COMMERCIALISATION OF REMOTE SENSING U.S. AND …

COMMERCIALISATION OF REMOTE SENSING U.S. AND INTERNATIONAL LAW

TOWARDS A LIBERALIZATION OF ECONOMIC REGULATIONS

by Michel Bourbonni5re

A thesis submitted to the Faculty of Graduate Studies and Research in partial fulfülment of the

requirements of the degree of Master of Laws (LL.M.)

The Institute of Air and Space Law McGiU University Mon treai, Quebec, Canada August 1996

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A B S T R A C T

This thesis analyses the International and American laws and reg dations

structuring the commercialization of space based remote sensing images.

Chapter one outlines the historical evolution influencing the present regulatory

structure. Chapter two describes the technolog y of space based remote sensing systems.

Chapter three analyses the international treaties and institutions dong with their

application to commercial remote sensing by satellites. Chapter four analyses the

American legislative evolution and regulatory structure pertaining to commercial remote

sensing . The argument of the thesis is that a contextual evolution of the global geopolitical

climate is forcing a regulatory retooling for commercial space endeavours. The

contextual evolution has created new paradigms based upon international economic

market values. The initial international treaties and institutions must evolve to reflect

these criteria.

Cette h&se analyse le droit international

commercialisation de la télM6tection spatial.

et Américain ayant trait à la

Le premier chapitre décrit l'&olution historique du droit spatial. Le deuxieme

chapitre décrit la technologie de la téléât5tection spatial. Le troisieme chapitre analyse

les instruments de droit spatial en ce qui ii trait à la commercialisation de la télM6tection.

Le quatrième chapitre analyse la structure législative et réglementaire Amencaine.

Il y a eu une evolution dans le contexte géopolitique qui engendre l'application

d'un nouveau paradigme économique et commercial. Les instruments de droits spatial

et les institutions doivent évoluer pour refleter ces nouveaux crit&res.

. 1 would like to express my sincere appreciation and gratitude to the following

professors, fiiends and colleagues who have contributed to my research and who have

made this past year mernorable.

Professor Dr. Richard Tanda, Director of the Centre of Regulated Industries,

whose expert howledge in economics and law provided me with guidance and invaiuable

cornments and suggestions.

Professor Dr. Michael Miide, Director of the Institute and Centre of Air and

Space Law, for his support and encouragement in my research.

1 owe a special thanks and appreciation to Dr. Louis Heack who inspired my

intellectuai thirst for air and space law and who continues to be an invaluable source of

motivation, and innovative ideas.

Finally, 1 owe a very special thanks to my spouse Teresa Carluccio, whose very

clear and logical mind ensured a smwth flow of ideas and consistency among them, and

to my children VaErie and Mathieu who always encouraged me to do my "homework".

iii

TABLE OF CONTENTS

INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

. . . . . . . . . . . . . . . . . . . . . . . . . . . CHAETER 1 Historical Considerations 4

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . CHWTER 2 Techical Aspects 9 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.1 Charactenstics of Remote Senshg 9

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.2 hirpose of Remote Sensing -10 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.3 Technology of Remote Sensing 12

2.4 Technologid Characteristics of the Landsat System . . . . . . . . . . . . . . . . 15 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . CHAP'ER 3 International Law 23

. . . . . . . . . . . 3.1 The Outer Space Treaty contents and the geopolitical Climate 23 . . . . . . . . . . . . . . . . . . . . 3.2 Commercial Nature of Remote Sensing Data - 2 8

3.3 Developing Countries Objections to the International Regulatory h e w o r k . . . . . . . . . . . . . . . . . . . . . . . . . . . . Sovereignty Over natural resources 37

. . . . . . . . . . . . . . . . . . . . . . . 3.4 United Nations remote Sensing P ~ c i p l e s 38

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . CHAPTER 4 American Law -47 . . . . . . . . . . . . . . . . . . . . . 4.1 Land Remote Sensing Commercialization Act 50

. . . . . . . . . . . . . . . . . . . . . . . . . . . 4.2 Land Remote Sensing Policy Act -59 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.3 Market Analysis -63

4.3.1 Market Structure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.3.11 Market Entry 70

4.3.II.A Satelite launching and Deployment . . . . . . . . . . . . . . . 70 4.3.II.B Lisencing requirements . . . . . . . . . . . . . . . . . . . . . . 72

4.3.II.B.1 Operating License . . . . . . . . . . . . . . . . . . . . 73 4.3. II-B- 1-a Procedural Characteristics . . . . . . . . . . . . . . 75 4.3.II.B.l.b Substantive Tests . . . . . . . . . . . . . . . . . . . 79 4.3. II-B- 1-b-1 National Security Concems . . . . . . . . . . . . 80 4.3. II-B- 1-b-II Seinires . . . . . . . . . . . . . . . . . . . . . . . 88 4.3. II-B- 1 -b-III Control and Jurisdiction . . . . . . . . . . . . . 90 4.3.II.El.b.IV Significant and Substantive Agreement . . . . 95 4.3.II.B. 1-b-V Jurisdictional Scope . . . . . . . . . . . . . . . . 97 4.3. II-B- 1-b-VI International Obligations . . . . . . . . . . . . . 98

. . . . . . . . . . . . . . . . . . . . . 4.3. II-B- 1-b-Vn Sanctions 99 4.3.B.2 Radio Frequency License . . . . . . . . . . . . . . . . 100 4.3.B.3 Export License . . . . . . . . . . . . . . . . . . . . . . 102

4.3.U.C Ground Station Contracts . . . . . . . . . . . . . . . . . . . . 105 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.4 Market Balkanization 110

. . . . . . . . . . . 4.5 International Freedom of Information & United States Law 111 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.6 Remote Sensing and GATS 113

CONCLUSION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Il5 BIBLIOGRAPHY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -122

INTRODUCTION

This thesis will analyse the International and American laws regulating the use

of outer space and the commercialization of space based remote sensing data. Chapter

one shaii briefly outline the distinct historical context within which space based

overhead irnaging technology and international space law was created and developed.

Chapter two of this paper will describe the technology of remote sensing. This

technology will be analyzed in its basic characteristics and purposes. This will be done

both in general terms and with specific references to the American Landsat program.

Chapter three wiU examine the international law and institutions pertaiaing to

commercial remote sensing. The major space treaties pertaining to the use of outer

space and remote sensing WU be examined along with theù possible effect upon the

commercialization of remote sensing data as enacted by internai domestic legislation.

This chapter will also focus on the international institutions and their effect or lack of

effect on commercialization of remote sensing data. The analysis will then determine

if international law imposes certain imperative content upon domes tic legislation

regulating remote sensing. The capacity of the international legal regime and present

institutions to regdate an evolving market based space remote sensing industry shall

be analysed.

Chapter four WU analyze the American policy and regulations pertaining to

remote sensing data commercialization. The relationship between the international

norms and intemal American regulations shail be analysed. The analysis wiil scrutinise

1

how intenial law has included andlor infiuenced international legai instruments ia their

content. There is a reciprocal and symbiotic effect between the intemal and

international legal systems. Each influences the other's evolution. The chapter shaii

then concentrate on an economic analysis of market structures and market entry within

the context of an information based free and open society. Certain policy choices and

presuppositions of the American legislation wiil be highlighted and cnticised. Although

this thesis is not primarily concemed with military and security aspects of remote

sensing data it is however concemed with the fact that the present American regulatory

structure is strongly Muenced by the military ongins of space based remote sensing

technology. From a historical perspective the presence of "military" overtones within

the American regulatory structure is understandable. The American regulatory culture

must now change in order to clearly reflect a new market paradigm. The central

argument of chapter four is that the Amencan regulatory culture must evolve and

conform with the realities of a global information based market economy. The

historical legacy of space technology, king permeated with Cold War concepts,

prevent an efficient and effective development of commercial market structures. The

effect of the "national security" concept upon the legal superstructure wili be discussed

in detail within the fourth chapter of this paper where its application and effect upon

commercial reguiations WU be explored. The conclusion wiU caii for the removal of

this concept fiom the American regulatory structure replacing it with a new conceptual

and institutional approach better suited to the needs of a modem information based

society.

This thesis will argue for the international and national need to establish an

institutional and legal hmework based upon commercial market paradigms for remote

sensing. A new reguiatory hmework is necessary to ensure the evolution of an

international legal superstructure w ith respect to the commercialization of space based

data coilection and dissemination. This thesis will conclude by establishing that

American leadership should be used to create a more open international market

structure for the space industry. The American space industry is the most important

of its kind in the worid. The American laws and regulations must therefore be a mode1

upon which the international market should be based. The World Trade Organization

çWTO) through the GATS should succeed UNCOPUOS in the regulation of

commercial remote sensing.

HISTORICAL CONSIDERATIONS

Remote sensing is a term geaerally associated with the application of satellite

technology. However the origins of overhead surveillance can be traced to the use of

hot air balloons during military conflicts, the purpose of which was to gain

information c o n c e d g enemy troops and capacity. The emergence of the concept of

airspace sovereignty above the underlying Statel initially severely curtailed the use of

overhead imagery. The overflight of an airplane through the airspace of a foreign State

became, irrespective of its altitude, a clear violation of international public law.

Despite this fact, during the Cold War the United States operated high altitude U-2 and

SR-71 spy planes to obtain irnagery of Soviet and Cuban mititary installations. In July

1955, at the first Geneva Summit on arms control verification, President Eisenhower

proposed the legalisation by an international treaty of photographic overflights of

certain military installation^.^ The Amencan proposal was refused by the Soviets,

l Convention on International Civil Aviation, December 7, 1944, T.I.A.S. No. 1591, 3 Bevans, 944, 15 U.N.T.S. 295. mereinafter Chicago Convention of 19441, art. 1: the contracting States recognise that every State has complete and exclusive sovereignty over its airspace above its temtory.

D.J. Johnson, M. Nelson & Robert J. Lempert, U.S. Soace-Based remote Sensine: Challenss and Prosoect~ (Santa Moncia, CA: Rand, 1993) at 5. "Eisenhower and others believed it was preferable to have legal overfiights of U- 2s as a confidence-building measure than to provoke the Soviets with violations of their airspace". This "open skies" concept was to be successfully used by President Bush in 1989 during negotiations between NATO and the Warshaw Pact.

whose technical capabilities at the tirne would not have ailowed them to match the

American overflights . D u ~ g the Cuban Missile cnsis President Kemedy authorised a sufficient

number of U-2 flights to photograph the entire island of Cuba? Initially the Soviets

and Cubans lacked the techaological capacity to prevent such overflights. The evolution

of Soviet weaponry, leadhg to the actual shooting down of a U-2 spy plane and the

capture of its pilot, Gary Powers, brought this practice to an end.4 The importance of

the U-2 incidents Lies in the fact that the only illegal aspect of this activity, inasmuch

as international law is concemed, were the flights themselves and not the espionage.

The collecting of imagery was in itself not an illegal act. There was no instrument of

public international law prohibiting a State fkom obtaining images of another State.

D. Brugioni, "The Art and Science of Photoreconnaissance" (March 1996) Scientific American 78.

The American U-2 spy plane was acnially operating without any identification marks, and its pilot was not wearing his military uniform. Gary Powers was at the time sentenced by a Soviet tribunal to ten (10) years of imprisonement for espionage. In the midst of international tension President Eisenhower finally admitted Amencan responsibility for this incident. Although the military and security implications are an important part of the evolution of international remote sensing law, a detailed study of the miiitary and security implications of remote sensing is beyond the scope of this note. For interesting reading on this topic, see L. Haeck, "Aspects juridiques de certaines utilisations militaires de l'espace" article to be published in the next issue and on file with the author Ann. Air & Sp. L.; O.J. Lissftzyn, "Some Legal Implications of the U-2 and RB-47 Incidentsw (1962) 56 American J. International L. 135; 0. Wright, "Legai Aspects of the U-2 incidents" (1960) 54 Amencan J. International L. 836; Hans- Joachim Heintze, Jorg Wallner, et al. "Remote Sensing and S trenghtening European Secunty" (1993) 9 Space Policy 55.

What is not specificaliy prohibited in public intemational law is allowed.' It therefore

logicaiiy foiîows that an airplane flying within the territorial space of its countq of

registry can legally obtain pictures of a foreign State. These so-caiied "side views" can

also be taken from neutral areas which are not under the sovereignty of any State. A

perfect exampie of such side views are pictures taken of a State from the high seas.

Another international incident between the Soviet Union and an American spy

plane confirmed the legaiky of "side views". An American RB-47 spy plane was

downed by the Soviet Military while operathg a surveillance mission in international

ainpace near the Soviet Coast of the Barents Sea. At the tirne, the Soviets mistakenly

believed that the Amencans would not be able to prove the precise location of the RB-

47 plane in international air space at the time it was d ~ w n e d . ~ In this case the Soviets

admitted their error and the American pilots were returned. The distinction between

the two incidents is crucial. In the iïrst case the American pilot was imprisoned for

espionage while in the latter case the pilots were safely retumed to the United States

by the Soviets. At this historical juncture it became possible to argue that in

international law there is a clear distinction between "side views" or "peripheral

reco~aissance" and "penetrative reco~aissance". In other words international law is

See the Stearnship Lotus case (France v. Turkev) (1927), P.C.I.J. Ser. A., No. 10.

B. Cheng, The Hiehwa~s of Air and Outer S~ace Over Asig (Dorbrecht, Netherlands; Boston Martinus Nij hoff publishers Norwell, MA. U.S.A.) at 56.

concemed with the point of origin of reconnaissance and not with the act of

reconnaissance in genera17. As Bin Cheng wrote:

We now have the major premise for answering the question whether &ta gathering by ariiticial satellites is lawfbl. The major premise in this syliogism is that whilst data gathering from intemational space is lawful, data gathering by one state in the territory of another state, including the latter's national airspace, without the latter's permission, tacit or express in unlawfiil.

Despite the legality of side views the usefblness of such images is very weak,

limited in both scope and detail. It has therefore k e n correctiy argued that

International law "grants every nation the nght to conduct e~pionage".~ The legal

problems of overhead photography and the limitations of side views could be overcome

with the use of outer space for remote imaging. However the establishment of such a

conclusion presupposes the classification of outer space as an international area beyond

the reach of national sovereignty. "Like the high seas, outer space is beyond State

sovereignty. As espionage from the former is generaliy accepted as king a legai

activity, it has k e n concluded that espionage from outer space is also legal. " 'O

This discussion highlights an interesting theoretical debate in space law between the functiondist school of thought and the spatialist school of thought. For an interesting analysis of this debate, see B. Cheng "The legal Regime of Airspace and Outer Space: The Boundary Problem Functionalism versus Spatialism: The Major Prernises (1980) V Ann. Air & Sp. L. 323.

Cheng, ibid, at 49.

H. Feder, "The Sky's the Lirnit? Evaluating the International Law of Remote Sensing" (199 1) 23 Int. Law & Pol. 599 at 605-606.

l'bid. at 604. -

In August 1960 the American govemment established its t i rs t reconnaissance

satellite program code named CORONA." Space based overhead intelligence

gathering by the military has since been fomally included in arms treaties under the

rubrique "National Technical Means".

l1 A.D. Wheelon, "Lifting the Veil on CORONA" (1995) 1 1:4 Space Poky 249.

8

CHAPTER 2

TECHNICAL ASPECTS OF REMOTE SENSING

CHAPTER 2 SECTION 1:

CHARACTERISTICS OF REMOTE SENSIN(;

The subject of this thesis is the gathering and dissemination of &ta via

commercial space based sateilite imaging technology. In the early sixties "astronauts

on board the Mercury and Gemini missions took photographs of the Eaith's surface

with handheld 35mrn and 70mm cameras.12 These pictures "inspired NASA and the

department of the Interior to request funding for an earth resources observation

satellite"." Consequently the use of this technology greatly evolved. The Apollo

missions used ''multiband cameras and sophisticated sensors recording unprecedented

views of earth" .14 From its origins as a tool of military intelligence pthering satellite

imagery has developed as a valuable tool of meteorology, cartography, geology, crop

monitoring, etc.

l2 H. Desaussure, "Remote Sensing Satellite Regulation by National and International Law" (1989) IS Rutgers Cornputer & Tech. L. J. 35 1 at 363.

l3 Johnson, s u p ~ note 2 at 7.

14 Ibid. at 363.

There is no legal definition of remote sensing which can claim universal

acceptance. In this thesis the term "remote sensing" shall refer to: "The science and

art of obtalliing information about an object, area or phenornenon through the analysis

of data acquired by a device that is not in contact with the object, area or phenomenon

under in~estigation."'~ It can be said that each individual nomaliy posses remote

sensing capabilities. These are Our sense of sight, sense of hearing and sense of srneil.

Remote sensing by satellite operates as an "eye" in the sky. Other human senses have

not k e n replicated to operate fkom space. Nevertheless it should be noted that

American and Intemationai laws pertainuig to remote sensing are exclusively concerned

with space based technology .

Space based remote sensing can be classified according to two main categories.

These are:

(i) The purpose of the operation; and,

(ii) Thetechnologyoftheoperation.


THE PURPOSE OF REMOTE SENSING

Remote sensing can be divided into five distinct types of uses, or purposes.

l6 T.M. Lillesand & R.W. Kiefer, Remoté Sensine and Image intemretation, (New York: John Wiley & Sons, 1979) at 1.

First, remote sensing can be "civil" in its purpose. Civil remote sensing is

conducted by "agencies, organizations, or individuals who exploit remote sensing

systems and data to promote the general welfare and provide for the public goo~i".~~

weather satelites are typical examples of civil uses or purposes. The data and

information resulting fkom a public good service is deemed vital public kaowledge and

is therefore witheld fiom comrnercialization. Access to information ciassified as a

"public good" must not be contingent upon the financial capacity of the individual who

needs the information. In accordance with this percption Amencan legislation has

consistently re fused to include weather satelites in the corn mercialkation of space based

remote sensing data. This thesis will not analyze the civil use of remote sensing

satellites.

Second, remote sensing can have a military or national security purpose. in fact

remote sensing satellites were origlliaiiy created for this kind of use. This thesis wiü

not deal w ith satellites w hich are exclusively designed and used for military intelligence

functions. However, this king said, it is nonetheless important to understand the

military ongins of this technology and its effect upon the development of space law.

The national mititary origins of remote sensing explains some aspects of the present

American regdatory and international legal structure. Even if military satelites are not

dealt with in this thesis, the military ongins of the technology and it effect upon the

l7 Johnson, supra note 2 at 2.

11

regulatory structure by the use of the "national security" concept is a central part of

this thesis.

Third, remote sensing satellites can have a scientific purpose. Scientific satellites

are used purely for research and discovery. Again, this thesis will not deal with

exclusivly scientific rexnote sensing satellites.

Fourth, remote sensing satellites can have a commercial purpose. Commercial

purpose is defined as the exploitation of "remote sensing data to gain profit, either

through the procurement and sale of data as an intermediate good or through value

added analysis that uses sensing as a production inputm.'* Although commercial

remote sensing data can be used for any of the above cited uses, the commercial

operation itself functions within its own replatory system. This thesis wiU address the

commercial legal system exclusively focussing particularly on the American legal

regime.


THE TECHNOLOGY OF REMOTE SENSING

As described above, remote sensing fiom space first used N m based optical

systerns. Such film based technology is simple. Cameras "capture Light reflected from

the surface of the earth with standard camera technology, and drop film canisters into

the atmosphere to be retrieved and pmcessed." l9 The technology has by now evolved

to the point where remote sensing satellites are presently equipped with electro-opical

s y ~ t e m s , ~ ~ synthetic aperture radar (also referred to as SAIQ21 orland infrared

technology ."

