IP: FCC comm. Furchtgott-Roth on "voluntary" self-regulation

[Dave Farber <farber () cis upenn edu>]

From: Declan McCullagh <declan () well com>


I was at the luncheon last week but didn't have time to write an article about
this speech. It is an important one: in the strongest possible language,
Furchtgott-Roth denounced so-called "voluntary self-regulation." Think this
applies only to the V-chip-plagued broadcast industry? Guess again. Remember
what was being seriously considered in mid-1997: 
  http://cgi.pathfinder.com/time/digital/daily/0,2822,12297,00.html

Unfortunately, Furchtgott-Roth is definitely in the minority among the FCC's
five commissioners.

-Declan

=========

Date: Tue, 17 Nov 1998 14:50:51 +0100 
From: Brooke Prater <tmi () clark net> 
Subject: Furchtgott-Roth Speech, 11/17/98 

    Remarks by Commissioner Harold Furchtgott-Roth
        Before the Media Institute
        November 17, 1998


Introduction
        The topic of this speech is the so-called voluntary standards.
        I cannot mention the word "volunteer" without thinking of
Tennessee.  In
East Tennessee, children don't grow up learning to say "Ma" and "Pa" but
rather
"Go Vols!"
        It is a great week to have followed Tennessee football, although
perhaps
not the women's basketball team.  Tennesse football has now been ranked number
one for two weeks in a row.  In nearly 40 years of following the team, this
has
never happened before.  And probably won't happen for another 40 years.
        I have vivid memories of my public elementary school in Knoxville
in the
1960s.  I don't recall so much the three "Rs" as I recall bible reading,
patriotic songs, and, at every turn, the distinction between good and evil,
right and wrong.
        In my school, there were no grays of moral relativism, only the sharp
and brilliant colors of goodness.  And one of the highest forms of goodness
that an individual could achieve was volunteerism.  
        Volunteers were a noble class, not by birth or genetics, but by
personal
rectitude, a noble class accessible to all.  Its nobility was only reinforced
when that class became the mascot of the local university.
        To be a volunteer was to be selfless, to take on additional
responsibilties without compensation.  Indeed there could be no reward, not
even recognition for volunteerism.  At least not in this life.
        Volunteerism often involved risks, success was never guaranteed.
Tennessee got its nickname from the large number of men who "volunteered" to
fight in various wars, particularly the Mexican-American War, many never to
return.
        Volunteerism is aspirational.  It is choosing to do good when it would
be more convenient not to.  It is a moral act not by compulsion but by
volition.
        There are different types of volunteerism.  Perhaps the highest
form is
completely anonymous. It is not pointed out or suggested by others. It is the
proverbial helping the little old lady across the street, a lady who you do
not
know, and who you will never meet again.  An act of kindness that is not
witnessed nor recorded.  An act of goodness that is never mentioned, that will
live in no person's memory but only in eternity.
        Anonymity is important for volunteerism.  One can enter
volunteerism at
free will, and one can leave volunteerism at free will. It is a two-way
street.  No one other than the people who volunteer actually know who the
volunteers are.  There is no binding contract for volunteerism, no enforcement
mechanism beyond a sense of honor, duty, and pride.
        Volunteerism is non-compulsory.  Compulsory behavior is the
opposite of
voluntary.  Compulsory behavior is not a moral act, a choice of right over
wrong. It is not aspirational.  It is not selfless. It is not anonymous. 
Indeed, corcion destroys not only volunteerism but all value and merit in
individual action.  In a world of compulsory behavior, there is no clear
distinction between good and bad behavior.  
        At a tender age, perhaps ten, I first heard a shattering phrase:  "In
the military, never volunteer."  It hurt my idealistic ears to hear that not
everyone thought volunteerism is a good thing.
        It seems in the military that volunteers are called for only when
miliatry law prohibits coercion.  Volunteerism is often based less on chivalry
than on limitations of military law.
        Volunteerism in the military is not a two-way street.  When you
volunteer to join the military, you oblige yourself to service for years.  You
cannot simply walk away tomorrow.  Once in the military, volunteering means
binding obligation.
        But here we are in Washington, not in Tennessee.  Not in the
military. 
Here, volunteerism is a federal program costing hundreds of millions of
dollars.
        If only it were money.  It is more the coercion that frightens me. 
Coercion outside of the direct rule of law.  Coercive behavior in Washington
has an ironic euphemism:  "voluntary standards."
        I am sure that many of you, coming from the media industry, are all
too
