[Federal Register Volume 67, Number 116 (Monday, June 17, 2002)]
[Rules and Regulations]
[Pages 41182-41196]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-15118]


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DEPARTMENT OF COMMERCE

National Telecommunications and Information Administration

47 CFR Part 301

[001206341-2027-02]
RIN 0660-AA14


Mandatory Reimbursement Rules for Frequency Band or Geographic 
Relocation of Federal Spectrum-Dependent Systems

AGENCY: National Telecommunications and Information Administration, 
Commerce.

ACTION: Final rule.

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SUMMARY: In this document, the National Telecommunications and 
Information Administration (NTIA) adopts rules governing reimbursement 
to Federal entities by the private sector as a result of reallocation 
of frequency spectrum. This rule implements provisions of the Strom 
Thurmond National Defense Authorization Act for Fiscal Year 1999 (NDAA 
99) which authorized Federal entities to accept compensation payments 
when they relocate or modify their frequency use to accommodate non-
Federal users of the spectrum. By this action, spectrum that has been 
identified for reallocation can be provided to the private sector for 
future commercial wireless service, and the Federal Government will be 
compensated for the costs incurred in making that reallocated spectrum 
available.

DATES: These rules become effective July 17, 2002.

ADDRESSES: A complete set of comments filed in response to the Notice 
of Proposed Rulemaking \1\ is available for public inspection at the 
Office of the Chief Counsel, National Telecommunications and 
Information Administration, Room 4713, U.S. Department of Commerce, 
1401 Constitution Avenue, NW., Washington, DC. The responses can also 
be viewed electronically at http://www.ntia.doc.gov.
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    \1\ See Mandatory Reimbursement Rules for Frequency Band or 
Geographic Relocation of Federal Spectrum-Dependent Systems, 
National Telecommunications and Information Administration, Docket 
No. 001206341-0341-01, Notice of Proposed Rule Making, 66 FR 4771 
(Jan. 18, 2001) (NPRM).

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FOR FURTHER INFORMATION CONTACT: Milton Brown, NTIA, (202) 482-1816.

SUPPLEMENTARY INFORMATION:

Table of Contents

1. Background
5. Discussion
    6. Affected Bands
    7. 216--220 MHz band
    9. 1432--1435 MHz band
    10. 1710--1755 MHz band
    12. 2385--2390 MHz band
    13. Future Bands
    14. Sharing
    19. Equipment/System Modification
    20. Landline System and Commercial Services
    22. Reimbursement of Relocation Costs
    25. Notification of Marginal Costs
    30. Cap
    34. Exempted Federal Facilities
    36. Marginal Costs
    39. Comparable Facilities
    43. Cost Sharing
    47. Information Provided to Potential Bidders
    50. Unclassified Assignments
    55. Classified and Sensitive Assignments
    61. Negotiation and Mediation
    63. Petition for Relocation
    66. Arbitration
    68. Reclamation
69. Regulatory Flexibility Act
79. Summary of Cost/Benefit Analysis
Appendix: Final Rules

Background

    1. NTIA is the executive branch agency principally responsible for 
developing and articulating U.S. domestic and international 
telecommunications policy. NTIA is the principal advisor to the 
President on telecommunications policies pertaining to the Nation's 
economic and technological advancement and to the regulation of the 
telecommunications industry. NTIA also manages the Federal Government's 
use of the radio spectrum.
    2. On August 10, 1993, Title VI of the Omnibus Budget 
Reconciliation Act of 1993 (OBRA-93) was signed into law.\2\ OBRA-93 
authorized the Federal Communications Commission (FCC or Commission) to 
use competitive bidding (auctions) for the reassignment and licensing 
of spectrum frequencies for certain commercial services. OBRA-93 also 
directed the Secretary of Commerce to transfer at least 200 megahertz 
(MHz) of spectrum below 5 gigahertz (GHz) from Federal agencies to the 
FCC for licensing to the private sector. Pursuant to OBRA-93, NTIA 
identified Federal bands for reallocation totaling 235 MHz from the 
Federal Government to non-Government use in its February 1995 Spectrum 
Reallocation Final Report.\3\
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    \2\ Pub. L. No. 103-66, 107 Stat. 312 (1993).
    \3\ See National Telecommunications and Information 
Administration, U.S. Department of Commerce, NTIA Special 
Publication 95-32, Spectrum Reallocation Final Report (Feb. 1995).
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    3. Title III of the Balanced Budget Act of 1997 (BBA-97) required 
the Secretary of Commerce to identify an additional 20 MHz below 3 GHz 
for reallocation to non-Government users.\4\ In response to this 
directive, NTIA issued a Spectrum Reallocation Report in February 1998 
which identified the additional bands for reallocation.\5\ BBA-97 
directed the FCC to auction the 20 MHz by 2002 and the 1710-1755 MHz 
band identified in the 1995 Spectrum Reallocation Final Report after 
January 1, 2001.\6\ Finally, BBA-97 authorized Federal entities to 
accept cash or in-kind payment as compensation for costs associated 
with vacating spectrum transferred from Federal to non-Federal use.
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    \4\ Pub. L. No. 105-33, 111 Stat. 251 (1997).
    \5\ See National Telecommunications and Information 
Administration, U.S. Department of Commerce, NTIA Special 
Publication 98-36, Spectrum Reallocation Report (Feb. 1998).
    \6\ Pub. L. No. 105-33, Sec. 3002(b), codified at 47 U.S.C. 925 
note (2001). Of the 20 MHz of spectrum, eight (8) MHz (i.e., 139-
140.5 MHz, 141.5-143 MHz and 1385-1390 MHz bands) were subsequently 
reclaimed by the Federal Government in accordance with the National 
Defense Authorization Act for Fiscal Year 2000. Pub. L. No. 106-65, 
113 Stat. 512, 768 (1999).
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    4. In 1998, Congress passed the Strom Thurmond National Defense 
Authorization Act for Fiscal Year 1999 (NDAA-99).\7\ This legislation 
sought to

[[Page 41183]]

encourage the transfer of electromagnetic spectrum from Federal 
Government to private use by authorizing mandatory compensation 
payments for Federal entities when they relocate or modify their 
frequency use to accommodate non-Federal users of the spectrum.\8\ 
Specifically, the Act requires ``[a]ny person on whose behalf a Federal 
entity incurs costs'' pursuant to frequency spectrum relocation or 
modification ``to compensate the Federal entity in advance'' for the 
entity's modification or relocation expenses.\9\ The Act also 
references various expenses associated with frequency relocation or 
modification that qualify for reimbursement including ``the costs of 
any modification, replacement, or re-issuance of equipment, facilities, 
operating manuals, or regulations incurred by that entity.'' \10\ 
Moreover, the Act requires the Federal entity to notify NTIA prior to 
an auction \11\ of the ``marginal costs anticipated to be associated 
with such relocation or with modifications necessary to accommodate 
prospective licensees.'' \12\
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    \7\ Pub. L. No. 105-261, 112 Stat. 1920 (1998)(amending section 
113(g) of the NTIA Organization Act (codified at 47 U.S.C. 923(g)).
    \8\ See 47 U.S.C. 923(g)(1)(A) (2001). ``Federal entity'' is 
defined as ``any department, agency, or other instrumentality of the 
Federal Government that utilizes a Government station license 
obtained under section 305 of the 1934 Act (47 U.S.C. 305).'' 47 
U.S.C. 923(i).
    \9\ See 47 U.S.C. 923(g)(1)(B).
    \10\ See Id. Sec. 923(g)(1)(A).
    \11\ Generally, the FCC's auction authority is codified in 
Section 309(j) of the Communications Act as amended, 47 U.S.C. 
309(j).
    \12\ See 47 U.S.C. 923(g)(1)(A).
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Discussion

    5. The Act directs NTIA and the FCC to ``develop procedures for the 
implementation of [relocation], which * * * shall include a process for 
resolving any differences that arise between the Federal Government and 
commercial licensees regarding estimates of relocation or modification 
costs.'' \13\ On January 18, 2001, NTIA issued a Notice of Proposed 
Rule Making (NPRM) regarding these procedures. The NPRM sets out 
proposed rules to implement the process by which Federal entities are 
reimbursed for marginal costs incurred in relocating or modifying 
facilities as a result of reallocation. The NPRM raised a number of 
questions and sought public comment on the reimbursement process. The 
public comments received in response to the NPRM present a wide range 
of interests that are summarized and discussed below.
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    \13\ See 47 U.S.C. 923(g)(1)(E).
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Affected Bands

    6. The NPRM identified the following bands that currently qualify 
for reimbursement: 216-220 MHz; 1432-1435 MHz; 1710-1755 MHz; and 2385-
2390 MHz. These bands are Federal Government spectrum that was 
previously identified by NTIA for transfer to the private sector 
pursuant to OBRA-93 and BBA-97. The NPRM sought comment on the bands 
that qualified for reimbursement, and stated that future bands that 
qualify for reimbursement would be identified via a public notice and 
request for comment. Few comments were received with respect to the 
bands that qualify for reimbursement. We note that the Commission 
recently released its Report and Order regarding the reallocation of 
three of these bands, as well as an additional Report and Order 
adopting service and competitive bidding rules for these bands.\14\ A 
discussion of the particular bands that currently qualify for 
reimbursement is provided below.
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    \14\ See Reallocation of the 216-220 MHz, 1390-1395 MHz, 1427-
1429 MHz, 1429-1432 MHz, 1432-1435 MHz, 1670-1675 MHz, and 2385-2390 
MHz Government Transfer Bands, ET Docket No. 00-221, Report and 
Order and Memorandum Opinion and Order, 17 FCC Rcd 368 at ]] 19, 22 
(2002); Amendments to Parts 1, 2, 27 and 90 of the Commission's 
Rules to License Services in the 216-220 MHz, 1390-1395 MHz, 1427- 
1429 MHz, 1429-1432 MHz, 1432-1435 MHz, 1670-1675 MHz, and 2385-2390 
MHz Government Transfer Bands, Report and Order, FCC No. 02-152 
(released May 24, 2002).
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a. 216-220 MHz Band
    7. Federal assignments within the 216-220 MHz band are eligible for 
reimbursement for relocation or modification costs pursuant to BBA-97 
and NDAA-99.
    8. Mobex, an Automated Telecommunications Systems (AMTS) operator, 
states that it presently operates on a secondary basis to the United 
States Navy's SPASUR system in the 216.880 MHz to 217.080 MHz band.\15\ 
Mobex maintains that in more than 15 years of operation, it has 
encountered no difficulty in sharing use of the band with the SPASUR 
system and does not anticipate any difficulty if it obtains additional 
AMTS licenses.\16\ Mobex states that there may be no other spectrum 
suitable for the SPASUR purpose. Thus, Mobex submits that if the Navy 
has no intention of relocating the SPASUR system, the Navy should so 
inform the Administration so that the 216-220 MHz can be severed from 
this proceeding.\17\ We anticipate that SPASUR will remain in the band 
at specified locations on a primary basis, and we anticipate that other 
Federal systems will maintain secondary status in the band and not seek 
reimbursement costs. As noted in paragraph 6 above, the FCC recently 
released a Report and Order adopting service and competitive bidding 
rules for these bands to accommodate new licensees. Accordingly, the 
216-220 MHz band will not be severed from this proceeding as Mobex 
suggests.
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    \15\ Mobex Comments at 3.
    \16\ Id.
    \17\ Id.
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b. 1432-1435 MHz Band
    9. Federal assignments within the 1432-1435 MHz band are eligible 
for reimbursement for relocation or modification costs pursuant to BBA-
97 and NDAA-99.
c. 1710-1755 MHz Band \18\
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    \18\ We note that this band is part of an ongoing proceeding 
whereby NTIA and the Commission are developing a plan for the 
assessment of spectrum for advanced wireless services (3G). See In 
the Matter of Amendment of the Commission's Rules to Allocate 
Spectrum Below 3GHz for Mobile and Fixed Services to Support the 
Introduction of New Advanced Wireless Services, including Third 
Generation Wireless Systems, ET Docket No. 00-258.
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    10. Federal assignments within this band are eligible for 
reimbursement costs for relocation or modification pursuant to BBA-97 
and NDAA-99. Affected Federal agencies will submit estimated relocation 
or modification costs to NTIA pursuant to these rules.
    11. The Federal Aviation Administration (FAA) asked whether 
agencies that are located in the 1710-1755 MHz band would be required 
to relocate by January 2004 if no private entities bid on the 
particular frequencies.\19\ January 2004 is not a statutory driven 
date. To the extent that no non-Government entities have been licensed 
in the 1710-1755 MHz band, we see no reason why the Federal entities 
would be required to relocate by that date. Accordingly, Federal 
agencies within the 1710-1755 MHz band will submit estimated costs to 
relocate pursuant to these final rules.
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    \19\ FAA Comments at 1.
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d. 2385-2390 MHz Band
    12. Federal assignments within this band are eligible for 
reimbursement of relocation or modification costs pursuant to BBA-97 
and NDAA-99. Affected Federal agencies will submit estimated relocation 
or modification costs to NTIA pursuant to these rules.
e. Future Bands
    13. Future bands that qualify for reimbursement will be identified 
via a public notice and request for comments.

