Before the Federalist Society, Telecommunications Practice Group
Federalist Society National Convention
November 12, 1998
It is a pleasure to be here at the Federalist Society. Some say
that this is a hot bed of conservatism. Of reactionary antigovernment
types. Of people hostile to centralized government itself.
Nothing could be further from the truth. Your very name, and your
very emblem of James Madison, are proof that you are indeed the
champions of a government based on the rule of law.
If you were as anti-centralized government as your detractors claim,
you would not be the Federalist Society. In fact, you might be the
Anti-Federalist Society.
Perhaps you have a penchant for history, and for Virginia itself.
You could have chosen George Mason, or Patrick Henry, or Governor
Randolph to lead your charge against the excesses of Washington.
But you chose to be the Federalists, the big government advocates
of their day. The representatives of the interests of the urban
elites, allied with the media interests. And you chose James Madison
as your mascot so to speak.
It is sometimes difficult for American society, 210 years after
the fact, to understand that, at the time of the Constitution, Americans
could be divided into two groups: those who wanted a weak central
government, and those who wanted an even weaker one. You have chosen
the advocates of the relatively stronger central government.
Separation of Powers
I have come to talk about a matter that is at the core of the Constitution,
the separation of powers. It seems a modern custom to pay homage
to the Bill of Rights as being at the heart of the Constitution.
It was James Madison who crafted the Bill of Rights in response
to fears by the Anti-Federalists that the centralized government
would be too powerful.
Indeed, the Bill of Rights was written to provide predictability
and certainty that the new centralized government would not trample
on the rights already enjoyed by citizens and by States. It did
not create new rights, but was an effort to preserve existing rights
from the threats of a potentially powerful and arbitrary central
government. The predictability and certainty provided by the Bill
of Rights helped ensure ratification of the Constitution. Despite
contemporary gloss to the contrary, much of the Bill of Rights seems
to have been buried alive years ago, particularly the 9th and 10th
Amendments, ironically, the bulwark against an overly powerful central
government.
No, I believe Madison's greatest achievement in the Constitution
was not the Bill of Rights but the structural concept of the separation
of powersthree distinct branches of government, each with
its own independent authority.
The separation of powers was not born with the U.S. Constitution.
It had long been championed by political philosophers, and it had
long been in practice in the American colonies and in the States
formed by the Revolution. Indeed, there were many local models for
the U.S. Constitution, particularly Virginia's. Madison's gift to
the U.S. Constitution was, thus, as much eloquence as originality.
Why is separation of powers important? Because the centralization
and embodiment of government in a single organ is indistinguishable
from an abuse of power.
A law enforcer who also is supposed to write laws, has little incentive
to bother writing laws; how much more convenient to make them up
as you go along. Worse yet, even when rules are written down, there
is no certainty or predictability so long as the enforcer can change
them later.
A judge who also writes laws or enforces laws is not a likely source
of independent justice. Why appeal an enforcement to the same person
who enforced the law? Or why appeal a law to the same person who
wrote it? There is no certainty or predictability in law if judges
are indistinguishable from legislators or executives.
When governmental powers are separated, individual citizens can
have equal standing before each element of government. Citizens
seeking changes in laws can appear before lawmakers without fear
of favoritism or retribution from law enforcers or judges. Those
who appear before law enforcers can do so without fear of an adverse
effect on lawmakers or judges. And those who appear before judges
can do so without apprehension of adverse affects on other matters
before lawmakers and law enforcers.
It is very difficult to have such equality of standing when power
is concentrated. The lawmaker, who is also judge and law enforcer,
will inescapably be aware of, and consider, matters of enforcement
and judicial review in dealing with outside parties. Where there
is a possibility of intermingling law, enforcement, and its review,
the temptation and the result are inevitable. The process in one
element of government is susceptible to corruption in consideration
of another process in another element; indeed, commingling and corruption
seem inescapable, and the rule of law vanishes.
The mere citizen who encounters the government only in the context
of law enforcement has much less to trade off, much less to exchange,
than the more powerful element of society that has not merely one
law enforcement issue with the government, but a whole host of law
enforcement issues, as well as legislative and judicial issues.
Where power is concentrated rather than separated, there can be
no rule of law. There can be no limitation on the excesses of law.
There can be no predictability or certainty of the processes of
law
Lord Acton wrote that "Power corrupts, and absolute power
corrupts absolutely." His insight applies equally well to the
scope of power as to the degree of power. Indeed, in law, scope
and degree of power are almost indistinguishable.
A powerful, centralized government is precisely what the American
colonists feared most. The separation of powers, not a written bill
of rights, is the cornerstone of the rule of law.
The Public Interest
But you have not come here today to listen to an amateur historian
expound on American history and the separation of powers. You have
come to hear an FCC Commissioner speak about the public interest.
In my view, however, it is all the same.
I believe that the public interest is predicated on a rule of law,
a rule of law that is predictable. And to that end, the public interest
requires some respect for the separation of powers.
You may begin to think that I am going to talk about delegation
of authority to the FCC and whether we commingle elements of the
legislative, executive, and judicial branches in one body. I will
leave that for some of your other panels to discuss. Today I would
like to focus more narrowly on the concept of the public interest
and how it might be applied.
