4 Earth observation satellite data
| Committee's assessment
| Legally and politically important |
| Committee's decision | Not cleared from scrutiny; further information requested
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| Document details | Draft Directive about dissemination of Earth observation satellite data for commercial purposes
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| Legal base | Article 114 TFEU; co-decision; QMV
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| Department | Business, Innovation and Skills
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Summary and Committee's conclusions
4.1 The Commission presents this draft Directive, as a single
market issue, to harmonise the rules that govern the dissemination
of Earth observation data, and particularly that of high resolution
satellite data (HRSD), to address possible fragmentation of the
EU market. The Commission notes that currently only three Member
States have legislation in place on this issue. It argues that
this is liable to cause distortion of competition, and that such
distortion is likely to increase as more countries gain HRSD capabilities.
The Commission says that approximating Member States' legislation
would ensure the proper functioning of the single market, as it
would make dissemination of data more straightforward and predictable
for businesses.
4.2 The Government reports considerable doubt as
to the need for this draft Directive, which the Commission justifies
on the basis of a very inadequate consultation and impact assessment.
As for the substance of the draft Directive the Government draws
attention to its fundamental security concern about the definition
of sensitive data, which it says is wider than just HRSD.
4.3 We note that whilst the Government considers
that the necessity for EU action remains open to question, and
is highly critical of the Commission's consultations and impact
assessment, it nevertheless recognises that some form of control
of HRSD is necessary on national security grounds. However this
draft Directive appears unacceptable, at least in its present
form.
4.4 Accordingly, before considering this matter
further we should like to hear from the Government:
· about
responses to any attempt it makes to persuade the Commission to
withdraw the proposal or Member States to join in blocking it;
· failing
success on that front, about negotiation of improvements to the
proposal, particularly in relation to a more nuanced coverage
of data, the dissemination of which might give rise to security
concerns, and to the question of whether a Common Security and
Defence Policy legal base would be more appropriate; and
· about
the outcome of the Government's own impact assessment.
4.5 Meanwhile the document remains under scrutiny.
Full details of
the document: Draft Directive on dissemination
of Earth observation satellite data for commercial purposes: (36150),
11002/14 + ADDs 1-3, COM(14) 344.
Background
4.6 The Commission's 2013 Communication, EU Space
Industrial Policy: Releasing the potential for economic growth
in the space sector,[9]
set out its view on the need for a coherent regulatory framework
to foster the EU market in space products and services. It referred
in particular to establishing a possible regulatory
initiative for the production and dissemination of HRSD for commercial
purposes. In May 2013 the Council adopted Conclusions on the Communication
and related documents which recognised "the
need to examine existing legal frameworks with a view to ensuring
the security, safety, sustainability and economic development
of space activities" and invited "the Commission to
assess the need for the development of a space legislative framework
in the context of ensuring the proper functioning of the internal
market, respecting the principle of subsidiarity".[10]
The document
4.7 In this context the Commission now presents this
draft Directive, as a single market issue, to harmonise the rules
that govern the dissemination of Earth observation data, and particularly
that of HRSD as defined in the proposal, to address possible fragmentation
of the EU market. The Commission notes that currently only France,
Germany and Italy have legislation in place on this issue. It
argues that this is liable to cause distortion of competition,
and that such distortion is likely to increase as more countries
gain HRSD capabilities. The Commission says that approximating
Member States' legislation would ensure the proper functioning
of the single market, as it would make dissemination of data more
straightforward and predictable for businesses.
4.8 The Commission proposes that the Directive would:
· provide
for open and unimpeded dissemination or free circulation of all
Earth observation data, except HRSD, as there are no security
concerns about the use of such data;
· focus
on how to handle dissemination of HRSD, because it is recognised
that some controls are needed due to security concerns;
· not
cover data from the EU's Copernicus and GMES (Global Monitoring
for Environment and Security) programmes,[11]
which are subject to their own data and security policies, or
data generated expressly for the purposes of security and defence;
· provide
a common definition and standard for HRSD, which is needed to
ensure Member States' respective national security concerns could
be properly and consistently addressed;
· establish
a 'screening procedure', which would enable assessment of the
sensitivity of HRSD prior to its generation and dissemination,
thus allowing rapid dissemination of non-sensitive data for commercial
purposes whilst safeguarding security concerns;
· require
Member States to implement laws to comply with its contents by
31 December 2017; and
· place
obligations on Member States for the collection and reporting
of information to the Commission, such as the overall numbers
of transactions screened, requests for screening, requests for
authorisation and denials of authorisation.
4.9 HRSD is defined by the Commission, in the annex
to the draft Directive, in terms of spatial resolution at different
parts of the spectral range, for example five metres or less in
the thermal infrared range, three metres or less in the microwave
range, and so forth.
