GAO Report: FCC Insiders Leak To Lobbyists

Telecom Policy Report, Oct 15, 2007

A recently released federal report says Federal Communications Commission (FCC) staffers have made it a practice of leaking nonpublic information to a few lobbyists regarding important telecom rulings prior to the actual public votes taken at open commission meetings, giving them the heads-up on when to start their campaigns.

The leaks are giving major corporations with an economic stake in the outcome an unfair advantage over competitors and the general public, charges the Government Accountability Office (GAO).

According to the report, FCC Should Take Steps to Ensure Equal Access to Rulemaking Information, the GAO says the FCC "generally followed the rulemaking process in the four case studies of completed rulemakings that GAO reviewed, but several stakeholders had access to nonpublic information." More specifically, "multiple stakeholders generally knew when the commission scheduled votes on proposed rules well before FCC notified the public," even though "FCC rules prohibit disclosing this information outside of FCC." As a result, the report says, "stakeholders with advance information about which rules are scheduled for a vote would know when it is most effective to lobby FCC, while stakeholders without this information would not."

The report was conducted at the request of Rep. Edward J. Markey (D- Mass.), chairman of the House Subcommittee on Telecommunications and the Internet, and it focused on the FCC process as the agency sets important rules for the telecommunications industry.

According to the congressman, "The FCC has a duty to be above-board in developing and implementing its rules. When the 'corporate insiders' and 'K- Street' crowd have the inside track on decisions critical to telecommunications, media, broadband or wireless policy, then the public and consumers, are at an inherent disadvantage. Both the law and the public interest, require that rulemaking decisions adhere to principles of openness and objectivity."

He continued, "We also were told by 9 of 12 stakeholders--both those involved with our case studies and stakeholders who regularly participated in FCC rulemakings--that they knew when proposed rules were scheduled for an upcoming vote well before FCC released the agenda to the public because they hear this information from FCC bureau staff and commissioner staff. This advance information is not supposed to be disclosed outside of FCC...We are recommending that FCC take steps to ensure equal access to information by making sure that nonpublic information is safeguarded from disclosure, and to determine what actions FCC should take if a prohibited disclosure is made, so that all stakeholders have the same information to inform their participation in the rulemaking process. FCC took no position on our recommendation.

"The good news is that the FCC has rules against disclosing inside information before everyone knows it publicly," adds Markey. "The bad news is that it appears violations of such rules are a daily reality at the FCC."

The Findings

Here's what the GAO report found:

"Several stakeholders told us that they learn which items FCC is about to vote on even though that information is not supposed to be released outside of FCC. FCC circulates information internally approximately 3 weeks before a public meeting to inform FCC staff of what is scheduled to be voted on at the public meeting. FCC rules prohibit the disclosure of this information to anyone outside of FCC.

"Specifically, the information is considered nonpublic information and cannot be released by any FCC employee without authorization from the FCC chairman. FCC officials in the units responsible for the case study rules and FCC officials in the units that conducted most of the rulemakings between 2002 and 2006 all told us that this is nonpublic information, and that they do not release it outside of FCC.

"However, nine stakeholders--both those involved in the case studies we reviewed and other stakeholders with whom we spoke who regularly participate in FCC rulemakings--told us that they hear this information from both FCC bureau staff and commissioner staff. One stakeholder--representing a large organization that is involved in numerous rulemakings--told us that FCC staff call them and tell them what items are scheduled for a vote.

"In contrast, stakeholders who know which items have been scheduled for a vote know when to schedule a meeting with FCC commissioners and staff because they know when FCC is about to vote on a rulemaking.

FCC officials told us that, for stakeholders to successfully make their case before FCC, 'timing is everything.' Specifically, if a stakeholder knows that a proposed rule has been scheduled for a vote and may be voted on in 3 weeks, that stakeholder can schedule a meeting with FCC officials before the rule is voted on. In contrast, a stakeholder who does not know that the rule is scheduled for a vote may not learn that the rule will be voted on until the agenda is announced 1 week before the public meeting. However, once the agenda has been announced, the Sunshine Period begins, and no one can lobby FCC officials about the proposed rule. As a result, the stakeholder who learns that a rule has been scheduled for a vote 3 weeks before the vote can have a distinct advantage over a stakeholder who learns about an upcoming vote through the public agenda. Our case study reviews and discussions with multiple stakeholders showed that some stakeholders know this nonpublic information and, as a result, these stakeholders may have an advantage in the rulemaking process."