A better agency: reforming the Federal Communications Commission.

AuthorWalden, Greg P.

TABLE OF CONTENTS I. INTRODUCTION 386 II. COST-BENEFIT ANALYSIS 389 III. MERGER REVIEW 390 IV. DUE PROCESS AND THE TIMELY PUBLICATION OF PROPOSED RULES 391 V. DEADLINES FOR ACTION ON PUBLIC FILINGS 392 VI. TRANSPARENCY: PERFORMANCE METRICS AND OPERATING MANUALS 393 VII. INDEPENDENT INSPECTOR GENERAL 395 VIII. CONCLUSION 396 I. INTRODUCTION

When I was a broadcaster in 2003, I filed a petition with the Federal Communications Commission (FCC) to license a couple of translators for our stations in Oregon. (1) While the licensing of a translator is not a trivial matter, it is one that the FCC's Media Bureau should be very familiar with and be able to address in short order. After all, licensing of radio stations is one of the core functions for which the FCC's predecessor agency, the Federal Radio Commission, was created in 1927. (2) The FCC granted my petition in December 2013, (3) approximately ten years after I filed the petition and six years after I sold the stations in 2007. (4)

This story depicts an agency utterly unconcerned with the quotidian yet necessary tasks that serve its constituents. Indeed, the FCC has been criticized on a variety of fronts for its process failures. (5) As former University of Colorado Law School professor Philip Weiser wrote in 2009: "[T]he great weight of opinion is that the FCC has always operated in a suboptimal fashion and is in dire need of institutional reform." (6) Professor Weiser went on to quote former FCC Chairman Reed Hundt, saying "that the agency suffers from a perennial 'reputation for agency capture by special interests, mind-boggling delay, internal strife, lack of competence, and a dreadful record on judicial review.'" (7) Congress, led by both Democrats and Republicans, has produced numerous reports detailing the FCC's miscarriages and disappointments over the past ten years. (8) The FCC itself has called for its own reform over and over again. (9)

Different critics ascribe different reasons for the agency's failures, but I consistently return to two structural factors that leave the FCC prone to such defects as Chairman Hundt described. (10) The first factor is the public interest standard under which the FCC is required to review mergers and regulate spectrum licenses, (11) and the second is the plenary authority of the Chairman, who, as a member of an independent agency, may not be removed except for cause. (12)

First, allow me to qualify this statement by noting that this is by no means an indictment of the public interest standard. The entire purpose of the government should be to serve the interest of the public. "By the people, for the people" (13) are words that every American child learns and every citizen recognizes as a basic tenet of the American ethos. My concern, however, is that the noble aims of the public interest standard are too easily hijacked and converted to convenient pretexts for political, personal, or other agendas.

As other critics have pointed out, the public interest standard has little definition. (14) Nobel Prize-winning economist Ronald Coase flatly stated that "[t]he phrase ['public interest, convenience, or necessity']... lacks any definite meaning. (15) Furthermore, the many inconsistencies in FCC decisions have made it impossible for the phrase to acquire a definite meaning in the process of regulation." (1)6 Even the FCC's own leadership has pointed out that the public interest standard "is vague to the point of vacuousness, providing neither guidance nor constraint on the agency's action." (17) Simply put, those charged with upholding the public interest standard are too easily convinced that their own values are those that are in the public interest. (18)

Such an unfettered mandate requires that the FCC be commanded by disciplined, dispassionate masters, dedicated to serving the public within the bounds of their congressional authorization. Realistically, such people are few and far between. In the hands of an ends-oriented Chairman, the public interest standard is all too malleable and often serves to excuse shortcuts in due process and public participation. Accordingly, I have argued consistently that strong process is the only method by which the FCC can regain its legitimacy and integrity. (19)

Under my term as Chairman of the House Subcommittee on Communications and Technology (the Subcommittee), we have dedicated significant time and effort to reforming the FCC, including moving three different bills through the House of Representatives during the 112th, 113th, and 114th Congresses. (20) Our efforts have been aimed at preventing potential abuses of the public interest standard under the variety of powers available to the FCC Chairman. (21)

The following sections will briefly consider our specific targets and proposals for FCC process reform, including: (1) requiring a formalized costbenefit analysis before the adoption of regulations, (2) limiting the FCC's excessive latitude in merger review, (3) providing for greater public access to the text of proposed rules and other documents in advance of voting, (4) imposing concrete deadlines for FCC action on complaints, petitions, and other public filings, (5) establishing greater transparency through the adoption of performance metrics and the provision of operating manuals for various FCC programs and decision-making functions, and (6) installing a truly independent Inspector General at the FCC. Collectively, these proposals represent a significant step in ensuring that the public interest standard is not stretched beyond recognition.

  1. COST-BENEFIT ANALYSIS

    One process ripe for reform is the FCC's lack of a formalized costbenefit analysis before the adoption of regulations. (22) Conducting real economic, cost-benefit analyses would require the FCC to understand how costs are allocated across the communications sectors and where consumers ultimately pay those costs in the marketplace. (23) This type of research would, in turn, allow the FCC to better address the needs of the consumers it protects and reflect the reality of the industries it regulates, particularly small businesses that may be disproportionately affected.

    This is not a novel idea. Presidents Ronald Reagan, (24) Bill Clinton, (25) George W. Bush, (26) and Barack Obama, (27) required all of their executive agencies to inquire into the real harms and benefits of their proposed rules. President Obama's executive order required, among other things, that every executive agency "propose or adopt a regulation only upon a reasoned determination that its benefits justify its costs (recognizing that some benefits and costs are difficult to quantify)" and "tailor its regulations to impose the least burden on society, consistent with obtaining regulatory objectives, taking into account, among other things, and to the extent practicable, the costs of cumulative regulations." (28) President Obama has further suggested that the regulatory principles applied to executive agencies should apply to independent agencies as well. (29)

    While it is true that certain services regulated by the FCC do not lend themselves easily to a purely economic analysis--for example, the value of broadcast news as a public good--it is by no means impossible. (30) The FCC should not shield itself behind its public interest mandate to avoid the hard work of understanding the true impact of its policies. Moreover, while naivete should not cloud the reality that expert studies are not completely bias-free, expert studies do require discipline and integrity to produce a rigorous examination of the market. The exercise of conducting such an analysis would force the FCC to "show its work" by documenting and sufficiently justifying to its constituents how it arrived at a given policy conclusion. (31) Such a requirement would help...

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