Transcripts For CSPAN3 Telecommunications Policy Conference Part 1 20170620

Telecommunication policy conference in washington at the National Press club. Thats where fcc chair pie was joined by Administration Officials and leaders. Well show you about three hours of this conference and well start with the discussion on the future of the internet. Okay. Well, everyone is so quiet that i think we should get started. That was really that was really good. Im randy may, president of the Free State Foundation, and im pleased to welcome you to the Free State Foundations ninth annual Telecom Policy conference. I want to extend an especially warm welcome to our cspan audience. Im a selfconfessed cspan junkie. Some of you may have heard me say that before. My mom, may she rest in peace, she always worried when i told her i was a cspan junkie, not really knowing what i meant by that, but im always pleased and grateful when cspan is here, and welcome to the cspan audience. This years annual Conference Follows on the heels of the tenth Anniversary Gala last december. So with next years annual conference well be in double digits for this event, too, which just confirms the old adage that time flies when youre having fun, and i might add when youre busy, as well. Almost every year, i say, some of you know this, i say that our annual Telecom Policy conference just keeps getting bigger and better and more impactful. Well, as long as it remains true, im going to keep saying it. Even though we had to reschedule this years conference because our first date, march 14th happened to be the only snowy day this winter in washington, i think this years conference upholds the tradition. A quick glance at the Program Shows why the conference is a mustattend, vent for anyone interested in communications, internet and hightech law and policy. I know you will agree we have an Outstanding Group of speakers and program sessions. The program that you have here is also on our website if you need another copy or want to download it near the top of our homepage. The theme for this years conference is a new direction for communications policy. Less regulation, more investment and innovation. With a new fcc and a new congress in place, the opportunity is right for charting a free marketoriented direction for communications, law and policy. As most of you know, at the fcc under the leadership of new chairman pi who will be with us for our lunch session today, the agency is already charting a new free marketoriented direction. Well be talking about the implications about this new course including what it means for innovation and most importantly what it means for our nations consumers. I have a hunch that at one time or another today the subject of the fccs new Net Neutrality proceeding or open internet proceeding as the previous fcc chairman preferred or restoring Internet Freedom proceeding as the current fcc chairman prefers, in any event that proceeding by whatever name you want to call it im sure will come up, and it should because its an important proceeding for the fcc. Aside from what well have with the fcc chairman we have a stellar lineup for todays program. It will feature those, and then well follow this session with an allstar panel lineup and then immediately following the Panel Session were going to break a short time for a very nice buffet lunch. I guarantee you its going to be nice, but i hope most of you are here for the program and not just for the lunch. And then were going to have a conversation with chairman pai and we are honored to have the two acting directors of the federal trade commission with us after the lunch session and thats tom lipski and tom paul will be featured at that session, and then winding up, Michelle Connolly who is a professor at Duke University and a member of the Free State Foundations board of academic advisers will offer some final thoughts. Now, remember to tweet, if youre a tweeter, the handle i think we have the twitter handle on each table, but its fsfconf9 which should call to mind fsf conference 9, thats fsfconf9. Before we get started i just want to take a second to acknowledge and thank some of our Staff Members that are here. Kathy baker is our Events Coordinator and communications coordinator, and she has an awful lot to do with this event, and we appreciate her. Lets give a round of applause if we could for kathy. [ applause. And then i want to acknowledge the scholarly work by two of our Staff Members that are here and their contribution, senior fellow seth cooper. Seth will be monitoring the program after lunch and mike hornie. Their contribution and work at the Free State Foundation is very, very important, and then, finally, i want to introduce to you on the newest senior fellow ted bolima. Ted joined us in midmarch. Ted is a ph. D economist and a lawyer, and really combines the law and economic expertise. Ted, if you could just stand up so people will see who you are. [ applause so thanks to all of them, and finally, i want to thank as i often do, but sometimes forget to do, my wife lori. She actually does an awful lot of work for the Free State Foundation that goes unrecognized a lot of behind the scenes work, and when i say that what she does tolerating without too much grumbling the often insane hours that i put in really for the Free State Foundation. So i appreciate everything that lori does, and maybe you could thank her with me. [ applause ] okay, with that, lets get started with our first session, and im just going to introduce our speakers first, with their indulgence and yours, too, ill hit some of the highlights that are in their bios, but again, ill refer you to the more complete bios in the brochure. Our initial speaker and keynoter for the day is howard chilanski. Howard is a professor of law at Georgetown University law school, and a partner, as well of the davis polk law firm, and importantly for our purposes today, of course, hes the former