[House Hearing, 114 Congress]
[From the U.S. Government Publishing Office]
FCC REAUTHORIZATION: IMPROVING COMMISSION TRANSPARENCY, PART II
=======================================================================
HEARING
BEFORE THE
SUBCOMMITTEE ON COMMUNICATIONS AND TECHNOLOGY
OF THE
COMMITTEE ON ENERGY AND COMMERCE
HOUSE OF REPRESENTATIVES
ONE HUNDRED FOURTEENTH CONGRESS
FIRST SESSION
__________
MAY 15, 2015
__________
Serial No. 114-43
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
Printed for the use of the Committee on Energy and Commerce
energycommerce.house.gov
___________
U.S. GOVERNMENT PUBLISHING OFFICE
97-184 WASHINGTON : 2016
________________________________________________________________________________________
For sale by the Superintendent of Documents, U.S. Government Publishing Office,
http://bookstore.gpo.gov. For more information, contact the GPO Customer Contact Center,
U.S. Government Publishing Office. Phone 202-512-1800, or 866-512-1800 (toll-free).
E-mail, [email protected].
COMMITTEE ON ENERGY AND COMMERCE
FRED UPTON, Michigan
Chairman
JOE BARTON, Texas FRANK PALLONE, Jr., New Jersey
Chairman Emeritus Ranking Member
ED WHITFIELD, Kentucky BOBBY L. RUSH, Illinois
JOHN SHIMKUS, Illinois ANNA G. ESHOO, California
JOSEPH R. PITTS, Pennsylvania ELIOT L. ENGEL, New York
GREG WALDEN, Oregon GENE GREEN, Texas
TIM MURPHY, Pennsylvania DIANA DeGETTE, Colorado
MICHAEL C. BURGESS, Texas LOIS CAPPS, California
MARSHA BLACKBURN, Tennessee MICHAEL F. DOYLE, Pennsylvania
Vice Chairman JANICE D. SCHAKOWSKY, Illinois
STEVE SCALISE, Louisiana G.K. BUTTERFIELD, North Carolina
ROBERT E. LATTA, Ohio DORIS O. MATSUI, California
CATHY McMORRIS RODGERS, Washington KATHY CASTOR, Florida
GREGG HARPER, Mississippi JOHN P. SARBANES, Maryland
LEONARD LANCE, New Jersey JERRY McNERNEY, California
BRETT GUTHRIE, Kentucky PETER WELCH, Vermont
PETE OLSON, Texas BEN RAY LUJAN, New Mexico
DAVID B. McKINLEY, West Virginia PAUL TONKO, New York
MIKE POMPEO, Kansas JOHN A. YARMUTH, Kentucky
ADAM KINZINGER, Illinois YVETTE D. CLARKE, New York
H. MORGAN GRIFFITH, Virginia DAVID LOEBSACK, Iowa
GUS M. BILIRAKIS, Florida KURT SCHRADER, Oregon
BILL JOHNSON, Missouri JOSEPH P. KENNEDY, III,
BILLY LONG, Missouri Massachusetts
RENEE L. ELLMERS, North Carolina TONY CARDENAS, California
LARRY BUCSHON, Indiana
BILL FLORES, Texas
SUSAN W. BROOKS, Indiana
MARKWAYNE MULLIN, Oklahoma
RICHARD HUDSON, North Carolina
CHRIS COLLINS, New York
KEVIN CRAMER, North Dakota
Subcommittee on Communications and Technology
GREG WALDEN, Oregon
Chairman
ROBERT E. LATTA, Ohio ANNA G. ESHOO, California
Vice Chairman Ranking Member
JOHN SHIMKUS, Illinois MICHAEL F. DOYLE, Pennsylvania
MARSHA BLACKBURN, Tennessee PETER WELCH, Vermont
STEVE SCALISE, Louisiana JOHN A. YARMUTH, Kentucky
LEONARD LANCE, New Jersey YVETTE D. CLARKE, New York
BRETT GUTHRIE, Kentucky DAVID LOEBSACK, Iowa
PETE OLSON, Texas BOBBY L. RUSH, Illinois
MIKE POMPEO, Kansas DIANA DeGETTE, Colorado
ADAM KINZINGER, Illinois G.K. BUTTERFIELD, North Carolina
GUS M. BILIRAKIS, Florida DORIS O. MATSUI, California
BILL JOHNSON, Missouri JERRY McNERNEY, California
BILLY LONG, Missouri BEN RAY LUJAN, New Mexico
RENEE L. ELLMERS, North Carolina FRANK PALLONE, Jr., New Jersey (ex
CHRIS COLLINS, New York officio)
KEVIN CRAMER, North Dakota
JOE BARTON, Texas
FRED UPTON, Michigan (ex officio)
C O N T E N T S
----------
Page
Hon. Greg Walden, a Representative in Congress from the State of
Oregon, opening statement...................................... 1
Prepared statement........................................... 30
Hon. Fred Upton, a Representative in Congress from the State of
Michigan, prepared statement................................... 65
Witnesses
Randolph J. May, President, Free State Foundation................ 35
Prepared statement........................................... 37
Answers to submitted questions............................... 70
Stuart M. Benjamin, Douglas B. Maggs Chair in Law and Associate
Dean for Research, Duke Law.................................... 47
Prepared statement........................................... 49
Robert M. McDowell, Former FCC Commissioner, Senior Fellow,
Hudson Institute............................................... 56
Prepared statement \1\....................................... 58
Answers to submitted questions............................... 78
Submitted Material
Discussion draft on the FCC Process Reform Act................... 2
Representative Clarke's discussion draft......................... 21
Representative Loebsack's discussion draft....................... 25
Representative Matsui's discussion draft......................... 28
Letter of May 14, 2015, from the Federal Communications
Commission to the subcommittee, submitted by Mr. Walden........ 67
Letter of May 15, 2015, from the Small Company Coalition to Ms.
Matsui, submitted by Ms. Matsui................................ 69
----------
\1\ The appendices to Mr. McDowell's testimony are available at:
http://docs.house.gov/meetings/IF/IF16/20150515/103464/HHRG-
114-IF16-Wstate-McDowellR-20150515.pdf.
