Does the FCC Need to be Reauthorized?

Hearings mark the beginning of Congressional efforts to write and pass legislation to reauthorize the FCC

Three weeks after the Federal Communications Commission’s controversial vote on network neutrality, FCC Chairman Tom Wheeler and his fellow commissioners faced a series of oversight hearings organized by a number of Congressional committees. Discussions of the merits of the FCC’s decision – and the process by which the independent agency reached it -- are garnering much of the attention in the press. But for the leadership of two key Congressional panels, this week’s hearings seem to be kicking off a long-term plan to reshape the FCC and how it does its business.

“Today’s hearing,” Senate Commerce Committee Chairman John Thune (R-SD) declared on March 18, “marks the beginning of the Commerce Committee’s efforts to write and pass legislation to reauthorize the FCC.”

The Authorizing Process

As part of its oversight function, Congress can pass authorizing legislation that establishes, continues (a reauthorization), or abolishes (a de-authorization) a federal agency or program. It can enact statutes authorizing the activities of the departments, prescribing their internal organization and regulating their procedures and work methods. Once an agency or program is created, the reauthorization process, which typically occurs on an annual or multiyear cycle, can be an important oversight tool. Significant issues are often raised during the authorization or reauthorization process. Lawmakers may ask such questions as: Can the agency be made smaller? If this program or agency did not exist, would it be created today? Should functions that overlap several agencies be merged or consolidated? What fundamental changes need to be made in how the department operates?

The FCC, an independent United States government agency formed to regulate interstate and foreign communications, was established by Congress under the Communications Act of 1934 to replace the former Federal Radio Commission. The Communications Act provided the FCC broad latitude to establish “a rapid, efficient, Nation-wide, and world-wide wire and radio communication service”. When established, the FCC had three divisions (Broadcast, Telegraph, and Telephone) led by seven Commissioners and 233 Federal employees. Today, the FCC has seven bureaus (Consumer & Governmental Affairs; Enforcement; International; Media; Public Safety & Homeland Security; Wireless Telecommunications; and Wireline Competition), five commissioners and 1,671 staff.

Congress has not reauthorized the FCC since the Federal Communications Commission Authorization Act of 1990 was passed a quarter century ago. “Indeed, the FCC is the oldest expired authorization within this Committee’s expansive jurisdiction,” said Chairman Thune this week, a situation that he said he intends to rectify in this Congress.

In 1990, President George H. W. Bush signed the 1990 legislation which authorized appropriations for the Federal Communications Commission for FY 1990 and 1991. In addition, the legislation:

The last FCC reauthorization happened in 1990
  • Made funds available to the FCC for administrative expenses associated with the collection of fees.
  • Earmarked specified FY 1991 FCC funds for upgrading and modernizing equipment at the FCC's electronic emissions test laboratory in Laurel, Maryland.
  • Authorized the FCC to accept and employ the services of qualified persons to prepare and administer examinations for commercial radio operator licenses or endorsements. Authorized the Commission to prescribe regulations to select, oversee, sanction, and dismiss such employees. Excepted such employees from consideration as Federal or special Government employees.
  • Extended through: (1) FY 1992 the FCC's travel reimbursement program; and (2) FY 1991 the FCC's authorization to make grants or to enter into agreements to utilize the talents of older Americans in programs authorized by the FCC.
  • Extended through FY 1992 the FCC's authorization to expend funds for the relocation within the State of Hawaii of the Hawaii Monitoring Station then located in Honolulu. Amended the Federal Communications Commission Authorization Act of 1988 to authorize the Administrator of General Services to dispose only to the State of Hawaii the property comprising such Station in order for such relocation to occur. Required such sale and conveyance to occur on an expedited basis. Specified terms and conditions of sale, including the payment of at least the fair market value of such property by Hawaii to the Administrator. Required GSA to reimburse the FCC the net proceeds of such sale. Provided that, in the event the GSA and Hawaii are not able to execute a contract for such sale, the Administrator shall not proceed to public sale of such property. Required the Station to continue full operations at its original location until a new facility was built and was fully operational.
  • Increased to 120 days (previously 90 days) the period of notice a common carrier was required to provide before implementing changes in the fees charged for wire or radio communications between different points within the carrier's system.
  • Authorized the use of multilateral (currently, only bilateral) agreements between the United States and an alien's government when allowing such alien the right to operate an amateur radio in both the United States and the countries privy to the multilateral or bilateral agreement.
  • Prohibited the willful or malicious interference with any radio communication of any station licensed or authorized under the Communications Act of 1934 or operated by the Government.
  • Excluded persons who are not applicants for certain licenses from the FCC from forfeiture penalty provisions in the case of rebates or offsets.

