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25th Anniversary of FCC Decision Enabling Wi-Fi and Bluetooth

25th Anniversary of FCC Decision Enabling Wi-Fi and Bluetooth
A series of posts describing how this all came about. (Click on picture above)

Sunday, October 28, 2007

Negotiated Rulemaking:
Why it Fails at FCC

Negotiated Rulemaking (sometiems called Neg/Reg) is an alternative to traditional notice and comment rulemakings. It is a member of a family of techniques known a "Alternative Dispute resolution"/ADR. Neg/Reg is a voluntary process for drafting regulations that brings together those parties who would be affected by a rule, including the Government, chartered as an advisory committee under the Federal Advisory Committee Act, to reach consensus on some or all of its aspects before the rule is formally published as a proposal.

Congress was so interested in this approach that in 1990 it passed the Negotiated Rulemaking Act to remove any uncertainty about the legality of this approach, establish guidelines and requirements, and encourage its use. The fact that it has been used four time recently by the Department of Education shows that it is not out of favor in the Bush Administration. So why doesn't the FCC use it? Simply because it has never been successful at FCC in the past. But there is little insight on why it works at other agencies and not at FCC. In this post I will discuss my theory.

I was heavily involved in the FCC's abortive efforts to use Neg/Reg for the "Big LEO" rule making that developed the rules for Iridium and other MSS systems. That effort foundered on an error the responsible senior FCC staffer made: He assumed that in case of deadlock that the advisory committee could act on majority vote. Unfortunately, Motorola had read the legislation better than he had and even hired a former law school professor of the Common Carrier Bureau Chief to explain that any outcome other than consensus must be agreed upon at the beginning of the advisory committee.

The agencies where Neg/Reg has worked successfully, such as EPA and Labor are all Executive branch agencies with a unitary head, as opposed to multimember regulatory commissions. The Nuclear Regulatory Commission has used Reg/Neg but not for about a decade.)

The theory behind Neg/Reg is that the directly affected parties meet face to face and in the spirit of Getting to Yes they negotiate tradeoffs with each other that minimize their "pain". They do this in fear that if they do not meet consensus the government decision maker will make some other set of tradeoffs that does not balance their concerns as well.

In Executive Branch agencies there is a sole decision maker, e.g. Secretary of Labor, who may or may not be directly accessible to the parties in the rule making. In the case of FCC there is a 5 member commission more accessible to major corporations than many agency heads. Thus there is always a hope that the commissioners might be more favorable than tradeoffs with one's opponents on the committee. The "Big LEO" deliberations were further complicated by the fact that there was a vacant commissioner's seat at FCC at the time so it was easy to rationalize that the next commissioner would agree with your position. Hence the parties could net reach closure.

I suggest the Commission try to avoid this problem of having a multimember Commission that can reopen the all issues if negotiations fail by using the provision of Section 5(c)(1) of the Communications Act (47 USC 5(c)(1) ) which allows the Commission to "delegate any of its functions" to "an individual commissioner". Thus if could establish a Neg/Reg committee to work on a new rule and at the same time establish a backup plan that Commissioner X is delegated to resolve the issue expeditiously if the negotiations fail. The key here is to scare the parties into resolving things expeditiously by making the necessary compromised among themselves. While this solution is not always in the public interest*, it often is. In any case, a timely decision is often better than a very lengthly "optimum" one where the costs of delay outweigh the benefits of optimality. This is especially true with new technologies that move at Internet speed while FCC decision making goes at a much slower pace.

* I recall a decision in the late 1980s dealing with increasing the power of educational FM stations at the lower end of the FM broadcast band. TV channel 6 licensees, directly below this band, were concerned about possible interference and privately negotiated a compromise with the education FM crowd. They jointly presented it to the Commission. While the Commission accepted most of the package of compromises, they modified them slightly in favor of the education FMers stating that "compromises negotiated directly between the directed affected parties are often, but not always, in the public interest." In particular they stated concern that the TV channel 6 licensees were more powerful and had great resources than the FMers and thus could not negotiate as equals.

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