Thursday, May 15, 2014

FCC 101: What is an NPRM Anyway? #FCC #NetNeutrality

The Federal Communications Commission is an independent federal agency established pursuant to the Communications Act of 1934 (see early FCC history).  Section 1 of the Act sets forth the authority for the creation of the FCC, stating,
For the purpose of regulating interstate and foreign commerce in communication by wire and radio so as to make available, so far as possible, to all the people of the United States, without discrimination on the basis of race, color, religion, national origin, or sex, a rapid, efficient, Nation-wide, and world-wide wire and radio communication service with adequate facilities at reasonable charges, for the purpose of the national defense, for the purpose of promoting safety of life and property through the use of wire and radio communications, and for the purpose of securing a more effective execution of this policy by centralizing authority heretofore granted by law to several agencies and by granting additional authority with respect to interstate and foreign commerce in wire and radio communication, there is created a commission to be known as the ''Federal Communications Commission'', which shall be constituted as hereinafter provided, and which shall execute and enforce the provisions of this chapter.
This is very broad authority.  This section grants jurisdiction to the FCC over all interstate radio and wireline communications, which pretty much covers everything.  You should also notice that this initial language has universal service language built right into it, setting forth the driving policy of making available to all people an efficient communications service.

Beyond this broad authority, the Act proceeds to also set for specific areas of responsibilities for the FCC.  Title II of the Act regulates telecommunications common carriers, otherwise known as the public telephone companies.  Title VI of the Act regulates cable service.  Title III of the Act regulates wireless service.  These different sections of the Act are ultimately reflected in different Bureaus within the Commission.  At the top of the FCC is the Commission of 5 commissioners.  Below the commissioners are the Mass Media Bureau, the Common Carrier Bureau, the Cable Services Bureau, the International Bureau, and the Wireless Bureau.  In recent times the FCC has begun a restructuring effort, adding an Enforcement Bureau and a Consumer Information Bureau.  No one office within the FCC has responsibility specifically over Internet or online communications issues.

Unlike other federal agencies, the FCC is an "independent" agency.  It does not answer to the President of the United States.  There is no chair on the President's cabinet for the FCC and the FCC Chairman does not serve at the will of the President.  Instead, the FCC is answerable to the U.S. Congress - in other words, the FCC has hundreds of bosses instead of just one.  The President, when he needs to attend to communications policy, works through the National Telecommunications and Information Administration within the Department of Commerce - those are the good folks who have had the responsibility of privatizing the Internet's Domain Name System.

Delegated Authority: Bureaus and Offices

Of course, not everything that the FCC does could or should be brought before the Commissioners.  The Commissioners have delegated authority to different Bureaus. 47 U.S.C. § 155(b)&(c). Smaller matters are handled by Bureau Chiefs or even Division Chiefs.  For example, enforcement fines under a certain dollar threshold do not have to be presented to the full Commission and can be issued by the Enforcement Bureau.  For the really big crimes with million dollar fines, the full Commission must vote and approve the action.  SLAMMING fines (involuntarily switching customers from one long distance carrier to another) has been a recent example of this. The primary work of the FCC is conducted by seven bureaus; these bureaus largely track industry lines and the original laws which were aggregated together to form the FCC in 1934


The FCC, like all federal agencies, is under the Administrative Procedure Act.  This ensures that the process before the FCC, as with all federal agencies, is democratic.  When making a policy decision, a federal agency must give adequate notice that it is contemplating that decision and an opportunity for the public to comment on how the decision should be made.  Any interested party can file comments in these proceedings and comments can take any form (as long as they have the proceeding docket number clearly identified on them).  Indeed, the FCC now has an online electronic form where interested parties can come and, with no more difficulty than writing an e-mail, fire off comments on any open proceeding.  When deciding, a federal agency is required to consider all comments provided and give a rational explanation why it either accepted or rejected those views.

At the FCC there are two typical ways in which any policy decision making process starts: the FCC can initiate a proceeding or an interested party can initiate a proceeding. 47 CFR 1.411


When an interested party wants to initiate a proceeding, believing that something is broke and needs fixin', the interested party can petition the FCC.  The FCC then can place the petition out for public comment.  This situation can occur where old rules were originally satisfactory but something has changed to bring new questions.  An example of was IVI's petition for a declaratory ruling that ISPs should be permitted to have access to leased access cable channels.  The FCC accepted that petition and initiated a comment gathering period discussed in more detail below . 

 FCC Initiated Proceedings

The second way to start a proceeding is for the FCC to initiate it.  In recent history, the FCC has been extremely active initiating policy decisions.  The passage of the Telecommunications Act of 1996 meant that the FCC was tasked with implementing the new law.  Where the Act is clear, there may be no need for the FCC to draw up rules implementing the Act.  But where the Act gave a mandate but left the details to be clarified, the FCC might initiate a rulemaking proceeding to work out the details.  