[[Page 41184]]

Sharing

    14. The NPRM sought comment on whether Federal entities should be 
required to relocate in those cases where sharing is technically 
possible.\20\ Most of the commenters supported the idea of the non-
Government licensee sharing with the incumbent Federal entity, under 
certain conditions. The Industrial Telecommunications Association, Inc. 
(ITA), for example, stated that sharing, as well as voluntary 
relocation, would expedite the auction process by reducing uncertainty, 
and avoiding the costly process of unnecessarily relocating Federal 
incumbents.\21\ ITA further noted that relocation may not be necessary 
because licensees could deploy systems around incumbent Federal users 
without overlapping contours.\22\ Other commenters, however, contended 
that certain conditions should accompany any sharing arrangement. For 
example, some commenters noted that the decision about whether the 
Federal entity should relocate or be permitted to share should be made 
by the new licensee as opposed to the Federal entity.\23\ Motorola 
supported the sharing of spectrum provided that it does not hamper the 
deployment of services.\24\ AT&T stated that sharing would be a 
superior option to full relocation in terms of cost, time and 
convenience, and might be appropriate where the Government's use is 
restricted to a small geographic area or an off-use time period.\25\ 
AT&T maintained that a licensee's choice between relocation and 
sharing, retuning or modification (as discussed below) should govern 
unless the Government demonstrates that the licensee's choice is 
impracticable.\26\
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    \20\ NPRM at ] 13.
    \21\ ITA Reply Comments at 5.
    \22\ Id. at 4.
    \23\ AT&T Comments at 3; Securicor Comments at 2.
    \24\ Motorola Comments at 7.
    \25\ AT&T Comments at 3.
    \26\ Id. at 4.
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    15. The Department of Defense (DoD) stated that if sharing is 
technically possible, the private entity would be required to pay for 
any modification required by the Federal entity.\27\ DoD further 
maintained that it is the Federal entity that must first determine how 
to achieve comparability of operations, and that ``permitting'' DoD to 
remain on a non-interference basis is not likely to be sufficient to 
achieve comparability.\28\ DoD also argued that to leave sharing as a 
potentially feasible option, no requirement should be established that 
would serve to limit the possibility of achieving comparability.
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    \27\ DOD Comments at 3.
    \28\ Id. at 3.
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    16. Commenters also offered suggestions and recommendations with 
respect to establishing sharing as an option. Motorola stated that 
clear rules need to be established to ensure that deployed systems are 
compatible and will not affect non-Government operations or mission 
critical Government facilities.\29\ Motorola further stated that costs 
required for system modification to support sharing must be provided 
prior to an auction of the reallocated spectrum so that a new entrant 
can consider the costs as part of a spectrum acquisition strategy.\30\ 
Securicor commented that NTIA should clarify that relocation of 
incumbent Federal entities is a right that is at the option of the 
auction winners.\31\ AT&T similarly commented that new licensees should 
have the ultimate choice among sharing, retuning, or full relocation of 
the Federal incumbents.\32\ ITA recommended that NTIA allow licensees 
to ``rely upon resources such as frequency advisors to evaluate 
proposed systems and either: (1) Ensure that there will be no 
prohibited overlap with incumbent, Governmental entities; or (2) begin 
a relocation negotiation process with the Federal incumbent 
licensee.''\33\ DoD stated that sharing should be considered on a case-
by-case basis, and that NTIA should make the clarification in the final 
rule that sharing is to be made available only if the incumbent Federal 
entities believe that it would meet their needs.\34\
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    \29\ Motorola Comments at 7.
    \30\ Id.
    \31\ Securicor Comments at 2-3.
    \32\ AT&T Comments at 4.
    \33\ ITA Reply Comments at 5.
    \34\ DOD Comments at 3.
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    17. Although sharing appears to be an option that private sector 
parties favor, OBRA-93, BBA-97, and NDAA-99 require non-exempt Federal 
entities to relocate from bands reallocated to non-Government uses in 
order to exercise their rights to reimbursement. Therefore sharing by 
non-exempt Federal systems will not be permitted once the requirements 
of OBRA-93, BBA-97, and NDAA-99 have been met. To the extent that a 
non-exempt Federal entity decides to remain in a reallocated band, the 
Federal entity would remain in the band on a non-interference basis and 
would not be entitled to reimbursement for any modification costs under 
these rules.
    18. We recognize that as a practical matter, however, during 
relocation of Federal Government stations from these bands, Federal 
agencies and private sector licensees may find it efficient for both 
entities to operate in these bands for a period of time. It may take a 
number of years for the relocation process to be completed in some of 
the subject bands depending upon the number of Government systems that 
must be relocated. We anticipate that the negotiation process, 
addressed below, will provide the new licensee and the Federal 
Government incumbent with a framework within which to negotiate an 
efficient transition of facilities. During the transition period, all 
incumbent Government systems will remain on a primary basis and must be 
protected by the non-Government licensee.

Equipment/System Modification

    19. The NPRM discussed circumstances where radiocommunication 
systems in certain bands can be modified to tune outside of the 
reallocated band to the upper or lower portion of the incumbent 
system's tuning capability. We noted that retuning is oftentimes less 
expensive to implement, assuming that there is no congestion in the 
upper or lower portion of the band as a result of the migration and 
assuming the transmitter-receiver frequency separation can be met. To 
the extent that a Federal entity is able to retune or modify its 
equipment in these circumstances, we proposed to limit reimbursement to 
the costs associated with retuning. AT&T supported our proposed 
limitation of reimbursement costs for retuning or modification in those 
situations where it is a technically feasible alternative to 
relocation.\35\ Thus, to the extent that a Federal entity that is 
required to relocate is able to modify/re-tune its equipment with the 
result that the modified equipment provides operational capabilities 
comparable with the original system, reimbursement will be limited to 
the marginal costs associated with modification/re-tuning.
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    \35\ AT&T Comments at 3.
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Landline System and Commercial Services

    20. The NPRM sought comment on whether a Federal entity should be 
entitled to reimbursement of relocation costs if it relocates to a 
landline communications system or a commercial radio service.\36\ 
Commenters overwhelmingly agreed that agencies should be reimbursed for 
relocation costs if they choose to relocate to a landline or commercial 
service. DoD stated that moving to a commercial service or landline 
system

[[Page 41185]]

would qualify as ``modification,'' and moving to a commercial radio 
service would certainly be considered ``relocation to another 
frequency.''\37\
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    \36\ NPRM at ] 14.
    \37\ DOD Comments at 4.
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    21. We agree with the commenters and find that Federal entities are 
entitled to reimbursement of relocation costs if they relocate to 
landline communications systems or commercial radio systems. For 
Federal entities that choose to relocate to landline communications 
systems or commercial radio systems, reimbursement will be limited to 
the marginal costs associated with such a relocation.

Reimbursement of Relocation Costs

    22. Private industry commenters overwhelmingly recommended that 
auction proceeds be used to pay for expenses incurred by the Federal 
entities as a result of relocation.\38\ Several commenters stated that 
this process would be more efficient and cost effective, eliminating 
the need for extensive negotiations, discussions and cost sharing 
considerations, thus permitting new licensees to rapidly deploy 
networks.\39\ Commenters also stated that using auction proceeds to 
compensate Federal entities would provide certainty on the part of the 
Federal entities that they would be fully and timely paid because of 
the guaranteed source of funds.\40\ Likewise, commenters noted that 
this approach would provide certainty on the part of potential bidders 
who would be free to value the licenses solely on the basis of the 
value of unencumbered spectrum, thereby reducing the risks associated 
with bidding on the spectrum and decreasing the likelihood of lengthy 
post-auction disputes.\41\
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    \38\ AT&T Comments at 12; Motorola Comments at 1; Cingular 
Comments at 1; PCIA Comments at 2; MicroTrax Reply Comments at 1.
    \39\ Motorola Comments at 6-7; AT&T Comments at 12.
    \40\ Motorola Comments at 5-6; AT&T Comments at 12.
    \41\ Cingular Comments at 2; PCIA Comments at 2.
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    23. Commenters provided other benefits of reimbursing Federal 
entities from auction revenues. AT&T, for example, stated that reducing 
the overall financial obligations of potential bidders would increase 
the number of bidders and thus promote competition.\42\ MicroTrax 
argued that using auction revenues to pay for relocation would 
encourage participation from smaller firms because they would not face 
any uncertainty about total spectrum costs and would be able to bid the 
full amount they judge the spectrum to be worth.\43\ Cingular noted 
that this approach is better because potential and winning bidders 
would not need information regarding classified or sensitive 
facilities, and because auction revenues would likely be higher.\44\
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    \42\ AT&T Comments at 12.
    \43\ MicroTrax Comments at 2.
    \44\ Cingular Comments at 2.
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    24. We appreciate the arguments advanced by commenters on this 
issue however, as several commenters have acknowledged,\45\ existing 
law requires that new non-Government licensees reimburse the Federal 
entity for relocation costs and it does not allow for reimbursement 
through auction proceeds.\46\ In fact, PCIA stated that several 
entities have been actively pursuing legislative relief.\47\ 
Accordingly, in the absence of a statutory change, auction proceeds 
will not be used to reimburse Federal entities for relocation costs.
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    \45\ PCIA Comments at 2; Motorola Comments at 6; Cingular 
Comments at 6.
    \46\ The statute provides that ``[a]ny person on whose behalf a 
Federal entity incurs costs...shall compensate the Federal entity in 
advance for such costs.'' 47 U.S.C. 923(g)(1)(B).
    \47\ PCIA Comments at 6.
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Notification of Marginal Costs

