Federal Register / Vol. 62, No. 212 / Monday, November 3, 1997 / Proposed Rules 59317

competitive position of other airlines.

The rules provide important protection

to smaller airlines. For example, by

prohibiting systems from ranking and

editing displays of airline services on

the basis of carrier identity, they limit

the ability of each system to bias its

displays in favor of its owner airlines

and against other airlines. The rules also

prohibit charging participating airlines

discriminatory fees. The rules, on the

other hand, impose no significant costs

on smaller airlines.

The CARS rules affect the operations

of smaller travel agencies, primarily by

prohibiting certain CARS practices that

could unreasonably restrict the travel

agencies’ ability to use more than one

system or to switch systems. The rules

prohibit CARS contracts that have a

term longer than five years, give travel

agencies the right to use third-party

hardware and software, and prohibit

certain types of contract clauses, such as

minimum use and parity clauses, that

restrict an agency’s ability to use

multiple systems. By prohibiting

display bias based on carrier identity,

the rules also enable travel agencies to

obtain more useful displays of airline

services.

The Regulatory Flexibility Act also

requires each agency to periodically

review rules which have a significant

economic impact upon a substantial

number of small entities. 5 U.S.C. 610.

Our rulemaking reexamining the need

for the CARS rules and their

effectiveness will constitute the

required review of those rules.

Our proposed rule contains no direct

reporting, recordkeeping, or other

compliance requirements that would

affect small entities. There are no other

federal rules that duplicate, overlap, or

conflict with our proposed rules.

Interested persons may address our

tentative conclusions under the

Regulatory Flexibility Act in their

comments submitted in response to this

notice of proposed rulemaking.

The Department certifies under

section 605(b) of the Regulatory

Flexibility Act (5 U.S.C. et seq.) that this

regulation will not have a significant

economic impact on a substantial

number of small entities.

Paperwork Reduction Act

This proposal contains no collectionof-information requirements subject to

the Paperwork Reduction Act, Pub. L.

No. 96–511, 44 U.S.C. Chapter 35.

Federalism Implications

The rule proposed by this notice will

have no substantial direct effects on the

States, on the relationship between the

national government and the States, or

on the distribution of power and

responsibilities among the various

levels of government. Therefore, in

accordance with Executive Order 12812,

we have determined that the proposed

rule does not have sufficient federalism

implications to warrant preparation of a

Federalism Assessment.

List of Subjects for 14 CFR Part 255

Air carriers, Antitrust, Consumer

protection, Reporting and recordkeeping

requirements, Travel agents.

Accordingly, the Department of

Transportation proposes to amend 14

CFR Part 255, Carrier-owned Computer

Reservations Systems, as follows:

PART 255—[AMENDED]

1. The authority citation for Part 255

continues to read as follows:

Authority: 49 U.S.C. 1301, 1302, 1324,

1381, 1502.

2. Section 255.12 is amended to read

as follows:

§ 255.12. Termination.

Unless extended, these rules shall

terminate on March 31, 1999.

Issued in Washington, D.C. on October 27,

1997.

Rodney E. Slater,

Secretary of Transportation.

[FR Doc. 97–29001 Filed 10–31–97; 8:45 am]

BILLING CODE 4910–62–P

DEPARTMENT OF COMMERCE

National Oceanic and Atmospheric

Administration

15 CFR Part 960

[Docket No. 951031259–7103–02]

Licensing of Private Land RemoteSensing Space Systems

AGENCY: National Oceanic and

Atmospheric Administration,

Commerce.

ACTION: Notice of proposed rulemaking.

SUMMARY: The National Oceanic and

Atmospheric Administration (NOAA)

proposes regulations revising its regime

for the licensing of private Earth remotesensing space systems under Title II of

the Land Remote Sensing Policy Act of

1992, 15 U.S.C. 5601 et seq. (1992 Act).

These proposed regulations implement

the licensing provisions of the 1992 Act

and the Presidential Policy announced

March 10, 1994. They are intended to

facilitate the development of the U.S.

commercial remote-sensing industry

and thus promote the collection and

widespread availability of Earth remote

sensing data while preserving essential

U.S. national security, international

obligations and foreign policy interests.

A fundamental principle is that

restrictions imposed on a licensee must

appropriately balance promoting

competitive capabilities of U.S.

commercial firms and the protection of

national security, international

obligations and foreign policy. The

proposed regulations also describe

when a system, though privately owned,

has received sufficient financial or other

support from the U.S. Government that

the operator may have to comply with

a nondiscriminatory data access policy

that applies to all Government systems.

These regulations reflect that policy.

DATES: Comments must be received by

January 2, 1998.

ADDRESSES: Comments should be sent

to, Charles Wooldridge, NOAA,

National Environmental Satellite, Data,

and Information Service, 1315 East-West

Highway, Room 3620, Silver Spring, MD

20910–3282.

FOR FURTHER INFORMATION CONTACT:

Charles Wooldridge at (301) 713–2024,

ext. 107 or Kira Alvarez, NOAA, Office

of General Counsel at (301) 713–1217.

SUPPLEMENTARY INFORMATION: Tile II of

the 1992 Act authorizes the Secretary of

Commerce (Secretary) to issue licenses

for operation of private remote sensing

space systems. The authority to issue

licenses has been delegated to the

Administrator of NOAA and redelegated

to the Assistant Administrator for

Satellite and Information Services.

On July 10, 1987, NOAA published

final regulations (1987 Regulations)

implementing Title IV of the Land

Remote Sensing Act of 1984 (the 1984

Act) setting forth the requirements for

obtaining a license. In 1988 the Radio

Television News Directors Association

(RTNDA) filed a Petition for Rulemaking

requesting NOAA to reopen these

regulations in light of the President’s

January 5, 1988 Decision Directive

encouraging commercial space

development. On January 18, 1989,

NOAA responded to this Petition,

agreeing to reopen the rulemaking and

incorporate certain principles favorable

to commercial development that were

consistent with the Directive. see 54 FR

1995.

Shortly thereafter, Congress began to

review the 1984 Act and, on October 28,

1992, enacted the 1992 Act which

repealed and succeeded the 1984 Act.

The 1992 Act made significant changes

to the 1984 Act, particularly with regard

to the latter’s requirement that all

unenhanced data must be provide on a

nondiscriminatory basis. The 1992 Act

also provided for judicial review of
59318 Federal Register / Vol. 62, No. 212 / Monday, November 3, 1997 / Proposed Rules

certain licensing and enforcement

actions.

On March 10, 1994, the President

announced a Policy Decision (the

‘‘President’s Policy’’) to ‘‘support and

enhance U.S. competitiveness in the

field of remote sensing space

capabilities while at the same time

protecting U.S. interests in the national

security and international obligations.’’

This policy adopted a number of

principles that promote an appropriate

balance between these interests.

On December 4, 1995 a Notice of

Inquiry and Request for Public

Comment was published in the Federal

Register (60 FR 62054), wherein NOAA

sought public comment to determine the

extent the 1987 Regulations needed

revision to conform to the President’s

Policy and the 1992 Act, and, if so,

which issues should be addressed.

NOAA received seven sets of comments

(see 61 FR 24480). On May 15, 1996,

NOAA published a Notice of Public

Hearing in the Federal Register (61 FR

24480) announcing a public hearing to

be held at the Department of Commerce

on June 14, 1996. The main theme that

emerged at the public hearing was the

request of commercial representatives

for transparency and predictability in

the regulations.

The regulations proposed herein

update the 1987 Regulations to reflect

these intervening events and

information gathered through the public

comment process, as well as the

experience gained in the issuance of

licenses over the last five years. When

finalized, these regulations will apply to

all existing licenses, as well as to all

pending license applications (i.e. those

applications which are currently being

reviewed and for which no license has

yet been issued) and will apply to all

future applications to operate a private

remote sensing system. The intent of the

proposed regulations is to promote the

development of the commercial remote

sensing industry by keeping

Government oversight to the minimum

necessary to ensure protection of U.S.

national security, international

obligations and foreign policy interests.

In addition, it is the intent of these

regulations to make U.S. Government

policies regarding remote sensing and

established timeliness, predictable and

transparent to licensees and applicants.

An underlying premise is that helping

the U.S. industry to lead this emerging

market supports the long term national

security, international obligation and

foreign policy interests of the United

States.

Major Revisions

1. National Security and Foreign Policy

Considerations

The regulations incorporate the basic

regulatory principle that any restrictions

on a licensee, including those required

for national security, international

obligations and foreign policy purposes,

should be the least burdensome possible

to achieve the stated objective

§ 960.10(a)). This was one of the two

principles previously recognized in the

January 18, 1989, response to the

RTNDA Petition for Rulemaking and is

reflected in the President’s Policy.

Proposed § 960.10(a) sets forth a

presumption that, in the case of systems

whose operational capabilities are

similar to those of systems already

licensed, national security, international

obligations and foreign policy concerns

can be resolved through license

conditions similar to those established

by the President’s Policy and described

in §§ 960.9 and 960.10 without the

necessity of permanently barring any

area from sensing. For systems whose

operational capabilities exceed those of

systems already licensed, the

Government will make every effort to

resolve any national security,

international obligation and foreign

policy concerns that may arise in review

of license applications with license

conditions rather than by denying the

license.

Section 960.10(b) sets forth the basic

license condition that has been designed

to preserve national security,

international obligations and foreign

policy interests. This condition was

established in the first license issued

after the 1992 Act, refined slightly in the

President’s Policy, and is contained in

all licenses issued since then. This

condition provides that the Secretary of

Commerce may require the licensee to

stop imaging an area and/or stop

distributing data of an area after being

informed by the Secretary of Defense or

State, as appropriate, that a period exists

when national security, international

obligations or foreign policy interests

may be compromised. It should be

noted that the consultation and

decisionmaking must take place at the

Secretarial level, thus ensuring that

invoking this provision will be invoked

only at the highest levels within the

U.S. Government. The decision will take

into account the potential negative

economic impact of interrupting

commercial operations.

In reaching determinations as to

whether the unrestricted data collection

and distribution capabilities of a

licensed commercial remote sensing

system would adversely affect the U.S.

national security, international

obligations and/or foreign policies, the

Secretary of Defense or Secretary of

State will exercise his or her judgment

in light of the existing or emerging

international situation. Of particular

concern will be situations in which: (a)

A condition of crisis or war exists or is

developing and this condition poses an

immediate and serious threat to U.S. or

allied national security objectives such

as affecting the lives or resources of U.S.

or allied personnel; (b) a condition of

crisis or serious impairment to U.S.

international obligations or foreign

policy exists or is developing and this

condition poses an immediate serious

and permanent threat to U.S. or allied

relations with one or more foreign

countries; (c) an adversary’s ability to

receive and exploit the data from the

licensee’s system contributes to the

threat U.S. or allied national security

objectives, concerning military planning

and operations, or to implement

international obligations, taking into

account the ability of the adversary to

receive and exploit similar data from

other sources.