A good example of this is the Universal Service program, set forth in section 254 of the Communications Act.  This gave the FCC broad authority to set up a program to subsidize Internet access to schools and libraries, but did not specify what should be included in the subsidy program or the size of the program.  The FCC initiated an extensive rulemaking proceeding to determine which facilities, equipment, and services qualified under the program.

Notice of Inquiry

There are two ways that an agency can initiate a proceeding; it can propose a rule or it can take a step back and initiate an inquiry.  The latter is a Notice of Inquiry (NOI).  This is a situation where the agency recognizes that it is dealing with an issue of significant public policy, but perhaps believes that there has been insufficient data or discussion gathered on the issue to formulate a policy at this time.  An example of this was the Section 255 NOI for IP telephony. In an NOI, the agency has not given APA notice of a pending decision and cannot conclude the proceeding with a decision. At the end of an NOI proceeding, the agency may elect to (1) propose a rule if appropriate or (2) issue a report with the information it gathered.
47 CFR § 1.430 Proceedings on a notice of inquiry.

The provisions of this subpart also govern proceedings commenced by issuing a ``Notice of Inquiry,'' except that such proceedings do not result in the adoption of rules, and Notices of Inquiry are not required to be published in the Federal Register. [51 FR 7445, Mar. 4, 1986]

Notice of Proposed Rulemaking

The second way for the FCC to initiate a proceeding is to propose a new regulation. 47 CFR s 1.412. It need not start with an NOI; it can start directly with a Notice of Proposed Rulemaking (NPRM).  In an NPRM, the FCC will explain a policy issue and then set forth a proposed resolution of that issues, providing notice of its proposed rule to guide future action.  

The FCC then gives a deadline for comments to be filed before the FCC; there is usually a subsequent period in which parties can reply to the arguments made in the initial round of comments.  All comments are publicly available for all parties to review and comment on (see the FCC's Electronic Comment Filing System where comments can be filed and viewed using the docket number of the proceeding). 47 CFR s 1.415 Comments and Replies
An example of a rulemaking is Computer III.  Computer II had set forth restrictions on the ability of Bell Telephone Operating Companies (BOCs) to enter the ISP market.  If BOCs wanted to become ISPs, they had to do it through a fully separate corporate subsidiary.  Ultimately, the FCC concluded that this created unnecessary inefficiencies.  Therefore, the FCC released Computer III where it addressed these inefficiencies by creating a system of nonstructural safeguards that would permit BOCs to enter the playing field of ISPs without a separate corporate affiliate, but not engage in anticompetitive behavior. 

Filing Comments

"When the FCC proposes new rules, a time period is established for the public to comment on these proposed rules. Anyone can file comments. You don’t need to be an attorney or to hire an attorney. Each of the Commission’s documents containing proposed rules clearly details the specific dates, deadlines and locations for filing comments and reply comments.

"Comments from the public play an important part in Commission decisions because they tell us what people think about our proposals and why they support or oppose them.

"After initial comments are filed, there is an additional period for responding to the first set of comments. During this second phase, you can file reply comments. People file reply comments to support or disagree with what others have said in their initial comments.

"How Do I File Comments with the Commission?

"You can file documents with the FCC for all docketed and rulemaking proceedings through our Electronic Comment Filing Syste (ECFS) . ECFS accepts documents 24 hours a day with a midnight filing deadline. The official receipt for electronic filings will reflect Monday through Friday dates, except legal holidays.. . . . . " About the FCC, FCC CGB. 