Within the field of remote sensiag technology one can distinguish between

"passive" and "active" remote sensing. 'Passive" sensing involves a reading of the

earth's natural radiation, whereas "active" sensing requires transmission by the satellite

of electrornagnetic radiation and the interpretation of its reflection."

Passive remote sensing devices "measure the iacoming energy, which either

started at the sua and was reflected by the object, or started at the object as a hinction

of its temperature" .14 Active remote sensing devices emit specific waves and then

l9 J. Bail, "Satelite Remote Sensing" in http://www . doc. gov/oasc/rmtsens. html at 2.

20 These "collect images in the visual spectral bands with charge-coupled devices similar to those used in video-carneras and fax machines. The images are trans fered to binary code, and transmitted to the earth throug h communications down-links. These images may then be rnanipulated using software, or produced in hard copy form". See ibid.

2L "Synthetic aperture radar systems emit and retreive radio waves bounced off the Earth's surface that can detect relief features regardless of light and weather conditions on Earth". See ibid.

"Like those used to forecast the weather, sense variations in heat levels". See Ibid. -

23 C.C. Joyner & D.R. Miller, "Selling Satellites; The Commercialization of LANDSAT" (1985) 26 Harv. International L. 1. 63 at 64.

http:Ilwww. WS~~.~O~~IEOS~TEXT/PUBLIC/~~~~~~~. html at 1.

interpret theû reflection fiom the subject matter. This technology is based on the

premise that each substance possesses a distinctive signature pattern of electromagnetic

energy reflection defived from its specific physical and chernical structure. With the

use of both passive and active remote sensing information can be coliected which is

invisible to traditional optical light recording technology.

The main attributes which determine the observation capacity of remote sensing

equipment are: spatial resolution,* spectral coverageZ6 and temporal fiequency."

Of these three attributes probably the most sensitive technical critenon of remote

sensing is the level of res~lution.~' It is generaiiy accepted that a resolutioo of ten

ZS "Descnbes the level of detail, or smailest size of an object, which can be identified. Present civil systems have spatial resolutions in the range from 10 meters to 4 kilometers. Some data with spatial resolution under 10 meters is currently commercially available from systems originally intended for military use such as the Russian satelite cameras. A number of civilian systems that have been proposed for launch within the next several years will offer 1-5 meter resolution data". Ibid.

26 This refers to how many different colors and different parts of the spectrum are measured. Systems today make from one to seven measurements of light energy for each target are-. Tbid.

" This "refers to the cycle coverage or how often data are collected from a particular satelite. The temporal fkquency of operating remote sensing satelites range from one satelite pass every month to two everyday. Ibid.

28 Ibid, at 106-107. "a digital image consists of many square dots or "pixels. A high-resolution image is defined as a digital picture where the length and width of each pixel represents a ground distance of less that five meters. The ground extent of the pixel is expressed in terms of GSD - ground sample distance (in meters). Images captured on film are described at an equivalent GSD.

meters dows the photography of subjects deemed sensitive for national secunty

rea~ons~~.

Passive remote sensing is currently commerciaiiy operated through both French

SPOT satellites and the American Landsa?' programs. The Canadian Radarsat

operates the first commercial active radar remote sensing pr~grarn.~' The data

cok ted by these satellites is then communicated to ground stations for interpretation

through various techniques of enhan~ernent.~~

Joyner & Miller, suz>r;i note 23 at 65. An analysis of national secunty concems is beyond the scope of this paper. On this topic, see B. Jasani & C. Larsson, " Security Implications of Remote Sensing " (February 1988) 4: 1 Space Policy 48; J. T. Richelson, "Implications for Nations Without S pace-Base- Intelligence Collection Capabilities' in M. Krepon, P. Zimmerman, L. Spector & M. Umberger, eds., Commercial Observation Satellites and International Securitv (New York: S t-Martin's, 1990) at 55-73; Ham-Joachim Heintze, Jorg Wallner, David Hounam, and Manfred Nowak, "Remote Sensing and strenghtening European Secunty" Space Policy (1993) p. 55.

Landsat is the acronym for Land Remote-Sensing Satelite system [hereinafter Land sa t] . The distinction between the two systems could be of legal significance as far as copyright questions are concemed but not for the purpose of this paper.

A ground station footprint is an approximate circular area where the satellite is within line of sight of the ground station. The footpnnt size is limited by the earth's curvature and increases at greater orbital altitudes. See V. Gupta "New Satellite Images for Sale" (1995) 20 International Secunty 94 at 106.


TECHNOLOGICAL CHARACTERISTICS OF THE LANDSAT SYSTEM:

The first Landsat space observation platform was launched on 23 July 1972 by

NASA.33 The original name of the satellite was Earth Resources Technology Satellite-

A (ERTS-A). The satellite "used a Nimbus-type platform that was modined to carxy

sensor systems and data relay eq~iprnent".~~ Landsat-2 was launched 22 January 1975

again by NASA. Landsats 3, 4, and 5 were respectively launched in 1978, 1982, and

1984. Landsats 4 and 5 are both equippd with MSS and Thematic mapper sens or^.'^

The Landsat space observation platforms orbit the Earth at an altitude of 705

kilometres. A cycle of 233 orbits is completed every sixteen days. The system provides

a swath overlap "that varies from 7 percent at the equator to nearly 84 percent at 81

north or south latitude".36 Each swath covers 185 kilometres. The satellites use

several different MSS and TM bands to analyze different characteristics of our

33 http://edcwww. cr. usgs. gov/glis/hyper/guide/ldt - tm. at 1.

Ibid.

35 Zbjd "However, routine collection of MSS data was terminateci in late 1992".

36 IbidA at 2.

planet.)' These bands can also be combined to form composite pictues. From this

possibility flows the art of image processing allowing the discovery information.

The MSS and TM sensors prirnarily detect reflected radiation from the earth surface in the visible and near-infrared (IR) wavelengths, but the TM sensors pprovides more radiometric uiformation than the MSS sensor. The wavelength range for the TM sensor is ftom the visible @lue), through the mid-IR, into the thermal-IR portion of the electrornapetic soectrum. Sixteen detectors for the visible and mid-IR wavelength bands in the TM sensor provide 16 scan lines on each active scan. Four detectors for the thermal-IR band provide four scan lines on each active scan. The TM sensor has a spatial resolution of 30 rn for the visible, near-IR, and mid-IR wavelengths and a spatial resolution of 120 m for the thermal-Ir band.38

The orbital pattern of the Landsat satellites is polar and sun-synchronous. The

equatorial crossing times range from 8:30 a.m. in the case of Landsat 1 to 9:00 a.m.

for Landsat 2 and 9:45 a. m. for Landsat 5.

The principal Landsat ground station is located in Norman, Oklahoma.

Downlinks from the satellites are recorded on a daily basis on high density tapes. The

main image processing facility is located in Lanham, Maryland. Data is communicated

37 "The characteristics of the MSS and TM bands were selected to maximise their capabilities for detecting and monitenng different types of Earth resources. For example, TM band 2 can detect green reflectance from healthy vegetation, and band 3 of TM is designated for detecting chlorophyli absorbtion in vegetation. TM band 4 is ideal for near-IR refiectance peaks in healthy green vegetation and for detecting water-land interfaces. TM band 1 can penetrate water for bathymetric mapping dong coastal areas and is useful for soil-vegetation differentiation and for distinguishing forest types. The two mid-IR red bands on TM (bands 5 and 7) are useful for vegetation and soi1 moisture studies, and discriminating between rock and minerai types. The thermal-IR band on TM (band 6) is designated to assist in thermal mapping, and for soi1 moisture and vegetation studies". http://edcwww .W. usgs.gov/glis/ hyper /gu ide ld t tm at 4.

nom the Oklahoma facility to the Maryland installations via a tracking and data

satellite whose ground station is located in White Sands, New Mexico.

As swn as the data is received by the processing facility it is immediately

screened for cloud cover and quaiity. Data which has been requested by a client is

immediately processed. Data is then stored for six months at this facility. Permanent

storage occurs at Jessup, Maryland.

The Landsat structure was created using a govemment bureaucratic paradigm.

The distancing of ground facilities from Oklahoma to Maryland via New Mexico is not

conducive to the efficient operation of a commercial remote sensing operation.

Remote sensing is no longer the exclusive domain of the superpowers.

Commercial remote sensing operations are currently being exploited in several

countries. Herein are two charts illustrating both current commercial remote sensing

capabilities and planned commercial remote sensing capabilities."

39 http:/lwww.doc.gov/oasc/rmtsens. html at 3, 7.

18

1 CURRENT WORLDWIDE COMMERCIAL R E M T E SENSMG CAPABILlllES

Satelite

U.S.A.

r

U.S.A.

France

Rmia

Russia

Russia

Canada

Japan

India

India

India

E.U.

E-O, MS

E-O, MS

SPOT E-O,PAN,

and MS

- -

FILM, PAN 3 6 mos

Archive Radar

E-O, MS

E-O, PAN,

MS

E-O, MS

E-O MS

Radar Var

(1) Timehess is generally d e h d as the time elapsed between customet order and product delivery for

a newly acquired, high priority image under nonaal operating circumstances. The figures show are

estimates b d on satelite revisit tirne, method of downlink and product delivery, and past reseiiet

experience.

(2) Almaz data are available from archives only as no Almar satellite is currently in orbit.

(3) Availability of RESURS data are sporadic at present.

(4) SAR data frorn JERS were only available in Japan for the first two years of the satellite's operation but

are now available worldwide.

(5) India has signed data distribution agreements with international commercial entities for delivery outside

of data frorn al1 LRS satellites.

"PAN" is short for Panchromatic

"MS" is short for multi-spectral

1 PLANNU> WORLDWlDE COMMERCIU. BEMOTE SENSING CAPABILITIES

SATELLITE RES.

U.S.A.

U.S.A.

U.S.A.

U.S.A.

U.S.A.

U.S.A.

PAN, MS 5-7 days

GDE PAN

U.S.A. I 2-3 days U.S.A.

U.S.A.

FRANCE

ISRAEL

mDIA

CHI-BRAZ

JUAN

JAPAN

KOREA

PAN

MS

lm-

3-Sm

2-3 days Space

Imagiw

5-7 days

PAN

CBERS

ADEOS

2.5m& Var

KOMSAT

(1) Timeliness is generaily defineci as the time elapsed between customer order and product delivery for

a newly acquired, high priority image under normal operathg circumstances. The figures shown are

estimates based on satellite revisit tirne, mechod of downlink and product delivery, and systern operator

plans.

(2) AVSAT is planned for geosynchronous orbit over the United States, providing continuous downlinL of

geophysical and meteorologicol data. W l e Astrovision's initial plans cailed for a 1995 launch, no

AVSAT sensor is cumntly in orbit.

(3) Earth Watch was f o d by the merger of WorldView Imaging and Bal1 Aerospace remote sensing

operations in 1994. The o r i g i d y planned launch date for EarlyBird was 1995. but plans now di for a

1996 launch of the first Earlybird satellite, with the second to follow in 1997.

(4) The launch of EarthWatch's second generation of satellites is now slated for 1997 and 1998.

(5) The EROS system was announced in Febniary 1996 as a joint venture between Israeli Aircraft

industries of Tel Aviv and Core Software of California.

"PAN" is short for Panchromatic

"MSw is short for multi-spectral

CHAPTER 3

THE INTERNATIONAL LAW OF REMOTE SENSINCI

This chapter deals with the applicable public international law and institutions

which regulate space based remote sensing activities. The purpose of the tirst part of

this chapter is to establish the nature and extent of the international laws regarding

space based remote sensing and to explain the environment in which they originated.

The second part of the chapter will examine the pertinence of these rules and their

effect and relevance upon the commerciaiization of remote sensing. The purpose of

the chapter king to illustrate that the original environment responsible for the the

institutional and legal superstructure has been transformed. When there is a contextual

and paradigrnatic evolution institions and legd principles must respect and reflect this

evolution. Science is quickly changing, not only in its content, but also in its relevance

to modern society. The era of big science as a public good has mutated. Science has

now merged with commercial paradigms. The resulting new paradigms are inciting

a conceptual evolution of the laws and institutions.


THE OUTER SPACE TREATY AND THE GEOPOLITICAL CLIMATE

It is genedy accepted that the space age began in 1957 when the Soviet Union

launched the fist artificial satellite, Sputnik 1, into orbit. Placed before a 'fait

accompliw the international legal regime had to evolve quickly to keep pace with this

new technological reality." International law had aiways developed slowly over a

long p e n d of time. A new dialectic between the superpowers consisting of muhial

deterrence and technological innovations would greatly accelerate the creation and

evolution of international space law." By 1979, after only twenty-two years, the

"corpus Juns Spatialis" consisting of five international treaties had been created . These

treaties were accompanied by several UN General Assembly resolutions on the

topic. 42

International public space law is essentially composed of treaty law. The

fundamental document which forms the basis of international space law is the Outer

Space Treaty." In 1967, the year of signature of the Outer Space Treaty, the

geopolitical climate of the Cold War stiil prevailed. A polansed bipolar and bipower

globe was not conducive to elaborate treaty making. The result was the creation of a

relatively simple treaty edicting general noms which allowed both superpowers to

continue their space endeavours. The paradigm was one of mutual distrust and

See W. McDougal, The Heavens and Earth. A wlitical histo (New York: Basic Books, 1985).

See S. Hobe, "Peaceful and Military Uses of Outer Space and Space Technology: The Importance of Space Technology to International Space Law" in Third ECSL Summer Course on Smce Law and Policv (Spain: University of Granada, 1994) at 165.

Ibid. at 165. - Treatv on Princi~les Governin~ the Activities of States in the Ex~loration and use of Outer Soace. includin~ the Moon and Other Celestial Bodies, 27 January 1967, T.I. A.S. No. 6347, 610 U.N.T.S. 205 [hereinafter Outer Space Treatyl

24

enlightened self interest where both superpowers agreed not to daim exclusive

sovereignty in outer space? Remote sensing was for both military machines an

essential twl of intelligence gathering. Neither the Sovist Union nor the United States

wanted a treaty which would have a restrictive effect upon thek "mutuaily tolerated use

of reconnaissance satellites or other means of reconnaissance"? The result was a

treaty as eloquent in its silence on certain issues as in what if edicts. It is therefore of

no great surprise that an exegetical analysis of the Outer Space Treaty reveals an

omission of any direct references to remote sensing. However, while the Outer Space

Treaty does not specifically mention remote sensing certain articles can however be

interpreted to apply to remote sensing.

Article II of the Outer Space Treaty edicts that outer space is not subject to

national appropriation. National State sovereignty therefore does not extend into outer

space. Space objects may orbit around the globe irrespective of vertical national

boundaries. This p ~ c i p l e however presupposes the existence of a horizontai national

bounâary over nation States. This horizontal boundary between air and outer space is

a key issue purposefuily ornitted in the Outer Space Treaty. The rationale for this

omission was claimed to be the belief that "any definition of a boundary between air

44 See M. Couston, Droit Soatial Économiaue. Reeimes Aooliçables à 1'Exoloitation de 1'Esoace" (Paris; Société française de droit abrien et spatial, 1995). "Si l'on considbre par exemple le principe de non-appropriation de l'espace et des corps célestes, lourd de conséquences pour les activitks spatiales commerciales, il n'a eté établi que parce que les deux Grands à 1'6poque n'étaient pas sûr, ni l'un ni l'autre, de gagner la course à l'espace et plutôt que de prendre le risque de voir leur adversaire s'approprier cet espace tant convoite, ils ont preféri5 le geler."

45 Hobe, supm note 4 1 at 174.

and outer space would hinder the development of technology and would thus be

useless" ." Although no text formaliy establishes this boundary there appears to be a

consensus that the lowest apogee of a satellite at the time of signature of the Outer

Space Treaty is the limit between air space and outer space, ïicated approximately 100

km above the earth's surface.*'

Article III of the Outer Space Treaty edicts that, in the interest of maintainhg

international peace and security and promoting international cosperation and

understanding, ali activities in space must be done in accordance with international law,

including the Charter of the United Nations." As we have already demonstrated the

collection of data through the use of space based remote sensing equipment is not

contrary to international law. As long as a satellite is at an altitude exceeding 100 km

from the surface of the earth it can be considered to be in outer space and thus does

not intrude in sovereign airspace. In light of this basic fact this thesis argues that

international law encourages the accumulation of data.

The Outer space treaty also edicts that outer space must be used for peaceful

purposes. An interesting interpretative debate ensues. The United States has argued that

Ibid. - The debate over the boundaries and demarcation is beyond the scope of this paper. Several themies exist such as the demarcation based on scientific and technological criteria, or the creation of an arbitrary or conventional boundary, or a boundary based on the functional approach. For an explanation of these theories see 1. H. Diederiks-Verschoor , An In traduction to Soace Law (Deventer: Kluwer Law and Taxation Publishers, 1993) at 15-20.

Outer Space Treaty, suDra note 43.

the t em "peaceful purpose' must be understd to denote non-aggressive purposes.

Taken in this way the word '*peaceful" does not mean non-military. By contrast, the

Soviets argued that the word "peacefulw rneans non rnilitary.

Although this thesis is primatily concemed with commercial use of remote

sensing, the definitional debate over the proper meaning and tenor of the concept

'peaceful" in an exegetical analysis of the Outer Space Treaty remains pertinent. Its

relevance lies in the fact of the dual use of modem civilian technology. The rnilitary

establishment can easily become a consumer of data produced from civilian remote

sensing satellite systems or even a purveyor of commercial data. Therefore if the

concept "peaceful" denotes non military, then the sale of military data coilected by

space based observation assets would be a violation of international law . Assuming that

the Outer Space Treaty is enforceble in domestic law the contract of sale of military

&ta obtained by space based remote sensing equipment would be nuU and void since

the object of the sale would be ficit. The interpretative nuance of this concept is

therefore crucial to the proper functioning of an open commercial market legai

structure.

This thesis argues in favour of the American position. The interpretation of the

word "peaceful" as proferred by the Soviet Union is untenable and at best dubious.

Considering that most satellites and space missions have been carried out by the

military for both the Soviets and the Americans this dissertation argues that the practice

of States tends to favour the non aggression interpretation as proferred by the United

Having detennined that remote sensing is an acceptable space activity

irrespective of its civilian or military aspects, one must now examine ehether

in ternational law aUow s this ac tivity to be commercialized.


COMMERCIAL NATURE OF REMOTE SENSING DATA

The Outer Space Treaty, as was indicated earlier, was concluded during the

Cold War at a time when commercial relations between the two superpowers were non-

existent.s0 Commercial considerations were therefore not directly dealt with in the

treaty. This dissertation argues that an exegetical analysis of the Outer Space Treaty

reveals that the terminology of the treaty is however general enough to ailow an

interpretation permitting commercial activities in space.

The words "exploration" and "use" are used repeatedly in the Outer Space

Treaty in its official titie, within the preamble, and in Articles 1 and III. One school

49 On this point and for an excellent analysis on the military use of space, see I.A. Vlasic, "Space Law and the Military Applications of Space Technology" in N. ~asentuliyana, Perswctives on International Law (Boston: Iüuwer Law International, 1995) at 385.

5o Commercial relations were even outlawed by the Trading with the Enemy Act 1917 act oct. 6, 1917, ch. 106, 40 STAT.411.

of thought argues that space must be the object of explorati~n.~' This dissertation

argues that such a restrictive interpretation is untenable and at best specious. The result

of such an interpretation would be to exclude from the Outer Space Treaty a i i practical

space activities directed towsrds earth. An expansive interpretation of these concepts

is in fact much more logical. By the use of an expansive interpretation where

"exploration" means simply scientific research and "use" means the practical

implementation of the result of the said research, one obtains a broad application of the

Outer Space Treaty. under an expansive interpretation, the Outer Space Treaty applies

not only to exploration of space, but also to exploration in and from space? The

word "use" therefore encompasses the practical application of aii of this research. It

has k e n proffered that the statements in the negotiations of the Outer Space Treaty

dong with the Viema Convention on the Law of Treaties argue in favour of an

expansive interpretation."

