[House Report 108-137]
[From the U.S. Government Publishing Office]



108th Congress                                                Report
 1st Session            HOUSE OF REPRESENTATIVES              108-137
======================================================================
 
                  COMMERCIAL SPECTRUM ENHANCEMENT ACT
                                _______
                                

  June 3, 2003.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed

                                _______
                                

 Mr. Tauzin, from the Committee on Energy and Commerce, submitted the 
                               following

                              R E P O R T

                        [To accompany H.R. 1320]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on Energy and Commerce, to whom was referred 
the bill (H.R. 1320) to amend the National Telecommunications 
and Information Administration Organization Act to facilitate 
the reallocation of spectrum from governmental to commercial 
users, having considered the same, report favorably thereon 
with an amendment and recommend that the bill as amended do 
pass.

                                CONTENTS

                                                                   Page
Amendment........................................................     1
Purpose and Summary..............................................     5
Background and Need for Legislation..............................     6
Hearings.........................................................     7
Committee Consideration..........................................     7
Committee Votes..................................................     8
Committee Oversight Findings.....................................     8
Statement of General Performance Goals and Objectives............     8
New Budget Authority, Entitlement Authority, and Tax Expenditures     8
Committee Cost Estimate..........................................     8
Congressional Budget Office Estimate.............................    11
Federal Mandates Statement.......................................    15
Advisory Committee Statement.....................................    15
Constitutional Authority Statement...............................    15
Applicability to Legislative Branch..............................    15
Section-by-Section Analysis of the Legislation...................    15
Changes in Existing Law Made by the Bill, as Reported............    20

                               Amendment

  The amendment is as follows:
  Strike all after the enacting clause and insert the 
following:

SECTION 1. SHORT TITLE.

  This Act may be cited as the ``Commercial Spectrum Enhancement Act''.

SEC. 2. RELOCATION OF ELIGIBLE FEDERAL ENTITIES FOR THE REALLOCATION OF 
                    SPECTRUM FOR COMMERCIAL PURPOSES.

  Section 113(g) of the National Telecommunications and Information 
Administration Organization Act (47 U.S.C. 923(g)) is amended by 
striking paragraphs (1) through (3) and inserting the following:--
          ``(1) Eligible federal entities.--Any Federal entity that 
        operates a Federal Government station assigned to a band of 
        frequencies specified in paragraph (2) and that incurs 
        relocation costs because of the reallocation of frequencies 
        from Federal use to non-Federal use shall receive payment for 
        such costs from the Spectrum Relocation Fund, in accordance 
        with section 118 of this Act. For purposes of this paragraph, 
        Federal power agencies exempted under subsection (c)(4) that 
        choose to relocate from the frequencies identified 
forreallocation pursuant to subsection (a), are eligible to receive 
payment under this paragraph.
          ``(2) Eligible frequencies.--The bands of eligible 
        frequencies for purposes of this section are as follows:
                  ``(A) the 216-220 megahertz band, the 1432-1435 
                megahertz band, the 1710-1755 megahertz band, and the 
                2385-2390 megahertz band of frequencies; and
                  ``(B) any other band of frequencies reallocated from 
                Federal use to non-Federal use after January 1, 2003, 
                that is assigned by competitive bidding pursuant to 
                section 309(j) of the Communications Act of 1934 (47 
                U.S.C. 309(j)), except for bands of frequencies 
                previously identified by the National 
                Telecommunications and Information Administration in 
                the Spectrum Reallocation Final Report, NTIA Special 
                Publication 95-32 (1995).
          ``(3) Definition of relocation costs.--For purposes of this 
        subsection, the term `relocation costs' means the costs 
        incurred by a Federal entity to achieve comparable capability 
        of systems, regardless of whether that capability is achieved 
        by relocating to a new frequency assignment or by utilizing an 
        alternative technology. Such costs include--
                  ``(A) the costs of any modification or replacement of 
                equipment, software, facilities, operating manuals, 
                training costs, or regulations that are attributable to 
                relocation;
                  ``(B) the costs of all engineering, equipment, 
                software, site acquisition and construction costs, as 
                well as any legitimate and prudent transaction expense, 
                including outside consultants, and reasonable 
                additional costs incurred by the Federal entity that 
                are attributable to relocation, including increased 
                recurring costs associated with the replacement 
                facilities;
                  ``(C) the costs of engineering studies, economic 
                analyses, or other expenses reasonably incurred in 
                calculating the estimated relocation costs that are 
                provided to the Commission pursuant to paragraph (4) of 
                this subsection;
                  ``(D) the one-time costs of any modification of 
                equipment reasonably necessary to accommodate 
                commercial use of such frequencies prior to the 
                termination of the Federal entity's primary allocation 
                or protected status, when the eligible frequencies as 
                defined in paragraph (2) of this subsection are made 
                available for private sector uses by competitive 
                bidding and a Federal entity retains primary allocation 
                or protected status in those frequencies for a period 
                of time after the completion of the competitive bidding 
                process; and
                  ``(E) the costs associated with the accelerated 
                replacement of systems and equipment if such 
                acceleration is necessary to ensure the timely 
                relocation of systems to a new frequency assignment.
          ``(4) Notice to commission of estimated relocation costs.--
                  ``(A) The Commission shall notify the NTIA at least 
                18 months prior to the commencement of any auction of 
                eligible frequencies defined in paragraph (2). At least 
                6 months prior to the commencement of any such auction, 
                the NTIA, on behalf of the Federal entities and after 
                review by the Office of Management and Budget, shall 
                notify the Commission of estimated relocation costs and 
                timelines for such relocation.
                  ``(B) Upon timely request of a Federal entity, the 
                NTIA shall provide such entity with information 
                regarding an alternative frequency assignment or 
                assignments to which their radiocommunications 
                operations could be relocated for purposes of 
                calculating the estimated relocation costs and 
                timelines to be submitted to the Commission pursuant to 
                subparagraph (A).
                  ``(C) To the extent practicable and consistent with 
                national security considerations, the NTIA shall 
                provide the information required by subparagraphs (A) 
                and (B) by the geographic location of the Federal 
                entities' facilities or systems and the frequency bands 
                used by such facilities or systems.
          ``(5) Notice to congressional committees and gao.--The NTIA 
        shall, at the time of providing an initial estimate of 
        relocation costs to the Commission under paragraph (4)(A), 
        submit to the Committees on Appropriations and Energy and 
        Commerce of the House of Representatives, the Committees on 
        Appropriations and Commerce, Science, and Transportation of the 
        Senate, and the Comptroller General a copy of such estimate and 
        the timelines for relocation.
          ``(6) Implementation of procedures.--The NTIA shall take such 
        actions as necessary to ensure the timely relocation of Federal 
        entities' spectrum-related operations from frequencies defined 
        in paragraph (2) to frequencies or facilities of comparable 
        capability. Upon a finding by the NTIA that a Federal entity 
        has achieved comparable capability of systems by relocating to 
        a new frequency assignment or by utilizing an alternative 
        technology, the NTIA shall terminate the entity's authorization 
        and notify the Commission that the entity's relocation has been 
        completed. The NTIA shall also terminate such entity's 
        authorization if the NTIA determines that the entity has 
        unreasonably failed to comply with the timeline for relocation 
        submitted by the Director of the Office of Management and 
        Budget under section 118(d)(2)(B).''.

SEC. 3. MINIMUM AUCTION RECEIPTS AND DISPOSITION OF PROCEEDS.

  (a) Auction Design.--Section 309(j)(3) of the Communications Act of 
1934 (47 U.S.C. 309(j)(3)) is amended--
          (1) by striking ``and'' at the end of subparagraph (D);
          (2) by striking the period at the end of subparagraph (E) and 
        inserting ``; and''; and
          (3) by adding at the end the following new subparagraph:
                  ``(F) for any auction of eligible frequencies 
                described in section 113(g)(2) of the National 
                Telecommunications and Information Administration 
                Organization Act (47 U.S.C. 923(g)(2)), the recovery of 
                110 percent of estimated relocation costs as provided 
                to the Commission pursuant to section 113(g)(4) of such 
                Act.''.
  (b) Special Auction Provisions for Eligible Frequencies.--Section 
309(j) of such Act is further amended by adding at the end the 
following new paragraph:
          ``(15) Special auction provisions for eligible frequencies.--
                  ``(A) Special regulations.--The Commission shall 
                revise the regulations prescribed under paragraph 
                (4)(F) of this subsection to prescribe methods by which 
                the total cash proceeds from any auction of eligible 
                frequencies described in section 113(g)(2) of the 
                National Telecommunications and Information 
                Administration Organization Act (47 U.S.C. 923(g)(2)) 
                shall at least equal 110 percent of the total estimated 
                relocation costs provided to the Commission pursuant to 
                section 113(g)(4) of such Act.
                  ``(B) Conclusion of auctions contingent on minimum 
                proceeds.--The Commission shall not conclude any 
                auction of eligible frequencies described in section 
                113(g)(2) of such Act if the total cash proceeds 
                attributable to such spectrum are less than 110 percent 
                of the total estimated relocation costs provided to the 
                Commission pursuant to section 113(g)(4) of such Act. 
                If the Commission is unable to conclude an auction for 
                the foregoing reason, the Commission shall cancel the 
                auction, return within 45 days after the auction 
                cancellation date any deposits from participating 
                bidders held in escrow, and absolve such bidders from 
                any obligation to the United States to bid in any 
                subsequent reauction of such spectrum.
                  ``(C) Authority to issue prior to deauthorization.--
                In any auction conducted under the regulations required 
                by subparagraph (A), the Commission may grant a license 
                assigned for the use of eligible frequencies prior to 
                the termination of an eligible Federal entity's 
                authorization. However, the Commission shall condition 
                such license by requiring that the licensee cannot 
                cause harmful interference to such Federal entity until 
                such entity's authorization has been terminated by the 
                National Telecommunications and Information 
                Administration.''.
  (c) Deposit of Proceeds.--Paragraph (8) of section 309(j) of the 
Communications Act of 1934 (47 U.S.C. 309(j)) is amended--
          (1) in subparagraph (A), by inserting ``or subparagraph (D)'' 
        after ``subparagraph (B)''; and
          (2) by adding at the end the following new subparagraph:
                  ``(D) Disposition of cash proceeds.--Cash proceeds 
                attributable to the auction of any eligible frequencies 
                described in section 113(g)(2) of the National 
                Telecommunications and Information Administration 
                Organization Act (47 U.S.C. 923(g)(2)) shall be 
                deposited in the Spectrum Relocation Fund established 
                under section 118 of such Act, and shall be available 
                in accordance with that section.''.

