Hill Likely to Press FCC to Open Its Rulemaking Processes

“The notion that the public could view and comment on a rule is modest,” said Cavicke. He said Commerce Committee Chairman John Dingell, D-Mich., and Telecom Subcommittee Chairman Ed Markey, D-Mass., have talked with ranking member Joe Barton of Texas, and are “enthusiastic” about “prodding” for FCC reform. If the commission doesn’t act, the committee may draft a bill, Cavicke said. An FCC decision to publish a weekly list of items on circulation is a step in the right direction, he said.

The FCC needs to adopt rulemaking procedures standard at the Securities and Exchange Commission, Federal Energy Regulatory Commission and other agencies, Cavicke said. “The FCC used to do that, and in the ‘90s it moved away from that,” he said. But “high on the agenda” is a feeling among members of both parties that the commission needs a standard process in which rules are published, comments are sought and decisions made with the public given enough time to comment. Cavicke said he’s had numerous requests for meetings in recent weeks from people concerned about the commission procedure. He said members are particularly irked at the unavailability of the final text for rules until three to six months after they're adopted.

FCC Chairman Kevin Martin was grilled by Republican and Democratic members of Congress on how he runs the agency and his handling of cable and media rulemakings. Questioning all commissioners for hours on Wednesday, members of both parties criticized a media ownership review that Martin hopes to bring to a close Dec. 18. A recent rash of delayed commission meetings and short notice of other hearings drew scorn. Martin said he’s running the agency openly and always aims to work with the other commissioners.

Dingell called the FCC “broken” and said he'll keep worrying until the commission allows enough time for public comment on rulemakings before voting on them. “I am concerned here about the way the FCC is running. I am much concerned about the way in which the process is running.” Dingell told Martin that “procedure” trumps “substance” because “it is so important that the process and the procedure be fair.” Courts may overturn FCC orders if his advice isn’t followed, Dingell said. The unusually crowded six-hour Telecommunications Subcommittee hearing included Commerce Committee members not on the panel. Executives and public-interest groups testified in the afternoon.

Both Republicans and Democrats on the FCC think the commission can do better in several areas, they indicated in brief answers to about a half-dozen rapid-fire questions from Dingell, who demanded yes or no answers. Asked if the FCC always operates “in a fair, transparent manner on the basis of an adequate record,” Commissioner Robert McDowell replied: “Sometimes yes, sometimes we need to do better.” Commissioner Deborah Tate agreed. Commissioners Jonathan Adelstein and Michael Copps replied “No.” Asked if staff members always have “full, unfettered access to FCC records for informed decisions,” McDowell again said that varies. “When I've had a problem, I've gone and asked the chairman, and he’s responded,” said Tate. Both FCC Republicans said the commission could do better when Dingell asked if it always has “open regulatory processes with chance for comment” by the public. The two Democrats said no.

The chairman’s handling of an 18-month-old media ownership review spurred the most questioning. Rep. Bart Stupak, D-Mich., interrogated Martin, at times interrupting him to ask about 10 reports on which the agency spent $350,000 and that Martin said make the case for partly lifting the cross-ownership ban. “Five of the 10 studies have serious flaws and questions,” Stupak said. “You don’t have a rational basis to even begin for a baseline, so how can you go forward?” Stupak said Martin seemed to break Office of Management and Budget rules in releasing the studies before they were reviewed by experts. Martin denied that.

Martin said he went beyond the requirement of FCC precedent in issuing a news release Nov. 13 seeking public comment on his plan to kill a 32-year-old ban on common ownership of a newspaper and radio or TV station in most cases in the 20 largest markets. “Indeed, the commission has no obligation to go through the extra step before we adopt the order of publishing the proposed rule,” he said. As for procedures, he said: “I am sure they can always end up being improved, but we have operated under the same processes and procedures” since he arrived at the agency as an aide to Harold Furchtgott-Roth, a commissioner from 1997 to 2001.