The Government's view
4.10 In his Explanatory Memorandum of 9 July 2014
the Minister of State for Universities and Science, Department
for Business, Innovation and Skills (Mr David Willetts), says
first, in relation to subsidiarity, that:
· the
Commission believes that a Directive is necessary due to the potentially
divergent, fragmentary regulation between Member States, if more
implement regulations;
· it
says that handling this issue at EU level would remove bureaucratic
barriers and improve conditions for business;
· it
is likely that more Member States, further to France, Germany
and Italy, would seek to establish national regulation on this
matter in the absence of EU-level action;
· if
one accepts the Commission's supposition that this would lead
to a distorted market or discrimination in access to data, the
proposed action has transnational aspects that could not be resolved
by Member States individually and there could be advantages to
a Directive; and
· there
is however a lack of evidence for the necessity of EU action and
this remains open to question.
4.11 Turning to the policy implications of the proposal
the Minister says that:
· dissemination
of HRSD could give rise to security concerns in the UK and the
increasing capability of commercial systems means that some control
mechanism is necessary, whilst at same time promoting and stimulating
use of space derived data for commercial and societal benefit;
· whilst
the Government recognises that some form of control is necessary
for national security arguments, the details of the proposal raise
some concerns; and
· it
is, furthermore, unconvinced that the measures proposed will stimulate
the market.
4.12 The Minister explains that:
· the
UK currently controls access to data through export licencing
conditions that are imposed on the export of the satellites themselves;
· there
has been some consideration of addressing security concerns through
technical conditions as part of the export licence, but current
UK export control regulations do not cover the dissemination of
data;
· the
draft Directive is based largely on existing German national policy
and legislation, which covers original data providers and requires
licensing for HRSD dissemination;
· the
approach taken by Germany is 100% coverage of all individual data
transfers and is highly reliant upon automated checking of the
metadata associated with any satellite data being transferred;
· it
does not however mitigate the risk of propagating data products
which may have been enhanced through amalgamation with additional
data inputs;
· practically,
the proposal would affect two UK companies: DMCii and Infoterra;
· DMCii
offers a range of services: on-demand imagery and a managed service
option for those who want imagery without having to undertake
to operate their own systems;
· DMCii
retains ownership and operates the satellite, but leases the long-term
imaging capacity to its customer(s);
· the
DMC satellites are designed and built by Surrey Satellite Technology
Ltd (SSTL) but each satellite is independently owned and controlled
by a DMC Consortium member;
· DMCii
owns and operates its own satellites and coordinates DMC members'
satellites to provide a seamless imaging service;
· DMCii's
parent company is SSTL;
· in
late 2014/early 2015 SSTL will be launching DMC3 which will be
capable of acquiring images with a spatial resolution of one metre
in Panchromatic mode and four metre in multispectral —
these would therefore would fall within the scope of the proposed
Directive;
· Infoterra
is a subsidiary of Airbus and sits within the GEO-Information
business division of Airbus Defence and Space;
· Infoterra
focuses on the provision of solutions such as acquiring and processing
data, data analysis, hosting and delivering large datasets, training
and consultancy; and
· customers
include the public sector (including the Commission, the European
Space Agency, national environment agencies and mapping agencies)
and commercial customers such as telecoms, oil and gas, insurance
and transport.
4.13 The Minister then comments that:
· a
fundamental security concern for the UK is the definition of 'sensitive
data' in the proposal and in particular the 'Information Content'
of any data;
· the
assumption in the proposal is that only HRSD is sensitive and
that 'normal resolution' data is not;
· this
is, however, an outmoded view of satellite data and how it might
be used;
· for
example, lower spatial-resolution data with a high temporal-resolution
(high revisit rate to a given point on the Earth) could be used
to track the movement of large targets, such as naval vessels,
over a large area;
· in
addition, 'fused data', where additional geospatial or other information
is incorporated into the data, can increase the sensitivity of
any data;
· if
the proposed Directive is to properly address security concerns,
the narrow focus on HRSD needs to be replaced with a more sophisticated
and nuanced recognition of what constitutes sensitive data;
· it
is unclear what grounds could be used to withhold data and how
disputes would be dealt with when a Member State's national security
might be at stake from another Member State's decision mechanism,
given the principle of free circulation of HRSD controlled at
first dissemination;
· neither
is it clear how the proposed scrutiny mechanism would work in
practice, how the concerns of other Member States and allies would
be accommodated and what security concerns could arise from the
publication of the metadata on which the process would rely;
· this
problem increases significantly when one considers that certain
data may be considered unclassified by one country whilst presenting
a security threat to another Member State (or its allies); and
· the
administrative burden implied by the proposed additional requirements
for regulation and licensing at a national level could be further
increased by an inconsistent or unwieldy disputes process —
the Commission would need to clarify this aspect to give assurance
to Member States.
