This Notice 
solicits such comments, particularly from the regulated industry.

DATES: Comments must be received on or before February 2, 1996.

ADDRESSES: Comments should be sent to, Michael Mignogno, NOAA, National 
Environmental Satellite, Data, and Information Service, Federal 
Building 4, Room 3301-E, Washington, D.C. 20233.

FOR FURTHER INFORMATION CONTACT: Michael Mignogno at (301) 457-5210 or 
Catherine Shea, NOAA, Office of General Counsel at (301) 713-0053. 
Additional Discussion Packages are available from Michael Mignogno at 
the above address.

SUPPLEMENTARY INFORMATION: In 1987, NOAA published its licensing 
regulations that set forth procedures for submission and Government 
review of an application pursuant to the Land Remote Sensing 
Commercialization Act of 1984. Only one license was issued 

[[Page 62055]]
under this act. When Congress passed the Land Remote Sensing Policy Act 
of 1992 (the Act), it made several revisions to the licensing process 
to stimulate commercial interest in operating systems. On March 10, 
1994, the President issued his policy to promote U.S. competitiveness 
in remote sensing space capabilities while protecting U.S. national 
security and foreign policy interests. Since 1993, NOAA has issued nine 
licenses.
    NOAA is considering updating its 1987 regulations to reflect 
statutory changes, intervening events, and recent licensing experiences 
and to ensure that the Government's oversight is simple, transparent, 
and predictable. Particularly, NOAA seeks to support the President's 
policy that long term U.S. national security and foreign policy 
interests are best served by ensuring the U.S. industry continues to 
lead this emerging market.
    In order to foster the policy of transparency in the licensing 
process, NOAA is seeking public input on whether extensive new 
regulations are necessary and, if so, what issues should be addressed 
in such rule. To assist this process, NOAA developed, for the Task 
Group, a series of Discussion Packages that highlight some of the more 
significant areas for discussion. NOAA is seeking early public input on 
these and on other significant aspects of the licensing process. NOAA 
is especially interested in suggestions for innovative methods to carry 
out its statutory licensing responsibilities in ways that enhance U.S. 
competitiveness. The significant issues identified to date and 
highlighted in the discussion packages can be summarized as follows:

1. Review Procedures for License Applications

    A. How can the process be improved and modified to provide greater 
transparency and predictability and shorter response time?
    NOAA seeks to eliminate uncertainty from the licensing process that 
could potentially threaten commercial practices while preserving 
essential national security and foreign policy interests. For each new 
system, these interests are first addressed during the review of the 
license application. The review must be thorough and careful, but at 
the same time transparent, predictable, and timely so as not to deter 
pursuit of and investment in potential systems. The Government must 
complete its review within the statutory time limit of 120 days or, if 
possible, within a shorter time limit.
    To address these legitimate interests and comply with the intent of 
the Act and the President's policy, NOAA is considering whether the 
Government should institute more formal administrative time limits and 
more detailed record keeping requirements in making determinations on a 
license application. It is contemplated that under such a system any 
reviewing agency unable to comply with a time limit would be required 
to submit a satisfactory explanation and specify the additional time 
required. The administrative record would be opened as soon as an 
application is received and would include all comments on that 
application. Ex parte communications would not be permitted and oral 
input should not influence the process in any way. The applicant would 
have the right to inspect this record during business hours.
    To promote timely and transparent decisions NOAA is considering 
additional procedures pursuant to its enforcement authority under 
section 203 of the Act. This section establishes the right to a hearing 
on the record in the event NOAA takes certain adverse actions such as 
the denial of a license or imposition of conditions in a license. NOAA 
is considering defining adverse actions to include the Government's 
failure to act within the applicable time limit and/or advise the 
applicant of the reasons for the delay.
    In the event of an appeal, the administrative record would stand 
alone as evidence for all determinations made during the application 
review. NOAA would have to demonstrate that a preponderance of the 
evidence in this record establishes, for example, that the system 
proposed would compromise identified national security or foreign 
policy interests. As such, the record would have to include information 
from the appropriate secretary sufficient to identify the interest at 
risk and describe why the proposed system would not preserve that 
interest. (This information may be classified where necessary). Should 
NOAA establish such an appeal process, the record would have to contain 
this information and the evidence would have to be sufficient to meet 
the requisite test or the agency determination would not prevail.
    B. What are the minimum informational requirements for a complete 
application?
    A related issue in terms of ensuring expeditious review is 
determining when an application is considered complete. It is important 
that applicants and the Government agree on what basic information must 
be provided in order to enable the Government to perform a thorough 
review and, at the same time, avoid over-burdening the applicant. Such 
an understanding also will avoid frequent requests for additional 
information which delay the process. Particularly important is the 
information that describes the operational aspects of a proposed system 
which are significant in terms of its national security and foreign 
policy implications. NOAA is interested in assessing what information 
is necessary before a review can begin and what level of burden is 
imposed by gathering the information necessary for a complete 
application. Any comments received on this issue also will be relevant 
in terms of compliance with the Paperwork Reduction Act.
    The existing informational requirements are found at 15 CFR 960.6. 
A more complete list, that includes additional items identified as 
significant by the reviewing agencies during recent license application 
reviews, is contained in Discussion Package 1. This Discussion Package 
also sets forth in more detail the type of process that NOAA is 
considering for reviewing license applications.

