The Trump FCC’s Toolkit For Deregulating Media and Telecommunications

Although there are many articles and blog posts discussing likely policy changes in the media and telecommunications space, it is far too early to know exactly when and what will happen at the Federal Communications Commission under the forthcoming Trump Administration. However, it is not too soon to identify the legal mechanisms available to Congress and the FCC to unwind many of the Obama era accomplishments. In light of the Democrats’ loss of the White House and failure to take control of the Senate, public interest advocates will have a very hard time protecting these and earlier regulatory requirements given the breadth of the power conferred by these statutes.

I. Reversing Recent Decisions

From the moment he took office in late 2013, outgoing FCC Chairman Tom Wheeler operated from the premise that his tenure might not extend beyond January 2017. Even though he undertook an ambitious agenda as soon as he arrived, a number of his major initiatives were not completed until the latter part of 2016. As a practical matter, it is reasonably easy for Congressional Republicans and the incoming Republican majority at the FCC to derail at least some of these recently adopted regulations. Here’s how.

The legal mechanisms available to Congress and the FCC to unwind Obama-era accomplishments

A) The Congressional Review Act

The Congressional Review Act (CRA) is a regulatory H-bomb. Newt Gingrich led the Republicans to a takeover of Congress in 1994 by campaigning on a “Contract with America” promising to adopt a series of changes within 100 days of taking office. The CRA was one component of this package. Although this provision has been on the books for 22 years, circumstances have made it largely unimportant until now; previously, it has been invoked only once for a matter that had considerable bipartisan support.

The CRA provides an expedited legislative process for resolutions that not only invalidate recently-adopted regulations but also prohibit the agency from adopting any new “rule substantially the same” as the vetoed rule until such time as Congress passes a new law authorizing such action. What distinguishes a CRA resolution from ordinary legislation is that the CRA preempts the Senate’s usual legislative rules so that such a measure may not be subject to a filibuster or other procedures requiring a 60-vote supermajority. With 52 votes and the vice-presidential tiebreaker, the CRA is likely to be a potent weapon. The only real limitation on use of the CRA is the amount of time available for floor debate in the Senate; Congress has only a few months to adopt CRA resolutions invalidating recent actions, and there are many controversial nominations and numerous high-priority legislative measures that may have a higher priority.

While there are several recent FCC actions that might be subject to the CRA, the measure that has drawn the most attention is the FCC’s decision to impose limits on how Internet service providers may use and protect their customers’ personal information.

B) Reconsideration

The Communications Act provides a procedure under which an aggrieved party can ask the agency to reconsider a recent decision. Such petitions for reconsideration are subject to a strict and unwaivable filing deadline of 30 days after a decision is officially “released,” typically by means of publication in the Federal Register. Several recent major FCC decisions, including the broadband privacy rules discussed above, as well as an August 2016 decision on rules pertaining to limits on broadcast ownership, have been or will be subjected to timely petitions for reconsideration.

While the reconsideration process does afford the Trump-appointed FCC the opportunity to reject or revise FCC actions, there are legal obstacles that the Commission may encounter in doing so. It is a basic principle of administrative law that, while agencies are free to abandon prior factual findings and legal interpretations, the reasoning of such changes is subject to judicial review. When an agency does a complete about-face, it can be difficult to provide a persuasive justification for the turnabout.

II. Revisiting Rules Already On The Books

For the many Obama-era rules that were adopted too early to be subject to the CRA or reconsideration, it will be somewhat more difficult and time-consuming to abandon them. However, the process is not so daunting that many such initiatives will be targeted for recision. At the very top of the list is the FCC’s Open Internet decision, which made broadband Internet access subject to the requirements of Title II of the Communications Act. This change empowered the FCC to adopt strong regulatory measures governing Internet service providers, starting with network neutrality rules.

A) Rulemaking

Any federal agency can, within the limits of its legislative mandate, repeal or change any of its regulations. There are, however, important procedural and substantive requirements to effectuate such modifications. Under the Administrative Procedure Act, to adopt, repeal or modify a regulation, the agency must publish a notice stating its intentions, accept public comments on the proposals and adopt a decision that is supported by the factual and legal arguments made during the notice and comment process. The decision is subject to judicial review and will generally be sustained so long as the agency demonstrates that its action was not “arbitrary and capricious.” (Not surprisingly, there are countless court decisions and law review articles fleshing out the meaning of this legal term of art.) It typically takes many months, and often even much longer, to complete this rulemaking process.