Subsection (c) also includes

additional criteria that reflect the

principle that restrictions be the least

burdensome possible to achieve the

stated objective: restrictions will be

imposed on the smallest area and during

the shortest period of time possible;

alternatives to the complete suspension

of operations such as delaying

transmission of data and/or restricting

the field of view will be considered; and

the distribution of data will generally

not be restricted if comparable data is

otherwise available from foreign

systems with comparable resolution and

accessibility over which the U.S. has no

jurisdiction or control.

The regulations implementing this

condition recognize the need for close

coordination between the U.S.

Government and the licensee during

periods when concerns relating to

national security, international

obligations and foreign policies have

been raised.

Subsection (d) allows (but does not

require) the inclusion in a license of a

related condition, also derived from the

President’s Policy, that ensures that,

during periods when imaging or data

distribution are restricted for national

security, international obligations or

foreign policy purposes under

subsection (c), on request the licensee

will provide the data exclusively to the

U.S. Government by means of

government furnished rekeyable

encryption on the downlink. This

condition makes commercial remote

sensing assets available as appropriate
Federal Register / Vol. 62, No. 212 / Monday, November 3, 1997 / Proposed Rules 59319

to enhance U.S. Government national

security capabilities. Subsection (e)

provides that technical modifications

needed to meet this condition may be

required to be paid for by the requesting

agency in accordance with section

507(d) of the Act.

2. Changes in Data Policy

A major change made by the 1992 Act

was to remove the 1984 requirement

that all private operators must make

their unenhanced data available on a

nondiscriminatory basis. The 1992 Act

retains this requirement of essentially

Governmental systems, such as the

Landsat system and those systems that

are substantially funded by the U.S.

Government, but allows the operator of

a non-governmental system to follow

normal commercial practices unless

U.S. interests dictate otherwise. (section

201(e), 202(b)(3), and 501).

Section 960.11 of the regulations

implements this change within the Act’s

overall objective of making

environmental data available to the

widest possible spectrum of users,

particularly for scientific and

operational purposes in support of the

public good. This section addresses

three categories of licensees. The first

are those whose development,

fabrication, launch, or operations costs

have been funded entirely or in

substantial part directly by the

Government. As dictated by the Act,

these operators must make their

unenhanced data available on a

nondiscriminatory basis (§ 960.11(a)).

This requirement ensures that the data

are broadly accessible and is consistent

with the basic policy codified in the

Paperwork Reduction Act, 44 U.S.C.

3506 et. seq. and included in OMB

Circular A–130, that data paid for by the

taxpayer is a public good to be made

equally available to all members of the

public see 44 U.S.C. 3506(d).

The second category of licensees are

those that are fully commercial, i.e., not

funded by the Government in whole or

in part. These operators will be allowed

to follow their preferred commercial

data practices, subject to providing the

unenhanced data to the governments of

those states sensed, subject to national

security, international obligations and

foreign policy concerns, as discussed

below (§ 960.11(b)). These licensees will

be encouraged to promote access to their

data on as widespread a basis as

possible and it is anticipated that, in

most cases, there will be a commercial

incentive to reach a broad customer

base. It is recognized that in some cases,

some of the data collected by such

systems may not become generally

accessible. However, NOAA believes

that overall this loss will be outweighed

by the substantially greater volume of

data that will be collected by a vigorous

commercial industry. It should be noted

that limited purchases by the United

States Government as a normal

customer of the licensee would not

constitute funding or support for

purposes of this section.

The third category of licensees falls

between the first two and consists of

those for whom the U.S. Government

provides some support. Here, the

Government’s interest is more

significant, because of the investment by

the taxpayer and the possible

precedential effect hat permitting

restricted access could have on future

U.S. access to the data from foreign

international data exchange involving

government subsidized public-private

ventures. The data policy applicable to

these licensees will be determined on a

case-by-case basis, balancing the effect

on the licensee of limiting its

commercial options against the

potential benefits of providing

widespread access of the data for

scientific, educational or other noncommercial purposes supporting the

public good. In evaluating the potential

for data loss, NOAA will consider both

the data to be gathered by the particular

licensee as well as the possible

implications for future

intergovernmental data exchanges.

It is anticipated that the U.S.

Government interest in making the data

available frequently can be addressed

through terms and conditions in the

license that do not require full

nondiscriminatory data access policy.

For example, it may be possible to

accommodate such interests by ensuring

access for research, education, and other

governmental purposes, while

protecting a licensee’s commercial

options.

3. The Sensed State Provision

When Congress removed the blanket

nondiscriminatory data access

requirement, it was careful to ensure

that access to the unenhanced data

would remain consistent with the basic

international principle, contained in the

United Nations’ Principles on Remote

Sensing, that the government of a

sensed state should have timely access

to all such data concerning its own

territory. Section 202(b)(2) of the 1992

Act requires that all licenses include the

condition that the licensee shall make

available to the government of any

country, including the United States,

unenhanced data collected by the

system concerning the territory under

the jurisdiction of such government on

reasonable terms and conditions as soon

as such data are available; consistent

with national security, international

obligations and foreign policy of the

U.S.

Section 960.9(c) of the proposed

regulations incorporates this

requirement and discusses the terms

and conditions that are ‘‘reasonable’’ in

those cases where the data will not be

made available on a nondiscriminatory

basis. Making the data available to

different classes of customers, e.g.

researcher, commercial end user, and

value-added redistributor, at different

prices is reasonable provided the data is

available to the sensed state on the most

favorable terms available to any member

of the class appropriate to the intended

use by that state.

If a licensee intends to provide its

unenhanced data on a restricted or

exclusive basis, it becomes more

difficult to determine what is

‘‘reasonable’’ vis-a-vis a sensed state.

The price of these data, if measured in

terms of their value to a particular

commercial customer, may be

prohibitive to a small government that

simply wishes to monitor its own

natural resources or to use the data, for

example, for purposes of land use

planning or to mitigate the effects of a

recent natural disaster. On the other

hand, the same price may be reasonable

if the sensed state intends to use the

data for competitive purposes. The

terms and conditions will have to be

considered on a case-by-case basis. In

any event, the sensed state has the

opportunity to demonstrate that the

terms result in an undue hardship

(§ 960.9(c)(3)(D)).

4. Procedural Changes

The existing regulations state that

they are intended to provide the

‘‘minimum practicable procedures’’ for

licensing private operators of remote

sensing space systems. In order to

promote the growth of the U.S. remote

sensing industry, U.S. Government

review of license applications and

foreign agreements must be as efficient

and expeditious as possible. Congress

recognized this need by establishing

certain statutory deadlines for U.S.

Government administrative action.

The Government’s remote sensing

policy with regards to preserving

national security, international

obligations and foreign affairs interests

should be clear and predictable.

Predictability is critical in terms of the

conditions that may require restrictions

on imaging after a system is operational.

The provisions of the regulations

describing these conditions are

discussed under number 1 above and set

forth at § 960.10.
59320 Federal Register / Vol. 62, No. 212 / Monday, November 3, 1997 / Proposed Rules

The proposed regulations clearly

state, and are intended to promote

adherence to, the time limits that

Congress has established for these

reviews.

The specific process by which the

various agencies of the U.S. Government

will interact in the review of a license

and amendment applications,

significant or substantial foreign

agreement, and determinations

concerning the restrictions and

limitation on imaging and data

collection, will be established in a

Memorandum of Understanding (MOU)

among the agencies. The MOU will

specify that disagreements among the

agencies will be decided by the

President. To promote transparency and

predictability of government action in

these procedures, we expect that the

MOU will be publicly available. The

MOU will be finalized by the time of

issuance of a final rule.

Section 960.6 of both the existing and

proposed regulations require a license

applicant to supply the NOAA

Administrator with sufficient

information about a proposed remotesensing space system’s orbit and data

collection characteristics to determine

that a system will be operated in a

manner that preserves the national

security and international obligations of

the United States.

Section 960.8(f) allows the applicant

to request a hearing before an

Administrative Law Judge (ALJ)

regarding any adverse action on a

license application. The documentation

in the record will serve as the basis for

the ALJ’s determination as to whether

the Administrator’s action regarding any

conditions imposed on the license,

denial of the license, or a decision that

no action can be taken within the

required limit, was appropriate.

Section 960.12 sets forth regulations

for the review of proposed significant

and substantial foreign agreements

between licensees and foreign nations or

persons for which notification is

required pursuant to section 202(b)(6) of

the Act and § 960.9(g) of these

regulations. We would note that the Act

does not expressly confer the right to

approve foreign agreements, but it is our

interpretation that the Secretary has

sufficient authority under the statute to

prevent a licensee from entering into an

agreement that violates the national

security, international obligation or

foreign policy interests of the United

States. Accordingly, submission and

approval of these will be a condition of

the license (960.9(c)).

To provide due process, the

regulations treat negative advice to a

licensee concerning a proposed foreign

agreement as an ‘‘adverse action’’ under

section 203(b) of the Act, which grants

the right to a hearing on the record for

certain actions, e.g., denying or

conditioning a license. Finally, § 960.12

contains a number of implementing

record keeping requirements similar to

those for the initial license review (see

§ 960.12(b)–(d)).

5. Investors in Licensees

Section 960.14 is new. It is intended

to encourage investment in the space

remote sensing industry while ensuring

that those licensed to operate these

systems retain sufficient control to be

able to preserve U.S. national security,

international obligations and foreign

policies. In essence, it requires a

licensee to notify NOAA of significant

changes in ownership and to give the

Government the opportunity to review

those changes that might result in a shift

of control, particularly to foreign

persons or nations.

Section 960.14(a)(1) simply requires

the licensee to notify NOAA when a

domestic investor’s financial interest in

the licensee reaches ten percent. Certain

basic information such as the identity of

the investor and the extent of the

holdings must be provided within ten

days after the 10 percent threshold is

reached.

Section 960.14(a)(2) recognizes that

the potential for transfer of control of

the management and/or operations of a

licensee is more likely when a single

domestic investor acquires a financial

interest in the licensee of 25 percent or

more. If the licensee, notwithstanding

the acquisition of such interest, will

retain control, it must document this

fact and include the information

described in this section.This

documentation is to be filed within 10

days of the transaction.

Section 960.14(a)(3) requires an

amendment where the financial interest

of a single domestic investor will reach

or exceed 40 percent of the licensee. In

effect, it is presumed that an investment

at this level results in a transfer of

control.

Section 960.14(b)(1) requires the

licensee to notify NOAA when a foreign

investor’s financial interest in the

licensee reaches five percent. Certain

basic information such as the identity of

the investor and the extent of the

holdings, and any updates to the

technology control plans, if necessary,

must be provided within ten days after

the five percent threshold is reached.

Section 960.14(b)(2) recognizes that

the potential for transfer of control of

the management and/or operations of a

of a licensee is more likely when a

foreign investor holds a financial

interest in the licensee of 15 percent or

more. If the licensee, notwithstanding

such acquisition, will retain control, it

must document this fact and include the

information described in this section.