Horror Stories
Many conservative lawyers, indeed many of you here today, have
horror stories about the abuse of the public interest doctrine at
the FCC.
It is axiomatic in some conservative circles that the public interest
standard is nothing more than a synonym for wholly arbitrary regulation.
To these conservatives, the public interest standard is completely
captured by regulators who love power and who dislike the rule of
law.
One frequent reaction is that Congress needs to rewrite the Communications
Act to expunge the concept of the public interest. Or at least define
it more narrowly, by legislative prescription. Frankly, I believe
Congressional action in this area is unlikely any time soon. It
is difficult for Congress to legislate; witness the more than 60
years that elapsed before a major rewrite of the Communications
Act of 1934 took place.
Another reaction is that the FCC should just ignore the public
interest standard.
But ignoring the law, even one that seems incomprehensible, is
never the right prescription for a government agency. Once a government
agency can decide which laws and which sentences are to be enforced
and which are not, there remains no rule of law.
I think that we can neither ignore the law nor afford to wait for
it to be rewritten. Rather, we must learn to understand it, and
to articulate how it may best be applied. That is what I wish to
speak about today.
Historical Origins
The concept of "public interest" is not to be found in
the Declaration of Independence, the Constitution, nor even the
Gettysburg Address. It is a common law concept first articulated
in the late 1600s by Lord Hale to reflect limitations in absolute
property rights where public usage is important, as with respect
to wharves.
Significantly, the concept of the public interest was not invented
to give one or more branches of government new arbitrary and unpredictable
authority. Its common law articulation, as much as anything, appears
to have formalized practice. If anything, the English common law
has always led to more rather than less certainty and predictability
in the market. The public interest standard in English common law
was an extension of the rule of law, not an insult to it.
The concept of the public interest was apparently introduced to
American federal jurisprudence by the Supreme Court in Munn v. Illinois
in 1877. That case upheld a state law regulating maximum rates for
grain elevators. Again, the thrust of the Supreme Court decision
was not to create new, arbitrary, and unpredictable powers for a
government agency, but rather to sanction the exercise of a duly
elected government to place some limitations on the exercise of
absolute property rights.
While some, including myself, might prefer simpler, unencumbered
property rights, the limitation on such rights by a State government
operating under the rule of law with separation of powers and with
due process is not so scary as the limitation on such rights by
a highly concentrated federal government with little or no predictability
and little or no due process.
The concept of the public interest was incorporated in the statutes
establishing federal regulatory commissions in the early 20th Century,
particularly in the area of common carriage.
Perhaps few if any federal agencies are as dedicated to the public
interest as the FCC. I recently took an electronic version of the
Communications Act and did a word search for "public interest."
I was astonished at how much of the Act was permeated with the concept.
It appears in many if not most sections.
Make no mistake: it is not there by accident nor merely as an historical
artifact. It is used time and again by Congress. It must mean something.
Unclear Meaning
What it means, however, is far from clear. The Commission has never
defined it precisely, nor have the courts. In 1943, in the National
Broadcasting case, the Supreme Court upheld the use of the public
interest standard by the FCC. For the majority, Justice Frankfurter
wrote that it was not an entirely arbitrary standard but in some
sense a Congressional response to a changing new technology. He
also wrote that the public interest standard is not necessarily
narrowly limited, yet he did not elaborate on the extent of its
outer boundaries. Nor has the Commission since.
It might not be entirely inappropriate for Congress to provide
an agency with a little extra flexibility where the course of technology
is unpredictable. Good laws should not necessarily become obsolescent
with changing technologies. (Some people might argue that bad laws
should.) In that sense, the public interest could include a little
flexibility to allow an agency narrowly to cope with circumstances
and technologies unforeseeable by Congress.
Except where it explicitly calls for another party to make a public
interest determination, the statute and the courts appear to leave
those determinations up to the Commission. But we have never made
such determinations explicitly.
I have some suggestions on how we might approach the problem in
the following areas: examining the statutory context of the phrase
"public interest"; maintaining the separation of powers;
ensuring that decisions are predictable, not arbitrary; and ensuring
that the application of the public interest is non-discriminatory.
Contextual Meaning
The FCC should look to the letter of the law, gain understanding
from the context of each reference to the public interest, and interpret
the public interest in a manner consistent with the rule of law
and with a predictable and certain application.
Much can be learned by examining the context in which the "public
interest" appears in the Act. Some advocates of a broad, and
expansive, and arbitrary interpretation of the public interest standard
argue it always has a broad meaning in all circumstances. A casual
review of the dozens of times it appears in statute explodes the
myth of a single meaning of the public interest, however.
Sometimes it appears with "public convenience and necessity;"
sometimes not.
Sometimes it is to be determined by the FCC, other times by States,
and still other times by licensees. It is used in many different
sentence structures with many different subjects, verbs, adjectives,
and adverbs.