SEC. 4. ESTABLISHMENT OF FUND AND PROCEDURES.

  Part B of the National Telecommunications and Information 
Administration Organization Act is amended by adding after section 117 
(47 U.S.C. 927) the following new section:

``SEC. 118. SPECTRUM RELOCATION FUND.

  ``(a) Establishment of Spectrum Relocation Fund.--There is 
established on the books of the Treasury a separate fund to be known as 
the `Spectrum Relocation Fund' (in this section referred to as the 
`Fund'), which shall be administered by theOffice of Management and 
Budget (in this section referred to as `OMB'), in consultation with the 
NTIA.
  ``(b) Crediting of Receipts.--The Fund shall be credited with the 
amounts specified in section 309(j)(8)(D) of the Communications Act of 
1934 (47 U.S.C. 309(j)(8)(D)).
  ``(c) Used To Pay Relocation Costs.--The amounts in the Fund from 
auctions of eligible frequencies are authorized to be used to pay 
relocation costs, as defined in section 113(g)(3) of this Act, of an 
eligible Federal entity incurring such costs with respect to relocation 
from those frequencies.
  ``(d) Fund Availability.--
          ``(1) Appropriation.--There are hereby appropriated from the 
        Fund such sums as are required to pay the relocation costs 
        specified in subsection (c).
          ``(2) Transfer conditions.--None of the funds provided under 
        this subsection may be transferred to any eligible Federal 
        entity--
                  ``(A) unless the Director of OMB has determined, in 
                consultation with the NTIA, the appropriateness of such 
                costs and the timeline for relocation; and
                  ``(B) until 30 days after the Director of the OMB has 
                submitted to the Committees on Appropriations and 
                Energy and Commerce of the House of Representatives, 
                the Committees on Appropriations and Commerce, Science, 
                and Transportation of the Senate, and the Comptroller 
                General a detailed plan describing how the sums 
                transferred from the Fund will be used to pay 
                relocation costs in accordance with such subsection and 
                the timeline for such relocation.
          ``(3) Reversion of unused funds.--Any auction proceeds in the 
        Fund that are remaining after the payment of the relocation 
        costs that are payable from the Fund shall revert to and be 
        deposited in the general fund of the Treasury not later than 8 
        years after the date of the deposit of such proceeds to the 
        Fund.
  ``(e) Transfer to Eligible Federal Entities.--
          ``(1) Transfer.--
                  ``(A) Amounts made available pursuant to subsection 
                (d) shall be transferred to eligible Federal entities, 
                as defined in section 113(g)(1) of this Act.
                  ``(B) An eligible Federal entity may receive more 
                than one such transfer, but if the sum of the 
                subsequent transfer or transfers exceeds 10 percent of 
                the original transfer--
                          ``(i) such subsequent transfers are subject 
                        to prior approval by the Director of OMB as 
                        required by subsection (d)(2)(A);
                          ``(ii) the notice to the committees 
                        containing the plan required by subsection 
                        (d)(2)(B) shall be not less than 45 days prior 
                        to the date of the transfer that causes such 
                        excess above 10 percent;
                          ``(iii) such notice shall include, in 
                        addition to such plan, a explanation of need 
                        for such subsequent transfer or transfers; and
                          ``(iv) the Comptroller General shall, within 
                        30 days after receiving such plan, review such 
                        plan and submit to such committees an 
                        assessment of the explanation for the 
                        subsequent transfer or transfers.
                  ``(C) Such transferred amounts shall be credited to 
                the appropriations account of the eligible Federal 
                entity which has incurred, or will incur, such costs, 
                and shall, subject to paragraph (2), remain available 
                until expended.
          ``(2) Retransfer to fund.--An eligible Federal entity that 
        has received such amounts shall report its expenditures to OMB 
        and shall transfer any amounts in excess of actual relocation 
        costs back to the Fund immediately after the NTIA has notified 
        the Commission that the entity's relocation is complete, or has 
        determined that such entity has unreasonably failed to complete 
        such relocation in accordance with the timeline required by 
        subsection (d)(2)(A).''.

SEC. 5. TELECOMMUNICATIONS DEVELOPMENT FUND.

  Section 714(f) of the Communications Act of 1934 (47 U.S.C. 614(f)) 
is amended to read as follows:
  ``(f) Lending and Credit Operations.--Loans or other extensions of 
credit from the Fund shall be made available to an eligible small 
business on the basis of--
          ``(1) the analysis of the business plan of the eligible small 
        business;
          ``(2) the reasonable availability of collateral to secure the 
        loan or credit extension;
          ``(3) the extent to which the loan or credit extension 
        promotes the purposes of this section; and
          ``(4) other lending policies as defined by the Board.''.

SEC. 6. CONSTRUCTION.

  Nothing in this Act is intended to modify section 1062(b) of the 
National Defense Authorization Act for Fiscal Year 2000 (Public Law 
106-65).

SEC. 7. ANNUAL REPORT.

  The National Telecommunications and Information Administration shall 
submit an annual report to the Committees on Appropriations and Energy 
and Commerce of the House of Representatives, the Committees on 
Appropriations and Commerce, Science, and Transportation of the Senate, 
and the Comptroller General on--
          (1) the progress made in adhering to the timelines applicable 
        to relocation from eligible frequencies required under section 
        118(d)(2)(A) of the National Telecommunications and Information 
        Administration Organization Act, separately stated on a 
        communication system-by-system basis and on an auction-by-
        auction basis; and
          (2) with respect to each relocated communication system and 
        auction, a statement of the estimate of relocation costs 
        required under section 113(g)(4) of such Act, the actual 
        relocations costs incurred, and the amount of such costs paid 
        from the Spectrum Relocation Fund.

SEC. 8. PRESERVATION OF AUTHORITY; NTIA REPORT REQUIRED.

  (a) Spectrum Management Authority Retained.--Except as provided with 
respect to the bands of frequencies identified in section 113(g)(2)(A) 
of National Telecommunications and Information Administration 
Organization Act (47 U.S.C. 923(g)(2)(A)) as amended by this Act, 
nothing in this Act or the amendments made by this Act shall be 
construed as limiting the Federal Communications Commission's authority 
to allocate bands of frequencies that are reallocated from Federal use 
to non-Federal use for unlicensed, public safety, shared, or non-
commercial use.
  (b) NTIA Report Required.--Within 1 year after of the date of 
enactment of this Act, the Administrator of the National 
Telecommunications and Information Administration shall submit to the 
Energy and Commerce Committee of the House of Representatives and the 
Commerce, Science, and Transportation Committee of the Senate a report 
on various policy options to compensate Federal entities for relocation 
costs when such entities' frequencies are allocated by the Commission 
for unlicensed, public safety, shared, or non-commercial use.

                          Purpose and Summary

    The purpose of H.R. 1320, the Commercial Spectrum 
Enhancement Act of 2003, is to provide a clear, predictable 
mechanism for compensating federal entities that move their 
spectrum operations from frequencies that are reallocated from 
government to non-government use.
    H.R. 1320 provides federal government spectrum licensees 
that incur relocation costs because of the reallocation of 
spectrum bands from government to non-government use with the 
authority to receive reimbursement for their relocation costs 
from the Spectrum Relocation Fund (SRF). H.R. 1320 defines 
relocation costs as expenses that are incurred by federal 
government agencies in order to achieve comparable capability 
of systems. This means that a federal spectrum operation moved 
to a different band will be reimbursed for all costs necessary 
to prevent that operation from experiencing any degradation in 
service or capability. In addition, the agency would be 
reimbursed for utilizing a different technology (such as 
wireline communications) rather than relocating to a different 
spectrum band.
    H.R. 1320 requires the Federal Communications Commission 
(the Commission) to notify the National Telecommunications and 
Information Administration (NTIA) eighteen months before 
conducting an auction of reallocated spectrum. The purpose of 
this notification is so that NTIA, after review by the Office 
of Management and Budget (OMB), can provide the Commission with 
an estimate of relocation costs for a particular band and a 
timeline for relocation. This information is critical because, 
under the legislation, an FCC auction of reallocated spectrum 
is only valid if the auction yields proceeds of at least 110 
percent of the estimated relocation costs.
    The proceeds from auctions of eligible reallocated bands 
are deposited in the SRF, which is an OMB-administered separate 
fund at the Treasury. If any agency has any transferred money 
remaining when relocation is complete, the agency is required 
to transfer the funds back to the SRF immediately. Unexpended 
auction proceeds are transferred to the Treasury no later than 
eight years after the proceeds were initially deposited in the 
SRF.