2. Restricting Imaging To Preserve National Security/Foreign Policy 
Interests--What Standard Must Be Applied and What Procedures Must Be 
Followed?

    Once a license is issued and a remote sensing satellite is 
operational, the most critical issue for the licensee is when the 
Government might restrict imaging of a particular area and for how long 
because of national security or foreign policy considerations.
    The basic license condition, derived from the President's policy, 
provides:

    The Secretary of Commerce may, after consulting with the 
Secretary of Defense or State, as appropriate, require the licensee 
to limit imaging an area and/or limit distributing data from an area 
during any period when national security or foreign policy interests 
may be compromised.

    To ensure that restrictions will be invoked only where appropriate, 
this consultation and any decision to implement this condition will be 
controlled at the Secretarial level and any Secretarial disagreement 
will be elevated to the Presidential level.
    While the above standard and process appears to have achieved 
considerable consensus, questions have been raised whether such a 
standard is too vague. For example, representatives of the media 
addressed this issue in the 1989 Petition for Rulemaking. The media 
representatives have maintained that imaging could be restricted only 
if ``there is clear evidence that such action is necessary to prevent 
serious and immediate injury to distinct and 

[[Page 62056]]
compelling national security and foreign policy interests of the United 
States.'' (Petition for Rulemaking filed by Radio Television News 
Directors Association, April 5, 1988)
    In 1989, NOAA responded to this Petition for Rulemaking announcing 
that it would reopen its regulations and would incorporate the 
principle that ``conditions imposed in a license will be the least 
burdensome possible.'' 54 FR 1945. This rulemaking was interrupted by 
passage of the Act in 1992 and NOAA is now considering a number of 
provisions to implement the President's policy. These could include 
ensuring that limitations on imaging would be imposed only over the 
smallest area and for the shortest period of time possible and would 
not be imposed at all if comparable data is otherwise available.
    Ultimately, any standard and process for making decisions 
concerning the need for restrictions on imaging must ensure that the 
Government has the ability to protect its national security and 
international obligation interests adequately while preserving First 
Amendment rights and other U.S. interests, including that of protecting 
industry's position in global competition. NOAA believes that it is now 
an appropriate time for a full discussion of this issue before systems 
become operational. Comments from previous rulemaking actions and other 
relevant material are contained in Discussion Package 2.