“FCC reauthorization is an area where I believe Republicans and Democrats can and should work together,” said Chairman Thune. “Wanting the FCC to be an effective, efficient, and accountable regulator shouldn’t be a partisan goal. I know Members on both sides of the aisle have commonsense ideas to make the agency more responsive to the needs of consumers, Congress, and regulated companies alike, and I look forward to hearing their suggestions and views. And I look forward to hearing the Commissioners’ thoughts today about ways Congress can help their agency improve.” Chairman Thune also expressed a desire for Congress to return to regularly authorizing the FCC “as part of its normal course of business.”

The FCC's Budget

Chairman Thune also questioned the FCC’s current budget request. The “FCC has requested $530 million dollars for Fiscal Year 2016. This funding level would be the highest in the Commission’s history. That alone raises eyebrows, particularly when American households continue to do more with less in this stagnant economy, but the FCC also wants to fund this increase in part by raiding the Universal Service Fund.”

Senate Commerce Committee Chairman John Thune (R-SD)
Senate Commerce Committee Chairman John Thune (R-SD)

"Paying for record high budgets by siphoning money from USF is a dangerous precedent,” Chairman Thune said. “While members of this Committee may have varying views on the USF’s efficiency, scope, and growth, one thing I think we can all agree on is that its limited funds should not be used as a reserve fund to pay for the FCC’s core statutory functions. That’s what the Commission’s regulatory fees are for. USF funds should pay for USF services, and I don’t believe the FCC should jeopardize the stability and integrity of the Universal Service Fund in order to paper over its record high budget request.”

The FCC’s FY 2015 budget is $456,474,000 and the Commission is requesting an approximate 17 percent increase for FY 2016. But over 90 percent of the increase represents the funds needed to initiate a required move through General Services Administration (GSA) to new headquarters or headquarters restacking. This process is necessitated by the expiration of the FCC’s current lease. GSA is working with the FCC to identify the most-cost effective alternative to the current leasing agreement. Otherwise, the FCC requests funds to follow through on essential information technology (IT) upgrades, as well as other projects initiated during FYs 2014 and 2015. These initial budget increases have been developed to provide cost savings as follows:

  • Move or restack the FCC Headquarters, as required by the expiration of the existing lease, establishing a more efficient space utilization to reduce the Commission’s footprint. This process will save the FCC up to $119 million over fifteen years.
  • Continue the IT modernization which includes replacing the FCC’s legacy infrastructure with a managed IT service provider to generate efficiencies and savings; rewriting legacy applications as part of a modular "shift" to a modern, resilient cloud-based platform; and improving the IT resiliency of the FCC enterprise. These measures are estimated to realize cost savings between two and three million dollars by FY 2017 and an additional five to ten million dollars over the next five years.
FCC efforts to modernize operations have been hamstrung by level appropriations since 2013, but a House bill proposes to freeze budget for the next four fiscal years

Also, the FCC said in its budget request, the initial budget increase is critically needed to fund the following:

  • Increase the Office of Inspector General (1) baseline budget for additional staff and contractor support.
  • Develop and implement the Do-Not-Call registry for telephone numbers used by Public Safety Answering Points (PSAPs).
  • Continue activities in support of the National Broadband Map.

The FCC also requested the transfer of $25,000,000 from the Universal Service Fund (USF) to the Commission’s appropriation to cover the costs related to the oversight of the USF programs. In particular, the FCC says, the funding will help improve USF program integrity by reducing fraud, waste, and abuse through targeted investments aimed at reducing and recovering improper payments, among other critical oversight functions.

