Why NTIA Should Tell NARUC “Thanks, But We Can Manage the Stimulus Spending Just Fine.”

OK, I get that when you are a trade association you push for your members. But this is silly.

The National Association of Regulatory Utility Commissioners (NARUC) has sent a letter to the National Telecommunications Information Administration (NTIA) and the USDA Rural Utility Service (RUS) explaining how the only, possible conceivable way for them to spend the $7.2 Billion they must spend under the Broadband Stimulus package is to send all the applications to NARUC’s members to evaluate. This way, the poor little overworked NTIA and RUS won’t have to worry their pretty little heads about anything. You can read NARUC’s press release here.

The appeal to administrative convenience is a convention one. And, like most conventional wisdom on the stimulus package — utterly wrong. For a start, Congress actually realized this would take resources. So NTIA can use up to 3% of the money for Administrative costs associated with running the program. The idea that poor little NTIA, forced to focus on the DTV transition and coupon program (which happens in June) can’t possibly manage to process all these applications is rather ridiculous in light of the fact that NTIA can spend Over $150 million on administrative costs. I think you can hire a bunch of real sharp, real experienced grant evaluators for that. Bluntly, such folks will do a heck of a lot better job of evaluating grant proposals than NARUC, as I explain below . . . .

The idea that NARUC’s members would somehow be better at this than NTIA is a rather convenient assumption of NARUC’s without much proof to offer to anyone not already sold on the notion — like NARUC. State public utility commissions (PUC’s) are not generally in the business of handing out grants, monitoring progress, and enforcing provisions. Some states have broadband programs administered through their PUC’s — CPUC Commissioner (formerly FCC Commissioner) Rachel Chong testified about California’s program at last week’s House Commerce Committee broadband stimulus oversight hearing — but a lot of states don’t have such programs or any other relevant experience. More to the point, while federalism is often a big plus, it does not work for programs that require national standards — like our national broadband program. This is why Congress was fairly explicit in making it permissible for NTIA to consult the states (the statute says “may” not “shall”), but also makes it absolutely clear that NTIA must maintain ultimate authority.

Which is the final reason why the “delegate to the states” convention wisdom that NARUC (and others) are pushing is not merely wrong, but utterly ass-backward. Delegating to the states is delegating authority but maintaining responsibility. Fifty states means fifty different sets of decisionmakers, operating on their own time tables in their own frameworks. And once you’ve delegated that decisinmaking power, getting it back if ANY state screw up is damned difficult — if not impossible. When Fox News starts editorializing about the millions of broadband stimulus dollars that went unspent because of state that do not have any organization or mechanism in place to figure out how to evaluate grant proposal and distribute stimulus money, or ended up lining the pockets of politically connected local incumbents, who is going to have sit in front of Congressional hearings and explain what happened? Hint, it won’t be the state PUC commissioners. “We gave it to the states” is not going to be a good excuse for OMB, GAO, Joe Biden’s oversight committee, and most importantly, the hordes of hostile pundits and members of Congress who actively want this to fail because they would really like to show that massive government spending doesn’t work.

Nor is it clear how state PUC’s would make decisions in the open and transparent way mandated by ARRA and the OMB Guidance. As OMB is rather clear that it treats the lack of transparency as a “risk” that agencies must account for and explain, the fact that delegation to the states would move decisionmaking out of the sunlight and behind closed doors is not a feature. NARUC, confident in the purity and angelic nature of its members, has not proposed any answer to the question of how its members would remain transparent and accountable for its evaluations or other “advice” or “services” provided. But as Mark Seifert would have answer a stack of questions about this from a dozen different irate and not particularly sympathetic sources, it would be nice if someone answered those questions before taking NARUC up on its offer.

Finally, it should be pointed out that state entities are going to have their own internal biases — even if we exclude the charge that too many state regulators are in the pockets of local incumbents. (At one of the NTIA hearings, NARUC’s Brad Ramsey said that delegating out to the states would get it away from out of touch Washington insiders surrounded by incumbent lobbyists, to which Mark Cooper responded “by moving it to out of touch state bureaucrats surrounded by state industry lobbyists?”) For example, states are rather unlikely to favor applications of Native American tribes over the applications of in-state businesses and entities. They are more likely to pick projects that focus exclusively on a their particular state than on projects that share benefits among several states. And do all states in a cross-state boarder project need to rank an application as #1 for it to get funding? How on Earth will 50 states manage to coordinate such activity — especially using national standards as developed by NTIA?

If NTIA and RUS want to get the benefit of state input, it can allow each state (either via the state’s Governor or state PUC) to delegate a representative to the NTIA and RUS evaluation teams. That will provide whatever value that states can give through their state-specific expertise while maintaining common standards and centralized control. Oh, and it will help poor, overwhelmed little NTIA and RUS by giving them each fifty free detailees, paid for by the states.

Stay tuned . . . .