Section 960.14(b)(3) provides that this

documentation must be filed 60 days

prior to acquisition together with the

relevant investment agreement which is

considered a ‘‘significant agreement’’

under § 960.12.

Section960.14(b)(4) requires an

amendment to the license where the

financial interest of either a foreign

investor or foreign investors as a whole

will exceed 40 percent of the licensee.

In effect, it is presumed that an

investment at this level results in

control. Since control by foreign

investors generally will not be

approved, licensees may obtain

approval for an amendment of this

nature only by rebutting this

presumption with clear documentation

that it retains control over its

management and operations. In addition

to other specified information for an

amendment, it must include a

certification that no foreign persons can

influence the corporation’s activities

and that the control of the Board of

Directors is still exerted by the majority

U.S. shareholders. The licensee must

also establish a technology control plan

that ensures that the company complies

with relevant U.S. laws such as export

control laws.

Foreign investment that exceeds 49

percent of the licensee is prohibited in

§ 960.14(b)(5).

Section 960.14(c) provides that if

through the acquisition of a financial

interest by any person(s) or nation(s),

regardless of the percentage of

investment, or a through contractual or

other relationship, there will be a

transfer of control of the licensee,

§ 960.13(d)(2) requires an amendment of

the license. However, as this section

makes clear, control of these sensitive

remote-sensing systems to foreign

investors generally raises national

security, international obligation or

foreign policy concerns and an

amendment involving such a transfer of

control is unlikely to be approved.

The procedures in this section applies

only to U.S. operators that are subject to

U.S. jurisdiction or control. However, a

foreign operator over which the U.S.

initially has no jurisdiction or control,

may decide to carry out its activities in

the U.S. to the extent that it becomes

subject to U.S. jurisdiction and control

under § 960.2(c). In such cases the

provisions with respect to changes in

foreign ownership will be set forth in

the license.
Federal Register / Vol. 62, No. 212 / Monday, November 3, 1997 / Proposed Rules 59321

6. New Enforcement Provisions

Section 203(a) of the 1992 Act revised

the administrative authorities granted to

the Secretary, primarily to provide

grater judicial oversight and more

predictability for the licensees. Thus,

the Administrator now may seek an

injunction in order to terminate, modify,

or suspend a license or to terminate

licensed operations in the case of

violations of the Act, regulations, or

license. Further, the Administrator may

obtain a warrant in order to seize

records or objects believed to be used in

a violation.

Subpart C of the proposed regulations

would implement these changes. They

also continue to set forth the procedures

for imposing any administrative civil

penalty under section 203(b) of the Act.

These include provisions for the formal

agency adjudication on the record to

which the licensee is entitled which are

found in 15 CFR part 904.

7. Additional Changes

a. Definitions

Several new technical definitions

have been added relating to the

operational capability of a remote

sensing system. These include the

terms: ‘‘ground sample distance,’’ ‘‘field

of view,’’ ‘‘instantaneous field of view,’’

‘‘resolution,’’ ‘‘spatial resolution,’’ and

‘‘tasking.’’ Experience in prior licensing

exercises has shown that these

parameters help define the operational

characteristics of the system for the

purpose of determining national

security and foreign policy concerns

and the definitions are intended to

establish these informational

requirements as precisely as possible.

In accordance with the President’s

policy, the regulations define the term

‘‘foreign agreement’’ to establish those

that are ‘‘significant and substantial’’

and, therefore, subject to the advance

notification requirement of sections

202(b)(6) of the Act and implemented in

§ 960.9(g) of the regulations. The

definition focuses on the two types of

agreements that could have particular

national security or foreign policy

implications: Those that give a foreign

party a degree of control over the

operation of the system, e.g. the ability

to control the spacecraft, task the

sensors, or exercise managerial control

over the system, including technology

transfer; and those that establish a

particularly important role for a foreign

party in distributing the data from the

system, either by operating a foreign

ground station or by acting as a major

customer or distributor; and those that

involve foreign investment. If the

agreement effectively expands the

capability of the system, for example by

adding a ground station that could

collect data not anticipated by the

license, the process would require an

amendment to the license (see

§ 960.13(e)(3)).

The proposed regulations would state

that ordinary data sales agreements

might be considered a significant or

substantial foreign agreement. However,

NOAA requests comment on this issue.

New definitions have also been added

defining ‘‘beneficial owner’’ and ‘‘voting

interest,’’ as part of the new foreign

investment agreement provisions.

Finally, the definition of

‘‘unenhanced data’’ has been modified

consistent with the 1992 Act, and the

definition of ‘‘value-added activity’’ has

been deleted as no longer necessary.

b. Informational Requirements

The proposed regulations update the

informational requirements of a license

application. As with the existing

regulations, the intent is to solicit only

that information relevant to those

limited U.S. interests covered by the

1992 Act while ensuring that

applications will be as complete as

possible. The information of primary

importance is that describing the orbit

and data collection characteristics

aspects of a proposed system which are

significant in terms of its national

security and foreign policy implications

(§ 960.6(c). Additional relevant

information concerns the applicant’s

data distribution plans and the extent of

any U.S. government support of the

system. This information is needed to

determine the appropriate data access

policy (§§ 960.6(d) and (e)).

c. The Archive Provision

In accordance with section 502 of the

Act § 960.9(h) states that licenses will

include terms and conditions for

making unenhanced data available to

U.S. Government agencies, including

the Archive, for the specific purpose of

including it in the basic data set. The

negotiation to provide such data on

reasonable terms and conditions will

take into account the commercial value

of the data. This section also states that

before the licensee unenhanced data

obtained under the license is purged,

the licensee shall offer such

unenhanced data to the Archive, at the

cost of reproduction and transmission,

which the Archive will then distribute

at the cost of fulfilling user requests.

Because the licensee will offer this

unenhanced data at this minimum cost

and the Archive will distribute the data

at the cost of fulfilling user requests, it

is presumed that the commercial value

of the data is negligible. No licensee can

negotiate terms with a potential

customer or distributor that would

prohibit or otherwise prevent the

licensee from meeting its obligation to

make all data collected available to the

Archive.

d. Protecting Proprietary Information

Proposed § 960.7 would require that

the applicant for a license submit two

different versions of their application.

One version would be the proprietary

version, with brackets around the

information that should be given

confidential treatment; and the other

would be the public version, with the

information inside the brackets taken

out. The prospective licensee must

include a general justification for such

confidential treatment. This

requirement reflects a balance between

the needs of the licensees to be assured

that the sensitive information which

they submit will be treated

confidentially, and the need to enable

the public to have access to these

government records.

Request for Public Comment

NOAA is requesting public comment

on the major revisions in the proposed

regulations, as described above. NOAA

is particularly seeking comment on the

following: (1) The definition of

‘‘Significant or Substantial Foreign

Agreement’’; (2) the review of foreign

investment agreements; (3) the reporting

of ‘‘beneficial owners’’; and (4) the

information requirements of the

application process.

With regards to the definition of

‘‘Significant or Substantial Foreign

Agreement’’ as well as the review of

such foreign agreements, NOAA has

proposed a regime for addressing issues

of foreign ownership, or control over

U.S. licensed private remote sensing

systems. As stated in an earlier section,

the intent is to set up a regime that

ensures that undue foreign control or

influence over satellite operations does

not compromise national security or

foreign policy goals while at the same

time promoting and permitting

investment in these capital intensive

systems. By monitoring the investment

closely and having certain thresholds

which raise the level of scrutiny, the

intent is that detailed review at certain

thresholds will be able to prevent the

occurrence of any imperiling national

security situations. We are interested in

hearing if our approach adequately

achieves our intentions, or, given our

intent, it would be better to adopt a

regime similar to that found at 10 U.S.C.

2327 for defense procurements or 50

U.S.C. app. 2710, the Exon-Florio

investment review procedures. Also of
59322 Federal Register / Vol. 62, No. 212 / Monday, November 3, 1997 / Proposed Rules

concern is whether the requirement to

provide information about beneficial

owners should be qualified to require

that information only need be provided

about ‘‘known’’ beneficial owners. This

would make the NOAA regulatory

requirement consistent with the

Security and Exchange Commission’s

requirement to provide information on

‘‘known’’ beneficial owners.

Concerning information requirements

of the application process, and technical

definitions found in these proposed

regulations, NOAA is considering

placing these requirements in an

appendix to the regulations. This would

make it easier to change the required

contents of an application, as only

notice in the Federal Register need be

provided for changes. This would give

the Administrator greater flexibility in

the face rapidly changing technology.

NOAA has also increased the

information requested in the application

to include information about export

licenses which the applicant holds or

intends to apply for. NOAA is seeking

comment on whether this requirement

is duplicative of the existing export

control regime.

Classificaiton

A. Regulatory Flexibility Act (5 U.S.C.

601 et seq.)

This proposed rule establishes a

process intended to promote the

development of the industry and to

minimize any adverse impact on any

entity, large or small, that may seek a

license to operate a private remotesensing space system. Even though there

has been a substantial reduction in size

and cost of Earth remote-sensing space

projects, costs of development and

launch still involve extraordinary

capitalization. As such, small entities

have yet to enter this field and appear

highly unlikely to do so.

Accordingly, the Assistant General

Counsel for Legislation and Regulation

of the Department of Commerce has

certified to the Chief Counsel for

Advocacy of the Small Business

Administration that the proposed rule,

if adopted, would not have a significant

economic impact on a substantial

number of small entities.

B. Paperwork Reduction Act of 1995 (35

U.S.C. 3500 et seq.)

This proposed rule contains

collection-of-information requirements

subject to review and approval by OMB

under the Paperwork Reduction Act

(PRA). The proposed rule revises

collection of information requirements

that were previously approved by the

Office of Management and Budget under

control number 0648–0174. A request to

make these revisions has been

submitted to the Office of Management

and Budget for approval. Public

reporting burden for these collections of

information is estimated to average 20

hours per license applications; 5 hours

for amendment submissions; 10 hours

for foreign agreement notification; 2

hours for notification of disposition/

orbital debris change; and 1 hour for

notification of deviation of orbit. This

estimates include the time for reviewing

instructions, searching existing data

sources, gathering and maintaining the

data needed, and completing and

reviewing the collection of information.

Comments are invited on: (a) Whether

the proposed collection of information

is necessary for the proper performance

of the functions of the agency, including

whether the information will have

practical utility; (b) the accuracy of the

agency’s estimate of the burden of the

proposed collection of information; (c)

ways to enhance the quality, utility, and

clarity of the information to be

collected; and (d) ways to minimize the

burden of the collection of information

on respondents, including, through the

use of automated collection techniques

or other forms of information

technology. Send comments regarding

this burden estimate or any other aspect

of this collection of information to

Charles Woolbridge, NOAA, National

Environmental Satellite, Data, and

Information Service, 1315 East West

Highway, Room 3620, Silver Spring, MD

20910–3282 and to OMB at the Office of

Information and Regulatory Affairs,

Office of Management and Budget,

Washington, DC 20503 (Attention:

NOAA Desk Officer). Notwithstanding

any other provision of the law, no

person is required to respond to, nor

shall any person be subject to penalty

for failure to comply with, a collection

of information subject to the

requirements of the PRA unless that

collection of information displays a

currently valid OMB control number.