                  Background and Need for Legislation

    Spectrum is the basic building block for any wireless 
service. Spectrum has therefore become an increasingly valuable 
asset to government and commercial entities. Government 
operations, especially defense-related operations, are 
increasingly reliant upon spectrum. The most recent military 
conflict in Iraq demonstrated that the armed forces rely on 
spectrum for a significant amount of tactical operations and 
intelligence gathering.
    Commercial mobile radio services have proliferated in the 
United States, where there are more than 140 million wireless 
subscribers. While voice services currently represent the vast 
majority of commercial mobile radio services, consumers have 
been using mobile data services at an increasing rate. However, 
mobile data services are generally offered at bit-rate speeds 
that prevent consumers from using these services to access 
video and data applications that require significant bandwidth.
    Advanced mobile data services, also known as third-
generation mobile services, will present consumers with the 
ability to access exciting new applications. These applications 
will provide consumers with enhanced opportunities to 
communicate, work, learn, shop, and entertain themselves in a 
mobile environment. However, commercial mobile radio service 
providers need additional spectrum in order to provide 
consumers with these services so that new data services are not 
offered at the expense of the quality of service and network 
reliability of existing services.
    Making additional spectrum available for commercial use 
that has the propagation characteristics necessary for advanced 
mobile services is therefore critical, although the propagation 
characteristics limit the number of spectrum bands on which 
advanced services can operate. In addition, certain spectrum 
bands are more desirable because they present opportunities for 
global harmonization of the frequencies used for advanced 
mobile services. The federal government currently conducts 
spectrum operations on certain spectrum bands that would be 
ideal for such services.
    Existing law rightly prohibits spectrum from simply being 
taken from federal agencies and made available for commercial 
use. Specifically, the Strom Thurmond National Defense 
Authorization Act for Fiscal Year 1999 (Strom Thurmond Act) 
requires an auction winner that wants to use spectrum 
reallocated from government to non-government use to reimburse 
a federal entity for costs incurred in the process of 
relocating the federal entity's spectrum operations to a 
different spectrum band. Under the Strom Thurmond Act, after a 
commercial entity wins an auction for a particular license of 
spectrumreallocated from government to non-government use, a 
commercial entity has to negotiate with the government entity to 
determine the cost and timeline for relocation of the government 
entity's spectrum operations. Furthermore, with certain exceptions, the 
National Defense Authorization Act of 2000 prohibits the surrender of 
spectrum by the Department of Defense unless comparable spectrum is 
made available, in advance, for the relevant operations. The Secretary 
of Commerce, Secretary of Defense, and the Chairman of the Joint Chiefs 
of Staff must jointly certify that the alternative band (or bands) 
provides comparable capability.
    As a result, a potential licensee has to pay twice--once to 
win the auction for the license and again to pay to relocate 
any government operations in the band. In addition, the federal 
agency occupying the band has complete control over when it 
would relocate its spectrum operations. This system provides 
potential licensees with little incentive to participate in 
auctions of reallocated government spectrum.
    H.R. 1320 attempts to remedy this problem by establishing a 
relocation fund for moving the spectrum operations of affected 
federal entities. Under H.R. 1320, proceeds from auctions of 
spectrum reallocated from government to non-government use are 
deposited directly into the SRF, instead of being deposited 
into the general fund of the Treasury. Affected federal 
entities draw from the SRF to pay for their relocation costs.
    H.R. 1320 creates certainty for both federal agencies and 
potential commercial licensees. The legislation creates 
certainty for federal entities required to relocate their 
spectrum operations that they will be fully compensated for 
their relocation expenses. In addition, H.R. 1320 creates 
certainty for potential commercial licensees because they will 
have a clear understanding, prior to an auction and throughout 
the relocation process, of the cost of relocating federal 
spectrum operations and of the timelines for relocating such 
operations.

                                Hearings

    The Subcommittee on Telecommunications and the Internet 
held a hearing on H.R. 1320 on March 25, 2003. The Subcommittee 
received testimony from: Nancy Victory, Assistant Secretary of 
Commerce for Communications and Information; Stephen Price, 
Deputy Assistant Secretary of Defense for Spectrum, Space, 
Sensors and C3 Policy; Steve Berry, Senior Vice President for 
Government Affairs, Cellular Telecommunications and Internet 
Association; and Larry Grossman, Co-Chairman, Digital Promise 
Project.

                        Committee Consideration

    On Wednesday, April 9, 2003, the Subcommittee on 
Telecommunications and the Internet met in open markup session 
and approved H.R. 1320 for Full Committee consideration, as 
amended, by a voice vote, a quorum being present. On Wednesday, 
April 30, 2003, the Full Committee met in open markup session 
and ordered H.R. 1320 favorably reported to the House, as 
amended, by a voice vote, a quorum being present.

                            Committee Votes

    Clause 3(b) of rule XIII of the Rules of the House of 
Representatives requires the Committee to list the record votes 
on the motion to report legislation and amendments thereto. 
There were no record votes taken in connection with ordering 
H.R. 1320 reported. A motion by Mr. Tauzin to order H.R. 1320 
reported to the House, as amended, was agreed to by a voice 
vote. Chairman Tauzin asked for and received unanimous consent 
to make technical and conforming changes to the bill.

                      Committee Oversight Findings

    Pursuant to clause 3(c)(1) of rule XIII of the Rules of the 
House of Representatives, the Committee held a legislative 
hearing and made findings that are reflected in this report.

         Statement of General Performance Goals and Objectives

    The goal of H.R. 1320 is to make spectrum used by federal 
agencies available for advanced commercial mobile radio 
services and to compensate the affected federal agencies for 
relocating their spectrum operations.

   New Budget Authority, Entitlement Authority, and Tax Expenditures

    In compliance with clause 3(c)(2) of rule XIII of the Rules 
of the House of Representatives, the Committee finds that H.R. 
1320, the Commercial Spectrum Enhancement Act of 2003, would 
result in changes to budget authority, entitlement authority, 
and tax expenditures and revenues to the extent stated below in 
the Committee Cost Estimate.

                        Committee Cost Estimate

    The Congressional Budget Office (CBO) analysis of the 
budgetary impact of H.R. 1320 fails to adequately consider the 
impact of this legislation on projected auction receipts and 
spending for the relocation of the spectrum operations of 
federal entities. CBO estimates that ``implementing H.R. 1320 
would increase net direct spending by $1.4 billion over the 
2006-2008 period and by $2.5 billion over the next 10 years.'' 
According to CBO, enactment of this legislation has no 
measurable effect on projected auction proceeds.
    The Committee strongly disagrees with CBO's analysis. 
Enactment of H.R. 1320 should increase net revenues to the 
federal government over 5 and 10 years. The Committee also 
believes that H.R. 1320 imposes greater fiscal discipline on 
eligible federal entities than CBO anticipates.
    The CBO baseline estimate for the 90 MHz 3G auction assumes 
that the federal government will collect $15 billion--59 cents/
MHz/pop--in auction receipts. CBO's analysis states, ``This 
estimate reflects our expectation that companies will discount 
their bids by about $2 billion to $3 billion [roughly 15%] 
because of the uncertainty associated with the time and cost of 
relocating federal and commercial users.'' Based on that 
statement. CBO must assume that the market value of the 3G 
spectrum will be $17-18 billion or 67-71 cents/MHz/pop in 2006 
when CBO expects the 3G auction to occur.
    The current market value of spectrum is significantly 
higher. Verizon Wireless purchased PCS licenses from Northcoast 
Communications in April of 2003 for $750 million, which 
translates into a market value of $1.58/MHz/pop. While the 
spectrum purchased by Verizon is comparable in propagation 
characteristics to the spectrum that will be included in the 3G 
auction, it is important to note some differences in the 
licenses. The Northcoast licenses were assigned on an MTA/BTA 
basis, which means that the licenses represent limited 
geographic areas. On the other hand, the 3G spectrum licenses 
are expected to be a mixture of national, super-regional and 
limited-geographic area licenses, which means that many of the 
3G spectrum licenses will be much more valuable than the 
Northcoast licenses. In addition, the 3G spectrum will be used 
for services that the Committee expects will yield much higher 
revenues than current-generation services. Nonetheless, CBO's 
market valuation estimate for the 3G spectrum, for an auction 
that will probably occur in 2006, is less than half of current 
market value for spectrum used for existing mobile services.
    Based on the Northcoast transaction, the current market 
value for 90 MHz of spectrum is in the $25-40 billion range. 
Even with CBO's 15% uncertainty discount (the Committee 
strongly disagrees with the application of this discount to the 
auction assuming that H.R. 1320 is enacted into law), the 3G 
auction should yield $21-34 billion in 2006. At those levels, 
enactment of H.R. 1320 would increase projected auction 
receipts by $6-19 billion over the 2006-2008 period and 
increase net revenues to the federal government by $3.5-16.5 
billion over the next 10 years relative to the CBO baseline.
    CBO acknowledges that ``simplifying the reimbursement 
process could reduce some of the uncertainty for bidders, which 
could result in higher auction proceeds.'' But their analysis 
concludes that the ``magnitude of any change would be small 
relative to other factors that will affect the market value of 
these frequencies.'' H.R. 1320 does much more than just 
simplify the reimbursement process. It significantly reduces 
the financial risks in the current relocation process for 
potential bidders and for federal agencies.
    Under current law, a winning bidder at an FCC spectrum 
auction begins negotiating with federal entities with 
operations in the auctioned bands after the bidder wins the 
license at auction. Thus, a winning bidder pays twice--once at 
auction and again if and when it reaches an agreement with a 
federal entity regarding the cost and timeline for relocation 
of federal spectrum operations. This cumbersome two-step 
process contains a number of risks for prospective bidders and 
for federal entities, particularly when national security 
interests are involved. In addition, under current law, an 
auction winner cannot spend all of its money at auction. 
Instead, an auction winner must save some money allocated to 
spectrum acquisition for paying government agencies to relocate 
their spectrum operations.
    H.R. 1320 eliminates the uncertainty over the additional 
cost of federal relocation for prospective bidders. Bidders pay 
once, at the auction, and have no financial liability to pay 
for relocation other than what they pay at auction. Bidders 
also receive information about federal relocation costs and 
schedules well before each auction occurs. In addition, bidders 
are held harmless for any federal relocation cost overruns. The 
bill further reduces the uncertainty associated with the timing 
of the relocation process with increased reporting requirements 
and oversight by Office of Management and Budget (OMB), 
Congress, and the General Accounting Office (GAO).
    Under H.R. 1320's improved process, bidders should pay much 
closer to market value for spectrum than under current law. The 
risk discount that CBO applies to the auction under current law 
cannot logically be applied to the auction after enactment of 
H.R. 1320. Reducing the CBO's uncertainty discount by 50% would 
increase CBO's estimate of the 3G auction proceeds to roughly 
$16.5 billion. Using CBO's below-market spectrum valuations, 
that change alone would make enactment of H.R. 1320 a net 
revenue-raiser for the federal government over the 2006-2008 
period. However, based on current market values and a reduced 
uncertainty discount for prospective bidders, the 3G auction 
should raise $23-37 billion. These assumptions would increase 
projected auction proceeds by $8-22 billion over the 2006-2008 
period and increase net projected revenues to the federal 
government by $5.5-19.5 billion over the next 10 years relative 
to the CBO baseline.
    H.R. 1320 also imposes cost-controls that the Committee 
believes will ensure that government agencies are accountable 
for their relocation expenses. H.R. 1320 creates third-party 
review of federal agency relocation estimates and timetables by 
National Telecommunications and Information Administration 
(NTIA), OMB, Congress and GAO. The bill also requires annual 
relocation progress reports to Congress that will detail 
whether cost overruns are occurring. These requirements should 
result in a more-orderly relocation process, reduce the 
likelihood of cost overruns, accelerate planned federal 
relocations, and decrease the future costs of maintaining 
outdated Department of Defense and other federal communications 
systems operating in bands with increasing global commercial 
interference problems.
    Even more importantly, section 4 of H.R. 1320 stipulates 
that no funds may be transferred from the Spectrum Relocation 
Fund to a federal entity until 30 days after the Director of 
OMB, in consultation with NTIA, has determined the 
appropriateness of an agency's relocations costs and timeline 
for relocation, and the Director of OMB has submitted a 
relocation plan to Congress and GAO containing detailed 
relocation cost estimates and timelines. Section 4 requires 
that OMB, in consultation with NTIA, must approve any 
subsequent transfer exceeding 10 percent of the first transfer 
to the agency and notify Congress and GAO 45 days in advance of 
the proposed transfer. It also requires that GAO review the 
proposed transfer and submit its assessment to Congresswithin 
30 days. These notification requirements will provide Congress with a 
sufficient amount of time to address concerns Congress may have 
regarding how an agency plans to spend relocation funds.
    For the foregoing reasons, the Committee believes that its 
estimate more accurately reflects the fiscal impact associated 
with the enactment of H.R. 1320 than the CBO estimate reprinted 
below.

