July 9, 1999

Re: Joint Application for a License to Land and Operate a Submarine Cable Network Between the United States and Japan

I. INTRODUCTION

I am pleased that AT&T and the other members⁽¹⁾ of the Japan-U.S. Cable Network consortium finally were granted permission to land and operate their submarine cable system in the United States. These companies and their customers were forced to wait far too long for approval to provide important trans-Pacific communications services.

I did not participate in the FCC's decision, however, because I believe that this Commission has no legal authority to receive, review, or grant applications for submarine cable landing/operating licenses. Congress directed the President, not the FCC, to perform these functions. Although an extant executive order purportedly delegates the President's duties to the FCC, I believe the purported delegation is unlawful and invalid because the President may not, without specific statutory authority, delegate any functions to an independent regulatory agency such as this Commission, nor may an independent agency lawfully accept any extra-statutory delegations from the President. Indeed, in the absence of statutory authority, the FCC could accept a delegation only if the Commission were found to be an executive branch agency subordinate to the President. Such a finding, of course, would be absurd.

This is not merely an academic criticism; the Commission's unlawful actions have serious consequences for submarine cable operators, carriers, and their customers, including individual American consumers and businesses. Applicants for submarine cable licenses routinely are subjected to intolerable FCC and State Department delays, as well as onerous conditions (both explicit and implicit) and other forms of regulatory arm-twisting. In the current instance, the applicant was subjected to nearly eight months of delay, implied conditions that affect the applicant's private contractual arrangements, and possibly an extorted promise to send some traffic over a competitor's submarine cable system. As if this weren't bad enough, the FCC also plans to examine the agency's "submarine-cable policies" in a rulemaking proceeding that, according to the FCC, may lead to retroactive imposition of new rules on licensees.

I have discussed the submarine cable issue at considerable length with the Commission's Office of General Counsel ("OGC"), which assures me that my concerns about FCC authority to receive, review, or grant applications for landing/operating licenses are unfounded. Simply put, OGC believes there are no statutory or constitutional impediments to FCC action in this area. I continue to disagree and, in this statement, describe my reasons.

Hopefully, in the future, the Commission will cease to act under the unlawful delegation and, thereby, relieve cable operators, carriers, and their customers from delay and other regulatory burdens. At a minimum, the FCC should formally investigate the legality of its actions in this area. This investigation should include seeking an opinion from the Office of Legal Counsel in the Department of Justice and, if an FCC rulemaking proceeding is undertaken, addressing the Commission's legal authority as a threshold matter.

II. BACKGROUND

The relevant statute, known as An Act Relating to the Landing and Operation of Submarine Cables in the United States ("Cable Landing License Act" or "CLLA"),⁽²⁾ provides that "no person shall land or operate in the United States any submarine cable directly or indirectly connecting the United States with any foreign country . . . unless a written license to land or operate such cable has been issued by the President of the United States."⁽³⁾ The CLLA also gives the President broad discretion for considering license applications. Indeed, pursuant to the CLLA, the President must be satisfied that granting a license "will assist in securing rights for the landing or operation of cables in foreign countries, or in maintaining the rights or interests of the United States or of its citizens in foreign countries, or will promote the security of the United States . . .."⁽⁴⁾

In 1921, President Harding issued an executive order that purported to delegate his authority under the CLLA to the Interstate Commerce Commission.⁽⁵⁾ In 1934, President Roosevelt issued another executive order that purportedly delegated this authority to the newly-created Federal Communications Commission.⁽⁶⁾ Roosevelt's order cited "the authority vested in me as President of the United States" as his power to make such a delegation⁽⁷⁾ Nearly two decades later, Congress passed a law, codified at 3 U.S.C. § 301, that authorizes Presidents to delegate functions to "the head of any department or agency in the executive branch."⁽⁸⁾ Subsequently, President Eisenhower issued yet another executive order that purportedly re-delegated to the FCC the president's authority under the CLLA, and cited "the authority vested in me by [3 U.S.C. § 301], and as President of the United States."⁽⁹⁾

III. FCC AUTHORITY

I believe that the purported delegations of presidential authority under the CLLA -- first to the ICC then to the FCC -- were unlawful and invalid. I reached this conclusion after posing the ultimate question in this context: May the President delegate his authority under the CLLA to the FCC and may the Commission accept such a delegation? I answered this ultimate question by considering each of its four elements. First, may the President delegate authority? Second, may the authority conferred by Congress in the CLLA be delegated? Third, may such a delegation of authority be made to the FCC? Fourth and finally, may the FCC lawfully act under such delegated authority?