This point is thoughtfûlly analyzed by H.L. Van Traa-Engelman, who also

argues in favour of an expansive interpretation of these two concepts. Although the

purpose of the Outer Space Treaty is to ensure freedorn of peaceful scientific

exploration of outer space Van Traa-Engelrnan correctly writes that "the combination

of the two words "exploration" and "use" indicates the possibility of a type of use

K.-H. Bockstiegel, Reconsideration of the Legal framework for Commercial Space Activities (ECSL Summer Course, 1994) at 179.

king more comprehensive than a type of use only limited to exploration purposes"."

It bas also been furthet argued that the word "use" must be interpreted as an expansive

attribute to the limited termhology of "exploration" ." Van Traa-Engelman points out

that :

The use particularly of the word progress (in the preamble) supports the conclusion that a progressive use of outer space, although within the limits of peaceful purposes, is not only permitted but even intended to be one of the objects of the treaty. According to Our specifications, since commerciai use can ody take place when a certain level of progress has been obtained, this type of use seems to be stimulated by the treaty as long as the contrary is not evident."

Article 1 of the Outer Space Treaty edicts that:

the exploration and use of outer space ... shall be carried out for the benefit and in the interest of ail countries, irrespective of their degree of economic or scientific development, and shali be the province of al i mankirid.

It has been argued by some authors that Article 1 of the Outer Space Treaty

prohibits commerciai use? This dissertation argues that such an interpretation is at

best specious for it would presuppose the existence of a contradiction between the

benefit and interest of all countries and commercial activity. Furthermore, Van Traa-

Y H.L. van Traa-Engelman, Commercial Utilization of Outer Syce Law and Practice (Dordrecht: Martinus Nij hoff Publishers , 1993) at 20.

55 S.B. Rosenfeld, "Use" in Economic Development of Outer Space, proceedings of the 24th Colloquium on the Law of Outer Space of the IISL, Rome, 6-11 September 198 1, at 73-77.

56 van Traa-Engelman, SUDQ note 54.

" b i d L at 21, where van Traa-Engelman mentions this opposing view.

Engelman correctly points out that "a prohibition has to be based on a clear treaty

obligation"" which is definitely not the case in the above cited text.

Article II edicts that "Outer space ... is not subject to National appropriation".

The purpose of this article is to "strengthen the principle of access and freedom in

outer space by refusing national appropriation claims regarding outer space"." The

intent of this disposition was clearly geopolitical as the superpowers did not want to

deal with reciprod clairns of sovereignty in outer space. Furthemore, national

appropriation is not a necessary prerequisite to commercial activity. Article 11 can

easily coexist with commercial activities.

Article 1 and II have achieved widespread acceptance in the practice of States

to the point where there is international consensus that "the twin principles of freedom

and non-appropriation have acquired the statu of customary law. "'O

Article III edicts the applicability of general p ~ c i p l e s of international law to

space activities. Commercial goals are obviously acceptable in international law.

The Outer Space Treaty never specificaiiy prohibits the commercial use of

space. The contrary is however also me; the Outer Space Treaty never clearly allows

commercial activity in space. Van Tm-Engelman correctly writes that:

whilst the majority of the Articles do not express a specific stance on the issue, a number seem at least to accommodate the commercial use of outer space. What must be noted here is the "heavy emphasis on 'state'

" Ibid. at 21.

59 lbid. at 21.

Feder, SUD^ note 9 at 605.

in the Treaty in general in combination with the provision of Article VI. 61

Article VI of the Outer Space Treaty, however, does impose substantial

restrictions on space activities perfonned by the private space actors which are the

"institutions pre-eminently concemed with commercial use".62 Said Article VI edicts

a rule of State responsibility for private actors in outer space and a corresponding

obligation upon the State to authorize and supervise private space activity so that these

may be carried out in conformity with the provisions set forth in the Outer Space

Treaty. This replation of State action in outer space WU be a strong factor

influencing national legislation of commercial space ac tivities. Its e ffects will be

included in interna1 American law regulating the commerciaiization of remote sensing.

It can be argued that the Outer Space Treaty establishes a legal regime which

prevents legal barriers fiom king established against the commercialization of space.

The treaty does this by establishing negative freedoms for States. The freedoms are

- - - - - - - . - ..

van Traa-Engleman, SuDra note 54 at 23. Article VI OST edicts that "states parties to the treaty shall bear international responsibility for national activities in outer space, including the moon and other celestial bodies, whether such activities are carried on by govemrnental agencies or by non-govemmental entities, and for assuring that national activities are caffied out in conformity with the provisions set forth in the present treaty. The activities of non govemmental

entities in outer space.. . shall require authorization and continuhg supervision by the appropriate State Party to the treaty".

'* nid. at 23. It has been further argued that Article VI of the Outer Space Treaty has been regarded as a part of general intemational law see, Dr. Assad Kotaite (President of the Council of ICAO) "ICAO's Role with Respect to the Institutional Arrangements and Legal Framework of Global Navigation Satelite System (GNSS) Planning and Implementation" said article to be published in the

. next volume of the Annals of Air and Space Law presently on file with the author.

negative simp1y because States are fiee from restrictions. The freedom is therefore

contingent upon their technological and economic capacities to sustain space research

and development. Small States cannot claim any benefits fiom this convention despite

the supposedly idealistic wording of Article 1 of the Outer Space Treaty. In reality

outer space is now king used for the benefit of aii States wbich can afford to pay

for access. Affordability is in tum contingent upon either the interna1 markets for

space products or the accessibiiity to intemational markets for space products.

Other treaties play a minor role in the international regulation of remote

sensing. The Rescue and Retum ~ g r e e m e n t ~ ~ and the 1972 Liability Conventiona

add nothing to remote sensing regulation. At best these two treaties simply reiterate

certain basic principles previously established in the Outer Space Treaty. The

Registration Convention of 197565 edicts in Article II that States must keep a record

of ali space objects launched "by means of an entry in an appropriate registryW.The

manner by which this is accomplished is lefi to the discretion of each state.

Furthermore the same article also imposes an obligation on each launchhg State to

Agreement on the Rescue of Austronauts. the Return of Astronauts and the Retum of obiects Launched into Outer Space, 19 U.S.T. 7570, T.I.A.S. No. 6599, 672 U.N.T.S. 45 [hereinafter Rescue and Retum Agreement].

Convention on International Liabilitv for Damage Caused bv Soace Objects, gwned for signature 29 March 1972, 24 U.S.T. 2389, T.I.A.S. No. 7762, 961 U. N.T.S. 187 mereinafter Liabilitv Convention].

Convention on the Reeistration of Objects Launched into Outer Space. opened for signature 14 Januay 1975, 28 U.S.T. 695, T.I.A.S. No. 8480, 1023 U.N.T.S. 15 mereinafter &gistration Conven tionl .

infonn the Secretary-General of the United Nations of the establishment of such

registry .

The Liability Convention although not dealing directly with remote sensing does

create certain international obligations which influence the Amencan regdatory

structure of this activity. The licensing requirements for remote sensing operators WU

take into consideration the obligations created by the Liabiiity Convention. Tbis point

wiü be examined later in the paper.

It is intereshg to note that private individuals were never the object of space

treaties. The reason for this is simple. During the formative years of space law space

activity was the exclusive domain of the superpowers, one of which had a market

economy while the other was communist. Private enterprise and consequently pnvate

space ventures were therefore not a conceptual option for the Soviet Union. Pnvate

space activity was perceived by the Soviets as an act of piracy. The Kennedy

administration correctly rejected this perception. However the Liability Convention is

a result of a compromise on this issue edicting State liability for private actors in outer

space.

States engaged in commercial activities in outer space benefit from the general

presumption which flows from the five space treaties in favour of freedom of space

activities? The particular effects and specific prescriptions of the five space treaties

are to be found in the following list of general limitations on outer space activity.

66 Bockstiegel, SUD^ note 5 1 at 180.

34

These include the prohibition of national appropriation of outer space (Outer Space

Treaty, An Ki), the duty of due regard to the corresponding interests of a i i other States

and to respect the principle of cwperation and mutual assistance (Outer Space Treaty,

Arts. V, M, X & Xi), the registration obligations (Outer Space Treaty, Art VIII and

Registration Convention) and the duty to respect international law including the Charter

of the United Nations (Outer Space Treaty, Art III)?'

In engaging in space activities private enterprises are subject to the same

limitations as are States. "The rights of private enterprises can not go any further in

public international law as the rights of theû home States"." Furthemore Article VI

of the Outer Space Treaty edicts a State's obligation to supervise its nationals during

their endeavours in space. This disposition bas direct e ffect upon intemal national

positive laws regulating space activities. The manner in which State supervision is

conducted is left to the discretion of each State. Disparities anse when different intemal

laws regulate through a variety of techniques, manners, and institutions, the entry of

private enterprise in the space market. What is certain however is that States have an

obligation at least to inform themselves of their nationals' space activities and to

"exercise influence in such a way that the use of outer space by private enterprise is

in conformity with the Outer Space Treaty."

67 Ibid. at 180.

nidL at 181.

69 Ibid. at 181.

A third obligation of States pertaïning to private commercial enterprises in outer

space emanates fkom Article IX of the Outer Space Treaty, which edicts that

international consultation is a necessary prerequisite if it is reasonable to believe that

any given space activity could be potentiaiiy harmful or interfere with activities of

other State parties. The effect of this disposition cm be quite large, as Dr. Bockstiegel

fkom Cologne University notes:

The private enterprise must be prepared that not only objections may be raised by its home state with regard to the commercial activity it plans, but also by other States and possibly foreign cornpetitors which the other state might consult in that respect. This, of course, raises a number of difficulties, because a private enterprise planning certain space activities might have a high and justified interest in not to bave this information conveyed to any competit~rs.'~

It is important to note that the scope of application of these internationai treaties

is not limited only to nation States. In fact Article Xm of the Outer Space Treaty

provides rules for the applicability of the treaty for inter-govemmental organisations,

Articles VI and X W I of the Outer Space Treaty regulates the applicability of the Outer

Space Treaty to international organisations. These dispositions are not surpnsing for

international govemmental organisations since they are "accepted as subjects of

international law, while this normaiiy is not the case for international non-govemmental

organizations" .'l


DEVELOPING COUNTRIES' OBJECTIONS TO THE INTERNATIONAL

REGULATORY FRAMEWORK, S0VE:REIGNTY OVER NATURAL

RESOURCES ARGUMENT:

In edicting the applicability of international law to outer space, the Outer Space

Treaty opened the door to a debate conceming the applicability of conflicthg legal

principles. Certain States argued that the U.N. resolution of 1962 (1803) concerning

"Permanent Sovereignty Over Natural ResourcesnR extended State sovereignty over

ceriain types of data. It was argued that national sovereignty encompassed aIi data

pertaining to natural resources coilected by space based equipment. Conversely, Article

19 of the United Nations Universal Declaration of Human Rights on the fiee flow of

informationn is presented as a legal justification for unrestricted collection of data by

space based remote sensing assets. This latter principle in tum "bears its greatest

relevance in the justification of the doctrine of the free dissemination of, and non-

discriminatory access to information' .14 Although both positions are logicaily

defendable they are contingent upon the ideological presuppositions of the States

concemed. This thesis however opines that the space industry must be based upon the

" Permanent Sovereignty Over Natural Resources, U.N.G.A. 1803 0, UN GAOR, Supp. (No. 17) (1962).

1948 Universal Declaration of Human Rights, G. A. Res. 2 17 A (III) UN GAOR ïïï 1, U.N. DOC. A1180 (1948), art 19.7

74 Van Traa-Engelman, supm note 54 at 236.

principle of maximizing the fkeedom of and to information. The collection of data, the

creation of idormation and the dissemination of both of thesemust be maxUIlaliy

facilitated Modem society is quickly becoming information based. Remote sensing cm

be an important part of this information economy. The fiee flow of overhead irnagery

data is consistent with the values of a fiee and democratic society. Transparency of

information breads public and international confidence and security. An excellent

example of the positive public potential of the use of commercial remote sensing

equipment in an open information market is its usehilnessas a resource for arms

control monitoring7'.

CHAPTER 3 SECTION 4

UNITED NATIONS REMOTE SENSING PRINCIPLES

The United Nations Cornmittee on Peaceful Uses of Outer Space (UNCOPUOS)

produced a document containhg fifteen p ~ c i p l e s pertaining to remote sensing. The

general assembly of the United Nations adopted this text entitled "Principles Relating

to Remote sensing of the Earth From Space' as U.N. resolution 41/65 on December

3 1986.

" On this point see U.N. Document "La Vérification Sous tous ses Aspects, y Compris le Rôle de l'organisation des Nations unies dans le Domaine de la Vérification" rapport du Secrétaire géneral, 95-26409.

The first nation to submit to UNCOPUOS a formal proposal to govern remote

sensing was Argentina in June 1970.76 Sixteen years later and after difficult

negotiations during UNCOPUOS's 29th session, held in June of 1986, a consensus was

reached pertaining to principles of remote ~ e n s i n g . ~ The difficulty in reaching a

conclusion resided in the fact that two distinct visions of remote sensing data ownership

were espoused by the world community. Certain countries, such as "Argentina, Brazii,

and other Latin-American countries believed that the States whose resources were the

subject of remote sensing had a proprietary right to the information about their

country"

The second major issue to be addressed was the accessibility to the data

obtained by remote sensing. The Latin Arnerican countries argued for a priority of

access to the sensed data by the sensed State. The priority of access argument is

predicated upon the previous sovereignty argument and is the logical corollary of that

position. The industrialised countries led by the American govemment were strongly

opposed to these arguments.

P ~ c i p l e 1 establishes the scope of applicability of the principles by edicting a

restrictive definition of remote sensing. It States that remote sensing is to be used "for

the purpose of improving naturai resources management, land use and the protection

76 DeSaussure, SUD^ note 12 at 354.

U.N. Doc, A/AC. 1WL. 158.

" DeSaussures, S Y P C ~ note 12 at 354.

of the en~ironrnent".~~ The principles therefore apply only to civiiian remote sensing

since the miiitary operations are specificaliy excluded from the definition. It can also

be argued that this definition excludes media purposes, that is to say news gathe~g."

Furthemore Principle 1 distinguishes three different types of data which can be

obtained by remote senshg. The classification of types of data is of primary

importance. Primary data is the raw data acquired through remote sensing in the fom

of electromagnetic signals, photograpbic film, magnetic tape or any other medium.*'

Processed Data is defined as pnmary data that has k e n processed to a point where

it can be interpreted." Analyzed information is knowledge resulting from the

interpretation of processed data by use of both the data and information from other

sources .83

The principles can be divided into two themes namely: (a) Principles promoting

cooperation among States, and @) Principles concemhg Sovereignty. Principle II

provides that remote senshg must be camed out for the benefit and interest of all

countries , regardless of their economic , social or technological development , taking the

needs of developing countries into particular consideration. The State which conducts

79 Princioles Relatine to Remote Sensine of the Earth from Outer Soace, G.A. Res. 41/65, 42 U.N. GAOR Annex at 2 (95th plen. mtg) U.N. Doc. A/RES/41/65 (1987) [hereinafter UN Principles on Remote Sensina, Principle I(a).

'O Feder, s u p note 9 at 612.

'' UN Princi~ies on Remote Sensing, supra note 79, Principle I@).

Ibid ., Principle I(c).

fiid L, Principle I(d) .

the remote sensing is encouraged in Principle V to promote international cooperation

by permitting other States to participate in this endeavour. Principle VI promotes the

establishment of State CO-operation in the areas of data collecting, data storage

processing and interpretation. Principle W encourages technical assistance by the

sensing States to other interested States on mutuaily agreeable terms. One of the most

important concepts is articulated in Principle W, which requires that a sensing State

must if requested by the sensed State enter into consultation. The purpose of this is to

give the sensed State the occasion to participate in and partake in the benefits of the

remote sensing operation over its own temtory. P ~ c i p l e IX reiterates the rules of the

Registration Convention requiring declarations to the Secretary General of the United

Nations.

Other Principles address the sovereignty concems of the sensed States by

attempting to "strike a balance between an open skies policy and one respecting

inherent rights of State~".~' Principle IV applies a concept onginaily found in the

Outer Space Treaty to remote sensing by articulating the belief that remote sensing is

to be camed out for the benefit and in the interest of ail countries: "This principle goes

further, however, by ensuring that States conduct these activities with respect for the

principle of fbil and permanent sovereignty of aii States and peoples over their own

wealth and natural resources. "85

Feder , s u ~ r a note 9 at 615.

Tbid. at 615. -

The balance which these principles attempt to achieve is to respect the rights

to fkeedom of information enjoyed by the sensing States, thus ailowing them the right

to coliect data fiom space on other countries, while on the other hand ensuring access

to this data by the sensed State dong with a non prejudicial use of this data by the

sensing State. P ~ c i p l e XII articulates this compromise by establishing access to

primary data and analyzed information on a non discriminatory basis at a reasonable

cost.

Principles X and XI enunciates positive obligations upon sensing States. A

sensing state must disclose information pertaining to disasters and environmental

disasters. Sirnilarly, any information which could prevent environmental damage must

be disclosed.

Principle XIV deals with the Liability of the State for remote sensing activities.

The Principles are very broad in nature and scope. They represent a

compromise between two different visions of the world. The legal status of these

Principles must now be discussed in order to ascertaine properly their tme value.

The principles are contained in a United Nations General Assembly resolution.

They are not contained in a treaty. A U.N. resolution does not legaliy bind the States

which voted for it. Furthermore the resolutions contain new concepts that are not the

codification of existing customary law. It has k e n argued that international law in

space couid be rapidly created as a form of instant customary law." Applying such

a position to the remote sensing principles is at best specious. Instant customary

international law lach by definition the attribute of elapsed time in State practice. Such

deficiency must be counterôalanced by a very strong opino juris. AU States which are

space powers must act with the belief that these principles have force of law, which is

dennitely not the case with the Remote Sensing Principles. As H. Feder correctly

argues, the "U.N. resolution cannot transform the Principles ioto customary

International law if they have not found their way into accepted practice"".

These principles have not in their totality k e n incorporated in the intemal law

of States. The principles are only at best able to reinforce existing concepts alieady

present in space treaty law and may only serve a hortatory purpose.

The principles cannot be said to have a moral force akin to the Universal

Declaration of Human Rights; as they are enounced in a resolution and not in a

Declaration their moral force is much weaker. The resolutions are an important step

in the evolution of international space law but they are simply that, a useful step in the

evolution of law.

The result is a resolution which fails to resolve some fundamental disagreements and f d s to set forth a specific regime. Its only real significance is that it expresses the desire of the U.N. to achieve international harmony and coordination in this specific activity, and establish the U.N. Secretary General as a recipient of ail information on national programs

" Ibid. at 617.

88 Desaussures, s u p note 12 at 357.

The result of these principles is twofold. First, the principles are weak in

content and applicabiiity. Member States conserve complete latitude in the

promulgation of their own values on remote sensing. Second, the principles on remote

sensing and the general international space treaty law were designed in accordance with

a paradigm which is passé, which no longer reflects the reaiity of the world today. As

previously stated this body of law was i~tially formed during the Cold War in a

bipwer bipolar geopolitical system. The dissolution of the USSR canceiïed this

paradigm. Furthemore the Principles on remote sensing were a compromise between

the developing States and the developed nations. This North-South dichotomy was

predicated upon the mistrust that the developing world had of the use the developed

States would make of the wealth of information obtained by remote sensing.

Information is now the comerstone upon which modem society is built.

Marshall McLuhan showed great foresight in coining the term "global village".

