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

Date: 
January 18, 2001
Docket Number: 
Docket No. 001206341-0341-01
[Federal Register: January 18, 2001 (Volume 66, Number 12)]
[Proposed Rules]               
[Page 4771-4782]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr18ja01-36]                         


[[Page 4771]]

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DEPARTMENT OF COMMERCE

National Telecommunications and Information Administration

47 CFR Part 301

[Docket No. 001206341-0341-01]
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: Notice of proposed rulemaking.

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SUMMARY: The National Telecommunications and Information Administration 
(NTIA) proposes to amend its regulations to set forth the rules 
governing reimbursement to Federal entities by the private sector as a 
result of reallocation of frequency spectrum. This action is necessary 
to provide spectrum for future commercial wireless communications 
service and to compensate the Federal Government for the costs incurred 
in making that spectrum available.

DATES: Submit comments on or before March 19, 2001. Reply comments are 
due April 18, 2001.

ADDRESSES: The public is invited to submit written comments in paper or 
electronic form. Comments may be mailed to Milton Brown, Office of the 
Chief Counsel, National Telecommunications and Information 
Administration (NTIA), Room 4713, U.S. Department of Commerce, 1401 
Constitution Avenue, N.W., Washington, DC 20230. Paper submissions 
should include a version on diskette in ASCII, Word Perfect (please 
specify version), or Microsoft Word (please specify version) format. 
Comments may be viewed on NTIA's website at http://www.ntia.doc.gov.
    Comments submitted in electronic form may be sent to 
reimbursement@ntia.doc.gov. Electronic comments should be submitted in 
the formats specified above.

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

SUPPLEMENTARY INFORMATION:

    Authority: 47 U.S.C. 921, et seq. (Supp. V. 1993); Strom 
Thurmond National Defense Authorization Act for FY 1999, Pub. L. No. 
105-261, 112 Stat. 1920 (1998); 47 U.S.C. 923(g).

I. Introduction

    1. NTIA is the executive branch agency principally responsible for 
developing and articulating domestic and international 
telecommunications policy. NTIA acts as 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 is also responsible for managing the 
Federal Government's use of the radio spectrum. The Federal 
Communications Commission (FCC), an independent agency of the Federal 
Government, manages electromagnetic spectrum used by the private 
sector, including state and local governments. With the proliferation 
of radio-based technologies, management and use of the radio spectrum 
has become increasingly complex. Federal agencies are extremely 
dependent on spectrum access to provide a wide variety of critical 
services to the American people. Congress has found that 
telecommunications and information are vital to the public welfare, 
national security, and competitiveness of the United States, and that 
technological advances in the telecommunications and information fields 
make it imperative that the United States maintain effective national 
and international policies and programs capable of taking advantage of 
these continued advancements.\1\
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    \1\ See National Telecommunications and Information 
Administration Organization Act, 47 U.S.C. 901 (b)(1)-(2).
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II. Background

    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 FCC 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. 103-66, 107 Stat. 31 (1993).
    \3\ See National Telecommunications and Information 
Administration, U.S. Department of Commerce, NTIA Special 
Publication 94-27, 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-Federal 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 band 
identified in the 1995 Spectrum Reallocation Final Report after January 
1, 2001.\6\
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    \4\ Pub. L. 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\ See note 4 supra at section 3002(b). 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, See Pub. L. 106-65, 113 Stat. 512 (1999).
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    4. In 1998, Congress passed the Strom Thurmond National Defense 
Authorization Act for Fiscal Year 1999 (the Act).\7\ This legislation 
sought to encourage the transfer of electromagnetic spectrum from 
Federal government to private use by authorizing Federal entities to 
accept compensation payments when they relocate or modify their 
frequency use to accommodate non-Federal users of the spectrum.\8\ 
Indeed the Act requires ``any 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 of the 
``marginal costs anticipated to be associated with such relocation or 
with the modifications necessary to accommodate prospective 
licensees.'' \11\
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    \7\ Pub. L. 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). ``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 47 U.S.C. 923(g)(1)(A).
    \11\ Id.
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    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

[[Page 4772]]

estimates of relocation or modification costs.'' \12\
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    \12\ See 47 U.S.C. 923(g)(1)(E).
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    6. These proposed rules provide a procedure for Federal entities to 
receive reimbursement for the relocation or modification expenses that 
they incur as a result of the reallocation of radio spectrum mandated 
by OBRA 93, BBA 97, and future reallocations. As such, these proposed 
rules address reimbursement issues associated with the relocation or 
modification of frequency spectrum that have been reallocated. The 
proposed rules do not apply to issues involving the reallocation of 
frequency spectrum. These proposed rules provide a mechanism for the 
Federal entities to submit estimates of the costs to relocate. The 
proposed rules direct NTIA to solicit estimates of the costs of 
relocation from the affected Federal entities, and provide that 
information to the FCC at least 180 days prior to an auction.\13\
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    \13\ We note that the FCC will notify potential bidders prior to 
the auction of the estimated relocation costs submitted by the 
Federal entities for the affected bands.
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    7. The proposed rules also provide procedures for the successful 
bidder to make payment to the Federal entity after an auction. Pursuant 
to direction from Congress, the proposed rules also include a process 
for resolving differences that arise between the Federal Government and 
the successful bidder regarding estimates of relocation or modification 
of costs. To the extent that a successful bidder disagrees with a 
Federal entity's estimated relocation costs, the proposed rules provide 
for a mandatory negotiation and/or third-party mediation period. If the 
parties do not agree to relocation costs within the mandatory 
negotiation period, the parties must enter into a non-binding 
arbitration program.
    8. As required by section 603 of the Regulatory Flexibility Act, 5 
U.S.C. 603, NTIA has prepared an Initial Regulatory Flexibility 
Analysis (IRFA) of the expected impact on small entities of the 
proposals suggested in this document. The IRFA is set forth in the 
Regulatory Flexibility Analysis section of these proposed rules. 
Written public comments are requested on the IRFA. These comments must 
be filed in accordance with the same filing deadlines as comments filed 
in this Notice of Proposed Rulemaking (NPRM), but they must have a 
separate and distinct heading designating them as responses to the 
IRFA. NTIA shall send a copy of this NPRM, including the IRFA, to the 
Chief Counsel for Advocacy of the Small Business Administration in 
accordance with section 603(a) of the Regulatory Flexibility Act, 5 
U.S.C. 603(a).

