In re:
Mandatory Reimbursement Rules for                    )
Frequency Band or Geographic                               )
Relocation of Federal Spectrum-                             ) Docket No.
Dependent Systems                                                  ) 001206341-0341-01

The Secretary of Defense hereby submits these comments in the above captioned proceeding.

I. Introduction

The National Telecommunications and Information Administration (NTIA) initiated this proceeding by issuing a Notice of Proposed Rulemaking (NPRM) to establish rules governing the mandatory reimbursement of Federal entities when those entities relocate or modify their frequency use to accommodate non-Federal users of the spectrum. NTIA states that 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 entity's modification or relocation expense. The Department of Defense (DOD) participated in the Interagency Radiocommunications Advisory Committee (IRAC) consideration of this NPRM and very much appreciates the fine work NTIA has done in issuing the NPRM. To enhance the public debate on how the NTIA rulemaking can best implement mandatory reimbursement, the DOD herein submits comments with respect to DOD’s interpretation of the Act’s requirements in several respects.

II. Frequency Sharing

The NPRM (Par. 13) indicates that in some cases it may be technically possible for incumbent Federal entities to continue to share the reallocated spectrum with the new commercial licensee. The NPRM asks whether these Federal entities should be required to relocate in those cases where sharing is technically possible, and if not, whether the Federal entity should be permitted to remain in the band on a non-interference basis. Additionally, NTIA asks who would pay for any system modification that would enhance spectrum sharing.

It should also be noted that some bands are to be reallocated on a mixed-use basis. Those bands are available for use by the Federal Government on a protected basis (not on a non-interference basis). (See, Spectrum Reallocation Report, NTIA Special Publication 98-36, Executive Summary & Appendix F.)

To address NTIA's cost issue, if sharing is technically possible, then it seems clear that the private entity would be required to pay for any necessary Federal entity modification required. As NTIA pointed out in Par. 4 of the NPRM, the Act requires compensation for relocation or modification.

Establishing a requirement that Federal entities must share if sharing is technically possible and share on a non-interference basis puts the cart before the horse. It is the Federal entity that must first determine how to achieve comparability of operations. It is important to note that "permitting" DOD to remain on a non-interference basis is unlikely to be sufficient to achieve comparability. For example, it is unlikely that sharing on a non-interference basis will provide DOD systems with adequate protections from interference. To leave the possibility of sharing as a potentially feasible option, no requirement should be established now that could serve to limit the possibility of achieving comparability. It must be a case-by-case determination. We understand that NTIA intends this option to be available only if the incumbent Federal entities believe that such sharing would meet their needs. We respectfully request that NTIA clarify this in its Final Rule.

III. Relocation to Landline Communications System or Commercial Radio Services

In Par. 14 of the NPRM, NTIA asks if a Federal entity should be entitled to reimbursement if it relocates to a landline communications system or commercial radio services. DOD believes that the clear answer to this question is "yes." At footnote 21, NTIA gives an indication of the basis of its question by pointing out the statute limits reimbursement to Federal entities that relocate to "another frequency or frequencies".

First, reimbursement is required for relocations or modifications of frequency use (see para 4 of the NPRM). Moving to a landline communications system or a commercial radio service certainly would qualify as a "modification", however defined.

Second, moving to a commercial radio service certainly would be relocation to another frequency. Likewise, certain landline systems utilize microwave links. So under either test, modification or movement to another frequency, the Federal entity would be entitled to compensation for these types of solutions.