C. National Environmental Policy Act

(42 U.S.C. 4321 et seq.)

Publication of the proposed

regulations does not constitute a major

federal action significantly affecting the

quality of the human environment.

Therefore, an environmental impact

statement is not required.

List of Subjects in 15 CFR Part 960

Scientific equipment, Space

transportation and exploration.

Dated: October 28, 1997.

Robert S. Winokur,

Assistant Administrator.

Accordingly, for the reasons set forth

above, part 960 of Title 15 of the Code

of Federal Regulations is proposed to be

revised to read as follows:

PART 960—LICENSING OF PRIVATE

REMOTE-SENSING SYSTEMS

Subpart A—General

Sec.

960.1 Purpose.

960.2 Scope.

960.3 Definitions.

Subpart B—Application Process

960.4 Pre-application consultation.

960.5 Filing Information.

960.6 Information to be included with

application.

960.7 Confidentiality of information.

960.8 Review procedures for license

applications.

960.9 Conditions for operation.

960.10 National security, International

Obligations and Foreign Policy concerns.

960.11 Data policy for remote sensing space

systems.

960.12 Notification of foreign agreements.

960.13 Amendments to licenses.

960.14 Investment agreements.

960.15 Certain rights not conferred by

license.

Subpart C—Enforcement Procedures

960.16 General.

960.17 Prohibitions.

960.18 Sanctions.

960.19 Civil penalties.

960.20 Seizure.

Authority: 15 U.S.C. 5624.

Subpart A—General

§ 960.1 Purpose.

(a) These regulations set forth the

procedural and informational

requirements for licensing and

supervising the operation of a private

remote sensing space system under Title

II of the Land Remote Sensing Policy

Act of 1992 (15 U.S.C. 5601 et seq.)

(Pub. L. 102–555) (the Act). The

regulations are intended to facilitate

development of the commercial space

remote-sensing industry in the United

States and broadly promote the

beneficial use of remote sensing data

while ensuring compliance with basic

requirements of the Act:

(1) Preserving the national security of

the United States;

(2) Observing the international

obligations and policies of the United

States;

(3) Ensuring that unenhanced data

collected by licensed systems

concerning the territory of any country

are made available to the government of

that country as soon as such data are
Federal Register / Vol. 62, No. 212 / Monday, November 3, 1997 / Proposed Rules 59323

available and on reasonable terms and

conditions;

(4) Ensuring that remotely sensed data

from space are widely available for

research, particularly environmental

and global change research; and

(5) Maintaining a permanent

comprehensive government archive of

global land remote sensing data for longterm monitoring and study of the

changing global environment and other

archival purposes.

(b) In accordance with the Act and the

President’s Policy announced on March

10, 1994 entitled, ‘‘U.S. Policy on

Foreign Access to Remote Sensing

Space Capabilities’’, decisions regarding

the issuance of licenses and operational

conditions (see §§ 960.8, 960.9, 960.12,

960.13 and 960.14) will be made by the

Secretary of Commerce, or his or her

designee, after consultation with the

Secretaries of Defense and State with

respect to national security,

international obligations, and foreign

policy.

(c) Obtaining a license to operate a

satellite pursuant to these regulations

does not affect related licensing

requirements of other Federal agencies

such as the Department of State, the

Federal Communications Commission,

and the Department of Transportation.

§ 960.2 Scope.

(a) The Act and these regulations

apply to any person subject to the

jurisdiction or control of the United

States who operates or proposes to

operate a private remote-sensing system

either directly or through affiliate, or

subsidiary. For the purposes of these

regulations a person is subject to the

jurisdiction or control of the United

States if such person is:

(1) An individual who is a United

States citizen; or

(2) A corporation, partnership,

association, or other entity organized or

existing under the laws of any state,

territory, or possession of the United

States.

(b) Other private space system

operators may be subject to U.S.

jurisdiction and control, and their

operations, therefore, subject to the

provisions of the Act and these

regulations, if they have substantial

connections with the United States or

deriving substantial benefits from U.S.

law that support their international

remote-sensing operations. Substantial

connections include factors or a

combination of factors such as using a

U.S. launch vehicle and/or 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. The

following examples are intended to

illustrate the application of this

paragraph, and should not be

considered limitations thereon, or as an

indication of how other Federal

agencies may interpret related licensing

requirements that they administer.

Example 1: A non-U.S. corporation

launches an operational remote-sensing

space system, pursuant to a Department of

Transportation license, using a U.S. operated

launch vehicle and/or a platform launched

from U.S. territory. The company operates no

spacecraft command ground station in the

U.S. although it has technicians and

supervisors present in the U.S. to ensure

integration of the foreign-built satellite or

space system with the launch vehicle. The

company acquires data directly from the

space system and processes and distributes it

from facilities outside the U.S., although it

advertises the availability of data and/or

information in U.S. publications.

The company is not subject to U.S.

jurisdiction or control and requires no

license for its remote-sensing activities.

Example 2: A company’s operation is the

same as in Example 1 except that it acquires,

processes and distributes the data to U.S. and

foreign customers from one or more facilities

within the U.S.

The company is subject to U.S. jurisdiction

and control and requires a license for the

purposes of this Act and these regulations.

Potential applicants with questions

concerning the application of these

regulations to specific operations may

consult with the Administrator prior to filing

an application. Such consultations shall not

be included in the record of any

subsequently filed application unless the

applicant specifically so requests or the

Administrator so advises the applicant.

(c) These regulations are applicable to

any action taken on or after the effective

date of these regulations by the

Secretary with respect to any existing,

proposed or future license.

§ 960.3 Definitions.

For purposes of these regulations, the

following terms have the following

meanings:

Act means the Land Remote Sensing

Policy Act of 1992.

Administrator means the

Administrator of NOAA or his or her

designee.

Affiliate means any person who is

under common ownership or control

with the applicant or licensee.

Archive means the National Satellite

Land Remote Sensing Data Archive

established by the Secretary of the

Interior pursuant to the archival

responsibilities defined in sec. 502 of

the Act.

Basic data set means those

unenhanced data generated by the

Landsat system or by any remote

sensing space system licensed under the

Act that have been selected by the

Secretary of the Interior to be

maintained in the Archive, as described

in section 502(c) of the Act.

Beneficial Owner means any person

who, directly or indirectly, through any

contract, arrangement, understanding,

relationship, or otherwise has or shares:

the right to exercise the voting power of

any security or financial interest in a

licensee; and the power to dispose of, or

to direct the disposition of, any security

or other financial interest in a licensee.

All securities or other financial interests

of the same class beneficially owned by

a person, regardless of the form which

such beneficial ownership takes, shall

be aggregated in calculating the number

of shares beneficially owned by such

person. A person shall be deemed to be

the beneficial owner of a security or

other financial interest if that person has

the right to acquire beneficial

ownership, as defined above, within

sixty days including but not limited to

any right to acquire: through the

exercise of any option, warrant or right;

through the conversion of a security;

pursuant to the power to revoke a trust,

discretionary account, or similar

arrangement; or pursuant to the

automatic termination of a trust,

discretionary account or similar

arrangement.

Field of view means the solid angle

through which an instrument is

sensitive to radiation.

Ground sample distance (GSD) means

the distance of the terrain between

successive ground resolution cells (the

area on the terrain that is covered by the

instantaneous field of view of a

detector).

Instantaneous field of view (IFOV)

means the narrow angle within which

incident energy is focused on the

detector of the radiometer at a particular

instant in time; defined as the radio of

detector size to the focal length of the

optical system, and often expressed in

microradians.

Measured values means the assigned

numbers, shades or colors, which

represent, in a standardized system, an

amount of electromagnetic radiation

sensed in a spectral band.

NOAA means the National Oceanic

and Atmospheric Administration.

Party (to a licensing process of foreign

agreement notification) shall include the

Secretary, the applicant, or the Secretary

of Defense, the Secretary of State and

the head of any other Federal

organization, as appropriate, recognized

by the Secretary of Commerce as being

involved in any proceedings between

the U.S. Government and a licensee/

applicant.

Person means any individual

(whether or not a citizen of the United
59324 Federal Register / Vol. 62, No. 212 / Monday, November 3, 1997 / Proposed Rules

States), corporation, partnership,

association, or other entity organized or

existing under the laws of any nation, or

consortium of any such entities acting

together for the acquisition, holding, or

disposal of securities or other financial

interests in the licensee. ‘‘Person’’ does

not include any government or

intergovernmental organization or

agency thereof.

President’s Policy means the

President’s Policy entitled ‘‘U.S. Policy

on Foreign Access to Remote Sensing

Space Capabilities’’ announced on

March 10, 1994.

Remote sensing space system means

any instrument or device or

combination thereof flown on any

space-borne platform and any related

ground based facilities capable of

actively or passively sensing the Earth’s

surface (including bodies of water) from

space by making use of the properties of

the electromagnetic waves emitted,

reflected, or diffracted by the sensed

objects. For purposes of these

regulations, small, hand-held cameras

shall not be considered remote sensing

systems.

Resolution means the ability of an

entire remote sensing system, including

lens, antennae, display, exposure,

processing, and other factors, to render

an interpretable image.

Secretary means the Secretary of

Commerce.

Security means any note, stock,

treasury stock, bond, debenture,

evidence of indebtedness, certificate of

interest or participation in any profitsharing agreement, collateral trust

certificate, pre-organization certificate

or subscription, transferable share,

investment contract, voting trust

certificate, certificate of deposit for a

security, any put, call, straddle, option,

or privilege on any security, certificate

of deposit, or group or index of

securities (including any interest therein

or based on the value thereof), or any

put, call, straddle, option, or privilege

entered into a national securities

exchange relating to foreign currency,

or, in general, any interest or instrument

commonly as a ‘‘security’’, or any

certificate of interest or participation in,

temporary or interim certificate for,

recipe for, guarantee of, or warrant or

right to subscribe to or purchase, any of

the foregoing.

Significant or substantial foreign

agreement means an agreement with a

foreign nation or person that provides

for:

(1) Cooperation in the operation of the

spacecraft;

(2) Tasking of the satellite sensors,

modifying satellite tasking commands,

or revising the priority of tasking

requests, or otherwise providing an

opportunity to exercise a significant

level of managerial control over the

system’s operation;

(3) Real-time direct access to the

system’s unenhanced data.