Through remote sensing the global village is becoming even smaller. It is not just the

communication within the viilage which technology has made easier, one can now see

everywhere within the village.

The old "corpus juris" of space law was based on State actors. The State

actors were in an ideological dialectical relationship, that is communist vs capitalist

and developed vs. developing. The dialectics have now c hanged. The capitalist-

communist division is no longer pertinent. The north-south dichotomy is quickly

evolving through easier access to technology. The developing countries are no longer

a forum for ideological clashes between the superpowers. The present public space law

legal system, unfominately, has not kept pace with this evolution.

One can conclude that international Law was formed in an epoch where States

were the only participants in space activity. The initial activities, and even more so for

remote sensing, were either military in nature or had a strong public goods attribute,

as in weather forecasting. However international law does impose certain obligations

upon States which must be reflected in their intemal legal dispositions. Briefly stated

these are:

(a) There must be a peacefbl use;

@) No nuclear use;

(c) Space used for the benefit of mankind; and,

(d) Non appropriation of outer space.

The entire body of space law does not prevent private industry from

participahg in space, although rules of liability do make States responsible for pnvate

actors. International law has been made according to a public paradigm. Due to their

origin, these laws ignore values which are important to the creation of an international

market where competitive forces can distribute the allocation of resources in an

efficient and competitive manner. Such a market environment encourages an equitable

use of outer space.

Present international law structures do not address problems of market entry,

price fixing and market divisions. The next chapter wiii examine how the American

legislation has created a protective environment for the American space industry. The

Amencan regulatory structure represent the most complete and influentid space legal

structure currently in force. The Amencan space industry is so powerful that its

regulatory system can influence global market stmctures. It is therefore imperative for

the Americans to take the initiative to liberate the legal structure fiom old paradigms

which &der the development of an open and cornpetitive international market.

CHAPTER 4

AMERICAN LAWS AND REGULATIONS OF REMOTE SENSING

This chapter wiii analyze the evolution of the American regulatory regime

govenllng remote sensing. The policy evolution wiil be outlined from a purely

operational govemmentaî service through the unsuccesshil attempt in 1984 to

commercialise and privatise the Landsat remote sensing program, to the new 1992

Land Remote Sensing Policy Act. The chapter wili argue that American remote sensing

policy has been characterised by a myopic view of the role of the remote sensing

industry which has resulted in incomplete deregulation and a dysfunctional system. The

origin of space based remote sensing technology as a tool of national security has

created a conceptual legacy which permeates the American regulatory culture.

Regulations contain bûdly defined terms and overly discretionary powers. The effects

of the regdations are counterproductive to the declared goals of the present laws. The

major concem outlined in this thesis is that paradigms have changed. Commercial

space based remote sensing operators must now take over a system that was established

as a bureaucratie govemmental structure. Furthermore commercial remote sensing

operators must deal with a regulatory scheme which was woven with concepts not

conducive to the proper hinctioning of a market based structure.

The core of the argument within this chapter is the following. In a manner

simiiar to the International contextual change the original intemal environment has

mutated. A new environment produces a new conceptual response. The result of a new

conceptual response is the creation of a distinct paradigm, that is, distinct to its epoch.

The new paradigm fùnctions as a novel homogeneous ethos upon which social

constructs, perceptions, and relations between the individual and institutions are based.

The manner in which the gregarious interactions are defined therefore changes. The

institutions through which our human interrelations occurs must therefore evolve. This

chapter shall examine the American legislative evolution and resulting regulatory

structures which define the manner in which commercial remote sensing operators

function. This chapter argues that the resulting new paradigm is currently forcing a

conceptual evolution to occur. That is, an efficient market paradigm is presently the

best criteon upon which to structure the manner in which commercial remote sensing

is to be regulated. Regdations must therefore evolve from its military and national

security origins to a more liberal, predictable and transparent structure. ' f i s king

said, the national security concems although no longer dominant are still nonetheless

pertinent. The pertinance of national security concems must be secondary in

importance and effect to an efficient market regulation. The problem with the present

replatory structure is that the national secunty concems ara overbearing upon the

market concerns. A new regulatory culture must create a balance where the national

security concems are addressed and proportionately balanced with the commercial

evolution. This chapter will argue for a simple change in emphasis away from the

historical dominance of national security concems in space based remote sensing. That

is the primary crirereon of choice for a regulatory structure must be commercial

viability, openness and predictability.

The second part of this analysis s h d examine the need for regulatory change

resulting fkom this new paradigm. The anaiysis wiil show a lingering resistance within

the American regulatory culture to the new paradigm. The resistance to change being

evidenced by the survival, and persistant use of the "national security" concept

acompanied by a variety of ambiguous terminology yielding overly discretionary

powers within the institutional and regulatory hmework. Although the "national

security" concems was initially the "raison d'être" of this technology the concept is

now the source of stress causing tensions with the new paradigm. The tension is

evidenced by a lack of predictability and transparancy, both necessary attributes to the

evolution of remote sensing in the market based paradigm of the new environment.

Due to the contemporary prevalence of protectionist attitudes the 1984

legislationB9 faiied to create a market in which the space based remote sensing

industry could become self sufficient. Protectionist attitudes are no longer relevant in

today's modem global market environment. The 1992 act corrected certain lacunae,

but a cold war protectionist penchant prevented an adequate liberalisation and

harmonization of the regulations governing remote sensing.

The essence of the argument is that the present regulatory structure lacks

transparency and predictability. There are inherent contradictions, regulatory

redundancies, and needless market entry barriers creating an overly bureaucratised

system. The result is an inefficient, poorly stnictured and fractured market for the

89 The Land Remote Sensino Commercialization Act, 15 U.S.C. ss. 4200 (Supp. IV 1986) pereinafter Land Remote Sensine Co. Act].

remote sensing industry. This thesis wiU argue for an evolution in the American

regulatory culture away from Cold War worries to a more dynamic and open global

information market structure reflecting new paradigms. The American tradition bas

k e n to maximise freedom. Trade wars have been fought to open foreign markets. This

tradition of openess must be refiected in the space based remote sensing regulatory

structure.


LAND REMOTE SENSING COMMERCIALIZATION ACT

In 1958 the Amencan govemment established a civilian space agency calied the

National Aeronautics and Space Administration (hereinafier cded NASA). Before

privatization began in 1984 NASA had launched 5 Landsat satellites. The Carter

administration in 1979 established as one of its goals the commercialization of the

Landsat remote sensing program.'" The policy was maintained by the Reagan

administration which declared in March 1983 its intention to complete the process

initiated by the previous Democratic admini~tration.~~ Meteorological satellites were

Desaussure, SUD@ note 12 at 365.

Ibid. at 365.

however to be excluded from privatisation as it was estimated that this was a public

good service."

Up until this pmcess began the Landsat program was administered by the

National Aeronautics and Space Administration (NASA). NASA's mandate was to

"conduct research and to develop space technology for transfer to the pnvate

~ e c t o r " . ~ ~ The result of this policy change began with the transfer of the Landsat

system to the National Oceanic and Atmospheric Administration (NOAA) in 1984.94

The Department of Commerce was entrusted with the task of negotiating and

transferring the control of the Landsat program to private enterprise9? Seven bidders

were initialiy interested in purchashg the Landsat system. The ultimate winner was

a consortium calied Earth-Orbiting Satellite Company (EOSAT), composed of RCA

and Hughes Aircraft. The privatization contract was finally signed on September 27,

1985.

The declared putpose of the Land Remote Sensing Commercialization Act of

1984 was to "provide for the phased orderly commercialization of land remote sensing

- - - - - . - - . . - - - - - . . - - . p. -- - - .

S. Parisien, "La Commercialisation des Activités de T61éd6tection Spatiale aux États-unis: Consid6rations Nationales et Internationales'' (1995) XW Ann. Air & Sp. L. 241 at 243.

93 K.M. Eisenbeis, Privatizine Govemment Information The Effects of Policv on Access to Landsat Satellite Data (London: Scarecrow Press, 1995) at 5.

DeSaussures, SUD^ note 12 at 365.

95 Ibid. at 365.

technologies" .96 Previously established French and Soviet commerciali;riition programs

forced the American government to react so as not to lose what were perceived to be

economic benefits from space technology. At the time it was estimated that sales from

the French SPOT remote sensing satellite program were to reach the ten million d o b

($lO,Oûû,OûO.ûû USD) leveLg7 The Soviets were also starting to commercialise their

sateilite imagery through a government mapping agency caiied Soyuzkarta.

The Land Remote Sensing Commercialkation Act does not contain a legal

definition of remote sensing. In the regulations adopted pursuant to this act a definition

can however be found where the activity is defineci more broadly than what the U.N.

principles ailow. The UN principles limit remote sensing to the sensing of the earth for

the purpose of irnproving natural resources management, land use and in the

protection of the environme~t.~~ The Land Remote Sensing Commerciahtion Act

on the other hand provides that remote sensing data is to be a major benefit in

managing the earth9s natural resources and in planninr and conductinn many

other activities of economic Neither the American regulations nor the

U.N. principles provide limits establishing a maximum level of resolution (GSD)

permissible. However data is subject to govemmental review through the Secretary of

% Ibid. at 365.

" Ibid. at 366.

98 UN Princides on Remote Sensinq, supra note 79.

* 15 U.S.C. section 4201(1) (Supp. IV 1986).

Commerce for cornpliance with the national security and international obligations of

the United States. 'Oo

The Amencan legislation does not follow the United Nations tripartite

classification of data but refers only to either basic or unenhanced data. American

regulations however do go a step further than the U.N. document in describing data

as either king basic, experimentai or unenhanced.lol Basic data is that collected by

private licensees which is selected by the govemment for public storage.lm

Experimental data is &ta collected by the United States govemment in experimental

programs.'" Unenhanced Data is the substantial equivalent of the U.N. definition

for primary data because it is the unprocessed or minimally processed signals of nùns

colle~ted. '~ American regulations add another definition in the t e m "value added

activity" which is "any activity that substantiaily and irreversibly changes the

information content of the unenhanced &ta". 'O5 As Desaussures writes, this last

'" DeSaussure, supra note 12 at 368; see also 15 U.S.C. sections 4203(c), 4241@), 4243(a)(l) (Supp. IV 1986); 15 C.F.R. sections 960.l(a), (c) (1988).

'O1 Rules and Regulations Federal Register, Vol. 52:132, p.25966 (herein after refered to as Rules and Regulations) section 960.3.

*OL Ibid.

Ibid.

'OL Ibid See also DeSaussure, supra note 12 at 368.

classification ''would cover both the prirnary data and analyzed information

classifications contained in the principles". lM

The United Nations principles offer a somewhat more Liberal mode1 for data

accessibility than the one espoused by the 1984 American legislation. As previously

outlined, the U.N. principles proffer immediate availability of both the prirnary and the

processed data by the sensed State on a nondiscriminatory basis and at reasonable

co~ts.'~' On the other hand, American legislation allows nondiscriminatory access to

ai i potential users for only raw or unenhanced data.''' The American legislation

appears prima facie more liberal than the UN Principles as far as determinhg who has

access to raw data is concemed as it opens the nondiscriminatory principle to all

prospective buyerslW instead of only to the sensed State. The nondiscrirninatory

basis is subject to an exception based on "national Security concerns". Il0 However

this discretionary exemption was maintained in the 1992 legislation and creates

inherent regulatory tensions. The Amencan legislation is however more restrictive than

the U.N. principles in limiting the type of data to which users have access. The result

of the American vision is that less data is available on a nondiscriminatory basis to a

'O6 Desaussure, SUDW note 12 at 369.

107 Rernote Sensing Principles XII, SUD^ note 79.

lm 15 U.S.C. section 601(a).

'" 15 U.S.C. 4204(3)(B).

''O 15 U.S.C. 4204(3)(A).

larger market. Furthermore the concept "nondiscriminatory" is defined within the

L.R.S.C.A. as king;

. . . without preference, bias or any other special arrangement . . . regarding delivery , format, financing , or technical considerations which would favour one buyer or class of buyers over another ...

The sale of data is made on a aondiscrirniaatory basis only if (i) any offer to seil or deliver data is published in advance in such a manner as will ensure that the offer is equaiiy available to al l prospective buyers; (6) the system operator has not established or changed any price, policy, procedure, or other term or condition in a manner which gives one buyer or class of buyer de facto favoured access to &ta; (üi) the system operator does not make unenhansed data available to any purchaser on an exclusive basis; and (iv) in a case where a system operator offers volume discounts, such discounts are no greater than the demonstrable reductions in the cost of volume

The nondiscriscrimination p ~ c i p l e contained in the 1984 legislation was applicable to

every remote sensing satellite operator.u2 Furthermore it was established as a

"rationale for equally charging al i users substantiaiiy higher data prices".l13 This

dubious conception of the "nondiscnminatory" concept had negative effects upon

several areas of American policy.

First, the higher data cost had a negative effect upon its purchase by

developing nations.'14 As J o a ~ e Irene Gabrynowicz correctly argues, this practice

of increased data prices had a negative effect on American foreign policy in that;

L.R.S.C.A., S. 104(3)@)

L.R.S.C.A., S. 601(a).

Il3 J.I. Gabrynowicz, "The Promise and Problems of the Land Remote Sensing Policy Act of 1992" (1993) 10 Space Policy 3 19 at 322.

Non-discriminatory access as a foreign poîicy was seriously weakened, denying data to a number of foreign users and denying the USA a practice which had resulted in foreign good will, enhanced intergovemmental relationships, and the democratization of foreign institutions through making w ith econornic, political and environmental value available to other nations. IlS

Second, by forcing ali private enterprises to seii aii data in the same marner,

an important characteristic of private markets was legislatively canceiied. The basic

reality of markets is that al1 customers do not have equal needs.l16 Producers should

have the ability to negotiate different pricing arrangements for valid commercial

reasons. For example different purchasers can create a given level of economic

certainty for the supplier. Space based remote sensing operators should be aliowed to

benefit from exclusive data supply arrangements. Market entry can be facilitated and

secured with exclusive supply contracts. Consequently this interpretation "barred many

cornpetitive pricing practices and prevented start-up ventures from attracting capital via

exclusivity clausest'. ' l7 The defective concept of "non discrimination" espoused

within the Land Remote Sensing Commercialization Act therefore functioned as a

barrier to market entry. Niche markets could not be created. This conceptual flaw of

the Land Remote Sensing Commercialization Act proved to be a major consideration

for the legislative retooling of remote sensing data market regulations.

Il6 Plato had written in the Republic that there is nothing more unequal than treating unequals equally!

Il7 S. Pace, The Re~ulation of Commercial Remote Sensing System~ (Santa Monica, CA: RAND, 1994) at 3.

There is a caveat which must be respected with exclusive data supply contracts.

The potential danger of exclusive supply contracts is that they can becorne a form of

anti-cornpetitive vertical market structure. Hence generating the need for proper anti-

trust regulation in order to aiiow these contracts to coherently function within a

cornpetitive market structure.

From a commercial point of view it is important to note the effect of the non

discriminatory p ~ c i p l e upon imagery publication. The key question to ask is whether

imagery can be published before the unenhanced data has been made comrnercially

available? This dissertation argues that the nondiscriminatory principle should not

prevent initial publication of imagery if there are no undue time constraints for

subsequent commercial data accessibility by other purchasers.

Once the raw data has gone through a value added process a form of propnetary

rights are created in the American legislation where nondiscriminatory and open access

rules are denied. "The proprietor of the information can deny access to others, or seiï

11 118 it on any basis and at any price he chooses .

In the füst phase of the program, the United States govemment maintained its

owaership of the Landsat system and of the raw and primary &ta.llg EOSAT

acquired rights to revenues fkom the sale of data.'20 EOSAT was to be considered

as an agent of the Secretary of Commerce insofar as its relationship with the foreign

118 Desaussure, SUD^ note 12 at 369.

Il9 Land Remote Sensine Co Ac?, supra note 89, art. 201@).

nid., art. 204(a).

ground reception stations wwas concemed. EOSAT was legally obliged to distribute

raw data to all potential purchasers on a non discriminatory basis."' The price of

data was to be established by EOSAT itself on a profit oriented basis.lP

The American government kept indirect control of the data through the

Secretary of Commerce. Foreign contracts had to be notified to the Secretary of

Commerce. This regulatory structure is another example of the coid war legacy

permeated with national security concems. The entire system was to be transferred to

the private sector which had to ensure continuity and new satellites.

This fïrst attempt at privatisation was a failure. Data costs were too high for the

market. The product was not very cornpetitive with the French SPOT system or with

the Soviets, both of which were selling higher resolution images. As D. Mussington

wntes, the 1984 regulatory structure had created a perverse regulatory structure "which

stifled innovations, (and) raised unit pnces for images and imagery technologies to

exceedingly high levels". l3 The Americans concluded that a legislative retooling was

required if they were to maintain theû international leadership in this field.

12' 15 U.S.C. 4215, S. 205(a).

ln L.R.S.C.A, SUD^ note 89, art. 202(a)(l).

lU D. Mussington, US Foreign Economic policy and high technol~v Industries: The Case of Irnginine and satellite Technolog& (Monterey , California; Monterey Institute of International S tudies, Center for International Trade S trategy , 1995).


LAND REMOTE SENSING POLICY ACT

The Land Remote Sensing Policy Act was signed by President George Bush on

28 October 1992.12* The Law reasserts the wiii of the United States to maintain its

world leadership in satellite remote sensing. Such a statement of "world leadership" is

uncharacteristic of American legislation. Political and strategical concems were

probably the main motivathg factor for such a declaration.

The Land Remote Sensing Policy Act cancelled the privatization goals of the

1984 act by stating clearly in section 5601 (6) that "full commercialization of the

Landsat program cannot be achieved within the foreseeable funire " . The philosophy

of the previous act, which rejected the maintenance of a pubiicly tinanced space based

remote sensing system, was cancelled. The Land Remote Sensing Policy Act

"recognises that using public funds for remote sensing satellites is a national investment

that makes long-term commercialization by the private sector possible".'^ It is

politicaliy easier to estabiish positive goals than to state that the previous act was an

error or failure. The Land Remote Sensing Policy Act abandons the phased transition

to a fuUy commercial system in a politically adroit and skilfuliy drafted marner. The

American govemment also reestablishes its financial commitment to the Landsat

program.

HR 6133, 102nd Congress, 2nd Sess., 5 October 1992.

lU Gabrynowicz, SUD^ note 1 13 at 32 1.

Under the Land Remote Sensing Policy Act remote sensing looses its purely

civilian designation. The Land Remote Sensing Policy Act tacitly achowledges the

hybrid military-civilian use of overhead irnapiog technology. This recognition is w t

explicitly stated but emanates fiom the management structure established by the

legislation. The Management of the Landsat program is no longer to be the sole

responsibility of the Department of Commerce, but is now assigned to a joint

Department of Defense and NASA program called "Landsat Management Program".

In this sense the new law correctly reflects a major characteristic of overhead imagery

technology but fails to establish a proper balance between the two branches of

government. It is correct to maintain an aspect of "national security". It is however

wrong in attempting to create a market structure to maintain an emphasis of priority

of "national security" in a commercial structure. What is required is a structure where

national security concems can be addressed without causing prejudice to market

structures. Even an excess of a good thing stiU remains an excess just the same.

Seen in this Light the Land Remote Sensing Policy Act is a good, albeit an

imperfect evolution fkom the previous act, which did not recog~se the dual nature of

the technology. Considering the dual use of the technology and the potential for

military purchase and use of civilian data the new joint management is a can become

positive aspect of the Land Remote Sensing Policy Act if a proper balance between the

military and commercial paradigms is established.

