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