Thursday, July 24, 2008

The Dangerous World of "Deemed Granted"

As regular readers of this space know, I have written a lot about the FCC’s forbearance process this year because it has seemed to me that the agency has not availed itself sufficiently of what Congress clearly intended to be a deregulatory tool. Won’t repeat it here. For those coming to the subject late, I’ll just explain that “forbearance” refers to a provision, added to the Communications Act in 1996, giving the FCC the authority to decline to apply existing regulations when certain conditions relating to consumer protection and competitive developments are met. Apart from anything else, the fact that the FCC’s forbearance authority is well-nigh unique among regulatory statutes ought to indicate forbearance was not included in the Communications Act as window dressing.

There is my longer paper, “Why Forbearance History Matters,” explaining the history that led to adoption of the forbearance provision, and there are three blogs here, here, and here discussing various aspects of forbearance authority. The sum and substance of my view is that the forbearance provision, from the beginning, has suffered from a severe case of desuetude.

There was a House Commerce Committee hearing on forbearance this week. The particular focus was on section of the statute which says a petition filed with the FCC seeking forbearance “shall be deemed granted” if the Commission does not deny the petition within a fifteen month decisional window. Commerce Committee Chairman John Dingell is quoted in the July 23rd Communications Daily as declaring that the “deemed granted” provision “is dangerous and bad policy because it allows agency action to take effect without any formal vote or supporting records.”

Put aside that Chairman Dingell voted for the 1996 Act with the “deemed granted” forbearance provision. It may be that he now feels it is “dangerous,” and that the act ought to be changed. That is his prerogative. But taking the statute as written, consider this: The “deemed granted” language surely is another indication, and a pretty strong one, that Congress intended for the forbearance provision to embody a presumptive deregulatory tilt. After all, Congress just as easily could have said, if the Commission fails to act by the statutory deadline, forbearance petitions are “deemed denied.” It didn’t. The choice made is reflective of an intent to incorporate in the statute a deliberate deregulatory presumption. The point of the forbearance provision was to allow the FCC to adjust its regulatory regime to what Congress in 1996 understood to be fast-changing marketplace conditions.

To my mind, the congressional hearing more productively could have focused on whether the fifteen month statutory deadline for acting on forbearance petitions is too long, and whether, even if such a lengthy period makes sense in order to give the FCC the ability to take account of especially difficult cases, whether the Commission’s history of acting on the petitions reflects dilatoriness. With marketplace changes occurring so rapidly, a year or more is a long time for the Commission to have to decide whether regulatory relief is granted.

I could stand corrected, but it is my impression that the Commission, and I don’t just mean the one as presently constituted, rarely has decided a forbearance petition much short of the statutory deadline. The more usual course is for the FCC to act on petitions on the last day. It just shouldn’t be the case that the agency always needs the full amount of time to act on almost all forbearance petitions. I would have preferred to see the hearing focus on spurring a more timely decisional process when the Commission does act, rather than on whether the deregulatory default in the case of exceedingly rare failures to act should be changed.

A final thought, a footnote if you will: So, as I write this, the Commission is faced with yet another last-minute forbearance decision, this time on the pending Qwest petition. My understanding is the agency must act tomorrow, or Qwest’s pending petition for regulatory relief in four urban markets will be “deemed granted.” I wrote about the Qwest petition last week in “Forbearance Relief: More on Rearview Mirror Regulation.” One issue that apparently has contributed to another last minute decision is wrangling over whether the agency ought to consider, in its required competition analysis, evidence concerning the number of consumers who have “cut-the-cord.” All I will say is this. Having in mind that the world is a really dangerous place (as in really dangerous) in many venues beyond the doors of the Portals, it does strike me that the notion the agency may decide not to consider the extent of the cut-the-cord phenomenon in Phoenix or elsewhere is more “dangerous” (in context) than the operation of the “deemed granted” provision. Maybe Chairman Dingell would even agree with me on this point!