House Approp Pai

The House budget-writing committee that’s tasked with finding $50 million in the federal budget to pay for the radio repack fund is more worried about FMs gaining access to cash than it is with where to find the money. During an appearance before a House Appropriations subcommittee on Thursday, Federal Communications Commission chair Ajit Pai assured lawmakers the agency is working quickly to sort out the details for broadcasters.

“I have asked the staff that is working on the incentive auction, including folks in the Media Bureau, to take a look at the recent legislation and to figure out what steps need to be taken to implement that instruction,” Pai explained. “I don’t have a specific timeframe, but they are working as quickly as they can to make sure FM stations have the certainty that they need.”

The omnibus budget bill signed into law by President Trump last month included $50 million for the FM Broadcast Station Relocation Fund to help radio stations prepare for the hit they may take during the upcoming television repack process. It’s expected to mostly help stations build back-up facilities to remain on the air while engineers are working on a co-located TV antenna. Congress also boosted the amount available to help TV stations cover their costs by an additional $1 billion during the next two years. That brings the government’s total repack funding to $1.75 million. Rep. Tom Graves (R-GA) said the additional money recognizes that TV broadcasters “participated in good faith” to make sure that spectrum repack auction was successful, and the job for Congress is to “ensure that our broadcasters have all the resources necessary to make this move.”

Asked whether the additional funding would be enough, Pai signaled it should be. “Thus far we don’t have any reason to believe that it isn’t adequate,” he replied.

What Will Be Covered?

The FCC has yet to define what will qualify as “reasonably incurred” expenses for radio stations. But Pai said he doesn’t expect that will present a significant hurdle. “There are some things that people can agree are reasonably related to the repack and there are other costs that we can agree are not,” Pai said. But since this is the budget writing committee, Pai also cautioned the FCC won’t spend willy-nilly. “That line-drawing exercise is something we have to be very careful about because, after all, these are limited funds and we want to make sure we are only allocating funding to the extent that it is required under the law,” Pai said.

The FCC is also working to devise a plan for how $50 million in public education funding to explain the repack to Americans will be spent. Pai said the effort is still in its “early stages” and the agency is looking at a “range of options that are allowed under the law and given our resources.” He said they’ll likely use the 2009 public education campaign deployed during the digital television conversion as a template.

FCC Workforce Shrinkage May Be Over

The primary purpose of Pai’s appearance before the Subcommittee on Financial Services and General Government Appropriations was to discuss the FCC’s 2019 budget. And Pai’s message to lawmakers was that he’s been tightening the belt. That includes doing his part in the Trump administration’s effort to scale back the size of the federal workforce. By the end of the current fiscal year, Pai said it’s projected the FCC’s full-time equivalent (FTE) count will have decreased 10% during the past two years.

“In light of this, our FY 2019 budget request proposes to freeze our FTE count rather than reduce it again—because further reductions in staffing would compromise the Commission’s ability to accomplish its mission,” Pai said. “The need to stabilize our FTE count is especially important given the many additional responsibilities Congress assigned the FCC.”

The FCC has requested $333,118,000 in spending in fiscal 2019 which would be paid for in part from a regulatory fees paid by radio and other industries regulated by the agency. If approved, that would be a 3% increase over the $322 million Congress gave the agency for the 2018 fiscal year. But Pai noted that with adjustments for inflation, the FCC’s budget has declined 17% since 2009.

“These reductions have required the Commission to operate more efficiently,” Pai said. That included actions such as shutting down a mail processing warehouse with that work now being done by an outside vendor that does the job for several government agencies. It’s a move he said “saved a significant amount of money.”

But Pai said the FCC is also spending money to upgrade its IT systems and applications. He’s proposing Congress give the FCC $8.5 million for one-time IT investments. “We consider this effort an essential operations improvement,” Pai testified. “Many of these systems and applications are quite old, and it is becoming increasingly difficult to keep them operational.”

Sinclair Static

The most contentious moments during the hour-long hearing was when Rep. Mike Quigley (D-IL) grilled Pai on changes made to the FCC’s television ownership rules that critics have said appear tailor-made to allow Sinclair Broadcast Group buy Tribune Media. “The FCC has taken numerous actions that call into question your independence in the matter and at the very least demonstrate an appearance of preferential treatment for Sinclair, a broadcasting group with close ties to the White House,” Quigley said. “These actions reveal a distributing pattern that jeopardizes the independence of the FCC.”

Pai told lawmakers he has no plans to recuse himself from a vote on whether to approve the pending $3.9 billion merger. “I’ve been advised by the general counsel that a recusal isn’t required under the applicable rules and regulations,” he said. And when asked whether he spoke to Sinclair executives about altering TV ownership rules prior to the Tribune deal being announced, Pai shot back, “Absolutely not.” He added that Sinclair executives have long advocated that the FCC’s current media ownership rules are outdated and in need of updating. “That’s consistent with the views that I’ve long-held,” Pai said.