Rethinking reform of the FCC: a reply to Randolph May.

• Author: Taylor, Russ
• Position: Administrative Law Review, vol. 56, p. 1307, 2004

1. INTRODUCTION II. RANDOLPH MAY'S CALL FOR AGENCY REFORM III. EXPLORING THE NEED FOR AGENCY REFORM XV. EXPANDING THE CONTEXTUAL SETTING OF THE REFORM DEBATE A. Previous FCC Decisions B. International Organizations C. Congress D. Federalism V. OFCOM ON THE POTOMAC VI. CONCLUSION I. INTRODUCTION

   Even the most strident opponents of regulation cannot fathom a world in which society does not--at some level--regulate the provision or consumption of information or communications. Even if markets function perfectly, we would still envision certain legal controls. A useful example of one such legal control is the First Amendment to the U.S. Constitution, which establishes firm boundaries on the government's ability to control information. Other forms of regulation may include the creation of a legal liability scheme if information is abused in some manner, such as libellous statements, copyright infringement, or identity theft. The absence of some form of regulation is unthinkable.

   But as a society, we have gone much further in our attempt to regulate information than merely enacting prohibitions on certain government or private actions. Our federal, state, and local policymakers have created extensive regulatory structures that govern everything from the provision of cable and telecommunications services using public rights of way, satellite and wireless services that involve a high degree of international coordination or standardization, and various media services, with both positive and negative content regulation. Providers of media and communications services are licensed, subsidized, monitored, and sanctioned to specify just a few of the most commonly employed regulatory techniques. The problems and opportunities for which we see a regulatory role seem endless.

   At the center of all this stands the Federal Communications Commission ("FCC"), a so-called independent federal regulatory agency that is composed of five commissioners, appointed by the President and confirmed by the Senate, not more than three of which are from the same political party. (1) The FCC is independent in the sense that, while it is subject to laws passed by Congress and court decisions, most of its actions cannot be directly overruled by the President through the administrative process. The FCC has an extensive array of responsibilities and obligations, a large budget and staff, and a prominent place in the heart of policymaking on media, technology, and communications. Further, because the FCC regulates several multibillion dollar industries that touch almost every aspect of our economic and social lives, its structure, remit, and activities are often subjected to severe scrutiny.

   But some argue that having the FCC stand at the center of all this policymaking is the wrong approach. They make a compelling case in many respects. Why should five unelected officials establish forward-looking policies that govern media and communications in our republic? Would it not be better to remove the bureaucratic mystery surrounding policymaking and have these sometimes contentious issues resolved by the President or persons answering directly to the President? The President is accountable directly to the American public and is often regarded as a swift decision maker. If there is controversy, what better focal point than the President? It is in this intellectual climate that the Administrative Law Review recently published Randolph May's essay on opportunities for reform of the FCC. (2)

   While this Article functions as a reply to May's essay, I salute May's many contributions to an important debate, namely, how best to structure society's control over the creation, distribution, and consumption of information. May's contributions are commendable as an initial matter for their very existence and nature. We should not regard our policymaking and regulatory structures as strictly bound by the idealist but perhaps unworkable principles of the past. If conditions change or our learning changes to such an extent that we believe a new regulatory structure is called for, then we should not hesitate to call for change. May does this.

   My aim in this Article is to expand on May's recent call for consideration of FCC reforms, criticize his methodology to some extent, (3) and briefly present a framework within which reform of the FCC or any regulatory agency or organization can be evaluated. But my most important aim in this Article is to convey the following: Any discussion about reform of an agency with the size, importance, and history of the FCC should be based, in part, on empirical data about how regulators work, not anecdotal information that simply confirms our existing assumptions. (4) Just as carefully as we scrutinize the regulator, we should also carefully scrutinize our own assumptions about regulatory structures and the regulatory process, and the empirical or logical methods by which we test those assumptions.