Comments About Comments

In submitting comments to a federal regulatory agency, you may wish to keep a few things in mind:
  • Be Succinct; Be Articulate: Frequently agency staff must read and summarize hundreds or thousands of comments. After a while, these comments just blur. Make it easy on staff so that they can get your point. Do not ramble on and on. Be succinct and be articulate. Make your argument in a nice and tight form, and make sure you make your point clearly.
  • Make Your Point Jump Out: Many petitioners will make their points in bold subtitle text, and then elaborate.
  • Be Clear What You Want: Many a legal document has created beautiful arguments about an issue, but then failed to declare what the petitioner wants. What relief do you seek? If you persuade your reader, what would you like them to do. You would be surprised how often this is over looked.
  • Provide a Summary: If you comments are long, provide a summary. You may wish to provide both an "executive summary" and short statements summarizing your points.. As wonderful as your 300 page comments may be, some decision makers will only see a staff prepared summary. It can be the summary that you crafted - or it can be the summary of some staff person who half understands what you are talking about.
  • Provide Evidence: Administrative law is less formal and merely speculation is accepted. But to make a truly persuasive argument, include as much evidence as possible. A hard fact goes far in countering rhetoric (it also sets up your appeal).
  • Provide Consensus: One of the most powerful tools in this process is consensus of interested parties. If you can get parties to agree on points, and make the work of the agency easier, that can be well received.
  • Educate, Dont Berate: This is one of those self fulfilling prophesies - if you scream at the government like they are your enemy, then they probably wont be your friend. If you come in with a positive attitude, as perhaps someone on the front line of this regulatory policy who is impacted by it greatly, and you are hear to educate staff about how this policy can best work - you may find a very positive reaction.
  • Dont Protect Your Document: This may not occur to you - agency staff will set on your argument like hungry ferrets, summarizing and digesting it, and reporting the results to working groups. This is frequently achieved by our friend "Cut and Paste." If you copy-protect your document, you make it hard for the staff to work with it. And if you make it hard for the staff to work with your 40 page comment, and they have 300 more comments to read, what do you think will happen?
  • Be Timely: Get your comments in by the deadline. But after the deadline passes, as noted in the section about ex partes, it doesn't mean the show is over. See if the agency still accepts feedback - see if you need to respond to some of the arguments made by some of the other parties - or if you might be able to hammer out consensus positions with them, even after the deadline.
  • Review Previous Comments: There are plenty of comments online now. Review a few as models and see what old-hacks are doing.
  • Follow Up: Your comments will get read. But they may only get read by lower staff. Back up your effort by setting up a visit with staff to explain your position and answer questions.
  • Dont Burn Bridges: If you lose, all it means is that you lost. In a democracy, someone almost always loses - frequently lots of people lose. That is part of living in a democracy, everyone makes their argument, and hopefully the best argument wins - hopefully. Losing doesn't mean democracy does work; it just means you lost. Democracy means that when you lose, you have another day to challenge the political process, perhaps by voting those bums out of office.
Ex Parte (Comments and Contact after the comment period is closed)

After the comment period is closed but before a decision has been made by the FCC, an interested party can still make its views knows.  All a party has to do is follow the FCC's ex parte rules, which sounds a lot harder than it is.  Just think about what is fair and democratic.  If one party comes and makes an argument to the FCC, all of the other parties would want to know about that and have a chance to respond.  And that is exactly what the rules permit.  You can usually come during this period and argue anything that you want in any way that you want - you simply must file a summary of your presentation with the Secretary of the FCC for inclusion in the record of that proceeding. 

"APA places no restriction on "off-the record" or "ex parte" communication between agency decision makers and other persons during informal rulemaking. [5 U.S.C. § 557(d)(1)] However, FCC has rules about such contacts to protect the fairness of its proceedings by providing an assurance that FCC decisions are not influenced by off-the-record communications between decision makers and others. The rules also give FCC the flexibility to obtain the information it needs for making decisions. Under its ex parte rules, FCC generally classifies its rulemaking proceedings as "permit-but-disclose," meaning that outside parties are allowed to present information to FCC either in writing or in person, but are required to disclose such communications in the public record. [47 CFR § 1.1206(a)(1)] The rules require a person making an oral ex parte presentation that includes data or arguments not already reflected in that person's other filings to submit a disclosure to the record summarizing the new data and arguments. The rules state that the summary should generally be "more than a one or two sentence description" and not just a listing of the subjects discussed. [47 CFR § 1.1206(b)(2)] When there is ambiguity about whether data or arguments are already in the public record, FCC encourages parties to briefly summarize the matters discussed at a meeting. FCC's ex parte rules also establish the Sunshine Period, which begins when FCC releases the Sunshine Agenda of items scheduled for a vote at a public meeting and ends when those items are released to the public after the vote or are removed from the agenda before the meeting. During the Sunshine Period, the public may not contact the agency to discuss any matters that appear on the Sunshine Agenda unless there is a specific exemption (27For example, there is an exemption for other federal agencies, Members of Congress, or congressional staff under certain conditions. 47 CFR § 1.1203(a)). The Sunshine Period does not apply to items that are voted on by circulation." [GAO-07-1046, p 11]


    "The Government in the Sunshine Act of 1976 (Sunshine Act). [5 U.S.C. § 552(b)] This act requires federal agencies headed by a collegial body composed of two or more individual members, such as FCC, to hold regular public meetings with sufficient public notice that the meeting will take place. The agency must release the meeting's agenda, known as the Sunshine Agenda, no later than 1 week before the meeting. In addition, the act prohibits more than two of the five FCC commissioners from deliberating with one another to conduct agency business outside the context of the public meeting." - FCC Should Take Steps to Ensure Equal Access to Rulemaking Information, GAO-07-1046, p. 10 (Sept 2007)

    A number of recent FCC Commissioners, such as Ch. Copps and Ch. Powell, have asked that the Sunshine Act be revised so that they may meet and deliberate in private.


