John Cooney: [0:02] Good afternoon. [0:04] As Jonathan mentioned, ACUS has identified and shined a light on a problem that has existed for 30 years but managed to stay off the radar screen of administrative law experts.[0:14] This recommendation deals with the process by which government agencies go about incorporating, by reference into federal rules, standards that are established by private sector or standard-setting organizations.
[0:27] The size of the phenomenon is quite extensive. The Office of the Federal Register estimated that, if all these rules that are now incorporated had to be published separately, the size of the Federal Register would increase by six or seven times.
[0:42] The process has proved, over the years, that there are substantial benefits to the government and the public from utilization of standards developed by private standard-setting bodies.
[0:50] First, the expertise is in the private sector. The engineers and the shipbuilding companies know better than the Coast Guard how to put together a double hull tanker.
[0:59] Second, the companies in the private sector groups that use their insights have a much better understanding of where the market is heading. Over time, productivity gains typically come from standardization at a certain point, especially in network industries like telecom and banking. That is what the standard-setting process helps accelerate.
[1:21] Third, there are substantial cost savings for agencies. Standards can be quite expensive to develop. Every time that the private sector develops one of these, the agencies save on appropriated funds.
[1:34] Standards are paid for by the standard-setting bodies charging people who are going to end up being subject to regulation to buy a copy. This is a variant of the standard user fee analysis.
[1:45] Finally, the agency employees are freed up by the private standard-setting process. Every minute that an agency employee is working on something that's already being done in the private sector, is one minute more that the agency can't be working on other problems that are pressing in on its agenda.
[2:05] Now, how was the incorporation by reference process run? Like many things in the government, it's run by OMB, driven by an OMB circular that's been in existence in one form or another for almost 30 years and was partially codified by the Technology Transfer Act of 1995.
[2:21] OMB sets the ground rules it implements with substantial assistance from NIST. The circular provides that the agencies so use voluntary consensus standards wherever possible and shall not use government unique standards unless that would be inconsistent with law or "otherwise impractical."
[2:40] The OMB process clearly looks to the fact that regulated entities will have to pay for the standards once they're incorporated by reference.
[2:50] Now, this system percolated along perfectly for about 30 years with very few objections. The agency would issue an NPRM, typically the text of the standard to be incorporated would not be available to the public. It would only be nominally available.
[3:06] A copy would be lodged in the library at headquarters in Washington and anybody who wanted to come see it could. But in practical effect, there was no transparency in this process.
Under that system there was a road of [indecipherable 03: [3:17] 18] volume of complaints, which typically came from smaller entities that were going to be subject to regulations. They might not be able to afford the cost of obtaining the rule to the same degree that Chevron might.
[3:30] But with the advent of the Internet, problems have developed in this system and ACUS was the first to spot them. First is there was a total lack of transparency. Second, the regulator then had to pay to obtain a copy of that and it's very anomalous in law that you have to pay to obtain a copy of the thing by which you were bound.
[3:52] But the standard-setting groups do have intellectual property rights. They copyright these materials and they finance the standard-setting process by selling copies to the entities after the fact. An unusual user fee process, but one that's become the norm.
[4:07] As I expressed it in the first committee meeting, with the advent of the Internet, the system started to break down due to the nature of information.
[4:15] As I expressed it, information just wants to be free and that's true in every sense. It wants to leak out and percolate through the system. It wants to be available at low cost and the American public has become used to obtaining large volumes of information for free over the Internet.
[4:33] The ACUS spotted this problem very early and got it on the agenda. It undertook a review of the project, pursuant to its statutory mission to make improvements in the regulatory process by balancing fairness and efficiency.
[4:47] The anomaly that has existed here, that there's a law that is not published in the Federal Register, really upset every administrative lawyer who looked at it. Their first reaction was always the same, that is we've reached out to other people they have the same reaction.
[5:02] How can it possibly be the case that rules by which entities will be bound are not publicly available, either at the proposed rulemaking stage or the final rulemaking stage? Yet that's the process that's endured for 30 years.
[5:15] The first step in the ACUS consideration was to do research, and Emily Bremer, who you'll hear from next, went around to a large number of agencies and obtained information from them about how they were dealing with the problem currently.
[5:28] Emily's findings, which are set forth in the research report, are really the intellectual property that ACUS has to bring to bear with this process with the agencies. What she found out is that many agencies were dealing with this problem in isolation. They had no idea other entities had to deal with the same problem.
