In addition to setting overall timelines for Commission review of agency rules, as I previously recommended, there are two agency practices that warrant re-evaluation:  where the agency relies on a “predictive judgment” to establish a policy or rule; and where the agency adopts an “interim” rule.  In both cases, the Commission supposedly relies on the best information to make a decision that is inherently time limited.  Unfortunately, when utilized, there is often no follow-up with hard facts or final rules.  That means those offering or receiving communications services in the marketplace are forced to adhere to rules based on stale decisions or outdated information.  We can and must do better.

Predictive Judgments

During its proceedings, the FCC sometimes makes predictions about how markets will evolve and about the impact of its rules or policies on the industry and stakeholders.  This practice is intended to be an educated and reasoned estimate, based on the circumstances before the Commission at the time, of the most logical and likely outcome in a particular situation.  As an expert agency, the FCC’s “predictive judgments” are often afforded deference by the courts, provided that they fall within the agency’s “field of discretion and expertise” and are the result of “reasoned decision-making”.  Therefore, it is not uncommon for the FCC to invoke this terminology in its orders, particularly when it comes to controversial decisions that are likely to be challenged in court.  Indeed, the term is used more than a dozen times in the 2015 Net Neutrality Order and 8 times in the 2011 USF/ICC Transformation Order.  It was most recently used as a foundation for the Commission’s decision that designated entities receiving taxpayer subsidies to participate in wireless auctions can lease all of their spectrum and do not have to be facilities based.  And, predictive judgment even appeared as a justification for creating reserve licenses in the upcoming incentive auction.

When employed, courts have outlined that the agency has a duty to reevaluate its predictions should they fail to materialize.  For example, in Aeronautical Radio v FCC, one court deferred to the Commission’s predictions on the effectiveness of international coordination “with the caveat, however, that, should the Commission’s predictions . . . prove erroneous, the Commission will need to reconsider its [decision] in accordance with its continuing obligation to practice reasoned decisionmaking.” Nonetheless, the FCC’s predictions, and the rules and policies based upon them, can endure for years without being revisited.  Indeed, they are typically reexamined only when the agency has a desire to reverse prior decisions. 

It shouldn’t come as a surprise that predictions made years ago about how technology, especially the Internet, may develop aren’t always on target.  In some regards, it is unfair to ask staff to act as a prognosticator in one of the most dynamic and changing fields.  To put it in perspective, even with all the best information in the world available today, how many people could accurately select the Super Bowl winner for 2016? 2020? 2025?  Take for instance the Commission’s wireless E911 location accuracy proceeding where predictions regarding the future availability of technology are used as support for implementing requirements on industry in a particular timeframe.  We will see how our predictions fare this time, but we certainly have not had a good track record of predicting the availability and penetration of such technology in the past.  The ultimate value of predictive judgments and therefore their use by the Commission is questionable but that will have to wait for another day. 

In the meantime, we need to address the acceptable life of any predictive judgment.  The haphazard approach of making predictions, failing to timely review and then rejecting them as it suits the agency’s interests is inconsistent with the FCC’s ongoing duty to engage in reasoned decision-making.  Instead, whenever the FCC bases a decision on a predictive judgment, it should include a timeframe for revisiting the prediction.  The exact duration will depend on the circumstances.  However, it is not unreasonable to expect that a predictive judgment not be allowed to last for more than three to five years without affirmative review.  Predictions of developments outside that time frame are really no more than guesses, and would raise serious questions about whether agency intervention is premature.

Interim Rules

The FCC also receives substantial deference from the courts when it adopts “interim” rules.  This can occur when the FCC is attempting to preserve the status quo or avoid a market disruption pending the completion of a broader rulemaking proceeding.  While adopting an “interim” regulation can be a legitimate exercise of agency authority, we have also seen examples where it has been invoked to lock in a policy preference for an extensive period of time, free from significant legal challenge.      

Of course, the deference afforded to the agency is not unlimited, and courts do grow impatient when an interim measure remains in effect for years.  For example, a court overturned an FCC “interim” rule relating to access charges that had been in place for an astonishing 13 years.  But parties should not have to wait years for the FCC to adopt final rules, or bear the cost of pursuing legal action to force the FCC to act sooner. 

In most cases, the FCC ties the interim rule to the completion of a specific rulemaking proceeding, which gives the appearance that interim rules will not have an unlimited duration.  But without setting a specific timeline as a backstop, the Commission is under no pressure to act quickly.  We have a number of interim rules on the books that have been pending finalization for years. 

Therefore, any interim rule should be accompanied by a timeframe for completing the final rules.  Here, the presumption should be that an interim rule not last for more than 18 months.  Even complex rulemakings have been completed within a year, so allotting 18 months would be more than generous in most instances.  And nothing prevents the Commission from extending that time frame as it approaches expiration or setting a slightly longer one for particularly difficult situations.  

The Commission’s new Process Review Task Force should add these practices to its list due for scrutiny.