administrator in the in president Obamas Administration of the office of information and Regulatory Affairs which is within the office of management and budget. That position is often referred to the regulatory czar, whether howard likes to be a czar or not, but thats the facts, and howa howard again, just briefly, hes a former director of the ftcs bureau of economics, and he also served previously as chief economist of the fcc from 1999 to 2000, and a senior economist for the president s council of economic advisers during president clintons administration. So again, and howard, as well as ted bolima have degrees in both hes got a ph. D in economics and also a law degree. By the way, not sure i mentioned it, but the topic of this session and youll see how howard and the next speaker im going to introduce have the experience and expertise to talk about it is Lessons Learned in proving regulation and government administration. So its hard to find someone more qualified than howard to talk about that along with bowden gray who will be the commenter and reactor to howards comments after howard delivered some opening remarks. C. Boyden gray is the Founding Partner of boyden gray and associates. Hes a former u. S. Ambassador to the european union, and a former white House Counsel and also very pertinent to our program today. He was counsel back in the first bush administration, george h. W. Bush, to the president to the president ial task force on regulatory relief for which he wrote the original executive order 12291. We dont want to get hung up on numbers here, and i have a hard time remembering, but he can fill us in on what that was. Boyden, someone told me once when i had another ambassador on our program, we had a few that once youre an ambassador that that title never leaves you, that youre always ambassador. So if i forget to boyden is a longtime friend of mine, if i dont refer to you as ambassador ill ask your indulgence with that. The other thing about bowden before we get started, he left off of his resume, its left off of his official bio what i think is the most important position that he held during his illustrious career is the former chair of the section of Administrative Law and regulatory practice of the aba. That might not strike you as being as important as, you know, ambassador to the eu, but im a former chair of that section, as well as the aba, and i consider that to be important. Its just a oneyear deal, but when i was serving my year as head of the section of Administrative Law i was asked whether i wanted could be ambassador to the eu at that time, and because i had that other job. I had to decline that, but i wasnt able to do it, but anyway, now you know about his other position. So with that introduction, im going to turn it over to howard to get us started and then well get bowdens reactions. Good morning. Thanks very much, randy. Its a real honor to be here and to share the podium with you and with boyden who is really, in some ways, just a founder of regulatory review and Regulatory Reform in the executive branch, and is somebody who anybody who has worked in my position at elvira has served a pantheon of people who are founders and foundational thinkers in the area and boyden is certainly one of them. What i want to the talk about today is regulatory process and Regulatory Reform, and i think there are some Lessons Learned, at least that i learned over the last four years in the Obama Administration doing regulatory review, but whats hard about regulation, what works and what doesnt work and why we need to be very careful when we embark upon a series of fixes through legislation or other kinds of means because there are very good things in our regulatory system and there are things that can use fixing, but fixing them is hard and well want to proceed very carefully, and i think that thats an Important Message to get across right now that there is, i think a lot of fairly radical rethinking of the federal governments regulatory program. I tend to think radical rethinkings are good things because they stir things up and they get people thinking, but as long as people think with a cool head and are willing to acknowledge that some steps they may take are wrong and try a different path and also so that we dont rust too quickly into legislation that locks us into what is an inferior regulatory system. So i would start with the premise that the United States has probably the best, most transparent and most accountable system of regulatory process in the world. One of the jobs i had as administrator was to go around the world, often with our ambassador our ustr mike freeman and to negotiate with foreign governments or entities on Regulatory Reform issues and regulatory harm issues, and one of the things that made that very difficult is in many places, regulation happens completely out of a black box. Theres some kind of a summary of a rule or some kind of description of an intent to regulate and some kind of preliminary report about what the effects of the rule will be and then boom, a regulation pops out of some back room, and there are very few bases on how one can challenge that rule and get it rethought. Compare that to what we have under the administrative procedure act. There are a few exceptions, but by and large an agency has to issue a proposed rule, that proposed rule has to go out for Public Notice and comment. The agency has to issue a final rule that is built upon the record that includes the notis in common and the response that the agency makes to those comments and at the end of it all, the agency is subject to judicial review. This works fairly well. Lots of rules get challenged in court and lots of rules get remanded or struck down in court and sure, thats a costly process, and if you think of the incentives that it generates down for the agencies to do a good job in rule making, one can see its not a bad system. The public is involved early