FCC REAUTHORIZATION: IMPROVING COMMISSION TRANSPARENCY, PART II
----------
FRIDAY, MAY 15, 2015
House of Representatives,
Subcommittee on Communications and Technology,
Committee on Energy and Commerce,
Washington, DC.
The subcommittee met, pursuant to notice, at 9:17 a.m., in
room 2322, Rayburn House Office Building, Hon. Greg Walden
(chairman of the subcommittee) presiding.
Present: Representatives Walden, Latta, Lance, Olson,
Pompeo, Kinzinger, Bilirakis, Johnson, Collins, Eshoo, Welch,
Loebsack, Matsui, and Pallone (ex officio).
Staff Present: Ray Baum, Senior Policy Advisor for
Communications and Technology; Leighton Brown, Press Assistant;
Andy Duberstein, Deputy Press Secretary; Gene Fullano,
Detailee, Telecom; Kelsey Guyselman, Counsel, Telecom; Grace
Koh, Counsel, Telecom; David Redl, Counsel, Telecom, Charlotte
Savercool, Legislative Clerk; Jeff Carroll, Minority Staff
Director; David Goldman, Minority Chief Counsel, Communications
and Technology; Lori Maarbjerg, Minority FCC Detailee; Margaret
McCarthy, Minority Senior Professional Staff Member; and Ryan
Skukowski, Minority Policy Analyst.
OPENING STATEMENT OF HON. GREG WALDEN, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF OREGON
Mr. Walden. I will call to order the Subcommittee on
Communications and Technology for our legislative hearing on
the ``FCC Reauthorization: Improving Commission Transparency,
Part II.''
And certainly welcome our expert witnesses here today. Good
morning, and thank you for joining us here today to discuss a
topic that I have long championed, and I am not the only one on
the subcommittee that has done so, FCC process reform. I am
pleased to announce that my colleague and friend, Ranking
Member Eshoo, and I will reintroduce the FCC Process Reform
Act.
[The discussion draft follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Mr. Walden. This is a bill that passed the House in the
112th Congress and the 113th Congress had passed unanimously.
We are dedicated to improving the way that government does
its business. We are introducing this bill again with the hope
and expectation that the third time will indeed be the charm.
We all agree that things could be better at the FCC. The
Commission regulates an incredibly dynamic and innovative
sector in the American economy. It ought to serve the public in
a transparent and predictable manner. This is the best way to
protect consumers and to provide stability for industry and for
investors.
Our bill would set procedural guardrails to protect against
the potential for lapses in process. Specifically, our
legislation would set goals for Commission process and would
allow the FCC to determine for itself the best way to meet
those goals. The objective is to grant the FCC significant
latitude in setting its own deadlines in developing performance
measures for program activities.
The public will be able to measure the Commission's
progress by means of annual reports detailing its performance
in meeting the deadlines. And provided that the Commission
threats the required rulemaking and inquiry process, the bill
will also provide for nonpublic collaborative discussions among
the Commissioners, which currently are prohibited by the
Sunshine in Government Act.
I am also pleased to bring several bills offered by my
colleagues across the aisle before the subcommittee for
discussion. I applaud their willingness to work with the
majority on improving the FCC process, and I believe there is
significant merit to the draft bill as offered. We are looking
forward to working together on these bills.
Representative Clarke's draft bill requires the FCC to
publish a quarterly dashboard marking progress on petitions and
complaints at the FCC, allowing the public to determine for
themselves how efficiently the FCC is operating.
[Representative Clarke's discussion draft follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Mr. Walden. Representative Loebsack's bill would require
the chairman to publish the internal procedures at the FCC
which would, for the fist time, allow the public to actually
understand how decisions are made when the Commission goes
behind closed doors to amend the proposed rules.
[Representative Loebsack's discussion draft follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Mr. Walden. And Representative Matsui's bill would
encourage the FCC to improve access to government for small
businesses. These are all fine ideas that can gain bipartisan
support and improve the state of the FCC significantly.
[Representative Matsui's discussion draft follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Mr. Walden. Together with the draft bills we discussed at
our last legislative hearing and the consolidated reporting
bill that was passed unanimously by the House in February,
these are real steps toward a higher standard for transparency
of decisionmaking at the FCC. And it is high time. The industry
deserves an efficient and effective regulator we can truly call
expert just as the public deserves a transparent and
accountable Federal Government.
I would like to thank our guests for being with us today.
Mr. May and Professor Benjamin are both recognized experts in
administrative law. And former Commissioner McDowell has the
invaluable experience of having been part of the Commission. So
your combined experience and expertise for the FCC make you
invaluable advisers to us on how our proposals may impact the
agency and industries governed by the FCC. So we thank you in
advance for your insights, and we appreciate the testimony that
you have provided.
And now I would like to ask unanimous consent to enter into
the record the letter that the Chairman of the FCC, Tom Wheeler
sent to both Congresswoman Eshoo and myself, memorializing his
statements made before the subcommittee last month, and how he
intends to address process reform with the task force. Without
objection.
[The information appears at the conclusion of the hearing.]
Mr. Walden. I applaud the chairman for his stated
commitment to process reform. I do acknowledge it sounds a
little familiar because we heard before our subcommittee in
December of 2013 about this effort, and again, in 2011, prior
Chairman Genachowski, 4 years ago this week basically said the
same thing.
Unfortunately, in the intervening years, while we have seen
some reform at the FCC, I don't think it has gone far enough,
as evidenced as by our bipartisan legislation that is moving.
I appreciate our colleagues working with us to bring about
lasting reforms that transcend any chairman of either party at
the Commission. We must not buy into the idea that an FCC
Chairman will diminish his or her power and work against their
own interests there. The FCC is structured to give the Chairman
the ability to operate in secret outside the watchful eye of
the public it was created to serve. So I entered that into the
record.
With the remaining 26 seconds, recognize the vice chairman,
Mr. Latta.
[The prepared statement of Mr. Walden follows:]
Prepared statement of Hon. Greg Walden
Good morning. Thank you for joining us here today to
discuss a topic that I have long championed--FCC Process
Reform. I'm pleased to announce that Ranking Member Eshoo and I
will re-introduce the FCC Process Reform Act. This is a bill
that passed the House in the 112th Congress and that the 113th
Congress passed unanimously. We are dedicated to improving the
way the government does its business and we are introducing
this bill again with the hope and expectation that the third
time is the charm.