2. RANDOLPH MAY'S CALL FOR AGENCY REFORM

   May offers two principal suggestions for reform of the FCC. He suggests (1) reducing the number of FCC commissioners from five to three or even one and (2) moving the FCC into the executive branch of government and removing its independent status. (5) As justifications for his reform proposals, May argues that "with a five-member agency, it is more likely that, as a result of compromises made in reaching a majority decision, the resulting order will lack clarity or even be internally contradictory." (6) He also argues, "Along with increased political accountability, presidential supervision should lead to decisions that are timelier, more internally coherent, and generally more consistent with other executive branch initiatives." (7)

   When I first read May's essay, I reacted quite strongly to these claims. This is not because I am an uncritical institutional supporter of the FCC or someone who otherwise fears change. My reaction is based primarily on what I perceive to be unexplored assumptions about regulation or governance of complex systems generally. My concern is not that we are too critical of issues surrounding agency reform. Instead, my concern is that we are not thinking critically enough about regulatory structures and processes. I will share my concerns and address them in this Article.

3. EXPLORING THE NEED FOR AGENCY REFORM

   As an initial matter we should explore whether, as May claims, conditions are ripe for reform of the FCC. (8) May's argument that it is time to consider reform of the FCC stems from two assertions: (1) during the tumultuous year of 2003, the FCC poorly handled two important policy issues before it, and (2) convergence and rapid change significantly altered the marketplace environment. (9) I shall address each rationale in turn.

   First, with respect to the year 2003, I agree with May that the FCC's consideration of the two policy issues he discusses (10) was marked by squabbling, delay, and generally poor policymaking. Otherwise, I will not generally explore or critique May's description of those two FCC proceedings. However, subject to my earlier disclaimer, a broader, methodological critique surfaces: Are those two proceedings representative of the business before the agency during this time? Are they representative of a systematic agency pathology that requires a cure? (11) Here, I part company with May because the evidence appears anecdotal and highly subjective. (12)

   Again, consistent with my initial disclaimer, we must realize that May is simply exploring opportunities for reform, albeit in a suggestive manner. But the criticism remains: Precisely why do the two selected proceedings, in May's words, "provide the opportunity and impetus" for considering reform of the FCC? (13) Why are they, again in May's words, "important for what [they say] about the functioning of the agency"? (14) In making these claims, we should first address the significant potential logical frailty in using two proceedings, from one year, out of the seventy years of the agency's existence and thousands of proceedings during that time. The two proceedings at issue may indeed say something larger about the structure of the FCC. (15) Alternatively, they may simply describe those two proceedings as statistical outliers, atypical of the agency's performance during 2003 (16) and thus offer very little insight to those concerned with agency reform.

   In any event, if we are to focus on one particular year, why not start with the FCC's critical assessment of its own performance during that year? Admittedly, an agency's self-appraisals will suffer from several problems such as insularity and bias. However, while painting a rather dismal portrait of an incompetent or unresponsive agency, May makes no mention of the FCC's annual self-appraisal reports ("Reports"), issued every year by the FCC and available to the public on its Web site. (17) The Reports track FCC performance in certain key areas such as spectrum, competition, homeland security, and modernization of internal practices. The Reports are exhaustive and specify data that illuminate the issues May addresses in his essay. For example, May criticizes the FCC for extraordinary delays in one particular rulemaking proceeding (a six-month delay), (18) but the FCC claims that, in Fiscal Year ("FY") 2003, the average time period between adoption of a decision and that decision's release to the public was a mere ten days. (19) The delay increased to fifteen days in FY 2004. (20) So, we are left with two accounts of the FCC's timeliness: May's qualitative account of the time delays associated with one or two particularly large and important proceedings, and the FCC's more quantitative account of its average speed of disposal of matters before it. Both accounts inform the debate. But calls for reform cannot be taken seriously unless they deal with both the illustrative and qualitative type of account and the exhaustive and quantitative type of...