III. Discussion

    9. These proposed rules have been developed to ensure that the 
Federal Government is fully reimbursed for the expenses it incurs in 
retuning, modifying or relocating a system as a result of reallocation. 
To the extent that there are other ways to accomplish this goal, NTIA 
will entertain comments from interested parties.

Affected Bands

    10. Pursuant to OBRA 93, NTIA identified 235 MHz of Federal 
Government spectrum for transfer to the private sector.\14\ Similarly, 
NTIA identified another 20 MHz of spectrum for reallocation to the 
private sector as mandated by the BBA 97.\15\ The table below shows the 
specific frequency bands reallocated from Federal Government use to the 
private sector as a result of the legislation and Federal Government 
action.
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    \14\ See note 3, supra. The Federal Government, however, later 
reclaimed fifty (50) MHz of this spectrum (i.e., 4635-4685 MHz) and 
substituted 4940-4990 MHz in its place. See 47 U.S.C. 924(b), 926; 
see also Letter from Larry Irving, Assistant Secretary for 
Communications and Information, U.S. Department of Commerce, to 
William E. Kennard, Chairman, Federal Communications Commission 
(March 30, 1999) (notifying FCC of reclamation and substitutiuon of 
spectrum).
    \15\ See note 5, supra.

                  Reallocated Frequency Bands From the Federal Government to the Private Sector
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                                                                      Bandwidth
         Freq. band (MHz)                     Legislation               (MHz)                Schedule
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1390-1400.........................  OBRA-93                                  10   January 1999
1427-1432.........................  OBRA-93                                   5   January 1999
1670-1675.........................  OBRA-93                                   5   January 1999
1710-1755.........................  OBRA-93                                  45   January 2004 \16\
2300-2310.........................  OBRA-93                                  10   August 1995
2390-2400.........................  OBRA-93                                  10   February 1995
2400-2402.........................  OBRA-93                                   2   August 1995
2402-2417.........................  OBRA-93                                  15   February 1995
2417-2450.........................  OBRA-93                                  33   August 1995
3650-3700.........................  OBRA-93                                  50   January 1999
4940-4990.........................  OBRA-93 \17\                             50   January 1997
216-220...........................  BBA-97                                    4   January 2002
1432-1435.........................  BBA-97                                    3   January 1999
2385-2390.........................  BBA-97                                    5   January 2005
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    11. On October 17, 1998, the President signed into law the Strom 
Thurmond National Defense Authorization Act for Fiscal Year 1999, which 
among other things, amended the NTIA Organization Act to require 
private sector entities to reimburse Federal users for relocations due 
to reallocation of spectrum assignments.\18\ The Act also sets forth 
which spectrum would be the subject of the mandatory reimbursement 
rules: the 1710-1755 MHz band from the first reallocation report, the 
20 MHz identified in the second reallocation report, and any future 
reallocations.\19\ The affected frequency bands that currently qualify 
for reimbursement under the proposed rule include the following:
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    \16\ The NTIA Spectrum Reallocation Final Report provided for 
early reallocation band (i.e., 1999) for the top 25 major cities in 
the United States with the private sector reimbursing the Federal 
users. Subsequently, Title III of BBA 97 (entitled ``Communications 
and Spectrum Allocation Provisions'') provides for the reallocation 
of this band for competitive bidding commencing after January 1, 
2001.
    \17\ See note 14, supra.
    \18\ See note 7, supra.
    \19\ See note 6, supra.

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[[Page 4773]]

Bands That Qualify for Reimbursement

216-220 MHz
1432-1435 MHz
1710-1755 MHz
2385-2390 MHz

    12. We seek comment on the affected bands identified above. Future 
bands that qualify for reimbursement will be identified via a public 
notice and request for comment.

Mandatory Relocation

    13. DOBRA 93 and BBA 97 require NTIA to identify spectrum for 
reallocation to exclusive non-Government uses. Moreover, Section 3002 
of BBA 97 amended the NTIA Organization Act to add a subsection to 
encourage Federal entities to relocate Government stations from the 
bands identified in any reallocation report through means of these 
reimbursement requirements or any other provision of law to ``maximize[ 
] the spectrum available for non-Federal use.'' \20\ Nevertheless, in 
some cases, it may be technically possible for incumbent Federal 
entities to continue to share the reallocated spectrum with the new 
commercial licensees. We seek comment on whether these Federal entities 
should be required to relocate in those cases where sharing is 
technically possible. If not, we seek comment on the conditions whereby 
such Federal entities should be permitted to remain in the band and who 
would pay for any system modification that would enhance spectrum 
sharing. For example, because the spectrum will be reallocated to 
exclusive non-Government uses as required by DOBRA 93 or BBA 97, should 
such a Federal entity be permitted to remain in the band only on a non-
interference basis after the appropriate regulatory approvals have been 
obtained?
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    \20\ See 47 U.S.C. 923(h).
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    14. We also solicit comment on whether a Federal entity should be 
entitled to reimbursement of relocation costs if it relocates to a 
landline communications system or commercial radio services.\21\ We 
note that such an option may provide the most spectrum efficient and 
cost-effective alternative to a government-exclusive radio frequency 
system consistent with policy directive set forth in the NTIA 
Organization Act. For example, section 104 of the NTIA Organization Act 
provides that the Secretary of Commerce, in assigning frequencies for 
mobile radio services and other radio services ``shall promote 
efficient and cost-effective use of the spectrum to the maximum extent 
feasible.'' 47 U.S.C. 903(d)(1). Moreover, the NTIA Organization Act 
provides that any Federal Government station identified for 
reallocation shall ``to the maximum extent practicable * * * relocate 
its spectrum use to other frequencies that are reserved for Federal use 
or to consolidate its spectrum use with other Federal Government 
stations in a manner that maximizes the spectrum available for non-
Federal use.'' Id. at section 923(h). There may also be other 
circumstances where no other frequency is available and a landline or 
other commercial service is a viable alternative available to the 
Federal entity that is required to relocate.
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    \21\ We note, however, that the statute provides reimbursement 
to Federal entities that relocate to ``another frequency or 
frequencies.'' 47 U.S.C. 923(g).
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Availability of a Comparable Facility