We all agree that things could be better at the FCC. The
Commission regulates an incredibly dynamic and innovative
sector in the American economy. It ought to serve the public in
a transparent and predictable manner. This is the best way to
protect consumers and to provide stability for industry and
investors. Our bill would set procedural guardrails to protect
against the potential for lapses in process.
Specifically, our legislation would set goals for
Commission process and would allow the FCC to determine for
itself the best way to meet those goals. The objective is to
permit the FCC significant latitude in setting its own
deadlines and developing performance measures for program
activities. The public will be able to measure the Commission's
progress by means of annual reports detailing its performance
in meeting the deadlines. And, provided that the Commission
completes the required rulemaking and inquiry process, the bill
will also provide for non-public, collaborative discussions
among the Commissioners, which currently are prohibited by the
Sunshine in Government Act.
I am also pleased to bring several bills offered by my
colleagues across the aisle before the subcommittee for
discussion; I applaud their willingness to work with the
majority on improving FCC process and I believe there is
significant merit to the draft bills offered. We are looking
forward to working together on these bills.
Representative Clarke's draft bill requires the FCC to
publish a quarterly dashboard marking progress on petitions and
complaints at the FCC, allowing the public to determine for
themselves how efficiently the FCC is operating. Representative
Loebsack's bill would require the Chairman to publish the
internal procedures at the FCC, which would, for the first
time, allow the public to understand how decisions are made
when the Commission goes behind closed doors to amend proposed
rules. And, Representative Matsui's bill would encourage the
FCC to improve access to government for small businesses. These
are all fine ideas that can gain bipartisan support and improve
the state of the FCC significantly.
Together with the draft bills we discussed at our last
legislative hearing, and the consolidated reporting bill that
was passed unanimously by the House in February, these are real
steps toward a higher standard for transparency of decision-
making at the FCC. It is high time. The industry deserves an
efficient and effective regulator we can truly call ``expert,''
just as the public deserves a transparent and accountable
federal government.
I'd like to thank our guests for being with us today. Mr.
May and Prof. Benjamin are both recognized experts in
administrative law, and former Commissioner McDowell has the
invaluable experience of having been a part of the Commission.
Your combined experience and expertise with the FCC make you
invaluable advisors on how our proposals may impact the agency
and the industries governed by the FCC. We thank you in advance
for your insights and look forward to what you have to say.
Mr. Latta. Well, thank you very much, Mr. Chairman.
And thanks very much to our witnesses for being with us
today, really appreciate it, and look forward to your
testimony.
The telecommunications industry drives a significant
portion of economic growth in our country. Therefore, Congress
needs to make sure that this sector is not burdened or hampered
by inefficiency or lack of accountability at the FCC. I
appreciate the chairman and the subcommittee for keeping FCC
transparency, efficiency, and accountability a top priority for
continuing an open discussion on agency reform.
I believe the draft bills before us today aim to improve
FCC process, and I thank our Democratic colleagues for bringing
them forward.
With bipartisan cooperation, this subcommittee can offer
reform that will greatly improve agency procedures, which begin
with Chairman Walden's and Ms. Eshoo's FCC process reform
discussion draft.
I look forward to today's witnesses' testimony and their
perspectives on the issues.
And, Mr. Chairman, I yield back.
Mr. Walden. Gentleman yields back the balance of his time.
The chair recognizes the gentlelady from California, Ms.
Eshoo.
Ms. Eshoo. Good morning, Mr. Chairman, and thank you for
convening today's hearing to consider three of the bills put
forward by Democrats at our April 30 subcommittee meeting.
And to the witnesses, welcome back to the witness table. It
is wonderful to see you. And we look forward to hearing you
share your expertise with us, and we thank you for it.
Improving FCC transparency is supported by Members on both
sides of the aisle, as well as Chairman Wheeler. In a letter to
the subcommittee yesterday, as the chairman just said, the FCC
Chairman articulated the agency's planned review of
transparency, rulemaking, and delegated authority all of which
can be done with passing new legislation.
At the same time, your consideration of bills offered by
Democrats demonstrates that we can work together to modernize
the FCC without jeopardizing regulatory certainty, which is
really very, very important, for all that deal with the FCC are
opening the door to legal challenges on every Commission
action. That is not what we are here for, and I believe that we
are staying away from that.
Today, we are also considering the FCC Process Reform Act,
a discussion draft I offered with Chairman Walden and
Representative Kinzinger, and which passed the House by voice
vote in the last Congress. Importantly, this compromise bill
gives the FCC flexibility to evaluate and adopt procedural
changes to its rules rather than putting rigid requirements in
statute.
I also welcome the inclusion of the FCC Collaboration Act.
Obviously, I do. It is a bipartisan bill I introduced earlier
this year with Representatives Shimkus and Doyle. But an
artificial delay of this particular provision as the discussion
draft establishes, I think, is an unnecessary delay, and I
think it is an odd one. If we are taking it up, let's get it
done, because it is a much needed reform. All the commissioners
of the FCC have testified on this, and I think that we need to
address this prior to passage of any package.
Finally, it is disappointing to me that the majority has
chosen not to consider H.R. 2125, the Keeping Our Campaigns
Honest Act. This was part of the package of bills offered by
Democrats at the subcommittee's April 30 hearing. Recent
election cycles and waves of spending by secret donors have
made it painfully clear that our electoral system and our
campaign finance laws are in the drastic need of reform.
In the long term, it will take Supreme Court decisions or a
constitutional amendment to rid our political system of endless
sums of money. But, in the short term, we can and should start
by requiring that all political ads spending be fully transport
and clearly disclosed. Now, I think the operative word in this
is ``transparency.'' At our last hearing, many members spoke so
eloquently about transparency.
Mr. Chairman, you have emphasized transparency, and yet,
when it comes to this, no transparency.
So full disclosure is an idea that once enjoyed bipartisan
support. Justice Anthony Kennedy in the Citizens United case
wrote for the majority, quote, ``The First Amendment protects
political speech, and disclosure permits citizens and
shareholders to react to the speech of cooperate entities in a
proper way. This transparency enables the electorate to make
informed decisions and give proper weight to different speakers
and messages,'' unquote.
Even Senator Mitch McConnell agreed, asking in 2000, why
would a little disclosure be better than a lot of disclosure?
