Friday, July 26, 2019

MEDIA ADVISORY: FSF President Randolph May Welcomes DOJ Approval of Proposed T-Mobile/Sprint Merger

The following statement may be attributed to Randolph May, President of the Free State Foundation, regarding the Department of Justice’s approval of the proposed T-Mobile/Sprint merger:

“I am pleased that the Department of Justice is now prepared to approve the T-Mobile/Sprint merger, albeit with conditions and divestitures that, in the current competitive communications environment, are likely not necessary to protect consumers, and which, in fact, may have the effect of reducing some of the benefits from the merger.

“That said, DOJ’s decision after a lengthy review finally to allow the merger to be consummated is welcome. As a general matter, and in this case involving the rapidly changing communications marketplace driven by technological innovations like 5G next-generation wireless networks, it takes longer than it should for the government to reach a decision. The gap in time between due deliberation and delay often is far too large. So, I hope the FCC will quickly approve the merger, and the state Attorneys General will now withdraw their lawsuit, which has had more than a whiff of politics driving it from the get-go."    

Thursday, July 25, 2019

Modern TV Act Would Remove Old Rules, Bring Video Policy Up to Date

The Modern Television Act of 2019 is promising new legislation that would bring federal video policy into greater alignment with 21st century market realities. Introduced in the U.S. House of Representatives on July 25 by Reps. Steve Scalise and Anna Eshoo, the Modern TV Act would repeal or at least reduce a number of old legacy broadcast TV and cable regulations that were based on a now-obsolete picture of the video market. The Modern TV Act is a bipartisan compromise measure that the 116th Congress ought to take up in earnest this year.

Among its provisions, the Modern TV Act would eliminate distant signal importation prohibitions, syndicated exclusivity rules, network non-duplication rules, authority to regulate local cable rates under Section 623, and cable leased access rules. Most of those rules involve dealings between market participants that own video programming and video service providers that distribute programming to retail subscribers. Once those rules are eliminated, video programmers and video service providers can, in most instances, simply negotiate contracts to address which programming receives carriage in which local TV markets. The Modern TV Act also would eliminate, or at least largely eliminate, cable and satellite compulsory licenses for carrying copyrighted video programming, thereby allowing parties to negotiate copyright royalties.

The Modern TV Act moves firmly in the direction of establishing a federal video policy that matches the competitive conditions of today's innovative video marketplace. For several years, Free State Foundation scholars have called attention to the fact that legacy regulations of broadcast, cable, and direct broadcast satellite (DBS) TV services are based largely on early 1990s, or even earlier, assumptions about the analog and VCR-era video market. But those regulations are now hopelessly out of touch with today's marketplace. 

The days are long gone when the video service choices of most Americans were largely limited to over-the-air (OTA) broadcast TV or a single cable operator. Today, most Americans can choose between a cable provider and two DBS providers, while many also have access to a former "telco" video services provider. Unlike the days when cable operators had a 91% market share among pay-TV services, at year's-end 2017, cable served 55.2% of multi-channel video programming distributor (MVPD) subscribers, DBS served nearly 33.5%, and "telco MVPDs" serviced 11.3%. Meanwhile, in 2018 antenna use for OTA broadcast TV reached its highest level since 2005, with 31% of U.S. households having an antenna on at least one TV. Online video distributor (OVD) services have also dramatically transformed the video market. In early 2019, Netflix had over 60 million U.S. subscribers to its streaming video service, while Amazon Prime and Hulu had 101 million and 28 million. Widespread adoption of OVD services has been recognized as an important cause of annual MVPD subscriber losses going back to 2013. Total MVPD subscriptions were down to 94 million at year's-end 2017, and sharp declines have been reported for 2018 and 2019.

Legacy regulations geared toward last century's outdated technologies and less competitive, pre-Internet market conditions confer no benefit on consumers today. Instead, their continuation saddles broadcast, cable, and DBS TV service providers with burdensome compliance costs as well as restrictions that can inhibit their ability to compete with each other and with online competitors. 

Furthermore, as Free State Foundation President Randolph May and I have explained in numerous writingsmany legacy video regulations, including leased access rules, amount to forced access mandates. Requiring video service providers to carry video programming not of their own choosing violates their First Amendment free speech rights. The Modern TV Act's proposed repeal of leased access rules would better respect the free speech rights of cable providers. 

To help bring federal video policy up to date, the 116th Congress should give prompt consideration to the Modern TV Act.

FCC Proposes to Keep Localities from Exceeding Taxing and Regulatory Limits

On August 1, the FCC will hold a vote on its proposed order to clarify the legal limits on the power of states and local franchising authorities (LFAs) to impose fees on cable operators and to regulate non-cable services. The Commission deserves credit for its proposed order, which is solidly backed by the Communications Act. The Commission's action will keep states and LFAs from weighing down cable operators with multiple, unjustified taxes and charges. And its proposed order also will ensure that broadband Internet services and other information services will be free from state and local state regulatory restrictions. 