                  Congressional Budget Office Estimate

    Pursuant to clause 3(c)(3) of rule XIII of the Rules of the 
House of Representatives, the following is the cost estimate 
provided by the Congressional Budget Office pursuant to section 
402 of the Congressional Budget Act of 1974:

                                     U.S. Congress,
                               Congressional Budget Office,
                                      Washington, DC, May 13, 2003.
Hon. W.J. ``Billy'' Tauzin,
Chairman, Committee on Energy and Commerce,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 1320, the 
Commercial Spectrum Enhancement Act.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Kathleen 
Gramp.
            Sincerely,
                                       Douglas Holtz-Eakin,
                                                          Director.
    Enclosure.

H.R. 1320--Commercial Spectrum Enhancement Act

    Summary: H.R. 1320 would amend the procedures used to pay 
for relocating federal telecommunications systems that use 
electromagnetic spectrum that will be licensed for commercial 
use. It would simplify the process companies use to reimburse 
the government for relocation costs and would allow agencies to 
spend those funds without further appropriation. Under current 
law, such spending is subject to appropriation. In addition, 
the bill would amend existing law regarding loans made by the 
Telecommunications Development Fund (TDF).
    CBO estimates that implementing H.R. 1320 would increase 
net direct spending by $1.4 billion over the 2006-2008 period 
and by $2.5 billion over the next 10 years. Allowing agencies 
to directly spend some auction proceeds would eliminate the 
need to appropriate funds for relocation costs. Consequently, 
this increase in direct spending could be largely offset by a 
reduction in discretionary spending if the total amounts 
appropriated in future years are reduced correspondingly.
    H.R. 1320 contains no intergovernmental or private-sector 
mandates as defined in the Unfunded Mandates Reform Act (UMRA) 
and would impose no costs on state, local, or tribal 
governments.
    Estimated cost to the Federal Government: The estimated 
budgetary impact of H.R. 1320 is shown in the following table. 
The costs of this legislation fall primarily within budget 
functions 050 (national defense) and 905 (undistributed 
offsetting receipts).

--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                         By fiscal year (in billions of dollars)
                                                                ----------------------------------------------------------------------------------------
                                                                  2003    2004    2005     2006    2007    2008    2009    2010    2011    2012    2013
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                               CHANGES IN DIRECT SPENDING
 Spectrum auction receipts under current law:
    Estimated budget authority.................................    -0.1    -0.3    -8.0     -8.0    -2.8    -2.5     0       0       0       0       0
    Estimated outlays..........................................    -0.1    -0.3    -8.0     -8.0    -2.8    -2.5     0       0       0       0       0
Proposed changes:
    Delay of spectrum auctions:
        Estimated budget authority.............................     0       0       7.5     -7.5     0       0       0       0       0       0       0
        Estimated outlays......................................     0       0       7.5     -7.5     0       0       0       0       0       0       0
    Spnding for relocation costs \1\:
        Estimated budget authority.............................     0       0       0        2.5     0       0       0       0       0       0       0
        Estimated outlays......................................     0       0       0        0.3     0.5     0.6     0.6     0.3     0.1     0.1     0
    Total proposed changes:
        Estimated budget authority.............................     0       0       7.5     -5.0     0       0       0       0       0       0       0
        Estimated outlays......................................     0       0       7.5     -7.2     0.5     0.6     0.6     0.3     0.1     0.1     0
Net spectrum auction receipts under H.R. 1320:
    Estimated budget authority.................................    -0.1    -0.3    -0.5    -13.0    -2.8    -2.5     0       0       0       0       0
    Estimated outlays..........................................    -0.1    -0.3    -0.5    -15.2    -2.3    -1.9     0.6     0.3     0.1     0.1     0
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ Implementing H.R. 1320 could result in a reduction in discretionary spending, similar to the $2.5 billion increase in direct spending if the total
  amounts appropriated in future years are reduced accordingly.