1. May the President delegate authority? The FCC's OGC informs me that the President has an "inherent constitutional power to delegate his authority," and that 3 U.S.C. § 301 does not limit this power. Generally, I agree that the President has an "inherent" power -- which, of course, could only be constitutional -- to delegate the performance of functions vested in him by law. In what the Supreme Court has called "the Chief Executive's most important constitutional duty,"⁽¹⁰⁾ the Constitution requires the President to "take care that the laws be faithfully executed."⁽¹¹⁾ Based on this duty, the Court has declared the general power to delegate:

The vesting of the executive power in the President was essentially a grant of the power to execute the laws. But the President alone and unaided could not execute the laws. He must execute them by the assistance of subordinates.⁽¹²⁾

Given that the President must ensure that the laws are "faithfully executed," however, it is impossible to conclude that the power to delegate has no limits. Could the President meet this constitutional duty by delegating a complex environmental protection function to the Treasury Department or a counter-terrorism function to the Department of Housing and Urban Development? Certainly not. Without extraordinary changes to their organic statutes, these agencies could not possibly execute such laws.

In the present instance, I question whether the President can meet his constitutional duty to take care that the laws are faithfully executed by assigning a function to the FCC that involves consideration of whether an action "will assist . . . in maintaining the rights or interests of the United States or of its citizens in foreign countries, or will promote the security of the United States."⁽¹³⁾ The FCC has about as much expertise on national security issues as does HUD on terrorism. Thus, although OGC may correctly conclude that "the President's constitutional power to delegate his functions to the FCC is not limited to the authority in [Section 301]," I believe that the power to delegate to this Commission has limits based upon the subject matter of the delegation and the organic statutory authority of the agency. More specifically, I believe that consideration of issues as broad as "the rights or interests" of American citizens, or as specialized as national security, are well beyond the expertise of the FCC and, therefore, cannot lawfully be delegated to the Commission.

2. May the authority conferred by Congress in the CLLA be delegated? In the absence of case law directly on point, the Justice Department's Office of Legal Counsel ("OLC") has concluded that the President may not delegate any function "where . . . from the nature of the case, or by express constitutional or statutory declaration, the personal individual judgment of the President is required to be exercised."⁽¹⁴⁾ Because I do not believe or claim that the President's functions under the CLLA are such non-delegable functions, I believe there is no constitutional or statutory impediment to the President delegating powers conferred in the CLLA to an appropriate entity, e.g., the State Department. Again, my quarrel is with the putative delegation to the FCC.

3. May a presidential delegation of authority be made to the FCC? This is the key element of the ultimate question. I believe that the President may not, absent specific statutory authority, delegate his functions to independent regulatory agencies, including the FCC. OGC, of course, does not agree.

At base, OGC seems to believe that the President has "inherent constitutional power to delegate his authority," and that the words "executive branch" in Section 301 are irrelevant because the entire section is surplusage. In other words, so the argument goes, the fact that President Roosevelt delegated his CLLA authority to the FCC nearly two decades before enactment of Section 301 makes this provision irrelevant in the current circumstance. Perhaps so.

OGC relies upon three OLC opinions to support its contention that the President has an inherent power to delegate his functions to the FCC. Unfortunately, these OLC opinions are either inapposite or unpersuasive to this issue. The citation to one of the opinions clearly misses the mark,⁽¹⁵⁾ for that opinion involves a delegation to the Secretary of the Treasury -- an Executive Branch official -- and specifically relies on Section 301.⁽¹⁶⁾

The citation to a second OLC opinion also is unpersuasive,⁽¹⁷⁾ because that opinion again involves a delegation to an Executive Branch official, the Counsel to the President, and suggests that the delegation may "fall within the President's inherent power to delegate," but specifically does "not . . . pass on that issue."⁽¹⁸⁾ The last cited opinion,⁽¹⁹⁾ involves a delegation to NASA -- yet again an Executive Branch agency -- and relies on the inherent power of the President to delegate as described in another OLC opinion,⁽²⁰⁾ which says that:

Generally, it may be said that the inherent rights or implied powers of the President are all those vast powers which are reasonably necessary in executing the express powers granted to him under the Constitution and Laws of the United States for the proper and efficient administration of the executive branch of the government."⁽²¹⁾

Clearly, the entities to which the President may delegate his authority are not unlimited. For example, how could the President properly delegate his functions to a federal judge, a member of Congress, a state governor, a town mayor, or a private citizen?⁽²²⁾ But what distinguishes these persons, for example, from the Secretary of State or the Director of the CIA? According to the Supreme Court, as noted above, delegatees of presidential authority must be "subordinates" of the President. And, as also noted, OLC believes that the inherent power to delegate arises out of the need to administer the executive branch of government. It appears, therefore -- whether a presidential delegation is made pursuant to 3 U.S.C. § 301 or the President's inherent power to delegate -- that the President may delegate his authority only to subordinates in the executive branch. Thus, for a presidential delegation to the FCC to be legally proper, the Commission must be found to be subordinate to the President in the executive branch.