    25. The NPRM proposes a rule that requires Federal entities to 
provide NTIA with the marginal costs anticipated to be associated with 
relocation or modification at least 240 days prior to an FCC 
auction.\48\ Pursuant to the NPRM, NTIA would forward that information 
to the FCC within 180 days prior to an auction.\49\
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    \48\ NPRM at ] 35.
    \49\ Id.
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    26. Mobex stated that the time line proposed in the NPRM is unduly 
long and would impair the Commission's objective of bringing new, 
competitive services to the public expeditiously.\50\ Mobex further 
stated that the time periods in the NPRM could prevent an auction from 
occurring for as much as two years from the present time. Mobex 
suggested that because all Federal entities can be ``deemed to have 
notice of the Administration's proposals now, they should be planning 
now, and NTIA should require the submission of the agencies' marginal 
cost data 30 days after the effective date of the NTIA order * * * 
[and] NTIA should then provide that cost information to the FCC within 
15 days after receiving it.''\51\
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    \50\ Mobex Comments at 3.
    \51\ Id at 4.
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    27. DOD noted that the requirement for agencies to notify NTIA of 
the marginal costs 240 days prior to an auction does not allow Federal 
entities the ability to provide the most up-to-date and accurate cost 
data.\52\ DOD believes that the rules must reflect the complexity of 
the processes each Executive branch agency and the FCC must take in 
order to successfully auction Federal spectrum.\53\ DOD requested that 
NTIA work with the Commission and its companion rules to provide 
agencies a more reasonable time frame to provide cost data.\54\ In 
response to Mobex's proposal that Federal entities present their cost 
data to NTIA 30 days after the effective date of the rules, DOD argued 
that 30 days will be insufficient for DOD to undertake the complex task 
of developing marginal costs.\55\ DOD stated that it is important for 
costs to be developed as close to the auction date as feasible and 
that, in some circumstances, identification of replacement spectrum 
will be a condition precedent for the estimation of marginal costs to 
relocate.\56\
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    \52\ DOD Comments at 12.
    \53\ Id.
    \54\ Id. at 13.
    \55\ DOD Reply Comments at 6.
    \56\ Id. The 240-day requirement is based on two assumptions: 
(1) the FCC has issued an allocation order and service rules with 
respect to certain bands sufficiently in advance of the auction of 
such spectrum; and (2) comparable spectrum has been identified in 
those limited cases in which comparable spectrum must be identified 
to accommodate DOD in accordance with Pub. L. 106-65, 113 Stat.768 
(1999).
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    28. The timeframe established in the NPRM was established to give 
NTIA a sufficient amount of time to gather pertinent information from 
the Federal entities and to put that information into a relevant format 
to forward to the FCC. More importantly, the time frame gives the FCC a 
reasonable amount of time to provide potential bidders with 
``sufficient time to develop business plans, assess market conditions, 
and evaluate availability of equipment for the relevant services.''\57\ 
Many of the comments received in this proceeding have expressed the 
importance and necessity of bidders being well informed of potential 
costs so that they can form bidding strategies. Hence, the time frame 
proposed is also an attempt to give bidders as much time as possible to 
consider potential costs associated with bidding on licenses.
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    \57\ See 47 U.S.C. 309(j)(3)(E)(ii).
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    29. Mobex argued that the proposed time period established for 
Federal entities to submit costs could prevent an auction from 
occurring for as much as two years. It is the auction date that drives 
the time that Federal entities must submit costs and not the other way 
around. With respect to DOD's argument that the proposed time-period 
would not allow the Federal entities to provide

[[Page 41186]]

up-to-date cost information, we note that any cost information provided 
prior to an auction and prior to actual relocation would necessarily 
not be up-to-date. In fact, DOD noted that costs submitted prior to an 
auction may have to be modified post-auction.\58\ We note also that DOD 
did not suggest a time prior to an auction that would be suitable or 
reasonable for it to provide up-to-date estimated cost information. 
Accordingly, we adopt as final the time frames set forth in the 
proposed rules.
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    \58\ DOD Comments at 10.
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Cap

    30. Mobex asserted that ``[p]ursuant to the Act, NTIA has proposed 
to establish a Relocation Cost Cap, beyond which a non-Federal licensee 
would not be required to compensate a Federal user for frequency 
relocation.'' \59\ Mobex supported the establishment of a relocation 
cap, and a cap on the costs to be imposed on a non-Federal user in the 
event that the Federal user decides to reclaim the spectrum.\60\ Mobex 
asserted that a cap is necessary to determine whether to participate in 
competitive bidding and to establish a bidding strategy.\61\
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    \59\ Mobex Comments at 4.
    \60\ Id.
    \61\ Id. at 4-5.
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    31. Securicor recommended that total relocation costs provided by 
Federal entities be set as the ceiling in post-auction negotiation and 
mediation to prevent ``new'' costs from being introduced after the 
bidders have relied on the cost valuation in the bid calculation.\62\ 
MicroTrax agreed that a cap would give more certainty to potential 
bidders prior to an auction, and thus more confidence leading them to 
participate in the auction.\63\ AT&T argued that the Federal entity 
should have no reimbursement rights to cost overruns ten percent or 
more over the initial pre-auction estimate.\64\
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    \62\ Securicor Comments at 3.
    \63\ MicroTrax Comments at 2.
    \64\ AT&T Comments at 14.
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    32. DOD stated that it is unable to locate any rule or discussion 
regarding a relocation cost cap in the proposed rules.\65\ DOD further 
stated that the Act does not authorize a cap on relocation costs or the 
right to reclaim.\66\ DOD maintained that because circumstances change, 
good faith estimates can be low or high.\67\ Finally, DOD stated that 
there is no suggestion in the statute that estimates cannot be modified 
post-auction, and thus NTIA has correctly not made such a proposal.\68\
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    \65\ DOD Reply Comments at 3.
    \66\ Id. at 4.
    \67\ Id.
    \68\ Id.
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    33. We agree with DOD that a relocation cap costs cannot be imposed 
on the Federal agencies. The statute requires any person on whose 
behalf a Federal entity incurs costs as a result of reallocation shall 
compensate the Federal entity in advance for such costs.\69\ Nothing in 
the statute indicates that Congress intended to limit or cap the 
reimbursement of costs incurred by the Federal entity in relocating or 
modifying their facilities. As a result, the NPRM neither recommended 
nor discussed a cap on relocation costs. Moreover, we find AT&T's 
recommendation to limit cost overruns to ten percent over estimated 
costs to essentially constitute a cap.
---------------------------------------------------------------------------

    \69\ 47 U.S.C. 923(g)(1)(B).
---------------------------------------------------------------------------

Exempted Federal Facilities

    34. The NPRM noted that there were Federal power agencies and other 
Government agencies that were statutorily exempt from the requirements 
to relocate.\70\ We sought comment on whether these agencies could 
voluntarily relocate, and, if so, whether they would be subject to the 
proposed rules or left exclusively to voluntary negotiations. Motorola 
stated that permitting the operation of exempted operations within 
certain spectrum bands threatens the viability of the use of these 
bands by non-Government entities.\71\ For example, Motorola argued that 
the usefulness of the 1710 to 1755 MHz band for third generation 
wireless services would be severely threatened if exempted Federal 
operations are permitted to operate in that band.\72\ Thus, Motorola 
recommended relocating these exempted Federal users, and requiring that 
these users submit potential relocation costs at the same time as other 
Federal users who are subject to mandatory relocation.\73\
---------------------------------------------------------------------------

    \70\ NPRM at ]] 26-27.
    \71\ Motorola Comments at 9.
    \72\ Id.; Motorola Reply Comments at 5.
    \73\ Motorola Comments at 10.
---------------------------------------------------------------------------

    35. By statute, exempted Federal assignments/facilities are not 
required to relocate, therefore Federal entities operating on these 
exempted assignments/facilities are not obligated to provide estimated 
relocation costs. The final rules, however, permit exempted Federal 
entities to accept reimbursement for relocation costs in cases of 
voluntary relocation. In cases where exempt Federal entities wish to 
relocate, they may negotiate the marginal cost to relocate with the new 
non-Government licensee in the same manner as non-exempt entities.

Marginal Costs

    36. The NPRM identified the marginal relocation and modification 
costs that are reimbursable, and proposed to define ``marginal costs'' 
as those that would be incurred by a Federal entity to achieve 
comparable capability of systems relocated to a new frequency 
assignment or band or otherwise modified.\74\ We also stated that 
marginal costs would include all engineering, equipment, software, site 
acquisition and construction costs, as well as any legitimate and 
prudent transaction expenses, 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.
---------------------------------------------------------------------------

    \74\ NPRM at ] 33.
---------------------------------------------------------------------------

    37. The FAA stated that Federal agencies should be reimbursed for 
the money spent in developing the estimated costs that the Federal 
entity must submit to NTIA 240 days in advance of an auction.\75\ We 
note that the definition of marginal costs in the Final rules would 
permit Federal agencies to recover such costs so long as they could 
reasonably be attributed to the relocation. Under the current 
definition of marginal costs, however, Federal agencies would not be 
permitted to recover costs associated with any estimates prepared as 
part of a reallocation assessment.
---------------------------------------------------------------------------

    \75\ FAA Comments at 1.
---------------------------------------------------------------------------

    38. DOD noted that the elements that define marginal costs are 
included in the proposed rule, section 301.110(a), which is not 
definitional but operational.\76\ DOD recommended that these elements 
be incorporated into the definition of marginal costs found in the 
proposed ``Definitions'' section 301.20(l). We agree and will modify 
the rules accordingly.
---------------------------------------------------------------------------

    \76\ DOD Comments at 9.
---------------------------------------------------------------------------

Comparable Facilities

    39. The NPRM does not require a Federal entity to relocate until a 
comparable facility is available to it for a reasonable time to make 
adjustments, determine compatibility, and ensure a seamless transition 
from an existing facility or frequency band(s) to the new or modified 
facility or frequency band(s).\77\ We proposed to define ``comparable 
facility'' to mean that the replacement facility restores the 
operational capabilities of the original facility to an equal or 
superior level. We

[[Page 41187]]

also proposed to use four basic factors to determine comparability of 
replacement facility: communications throughput, system reliability, 
operating costs, and operational capability.\78\ We noted in the NPRM 
that these four factors may not be appropriate measures for all Federal 
Government stations required to relocate, and noted that radar systems, 
in particular, may require other measurements.\79\
---------------------------------------------------------------------------

    \77\ NPRM at ] 13.
    \78\ Id. at ] 16.
    \79\ Id. at ] 21.
---------------------------------------------------------------------------