    15. The proposed rules do 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). NTIA defines the term 
``comparable facility'' to mean that the replacement facility restores 
the operational capabilities of the original facility to an equal or 
superior level. For example, in the 1710-1755 MHz band, the vast 
majority of Non-DoD Federal Government facilities are fixed point-to-
point microwave networks, and may be replaced by fixed microwave 
facilities in other bands. On the other hand, DoD operates a number of 
systems, including highly mobile, non-communications systems. These 
military systems must operate within the limits of established 
doctrine.
    16. NTIA will consider four basic factors to determine 
comparability of replacement communications facility, although there 
may be other factors to consider. These four basic factors are 
communications throughput, system reliability, operating costs, and 
operational capability. A replacement facility will be considered 
comparable if the new system's operational capability, communications 
throughput and reliability are equal to or greater than that of the 
system being replaced, taking into account the operating costs.
    17. Communications throughput, for the purposes of this proceeding, 
means 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.
    18. System reliability means the percentage of time information is 
accurately transferred 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) and 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 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 
percent 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 receiver carrier-to-noise ratio exceeds the receiver 
threshold. It should be noted 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.
    19. Operating costs are 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 (e.g., additional rental payments and increased 
utility fees) for five years after relocation.
    20. Operational capability is 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.
    21. These four factors, however, may not be appropriate measures 
for all Federal Government stations required to relocate. For example, 
to measure comparability for radar systems it may be more accurate to 
compare the minimum required radar target cross section able to be 
detected at a given range with a specified probability of false alarm 
under mission-required conditions. Other measures of radar system 
comparability may include target resolution and the ability to meet 
performance specifications under adverse conditions such as weather and 
hostile jamming. Radar and other spectrum-dependent systems may require 
access to specific frequency bands to perform their missions in an

[[Page 4774]]

optimal manner. For example, long range surveillance functions 
relatively free of weather effects are optimized at low frequencies and 
weapon control at higher frequencies. The use of higher frequencies, 
however, may limit the useful range of some spectrum-dependent systems, 
such as radar or data links. Such limitations could affect mission 
performance.
    22. NTIA seeks comments on this proposed definition and whether the 
factors described above are sufficient to determine comparability of 
facilities. If not, NTIA seeks comment on what other factors should be 
considered, and whether such factors should be tailored to specific 
Federal Government systems to be relocated.

Frequency Assignments Eligible for Reimbursement

    23. The proposed rules outline the conditions, limitations and 
eligibility requirements for reimbursement of the costs associated with 
relocation as a result of reallocation.
    24. Equipment/system modification: Sometimes radiocommunication 
systems in certain bands can be modified to tune outside of the 
reallocated band to the upper or lower portion of the incumbent band. 
Re-tuning is oftentimes less expensive to implement, assuming there is 
no congestion in the upper portion of the band as a result of the 
migration and assuming the transmitter-receiver frequency separation 
can be met. Re-tuning could save an agency a considerable amount of 
money because it does not require additional towers or stations, new 
feed lines or associated equipment. Thus, to the extent that a Federal 
entity that is required to relocate is able to modify its equipment, 
with the result that the retuned equipment provides operational 
capabilities comparable with its original system, NTIA proposes to 
limit reimbursement to the costs associated with re-tuning. We note, 
however, that modification/retuning may not be possible when taking 
into consideration the factor of ``operational comparability'' as noted 
above. We seek comment on this proposed limitation.
    25. Old Assignments versus new assignments: NTIA identified the 
Federal bands for reallocation from the Federal Government to non-
Government use in the February 1995 Spectrum Reallocation Final Report, 
as well as the February 1998 Spectrum Reallocation Report. On October 
17, 1998, the President subsequently signed into law the National 
Defense Authorization Act for Fiscal Year 1999 that requires the 
private sector to reimburse Federal entities for the cost of relocation 
or modification of systems as a result of reallocation. Thus, for 
purposes of these proposed rules, we propose to characterize an old 
assignment to a Federal entity as one that was authorized before 
October 17, 1998, and a new assignment as one that was authorized after 
October 17, 1998. With respect to reimbursement under these rules, we 
propose that only old assignments within the affected bands (i.e., 216-
220 MHz, 143-1435 MHz, 1710-1755 MHz, 2385-2390 MHz) would be entitled 
to reimbursement. NTIA believes that the costs associated with any new 
assignment requested by Federal entities after the respective dates of 
reallocation reports in the affected bands should be borne by that 
Federal entity rather than a new commercial licensee to prevent unjust 
enrichment. We seek comment on this limitation.
    26. Exempted Federal power agencies: Assignments made to Federal 
power agencies (FPAs) are statutorily exempt from the requirements to 
relocate under the reallocation reports.\22\ Thus, the 1995 Spectrum 
Reallocation Final Report provides a list of frequency assignments in 
the 1710-1755 MHz band that support the FPAs and that are not required 
to relocate.\23\ NTIA believes, however, that Section 923(g)(1)(A) of 
Title 47 of the U.S. Code can be read to permit an FPA to accept 
reimbursement for relocations undertaken on a voluntary basis. We seek 
comment on whether an FPA that wishes to relocate from a band of 
spectrum identified for reallocation can accept voluntary reimbursement 
from a commercial licensee. If so, should the parties be subject to 
these proposed rules or be left exclusively to voluntary negotiations?
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    \22\ See 47 U.S.C. Sec. 923(c)(4)(C). The term Federal power 
agency refers to the Tennessee Valley Authority, the Bonneville 
Power Administration, the Western Area Power Administration, the 
Southwestern Power Administration, the Southeastern Power 
Administration, and the Alaska Power Administration.
    \23\ See Spectrum Reallocation Final Report, NTIA Special 
Publication 95-32, Appendix E, Tables 1and 2.
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    27. Other government stations: Under the 1995 Spectrum Reallocation 
Final Report and the 1998 Spectrum Reallocation Report, NTIA also 
exempted other Federal Government assignments from the requirement to 
relocate from the bands identified for reallocation either indefinitely 
or for a longer terms of years.\24\ We seek comment on whether these 
Federal entities can accept reimbursement for voluntarily relocating 
these stations to a commercial licensee, and if so, whether such 
negotiations should be subject to these proposed rules.
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    \24\ See id. at Appendix E (Exempted Safety-of-Life Fixed 
Microwave Stations in the 1710-1755 MHz band); see also 1998 
Spectrum Reallocation Report at 3-18 (Table 3-2), 3-38 (Table 3-4), 
3-48 (Table 3-6), 4-1 (Table 4-1) (setting forth the sites exempt 
from relocation or with special relocation dates in the 216-220 MHz, 
1432-1435 MHz, and 2385-2390 MHz bands).
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    28. Experimental Stations: In general, the proposed rules do not 
permit reimbursement for relocated frequency assignments for 
experimental stations or experimental testing stations. An 
``experimental station'' means a station utilizing radio waves in 
experiments with a view to the development of science or technique. An 
``experimental testing station'' is used for the evaluation or testing 
of electronics, equipment or systems, including site selection and 
transmission path surveys. These stations are oftentimes temporary use 
stations and are operated on a non-interference basis. NTIA believes 
that most experimental stations not be entitled to reimbursement under 
the statute. Reimbursement, however, would still be required for 
frequency assignments to experimental stations for systems that are in 
the developmental stage that have been certified for spectrum support 
by NTIA for Stage 3 developmental testing.\25\ Because systems at the 
Stage 3 are certified for testing of proposed operational hardware and 
potential equipment configurations, we believe that these systems are 
entitled to reimbursement. We seek comment on our treatment of 
experimental stations in the proposed rules.
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    \25\ NTIA Manual of Regulations and Procedures for Federal Radio 
Frequency Management, Section 10.3.1 (September 1995). Stage 3 
certification is required for testing proposed operational hardware 
and potential equipment configurations.
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Cost Sharing