Basis of Estimate

    H.R. 1320 would amend current law that governs auctions of 
the electromagnetic spectrum in two ways. First, it would 
change the process used to pay for the cost of relocating 
government operations when spectrum that is used by agencies is 
going to be reallocated and licensed for commercial services. 
Second, the bill would change the treatment of loans made by 
the Telecommunications Development Fund. The cost of these 
changes is described below.
            Federal relocation costs
    CBO estimates that implementing H.R. 1320 would increase 
net direct spending by $2.5 billion over the next 10 years 
because it would allow agencies to spend some of the proceeds 
from spectrum auctions without further appropriation. Spending 
for agencies' spectrum relocation expenses is subject to 
appropriation under current law. By providing this direct 
spending authority, the bill could lead to lower discretionary 
spending in the future if the funds appropriated are reduced by 
corresponding amounts.
    Relocation Costs Under Current Law. Some of the 
electromagnetic spectrum now used by federal agencies is being 
reallocated from government to commercial use. Relocating 
agency operations to new frequencies or services typically 
involves buying new equipment and facilities. Under current 
law, those costs will be paid by the companies that win the 
commercial licenses at auctions held by the Federal 
Communications Commission (FCC). Agencies will notify bidders 
of estimated relocation costs before the auction begins, but 
final payment will be negotiated and made after the winning 
bidder has obtained--and paid for--the license. Funds paid by 
the commercial licensees for relocation costs will be deposited 
in the Treasury as miscellaneous receipts, but agencies cannot 
spend the proceeds until they are appropriated. How well the 
current relocation process would work is unknown because no 
auctions of such frequencies have occurred since the 
requirements were enacted in 1998.
    Proposed Changes. H.R. 1320 would make two key changes in 
the agency relocation process. First, costs for relocation 
would be paid from the total auction proceeds, rather than by 
individual licensees. The bill would direct the FCC to set a 
minimum bid for an auction equal to 110 percent of the 
estimated relocation costs. If auction proceeds exceed that 
minimum bid, then all of the proceeds from the auction of the 
federal frequencies would be deposited in a Spectrum Relocation 
Fund. Auctions that failed to at least match the minimum bid 
would be cancelled. Under the bill, all auction proceeds in the 
fund could be spent by agencies without further appropriation 
on eligible relocation costs. Agency expenditures and 
relocation progress would be subject to review by the Office of 
Management and Budget (OMB), the National Telecommunications 
and Information Administration (NTIA), various Congressional 
committees, and the General Accounting Office (GAO). Unspent 
auction proceeds would remain in the Treasury.
    The bill also would require the FCC to notify NTIA of an 
upcoming auction of least 18 months in advance, giving agencies 
a year to prepare estimates of relocation costs that must be 
given to the FCC at least six months prior to the start of the 
auction.
    Bugetary Effects Related to Auctioning the 1710-1755 
Megahertz Band. The relocation procedures, both in current law 
and under H.R. 1320, apply only to certain frequencies.Among 
the bands eligible for reimbursement are the 1710-1755 megahertz band, 
three small bands covered by existing law, and any frequencies 
reallocated from government to commercial use after January 1, 2003.
    Most of the estimated cost of this bill would result from 
applying the new process to the 1710-1755 megahertz band, which 
is scheduled to be paired with 45 megahertz of commercial 
spectrum and auctioned for use by advanced, third-generation 
wireless services in the next few years. Under current law, CBO 
anticipates that licenses for this 90 megahertz will be 
auctioned near the beginning of fiscal year 2005 and that 
proceeds totaling about $1.5 billion would be collected over 
the 2005-2006 period. This estimate reflects our expectation 
that companies will discount their bids by about $2 billion to 
$3 billion because of the uncertainty associated with the time 
and cost of relocating federal and commercial users.
    CBO estimates that implementing the new relocation 
procedures would affect the budget in three ways:
     Requiring the FCC to give NTIA at least 18-months 
notice would delay the start of the auction relative to CBO's 
baseline assumption, thereby shifting about $7.5 billion in 
offsetting receipts from 2005 and 2006. CBO assumes that the 
18-month period would not begin until the NTIA and FCC identify 
alternative frequencies for federal operations, which will be a 
key determinant of relocation costs.
     Agencies would spend about $2.5 billion, without 
further appropriation, to relocate federal systems that now use 
this band. This estimate reflects the preliminary estimate 
prepared by NTIA in 2001 on the cost of moving all federal 
systems out of this band. Most of this expense will be incurred 
by the Department of Defense (DoD).
     The estimated increase in direct spending could be 
larely offset by a reduction in discretionary spending if the 
amounts appropriated in future years are reduced 
correspondingly. However, CBO anticipates that total spending 
probably would be higher under H.R. 1320 than under current law 
because agencies' relocation plans would not be subject to 
negotiations with winning bidders or the appropriation process.
    It is possible that the net effect of the bill on direct 
spending could be higher or lower than estimated by CBO. On the 
one hand, agency spending could exceed $2.5 billion because the 
NTIA study was based on preliminary data and did not include 
all systems or all allowable expenditures. Recent statements by 
DoD have suggested that its costs alone could exceed $4 
billion.
    On the other hand, simplifying the reimbursement process 
could reduce some of the uncertainty for bidders, which could 
result in higher auction proceeds. Under current law, companies 
may underbid or overbid for spectrum licenses depending on how 
the amount they ultimately pay agencies for relocation expenses 
compares to the amount assumed in their bidding strategy. 
Likewise, under the bill, agencies might have access to funds 
more quickly than under the current process, but CBO has no 
basis for determining whether this would have a material effect 
on when the spectrum would be available for commercial service. 
On balance, CBO expects that simplifying the process for 
bidders might lead to higher proceeds, but we estimate that the 
magnitude of any change would be small relative to other 
factors that will affect the market value of these frequencies.
    Budgetary Effects Related to Other Bands. Based on 
information from NTIA and other agencies, CBO expects that 
implementing this bill would have no significant effect on the 
net proceeds from other auctions likely to be held before the 
FCC's auction authority expires in 2007.
            Telecommunications Development Fund
    The TDF was established by law in 1996 to spend the 
interest earned on certain proceeds collected by the FCC as 
part of the spectrum auction process. These interest earnings 
are used as venture capital for small businesses and spent on 
other activities related to telecommunications services. The 
fund is administered by a seven-member board appointed by the 
FCC and is governed by certain statutory criteria. H.R. 1320 
would remove one of those requirements, namely that loans made 
by the TDF are subject to the Federal Credit Reform Act.
    Since its creation, CBO has suggested that the TDF be 
included in the budget as a federal activity because its 
leadership, purpose, and funding are controlled by the 
government. OMB, however, treats the TDF as a nonfederal 
entity. Because the TDF currently is treated as a nonfederal 
entity, CBO estimates that enacting this provision would have 
no budgetary impact.
    Intergovernmental and Private-Sector Impact: H.R. 1320 
contains no intergovernmental or private-sector mandates as 
defined in the UMRA and would impose no costs on state, local, 
or tribal governments.
    Comparison With Other Estimates: In February 2003, the 
Administration recommended enacting legislation similar to H.R. 
1320. The Office of Management and Budget estimated that 
enacting its proposed legislation also would increase direct 
spending by $2.5 billion over the 2005-2013 period.
    Estimate Prepared by: Federal Costs: Kathleen Gramp, Impact 
on State, Local, and Tribal Governments: Victoria Heid Hall, 
and Impact on the Private Sector: Paige Piper/Bach.
    Estimate Approved by: Peter H. Fontaine, Deputy Assistant 
Director for Budget Analysis.

                       Federal Mandates Statement

    The Committee adopts as its own the estimate of Federal 
mandates prepared by the Director of the Congressional Budget 
Office pursuant to section 423 of the Unfunded Mandates Reform 
Act.

                      Advisory Committee Statement

    No advisory committees within the meaning of section 5(b) 
of the Federal Advisory Committee Act were created by this 
legislation.

                   Constitutional Authority Statement

    Pursuant to clause 3(d)(1) of rule XIII of the Rules of the 
House of Representatives, the Committee finds that the 
Constitutional authority for this legislation is provided in 
Article I, section 8, clause 3, which grants Congress the power 
to regulate commerce with foreign nations, among the several 
States, and with the Indian tribes.

                  Applicability to Legislative Branch

    The Committee finds that the legislation does not relate to 
the terms and conditions of employment or access to public 
services or accommodations within the meaning of section 
102(b)(3) of the Congressional Accountability Act.

             Section-by-Section Analysis of the Legislation


Section 1. Short Title

    Section 1 establishes the short title of the bill, the 
``Commercial Spectrum Enhancement Act of 2002.''

Section 2. Relocation of Eligible Federal Entities for the Reallocation 
        of Spectrum for Commercial Purposes

    Section 2 of the bill amends section 113(g) of the National 
Telecommunications and Information Administration Organization 
Act (47 U.S.C. 923(g)) by striking the existing provisions 
governing the compensation of federal entities for relocation 
costs incurred as the result of the reallocation of frequencies 
from government to non-government use and by replacing those 
provisions with the following:
    Section 113(g)(1) provides that any federal entity that has 
spectrum operations and that incurs relocation costs because of 
the reallocation of eligible frequencies from government to 
non-government use shall receive compensation for relocation 
expenses from the SRF. Section 113(g)(1) also permits Federal 
Power Agencies (FPAs) that voluntarily relocate from spectrum 
bands reallocated from government to non-government use to 
receive compensation for relocation costs from the SRF.
    Section 113(g)(2) establishes the frequency bands from 
which a federal entity's relocation costs would be compensated 
from the SRF. The bands include the 216-220 megahertz band, the 
1432-1435 megahertz band, the 1710-1755 megahertz band, and the 
2385-2390 megahertz band. Also included as an eligible band is 
any other band of frequencies reallocated from federal to non-
federal use after January 1, 2003 that the Commission assigns 
by auction, except for the 1390-1400 megahertz band, the 1427-
1432 megahertz band, the 1670-1675 megahertz band, the 2300-
2305 megahertz band, the 2305-2310 megahertz band, the 2390-
2450 megahertz band, the 3650-3700 megahertz band, and the 
4940-4990 megahertz band.
    Section 113(g)(3) defines relocation costs for which 
reimbursement from the SRF may be received by federal entities 
for achieving comparable capability of systems by relocating 
spectrum operations to a different frequency band or by 
utilizing an alternative technology. The Committee recognizes 
the unique situation of the Federal Power Agencies with respect 
to their funding derived from ratepayers. The Committee does 
not expect the requirement for the agencies to develop a pre-
auction estimate of relocation expenses to result in out-of-
pocket costs for the FPAs. To the extent necessary, the 
Committee expects NTIA and the Department of Energy will assist 
the FPAs in developing this estimate.
    New section 113(g)(4) requires the Commission to notify 
NTIA at least 18 months prior to the commencement of any 
auction of reallocated eligible frequencies. At least six 
months prior to such an auction, NTIA, on behalf of a federal 
entity that will be relocating spectrum operations from a 
reallocated band, must notify the Commission of the estimated 
relocation costs and timelines for such relocation. OMB is 
required to review the estimated costs and timelines before 
NTIA makes its submission to the Commission. New section 
113(g)(4) also requires the NTIA to provide federal entities, 
upon a timely request, with information regarding alternative 
frequency assignments for the purpose of calculating estimated 
relocation costs and timelines. NTIA must provide the 
information to the Commission and to requesting federal 
entities by the geographic location of the federal entities' 
facilities or systems or the frequency bands used by such 
facilities or systems. However, new section 113(g)(4) only 
requires NTIA to provide such information to the extent that it 
is consistent with national security and if it is practicable 
to do so.
    New section 113(g)(5) requires NTIA to provide a copy of 
any cost and timeline estimate submitted to the Commission to 
the Committees on Appropriations and Energy and Commerce of the 
House of Representatives, the Committees on Appropriations and 
Commerce, Science, and Transportation of the Senate, and the 
Comptroller General.
    New section 113(g)(6) requires NTIA to take any actions 
necessary to ensure the timely relocation of federal entities' 
spectrum operations from eligible frequencies to frequencies or 
facilities of comparable capability. Once NTIA has determined 
that a federal entity has achieved comparable capability of 
systems, new section 113(g)(6) requires NTIA to terminate the 
entity's authorization to operate on the reallocated frequency 
band, and to notify the Commission that the entity's 
relocationis complete. New section 113(g)(6) also requires NTIA to 
terminate a federal entity's authorization if the NTIA determines that 
the entity has unreasonably failed to comply with the timeline for 
relocation submitted by OMB to Congress after the completion of the 
auction.