on, and the public has the chance to account for the agency at the end. That is rare. Not only that, but what the public gets to comment on is the rule. The what the public gets to see and say in response to that rule is the deregulatory Impact Analysis and not a white paper describing the rule and not a white paper describing what some people think the effects might be, but the analysis and things that can get challenged and things that can be brought before a court. One wants to think twice before one backs up and fundamentally changes a system that actually has, even if not perfect or costless ashgs pretty good system of transparency and accountability built into it. Its a very rare kind of thing. Let me back up and talk about the things that i think are Lessons Learned and things about we need to fix in regulation and what we might do to come up with an even better regulatory system going forward. So what is the job of a regulator or a Regulatory Review Office . I throw that in because that was my job. So the first is to identify a real problem. This may sound like an obvious statement, but it is not always the case, the regulations that agencies issue address problems that are genuine. That is to say, occurring or very likely to occur. Sometimes when they see regulation, thats to get ahead of the problem to stop it before it starts and with insufficient grounding so that the problem is actually going to occur. That is a Weak Foundation on which to do regulation because then the benefits which ill talk about in a minute, are always a difficult thing to make saliant and to prove become even harder because not only are the benefits hard to examine because theyre in the future, theyre highly contingent on the problem even occurring and its very hard to make a good case for regulation and very hard to make a case to the parties that must bear the cost of that regulation when the regulation, and the benefits of the regulation are contingent on a problem actually occurring. So identifying a real problem and having a convincing case that this is a problem that society should solve and bear the cost of solving is the first issue, and ill start by saying i think sometimes there is insufficient attention to making that case. Agencies could do a better job making that case. Its not typically what agencies are set up to do. They look at statutory authorization and they look to mandate from congress or a petition from the congress or some event that has happened out there, any thand they respond. The communications aspect of explaining what theyre doing and why theyre doing it is not always done very well. Sometimes thats because thats a hard case to make. Well, thats all the more reason the agency should have to get out there and have to make the case and that suggests there might not be a real problem or that the problem is one that is too costly to solve so identifying a real problem and communicating and making that case convincingly is the first step in rule making. The next step is to identify potential solutionses to that problem, and i Say Solutions because again, another short coming that i find even within our overall quite good regulatory system is agencies tend to move very quickly toward a solution to a problem. That is not always the case by any stretch of the imagination, but one of the things that i found as administrator of oira is that many proposed rules on very significant issues came into the Office Without much examination of regulatory alternatives beyond the proposal that the agency was making, but regulatory alternatives are important. Discussing them, even analyzing them in a quite vigorous way because they show the public when the rule goes out for notices and comment and what else might be a possible approach . What are the other things that the agencys thought about and rejected or at least became less convinced for appropriate solutions to the problem. There are a number of reasons one wants to do that. Different alternatives will have different cost benefit profiles. Different alternatives will elicit different data and comments from the public and the agency may find out that something that they, inside their sort of closed circle of people working on the rule, they may find that theres information that convinces them they made a mistake, that they may pursue one of those alternatives and go back to the drawing board. So identifying potential Effective Solutions to that problem and even if the Agency Proposes one of those to nonetheless, be transparent in discussing and explaining what alternatives there might be. This, by the way, is in the executive orders that govern regulatory review in the executive branch. Theyve been there, i can throw out a lot of numbers, executive order 1266, executive order 13610 and all of these great executive orders that actually since president reagan every administration regardless of Political Party has seen fit to reiterate and strengthen on similar principles of regulatory review so alternatives are a big one. Now, the third thing that im about to identify here is probably in some sense the most controversial, and that is determined that the proposed solution and indeed alternatives that are offered up as possible proposals or possible rules down the road, proposed solutions to the problem should not impose costs that outweigh the benefits of solving the problem. That sounds obvious. Why would we undertake a rule that is more costly than the benefits it brings . But this is, of course, an extremely fraught exercise. Now the executive orders do not say, and theyre right not to say that the quantified benefits of a rule must exceed the quantified costs of the rule, and i think one of the biggest mistakes that can be made in Regulatory Reform is to issue a mandate that says no rule shall be issued whose quantified benefits do not offset its quantified cost. That would be a disaster for a number of reasons. First of all, there