[5:45] The second thing she found out, and the critical thing, is that many of the agencies are already down the road in figuring out how to deal with this question. That they've developed techniques for working with the standard-setting bodies to try and find a way to make information available to the public in greater quantity and at more stages of the regulatory process.
[6:05] One example that Emily found is that many agencies try to negotiate with standard-setting bodies so that a free copy of the standard to be incorporated is available in a read-only form on a website at the NPRM stage of the process, so at least interested members of the public can see it for free at the NPRM stage.
[6:28] Armed with Emily's report, the committee began its deliberations. The committee accepted, right off the bat, that there were two important public interests involved here that had to be accommodated.
[6:38] The first is the interest in providing greater public access to information about rules that were going to be incorporated by reference.
[6:45] The second was to try to preserve the benefits to the public of the private standard-setting bodies, the private/public partnership that had worked successfully for many years.
[6:55] The committee focused on the question is how those interests could best be accommodated. In carrying out its task, the committee was greatly helped by the participation of three groups.
[7:06] First was the agencies themselves who had been wrestling with this, especially the Office of Federal Register and the Coast Guard.
[7:13] Second, advocates of greater public access, greater transparency about the rulemaking process were very helpful. Carl Malvern, in particular, was getting up at six A.M. to participate in the phone calls.
[7:26] Third, we had substantial assistance from the American National Standards Institute and several of the major standards-setting bodies, who explained the operation of the private standards-setting process today and the steps that their members were already undertaking with the agencies to devise ways that they could make the information available to the public in greater quantity and at more stages without undermining the copyright process that's necessary to support the cost of running these standards-setting processes, which can be long and grueling.
[8:01] The recommendation that emerged from the committee is, basically, the key part of it is in section three in the package, which identifies ways based on Emily's research that the agency should work with the standards setting groups to try to find ways to make more information to the public.
[8:16] The recommendation encourages the agencies to push the organizations to make information available for free, if at all possible, but it recognizes that it may not be possible to have information available for free in all cases.
[8:28] In those situations, the agencies are encouraged to work with the organizations to develop technological solutions that will make the information as broadly available as possible and for free or at as low a cost as possible while recognizing that, if all else fails, the requirement that the members of the public be required to pay for access to the standard after its incorporation is a legitimate outcome of the process.
[8:56] In the committee's judgment, this approach is the best way to drive the process forward for the ultimate goal, which everybody shares, of trying to provide as much information to the public as possible.
[9:06] This approach will keep the benefits of the structure that's emerged over the last 30 years, the existing system of public/private partnerships. It will provide more public access than is available today, that is for certain. This will be a large step forward.
[9:21] It will also update that system, in the sense of having the agencies push the standards-setting bodies to see if there are more ways that haven't been identified yet or haven't been fully exploited yet, by which more information can be made available to the public.
[9:35] As the committee was concluding its deliberations, the executive branch came to exactly the same conclusion. The National Science and Technology Council of the Office of Science and Technology Policy in the White House published a report by which it endorsed the use of private sector standards-setting wherever possible.
[9:52] It concluded that the text of the standard should be made available to all interested parties on a reasonable basis and that the term reasonable basis may "include monetary compensation where appropriate."
[10:04] We know where the administration stands and its position is similar to that for administrations over the last 30 years, that there are situations in which requiring entities to pay for the rules for which they will be bound is an appropriate outcome.
[10:18] But the White House does not have an action plan for driving forward. ACUS does.
[10:23] ACUS, thanks to its research and all of Emily's hard work, has identified techniques that some of the agencies are using now and have used successfully, and has come up with a system by which those resources can be made available to the other agencies, to inform agencies about what their peers are doing, what their experience has been, who's had experience within those agencies and its process and contacts that the other agencies can contact to try to find ways of developing techniques that will allow for greater accessibility.
[10:53] The other salient benefit of the recommendation is that it can be implemented starting tomorrow morning, if you approve it. Implementation of these steps does not require new authorizing legislation and it doesn't require that the agencies go to Congress and obtain greater appropriations in order to carry out the standards-setting process.
[11:14] Once the recommendation is adopted, ACUS can begin spreading this information to the agencies and can begin working with them immediately, and working with the standard-setting bodies to try to find ways to promote accessibility of information.
[11:28] With that lengthy introduction, I'll now turn to Emily Bremer and ask her to describe what is, as they, the heart of the recommendation, which is what is the experience? What have the agencies actually found? What has worked? What are steps that can be taken from this point forward to try to promote greater accessibility?