Pai Defends FCC Net Neutrality Rules Rescission Amid Senate Appropriations Democrats' Criticism

Both appeared before the subcommittee to discuss their agencies' FY 2019 budget requests. The FCC seeks about $322 million, down more than $21 million from the $343 million allocated in FY 2018 continuing appropriations but the same as the Trump administration’s proposed budget for the agency for that year. The Office of Inspector General budget would remain largely steady at $11 million. The FTC's proposed budget is almost $310 million, up from $306 million proposed in FY 2018 and slightly down from the almost $311 million budget it operated on for the year under continuing appropriations (see 1802120037).

Senate Appropriations Committee ranking member Patrick Leahy, D-Vt., delivered the sharpest attack against Pai during the hearing, with other committee Democrats more conciliatory. “I disagree with many of the decisions you've made at the FCC” since becoming chairman, Leahy told Pai. “You've shown contempt for the public through your decisions,” including seeking changes to media ownership rules critics view as benefiting Sinclair and its proposed buy of Tribune and ignoring what Leahy perceives as “overwhelming public support” for retaining net neutrality rules .

“Too many people” in President Donald Trump's administration “sometimes forget they serve all Americans, not just” Trump, Leahy said. “Perhaps appearances at partisan political events” like the attendance of Pai and fellow Republican FCC commissioners at the American Conservative Union's February Conservative Political Action Conference or appearing in videos with “alt-right activists will ingratiate you” to Trump “but we have to remember that” lawmakers and officials are called to serve the entire U.S. populace.

The Office of Special Counsel decided Pai's appearance and talk at CPAC didn't violate the Hatch Act because Pai's participation involved the FCC's official work and agenda and wasn't political (see 1805170011). OSC previously said fellow GOP FCC Commissioner Mike O'Rielly, who appeared alongside Pai at CPAC, violated the Hatch Act by advocating for Trump's re-election (see 1805010083).

Net Neutrality

The FCC decided in voting for the rescission order “that the best approach is the light-touch approach” that existed before the 2015 rules took effect, Pai told the senators. The FCC attempted to go beyond its prior net neutrality approach by instituting the “enhanced transparency” rule attached to the rescission order with the hope it would better ensure the continuation of the “free and open internet." Financial Services Chairman James Lankford, R-Okla., and ranking member Chris Coons, D-Del., also cited the FTC's role in net neutrality post-rescission.

The FTC intends to hold a series of public hearings beginning later this year on "issues of substantial relevance" to the FTC's mission, including one on "competition and consumer protection implications" of the rescission order, Simons said. "We intend to invite all relevant stakeholders and allow the public to provide comment to the commission so we may hear a broad and diverse range of viewpoints." If the FCC rescission order takes effect the FTC could take enforcement action for violations of key net neutrality tenets such as prohibitions on blocking and throttling “under the right circumstances” in which they could be considered unfair practices, Simons told Coons.

Coons and Sen. Joe Manchin, D-W.Va., noted the Senate's vote on the CRA resolution but maintained they believe it's important to also seek a legislative solution. “I still think that there is a pathway forward” on a compromise bill, Manchin said: “There's a balance to be had” between the needs of the communications industry and consumers, but the CRA vote shows “we're not going to allow” the sort of imbalance allowed under the rescission order. Coons also noted his desire to “find a way together” to ensure pro-consumer net neutrality rules that also value innovation and private sector investment.

The FTC is evaluating its existing authority on privacy and data security with an eye to identifying if it needs “additional” authority from Congress to enforce effectively in both areas, Simons said. “We're active” on a range of privacy and data security cases, as evidenced by the agency's ongoing investigation into whether the Cambridge Analytica controversy shows Facebook violated its 2011 consent decree with the FTC, which required the platform to actively monitor third-party handling of private data (see 1803200047 and 1803260039), Simons said. He cited FTC commitment to enforcing the EU-U.S. Privacy Shield framework and its investigation into the Equifax data breach. He noted the FTC commitment to working with the FCC on a swath of tech issues, including combating abusive robocalls.

Questions about newly-named Consumer Protection Bureau Director Andrew Smith's ability to enforce on Equifax didn't come up. The FTC's Democratic commissioners and some Hill Democrats have questioned Simons' appointment of Smith, who as a financial services attorney at Covington & Burling did work for Equifax and Facebook (see 1805150062 and 1805170066). Coons noted his concern that most Americans still “aren't aware of the scope” of personally identifiable information exposed in cases like Cambridge Analytica-Facebook or the litany of data breach cases in recent years. “We have some important work to do” on that, he said.

Media Policy

Pai also faced questions on a range of other policy items, including the media ownership agenda. Pai made no commitments about how the FCC will proceed on Sinclair/Tribune and related policy proceedings, including the ongoing national broadcast ownership cap proceeding. He refused to predict how the FCC would move forward on restoration of the UHF discount once the D.C. Circuit Court of Appeals rules on the UHF discount case (see 1804200059). Forecasting from any oral argument “involves some uncertainties,” he said.

Manchin voiced his concern that U.S. political discourse has “gone to heck in a handbasket” since the decades-old demise of the fairness doctrine. He cited conversations with an unidentified senator on FCC 1987 repeal as showing him “the depths of how things have changed.” Pai pushed back, acknowledging that he knows “more than most about the toxicity of the political environment” but that he doesn't see an “FCC-led solution.” Lankford likewise said it would be tough to envision a framework that wouldn't involve “somebody sitting in D.C. evaluating every broadcast” to determine balance.

Sen. Steve Daines, R-Mont., focused on maintaining U.S. dominance in deploying wireless technology, saying he fears “we are losing the race to 5G” to China and others. Trump administration officials repeatedly cited the national security implications of maintaining U.S. leadership in 5G innovation, which lawmakers said is a sign Congress needs to act on broader telecom policy issues that would help sustain that dominance (see 1712180071, 1712270032 and 1803210019). Pai cited the FCC's upcoming 5G spectrum auctions in the 28 and 24 GHz bands, as well as his proposals for allocating additional spectrum from the 26 and 42 GHz bands. “We are moving as quickly as we can on the spectrum front,” he said. A 5G item is tentatively set for commissioners' next meeting (see 1805170068).

Sen. Shelley Moore Capito, R-W.Va., who until last month chaired Senate Appropriations Financial Services, wrote Pai Thursday urging the FCC to set aside funding within Mobility Fund Phase II for areas with unique topography and difficult-to-serve locations like West Virginia.