(4) Distributorship arrangements

involving the receipt of high volumes of

the system’s unenhanced data;

(5) An equity interest in the Licensee,

if the equity interest in the Licensee by

a foreign nation and/or person equals or

exceeds or will equal or exceed 15

percent of total outstanding shares, or

entitles the foreign person to a position

on the Licensee’s Board of Directors;

(6) The acquisition by any person(s)

or nation(s) of any security or other

financial interest of the licensee,

regardless of the percentage acquired,

that will result in a transfer of sufficient

voting power to control the

management, policies, and/or

operations of the licensee; or any

contractual or other relationship with a

foreign person or nation, wherein the

foreign person or nation obtains the

ability to control the management,

policies, technology transfer and/or

operations of the licensee.

(7) Significant or Substantial Foreign

agreements may include agreements for

the sale of data, for the sale of value

added products, or for the establishment

of marketing outlets in foreign

countries, pursuant to operations in the

ordinary course of business as described

in the applicant’s plan for sale and

distribution contained in a license

application submitted pursuant to these

regulations.

Spatial resolution means the ground

area sensed by a radiometers’s IFOV

calculated at nadir as the product of the

IFOV and the satellite altitude.

Spectral band means the interval in

the electromagnetic spectrum defined

by two wavelengths, frequencies, or

wave numbers.

Subsidiary means a person in which

the applicant or licensee holds the

voting power necessary to control its

management, policies, and/or

operations. If a subsidiary is the entity

responsible for operation a remote

sensing space system, and the

subsidiary is under the jurisdiction or

control of the United States, the

subsidiary must obtain the license.

Tasking means any action taken to

command a satellite or it’s sensor to

acquire data for direct transmission or

storage on the satellite’s recording

subsystem. Such action can be in the

form of commands sent to the satellite

from a ground site for immediate

execution or for storage in the satellite’s

memory for execution at a specified

time or location within a given orbit.

Unenhanced data means Earth remote

sensing signals or imagery products that

are unprocessed or subject only to data

preprocessing. Data preprocessing may

include rectification of system and

sensor distortions in remote-sensing

data received directly from the satellite;

registration of such data with respect to

features of the Earth; and calibrations of

spectral response with respect to such

data, but does not include conclusions,

manipulations, or calculations derived

from such data, or a combination of the

remote-sensing data with other data and

excludes phase history data for

synthetic aperture radar systems or

other space based radar systems.

Voting Power means the power to

vote, or direct the voting of, any security

or other financial interest in a licensee,

including the power to vote on or for:

(1) The conduct of the operations or

significant policies of the licensee;

(2) The selection or appointment of

directors, trustees, or partners (or

persons exercising similar functions of

the licensee); and/or

(3) The power to vote on the

appointment of the principal executive

officers of the licensee.

Subpart B—Application Process

§ 960.4 Pre-application consultation.

Potential applicants are encouraged to

contact the Administrator at the earliest

possible planning stages. Such

consultation may reveal design or data

collection requirements that may be

accommodated early at low cost or

avoid costly changes in design or data

collection characteristics. Consultation

before a license application is submitted

may also prove useful in defining

informational requirements and in

expediting review. Informal

consultations held prior to the

submission of an application will not be

considered part of the agency record of

an application. The agency record will

be open upon the filing of the

application pursuant to § 960.5.

§ 960.5 Filing Information.

(a) Who must file. A person desiring

to operate a private remote space

sensing system and/or establish

substantial connections with the United

States relating to the operation of a

private remote space sensing system

shall file an application for such a

license under these regulations. The

holder of an existing license seeking to

modify the terms of that license shall

file an application for an amendment

under § 960.13.

(b) Where to file. Applications and all

related documents shall be filed with

the Assistant Administrator, National
Federal Register / Vol. 62, No. 212 / Monday, November 3, 1997 / Proposed Rules 59325

Environmental Satellite, Data and

Information Service (NESDIS), NOAA,

Department of Commerce, Washington,

D.C. 20233.

(c) Form. No particular form is

required but each application must be in

writing, must include all of the

information specified in this subpart,

and must be signed by an authorized

principal executive officer.

(d) Number of copies. Three (3) copies

of each application must be submitted

in a readily reproducible form. If

proprietary treatment is requested for

any portion of the application, one (1)

copy of the public version required by

§ 960.7(b) must also be submitted in a

readily reproducible form.

§ 960.6 Information to be included in the

application.

The following information shall be

filed by the applicant and revised as

necessary:

(a) The name, mailing address,

telephone number and citizenship of:

The applicant and any affiliates or

subsidiaries; the chief executive officer

of the applicant and each director, if the

applicant is a corporation, or each

general partner, if the applicant is a

partnership; all executive personnel or

senior management; any directors,

partners, executive personnel or senior

management who hold positions with or

serve as consultants for any foreign

nation or person; each domestic

beneficial owner of an interest equal to

or greater than 10 percent in the

applicant; each foreign owner of an

interest equal to or greater than 5

percent in the applicant; each foreign

lender and amount of debt where

foreign indebtedness exceeds 25 percent

of an applicants total indebtedness; and

a person upon whom service of all

documents may be made.

(b) A copy of the charter or other

authorizing instrument certified by the

jurisdiction in which the applicant is

incorporated or organized and

authorized to do business.

(c) Orbital and data collection

characteristics regarding the applicant’s

proposed remote sensing space system

in sufficient detail to enable the

secretary to determine whether the

proposal meets requirements of the Act

and the President’s Policy. These

characteristics shall include:

(1) The date of the intended

commencement of operations and the

expected duration of the operations;

(2) The number and type of satellites

and sensors proposed;

(3) The range of orbits and altitudes

proposed, orbital characteristics such as

inclination angle, equator crossing time,

and those parameters which affect

swath width;

(4) The range of ground sample

distance, spatial resolution, field of

view, and instantaneous field of view

proposed;

(5) The specific spectral bands and/or

radar characteristics that are proposed;

(6) The data collection capabilities

proposed including on board storage

capacity, off-nadir viewing, scene revisit

time, tasking procedures, and

scheduling plans;

(7) The command (uplink and

downlink) and mission data (downlink)

transmission frequencies and system

transmission (uplink and downlink)

footprint;

(8) The methods applicant will use to

ensure that integrity of its operations

during a national security crisis,

including plans for: positive control of

the spacecraft and relevant ground

stations; denial of unauthorized access

to data transmissions to or from the

satellite; and restriction of collection

and/or distribution of unenhanced data

from specific areas at the request of the

U.S. Government. If such plans include

encryption, encryption devices used

will require U.S. Government approval.

(9) A description of an significant or

substantial agreements between the

applicant, its affiliates and subsidiaries,

with foreign nation or person, including

copies if available;

(10) The proposed concept of

operations for the system; and

(11) If the applicant wishes,

information concerning the extent to

which data comparable to those

generated by the applicant’s system

could be acquired or made available

from foreign systems which are not

subject to these regulations.

(d) The applicant’s proposed

technology control plan, if the concept

of operations includes any international

component which requires an export

license. Such plan should ensure that

the applicant:

(1) Maintain policies and procedures

to safeguard the export of controlled

information that is entrusted to it; and

(2) Complies with U.S. export control

laws and regulations, and does not take

actions adverse to the conditions of the

license; and

(3) Protects the operational control of

the licensed system from foreign

influence and any technology transfer

that would impinge on national

security, international obligations and

foreign policy; and

(4) Informs the Administrator of all

export licenses which the applicant

holds or intends to apply for.

(e) The applicant’s plans for providing

access to or distributing the unenhanced

data generated by the system including:

(1) A description of the plan for the

sale and distribution of such data;

(2) The method for making the data

available to governments whose

territories have been sensed;

(3) A description of the place for

making data available to the Archive

inclusion in the basic data set; and

(4) Opportunities for the data to be

made available for long term

monitoring, protection, and study of the

changing global environment and study

of the changing global environment.

(f) If the applicant is proposing to

follow a commercial data distribution

and pricing policy as provided for by

§ 960.11(b) or (c), the application shall

include the following additional

financial information:

(1) The extent of the private

investment in the system;

(2) The extent of any direct funding or

other direct assistance which the

applicant or its affiliates or subsidiaries

have received or anticipate receiving

from any agency of the U.S. Government

for the development, fabrication,

launch, or operation of the system

including direct financial support, loan

guarantees, or the use of U.S.

Government equipment or services;

(3) Any existing or anticipated

contract(s) between the applicant,

affiliate, or subsidiary and U.S.

Government agencies for the purchase

of data, information, or services from

the proposed system;

(4) Any other relationship between

the applicant, affiliate, or subsidiary and

the U.S. Government which has

supported the development, fabrication,

launch, or operation of the system; and

(5) Any plans to provide preferred or

exclusive access to the unenhanced data

to any particular user or class of users.

(g) The plan for post-mission

disposition of any remote-sensing

satellites owned or operated by the

applicant to allow a determination that

the plan minimizes orbital debris and

does not endanger public safety. If the

satellite disposition involves an

uncontrolled re-entry the applicant

must provide an analysis of the total

debris casualty area of the system’s

components and structure surviving reentry and assure that the system design

minimizes the threat to the public from

such re-entry.

(h) If information supplied in an

application becomes materially

inaccurate or incomplete prior to

issuance of the license, the operator

must promptly file the new or corrected

information with the Administrator. If

new or revised information is filed
59326 Federal Register / Vol. 62, No. 212 / Monday, November 3, 1997 / Proposed Rules

during the application process, the

Administrator shall promptly determine

whether the deadline imposed by

section 201(c) of the Act must be

extended to allow adequate review of

the revised application and, if so, for

how long.

§ 960.7 Confidentiality of information.

(a) Proprietary information. The

Administrator will treat business or

trade secrets or commercial or financial

information, the release of which to the

public would cause substantial harm to

the competitive position of the

submitter, as proprietary information, if

that information is so designated by the

submitter.

(1) Any person who submits

information to the Administrator in

connection with any requirements

imposed by these regulations may

request that the Administrator consider

that information, or any specified part,

be treated as proprietary.

(2) The submitter shall identify

proprietary information on each page by

placing brackets around the proprietary

information and clearly stating at the

top of each page containing such

information ‘‘Proprietary Treatment

Requested.’’

(3) The submitter shall provide a

general explanation as to why

proprietary treatment is being requested.

(b) Public summary. Prior to issuance

of a license, any person submitting

information for which proprietary

treatment is requested, shall also

provide to the Administrator a public

version of the document. This public

summary shall be available for public

review at a location designated by the

Administrator. The public summary

shall include:

(1) An adequate public summary of all

proprietary information; and

(2) A statement itemizing those

portions of the proprietary information

which cannot be summarized

adequately and all arguments

supporting that conclusion for each

portion.

(c) Status during consideration of

request. While considering whether to

grant a request for proprietary treatment,

the Administrator will not disclose or

make public the information. The

Administrator normally will decide not

later than 14 days after the Secretary

receives the request. The Administrator

will give persons whose request for

proprietary treatment of their

information has been denied seven (7)

working days notice before the

information is disclosed.