    40. We further proposed to define the four factors to determine 
comparability. ``Communications throughput'' is defined as the amount 
of information transferred within the system for a given amount of 
time. For digital systems, communications throughput is measured in 
bits per second (bps); for analog systems, the communications 
throughput is measured by the number of voice, video or data channels. 
``System reliability'' is defined in the NPRM as the percentage of time 
information is accurately transferred within a system. The reliability 
of a system is a function of equipment failures and the availability of 
the frequency channel given the propagation characteristics and 
equipment sensitivity. System reliability also includes the ability of 
a radio-communications station to perform required functions under 
stated conditions for a stated period of time. System reliability may 
involve three distinct concepts: attaining a specified level of 
performance; the probability of achieving that level; and maintaining 
that level for a specified time. For digital systems, this would be 
measured by the percentage of time the bit error rate (BER) exceeds a 
desired value; for analog transmissions, this would be measured by the 
percentage of time the receiver carrier-to-noise ratio exceeds the 
receiver threshold. We noted in the NPRM that, for many DOD systems, 
performance is defined by sophisticated system specifications as 
related to specific mission requirements. In measuring/assessing DOD 
systems, these specific system specifications must be used. ``Operating 
costs'' is defined as the costs to operate and maintain the Federal 
entity's replacement system. New licensees would compensate Federal 
entities for any increased recurring costs associated with the 
replacement facilities for five years after relocation. ``Operational 
capability'' is defined as the measure of a system's ability to perform 
its validated functions within doctrinal requirements, including 
service, joint service, and allied interoperability requirements with 
related systems.
    41. Securicor noted that the totality of costs proposed are, in 
general, consistent with the notion of comparable facilities.\80\ 
Securicor expressed concern, however, that the NPRM could be 
interpreted to provide better facilities than those the Federal 
entities currently use and that relocation should simply put them in a 
comparable place. Thus, Securicor argued, the Federal entities should 
not have increased value in their facilities as a result of relocation. 
We believe that Securicor's concern was addressed in the NPRM. We 
proposed that marginal costs include costs related to the need to 
achieve comparable capability when replacing, modifying or reisssuing 
equipment in order to relocate when the systems that must be procured 
or developed have increased functionality due to technological growth. 
Marginal costs would not include costs related to optional increased 
functionality that is independent of the need to achieve comparable 
capability.\81\
---------------------------------------------------------------------------

    \80\ Securicor Comments at 4.
    \81\ NPRM at ] 33.
---------------------------------------------------------------------------

    42. The FAA stated that Federal agencies should be reimbursed for 
operating costs for a minimum of five years, with costs for the years 
thereafter subject to negotiation between the parties.\82\ The FAA 
believes that a five-year limit may not fully reimburse Federal 
entities for the costs of relocation.\83\ We believe that the parties 
are free to negotiate on any aspect of relocation, including operating 
costs. We will not, however, dictate the terms of negotiations between 
the parties. We believe that five years is a sufficient amount of time 
for a licensee to compensate a Federal agency for increased recurring 
costs as described herein. To the extent that the parties wish to 
extend that period, it may be addressed in the negotiation/mediation 
period as described herein, but it will not be a mandatory requirement 
of these rules.
---------------------------------------------------------------------------

    \82\ FAA Comments at 2.
    \83\ Id.
---------------------------------------------------------------------------

Cost Sharing

    43. In the NPRM, we proposed to adopt a cost-sharing plan in those 
situations where the requirement to reimburse a Federal entity could 
disproportionately fall upon one licensee or a small number of 
licensees. Such a cost-sharing plan would also ensure that a Federal 
entity is compensated in those circumstances where a portion of the 
spectrum is not licensed or acquired by any particular licensee. As 
part of this proposal, we sought comment on the appropriate entity to 
serve as a clearinghouse to administer a cost-sharing plan.
    44. The commenters were supportive of the proposal for a cost-
sharing plan and recommended that NTIA adopt an industry-run 
clearinghouse similar to the one adopted by the Commission in the 
relocation of microwave incumbents.\84\ Specifically, PCIA and ITA 
recommended that NTIA follow the Commission's example and request 
interested parties to submit business plans with certain minimum 
criteria including financial data, timing, accounting methods, 
confidentiality, neutrality and dispute resolution.\85\ PCIA noted that 
it has prior and continuing experience as a Commission-certified cost-
sharing clearinghouse and has recommendations for selecting a qualified 
clearinghouse.\86\ PCIA also offered that it would be fully qualified 
to serve as a cost-sharing clearinghouse in this matter and relayed its 
experience in providing clearinghouse functions for the relocation of 
fixed microwave licensees.\87\ AT&T suggested that although the cost-
sharing rules in the microwave relocation process have generally worked 
well, more detailed guidance regarding problem areas and some 
modification to the rules would speed relocation, increase the fairness 
and efficiency of reimbursement, and reduce conflict.\88\ AT&T also 
stated that any clearinghouse should be funded by auction proceeds 
throughout the life cycle of the clearinghouse, which could last beyond 
the sunset date.\89\
---------------------------------------------------------------------------

    \84\ PCIA Comments at 8; AT&T Comments at 12-14; Securicor 
Comments at 6-7; ITA Comments at 6.
    \85\ PCIA Commenta at 8-9; ITA Comments at 6.
    \86\ PCIA Comments at 7.
    \87\ Id.
    \88\ AT&T Comments at 12-13.
    \89\ Id. at 14.
---------------------------------------------------------------------------

    45. DOD did not take a position on any particular plan with respect 
to a cost-sharing plan, but states that it will work with the private 
sector to address this complex issue.\90\ DOD provided examples of the 
complexity of its systems and the possible difficulties that would 
burden one successful bidder to cover the full cost of relocation.\91\ 
DOD believes that it would be helpful to establish a framework whereby 
each Federal agency could request that all licensees of frequency 
assignments affecting a Federal agency participate in a single 
negotiation process.\92\ DOD warned that relocation

[[Page 41188]]

implementation will not be easy and that successful bidders may need to 
compensate DOD for multiple systems that are likely to be 
geographically dispersed throughout the world.\93\ Moreover, DOD stated 
that technical solutions to achieve comparability are likely to be 
different for different systems.\94\
---------------------------------------------------------------------------

    \90\ DOD Comments at 8.
    \91\ Id.
    \92\ Id. at 10-11.
    \93\ Id. at 11.
    \94\ Id.
---------------------------------------------------------------------------

    46. We agree with commenters that a cost-sharing plan may be 
appropriate, in certain circumstances. At the present time, however, we 
decline to adopt rules to establish such a plan. Instead, we intend, in 
the near future through a further notice of proposed rulemaking, to 
develop a cost-sharing plan and seek proposals for a clearinghouse or 
some other mechanism for administering a cost-sharing plan. At that 
time, we would make any modifications to our reimbursement rules that 
are necessary to implement such a cost-sharing plan. The absence of a 
cost-sharing plan does not adversely affect the scheduled auction of 
the 2385-2390 MHz band because the FCC has adopted a nationwide 
licensing plan for that band. However, we recognize that addressing the 
cost-sharing question would be necessary prior to the auction of bands 
that are licensed in smaller geographic areas or multiple spectrum 
bands.

Information Provided to Potential Bidders

    47. The NPRM identifies the type of information that NTIA proposes 
to provide the FCC regarding unclassified, classified and sensitive 
Government assignments.\95\ Commenters generally argued that more 
information was needed and that the information proposed was not 
specific. AT&T submits that the proposed rules do not recognize the 
potential bidders' need for specific information prior to an auction, 
and that further disclosure of specific information is essential so 
that bidders can formulate bidding strategies that take into account 
likely reimbursement costs or whether to participate in the auction at 
all.\96\ AT&T further states that a lack of necessary information may 
have the effect of luring bidders into auctions that they otherwise 
might have not entered, had they fully realized the costs of 
relocation.\97\ Such uninformed participation in the auction could lead 
to bankruptcy or a default on the awarded licenses.\98\
---------------------------------------------------------------------------

    \95\ NPRM at ]] 42-46.
    \96\ AT&T Comments at 7.
    \97\ Id. at 10-11.
    \98\ Id. at 11.
---------------------------------------------------------------------------

    48. Motorola and PCIA noted that Government use of spectrum is 
inherently different from non-Government use and, as such, non-
Government users have limited experience with the systems and face 
difficulty ascertaining relocation costs for Government equipments.\99\ 
Thus, Motorola argued, it is difficult for non-Government licensees to 
negotiate in a meaningful way to determine relocation costs after an 
auction.\100\ Motorola recommended that OMB and NTIA, working in 
conjunction with the Commission, would be in the best position to work 
with Government users to accurately determine relocation costs prior to 
an auction.\101\ PCIA likewise argued that NTIA should develop 
procedures that provide final technical cost information to be made 
available to auction participants well in advance of the auction.\102\ 
PCIA argued that for the relocation/reimbursement process to be 
effective, the pre-auction cost estimate must be sufficiently 
definitive.\103\
---------------------------------------------------------------------------

    \99\ Motorola Comments at 4; PCIA Comments at 6.
    \100\ Motorola Comments at 4.
    \101\ Id.
    \102\ PCIA Comments at 2.
    \103\ Id. at 7.
---------------------------------------------------------------------------

    49. Securicor stated that potential bidders should be informed 
about whether the incumbent facilities can be relocated on a single, 
local or regional basis, or whether an entire system can be 
relocated.\104\ PCIA noted that information provided should be 
sufficiently complete to permit bidders to assess relative relocation 
costs of spectrum blocks within each geographic area.\105\
---------------------------------------------------------------------------

    \104\ Securicor Comments at 5.
    \105\ PCIA Comments at 7.
---------------------------------------------------------------------------

a. Unclassified Assignments
    50. With respect to unclassified Government assignments, the NPRM 
provided the following list of information that we propose to provide 
to the FCC prior to an auction of the affected bands: \106\
---------------------------------------------------------------------------

    \106\ NPRM at ] 42.
---------------------------------------------------------------------------

    (1) List of Government facilities;
    (2) Government agency operating each facility;
    (3) Location of each facility;
    (4) General type of operation and equipments (e.g. fixed microwave 
tactical mobile radio, etc.);
    (5) Whether the facility can be retuned, modified, or must be 
relocated;
    (6) Estimated marginal cost of retuning, modification, or 
relocation;
    (7) Whether the facility overlaps to one or more license areas or 
spectrum blocks; and
    (8) Total estimated costs for all assignments.
    51. Commenters maintained that the proposed rules for the release 
of information regarding unclassified facilities is too broadly defined 
and more details should be provided. They argued that our proposal to 
provide information regarding ``location of each facility'' does not 
clarify what data would fall within that disclosure requirement, e.g., 
the general geographical area, the licensed area, specific geographical 
coordinates such as latitude or longitude, or other information.\107\ 
As an example, AT&T stated that when a microwave or similar facility is 
being relocated, a potential bidder would need to know, at a minimum, 
the number of microwave paths for the applicable license area that 
would need to be relocated.\108\ Moreover, AT&T and Securicor 
maintained that bidders need more detailed information regarding the 
type, amount, condition and functions of the current equipment being 
replaced.\109\ Finally, AT&T submitted that a simple ``yes or no'' 
regarding whether equipment can be retuned is insufficient.\110\ 
According to AT&T, the bidder would need detailed information regarding 
the agency's analysis in order to determine if the agency's plan is 
viable or cost-efficient, or whether the bidder should propose a 
superior plan of its own.\111\ AT&T stated that ``NTIA's anemic 
disclosure requirements in the unclassified context would hinder the 
ability of bidders to evaluate the true costs of their participation in 
the auction while serving no compelling countervailing purpose such as 
the protection of important national security information.'' \112\
---------------------------------------------------------------------------

    \107\ AT&T Comments at 7; Cingular Comments at 6; see also 
Motorola Reply Comments at 2.
    \108\ AT&T Comments at 8.
    \109\ Id.; Securicor Comments at 5.
    \110\ AT&T Comments at 8.
    \111\ Id.; see also MicroTrax Comments at 2.
    \112\ AT&T Comments at 9.
---------------------------------------------------------------------------

