Wheeler Seen as Pushing the Envelope in Rising Use of Delegated Authority

FCC Chairman Tom Wheeler’s use of delegated authority reached a high point of sorts last week when AT&T’s buy of Leap Wireless was approved by the Wireless and International bureaus, rather than by commissioner vote (CD March 14 p5), officials said. Commission Democrats Mignon Clyburn and Jessica Rosenworcel complained internally that they would have preferred a commission vote on that deal, which gave one of the two biggest wireless carriers control of an important prepaid service player, FCC officials told us. Republicans Ajit Pai and Mike O'Rielly have complained about other items being approved on delegated authority, agency officials said.

FCC officials said there’s rising concern about Wheeler’s use of delegated authority, which emerged as an issue late last year (CD Dec 27 p1), after the Media Bureau’s approval of Gannett’s $2.73 billion buy of Belo and Tribune’s $2.2 billion purchase of Local TV (CD Dec 23 p3). An FCC official said no commissioner formally requested that AT&T/Leap be handled at the commission rather than staff level.

Republican concerns hit a crescendo last week after Media Bureau Chief Bill Lake released a public notice warning broadcasters the bureau would “closely scrutinize” any transaction that involves both a sharing agreement and a contingent financial interest, officials said. O'Rielly and Pai objected. “When I objected, I was told that the Public Notice merely clarified existing Commission policy,” Pai said (http://fcc.us/1hsh4FK). “It does not."

More fights are looming. For example, while commissioners will sign off on key rules for the TV incentive auction, eighth-floor staffers said they're concerned other decisions will be pushed to follow-up public notices with staff rather than commissioners eventually making decisions. No decision has been made on this, an official said.

Several FCC officials said Wheeler, former president of NCTA and CTIA, sometimes acts more like a CEO or cabinet secretary than the chairman of a bipartisan regulatory commission. The Communications Act does define the chairman as the “chief executive officer of the Commission.” It’s Wheeler’s “prerogative” to push things through on delegated authority, but on major transactions “the commissioners should have to be on the record,” one agency official said.

"Delegated authority is a really dicey issue,” said NAB Executive Vice President Rick Kaplan, former chief of the Wireless Bureau. “Unless the commissioners specifically delegate the decision to the staff, the presumption should be the that the commissioners themselves should be making the decisions. The staff, and I was one of them, is not nominated by anybody, confirmed by anybody and therefore has no accountability to anybody but the chairman.” Delegated authority is misnamed, Kaplan added. “Delegated authority is really additional chairman authority because the chairman directs the staff.”

"Every Administration has this conflict at some point because of the inherent tension over delegated authority,” said Paul Gallant, an analyst at Guggenheim Partners, by email. “It’s a mix of legal interpretation, policy and politics. And because the chairman controls most of the agency’s levers, he or she typically has the upper hand."

"I get the sense that Wheeler is pushing the envelope with regard to the use of delegated authority, and I would not be surprised to see the other commissioners push back,” said Randolph May, president of the Free State Foundation. “While there are not clear-cut demarcation lines, delegated authority is intended to be used for ‘routine’ matters and items that don’t involve policy determinations. When the delegated authority is used for items that cross the boundary lines, or that even appear to do so, it detracts from nurturing the collegial decision-making process that ought to at least be a goal of a multi-member agency like the FCC. And, more directly, of course, it avoids giving the other commissioners a chance to have input on an item that their vote might otherwise secure."

Picking His Spots

Blair Levin, former FCC chief of staff, said anyone who objects to the FCC’s acting on delegated authority should realize that commission-level votes add time to any decision. “At a time when most of the discussion is about how do we get the commission to act more expeditiously, people are complaining when the FCC acts expeditiously,” Levin said. “The chairman always has a balancing act that is in part about efficiency and also shared power and there is no clear line.” Levin said the transactions the FCC has handled under Wheeler on delegated authority haven’t been particularly controversial. “But if you're going to criticize Wheeler for using delegated authority, you should also say, ‘We acknowledge it will take a lot more time to get certain deals done,'” he said. Levin is now executive director of the Gig.U initiative to connect communities near universities with high-speed broadband.

Wheeler likely weighed the alternatives before deciding not to seek a commissioner vote on AT&T/Leap, said Jeff Silva, analyst at Medley Global Advisors. “There’s a balancing involved, one which requires the utmost prudence and discretion, but is sometimes highly influenced by facts on the ground at the time,” he said. “As such, FCC chairs generally have tended to pick their spots in the use of delegated authority. This appears to be one of those times.” Silva said AT&T/Leap was released with the FCC’s nonbinding shot clock for merger reviews set to expire. “It’s possible Chairman Wheeler, with a full regulatory plate and facing time pressures on other fronts, simply in this case wanted to avoid regulatory delay,” he said. “It’s important to appreciate that every commissioner inherently feels a strong obligation to weigh in on the important matters of the day. The problem is, there’s not a perfect formula that works for everyone in every instance."