Consistent with the FCC's existing authority, I think it's time
for the agency to bring greater transparency to America's
electoral system by requiring sponsors of political ads very
simply to disclose their true identity, not just their
ambiguously named Super PAC.
The public has a right to know who is attempting to
persuade them over the public airwaves--public airwaves--and
Representative Yarmuth's bill would achieve that goal by
casting light and transparency on election advertising.
So there you have it, the good and the not-so-good. I
welcome, again, our witnesses back to the subcommittee. And
your expertise on how to ensure FCC flexibility while promoting
openness, transparency, and accountability is very important
for us. Thank you.
And I yield back, Mr. Chairman.
Mr. Walden. Gentlelady yields back the balance of her time.
I don't believe anyone is claiming the time for the
chairman of the committee, so I will recognize the ranking
member on the committee, Mr. Pallone.
Mr. Pallone. Thank you, Chairman Walden and Ranking Member
Eshoo.
And welcome to our witnesses. I know all of you have been
here before to help us with these issues, and I appreciate your
coming back.
This is the second time in the past few years that this
subcommittee has focused on perceived shortcomings at the FCC.
At our hearing a couple weeks ago, we heard testimony from FCC
Chairman Wheeler about the extensive work he has already done
to update the FCC's internal processes, but more could always
be done. And that is why Chairman Wheeler committed to us that
he would continue to work with his fellow Commissioners to
comprehensively review all of the internal procedures at the
agency.
We also heard at the last hearing that the Democratic
members of this subcommittee have a number of concerns with the
FCC process reform proposals the Republicans put forward. The
most serious concern was that these proposals run counter to
the repeated warnings from legal experts that creating agency-
specific reforms invite lawsuits which create uncertainty and
deter investment.
But rather than simply throw our hands up in opposition, we
offered an alternative approach to keep the FCC fast,
efficient, and transparent. And our commonsense proposals would
keep the FCC as agile as the industries it regulates, without
sparking years of legal uncertainty.
I hope the Republicans understand our concern, and I am
grateful that Chairman Walden is willing to give some of our
proposals a fair hearing. But I do want to join with Ms. Eshoo
and express disappointment that this hearing does not include
all of our proposals, including the one presented by Mr.
Yarmuth, and that is because transparency should extend to the
political process as well as the FCC's internal process.
That is why our alternative package includes a way to
ensure that the public knows who is paying for expensive
political ads on TV. Americans deserve to know who is using the
public airwaves to influence political debates, and
transparency should not stop at the doors of the FCC.
But I want to thank both of my colleagues again.
I would like now to yield the remainder of my time to the
gentlewoman from California, Ms. Matsui.
Ms. Matsui. I thank the ranking member for yielding me
time. I would like to thank the witnesses for being with us
today.
We all agree here that transparency and efficiency at the
FCC is a good thing, and I am pleased that my draft bill is
being considered today to make it easier for small businesses
in Sacramento and across the country to engage with the FCC on
policies that may impact them. Whether it is a family business
or a startup, small businesses can't spend scarce resources on
lawyers or lobbyists to have an impact on FCC decision. But, in
most cases, their companies will be affected by FCC decisions
just as much as larger corporations. We should make it as
simple as possible for the small businesses to have their
voices heard at the FCC. My draft bill would have the FCC
coordinate with the Small Business Administration to improve
small business participation at the FCC.
Mr. Chairman, I would like to submit for the record a
letter of support from the Small Business Coalition comprised
of rural and travel carriers for this legislation.
Mr. Walden. Without objection.
[The information appears at the conclusion of the hearing.]
Ms. Matsui. This is a commonsense bill that I hope my
colleagues will support.
And I yield back the balance of my time.
Mr. Walden. Gentlelady yields back the balance of her time.
Mr. Pallone, goes back to you, I think.
Mr. Pallone. I yield back.
Mr. Walden. He yields back.
And so, with that, we will move onto our witnesses. And I
appreciate my colleagues' testimony or opening statements.
Three out of four minority party bills up for consideration is
not a bad ratio when you are in the minority.
Let me move on now to Mr. Randy. Just making a note here. I
wish we had gotten three-quarters of our bills when we were in
minority, but oh well.
Randy May, President, Free State Foundation. Take it away.
Good morning.
Mr. May. Mr. Chairman----
Mr. Walden. But we do need you to turn that mic on. Just
once.
Mr. May. Mr. Chairman. Well, that doesn't work either.
Mr. Walden. Can we get somebody over there who actually
knows how to--no, I don't think it is on.
With that, Mr. May, please, go ahead and start your
testimony.
STATEMENTS OF RANDOLPH J. MAY, PRESIDENT, FREE STATE
FOUNDATION; STUART M. BENJAMIN, DOUGLAS B. MAGGS CHAIR IN LAW
AND ASSOCIATE DEAN FOR RESEARCH, DUKE LAW; AND ROBERT M.
MCDOWELL, FORMER FCC COMMISSIONER, SENIOR FELLOW, HUDSON
INSTITUTE
STATEMENT OF RANDOLPH J. MAY
Mr. May. Mr. Chairman, Ranking Member Eshoo, and members of
the committee, thank you for inviting me to testify. I am
President of the Free State Foundation, a nonpartisan think
tank, that, among other things, focuses its research in the
communications law and policy and administrative law areas. As
my written testimony details, I have longstanding experience in
these areas. So today's hearing on process reform is at the
core of my expertise.
Mr. Chairman, as we were discussing earlier, all three of
the witnesses today happen to have strong Duke connections,
Duke University, but I want to point out that I am the only one
of my Duke friends here that has two Duke degrees, so I hope
you will consider that when you are weighing my testimony.
I commend Chairman Walden and the committee for your
efforts to focus on process reform over the years, in addition
to the important work undertaken as part of the Comms Act
update process to reform the substance of our communication
laws. I have supported the Commission's earlier process reform
efforts, and I support the current efforts aimed at increasing
FCC transparency.
Alexander Bickel, one of the 20th century's most prominent
legal scholars, wrote in his 1975 book, ``The Morality of
Consent,'' that ``The highest form of morality is almost always
the morality of process.''
Sound process is crucial to ensuring accountability,
conforming to rule-of-law norms, maintaining public confidence
in the decisionmaking of our administrative agencies, and
increasing administrative efficiency.