4. May the FCC lawfully act under lawfully delegated authority? In appropriations statutes, Congress stipulates that the FCC may expend only those funds "necessary . . . as authorized by law."⁽²³⁾ Thus, if a purported delegation to the FCC is unlawful, even through no fault of the Commission, it is unlawful for the Commission to expend appropriated funds in accordance with the delegation. Further, it is immaterial that, under the current executive order purporting to delegate CLLA functions to the FCC, the State Department retains ultimate decision making authority. The FCC may not lawfully expend any funds, including those used to carry out even limited CLLA functions ("including the authority to issue, withhold, or revoke licenses to land or operate submarine cables in the United States"⁽²⁴⁾) if not authorized by law to do so.

IV. CONCLUSIONS

For the foregoing reasons, I believe that the President has not lawfully delegated his authority under the CLLA to the FCC, and believe that it is illegal for this Commission to act under this unlawful delegation. After repeatedly raising the foregoing legal concerns with the FCC's OGC, I have found that the staff responses are either a host of conclusions not supported by statute (e.g., "many of the Commission's communications-related duties, and in particular, those touching upon international relations and foreign policy, are exercised under authority and supervision of the President "), or result from two mindsets that imply (1) we've always done it that way, so it's OK (e.g., "if Congress had perceived any defect in this longstanding delegation of presidential authority, it surely would have acted well before now to correct the matter"⁽²⁵⁾), and (2) we have the subject matter expertise so we should do it (e.g., "the subject matter of the delegation appears to be well within the Commission's jurisdictional expertise"). I find these mindsets unpersuasive, unsatisfactory, and unlawful. Questioning the legality of longstanding practices is not new in American jurisprudence (civil rights and privacy being two obvious areas), and even if we had subject matter expertise -- as already noted, we do not -- this does not mean we have the authority to act. For example, even though we are capable of handling some of the work of the National Telecommunications and Information Administration and state public utilities commissions, that doesn't mean we have the authority to do it. By implication, therefore, OGC must believe that the FCC is, at least for the purposes of responding to orders, an executive branch agency beholden to the President. This cannot be.

As noted above, the question of whether or not the FCC has authority to receive, review, and grant licenses to land and operate submarine cables is not merely academic, because the agency has chosen to make the grant of such licenses anything but routine. In the present case, nearly eight months have passed since the applicants requested permission to land and operate the Japan-U.S. Cable Network.⁽²⁶⁾ A quick review of applications and licenses reveals that the average delay is at least four and a half months, and the delay is frequently much longer. Needless to say, in the current business environment, especially in the provision of high-bandwidth data communications services, such delays are intolerable.

Further, regulatory requirements -- euphemistically known as "conditions" -- frequently are imposed upon licensees. Worse than imposing explicit conditions, i.e., those contained in the actual license grant, the FCC often is able to impose implicit conditions on applicants. In the present case, the applicants were "persuaded" (under threat of application denial or further delay) to modify their original applications, as well as private contracts, in order to satisfy the desires of regulators (and the applicants' competitors). Amazingly, one key issue concerned alleged monopolization of telecommunications services ("backhaul") provided entirely within another country -- a subject wholly outside of the FCC's jurisdiction. The lesson appears to be that if the Commission can't get what it wants directly, it's easy to employ an unlawful delegation of power to achieve the same result.

Worst of all, this whole process is subject to abusive, clandestine arm-twisting. In this case, I have heard allegations that FCC staff "encouraged" some of the applicants to shunt some future traffic to a competitor's trans-Pacific cable. If true, this would amount to unforgivable regulatory extortion. Even if not true, it's easy to see how the current process is open to such abuses.

In sum, I am pleased that AT&T and the other members of the Japan-U.S. Cable Network consortium finally were granted permission to land and operate their submarine cable system in the United States. I did not participate in the FCC's decision, however, because I believe that this Commission has no legal authority to receive, review, or grant applications for submarine cable landing/operating licenses.

