Improved economic analysis should be an integral part of Pai’s FCC legacy


As the Biden administration and the Senate vie for the next Federal Communications Commission (FCC) presidential nominee, they will likely debate the nominee’s views on contentious policy issues such as net neutrality and Section 230. the Communications Decency Act. But a key part of current Chairman Ajit Pai’s legacy is his commitment to improving the processes and quality of rulemaking. This commitment is evident in changes to the FCC’s structure and processes to ensure quality economic analysis informs policy decisions.

First, the FCC created the Office of Economics and Analytics (OEA). Prior to the end of 2018, most FCC economists were dispersed among the FCC’s policy development offices, where lawyers not only made policy, but also managed the economists. Within the OAS, economists are managed by fellow economists who are not only better equipped to support and guide their work, but can also help maintain the independence of economic analyzes from the policy objectives of the president, commissioner or any employee of the FCC. This centralization of economists aligns with the structure adopted by other independent agencies such as the Federal Trade Commission, Surface Transportation Board, Commodity Futures Trading Commission and Securities and Exchange Commission (SEC).

Second, the FCC has tasked the new OAS with providing the commissioners with a full economic analysis of the benefits, costs, and other economic impacts of the material proposed rules. This change brings the FCC back into line with economic best practices instituted by other executive and independent agencies. As noted in an important FCC memo, the FCC is committed to the analytical principles and practices set forth in President Clinton’s Executive Order 12866, which governs regulatory analysis and review within the branch. and Circular A-4 from the Office of Management and Budget, which outlines best practices for regulatory impact analysis. Of course, the Executive Order and Circular are not binding on the FCC since it is an independent agency, but the FCC seeks to follow these principles and practices simply because they constitute good public policy.

The FCC’s new emphasis on quality economic analysis represents a significant cultural shift. An FCC economist said, “My job was to support policy decisions made in the president’s office. Now I am much freer to say what I think. The perspective of this economist is not atypical; this corresponds to our general impression of the feeling of the staff on our collective mandates at the agency. In our experience, FCC economists tend to be realistic; they understand that the economy is not always the driver of a commission decision, but appreciate an environment where they are heard consistently and without filter.

Policy makers of all political stripes should welcome an objective and unbiased assessment of the economic effects of proposed regulations. Indeed, courts increasingly expect regulators to take these impacts into account, and it appears that courts are less likely to strike down regulation that includes economic analysis and support. And like the courts, regulatory experts from across the political spectrum recognize the potential value of the FCC’s changes. Cass Sunstein, a noted academic and administrator of the Office of Information and Regulatory Affairs under President Obama, tweeted in 2018 that [the OEA] was a “promising idea”. Susan Dudley, her predecessor under President Bush, suggested that by providing transparent analysis, the new office should help reduce the influence of special interests on regulatory decisions.

Given the importance of unbiased economic analysis, it is not surprising that the United States Administrative Conference recommended in 2019 that regulators assess whether their economists are organized and managed to produce optimal economy and communicate the results to decision makers. manufacturers. The FCC was ahead of the curve on this issue, and that’s where it should stay.

Babette Boliek is a professor of law at Pepperdine University and served as FCC’s chief economist in 2018-2019. Jerry Ellig is a research professor at the Center for Regulatory Studies at George Washington University and served as the FCC’s Chief Economist in 2017-2018. Jeff Prince is a professor and chair of business economics and public policy at Indiana University and served as the FCC’s 2019-20 chief economist.


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