Section 3. Minimum Auction Receipts and Disposition of Proceeds

    Section 3(a) amends section 309(j)(3) of the Communications 
Act of 1934 (47 U.S.C. 309(j)(3)) by requiring an auction of 
eligible frequencies described in section 113(g)(2) to yield at 
least 110 percent of the estimated relocation costs as provided 
to the Commission under new section 113(g)(4).
    Section 3(b) further amends section 309(j) of the 
Communications Act by requiring the Commission to revise its 
regulations to ensure that the total cash proceeds from any 
auction of eligible frequencies equals at least 110 percent of 
the estimated relocation costs provided to the Commission. 
Section 3(b) amends section 309(j) of the Communications Act to 
prohibit the Commission from concluding any auction of eligible 
frequencies if the total cash proceeds are less than 110 
percent of the total estimated relocation costs. If the 
Commission cannot conclude an auction, the Commission is 
required to cancel the auction, return any deposits to 
participating bidders within 45 days, and absolve such bidders 
from any obligation to the United States to bid in any 
subsequent reauction of the spectrum.
    For auctions of eligible frequencies, Section 3(b) permits 
the Commission to grant a license for commercial use prior to 
the termination of a federal entity's authorization. However, 
the Commission is required to prevent the licensee from causing 
harmful interference to a federal entity until the entity's 
authorization has been terminated. The Commission should 
authorize the commercial use of government frequencies prior to 
termination of the federal entity's authorization, to the 
extent such use would not cause harmful interference to the 
federal entity. However, the Committee expects the Commission 
to consider any such commercial use to be in addition to the 
term of a commercial entity's license that commences upon the 
termination of the federal entity's authorization by NTIA in 
accordance with H.R. 1320.
    Section 3(c) amends section 309(j) of the Communications 
Act by requiring that proceeds from an auction of eligible 
frequencies must be deposited in the SRF.

Section 4. Establishment of Fund and Procedures

    Section 4 creates a new section 118 of the National 
Telecommunications and Information Organization Act. New 
section 118(a) establishes a separate fund (the SRF) on the 
books of the Treasury. New section 118(a) provides that OMB 
shall administer the SRF in consultation with NTIA.
    New section 118(b) provides that the SRF shall be credited 
with the proceeds from auctions of eligible frequencies.
    New section 118(c) provides that the amounts in the SRF 
shall be used to pay the relocation costs of federal entities 
that relocate their spectrum operations from eligible 
frequencies. The amounts in the SRF are not available for any 
other purpose.
    New section 118(d) appropriates from the SRF such sums as 
required to pay the relocation costs of eligible federal 
entities. The Committee recognizes that this provision deviates 
from the traditional Congressional process for appropriating 
money for federal agencies. However, new section 118(d) is one 
of the most important provisions in H.R. 1320. Without the 
absolute certainty that money will be available to pay 
relocation costs, federal agencies would be extremely 
reluctant, if not outright opposed, to relocating their 
spectrum operations. This certainty can only be provided 
through a deviation from the annual appropriations process, and 
through guaranteeing that all proceeds from an auction of 
eligible frequencies will go directly into the SRF, be used 
exclusively for relocation expenses, and be available from the 
outset, not subject to annual appropriations.
    New section 118(d) also provides that monies from the SRF 
cannot be transferred to a federal entity unless OMB, in 
consultation with NTIA, has determined the appropriateness of 
the relocation costs and the timeline for relocation. The 
Committee expects agencies, in consultation with OMB and NTIA, 
to reevaluate cost estimates after an auction has been 
completed. The Committee does not expect the cost estimate 
required by new section 113(g)(4) to be the only cost estimate 
performed to determine actual relocation costs.
    New section 118(d) further provides that monies from the 
SRF cannot be transferred to a federal entity until 30 days 
after OMB submits a detailed plan describing how the funds will 
be spent for relocation and the timeline for relocation to the 
Committees on Appropriations and Energy and Commerce of the 
House of Representatives, the Committees on Appropriations and 
Commerce, Science, and Transportation of the Senate, and the 
Comptroller General.
    New section 118(d) provides that any auction proceeds 
remaining in the SRF after the payment of relocation costs 
shall revert to and be deposited in the Treasury no later than 
8 years after such proceeds are initially deposited in the SRF. 
Proceeds from subsequent auctions conducted in accordance with 
H.R. 1320 would not revert to the Treasury eight years after 
the initial deposit of proceeds from the first auction 
conducted in accordance with H.R. 1320. Excess proceeds from 
each auction remain in the fund for no more than eight years 
after their initial deposit following that particular auction.
    New section 118(e) provides that monies appropriated from 
the SRF are transferred to eligible federal entities in 
accordance with new section 118(d). New section 118(e) permits 
more than one transfer to be made to an eligible federal 
entity. However, if a subsequent transfer (or transfers) 
exceeds 10 percent of the first transfer to an entity, such 
subsequent transfer cannot be made without the prior approval 
of OMB, in consultation with NTIA, and until 45 days after OMB 
notifies the Committees on Appropriations and Energy and 
Commerce of the House of Representatives, the Committees on 
Appropriations and Commerce, Science, and Transportation of the 
Senate, and the Comptroller General. The notice of the 
subsequent transfer must include a detailed plan describing how 
the funds will be spent for relocation and the timeline 
forrelocation, as well as an explanation of the need for the subsequent 
transfer. In addition, within 30 days after receiving the plan, the 
Comptroller General is required to review the plan and submit to the 
relevant committees an assessment of the explanation for the subsequent 
transfer.
    New section 118(e) also provides that amounts transferred 
to an eligible federal entity shall be credited to the entity's 
appropriations account. The amounts shall remain available 
until expended, although any funds in excess of actual 
relocation costs shall be transferred back to the SRF 
immediately after NTIA has notified the Commission that an 
entity's relocation is complete or has determined that such 
entity has unreasonably failed to complete the relocation in 
accordance with the timeline submitted to Congress by OMB under 
new section 118(d). Eligible federal entities that receive 
amounts from the SRF are required to report their expenditures 
to OMB.

Section 5. Telecommunications Development Fund

    Section 5 clarifies that the Telecommunications Development 
Fund is not subject to the requirements of the Federal Credit 
Reform Act of 1990 or any other applicable law. Loans made with 
monies derived from the Telecommunications Development Fund are 
not backed by the full faith and credit of the United States. 
Therefore, subjecting such loans to the Federal Credit Reform 
Act and other similar laws is not necessary.

Section 6. Construction

    Section 6 provides that H.R. 1320 does not modify section 
1062(b) of the National Defense Authorization Act for Fiscal 
Year 2000 (Public Law 106-65), which prohibits, with certain 
exceptions, the surrender of spectrum by the Department of 
Defense unless comparable spectrum is made available, in 
advance, for the relevant operations. The Secretary of 
Commerce, Secretary of Defense, and the Chairman of the Joint 
Chiefs of Staff must jointly certify that the alternative band 
or bands provides comparable capability.

Section 7. Section Annual Report

    Section 7 requires NTIA to submit an annual report to 
Committees on Appropriations and Energy and Commerce of the 
House of Representatives, the Committees on Appropriations and 
Commerce, Science, and Transportation of the Senate, and the 
Comptroller General regarding (1) the progress made in adhering 
to the timelines presented by OMB to Congress under new section 
118(d), and (2) the estimated relocation costs, the actual 
costs incurred, and the amount of such costs paid from the SRF. 
This information must be provided on a communication-system-by-
system and an auction-by-auction basis.

Section 8. Preservation of Authority; NTIA Report Required

    Section 8 clarifies that, with the exception of the 216-220 
megahertz band, the 1432-1435 megahertz band, the 1710-1755 
megahertz band, and the 2385-2390 megahertz band, nothing in 
H.R. 1320 is intended to limit the Commission's authority to 
allocate spectrum reallocated from government to non-government 
use for unlicensed, public safety, shared, or non-commercial 
purposes.
    Section 8 also requires NTIA to submit a report to the 
Committee on Energy and Commerce of the House of 
Representatives and the Committee on Commerce, Science, and 
Transportation of the Senate within one year after enactment of 
H.R. 1320 regarding policy options to compensate federal 
entities for relocation costs when such entities' spectrum 
bands are reallocated from government to non-government use and 
the Commission allocates the spectrum for unlicensed, public 
safety, shared, or non-commercial purposes. The Committee 
expects NTIA to make policy recommendations appropriate to and 
consistent with its statutory authority.

         Changes in Existing Law Made by the Bill, as Reported

  In compliance with clause 3(e) of rule XIII of the Rules of 
the House of Representatives, changes in existing law made by 
the bill, as reported, are shown as follows (existing law 
proposed to be omitted is enclosed in black brackets, new 
matter is printed in italic, existing law in which no change is 
proposed is shown in roman):

NATIONAL TELECOMMUNICATIONS AND INFORMATION ADMINISTRATION ORGANIZATION 
ACT

           *       *       *       *       *       *       *



TITLE I--NATIONAL TELECOMMUNICATIONS AND INFORMATION ADMINISTRATION

           *       *       *       *       *       *       *


PART B--TRANSFER OF AUCTIONABLE FREQUENCIES

           *       *       *       *       *       *       *


SEC. 113. IDENTIFICATION OF REALLOCABLE FREQUENCIES.