Essential to Efficient FCC Operation

Gus Hurwitz, assistant professor at the University of Nebraska College of Law, said use of delegated authority raises some difficult issues. It “could be truly problematic if bureau chiefs either aren’t accountable to the Commission as a whole or are only accountable to the Chairman and the Chairman isn’t accountable to the Commission as a whole,” Hurwitz said via email. “The bottom line is that delegated authority is essential to the efficient operation of the Commission. So long as it’s not being used to bypass statutory or Constitutional requirements, if Chairman Wheeler wants to use it to push political fighting out of the decisionmaking process, that seems good and proper. The key is that, if a bureau decision is substantively defective, there needs to be a way to appeal it to the full Commission (and then to federal court if it is still defective), and this process can’t be used to make new policy."

If commissioners want to dissent but can’t because there is no vote, they can still release statements, Hurwitz said. “Those who are concerned that the Chairman is acting more like a CEO than the chairman of a bipartisan commission may want to remember that the Communications Act describes the chairman as the Chief Executive Officer of the Commission,” he said. “That the Chairman’s use of delegated authority has upset both the majority- and minority-party commissioners suggests that he is, in fact, acting as a bipartisan CEO.”

"There certainly has been abuse of delegated authority powers in the past, particularly when the commission fails to act promptly on applications for review,” said Andrew Schwartzman, Benton senior counselor at Georgetown University Law Center’s Institute for Public Representation. The reason for the current “heated debate” over shared service and joint sales agreements is that the Media Bureau “repeatedly blessed questionable arrangements and the commission has sat on applications for review challenging these decisions for up to nine years,” Schwartzman said. However, “use of delegated authority in non-controversial matters makes very good sense,” Schwartzman said. “Even when a matter is a subject of dispute, use of delegated authority is also appropriate when a matter is clearly governed by existing policy and law. I support Chairman Wheeler in letting the bureaus employ delegated authority in these circumstances."

"Delegated authority can be a very useful tool for efficiently moving items to decision that do not require the breaking of new legal ground,” said Independent Telephone and Telecommunications Alliance President Genny Morelli. “ITTA encourages Chairman Wheeler to continue using delegated authority in that manner,” she said. “It’s a practical way to help address the commission’s decision backlog in situations where the statute and the commission’s rules are clear and merely require application in a particular case."

But when there’s an internal split the best path forward, delegated authority can rankle. The recent request by the Wireline Bureau for “focused comment” on how best to reform the E-rate program (CD Mar 7 p16) didn’t sit well with the two Republican commissioners, said Davis Wright telecom attorney Jim Smith Monday at a Comptel conference in Las Vegas. Pai and O'Rielly wanted that to be a full item coming up for a full FCC vote and “were displeased with the way it was done,” Smith said. Pai suggested the FCC advance a “concrete proposal” in a further notice of proposed rulemaking. “If the Commission needs to focus comment on an issue,” it should do so in a way that complies with the requirements of the Administrative Procedure Act, he said, suggesting the agency advance a “concrete proposal” in a further NPRM (CD Mar 10 p11).

The FCC also approved T-Mobile/MetroPCS on delegated authority, under then-Chairman Julius Genachowski, said Harold Feld, senior vice president at Public Knowledge. “I am also sympathetic to the argument that mergers with large financial value may present only routine issues and therefore be better resolved at the bureau level,” he said. “Even though the rules permit approval at the bureau level, it has unfortunate consequences. While we were generally satisfied with the conditions imposed in the AT&T/Leap [order] ... we would not have much recourse if we weren’t because the parties can consummate the transaction after approval by the bureau, making an appeal to the full commission fairly useless.”

A chairman can create political problems by doing too much on delegated authority, Feld said. “A vote by the full commission guarantees at least two other commissioners willing to defend the final result,” he said. “It also deflects criticism that the chair is seeking to circumvent traditional prerogatives of commissioners in the name of expediency. To the extent deciding these matters at the bureau level is a function of feeling pressed for time, the commission should consider revisiting the existing shot clock. The idea that any deal can be decided in 180 days, no matter what its size and complexity, is somewhat ridiculous. If the concern is that eighth floor negotiations take time, the better solution is to recognize that and make the time rather than stick to an artificial deadline set 15 years ago."

The FCC “is kind of shaping up to be a dysfunctional place and there’s a lot of reasons for that,” said a former FCC official who does represent clients before the commission. “The FCC is starting to reflect the same divisions we see on Capitol Hill. It’s becoming a mirror of Congress in part because you've got three former Congressional staffers” on the commission. O'Rielly was a longtime Hill staffer and both Rosenworcel and Pai logged time working for the Senate before they were nominated. ,