* * * * * * *

1.     In addition to AT&T Corporation, consortium members include Com Tech International Corporation, Frontier Communications Services, Inc., GTE Hawaiian Tel International, Incorporated, GTE Inelligent Network Services Incorporated, International Exchange Networks Ltd., Level 3 International, LLC, MCI WorldCom, Inc., PCI Communications, Inc., Pacific Gateway Exchange (Bermuda), Ltd., PRIMUS Telecommunications, PSINet, Inc., Qwest Communications Corporation, RSL COM U.S.A., Inc., SBCI-Pacific Networks, Inc., Sprint Communications Company, L.P., Teleglobe USA Inc., Telegroup, Inc., and VIATEL Inc.

2.      42 Stat. 8, codified at 47 U.S.C. §§ 34-39.

3.      Id. at § 1.

4.      Id. at § 2. As initially enacted, the CLLA stipulated that "nothing herein contained shall be construed to limit the power and jurisdiction heretofore granted the Interstate Commerce Commission with respect to the transmission of messages." Following creation of the FCC, that stipulation was modified to read, "nothing herein contained shall be construed to limit the power and jurisdiction of the Federal Communications Commission with respect to the transmission of messages." Id. OGC argues that, by mentioning the FCC in the CLLA, Congress intended to allow the President to delegate his CLLA functions to the Commission. To the contrary, Congress was not assigning any new functions to the ICC or, later, to the FCC but, rather, was making clear that the CLLA did not reduce preexisting ICC/FCC powers. If Congress had intended the FCC to assume the CLLA duties, it certainly could have assigned them directly at the very moment it was considering the FCC in the context of the CLLA.

5.      Exec. Order No. 3,513 (July 9, 1921).

6.     Exec. Order No. 6,617 (June 30, 1934).

7.      Id.

8.      65 Stat. 712, codified at 3 U.S.C. § 301.

9.     Exec. Order No. 10,530 (May 12, 1954).

10.      Lujan v. Defenders of Wildlife, 504 U.S. 555, 577 (1992).

11.      U.S. Const., Art. II, Sect. 3.

12.      Myers v. United States, 272 U.S. 52, 117 (1926).

13.      CLLA at Sect. 2 (emphasis added).

14.      Memorandum re: President's Authority to Delegate Functions (Jan. 24, 1980), cited at 1995 WL 917147 (O.L.C.) (June 7, 1995), fn. 32.

15.      6 U.S. Op. OLC 428 (1982).

16.      Id. at 430. And of course, I agree with OGC's statement that "the President's inherent authority is not affected or limited by the provisions of Section 301"; certainly statute cannot limit the Constitution.

17.      7 U.S. Op. OLC 10 (1983).

18.      Id. at 12.

19.      1995 WL 917147 (O.L.C.) (June 7, 1995).

20.      Memorandum re: President's Authority to Delegate Functions (Jan. 24, 1980), cited at id., fn. 31.

21.      Id. (emphasis added).

22.     OGC argues in response to these hypotheticals that the CLLA functions "could, in theory, permissibly be exercised by either the President or the FCC. Therefore, unlike the hypotheticals [ I ] posed (concerning possible presidential delegations to federal judges or to members of Congress), [ OGC ] remains confident that the delegation at issue does not raise any constitutional separation of powers issues that might preclude the delegation." At worst, this is nonsense. And at best, it's conclusory to state that the functions could be "exercised by either the President or the FCC."

23.      Pub. L. 105-277, 112 Stat. 2681.

24.     Exec. Order No. 10,530, fn. 8, supra, at p. 3.

25.     This is a remarkable statement from OGC. In essence, OGC says that Congress should monitor the execution of laws and, if a law is not being faithfully executed, Congress should change the law.

26.     The State Department is partly responsible for this delay. A draft FCC decision was ready for a Commission vote on June 15, 1999, but was delayed awaiting the "necessary" approval from the State Department, which was not granted until over three weeks later, on July 7, 1999. As noted in this statement, some parties argue that because the executive branch maintains ultimate decision making authority for submarine cable landing licenses, there cannot have been an improper delegation to the FCC. Even though I think this arguement is flawed for other reasons (because I believe the President may not delegate any task to the Commission, including "only" receiving and reviewing applications), the State Department's July 7 letter appears to undermine the argument that State is the ultimate decision maker. Indeed, it says that "the Department of State has no objection to approving the joint application request." This wording certainly suggests an advisory, not plenary role. A copy of the July 7 letter is attached.