Walden Renews Debate on FCC Processes But Still at Loggerheads With Democrats

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By Paul Barbagallo  

 

The House Energy and Commerce Communications and Technology Subcommittee resumed debate July 11 over reform of the Federal Communications Commission, more than a year after the House passed a Republican bill to fundamentally change the agency's processes and procedures over Democratic opposition.

Rep. Greg Walden (R-Ore.), the chairman of the subcommittee and lead sponsor of a new draft version of the bill, the FCC Process Reform Act of 2013, said he reopened the discussion--and is once again pushing legislation--to bring light to inefficiencies and potential abuses of power at the FCC.

“The communications industry is one of the few sectors still firing on all cylinders in this economy--averaging $80 billion a year in investment since 1996. It cannot continue to do so, however, if faced with poor FCC process,” Walden said at the start of a hearing July 11.

As drafted, Walden's new proposal is markedly similar to his FCC Process Reform Act (H.R. 3309) that passed the House last March on a 247-174 vote, and not surprisingly it has already drawn criticism from Democrats.


   

“Administrative law experts tell us [Walden's reform bill] would tie the FCC up in years of litigation.”  

 

 

 

Rep. Anna Eshoo (D-Calif.)

“[The bill] hasn't nor will it go anywhere,” said Rep. Anna Eshoo (D-Calif.), the subcommittee's ranking member. “Administrative law experts tell us it would tie the FCC up in years of litigation. Simply put, the bill contains bad policy.”

Most broadly, the draft bill would require the FCC to conduct cost-benefit analyses before adopting rules, set new deadlines for agency actions, and provide more time for the public to comment on commission decisions.

FCC Merger Powers Targeted

Among the more controversial provisions is a new mandate that all merger conditions be “narrowly tailored to remedy a harm that would likely arise as a direct result of the specific transfer or specific transaction.” Another is a prohibition on “voluntary commitments” offered by merging companies to gain FCC approval for mergers that fall outside the scope of the agency's authority.

Testifying before the subcommittee, Stuart Benjamin, a Duke University School of Law professor who served as the FCC's first distinguished scholar in residence under former FCC Chairman Julius Genachowski, said these two provisions in particular would leave the FCC with “little, if any, role” in reviewing mergers in the communications sector.

“The requirement of 'narrow tailoring' is not found in the U.S. code,” Benjamin explained. “No existing federal statute has language like this--indeed, only three federal statutes use the term 'narrowly tailored' or its variants, and one of those iterations is in the findings. 'Narrowly tailored' is the language of strict judicial scrutiny-the most rigorous scrutiny courts apply. … If courts apply narrow tailoring to require the least restrictive form of regulation, it may well be that no pre-merger conditions will satisfy the courts.”

To Benjamin, Congress would be better served by repealing the FCC's transactional review authority altogether, rather than opening up the agency to countless legal challenges.

Special Carve-out for FCC in APA

On a macro level, the draft bill would single out the FCC from all other federal agencies governed by the Administrative Procedure Act, which Benjamin argues would be “unique,” and send the commission off into “uncharted territory.”

“The goals underlying many provisions of the bill would seem to apply with equal force to all agencies, and there is no obvious reason why these provisions should be limited to the FCC,” Benjamin said in his testimony. “Applying them only to the FCC moves away from the Administrative Procedure Act's valuable unification of agency procedures and standards.”

Richard Pierce, a George Washington University Law School professor, agreed, noting that the Supreme Court has preserved the Administrative Procedure Act's “sensible uniform decision making procedure from attempts to eviscerate it by returning to the uncertain, confused, and ad hoc situation that existed prior to [its] enactment.”

“That is exactly what the proposed [bill] would accomplish,” Pierce said.

Supporters Cite Modest, Practical Fixes

But other witnesses were quick to lend their endorsements. Larry Downes, internet industry analyst, consultant, and author of the books “Unleashing the Killer App” and “The Laws of Disruption” said the draft bill would “provide many commonsense, modest, apolitical repairs, imposing needed structure on the commission's processes.”

One is a requirement for the FCC to balance both the costs and benefits of any proposed rules, orders, and merger conditions, as well as consider alternatives to regulation, which in Downes's view would replace the current “free-ranging and often-opaque decisionmaking processes.”

“Ensuring that the costs of regulation do not exceed their benefits, and requiring agencies to consider alternative rules that could address the same harms more efficiently, has been a goal of 'good government' reform for decades,” Downes said. “It is an entirely bipartisan goal. Indeed, it is a goal shared by the current administration. In a 2011 executive order, President Obama imposed precisely the same rigor on executive agencies.”

Randolph May, president of the free-market think tank Free State Foundation and a former FCC associate general counsel, echoed support for Walden's proposals, particularly one that would force the FCC to “identify and analyze the market failure and actual consumer harm” that rules aim to address before reaching their final decision.

“You would hope that the FCC would be doing these things anyway, but they are not,” May said.

Taking a more neutral tack with his testimony to the subcommittee, James Bradford Ramsay, general counsel of the National Association of Regulatory Utility Commissioners, said that while the draft bill is not perfect, it provides a “good framework for bipartisan action” going forward.

A long-time lawyer representing state regulators in matters before the FCC, Ramsay said he has witnessed “process abuses” under every FCC chairman since Alfred Sikes.

Ramsay said his association supports several key provisions in the draft, notably one that would require the FCC to issue the full text of a proposed rule before a vote, and another that would set a minimum of 30 days for industry stakeholders to comment on a proposal and 30 days to reply.

“Statutory deadlines make it easier--not more difficult--to plan comment cycles,” he said. “…Under the current rules, [state commissions], who often are among the best positioned to provide useful and relevant input, cannot get comments drafted and approved in time to make shorter deadlines. By establishing a minimum 30-day comment time frame, Congress would be tilting the FCC process in favor of better and more complete records. Shortchanging the development of the record can only lead to less informed decisions.”

A Communications Act Rewrite Seen Helping

Also testifying during the hearing was former FCC Commissioner Robert McDowell, who has consistently called for reforms of the FCC's processes and procedures.

Though reiterating his support for the draft bill's provisions, McDowell noted that some of the FCC's procedural problems stem from its antiquated governing statute--the Communications Act.

“Such a comprehensive rewrite has not occurred since 1996, and even that left in place legacy 'stovepipes' that regulate technologies rather than market conditions,” McDowell said.


For a discussion draft of the FCC Process Reform Act of 2013, which has not yet been numbered, visit http://docs.house.gov/meetings/IF/IF16/20130711/101107/BILLS-113pih-FCCProcessReformAct.pdf.

For witnesses' testimony, visit http://energycommerce.house.gov/hearing/improving-fcc-process.