To briefly recap, Section 621(a)(1) of the Communications Act recognizes that LFAs may require cable TV service operators to obtain franchises, but subject to limits.Section 622(b), for instance, caps franchise fees on cable operators at 5% of its cable service gross revenues during any 12-month period. And under Section 624(b), LFAs "may not ... establish requirements for video programming or other information services." However, some LFAs have imposed costs that appear to exceed those statutory limits, potentially diverting cable operator resources away from investment in next-generation broadband Internet services. And some uncertainty surrounded whether LFAs might exceed their cable franchising authority to regulate broadband Internet services.   

The Commission's proposed order implements the statutory limits on LFAs in four key respects:
  1. By including "in-kind" contributions charged by LFAs in exchange for video franchises within the 5% cap on franchise fees;
  2. By concluding that the regulatory jurisdiction of LFAs over video franchising cannot be used to regulate most non-cable services provided over "mixed-use" cable networks, including broadband Internet access services;
  3. By preempting any LFA-imposed fees or taxes on cable operators that exceed the Section 622(b) cap as well as any franchising requirements for providing non-cable services through cable networks; and
  4. By applying limits regarding LFAactions at the state level and to state regulatory requirements on local franchising.
Free State Foundation President Randolph May and I have previously written about the Commission's Section 621 proceeding and its proposed order in reply comments submitted to the FCC, which the agency cites in its draft order, and also in a pair of blog posts. We urged the Commission to shore up its "in-kind" contribution and "mixed-use" rules and to expressly apply limits on LFAs to the state-level franchising authorities. 

The Commission's proposed Section 621 order is important, and it is commendable. It is faithful to the law, it will keep LFA and state-level franchising actions within proper boundaries, and it's hospitable to encouraging investment and deployment of next-generation broadband services. 

Monday, July 15, 2019

CASE Act Would Make Copyright Protections for Small Claims a Reality

Online infringement of copyrighted sound recordings and movies is widespread on popular user-upload Internet websites like YouTube. Mass infringement on user-upload sites deprives copyright owners of their exclusive right in their creative works – including their right to the proceeds of their creations. Unfortunately, the heavy costs of civil litigation in federal court, including lawyer fees, make it uneconomical for many copyright owners to obtain justice under law. 

On July 18, the Senate Judiciary Committee will consider S.1273, the Copyright Alternative in Small-Claims Enforcement Act – or CASE Act. Introduced by Senators John Kennedy, Dick Durbin, Thom Tillis, and Mazie Hirono, the bipartisan CASE Act would establish a Copyright Claims Board within the U.S. Copyright Office. The Copyright Claims Board would administer a voluntary small-claims process for addressing many types of copyright infringement claims. Such a small claims process would make it simpler and less expensive for independent creators, including songwriters and recording artists, film makers, photographers, and graphic artists, to vindicate their intellectual property rights. The Senate Judiciary's schedule vote on the CASE Act is welcome news, and a hopeful step toward modernization of copyright law for the Digital Age. (A companion bill, H.R. 2426, also has been filed in the 116th Congress.)

In our Perspectives from FSF Scholars paper “Modernizing Civil Copyright Enforcement for the Digital Age Economy: The Need for Notice-and-Takedown Reforms and Small Claims Relief,” FSF President Randolph May and I make the case for why Congress should update civil enforcement provisions by establishing a small claims process for copyright infringement claims within the Copyright Office.

Friday, July 12, 2019

Delegation, Deference, and the FCC

During the last week of its just-ended term, the Supreme Court handed down two eagerly anticipated decisions with significant implications for administrative law and, indeed, more broadly, for separation of powers constitutional jurisprudence. The two decisions are Gundy v. United States and Kisor v. Wilkie. While there will be thousands of pages in law reviews, blogs, and elsewhere devoted to dissecting various aspects of these two important cases – within the next several months, no doubt! – here I want to focus mainly on their implications for the Federal Communications Commission. 

And, to be straight-up about it, I want to use the Court's opinions in the two cases as an occasion to highlight two earlier law articles of mine advocating what at the time seemed fairly radical administrative law and constitutional propositions – but which now appear much less so.

But first a brief recap of the principal holdings of the two cases. In Gundy, the Court rejected, by a 5 – 3 vote, Mr. Gundy's challenge to his conviction under the Sex Offender Registration and Notification Act (SORNA) for failure to register as a sex offender. Gundy, who had been convicted of his offense prior to SORNA's enactment, argued that the statute's delegation of authority to the Attorney General to "specify the applicability" of SORNA's registration requirements" and to "prescribe rules for [their] registrations" for pre-enactment offenders is so devoid of direction as to violate the nondelegation doctrine. In other words, Gundy argued that Congress unconstitutionally had delegated its legislative power to the executive branch.