    29. NTIA proposes to adopt a cost-sharing plan where the potential 
requirement to reimburse a Federal entity for relocation costs could 
disproportionately fall upon one potential bidder or licensee or a 
small number of potential bidders or licensees. For example, there may 
be multiple bidders in a geographic area for small bandwidth that may 
result in division of a Federal entity's bandwidth. There is no 
mechanism in place to compensate the Federal entity for that portion of 
the spectrum that is not licensed or acquired by any particular auction 
winner. In these circumstances, one auction winner could be made to pay 
for the entire spectrum allocation held by the Federal entity, despite 
the

[[Page 4775]]

fact that only a portion of the bandwidth is needed. On the other hand, 
auction bidders that need only a portion of the bandwidth may perceive 
the cost of relocating a Federal entity too expensive in the absence of 
a cost-sharing plan, and thus may forgo providing a particular service 
to a geographic area.\26\ To ensure that no private entity bears the 
full cost burden of relocating a government entity and to ensure that a 
geographic area is not denied service because the costs of 
reimbursement are disproportionate, we seek comment on whether a cost 
sharing plan, among auction winners, should be implemented. We also 
seek comment on what measures might reasonably be implemented to assure 
that the federal entity is guaranteed full payment from multiple 
licensees. We also seek comment on whether a band manager or some other 
entity that licensees may establish would be appropriate to serve as a 
clearinghouse to administer the cost-sharing plan. Although we 
contemplate developing a cost-sharing plan and criteria for identifying 
a clearinghouse for each auction, NTIA proposes to determine on a case-
by-case basis whether a cost-sharing plan is needed for each auction. 
We seek comment on whether this case-by-case approach is appropriate.
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    \26\ There also may be circumstances where the national nature 
of federal systems is such that the requirement to reimburse a 
federal entity for relocation costs may disproportionately fall on a 
small number of successful bidders. Thus, a particular licensee's 
geographic area may cover a critical element of a much larger 
national system, such as a system where a small number of satellite 
uplink transmitter terminals, each located at a specific site, 
communicates to many satellites. In other situations, there are 
highly mobile systems (e.g., airborne telemetry or data link 
systems) that are not related to any specific geographic area.
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    30. If the proposed cost-sharing plan is adopted, NTIA proposes and 
seeks comment on whether it should be administered by an industry-
supported organization or the government. NTIA does not propose at this 
time to designate any particular organization as the representative of 
the industry that will benefit from the auction of government spectrum, 
nor does NTIA propose any particular form that such an organization 
might take. NTIA seeks comment on the criteria it should use in 
designating a clearinghouse, and on whether it should be an existing 
organization or a new entity created for this purpose. NTIA also seeks 
comment on how the clearinghouse would be funded. If a clearinghouse is 
established receipts from expenses already incurred would be submitted 
to the clearinghouse for accounting purposes. We propose to sunset the 
cost-sharing plan to five years after any auction of a government 
spectrum subject to reimbursement rules. We believe that it is 
important to set a date certain on which any clearinghouse will be 
dissolved, and adopt a cost-sharing plan with the fewest possible 
variables so that it will be easy to administer.
    31. We also seek comment on how a negotiation framework can best be 
established so as to minimize the personnel and other budgetary costs 
to the Government. For example, should NTIA establish a negotiation 
framework that will permit relocation of each Government system on a 
system-wide basis? Under such a framework, a Federal agency could 
request that all auction winners with frequency assignments that 
require that the agency relocate its system, participate in a single 
negotiation process so that a system-wide relocation solution can be 
achieved. Each Federal entity would provide a single point of contact 
for such consolidated negotiations. NTIA believes that such a 
negotiation mechanism could benefit both affected agencies and the 
private sector by streamlining administrative processes and reducing 
negotiating costs for both parties.

Sunset of Reimbursement Rights

    32. The Defense Authorization Act of 1999 mandated reimbursement to 
Federal agencies and did not limit the time period for reimbursement. 
Thus, these proposed rules do not provide a sunset provision with 
respect to the reimbursement rights of Federal entities. We seek 
comments on our proposal not to include a sunset provision in these 
rules. Specifically, we seek comment on whether the statute precludes a 
sunset date.

