Charting a Course into the Digital Era: Guidance for NOAA's Nautical Charting Mission (1994)

In the sections that follow, the resource constraints facing the National Oceanic and Atmospheric Administration's (NOAA's) nautical charting mission are discussed and some innovative options are suggested for relieving them. The options are intended as a stimulus to NOAA to consider new approaches to solving the problems of diminishing resources coupled with additional requirements in its nautical charting mission. In many cases, NOAA would have to seek legislative action to enable it to retain revenues from these arrangements.

To some extent, discussion of programmatic matters is outside this committee's purview. However, several significant resource-related barriers, some of which are programmatic in nature, appear to impede the future progress and effectiveness of NOAA's nautical charting program. The common backdrop to these considerations is that the budget for nautical charting activities has decreased in real dollars over the past decade (see Figure 1-3), while technological and user community challenges have increased dramatically. Resource barriers constrain each of the three major functions of the nautical charting program: data acquisition, data-base management, and product generation and dissemination.

As the backlog of survey requests has grown, the number of survey vessels and the number of days at sea have declined due to budgetary constraints. At the present level of resources allocated to surveys, resolution of the outstanding backlog of survey requests would take decades. While not all outstanding requests are of equal importance, the general significance of surveying to the nautical charting mission is clear. Surveys are costly, and to alleviate the request backlog, NOAA must identify new sources of support for survey activities and/or make more efficient use of available resources (see discussion in Chapter 3).

A one-time investment of approximately $20 million is required to load the Automated Nautical Charting System (ANCS II) nautical information data base (NIDB) by digitizing and attributing data from NOAA paper charts. The funds for this work are not in hand at present. Once the digital nautical data base has been populated with data now contained in the paper chart suite, it can probably be maintained with existing resource levels by using automated systems under development. The NIDB would form the basis of a master digital nautical data base.

Under the cost recovery requirement, prices for NOAA nautical charts have increased threefold in recent years, with all revenues reverting to the U.S. Treasury. Flat budgets and the inability to retain revenues from product sales have prevented NOAA from responding to user needs for timely, customized paper and digital products under NOAA's traditional in-house product development arrangement.

Production and dissemination do not pose a major resource problem so much as a challenge to accelerate the completion of a national digital nautical data base and to institute partnerships for product generation and distribution with private ventures. The automated nautical chart production system (ANCS II), together with an up-to-date digital nautical data base, would enable expedient support for new and existing products, both paper and electronic, and facilitate the formation of industry/government partnerships for production and distribution.

The committee's inquiries and analyses, as documented in the preceding chapters, show convincing evidence that in a time of severe budget constriction it is essential to approach future efforts in nautical charting on a collaborative basis. If NOAA pursues solutions to future data collection, data maintenance, and product challenges in isolation from other federal and state agencies and from the private sector, there are risks of duplication and inefficiency. It is, therefore, imperative that NOAA work with other producers and users to ensure that nautical data can be easily exchanged or linked with other data sets as a means for strengthening the overall NOAA nautical data program and providing a multipurpose digital nautical data base.

Congress attempted to recover the costs of creating, publishing, and distributing nautical charts and the associated data base when it imposed the data-base maintenance cost recovery requirement (44 USC 1307) on NOAA's chart sales. Recent trends in chart sales suggest, however, that this will not work under the circumstances that now confront NOAA. Additional funds could be sought in direct public appropriations (as done now) or in cost recovery from the sale of products based on NOAA data.

Reliance on direct appropriations requires repeated justification of funding levels in times of increasing restrictions on public expenditures. Benefit-cost assessments (Epstein and Duchesneau, 1987; Brinkman and Caverley, 1992; Coochey, 1992) have been attempted to determine the value of chart products, but ascertaining definitive valuations remains a difficult and uncertain task. Cost recovery (charging users directly for the cost—full or partial—of producing the product) is appealing because it reduces the need for artificial estimates and lets the market help determine product value. However, this approach is complicated by the nature of the NOAA product, which is primarily information. Information has what economists call public good attributes: once it is generated and published, many users can benefit from it without diminishing its value and at virtually no additional cost. For example, NOAA charts can be copied and resold without reimbursing the government, and evidence suggests that this practice is reducing sales of NOAA-printed charts. In any event, the revenues generated by NOAA chart sales at present do not revert to NOAA but rather to the miscellaneous receipts fund of the U.S. Treasury.

