The FCC’s lack of respect for due process, part II

Since Tom Wheeler took over the chairmanship of the Federal Communications Commission (FCC), we have seen one assault after another on American’s procedural due process rights. In addition to the well-documented improprieties with the White House during the Open Internet debate, Wheeler, among other transgressions, has attempted to force nonprofits to reveal their donors in strict violation of Supreme Court precedent, hired advocates who had filed in significant FCC dockets as an interested party to come into the commission to supervise those very dockets, and attempted to hold a FCC “town hall” in which he had invited an outside party to participate and comment on a yet-to-be-released item during the “sunshine” period.

{mosads}Wheeler is now at it again, this time in the context of the FCC’s attempt to impose stringent price regulation for “business data services” (BDS). Let’s look at this shameful timeline.

Sometime last late last year, the FCC started working on a new regulatory framework for BDS. At the heart of the commission’s new regulatory framework was an economic appendix prepared by an outside expert, Marc Rysman of Boston University.

On April 14, 2016, approximately two weeks before the FCC was to vote on the formal “Notice of Proposed Rulemaking” containing its proposed BDS regulatory framework, the agency requested outside peer review (as required by law) of the Rysman Appendix from Andrew Sweeting of the University of Maryland and Tommaso Valletti of Imperial College Business School (U.K.). Sweeting responded on April 26, 2016 (12 days after the peer review request); and Valletti responded on April 28, 2016 (14 days after the peer review request). Neither peer review was particularly kind to Rysman’s analysis.

On April 28, 2016, the FCC voted on its “Notice of Proposed Rulemaking” to provide an aggressive new regulatory paradigm for BDS (hereinafter “BDS NPRM”). Due to editorial privileges, however, the FCC did not formally release the BDS NPRM until May 2, 2016. Although the commission had the Sweetling and Valletti critiques in hand during the editorial privilege window and could have incorporated them into the final BDS NPRM, the the FCC declined. In fact, the FCC made no mention of either critique of the Rysman Appendix in its final BDS NPRM, choosing instead to keep the existence of the Sweeting and Valletti reviews secret from the public.

On June 28, 2016 — almost two months to the day since the BDS NPRM was first voted upon and the very date initial comments were due — the FCC finally made the existence of the Sweeting and Valletti peer reviews public. Adding to the commission’s subterfuge, the agency chose the same day also: (1) to perform a massive data dump into the record; (2) to release an updated version of the Rysman Appendix; and (3) to introduce three new staff studies (the same staff which are charged with writing the final BDS rules) purporting to address, and ultimately correct, the shortcomings of the Rysman Appendix. In so doing, the FCC made sure that no one could address either these data or studies in their initial comments.

For those who care about the integrity of our government institutions, the FCC’s constant disregard for due process is deeply troubling. As the D.C. Circuit recently wrote in Association of American Railroads v. Department of Transportation (2016):

No clause in our nation’s Constitution has as ancient a pedigree as the guarantee that “[n]o person … shall be deprived of life, liberty, or property without due process of law.” U.S. CONST. amend. V. Its lineage reaches back to 1215 A.D.’s Magna Carta, which ensured that “[n]o freeman shall be … disseised of his … liberties, or … otherwise destroyed … but by lawful judgment of his peers, or by the law of the land.” Magna Carta, ch. 29, in 1 E. Coke, The Second Part of the Institutes of the Laws of England 45 (1797). Since the Fifth Amendment’s ratification, one theme above all others has dominated the Supreme Court’s interpretation of the Due Process Clause: fairness. Id. at 27.

Now to be clear, as Justice Benjamin Cardozo wrote in Snyder v. Massachusetts (1934), while “[d]ue process of law requires that the proceedings shall be fair … fairness is a relative, not an absolute, concept. It is fairness with reference to particular conditions or particular results.” That said, as the D.C. Circuit again affirmed just last month in U.S. Telecom Association v. FCC, it remains black-letter law that “[u]nder the [Administrative Procedure Act], an NPRM must ‘provide sufficient factual detail and rationale for the rule to permit interested parties to comment meaningfully.'”

As the FCC has by any reasonable account deprived parties with the opportunity to comment meaningfully upon the fundamental economic analysis and data upon which it intends to use to impose rate regulation for BDS, I think it is safe to argue that under even the broadest light, the agency’s conduct in this case is a prima facie violation of procedural due process.

What is the FCC so afraid of? Is it truly scared to have substantive debate on the issues? Is the outcome so predetermined that it has to resort to kangaroo court tactics that would make North Korean leader Kim Jong-un proud? Indeed, it is a bit ironic (if not outright hypocritical) that while the FCC is doing everything it can to prevent meaningful comments about a highly complex topic, the Obama administration is doing everything in its power to create a culture which encourages robo-comments which offer up nothing substantive to the debate other than to promote ideological sophistry from both sides of the political spectrum. And we wonder why (rhetorically) the FCC is now regarded as an “economics-free zone,” as an AT&T executive noted?

Given the D.C. Circuit’s recent proclivity to grant the FCC great deference, no matter how many liberties it may take, restoring the rule of law at the FCC will ultimately fall into the hands of Congress. Fortunately, the House Energy and Commerce Committee has scheduled yet another oversight hearing next week with all five members of the Commission in attendance, where perhaps some sunlight can be used as a disinfectant. I therefore encourage the Commerce Committee members and staff — from both sides of the aisle — to do their homework, come to the hearing prepared, and call Chairman Wheeler out on the carpet.

Spiwak is the president of the Phoenix Center for Advanced Legal & Economic Public Policy Studies, a nonprofit 501(c)(3) research organization that studies broad public-policy issues related to governance, social and economic conditions, with a particular emphasis on the law and economics of the digital age.