Costs to Relocate

    33. The proposed rules identify the marginal relocation and 
modification costs that are reimbursable. NTIA proposes to define 
``marginal costs'' as 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, but would 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 prior to the date of the required relocation. The 
costs identified as reimbursable in these proposed rules conform to 
those identified by Congress in 47 U.S.C. Sec. 923(g)(1)(A) and 923 
(g)(2)(A). We seek comment on this definition of marginal costs.
    34. Consistent with the statute, the proposed rules would require 
reimbursement payments to be made in advance of relocation. The 
proposed rules would also require the successful bidder to guarantee to 
pay all marginal costs as a precondition of NTIA's withdrawal of the 
relevant Federal license. The proposed rules also would permit payments 
to be made in cash or in kind, as agreed to by the affected Federal 
entity. The proposed rules further require that cash payments be made 
in the account of the Federal entity in the Treasury of the United 
States, or in a separate account as authorized by law.

Notification of Marginal Costs

    35. Under 47 U.S.C. 923(g)(1)(A), NTIA must provide information to 
the FCC so that the FCC can advise potential bidders of the marginal 
costs of relocation or modification. This statute also requires Federal 
entities that propose to relocate to notify NTIA of the marginal costs 
anticipated to be associated with such relocation or with modifications 
necessary to accommodate a prospective licensee. NTIA's proposed rules 
thus require Federal entities that propose to relocate, modify or 
retune systems to provide such marginal cost information to NTIA at 
least 240 days prior to an FCC

[[Page 4776]]

auction.\27 \ In turn, NTIA intends to provide this information to the 
FCC at least 180 days prior to such auction so that the FCC will have a 
sufficient amount of time to notify potential bidders.\28\
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    \27\ The marginal costs submitted on behalf of the Federal 
agencies as part of the notification process may be subject to 
review and approval by the Office of Management and Budget (OMB). 
OMB's review would assure the accuracy of the costs. See also 
Section 1064(d) of the Strom Thurmond National Defense Authorization 
Act for Fiscal Year 1999, Pub. L. No. 105-261, 112 Stat. 1920 
(1998).
    \28\ For example, we anticipate that the first FCC auction for 
spectrum frequency subject to these rules will occur in December 
2001. In that case, NTIA would provide cost information to the FCC 
no later than June 1, 2001. Therefore, the Federal entities would 
have to provide estimated cost information to NTIA by April 1, 2001.
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Negotiation and Mediation

    36. Under the proposed rules, within 30 days after the license is 
granted, the auction winner would be required to contact the Federal 
entity that is required to relocate. Under the proposed rules, receipt 
of the notification by the Federal entity would trigger a 135-day 
negotiation and/or third-party mediation period between the Federal 
entity and the auction winner. During the mandatory negotiation period, 
parties are encouraged to resolve any differences with respect to 
relocation or modification costs or any other related issues. If, at 
the end of the 135-day period, the parties have not reached an 
agreement with respect to relocation, under the proposed rules, the 
parties may agree, by mutual consent, to extend the mandatory 
negotiation period. We believe that this mandatory negotiation period 
affords the parties an opportunity to freely, and without constraints, 
negotiate the terms relative to relocation. To the extent that the 135-
day period is insufficient, we believe that the extension of time 
provision gives the party additional time that may be necessary to come 
to an agreement. This provision would also allow the parties to take 
advantage of a neutral third party to help facilitate the negotiation 
process without rendering a decision. We solicit comments on the 
proposed rule to require mandatory party-to-party negotiations and/or 
third-party mediation.
    37. Under the proposed rules, the parties would be required to 
negotiate relocation or modification costs in good faith during the 
mandatory negotiation period. Good faith requires each party to provide 
information to the other that is reasonably necessary to facilitate the 
relocation process. Good faith means that (1) neither party may refuse 
to negotiate; and (2) each party must behave in a manner necessary to 
facilitate negotiation in a timely manner. We seek comments on these 
good faith obligations.

Non-Binding Arbitration

    38. If the parties have not reached agreement and do not agree to 
extend the negotiation/mediation period, or if a previously extended 
negotiation/mediation period expires, the proposed rules would require 
the parties to enter into non-binding arbitration. The parties would 
have to agree on the arbitrator, and to prevent bias, the arbitrator 
would not be the same person as the mediator if mediation has been used 
by the parties and failed. Each party would pay its own costs for 
arbitration and share equally the cost of the arbitrator. The 
arbitrator's non-binding decision may be requested by NTIA as part of 
the record in a petition for relocation, as described below. The 
recommended decision may be a factor, among others, in NTIA's 
determination on a petition for relocation. We seek comments on the 
proposed requirement that parties enter into non-binding arbitration. 
We also seek comments on any alternative proposal for the resolution of 
disputes between the parties.

Petition for Relocation

    39. Under 47 U.S.C. 923(g)(2), an auction winner seeking to 
relocate a Federal Government station must submit a petition for 
relocation to NTIA. Under the proposed rules, NTIA requires that a copy 
of the petition also be simultaneously provided to the FCC.\29\ 
Moreover, under the proposed rule, NTIA's determination on the petition 
would be set forth in writing within six months after the petition has 
been filed and be provided to the auction winner and the Federal 
entity. The statute requires NTIA to limit or terminate the Federal 
entity's license within six months after receiving the petition if the 
following requirements are met:
---------------------------------------------------------------------------