  (a) * * *

           *       *       *       *       *       *       *

  (g) Relocation of Federal Government Stations.--
          [(1) In general.--
                  [(A) Authority of federal entities to accept 
                compensation.--In order to expedite the 
                commercial use of the electromagnetic spectrum 
                and notwithstanding section 3302(b) of title 
                31, United States Code, any Federal entity 
                which operates a Federal Government station may 
                accept from any person payment of the expenses 
                of relocating the Federal entity's operations 
                from one or more frequencies to another 
                frequency or frequencies, including the costs 
                of any modification, replacement, or reissuance 
                of equipment, facilities, operating manuals, or 
                regulations incurred by that entity. Any such 
                Federal entity which proposes to so relocate 
                shall notify the NTIA, which in turn shall 
                notify the Commission, before the auction 
                concerned of the marginal costs anticipated to 
                be associated with such relocation or with 
                modifications necessary to accommodate 
                prospective licensees. The Commission in turn 
                shall notify potential bidders of the estimated 
                relocation or modification costs based on the 
                geographic area covered by the proposed 
                licenses before the auction.
                  [(B) Requirement to compensate federal 
                entities.--Any person on whose behalf a Federal 
                entity incurs costs under subparagraph (A) 
                shall compensate the Federal entity in advance 
                for such costs. Such compensation may take the 
                form of a cash payment or in-kind compensation.
                  [(C) Disposition of payments.--
                          [(i) Payment by electronic funds 
                        transfer.--A person making a cash 
                        payment under this paragraph shall make 
                        the cash payment by depositing the 
                        amount of the payment by electronic 
                        funds transfer in the account of the 
                        Federal entity concerned in the 
                        Treasury of the United States or in 
                        another account as authorized by law.
                          [(ii) Availability.--Subject to the 
                        provisions of authorization Acts and 
                        appropriations Acts, amounts deposited 
                        under this subparagraph shall be 
                        available to the Federal entity 
                        concerned to pay directly the costs of 
                        relocation under this paragraph, to 
                        repay or make advances to 
                        appropriations or funds which do or 
                        will initially bear all or part of such 
                        costs, or to refund excess sums when 
                        necessary.
                  [(D) Application to certain other 
                relocations.--The provisions of this paragraph 
                also apply to any Federal entity that operates 
                a Federal Government station assigned to used 
                electromagnetic spectrum identified for 
                reallocation under subsection (a) if before 
                August 5, 1997, the Commission has not 
                identified that spectrum for service or 
                assigned licenses or otherwise authorized 
                service for that spectrum.
                  [(E) Implementation procedures.--The NTIA and 
                the Commission shall develop procedures for the 
                implementation of this paragraph, which 
                procedures shall include a process for 
                resolving any differences that arise between 
                the Federal Government and commercial licensees 
                regarding estimates of relocation or 
                modification costs under this paragraph.
                  [(F) Inapplicability to certain 
                relocations.--With the exception of the band of 
                frequencies located at 1710-1755 megahertz, the 
                provisions of this paragraph shall not apply to 
                Federal spectrum identified for reallocation in 
                the first reallocation report submitted to the 
                President and Congress under subsection (a).
          [(2) Process for relocation.--Any person seeking to 
        relocate a Federal Government station that has been 
        assigned a frequency within a band that has been 
        allocated for mixed Federal and non-Federal use, or 
        that has been scheduled for reallocation to non-Federal 
        use, may submit a petition for such relocation to NTIA. 
        The NTIA shall limit or terminate the Federal 
        Government station's operating license within 6 months 
        after receiving the petition if the following 
        requirements are met:
                  [(A) the person seeking relocation of the 
                Federal Government station has guaranteed to 
                pay all relocation costs incurred by the 
                Federal entity, including all 
engineering,equipment, site acquisition and construction, and 
regulatory fee costs;
                  [(B) all activities necessary for 
                implementing the relocation have been 
                completed, including construction of 
                replacement facilities (if necessary and 
                appropriate) and identifying and obtaining new 
                frequencies for use by the relocated Federal 
                Government station (where such station is not 
                relocating to spectrum reserved exclusively for 
                Federal use);
                  [(C) any necessary replacement facilities, 
                equipment modifications, or other changes have 
                been implemented and tested to ensure that the 
                Federal Government station is able to 
                successfully accomplish its purposes; and
                  [(D) NTIA has determined that the proposed 
                use of the spectrum frequency band to which the 
                Federal entity will relocate its operations 
                is--
                          [(i) consistent with obligations 
                        undertaken by the United States in 
                        international agreements and with 
                        United States national security and 
                        public safety interests; and
                          [(ii) suitable for the technical 
                        characteristics of the band and 
                        consistent with other uses of the band.
                In exercising its authority under clause (i) of 
                this subparagraph, NTIA shall consult with the 
                Secretary of Defense, the Secretary of State, 
                or other appropriate officers of the Federal 
                Government.
          [(3) Right to reclaim.--If within one year after the 
        relocation the Federal entity demonstrates to the 
        Commission that the new facilities or spectrum are not 
        comparable to the facilities or spectrum from which the 
        Federal Government station was relocated, the person 
        who filed the petition under paragraph (2) for such 
        relocation shall take reasonable steps to remedy any 
        defects or pay the Federal entity for the expenses 
        incurred in returning the Federal Government station to 
        the spectrum from which such station was relocated.]
          (1) Eligible federal entities.--Any Federal entity 
        that operates a Federal Government station assigned to 
        a band of frequencies specified in paragraph (2) and 
        that incurs relocation costs because of the 
        reallocation of frequencies from Federal use to non-
        Federal use shall receive payment for such costs from 
        the Spectrum Relocation Fund, in accordance with 
        section 118 of this Act. For purposes of this 
        paragraph, Federal power agencies exempted under 
        subsection (c)(4) that choose to relocate from the 
        frequencies identified for reallocation pursuant to 
        subsection (a), are eligible to receive payment under 
        this paragraph.
          (2) Eligible frequencies.--The bands of eligible 
        frequencies for purposes of this section are as 
        follows:
                  (A) the 216-220 megahertz band, the 1432-1435 
                megahertz band, the 1710-1755 megahertz band, 
                and the 2385-2390 megahertz band of 
                frequencies; and
                  (B) any other band of frequencies reallocated 
                from Federal use to non-Federal use after 
                January 1, 2003, that is assigned by 
                competitive bidding pursuant to section 309(j) 
                of the Communications Act of 1934 (47 U.S.C. 
                309(j)), except for bands of frequencies 
                previously identified by the National 
                Telecommunications and Information 
                Administration in the Spectrum Reallocation 
                Final Report, NTIA Special Publication 95-32 
                (1995).
          (3) Definition of relocation costs.--For purposes of 
        this subsection, the term ``relocation costs'' means 
        the costs incurred by a Federal entity to achieve 
        comparable capability of systems, regardless of whether 
        that capability is achieved by relocating to a new 
        frequency assignment or by utilizing an alternative 
        technology. Such costs include--
                  (A) the costs of any modification or 
                replacement of equipment, software, facilities, 
                operating manuals, training costs, or 
                regulations that are attributable to 
                relocation;
                  (B) the costs of all engineering, equipment, 
                software, site acquisition and construction 
                costs, as well as any legitimate and prudent 
                transaction expense, including outside 
                consultants, and reasonable additional costs 
                incurred by the Federal entity that are 
                attributable to relocation, including increased 
                recurring costs associated with the replacement 
                facilities;
                  (C) the costs of engineering studies, 
                economic analyses, or other expenses reasonably 
                incurred in calculating the estimated 
                relocation costs that are provided to the 
                Commission pursuant to paragraph (4) of this 
                subsection;
                  (D) the one-time costs of any modification of 
                equipment reasonably necessary to accommodate 
                commercial use of such frequencies prior to the 
                termination of the Federal entity's primary 
                allocation or protected status, when the 
                eligible frequencies as defined in paragraph 
                (2) of this subsection are made available for 
                private sector uses by competitive bidding and 
                a Federal entity retains primary allocation or 
                protected status in those frequencies for a 
                period of time after the completion of the 
                competitive bidding process; and
                  (E) the costs associated with the accelerated 
                replacement of systems and equipment if such 
                acceleration is necessary to ensure the timely 
                relocation of systems to a new frequency 
                assignment.
          (4) Notice to commission of estimated relocation 
        costs.--
                  (A) The Commission shall notify the NTIA at 
                least 18 months prior to the commencement of 
                any auction of eligible frequencies defined in 
                paragraph (2). At least 6 months prior to the 
                commencement of any such auction, the NTIA, on 
                behalf of the Federal entities and after review 
                by the Office of Management and Budget, shall 
                notify the Commission of estimated relocation 
                costs and timelines for such relocation.
                  (B) Upon timely request of a Federal entity, 
                the NTIA shall provide such entity with 
                information regarding an alternative frequency 
                assignment or assignments to which their 
                radiocommunications operations could be 
                relocated for purposes of calculating the 
                estimated relocation costsand timelines to be 
submitted to the Commission pursuant to subparagraph (A).
                  (C) To the extent practicable and consistent 
                with national security considerations, the NTIA 
                shall provide the information required by 
                subparagraphs (A) and (B) by the geographic 
                location of the Federal entities' facilities or 
                systems and the frequency bands used by such 
                facilities or systems.
          (5) Notice to congressional committees and gao.--The 
        NTIA shall, at the time of providing an initial 
        estimate of relocation costs to the Commission under 
        paragraph (4)(A), submit to the Committees on 
        Appropriations and Energy and Commerce of the House of 
        Representatives, the Committees on Appropriations and 
        Commerce, Science, and Transportation of the Senate, 
        and the Comptroller General a copy of such estimate and 
        the timelines for relocation.
          (6) Implementation of procedures.--The NTIA shall 
        take such actions as necessary to ensure the timely 
        relocation of Federal entities' spectrum-related 
        operations from frequencies defined in paragraph (2) to 
        frequencies or facilities of comparable capability. 
        Upon a finding by the NTIA that a Federal entity has 
        achieved comparable capability of systems by relocating 
        to a new frequency assignment or by utilizing an 
        alternative technology, the NTIA shall terminate the 
        entity's authorization and notify the Commission that 
        the entity's relocation has been completed. The NTIA 
        shall also terminate such entity's authorization if the 
        NTIA determines that the entity has unreasonably failed 
        to comply with the timeline for relocation submitted by 
        the Director of the Office of Management and Budget 
        under section 118(d)(2)(B).

           *       *       *       *       *       *       *


SEC. 118. SPECTRUM RELOCATION FUND.