are rules that this society chooses to put in place that have nonquantifiable benefits, distributional objectives, fairness objectives. Objectives of social inclusiveness. One may agree or disagree politically with those objectives, but if they are disclosed, if they are well achieved by the rule and if the rule says part of the reasons well achieve these costs is so that samesex families in the military can have access to base housing and feel more included and be better soldiers. How do you put a dollar value on that . Pretty darn hard to do so. Its a dignitary interest, and theres not a quantifiable benefit unless you really stretch and give us not very credible quantification. There is an immediate and quantifiable cost, how muchmore base housing you will need. You would not be able to have that rule if you had a rigid and quantified benefit and outweighed quantified house rule and the executive orders talk about benefits that justify the costs of a rule. Thats squishy, ill admit it, but i think its important to be a bit squishy because i think it allows society to make decisions that it will have regulation that it doesnt have benefits that are easily quantifiable or purely distributional and costs society something because we, as a society, want to pay for those things. That said, i do think it is important that the public know very quickly what it is paying to get those kinds of benefits. So the disclosure of costs, all costs that can be quantified or can be identified even if not well quantified that are going to be incurred in the pursuit of those benefit, as a matter of democratic process have to be put out there clearly and transparently. Now, agencies hate to disclose costs and they love to tout benefits. One of the jobs of a Regulatory Review Office is to write right that balance. I think well see interesting things happen under president trumps executive orders. If one has to repeal two rules to issue a new rule. Something thats at least aspiration alley sought, and it would be quite hard to do, well see the agencies flipping on costs and benefit as they come forward and are urging repeal of certain rules. To repeal a rule you have to make a rule. You have to make a rule repealing the old rule. Under the administrative procedure act you cant say never mind, were not doing that anymore. Once that rule is out there and published, it is a change in regulatory policy to repeal it. Youve got to do that on a full apa process and fully disclosed on the record and subject to judicial review. That means you have to explain why your previous record was wrong and why facts and evidence today suggest repealing the rules. The things that were the benefits of the rule that was originally passed are now going to be the costs of repeal and one saw this highlighted very well in an Interesting Exchange on fox news between Chris Wallace and epa administrator scott pruit. Administrator pruit talked about repealing a bunch of Greenhouse Gas emission rules. Chris wallace said what are you going to do about the 90,000 cases of asthma that those rules are preventing . That was a very interesting question to ask because if youre going to repeal the rules, there is a cost to society. So my bet is agencies are now going to come around and say, those rules were not so beneficial, but boy, they were really costly, the opposite of what agencies really do. One again needs a truthteller in an office that will review those analysis and cases. Even if in our system theres incentive for agencies to buy us cost and benefits in the policy we want to achieve. An independent review office is important. I think the office we have in place does a good job. I think ability to be in court. How much farther would one want to go in imposing cost benefits or mandatory layers of judicially review of those rules is i think a hard question and i worry about Regulatory Reform efforts that say, well, make reviews mandatory to the agencies in every case with cost benefit analysis, and make those reviews judicially reviewable. Well, if im going to do that you will get collusion between oira and the agencies from the beginning, not to make better rule, but to make the rules as judgmentproof as possible. One wants a separation between the Regulatory Review Offices and not collusion. One wants a Regulatory Review Office that wants to call out the agency for the problems and the mistakes it makes. Anything that would make any of those Communications Evidence that the rules should be overturned would eliminate those communications and i fear it would put the review office into a collusive posture. Another area where i think one wants to be very careful about reforming regulatory review. I just want to the come back and talk a little about costs and benefits and well turn to a couple of examples that highlight some of the challenges we face in regulation. The political dynamics of regulation are always fraught. Theyre always difficult because inherently the political economy of regulation is unbalanced. Costs tend to fall on a fairly narrowly defined set of parties. They tend to be relatively short term in their occurrence, relatively measurable and so any time theres a rule the people who are going to have to pay for that rule, they know theyre going to have to pay for it. They have a good idea of what theyll have to pay and heir often not the parties who will directly receive the benefits. Thats not actually a problem. Its the party thats causing the costs, they should pay for them whether theyre getting the benefits or not. You impose a burden on society. You should pay to fix it. Pretty basic economic, but thats actually not the most common situation in the world. Often the parties that have to fix a problem are fixing a problem that is more social in nature or that is simply the most cost avoider even though theyre not the cost koster. And one needs to think more costly about justifying those cost, but the point is theres