House Republicans Want Answers About FCC’s Grain Waiver

Granting the Grain waiver “raises questions about these [FCC] processes” in regard to fairness, openness and transparency, said the letter from three Republicans to FCC Chairman Tom Wheeler (http://1.usa.gov/1tygAHE). They pointed to Grain’s spectrum leases with AT&T and Verizon, which they say would have disqualified Grain under the rule that was waived. Commerce Committee Chairman Fred Upton, R-Mich., Communications Subcommittee Chairman Greg Walden, R-Ore., and Oversight and Investigations Subcommittee Chairman Tim Murphy, R-Pa., signed the letter.

"This is a baseless and partisan investigation,” House Commerce Committee ranking member Henry Waxman, D-Calif., told us in a statement. “The FCC did exactly what it should do, which is to promote competition and encourage participation in the auction. And it followed long-standing Commission precedents in the process it used. The Committee should be helping the FCC achieve successful and timely auctions of the AWS-3 and TV broadcast spectrum, not distracting the agency with burdensome and pointless document requests.”

The investigation “into the Grain waiver is nothing more than an attempt to score political points,” House Commerce member G.K. Butterfield, D-N.C., said in a statement. “The FCC waiver process was conducted in a fair and open manner. This baseless attack on the very integrity of the FCC is offensive and wrong.”

The FCC had waived its attributable material relationship rule in an order released in July, allowing Grain and similarly situated entities to participate in spectrum auctions in the category of a small business. Some critics focused on the Democratic political donations that David Grain, the firm’s founder and managing partner, has made in recent election cycles, though House Republicans didn’t mention the donations in their Thursday letter to the FCC. Upton and Walden lashed out at the political connections in a joint statement earlier in July. They slammed FCC action “at the behest of those with real or perceived political connections” and said the Grain waiver would seem to back the need for further process overhaul at the agency. Their news release explicitly mentioned Grain’s donations to President Barack Obama.

The Thursday letter asks the FCC to give House Republicans copies of any Grain waiver drafts, all communications between Grain and the FCC between Nov. 4 and now, and copies of communications within the FCC about the designated entity rules. The lawmakers want copies of all communications between Grain Management and the FCC on the topic of auction rules since April 25, 2006. They also want the agency to give them other examples of such waivers since 2006 and to explain their reasoning for each. Upton, Walden and Murphy want all the material by Aug. 15 as well as, by then, a briefing to committee staff on how the agency decided to grant the waiver.

Rep. Bobby Rush, D-Ill., began circulating a Dear Colleague letter Thursday slamming the investigation. The Republicans’ letter to Wheeler “is devoid of any allegations, circumstances, or coincidences that would suggest the Commission’s processes surrounding its ruling on this matter were questionable, unfair, not open or lacked transparency,” Rush said. “I suspect that the Commission’s waiver decision on this matter is being called ‘questionable’ due to other concerns that have no real bearing on the merits of the instant petition and waiver proceeding or serve as pretexts to advance separate and unrelated arguments and agendas in other Commission proceedings.” He also strongly defended the Grain waiver: “Absent the grant of this waiver, it is highly improbable that any small, minority owned business with the Petitioner’s experience and capital resources, could adequately prepare itself in time to prequalify as a bidder in the AWS-III auctions."

Rush said minority ownership of FCC licenses and licensed facilities in wireless and broadcast services has dropped at a “precipitous rate” in recent years, an issue for which the FCC should be held accountable. “Perhaps, rather than conducting oversight on discrete matters decided by the Commission, which will advance the goals of Congress to diversify ownership of all auctioned licenses, the Energy and Commerce Committee should hold hearings reviewing why the Commission’s auction-related rules and decisions have contravened Congress’s own stated goals of promoting economic opportunity and competition by disseminating licenses among a wide variety of applicants, including small businesses, rural telephone companies, and minority and women owned businesses,” Rush said.

"I was disappointed to read the House E&C Committee’s letter to Chairman Wheeler,” MMTC President David Honig said. He emphasized how the FCC opened a public proceeding to consider the waiver immediately after it was filed, with no opposition filed. He observed that minority- and women-owned firms have been “particularly absent” from past spectrum auctions and it’s “unsustainable, uneconomic and morally wrong” for people of color to own none of the commercial wireless spectrum they use so much.

"We welcome the Committee’s request for information about the Commission’s recent action to promote the ability of entrepreneurs and small businesses to compete in our upcoming auctions,” an FCC spokesman said. “The Commission’s action, which followed a period of public notice and comment, is consistent with Congress’s directive to design auctions that encourage participation among a wide variety of companies, including small businesses. We stand ready to act as a resource to Congress as we continue to address this important issue."

Wheeler mentioned Grain in a July 8 letter, released by the agency this week, to Congressional Black Caucus Chairwoman Marcia Fudge, D-Ohio; Butterfield, vice chairman of the caucus; and Rush, a caucus member. Grain had requested the clarification or waiver, and the Wireless Bureau “sought comment on the request and will consider it expeditiously,” Wheeler told those House lawmakers (http://bit.ly/1ptR1DJ). “The Commission will also review the ‘attributable material relationship’ rule, among others, in the designated entity proceeding described above.” Wheeler planned to present a designated entity rulemaking to fellow commissioners “in the near future,” he said in that letter.

"Grain Management, which builds, owns and operates wireless infrastructure across the U.S., acquired its spectrum in the private secondary market without any government benefits,” Honig said. “It would be unreasonable to declare a firm ineligible to apply for DE benefits simply because it entered into a private marketplace transaction involving assets it acquired without government benefits.” He said the agency “did what it was supposed to do” and that Wheeler “should be commended.”