familiar with this special breed of laws.  Voluntary standards are a favored
tool at the Federal Communications Commission.
        My thesis about voluntary standards is two-fold.  First, voluntary
standards are neither a product of free will, nor are they merely exemplary. 
In other words, they are not voluntary, and they are not standards.
        Second, when coupled with broad agency discretion in other matters
concerning the regulated parties, voluntary standards provide a dangerous
mechanism for the evasion of statutory limits on delegated authority.  Evasion
of limits on agency authority is a threat to the rule of law and to the
principle of limited government, both of which are essential to a free
society.  Worse, the use of these standards may involve constitutional
violations.
Voluntary Standards Are Neither
        Often, it helps to step back and think about what people are really
saying when they use certain words. When we do so, we sometimes learn that the
actual meaning of the terms and the accepted understanding of them -- the
"spin" -- are worlds apart.
        Let's consider the etymology of the phrase "voluntary standard." 
According to my dictionary, the adjective "voluntary" means "performed, made,
or given of one's own free will" and "acting of oneself, not constrained,
impelled, or influenced by another."  There is even a legal definition for all
of the lawyers here:  "acting or done without any present legal obligation to
do the thing done or any such obligation that can accrue from the existing
state of affairs."  (Webster's Third New International Dictionary (1961)).
        The original derivation of the noun "standard" is from the German term
for "rallying place" or "flag to mark a rallying place."  Today, it has
come to
mean "something that is established by authority, custom, or general
consent as
a model or example to be followed."
        Thus, to meet the actual definition of a voluntary standard, an
exemplary or suggested, but not definitive, approach to certain conduct --
that
is, a starting point or "rallying place" for behavior -- would have to be
undertaken as a matter of free will, without its selection being
constrained or
influenced by anyone outside the selecting group.  Models, not baselines, for
behavior would be created, adopted, and adhered to in the absence not only of
current legal obligations to do so, but also of  future legal obligations that
could be imposed  -- as the dictionary says, "without . . . any obligation
that
can accrue."
        The First Amendment is premised on a healthy skepticism toward
government-supplied descriptions of official action.  In the mind of the
Framers, the "fourth estate" would always be free, under the Free Press
Clause,  to supply its own characterization of such action and to challenge
the
government's, and the citizenry would be at liberty, under the Freedom of
Speech Clause, to ventilate their opinions about those matters politic.  Such
freedoms would, hopefully, serve as a check against the incentive of those in
authority to seek to control public criticism of their decisions and thus to
perpetuate their power.
          Perhaps now more than ever, however, the language of government
is the
language of euphemism, as Robert Corn-Revere, the Chairman of your First
Amendment Advisory Council, has observed in his refreshing essay, "Voluntary"
Self-Regulation and The Triumph of Euphemism.  Quoting Orwell, Corn-Revere
explained that this language is used to "make lies sound truthful and murder
respectable, and to give the appearance of solidity to pure wind."  
        But even taking the government at its own choice of words -- in this
case, "voluntary  standards"-- the FCC's regulatory efforts fail to qualify as
the "sound-good, feel-good" mechanisms they purport to be.  They don't even
live up to their spin.  
        Too many examples of supposedly voluntary commitments come to mind:
broadcast ratings systems for v-chips; promises, such as free cable access for
schools, in "social contracts" for cable operators as consideration for the
resolution of rate complaints; the airing of children's programming in
exchange
for waivers of broadcast ownership rules; the performance of conditions
attached to telecommunications merger reviews; financial payments to the
government by broadcasters for the dismissal of indecency filings; and
compliance with unconstitutional employment "outreach" regulations and
reporting requirements.  The list is long, and those are only the publicly
made
commitments.
        For speakers of ordinary English, none of those pledges could
fairly be
called voluntary.  As two respected administrative law commentators,
Professors
Davis and Pierce, have observed, even agency statements that purport to be
nonbinding  
        can have coercive effects through more subtle, less formal means.  To
the extent that an agency possesses significant discretionary power over a
class of regulatees or beneficiaries, many are likely to "comply"
"voluntarily"
with an agency's "nonbinding" statement of its preferred policies.