always a strong, vocal and organized constituency to oppose the costs. Now think about benefits. Benefits can be more speculative, more probabilistic, farther in the future and much more diffuse. If you work in a coal mine and youre told to reduce the coal dust in the air around the mine. You know what that will koftd. You dont know if youll ever get black lung disease, if you get it its 30 years down the road and no salient immediate benefit except that your employer is telling you, my operating costs are going up and ill have to trim some benefits or trim some jobs. The benefit side of that is a lot less salient. If we were to leave regulation to open politics rules wouldnt happen. Some rules would, but in response to true emergencies or true crises. We have a dynamic of strong Advocacy Group on one side saying failure to regulate is a disaster an advocates of the parties who will bear the cost will say regulation is a disaster because it will ruin investment. The truth is somewhere in between. Regulation is not a game of extremes and its not a binary do dont. Its a game of tradeoffs. Its an enterprise of analyzing how we solve problems in ways that best balance the cost and benefits. The parties that bear the cost need to acknowledge that there are benefits and work to find a better way to achieve them. The parties that will get the benefits and advocate for them need to understand that there are costs and you cannot ignore the consequences of imposing those costs and work for more efficient and incremental ways of achieving regulation. Right now thats not the political dynamic, but that is the dynamic within the agencies and i think agencies need to be left to doing the careful balance thing and that incrementalism in the transparent and accountable system that is the administrative procedure act. One concern i have about the biggest proposals that are out there is it will interfere with the process fundamentally. Agencies need to be able to build a record and not have that record challenged midstream and wait until its completely built and wait until a final rule is issued on a complete record and then that can be challenged in court. There are proposals out there that can have interim records of a propose the rule challenged in court. That prevents the agency from perfecting the record and i use perfection in quotes based on the feedback that it gets back from the Public Comment process. It actually allows challenges at an earlier stage. The way that agencies can avoid these unbalanced political dynamics and actually solve real problems is to have the opportunity to build a full record and that way it will come to a court to decide if theres really evidence of benefits and is there really evidence that these benefits justify the costs . Has the agency done a good job on both the cost and benefit side and make a determination based on the evidentiary record based on the analysis. We run into significant problems and much lower quality rule making. I want to return to, what i think is thea the foundation of sound regulation. The identification of real problems and the identification of really workable solutions. I do think that agencies get off on the wrong foot and the whole process that makes the apa work well fatteulters because there a belief or a big movement that claims that there say problem to be solved without real evidence that the problem really exists. In 2007 i wrote an article and it was called Something Like Net Neutrality, regulating with more questions than answers. I went through both sides and multiple side of the Net Neutrality debate and each side could be right depending on the answers to some very hard questions and questions about investment incentives and questions about the marginal value of different investments. Questions about the true economic incentives that are different parties would have to discriminate or not discriminate. I tried to make the case that those questions were not well answered. And i wrote the article because i was perplexed by the incredibly adamant argument that we had to have regulation now today yesterday to stop all of this horrible stuff that wasnt yet happening. I think that its important as the fcc goes forward in reexamining rules that were issued in the last administration to look carefully at what questions we have the sk answers to and what questions we dont have the answers to and not be afraid to deregulate where mistakes were made and also not to be afraid to stick with regulation where the evidence shows it would not hurt investment and in fact, would achieve some good. I think thats why i sort of started out by saying a radical shift in direction could be a healthy thing from time to time. It can change perspective and get people to think very differently and to reexamine things that have been longassumed, but i think one cant hit blindly in one direction, regulate, deregulate. Its got to be a period fundamentally of reanalysis and reexamination. It is my hope that thats what will happen as the Commission Goes forward. One final note, often the actions of agencies are pilloried in the public. This is tough, but i would urge agencies to stay the course. I thought it was very interesting that most newspapers, not all, but most came out adamantly against the repeal by congress of the privacy regulations that the fcc put in place. Insufficiently covered, in my view, was the fact that this was really a question of comparative institutional competence and a restoration of the privacy function to the agency with much broader jurisdiction over that and much more experience. The federal trade commission. It wasnt leaving the space unregulated and it was leaving the structure in approach to regulation. That message didnt get out there very well. I commend chairman pai for their excellent editorial on the issue, but whether or not that ends up capturing the day it happens to be right so they should stay the course, and i