In testimony before the Senate, Chairman Wheeler said, "The Commission’s efforts to modernize operations have been hamstrung by level appropriations since 2013. In particular, we need to upgrade our IT infrastructure; we have more than 200 relic IT systems that are costing the agency more to service than they would to replace over the long term. I believe these investments are essential and will payback in dividends with the increased efficiency gained."

A Draft Reauthorization Bill in the House

On March 17, House Communications and Technology Subcommittee Chairman Greg Walden (R-OR) released a draft bill to reauthorize the FCC. The draft legislation would:

House Communications and Technology Subcommittee Chairman Greg Walden (R-OR)
House Communications and Technology Subcommittee Chairman Greg Walden (R-OR)
  • Authorize Federal Communications Commission appropriations at the current level for the next four fiscal years.
  • Authorize appropriations to the Commission for spectrum auction expenses at the current level through 2022 - the last year of existing FCC auction authority.
  • Authorize $9 billion per year in appropriations — to be offset by fund contributions — for the support of Universal Service programs. This would cap the Federal Universal Service Fund at $9 billion per year, limiting the growth in the fund, and thus the amount of money the FCC extracts from consumers each year.
  • Authorize the Commission to make changes to its schedule of fees to reflect changes in the composition of the Commission’s work and the rate of inflation.
  • Create an independent Inspector General at the FCC, removing the ability of the Chairman to hire or fire the agency’s Inspector General.(1)

"Reauthorization of the Federal Communications Commission is long overdue," said Commerce Committee Chairman Fred Upton (R-MI) "as the agency was last reauthorized nearly a quarter of a century ago. A lot has changed over the last 25 years, and reauthorization provides an important opportunity to refocus the Commission for the innovation era on its core purpose and responsibility to administer the policies set by Congress for the American people. I intend to see that we deliver."

"Independent agencies are tasked with faithful implementation of the laws and policies adopted by Congress,” said Chairman Walden. "Changes to the scope of an agency’s reach are therefore properly achieved only through legislation." He pointed to concerns about:

  • The process by which the FCC adopted net neutrality rules;
  • The FCC’s preemption of state laws restricting municipal broadband;
  • FCC enforcement of privacy protections traditionally under the purview of the Federal Trade Commission;
  • Delegation of FCC authority to its bureaus; and
  • A backlog of open, uncompleted dockets.

FCC Commissioner Ajit Pai echoed these concerns in his Senate testimony, "I believe that action should be taken to restore the FCC to its collaborative and bipartisan tradition," Pai said.

At the same hearing, FCC Commissioner Michael O’Rielly noted that he has voted with Chairman Wheeler on approximately 90 percent of all items. “Unfortunately, this percentage drops significantly -- to approximately 62 percent -- for the higher-profile Open Meeting items,” he testified. O’Rielly has advocated that any document to be considered at an FCC Open Meeting should be made publicly available on its website at the same time it is circulated to the Commissioners, typically three weeks in advance. He’s also questioned the FCC’s post-adoption process: items approved at an FCC meeting can be changed by the Commission staff after the meeting to make or strengthen arguments in response to Commissioner dissents or additional industry filings to improve the Commission’s potential litigation position.

Politico reports that Republican aides to the House Commerce Committee say that a provision pushing the FCC to reveal orders prior to a vote is likely to resurface in a FCC process reform bill. Republicans sought to force such a change in their 2012 process reform bill, but watered it down in their 2014 proposed legislation in order to appease Democrats. But that was before the net neutrality fight brought the obscure issue to a much wider Washington audience.

Politico says it is a tough issue for Democrats, who generally oppose the idea because they say some confidentiality is needed for wonky negotiations at an expert agency and there's a need to stave off premature public reaction. But it's not an enviable position for Democrats, who remember all too well Republicans' health care one-liner that Democrats want to "pass the bill to find out what's in it." Asked about the Republicans' FCC transparency push, Subcommittee Ranking Member Anna Eshoo (D-CA) tried to question the GOP's own openness: "I think it's a lovely idea, and I think the people that are proposing it should follow what they are proposing," citing Walden’s reauthorization bill that Democrats didn't get a heads-up on. Full Committee Ranking Member Frank Pallone (D-NJ) suggested that if Republicans want bipartisanship, they should provide more than 48 hours notice on drafts. “As witness testimony was already being submitted, the Republicans released -- with no notice -- a partisan discussion draft that would completely overhaul the FCC's funding,” Rep Pallone said. “This maneuvering is unfair to the witnesses and unfair to the members of the subcommittee.”