  (a) Establishment of Spectrum Relocation Fund.--There is 
established on the books of the Treasury a separate fund to be 
known as the ``Spectrum Relocation Fund'' (in this section 
referred to as the ``Fund''), which shall be administered by 
the Office of Management and Budget (in this section referred 
to as ``OMB''), in consultation with the NTIA.
  (b) Crediting of Receipts.--The Fund shall be credited with 
the amounts specified in section 309(j)(8)(D) of the 
Communications Act of 1934 (47 U.S.C. 309(j)(8)(D)).
  (c) Used To Pay Relocation Costs.--The amounts in the Fund 
from auctions of eligible frequencies are authorized to be used 
to pay relocation costs, as defined in section 113(g)(3) of 
this Act, of an eligible Federal entity incurring such costs 
with respect to relocation from those frequencies.
  (d) Fund Availability.--
          (1) Appropriation.--There are hereby appropriated 
        from the Fund such sums as are required to pay the 
        relocation costs specified in subsection (c).
          (2) Transfer conditions.--None of the funds provided 
        under this subsection may be transferred to any 
        eligible Federal entity--
                  (A) unless the Director of OMB has 
                determined, in consultation with the NTIA, the 
                appropriateness of such costs and the timeline 
                for relocation; and
                  (B) until 30 days after the Director of the 
                OMB has submitted to the Committees on 
                Appropriations and Energy and Commerce of the 
                House of Representatives, the Committees on 
                Appropriations and Commerce, Science, and 
                Transportation of the Senate, and the 
                Comptroller General a detailed plan describing 
                how the sums transferred from the Fund will be 
                used to pay relocation costs in accordance with 
                such subsection and the timeline for such 
                relocation.
          (3) Reversion of unused funds.--Any auction proceeds 
        in the Fund that are remaining after the payment of the 
        relocation costs that are payable from the Fund shall 
        revert to and be deposited in the general fund of the 
        Treasury not later than 8 years after the date of the 
        deposit of such proceeds to the Fund.
  (e) Transfer to Eligible Federal Entities.--
          (1) Transfer.--
                  (A) Amounts made available pursuant to 
                subsection (d) shall be transferred to eligible 
                Federal entities, as defined in section 
                113(g)(1) of this Act.
                  (B) An eligible Federal entity may receive 
                more than one such transfer, but if the sum of 
                the subsequent transfer or transfers exceeds 10 
                percent of the original transfer--
                          (i) such subsequent transfers are 
                        subject to prior approval by the 
                        Director of OMB as required by 
                        subsection (d)(2)(A);
                          (ii) the notice to the committees 
                        containing the plan required by 
                        subsection (d)(2)(B) shall be not less 
                        than 45 days prior to the date of the 
                        transfer that causes such excess above 
                        10 percent;
                          (iii) such notice shall include, in 
                        addition to such plan, a explanation of 
                        need for such subsequent transfer or 
                        transfers; and
                          (iv) the Comptroller General shall, 
                        within 30 days after receiving such 
                        plan, review such plan and submit to 
                        such committees an assessment of the 
                        explanation for the subsequent transfer 
                        or transfers.
                  (C) Such transferred amounts shall be 
                credited to the appropriations account of the 
                eligible Federal entity which has incurred, or 
                will incur, such costs, and shall, subject to 
                paragraph (2), remain available until expended.
          (2) Retransfer to fund.--An eligible Federal entity 
        that has received such amounts shall report its 
        expenditures to OMB and shall transfer any amounts in 
        excess of actual relocation costs back to the Fund 
        immediately after the NTIA has notified the Commission 
        that the entity's relocation is complete, or has 
        determined that such entity has unreasonably failed to 
        complete such relocation in accordance with the 
        timeline required by subsection (d)(2)(A).

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                              ----------                              


COMMUNICATIONS ACT OF 1934

           *       *       *       *       *       *       *



                TITLE III--PROVISIONS RELATING TO RADIO

PART I--GENERAL PROVISIONS

           *       *       *       *       *       *       *


SEC. 309. ACTION UPON APPLICATIONS; FORM OF AND CONDITIONS ATTACHED TO 
                    LICENSES.

  (a) * * *

           *       *       *       *       *       *       *

  (j) Use of Competitive Bidding.--
          (1) * * *

           *       *       *       *       *       *       *

          (3) Design of systems of competitive bidding.--For 
        each class of licenses or permits that the Commission 
        grants through the use of a competitive bidding system, 
        the Commission shall, by regulation, establish a 
        competitive bidding methodology. The Commission shall 
        seek to design and test multiple alternative 
        methodologies under appropriate circumstances. The 
        Commission shall, directly or by contract, provide for 
        the design and conduct (for purposes of testing) of 
        competitive bidding using a contingent combinatorial 
        bidding system that permits prospective bidders to bid 
        on combinations or groups of licenses in a single bid 
        and to enter multiple alternative bids within a single 
        bidding round. In identifying classes of licenses and 
        permits to be issued by competitive bidding, in 
        specifying eligibility and other characteristics of 
        such licenses and permits, and in designing the 
        methodologies for use under this subsection, the 
        Commission shall include safeguards to protect the 
        public interest in the use of the spectrum and shall 
        seek to promote the purposes specified in section 1 of 
        this Act and the following objectives:
                  (A) * * *

           *       *       *       *       *       *       *

                  (D) efficient and intensive use of the 
                electromagnetic spectrum; [and]
                  (E) ensure that, in the scheduling of any 
                competitive bidding under this subsection, an 
                adequate period is allowed--
                          (i) * * *
                          (ii) after issuance of bidding rules, 
                        to ensure that interested parties have 
                        a sufficient time to develop business 
                        plans, assess market conditions, and 
                        evaluate the availability of equipment 
                        for the relevant services[.]; and
                  (F) for any auction of eligible frequencies 
                described in section 113(g)(2) of the National 
                Telecommunications and Information 
                Administration Organization Act (47 U.S.C. 
                923(g)(2)), the recovery of 110 percent of 
                estimated relocation costs as provided to the 
                Commission pursuant to section 113(g)(4) of 
                such Act.

           *       *       *       *       *       *       *

          (8) Treatment of revenues.--
                  (A) General rule.--Except as provided in 
                subparagraph (B) or subparagraph (D), all 
                proceeds from the use of a competitive bidding 
                system under this subsection shall be deposited 
                in the Treasury in accordance with chapter 33 
                of title 31, United States Code.

           *       *       *       *       *       *       *

                  (D) Disposition of cash proceeds.--Cash 
                proceeds attributable to the auction of any 
                eligible frequencies described in section 
                113(g)(2) of the National Telecommunications 
                and Information Administration Organization Act 
                (47 U.S.C. 923(g)(2)) shall be deposited in the 
                Spectrum Relocation Fund established under 
                section 118 of such Act, and shall be available 
                in accordance with that section.

           *       *       *       *       *       *       *

          (15) Special auction provisions for eligible 
        frequencies.--
                  (A) Special regulations.--The Commission 
                shall revise the regulations prescribed under 
                paragraph (4)(F) of this subsection to 
                prescribe methods by which the total cash 
                proceeds from any auction of eligible 
                frequencies described in section 113(g)(2) of 
                the National Telecommunications and Information 
                Administration Organization Act (47 U.S.C. 
                923(g)(2)) shall at least equal 110 percent of 
                the total estimated relocation costs provided 
                to the Commission pursuant to section 113(g)(4) 
                of such Act.
                  (B) Conclusion of auctions contingent on 
                minimum proceeds.--The Commission shall not 
                conclude any auction of eligible frequencies 
                described in section 113(g)(2) of such Act if 
                the total cash proceeds attributable to such 
                spectrum are less than 110 percent of the total 
                estimated relocation costs provided to the 
                Commission pursuant to section 113(g)(4) of 
                such Act. If the Commission is unable to 
                conclude an auction for the foregoing reason, 
                the Commission shall cancel the auction, return 
                within 45 days after the auction cancellation 
                date any deposits from participating bidders 
                held in escrow, and absolve such bidders from 
                any obligation to the United States to bid in 
                any subsequent reauction of such spectrum.
                  (C) Authority to issue prior to 
                deauthorization.--In any auction conducted 
                under the regulations required by subparagraph 
                (A), the Commission may grant a license 
                assigned for the use of eligible frequencies 
                prior to the termination of an eligible Federal 
                entity's authorization. However, the Commission 
                shall condition such license by requiring that 
                the licensee cannot cause harmful interference 
                to such Federal entity until such entity's 
                authorization has been terminated by the 
                National Telecommunications and Information 
                Administration.

           *       *       *       *       *       *       *


TITLE VII--MISCELLANEOUS PROVISIONS

           *       *       *       *       *       *       *


SEC. 714. TELECOMMUNICATIONS DEVELOPMENT FUND.

  (a) * * *

           *       *       *       *       *       *       *

  [(f) Lending and Credit Operations.--Loans or other 
extensions of credit from the Fund shall be made available in 
accordance with the requirements of the Federal Credit Reform 
Act of 1990 (2 U.S.C. 661 et seq.) and any other applicable law 
to an eligible small business on the basis of--
          [(1) the analysis of the business plan of the 
        eligible small business;
          [(2) the reasonable availability of collateral to 
        secure the loan or credit extension;
          [(3) the extent to which the loan or credit extension 
        promotes the purposes of this section; and
          [(4) other lending policies as defined by the Board.]
  (f) Lending and Credit Operations.--Loans or other extensions 
of credit from the Fund shall be made available to an eligible 
small business on the basis of--
          (1) the analysis of the business plan of the eligible 
        small business;
          (2) the reasonable availability of collateral to 
        secure the loan or credit extension;
          (3) the extent to which the loan or credit extension 
        promotes the purposes of this section; and
          (4) other lending policies as defined by the Board.

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