Some Democrats said Martin should slow the media ownership review and not seek the vote he plans to get Dec. 18. Markey asked Martin if cross-ownership waivers would be easy to get in smaller markets under Martin’s proposal, a fear voiced by the FCC Democrats. Martin said waivers won’t come easily, and that he'll work with other commissioners on waiver language “to the extent that they are willing to engage in the substance.” Rep. Jane Harman, D-Cal., said the “Dec. 18 date is pushing it too fast,” ending with a dual jibe at the FCC and Congress: “I want to wish you a happy holiday from one dysfunctional body to another… What I hope in the new year is that the dysfunction stops.”

Markey said he hopes Martin will slow the review, begun in June 2006, so he doesn’t have to consider legislatively forcing the FCC’s hand. The Senate Commerce Committee Tuesday passed the Media Ownership Act of 2007, which would require Martin to seek public comment on his cross-ownership proposal for 60 more days, among other things. Markey has no immediate plans to introduce a similar bill in the House Commerce Committee, he told reporters. “I'm working on the premise that there’s a chance” to postpone the vote, he said. “I'm urging him to take more time.” If Martin doesn’t do so, Markey said, he'll consider introducing a bill.

Martin was tight-lipped on whether he'll delay action. “It’s important for us to end up moving forward,” he told reporters. “Obviously, as always when considering items for a vote, I will engage with the other commissioners about the substance of the item.” Martin said he “tried hard to have a fair and open process” for the ownership review. “The commission can always consider ways to improve its processes.”

Both Democrats and Republicans said it seems inconsistent for Martin to push for a Dec. 18 vote on a cable ownership cap while supporting ownership deregulation. Some members also said Martin should do more to deregulate media ownership. Rep. George Radanovich, R-Cal., asked Martin if the cable cap is “arbitrary.” Martin said his cable and media policies have been “very consistent.” Cross-ownership is the only media rule not updated in years, he added.

Martin should let a company own more radio stations in large cities than the current cap of eight, said members including Gene Green, D-Tex., and Mary Bono, R-Cal. But Green said he has concerns about other elements of FCC ownership review. “The last several media ownership hearings were held on short notice,” he said. Rep. Jay Inslee, D-Wash., laid into the chairman for giving only seven days’ notice of last month’s final media ownership hearing in Seattle, only days before Martin proposed cross-ownership deregulation. “My folks in Seattle believe that they were treated like a bunch of chumps. They had the FCC come out, treat them like they were listening to them, and then the deal was already done,” Inslee said.

Ranking Commerce Committee Member Joe Barton, R-Tex., criticized Martin’s cable cap order as inconsistent. There’s a need for deregulation not just in media but in cable, he said. “It’s been said that consistency is the hobgoblin of little minds. If that’s the case, we could use a few hobgoblins at the FCC.”

Tax Incentives for Minority Broadcasters

Moves in Congress or at the FCC to change handling of minority broadcast ownership likely will face intense court scrutiny, said a Congressional Research Service legal analysis Tuesday. The report came on the heels of another CRS report on FCC media ownership rules. It warns that Congress may have to rethink the legal basis it uses in setting many broadcast ownership policies. Policies and rules have been tied to the argument that spectrum is scarce

a premise lately challenged by several broadcasters. The Supreme Court declined to hear a case on the issue, but the argument still could be raised, the report said.

CRS focused on two bills (HR-600, HR-3003) intended to revise tax incentives and so increase minority broadcast ownership, along with an FCC proposal meant to foster minority ownership. The FCC proposal would function by letting more “socially and economically disadvantaged” businesses qualify for incentive programs. The CRS report said tax incentive programs tied to minority broadcast ownership lost favor in mid-1990s when Congress balked at a Viacom deal that would have allowed the company to defer up to $640 million in taxes.

“Congress expressed concern that the tax certificate program provided little protection from abuse,” the report said, noting that there was no limit on how much “gain that could be deferred.” The last straw was a loophole letting a company buy a minority-owned property and flip it within a year with no consequences. Congress killed the tax incentives in 1995.

More recently, the FCC said Aug. 1 that it seeks comments on a definition for disadvantaged businesses to help craft new broadcast ownership rules. The CRS said recent Supreme Court rulings in cases on racial classifications for government programs will dictate caution by FCC and Congress in devising incentive programs. One strategy would be to fit laws or rules with sunset provisions and review procedures, with programs evaluated for relevance and fairness, CRS said.