Wednesday, July 01, 2009

Giving Forbearance the Red Tape Treatment

When the Federal Communication Commission’s report and order concerning new forbearance petition procedures was circulating in draft form it furnished the occasion for my recent FSF Perspectives paper, 'Delaying Deregulation: Forbearance at the FCC.' On June 29, the FCC adopted its new procedural rules governing forbearance petitions. While some of the new rules appear designed to facilitate more efficient petition processing, others appear to arm the FCC with new procedural devices to facilitate denying petitions. Under the new forbearance procedures, a deregulatory process just got more regulated.

The new procedural rules include certain proceedings management and petition completeness requirements. Among other things, petitioners are now required to clearly identify the petitioning parties who are seeking relief from regulation. Petitioners must also specify the regulations from which from which they seek relief. These requirements have the ring of reasonable administration. Petitions containing specific requests for relief are probably easier to process than ambiguous or confusing requests. But just how necessary are such completeness requirements? If a petition was unclear about what rules a petitioner is seeking relief from, what’s keeping the FCC from helping things out a bit by framing the petition’s ambiguities in the most common-sense and coherent way it can and then trying its best to make its ruling? A grant or denial of a forbearance petition under those circumstances would likely survive any subsequent court challenge by petitioners. Courts presume good faith on the part of federal agencies, and they analyze agency action in such cases under a deferential review standard.

Petitioners are now formally required to make a prima facie showing that each element of the forbearance criteria is satisfied. Petitions must also factor FCC precedent into their petitions. All things being equal, more thorough petitions that focus on the statutory criteria could bring more immediate agency focus and deliberation to filed petitions. But don’t petitioners already have incentive to make the strongest case possible to meet the forbearance criteria?

What’s more, the new procedural rules place the burden of proof on petitioners. Keep in mind the fact that petitions not acted on by the FCC within the statutory timeline or extension period are automatically 'deemed granted' by operation of law. This fact makes placement of formal burdens on petitioners during the statutory time limit counterintuitive. The disconnect is apparent when one considers the different tie-breaking effects of the FCC’s new procedural rule and the (Telecom Act of 1996) Section 10 'deemed granted' clause. In effect, under the new procedural burdens, a tie goes against the petitioners. The party carrying the burden of proof must persuasively present evidence showing the statutory elements are met. But under the 'deemed granted' clause, a tie essentially goes against the FCC. (In fact, a forbearance petition filed by Verizon that resulted in a deadlocked 2-2 vote at the FCC was 'deemed granted' by operation of law.)

One gets the sense that in adopting these new forbearance procedural rules the FCC is attempting to move itself out of the hot seat. Section 10 is a unique statutory provision precisely because it puts the onus on a government agency to make time-limited decisions about whether it must deregulate. By putting procedural burdens of production and proof on forbearance petitioners, the FCC to shifts some of the attention away from itself and onto the petitioners. Appeals to a quasi-legal procedural apparatus allow the FCC to strike a more judicious tone in its rulings, rather than continue in a discretionary policymaking posture. Reliance on formalities such as burdens of proof can also add a kind of heft to an agency’s decision whereas a substantive rationale alone can make for a closer call.

The FCC’s order and report suggests that more assertive use of one of the Telecom Act of 1996's key deregulatory policies is nowhere on the radar. Section 10 was enacted to give the FCC the discretionary authority to forbear from applying outdated and unnecessary regulations that it had previously been denied by court rulings. To the extent that the FCC interprets forbearance in light of its new procedural regimen for petitioners, the FCC’s own authority to forbear from enforcing onerous and outdated regulations sua sponte appears to have gone by the wayside.

The new procedural rules may be a disappointment but they do not spell doom. A couple bright spots to the FCC’s report and order are worth brief mention. For starters, the new rules include forbearance petition transparency. The FCC pledges in its report and order that it will post to its website a timeline of pending forbearance petitions containing relevant information for each. That is a welcome development. Since the FCC’s website is difficult to search for information, having available and relevant forbearance petition information accessible from a specific part of the site will make pending petitions much easier to track.

Importantly—and contrary to the fears of some commentators in the forbearance rulemaking proceeding—the FCC did not adopt new rules to authorize it to revisit previously deemed granted petitions. This was a wise move by the FCC. There is no basis in Section 10 or any other part of the Telecom Act of 1996 for the FCC to undo congressional policy by revisiting petitions that have been 'deemed granted' by operation of law. As the D.C. Circuit has recognized, when a petition is deemed granted it is a result of Congress’s decision, not the FCC’s.

In sum, the FCC’s report and order on forbearance procedures favors more regulated deregulation. Or should it be called deregulatory regulation? Whatever the case, the result can definitely be called forbearance red tape.