The Land Remote Sensing Policy Act maintains the open skies concept and

redefines the nondiscriminatory data access principles previously edicted within the

"Land Remote Sensing Commercialization Act" of 1984. The redefmition limits the

scope of applicability of the nondiscriminatory principle to Landsat or government

(USA) funded remote sensing programs. Privately hinded remote sensing enterprises

are no longer encumbered by a non discretionary pncing mechanism. Section 5651 of

the Land Remote Sensing Policy Act edicts that:

... any unenhansed data generated bv the Landsat svstem or any other remote sensine svstem funded and owned bv the United States Govemment shali be made available to ali users without preference, bias, or any other special arrangement ... regarding delivery, format, pncing , or technical considerations w hich would favour one customer or cfass of customers over another?

The change in policy leading to a redefïnition of the nondiscriminatory concept

of the American remote sensing legislation presupposes a review of the American

interpretation of the U.N remote sensing principles.

The Land Remote Sensing Policy Act marks a truly important change in the

American interpretation of the UN remote sensing p ~ c i p l e s hereinabove analyzed.

Prior to the Land Remote Sensing Policy Act it was argued that P ~ c i p l e W

pertaining to the dissemination of data only applied to data collected by remote sensing

systems which were operated by States. The argument was based on the premise that

"data nom private systems was not available to the State, therefore it was unavailable

for the purposes of the Principles". 12' According to this theory private remote sensing

operators would not have a legal or moral obligation to communicate data to a sensed

126 L.R.S.P.A., SUD^ note 89.

ln Gabrynowicz, SUD^ note 113 at 325.

State. In its tùst attempt at commercial remote sensing legislation the American

govemment did not adopt the U.N. principle of data accessibility privileges for a

sensed State? The 1992 act reflects a very clear policy change concemhg this

point, extending the scope of applicability of data accessibility privileges by sensed

States to pnvate remote sensing companies in section 5621 @) of said act. The Land

Remote Sensing Policy Act edicts clear and specific rules which oblige pnvate

companies to ensure data accessibility to foreign govemments. 12' This is an important

aspect of the new regulatory structure as it is incorporated within the mandatory

conditions for licensing private remote sensing operators within section 960.12(d)(l)

of the regulations. In this respect the Land Remote Sensing Policy Act data rules and

Licensing requirements resemble the UN principles.

International law evolves through the practice of States. The practice of States

can be evidenced by their internai positive laws. The practice of States is particularly

important for space iaw when one examines the practice of the major States involved

in space activity. The US is ineluctably the major State present in space. This

dissertation therefore argues that the Amencan policy on remote sensing as edicted in

12' Section 601 (a) of the Land Remote Sensing Commercialisation Act edicts that "Any unenhanced data generated by any system operator under the provision of this act shall be made available to al1 users on a nondiscriminatory basis in accordance with the requirements of this act."

'29 Land Remote Sensing Policy Act of 1992, sanctioned October 28 1992 15 USC 5601, (also herein refered to as L.R.S.P.A.) sections. 5622@)(2), edicts that a lisencee must "make available to the govemment of any country (including the United States) unenhanced data collecteci by the system conceming the temtory under the jurisdiction of such govemment as soon as such data are available and on reasonable ternis and conditions " .

the Land Remote Sensing Policy Act has a definite effect upon the interpretation of the

UN remote sensing principles (specificaliy principle XI I ) and their applicability to

private entities partaking in this activity .

Under the Land Remote Sensing Policy Act the cost structure of the data has

been reduced, since profitability is no longer a criterion for data sales. Section 5651

(a) edicts that data "shd be made available to ali users without preference, bias or any

other special arrangements. The only exception is to be found in section 5651 @) for

data sold to the US govemment to be used solely for non commercial purposes.

n 130 Unenhanced data is now to be supplied at "the cost of fulfilling user requests ,

which in turn is defined in the Land Remote Sensing Policy Act as being

the incremental costs associated with providing product generation, reproduction, and distribution of unenhanced data in response to user request and shali not include any acquisition, amortitation, or depreciation of capital assets originaliy paid for by the Unites States Govemment or other costs not specifically attributable to fulfdiing user requests. 131


MARKET ANALYSIS

This section wili analyze market structures resulting From the existing

international and Amencan regulatory framework descnbed above. The

130 Ibid., S. 5613(a).

13' %id., S. 5602(2).

commerciaiization of remote sensing presupposes the cornmodification of data.

Information as a marketable product has inherent attributes producing a distinct market.

CHAITER 4 SECTION 3 SUB!3ECTION 1:

MARKET STRUCTURE

First, information or knowledge is a non consumable product in the sense that

data, once obtained, can be easily stored and become the object of a multiplicity of

commercial transactions. Once data is obtained or created its reproduction cost is

minimal. Furthemore data can theoreticaily be sold infinitely as it never gets used up.

Data can however become outdated. In remote sensing this results from improvements

in the technological means to achieve a smalier degree of ground separation distance

through sophisticated higher resolution technology. This, however, does not mean that

old data necessarily looses its pertinence or usefûlness. In comparative analysis, an

important part of remote sensing, older data is used to evaluate the physical evolution

of an area. In this way new data can make old data useful. Hence the necessity of

properly archiving data.13' The Land Remote Sensing Policy Act adresses this point

- - - - - - - - - - - - - - - - - - - - -- - - - - - - -- --

132 "It has been estimated that Earth observation satelites will produce of the order of 20 Tbits (20 x 10 twelfth power bits) of data per day. These data, together with the data previously accumulated, will produce archives of Earth observation data which will contain in total the order of 100,000 tbits by the year 2005.2, see R. Harris & R. Krawec, "Some Current International and National Earth Observation Data Policy " (1993) 9 Space Policy 273.

in its pricing policy . The investment in researc h, processing , storage, and distribution,

is deemed not to be recovered in the data price mechanism.

Secondly, prior to the commerciaLization movement remote sensing data was

considered a public good. The Land Remote Sensing Policy Act maintains this attribute

for weather satellites.'" Comrnerciaiization necessarily presupposes the inclusion of

data in the private realm within a system of private property. The rationale for this is

that data can then "be produced and sold in the market in order to take advantage of

the efficiency of the market"."' The problem with transferring a good fiom the

public realm to the private realm lies in the fact that transaction costs for the

participants are increased in a private market struct~re.''~ For the transition to be

worthwhile the efficiency gained in the market structure must therefore be greater than

the resulting increased transaction costs. Without a properly structured market

mechanism the transition could exacerbate market distortions . 13'

The supply side of the Earth observation industry is composed of four

interlinked levels , 13' these are:

(1) spacecraft and sensor manufacture;

-- -

'" L.R.S.P.A., S. 5671, s u ~ r a note 129.

R. Mansell & S. Paltridge, "The Earth Observation Market: Industrial Dynamics and their Impact on Data Policy" (1993) 9 Space Policy 286 at 290.

MX. Macauley & M.A. Toman, "Providing Earth Observation Data from Space: Economics and Institutions" 8 1 American Economics Review. 38 at 39 (199 1).

(2) spacecraft system launch;

(3) sensor system operation, signal transfer to ground stations, and primary

processing of information; and,

(4) "value added" processing and dissemination of imagery.

One of the results of the American policy is the creation of a v e r t i d y

integrated market.13' Level No. 3 was in fact legislatively integrated with level 1

by the American decision to aiiow EOSAT to operate the Landsat system. EOSAT

is a company whose corporate ownership has changed since 1984 and which is

currently controlled by Hughes Aircrafi Company and the Lockheed Martin

C~rporation"~ (level 1 and level 2 space segment suppliers). The rationale for

jus tehg vertical integration in this market is tah the cost of a Landsat satellite is

approximately 300 million USD per unit.I4O The cost is so excessively high that the

capital investment cannot be justified by the revenues of raw data sales alone.

Commercial viability can only be ensured if satellite builders and operators "gain

13* This phenornenon is not exclusive to the American market as Vertical integration has also occured in the Canadian and French remote sensing industry. See Mussington, SUD^ note 81 at 72, which illustrated this "SPOT image's purchase of a 20 per cent stake in Imagerie Stereo Applique au Relief (ISTAR), a small image-enhancement company involved in the processing satellite and aircraft images; Martin Marietta's purchase of a 15 per cent equity stake in Radarsat International Eosat's purchase of distribution nghts for IRS-P2 satellite imagery.

139 http:/lwww.eosat.com/EOS~TEXT/PUBLiC/whoeosat. html at 1.

140 S. Pace, "Remote Sensing and Global Competitiveness" (Santa Monica, CA: RAND, 1993) at 4.

downstream revenues from value-added distribution and application""'. Furthemore,

vertical integration is, accordùig to this school of thought, a means of reducing

dependence of the data processing sector from exclusive government data suppliers.

Govemment is thus seen as an added risk factor in a commercial venture. It is argued

that govemments are subject to possible political variances affecting data supply policy.

In defending this theory Scott Pace writes:

Thus while it is tempting to rely on subsidized govemment data (whether nom the U.S. or elsewhere), longer run pressures by both suppliers and users should be towards competitive, vertical alliances providing different types of remote sensing data. Such alliances can provide market feedback to new technology developments, enhance technology transfer among members, and establish market openings for other products of alliance members. 14*

Mr. Pace's argument is fine as far as it goes, but it does not go far enough.

Granted, vertical integration can at times be a usefull tool in corporate development.

There are however certain anti-trust concerns with this form of commercial structure.

Vertical integration is not the panacea to the problems of commercial remote sensing.

Even private industry has admitted that this market structure has its lacunae.

Initiaily EOSAT claimed to refuse vertical integration of the American overhead

imagery market.lq This was too little too late since vertical integration was already

14* Ibid.

143 See Mansell & Paltridge, s u m a note 134 at 295 "in the United States, Hughes and General Electric (after its purchase of RCA), EOSAT's parent companies, have resisted suggestions that their subsidiary should enter the value added services market for earth obsentation data. EOSAT has claimed that entering the value added services market would be akin to competing with its own customers

a "fait accompli" due to the corporate ownership of EOSAT. The potential problem in

the American structure is tbat Hughes is a dominant primary space contractor. This

vertical integration places Hughes in a conflict of interest position when marketing

remote sensing satellites. Furthermore Eosat may not oniy control the supply side of

images but also a large portion of the value added market. This king said, it is

however important to keep in mind that vertical integration is not necessarily coatrary

to anti-trust laws.'" Vertical integration however does become a problem if and

when it is used as a tool by major players to control price structures and limit market

entry. If pricing in a verticaliy integrated satellite data market reflects the total

industrial structure from the space supplier down to the data supplier the result is a

distorted pricing mechanism. If the demand-supply pricing mechanism is distorted (i.e.

does not reflect tme end user demand) a reduction in market entry possibilities for new

participants which are not linked with primary space suppliers results.

For the space segment suppliers this (vertical integration) has the advantage of allowing them to own the intermediaries between the end users and govemment agencies who buy the space systems. They are in a strong position to influence the flow of information along the value added chain. They are also well positioned to influence prices as long as economic rights in Earth observation data products are effectively maintained. 14'

although this position may be changing as EOSAT is explonng options to sel1 more than raw data."

For an interesting on the effect of economic theory and the evolution of antitrust law pertaining to vertical integration see S. C. S teven , " Exclusionary Vertical Restraints Law; Has Economics Mattered" (1993) 83 Amencan Economic Review 168.

ManseIl & Paltridge, SUD^ note 134 a? 296.

The Landsat system was stnictured in a time when profitability of the operation

was not an important consideration. As earlier indicated in the thesis, Laudsat ground

structures were not conceived of as efficiency would dictate, k ing artificially seperated

in three different States. Landsat is a conceptual relic from a govemmental 'big

science" era. This thesis argues that the Land Remote Sensing Policy Act makes a

strategic error in attempting to make the system profitable through vertical market

integration.

The fact remains that pnor to privatisation Landsat was a govemment operated

monopoly. The commercialization of the Landsat system was a big gift to the Hughes

and Martin Marietta group. The transfer of a monopoly to private space contractors

without a recuperation by the Amencan govemment of its investment created a

govemment subsidised industry. In this case vertical integration was used to transfer

a govemment monopolistic industry into the private market place. This imperfect

market structure can, if improperly supervised, give rise to various types of unfair

market practices.

The consequence of this market structure could be the manipulation of the

smaiier &ta market for the benefit of the space segment suppliers, that is the sale of

satellites? Vertical integration can also lead to exclusionary market power. In this

case Hughes, king a large satellite manufacturer, can affect the costs of EOSAT's

14' Ibid' at 296. "In a marketplace characterized by this type of integration it is likely that the intemediaries will seek to minimize the potential for new entry in the data intermediary segment of the market and to maximize the iikelihood of continuing demand for space segment construction".

cornpetitors. Anti-trust laws must therefore be vigilantly applied to prevent market

distortions.

CHAPTER 4 SECTION 3 SUBSECTION 11:

lMARKET ENTRY

Market entry for new participants in the remote sensing industry can be very

difficult. This section will analyze market entry for remote sensing satellite operation

from three perspectives: (a) satellite launching and deployment ; (b) Licensing

requirernents; and (c) ground station contracts.

CHAPTER 4 SECTION 3 SUBSECTION II A:

MARKER ENTRY: SATELLITE LAUNCHING AND DEPLOYMENT

Satellite development (a level No. 1 entry) and deploy ment (a level No. 2 entry)

are very expensive, thus creating a strong bamer to new participants. The main

economic concern in a systems launch is the determination of the financial viability of

either a large platform with many sensors or the use of several smaii platfor~ns.'~~

The American legislation establishes a policy choice favouring the large complex space

platform by edicting the continuation of the Landsat program. On the positive side this

choice represents an economy of scale, while on the negative side the choice is

ld7 Maccauley & Toman, SUD^ note 137 at 39.

70

accompanied with a higher level of launch risks. The recent launch Mure of a Landsat

satellite proved damaging to the Amencan expenment, precipitating a legislative

change to the Land Remote Sensing Policy Act and the reemergence of govemment

intervention to rescue a weakened participant in a pnvate market.

This dissertation argues that if commercialization was in fact the primary

concem of the Amencan government the most logical choice would have been to

favour within the Land Remote Sensing Policy Act the development and deployment

of s m d scale space imaging systems.'" The commercial advantages of smaii scale

space imaging systems are clear: development and launch costs are reduced dong with

launching risks, thus facilitating market entry . 149 Niche markets can thus be

created. ''O

The decision to have Landsat operated by one systems operator, EOSAT, was

wrong. The granting of a monopoly to EOSAT was not conducive to the creation of

'48 See B. J. Harris, "Commercial Applications Multispectral Senson Systemn in R.J. Birk & B. Spiering, Small Satelite Technoloeies and A plications II @'roc. SPIE 169 1, 1992) at 63-74; B. J. Harais, "Commercial Remote Sensing Small Satelites feasibility Study" in R.J. Birk & B. Spiering, Small Satelite Technoloeies and Applications II (Proc. SPIE 1691, 1992) at 2-1 1.

149 "If small-scale systems are viable, then much of the argument for an exclusive role of govemment to remedy market failure due to scale and scope effects in the supply process is undermined." See Macauley & Toman, âupm note 137 at 40.

"Encouraging entrepreneurhl entry would require the dissolution of present entry barriers, including legal restrictions on remote sensing data access and discriminatory pricing. In addition, ready access would need to be provided (at user cost) to existing public facilities like launc h sites and communication networks." See Macauley & Toman g.mm note 137 at 40; see also D. Polsky Werner, "Addax Finds Remote-Sensing Niche" Space News (1 3- 19 Much 1995) at 32.

a heaithy space &ta market. This decision impeded the formation of a proper market

in two ways. First, as already demonstrated, a vertically integrated structure with

internai conflicts resulted. Second, and just as importantly, the choice was restrictive

in its effects on market entry. A regulatory structure permitting a multiplicity of

participants to develop and place sensors on a single space platform would have

optimised market entry. The result would have k e n to spread the nsk among a greater

number of smaller participants. The benefit is twofold and very utilitarian as a greater

number of padcipants can benefit from an economy of ~cale. '~' Under this mode1

space on satellites is sold to companies who wish to place sensors on board. Once the

space aboard the satellite has been sold its financial viability for the operator is insured

and the launch can take place. Financial risks are reduced and market entry is

maximised.

CHAPTER 4 SECTION 3 SUBSECTION II B:

MARKET ENTRY: LICENSING REQUIREMENTS:

The present regulatory structure forces a remote sensing satellite operator to

obtain three separate lincenses. These are (a) a remote sensing operating lisence; (b)

a radio frequency license; and, (c) an export license.

- - - - - --

15' See Macauley & Toman, S U D ~ note 137 at 40.

72

CHAPTER 4 SECTION 3 SUBSECTION II B-1:

OPERATING LICENSE:

The Land Remote Sensing Policy Act establishes the Secretary of Commerce

as the authority for the issuing of a remote sensing operator license.ln Licenses are

processed within the Department of Commerce by the General Counsel of the

N0AA.l." In reviewing an application for an operating license there is a presumption

favouring remote sensing systems whose technology and charactenstics are readily

available or planned for availability on the world market? Under the previous 1984

Land Remote Sensing Commercialization Act the Department of Commerce had issued

only two licenses for remote system operators. These were for Landsat and for the

Large Format Camera carried by the Space Shuttle.'" To date ten (10) operating

licenses have been issued to private operators since the promulgation of the Land

152 15 U.S.C., S. 5621 et seq. and 5602(12) suDra note 129.

lm Pace, su~ra note 1 17 at 3.

lY "Foreign Access to Remote Sensing Space Capabilities" (1994) 10 Space policy 243.

lS5 Pace, su~ra note 117 at 3.

Remote Sensing Policy ~ct . ' " It has been argued that without the 1992 legislative

retooling these new companies would not have applied for remote sensing lisences.ln

Licensing regdations are an important part of implementing the

commercialization policy goals edicted within the Land Remote Sensing Policy Act.

A successhil regulatory regime must be transparent and predictable in order to facilitate

market entry. License applications must be treated expeditiously and with

confidentiality. In areas of high technology trade secrets are crucial to corporate health,

as a leak could compromise a cornpetitive edge. This section will analyze the licensing

requirements in this light, concentrathg on certain regulatory aspects which are

deemed important to the industry. The analysis wili scmtinise fîrst the procedural and

then the substantive aspects of the regdation.

Is6 Public Meeting on Licensing of Pnvate Remote-sensing Space Systems, held on Friday June 14, 1996 in room 4830 DOC Building, 14th & Constitutional Avenue, N.W. Washington D.C. Moffit Reporting Services, unpublished document on file with the author, at p.5. (hereinafter refered to as "Public meeting for regulatory review " .

ln Pace, SUD= note 1 17 at 3.

IS8 This bipartate division is done for the sake of intelectual and analytical perspicuity. It must not be interpreted as a negation of the substantive attributes of procedure itself. Form, and therefore procedure, in itself can in fact predetermine substance.

CHAPTER 4 SECTION 3 SUBSECTION II B-1-a:

OPERATING LICENSE: PROCEDURAL CHARACTERISTICS

Applications are nled with the Assistant Administrator National Environment

Satellite, Data and Information service (NESDIS), NOAA, Washington, DC.lS9

Applications must be in wnting but no specific format or form is mandatory. In the

case of a corporation the application must be signed by at least a vice-president. A

corporate resolution authorising another officer of lower rank to sign the application

would not suf f i~e . '~ The application must be submitted in eight (8) copies16' and

must contain detaiied information conceming the corporate structure of the applicant

including a certified copy of the charter or instrument by which the applicant was

formed and authonsed to do bus in es^.'^^

The application must also contain certain technical information, such as adequate

operational information regarding the applicant's remote-sensing space system on which

to assess cornpliance with national security and international requirements. The

technical information required includes:

(1) the intended date of commencement of operations and the expected duration

of such operations;

lS9 Rules and Regulations, S. 960.5(a).

