Federal Communications Commission Washington, D.C. 20554 January 11,2016 The Honorable Fred Upton Chairman Committee on Energy and Commerce 2125 Rayburn House Office Building Washington, DC 20515 The Honorable Greg Walden Chairman Subcommittee on Communications and Technology 2125 Rayburn House Office Building Washington, DC 20515 The Honorable Steve Chabot Chairman Committee on Small Business 2361 Rayburn House Office Building Washington, D.C. 20515 The Honorable Bob Latta Vice Chairman Subcommittee on Communications and Technology 2125 Rayburn House Office Building Washington, DC 20515 Dear Mr. Chairmen, Thank you for your November 19, 2015 letter to Chairman Wheeler of the Federal Communications Commission (FCC) regarding the temporary small business exemption from the Net Neutrality Order's "enhanced transparency requirements". As you know, we dissented from last year's Net Neutrality decision, arguing that it was unlawful and would impose unnecessary and unjustified burdens on providers. To provide at least a modicum of relief for some providers, however, we believe that the FCC should at least make the small business exemption permanent. Unfortunately, on December 15, 2015, the FCC's Consumer and Governmental Affairs Bureau issued a Report and Order that declined to do so. We write to draw your attention to this flawed ruling and seek your further input. Specifically, despite the near unanimous concerns of commenters in the record about applying new burdens to small businesses, the item merely extends the temporary exemption until December 15, 2016. Additionally, the item declined to change the threshold for the exemption during this period to align it with the definition set by the Small Business Administration for small telecommunications carriers, or even the FCC's SBA-approved definition of a small wireless carrier. The record in the FCC proceeding made clear that small providers have fewer resources to devote to enhanced transparency requirements. Therefore, as you note in your letter, the rules would have a disproportionate impact on small businesses if they ultimately go into effect. In fact, as you described, these requirements could even jeopardize the ability of small ISPs to deploy and offer broadband service in their communities, to the detriment of consumers that could benefit from new or improved service. By failing to make the exemption permanent, the FCC missed an opportunity to remedy these concerns and take this issue off the table. Instead, providers face prolonged uncertainty and the looming threat of future regulation. Therefore, they are forced to continue diverting limited resources to challenge the rules while at the same time planning how to come into compliance if their challenges are ultimately unsuccessful. To justify this outcome, the item uses the Paperwork Reduction Act (PRA) process as an excuse for delaying a final decision on the small business exemption. It asserts that the PRA process will help the FCC estimate the burden of complying with the new requirements. That type of approach - where an agency adopts rules and "right-sizes" them afterwards - is completely backwards. An agency is supposed to seek comment on proposed rules and the associated costs and benefits during the rulemaking proceeding so that the final rules and the estimated burdens submitted to the Office of Management and Budget (0MB) for review reflect a reasoned cost-benefit analysis. Addressing the impact of rules after the fact effectively sets up a second proceeding before 0MB to challenge burden estimates that the FCC concedes have not been substantiated. That is not how the process is designed to work, and creates further uncertainty as the Commission may have to modify its rules if its baseless burden estimates turn out to be inaccurate. Moreover, this admission that the FCC has not yet fully assessed the impact of the rules on small business is inconsistent with the FCC' s representations under the Regulatory Flexibility Act that it completed the required economic analysis. We welcome your viewpoints on this as well. We appreciate the attention you have given to this proceeding and we would be pleased to assist you and your Committees in any way. Sincerely, Michael O'Rielly AjitPi Commissioner Comissioner Federal Communications Commission Federal Communications Commission cc: The Honorable Steve Scalise The Honorable Steve King The Honorable Marsha Blackburn The Honorable Leonard Lance The Honorable Renee Ellmers The Honorable Joe Pitts The Honorable Bill Johnson The Honorable Pete Olson The Honorable Mike Bost The Honorable John Shimkus The Honorable Gus Bilirakis The Honorable Brett Guthrie The Honorable Markwayne Mullin The Honorable Michael Burgess The Honorable Richard Hudson The Honorable Trent Kelly The Honorable Joe Barton The Honorable David Brat The Honorable Tim Huelskamp The Honorable Carlos Curbelo The Honorable Mike Pompeo The Honorable Adam Kinzinger The Honorable Chris Collins The Honorable Blame Luetkemeyer The Honorable Cresent Hardy The Honorable Billy Long The Honorable Steve Knight The Honorable Richard Hanna The Honorable Kevin Cramer The Honorable Christopher Gibson The Honorable Aumua Amata