Over 2,000 federal regulations are behind paywalls. How? A method of creating regulations called “incorporation by reference.”
Incorporation by reference (IBR) is when a law or regulation references another document and makes it a part of the law or regulation, granting it full power of law. This occurs fairly regularly in state and federal laws and regulations. For example, state regulations will often reference portions of federal regulations, rather than create either a duplicate set of regulations on the state’s books or create a new standard.
Importantly, when regulatory agencies use IBR in regulations, it usually means that the secondary document is given the full force of the law. In other words, IBR'd documents become regulations
Consider this example. 486 different federal regulations refer to the Boiler and Pressure Vessel Code, which is produced by the American Society of Mechanical Engineers (ASME). The Boiler and Pressure Vessel Code, which is 19,808 pages long, describes modern standards used in the safe design, manufacture, inspection, testing and maintenance of boiler and pressure vessels, power-producing machines and nuclear power plant components. If prevailing price is any indicator, then it must be a useful set of standards, because it costs about $20,000 to purchase. In fact, if these standards were free to all, they'd arguably be a public good.
But these standards, and many other standards developed by similar standard developing organizations, are not free, and that’s understandable. Their production requires the inputs of many engineers, scientists and other subject matter experts from an array of companies and organizations.
A clear governance problem arises when standards such as these become regulations via incorporation by reference and the IBR'd standards are behind a paywall. That’s right – many, many of the standards that are IBR’d are behind paywalls.
Just how many "regulations" (i.e., IBR'd standards) are behind paywalls? For that matter, how often are standards such as the Boiler and Pressure Vessel Code IBR’d in the first place? I recently set out to answer these very questions and was dismayed at the results.
First, I searched the Code of Federal Regulations for the term “incorporated by reference” or similar phrases. I got over 23,000 hits. In other words, it appears that external documents are given the power of regulation at least 23,000 times in federal regulations – and this is federal only. We know this practice is prevalent at the state and local levels too, although we don’t yet know how prevalent.
I like to compare the costs of regulations to an iceberg, where there is some visible portion sticking out above the water but there is also a hidden part of the iceberg lurking beneath the waves. For regulatory costs, there are some obvious and visible costs, such as paperwork hours or the outlays related to the purchase of new safety equipment. But there are hidden costs – innovation that didn’t happen, for example. Apparently, the iceberg analogy can also be used to describe the body of regulations themselves. Many are readily visible in the Code of Federal Regulations, but many others are at least somewhat hidden in the sense that you have to look into some other document to find them.
And it gets worse. I was able to find a database maintained by the National Institute for Standards and Technology that lists the standards incorporated by reference in federal regulations. That database has about 25,000 entries, but many of them are duplicates – the average standard in this database is incorporated by reference about five different times. After getting rid of duplicate rows, I was left with 5,689 standards that are IBR'd at least once. If each of these standards is 10 pages long, that means 56,890 pages of regulations are not actually on the books but have legal force (In reality, they’re probably much longer on average). The Code of Federal Regulations itself was 188,343 pages long as of 2021, so if the 10-page assumption is anywhere close to right, that means about 30% of federal regulations are not actually printed in the Code.
Somehow, it gets even worse. I tried to track down each of these 5,689 IBR’d standards, and found that 2,269, or about 40%, are behind paywalls. The average cost to access the paywalled standards is $122.09, and if you wanted to purchase all 2,269 paywalled standards, it would cost you about a quarter-million dollars.
The bottom line is this: Law should be accessible to all, not just those with the ability to purchase it. If regulatory agencies want to use privately developed industry standards as regulations, they should ensure the standards are freely accessible. That might mean compensating the standard developers in another way, but not via paywalls on the public
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Tricky topic for sure. The standards are valuable IP. If an agency wants to use them, they probably should pay the equivalent of whatever the expected value of paywall access would have been. My guess is that is still cheaper than developing an alternative set of standards in-house at an agency. But it might be politically harder to ask Congress or a state legislature for a budget line item like that, as opposed to a line item for one or two FTEs to develop the standard in-house.
Alternatively, agencies could develop some performance standards that they think following a set of IBR'd standards would achieve, and then advise businesses (maybe in guidance) that the performance standards would likely be met by following the standards devised by ASME or whoever the standard developing organizationis.
Wow this is definitely an iceberg. Honestly, I think 10 pages might be generous. I feel as if most IBR'd standards will probably be longer on average as they will be extremely technical. If agencies are forced to compensate organizations for their standards, I wonder if it would result in a drop in quality. I could see agencies being less willing to IBR, even if the potential IBR'd standard is better, to accommodate their budget or avoid potential legal trouble. From the standard setting side, I could see incentives to not pay the up front cost to develop the standard if they are not able to price set. Seems like a tricky situation.