Tuesday, July 03, 2018

Commissioner O’Rielly’s Speech on FCC Process Reform at FSF’s Seminar

In a speech before the Free State Foundation’s June 28, 2018 Policy Seminar, FCC Commissioner Michael O’Rielly spoke about the FCC’s recent process reforms and next steps. He noted that process reform has been a mission of his since soon after he joined the Commission in 2013 and that he spoke about FCC process reform three years ago at another Free State Foundation conference.
The most groundbreaking reform recently adopted by the FCC, according to Commissioner O’Rielly, has been the online posting of items three weeks before their consideration at monthly Commission meetings:
When I first proposed the idea, I knew that providing information to all, instead of to the few with pricey D.C. representation, would enhance the transparency and legitimacy of the agency. But, the response from many was that it would bring the FCC’s work to a halt, Commissioners would be hesitant to negotiate, and some sort of regulatory chaos would ensue. None of this has come to pass. Instead, the Commission’s process has become far more efficient. Meetings are targeted to specific issues, unnecessary discussions of non-existent issues have been eliminated, conversations are more productive, Commissioners are still speaking their minds, and work product has greatly improved.

Commissioner O’Rielly also discussed the progress being made in establishing the FCC’s Office of Economics and Analytics “to ensure that the new office has the ability and power to institute drastic and long-lasting change to how we consider the economic impact of the rules we adopt.” As a result, future cost-benefit analyses performed by the FCC will require “a rigorous, economically-grounded analysis for any rulemaking that will have an annual cost to the economy of $100 million or more.”
As for next steps, Commission O’Rielly noted, “At last count, I have approximately 50 ideas – both old and new – that I plan to discuss with the Chairman. No need for anyone here to run for the doors; I am only going to highlight some of these ideas today.” He then described five of these ideas. 
1. Codify Commission Procedures. According to the commissioner: “Most of you would probably be shocked to learn that few of our internal workings are written down anywhere. They are merely passed down through the years under the guise of ‘how we’ve always done it.’ How does one disagree with a current practice when the practice doesn’t technically exist?” His solution is to direct FCC staff to start putting the Commission’s working practices down in written word and publishing them in the Code of Federal Regulations for the entire world to see.
2. Formalize Timeframes and Timelines. After noting that too often FCC proceedings “can get stuck in regulatory quicksand,” Commissioner O’Rielly said: “The Commission should take the necessary steps to ensure that all work is concluded expeditiously, and that the public has an opportunity to challenge a decision promptly. Appropriate timeframes should be placed on all FCC proceedings, the 180-day merger shot clock should not be aspirational, and clear deadlines need to be placed on Team Telecom’s review of the foreign ownership implications of certain applications before the FCC.” 
3. Eliminate the Administrative Law Judge Process. Commission O’Rielly said “We should not continue the practice of prolonged proceedings to determine that a hearing is needed, to then transfer the issue to an ALJ for a drawn-out hearing, just for the matter to come back to be fully considered yet again and voted on by the Commission. What a waste of time and resources.” He noted that despite the thousands of proceedings and applications that come before the FCC, only six active cases designated for hearing.
4. Deregulatory Presumption. For this recommendation, Commissioner O’Rielly endorsed a proposal made by Free State Foundation President Randy May in 2011 that the FCC start with “a presumption that regulation is not necessary due to the presence of meaningful competition,” which “could only be overcome by clear and convincing evidence to the contrary.” He added: there is no reason why the Commission, on its own accord, could not use such an approach when considering forbearance petitions or reviewing rules. And, if for some reason regulation is found to be necessary, the Commission should impose sunset provisions or require periodic reviews for any new or retained rules.” 
5. Fixing Enforcement. His last recommendation focused on the forfeiture collection process, noting that the FCC’s policies in this area are too inconsistent in terms of how penalties are calculated, transparency, how well the collection process is enforced, and when the statute of limitation expires. He added: “Enforcement proceedings should never be used to set policy or precedent that will apply to multiple parties without the opportunity for basic notice and comment.” 
As Commissioner O’Rielly acknowledged, FCC process reform is not always splashy and does not necessarily generate headlines. But it is nonetheless very important for the Commission to succeed in its substantive goals: “For the agency to accomplish the big-ticket items, it must have a process that is efficient and one that is respected internally and externally. Otherwise, the Commission leaves itself open for both process complaints and substantive objections.” He concluded that at least some of these proposals could be implemented first on a trial basis to see how they work in practice. He added that trialing may not be necessary, but it could be used to advance the reform agenda. In any event, Commissioner O’Rielly explained, such trialing “must be a good idea because Randy May wrote a blog on this very idea back in January 2017.”