Telecom Regulation Experts Question FCC’s Conformity to Law, Constitution at WLF Briefing

FCCGuest Commentary

By Grace Galvin, Washington Legal Foundation*

Technology is constantly changing, and the Federal Communications Commission (FCC), like everyone else, feels the need to keep up with the times. The agency’s recent efforts to maintain its role as the core regulator of the communications sector, however, has gotten it into a bit of trouble.

Washington Legal Foundation brought a panel of experts together on October 20, 2016, including FCC Commissioner Ajit Pai, former FCC Commissioner Harold Furchtgott-Roth, and administrative law attorney Brett Shumate of the Wiley Rein LLP, to discuss FCC’s increasing tendency to overreach the limits placed on it by the federal Telecommunication Act and the US Constitution.

Commissioner Pai looked back on recent years and said FCC has gotten into trouble with the courts “by forging ahead with what it considered to be good policy, regardless of legal consequences.” Federal circuit courts outside of D.C. have been quick to admonish the FCC for overstepping its statutory and constitutional boundaries.

For example, the Sixth Circuit recently struck down FCC’s attempt to preempt state law in Tennessee and North Carolina. These states limited municipal broadband Internet services. If a municipality provided broadband services, then those services could not extend beyond city limits.

FCC tried to step in and override state law under the supposed authority of Section 706 of the Telecommunications Act, which gives the agency broad power/abilities to create regulations that would expand broadband access. Commissioner Pai argued against FCC’s action and looked to the basic foundation of federalism for support.

Pai said he would leave the policy decisions up to the elected state officials. But the legal question here, Pai said, is whether a federal agency has the authority to essentially rewrite state law to fit its own preferences.

“What is the purpose of a federal agency?” asked Pai. “Is it to reach out for good policies and pursue them no matter what the legal constraints? Or, is it to figure out what can we do within our authority to promote the public interest?”

Pai has been an FCC Commissioner since 2012 (and in the FCC General Counsel’s office prior to that), and he tends to the latter view, saying that he is “more than willing to do whatever it takes to promote competition, sound regulation, and policies that respect the principles of economics” within the constraints of the power Congress granted to FCC.

While Pai pointed to recent specific examples of FCC overreach, former Commissioner Furchtgott-Roth said he believes this tendency began as far back as the 1930s, when the agency was first formed.

One of the outcomes of combining all of the powers of government into one entity, which has been written about by great political philosophers over the centuries, is that you wind up with lots of problems. And one of those problems is, I think very visible, the effort to try to reach beyond the organic statute.

The FCC has been spending a great deal of time in the federal courts consequent to these efforts. But Furchtgott-Roth also pointed out that over time, the Commission has been forced to address complicated wider variety of issues:

The amount or frequency of litigation with the commission in federal courts is substantially greater today than it was before 1980, simply because there are a lot more industries that are being regulated today and the issues that the commission addresses are changing very rapidly as technology changes.

This pattern of overreach is not limited to FCC, Mr. Shumate said, as several other federal agencies are also looking to expand their jurisdiction. However, Shumate also suggested FCC has taken this to new levels, aggressively testing its congressional limits.

One of those aggressive moves is reshaping and extending a provision of the Telecommunications Act that Congress designed for ensuring telephone privacy into what Shumate called a “comprehensive Internet, privacy, and cyber security regime.” Shumate said the expansion of this statute would be redundant because another agency, the Federal Trade Commission, already regulates these very issues.  On October 27, by a 3-2 margin, FCC voted to release privacy rules for Internet service providers.  Commissioners Pai and O’Rielly voted against their release.

Shumate presented a theory to explain why he believes FCC stands as the most aggressive federal agency. Simply put, he said FCC is fighting for relevance in today’s society.

You don’t have to buy a newspaper anymore. You don’t have to buy cable television. You don’t have to go to the movies anymore. The Internet makes all of these things possible, and there is no question that these developments are a good thing for society. But for the FCC these changes are an existential threat.

If the Internet continues to replace the traditional modes of communication that the Commission has historically regulated, then there may be little need for FCC in the regulatory space created by Congress. Shumate said this is why the agency is aggressively seeking to expand its role when it comes to the Internet. “That’s where the action is going to be in the future,” said Shumate. “And the FCC wants to be that cop on the beat so it can stay relevant in the 21st century.”

Shumate went on to explain how the FCC is using improper administrative procedures to carry out its goal. For example, ahead of publishing a notice of proposed rulemaking (NPRM), federal agencies often release a notice of inquiry, a document which asks broad questions but does not formally propose anything. Often, FCC’s NPRMs resemble notices of inquiry. While interested parties have an opportunity to comment, Shumate said, “they can’t possibly offer informed comments because the agency hasn’t actually proposed where it intends to go.”

After receiving comments on a vague NPRM, the Chairman has taken to releasing “fact sheets” briefly explaining the rule he has proposed to the other Commissioners. FCC may provide some time for public comment on the fact sheet, but, again, the comments cannot possibly be well informed because of the brevity of the document. After the fact sheet, the Commission moves directly to a vote on whether to make the Chairman’s proposed rule a final rule.

Some may think that the fact sheets “are an example of open government,” said Shumate. “Don’t be fooled by [them],” Shumate added. “They are not your friend. They are a trap.” FCC will use regulated entities’ knowledge of the fact sheets, and any comments provided on them, against them in court in response to claims that the Commission failed to provide notice of the final rules.

“I think the entire rule-making is a waste of time if the commission hides the ball at the outset of the proceeding by not issuing a proper NPRM, and then uses a fact sheet as a substitute for the NPRM at the end of the proceeding,” Shumate said.

Commissioner Pai agreed with Shumate. “I think to the average American, it would seem rather strange to say that an agency will only let you see what it’s going to do after it has voted on doing it,” Pai said.

Questions from the audience called on the panel to discuss today’s tense political climate and how it has affected FCC’s ability to function properly. “Now, unfortunately, on a lot of the high-profile issues, the political affiliation seems to dictate where you’re going to come down,” said Pai. “And that’s not the way it should be.”

Furchtgott-Roth joined Pai in criticizing the Commission’s partisan tendencies, especially with regard to the network neutrality order, which he described as an “extraordinary grasp of power by the Commission, outside the bounds of Congress, and outside of any statute that the president had ever signed.”

When it comes to creating the law, Furchtgott-Roth said members of both parties should want to see a more orderly way of getting things done. “They really missed out,” said Furchtgott-Roth. “They missed out in the sense that the legislative process is very involved.” He said the Commission has created walls, affronting Congress in the process. “I’m shocked that there isn’t widespread protest on both sides of the aisle on Capitol Hill,” Furchtgott-Roth said.

But Commissioner Pai also said he is hopeful about the future of the FCC in 2017 and beyond. He said there are a number of goals a bipartisan majority of the commission and Congress could achieve “if, and only if, we’re willing to let some of these more tinged debates fade into the background.”

*Ms. Galvin is a Communications Associate at WLF.  She received her JD from Charleston School of Law and is pursuing a Master’s in Journalism and Public Affairs at American University.

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