(d) Treatment of proprietary

information. Unauthorized disclosure of

any proprietary information marked in

accordance with this section is subject

to the criminal penalties set forth in 18

U.S.C. 1905. NOAA shall provide

marked information only to those

interested agencies which require the

information for review purposes and

shall ensure that the copies provided to

these agencies contain all markings

provided.

(e) Requests for disclosure. (1)

Requests for public disclosure of

information submitted, reported, or

collected pursuant to this part shall be

in accordance with 15 CFR 903.1 (which

directs the reader to 15 CFR part 4).

(2) Upon receipt of a request for

disclosure of information for which

proprietary treatment has been

requested, NOAA will immediately

notify the applicant or licensee who

submitted the information and inquire

whether the applicant or licensee

continues to request proprietary

treatment.

(3)(i) If the applicant or licensee

waives or withdraws a request for

proprietary treatment in full or in part,

the person shall deliver to NOAA a

written statement to that effect. If the

person confirms the request for

proprietary treatment, such person is

strongly encouraged to deliver to NOAA

a written statement in sufficient time for

NOAA to fully consider it in making its

formal determination (generally, not

later than the close of business on the

seventh working day after being notified

under paragraph (e)(3) of this section).

Such statement shall provide an

explanation as to why each piece of

information subject to the request is

entitled to proprietary treatment under

this section. The explanation should

describe:

(A) The commercial or financial

nature of the information;

(B) The nature and extent of

competitive advantage enjoyed as a

result of possession of the information;

(C) The nature and extent of the

competitive harm that would result

from public disclosure of the

information;

(D) The extent to which the

information has been disseminated to

employees and contractors of the person

submitting the information;

(E) The extent to which persons other

than the person submitting the

information possess, or have access to,

the information; and

(F) The nature of the measures that

have been and are being taken to protect

the information from disclosure; and

(G) Present any other arguments

against disclosure of information.

(ii) Failure to respond to the agency

notification in a written statement will

be deemed as a waiver of confidential

treatment.

§ 960.8 Review procedures for license

applications.

(a)(1) Within twenty-one (21) days

after the receipt of an application, the

Administrator, shall notify the

applicant, in writing whether the

application omits any of the information

required by § 960.6.

(2) For any systems whose operational

capabilities are similar to those of

previously licensed systems, an

application will be considered to be

complete on the date of receipt if all

information required in § 960.6 has been

provided. For any systems whose

operational capabilities exceed those of

previously licensed systems, the

Administrator shall determine the

additional information necessary to

complete the application. The

Administrator shall notify the applicant

of the need for this information and

specify the period of time in which to

provide it. The 120 day review period

prescribed in section 201(c) of the Act

will commence upon receipt of the

information requested by the

Administrator.

(b) The Administrator shall review

any completed application and make a

determination thereon, in accordance

with the Act and § 960.1(b) within 120

days of the receipt of such completed

application. If final action has not

occurred within such time, the

Administrator shall inform the

applicant of any pending issues and of

actions required to resolve them.

(c) Before issuing a licensee, the

Administrator shall find, in writing, that

the applicant will comply subject to

penalties prescribed by law with any

national security concerns, international

obligations, and foreign policies of the

United States and with all other

requirements of the Act and these

regulations.

(d)(1) If the Administrator denies the

license or includes additional

conditions in the license other than

those set forth in §§ 960.9 and 960.10,

the Administrator shall notify the

applicant in writing together with a

concise statement, of the facts in the

record which the Administrator has

determined support the action. Such

notice shall inform the applicant that,

within twenty-one (21) days of the date

the notice was mailed, the applicant

may request a hearing on the record on

the Administrator’s decision by serving

a written request on the Administrator

at the address specified in the Notice.

(2) The applicant shall be entitled at

any time during business hours to

inspect and copy the entire record, in
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accordance with applicable law (e.g. 5

U.S.C. 552b, the Freedom of Information

Act), upon which the decision was

made.

(3) In the interest of compiling an

accurate record of the decisionmaking

for later possible review, oral

communications on matters affecting

the substance of a pending receives such

a communication, the Administrator

shall include in the record a summary

of the communication and the

circumstances surrounding its receipt.

(e)(1) The hearing requested under

paragraph (d)(1) of this section may be

granted unless, in accordance with 5

U.S.C. 554(a)(4), the hearing would

involve the conduct of a military or

foreign affairs function, i.e.

determinations concerning license

conditions necessary to meet national

security concerns, international

obligations and foreign policy concerns

are not subject to review. A

determination to deny a hearing on this

basis shall constitute final agency

action.

(2) Any hearing shall be closed to the

public as necessary to protect classified

information.

(3) A hearing under this section shall

be based solely on the record developed

in accordance with § 960.6 and this

section.

(4) The hearing shall be held in

accordance with the procedures set

forth at 15 CFR part 904, subpart C,

except to the extent that these sections

allow the introduction of testimony or

other evidence not contained in the

administrative record upon which the

decision was made (see e.g.

§§ 904.204(d) and (e); 904.240–242; and

904.252).

(f) The Administrator shall terminate

the license application process if:

(1) The application is withdrawn

before the decision approving or

denying it is issued; or

(2) the applicant, after receiving a

request for additional information

pursuant to paragraph (c) of this section,

does not provide such information

within the time stated in the notice.

§ 960.9 Conditions for operation.

(a) Each license issued for the

operation of a remote sensing space

system shall specify that the licensee

shall comply with all the requirements

of the Act and these regulations, and

shall set forth the conditions necessary

to ensure compliance.

(b) A licensee shall operate its system

in a manner that preserves the national

security and observes the international

obligations and the foreign policies of

the United States. The basic license

conditions to ensure compliance with

these requirements are set forth in

§ 960.10 and conditions consistent with

this section will be incorporated in each

license. Any additional conditions

necessary to ensure compliance with

these requirements will be incorporated

into that license in accordance with

§ 960.8(d).

(c)(1) A licensee shall make available

to the government of any country

(including the United States)

unenhanced data collected by its system

concerning the territory under the

jurisdiction of such government as soon

as such data are available and on

reasonable terms and conditions.

However, no sensed data shall be

provided to the sensed state if such

release is contrary to U.S. national

security, international obligations or

foreign policy concerns, e.g. where the

sensed state is deemed to be a state

sponsor of terrorism or a country subject

to U.S. or international arms embargoes.

(2) To comply with this subsection, a

licensee must make its unenhanced data

available on request to the affected

government as soon as the licensee is

able to distribute them commercially or

as soon as the licensee has processed

them into a format that the licensee uses

for its own purposes, whichever occurs

sooner.

(3) For purposes of this subsection,

terms and conditions are reasonable if

the licensee:

(i) Follows a nondiscriminatory data

access policy that complies with section

501 of the Act and § 960.11 of this part;

(ii) Makes the unenhanced data

available to all users on a regular

commercial basis and does not establish

terms and conditions which favor any

user, or any class or users over the

affected government in terms of

delivery, format pricing, or technical

considerations; or

(iii) Establishes separate, reasonable

terms and conditions for the affected

government if the licensee makes some

or all of the unenhanced data available

only to particular users. In establishing

these reasonable terms and conditions

the licensee shall take into account the

intended use of the data by the affected

government; and

(iv) Has provided affected

governments an opportunity to

demonstrate that the above terms and

conditions present an undue hardship

in acquiring the unenhanced data.

(4) Issues relating to appropriate

notification of affected governments

including issues concerning disputed

territories and the methods for ensuring

availability, international obligations

and foreign policy will be referred to the

Department of State.

(5) Issues relating to national security

will be referred to the Department of

Defense.

(d) A licensee shall make available on

a nondiscriminatory basis in accordance

with section 501 of the Act and § 960.11

of this part any unenhanced data

designated by the Administrator in the

license in accordance with section

201(e) of the Act and § 960.11.

(e) A licensee shall dispose of any

space platforms owned or operated by

the licensee upon termination of

operations under the license in a

manner satisfactory to the President.

The licensee shall obtain approval from

the Administrator of all plans and

procedures for the disposition of such

platforms, e.g. uncontrolled re-entry,

burn on re-entry or controlled de-orbit,

providing sufficient notification to

allow determination that the proposed

procedures will minimize orbital debris

and not jeopardize safety.

(f) A licensee shall inform the

Administrator immediately of any

deviation or proposed deviation from

the approved operational characteristics

of the system furnished pursuant to

§ 960.6 or § 960.13. Such notification is

required sufficiently prior to the

deviation so as to enable government

approval of such deviation if

circumstances permit or, if advance

notice is not possible because of an

emergency posing an imminent and

substantial threat of harm to human life,

property, the environment or the remote

sensing space system itself, the licensee

shall notify the Administrator of the

deviation as soon as circumstances

permit.

(g) A licensee shall notify the

Administrator, for review under

§ 960.12, or its intent to enter into any

significant or substantial foreign

agreement. The proposed agreement

may not be implemented by the licensee

until the licensee has been advised by

the Administrator that the document’s

provisions are acceptable or acceptable

with conditions.

(h) A licensee shall make available

unenhanced data requested by the

Archive for the basic data set on

reasonable terms as agreed by the

licensee and the Archive. A licensee

shall make available to the

Administrator for review upon request

the record of unenhanced data obtained

pursuant to the license. Before any

unenhanced data so obtained is purged

from its holdings, or the holdings of its

distributors, or customers that may have

rights to distribute such data, the

licensee shall make such data available

to the Archive at the cost of

reproduction and transmission with no
59328 Federal Register / Vol. 62, No. 212 / Monday, November 3, 1997 / Proposed Rules

further restrictions on release of the data

to the public.

(i) If the space system will utilize a

U.S. Government platform, the licensee

will reach an agreement with the

appropriate agency to reimburse the

Government for all related costs and to

ensure that use of the platform will not

interfere with the Government’s

mission.

§ 960.10 National security, international

obligations and foreign policy concerns.

(a) For any system whose operational

capabilities are similar to those of

previously licensed systems, it is

presumed that any concerns relating to

national security, international

obligations, and foreign policies can be

resolved through the imposition of

similar license conditions. For any

system whose operational capabilities

exceed those of previously licensed

systems, the Administrator shall make

every effort to resolve these concerns

through license conditions and any

additional ones as necessary, but may

deny the issuance of a license if

necessary to avoid compromising these

concerns.

(b) The conditions in licenses shall

include:

(1) The licensee shall maintain

positive control of the spacecraft at all

times and shall include safeguards to

ensure the integrity of spacecraft

operations. The Licensee shall also

maintain and make available to the U.S.

Government, upon request, a record of

all satellite tasking operations for the

previous year, and allow the

Administrator to inspect such records at

all reasonable times.

(2) During periods when national

security or international obligations

and/or foreign policies may be

compromised, as defined by the

Secretary of Defense or the Secretary of

State, respectively, the Secretary may,

after consultation with the appropriate

agency(ies), require a Licensee to limit

data collection and/or distribution by

the system to the extent necessitated by

the given situation. Decisions to impose

such limits only will be made by the

Secretary of Commerce in consultation

with the Secretary of Defense or the

Secretary of State, as appropriate.

