WASHINGTON-The chairman of the Senate subcommittee that controls the purse strings of the Federal Communications Commission believes strongly companies that purchase spectrum licenses either should pay the original bid price or lose the license.
“On this issue, Sen. [Judd] Gregg felt strongly since he oversees the FCC’s budget. [Spectrum] is a public resource,” said Ed Amorosi, press secretary for Gregg. Gregg is a Republican from New Hampshire and chairs the commerce, justice, state and judiciary subcommittee of the Senate Appropriations Committee.
The commerce subcommittee included language in the FCC’s funding bill that would allow the agency to take back licenses tied up in bankruptcy, including licenses held by NextWave Telecom Inc. and General Wireless Inc.
Both NextWave and GWI have had the value of their C-block personal communications services licenses lowered by bankruptcy judges who ruled that the delay in awarding the licenses from May 1996, when the C-block auction ended, to February 1997, constituted a fraudulent conveyance. The FCC is appealing both actions. An expedited appeal of the NextWave case is expected to be completed this summer.
The Senate Appropriations Committee accepted the language and the bill is now awaiting action by the full Senate.
The inclusion of the language upset bankruptcy lawyers, who claim the issue has not been examined by the Judiciary Committee. Sen. Orrin Hatch (R-Utah), chairman of the Judiciary Committee, is said to be upset his jurisdiction in bankruptcy law has been usurped. When this issue rocketed to the forefront at the end of the last Congress, Hatch sent a letter criticizing the language. He is said to have sent another letter this year, although attempts to confirm this have been unsuccessful.
Gregg sees it differently, Amorosi said. Because revenue for the FCC’s budget is derived from the auction of spectrum licenses, Gregg “felt that it falls within [the jurisdiction] of the Appropriations committee,” Amorosi said.
The Congressional Budget Office has said the bankruptcy legislation would give money-tight budgeteers an additional $500 million.
Opponents of the bankruptcy provision claim the FCC would receive more than that amount if it just allowed the companies to pay the government the sums determined by the bankruptcy judge.
This is incorrect, according to budget experts, who point out that according to the credit reform procedures put in place in the early 1990s, the government must count as a loss any time they do not receive the full amount they were expecting. In other words, if NextWave does not pay back the full amount the government says it is owed, then it is a loss regardless of what the bankruptcy judge ruled.
Similar language has not yet been included in the House version of the FCC’s funding bill.
What happens in the House could be important for the legislation since similar legislation was pulled last year by House Majority Leader Richard Armey (R-Texas).