B) Statutorily Mandated Review

A deregulatory FCC has a potent tool not available to other federal agencies. The Telecommunications Act of 1996 added two provisions to the Communications Act that mandate periodic review of the FCC’s regulations. Another statute, the Regulatory Flexibility Act, which requires agencies, including the FCC, to revisit certain rules 10 years after their adoption, confers an additional vehicle for possible changes.

Section 11 of the Communications Act directs the FCC, every two years, to review all of its regulations “that apply to the operations or activities of any provider of telecommunications service...,” and if it finds that they are “no longer necessary in the public interest as the result of meaningful economic competition between providers of such service...,” to “repeal or modify” those rules. The term “provider of telecommunications service” is very broad, so the FCC could use this mechanism for rapid and substantial deregulation. Thus far, the FCC has not aggressively employed this tool; indeed, it did not even commence the review that was supposed to have been begun in 2014. However, the 2016 review, initiated just before election day, could turn out to be an extremely consequential proceeding

Section 202(h) of the Telecommunications Act of 1996 confers a similar mandate directing the FCC to review “all of its [broadcast] ownership rules”; Congress subsequently changed the frequency of the broadcast ownership review from biennial to quadrennial. In 2003, under then-FCC Chairman Michael Powell, the Commission did attempt to employ Section 202(h) to loosen the Commission’s broadcast ownership limits. However, most of the deregulation was reversed by the U.S. Court of Appeals for the Third Circuit, a decision that has led to more than a decade of complicated litigation involving successive quadrennial review proceedings. In these cases, the broadcast industry has repeatedly, but unsuccessfully, appealed the FCC’s failure to deregulate, and public interest groups (to whom the author has been co-counsel) have challenged what they have seen as the FCC’s failure to assess the impact of possible regulatory changes on minority and female ownership. As noted above, the Commission’s recent decision concluding its 2014 Quadrennial Review is subject to reconsideration, and could well lead to dramatic deregulation very quickly. In any event, the FCC must initiate a new Quadrennial Review in 2018.

The Regulatory Flexibility Act (RFA), which dates to 1980, requires a decennial review of agency rules which might “have a significant economic impact upon a substantial number of small entities” to identify provisions that should be amended or rescinded. There is very little case law under the RFA, but it appears that such amendment or recision would require a separate rulemaking proceeding. The impact of the RFA could be tested soon, since the FCC has recently initiated its review of regulations adopted during the period 2001-2004.

C) Forbearance

The 1996 Telecommunications Act afforded yet one more powerful deregulatory mechanism for the FCC to employ. A new Section 10 of the Communications Act permits the FCC to “forbear from applying” any rule applicable to a “telecommunications carrier or telecommunications service” if the requirement is deemed no longer to be necessary. While the FCC can initiate a forbearance rulemaking on its own, the most important aspect of Section 10 is that telecommunications carriers can file a petition calling for forbearance as to particular rules and the FCC must rule on the petition within one year or, if the FCC claims an extension, 15 months. Significantly, if the FCC fails to act within the time limit the petition is “deemed granted.” Thus, even if the FCC were deadlocked and unable to muster a majority to vote on a petition, the forbearance would proceed.

III. Non-Enforcement

It isn’t always necessary for the FCC to repeal a regulation to undermine its impact. Agency enforcement policies are inherently discretionary. Thus, within certain limits, while deregulation proceedings are pending or as to regulations which cannot easily be repealed, a deregulatory-minded agency can choose to look the other way or effectively undermine the impact of regulations by entering into weak settlements. While the Communications Act does allow customers of telecommunications companies to bring private law suits, this often expensive and time-consuming process is often limited by judicial precedents that require courts to defer to the FCC’s legal interpretations.

IV. Conclusion

As Bette Davis did not actually say, “Fasten your seatbelts, it’s going to be a bumpy ride.”

By Andrew Jay Schwartzman.