Improving Economic Analysis Should Be Part of Pai’s FCC Legacy

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As the Biden administration and the Senate battle it out over the next Federal Communications Commission (FCC) presidential candidate, they will likely debate the candidate’s perspective on controversial political issues such as net neutrality and the article. 230 of the Communications Decency Act. But a key element of the current president Ajit PaiAjit PaiLobbying world Biden Revokes Trump-Era Order Targeting Shield for Top Democrat Website Operators: FCC Actions ‘Potential Setback’ for Autonomous Vehicles MORES legacy is a commitment to improving rulemaking and quality processes. This commitment is evident in the changes made to the structure and processes of the FCC to ensure that quality economic analysis informs policy decisions.

First, the FCC created the Office of Economics and Analysis (OEA). Before the end of 2018, most of the FCC’s economists were scattered among the FCC’s policy-making offices, where lawyers not only made policy but also managed economists. In OEA, economists are led by other 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 political goals of the president, commissioner, or any other. FCC employee. 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 tasked the new OAS to provide commissioners with a comprehensive economic analysis of the benefits, costs, and other economic impacts of the important proposed rules. This change again aligns the FCC with best economic practices instituted by other executive and independent agencies. As stated in an important FCC note, the FCC is committed to the analytical principles and practices described in Presidential Executive Order 12866 of President Clinton, which governs the analysis and review of regulation within the executive, and Circular A-4 of the Bureau of Management and Budget, which describes best practices in 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 Noted“Before, my job was to support political decisions made in the president’s office. Now I am much more free to say what I think. The view of this economist is not atypical; this corresponds to our general impression of the staff’s feelings on our collective mandates at the agency. In our experience, FCC economists tend to be realistic; they understand that the economy may not always be the driving force behind a commission decision, but appreciate an environment where they are heard in a consistent and unfiltered manner.

Decision-makers of all political stripes should welcome an objective and impartial assessment of the economic effects of proposed regulations. Indeed, courts increasingly expect regulators to take these impacts into account, and there are evidence that courts are less likely to overturn regulations that include economic analysis and support. And like the courts, regulatory experts from all political backgrounds recognize the potential value of the FCC’s changes. Cass Sunstein, a distinguished scholar 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, his predecessor under President Bush, ssuggested 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 advised in 2019, regulators should assess whether their economists are organized and managed in a way that produces optimal economic analysis and communicates the results to decision makers. The FCC was ahead on this issue, and that’s where it should stay.

Babette Boliek is Professor of Law at Pepperdine University and was FCC 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 2017-18. Jeff Prince is Professor and President of Business Economics and Public Policy at Indiana University and was FCC’s Chief Economist in 2019-2020.


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