Third, the relevant legislative history with respect to 47 USC 923(g) supports the concept that reimbursement should be provided even when the Federal entity relocates to a landline communication system or commercial radio services. The Conference Report on the original provision uses broad language in describing the reimbursement provision. It states in relevant part that "[the provision] permits Federal agencies to receive reimbursement for their costs of relocating from government spectrum that is reallocated to mixed or non-government use. Conference Report H. on the Balanced Budget Act of 1997, Rpt. 105-217. Similarly, the Conference Committee Report on the amendments to the provision states, in relevant part, that "[t]he provision would ... require that any entity that purchases any portion of the radio frequency spectrum previously reserved for use by any federal agency, including DOD, ... shall reimburse the Federal agency for the cost incurred by the Federal government to make that portion of the frequency spectrum available." Conference Report on the Strom Thurmond National Defense Authorization Act for Fiscal Year 1999, H. Rpt 105-736 ("Department of Defense use of frequency spectrum (sec. 1064)").

Any answer other than "yes" would make meaningless NTIA's statement in Par. 9 of the NPRM that the "…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."

IV. Voluntary Withdrawal of Assignments

In Par. 41 of the NPRM, comments are sought on the potential that a Federal entity might voluntarily withdraw after reaching agreement with the successful bidder.

In DOD's view, withdrawing voluntarily from an allocation could lead to a forfeiture of rights under the "right to reclaim" portion of the Act. There it is stated

"the person who filed the petition under paragraph (2) for such relocation shall take action to relocate its spectrum use…" (Emphasis added.) If a petition is not filed, is there a "person" to take any action required? DOD would rather not face that potential argument in the future. DOD will not move unless a petition to relocate has been filed and granted, as the Act requires.

However, DOD anticipates, as does NTIA, that there will be cases where the parties are in agreement on all matters and there would be no reason to delay the Federal entity's moving. In those circumstances, it would seem a simple matter for the private party to file the petition to relocate and the Federal entity to indicate in a timely response to the petition that it has no objection to its speedy grant. Both expedition and protection of "right to reclaim" would be achieved.

DOD understands that NTIA has sought comment on the possibility of voluntary withdrawal of assignments as an option to be available only when both the successful bidder and the incumbent Federal entities are in agreement. DOD understands that one possibility would be for the incumbent Federal entities to protect their rights vis-a-vis the successful bidder through a contract entered into between the two sides. However, in DOD’s view, this option would not preserve DOD’s right to reclaim. Thus, although DOD has no objection to the inclusion of the option DOD does not expect to make much use of it if it is available.

V. Experimental Stations:

NTIA’s Proposed Rule would not permit reimbursement for relocated frequency assignments for experimental stations or experimental testing stations, as these terms are used in the Office of Management and Budget and NTIA "spectrum certification" regulations. The Act does not make a distinction with respect to the type of Federal Government station for which reimbursement is required. Early stages of development of systems are part of the built-in costs of developing operational systems. DoD believes that the NTIA Rule should provide for reimbursement for these costs and not make what would be, for program budget purposes, artificial distinctions.

VI. Cost Sharing

NTIA states in Pars. 29-31 that the burdens of reimbursing the Federal entity could under certain circumstances fall disproportionately on some auction winners. It proposes a cost-sharing plan, seeking comments on how such a plan might be administered. It proposes that there be a sunset of five years for any cost-sharing arrangements between successful bidders. It also asks for comments on how a negotiating framework can be established so as to minimize the personnel and other budgetary costs of the Federal government. It suggests that a Federal agency might establish a single point of contact.

DOD takes no position on any particular plan with respect to a cost-sharing plan for successful bidders. DOD will work with the private sector within the framework of an NTIA Rule to address this complex issue. DOD believes that the Federal incumbents and the successful bidders have a shared interest in making the simplest and cleanest possible arrangements for the Federal incumbents to be fully compensated in advance so relocation or modification can occur in a timely fashion.

DOD agrees with NTIA where it notes (in paragraph 29 and in footnote 26) that Federal systems may raise particularly complex questions with respect to how to fairly apportion reimbursement costs for certain Federal systems. Different types of Department of Defense systems illustrate this concern.

As one example, satellite ground stations in a small number of locations may control multiple satellite systems with broad geographic coverage. In such instances, it will be difficult for one successful bidder to cover the full cost of relocating the DOD entity.