    52. DOD maintained that NTIA's proposed rules regarding the release 
of information for unclassified assignments are adequate.\113\ DOD 
argued that its systems are unique and a general mandate of more 
information will not be helpful.\114\ Thus, DOD stated that it will 
attempt to present information relating to its systems in a meaningful 
fashion to bidders, and feels it can do more to reach that result on a 
case-by-case basis.\115\ DOD maintained that information regarding 
whether a facility can be retuned, modified or relocated is an 
operational decision that can only be made by the Federal entity

[[Page 41189]]

before it can estimate its marginal costs.\116\ DOD further stated that 
the Federal entity cannot provide information as to whether the 
facility overlaps one or more licensed areas or spectrum blocks and 
notes that, while it would know that a nationwide system would overlap 
licensed areas, it would not be able to make that determination for 
systems serving smaller areas.\117\ DOD stated that it would provide 
its best estimate of marginal costs taking into account the solution it 
deems appropriate (e.g., retuning, modification, relocation) on a pre-
auction basis.\118\ This estimate, DOD maintained, may not include all 
relocation costs incurred, and may have to be modified post-
auction.\119\ DOD noted that neither the licensee nor the Federal 
entity can know until after negotiation if, for example, ``in kind'' 
reimbursement is possible.\120\ Thus, DOD maintained that it may not be 
possible for a Federal entity to provide all relocation costs that 
would be included in a petition for relocation on a pre-auction basis 
to NTIA.\121\
---------------------------------------------------------------------------

    \113\ DOD Reply Comments at 3.
    \114\ Id.
    \115\ Id.
    \116\ DOD Comments at 13.
    \117\ Id. at 13-14.
    \118\ Id. at 14.
    \119\ Id.
    \120\ Id. at 15.
    \121\ Id.
---------------------------------------------------------------------------

    53. The comments here appear to be two-fold: (1) Commenters want a 
total and final cost for relocation prior to the auction or; (2) 
commenters want a validation of the Federal entities' cost estimates. 
The statute only requires that potential bidders be notified of the 
estimated relocation or modification costs prior to an auction.\122\ 
Despite this sole requirement, we proposed to provide the estimated 
cost of relocation, retuning or modification as well as other 
information related to the Government facility. We understand the 
commenters' desire for certainty in the actual costs associated with 
acquiring a license at an auction, but it is unlikely that a Federal 
entity, prior to an auction, would be able to state unequivocally its 
total costs to relocate at that time. Congress apparently recognized 
this difficulty when it required Federal users to submit estimated 
costs. We encourage the Federal entities to put forth their best 
estimates, and leave the parties to negotiation and mediation in order 
to come to an agreement on the actual costs. Commenters also listed 
additional information that they needed, but gave no compelling reasons 
for requiring that information. Costs should be the only information 
that potential bidders require to form a bidding strategy. To the 
extent that an agency provides a cost estimate, the only reason that a 
potential bidder would need more information (e.g., age, condition, 
type of equipment) would be to validate or challenge the Federal 
agency's cost estimate. We believe that the parties will have ample 
opportunity during post-auction negotiations to discuss estimated and 
actual costs to relocate, retune, or modify.
---------------------------------------------------------------------------

    \122\ 47 U.S.C. 923(g)(1)(A).
---------------------------------------------------------------------------

    54. Accordingly, the final rule reflects the list of information 
contained in the NPRM regarding unclassified Federal assignments with 
one exception. NTIA will not be able to provide the FCC with 
information as to whether the facility overlaps into one or more 
license areas (no.7, para. 50). The proposed licensed area for an 
auction is determined by the FCC, and without prior knowledge of the 
licensing scheme to be used in a particular auction, NTIA is not able 
to make a determination of overlapping facilities. The FCC, however, 
may be able to make this determination based on other information 
provided by NTIA, particularly the location of each facility (no. 3, 
para. 50).
b. Classified and Sensitive Assignments
    55. The NPRM took a different approach with respect to the 
treatment of classified Government facilities and sensitive 
assignments. We proposed that the information that would ultimately be 
provided to bidders with respect to classified facilities would be a 
single, consolidated and unclassified figure for the cost of 
relocating, retuning or modifying.\123\ This information would be 
provided to the bidder with the following condition: to the extent that 
it is consistent with national security considerations, this figure 
would be broken down by geographical location and spectrum block.\124\ 
After the auction, the winner would be able to apply for a facility 
clearance pursuant to the National Industrial Security Program 
Operating Manual and related individual security clearances.\125\ With 
respect to sensitive assignments, we proposed to provide information in 
the same manner as classified assignments, except that following the 
auction, we proposed that the Government agency release the sensitive 
information to the winning bidder pursuant to a non-disclosure 
agreement.
---------------------------------------------------------------------------

    \123\ NPRM at ] 44.
    \124\ Id.
    \125\ Id.
---------------------------------------------------------------------------

    56. Cingular stated that under the proposal for sensitive and 
classified information, potential bidders may lack crucial information 
concerning the relocation costs associated with a given band of 
spectrum.\126\ Thus, Cingular argued, the risk posed by acquiring 
encumbered spectrum with unknown liabilities could serve to depress the 
prices bidders are willing to pay for licences.\127\ Moreover, Cingular 
maintained that such a procedure could exacerbate disputes between 
Federal incumbents and winning bidders insofar as winning bidders are 
saddled with a price tag that is significantly higher than what was 
anticipated.\128\ Cingular warned that endless litigation and delay 
would likely result as licensees attempt to verify relocation 
expenses.\129\
---------------------------------------------------------------------------

    \126\ Cingular Comments at 4.
    \127\ Id.
    \128\ Id.
    \129\ Id.
---------------------------------------------------------------------------

    57. AT&T stated that NTIA's proposal with respect to the release of 
classified information would place bidders in the untenable position of 
``relying entirely on an unverifiable estimate of costs created by a 
unknown methodology by a financially-interested Government entity with 
no real-world cost pressures informing its calculation.''\130\ AT&T 
maintained that far less restrictive methods are available, such as 
disclosing essential bidding information to company representatives who 
have the proper security clearances.\131\ AT&T also suggested that a 
neutral panel or an independent consultant with the proper security 
clearances could review the submitted information.\132\
---------------------------------------------------------------------------

    \130\ AT&T Comments at 10.
    \131\ Id.
    \132\ Id.
---------------------------------------------------------------------------

    58. Mobex supported NTIA's proposal for dealing with classified and 
sensitive Government assignments because it would provide the 
Government with the necessary security while providing non-Government 
licensees with sufficient information to conduct business in a 
reasonable manner.\133\
---------------------------------------------------------------------------

    \133\ Mobex Comments at 5.
---------------------------------------------------------------------------

    59. DOD maintained that the process set forth for releasable 
classified systems reflect the requirements of Executive Order 12958 
\134\ and related Federal law and regulations regarding the release of 
or access to classified information.\135\ DOD stated that the proposal 
requiring successful bidders to apply for a security clearance to gain 
access to classified material as necessary to reach resolution of 
reimbursement costs, strikes a reasonable balance between national 
security interests and the bidder's commercial interests.\136\
---------------------------------------------------------------------------

    \134\ Exec. Order No. 12958, 60 FR 19,825 (Apr. 17, 1995).
    \135\ DOD Comments at 15.
    \136\ DOD Reply Comments at 2.
---------------------------------------------------------------------------

    60. We believe that the proposed rule regarding classified 
assignments strikes

[[Page 41190]]

a reasonable balance between protecting national security interests and 
providing auction participants with the necessary information to bid 
for licenses. Again, commenters have not made a convincing argument for 
needing more information than that related to cost in order to 
formulate a bidding strategy. Post-auction, the auction winner or the 
licensee, with proper security clearances, can have access to 
classified information consistent with the National Industrial Security 
Program Operating Manual. With respect to sensitive assignments, NTIA 
will request that Federal entities review sensitive assignments and 
consider the releasability of those assignments to the extent possible. 
Otherwise, we will provide a single, consolidated and unclassified 
figure for the cost of relocating, retuning or modifying sensitive 
assignments, and require that the winning bidder or licensee sign a 
non-disclosure agreement regarding sensitive information pertaining to 
the Federal assignment, if required. The consolidated figure would be 
broken down by geographical location and spectrum block to the extent 
possible.

Negotiation and Mediation

    61. The NPRM sets out proposed rules regarding negotiation and/or 
mediation between the Federal entities and the winning bidders and 
licensees. DOD objects to the proposed rules as they relate to issues 
other than costs.\137\ Proposed rule 301.120(a) provides in part that 
``parties are encouraged to resolve any differences with respect to 
relocation or modification costs or any other related issues * * *'' 
\138\ According to DOD, 47 U.S.C. section 923(g)(1)(E) only permits 
NTIA and the FCC to develop rules resolving differences between the 
Federal Government and licensees with respect to estimates of 
relocation or modification costs. Thus, DOD believes that the mediation 
and negotiation process should not include issues other than cost.\139\
---------------------------------------------------------------------------

    \137\ DOD Comments at 18.
    \138\ NPRM at p. 4781 (emphasis added).
    \139\ DOD Comments at 18.
---------------------------------------------------------------------------

    62. We believe that DOD's interpretation of the statute is too 
restrictive. Initially, we note that costs, or issues closely related 
to costs, will be the primary focus of any negotiation or mediation. We 
believe, however, that issues other than costs will arise in these 
negotiations and that these rules are intended to incorporate those 
issues. For example, the Petition for Relocation clearly gives NTIA the 
authority to make determinations on a number of issues other than 
costs. Pursuant to the statute, when NTIA is presented with a Petition 
for Relocation, it must make a determination on whether the person 
seeking relocation has guaranteed to pay all relocation costs, whether 
all activities necessary for relocation have been implemented, and 
whether replacement facilities, equipments modifications or other 
changes have been implemented.\140\ Thus, the statute gives NTIA 
authority to make determinations on issues other than costs. More 
importantly DOD admits in this proceeding that NTIA has the authority 
to make a determination ``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 system and consistent with other uses of the 
band.'' \141\ This issue, which DOD admits NTIA can make a 
determination on, does not relate to cost. We believe that the statute 
provides authority for NTIA to promulgate rules that permit the parties 
to negotiate and/or mediate about relocation or modification costs ``or 
any related issues.'' The rules that we adopt in this proceeding are 
intended to afford parties enough flexibility in their negotiations to 
ensure that the Federal agencies are fully reimbursed and that the 
spectrum is made available to the private sector in an expeditious 
manner. We see no benefit in limiting the issues that the parties wish 
to negotiate. Thus, we adopt the proposed rules regarding negotiation 
and mediation.
---------------------------------------------------------------------------

    \140\ 47 U.S.C. 923(g)(2)(A)-(C).
    \141\ Id. 923(g)(2)(D); see also DOD Comments at 16-17.
---------------------------------------------------------------------------

Petition for Relocation

    63. The NPRM discusses the Petition for Relocation, which a 
licensee seeking to relocate a Federal entity must submit to NTIA in 
order for NTIA to eventually limit or terminate the Federal entity's 
license.\142\ The statute requires NTIA to limit or terminate the 
Federal entity's licenses within six months after receiving the 
petition if the following requirements are met:
---------------------------------------------------------------------------

