Sean Croston is an Attorney at the Federal Trade Commission. The views expressed in this article are his alone and do not represent the views of the Federal Trade Commission or the United States.
In the opening days of his first term, President Obama proclaimed that his administration would be the most transparent in history, stating that:
Transparency promotes accountability and provides information for citizens about what their Government is doing…. My Administration will take appropriate action, consistent with law and policy, to disclose information rapidly in forms that the public can readily find and use. Executive departments and agencies should harness new technologies to put information about their operations and decisions online and readily available to the public.
In that spirit, debate continues over incorporation by reference (IBR), an obscure but important administrative law tool that allows federal agencies to build into their binding regulations various standards developed by outside entities. The crux of the debate is whether, or to what extent, agencies should be able to incorporate outside standards into their regulations when those standards are not freely available to regulated entities or other interested persons (e.g., neighbors, competitors, or beneficiaries of those regulations) who might wish to comment on the regulations or to petition for amendments to the regulations. Unfortunately, a recent announcement by the Office of the Federal Register (OFR) will do little to increase government transparency or resolve the debate over IBR.
Concern about IBR can be illustrated by an example recently raised by Representative Dina Titus. She observed that one Pipeline and Hazardous Materials Safety Administration regulation included provisions incorporated from an industry standard that would require members of the public to pay more than a thousand dollars to access it from the private standard-setting organization. Yet, as Representative Titus noted, “if you’re a small community, $1,000 is a lot of money for access to just one of many pipeline safety standards.” She expressed concern about a government agency “issuing a regulation that requires whoever wants to read it—particularly local communities, first responders, and private citizens—to have to purchase it from a private association.”
Surprisingly, the small subsection of the Freedom of Information Act (FOIA) that authorizes and governs IBR is quite simple. After requiring federal agencies to “separately state and currently publish in the Federal Register for the guidance of the public” all generally-applicable regulations and guidance documents, it provides that “matter reasonably available to the class of persons affected thereby is deemed published in the Federal Register when incorporated by reference therein.”
Last February, a group of scholars petitioned OFR, asking the agency to set some limits on agencies’ use of IBR, particularly when used in binding regulations. After all, the law plainly gives OFR authority to set some limits on IBR material that is not reasonably available to people affected by it, although the agency has not really exercised that power. After collecting public comments and waiting nineteen months, OFR finally published its response, which largely denied the scholars’ petition. OFR’s response was disappointing on several grounds.
First, and most incredibly, the agency claimed that the White House’s Office of Management and Budget (OMB)—not OFR—had authority to set federal IBR policy. But while OMB unquestionably sets federal policy governing agencies’ “use” of “voluntary consensus standards” under the National Technology Transfer and Advancement Act, the use of standards (including common uses outside of binding law) is separate from the public availability of all standards incorporated into law. As OFR’s own website proclaims, “Congress gave complete authority to the Director of the Federal Register to determine whether a proposed incorporation by reference serves the public interest.” This “complete authority” necessarily includes a responsibility to set and periodically adjust some basic rules governing proposed IBRs. Thus, while OMB can and apparently did make some suggestions to OFR, in the end it is OFR’s duty to clarify the law regarding IBRs. (It would be helpful to see OMB’s specific suggestions—as required by Executive Order 12866—but they do not appear to be publicly available.)
Second the FOIA statute imposes a two-part requirement on agencies seeking to rely upon IBR materials: they must be “reasonably available” to “the class of persons affected” by the relevant agency regulations. Yet in its recent announcement, OFR refused to issue regulations definitively addressing either of these factors.
With respect to “the class of persons affected,” OFR explained that it was “not proposing a definition so that agencies maintain the flexibility to determine who is within the class of persons affected by a regulation or regulatory program on a case-by-case basis to respond to specific situations.” But regulatory agencies lack the foresight (and the incentives) to honestly and correctly determine exactly who will be “affected” in the future by their regulations. In addition, OFR previously stated that its mission is to distribute legal information and publications to “the public,” not to maintain agencies’ regulatory flexibility. Adopting some restrictions on agencies’ ability to conceal binding regulatory information from the public would advance OFR’s actual mission. Moreover, OFR’s response to the scholars’ petition did include a proposal that indirectly (but correctly) recognized that “interested parties” who would like to comment on IBR materials, petition for their amendment, or simply follow their requirements actually have an interest in the materials. All of these “interested parties” are the “persons affected” by IBRs, and OFR should craft a regulatory definition that makes this understanding explicit.
Most regrettably, although OFR noted that “a majority of the commenters agreed that ‘reasonably available’ means [available] for free to anyone online,” the agency still refused to adopt this principle or otherwise set effective limits on IBR material based on its “reasonable availability” to affected persons. Instead, OFR only feebly and half-heartedly asked agencies to “work to” make materials more available by collaborating with standards developers. Perhaps OFR wanted to avoid admitting that $1,000 standards are clearly “unavailable” to interested persons under any standard of reasonableness. (Similarly, costly IBR material that itself incorporates 35 additional standards that are only available behind paywalls is plainly “unavailable.”) Or perhaps OFR truly believed, as it stated, that it simply lacked the resources to enforce any regulatory limits. But OFR should presume agencies’ good-faith compliance with its rules. Moreover, it could always issue contingent IBR approvals that are effective—and thus make the underlying agency regulations enforceable—for only so long as the incorporated material is freely (or otherwise reasonably) available to the public. This would create an incentive for agencies to ensure the availability of incorporated documents and allow for efficient private enforcement of IBR materials’ availability.
In sum, the current and proposed system is one in which many agencies will continue to profit by letting standards developers do the job of crafting (sometimes self-interested) regulatory standards. In turn, those rent-seeking standards developers will continue to reap the profits from setting unfair monopoly prices for binding legal materials. Meanwhile, the public’s important informational interests will continue to be ignored in this “pay-to-play” regulatory system. Despite OFR’s clear, continuing legal responsibility to set real limits on legally-binding IBR material that is not “reasonably available” to interested persons, its recent petition response indicates that it is unfortunately continuing to shirk its duty.