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House Republicans Launch Investigation of FCC Waiver for Obama Donor

The lawmakers want to know how the donor's private equity fund qualified for a break in airwave bidding.


House Republicans launched an investigation Thursday into a controversial Federal Communications Commission waiver recently granted to a private equity fund owned by a donor to President Obama that could give the firm discounted access to licenses in an upcoming airwaves auction.

House Energy and Commerce Chairman Fred Upton, R-Mich., and two other subcommittee chairmen announced the inquiry Thursday, sending the FCC a request for documents showing how the agency came to the decision to grant the waiver.

“The Energy and Commerce Committee is committed to conducting vigorous oversight to ensure that commission processes are fair, open and transparent, and that they serve the public interest,” the lawmakers wrote. “The granting of the Grain Management waiver raises questions about these processes.”

Grain Management, owned by Obama donor David Grain, is a Florida-based private equity fund that invests in cellphone towers and airwaves licenses that it leases to AT&T and Verizon Wireless. The company counts former FCC Chairman Bill Kennard as a senior adviser.

Bloomberg recently wrote about the waiver, which was opposed by the FCC’s two Republican members when it was granted July 21 because it basically gutted a central provision of a program designed to encourage minority-owned or small businesses to build or operate wireless carriers.

The investigation could prove problematic for FCC Chairman Tom Wheeler, a former cable and wireless industry lobbyist and Obama campaign fundraiser, because it raises the question of whether his agency provided a lucrative favor to a longtime Democratic donor with ties to the agency.

Grain has been a frequent donor to Democratic lawmakers, including President Obama as well as Rep. James Clyburn of South Carolina, who is the father of FCC Commissioner Mignon Clyburn.

The waiver granted to Grain could allow it to qualify for a program that gives minority and female-owned small businesses bidding credits in airwaves auctions.

The program was designed to help small businesses provide wireless service to consumers and has limits on how much of a firm’s airwaves could be leased to large carriers. The agency was trying to prevent investors from using the program as an arbitrage opportunity.

Grain Management wouldn’t have qualified to bid for airwaves at a discount without the waiver because its revenue exceeded the program’s limits and it leases its licenses to AT&T and Verizon.

In approving the waiver, the FCC said the move would “would serve the public interest” and promote the FCC’s goal “of disseminating licenses among a wide variety of applicants.”

The FCC’s two Republican members disagreed and blasted the action. The commission’s decision “that a company can lease every last slice of its spectrum without even implicating the purpose underlying the (program’s rules) and therefore obtain (small business) benefits is as unlawful as it is absurd,” Republican FCC Commissioner Ajit Pai wrote.

In a statement Thursday, the FCC said it welcomes the congressional request for information. “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,” an FCC spokesman said. “We stand ready to act as a resource to Congress as we continue to address this important issue.”

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