In the context of these difficulties, several means for increasing the resources available to NOAA for nautical charting were considered by the committee. Further investigation of the following approaches to resolving NOAA's resource constraints might be fruitful. It is likely that the optimal strategy will be a combination of several of the options described below.

The most attractive and economically efficient approach may be for NOAA to use royalty (or licensing) fees from public/private partnerships to increase the level of revenue that it receives from the use of its data. Several alternative routes exist within this broad approach. In most cases, legislation would have to be enacted to allow NOAA to retain revenues arising from these arrangements.

Copyrighting nautical charts has been suggested as a means to protect the U.S. government from the effects of unauthorized reproduction of NOAA charts. Copyright is an attempt to assign ownership to information. U.S. government-produced works are not copyrighted as a matter of policy (17 USC 105). Other nations do copyright their charts, and international agreements allow copying of such charts by other national authorities. As hydrographic offices come under increasing pressure to recover costs, they will likely attempt to make stronger use of copyright. (The International Hydrographic Organization is now addressing this question.) The issue becomes even more complex with digital data sets, because unauthorized duplication may become trivially easy and inexpensive.

While copyright authority is sometimes cited as a possible source of funds for federal programs that provide an information product, it is presently contrary to existing law and

arguably counter to basic tenets of the U.S. Constitution. Further, copyright by itself would not resolve NOAA's resource constraints.

A related approach is to seek support in Congress for a change in the Cost Recovery Act that will enable NOAA to retain funds that it recovers from the sale of charts and other products. Such an arrangement has existed for the U.S. Geological Survey since the early 1980s. For nautical charting this would involve changing the portion of the Cost Recovery Act that affects NOAA (44 USC 1304) to enable it to keep revenues resulting from the use of its data and spend those revenues on further improvement of the data. To prevent the recovered funds from being diverted to other uses within NOAA, the Nautical Charting Division could seek a mandate for the frequency and characteristics of chart updates as well as for the rate of introduction of new charts. This is similar to the approach now used for aeronautical charts.

Even without copyright on government data or retention of revenues from government chart sales, it is possible for NOAA to obtain royalties from private-sector product dissemination through ''cooperative research and development agreements" (CRADAs). Under 15 USC 3710, federal laboratories may "negotiate licensing agreements . . . for . . . intellectual property developed at the laboratory . . . or . . . voluntarily assigned to the Government." Royalties received from such agreements may be disbursed by the agency to its laboratories, and 15 percent (with a ceiling of $100,000 per year) may go to individual inventors (15 USC 3710c). Other agencies' experiences may be instructive: the U.S. Geological Survey has arranged several domestic CRADAs and is actively investigating foreign CRADAs, and the U.S. Army Corps of Engineers presently earns some $12 million annually from CRADA relationships.

If NOAA is not going to be able to secure copyright protection, a linchpin for revenue retention may lie in its data base rather than its printed products. If NOAA creates chart products through arrangements with private producers, the raw data-base versions of charts may be easier for NOAA to protect (through licenses) than printed or scanned equivalents.

For example, if NOAA supplies raw, certified digital data to private printing ventures that process the data through their own image production systems to generate chart products, the products might be able to be copyrighted by the private producer since they are not mere photographic copies of NOAA's digital charts and may or may not incorporate additional

enhancements that did not originate at NOAA. The case of West Publishing Company v. Mead Data Central (799 F.2d 1219 (8th Cir. 1986)) suggests that copyright protection can be extended to private electronic compilations of uncopyrighted government source data. NOAA could then collect user or license fees based on privately copyrighted product sales. Such user fees are likely to be easier to apply to raw digital data than to charts themselves. NOAA does not have the legal authority to do this at present, except pursuant to a CRADA.

So long as NOAA continues to print charts that are not copyrighted, there will probably be those who simply copy the public domain charts and reprint them as they do now. The market incentive to carry some sort of official NOAA approval will lead some firms to work with NOAA in producing their chart products, once NOAA makes available its participation in the kind of collaborative certification procedures and partnerships described in Chapter 6.

