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CONTACT: Amy Smorodin
November 14 , 2006
(202) 289-8928
DACA Releases Institutional Reform Proposal
Working Group Proposes “Split Agency” Form for Rulemaking and Adjudications

WASHINGTON D.C. - Today at the luncheon event "Regulatory Reform Options for Today's Digital Age," the Digital Age Communications Act (DACA) Project released the initial Report from the Working Group on Institutional Reform. The report proposes a "split agency" structure under which adjudications and enforcement activities, envisioned to be the predominant forms of regulatory activity under DACA, will be performed by a multimember commission like the current FCC, while the rulemaking function, considerably circumscribed under DACA, would be carried out by a single administrator located within the Executive Branch. The draft report from the Institutional Reform Working Group marks the last in the series of initial reports to come out of the project.

In the report, the Working Group analyzed the historical development of independent agencies, which came about during the Progressive and New Deal eras in response to substantial industrialization affecting the economy. The theoretical hallmarks of the independent agencies like the FCC were supposed to be an abiding faith in specialized expertise to manage industry and freedom from political interference. However, "experience with the actual commissions has sufficiently undermined these original ideals," the report explains. Instead, "government administrators and regulators are now more humble in estimating their own abilities and less skeptical of market mechanisms." More frequent calls for increased political accountability for the policymaking functions exercised by regulatory commissions are cited as reasons for institutional reform.

Before choosing the "split agency" model for restructuring the FCC, the Working Group analyzed five other options. The report contains a discussion of the pros and cons of each of the following six options:

  • An Independent Multi-Member Commission with a Significant Delegation of Power and Subject to Substantial Judicial Review (Status Quo).
  • A Multi-Member Commission with an Even Greater Delegation of Power, More Independence, and Less Judicial Review (Progressive Era Ideal).
  • Abolition of Administrative Functions and Regulation Accomplished Through Private Rights of Action Adjudicated in Courts (Abolitionist Model).
  • A Multimember Commission Located in an Executive Department But With Some Degree of Independence (ICC Remnant Model).
  • Rulemaking Powers Vested in a Single Executive Branch Official and Adjudicatory Powers Vested in a Multi-Member Independent Commission (Split Agency Model).
  • An Agency with a Unitary Head Having No Political Independence (Pure Executive Agency).

The Working Group concludes that the split agency model "is the one most conducive to fulfilling the [DACA] statute's purposes in a manner that achieves political accountability for administrative policymaking through rulemaking, while at the same time achieving efficient, effective, and sound decision-making in carrying out both the adjudicatory and rulemaking functions that are the hallmarks of administrative agency action." This option comports with the recommendations of the Regulatory Framework Working Group, which concluded regulation based on competition law principles enforced primarily through ex post adjudication should replace much of the ex ante regulation that currently characterizes the FCC's activity.

The full report is available on the PFF website. The Institutional Reform Working Group is co-chaired by John F. Duffy, Professor, George Washington University Law School, and Randolph J. May, President, The Free State Foundation. Other members of the group include: Wayne Brough, FreedomWorks; James Gattuso, Heritage Foundation; Solveig Singleton, PFF; and Adam Thierer, PFF.

The Digital Age Communication Act (DACA) Project was launched in early 2005 with the intent of providing guidance for regulators and legislators on how to address regulatory issues in an era of competing digital services and platforms. DACA consists of dozens of individuals, including PFF fellows, scholars at other think tanks and universities, and public policy officials from the last five presidential administrations. Previous reports released by the project include suggestions from working groups on Regulatory Framework, Federal-State Framework, Universal Service and New Spectrum Policy. More information on the DACA Project can be found on the PFF website.

The Progress & Freedom Foundation is a market-oriented think tank that studies the digital revolution and its implications for public policy. It is a 501(c)(3) research & educational organization.



The Progress & Freedom Foundation