Senate Hearing Trains Spotlight on FCC Process

Hearing probes agency independence and Administration influence

The Senate Homeland Security & Governmental Affairs Committee took aim Wednesday at the FCC's network neutrality Open Internet order and ex parte contacts in a hearing on "The Administrative State: An Examination of Federal Rulemaking."

Sen. Ron Johnson (R-Wis.), who presided, called it an incredibly important hearing and said that while some regulation was needed, there was a point of "overregulation."

The hearing dealt with the broader issue of regulating through administrative action—which is the charge Republicans have leveled at the Obama Administration for pushing Title II reclassification of ISPs and more recently calling for new set-top box rules. But it used the FCC as an example of the federal regulatory overreach the committee's Republican leadership asserts.

Four of the five witnesses were of like mind that there was currently federal regulatory overreach, with the scope of agency regulations far broader than Congress had intended.

Witness Jonathan Turley, a professor at George Washington University, said he did not want to weigh in on merits of net neutrality, but what he saw as an opaque process. He said that he agreed with many things President Obama was trying to do but not the way he was doing it.

Randolph May, president of the Free State Foundation and former associate general counsel at the FCC, said the rulemaking process is faulty and has given rise to the administrative state. He focused on the FCC's net neutrality rulemaking as a solution in search of a problem.

May cited the President's involvement in the Title II decision and said it raises questions about the FCC's "supposed" independence. He also cited the President's call for set-top box rules as another "high-profile presidential intervention" that undermined the agency's independence and the public's confidence in its integrity.

Of the five witnesses, only Robert Weissman, president of Public Citizen, struck a dissenting note.

Weissman focused on the regulatory process. He said that regulation has made the country stronger, safer, more secure, cleaner and healthier.

He said industry overestimates the cost, with apocalyptic predictions that don't pan out. He said that even a conservative cost/benefit analysis puts the benefit to cost ratio at at least two to one and as much as 15 to one.

He conceded there were severe problems with the regulatory process, specifically delay of regulatory decisions that impedes business decisions and hurts consumers. He said another problem was weak enforcement, and the use of cost-benefit analyses that lead to a bias toward industry

He also took aim at the revolving door of agency officials that move to industry.

Johnson said nobody argues that no regulation was needed, but that regulators were "flooding the zone" and overregulating that creates high levels of uncertainty. He used as an example the assertion that net neutrality has depressed investment.

Turley said nobody could believe the net neutrality process was a good system given the "total disregard" for the notice and comment requirements of the Administrative Procedures Act. Johnson also talked about the FCC "turning on a dime" to follow the President's lead on Title II. ISPs have argued that the FCC changed gears to a Title II approach without notifying stakeholders that was happening and giving them a chance to comment on that new approach.

May said the President's intervention in Title II was unusual, with a statement and "wink and a nod" that while the FCC was independent, this is what he wanted to happen. He also pointed out that the FCC had been drafting a decision that did not reclassify ISPs under Title II.

May said there was certainly the appearance that the agency's independence was jeopardized and on the basis of political considerations, not its expertise.

Johnson said it was obvious they weren't acting independently. He also said the committee had still not been able to get the FCC to give it a copy of that original non-Title II draft.

May said the President's support of set-top rules suggested a troubling pattern.

Sen. Heidi Heitkamp (D-N.D.) took up for regulators, but not necessarily for the process, saying Congress should be clearer in its legislation and that was a reason regulators were filling that gap with lengthy regs.

She conceded changes need to be made regarding advance notice of rulemakings and cost-benefit analyses for regulations—areas of reform she thought had common ground—but that it was not productive to simply hammer regulators over what was Congress' failure to be more specific in its laws.

Heitkamp said the argument about process should not be as partisan as it is. She said Congress had failed to provide enough guidance, which had not only allowed agencies to legislate but required them to do so.

Johnson said he was also surprised it was partisan and that regulatory reform bills have not been able to get traction. 

Sen. Kelly Ayotte (R-N.H.) agreed that Congress needed to take some responsibility and write tighter laws.

May said one of the problems with less-than-tight congressional direction is the FCC's "public interest standard," which is overly broad.