4.14 The Minister comments further that:
· the
Government considers that the proposed approach may undermine
the global competitiveness of EU companies by introducing bureaucratic
and overly burdensome regulatory oversight, using the issue of
market imbalances to intervene in sensitive areas that may impact
national security; and
· the
national security sensitivities, which derive from a range of
issues including data content and temporal resolution, mean that
serious questions exist over whether such regulatory measures
should be implemented under a Common Security and Defence Policy
legal basis.
4.15 Turning to consultation the Minister says that:
· the
Commission has undertaken consultations with various interested
parties;
· these
have included two studies commissioned from external consultants,
an online survey and a public hearing to solicit views of data
providers and resellers;
· the
online survey achieved a 50% response rate —
however, only 40 companies were invited to respond, so this cannot
be considered a significant sample;
· it
is not clear how these 40 were chosen —
given the relatively small total numbers involved, one might reasonably
expect that all companies would be invited to respond;
· additionally,
the survey questions were also poorly worded —
by asking if improvements in delivery, speed, transparency would
be "useful", answers would be inevitably biased to a
positive response;
· the
context for and costs of such improvements were not articulated
—
one cannot have full confidence in the results of the survey given
these oversights;
· the
European Association of Remote Sensing Companies has noted that
the results from the Commission's consultations are far from convincing
and the case for EU action has not been made; and
· their
experience indicates that there is no problem with the market
as it is —
the varying regulatory regimes between Member States, and indeed
with non-EU states, has not led to any difficulties for data providers
and their customers.
4.16 The Minister is also critical of the Commission's
impact assessment of the draft Directive, saying that:
· the
assessment is limited —
there is no clarity on the total number of interested companies,
taking into account all customers and end-users, so no meaningful
cost-benefit analysis can be performed in real terms;
· this
seriously limits any assessment of the impact of new regulation;
· it
is known that there are approximately 100 data resellers in the
EU, but the Commission states that 'the number of end user businesses
is not precisely known' —
since new legislation would inevitably have some impact on the
end users as well as data providers, this is a significant omission;
· he
(the Minister) spoke at the EU Space Policy conference in January
2014[12] and referred
to this proposal, warning that the evidence supporting such a
move was very weak and that there was a danger that the proposal
could badly affect growing EU space companies;
· the
evidence in the assessment of the need for EU action is unclear
—
it depends upon the consultation exercises which cannot be considered
authoritative;
· whilst
it is stated that 'some 60% stakeholders asked in the online questionnaire
indicate, that it would be helpful for their business, to have
a standard threshold for HRSD', this only equates to 12 of the
20 companies who responded;
· this
cannot be considered reliable, especially when there is potential
impact not only on the 100 companies, but also on the many more
end-users;
· the
assessment recognises that less than 1% of the data collected
by the existing HRS-systems was subject to some kind of restriction
due to security concerns;
· this,
coupled with the relatively small number of interested companies,
calls into question the need for this legislation;
· the
impact in terms of administrative and financial burden appears
under-estimated —
the Commission states that in Germany (on whose current national
regime the proposal is largely based) approximately €200,000
(£160,000) per year is allocated to implementation of the
national regulation;
· the
Government held a bilateral with Germany to discuss its licencing
regime and learned that to manage four or five data dissemination
providers, five full time equivalent staff are required to license
and ensure compliance with the licence conditions;
· it
should also be noted that for data providers, an initial cost
(to implement licensing requirements) of approximately €200,000
(£160,000) each would be incurred, in addition to approximately
€300,000 (£240,000) annual operating costs (covering
staff, technical equipment and administrative fees); and
· the
Government will prepare an impact assessment to assess the true
level of impact the proposal is likely to have on interested parties
in the UK.
4.17 The Minister adds, in relation to the financial
implications of the proposal, that:
· these
are said by the Commission to be relatively low for itself and
limited to human resources and administrative costs associated
with implementing the legislation;
· its
impact assessment suggests this would be covered with current
resource, but it estimates a total cost of €0.300,000 (£0.240,000)
for the period 2014-20;
· similar
costs to those in the current German system would be expected
at a UK national level, limited to the administrative costs of
regulation, licensing and overseeing compliance with the legal
obligations which would imposed through this proposed legislation;
and
· this
would depend on the regulatory regime the UK chose to adopt, which
will be explored more fully in the UK impact assessment, but the
current German system gives a good model for comparison.
Previous Committee Reports
None.
9 (34737) 6950/13: see Thirty-ninth Report HC 86-xxxviii
(2012-13), chapter 3 (17 April 2013) and Third Report HC 83-iii
(2013-14), chapter 4 (21 May 2013). Back
10
See http://www.consilium.europa.eu/ueDocs/cms_Data/docs/pressData/en/intm/137340.pdf. Back
11
See http://www.copernicus.eu/. Back
12
See http://www.spaceconference.eu/2014/en_GB/welcome.html. Back
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