This is especially so because the FCC's decisions, which
impact the public in significant ways, are made by unelected
decisionmakers who are not directly accountable to the public.
While I applaud the sentiments that Chairman Wheeler has
expressed regarding process reform, the reality is that the
Commission's own efforts have fallen short of what needs to be
done.
If enacted, the draft bills that are the subject of this
hearing would constitute important steps forward in reforming
the Commission's processes, and I find little in them to
disagree with. The FCC Process Reform Act of 2015, which
requires the Commission to initiate proceedings either to adopt
procedural changes or to seek public comment on whether and how
to implement other changes, is commendably comprehensive.
That said, I believe Congress should adopt some key
specific reforms now without waiting any longer for the
Commission to act on its own. So I want to use my remaining
time to support the proposals in the drafts produced by
Representatives Latta, Kinzinger, and Ellmers. By increasing
transparency, these bills promote rule-of-law norms, enhance
public confidence in the integrity of the agency's
decisionmaking, and increase the Commission's efficiency.
In some quarters, Representative Kinzinger's proposal
requiring advance publication of items to be considered by the
Commission at a Sunshine meeting provokes controversy, but it
should not. Indeed, it should seem odd that in advance of a so-
called Sunshine meeting, the text of the document the
Commission is voting on is kept out of the public's hands, in
the dark.
When Commissioners read their prepared statements, the
public can only guess at the substance of what is being
addressed. There is no reason why, subject to the usual
exemptions regarding privilege, that the text of the document
to be voted on should not be released in advance of the
meeting. Inevitably, there are often leaks concerning the
proposed text of items, some accurate and some not.
Some members of the public, by virtue of position,
proximity, or personal relationships, may receive more or
better information concerning the proposed text than others.
This does not inspire public confidence in the integrity of the
Commission's decisionmaking, and it doesn't enhance the
soundness of the Commission's decisions.
As Commissioner O'Reilly has pointed out, in discussions
with members of the public prior to the Sunshine cutoff quiet
period, the inability to talk in specifics about the proposed
item inhibits the usefulness of exchanges with the public that
might produce better, more informed decisions. Aside from
whatever specific time period is selected, Representative
Ellmers' bill, that the text of rules adopted by the Commission
be published online in a timely fashion, constitutes a useful
reform.
In light of legitimate concerns regarding the abuse of the
FCC's ubiquitous grant of editorial privileges to the staff at
the time of adoption of agenda items, there should be some
action forcing publication requirement to help ensure that the
rules before the Commission at the time of the vote in all
material respects are rules that will become the official
agency action. If this is not the case, then the very purpose
of the Sunshine Act is vitiated, for the public is not actually
witnessing a vote on the actual item that is going to be
adopted by the Commission.
Finally, in closing, Representative Latta's bill to require
that items to be decided pursuant to delegated authority be
identified on the agency's Web site at least 48 hours in
advance ought to be noncontroversial. While it is appropriate
for many items that do not present novel or significant
questions to be decided by the staff, the Commissioners
nominated by the President and confirmed by the Senate have the
ultimate decisionmaking authority on matters within the
Commission's jurisdiction. So a Commissioner should have the
opportunity to vote if they wish on all matters on which
official agency action is taken, and Representative Latta's
bill is a means to effectuate that opportunity.
Thank you for giving me the opportunity to testify today,
and I will be pleased to answer any questions.
[The prepared statement of Mr. May follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Mr. Walden. Thank you, Mr. May. We appreciate that.
If you will slide that microphone over, we will go to
Stuart Benjamin, the Douglas B. Maggs Chair in Law and
Associate Dean for research at Duke Law.
Mr. Benjamin. They all work now, I think.
Mr. Walden. Yes, you are on.
Mr. Benjamin. Great.
Mr. Walden. Good morning.
STATEMENT OF STUART M. BENJAMIN
Mr. Benjamin. Chairman Walden, Ranking Member Eshoo,
members of the subcommittee, thanks for having me. So my
background in many ways revolves around the FCC.
I teach administrative law, telecommunications law, First
Amendment law. I am coauthor of a telecommunications casebook.
From 2009 to 2011, I served as the inaugural distinguished
scholar in residence at the FCC, a title you can blame on
Commissioner McDowell here who suggested it and who actually
had first suggested to me in 2006: You should go work at the
FCC maybe.
But any event, more recently, I have been periodically
serving the Commission as a consultant, but I want to
emphasize, I have not spoken to anybody in the Commission about
any testimony in any of these bills. I have no clients. I have
had no clients since I became an academic. Nobody has paid me
for this testimony. I don't do any private consulting, et
cetera.
OK. So all the bills that are the focus today and the three
bills that the subcommittee considered on April 30 avoid most
of the most serious concerns that I raised in 2013. So I think
I commend you all for--it seems to me that they have moved in a
very useful direction. I think it makes a lot of sense, for
instance, to tell the FCC: Here is what we want you to do. We
are making the big policy decisions. You implement them.
I also think it makes a lot of sense to focus on disclosure
rules. Some disclosures can do more harm than good and actually
inhibit effective decisionmaking processes, but many forms of
disclosure have little or no such inhibiting effects on
decisionmaking processes and may well make both members of the
public and Members of the Congress understand better what is
going on at the Commission.
I do have some reservations. They are pretty modest in the
grand scheme of things, but I would be remiss if I didn't lay
them out. The first, the same I mentioned in 2013, I know this
committee's jurisdiction, but I simply have to say it because
it is my view of the world. I think it is a better approach if
you have reforms you think make sense to apply them across the
board.
This is not just a fetish. It is that this allows for
judicial resolution more quickly than of the issues that any
particular piece of legislation creates. And so the greater the
specificity, the longer it takes the courts to work out exactly
how that is going to apply.
Second, as I said, I think this largely avoids the concerns
I raised in 2013 about litigation risk. There are some
provisions here that create some uncertainty and some
litigation risk. They are not huge. I mentioned one in my
written statement that there is a reference to how the FCC is
going to handle extensive new comments. So the FCC is going to
have to define now what are extensive new comments, and then
there is going to be litigation about what constitutes
extensive new comments.
