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House Communications Subcommittee Favors Republican-backed Stimulus Funding Bill

The House Communications Subcommittee discussed on Friday then favorably reported out a Republican-backed bill that would clarify that the unused money from any terminated broadband stimulus grantee's program would necessarily be returned, and as expeditiously as possible.

Faced with a series of floor votes, Subcommittee Chairman Greg Walden (R-Ore.) succeeded in expediting discussion with promises that issues on some of the language raised by Democrats would be addressed in full committee. In fact, if broadband service to anchor institutions was as fast as Friday's hearing, much of that broadband stimulus money could already be returned.

Democrats are concerned that the bill is unnecessary, since the National Telecommunications & Information Administration and Rural Utilities Service reading of the Recovery Act stimulus funding language is that any de-obligated funds go back to the treasury.

Together they handed out about $7 billion in broadband grants and loans.

But at the hearing, NTIA Chief Lawrence Strickling did agree that, while the legislation was not necessary to insure that NTIA did that, he did acknowledge that the current law says "may" de-obligate funds and that changing it to "shall" would make it clearer (that funds go back to the treasury rather than staying in the program).

Walden pointed out that he was concerned that the "may" might give some future administration discretion not to return the funds. Or some grantees room to challenge that.

In addition to changing that "may" to a "shall," the bill would put a new timetable on NTIA and RUS action once they had been talking of potential material evidence of waste, fraud, and abuse of nonperformance. They would have 30 days to make a determination, then 3 days to tell Congress what that was.

Rep. Anna Eshoo (D-Calif.) ranking member of the Subcommittee, said that could be problematic, and RUS administration Jonathan Adelstein agreed, saying that the Office of the Inspector General, in cases of serious fraud, had advised RUS not to take action and they they would refer it to the Justice Department, so the legislation would set up a case of mixed signals, act quickly on the one hand, defer on the other.

Walden said that issue would be resolved.

Eshoo said the legislation was a waste of time, while Henry Waxman (D-Calif.), former chairman of the Energy & Commerce Committee, took a more conciliatory tone. He said it was important to have the hearing and praised the Republican leadership for working with the Democrats and their staffers on a bipartisan basis on the bill, which he said he hoped would be a harbinger of things to come.

Waxman agreed with Eshoo that the bill didn't seem to be necessary, but said he did not oppose it, nor did Strickling.

The bottom line on the Democratic side was that it was unnecessary and that the committee had more pressing issues. Rep. Mike Doyle (D-Pa.) said that if Seinfeld was a show about nothing, the bill was about "very little." He also likened it to the Peterman catalog (another Seinfeld reference). Lots of pages of "things we don't need." He said the bill was unnecessary, "not that there is anything wrong with that," completing the extended Seinfeld reference, to the apparent good humored relief of the chairman, who was pushing the hearing and markup toward the door as fast as he could.

Another Democrat concern was that some of the language might threaten to upend workable projects that were simply having some troubles.

One Democrat asked whether de-obligating funds for failure to perform might mean pulling the plug on projects too early, rather than offering technical assistance to folks who might just need help.

Strickling and Adelstein said their agencies were both committed to helping projects over bumps. Strickling suggested NTIA's view of nonperformance might the example of when an entire staff resigns and there seems to be no plan going forward.

Strickling pointed out that so far two grantee projects have been terminated, with all the money from one--$14 million--already returned to the treasury, and the expectation that almost all of the other $23 million would also be returned. The first was a project in Indiana where a project to build out broadband to schools had run into a school consolidation effort that changed the economics. He made the point that NTIA had focused on projects that could be sustainable beyond the original grant [something Republicans in particular had been concerned about with the stimulus money].

Adelstein said that of the 10 projects on his side that had been terminated, not a dime of money had been spent.

Waxman said they needed to be careful not to do anything that would complicate oversight of the projects or de-obligate funds without due cause.

Doyle asked Strickling to clear up concerns that the stimulus money was going to overbuild existing service. Strickling countered that his program was focused on middle mile projects that would benefit incumbents as well as new entrants, and that there had so far been some 90 interconnection agreements that included with established carriers--like AT&T--taking advantage of the new plant to improve service to their customers as well.

One of cable operators' key concerns is that the stimulus money would subsidize competition to existing service.

Strickling tagged the overbuild criticism a "misconception."