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ProVocative

ProVocative

Standards, Regulations and Incorporation by Reference

An Interview with Emily Bremer of the Administrative Conference of the United States1

Incorporation by reference, and the related study and recommendations by the Administrative Conference of the United States, as well as the public-private partnership in standards development, are discussed by the Conference’s Emily Bremer.

How do standards affect business, regulators and the regulated, and trade when they are referenced or codified into law?

The most obvious consequence is to make it mandatory for certain parties to use or conform to the standards, but this means different things for different people and institutions, depending on where and how the standard is referenced or codified. When the U.S. Congress codifies a standard in a statute, the result is often to require a federal agency to use that particular standard in its regulations. A good example is the Consumer Product Safety Improvement Act of 2008, which effectively required the Consumer Product Safety Commission to use ASTM International F963-07, Consumer Safety Specification for Toy Safety, in its regulations. The effect is different when it is an agency that incorporates a standard by reference into a regulation. Such action makes the standard mandatory for regulated parties because, as a legal matter, the standard is treated as if it were reprinted in full in the text of the regulation.

Depending on the regulatory context and the type of standard used, regulatory incorporation by reference may require regulated parties to take different kinds of action. Regulated parties may be called on to manufacture goods that conform to technical specifications, test the safety of products using standardized testing methods or purchase equipment that meets specified standards. For example, to comply with the Occupational Safety and Health Administration’s head protection regulations, employers are required to provide employees with equipment that conforms to certain ANSI standards incorporated by reference into 29 CFR § 1926.100.2 In contrast, regulated parties must, among other things, use the test procedures specified in ASTM F1169-10, Consumer Safety Specification for Full-Size Baby Cribs, in order to comply with CPSC’s regulations for baby cribs codified at 16 CFR §§ 1219, 1220.3 As the CPSC regulations demonstrate, agencies occasionally modify, add to or subtract from a standard in the course of incorporating it by reference, in order to ensure that the standard meets regulatory objectives.

Incorporating standards by reference into regulations has significant benefits for federal regulators. If an agency needs to include a technical standard in a regulation, it has two choices: it can create its own “government-unique” standard solely to suit its regulatory purposes, or it can use a technical standard that is already available. Using a standard that is already available saves the agency the significant cost and delay associated with creating a government-unique standard. It enables the agency to benefit from the expansive technical, industrial and business expertise that is available in the private sector. Such expertise would be difficult, if not impossible, for the agency to draw on if it created its own standard through ordinary administrative processes. Using available standards also makes it easier and less expensive for an agency to enforce its regulations. Agencies typically incorporate by reference standards that are already ubiquitously used by industry. Aligning regulatory requirements with industry best practices reduces noncompliance and avoids unnecessarily confusing regulated parties, thereby reducing the time and money needed to enforce the regulations.

For similar reasons, incorporation by reference benefits regulated parties and the public interest. The standards development process provides additional opportunity for regulated and other interested parties to participate in the development of standards that may later be codified as regulatory requirements. Just as agency use of available standards makes enforcement easier, so too does it reduce regulatory burdens and confusion for regulated parties. Perhaps the most important benefit of the practice, however, is to further the public interest by improving the quality of technical standards used in federal regulations. The U.S. standards development system is robust and responsive to ever-evolving technical knowledge and the emergence of new risks to health and safety. And, as I previously mentioned, there is significant private sector expertise brought to bear in the standards development process. Incorporation by reference of standards created through this system serves the public interest by providing an opportunity for agencies to use the best standards in regulation.

When standards are incorporated by reference into regulations and law, it brings some issues to the fore for agencies and legislators. What are those issues and how are they being addressed?

Last year, the Administrative Conference of the United States undertook a study of the issues that agencies face when incorporating standards (and other extrinsic materials) by reference into federal regulations. As the in-house researcher for the project, I worked with officials at the Office of the Federal Register, the agency responsible for approving all incorporations by reference that appear in the Code of Federal Regulations, the National Institute of Standards and Technology, which coordinates agency interaction with standards developers, and officials at OMB.4 I also interviewed officials at nearly a dozen regulatory agencies, including OSHA and CPSC, as well as representatives of about a half dozen standards development organizations, including ASTM International and ANSI.

My research revealed that agencies face four primary types of issues when incorporating by reference: 1) ensuring that incorporated standards are “reasonably available” to the public; 2) keeping incorporating regulations up to date as new versions of standards or other materials become available; 3) complying with procedural requirements for incorporating by reference; and 4) avoiding common pitfalls in drafting regulations that incorporate by reference. At its semiannual plenary session in December 2011, the Conference adopted Recommendation 2011-5, Incorporation by Reference, 77 Fed. Reg. 2,257 (Jan. 17, 2012),5 providing guidance for how agencies can best address these issues. Here I’ll focus on the first two issues: public access and updating.

