Reforming the FCC

The FCC so seldom uses adjudicative processes that some observers overlook the fact that the agency is authorized to use them at all. Indeed, when the agency conducts an adjudication, the process looks nothing like traditional adjudicatory processes. After all, the FCC often provides no opportunity for discovery, the submission of evidence under oath, the open selection of witnesses, or cross-examination. Consider, for example, the recent Comcast case involving that company’s network management processes.^[107] In that case, the FCC styled the proceeding as an adjudication even though it did not use any judicial-like process-i.e., the actual proceeding mirrored the agency’s rulemaking processes noted above. Indeed, that proceeding once again evoked the all too familiar complaints by dissenting Commissioners that they were forced to vote on an Order without the benefit of sufficient time to evaluate its substance.^[108]

The FCC’s management of the Comcast case in a fashion more akin to a rulemaking should not surprise observers of the agency. After all, the FCC only employs two ALJs and they rarely are given assignments to handle adjudicative proceedings. As for the Enforcement Bureau, its processes are often managed with a level of political oversight and a lack of commitment to neutral determination of complaints. Consequently, it is not empowered to act effectively on complaints and has failed, according to a GAO report, to resolve many of them or explain why no action was taken.^[109]

Going forward, the FCC has an important opportunity to invigorate its enforcement program and use it in a more strategic matter. As for enforcement, the FCC needs to develop a better capability for enforcing its rules in a credible manner so that it can, in appropriate instances, shift from its legacy focus on restricting what parties can do before-the-fact to evaluating the impact of actual behavior after-the-fact. In the case of spectrum policy, for example, the FCC’s legacy orientation means that spectrum licensees are restricted in how they can use their spectrum so that they avoid even the theoretically possible creation of interference-as opposed to making a showing that they created interference in practice.^[110] To be sure, the FCC has experimented with the model of allowing greater front-end flexibility in return for after-the-fact oversight,^[111] but this approach is the exception.

To appreciate the limited development of the FCC’s enforcement processes, consider the longstanding complaints that satellite radio providers were violating the terms of their licenses. In particular, as Commissioner Tate put it, Sirius Satellite Radio “failed to comply-knowingly and repeatedly-with the specifications for its FM modulators and the terms of its Special Temporary Authorizations (“STAs”) for more than five years.”^[112] In the face of this problem, one might suspect the FCC had conducted a vigorous enforcement proceeding. That belief, however, would be mistaken. In fact, the FCC only took action and entered into a consent decree with the two companies once they were on the brink of receiving approval to merge with one another. Consequently, as a condition of receiving approval to merge, XM agreed to a “voluntary contribution” of $17,394,375 and Sirius agreed to one of $2,200,000.^[113]

The FCC’s failure to treat seriously the longstanding complaints about Sirius and XM’s behavior is emblematic of the agency’s lack of commitment to effective enforcement. In failing to enforce its rules effectively and reliably, the FCC both undermines a commitment to rule-of-law values and sometimes ends up making accommodations to parties who violated rules that were not previously enforced.^[114] Ideally, the FCC would, in such cases, authorize the Enforcement Bureau to bring cases before ALJs to develop the necessary factual record to either make the entry of consent decrees a meaningful law enforcement act (as opposed to a political negotiation^[115]) or lead to an adjudicated decision. In practice, however, the FCC almost never uses its ALJs and, according to its website, its ALJs have decided only three matters since 2005.^[116] In fact, the ALJs are reportedly kept busy by being loaned out to the Social Security Administration.

The promise of using ALJs is readily apparent when one evaluates how state agencies manage telecommunications policymaking. In many cases, state public utility commissions are able to use ALJs to hear evidence and create a well developed factual basis for the agency’s deliberations.^[117] Indeed, in some states, the “ALJs are more independent than state appellate or trial court judges.”^[118] In using ALJs, state commissions (and federal ones like the Federal Energy Regulatory Commission) separate the trial staff so that they do not interact with the staff persons who advise the commission in its role as adjudicator.

In conceiving the appropriate role for ALJs, it is important to appreciate that they need not be used to decide matters of regulatory policy per se. Rather, they can merely be asked to determine the relevant facts, which is their comparative advantage. Take, for example, the Comcast decision, where the FCC attempted, using a paper record, to evaluate what types of network management techniques Comcast used. In so doing, the FCC relied on the self-serving and unexamined statements presented in that process and reached a judgment vulnerable to the criticism offered by Commissioner McDowell: “[t]he truth is, the FCC does not know what Comcast did or did not do.”^[119] The FCC could instead have referred the matter to an ALJ to render a set of proposed factual findings pursuant to established procedures that would have enabled the agency to better understand the relevant facts and make a more informed policy judgment.

In contemplating a role for ALJs, it is important to recognize that this model can be implemented in more or less effective ways. At the FTC, for example, the use of administration adjudication can undermine that agency’s effective and expeditious resolution of disputes when personnel rules prevent the agency from using ALJs with relevant expertise in antitrust or consumer behavior. To address this issue, the agency has recently proposed new rules to expedite the process, has experimented with using Commissioners to sit as ALJs (although that raises questions about prejudging issues), and has asked Congress to allow it to select ALJs with relevant experience. Nonetheless, even assuming that the FTC improves its administrative litigation process, some have leveled the more fundamental criticism of this model of decision-making that it often leads to the pre-ordained results sought by the FTC.^[120] This cautionary concern, to the extent it counsels against administrative litigation in the FTC context, is far less applicable in the FCC context where “cooking the books” is already an endemic concern as to its rulemaking processes. Consequently, the effective use of ALJs by the FCC promises to improve the quality of its policymaking process because it would provide the agency with a more rigorous factual understanding of the relevant issues than can be obtained by sorting through a paper record to identify the salient facts.