As a second example, certain air combat training systems and flight test telemetry combine fixed point to point fixed sites and highly mobile vehicles that are geographically mobile over wide portions of the United States. Each base may have some fixed transmitters at the base, but the aircraft can and do move from base to base as part of testing. Again, apportioning relocation costs fairly would be complex.

Finally, many Department systems are fully geographically mobile. For example, the 1710 - 1755 Mhz band is used by Air Force precision guided weapons (PGM). The PGM weapons system includes a large pod mounted under an F-15E that contains telecommand and video reception equipment. The weapon is a 2000 lb bomb with a special camera attached to the front and a telemetry unit attached at the rear end. The camera transmits pictures that a "rear seater" in the plane uses to manually guide the weapon to the target. The pilot and rear seater must constantly practice with the weapon system to remain proficient. The planes are based at various locations across the US and fly practice missions over numerous routes.

In the foregoing instances, and others, DoD is prepared to work with NTIA and the private sector to ensure that advance compensation occurs in a timely and efficient manner. Nevertheless, DOD does not want to underestimate the complexity of potential cost-sharing plans.

In Par. 31, NTIA asks whether it should establish a negotiation framework that will permit relocation of each Government system on a system-wide basis. We believe it would be helpful to establish a framework whereby each affected Federal agency could request that all auction winners with frequency assignments affecting a federal agency participate in a single negotiation process. Under such an approach, DOD agrees that a single point of contact is a reasonable approach. Implementation of relocations, however, will not be an easy matter for DOD. A successful bidder may need to compensate DOD for multiple systems and these systems are likely to be geographically dispersed throughout the world. In addition, the technical solutions to achieve comparability are likely to be different for different systems.

The Act requires that all payments be made in advance for new construction and all other expenses to be incurred. Although DOD systems are complex, DOD will cooperate and attempt to work with any plan that satisfies that basic requirement and does not result in any additional costs to it.

VII. Sunset of Reimbursement Rights

DOD agrees there should be no sunset of reimbursement rights. (NPRM, par. 32). The Act does not contain a sunset provision, and to adopt one is to impermissibly usurp the legislative role of Congress. Moreover, the Act and these proposed rules are to apply to future reallocations.

VIII. Costs to Relocate

DOD agrees with NTIA's proposal on what is properly included in marginal costs. (NPRM, par. 33). However, DOD suggests that the elements set forth in par. 33 be incorporated into the definition of marginal costs found in proposed definitional rule section 301.20(l). Currently, the elements that define marginal cost are included in proposed rule section 301.110 (a), which is not definitional but operational. It makes sense that these elements also be included in the definition section of the rules.

IX. Notification of Marginal Costs

A. Time Frames.

NTIA discusses the time frames for notification in Par. 35 of the NPRM. DOD is concerned that a requirement for a Federal entity to notify NTIA of its marginal costs 240 days (8 months) before an auction by the Federal Communications Commission does not provide Federal entities with the ability to provide the most up-to-date and accurate cost data. We understand that NTIA intends to notify the FCC 180 days prior to an auction in order to comply with the FCC regulations concerning the requirement to prepare bid packages for potential bidders and that analysis of the raw cost data, to take into account such factors as geographic bidding areas may be complex and time consuming. Nevertheless, DOD believes that the rules must reflect the complexity of the processes each Executive branch agency and the FCC must undertake in order for the FCC to be able to successfully auction spectrum formerly reserved to the Federal government. Accordingly, DOD respectfully requests that NTIA work with FCC, to modify the companion FCC rules, if necessary, in order to provide federal agencies with a more reasonable timeframe in which to provide cost data.

B. Unclassified Systems.

The proposed rules set forth what is to be included in the NTIA’s pre-auction notification to the FCC. NTIA first deals with unclassified systems in its proposed rules. DOD notes the FCC and NTIA have both proposed receiving certain specified pre-auction information relating to Unclassified Government Facilities. (FCC 27MHz NPRM, par. 60; NTIA NPRM, par. 42). Each lists eight items, the first seven of which agree word for word. Several items need clarification.

