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[While views may differ, this is an interesting take from the
Washington Post]<br>
<br>
Regulatory failure? Blame the D.C. Circuit. By Steven Pearlstein
Friday, April 9, 2010; A14 <br>
<br>
There's a lot of talk these days about how Washington has become
dysfunctional. While most of the focus has been on Congress, the
inability to perform even basic functions also extends to the agencies
that are charged with protecting workers, consumers and investors.
Unfortunately, it often takes a global financial crisis or a deadly
coal mine explosion to remind us of the serious consequences of
regulatory failure. <br>
<br>
Much of the blame belongs with regulators who have been captured by the
industries they are meant to oversee or have been swept up in the
general political drift toward deregulation. But, as we were reminded
by a case this week involving the Federal Communications Commission,
another big culprit is the U.S. Court of Appeals for the District of
Columbia Circuit, which over the past decade has intimidated,
undermined and demoralized the regulatory apparatus. <br>
<br>
Many of the D.C. Circuit judges have long since stopped pretending to
defer to the factual determinations and policy judgments of duly
appointed regulators, as the law requires. Deference has now given way
to skepticism, hostility and contempt that can easily be read between
the lines of overly legalistic opinions that routinely ignore the plain
language of statute and the clear intent of Congress. It's gotten so
bad that top regulators told me privately this week that they routinely
put aside consideration of needed new initiatives because they assume
they will be foiled by the hostile appeals court. <br>
<br>
Driving the court's regulatory bias are judges such as Brett Kavanaugh,
Laurence Silberman and Stephen Williams, Republican appointees who
bring to the bench an abiding skepticism about the value of
bureaucratic rulemaking. Their cramped view is that regulators can take
only those actions specifically and explicitly authorized by statutes,
ignoring the fact that many laws are so old that they never could have
anticipated the dramatic changes in technology and the economy. <br>
<br>
Even the court's more liberal members betray an attitude that
regulators are a well-meaning but overzealous bunch who, like
teenagers, need constant adult supervision from judges who are smarter
and wiser. Their decisions frequently scold agencies for failing to dot
their i's and cross their t's in justifying new regulations, sending
the regulators back to try again and again. <br>
<br>
It was one of those liberal members, David Tatel, who wrote this week's
opinion finding that the FCC has no business regulating Internet
providers. The case was brought by Comcast, which had been slapped on
the wrist by the FCC for managing its Internet service in a way that
slowed bandwidth-hogging activities such as file-sharing when its
network became congested. Comcast appealed, knowing that the agency's
action was but the first step toward a policy of "net neutrality" that
could prevent broadband providers from one day favoring their own
content over that of their competitors. <br>
<br>
A long line of Supreme Court cases essentially made it possible for the
FCC to broaden the scope of its activity as communication technology
evolved from radios and copper-wire telephones. These cases often
relied on the commission's broad mandate to "expand service" at
"reasonable charges" with "fair and efficient networks." More recently,
the Telecommunications Act of 1996 declared Congress's desire "to
promote the continued development of the Internet" and "encourage the
development of technologies which maximize user control over what
information is received." <br>
<br>
But this did not impress Tatel, who simply dismissed it as mere
"congressional statements of policy" and criticized the agency for
failing to find specific statutory authorization for interfering in
this way in Comcast's business. The irony of his decision is that it
has now undermined the FCC's "light touch" approach to Internet
regulation, begun under the Bush administration, and will probably
force the agency to declare broadband providers to be "common
carriers," triggering far more intrusive rulemaking. That, in turn,
will surely lead to a another decade-long legal war as the industry
challenges each rule at the court of appeals. <br>
<br>
That is just what happened in the 1990s, when the FCC -- on the
instruction of Congress -- moved to force the old local Bell telephone
monopolies to share their lines with upstart competitors. Time and
again, the FCC formulated rules to govern how that access would be
provided and how much the upstarts would pay for the "unbundled
elements," and time and again, the D.C. Circuit struck down the ruling.
<b>The fight went on so long that, by the time the court was finally
satisfied, virtually all the upstart carriers had been driven out of
business, the technology had moved on, and the whole issue was moot. </b><br>
<br>
But it's not just the FCC. <br>
<br>
Last month, the court of appeals gave its trademark treatment to the
Food and Drug Administration, which had the temerity to try to meet
Congress's clearly stated desire to speed the introduction of generic
drugs into the market once the original patents expire. <br>
<br>
And last year, Judge Williams went through 24 pages of hair-splitting
logic to explain why the Federal Trade Commission was out of bounds
when it tried to discipline a tech company for enhancing its monopoly
in a certain chipmaking process by deceiving an industry
standard-setting body.<b> According to Williams, the fact that its
deceit "merely" enabled a monopolist to charge higher prices doesn't
constitute illegal anti-competitive behavior. </b><br>
<br>
<b>Surely no decisions were more ludicrous, or did more to undercut
sensible regulation, than a pair of rulings in 2005 and 2006</b> in
which the D.C. Circuit overturned a rule promulgated by the Securities
and Exchange Commission requiring that 75 percent of the directors of a
mutual fund be independent of the company chosen to manage the fund's
investments. It's hard to imagine that Congress didn't mean to protect
small investors from self-dealing by mutual fund companies when it
wrote the Investment Company Act of 1940. But Judge Judith Rogers
overturned the rule anyway after finding flaws in the agency's estimate
of how much the rule would cost each mutual fund to implement -- by any
estimate, a trifling sum compared with the tens of millions of dollars
managed by even the smallest mutual funds. <br>
<br>
None of these is the sort of case that makes big headlines or causes
the public to rise up in outrage, but they are the means by which a new
breed of judicial activist is quietly undermining the reach and the
effectiveness of government. It's all well and good for Congress to go
through the process of hammering out new laws on financial regulation
or mine safety. But thanks to the U.S. Court of Appeals for the
District of Columbia Circuit, there's a good chance they'll never be
implemented. © 2010 The Washington Post Company<br>
<br>
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