Third, I think that one section of the bill is in some
tension with Representative Kinzinger's draft bill, that is the
section 13(a)(3)(c) of this bill says: Want to make sure that
all Commissioners get a full chance to review FCC orders, et
cetera. Representative Kinzinger's bill says: Within 24 hours
of an order being circulated to all the Commissioners, it has
to be circulated to the public, and then good-faith changes can
be made after that.
So the trigger is, now we have to justify changes after it
goes to the public. Why do I highlight this? Because for
Commissioners, the best opportunity for them to respond is when
they have actually gotten formal receipt and they can have
contact. And, by the way, and if we could have changes in the
Sunshine Act, they could actually even meet among themselves in
groups greater than two and not have to switch to talking about
the Nationals whenever a third walks up. But that is the best
opportunity. And now we have actually raised the cost of
changes because now you have to justify these as good-faith
changes.
A couple other things, let me just mention quickly. One is
that section 13(a)(2)(c) is the one that says if there are
submissions received after the comment window, then the public
gets to respond to those. There is a possibility then for an
endless loop, right. So the public responds with new
submissions, then those need to be responded to, et cetera.
And the way to avoid that problem, it seems to me, is for
the FCC simply not to receive submissions after the comment
window. But the question then is, sometimes things happen after
the comment window; technology is changing all the time. Don't
we want the FCC to have the latest information, the most pieces
of information when it is making its decisions.
Finally, let me just mention that the requirement in
13(a)(2)(g) requiring that notices of proposed rulemaking
contain the specific language of the proposed rule, let me
simply note this will cement the transition of the formal
rulemaking process from a rulemaking to a rule-adopting
process. That is to say, what that really means is, all the
relevant decisions will have been made before the comment
process, before the NPRM.
And that might be a better world in some ways; we might
think public comments can only move the Commission at the
margin or move any agency at the margin, but it does mean that
the agency has to have fully baked its whole rule before it
actually begins the public comment process.
Anyway, let me desist with that. And thank you very much
for your time.
[The prepared statement of Mr. Benjamin follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Mr. Walden. Thank you very much, Mr. Benjamin. We
appreciate your coming up for our hearing today.
Now, we will turn to our final witness, the Honorable
Robert McDowell, former SEC Commissioner and a senior fellow at
the Hudson Institute.
We welcome you back before the committee.
STATEMENT OF ROBERT M. MCDOWELL
Mr. McDowell. Mr. Chairman, thank you for having me back.
it is an honor and privilege to be here.
And Ranking Member Eshoo and all the members, thank you. It
is good to be back here.
First, all the disclaimers: Today, I am testifying only in
my personal capacity and not on behalf of the Hudson Institute
or the law firm of Wiley Rein or any of its clients, and the
thoughts I express today are purely my own. And I have stapled
to the back of my testimony a lot of other FCC reform ideas I
wrote about as a Commissioner and have testified about with you
in this room and downstairs and elsewhere.
So, when I was an FCC Commissioner, we had many positive
and constructive conversations with this committee and with
each other about FCC reform. And one of the refreshing aspects
that has already been touched upon today of this topic is the
tremendous potential this topic offers for bipartisan
cooperation to find solutions in the spirit of pursuing good
government.
It can be done because it has been done. For example,
former Acting Chairman of the FCC Mike Copps and I collaborated
on many reform efforts back in 2009, including the
modernization of the FCC's ex parte rules and proposed changes
to the Sunshine in Government Act. And, similarly, Chairman
Genachowski and I worked together in many other matters as
well.
And I do note that with great enthusiasm, we have several
bills and discussion drafts written on both sides of the aisle
that are being considered by this committee, and good ideas
abound. Without offering a specific endorsement, I will endorse
the spirit and theme in some of the ideas here today. So I
applaud the committee for its energy and good faith that you
are putting behind this effort.
The bottom line on reform efforts however is that they
should be based on the principles of sound due process,
transparency, accountability, fairness, and efficiency. And I
am going to edit out because I know we are behind schedule some
of what I was going to say, but I would like to add, there are
a few ideas that I have talked about over the years that the
Commission should be required to justify new rules with bona
fide cost-benefit analyses. New rules perhaps should sunset
after a defined period of time and that renewal should be
justified from scratch in a new proceeding.
And it is precisely because the communications marketplace
is evolving so rapidly. Technology is coming out of
Congresswoman Eshoo's office, and other districts here are
really just abounding and changing by the second.
But also I think we need to look at merger reviews. When
the Commission intends to deny a merger, the parties should be
able to go to court for review after waving the costly and
time-consuming hearing process. And also mergers, I think,
should have a bona fide shot clock, obviously with some
exceptions for extraordinary circumstances.
And I do agree that the Sunshine in Government Act should
be modernized so that more than two Commissioners can talk
about substance. That would actually help a lot of what we are
talking about here. At the end of the day, Commission orders
have to be well reasoned and are disclosed and are appealable,
of course, to the courts. So it is not a secret as to how the
Commission is arriving at a decision, but that should be fixed
as well.
And, lastly, I would be remiss if I didn't reiterate my
call for Congress to rewrite our country's creaky and
antiquated communications laws. The 1934 act will celebrate its
81st birthday next month, and the 1996 act is almost 20-years-
old, which reminds me of my 20th wedding anniversary. We were
married in 1996, so it is always good to keep those in mind.
But a lot has changed in just the last few weeks, let alone
the last 81 years. We need to modernize our communications laws
to reflect current market conditions and technologies. So thank
you again for having me here today. It is a tremendous honor to
be here, and I look forward to answering your questions.
[The prepared statement of Mr. McDowell follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
[The appendices to Mr. McDowell's testimony have been
retained in committee files and can be found at: http://
docs.house.gov/meetings/IF/IF16/20150515/103464/HHRG-114-IF16-
Wstate-McDowellR-20150515.pdf.]
Mr. Walden. Well, thank you, Mr. McDowell.
We appreciate the testimony of all of our witnesses. We
will go into the question phase at this point, knowing we are
going to get votes here in a minute. And I actually look at
what we are doing here today as kind of phase one of the Comms
Act update is Title 1, which is how the FCC itself operates.
There are many other issues to come in our efforts, but
certainly the operations of the Commission itself need to be
reviewed from time to time, that is our responsibility.
I know there has been a lot said about how we are just
focused on one Commission, and I think Mr. Benjamin you touched
on this, as others have over time, that somehow changing the
rules here isn't how we should do this. We should do it across
all agencies.