Item 5 asks whether the facility can be retuned, modified or must be relocated. This is an operational decision that can only be made by the Federal entity. It is a necessary decision the Federal entity must make before it can estimate its marginal costs pursuant to item 6. It also of course implies replacement spectrum has been identified if that is the solution required to maintain system comparability.

Item 7 asks whether the facility overlaps to one or more license areas or spectrum blocks. This is information that cannot be provided by the Federal entity. While DOD would know that a nationwide system would overlap license areas, it cannot make that determination for systems that serve smaller areas.

Item 8 is the only item where the FCC and NTIA use different language. Item 8 for the FCC is "Total Costs of Relocation (Cap)." NTIA refers in par. 42 to its item 8 as "Total estimated costs of relocation for all assignments". The Act calls for the Government agency to provide NTIA a pre-auction estimate of "the marginal costs anticipated to be associated with such relocation or with modifications necessary to accommodate prospective licensees." (47 U.S.C. 923(g)(1)(A)). It also provides that a subsequent petition for relocation by the successful bidder must guarantee payment of "all relocation costs incurred by the Federal entity." (47 U.S.C. 923(g)(2))

DOD will initially provide its best estimate of "marginal costs", taking into consideration the solution it believes appropriate, e.g., retuning, modification or relocation, on a pre-auction basis. Because this will be an estimate, it may not be "[a]ll relocation costs incurred by the Federal entity" which must be guaranteed in the relocation petition. For example, the estimate may have to be modified post-auction following negotiations between the successful bidder and the Government, including the possible provision of statutorily allowed "in-kind" replacement facilities. Neither the Federal entity nor the successful bidder can know until after negotiations if, for example, "in-kind" reimbursement is possible. As to "in-kind", it may be beneficial for the successful bidder to consider that option because it may give the bidder more control over contracting, overall costs, construction schedules, and recurring costs. Basically, it is impossible for the affected Federal entity to provide costs properly included in a petition for relocation on a pre-auction basis to NTIA. Therefore, DoD intends to report a summation of the estimated costs provided in item 6 for all assignments as its response to item 8.

C. Classified Systems.

DOD has worked with NTIA through the IRAC process on the information properly releasable for classified systems. NTIA has set forth a process for classified systems in its rulemaking (NPRM, Pars. 43,44.) consistent with applicable laws and regulations. Those procedures reflect the requirements of Executive Order 12958 and related Federal laws, rules and regulations and must govern the release of or access to any classified information both by NTIA and the FCC.

X. Petition for Relocation

In par. 39 of the NPRM, NTIA discusses the statutorily required petition for relocation. NTIA states, "…under the proposed rule, NTIA’s determination on the petition would be set forth in writing…" The proposed rule is 301.140. NTIA there also suggests in several places that it makes a "determination" on the petition.

NTIA’s proposed rule does not comport with the language of the Act. 47 U.S.C. 923(g)(2) provides that there are four conditions precedent to a grant of a petition for relocation. The first requires that the petitioner has guaranteed to pay all relocation costs. The second requires that all activities for the implementing the relocation have been completed. The third requires that 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. The fourth condition, and only the fourth condition, requires that NTIA make a "determination", and then only after consultation with the Secretary of Defense and the Secretary of State, that the spectrum band to which the Federal entity will relocate is consistent with treaty obligations and with national security and public safety interests, and otherwise suitable.

NTIA should defer to the Federal entity on conditions one through three. The affected Federal entity is best able to assess whether those conditions have been met in all geographic locations and for all systems that may be involved in relocation. The Federal entity will state whether the first three conditions have been met in a reply to the petition. The statute does not require "determinations" on these three conditions. NTIA makes a determination on condition four, after consulting with the Department of State and the DOD. Thereafter, NTIA acts on the petition by granting or denying it. Proposed rule 301.140 should therefore be amended.