    \29\ We note that the statute permits the Federal entity to 
reclaim its facilities if it demonstrates to the FCC that the new 
facilities are not comparable. See 47 U.S.C. 923(g)(3). Rules 
regarding the Federal entity's right to reclaim will be promulgated 
by the FCC. See also 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, 
Notice of Proposed Rule Making, FCC 00-395, at para. 64 (November 
20, 2000).
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    (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 station is able to accomplish its purposes; and
    (D) NTIA has determined that the proposed use of the spectrum 
frequency band to which the Federal entity will relocate is consistent 
with:
    (i) Obligations undertaken by the United States in international 
agreements and United States national security and public safety 
interests; and
    (ii) The technical characteristics of the band and other uses of 
the band.
    If NTIA does not act within 6 months after the Petition for 
Relocation is filed, the Petition is deemed denied. NTIA's 
determination, or failure to act on a Petition within 6 months, would 
be final and conclusive upon the parties.
    40. The proposed rules would permit an auction winner to file a 
petition for relocation anytime after an agreement has been reached on 
marginal costs. The proposed rules also permit an auction winner to 
file a petition for relocation if the parties fail to reach agreement 
and non-binding arbitration has occurred. In that case, the auction 
winner 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 determination. The recommended decision may be a factor, 
among others, in the NTIA determination on the petition for relocation. 
In making its determination, NTIA will consult with the affected 
Federal entity and, as appropriate, may also consult with the Office of 
Management and Budget and other executive branch agencies. We seek 
comment on these proposed rules as they relate to the Petition for 
Relocation.
    41. In certain circumstances, it may be beneficial for the Federal 
entity to seek voluntary withdrawal of an assignment after the parties 
reach an agreement through negotiation, mediation, or non-binding 
arbitration. NTIA anticipates the vast majority of relocations to occur 
under agreements reached between the parties, thus permitting voluntary 
withdrawals of assignments would greatly streamline the administrative 
process of making the spectrum available to auction winners. NTIA

[[Page 4777]]

seeks comment on permitting such voluntary requests for assignment 
withdrawal as an alternative to the petition for relocation in cases in 
which the parties have reached agreement.

Unclassified, Classified and Sensitive Assignments

    42. Unclassified government facilities. With respect to 
unclassified government facilities, we propose to provide the following 
information to the FCC prior to an auction of the affected bands:
    (1) List of Government facilities.
    (2) Government agency operating each facility.
    (3) Location of each facility.
    (4) General type of operation and equipment (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.
    (8) Total estimated costs of relocation for all assignments.
    43. Classified government facilities. These proposed rules would 
permit reimbursement to the Federal entity, even if an assignment is 
classified. As defined in the proposed rule and consistent with 
Executive Order 12958,\30\ a ``classified assignment'' would be a 
frequency assignment and information related to a frequency assignment 
that has been determined pursuant to Executive Order 12958 or any 
predecessor 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. As directed 
by Executive Order 12958, Executive Order 12968 \31\ and related 
national security regulations, classified assignment can only be made 
available to individuals with the appropriate clearances and with a 
``need to know'' (need for access) in order to perform or assist in 
performing a lawful and authorized government function.
---------------------------------------------------------------------------

    \30\ Exec. Order No. 12958, 3 CFR 333 (1995).
    \31\ Exec. Order No. 12968, 3 C.F.R. 391 (1995).
---------------------------------------------------------------------------

    44. Prior to an auction, Federal entities 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 license service area 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.
    45. Sensitive assignments. As defined in the proposed rule, a 
``sensitive assignment'' would be a frequency assignment and 
information related to a frequency assignment (e.g. operations or 
technical parameters) that are not releasable to the public under the 
Freedom of Information Act or relevant laws or regulations.\32\ Prior 
to an auction, 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 
license service area 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, we propose that the government agency release the 
sensitive information to the winning licensee pursuant to a non-
disclosure agreement.
---------------------------------------------------------------------------

    \32\ Many of these assignments involve federal public safety and 
law enforcement activities.
---------------------------------------------------------------------------

    46. We seek comment on our proposed treatment of these assignments.

Other Information

Executive Order 12866
    47. This proposed rule has been determined to be significant under 
section 3(f) of Executive Order 12866.
Executive Order 13312
    48. This rule does not contain policies with Federalism 
implications sufficient to warrant preparation of a Federalism 
assessment under Executive Order 12612.

Regulatory Flexibility Act

    49. As required by the Regulatory Flexibility Act (RFA) \33\ NTIA 
has prepared an Initial Regulatory Flexibility Analysis (IRFA) of the 
possible impact that this proposed rule, if adopted, would have on 
small entities. Written public comments are requested on the IRFA. 
Comment must be identified as responses to the IRFA and must be filed 
by the deadlines for comments on the NPRM.
---------------------------------------------------------------------------

    \33\ See 5 U.S.C. 603.
---------------------------------------------------------------------------

Initial Regulatory Flexibility Analysis

    50. As required by the Regulatory Flexibility Act (RFA), NTIA has 
prepared this present Initial Regulatory Flexibility Analysis (IRFA) of 
the possible significant economic impact on small entities by the 
policies and rules proposed in this NPRM. Written public comments are 
requested on this IRFA. Comments must be identified as responses to the 
IRFA and must be filed by the deadlines for comments on this NPRM.
A. Need for, and Objectives of, the Proposed Rules
    51. The Strom Thurmond National Defense Authorization Act for 
Fiscal Year 1999 authorized Federal entities to accept compensation 
payments when they relocate or modify their frequency use to 
accommodate non-Federal users of the spectrum.\34\ In essence, the Act 
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 Title VI of the Omnibus Budget Reconciliation Act of 1993 
(OBRA 93),\35\ the Balanced Budget Act of 1997 (BBA 97) and future 
reallocations. The Act also directs NTIA and the Federal Communications 
Commission (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 and modification costs.'' 
\36\
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    \34\ 47 U.S.C. 923(g)(1).
    \35\ Pub. L. 103-66, 107 Stat. 31 (1993).
    \36\ See 47 U.S.C. 923(g)(1)(E).
---------------------------------------------------------------------------

    52. This initial regulatory flexibility analysis provides, to the 
extent possible, relevant information regarding reimbursement such as 
the Federal frequency assignments for reallocation and the estimated 
relocation costs that will ultimately be borne by the private sector. 
As stated above Congress directed NTIA and the FCC to develop 
procedures for the implementation of the reimbursement process. 
Pursuant to