    When the FCC has considered all the filed comments and all of the ex parte presentations, it can than issue an order setting forth the final rule.  The FCC must provide a rational explanation why it accepted or rejected different parties' views.  If the parties are satisfied, the rule will guide FCC action and be enforced by the FCC's Enforcement Bureau.

    The Order may be voted on in an Open FCC Meeting or it may be voted on without a meeting. The Orders come is a few different versions: (1) Reports and Orders, (2) Orders, and (3) Memorandum Opinion and Order. The Order must comply with the APA and present a rationale explanation why the FCC accepted or rejected each comment and argument introduced into the proceeding before it. As a result, most Orders are lengthy documents that (a) explain what issue is before the FCC, (b) summarize all arguments and comments (c) discuss all arguments and comments, and (d) conclude with what decision the FCC will take.

    Normally proceedings are handled by specific bureaus. The bureau staff will review the entire proceeding, and draw up a draft order. The draft order is then place on "circulation" before the five Commissioners and their staff. During "circulation" the draft order may be revised in response to questions and concerns of the Commissioners, and in order for the Commission to achieve a majority vote.

    "Three weeks before the commission considers an item at a public meeting, the chairman’s office releases to FCC officials the draft version of the proposed rules the commission expects to vote on at the public meeting. These drafts are internal, nonpublic documents. FCC officials told us they do not release information to the public about what items the commission is planning to vote on at public meetings or items being circulated by the commission for adoption. FCC’s written rulemaking guidance states that such information is nonpublic and may not be disclosed in any format, including via paper, electronic, or oral means, unless the chairman authorizes its disclosure." [GAO-07-1046, p 15]

    The Commissioners then vote the item, and the outcome of the proceeding is determined by majority vote.

    "Once the commission adopts a rule, the originating bureau often makes technical corrections to it and may also make substantive changes. Each commissioner is given the final rule before it is released and can decide if the rule has undergone substantive changes. Any substantive changes are approved by the commissioners, and the rule goes through a final internal review before FCC releases the rule and submits it to the Federal Register for publication.36 FCC may adopt and release some rules on the same day, while other rules may require months of revision because the commission may vote on a particular issue or policy position and not the precise wording of the rule. When this occurs, the final wording of the rule is approved by all commissioners before the order is released." [GAO-07-1046, p 15]


    It is conceivable that the parties are not satisfied - and the process frequently does not end here.  The dissatisfied parties can relief before the FCC either by petitioning for reconsideration or clarification. 47 CFR s 1.429  "Stakeholders are allowed 30 days after a rule is published in the Federal Register to file a petition for reconsideration, although FCC usually has no required time frame for acting on such a petition." [GAO-07-1046, p 17] If the FCC grants the petition, there will be a new round of comments that the FCC will have to consider.  The FCC can also determine that the petition essentially argues nothing new, covering old ground, and therefore deny the petition.

    Dissatisfied parties can also appeal decisions of the FCC in federal court.  As you move up the appeal ladder, however, your grounds for appeal become narrower and narrower.  In federal court, a dissatisfied party cannot just argue that it is bad policy - an argument which can be persuasive down before the FCC.  In federal court, a dissatisfied party is likely to argue that the decision of the FCC was unconstitutional, violates the APA, or violates the Communication Act.  Constitutional claims are typically First Amendment issues; perhaps the most famous was Pacifica v. FCC in which the FCC fined Pacifica radio for playing George Carlin's "Seven Dirty Words" routine.

    When a dissatisfied party argues that a decision was irrational, this is based on the Administrative Procedure Act, requiring the FCC to consider all comments and give a rational explanation of its decision.  As long as the federal agency can give a rational explanation of its decision, a federal court will give it discretion, making this very hard grounds to win on. 

    Finally, a dissatisfied party can argue that a decision does not comport with the Communications Act itself.  This is typically an argument that a federal agency is taking an action that is not within its jurisdiction.  Here, hypothetically, a federal court might say that the FCC lacks the authority to regulate organic mushrooms.

    "An appeals court may uphold, vacate (hold unlawful or set aside), or remand an FCC rule (send it back to the agency for further consideration) entirely or in part, which may lead the commission to take additional action on the rulemaking, such as issuing a new version of the rule to address the court’s concerns." [GAO-07-1046, p 17]

    After federal court, if you are still dissatisfied, you can appeal your case to the Supreme Court.  The Supreme Court usually has discretion whether or not it will listen to your case in the first place (the Communications Decency Act was one of those rare laws where Congress gave the Supreme Court no discretion - it would have to hear any constitutional challenge to the CDA).  Appeals to the Supreme Court are rare, but when they occur, they have the potential for dramatic implications in communications policy.

    When all is said and done, and we have a rule, then the issues move out of the policy offices of the FCC, across the hall, and into the enforcement offices.