Rules and Regulations SUD^ note 101, section 960.5@)(1).

ibid Section. 96OS(c). -

16* Section 960.6@).

(2) The method ef iaunch. and the name and location pf & O-mrator ef &

launch vehicle and & launch site;

(3) The range of orbits and altitudes requested for authorised operations;

(4) The range of spatial resolution or instantaneous field of view requested;

(5) the spectral bands requested for authorised operation. la

The regulation edicting launch specifications as a condition of licensing has

proved to be cumbersome, redundant and consequently restrictive in effect. It is

cumbersome because if a launch provider cannot provide a timely launch a new license

application consuming valuable time and energy must be made in order to change the

launch service provider.

The replation is redundant because launch service providers are also subject

to strict regulations establishing the safety of their activity. Furthermore, if a licensee

wishes to use a foreign launch service the export of his satellite is subject to an export

license which is aiready effectively dealt with at that point in time, again avoiding

procedural redundancy. This thesis argues that the regulations should only request the

applicant to divulge whether the launch service provider is American or foreign and

that the use of different launch providers should not require licensing modifications.

The lisence should only require the use of a duly certified launch service provider.

This presupposes that a launch service is a fùngible good. This type of regulation

would in k t be beneficial in two ways. First it would benefit the American launch

- - -

163 ibid Sections 960.6(1), (2), (3), (4), & (5).

76

seMces industry by creating a competitive edge through a reduced regulatory process.

Second, by reducing launch uncertainties to potential investors, fioancing would be

subject to lower risks logicaily yielding lower financing costs. A launch is in itself

already a high risk endeavour not to be overburdened by excessive replatory

delays . lu

Technical information in the application, such as the range of orbits or altitude,

range of spatial resolution and instantaneous field of view, spectral bands, etc, can also

be important to the competitive position of the applicant. The application may also

contain more commercial information, such as intended data acquisition and

distribution plans 16', method of data distribution (including SC heduling plans and

pro ce dure^),'^^ location of major distribution outlets, data reproduction policy,

pricing policy, etc. In this regard the confidentiality of the application procedure is of

prime importance to industry.

Several govemmental agencies are involved in issuing remote sensing operathg

licenses. These are the Department of Defense (DOD), the intelligence community, the

State Department and the Department of the Intenor. Industry has voiced concem on

lu On this point Mr. Burnett of EarthWatch gave the following critique in the Public meeting for regulatory review, supra note 156, at 42, 43, "1 mean, we'eve got investors that have invested money in this business on the basis of getting the satellite up this fdl and into operation. We certainly don't want, in the future, to have to have a situation where we have to corne in and go through at least two processes to change a launch vehicle service provider.

Rules and Regulations, supra note 101 Section 960.6(d)(5)(e).

'" - ibid Section 960.6(d)(5)(2).

this point regardhg the possible information leaks to which the procedure might

inherently be subject. The application review should be centralised in one office to

prevent hiformation lealcages resulting fiom the circulation of documents.16'

The interagency aspect of the application processl" is the source of two

concems for applicants. The first problem resides in the fact that possible thne delays

c m be caused by the interagency review process. Although section 5621 (c) of the

Land Remote Sensing Policy Act provides that the Secretary shaii process licensing

applications within 120 days fiom the receipt of such applications there are two lacunas

to this legishtive disposition. First, the delay is not de rigueur. Second, and most

importantly, the delay does not apply to other agencies which may participate in the

process. According to Michael Mignogno, Chief of Landsat commercialization division

within the NOAA, the first three weeks, that is twenty-one days, are used to determine

the cornpleteness of the application. 169 Agencies should also look for completeness

before conducting a forma1 review. The NOAA then asks the other agencies to

lm In the Public meeting for regulatory review when discussing this point Gerald Musarra from Lockheed Martin corporation argued about "keeping information in one place as opposed to unnecessary copying and circulating of it so that those who have an absolute need to know go to the information and not the other way around. " Public meeting for regulatory review, supra note 156 at 3 1.

la L.R.S.P.A., S. 5657.

'" Public Hearings, SUD^ note ??? at 56.

complete their work within sixty day~.''~ The quicker the process is the better it is

for the applicant."'

The second problem resides in the uncertainty caused by the interagency review

process. It is very difficult to predict the outcome of an interagency process. The

result is an increase in applicant uncertainty during the application procedure. '"

CIIAPTER 4 SECTION 3 SUBSECTION II B-lob:

OPERATING LICENSE: SUBSTANTIVE TESTS

The second aspect of the issuhg of a remote sensing operating license relates

to the substantive tests that are applied. This section wiil analyze seven substantive tests

of licensing regulations which are of particular concern to industry in that they affect

the stmcturing of the market within which industry operates. These are (i) national

secunty concems, (ii) seinire, (iii) control and jurisdiction concerns, (iv) substantive

170 - Ibid. at 57

"' As John Neer from Space Imaging argued "...you wouldn't want to wait three months to find out you should do a loads anaiysis on a new vehicule." Public meeting for regulatory review, supra note 156 at 58.

ln As Gerald Musarra of Lockheed Martin argued "1 think that what probably causes potential licensees the most discornfort is the idea that the application is filed, and you have really no sense of the sorts of things that would corne into play in the course of the inter-agency review that could create a problem for application, either result in its being denied or could result in the imposition of conditions in the license that might make it difficult to operate." Public meeting for regulatory review, su~ra note 156 at 50.

and significant agreements concems, (v) Jurisdictional scope, (vi) international

obligations and (vii) sanctions .

CHAPTER 4 SECTION 3 SUBSECTION II B-1-b-1:

NATIONAL SECURITY CONCERNS

AU applicants must satisfy national secunty concems and international

obligations of the United States.'" The operator is obliged to maintain a record of

ai i satellite tasking for the previous year and to fumish the American government

access to these records upon request.'74 AU encryption devices must be approved by

the American govemment. D u ~ g times of conflict access to the satellites could then

be govemment controlled. Al1 data clownlinks must be such as to permit easy access

by the American Govemment. 17' Access to imagery for a certain time or for a certain

area can therefore be restricted for reasons of "national security". The problem with

the "national security" concept is that it is very general in nature, and discretionary,

causing a high level of uncertainty for the operator of the remote sensing equiprnent.

For a commercial image provider this issue is of prime importance as it can have a

L.R.S.P.A., SUD^ note 129, Section. 5622(b)(l). see also section 960.11 of the Rules and Regulations SUD^ note 101.

17' U.S. Policy on Foreign access to Remote Sensing Space Capabilities, HR 6133 (march 10 1994) at 243.

direct dissuasive effect on both investors and potential clients. n6 The rationale behind

this vague cirafting style is simple. It is impossible to foresee in a comprehensive list

aU possible national security concems which would necessitate govemment suspension

of overhead imagery. The govemment therefore unequivocaiiy reserves the right of

suspension. The problem is that this type of draftïng reduces predictability and

transparency, two attributes required to enhance the market environment. This type of

regulatory culture is an archaism fiom the Cold War period. As this thesis has

demonstrated paradigms have changed. This however must not be interpreted as

meaning that there is no longer a need for national security concem in the regulatory

process. Rather, it means that a new balance must be achieved in the regulatory culture

between market necessities and weil defined national security concems which are

predictable and transparent. Otherwise potential investors in space based remote

sensing ventures wiü simply seek other venues for their enterprises. The consequence

of the "national security" concept in the regulatory structure is a reduction in the

competitiveness of the American space image providers. This thesis argues that the

uncertainty and dissuasive effects caused to investments by the ''national security" is,

17' AS Gil Rye of OSC argued in the public meeting in describing the effect this has on potential investors; "It's one thing to ask the customer to understand that the U.S. Govemment may decide to pull the plug, but it's another thing to say we really can't articulate or explain to you when the govemment might or under what circumstances the govemment might pull the plug. Public meeting, SUD^ note 164 at 89. On the same point Phi1 Cumer of GDE argued " We've had potential custorners or more independent business partner distributor type things who've wanted a signed assurance by the U.S. Govemment that the plug will never be pulled over the areas that they're interested in or they wouldn't continue at al1 if they just assumed they wouldn't get it". Public meeting for regulatory review, suprg note 156 at 93.

ironically, itself prejudicial to national economic interests. The argument presupposes

a replatory regime within which a new equilibrium is reached between 'national

securityn concems and economic market concems where the latter has priority over

the former thus prevailing if a conflict occurs. Furthermore, it is unjust to ask industry

in its efforts to seek out investors and new markets to be the interpreter of a vaguely

estabiished legal concept.

The legal justification for the constitutionality of this institutional discretionary

power is that the restriction is not content-based but rather is a "denial of access to

information". ln A lower standard than that established by the First Amendment

results. This thesis argues that even if the NOAA argument is not irrational it does

have several lacunae.

First, the legal justification for the constitutionality of the govemment

discretionary power may have been cogent when EOSAT operated in a monopoly

situation but in the current cornpetitive market it is no longer viable. As we have seen,

ten licenses have now been issued to private remote sensing companies. Within this

context the suspension of imaging capabilities is much more akin to a e s t amendment

violation than a denial of access to information.

ln Petition by The Radio-Television News Directors Association, the Amencan Society of Newspaper Editors, the Media Institute, the National Association of Broadcasters, the National Broadcasting Company, Inc. , the Reporters Cornmittee for Freedom of the Press, and Turner Broadcasting System, Inc., for rule making working document No. 2 at 13, see also regulations 25968. presented and prepared by Pierson, Bal1 & Dowd Attorneys at law. Document on file with the au thor.

Second, the regulation has a negative effect upon the goals of the Land Remote

Sensing Policy Act. Govemment policy is clearly one of promoting the development

of the remote sensing industry. However the "national security concept" as it presently

exists has a dissuasive effect on investments by the press, thus increasing market entry

barriers. The national security aspect has fiom the very beginning been severely

cnticised by the press. In April of 1988, during the cirafting of the first regulations,

The Radio-Television News Directors Association, the American Society of Newspaper

Editors, the Media Institute, the National Association of Broadcasters, the National

Broadcasting Company, Inc., the Reporters Cornmittee for Freedom of the Press, and

Turner Broadcasting System, Inc., jointly submitted a petition arguing for the inclusion

of the First Amendment principles in the regulatory structure. Unfortunately this was

not to be the case. The uncertainty resulting fiom the strong discretionary power

included in the existing regulations now creates a strong barrier to market entry by the

press.178 It is important to note that the purpose of newsgathering by remote sensing

is a commercial operation with an important distinction fiom other earth remote

sensing satelites in that a newsgathering operation does not target information

pertaining to natural resources. 179

878 ibid "The resulting uncertainty has inhibited the media's efforts to explore the feasibility of developing an independent remote-sensing capability. '

179 Li Frieden, "Newsgathenng by Satellites: a New Challenge to International Law at the Dawn of the Twenty-Fint Century" (1989) 25 Stanford I. Int'l. L. 103 at 193. See also R.P. Merges & G.H Reynolds, "News Media Satellites and the First Amendment: A Case Study in the Treatment of New Technologies" (1989) High Tech. L. J. 1.

The moment is propitious for a regulatory amendment. The NOAA must take

advantage of this and effect a regulatory change to include first amendment rights. The

benefits of such an amendment are numerous.

First, the courts have had the opportunity to analyze the scope and effect of the

f%st amendment. The problems caused by the vagueness of the "national security"

concept within the present regulations would be eliminated. A more predictable and

transparent repiatory environment would result. The first amendment rights are not

incompatible with national security concerns. Freedom of expression and national

security concerns have in fact already k e n delicately balanced by the courts. In the

Pentagon Papers case the United States Supreme Court was faced with a conflict

between national security concems and the freedom of the press. The argument that

overhead imagery must be censored at times of conflict to Save Amencan lives is

"prima facie" persuasive but incomplete. Granted during the Gulf war a limitation of

overhead imagery proved to be necessary. This limitation was however acquiesced to

voluntarily by space based image prividers and not through coercive measures.

However the freedom of the press to completely inform the public of govemmental

activity can in itself also Save lives. As Mr. Justice Black wrote in a decision in which

Mr. Justice Douglas concurred:

In the First Amendment the Founding Fathers gave the free press the protection it must have to fûlfii its essential role in our democracy. The press was to serve the govemed, not the governors. The govemment's power to censor the press was abolished so that the press would remain forever free to censure the government. The press was protected so that it could bare the secrets of govemment and inform the people. Only a free and unrestrained press can effectively expose deception in

government. And paramount among the responsibilities of a fiee press is the duty to prevent any part of the govemment nom deceiving the people and sending hem off to distant lands to die of foreign fevea and foreign shot and sheli. In my view, far from deserving condemnation for their courageous reporting, The New York Times, the Washington Post, and other newspapers should be commended for serving the purpose that the Founding Fathers saw so clearly. In revealing the workings of govemment that led to the Vietnam war, the newspapen nobly did precisely that which the founders hoped and trusted they would do.. .''O

Freedom of the press and of information is in itself a question of national secunty, for

such fkeedom is the very founhtion of a tmly democratic political system.

The application of f i r t amendment rights to remote sensing regdations does not

necessarily entail a denial of remedies to the American govemment in limiting imagery

at times of national security risks. Government could attempt to obtain a federal court

injunction limiting the publication of imagery. In this case the prior restraint doctrine

argues that "injunctions against speech should be disfavoured. " la' WMe injunctions

are disfavoured they are not impossible to obtain. In the case of United States v. The

Promessive, 1nc.,l8* the United States govemment did obtain an injunction restricting

publication. As Justice Warren (District Judge) wrote in his decision,

... In the light of these factors, this court concludes that publication of the technical information on hydrogen bomb contained in the article is analogous to publication of troop movements or locations in time of war and fails within the extrernely narrow exception to the rule against prior restraint .

lS0 N.Y. Times Co. v. United States, 403 US. 713, (1971).

See J.N. Moore, F.S. Tipson & R.F. Turner, National Security Law (Durham, NC: Carolina Acadernic Press, 1990) at 977.

182 467 F.Supp. 990 ( W B . Wis. 1979).

The important point here is tbat the First Amendment p ~ c i p l e would c k @ the

reasons used for limiting imagery publication. Limitations could only result nom an

injunction. An open court debate over image publication restraints, where ail parties

could voice their concems, would result. The advantage obtained is that of stabsty and

predictability . The principle would make the regulato ry structure immune from

whimsical political change, another dissuasive force to large investments. The resulting

regulatory stability, clarity and predictability would enhance the competitiveness of

American remote sensing image providers . For the American Government the

injunction process is however a doubh edged sword since there is a pemasive nsk in

attempting to block publication of sensitive information. As Thomas S. Martin (then

deputy assistant attorney general for the Civil Division) wrote in commenthg the case

of "The Progressive" :

the principle difficulty is that the govemment must confirm the nature and accuracy of that which it wishes to keep secret. Once the govemment takes this action, the stakes become enormously high. Wbat one then has is not an article that some countries WU pay attention to because it might be right, but an article that every country will pay attention to because it is nght. If it is in fact published or otherwise distributed, the damage resulting is increased ge~rnetrically.'~~

lg3 Thomas S. Martin, "National Security and the Fint Amendment: a Change in perspective" [June 19821 68 A.B.A.J. 680, 683. See also Vincent Blasi, "Towards a Theory of Prior restraint: The central linkage" (1981) 66 Minn. L. Rev. 1 1 ; Stepher R. Barnett "The puzzle of Prior restraint" (1977) 29 Stan L. Rev. 539; E. Schmidt, "The Espionage Statutes and Publication of Defense Information" 73 Colum. L. Rev. 929 (1973); Thomas 1. Emerson, "The Doctrine of Pnor Restraint" (1955) 20 L. & Contemp. Probs. 648; John Calvin Jefferies Jr., "Rethinking Prior Restraint" (1983) 92 Yale L.J. 409; William T. Mayton, "Towards a Theory of First Amendment Process; Injunctions of Speech, Subsequent Punishment, and the Cost of the Prior Resvaint Doctrine" (1982) 67 Corne11 L. Rev. 245; Frederick Schauer, "Feu, Risk and the First Amendment:

This thesis argues that the term "national security" is so nebulous and imprecise

that it renders the regulation unconstitutional, 18' yielding "a fortiori' another reason

for the r e g latory modification herein espoused. Again, w hat must be avoided, and this

can never be overly stressed, is the danger, inherent in the present regulatory structure,

of the use of "national security concems" to restrict freedom of expression and fkeedom

of the press.'*' The "national security" handicap must be abolished fiom the

regulatory structure for proper market development to occur. "National Security"

concems can best be protected by a viable well structured market composed of

consciencous corporate citizens. The threat of the loss of access to the American space

market for irresponsible use of space technology can achieve much more than any

ambiguous coercive measures.

Furthemore the "national security" concept is an inneficient way of replating

the misuse of data. Misuse of data is a problem occuring on the consumer side of a

commercial equation and not on the provider side. Therefore the American govemment

cannot regulate &ta use by applying a nebulous "national security" concept to licensing

regulations. Market entry bamers cannot ensure proper data use. Also export licenses

Unraveling the 'Chilling Effect'" (1978) 58 B.U.L. Rev. 685.

'" Federal Register, Vol. 52: 132 at 25968.

las See also G.M. Krarner, "The First Amendment of Viewed from Space: National Security Versus Freedom of the Press" (1989) ADAS at 339. Amencan constitutional requirements on remote sensing can also be seen as regulating content to ensure rights of pnvacy. Overhead observations could be interpreted by courts as an unreasonable search.

regulate which foreign entity has access to this technology. Hence, the question of

foreign access to this technology should not be a critereon of choice in granting an

operating license as it creates a regulatory redundancy. A teleological analysis of the

"national security" concept thus strenghtens the argument for its deletion from the

licensing regulatory structure.

CHAPTER 4 SECTION 3 SUBSECTION II B-1-b-II:

SEIZURE:

There are specific replations which edicts various enforcement procedures if

the licensee fails to comply with the Land Remote Sensing Commercialization Act. One

of these procedures is the ability to seize "any object, record, or report if there is

probable cause to believe that such object, record, or report is being or is likely to be

used to commit a vi~lation". '~~ The administrator then issues the licensee a Notice

of Seinire (NOS).I8' Within thirty days after receipt of said NOS the licensee may

request a hearing . lS8 The administrator then has a discretionary ability to decide

whether or not to return the seized items to the licensee pending the outcome of the

hearing.189 It is doubdul that the Administrator would exercise his discretion in

.

186 Rules and Regulations, supra note 101 section. 960.13 and 960.13(c).

lS7 Rules and Regulations, ibid section. 960.16(a).

lS8 Rules and Regulations, ibid Section 960.16@).

lS9 Regulations, S. 960.16@).

fàvour of the licensee. If the Administrator has gone through the process of issuing a

NOS it is because he believes to have probable cause for doing so and wiU not negate

his previous action or weaken his position before the hearing by exercising his

discretionary power in favour of the licensee. In this light, the discretionary power of

the administrator is illusory, a mere shadow and simulacmm of justice. The result is

an arbitrary seirure where the seized party must then fight to get his property back.

From this standpoint, the process is wrong and u n j ~ s t . ' ~ ~ What is accompiished by

the current regulations is a reversa1 of the burden of proof. When the weak must be

protected fiom the strong a reversa1 in the burden of proof can be a usefuli procedural

tool as it is used for reasons of equity. This is however not the case. In the subsequent

hearing the licensee must prove that the NOS was wrongfùiiy issued and abusive. The

inclusion of First Amendment rights in the regulatory structure would necessdy entail

a correction of the seizure rules.