Consider, for example Section 303, which grants the FCC broad authority
to regulate the wireless industry. This grant of authority, however,
is available to the Commission only when the "public convenience,
interest, and necessity requires" it (emphasis added). A requirement
is a difficult showing. Has the Commission ever demonstrated an
unambiguous requirement that something terrible would otherwise
happen, before employing Section 303? I have yet to find a compelling
example of a Commission showing. Perhaps someone knows of such a
showing.
Separation of Powers
I return now to the original concept of the separation of powers.
How does it apply to the public interest standard at the FCC? Consider
that the FCC embodies powers of all three branches of government.
We promulgate rules, we enforce them, and we resolve disputes under
them.
But the Commission's authority in each of these areas is far from
absolute. Our rulemaking authority is limited to interpretations
within the four corners of statutory authority given by Congress.
Some aspects of our enforcement actions are often done through other
government agencies. And our dispute resolutions are always appealable
to courts of law.
In an ideal world, even these limited functions would not be combined
in one governmental body. But to the extent we have them in one
agency already, and the Supreme Court has upheld such arrangements,
we should be careful to keep decisions and processes for each type
of activity within the Commission separate. Enforcement must not
become rulemakings, and dispute resolutions must not be predicated
on rulemakings or enforcement.
Where the public interest standard is invoked in rulemakings to
expand or contract Congressional statutory directivesor worse,
to contravene Congressional intentthe separation of powers
and the rule of law are undermined.
Where the public interest standard is used in rulemaking to defer
final rules until an enforcement action, the separation of powers
and the rule of law are defeated.
Instead, to maintain some separation of powers, the public interest
should be construed as narrowly as possible in the context of rulemaking
and enforcement. Rulemaking in particular is forward looking, and
broad discretion in the public interest affects all classes of individuals.
If there is any scope for greater flexibility under the public interest,
perhaps it should be in dispute resolution, where only a small number
of individuals will be affected.
Unfortunately, at the Commission little attempt is made to segregate
rulemaking, enforcement, and dispute resolution. The application
of the public interest standard is rarely if ever distinguished
in each of these three areas.
Predictability
One of the cornerstones of the rule of law is predictability of
the application of law. This again argues for narrow applications
of the public interest standard in both rulemakings and enforcement.
Moreover, it also calls for statements of public interest standards
in advance of their application.
In particular, predictability of enforcement actions with a public
interest standard may be enhanced by the use of rebuttable presumptions.
That is, enforcement is presumed to go in a stated direction with
a burden of proof on the party seeking a different outcome.
Another vehicle for greater predictability in limited rulemaking
instances and in enforcement actions would be the use of cost-benefit
analyses. Such analyses could inform an initial determination of
where the "public interest" lies, and where it does not.
Such analyses are inherently imprecise and would serve more as a
filter than a final basis for a determination.
Sadly, the Commission rarely if ever defines public interest standards,
whether ex post or ex ante. And there are no rebuttable presumptions.
All we have are presumptions of uncertainty.
Nondiscriminatory Application of
the Public Interest Standard
I have reluctantly come to the conclusion that the concept of the
public interest may be applied in different ways across different
sections of the Act. But I have not, and cannot, conclude that it
can mean different things in the same sentence and the same section
of the Act. Specifically, it cannot be applied in one section in
one way for one licensee or applicant, and a different way in the
same section for a different licensee.
Consider, for example, granting the transfer of licenses under
the public interest standard in Section 309. The Commission receives
many requests for the transfer of licenses. The degree of scrutiny
these requests receive varies substantially. Many are dispensed
by the relevant bureaus, and only a few are considered directly
by the Commission itself.
The degree of attention that these license transfers receive from
the Commission appears to depend on whether a merger or acquisition
is involved and whether the licensees are inside or outside of industries
otherwise regulated by the Commission. These distinctions on the
extent of review, however, are not to be found in statute. Indeed,
they are not even to be found in Commission rules.
Many license transfers do not involve mergers and acquisitions,
and these transfers appear to receive less scrutiny than those involved
in mergers and acquisitions. Moreover, transfers of licenses associated
with large mergers of telecommunications companies appear to receive
the closest scrutiny. The Commission has interpreted its authority
to approve license transfers in the public interest as equivalent
to an implicit authority to approve or disapprove of mergers generally
in the public interest.
Yet license transfer associated with mergers in other industries,
for example, railroads, do not receive the same scrutiny. The Commission
has not asserted authority to approve or disapprove of mergers in
the rail industry, the electric utility industry, the airline industry,
or any of the many industries that routinely have FCC-issued licenses.
The Commission, in this instance, and in others, appears to have
settled on a discriminatory application of the public interest standard.
Specifically, under Section 309 we hold licensees in certain industriesthose
we happen to regulate heavilyto one public interest standard,
while holding licensees in other industries to a much more flexible
and lower standard.
The same standard should apply in all industries. In my view, that
standard should likely be the one we have applied to other industries.
Conclusion
The Federalists had it right. The central federal government can
and ought to be of great value to the people of the United States.
It is today, but it could be even more so if the public interest
standard were applied in a consistent manner, one that respects
statutory language, one that honors separation of powers, and one
that leads to predictability of legal process. The Federalist Society
can help contribute to the proper application of the public interest
through vigilance at the FCC.
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