Pareto Policy Solutions, LLC

advancing innovation through smart regulation

Pareto Policy Solutions, LLC is a policy analysis and advocacy firm committed to advancing sustainability through “smart” regulation: regulation that rewards, and does not penalize, superior performance.  Often, such actions leverage advances in science and technology and make the regulatory program itself more effective as well as more efficient.

Consensus Standards and Regulation

To reduce the cost and burden of writing a regulation, regulators often “incorporate by reference” voluntary consensus standards (VCS) developed by standard-setting organizations and used by the private sector. 

Adopting a consensus standard reduces the cost to federal regulators and to regulated entities, and increases the benefits of regulation by easing compliance and promoting interstate commerce and international trade.

Agencies, however, do not always defer to consensus standards.  Prior to 1995, a more common practice was to develop government unique standards (GUS).  This practice started to change after enactment of the National Technology Transfer and Advancement Act in 1995, the objective of which is for federal agencies to adopt VCS in lieu of GUS. 

Specifically, the Act requires federal agencies and departments to use technical standards developed or adopted by voluntary consensus standards bodies if compliance would not be inconsistent with applicable law or otherwise impracticable; shall consult with voluntary, private sector, consensus standards bodies; and shall participate in the development of technical standards.  In accordance with OMB guidance, each agency must also appoint a Standards Executive to help implement the Act and report on its progress.

It is important to note that under the Act, an Agency is free to reject a consensus standard by simply explaining why it would not be sufficient for its regulatory purpose.  Given the statutory language, judicial challenge of an agency refusal to use a VCS is unlikely to be successful.

Recent public comments on agency implementation of the Act have focused attention on whether the statute ought to be changed to better promote the use of VCS.  Among the public recommendations:

--Change the mandate:  require agencies to rely on a VCS with few prescribed exceptions, require agencies to initiate development of a VCS if none exists, and/or require an agency to select multiple VCS whenever possible.

--Change the participation requirement:  require any federal agency representative on a standard-setting body to be a voting member and not simply an observer, require public reporting of every instance of agency participation in standard development, require agencies to periodically review (e.g., every five years) every consensus standard that is incorporated by reference in a regulation.

--Change the leadership requirement:  increase the clout of the Standards Executive within an agency to better secure adequate resources for agency participation in standard-setting activities.

Perhaps it is the time for Congress to revisit the NTTAA and its provisions regarding use of consensus standards in lieu of government standards.

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