    \142\ NPRM at ] 39-41.
---------------------------------------------------------------------------

    (A) The person seeking relocation of the Federal Government station 
has guaranteed to pay all relocation or modification 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 or 
modification 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;
    (C) Any necessary replacement facilities, equipment modifications, 
or other changes have been implemented and tested to ensure that the 
Federal Government's station is able to accomplish its purpose; and
    (D) NTIA has determined that the proposed use of the spectrum 
frequency band to which the Federal entity will relocate is:
    (i) Consistent with obligations undertaken by the United States in 
international agreements and United States national security and public 
safety interests; and
    (ii) Suitable for the technical characteristics of the system and 
consistent with other uses of the band.\143\
---------------------------------------------------------------------------

    \143\ Id. at ] 39; see also 47 U.S.C. 923 (g)(2)(D).
---------------------------------------------------------------------------

    64. According to DOD's comments, NTIA is only required to make a 
determination on the fourth condition, i.e., ``the proposed use of the 
spectrum frequency band to which the Federal entity will relocate is 
consistent with * * *.'' \144\ With respect to the other three 
conditions, DOD maintained that NTIA should defer to the Federal 
entity. DOD recommended that the proposed rules that reference NTIA's 
determination on a Petition for Relocation be changed to reflect that 
interpretation.\145\ Moreover, DOD recommended that the proposed rule 
be amended to require NTIA to serve a copy of the Petition to Relocate 
on the affected Federal entity.\146\ DOD also claimed that the proposed 
rule stating that NTIA may consult with the Office of Management and 
Budget and other executive branch agencies in making its determination, 
is not necessary because ``NTIA can always consult with OMB or other 
agencies.'' \147\
---------------------------------------------------------------------------

    \144\ DOD Comments at 16-17.
    \145\ Id.
    \146\ Id. at 17.
    \147\ Id. at 18.
---------------------------------------------------------------------------

    65. DOD's view is overly narrow in this area. If the statute did 
not contemplate that NTIA would make a determination on all of the 
factors surrounding a Petition for Relocation, then there would have 
been no need for a party to submit a Petition for Relocation to NTIA. 
Moreover, Congress clearly identified that portion of the

[[Page 41191]]

Petition for Relocation upon which NTIA could not solely make a 
determination. Subsection 2(D) provides that NTIA must consult with the 
Secretary of Defense, the Secretary of State, or other appropriate 
officers of the Federal Government when determining whether the 
Petition for Relocation is consistent with obligations undertaken by 
the United States in international agreements and with Untied States 
national security and public safety interest.\148\ If NTIA was required 
to consult with or defer to other agencies on other Petition for 
Relocation factors, Congress would have expressly made that clear, as 
it did in section 2(D). ``Where Congress includes particular language 
in one section of a statute but omits it in another section of the same 
Act, it is generally presumed that Congress acts intentionally and 
purposely in the disparate inclusion or exclusion.'' \149\ Accordingly, 
DOD's proposal that NTIA defer to the Federal entity on a Petition for 
Relocation is rejected, and NTIA will make its own determination on the 
factors presented in a Petition for Relocation.
---------------------------------------------------------------------------

    \148\ 47 U.S.C. 923(g)(2)(D).
    \149\ Rusello v. United States, 464 U.S. 16, 23 (1983).
---------------------------------------------------------------------------

Arbitration

    66. The NPRM sought comments on the requirement that parties enter 
into non-binding arbitration if they have not reached agreement after 
the negotiation/mediation period and have not agreed to extend such 
period, or if the time on a prior extended negotiation/mediation period 
has expired. The arbitrator's non-binding decision may then be 
requested by NTIA as part of the record in a petition for relocation. 
The American Arbitration Association (AAA) noted that the disputes 
likely to arise from these proceedings would be well suited for 
resolution through arbitration. In fact, the AAA suggested using 
binding arbitration in disputes related to cost sharing.\150\ DOD 
supported the use of non-binding arbitration when the parties do not 
come to an agreement and notes that it is not able to engage in binding 
arbitration at this time.\151\
---------------------------------------------------------------------------

    \150\ American Arbitration Association Comments at 1.
    \151\ DOD Reply Comments at 3.
---------------------------------------------------------------------------

    67. As mentioned, Congress authorized NTIA and the FCC to develop 
procedures for the implementation of relocation of Federal Government 
stations, including a process for resolving any differences that may 
arise between the Federal Government and commercial licensees regarding 
estimates of relocation or modification costs.\152\ The Administrative 
Dispute Resolution Act (ADRA),\153\ as amended, was enacted to 
authorize and encourage the use of alternative means of dispute 
resolution by Federal agencies. Congress recognized that the use of 
prompt and informal methods of dispute resolution, such as 
conciliation, mediation and arbitration, yields significant cost-
savings and efficiencies, among other advantages, and results in 
outcomes that are more stable and less contentious.\154\ We note DOD's 
comments regarding its inability to engage in binding arbitration 
pursuant to the ADRA, and because other agencies may likewise be 
prohibited from engaging in binding arbitration, we will not include it 
in our rules as the AAA recommends. Accordingly, we adopt with minor 
changes the proposed rule with respect to non-binding arbitration.
---------------------------------------------------------------------------

    \152\ 47 U.S.C. 923(g)(1)(E).
    \153\ Pub. L. No. 101-552, 104 Stat. 2736 (1990), amended by 
Pub. L. No. 104-320, 110 Stat. 3870 (1996), codified at 5 U.S.C. 
571, et seq. (2001).
    \154\ H.R. Rep. No. 101-513, 1 (1990).
---------------------------------------------------------------------------

Reclamation

    68. AT&T recommended that NTIA narrowly construe the Government's 
right to reclamation under title 47 U.S.C. section 923(g)(3), which 
requires the non-Government licensee to take reasonable steps to remedy 
defects or to move a Federal entity back to its original spectrum if 
that entity demonstrates that the new facility is not comparable to the 
original facility.\155\ AT&T argued that the imposition of such burdens 
on licensees is inappropriate when Federal entities have failed to 
raise such comparability issues with the auction winners.\156\ We noted 
in the NPRM that a Federal entity must demonstrate ``to the FCC'' that 
its new facilities are not comparable in order to reclaim previously 
held facilities.\157\ We also noted that the FCC would be promulgating 
rules regarding a Federal entity's right to reclaim.\158\
---------------------------------------------------------------------------

    \155\ AT&T Comments at 16.
    \156\ Id. at 17.
    \157\ NPRM at n. 29.
    \158\ Id.
---------------------------------------------------------------------------

Regulatory Flexibility Act

    69. As required by the Regulatory Flexibility Act,\159\ an Initial 
Regulatory Flexibility (IRFA) was prepared for the NPRM. Written 
comments were requested but none were submitted that directly addressed 
the issues raised in the IRFA. There was very little mention of small 
businesses in the comments submitted in response to the NPRM. The 
comments that addressed small businesses are discussed in the text of 
the final rules, and repeated below. None of the comments received 
raised issues with respect to the impact of these rules on small 
businesses. NTIA has prepared a Final Regulatory Flexibility Analysis 
of the expected impact on small entities of this rule. NTIA's final 
regulatory flexibility analysis, in accordance with the Regulatory 
Flexibility Act \160\ is as follows:
---------------------------------------------------------------------------

    \159\ See 5 U.S.C. 603.
    \160\ See 5 U.S.C. 604.
---------------------------------------------------------------------------

    70. Need for, and Objectives of, the Rules: This rulemaking 
proceeding implements procedures pursuant to NDAA-99 for the 
reimbursement of relocation costs to Federal entities by the private 
sector as a result of reallocation of frequency spectrum. NDAA-99 
requires the private sector to reimburse Federal entities for the costs 
that are incurred as a result of the reallocation of radio spectrum 
mandated by OBRA-93 and BBA-97 and future reallocations. Moreover, 
NDAA-99 requires NTIA and the Commission to ``develop procedures for 
the implementation of [relocation] which * * * shall include a process 
for resolving any differences that arise between the Federal Government 
and commercial licensees regarding estimates of relocation and 
modification costs.'' \161\ These rules provide relevant information 
regarding reimbursement, such as: identification of frequency 
assignments eligible for reimbursement; a definition of marginal costs 
that are reimbursable; a description of the dispute resolution process; 
and criteria for determining a comparable facility.
---------------------------------------------------------------------------

    \161\ See 47 U.S.C. 923(g)(1)(E).
---------------------------------------------------------------------------

    71. Issues Raised in Response to the IRFA: Although requested, 
there were no comments that raised issues directly in response to the 
IRFA. There were, however, comments submitted in response to the NPRM 
that addressed the economic impact of these rules. As noted in the 
discussion of the the final rules, commenters recommended that, if 
relocation costs were to be paid from auction proceeds, the overall 
financial burden associated with these rules would be reduced. AT&T, 
for example, argued that reducing the overall financial obligations of 
potential bidders to payment for the spectrum would increase the number 
of bidders that could participate in the auction.'' \162\ MicroTrax 
states that paying relocation costs from auction revenues would 
encourage participation from smaller firms because such firms would not 
face uncertainty about total spectrum

[[Page 41192]]

costs.\163\ Motorola likewise argues that paying relocation costs from 
auction revenues would provide a level of certainty and, in turn, 
enable new entrants faster access to encumbered spectrum.\164\
---------------------------------------------------------------------------

    \162\ AT&T Comments at 12.
    \163\ MicroTrax Comments at 2.
    \164\ Motorola Comments at 6.
---------------------------------------------------------------------------

    72. Although there may be some merit in the arguments made by 
commenters, the legislation does not permit auction proceeds to be used 
to pay for relocation costs. Although reimbursement from auction 
proceeds may be a less expensive alternative and one that could 
possibly lessen the economic impact on small businesses, that is not an 
alternative that is legally permissible at this time. We note, however, 
that the President's Budget for Fiscal Year 2003 included a proposal to 
amend the current statute to streamline the reimbursement process by 
creating a central spectrum relocation fund in which auction receipts 
sufficient to cover agencies' relocation costs would be deposited, and 
from which Federal agencies would be reimbursed.\165\ Legislative 
action would be necessary to implement this proposal. We do not believe 
that we have the statutory authority under the current law to pursue 
this alternative at this time.
---------------------------------------------------------------------------

    \165\ Budget of the United States Government, Fiscal Year 2003, 
Appendix, at 241 (Department of Commerce, National 
Telecommunications and Information Administration).
---------------------------------------------------------------------------