In summary, cost recovery through royalties, license fees, and user fees is an effective and efficient means for meeting the congressional cost recovery mandate and for improving NOAA's funding for nautical charting. However, NOAA will have to seek enactment of legislation to allow these arrangements to be implemented.

As described in Chapter 6, significant opportunity exists for NOAA to benefit from the modem resources available in the private sector and through partnerships to conduct surveys, thereby leveraging the resources available to enhance the NIDB with new data. Contract surveys of areas critical to particular users could be performed with nonfederal (or Navy) funds to NOAA specifications. Additional opportunities exist to team with other agencies of the federal government, to leverage the sum of all federal funds applied to nautical charting and surveying to the taxpayer's advantage.

The Harbor Maintenance Trust Fund is fed by maritime cargo taxes and managed by the Corps of Engineers. The Water Resources Development Act (1986), as amended by the Omnibus Budget Reconciliation Act of 1990, provides that a specified portion of the proceeds from the fund are to be transferred to NOAA for its activities related to commercial navigation. However, no mechanism was provided in the law to allow this transfer to take place. As a result, the funds earmarked for NOAA's use are now sizable but cannot be allocated or used. Recent legislation aimed at making these funds available to NOAA (the Marine Navigation Safety and Improvement Act of 1993), while well intentioned, has been rejected by the Clinton administration because, under present federal budgetary constraints,

they would count against the Department of Commerce's discretionary appropriation caps. For NOAA, therefore, such funds do not represent any "new" revenues and must be offset by reductions in expenditures elsewhere if they are specifically earmarked for nautical charting.

This fund, which is substantial, appears to offer a potential resource, however, for making the investments needed to move into the digital era in nautical charting, and NOAA could benefit from investigating alternatives to making the Harbor Maintenance Trust Fund resources available to the nautical charting program as additional revenue. If money accumulated in the Harbor Maintenance Trust Fund in the past cannot be retrieved, NOAA could at least pursue Harbor Maintenance Trust Fund resources that will accumulate in the fund in the future.

The need for accurate and up-to-date nautical charts and information—both graphic and digital—is to be supported by both the changing needs of traditional navigation users and the growth of a new community of users for environmental research and coastal and marine development and regulatory purposes. Yet the activities necessary to meet these expanding needs—additional and more rapid surveys, digitization of the existing information contained in paper charts, production of new suites of customized electronic and paper products—are generally unfunded, or at least insufficiently funded.

Part of the difficulty facing NOAA's nautical charting operations is that the economic consequences of less-than-adequate support have not been substantiated and articulated in a sufficiently convincing manner. The importance of maritime trade to the United States is well established. The benefits of investing an additional $20 million or $100 million annually in improvement and maintenance of nautical charts and information are not widely recognized. Studies of the value of nautical charting programs have provided interesting insights but have not convinced congressional or senior executive branch decisionmakers of the need for additional resources.

The committee's scope did not explicitly include analysis of budgetary aspects of NOAA's nautical charting mission. Consequently, it did not examine economic studies in detail or attempt to construct an argument for a particular level of investment or effort. At the same time, it is impossible to ignore the impact of growing budgetary constrictions on the ability of NOAA to make the transition to the new technological era of digital nautical charts described in this report and soon to be imposed by international regulation. Turning the situation around requires the immediate attention of the administration and Congress. Moreover, implementing the approaches to producing and disseminating nautical information products that are described in Chapter 6 and the strategies to recover revenues described in this chapter will require innovative, flexible, and imaginative leadership within NOAA, for they embody a new way of doing the public's business.

Brinkman, G. L., and S. L. Caverley. 1992. Benefit-Cost Assessment of the Canadian Hydrographic Service. Report prepared by Intercambio Limited for Canadian Hydrographic Survey, Ottawa.

Coochey, J. 1992. An Economic Analysis of the Benefits of the RAN Hydrographic Program. Unpublished study prepared for the Royal Australian Navy.

Epstein, E. F., and T. D. Duchesneau. 1987. The Use and Value of Nautical Chart Information. Unpublished study for the National Ocean Service, NOAA.