The most challenging and controversial issue that Recommendation 2011-5 addresses is that of ensuring that incorporated standards are reasonably available to the public. The requirement that incorporated materials be “reasonably available to the class of persons affected” comes from a provision of the Freedom of Information Act, 5 U.S.C. § 552(a)(1),6 which authorizes agencies to incorporate by reference. Standards developers typically own the copyright to the voluntary consensus standards they publish, and they rely upon the revenue from the sale of the standards to support the standards development process. The consequence is that regulated and other interested parties often have to pay a private party to see the full text of a proposed or final regulation that incorporates a standard by reference. From an administrative law perspective, this is troubling. The traditional solution was to require OFR and promulgating agencies to keep hard copies of incorporated standards available for public inspection at agency offices, which are typically located in Washington, D.C.

Changes in technological and administrative policy over the last two decades, however, have revealed the traditional solution of public inspection to be inadequate. Today, agencies use the Internet to conduct rulemaking electronically, and agency documents, including proposed rules, public comments, final regulations and other key administrative materials are increasingly available online. Related is that administrative law and policy have pushed agencies to be more transparent about how they make policy decisions and enforce regulatory requirements. These developments have fundamentally changed expectations about the availability of agency documents and processes. As agency documents have increasingly become available for free on regulations.gov, reginfo.gov, individual agency websites and through OFR’s electronic CFR and Federal Register sites, restrictions on public access to incorporated standards have become increasingly noticeable — and increasingly objectionable.

Recommendation 2011-5 urges a collaborative solution to incorporation by reference’s public access problem. It embraces the principle that incorporated materials, including standards, should be reasonably available both to regulated parties and to other interested parties. Making the materials more widely available is particularly important during the rulemaking process. During this period, members of the public and interested parties may have valuable information to provide to agencies, even if they will not be subject to the regulations ultimately adopted. But the cost of obtaining a copy of the standard may deter or even prevent such parties from meaningfully commenting on the agency’s proposed regulation.

My research revealed that this problem can be successfully addressed if agencies and standards developers work together and use available electronic tools, such as read-only access, to make standards more available to the public without undermining the value of the standards developer’s copyright. This approach is easier during the rulemaking process, when public access is most needed, because making the standards available for the 30 or 60 days of the comment process reduces the likelihood that providing free access will hurt sales of the standard. The recommendation urges agencies to work with standards developers to increase access, identifying a variety of factors to guide the collaboration. Of course, incorporated standards are highly technical, so just providing a copy of a standard may not give the public meaningful access. Recommendation 2011-5 recognizes this reality and provides that agencies should explain to the public in plain language in proposed and final rules what the standard does and how it furthers the agency’s regulatory purposes.

Congress has recently taken an interest in the public access issue. In January 2012, Congress enacted the Pipeline Transportation Safety Improvement Act of 2011, which includes a section (Section 24) that prohibits the Pipeline and Hazardous Materials Safety Administration from incorporating by reference in guidance or regulations any standard that is not available to the public for free on an Internet website. The law takes effect in January 2013, and PHMSA is struggling to find a way to comply. Most of the standards PHMSA uses are copyrighted, and it cannot afford to buy the license to distribute the standards as required by Section 24. PHMSA’s struggle to comply with the law supports the wisdom of the Conference’s approach in Recommendation 2011-5.

Keeping incorporating regulations up to date poses another challenge for agencies. The law requires that agencies identify the specific version of a standard that is being incorporated by reference into a regulation. This is sound policy. Allowing agencies to incorporate by reference without identifying the specific version of the standard that is incorporated would make regulations less clear and would likely sow confusion among regulated parties; it would also permit dynamic incorporations, under which the law would change whenever an incorporated standard changed. This situation would deprive the agency of responsibility and control over its own regulations. That would be undesirable as a matter of public policy and might also raise legal issues because it would transfer regulatory authority to private standards developers.

Updating is a challenge: When a new version of a standard becomes available, an agency must conduct a notice-and-comment rulemaking to update its regulation accordingly. Some agencies, particularly those required to observe heightened procedural requirements in rulemaking, are not able to invest the time and resources necessary to keep regulations up to date. This has the potential to endanger the public interest because it prevents agencies from using the most technically advanced standards available.

Recommendation 2011-5 provides several approaches that agencies have successfully used to either keep regulations up to date or mitigate the costs of outdated references. For example, the recommendation counsels agencies to use a process known as direct final rulemaking to efficiently update incorporations by reference when the change to the underlying standard is noncontroversial; it also recommends that agencies use equivalency determinations or enforcement discretion to permit or encourage conformity with newer standards that may be more protective than those incorporated by reference. Finally, because available tools are not always sufficient to address the problem, Recommendation 2011-5 proposes a statutory solution that Congress could enact to authorize agencies to use a more streamlined process for updating incorporations by reference.