    73. Description and Estimate of the Number of Small Entities to 
Which the Rule Will Apply: None of the comments submitted in response 
to the NPRM addressed the number of small entities to which these rules 
will apply. As noted in the IRFA, it is difficult, if not impossible to 
estimate the number of small entities, if any, to which these rules 
will apply. Although NTIA makes reallocated spectrum available to the 
FCC for auction to the private sector, NTIA has no control over: (1) 
The auction participants; (2) the auction winners; or (3) the service 
for which the spectrum will be used. A determination of those factors 
is critical to providing a description or estimate of the number of 
small entities to which these rules will apply. There is no way, at 
this time, to predict the types of entities that will be potential 
bidders for spectrum that the FCC makes available in the future. In 
fact, entities that are not even in existence at this time may be 
participating in future auctions for particular spectrum frequencies 
and be subject to these rules. We note, however, that the FCC 
promulgates service rules prior to auctions that provide a description 
and estimate of the number of small entities that are affected by that 
particular auction.
    74. Steps Taken to Minimize Significant Economic Impact on Small 
Entities and Significant Alternatives Considered: The NPRM proposed and 
solicited a number of alternatives to minimize the economic impact on 
small entities. For example, the NPRM solicited comments on whether a 
Federal entity could retune or modify its equipment outside of the 
upper or lower portion of the incumbent band. Retuning is usually less 
expensive to implement and can save an agency a considerable amount of 
money, thereby reducing the reimbursement obligation of the private 
sector. We received comments supportive of this alternative and, 
therefore, we will permit Federal agencies to retune or modify their 
equipment when feasible. This alternative will minimize the economic 
impact of small entities to the extent that they bid on licenses 
subject to reimbursement.
    75. Another alternative suggested in the NPRM was to permit Federal 
entities to relocate to a landline communications system or a 
commercial radio service. As stated in the text of the final rules, 
commenters overwhelmingly agreed that agencies should be reimbursed for 
relocation costs if they choose to relocate to a landline or commercial 
service. This option may be a cost-effective alternative to the Federal 
entity relocating to another frequency, and thus may reduce the 
reimbursement obligation borne by the private sector and, perhaps, 
small entities.
    76. The proposed rules address those circumstances where one 
auction winner could be made to pay for the entire spectrum allocation 
held by a Federal entity despite the fact that only a portion of the 
bandwidth may be needed. For example, there may be multiple bidders in 
a geographic area for a small bandwidth that may result in division of 
a Federal entity's bandwidth. Because there is no mechanism in place to 
compensate the Federal entity for that portion of the spectrum that is 
not licensed or acquired by a particular licensee, relocation costs 
could disproportionately fall upon one auction winner. In the NPRM, we 
proposed establishing a clearinghouse to administer a cost-sharing 
plan. The comments received in response to the NPRM were supportive of 
the proposal, and recommended that NTIA adopt an industry-run 
clearinghouse similar to the one adopted by the FCC in the relocation 
of microwave incumbents. In the text of the final rules, we note our 
intention to seek proposals for a clearinghouse or some other entity to 
administer a cost-sharing plan. A cost-sharing plan would spread the 
financial burdens among the auction participants, thereby reducing the 
overall financial obligation on an individual licensee.
    77. The NPRM solicited proposals on other alternatives that may 
reduce reimbursement expenses and thus reduce the economic impact on 
small entities. As stated above, the only alternative suggestion that 
we received from the comments was to pay for reimbursement from auction 
proceeds. As noted above, the current legislation does not permit us to 
pursue this alternative.
    78. Description of Projected Reporting, Recordkeeping and Other 
Compliance Requirements: These rules do not impose reporting, 
recordkeeping or other compliance requirements on the private sector, 
small entities or otherwise.

Summary of Cost/Benefit Analysis

    79. NTIA prepared an Analysis of Benefits and Costs of the 
Mandatory Reimbursement Rules (Analysis). To view the complete 
analysis, please contact Milton Brown at the address and telephone 
number provided above. In summary, the analysis reveals the difficulty 
in performing a realistic cost-benefit analysis because of the number 
of factors that cannot be foreseen at this stage that would weigh 
heavily into such an analysis. Although NTIA makes reallocated spectrum 
available to the Federal Communications Commission (FCC) for auction to 
the private sector, NTIA has no control over: (1) The auction 
participants; (2) the auction winners; or (3) the service for which the 
spectrum will be used. Those determinations are all within the 
authority of the FCC and play a significant role in any analysis of 
benefits or costs. We note in the analysis that this rulemaking 
examined a number of alternatives to accomplish the statutory 
directive. For example, we determined that allowing Federal entities to 
retune equipment, and to relocate to landline or commercial systems may 
be a cost-effective alternative to relocating to another set of 
frequencies. This rulemaking also explored the option of cost-sharing 
in those situations where relocation costs could disproportionately 
fall upon one auction winner. We note also that the benefits of the 
rule include the addition of commercial wireless services for 
consumers. Without the rules, there would be a cloud of uncertainty 
over the auction, the relocation process, and the reimbursement 
obligations. These issues are discussed in greater detail in the full

[[Page 41193]]

analysis, as well as in the text of the discussion section of the final 
rules.

List of Subjects in 47 CFR Part 301

    Classified information, Communications common carriers, 
Communications equipment, Defense communications, Federal buildings and 
facilities, Radio, Satellites, Telecommunications.

Nancy J. Victory,
Assistant Secretary for Communications and Information.

Rules

    Accordingly, NTIA amends 47 CFR chapter III by adding part 301 to 
read as follows:

PART 301--MANDATORY REIMBURSEMENT FOR FREQUENCY BAND OR GEOGRAPHIC 
RELOCATION OF SPECTRUM-DEPENDENT SYSTEMS

Subpart A--General Information
Sec.
301.1   Purpose.
301.10   Applicability.
301.20   Definitions.
Subpart B--Procedure for Reimbursement for Relocations and Dispute 
Resolution
301.100   Costs to relocate.
301.110   Notification of marginal costs.
301.120   Negotiations and mediation.
301.130   Non-binding arbitration.
301.140   Petition for relocation.
301.150   Request for withdrawal.

    Authority: 47 U.S.C. 921, et seq.; Pub. L. 105-261, 112 Stat. 
1920.

Subpart A--General Information


Sec. 301.1  Purpose.

    Pursuant to Public Law 105-261 (112 Stat. 1920), private sector 
entities are required to reimburse Federal users for relocation of 
Federal Government stations from one or more frequencies due to 
reallocation. Reimbursement costs are in addition to funds paid by the 
non-Government licensee in connection with grant of the license by the 
Federal Communications Commission.


Sec. 301.10  Applicability.

    (a) Affected bands. (1) These provisions apply to Government 
assignments in the following bands of frequencies located below 3 GHz:
    (i) 216 to 220 MHz.
    (ii) 1432 to 1435 MHz.
    (iii) 1710 to 1755 MHz.
    (iv) 2385 to 2390 MHz.

    (2) NTIA will identify additional bands that may become subject to 
this part in a public notice and request for comments published in the 
Federal Register.
    (b) Availability of comparable facility. The Federal entity will 
not be required to relocate until a comparable facility, or 
modification to an existing facility, is available in enough time to 
determine comparability, make adjustments, and ensure a seamless 
handoff. The factors to be considered in determining comparability 
include at least communications throughput, system reliability, 
operating costs, and operational capability as defined in this part. 
These factors may not be appropriate to determine comparable facility 
for certain Federal Government stations required to relocate, such as 
radar systems.
    (c) Frequency assignments eligible for reimbursement. (1) Equipment 
modification/Retuning. To the extent that a Federal entity that is 
required to relocate is able to modify/retune its equipment with the 
result that the modified equipment provides operational capabilities 
comparable with the original system, reimbursement will be limited to 
the marginal costs associated with modification/retuning.
    (2) Old assignments/new assignments. Old assignments are those that 
were authorized prior to October 17, 1998 (i.e., 216-220 MHz, 1432-1435 
MHz, 1710-1755 MHz, 2385-2390 MHz). New assignments are those 
assignments in the affected bands that were authorized after October 
17, 1998. New assignments in the affected bands are not eligible for 
reimbursement under these rules.
    (3) Exempted Federal power agencies and other exempted assignment. 
Frequency assignments in the 1710--1755 MHz band that are exempt from 
reallocation requirements are not required to relocate and therefore 
are not entitled to reimbursement under these rules. Federal agencies 
may accept reimbursement for relocation costs of exempted assignments 
in cases of voluntary relocation.
    (4) Experimental stations. Frequency assignments for experimental 
stations or experimental testing stations are not entitled to 
reimbursement under this part. Reimbursement shall apply to 
experimental stations that have been certified for spectrum support 
prior to October 17, 1998 by NTIA for stage 3 developmental tests under 
section 10.3.1. of the NTIA Manual of Federal Regulations and 
Procedures for Federal Radio Frequency Management. This manual is 
available on NTIA's website at http://www.ntia.doc.gov/osmhome/redbook/redbook.html. The manual is also available from the U.S. Government 
Printing Office (S/N: 903-008-0025-3).
    (5) Certain other government stations. Other exempted stations 
identified under the 1995 Spectrum Reallocation Final Report and the 
1998 Spectrum Reallocation Report are not required to relocate and 
therefore are not entitled to reimbursement under these rules. These 
agencies may, however, accept reimbursement for relocation costs in 
cases of voluntary relocation.
    (d) Sunset of reimbursement rights. There is no sunset of 
reimbursement rights for affected agencies.
    (e) Authority. The rules set forth in this subpart in no way affect 
what authority, if any, has been delegated to the Federal entity to 
negotiate or contract on behalf of the United States.


Sec. 301.20  Definitions.

    As used in this part:
    (a) The term allocation means an entry in the National Table of 
Frequency Allocations (47 CFR 2.105) of a given frequency band for the 
purpose of its use by one or more radiocommunication services, or the 
radio astronomy service under specified conditions.
    (b) The term assignment means authorization for a Government radio 
station to use a radio frequency or frequencies or radio frequency 
channel or channels under specified conditions.
    (c) The term auction means the competitve bidding process that 
Congress authorized the Federal Communication Commission to use in 
Title VI of the Omnibus Budget Reconciliation Act of 1993 and the 
Balanced Budget Act of 1997 for the reassignment and licensing of 
spectrum identified in Sec. 301.10(a) for certain commercial radio-
based services.
    (d) The term classified assignment means a frequency assignment and 
information related to a frequency assignment that has been determined 
pursuant to Executive Order 12958 or any predecessor order or successor 
executive order to require protection against unauthorized disclosure 
and that is marked as ``confidential,'' ``secret,'' or ``top secret'' 
to indicate its classified status when in documentary form.
    (e) The term Commission or FCC means the Federal Communications 
Commission.
    (f) The term communications throughput means the amount of 
information transferred within the system for a given amount of time. 
For digital systems, the communications throughput is measured in bits 
per second (bps); for analog systems, the communications throughput is 
measured by the number of voice, video or data channels.
    (g) The term comparable facility means that the replacement 
facility restores the operational capabilities of the original facility 
to an equal or