Writing for the majority, Justice Kagan held the delegation "easily passes muster," especially in light of the Court's precedents affirming other broad delegations of legislative power so long as the statute contains some "intelligible principle" to guide executive branch officials in its execution. For good measure, Justice Kagan observed: "Indeed, if SORNA’s delegation is unconstitutional, then most of Government is unconstitutional—dependent as Congress is on the need to give discretion to executive officials to implement its programs."

In an extended dissent, Justice Gorsuch, joined by Chief Justice Roberts and Justice Thomas, argued that SORNA gives the Attorney General too much "unfettered discretion" to decide which registration requirements to impose on pre-enactment offenders – in short, more policy-making authority than Congress may delegate to executive branch officials. Justice Gorsuch contended that the "intelligible principle" requirement has been applied so leniently that it has permitted "delegations of legislative power that on any other conceivable account should be held unconstitutional."

As for claims the Court should not be put in a position of policing congressional delegations by drawing lines as to the degree of permissible indeterminateness, Justice Gorsuch pointed to other instances in which the Court has reined in Congress in a way that necessarily implicates separation of powers boundaries: "These cases show that when separation of powers is at stake we don't just throw up our hands. In all these areas, we recognize that 'abdication is not part of the constitutional design.'"

All that said, Justice Alito's brief 145-word opinion "concurring in the judgment" likely is the most important of all for what it portends. While voting to reject the nondelegation challenge in light of the Court's precedents, he declared: "If a majority of this Court were willing to reconsider the approach we have taken for the past 84 years, I would support that effort. But because a majority is not willing to do that, it would be freakish to single out the provision at issue here for special treatment."

Justice Kavanaugh did not participate in the consideration of Gundy. But based on his D. C. Circuit opinions and other writings, there is little doubt that he is more than willing to reconsider the Court's approach to applying the nondelegation doctrine. So, it appears there are now five Justices prepared to do so – Chief Justice Roberts, and Justices Thomas, Alito, Gorsuch, and Kavanaugh.

And now to Kisor, which also implicates separation of powers principles. There the Court, with Chief Justice Roberts supplying the crucial fifth vote, refused to overrule the so-called Auer-Seminole Rock deference doctrine, which, in essence, requires judges to defer to administrative agencies' interpretations of their own rules. As Justice Gorsuch contended in a lengthy concurring opinion as vigorous as his Gundy dissent, separation of powers principles, once again, are implicated when judges defer to agencies' interpretations of their regulations rather than deciding for themselves, without application of any controlling deference, whether the regulations are lawful.  Justice Gorsuch, harkening back to Chief Justice Marshall's famous dictum in Marbury v. Madison that “[i]t is emphatically the province and duty of the judicial department to say what the law is,” stated the Auer deference doctrine "sits uneasily with the Constitution."

For my present purposes, with regard to Kisor, it is enough to point out that both Chief Justice Roberts and Justice Kavanaugh made clear that their concurrences should not be read to suggest that their refusal to overrule Auer necessarily implies the same result if the Court reconsiders the Chevron doctrine. As the Chief Justice stated: " Issues surrounding judicial deference to agency interpretations of their own regulations are distinct from those raised in connection with judicial deference to agency interpretations of statutes enacted by Congress."

Now, with this background in mind, I want to highlight my two much earlier law review articles that no longer appear, jurisprudentially, to be so bold. Indeed, I hope that one day in the not too distant future, the positions I articulated in 2001 and 2006 will be accepted by the Court.

First, in The Public Interest Standard: Is It Too Indeterminate to Be Constitutional?, 53 Fed. Comm. L. J. 427 (2001), I answered "yes." I rehearsed the history of the nondelegation doctrine and addressed the major precedents, acknowledging that the Supreme Court long ago rejected the claim that the public interest standard – which appears in the Communications Act over 100 times – is too amorphous to be constitutional. See FCC v. Pottsville Broadcasting Co., 309 U.S. 134 (1940) and National Broadcasting Co., Inc. v. United States, 319 U.S. 190 (1943).

In Pottsville, Justice Frankfurter thought it sufficient to conclude that the public interest standard "is as concrete as the complicated factors for judgment in such a field of delegated authority permit." You can read that formulation over and over until the proverbial cows come home and not discern any intelligible principle. Indeed, it calls to mind the old saw: "The public interest standard is whatever three of the five FCC commissioners decide on any given day." Just so. It is difficult to discern an "intelligible principle" in a delegation simply directing agency officials to act in the public interest. I am optimistic that when the Court reconsiders, in an appropriate case, the contours of the nondelegation doctrine, it will hold the public interest standard, under which so much of the FCC's regulatory activity takes place, out of bounds.