(Davis & Pierce, I Administrative Law Treatise 232 (3d ed. 1994)).  
        Each of these so-called voluntary standards, if done in a truly
voluntary and resolute manner, might be considered a righteous act.  But done
by government coercion, or at government suggestion with government scrutiny,
these acts cease to be either voluntary or righteous; they remain resolute
only
in their fear of government coercion.
        In each of the aforementioned cases, the regulatees' promise of
performance was made in the face of potential adverse action by the FCC in
licensing, rate regulation, or enforcement matters.  What regulated entities
saw when they looked down the barrel at the agency was: possible denial of
their license renewal applications; denial of applications to transfer
licenses; orders of rate refunds; orders of divestitures; and monetary
forfeitures.  
        Even when the FCC had limited jurisdiction, as with respect to the
ratings system, where our role was limited by statute to determining whether
that system was "acceptable," broadcasters were faced with the explicit
statutory alternative of outright government regulation if they failed to
produce an agreement.  That in itself is a harm that industry would strive to
avoid, and indeed did.
        Circling back to the definition of voluntariness, in none of these
scenarios did the regulatees "act of theirselves."  In each instance, the
regulatee's dance partner was the government: like Fred and Ginger, each step
they took was cheek to cheek, made either in response to, or in anticipation
of, a move by the government.  Can it be doubted that the regulatee's every
choice of maneuvers was influenced, limited, or affected by the government? 
And while perhaps executed without any presently existing, direct obligation,
they were carried out not only under indirect pressure but surely also with
the
knowledge that failure to do so could lead to the accrual of express
obligations. 
        As I said in the v-chip proceeding, once the government becomes
involved
in pressuring parties to take part in any particular program, the program
ceases to be "voluntary" in any real sense of the word.  Participation on pain
of governmental penalty is simply not willing participation.  
        Nor can the criteria decided upon in the above examples be termed
"standards."  When backed by the regulatory authorities, linguistically soft
"guidelines" quickly harden into minimum rules of behavior.  
        As Judge Lawrence Silberman, writing for the D.C. Circuit, recently
held, even "screening device[s] . . . create a strong incentive to meet the
. .
. goals" stated therein. "No rational firm--particularly one holding a
government-issued license--welcomes a government audit. . . .  In order to
avoid the inconvenience and expense of being subjected to further review,
[regulatees] will treat . . guidelines as 'safe-harbors.'"  (Lutheran
Church-Missouri Synod v. FCC, slip op. at 17.)  
        For example, are broadcasters going to offer less than 3 hours of
children's programming per week, the current "processing guideline" offering
"nonmandatory guidance," as the Commission called it, on compliance with the
Children's Television Act of 1990?  Only if they wish to engender stricter
scrutiny by the Commission.