[[Page 41194]]

superior level taking into account at least four factors: 
Communications throughput, system reliability, operating costs, and 
operational capability.
    (h) The term experimental station means a station utilizing radio 
waves in experiments with a view to the development of science or 
technique.
    (i) The term experimental testing station refers to an experimental 
station used for the evaluating or testing of electronics equipment or 
systems, including site selection and transmission path surveys.
    (j) The term Federal entity means any department, agency or other 
instrumentality of the Federal Government that utilizes a Government 
station authorization obtained under section 305 of the Communications 
Act of 1934 (47 U.S.C. 305).
    (k) The term in-kind means the value of non-cash contributions 
provided by non-Federal private parties. In-kind contributions may be 
in the form of real property, equipment, supplies and other expendable 
property, and the value of goods and services directly benefitting and 
specifically identifiable to the project or program.
    (l) The term licensee refers to a person awarded a license by the 
Federal Communications Commission for use of the bands identified in 
Sec. 301.10. The transfer or assignment of a license does not change 
the time periods established in these rules.
    (m) The term marginal costs means the costs that will be incurred 
by a Federal entity to achieve comparable capability of systems 
relocated to a new frequency assignment or band or otherwise modified. 
Specifically, marginal costs would include all engineering, equipment, 
software, site acquisition and construction costs, as well as any 
legitimate and prudent transaction expenses, 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. Marginal 
costs would include costs related to the need to achieve comparable 
capability when replacing, modifying or reissuing equipment in order to 
relocate when the systems that must be procured or developed have 
increased functionality due to technological growth. Marginal costs do 
not include costs related to optional increased functionality that is 
independent of the need to achieve comparable capability. To the extent 
that a Federal entity needs to accelerate the introduction of systems 
and equipment to allow for relocation earlier than the Federal entity 
had planned, replacement costs of the accelerated systems and equipment 
shall be included in marginal costs. Marginal costs would also include 
the costs of any modification or replacement of equipment, software, 
facilities, operating manuals, training costs, or regulations that are 
attributable to relocation. Marginal costs would not include costs 
related to routine upgrades and operating costs and lifecycle 
replacements that would have occurred absent the need to relocate 
pursuant to these rules.
    (n) The term mediation means a flexible and voluntary dispute 
resolution procedure in which a specially trained mediator facilitates 
negotiations to reach a mutually agreeable resolution. The mediator may 
not dictate a settlement. The mediation process involves one or more 
sessions in which counsel, parties and the mediator participates, and 
may continue over the period of time specified in this part. The 
mediator can help the parties improve communication, clarify interests, 
and probe the strengths and weaknesses of positions. The mediator can 
also identify areas of agreement and help generate options that lead to 
a settlement.
    (o) The term NTIA means the National Telecommunications and 
Information Administration.
    (p) The term operational costs means the cost to operate and 
maintain the Federal entity's replacement facility. New licensees would 
compensate Federal entities for any increased recurring costs 
associated with the replacement facilities for five years after 
relocation. Such costs shall include, but not be limited to, additional 
rental payments and increased utility fees.
    (q) The term operational capability means the measure of a system's 
ability to perform its validated functions within doctrinal 
requirements, including service, joint service, and allied 
interoperability requirements with related systems.
    (r) The term relocation refers to the process of moving a system 
that is displaced as a result of reallocation.
    (s) The term sensitive assignment refers to those assignments whose 
operations or technical parameters are not releasable to the public 
under the Freedom of Information Act.
    (t) The term system reliability means the percentage of time 
information is accurately transmitted within a system. The reliability 
of a system is a function of equipment failures (e.g., transmitters, 
feed lines, antennas, receivers and battery back-up power), the 
availability of the frequency channel given the propagation 
characteristics (e.g., frequency, terrain, atmospheric condition and 
noise), and equipment sensitivity. System reliability also includes the 
ability of a radio-communications station to perform a required 
function under stated conditions for a stated period of time. System 
reliability may involve three concepts: Attaining a specified level of 
performance; the probability of achieving that level; and maintaining 
that level for a specified time. For digital systems, system 
reliability shall be measured by the percentage of time the bit error 
rate (BER) exceeds a desired value; and for analog transmissions, this 
would be measured by the percentage of time that the received carrier-
to-noise ratio exceeds the receiver threshold.

Subpart B--Procedure for Reimbursement for Relocations and Dispute 
Resolution


Sec. 301.100  Costs to relocate.

    (a) Relocation costs. The licensee is required to reimburse the 
Federal entity for all costs incurred as a result of modification, 
retuning and/or relocation.
    (b) Method of reimbursement. Reimbursement payments shall be made 
in advance of relocation and may be in cash or in-kind as agreed to by 
the affected Federal entity. Any such payment in cash shall be 
deposited in the account of such Federal entity in the Treasury of the 
United States or in a separate account as authorized by law. If actual 
costs are less than the payments made, the Federal entity shall refund 
the difference.


Sec. 301.110  Notification of marginal costs.

    (a) NTIA shall provide the Federal entity's estimated marginal cost 
information to the FCC at least 180 days prior to the date on which the 
FCC schedules an auction to commence. Marginal costs, as defined in 
Sec. 301.20(l), are the costs that will be incurred by a Federal entity 
to achieve comparable capability of systems relocated to a new 
frequency assignment or band or otherwise modified. Any Federal entity 
that proposes to relocate, modify or retune shall notify NTIA at least 
240 days before the auction of the marginal costs anticipated to be 
associated with relocation or with modifications necessary to 
accommodate prospective licensees. The information provided to NTIA 
must also include the name and telephone number of a person within the 
Federal entity that can be contacted by the auction winner or licensee.
    (b) Unclassified assignments. NTIA will provide the following 
information to the FCC prior to the date on which the FCC scheduled the 
auction to

[[Page 41195]]

commence with respect to unclassified Government facilities:
    (1) List of Government facilities.
    (2) Government agency operating each facility.
    (3) Location of each facility.
    (4) General type of operation and equipment.
    (5) Whether the facility can be retuned, modified, or must be 
relocated.
    (6) Estimated marginal cost of retuning, modification, or 
relocation.
    (7) Total estimated costs for all assignments.
    (c) Classified assignments. Prior to the date on which the FCC has 
scheduled an auction to commence, Federal entities located on the 
spectrum to be auctioned will provide a single, consolidated and 
unclassified figure to NTIA for the cost of relocating, retuning, or 
modifying all such classified systems. NTIA will provide this 
information to the FCC which in turn will provide the figure to bidders 
with the following conditions: To the extent it is consistent with 
national security considerations, the figure may be broken down by 
geographical location and spectrum block to give those bidding on a 
geographic basis the best indication possible of the cost they may have 
to pay to relocate, retune or modify the systems at issue. Following 
the auction, the winner may apply for a facility clearance pursuant to 
the National Industrial Security Program Operating Manual and related 
individual security clearances. If those clearances and accesses are 
granted, classified information may be made available with regard to 
certain Government systems in accordance with the terms and conditions 
prescribed in the clearances and accesses provided, and subject to the 
overall rules and authorities found in Executive Order 12958, Executive 
Order 12968, and related Federal laws, rules and regulations.
    (d) Sensitive assignments. Prior to the date on which the FCC has 
scheduled an auction to commence, Federal entities will provide a 
single, consolidated and unclassified figure to NTIA for the cost of 
relocating, retuning, or modifying all such sensitive systems. NTIA 
will provide this information to the FCC which in turn will provide the 
figure to bidders with the following conditions: To the extent it is 
consistent with the sensitive nature of the assignment, the figure may 
be broken down by geographical location and spectrum block to give 
those bidding on a geographic basis the best indication possible of the 
cost they may have to pay to relocate, retune or modify the systems at 
issue. Following the auction, the Government agency shall release the 
sensitive information to the winning licensee pursuant to a non-
disclosure agreement, if required.


Sec. 301.120  Negotiations and mediation.

    (a) Within 30 days after public notice of the grant of a license 
for use of the bands identified in Sec. 301.10, the licensee is 
required to provide the Federal entity that occupies the band with 
written notification of such event. Public notice of the grant 
commences the 135-day period for negotiation or mediation. During this 
period, parties are encouraged to resolve any differences with respect 
to relocation or modification costs or any other related issues, either 
through party-to-party negotiations and/or a third party mediator. Each 
party shall pay its own costs for negotiation and mediation. If, at the 
end of the 135-day period, the parties have not reached an agreement 
with respect to relocation, the parties may agree to extend the 
negotiation period.
    (b) Good faith obligation. The parties are required to negotiate in 
good faith. Good faith means that:
    (1) Neither party may refuse to negotiate; and
    (2) Each party must behave in a manner necessary to facilitate the 
relocation process in a timely manner. Classified or sensitive 
information will be treated in accordance with Sec. 301.110.


Sec. 301.130  Non-binding arbitration.

    If the parties have not reached agreement to extend the 
negotiation/mediation period, or if a previously extended negotiation/
mediation period expires, the parties shall enter into non-binding 
arbitration. The parties shall agree on an arbitrator, and the 
arbitrator may not be the same person as the mediator if mediation has 
been used by the parties and failed. The parties may design such rules 
for arbitration as deemed appropriate. The arbitrator's non-binding 
written decision may be requested by NTIA as part of the record in its 
determination on a petition for relocation under Sec. 301.140. The 
decision may be a factor, among other things, in the NTIA determination 
on a petition for relocation. Each party shall pay its own costs for 
arbitration and share equally the cost of the arbitrator.


Sec. 301.140  Petition for relocation.

    (a) In general. A licensee seeking to relocate a Federal Government 
station must submit a petition for relocation to NTIA. A copy of the 
petition must also be simultaneously provided to the FCC. NTIA's 
determination shall be set forth in writing within six months after the 
petition for relocation has been filed, and be provided to the auction 
winner and the Federal entity. NTIA shall limit or terminate the 
Federal entity's operating license within six months after receiving 
the petition if the following requirements are met:
    (1) The person seeking relocation of the Federal Government station 
has guaranteed to pay all modification and relocation costs incurred by 
the Federal entity, including all engineering, equipment, site 
acquisition and construction, and regulatory fees;
    (2) All activities necessary for implementing the relocation or 
modification 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);
    (3) Any necessary replacement facilities, equipment modifications, 
or other changes have been implemented and tested to ensure that the 
Federal Government station is able to accomplish its purposes; and
    (4)(i) NTIA has determined that the proposed use of the spectrum 
frequency band to which the Federal entity will relocate its operations 
is
    (A) Consistent with obligations undertaken by the United States in 
international agreements and with United States national security and 
public safety interests; and
    (B) Suitable for the technical characteristics of the system band 
and consistent with other uses of the band.
    (ii) In exercising its authority, NTIA shall consult with the 
Secretary of Defense, the Secretary of State, or other appropriate 
officers of the Federal Government.
    (5) If these requirements are not met, NTIA shall notify the 
petitioner that the request is declined and the reasons for denial.
    (6) If NTIA does not issue a determination under this section 
within 6 months of the filing of a Petition for Relocation, the 
Petition for Relocation is deemed to be denied.
    (7) In making its determination under this section, NTIA shall 
consult with the affected Federal entity and the Office of Management 
and Budget and other executive branch agencies.
    (b) Petition after agreement between the parties. The licensee may 
file a petition for relocation pursuant to Sec. 301.140 at anytime 
after the parties have reached agreement on relocation in negotiations 
or mediation as provided in Sec. 301.120 and submit the agreement as 
evidence of having met the

[[Page 41196]]

requirements of the Petition for Relocation.
    (c) Petition after failure to reach an agreement. If the parties 
fail to reach an agreement as provided in Sec. 301.120 and non-binding 
arbitration has occurred pursuant to Sec. 301.130, the licensee may 
file a petition for relocation with NTIA after a decision has been 
rendered by the arbitrator. Any recommended decision by the arbitrator 
may be requested by NTIA as part of the record in a petition for 
relocation under Sec. 301.140. The recommended decision may be a 
factor, among others, in the NTIA determination on the Petition for 
Relocation.


Sec. 301.150  Request for withdrawal.

    As an alternative to a Petition for Relocation, if the parties 
reach an agreement in negotiations or mediation or agree with the 
decision of the arbitrator, the Federal entity may seek voluntary 
withdrawal of the assignments that are the subject of the relocation.

[FR Doc. 02-15118 Filed 6-14-02; 8:45 am]
BILLING CODE 3510-60-P