would urge all agencies if they go forward in regulating or deregulating to adopt a similar posture. Do what is right . Do what careful examination of a rigorous record would show to be correct and dont worry about the noise on the outside. Thank you. [ applause ] thank you very much, howard. That was a very stimulating, important address to lead off the conference, and now well hear from ambassador gray. And after ambassador grays remarks, hopefully well have time for a few questions from the audience. I always like to do that when we have time. Ambassador gray . Thank you very much. Just as a preliminary matter i want to make it absolutely clear that howard has done a really good job of maintaining the credibility of oira which is absolutely essential to keep a close monitoring on the value and the utility and the importance and the need, especially the need, for regulatory activity and there were certainly, obviously, temptations and pressures to relax in the last administration. Howard never did it. Oira is still as strong as it needs to be and it needs a bigger budget, but its in good hands and in good shape. So my thanks to howard for not thanks, but commendation for maintaining of the very strong tradition, and i also want to say at the outset that im really sad, randy, that you didnt take that job. Ill tell you, one of the best benefits of it was that i liveded in a residence that had been built or renovated by a Russian Oligarch who was so disfavored in russia that he thought he would live out his years, if he could, in belgium any not in russia where he was being pursued by all manner of people that he had built and he did this marvelous residence, but he was so bad that the belgians would never give him a visa. So the state department picked up the residence and thats where i lived and when i was introduced to it i had these local flemish intelligence authors and they told me this was the safest residence in the entire european union, and of the radical cell that lived in belgium that was responsible for the attacks in paris. I should make clear that just so an urban myth doesnt get started, that was only a joke, but now that i know about the russian connection, if it were true, and if i had been offered that job then im glad to know what boyden just related. Well, you dont know the full of it yet. The intelligence expert said that i had the highest safety equipment, triple mylar windows, electronics that no one could make work, but the center piece of my safety were huge, thick, sixinch doors protecting my bedroom. Just think of what you missed. And these were known as fourthcentury doors. And why fourth century and why not third, or 21st . Fourthcentury door, you might wonder what it is. In ord are for you to have a half an hour to call the police in case youre under attack could withstand anything that could be thrown at it in the fourth century. A very useful, very useful thing. I tell the story because ive had to give lots of speeches after dinner when people had had too much to drink and didnt want to get into the intricacies or whatever it was and people would laugh and then my Communications Specialist came up to me and said you must stop talking about the fourthcentury door because its going to heap disgraces, and i said no such thing and ive been twice briefed and theyre wrong. What you have is not a fourthcentury door, but a forcedentry door. [ laughter ] so you can see how its so easy to get mixed up and language and sometimes, i dont argue about the quantifiable cost, it is very important to get as good a handle as you can about the rule that is about to be implemented and the facts are very important, and to understand, is there a real problem is very important and i commend, again, our speaker for looking at that. I dont have much time so im just going to go off into a little bit of a tangent. The identification of a problem is where he started, and it really is the key and often agencies will just take flight and they will take the chevron doctrine any hint of ambiguity in the statute is to go flying off into the sunset and sometimes the problems that they secure just plain dont exist at all. And at the end of his life and one of his last decisions in the famous case and thats the case involving epa and Climate Change and knowing that the president has apparently just pulled out of the paris accords, the harms that epa was arguing just plain didnt exist and the statutes in terms of big, big inflations creating big, big pollution emissions and this is not a co2 kind of thing. Co2 can come out of a house and can come out of an office building. You cant cover everything, and the statute was of 200ton emissions limit and the epa said that doesnt make any sense. What actually the statute, what it actually meant was 100,000 tons and thats where were going to start and we will tailor the statute to fit what we think is the problem and at one point, one of the cases said maybe you have to make that jump from 200 tons, and you may have taken the wrong route in figuring out whether or not there was a real problem. There wasnt a real problem, in my opinion and they said were not going to sit ideally by on the dock and wave goodbye to epa as it embarks on its voyage of discovery. Weir not going to sit ideally by as it embarks on its voyage of discovery. On the Net Neutrality rule, and then went to the hearing which was denied, and two dissents emerged and they were powerful enough from judge brown and cavanaugh, judge cavanaugh, they were powerful enough that it prompted a retaliatory opinion, and if you all want to know the current state of thinking about how to look at these issues with a broad brush, assuming that the hard work of figuring out what are the costs and benefits and what not had been done. Assuming that has been done, if you want to look at the big picture i recommend you all read the lead opinion, the lead opinion by sarah vausen, and trying to rebutt