The FCC Moves to Reform Itself

At the hearings this week, FCC Chairman Wheeler highlighted his efforts to improve FCC processes since he took office. In 2014, an internal FCC staff working group presented a Process Reform Report to the Commission as an important first step to becoming more agile and business-like in order to become more effective, efficient, and transparent. Guided by the report, the FCC been moving forward with changes to streamline how it functions so the agency is better able to serve the entities it regulates, as well as the American public. As an example, the Chairman noted his use of consent agendas at meetings to facilitate quick action on non-controversial items that require a vote of the commissioners. The FCC has also made significant progress, he reported, toward all-electronic filing and distribution of documents. On March 19, the FCC announced the availability of an online-filing module for Petitions for Rulemaking that previously could be filed only on paper.

In response to concerns about a backlog of undecided matters at the FCC, Wheeler noted that every Bureau and Office with responsibility for responding to requests from external petitioners and licensees has developed a backlog reduction plan. And in 2014, the FCC closed more than 1,500 dormant dockets.

In early 2015, the FCC launched a new online Consumer Help Center, which will make the FCC more user-friendly, accessible, and transparent to consumers. The new tool replaces the FCC's previous complaint system with an easier-to-use, more consumer-friendly portal for filing and monitoring complaints. In addition to being easier to use for consumers, the information collected is to be integrated with the FCC's policymaking and enforcement processes.

The FCC is forming a task force to review its internal procedures following criticism from Republicans, Chairman Wheeler announced on March 19. He will appoint one staff member from each of the five commissioners' offices to review and compare procedures of similar agencies. Chairman Wheeler said the task force will be led by his special counsel Diane Cornell, and it will determine whether more change is needed.

Commissioner Michael O’Rielly said he welcomed the announcement and his staff will actively participate. “To be clear, the standard for the task force must be what is in the best interest of the American people and promotes a fair, open and efficient Commission process, not what other agencies happen to be doing. With this goal in mind, the Commission will surely be able to set a good government model other agencies can emulate. The task force should complement -- not substitute for -- Congress’ effort to move process reform legislation.”

Conclusion

During the House Communications Subcommittee hearing, House Commerce Committee Ranking Member Frank Pallone said, "I've yet to hear a convincing explanation for why this legislation is a good idea. Given what we just went through with the Department of Homeland Security, I doubt our constituents are clamoring for us to create another funding cliff. This agency is too important to play these types of games with its funding."

Rep Eshoo similarly said the reauthorization seemed intended to "squeeze an agency that is already operating at the lowest number of full-time staff in 30 years. The FCC must have the means to fulfill its mission to protect consumers, promote competition, and advance innovation."

As Chairman Thune noted, this week's hearings mark just the beginning of what could be a long fight.


Notes:

  1. Congress has created statutory offices of inspectors general (IGs) in nearly 70 major federal entities and departments. The IGs, for example, are located in all fifteen cabinet departments, the Central Intelligence Agency (CIA), and the independent regulatory commissions. Granted substantial independence by the Inspectors General Act of 1978, as amended in 1988 and again in 2008, these officials are authorized to conduct investigations and audits of their agencies to improve efficiency, end waste and fraud, discourage mismanagement, and strengthen the effectiveness and economy of agency operations. IGs strive to keep Congress fully and currently informed about agency activities, problems, and program performance through such practices as the issuance of periodic reports and testimony before House and Senate committees. Appointed in various ways -- in most cases either by the President subject to Senate confirmation or by agency heads -- IGs report their findings and recommendations (1) to the Attorney General in cases of suspected violations of federal criminal law; (2) semiannually to the agency head, who must transmit the IG report to Congress within thirty days with no changes to the report but with his or her suggestions; and (3) in the case of “particularly serious or flagrant problems,” immediately to the agency head who must send the report to Congress within seven days unaltered but with his or her recommendations.

By Kevin Taglang.