(a) Within seven days of the Secretary's notification to the applicant under §960.5(c) that the application is complete, the Secretary shall determine, after consultation with the Secretaries of Defense and State as appropriate, the category for the system as follows:

(1) If the application proposes a system with the capability to collect unenhanced data substantially the same as unenhanced data already available from entities or individuals not licensed under this part, such as foreign entities, the Secretary shall categorize the application as Tier 1;

(2) If the application proposes a system with the capability to collect unenhanced data substantially the same as unenhanced data already available, but only from entities or individuals licensed under this part, the Secretary shall categorize the application as Tier 2; and

(3) If the application proposes a system with the capability to collect unenhanced data not substantially the same as unenhanced data already available from any domestic or foreign entity or individual, the Secretary shall categorize the application as Tier 3.

(b) If the Secretary of Defense or State disagrees with the Secretary's determination in paragraph (a) of this section, the Secretary of Defense or State may notify the Secretary and request the Secretary's reconsideration. Such a request for reconsideration may not be delegated below the Assistant Secretary level. If the Secretary of Defense or State disagrees with the Secretary's reconsideration decision, the Secretary of Defense or State may appeal that tier categorization pursuant to the interagency dispute resolution procedures in Section IV(B) of the MOU, but only at the Advisory Committee on Private Remote Sensing Space Systems level or higher. The Secretary shall categorize the system in accordance with the decision resulting from such MOU procedures.

(c) The system shall remain in the tier assigned to it under paragraph (a) in this section until such time as the Secretary determines, after consultation with the Secretaries of Defense and State as appropriate, that the system belongs in a lower-numbered tier due to the advancement of non-U.S. commercial remote sensing capabilities or due to other facts, or until the Secretary grants the licensee's request for a license modification that results in re-categorization under §960.13. When the Secretary determines that a lower-numbered tier is appropriate due to reasons other than a modification under §960.13, the Secretary will notify the applicant or licensee in writing that the system falls under a lower-numbered tier than the one previously assigned under this section. Upon receiving that notification, the applicant or licensee will be responsible for complying only with the license conditions applicable to the new tier.