Regulations concerning any seizure must also respect limitations imposed by the

Fourth Amendment. Before a seinire could be carried out the Administrator would be

obliged to obtain a warrant from an impartial magistrate after proving probable

cause.191 This thesis argues that court review pnor to a seizure is just, equitable and

proceduraliy correct. By cancelling a discretionary use of administrative power the

system becornes more transparent and predictable. The result is a better climate for

lW The principle here being that no one cm do justice to oneself. It dates back to antiquity and has endured over tirne.

191 See Marvland v. Macon 472 U.S. 463, 468 (1985); Zurcher v. Stanford Daily, 436 U.S. 547, 565 (1978).

market development; hence strenghtening the Amencan position within the global

indus~y of space based remote sensing image providers.

CHAPTER 4 SECTION 3 SUBSECTION II B-1-b-III:

CONTROL AND JURISDICTION:

The Land Remote Sensing Policy Act provodes a "control and jurisdictionU

criteria in the Iicensing regime for future private remote sensing satellite systems.'*

It is expressly forbidden for any person who is subject to jurisdiction or control of the

United States to operate a private remote sensing space system without a licence.19'

The cnteria of "subject to the control or jurisdiction of the United States" is to be

interpreted by taking into account the location of operations, assets, persomel, and

other such factors.lg4 Govemment jurisdictional control is defined in the regulations

as apply ing to:

(a) An individual who is a citizen of the United States;

@) A corporation, partnership, association or other entity organized or existing under

the laws of the United States or any State, territory or possession thereof; or

'92 L.R.S.P.A. supm note 129 Section. 5621.

19) L.R.S.P.A. %idLi Section. 5622.

lg4 L.R.S.P.A., ibid Section. 5612(d).

(c) Any other private space system operator having substantial comections with the

United States or deriving substantial benefits from United States laws tbat support its

international remote sensing operations . Igs

This prohibition affects both direct operators and indirect operators (affiliates

or subsidiary companies). An affiliate is defied in the replations as king either any

legal person which owns or controls more than 5% interest in the applicant or licensee

or which is under common ownership or control with the applicant or Li~ensee.'~~

That is one who shares with the applicant or licensee a common owner.

Ownership cnteria are evidently very strict. A subsidiary company is defined

as king an entity whose controlling interest is held by the applicant or Licensee.19'

Licenses are to be issued by the Secretary of Commerce in consultation with other

appropriate govemment agencies . lg8

The current benchmark for foreign equity investment in an American remote

sensing company is 25% The Presidential Directive extabiishes that foreign interests

in American remote sensing companies are to be Limited and estabiished by the

lg5 Federal Register, Vol. 52: 132, at 25970, S. 960.2 Relevant connections include using a U.S. launch vehicle andlor platform, operating a spacecraft command and/or data acquisition station in the U.S., and processing the data at and/or marketing it from facilities within the U.S.

'% Federal Register, Vol. 52: 132, ai 25970, see aiso Rules and Regulations SUD^

note 101 section. 960.3.

l" Federal Register, Vol. 52:132, at 25971, see also Rules and Regulations SUD^ note 101 section. 960.3.

lg8 L.R.S.P.A., $ a m note 129 at ss. 5602 9120, & 5621.

Secretary of Commerce. The Secretary of Commerce has in tum left the application

of this mle to the National Oceanic and Atmospheric Administration who specifies

when issuing a license a 2596 foreip ownership limit on the license itself. This thesis

argues that the foreign equity investment rule is not only an anachronism, but conflicts

with the regulatory structure and with the commercia~tion goals of the Land Remote

Sensing Policy Act.

First, the 25% rule evidently dissuades foreign investment in Amencan remote

sensing companies. The rule reroutes foreign capital into the hands of foreign

cornpetitors, thus reducing the competitive advantage of American remote senshg

companies. The regulation therefore creates incentives for foreign systems to

proiiferate. This restrictive regulatory disposition therefore iimits the pool of capital

fiom which fmancing can be drawn. The freedom of private sensing companies to

obtain financing in foreign capital markets is curtailed. Consequently, a reduction in

the bargaining power of remote sensing operaton occurs. This is due to the fact that

they can only negotiate loans in the American fuiancial markets. The result is higher

hancing costs with a more expensive and less competitive end product. In this way

the mle contradicts the declared goal of the Land Remote Sensing Policy Act, which

is to maintain international leadership. Ig9

Another contradiction is illustrated in the following situation; section 960.2 of

the regulations provides that a license is mandatory for:

199 L.R.S.P.A., ibid Section 5601(3).

any person subject to the jurisdiction or control of the United States who operated a private remote-sensing space system either directly or through an afnliate or subsidiary.

For the purposes of these regulations a person, affiliate, or subsidiwy is subject to the jurisdiction or control of the United States if such a person is:

(c) any other private space system operator having substantial connections with the United States or denving substantiai benefits nom U.S. law that support its international remote sensing operatiom.

The regulations therefore require foreign remote sensing operators to get an American

lisence when their operations have a substantial American co~ection but not if they

substantialiy invest their money in American companies. This is illogical to Say the

lea~t.~'' This thesis argues that foreign investrnent is too important and complex to

be regulated by a simplistic 25% equity rule. The object of the regulation is to promote

the American remote sensing industry. A regulatory amendment dropping the 25 % rule

and welcoming foreign investments would have a double beneficial effect. Not only

would more money be available for American businesses but by the same stroke

investments would be diverted from foreign remote-sensing ventures. What must be the

object of the regulations is the effective control of remote sensing companies in

conjunction with the proper functioning of the remote sensing market. Protectionism

cloaked in nationalkm cannot achieve this. Foreign investment in American space

As Mr. Dennis Bumett of EarthWatch argued in the public meeting for regulatory review SUDIX, note 156, at 152 describing this contradiction ". . .we've got a big net here, and you al1 have to corne in there, and you can't operate unless you're licensed by us. Oh, by the way, a certain percentage of you can't get licenses because of your ow nership structure. y ou ' re a foreig n Company, yod re operating in the united Stated and now I'm sorry. well, you have to get a license, but you can't get a license".

based remote sensing companies should be subject to anti-trust regulations. The

critereon of choice for the review of foreip investment rnust be based on a marht

paradigm, that is maximitiag competitioa.

Foreign investments can be controiîed in the same way in which the foreign

ownership concept evolved for the airline iad~stry.*~~ Foilowing the air transport

industry model, foreign inves tments in American remote sensing companies would be

welcome subject to a reciprocal acceptance of American investment in foreign space

industries. In this type of replatory structure a more cornpetitive global market results

and foreign market penetration is facilitated through alliances. Furthermore the

regulation of these global alliances could more effectively be established through anti-

trust ptinciples than through NOAA regulations. Furthermore the use of an antitrust

regulatory model would have the added benefit of preventing horizontal integration of

the market. The present regulatory structure is unfominately silent on this point.

201 see Arlington, David T., "Liberalisation of Restrictions on Foreign Ownership in U.S. Air Carriers" JALC 133 (1993).

CHAPTER 4 SECTION 3 SUBSECTION II B-1-b-IV:

SIGNIFICANT AND SUBSTANTIAL AGREEMENT:

Any agreements entered into by the licensee with either a foreign nation, or an

entity or consortium involving foreign nations or foreign entities must be divulged to

the Secretary of Commerce? Two problems arise nom this disposition.

The first problem is that the Licence has an obligation to ver@ the corporate

structure and nationality of the person, be it physical or juridical, with whom he is

contracting. This obligation is quite onerous. Taken a step fiirther the licensee has to

ensure itself that any corporate structure modifications of its partners respect American

legislation. Foreign investment, whether it be the purchase of shares, or substantial

loan agreements in a partner of the licensee would also have to be controlled be the

Licensee. Other more subtle corporate changes such as the change in the effective

control of the board of directors of a Company could also be subject to scrutiny. Again,

the extraterritorial effect of the American legislation is clear.

The second, and more serious problem, is that there is no accepted definition

of what constitutes a significant or substantial agreement is?03 A high level of

uncertainty in the creation of foreign commercial alliances results, handicapping what

is nomaliy an efficient tool for foreign market petration. The regdations have a

--

2m L.R.S.P.A. S U D ~ note 129, section. 5622@)(6).

Zm In the Public meeting on regulatory review pnvate industry was very cntical about this ambiguity S U D ~ note 156.

definitional lacuna which must be adressed. Considering that sanctions for violating

licensing requirements cm be quite onero~s:~ a prudent administrator of a remote

sensing company could conceivably have all international agreements reviewed. This

is an unjust burden for industry to bear. Regulations edicting transaction review

should be completely cancelled or at least strictly limited to a few clearly defhed

transactions. If not cancelled the regulations should include at least a disposition

whereby, if it is uncertain whether or not a transaction should be reviewed, the

regulating authorities would simply need to be infonned of the transaction. Unless the

regulatory authorities then specifically inform the licensee of the need for a review

application within a specific and very short deadline the transaction would be presumed

not to require review. In this way a remote sensing operating company would not be

subject to the dilemma of dealing with an undefined regulatory variable. The

terminological imprecision of the regulatory disposition edicting the diwlgence of

information pertaining to significant and substantial agreements to the Secretary of

Commerce renders the disposition constitutionaly questionable. The term "signifkant

and substantial agreements" is, like the term "national security" so nebulous and

imprecise that it renders the regulatory disposition unconstit~tional~~~ yieldllig "a

fortiori" another reason for the amendment of the general regulations goveming

disclosures .

'04 Rules and Regulations, SUD^ note 101 section. 960.15.

205 Federal Register, Vol. 52: 132, at 25968.

CHAPTER 4 SECTION 3 SUBSECTION II B-1-b-V:

JURISDICTIQNAI, SCOPE:

Concems over the questions of jurisdictional scope address the effect of the

" sufficient connections with the United States " critena used to determine whether

juridical person is a legal subject of Amencan junsdiction. The question of junsdiction

pertains to the operators themselves and not to the space based assets. A satellite could

conceivably be registered in another country while its operators are subject to

American regulations. The theoreticai desirability of such a regulatory disposition lies

in the fact that it can ensure a level playing field for ali participants inside the dominant

American market for remote sensing data. It is, however, important to note that such

licensing requirements only apply to private enterprises, and herein lies its problem.

By excluding govemment owned remote sensing enterprises such as the French SPOT

satellites, the American regulations create two market entry categories .*O6 Market

entry is therefore faciiitated for govemment owned remote sensing enterprises and

rendered more difficult for private enterprise. This public - private distinctionin the

American regulations governing market entry requirements hhders privatisation of

foreign . remote sensing concems and therefore has an extratemtorial effect in

stnicturing the global market structure. The danger here is the development of what

appears to be a form of "passive coliusion" among govemmentaiiy controiied or

*O6 Federal register, Vol. 52: 132, at 25967.

subsidised remote sensing entities. Agah proper application of an anti-trust regdatory

system would be a more efficient method of market control.

CHAPTER 4 SECTION 3 SUBSEXTION II B-1-b-VI:

RESPECT OF INTERNATIONAL OBLIGATIONS:

In issuing the License the Secretary of Commerce must determine in writing that

the licensee wiU respect American international obligations and national security

con~erns.~~' The criteria of capacity to respect international obligations and

particularly the national security aspect thereof introduces a subjective evaluation

procedure for the applicant. The international obligations of the United States in this

case are first that the licensee must demonstrate his capacity to make available to the

government of a sensed State unenhanced data as soon as such data is available and on

reasonable terms and conditions.208 Second, the Licensee must also provide for the

disposition of the space based assets after their useful 1ife'O9 in such a manner as to

207 L.R.S.P.A. suma note 129, Section. 5621(b).

208 - Ibid., Section. 5622@)(2).

209 .Y Ibid S. 5622@)(4). This international obligation results from the "Treaty on Pnnciples Goveming the Activities of States in the Exploitation and Use of Outer Space, including the Moon and other Celestial Bodies" article VI, and the "Convention on the International Liability for darnage caused by Space Objects. Article II which edicts a regime of absolute liability of States for damage caused by space assets to objects on the surface of the earth or to airplanes in flight, and article III which creates a regime of liability of States based on negligence for darnage caused by space assets elsewhere than on the surface of the earth.

be satisfactory to the President of the United-States. Additionally the Secretary of

Commerce shaii receive complete orbit and data collection characteristics of the system

and of any modification or deviation thereof."* There is therefore additional

executive authority here .

In issuing a license the national Oceanic and atmospheric Agreement does not

apply a critereon of business or financial viability of the operation. The granting of

a license is contingent upon the technical ability of respecting national security

concems and international obligations. There are no criterea of public convinience or

of fit w U g and able as in the airline industry.

CHAPTER 4 SECTION 3 SUBSECTION II B-1-b-W:

SANCTIONS:

The possible sanctions for the licensee in the event he should fail to meet his

obligations are quite severe Civil penalties of up to $10,000 per &y can be issued by

the Secretary of Commer~e.~~' The secretary of Commerce may also either tenninate,

modify, or suspend licenses if it is deemed that the iicensee has substantiaiiy failed in

210 Tbid., Section. 5622(5).

*11 Tbid., Section 5623(a)(3): "each day of operation in violation of such licenses or regulations constituting a separate violation. "

its obligations either in failing to execute any international obligations of the American

govemment or in violating any national security concems of the United States?

It is important to stress that the issuing of a licence, and therefore market entry,

cannot be prevented by the Secretary of Commerce on the sole basis of protecting

Amencan licensees from further ~ornpetition,~'~ providing that the licence applicant

is subject to the jurisdiction or control of the Unites States. These are very broad

criteria of application, giving in fact sweeping powers to the Secretary of Commerce,

and they mise several points of concem regarding financing, jurisdictional scope, and

First Amendment concerns.


RADIO FREQUENCY LICENSES:

The operation of a satellite presupposes communications links. These are

necessary to control the satellite and its equipment (commonly referred to as the uplink)

and to receive the data transmitted by the satellite (commonly referred to as the

downlink). A separate and distinct license must be obtahed by the satellite operator

from the Federal Communications Commission (FCC). The 1992 Land Remote Sensing

Policy Act edicts that the Secretary of Commerce must respond to an operathg

212 Ibid., Section 5623(a)(2).

213 - Ibid., Section 562 1 (d).

licensing application within 120 days of the receipt of such application.*14 This t h e

Mt however does not apply for the FCC License application. According to Scott

Pace, technical coordination issues are not a major concem for radio fiequency

iicensing. The main problem creating a market entry banier results from the fàct that

the FCC has not established a license fee schedule structured for the economic reality

within which a remote sensing satellite operator must ~perate.~'' The only FCC fee

schedule established has been for communication satellites and represent a six-figure

market entry fee.216 Market entry fees for radio fiequency licenses must be different

than those for communications satellites since the size of the market in remote sensing

is considerably smailer that the communications satellite market. The following chart

iUustrates this difference in market size for the year 1995.

ibid Section 5621(c). -

215 Pace, suma note 140 at 4.

*16 b i d L at 4, 5.

~ DOMESTIC REVENUE FROM COMMERCIAL SPACE ACTWI'TIES

ACTLVfl'Y AMOUNT MARKET A SEARE

Sat Comm.Svc. 2,750 USDB (1995) 37 %

Satelite Mfg. 1.70 USDB (1995) 23%

Launch Services .6SO USDB (1995) 9 %

. -

Remote Sensing .316 USDB (1995) 4 %

TOTAL 7.416 USDB (1995) 100 %

>


EXPORT LICENSE:

The American govemrnent has established a policy pertaining to foreign access

to remote sensing capabilities. The policy attempts to strike a balance between "the

development of industrial competitiveness in the field of remote sensing space

capabilities whiie at the same time protecting US national security and foreign policy

inter est^".^^^ This poiicy regulates the exportation of remote sensing capabilities and

therefore the capacity of foreign entities to gain quick market entry by the purchase of

*17 http: Ilwww .dm govloasclintro. html at 2.

218 "Foreign Access to Remote Sensing Space Capabilities" (1994) 10 Space Policy at 243.

space assets. Space based remote sensing systems have k e n classified "among the most

valuable United States national secunty assets"?19 The scope of this policy not only

includes access to the overhead imagery systems themselves but also to export licenses

for certain items which are contained in the United States munitions List (USML), and

the operating licences granted under the Land Remote sensing Policy Act. The licences

are mutually exclusive. In other words, the granting of an operational licence does not

relieve the licencee from the obligation to obtain a separate export licence if the need

arises.

According to the stated policy the American government shail consider export

Licences on a case by case basis. Export agreements must ensure the purchaser's

"willingness and ability to accept commitments to the United States govemment

conceming sharing, protection and denial of products and data".p0 Constraints can

also be imposed by American authonties concerning resolution, geographic coverage,

timeliness , spectral coverage, data processing , exploitation techniques, tasking

capabilities and ground architecture^."^ It is clear that the purchase of Arnerican

remote sensing space technology presupposes acquiescence to American extratemtorial

legislation.

*19 U.S. Policy on Foreign Access to Remote Sensing Space Capabilities, HR 6133 (10 March 1994).

U.S. Policy on Foreign Access to Remote Sensing Space Capabilities, HR 6133 (10 March 1994).

ni U.S. Policy on Foreign Access to Remote Sensing Space Capabilities HR 6133 (10 March 1994).

Licences are valid for a specific p e n d of time and are subject to foreign

ow nets hip requirements as desc ribed above. Any derogation from this principle is

possible subject ody to the "explicit permission of the Secretary of Comrner~e" .~

The secretary of commerce exercises in this case strong discretionary powen. Such

powers must however be exercised in con fo rmity w it h various international commercial

agreements. The classification of remote sensing technology as a "munition" is

exceptional and is a unique c haracteristic of the regulatory structure promulgated by

the American go~ernment .~ It is important to stress that the attribute "munitions"

only applies to the technology, hardware, and software, but not to the data itself. A

reclassification to the Commerce Control list of dual use technology could ease market

entry , making the " licensing process more predictable and timely for exporters" .='

The present regulatory structure ignores the fundamental differences between

a r m s and remote sensing technology. First, irrespective of their defensive or offensive

purpose, arms are by definition designed to cause harm. On the other hand, remote

sensing technology is designed to obtain information which is quickly becoming a

fundamental feature of modem society. Second, the armament market is a govemment

driven market based on public expenditures. The commercialization of remote sensing

presupposes its transfer from a govemrnental market to a commerciaily driven market.

U.S. Policy on Foreign Access to Remote Sensing Space Capabilities HR 6133 (10 March 1994).

" Pace, supra note 140 at 4.

rU Ibid. at 4.

The removal of remote sensing equipment from the USML is therefore logicaily

required. Furthermore, there is a redundancy in regulations concerning exports. This

area is overly regulated considering the overlapping effect of the USML, the CCL, the

national security concept, the foreign agreement and foreign investment review

processes. There is currentiy an unnecessary amount of bureaucracy aimed at

protecting Amencan interests from an iii dehed danger. The Cold War is finished and

paradigms have changed.

The needs of the market structures must be adressed. Licensing procedures must

be streamlined and clarified. There should be one application procedure in only one

government office for both the operating license and radio fiequency license. A

simplification in administrative procedures would certainly ease market entry.

CHAPTER 4 SECTION 3 SUBSECTION II Br

MARKET ENTRY: GROUND STATION CONTRACTS:

Market entry can also be achieved through foreign ground station operation

contracts. Due to the nature of the technology, remote sensing satellites cannot be in

constant communication with their principle ground station. Furthermore, the nature

of the competition demands that information be available in real time. This means that

data must be available for analysis and sale as quickly as possible after the satellite has

actuaiiy sensed the subject under examination. The preservation of data on the satellite

for communication to a single main ground station is therefore commerciaily

undesirable for two reasons. First, such data storage on board the space platform

would require a more cornplex and expensive satellite thus rendering the data in tum

more expensive. Second, this method of data storage and delivery would result in

long delays in information relay. The satellite operator must instead 'negotiate a

technical partnershipWm to be cornpetitive in real time deiivery of data. This is a

technological imperative which forces satellite operators to have international partners.

