Key Reagan Advisers Split Over Landsat : Baldrige, Stockman at Odds on Plan for Satellite Program

The future of U.S. involvement in the commercial Earth-sensing satellite industry, which was pioneered over the past decade by American firms, is hanging on a tumultuous battle between Commerce Secretary Malcolm Baldrige and Budget Director David A. Stockman.

Under a plan to transfer ownership from government to private industry, the so-called Landsat system would be run by the Earth Observation Satellite Corp. (EOSAT), a joint venture of Hughes Aircraft and RCA, and several subcontractors.

The arcane and minuscule industry is seen by its ardent supporters, including Baldrige, as critical to U.S. industry because satellite pictures of Earth will provide economically important information for decades to come.

Proponents of the system--which include the space industry, agricultural interests, the natural resources industry and a wide variety of nations that want to use Landsat--foresee a rapidly expanding market for space-sensing data.

Landsat data has greatly improved oil and gas exploration. It has assisted in crop forecasting and in making recommendations for harvesting of crops. The fishing industry has used the data to help locate fertile fishing grounds. The system works by taking photographs and assemblying data plots of Earth in about a dozen light bands, each providing valuable data not available otherwise.

Critics See Boondoggle

Stockman and other critics see Landsat as a space industry boondoggle that produces spectacular public relations successes and only moderate commercial benefit at staggering economic costs.

The two Reagan Administration officials met Friday with six key senators to resolve a longstanding dispute over whether the U.S. should provide the $286-million subsidy over a 10-year period that is required to start a commercial industry.

The meeting, as past meetings between the senators and Administration officials, produced no resolution, according to Senate staff members.

Each of the two Administration camps charges that the other has reneged on earlier agreements. Stockman supporters say Baldrige agreed to a $250-million subsidy last year and then came back for $36 million more this year. Baldrige supporters allege that Stockman agreed to the $250-million subsidy and now wants to provide no subsidy at all.

“The fact is that we have had five formal proposals and 14 restructurings since March, 1984,” says an exasperated Charles Williams, EOSAT president. “The way the system was proposed, it was supposed to start on June 1.”

Senators Just Waiting

Republican Sen. Paul Laxalt of Nevada and other key senators from the Senate Appropriations Committee are waiting for the Reagan Administration to resolve its differences before initiating any action to fund the system. Substantial support exists in Congress for funding the system, thanks to heavy lobbying by Landsat data users, such as the oil interests, Senate sources say.

Industry sources expect that Baldrige’s next move will be to appeal to Donald T. Regan, President Reagan’s chief of staff, to direct Stockman to accept the Commerce Department subsidy plan. Ultimately, the matter is expected to go to President Reagan, who industry proponents believe will support the subsidy.

Both Baldrige and Stockman have been circulating documents in the past month that offer diametrically opposite visions of the industry’s future.

According to a memo Stockman has circulated within Congress, there is “no significant” government market for Landsat data and an “insignificant private market.” Stockman says the U.S. has “archived reams of data” that will be adequate for future needs.

Stockman also claims that EOSAT will eventually come back for more subsidies, which under the worst case would double the $286-million cost to the government.

‘Let Them Subsidize Us’

And most important, Stockman says the French and Japanese are developing Landsat systems with government subsidies. “Let’s let them subsidize us for a change,” he said in the memo.

Such arguments are anathema to proponents of the system, who see the United States as forfeiting nothing short of “national economic power,” according to J. Robert Porter, president of Earth Satellite Corp., an EOSAT subcontractor.

“The effect would be that a technology pioneered by the U.S. would be exploited by the French, Japanese and others,” adds Cary Gravatt, head of the Landsat Transition Group in the Commerce Department.

Williams, EOSAT president, said the system will require no additional subsidies. He estimates that the government and commercial market for Landsat data will grow from an initial $14 million annually to $75 million by 1994 when subsidies end.

That should be enough to operate the system of two satellites and provide for the production and launching of future satellites, as well as a profit for RCA and Hughes.

Williams, the EOSAT president, says his company will cut annual operating expenses, which do not include the cost of the satellites, from the current $40 million under government operations to $25 million.

Diplomatic Protests

In addition, several foreign nations, including Canada and Saudi Arabia, are preparing to file formal diplomatic protests if the Landsat system is killed, because they have spent millions of dollars to develop ground stations to receive U.S. data.

Landsat has been operated over the past 13 years as a research and development system by the National Aeronautics and Space Administration. The existing system consists of two satellites in orbit and a ground network.

The subsidy plan to commercialize Landsat, formulated by the Landsat Transition Group, commits EOSAT to launching two satellites by 1992 to replenish the existing spacecraft and to building an Earth receiving station.

Hughes Aircraft would build the payload, which are sophisticated infrared and visible light sensors. RCA would build the spacecraft bus to carry the sensors.

Hughes’ portion of the work would be conducted at its Santa Barbara Research Center, which stands to gain $120 million worth of contracts over the first three years of the Landsat system, Williams said.