Evasion of Statutory Limits and the Constitution
        So the phrase "voluntary standards" is, even by the government's own
terms, a misnomer.  But what is substantively wrong with this administrative
mechanism?  What is it that the misnomer seeks to obscure?
        The use of voluntary standards allows administrative agencies
better to
skirt statutory limits on their authority, an offense to the concept of
administrative agencies in possession of only those powers delegated to
them by
Congress.  Their use can also more readily permit agencies to impose
requirements violative of the Constitution.  
        It is no coincidence that the commitments extracted from regulated
entities in the guise of voluntary standards tend to be things that the agency
lacks statutory authority straightforwardly to require.  Voluntary standards,
as opposed to duly promulgated rules, can all too easily be used to bootstrap
jurisdictional issues:  got jurisdiction to approve or disprove the
transfer of
licenses but no express statutory authority to require unbundling of the
licensee's product offerings?  Just make it a "optional" condition of the
license transfer, add water, mix, and you have fresh jurisdiction to
regulate a
whole new area.  
        The problem with this approach, however, is that it renders
superfluous
Congressional attempts to delineate our areas of responsibility.  When
unelected federal regulators are not bound by specific Congressional
delegations of power, governmental accountability, principles of federalism,
and the rule of law are thwarted.  And each time this happens, we are all a
little less free.  
        The agency may not only be seeking to impose conditions that exceed
its
statutory authority.  The conditions might be unconstitutional to boot.  As
with the commitment to provide children's programming that arose out of the
FCC's consideration of the 1995 CBS/Westinghouse application for transfer of
control, the Commission might seek to require indirectly the very sort of
content-based commitments that it may well suspect the First Amendment cordons
off from its reach.  And each time this happens, we lose some freedom of
speech.
        Voluntary standards are tempting to regulators for technical reasons
too.  They allow agencies to bypass the seemingly cumbersome and
time-consuming
requirements of the Administrative Procedure Act, such as notice and comment. 
These procedures, however, were designed and enacted into law in order to
provide some measure of accountability and reasoning in agency decisionmaking.
When effectively binding rules -- which, as I have argued, is what "voluntary
standards" are -- are adopted but these procedures are not followed, the
safeguards of the APA are violated.
        There is another reason that agencies might prefer voluntary standards
to rules: they are harder to challenge in a court of law.   Judicial review of
the statutory basis for "voluntary" standards may be difficult to obtain
because such guidelines, being technically non-binding, may never formally be
announced or enforced against any regulatee.  Indeed, the agency's
"suggestions" may be entirely unwritten, emanating from ad hoc discussions
between regulators and the regulated.  For these reasons, procedural problems
of jurisdiction and of justiciability may arise for plaintiffs who try to
challenge administrative arm-twisting.  
         Moreover, while regulatees who are the subject of retaliatory adverse
action for failure to accede to the agency's wishes will have certainly have
standing to challenge that action, as opposed to the standards themselves,
success in that endeavor will be hard to come by.  It is not easy to prove
retaliation as a factual matter.  And as long as the agency articulates a
contemporaneous, reasonable explanation for its decision, courts are generally
required to defer to the agency.
        Thus, by issuing "voluntary standards" in one area while wielding
tremendous discretionary authority over industry in others, the agency can
obtain indirectly guarantees from regulatees that it lacks substantive
authority to require directly or which would likely violate the
Constitution if
that were done -- all the while increasing insulation of its actions from
judicial review.  
        Regulated entities should not be put in the untenable position of
being
asked by those with potential power to regulate their businesses out of
existence to "agree" to certain rules of conduct that would be unlawful if
promulgated formally.  In the interest of fairness and accountability, I
believe that the Commission should adopt rules, as opposed to nominally
non-binding "standards" or "guidelines," whenever possible. 
         If our statutory authority to prescribe certain rules of conduct is
dubious, covered entities should have the opportunity to challenge the legal
basis for any such rules in a court of law.  We should not resolve doubts
about
statutory authority by issuing nonbinding documents rather than rules.  We
should either not act at all, or act through established rulemaking processes,
with notice and comment, and then defend our position.  But we should not
leave
regulated entities with decreased opportunities for judicial review of the
standards but effectively bound to comply with them.
        By avoiding procedural mechanisms such as "voluntary standards,"  we
could help, as legal scholar Lars Noah put it, to "push administrative
bargaining out of complete darkness and, if not into the sunshine, at least
into the shadow of the law."  (Lars Noah, "Administrative Arm-Twisting in the
Shadow of Congressional Delegations of Authority," 1997 Wis. L. Rev. 873,
941)).
 Conclusion 
        In the end, though, what makes the above-described administrative
arm-twisting work is the repeat-player nature of most regulated entities.
They
know they will have to deal with regulators not just once, but over the course
of many decisions about their very livelihood.  The pressure to go along to
get
along can be powerful.  
        I understand that pressure.  Yet I would give the media industry an
admittedly unsolicited piece of advice to place on the other side of the
scale:
the broad discretion that you bargain away to your friends today will almost
certainly be used against you by your foes tomorrow.  In the long run,
negotiating when the law is on your side may be more harmful to your interests
than the immediate regulatory evil you seek to avoid.
        But  it is the Media Institute that is uniquely situated to take a
stand
against the subtle, but nonetheless real, effects of administrative
arm-twisting.  It has no government licenses to lose or sanctions to avoid,
only people to persuade.
        As Americans, we join many voluntary groups:  civic, social,
religious,
charitable, and others.    In the last century, DeTocqueville was amazed at
the
capacity of Americans to join voluntary groups.  Through these groups and our
own initiative, we engage in many voluntary activities -- not as the result of
coercion or government enforcement, but through personal commitments.  The
Media Institute is one such organization.
        In this regard, the Media Institute is a striking symbol of the
byproducts of the constitutional principles that it so vigorously defends.  It
is the First Amendment that protects the associational rights of the
members of
the Media Institute to convene likeminded persons for the purpose of advancing
their ideas.  It is the First Amendment that protects the Media Institute from
government impingement upon, or retaliation for, the statements that it makes
in pursuit of those goals, however critical of government or individual
decisionmakers they may be. Without the First Amendment, we might not have a
Media Institute: its ideas might be "too dangerous," or its voice "too loud."
        And without the Media Institute, we would not have a First Amendment
discourse in government that is as meaningful as it is.  Thank you for the
good
work that you do, for your vigilance and thoughtfulness on the issues that
surround the regulation of communication.  Please keep it up.
        Thank you.



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_____________________________________________________________________
David Farber         
The Alfred Fitler Moore Professor of Telecommunication Systems
University of Pennsylvania 
Home Page: http://www.cis.upenn.edu/~farber