[[Page 4778]]

this direction from Congress, NTIA prepared this NPRM. NTIA is not able 
to determine the type of entities that will be potential bidders for 
the particular spectrum frequencies at issue here, thus NTIA is unable 
to fully describe the effect that the proposed rules will have on small 
entities. However, significant economic impacts are unlikely because it 
is expected that bidders in an auction for the eligible spectrum, 
including small entities, will factor in the estimated relocation costs 
and adjust their bids accordingly.
B. Federal Frequency Assignments Subject to Reallocation
    53. On August 10, 1993 OBRA 93 was signed into law. OBRA 93 
authorized the FCC 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.\37\ Subsequently, BBA-97 required the Secretary of Commerce to 
identify an additional 20 MHz below 3 Ghz for reallocation to non-
Federal users.\38\ In response to this directive, NTIA issued a 
Spectrum Reallocation Report in February 1998 which identified the 
additional bands for reallocation.\39\ The specific frequency bands 
that currently qualify for reimbursement pursuant to the proposed rules 
are: 216-220 MHz; 1432-1435 MHz; 1710-1755 MHz; and 2385-2390 MHz.
---------------------------------------------------------------------------

    \37\ See National Telecommunications and Information 
Administration, U.S. Department of Commerce, NTIA Special 
Publication 94-27, Spectrum Reallocation Final Report (Feb. 1995).
    \38\ Pub. L. 105-33, 111 Stat. 251 (1997).
    \39\ Of the 20 MHz of spectrum, eight (8) MHz were subsequently 
reclaimed by the Federal Government in accordance with the National 
Defense Authorization Act for Fiscal Year 2000. See Pub. L. 106-65, 
113 Stat. 512 (1999).
---------------------------------------------------------------------------

C. Estimated Relocation Costs
    54. At this point, NTIA does not have the final estimated costs of 
relocation for all of the bands identified in the NPRM. In fact, the 
NPRM proposes dates for the Federal entities to provide that 
information to NTIA. The final spectrum reallocation reports prepared 
by NTIA in response to OBRA 93 and BBA 97 identified estimates of 
implementation costs to Federal agencies of approximately $1.5 billion 
based on data provided by major Federal agencies. Subsequent 
modifications to these estimates have been made based on a report to 
Congress from the Department of Defense (DoD), and changes to the 
reallocation plan as directed by the National Defense Authorization Act 
for FY 2000. Taking these factors into account, the current 
reimbursable long-term cost estimates to the Federal agencies of 
implementing the spectrum reallocations under OBRA 93 and BBA 97 is 
between $460-$810 million.
    Although NTIA identifies spectrum to reallocate from the Federal 
government to the private sector, NTIA does not determine how the 
spectrum will be used by the private sector. The Federal Communications 
Commission, through its regulations identifies options for making use 
of bands transferred from Government to non-Government use pursuant to 
OBRA 93 and BBA 97. In fact, the FCC recently issued an NPRM on the 
allocation of 27 megahertz of spectrum from the 216-220 MHz, 1390-135 
MHz, 1427-1429 MHz, 1429-1432 MHz, 1432-1435 MHz, 1670-1675 MHz, and 
2385-2390 MHz bands.\40\ In that NPRM, the FCC proposes general Fixed 
Service and Mobile Service allocation for these bands, and solicits 
comments on other possible allocations and potential service rules for 
the services to which the bands may be allocated. The FCC also solicits 
comments on its Initial Regulatory Flexibility Analysis of the NPRM 
which describes the number of small entities to which its proposed 
rules would apply.
---------------------------------------------------------------------------

    \40\ 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, Notice of Proposed 
Rule Making, FCC 00-395, at para. 64 (November 20, 2000).
---------------------------------------------------------------------------

    In accordance with 5 U.S.C. 603, the following information is 
provided to conduct the necessary initial regulatory flexibility 
analysis:
D. Legal Basis
    55. The objective of the proposed rule is to establish procedures 
to compensate the Federal Government for expenses it incurs in 
relocating to a new frequency as a result of a reallocation of 
spectrum. Congress determined that the Federal Government should be 
reimbursed by commercial licensees that are awarded spectrum previously 
held by the Federal Government. The legal basis for the proposed rule 
is the Defense Authorization Act for Fiscal Year 1999 which directs 
NTIA and the FCC to develop procedures to implement reimbursement, 
including a process for resolving differences that arise between the 
parties regarding estimates of relocation or modification costs.
E. Description and Estimate of the Number of Small Entities to Which 
the Proposed Rules Will Apply
    56. It is difficult, if not impossible, to estimate the number of 
small entities, if any, to which the proposed rule would apply. The 
rule applies to winners of a competitive bidding (auction) that the FCC 
will hold at an undetermined date after January 2001. There is no way 
to predict, at this point in time, the type of entities that will be 
potential bidders for the spectrum that the FCC makes available. In 
fact, entities that are not even in existence at this time may be 
participating in a future auction for the particular spectrum frequency 
at issue. The FCC may impose eligibility requirements, however the 
auctions are usually open to any type of entity. Any estimate of the 
number of small entities to which this proposed rule will apply should 
be made after the FCC makes a determination of the type of service that 
the FCC allocates for these bands of spectrum. The proposed rules, 
however, require the FCC to provide the estimated cost of reimbursement 
to potential bidders. Thus, to the extent that a small entity is a 
potential bidder, it will be able to calculate its costs to bid on the 
particular spectrum frequency, taking into account the estimated cost 
to reimburse the Federal Government. As stated above the estimated 
costs of relocation at this time is between $460-$810 million. Because 
these costs are only estimates and bids may be adjusted to reflect 
these costs, it is difficult at this time to determine the impact that 
these costs will have on small entities. We solicit public comment on 
this IRFA as to the impact that the proposed rule will have on small 
entities as well as any alternative ways to alleviate such an impact.
F. Description of Projected Reporting, Recordkeeping and Other 
Compliance Requirements
    57. The proposed rules do not impose reporting, record keeping or 
other compliance requirements on the private sector, small entities or 
otherwise.
G. Federal Rules That May Duplicate, Overlap, or Conflict With the 
Proposed Rules
    58. It does not appear that any other Federal rule duplicates, 
overlaps or conflicts with the proposed rule. The proposed rules are 
focused on reimbursement to Federal entities for relocation costs from 
specific spectrum frequencies. No other Federal rule requires the 
private sector to reimburse

[[Page 4779]]