310.140 (a) should be amended in two respects. First, a copy of the petition must also be served on the affected Federal entity. Second, the sentence beginning "NTIA’s determination shall be set forth…" should be changed to "NTIA’s action on the petition shall be set forth…"

310.140(a)(4)(ii) should be changed to add "under (i)" after "in exercising its authority" so that it reads "in exercising its authority under (i), …"

310.140(a)(6) should be changed from "If NTIA does not issue a determination under this section…" to "If NTIA does not notify the petitioner of action taken under this section…"

310.140(a)(7) is not necessary. NTIA can always consult with OMB or other agencies.

310.140 (c), last sentence, should be changed from "The recommended decision may be a factor, among others, in the NTIA determination…" to "The recommended decision may be a factor that NTIA considers in reviewing the petition…"

XI. Negotiations and Mediation

Proposed rules 301.120 and 301.140 also must be modified to more closely parallel the statute.

Proposed rule 301.120 (a) states that "…the parties are encouraged to resolve any differences with respect to relocation or modification costs or any other related issues…." (Emphasis added.) 47 U.S.C. 923(g)(1)(E) states that NTIA and the FCC shall develop procedures that "…shall include a process for resolving any differences that arise between the Federal Government and commercial licensees regarding estimates of relocation or modification costs under this paragraph…". The mediation and negotiation process should not include issues other than costs. Accordingly, the last phrase "or any other related issues" should be stricken.

The last and penultimate sentences of proposed rule 301.130 should also be modified for the reasons set forth above. The sentences should read: "The arbitrator’s non-binding decision may be requested by NTIA. The decision may be a factor, among other things, in the action taken by NTIA on the petition for relocation."

Federal agencies use the radio spectrum efficiently and cost effectively to provide a wide variety of critical services to the American people. The cost reimbursement legislation gives the Executive branch and the Federal Communications Commission another important tool to better manage this scarce natural resource. The Department of Defense urges the NTIA to make all of the changes outlined above and to give full consideration to all of DOD’s comments.

Respectfully submitted,

Signed

I hereby certify that a copy of the foregoing "Comments of the Secretary of Defense" were sent via facsimile to be followed by a mailing a copy first class mail, postage prepaid, this __10th__ day of _April, 2001 to the following:
 
 

George Sakai
Director, Office of Spectrum Policy
And Management
ASR-1
Federal Aviation Administration
800 Independence Avenue S.W.
Washington, D.C. 20591

Douglas I. Brandon
David P. Wye
AT&T Wireless Services, Inc.
1150 Connecticut Avenue, N.W.
Washington, D.C. 20036

Howard J. Symons
Sara F. Leibman
Catherine Carroll
701 Pennsylvania Avenue, N.W.
Suite 900
Washington, D.C. 20004

Richard C. Barth
Steve Sharkey
Motorola, Inc.
1350 I Street, N.W.
Washington, D.C. 20005

JR Carbonell
Carol L. Tucker
Cingular Wireless, llc
5565 Glenridge Connector
Suite 1700
Atlanta, GA 30342

Robert L. Hoggarth
Harold Salters
Personal Communications Industry Assn.
500 Montgomery Street, Suite 700
Alexandria, VA 22314-1561

Robert B. Kelly
Scott A. Mackoul
Securicor Wireless Holdings
Squire, Sanders & Dempsey L.L.P.
1202 Pennsylvania Ave. N.W.
PO Box 407
Washington, D.C. 20044-0407

Dennis C. Brown
MOBEX Communications, Inc.
126/B North Bedford Street
Arlington, VA 22201

S. Pierre Paret
American Arbitration Association
600 Pennsylvania Ave. N.W., Suite 700
Washington, D.C. 20004-2676
 

Signed

____________________________

Paul R. Schwedler