But, Mr. McDowell, isn't it true that the FCC actually
doesn't operate fully under the APA today? It has its own--like
for example, I pointed out in the last hearing, the IG is
appointed by the Chairman and reports to the Chairman. That is
not the way it is in other agencies necessarily. It has its own
unique carve out, doesn't it?
Mr. McDowell. Well, it can, yes, absolutely. And the
example you point out is a good example of that, so----
Mr. Walden. And your cost-benefit analysis required in
other agencies is not here, correct?
Mr. McDowell. Correct.
Mr. Walden. And do you think that should change?
Mr. McDowell. Absolutely. I mean, I have called for that
for years when I was a Commissioner. I think it would benefit
everybody. What are the costs? There are costs to new rules,
and there is sometimes and almost always unintended
consequences. Sometimes there are intended consequences. But we
should take a look at those in a fully vetted way. And those
can actually harm the most entrepreneurs and small businesses.
Mr. Walden. And what do you make of Mr. May's suggestion
that rules every 2 years should be reconsidered?
Mr. McDowell. Randy and I have agreed on a lot of things
over the years, and whether two is a magic number or some other
period of time, the spirit of that is that they should be
renewed and reviewed often, and they should be sunsetted.
Mr. Walden. Do you think that would create too much
uncertainty in the marketplace if the rules get changed every 2
years or reviewed every 2 years or 3 or 4?
Mr. McDowell. Well, however many years it would be, you
could make that argument certainly, but a bad rule in place
isn't good for the marketplace either.
Mr. Walden. Mr. May, do you want to comment further on your
suggestion.
Mr. May. Thank you, Mr. Chairman.
And, you know, it took me a long time to be old enough not
to question a Duke law professor, but now I think I have the
years.
On the point you raised about the APA changing that Mr.
Benjamin has raised and raised before versus making changes to
the Communications Act, I just want to say this because this is
an important point that has reoccurred: The APA sets minimum
requirements for Federal agencies subject to it, which are most
Federal agencies, including the FCC. But, in many agencies,
there are different procedural requirements that Congress has
adopted. The FTC, EPA, OSHA, they all have different procedural
requirements because they do different things, and they have
different subjects and issues.
And, in this particular case, aside from the differences in
the FCC's jurisdiction, this committee has identified process
failures over the last 2 years, 1 to 2 years that, in my view,
are pretty substantial, which warrant addressing those.
And then I think the final thing I would say on this point
is that I think there is a value sometimes in experimenting
with different processes. I don't think all the agencies have
to be the same. We may learn some things if these procedures
are adopted that would be useful to apply to other agencies, or
we may learn that they need to be adjusted, or we may learn
possibly that they don't work and Congress is going to be back
next year and the year after, and they can be either tweaked or
eliminated.
But I don't--the final thing I would say is, I don't think
it is a reason not to make changes because there may possibly
be litigation about some of the terms in the laws. I mean, if
you take that view, then you guys wouldn't do anything up here
if you are concerned that the law you adopted----
Ms. Eshoo. And gals.
Mr. May. And gals, yes. I meant that generically, Ms.
Eshoo.
Mr. Walden. Let me go to this point, and that is, Mr. May,
you referred to the FCC's practice of granting the staff
editorial privileges in your prepared testimony. How does that
longstanding practice affect Commission transparency and
decisionmaking?
Mr. May. Well, to me, this is a pretty fundamental point. I
have watched the grant of editorial privileges for basically
three decades. My perception is it is difficult to prove
empirically, but I think over time, it is more often than not--
not more often than not, but it is more common now that these
editorial privileges may involve things we would consider
substantive.
But the basic problem is----
Mr. Walden. Yes. I have got 18 seconds left. Mr. McDowell,
from your experience there, talk just quickly, editorial
privilege. What does that really mean in reality?
Mr. McDowell. Well, in the ideal, it means typos and
cosmetic, not substantive changes, not like throwing in the
word ``not.''
Mr. Walden. Or ``shall.''
Mr. McDowell. Or ``shall,'' yes, exactly.
Mr. Walden. And that does happen?
Mr. McDowell. Yes, it has. Yes, absolutely, it has.
Mr. Walden. All right. My time is expired.
Turn to the gentlelady from California, Ms. Eshoo, for 5
minutes.
Ms. Eshoo. Thank you, again, to the witnesses.
The current FCC process reform bill language provides for a
delay--and I mentioned that in my opening statement in--the
implementation of the FCC Collaboration Act. Now, given the
widespread support, and it has been already touched on in your
testimony, the support for the reform, do you think that such a
delay is necessary? We say it is great. It is important. We
should move ahead with it. We embrace it. We support it. We
endorse it, but we are going to delay it. So tell me what you
think.
Mr. May. Thank you, Ms. Eshoo. And I apologize for the
reference to ``guys.''
Ms. Eshoo. That is all right.
Mr. May. I meant it generically. But, look, I would say
this, I am a long-time supporter of the Sunshine Act exchange.
Ms. Eshoo. I know you are.
Mr. May. I support these changes. I, myself, might go
further.
Ms. Eshoo. But do you think it should be delayed?
Mr. May. I think this should be done together for this
simple reason, that when you look at all these changes, they
all relate to how the Sunshine Act works in terms of advance
publication of notices, what you do afterwards. So I would do
them all together. That would be my preference.
Ms. Eshoo. Thank you.
Mr. Benjamin. I personally don't see any reason for delay
only because this is the only issue on which I believe every
single administrative lawyer in the country--well, 99.8 percent
would agree.
Ms. Eshoo. That is pretty good, yes.
Mr. Benjamin. It is hard to think of anything that has more
unanimity than that. The Government Sunshine Act has had
unintended consequences, producing, as far as I can tell, the
only benefit of which is more discussions of the Nationals.
Ms. Eshoo. Exactly.
Commissioner McDowell.
Mr. McDowell. That can be a good thing. They were the best
team in the National League last year.
Mr. Benjamin. But they didn't go anywhere.
Mr. McDowell. Playoffs will fix that.
So, in an ideal world, we would want these things to be
done as quickly as possible. Obviously, there are other
circumstances in reality that prevent that sometimes.
Ms. Eshoo. But do you think it shouldn't be delayed?
Mr. McDowell. In the ideal, no.