Federal entities for relocation costs of the specific radio spectrum 
frequencies identified in the proposed rules. The FCC, however, will 
promulgate service rules regarding these spectrum frequencies, however, 
we do not anticipate that the FCC's rules will duplicate, overlap or 
conflict with this proposed rule.
H. Steps Taken To Minimize Significant Economic Impact on Small 
Entities, and Significant Alternatives Considered
    59. As stated above, the applicable statute requires NTIA to 
develop rules to implement the reimbursement process.\41\ The NPRM, 
proposes and solicits comment on a number of alternatives which would 
minimize economic impact on small entities. For example, the proposed 
rules solicit comments on whether a Federal entity could retune or 
modify its equipment outside of the reallocated band to the upper or 
lower portion of the incumbent band. Re-tuning is usually less 
expensive to implement and can save an agency a considerable amount of 
money thus lessening the reimbursement obligation of the private 
sector. Another alternative in the proposed rule which could minimize 
the economic impact on small entities is the proposal to permit Federal 
entities to relocate to a landline communications system or a 
commercial radio service. Such an option may be a cost-effective 
alternative to the Federal entity relocating to another frequency. 
Again, this alternative may reduce reimbursement expenses that would be 
borne by the private sector and, perhaps, small entities. To the extent 
that there are other ways to accomplish the stated objectives of 
Congress, the proposed rule states that ``[t]hese proposed rules have 
been developed to ensure that the Federal Government is fully 
reimbursed for the expenses it incurs in retuning, modifying or 
relocating a system as a result of reallocation. To the extent that 
there are other ways to accomplish this goal, NTIA will entertain 
comments from interested parties. Comments received addressing 
alternatives to the proposed rules will be discussed in a more thorough 
analysis in the Final Rule.
---------------------------------------------------------------------------

    \41\ See 47 U.S.C. 923(g)(1)(E).
---------------------------------------------------------------------------

List of Subjects in 40 CFR Part 301

    Administrative practice and procedure, Classified information, 
Communications, Communications equipment, Government procurement, 
Government property, Radio, Satellites, Telecommunications, Telephone.

Proposed 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   Nonbinding 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 any costs paid by 
the successful bidder for the frequency spectrum at the FCC auction.


301.10  Applicability.

    (a) Affected bands.
    (1) These provisions apply to the following bands of frequencies 
located below 3 gigahertz:


(i) 216 to 220 MHz

(ii) 1432 to 1435 MHz

(iii) 1710 to 1755 MHz

(iv) 2385 to 2390 MHz

    (2) NTIA may periodically identify additional bands that are 
subject to this part in a notice published in the Federal Register.
    (b) Availability of comparable facility. The Federal entity will 
not relocate until a comparable facility, or modification to an 
existing facility, is available for enough time to determine 
comparability, make adjustments, and ensure a seamless handoff. The 
factors to be considered in determining comparability are 
communications throughput, system reliability, operating costs, and 
operational capability as defined in this part.
    (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/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/retuning.
    (2) Old assignments/new assignments. Old assignments are those that 
were authorized prior to October 17, 1998 (i.e., 216-220 MHz, 143-1435 
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. Frequency assignments in the 
1710--1755 MHz band that support the Federal power agencies that are 
exempt from reallocation requirements are not entitled to reimbursement 
under these rules.
    (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 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 entitled to reimbursement 
under these rules. These reports are available at http://
www.ntia.doc.gov.
    (d) Sunset of reimbursement rights. There is no sunset of 
reimbursement rights for affected agencies.


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 given for a radio 
station to use a radio frequency or radio frequency channel under 
specified conditions.
    (c) The term auction means the competitive bidding process that 
Congress authorized the Federal

[[Page 4780]]

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) of 
this subpart 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 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) and 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 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, which 
have been developed for operational use.
    (j) The term Federal entity means any department, agency or other 
instrumentality of the Federal Government that utilizes a Government 
station license 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 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.
    (m) 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.
    (n) The term NTIA means the National Telecommunications and 
Information Administration.
    (o) 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.
    (p) 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.
    (q) The term relocation refers to the process of moving a system 
that is displaced as a result of reallocation.
    (r) The term sensitive assignments refer those assignments whose 
operations or technical parameters are not releasable to the public 
under the Freedom of Information Act.
    (s) 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 auction winner 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 before to an auction. Marginal 
costs 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. 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, but would 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

[[Page 4781]]

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 prior to the date 
of the required relocation. Any Federal entity that proposes to 
relocate 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.
    (b) Unclassified assignments. NTIA will provide the following 
information to the FCC prior to the auction with repect 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) Whether the facility overlaps to one or more license areas or 
spectrum blocks.
    (8) Total estimated costs of relocation for all assignments.
    (c) Classified assignments. Prior to an auction, Federal entities 
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 license service area 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. The manual 
is available throught the Defense Security Service at http://
www.dss.mil/isec/nistom.htm or the Government Printing Office (ISBN 0-
16-045560-X). 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 an auction, 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 license service area 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.


Sec. 301.120  Negotiations and mediation.

    (a) Within 30 days after the license is granted, the auction winner 
is required to contact the Federal entity that occupies the band that 
the FCC has awarded to the auction winner. Receipt of this notification 
by the Federal entity triggers the 135-day period for negotiation or 
mediation between the Federal entity and the auction winner. 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. 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 of this 
subpart.


Sec. 301.130  Nonbinding 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 nonbinding 
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 nonbinding 
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.


301.140  Petition for relocation.

    (a) In general. An auction winner 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 6 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 6 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 band and 
consistent with other uses of the band.

[[Page 4782]]

    (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 why.
    (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, as appropriate, the 
Office of Management and Budget and other executive branch agencies.
    (b) Petition after agreement between the parties. The auction 
winner may file a petition for relocation pursuant to Sec. 301.140 of 
this subpart at anytime after the parties have reached agreement on 
relocation in negotiations or mediation as provided in Sec. 301.120 of 
this subpart and submit the agreement as evidence of having met the 
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 auction winner 
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.

    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.

    Dated: January 11, 2001.
Gregory L. Rohde,
Assistant Secretary for Communications and Information.
[FR Doc. 01-1306 Filed 1-17-01; 8:45 am]
BILLING CODE 3510-60-P