Second, in Defining Deference Down: Independent Agencies and Chevron Deference, 58 Admin. L. J. 429 (2006), I argued that the decisions of the so-called independent agencies, like the FCC, SEC, FTC, and others, should receive less deference under the Chevron doctrine than those of regular executive branch agencies. The argument is fully explained in the article. In short, the contention is that any fair reading of Chevron shows that the principal (even if not exclusive) rationale for granting deference to the agencies – EPA in that case – is the notion that Chief Executive, as opposed to the courts, is politically accountable. Because the independents are less politically accountable to the Chief Executive than are the executive agencies, it follows that their decisions should be accorded less deference upon review.

Well, if you're skeptical, it may give you comfort to know, as I point out in my Defining Deference Down article, that then-Harvard Law School dean – now Supreme Court Justice – Elena Kagan agreed with me in her notable Presidential Administration article published in the Harvard Law Review in 2001. There Justice Kagan suggested that a variable Chevron doctrine "would begin by distinguishing between actions taken by executive branch agencies and those taken by independent commissions." She concluded that the Chevron doctrine "attuned to the role of President would respond to the disparity by giving greater deference to executive than to independent agencies."

I've suggested many times that, based on my view of fundamental separation of powers principles, that the Chevron doctrine should be reconsidered as it applies to all agencies, not just the independents. But, at the same time, I've envisioned that barring such broader reconsideration, giving less deference to the decisions of the independents, would be a modest incremental step, as I said in my Defining Deference Down article, that would be "more consistent with our constitutional system."

Neither Gundy nor Kisor effected any revolution in administrative or constitutional law. But both involve fundamental separation of powers principles that go to the core of our tripartite system of government in which certain discrete responsibilities are assigned – and must be largely confined – to each of the separate branches. So, for now, it is enough to hope that, all things considered, the two decisions moved us some steps closer to the Framers' original constitutional understanding.

Tuesday, July 02, 2019

Independence Day 2019

I wrote this Independence Day message on June 9, two days after visiting Pointe du Hoc, Omaha Beach, and the American Cemetery and Memorial in France. I have had it in the "pending" file since then.

My visit to Normandy occurred one day after the 75th anniversary of Operation Overlord, the D-Day invasion of Allied Forces that began the effort to finally defeat the Nazi regime in France.

Pointe du Hoc is where, on D-Day, American soldiers used rope ladders to scale 100-foot cliffs to disarm suspected German artillery that would have fired on the soldiers landing on Omaha Beach. On Omaha Beach alone, U.S. forces suffered around 2000 casualties. The American Cemetery is the final resting place of more than 9200 American soldiers, including 45 pairs of brothers.

Had Operation Overload not been successful – and if America had not led the allies in going on to defeat Germany – America almost certainly would be a far different place than it is today. It is highly unlikely that we would be celebrating "Independence Day" and recalling the words of the Declaration of Independence in the same way we do today.

As I was walking on the now-pristine sands of Omaha Beach and then among the endless rows of simple white marble crosses and Stars of David at the America cemetery, I couldn't help but recall the words of those who, either without understanding or lacking seriousness of purpose, wonder aloud about America's greatness.

There are too many naysayers, of course.

But take these two examples. In March 2019, former Attorney General Eric Holder asked: "Exactly when did you think America was great?" New York Governor Andrew Cuomo suggested in August 2018 that America "was never that great."

They should be ashamed. They should know better.

Do Eric Holder and Andrew Cuomo not think America was great on June 6, 1944, and in the succeeding days when it led the Allies in launching the most successful land invasion in history? If not, it is a travesty to all those young men who gave their lives on the Normandy beaches in the cause of defeating Nazism.

America was great then. And on countless occasions before and after.

To be sure, America has not always lived up to its ideals – the Declaration's self-evident truth that "all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty, and the Pursuit of Happiness." Slavery and Jim Crow will forever be deep-seated moral stains in the fabric of the American story. They are examples – and there are others too – of America falling short of its aspirations.

But falling short of the Declaration's aspirations is not the same as forever forfeiting the claim to America's greatness.

If you doubt, I urge you, on the miles of narrow roads approaching the Normandy beaches, to witness the hundreds of American flags draped from the homes along the way. And the hundreds of posters with the faces of American heroes hanging from every pole.

So, I maintain that, on the whole, those brave American soldiers that spilled out of the landing crafts onto Omaha Beach in 1944 – including those resting forever under the white marble stones – believed they were fighting to preserve individual freedom and America's independence.

If Eric Holder, Andrew Cuomo, or anyone else ever asks you: "Exactly when did you think America was great?" just say, please go to Pointe du Hoc, Omaha Beach, and the American Cemetery and Memorial.

That's something to keep in mind this Independence Day.

PS - My previous Independence Day messages are here: 200720082009201020112012201320142015,  20162017, and 2018.