Sensible Action on Midnight Regulations

The departing Obama Administration was busy in its last hours.  At the FCC, former Chairman Wheeler took several last-minute actions that have been accurately called “midnight regulations.”  In a statement, Pai noted that “[i]n the waning days of the last Administration, the Federal Communications Commission’s Bureaus and Offices released a series of controversial orders and reports. In some cases, Commissioners were given no advance notice whatsoever of these midnight regulations. In other cases, they were issued over the objection of two of the four Commissioners.  And in all cases, their release ran contrary to the wishes expressed by the leadership of our congressional oversight committees.  These last-minute actions, which did not enjoy the support of the majority of Commissioners at the time they were taken, should not bind us going forward.  Accordingly, they are being revoked.”

That’s a breath of regulatory fresh air.  As the Commission only had four of its five members at this time, regulations were issued without the support of a majority of Commissioners and, sometimes without informing all commissioners in advance.  That’s no way to run a regulatory agency that is supposed to be driven by analysis of facts and actual marketplace conditions.  There’s a new sheriff in town, and the rules, thankfully, are changing.

One prime example of the dangers of midnight regulation is that under former Chairman Wheeler, the Wireline Competition Bureau granted designation as an Eligible Telecommunications Carrier (ETC) to nine service providers at the last minute.  Now Chairman Ajit Pai has stepped in to call time out.  He has not rejected the designations but merely asked the bureau to withdraw them.  For this, some now criticize him.

This entire controversy, however, appears to be nothing more than theatre and overreaction.  As his other actions – in particular, setting up a task force on ways to bring broadband to underserved communities – have shown, Pai is passionate about bringing high-speed broadband to every corner of the country.   But as with other midnight regulations, it’s wise to take a pause and see whether they are really necessary or, as here, what the impact would be of letting them go forward.

Unlike every other fund in the current federal Universal Service program, the Lifeline fund has no cap or other automatic fiscal restraint.  It’s perfectly reasonable and appropriate for a new Chairman to want to consider the impact of new designations on the sustainability of a very good fund, particularly in light of the waste, fraud, and abuse that has sadly too often characterized some Lifeline spending in the past.

Moreover, the Chairman’s decision to take a pause impacts only nine of the over 900 existing ETCs that today participate in the Lifeline program.  That means over 99% of the companies participating in Lifeline remain unaffected.

So let’s all take a deep breath and let the process work itself out – and be sure that regulations are adopted only through regular procedures that reflect the reality of the marketplace.