or rebutting, it depends on your point of view to dissent and Janice Rogers brown steals a little line from scalia mimicking his im not going to sit ideally by, but she does say were just not going wave goodbye to the fcc and then Wander Around in the sun set just going wherever it feels like going and this is part of the problem. Agencying c agencies can take off in full flight under the way chevron works and thats where some of the reformoriented efforts are being pointed and its the courts that will do this first and this is something that was a court problem to begin with, but i think the courts are watching this very, very carefully and i think youll see some of the best writing on this on the opinion ps of ts of the new jus on the litigation and the chevron doctrine and i think whats going to happen is the courts are going to begin to pin the agencies or more precise to the congress back and say you cant do this. Its too broad. Theres no call for any particular action. Youve not identified good real problem. Youve thrown up your hands and said go regulate and thats not enough. Weve had nothing to review on. Chevron doesnt apply when you have a problem and chevron doesnt apply when you have a big issue like Net Neutrality so were going to decide what the law is and well decide that your law is too vague, broad and openended and you better go back and do it right and start again. Now, i dont know if well see cases thrown out like shekter is was in 1937, but well see a lot of case law in the future narrowing these statutes to the point where its going to give congress a little kick in the you know what, and make them be a little more precise. Ill end with the question, of course, i did a lot of legislative work when i first came to washington, and saw these markup sessions where fights would take place markup sessions where food fights would take place. They would call in the parliament and they were really good drama. They were really good, good entertainment. And i have asked audiences how many people have ever heard of an amendment to the third degree . Are any hands going up . I see one. Maybe one there in the back. Thats sort of discouraging in a way. How many people have actually been to a markup session . Well, more hands. But not very many. Do you think you think most of the hands would go up. And thats the problem. We need more markup sessions and more amendments to the third degree. So thank you very much for the opportunity to speak to you. [ applause ] well, if youre like me, youre probably thinking, gee, maybe we could just have the rest of the day, you know, with a session with these two. Unfortunately, were not going to be able to do that, but weve got a little more time. You know, i will say when i gave that introduction of ambassador gray, i didnt mention that he has his degree from the university of North Carolina. I think he was editor in chief of the law review there. And as many of you who know me well and have heard me say previously, im a double dukey. I have two degrees from Duke University. Only someone who went to the university of North Carolina would ever actually appear on one of my programs. Well, that was terrific. I want to ask a question, actually. No one touched on this, but among the audience here, it is a topic that everyone is familiar with and i think you two your reactions would be useful. Chairman pie instituted a new practice at the fcc a few months ago. I think hes now decided it is going to be permanent. And the practice is that he releases draft order, nprms or orders at the same time he circulates them to his fellow commissioners. Thats three weeks before the fccs sunshine meeting. The issue came to a head and first came up, basically, during the last round of the Net Neutrality proceeding when when Many Congress people and others were asking to see the draft order. And it was considered at the time, and still may be by many, to be fairly controversial because it hadnt been done. But now its been done. Im going to ask him about it during our lunch conversation and probe a bit. But you two have had so much experience with the agencies. Whats your reaction to this new way of doing business at the fcc in terms of making public these draft rule making proposals . Someone go first, if you if you wish. Look, i think we have to see how it pans out. There are possible pros and there are possible cons. To the extent that a chair of a commission is releasing a draft order that comes out of the Chairmans Office that other commissioners have not had a chance to weigh in on or perhaps only a subset of commissioners have had a subset to weigh in, there is the potentially problematic aspect in that it brings the public in at an early preliminary stage before the commission has done its internal deliberative process. And while i think on one hand it, you know, can be viewed as transparency, on the other hand, it can really interfere i think with dialogue among the commissioners and their releasing of a regulation that actually speaks for all of the commission in a more balanced way. So there is the possibility that it could lead to a you know, it could be a strategic play to limit the input of other commissioners on a controversial issue. Certainly, i fought tooth and nail against opening up all of the discussions that they were having with the agencies and all of the interim drafts for exactly the same reason. We needed the ability to tell the agency, youre wrong. Fix this. Ask hard questions. And then put a draft out to the public that had gone through all of that internal deliberation. So, you know, i can see some positive things from it. But i think well have to wait and see how it actually works out. Do you have any reaction at all . Well, this may not be exactly on point. But the internal deliberative process is very, very important, having been involved in it many times. Im quite partial to it. As an outsider, sometimes i wonder if it doesnt