Ms. Eshoo. Exactly, yes.
Mr. Benjamin, are there any statutory changes that you
think are necessary to improve efficiency at the Commission?
Mr. Benjamin. ``Necessary'' is a tough word. I don't think
much is necessary, so, as a high enough hurdle, that nothing
jumps out at me that I would think, boy, you absolutely have to
do this.
Ms. Eshoo. Yes. Under Representative Latta's bill, it is my
understanding that a list of all the delegated items, including
routine application, processing, noncontroversial public
notices, would have to be publicly produced 48 hours before the
bureau is allowed to act.
Now, we heard 2 weeks ago that the Commission literally
makes hundreds of thousands of delegated authority decisions on
a yearly basis. We had a lot of conversation about this at the
last hearing. How do you think this new requirement would
impact the Commission's work?
And I think, Commissioner McDowell, you probably want to
lean in on this. And what do you think the cost impacts would
be?
Mr. McDowell. Actually, I think the cost impacts, to start
with that, would be minimal. The staff is already working on
those matters, right, so by merely kind of listing them on the
Web site. As the FCC's IT system improves hopefully, it should
be an incremental cost, if any additional cost. And, actually,
it improves transparency. I don't think it would be a burden on
the staff at all. They are already working on it.
Ms. Eshoo. Thank you very much.
In the interest of time, Mr. Chairman, I am going to yield
back, but just one comment. I think given what our three
witnesses, how they responded to my question about the
Collaboration Act and delay, that we shouldn't delay.
So I yield back. Thank you.
Mr. Walden. Appreciate that.
And I think the FCC already produces its Daily Digest of
all those, doesn't it?
Mr. McDowell. The Daily Digest is about actions that have
happened, and it is not about everything that goes on at the
Commission necessarily.
Mr. Walden. All right. Mr. Latta, we will turn to you for 5
minutes.
Mr. Latta. Well, thank you, Mr. Chairman.
And again, to our witnesses, thanks very much for appearing
today.
Mr. McDowell, if I may, over the past several Congresses, I
have introduced legislation that would require the FCC to
conduct cost-benefit analysis at the time of a notice for
proposed rulemaking and again at the time the final rule is
issued. I believe that a cost-benefit analysis will provide the
public with a transparent monetary impact of the FCC rules.
Additionally, under the APA, other agencies already determine a
cost-benefit analysis of rules.
Do you think that the FCC should be held to the same
standard? And do you also believe it would be an advantage for
the Commissioners to have a better understanding of what cost
and benefits are of an action before they vote?
Mr. McDowell. Absolutely. And something I called for for
years as a Commissioner as well. I think it is just a matter of
good government to know what are the costs of the proposed
rules. There are similar statutes already in place, Paperwork
Reduction Act, the Regulatory Flexibility Act, but they are not
quite the same as what you are proposing. And I think what you
are proposing actually makes it clearer and would make the
agency more accountable for its actions if it knows that the
rules it is about to impose or going to impose cost.
So I think that could only be a benefit. Sometimes rules
need to be put in place, but let's understand exactly what the
effects and the side effects might be.
Mr. Benjamin. Can I jump in on that?
Mr. Latta. Mr. Benjamin, go right ahead.
Mr. Benjamin. So there is a bill that Senator Portman
introduced in the previous Congress, the Independent Agency
Regulatory Analysis Act, that would have all independent
agencies' regulations be run through OIRA or just like
executive agencies. So it would be the same process. For what
it is worth, I will just say, strikes me as a great idea to
have everything subject to cost-benefit analysis.
Mr. Latta. Well, thank you very much.
Mr. Chairman, in the interest of time, since I think we are
voting, I will yield back.
Mr. Walden. Gentleman yields back.
Recognize gentleman from Vermont.
Mr. Welch. Well, we have votes, but two things: One, I want
to thank the chair and the ranking member for having this
hearing. Number two, I really think this is an area where we
should try to make what changes will help the organization
function better. And we have got tremendous witnesses here who
have given us some concrete suggestions. And I am all in on
trying to implement some of these changes to make it work
better.
We should be spending our times having the debate about
policy and being, in my view, as accommodating to folks who
have responsibility to run these institutions so that they have
the equipment they need, they have procedures in place, and
that they can do the tough job we give them as efficiently as
possible.
So thanks for you and Ms. Eshoo for having this hearing.
And thank you for the witnesses coming here and really
appreciate the benefit of your experience and advice.
Mr. Walden. I think that we are in the middle of votes, and
we are going to be probably an hour plus. So I think we
probably move to adjourn. I don't know if any members--this is
the last votes of the day, so I would be surprised if we had
too many come back.
I think that is what we will do is that, rather than hold
you all here with the hopes someone comes back on a go-away day
and the last votes, I think what we will do is ask you to
respond to written questions as submitted by our colleagues and
ourselves.
We very much value your testimony, your counsel. You bring
years of really important experience to the table. We have
listened to your past suggestions and tried to incorporate
those, and we will listen to these as well and plan to move
forward.
So thank you very much.
And, with that, the subcommittee stands adjourned.
[Whereupon, at 10:06 a.m., the subcommittee was adjourned.]
[Material submitted for inclusion in the record follows:]
Prepared statement of Hon. Fred Upton
The quality of our rules and laws are judged as much by the
process under which they are produced as by the substance of
their words. Our best work comes through an open, transparent,
and accessible process--whether in the halls of Congress or the
caverns of the federal bureaucracy. Too often of late, however,
the work of the FCC has been marred by opacity and
gamesmanship. Information on the commission's process has been
relegated to after-the-fact press statements--leaving us all
guessing how the FCC makes decisions. As a result, trust in
those decisions has suffered.
Oversight of the commission and dedication to ensuring the
highest standards of conduct from commissioners has long been a
hallmark of the Energy and Commerce Committee. That work
continues with a bill to reform FCC processes generally,
sponsored by Subcommittee Chairman Greg Walden and Ranking
Member Anna Eshoo, as well as three draft bills offered by
Democratic members of this subcommittee. This subcommittee has
always fostered bipartisanship, and it is extremely encouraging
that we are able to strengthen this tradition today.
I applaud my Democratic colleagues for joining us in
calling for improved transparency and better process at the
FCC. I firmly believe that we can and will make the commission
a more efficient and accountable agency.
----------
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
[all]