(3) During those periods when, and

for those geographic areas that, the

Secretary will require the Licensee to

limit distribution under paragraph (b)(2)

of this section the licensee shall, on

request, make the unenhanced data thus

limited available exclusively to the U.S.

Government by means of government

furnished rekeyable encryption on the

down-link. To make this possible, the

conditions in the license shall also

require the licensee to use only

encryption devices approved by the U.S.

Government and to use a data downlink format that allows the U.S.

Government access and use of these

data during such periods.

(c) In determining the extent of

required controls on the collection or

distribution of imagery, the Government

will give full consideration to:

(1) Making limitations imposed

applicable to the smallest geographic

area feasible and for the briefest period

of time necessary for the full

achievement of the intended objective.

(2) Alternative actions such as

delaying the transmission or

distribution of data, restricting the field

of view of the system, encryption of the

data if this is possible, or other means

to control access to the data so as to

justify the overall impact on commercial

operations.

(d) In accordance with section 507(d)

of the Act, if the conditions described in

paragraph (b)(3) of this section or any

other license conditions result in

technical modifications being imposed

on a licensee on the basis of national

security concerns and the

Administrator, in consultation with the

appropriate federal agencies, determines

that additional costs will be incurred by

the licensee, or that past development

costs (including the cost of capital) will

not be recovered by the licensee, the

agency or agencies requesting such

technical modifications may be required

to reimburse the licensee for such

additional or development costs, but not

for anticipated profits. Reimbursements

may cover costs associated with

required changes in system

performance, but not costs ordinarily

associated with doing business abroad.

The costs and terms associated with

meeting this condition will be

negotiated directly between the

Licensee and the agency or agencies

requesting the technical modifications

in accordance with section 507(d) of the

Act. In no event shall licensees be

entitled to reimbursements for license

conditions imposed on the basis of

international obligations and foreign

policy considerations.

§ 960.11 Data policy for remote sensing

space systems.

(a) In accordance with section 501 of

the Act, if the U.S. Government has or

will directly fund all or a substantial

part of the development, fabrication,

launch, or operation costs of a licensed

system, the Administrator shall state in

the license that all of the unenhanced

data from the system shall be made

available on a nondiscriminatory basis.

(b) If the U.S. Government has not

funded and will not fund, either directly

or indirectly,any of the development,

fabrication, launch, or operations costs

of a licensed system, the Administrator

shall make no designation in the license

and the licensee may provide access to

its unenhanced data in accordance with

normal commercial policies, subject to

the requirement for providing data to

the government of any sensed state in

§ 960.9(c) and subject to implementation

of the licensee’s plan contained in its

application to provide widespread

access to its unenhanced data for noncommercial scientific and educational

purposes.

(c) If the U.S. Government has funded

some of the development, fabrication,

launch, or operations costs of a licensed

system (either directly or indirectly), the

Administrator, in consultation with

other appropriate U.S. agencies, shall

determine whether the interest of the

United States in promoting widespread

availability of remote-sensing data

requires that some or all of the

unenhanced data from the system be

made available on a nondiscriminatory

basis in accordance with section 501 of

the Act and shall designate in the

license any data subject to this

requirement. In making this

determination, the Administrator shall

consider:

(1) The extent and proportion of

private and federal funding of the

system;

(2) The extent of the governmental

versus the commercial market for the

unenhanced data;

(3) The effect of a nondiscriminatory

data access designation on the

applicant’s commercial activity;

(4) The extent to which the

applicant’s proposed commercial data

policies would encourage foreign

operators to limit access, particularly for

research and public benefit purposes;

and

(5) The extent to which the U.S.

interest in promoting widespread data

availability can be satisfied through

license conditions that ensure access to

the data for research and public benefit

purposes without requiring full

nondiscriminatory access.

(d) The data policy established

pursuant to this section shall be

consistent with any contract or other

agreement entered into between a U.S.

government agency and the licensee.

§ 960.12 Notification of Foreign

Agreements

(a) Upon notification by a licensee,

pursuant to § 960.9(g), the

Administrator shall initiate review of

the proposed significant or substantial
Federal Register / Vol. 62, No. 212 / Monday, November 3, 1997 / Proposed Rules 59329

agreement in light of the national

security, international obligations and

foreign policy concerns of the U.S.

Government.

(b)(1) If the Administrator determines,

pursuant to the Act and § 960.1(b), that

a proposed agreement will impair his or

her ability to enforce the terms or

conditions of the license, the

Administrator shall identify the terms

and conditions of the license and

specify how the agreement impairs

enforcement.

(2) If the Administrator determines,

under paragraph (d)(1) of this section

that a proposed agreement will

compromise a specific national security

interest, international obligation, or

foreign policy of the United States, the

Administrator shall provide the

Licensee with an unclassified

explanation of the U.S. interest that is

at risk, if such is possible without

jeopardizing the interest at risk. Such

notice shall inform the licensee that,

within twenty-one (21) days from the

date the notice was mailed, the licensee

may provide an alternative that will not

jeopardize the U.S. interest that is at risk

or request a hearing or, within seven (7)

days of such date, may request an

expedited hearing.

(e)(1) The Administrator shall grant

the hearing requested under paragraph

(d) of this section unless, in accordance

with 5 U.S.C 554(a)(4), the hearing

would involve the conduct of a military

or foreign affairs function, i.e.

determinations of the concerning

license conditions necessary to meet

national security concerns, international

obligations and foreign policy concerns

are not subject to review. A

determination to deny a hearing on this

basis shall constitute final agency

action. Any hearing shall be closed as

necessary to protect classified

information. The hearing shall be based

solely on the record developed in

accordance with this section and shall

be for the purpose of determining

whether a preponderance of the

evidence in that record supports the

objection raised to the proposed

agreement.

(2) The applicant shall be entitled at

any time during business hours to

inspect and copy the entire record, in

accordance with applicable law, upon

which the decision was made.

(3) In the interest of compiling an

accurate record of the decisionmaking

for later possible review, oral

communications on matters affecting

the substance of a pending receives such

a communication, the Administrator

shall include in the record a summary

of the communication and the

circumstances surrounding its receipt.

(f)(1) A hearing requested under

paragraph (d) of this section shall be

held in accordance with the procedures

set forth as 15 CFR part 904, subpart C,

except insofar as those procedures

provide for the introduction of

testimony or other evidence not

contained in the administrative record

upon which the decision was made (see

e.g. §§ 904.204 (d) and (e); 904.240–242;

and 904.251–252).

(2) The Licensee shall be entitled to

an expedited hearing as provided for in

15 CFR 904.209 if the request is filed

and all other parties are served within

seven (7) days of the date the

Administrator’s notice under paragraph

(d) of this section, was mailed,

specifically sets forth the Licensee’s

objections to the determinations

contained in the notice, and

demonstrates that delaying the proposed

agreement during the time necessary to

complete the normal hearing process

will jeopardize that agreement. Where

an expedited hearing is granted, the

procedures of subpart C of 15 CFR part

904 shall be modified to accommodate

the following schedule:

(i) The hearing shall commence

within 5 days after the filing of the

request with the Office of the

Administrative Law Judge (ALJ) unless

the ALJ postpones the date of the

hearing or grants continuation of the

hearing in the interest of justice or the

parties agree that it shall commence at

a later time.

(ii) The ALJ shall make provision for

daily transcripts. Hearing shall be

stenographically reported, transcribed,

and made available to the public as

required by statute.

(iii) Within 5 days of the conclusion

of the hearing, the parties shall propose

findings and conclusions to the ALJ

accompanied by a supporting brief.

(iv) Within 10 days after receipt of

such brief, the ALJ shall issue his or her

findings and conclusions and a

statement of the reasons on which they

are based. The ALJ’s decision shall

become final in 10 days unless a party

files suit in the United States District

Court contesting the decision as not

based upon substantial evidence in the

record considered as a whole.

(v) Extensions of procedural dates

shall be granted only when required in

the interest of justice, unless the parties

otherwise agree.

(g) Notification of any agreement that

provides for an on-going or a continuous

relationship serves as notification of

specific transactions carried out within

the scope of that agreement.

(h) A Licensee seeking to enter a

foreign agreement that would require

the modification of the terms of an

existing license shall submit a license

amendment as provided in § 960.14 and

the proposed foreign agreement shall be

considered in the context of the

amendment review process.

§ 960.13 Amendments to licenses.

(a) The licensee shall notify the

Administrator when the information

supporting a license has become

inaccurate and shall file all necessary

amendment applications in a timely

manner. Notifications shall contain all

relevant new information and shall be

filed at the same address identified in

§ 960.5(a). Amendment applications

shall be filed in accordance with the

procedures specified in §§ 960.5 and

960.6 for original license applications.

(b) Pursuant to the Act and § 960.1(b),

the Administrator shall determine

whether the amendment is permissible

under the Act and § 960.9.

(c) If the Administrator determines

that the notification omits information

required for an amendment application,

the Administrator shall notify the

licensee of the items omitted.

(d) A licensee may not take any of the

following actions until it has been

granted an amendment to the license:

(1) Assign the license;

(2) Transfer sufficient voting power to

control the management, policies and/or

operations of the licensee or an

operating subsidiary to any person or to

foreign nations or persons collectively;

(3) Incur any change in citizenship of

the chairman of the board, president, or

other chief executive officer; or

(4) Deviate from the orbital

characteristics, performance

specifications, data collection and

exploitation capabilities, and any other

operational characteristic identified

under § 960.6(c), except to the extent

necessitated by an emergency posing an

imminent and substantial threat of harm

to human life, property, the

environment or the remote sensing

space system itself. In such emergency

cases, the licensee shall return to

previously approved operations as soon

as circumstances permit. Any request to

depart from approved orbital and data

collection characteristics of the system

for an extended period shall be in the

form of a timely request to amend the

license.

§ 960.14 Investment agreements.

(a)(1) Domestic investment

agreements. If the acquisition of any

security or other financial interest in a

licensee results in any domestic person

becoming the beneficial owner of 10

percent or more of such securities or

class of such securities, or of any other

financial interest in the licensee, the
59330 Federal Register / Vol. 62, No. 212 / Monday, November 3, 1997 / Proposed Rules

acquisition constitutes a material

change in the information supporting

the license and requires notification

under § 960.13. The licensee shall file

this notification within ten days of the

acquisition and shall include:

(i) The name of the acquirer;

(ii) The date of acquisition;

(iii) The number of shares of

securities or the extent of any other

financial interest in the licensee owned;

and

(iv) Such other information as NOAA

may specify.