shield agencies from the kind of transparency that howard is talking about. And, so, there is a balancing act that goes on here, and it is a tricky one and it is going to continue to be a tricky one, i think, probably for a long time. Okay. Im going to ask one more question, and then we may have time for one or two from the audience. But, howard, maybe this is to you. As you may know, the fcc, when it released its notice of proposed rule making for this round of the Net Neutrality saga, it specifically is asking for a cost benefit analysis. Most of you know, the independent agencies are not required by the executive orders, if i still understand this, to do these, but its something that the fcc is doing and many people have recommended that the agency do for the reasons that you talked about. I just want to know, is that how common is that among other independent agencies to undertake what i think will be a fairly formal cost benefit analysis by the fcc in your experience . Thanks. Its been a mixed bag. And even sometimes the same agency will sometimes do it and sometimes not. For example, in the case of cfpb. My own view is that all agencies should have to do this. I do not believe, and i think im the only administrator ever to say this. At least senator portman tells me im the only one to take this position. I dont think the independent agencies should be under review. I do think they should have the obligations to undertake the costbenefit analysis that the executive order requires because otherwise i think the public really doesnt have the full kinds of information and record it needs to comment in an informed way on the rules. Okay, thank you. For all those standing back there, weve got there are scattered seats. It is fantastic to see this huge cro crowd. Thats gratifying. But there are seats up front, even if they have a sign that says reserved on the seats, you can occupy them now. And that will be fine for now. What i want to do, maybe, is take one or two questions from the audience. I want you to raise your hand if you have a question and im going to recognize you and wait for the mic wait for the mic to be brought to you and lets keep the questions succinct, please. Thanks very much, randy. A question for howard. Theres been a great growth in guidance documents and informal sorts of quasi rule making. And some have raised concerns that these raise a real problem, apart from concerns about due process and so on, but cost benefit analysis, these are things that are not seen. Should that change . Whats your view about that . Thanks, aldon. Its a great question and in fact senator langdon has raised questions on this. It would be not practical to review all guidance documents. Guidance documents, when they are done right, are interpretive. They are nonbinding. They do not create new regulatory obligations. And to review every single one of them in advance to determine whether they violate those boundaries would just be an enormous amount of work and probably not an efficient use of resources. On the other hand, agencies do, on occasion, overstep and try to effectively regulate through guidance documents. The good news is most of the time theyre called out on that. Theyre challenged and told they cant do that. I think what there has to be is some kind of rule that basically says that a guidance document cannot have effect if it does not if it has not gone through a certain process internally at the agency and been posted in a way that is transparent with an explanation of how it relates to the underlying rule. What that would mean is an agency could not come out and say, oh, our guidance document over here means that you cant store those chemicals in this way anymore, just to take one particularly controversial example. Wait a minute. Thats a change in regulatory policy. So by having these requirements for significant guidances, a lot of the problems can be resolved. There is a terrific bush 2 administration document, a 2007 document published from the federal register, which is an omb guidance on guidance. We recirculated it to agencies and said this really matters and this is something that perhaps could be embedded in statute to make the requirements even stronger. On the issue of guidance documents, do you have anything you want to add . Or i think this will be the last comment. So if there is anything you want to add at all, briefly please go ahead. Well, i agree. I dont think it is a routine matter. You can possibly look at every guidance document. But i think the ones that really have impact, youll hear about them and youll know about them. So im not really worried about it. What i my my ending comment would be, to change the subject, back to the Consumer Finance Protection Bureau and the fact that it is shielded. You are not even supposed to look at even you think, i i do, so im surprised you mentioned them. They are free of all constraints and all accountability and they spent because they to take their funding comes from the fed. They are prohibited from intervening at all in what they do. Congress has no power of the purse. But he does have to testify occasionally. And he did testify. And it turned out they had spent several hundred Million Dollars on the renovation of the headquarters. And one of the subcommittee chairman of the House Financial Services Committee Said to him, well, who was in large of this rather lavish renovation . And his response to this member of congress was, what does it matter to you . Okay. Well, i think what matters to me right at this moment is that i think youll agree that it would be would have been difficult to find two other people with more experience and background, scholarly experience, but more important practical experience in the area of regulation and to talk about Lessons Learned. So please join me in thanking them both. [ applause ] so what were going to do now, im going to ask the panel to come up for our next program and get