What do you feel is the status of the public-private partnership in standards development in the United States? How does this partnership benefit both the participants and the public?

Based on my research, the Conference’s deliberations and my subsequent engagement in the ongoing incorporation by reference debate, I believe that the public-private partnership in standards is valuable to government, business, standards developers and the public. As I have already discussed, our strong federal policy favoring agency use of voluntary consensus standards saves agencies time and money, both with respect to the development of technical standards and the enforcement of applicable regulatory requirements. It also makes regulations better — more protective of health and safety, more efficient and less burdensome.

Current federal policy has facilitated a genuine public-private partnership in standards too. It’s not just about federal agencies using available technical standards. Many agencies have established good working relationships with standards developers. Agency personnel often participate in the standards development process, as recommended by the Conference in Recommendation 78-4 and encouraged by Circular A-119.7 This exposes agency officials to outside technical and business knowledge while simultaneously providing an opportunity for regulatory concerns to be considered in standards development. When new or unexpected problems arise, agencies and standards developers are able to share information, speeding the development of standards that address those problems. Standards developers are often able to respond more quickly to such problems than agencies. And even if it takes time for a revised standard to be reflected in applicable regulations, the public interest is served when industry moves swiftly to conform to standards that have been revised to address public safety issues identified by agencies.

This is to not to say that things are perfect: There are opportunities for improvement. Recommendation 2011-5 identifies many ways to improve the public-private partnership, at least at the point of incorporation by reference. But agencies cannot implement all of these recommendations alone. The provisions that aim to improve the public availability of standards particularly require interaction with the standards development community. Here, as in other areas of this productive public-private partnership, agencies and standards developers must both be willing to collaborate to improve the system.

The Conference has recently completed a report on conformity assessment. Why did the Conference focus on this topic and what did your research consultant discover about it?

The Conference focused on the issue of third-party programs to assess regulatory compliance because such programs are increasingly used by agencies and promoted or required by Congress. Agencies in diverse areas of regulation are using or contemplating the use of private third parties to carry out inspections and to verify that regulated entities are in conformity with standards and other requirements. Through these programs, third parties are charged with assessing the safety of children’s products or medical devices, or ensuring that products labeled as organic or energy efficient meet federal standards. Congress appears enthusiastic about third-party programs, having mandated or authorized their use in recent legislation. For example, Title III of the Food Safety Modernization Act of 2011 directed the Food and Drug Administration to employ a third-party approach to food safety inspections. FDA is currently working on regulations to implement this directive.

Third-party conformity assessment programs are attractive for a variety of reasons, but they also pose challenges that warrant careful consideration as Congress and agencies increasingly seek to use such programs in federal regulation. Such programs may provide a more cost-effective way to assess compliance with health or safety standards. Agencies often have limited resources available to conduct regulatory inspections or otherwise ensure compliance with regulatory requirements. Using a third-party program may improve regulatory compliance while freeing up agency resources to address other pressing issues. At the same time, third-party programs constitute a partial privatization of regulatory processes and must be designed carefully to fulfill the agency’s needs without unintended and counterproductive consequences.

References

1. The views expressed in this interview are those of Emily Bremer and not those of the Conference or its members.

2. ANSI is the American National Standards Institute; Occupational Safety and Health Administration, 29 CFR [Code of Federal Regulations] § 1926.100, Safety and Health Regulations for Construction, Personal Protective and Life Saving Equipment.

3. U.S. Consumer Product Safety Commission, 16 CFR §§ 1219, 1220, Safety Standards for Full-Size Baby Cribs and Non-Full-Size Baby Cribs.

4. Office of Management and Budget.

5. See the ACUS recommendation and the Federal Register adoption of recommendations notice and related content, and 77 Fed. Reg. 2,257 (Jan. 17, 2012).

6. Freedom of Information Act, 5 U.S.C. § 552(a)(1).

7. OMB Circular A-119, Federal Participation in the Development and Use of Voluntary Consensus Standards and in Conformity Assessment Activities.

Emily Bremer is an attorney advisor at the Administrative Conference of the United States, Washington, D.C. In this position she helps identify administrative process issues that warrant study, performs legal and policy research, and supports Conference members as they craft recommendations designed to make government work better. Bremer previously was an associate in Wiley Rein LLP, where she litigated cases involving federal pre-emption, jurisdiction, administrative law and constitutional issues. She also represented clients in proceedings before the Federal Communications Commission, counseled telecommunications companies on the scope of federal rights and drafted amicus curiae briefs filed with federal appellate courts and the U.S. Supreme Court.

This article appears in the issue of Standardization News.