3. Review of Foreign Agreements

    Section 202(b)(6) of the Act requires that licensees ``notify the 
Secretary [of Commerce] of any agreement the licensee intends to enter 
with a foreign nation, entity, or consortium involving foreign nations, 
or entities.'' To implement this section, NOAA's licenses now require 
licensees to provide notice of a significant or substantial foreign 
agreement at least 60 days before conclusion. This requirement reflects 
interagency consensus that sixty days is needed for meaningful 
notification but that, consistent with the President's policy, this 
burden is justified only if agreements are significant or substantial. 
As required by the President's policy, NOAA anticipates defining such 
agreements in these regulations and solicits comments on this issue (as 
well as the appropriateness of the 60 day review period).
    This provision of the Act is subject to differing legal opinions. 
One view of the Act is that it requires that licensees notify the 
Secretary of every agreement. The Department of Commerce disagrees with 
this interpretation. Legislation has been introduced on this subject; 
however, to date no subsequent legislative action has occurred.
    Should NOAA's legal interpretation not be upheld and no legislation 
be passed, comments might want to address whether NOAA should consider 
defining different classes of agreements with corresponding 
notification requirements. For example, the regulations could retain a 
60 day notice requirement for significant or substantial agreements 
while requiring that notice of other agreements be provided only prior 
to their effective date.
    A. What agreements must be submitted for review?
    The threshold question with respect to the notification requirement 
of section 202(b)(6) of the Act is what agreements are covered. The 
purpose of such notification is to ensure continued preservation of 
U.S. national security and foreign policy interests. Existing licenses 
require notification of those types of agreements that could have 
particular national security or foreign policy implications such as: 
those that give a foreign party control over the operation of the 
system, e.g., the ability to operate the spacecraft, task the sensors, 
or exercise managerial control; and those that provide for a 
significant role in distributing the data from the system, e.g., by 
operating a foreign ground station.
    Routine data sales have traditionally been excluded from the 
definition of significant agreement because an advance notice 
requirement would put U.S. companies at a competitive disadvantage. 
Furthermore, scrutinizing all direct sales to foreign customers would 
not effectively preserve U.S. interests inasmuch as a determined buyer 
could purchase any scene or scenes desired through a variety of legal 
channels.
    More specifically, existing licenses require notice of the 
following types of foreign agreements:
    (1) cooperation in the launch and/or operation of the spacecraft;
    (2) Tasking of the satellite sensors, modifying satellite tasking 
commands, revising the priority of tasking requests, or otherwise 
providing an opportunity to exercise managerial control over the 
system's operation;
    (3) Real-time direct access to unenhanced data; or
    (4) Distributorship arrangements involving the receipt of high 
volumes of unenhanced data;
    (5) An equity interest in the Licensee. (A license amendment is 
required if the aggregate equity interest in the Licensee by foreign 
nations and/or persons exceeds or will exceed 25 percent.)
    These licenses exclude agreements that provide only for the sale of 
data or value added products, or for the establishment of marketing 
outlets in foreign countries established in the ordinary course of 
business if described in the plan for sale and distribution contained 
in the license application.
    NOAA seeks comment on whether the above criteria are adequate to 
define ``significant or substantial'' agreements. In particular, NOAA 
is searching for appropriate criteria to determine when review is 
necessary for agreements providing solely for foreign investment in a 
licensee. Every sale of stock to a foreign investor cannot be subject 
to review. On the other hand, a threshold for review is necessary to 
ensure that the technology remains secure and that the operator remains 
sufficiently under U.S. ownership or control that it must respond 
appropriately when necessary to preserve national security. 
Furthermore, in accordance with the President's policy, aggregate 
foreign investment in excess of a particular amount would not only be 
subject to notification but to approval, i.e., by amendment to the 
license. NOAA is particularly interested in industry views about what 
criteria should trigger a review of a foreign investment agreement.
    B. What process should be in place to inform applicants when the 
Government has identified a concern with a potential foreign agreement? 
When the Government raises a concern and issues negative advice, what 
rights of appeal should be available to an applicant or licensee?
    To promote more timely and transparent decisions on the review of 
significant foreign agreements NOAA is considering a process that would 
be similar to the review of an initial license application in that the 
Government would institute more formal administrative time limits and 
more detailed record keeping requirements. However, this process would 
recognize that, unlike the case of an initial application, the 
Secretary does not have the legal authority to approve or disapprove 
these agreements. Therefore, if the Secretary does not advise a 
licensee of any conflicts within sixty days of notification, the 
licensee is free to enter into the agreement.
    A possible process to be considered and on which NOAA seeks 
comments is as follows: If the Secretary does advise a licensee of a 
conflict, i.e., that the proposed agreement will compromise national 
security or foreign policy interests, the licensee may at that point 

[[Page 62057]]
request a hearing on the record to determine whether a preponderance of 
the evidence in the record supports that conclusion. In circumstances 
where waiting for the normal hearing process could jeopardize relations 
among parties to the agreement, NOAA would provide an expedited hearing 
process.
    Discussion Package 3 sets forth in more detail the type of process 
under consideration.

6. Miscellaneous

    Comments on the above issues are specifically solicited but all 
comments on improving and simplifying the regulations are welcome and 
will be reviewed and considered in the course of the normal agency 
process of issuing proposed regulations, should such regulations be 
deemed necessary. NOAA is also interested in comments on whether or not 
NOAA should sponsor a public meeting on the issues presented in this 
notice or others related to the regulations.
    NOAA intends that all information obtained from the public in 
connection with this Notice be a matter of public record. Consequently, 
comments must be in writing to be considered. Oral comments are 
discouraged. NOAA will not accept submissions made on a confidential 
basis. The record containing all comments will be maintained with the 
above listed contacts, NOAA, Federal Building 4, Room 3301, Suitland, 
MD. From 9 a.m. to 3 p.m., it may be inspected, by appointment, and any 
comments copied in accordance with regulations published in Part 4 of 
Title 15 of the Code of Federal Regulations. Further information about 
inspection and copying of records at this facility may be obtained from 
the above contacts.
    Commentors can request copies of the Discussion Packages referenced 
in this document from the contacts listed above.
Robert S. Winokur,
Assistant Administrator for Satellite and Information Services.
[FR Doc. 95-29330 Filed 12-1-95; 8:45 am]
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