House probes $267M loan to bankrupt broadband firm

By Gautham Nagesh - 11/10/11 11:38 AM ET

The House Energy and Commerce Committee launched an investigation late Wednesday into a $267 million loan from the Agriculture Department to bankrupt broadband provider Open Range Communications.

Members of both parties joined a letter to Rural Utilities Service Administrator Jonathan Adelstein about the loan, which was approved in March 2008 to support broadband development in rural communities. Open Range apparently received the largest loan issued through the program, but still ended up filing for bankruptcy earlier this month.

“Open Range’s bankruptcy potentially puts $73.5 million of taxpayer money at risk,” wrote committee Chairman Fred Upton (R-Mich.), ranking member Henry Waxman (D-Calif.) and others.

“In light of Open Range’s bankruptcy, the Energy and Commerce Committee requests a bipartisan briefing to explain the RUS application review process for the Open Range loan and the oversight RUS conducted to ensure taxpayer funds were used as intended.”

The investigation is reminiscent of the Committee’s probe of bankrupt energy firm Solyndra, which also filed for bankruptcy this year after receiving a hefty loan from the government. Republicans have suggested the green energy loan indicated favoritism by the Obama administration. The Open Range loan occurred during former President George W. Bush’s administration.

The letter cites concerns from the Agriculture Department’s inspector general about the oversight of broadband loan programs, specifically that $340 million had been paid out despite “incomplete applications, loans that defaulted, and grant funds used for inappopriate purposes.”

The lawmakers, which include Energy and Commerce subcommittee on Oversight and Investigations Chairman Cliff Stearns (R-Fla.) and ranking member Diane DeGette (D-Colo.) as well as Communications and Technology subcommittee Chairman Greg Walden (R-Ore.) and ranking member Anna Eshoo (D-Calif.), ask for the firm’s complete loan application and any documents related to the decision to approve it.

If any improprieties are identified during the investigation it could raise concern about the awarding of broadband stimulus funds: The Rural Utilities Service was charged with distributing a large chunk of the billions set aside as part of the 2009 Recovery Act for the expansion of broadband service nationwide.