In this case market entry is purchased by the acquisition of commercial nghts by

foreign ground stations who cooperate with the American cornmercialization program.

The basic access fee for a foreign ground station is 1 million USD? If a station

desires serial transmission of data an additional cost of 150,000 USD is charged

thereafter for eac h addi tional station.z7

Such a procedure is fine as far as it goes, but it does not go far enough to

ensure a proper information market structure. The ground station license mode1 is

particularly good for the Americans, it does however have certain lacunae.

First, foreign ground stations can only receive data that the operator has decided

they should receive. The operator of the space platform thus maintains complete

control over what is sensed from outer space. This concept is calied "shutter control"

PS P. Salin, "Landsat Contracts Signed by U.S. Agencies with Foreign Ground Stations" (1992) 41 German J. Air & Sp. L. 165.

P.A. Salin, "LANDSAT Contracts Signed by US Agencies with Foreign Ground- Stations: Commercial Remote-Sensing from NASA Scientific Expenments to EOSAT Pnvate Endeavours" (1992) German J. Air & Sp. L. 165 at 174.

and is in fact a form of censorship. Furthemore, the product, Le. data, which is

commercialised or sold by the foreign ground stations is subject to the control and

commercial policies established by the American owner of the space platform, which

are in tum influenced by the American regulatory regime. These agreements speciQ

that they be governed by the laws of EOSAT's State of incorporation, that is

Deleware? The result is an extraterritorial effect of American data collection

poiicy .

Second, EOSAT contracts with foreign ground stations grant "nonexclusive"

sales rights to these new commercial partners. As P. Salin points out in his article

"overlapping and possible direct competition" From neighbouring stations becomes a

r e a l i ~ . ~ ~ The ground stations in India and Pakistan, or those in Argentina and Chile

are now in direct competition with one another. EOSAT therefore not only promotes

the commercialization of the data but also structures the cornpetitive behaviour of

foreign ground station sales of Landsat data.

Third, this door to market entry can only be used by a Limited number of

participants. A finite nurnber of ground stations are required to run a remote sensing

system. If the space platform operator aiiows too many foreign ground stations to

operate, the economic viability of each station and consequently of the entire systern

could be jeopardised.

ns Ibid. at 174.

" Ibid. at 173.

From an economic point of view, the danger in a vertically integrated market

structure would be to find in a ground station contract a form of restrictive distribution

arrangement. A restrictive distribution arrangement is one where one or both of the

parties accep limitations on the scope of managerial discretion with respect to certain

marketing practices, such as the selec tion of sales territones, customers, products, or

p r i ~ e s . ~ * In establishing ground station agreements, EOSAT (or any other private

remote sensing operator for that matter) must within the contract control the sales of

the data by the ground station operator in order to protect its operating license

requirements. Some of these licensing requirements call for a certain form of price

control."' Other operating requirements involve a governmental review and

consequentiy corporate control of substantial agreements with ceRain clients, as

described earlier. These ground station agreements must therefore transfer certain

decision-making authority directly to the main-operator in the United States.

Entry into the remote sensing data provider market via a ground station

contract has the advantage of king relatively inexpensive as satelite development and

launching costs are avoided. The disadvantage of this form of market entry is that it

L. E. Preston, "Restrictive Distribution Arrangements: Economic Analysis and Public Policy Standards" (1965) Law & Contemporary Problems, 506; see also Cornanor, Williams S., " Vertical Price fixing, vertical Market restrictions, and The New Antitrust policy" (1985) vol. 98 Harvard Law Review, 983; Hay george, "Vertical restraints After Mosanto" (1985) vol. 70 Comell law Review, p. 4 18; Williamson, Oliver E., / Assesing Vertical Market Restrictions; Antitrust Ramification of the transaction Cost Approach" University of Pensylvania Law Review (1979) Vol. 127, p. 953.

See L.R.S.P.A., suDr9 note 129 Section. 5622(bj(2j.

is at best a limited enterprise. The ground station is subject to the regulatory

requirements of the satelite system operators country. The foreign ground station

operator is therefore subjected to the extratemtorial application of a foreign regulatory

system. This king said, however, ground station contracts can be important an

important tool of market development.

First, on an international public level, the operation of a ground station can

promote stmctumlly the international market by allowing developing nations to obtaia

an inexpensive participation in the space industry. By investing in ground stations and

purchasing rights to obtain, or market remote sensing data, developing nations

participate in financing space endeavours. In this way space becomes more accessible

to developing nations who can then use this investment as a tool of technological

development for a modern market industrial base.

Second, on a private level, ground station contracts can be a form of market

petration for private space imaging providers. It can be an inexpensive method of

establishing an international sales network as foreign investors wiU attempt to rnaximize

the retum on their investment by promoting the use of space based imaging in their

part of the world.

CHAPTER 4 SECTION 4

MARKET BALKANISATION:

The 1984 act created a market in which data was sold for a profit. AU

institutions, be they govemmental, educational, public or private were treated in the

same manner. It was felt however that data was becoming too expensive as demand

was decreasing. The 1992 Land Remote Sensing Policy Act reoriented the American

policy, ailowing low cost access to public and govemment bodies for non commercial

data use.WZ This created very strong market divisions. The Amencan govemment is

in reality restricting access to its intemal markets in an effort to strengthen its

dominance of the international market.

The 1984 Land Remote Sensing Commercialization Act contained a disposition

edicting that data not only be made available to ail potential users in a non-

discriminatory manner, but also that this be done in a manner consistent with

applicable antitrust l a ~ s . " ~ The 1992 Land Remote Sensing Policy Act is notably

silent on the same point, omitting any specific reference to the application of antitrust

laws to data dissemination. Although badly done the 1984 act was more concerned to

=* 15 U.S.C. 5601 (13) edicts "To maximize the value of the Landsat program to the American public, unenhanced Landsat 4 through 6 data should be made available, at a minimum, to United States Govemment agencies, to global environmental change researchers, and to other researchers who are financially supporteci by the United States Govemment, at the cost of fulfilling user requests, and unenhanced Landsat 7 data should be made available to al1 users at the cost of fulNling user requests".

233 15 U.S.C. 4203 0).

create a free market, while the 19- act displays a less rigorous approach to ensuring

an open markt in the United States for space based remote sensing data.


INTERNATIONAL FREEDOM OF INFORMATION AND UNITED STATES

LAW

International law concernhg Freedom of information can be applied to the

United States remote sensing policy pertaining to market regulations. As was seen

earlier, the American position regarding the legality of remote sensing data acquisition

was based on the international right of freedom of information. This cogent argument

defeated arguments of the developing States who wished to claim sovereignty rights

over data. The right to gather data, coupled with Article V of the Outer Space Treaty,

which edicts that international law applies to outer space activities, ineluctably leads

to the application of the major international *dom of information covenants to the

remote sensing industry. The relevant covenants are The Universal Declaration of

Human R i g h t ~ , ~ ~ and the International Covenant on Civil and Political Rights?

The European Convention for the Protection of Human Rights and Fundamental

Freedoms would additionally apply to the European c~mpetitors."~ The American

-- -

234 U.N.G.A. Res. 217 0, 10 Decernber 1948.

" U.N.G.A. Res. 2 2 0 0 0 , 16 December 1966, art. 19.

231 U.N.T.S. 221 (1955), art 10.

position justifying remote sensing was based on a restrictive application of these

documents. These legal texts however proffer rights which are much broader in scope

than the Americans were willing to admit. It can be argued fiom the above cited texts

that there exists more than a simple right to seek data and information. A right to

impart information and data can also be said to exist. The importance of this argument

lies in the fact that the exercise of a right to impart or communicate data presupposes

international data market permeability .

The rights to acquire and impart data are negative nghts, the logical corollary

of which is the positive right to acquire space technology. Equal access to and use of

outer space for all nations can only occur if there is a wiilingness of the major space

powers to share their acquired knowledge and technology. The benefits of this

argument are twofold. The international access to space technology not only eases the

financial stress of space technology development for the space powers but dso eases

market entry for the developing nations.

The international concem restricting this Freedom rests in the argument of the

security of States. A mechanism must therefore be found which can balance these two

concems. International commercial access to space markets must be secured even as

the national security concems of the space powers must be addressed.

CaAfTER 4 SECTION 6

REMOTE SENSING AND GATS:

The Uruguay Round of the GATS expanded the economic impact of the

agreement by including services. An annex was also ùicluded regardhg space based

telecomrnunications. GATS is designed to reduce protectionism and favour international

cornpetition. Two important concepts of international trade can now be applied to space

tec hnology , these are the Most Favoured Nation Principle (MFN), and the National

Treatment p ~ c i p l e . National security concems are also addressed in the GATS as they

are acceptable exceptions to the p ~ c i p l e s just noted?' Furthemore, developing

nations' concems have also been addressed in the GATS to protect developing markets

aliowing a progressive integration with stronger markets."'

By expanding the GATS to the remote sensing industry international data trade

could be harmonised. Present American regulations are vague. Nebulous replations

do not encourage investments. The inclusion of remote sensing in the GATS would

ensure constant application of American regulations to the international market and new

GATS, Arts. XXI & XIV.

Developing nations could be reluctant about the effect of the GATS on a protected market. See R. Janda, "Passing the Torch: Why ICA0 Should Leave Economic Regulation of International Air Transport to WTO" (1995) XM Ann. A u & Sp. L. 409 at 427. Such a concem would not occur for developing states in the space sector because firstly these do not have space industries to protect and without access to the large Amencan markets it is impossible for them to develop space industries.

market entrants. The result would be industrial alliances based on economic paradigms

and not political goals.

The GATS also has antidumping reg~lations?~ One may ask whether the

Land Rernote Sensing Poiicy Act which makes raw data available at below production

costs would violate the GATS dumping regulations. After all, it is clearly stated in the

American legisiation that the data availability policy was enacted to favour the United

States data enhancement industry and maintain American leadership. On this point

Serge Parisien argues that the American legislation would not be considered dumping

since the United-States has consistently low prices in both its domestic and

international markets?'

*' GATS, Art VI.

240 S. Parisien, SUD^ note 92 at 280.

CONCLUSION

A new information gathering, access and distribution paradigm has developed.

The international law of space was created in an environment permeated by the

paradigm of public State action. States were not only the sole actors but also were

necessarily funding the entire adventure. The motivations for going into space were

polùicaliy saturated with national chauvinism. The American military industrial

complex initially had a monopoly on the development of space technology. Private

commercial industry and thus private money markets were excluded fiom space

adventures . Initially , the commercial economic market paradig m could not fùnction in

space due to the high nsks and uncertain economic retums. The reality of the world

today is very different. The epoch of big government budgets for purely exploratory

space science projects is gone. The market environment is now a MUST for continued

space use. Commercialization is presently the key to space technology development.

The success of future commercial space ventures wiil depend upon the creation of an

efficient, transparent, and predictable market structure.

Space product markets must be liberalised. Reciprocity and freedom of trade

wilî ensure a more homogeneous economic development. Medium and small seize

space actors, if they are to be successfÙ1, must have access to large markets, and in

particular to the dominant intemal American space market. Market entry must therefore

be facilitated. Herein lies the key to a future international market structure. In a

manner similar to that by which the air transport industry was liberalised entry to the

large Amencan market can be used as a motivating factor to Liberalise the space market

policies of other nations. Access to large global markets can only be beneficial to ail

space participants. It therefore logicaily foiiows that the present market balkanization

is countefproductive even if cloaked in national chauvinism.

International and domestic laws must therefore evolve and change to absorb this

new paradigm. Freedom of use of outer space means Little if one does not have the

corresponding financial capacity to exploit the international space market. The freedom

of use of outer space as edicted by the Outer Space Treaty has consistently been

interpreted as a negative freedom, namely the freedom fiom constraints in international

law to physically achieve and maintain orbit. The same negative libertarian philosophy

has also been applied to the entrenchment of the fkeedom to collect data by space based

remote sensing satellites. The negation of national boundaries in space is a negative

libertarian construct. Such a system of liberties is fine as far as it goes but it dws not

go far enough. A positive Liberty of access to technology and to the corresponding

market is required for an efficient and equitable exploitation of this resource. Anything

else would tirnit space activity to those States with large intemal markets. As a matter

of fact, by using an expansive interpretation of the space legal documents it could

logicaliy be argued that market access is in fact a concept of international law. The

benefit of all of mankind could be interpreted as a freedom of ail mankind to bave

access to space products. The logical corollary to freedom of information gathering is

fkeedom of the dissemination of such information. Commercial dissemination of data

presupposes market entry.

This change in approach also necessitates a fundamental change in the

institutions of space law. Space markets must be properly regulated. The American

reguiatory culture must free itself of its Cold War legacy. Military and security

considerations are not conducive to the proper functioning of commeercial structures.

A free market cannot properly operate without basic economic rules.

UNCOPUOS w2s fine when it was created but it is not a forum conducive to

proper regulation of an international market for space activities. UNCOPUOS is an

inherently political creation to which market paradigms are foreign.

Space technologies are becoming an important aspect of international trade.

This paper argues that the WTO through the GATS is a proper forum within which a

better market based regulation of space exploitation may be conducted. Universal

access to space technology markets is an essential condition of efficient space

exploitation for the benefit of all of mankind.

The continuum of application of military needs on the one hand and of

commercial requirements on the other must not be used as an excuse to close off

markets on the pretext of national security concems. The evolution in air transport

regulation through the open skies concept, and of foreign ownership of airlines are

prime examples of the failure of this argument. In remote sensing, "open skies" is a

usefbl concept meaning that space participants can collect OH1 data as it wants; but a

completely "open skies" theory must also include not just a right to freely collect data

but also to fieely disseminate, and impart data in all markets. Again, this presupposes

the right to purchase remote sensing equipment and to have access to intemal national

markets.

The failure of the first American commercialization attempt can additionally be

traced to the fact that the industry was only partially commercialized. Export

restrictions on remote sensing equipment were maintained, and foreign fioancing was

severely limited. Furthermore, both 1984 and 1992 legislations possessed vague

terminology creating uncertainty , and lack of transparency . The results were restrictive,

in effect reducing entry and creating market balkanization.

The American regulatory dispositions created a protectionist system where entry

to the market is very costiy and nebulous. The Amencan regulations are characterised

by the high discretionary powers given to the S.O.C. and by their extraterritorial

effects. This thesis has displayed a number of problems within the current Amencan

regulatory system. These are:

First, the subsidy of a monopoly. The Amencan govemment gave the Landsat

system to Hughes and Martin Marietta. This confîîcts with stated american policy

against subsidies and amounts to protectionism for American industry.

Second, overbearing control in the name of "national security". The technology

now bears the burden of its origin. The "national security" concepts must be removed

fiom the regulatory structure. The "national security " concept is redundant,

ambiguous, and a barriet to market enw. The American govemment is attempting to

control misuse of data through a nebulous concept which regulates market entry. This

is counterproductive and wrong. The concept has the effect of hindering the

development of the intenial American remote sensing industry and has no effect

whatsoever upon the actual misuse of data. It is an anachronism from a Cold War

regulatory culture. The control of use of remote sensing data through the creation of

an international registry of remote sensing data purchasers is a more efficient and

thorough marner of adresshg questions of national and international secunty. This,

however, presupposes that the concept "national se~urity'~ is redefiwd as behg "misuse

of data". An international registry of data purchasers is more efficient because what

must be regulated is the misuse of the data and not the access to the market as a

provider of &ta. It is more thourough because as the technology is no longer the

exclusive domain of the Americans their regulatory structure cannot cover a global

space based remote sensing data industry. Any attempt to do so by an intemal

American regulatory structure can only be countreproductive to the development of a

proper market structure. Transparency of use is the best safeguard against misuse.

Data and information do not kill, people do.

Such a registry has the added advantage of respecting concepts of fieedom of

information, a key concept forming the basis of an information based society.

Third, the replatory structure suffers from the absence of anti-trust

applications. Various forms of vertical and horizontal market integrations and

alliances, both tacit and overt, direct and indirect are o c c u ~ g . These must be

properly regulated before they become a problem.

Fourth, There is an unnecessary regulatory burden in obtaining a space based

remote sensing operating license. The information to be subrnitted with an application

must be reduced. Launch requirements must also be rernoved from licensing

conditions.

With aîi this king said one must however keep in mind that the market for

space based imagery is weak and that it is an infant industry. Investments are stiü very

speculative in nature. Although the American plicy does assure the continuance of

the Landsat technology the continued subsidy of EOSAT must not become a barrier to

competitive commercial developrnent. There does appear to be a "demanci" problem

in the market equation. The present technology does not appear capable of giving

consumers real time imagery upon demand. Market regulatory structures however

must not exacerbate a difficult situation.

Commercialization is necessary to make space avaiiable to all. This is not only

consistent with the principles established in the Outer Space Treaty but is the best way

to achieve the treaty's ends in a modern information based market society. This

is a nascent industry where the main participants are stiii jousting in an unstructured

global environment to estabiish their national market positions.

United Nation principles on remote sensing must also be changed to respect the

changing paradigm of space commercialization wherein the military and non military

dichotomy wiii cease to exist. A change of forum to the WTO would not oniy give the

UN principles an economic dimension but result in a more effective enforcement

mechanism for universal access to space. Countries would no longer be able to persue

unfai. trade practices in the remote sensing industry. The time is now propitious for

the elabration of a market environment regdation for space exploitation whereby

market entry would be facilitated.

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A/RES/41/65 (1987).

58) Convention on International Civil Aviation, December 7 1944, Tias, No. 159 1,

3 Bevans, 944, 15 U.N.T. S. 295, hereinafier referred as "Chicago Convention

of 1944",

59) Agreement on the Rescue of Austronauts, the Retum of Astronauts and the

Return of objects Launched into Outer Space 19 U.S.T. 7570 T.I.A.S. No.

6599, 672 U.N.T.S. 45.

60) Convention on International Liability for Damage Caused by Space Objects,

opened for signature, 29 March 1972, 24 U.S.T. 2389, T.I.A.S. No. 7762, 961

U.N.T.S. 187

61) The Convention on the Registration of Objects Launched into Outer Space,

opened for signature, 14 January 1975, 28 U.S.T. 695, T.I.A.S. No. 8480,

1023 U.N.T.S. 15

62) Treaty on P ~ c i p l e s Govemhg the Activities of States in the Exploration and

Use of Outer Space, Including the Moon and Other Celestial Bodies, 27

January 1967, TIAS No. 6347, 610 UNTS 205.

63) Permanent Sovereignty Over Natural Resources, U. N. G. A. 1803 (XVII), UN

GAOR, Supp. (No. 17) (1962).

64) 1948 Universal Declaratioa of Human Rights, G.A. Res. 217 A (III) UN

GAOR rn 1, U.N. DOC. A ~ O (1948)

INTERNATIONAL CASES

65) Steamship Lotus case (France v. Turkey (1927), P.C.I.J. Ser. A., No. 10.

AMERICAN LAWS

66) The Land Rernote-sensing Cornmerciaikation Act, 15 U.S.C. U.S. Policy on

Foreign Access to Remote Sensing Space Capabilities.

67) Land Remote Seming Commercialization Act of 1984, sanctioned july 17 1984,

15 USC 4201.

68) Land Remote Sensing poiicv Act of 1992, sanctioned October 28 1992, 15 USC

5601.

69) US Policy on Foreign access to Remote sensing capabilities, HR 6133 (March

10 1994).

70) Rules and Regdations Federal Register, Vol. 52: 132, p. 25966.

71) Trading With the Enemv Act 1917, 6 October 1917, ch. 106, 40 STAT.411.

AMERICAN CASES

72) Maryland v. Macon 472 U.S. 463 (1985).

73) Zurcher v. Stanford Dailv 436 U.S. 547 (1978).

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