Want To Read The Law? Better Pay Up.

(By Andrew MacKie-Mason)

A post by Adam Kolber at PrawfsBlawg made me aware of an egregious practice by many federal regulatory agencies: they incorporate privately developed industry standards into federal law by reference, without including a copy of those standards as part of the regulation.

On its own, that isn't too bad, of course: it just makes research a little bit harder. But the unconscionable thing is that the agencies do not require that the standards be freely available to the public. A lot of the time, private standards agencies will make copyright claims and require that interested parties pay for access to the standards, which are a part of the law.

These aren't highly obvious legal restrictions either, or restrictions on things which are malum in se (bad in themselves.) They're highly technical rules that companies in certain industries must follow for fear of legal repurcussions. There's no way to be sure of compliance without purchasing access to the standards — in other words, you have to pay to know what the law says.

One of the crucial assumptions of our system of justice is that the law is available to be read by anyone who's interested and cares to take the time. If I'm interested in the precise details of traffic laws in my state, for instance, I can easily look through them without even hiring a lawyer. Nowadays I just look on the Internet; previously I could go to a library or government office. But not so with these "standards." They're hidden from anyone who isn't willing to pony up the cash. It's governmental secrecy at its worst.

Of course, the solution is obvious: rather than forcing regulated companies to pay the cost of writing regulations (by paying the standards agencies for access) the government agencies should pay the standards agencies enough to get permission to publish the full text of the standards along with the rest of the regulations. It'll cost the same amount, but the right people will be paying. The private-public partnership will be preserved, without any of the terrible aspects of the current system.

Not only do laws which require cash for access invite egregious due process violations (how can we hold people responsible for obeying laws which they have to pay to read?), they also set up terrible incentives for regulators. Emily Bremer, an Attorney Adviser at the Administrative Conference of the United States who "wrote the research report underlying the recommendation" of ACUS supporting this practice, commented on the PrawfsBlawg post in her personal capacity. While trying to defend the incorporation of paid-access standards into the law, she provided an excellent explanation of why it's a terrible idea:

I agree that government buying the standards is an obvious solution, and it was an option discussed during the Conference's process. In my view, the difficulty with the approach is largely practical. If the goal is to provide a full copy of an incorporated standard online for all to see, the agency has to pay more than just the cost of the standard's regulatory use. It has to buy out the whole market for the standard (because it become available to anyone, even if they want it for a non-regulatory purpose). The potential cost is staggering, especially if you consider that there are thousand of standards already incorporated by reference that would have to bought out at once to implement the solution in the short-term. Particularly in the current budget environment, this is just not a workable solution. 

Another concern, beyond the potential for excessive entanglement between government and private standard developers, is the incentives the approach might create for agencies considering incorporating a standard. Standards are regularly updated to reflect evolving technical knowledge. Say Agency A incorporates the 2002 version of a standard by reference and pays for it to be freely available online. A new version comes out in 2005, and its more protective, but perhaps only marginally. When Agency B finds that it needs to incorporate the standard by reference, financial considerations might provide an incentive for it to incorporate the less protective 2002 standard. After all, that one's already been bought by another agency, so why spend scarce resources on the slightly newer version?

This is a great statement of a relatively obvious fact: forcing regulated agencies to pay for the cost of writing the regulations hides the cost of writing those regulations. It should be obvious to an informed observer that having the agencies pay for access to the standards wouldn't be more expensive than having the regulated companies pay; it just relocates the expense. But the incorporation scheme allows agencies to pretend that they're doing their job more cheaply than they actually are.

And it is almost never a good idea to separate decision-making from payment, because it removes the incentives for rational cost-benefit analysis. In the hypothetical Ms. Bremer poses in the second paragraph, Agency B definitely should incorporate the 2002 standards rather than the 2005 standards. Just as it doesn't make sense for the government to pay a lot of money for only slightly better standards, it doesn't make sense for the government to force companies to pay a lot of money for access to only slightly better standards. For that matter, it doesn't make sense for standards agencies to spend a lot of money rewriting standards if they're only going to make them slightly better. If Agency B requires companies to purchase the 2005 standard, there will be a huge amount of inefficiency and waste of scare resources. And that's something we can't afford, especially in the current economic environment.

I'm not usually one to be outraged by federal regulation, but if we're at the point where the government isn't even paying to write the regulations anymore, we've gone too far. Governing, especially with an administrative state, is expensive. We shouldn't allow agencies to hide that fact by using their authority to force private companies to do their job for them.