FUNDING FOR AUCTIONS THREATENED IN SENATE APPROPRIATIONS BILL

Several Capitol Hill staffers were working to understand what impact a line in the Senate Commerce Justice State appropriations bill could have on the FCC’s auction authority, officials said Wed. A spokesman for the Senate Appropriations Committee said the measure in the CJS bill, which was passed last Thurs. by the Committee, would prevent the FCC from using a portion of the auction revenue for auction administration. Sources said legal fees and other considerations have driven the cost of holding auctions to about $97 million per year. Several Hill staffers were unaware of the provision or if it would have an impact on the FCC’s auction authority or budget.

The Senate CJS appropriations bill (S-1585) appears to prevent the FCC from using a fund established in U.S.C. 309 (J)(8)(B) for the purpose of conducting auctions. The fund uses auction proceeds to pay administrative costs of running an auction. “The measure prohibits the FCC from spending money above and beyond” the agency’s regular $277 million budget, the Senate Appropriations Committee spokesman said. The Office of Management & Budget (OMB) estimated the cost of conducting auctions in 2004 would be about $99 million. It reported the cost of operating auctions in 2002 at $78 million and said the estimated 2003 cost to be $97 million. A source said that figure included legal costs associated with the NextWave case and other auction-related issues with which the FCC has dealt.

Several Hill sources said they were unsure if this provision would affect the auction or budget process of the FCC, and several said they were working to find out what impact it would have. One Senate source said it appeared to be a budget, not policy, issue. The source said appropriators, looking to cut spending, eliminated the spending as a cost-cutting measure. The House has already passed a CJS appropriations bill that didn’t include the same provision. But a Senate source said that House appropriators cut Commerce Dept. funding that wasn’t cut in the Senate CJS bill.

Another Senate source said there was Hill talk that the funding to run auctions would be returned when the bill went to conference. S-1585 hasn’t been scheduled for a Senate floor vote. The appropriations bill also would allow Northpoint access to the 22.2-22.7 GHz band of spectrum without going through auction, and included an amendment that would prevent the FCC from spending money to raise the 35% broadcast ownership caps. Both amendments are controversial.