(2) If the acquisition of any security or

other financial interest in a licensee

results in any domestic person

becoming the beneficial owner of 25

percent or more of such class of

securities, or any other financial interest

of the licensee, the licensee shall

provide assurance that such acquisition

will not result in a transfer of sufficient

voting power to control its management,

policies, and/or operations. The licensee

shall file a statement within 10 days of

such acquisition setting forth the basis

for its conclusion that no such transfer

of voting power will occur and include

the following information in addition to

that required by paragraph (a)(1) of this

section:

(i) The identity and residence of the

beneficial owner and of all other

persons by whom or on whose behalf

the purchases are to be effected;

(ii) The number of shares of such

securities or the extent of any other

financial interest in the licensee which

are beneficially owned, and the number

of shares or other financial interests

which there is a right to acquire,

directly or indirectly, by

(A) Such person, and

(B) By each affiliate of such person,

giving the background, identity, and

residence of each such associate;

(iii) Information as to any contracts,

arrangements, or understandings with

any person with respect to any

securities of or other financial interests

in the licensee, including but not

limited to transfer of any of the

securities, joint ventures, loan or option

arrangements, guaranties of loans,

guaranties against loss or guaranties of

profits, division of losses or profits, or

the giving or withholding of proxies,

naming the persons with whom such

contracts, arrangements, or

understandings have been entered into,

and giving the details thereof;

(iv) The number of shares of the

securities and the particular class of

securities, or the extent of the other

financial interests in the licensee, which

are retained by existing beneficial

owners; and

(v) Such additional information, as

NOAA may prescribe as necessary or

appropriate to protect the national

security interests or international

obligations of the United States.

(3) Before any domestic person

becomes the beneficial owner of 40

percent or more of any securities, any

class of securities, or any other financial

interest of the licensee, the licensee

must file an amendment application in

accordance with § 960.13 at least 90

days prior to acquisition.

(b)(1) Foreign investment agreements.

If the acquisition of any security or

other financial interest in a licensee

results in any foreign person or nation

becoming the beneficial owner of 5

percent or more of such securities or

class of such securities, or of any other

financial interest in the licensee, the

acquisition constitutes a material

change in the information supporting

the license and requires notification

under § 960.13 unless the licensee has

provided notice in advance of

acquisition pursuant to paragraphs (b)

(2)–(5) of this section. The licensee shall

file this notification within ten days of

the acquisition and shall include:

(i) The name of the acquirer;

(ii) The date of acquisition;

(iii) The number of shares of

securities or the extent of any other

financial interest in the licensee owned;

(iv) Any updates to the technology

control plan, if necessary; and

(v) Such other information as NOAA

may specify.

(2) Before any foreign person or

nation, becomes the beneficial owner or

15 percent or more of any securities, any

class of securities, or any other financial

interest of the licensee, the licensee

shall provide assurance that such

acquisition will not result in a transfer

of sufficient voting power to control its

management, policies, and/or

operations. The licensee shall file a

statement setting forth the basis for its

conclusion that no such transfer will

occur and include the following

information in addition to that required

by paragraph (b)(1) of this section:

(i) The identity, residence, and

citizenship of the beneficial owner and

of all other foreign persons or nations by

whom or on whose behalf the purchases

are to be effected;

(ii) The number of shares of such

securities or the extent of any other

financial interest in the licensee which

are beneficially owned, and the number

of shares or other financial interests

which there is a right to acquire,

directly or indirectly, by

(A) Such foreign person or nation, and

(B) By each affiliate of such foreign

person or nation, giving the background,

identity, residence and citizenship of

each such associate;

(iii) Information as to any contracts,

arrangements, or understanding with

any foreign person or nation with

respect to any securities of or other

financial interests in the licensee,

including but not limited to transfer of

any of the securities, joint ventures, loan

or option arrangements, guaranties of

loans, guaranties against loss or

guaranties of profits, division of losses

or profits, or the giving or withholding

of proxies, naming the persons with

whom such contracts, arrangements, or

understandings have been entered into,

and giving the details thereof;

(iv) The number of shares of the

securities and the particular class of

securities, or the extent of the other

financial interests in the licensee, which

are retained by existing beneficial

owners;

(v) Any updates to the technology

control plan, if necessary; and

(vi) Such additional information, as

NOAA may prescribe as necessary or

appropriate to protect the national

security interests or international

obligations of the United States.

(3) The statement required by this

section shall be provided at least 60

days prior to acquisition by foreign

persons or nations. The statement shall

be filed with the relevant investment

agreement which shall be deemed a

‘‘significant or substantial agreement’’

and reviewed in accordance with

§ 960.12.

(4) Before any foreign person(s) or

nation(s) collectively become the

beneficial owners of more than 40

percent of any securities, any class of

securities, or any other financial interest

of the licensee, the licensee must file an

amendment application in accordance

with § 960.13 at least 90 days prior to

acquisition. The amendment application

must clearly rebut the presumption that

the acquisition will result in the transfer

of sufficient voting power to control the

licensee’s management, policies, and/or

operations and shall include a

certification, in writing, to the

Administrator that no foreign persons or

nations, either individually or

collectively, can influence the

Licensee’s corporate activity related to

its obligations under the terms and

conditions of its license; this

certification must show that control

over the Board of Directors is still

exercised by the majority U.S.

shareholders and explain how the Board

of Directors insures that there is no

undue influence exercised by the

foreign shareholders on the

appointment of key officers of the

corporation.
Federal Register / Vol. 62, No. 212 / Monday, November 3, 1997 / Proposed Rules 59331

(5) No amendment shall be granted

where more than 49% of the voting

interest will be beneficially owned by

foreign persons or nations.

(c) If the acquisition by any person(s)

or nation(s) of any security or other

financial interest of the licensee,

regardless of the percentage acquired,

will result in a transfer of sufficient

voting power to control the

management, policies, and/or

operations of the licensee; or if any

person(s) or nation(s) will through a

contractual relationship or any other

means obtain the ability to control the

management, policies and/or operations

of the licensee, the licensee must file an

amendment application in accordance

with § 960.13 at least 90 days prior to

acquisition. There is a strong

presumption that the transfer of such an

interest to foreign persons or nations

will not preserve the national security

or international obligations of the

United States and will not be approved.

(d) The provisions of this section

apply only to licensees that are subject

to U.S. jurisdiction or control under

§ 960.2(a). Foreign persons that are

subject to U.S. jurisdiction or control

under § 960.2(b) shall report changes in

their financial interests in accordance

with the terms and conditions of their

licensees.

§ 960.15 Certain rights not conferred by

license.

Issuance of a license does not affect

the authority of the Federal

Communications Commission under the

Communications Act of 1934 (47 U.S.C.

151 et seq.), or the authority of the

Secretary of Transportation under the

Commercial Space Launch Act of 1984

(49 U.S.C. app. 2601 et seq.), the

authority of the Secretary under the

Export Administration Act (50 U.S.C.

app. 2401 et seq.), or the authority of the

Secretary of State under the Arms

Export Control Act (22 U.S.C. 2778).

Subpart C—Enforcement Procedures

§ 960.16 General.

The Administrator may take

appropriate actions against a licensee if

the licensee fails to comply with the

Act, these regulations, or any condition

or restriction in the license, Such

actions may include any or all of the

following: pursuit of judicial

determinations to terminate, modify or

suspend licenses or to terminate

licensed operations, administratively

imposed civil penalties, and seizure

pursuant to warrant. Such actions shall

be taken in accordance with this

subpart.

§ 960.17 Prohibitions.

It is unlawful for any person who is

subject to the jurisdiction or control of

the United States, directly or through

any subsidiary or affiliate to:

(a) Operate a private remote sensing

system without possession of a valid

license issued under the Act and these

regulations;

(b) Violate any provision of the Act or

these regulations or any term, condition,

or restriction of the license; or

(c) Violate any order, directive, or

other notice issued by the Secretary in

accordance with § 960.10(b)(2) to inform

the licensee of any temporary

restrictions imposed or necessary

actions to be followed during periods

when national security or international

obligations/and or foreign policies may

be compromised.

§ 960.18 Sanctions.

As authorized by section 203(a) of the

Act, if the Administrator determines

that the licensee has substantially failed

to comply with the Act, these

regulations, or any term, condition or

restriction of the license, the

Administrator may request the

appropriate U.S. Attorney to seek an

order of injunction or similar judicial

determination from the U.S. District

Court for the District of Columbia

Circuit or a U.S. District Court within

which the licensee resides or has its

principal place of business, to

terminate, modify, or suspend the

license, and/or to terminate licensed

operations on an immediate basis. For

purposes of this section, failure to

comply with the Act, these regulations

or a term, condition, or restriction of a

license or of the Act shall be considered

substantial where

(a) The failure is knowing; or

(b) The failure occurs after notice by

the Administrator; or

(c) The licensee has been advised that

it failed to comply with an international

obligation, foreign policy or national

security concern of the United States.

§ 960.19 Civil penalties.

(a) In addition to the sanctions

provided in § 960.16, any person who

violates any provision of the Act or of

any license issued thereunder or

regulation contained in this part may be

assessed a civil penalty by the

Administrator of not more that $10,000

for each violation. Each day of operation

in violation constitutes a separate

violation.

(b) When the Administrator proposes

the assessment of a civil penalty under

this section, the Administrator will

serve upon the licensee by mail a Notice

of Civil Penalty and Assessment

(Notice) containing:

(1) A concise statement of the facts

believed to show a violation;

(2) A specific reference to the

provisions of the Act, regulation, or

license allegedly violated;

(3) The amount of the proposed

penalty in accordance with paragraph

(a) of this section.

(c) Within 30 days after receipt of the

Notice, the licensee may request a

hearing by serving a written request on

the Administrator either in person or by

certified or registered mail, return

receipt requested, at the address

specified in the Notice. Such hearing

shall be held in accordance with

procedures set forth at 15 CFR part 904,

supart C.

(d) If the respondent does not request

a hearing within thirty days of the date

of the Notice, the civil penalty and the

assessment shall become the final

determination of the Administrator.

§ 960.20 Seizure.

If the Administrator believes that any

object, record, or report, was used, is

being used or is likely to be used in

violation of the Act, these regulations or

any condition or restriction of the

license, the Administrator may seek a

warrant from a magistrate to seize such

item(s) by showing probable cause for

this belief. Seizure shall be conducted

in accordance with 15 CFR part 904,

subpart F.

[FR Doc. 97–28948 Filed 10–31–97; 8:45 am]

BILLING CODE 3510–12–M

ENVIRONMENTAL PROTECTION

AGENCY

40 CFR Part 52

[CA 083–0053b; FRL–5911–5]

Approval and Promulgation of State

Implementation Plans; California State

Implementation Plan Revision, San

Diego County Air Pollution Control

District, Ventura County Air Pollution

Control District

AGENCY: Environmental Protection

Agency (EPA).

ACTION: Proposed rule.

SUMMARY: EPA is proposing to approve

revisions to the California State

Implementation Plan (SIP) which

concern the control of volatile organic

compound (VOC) emissions from metal

container, metal closure, and metal coil

coating operations and marine vessel

coating operations. The intended effect

of proposing approval of these rules is