The Failure of "Standards Policy"
A major facet of "standards policy" in many federal agencies involves how government participates in private standards-setting. Several agencies have been preoccupied with whether government employees should cast formal votes on private sector committees. This issue is symbolic rather than consequential, diverting attention from policies that could have a much greater effect on private standards. It makes little difference whether government representatives who otherwise participate in private standards-setting cast a formal vote. Issues are rarely decided by vote, and the stringent opposition of almost any participant, voting or not, usually gives pause to the entire group. The issue has attracted so much attention at the CPSC because it is seen by many as indicative of the agency's overall regulatory mission. To those actively involved in writing public standards—a group generally skeptical of the private sector—voting represents an endorsement they fear will weaken the agency's regulatory resolve. To the small number assigned to participate in private standards-setting, voting would legitimate their uneasy mission.
Rather than worry about voting, it would make more sense simply to increase government participation in private standards-setting. OSHA did not participate in NFPA 61B. Similarly, in the case of liquefied natural gas facilities, the Materials Transportation Bureau (of the Department of Transportation) chose not to participate on the relevant NFPA committee. Better communication between the public and private sectors could improve standards-setting in several ways. This is probably a much more effective way of influencing private organizations than, say, trying to increase consumer participation. Government participation is more reliable over time, and its representatives tend to be more knowledgeable than most consumer representatives. Most participants in the private sector interviewed for this study agree that consumer participation is often not very influential, but they expressed a different view about government. Benefits from increased participation would also flow to government. Participation is a form of education that can help an agency better understand its own regulatory choices.
Aside from the issues of participation and voting, most current statements of "standards policy" are vague, bordering on useless. The OMB circular, for example, directs administrative agencies to rely on private standards "whenever feasible and consistent with law." The amended version of the CPSC's authorizing statute requires deference to voluntary standards if:
(1) it is likely that there will be substantial compliance with the voluntary standard, and (2) compliance with the voluntary standard is likely to result in the elimination or adequate reduction of the risk of injury.
Neither of these policies contains much real guidance for deciding when private standards are "adequate," and neither speaks to the institutional differences between public and private approaches. Instead, agencies are left to devise their own ad hoc policies. Most seem uninterested in developing any kind of general standards policy. A report on the implementation of the OMB circular notes the sentiment that many agencies "have not yet heard of the circular, or not done anything about it, or don't really care." The Interagency Committee on Standards Policy, charged with implementing the circular, virtually disbanded in 1987 owing to a lack of interest among participating agencies.
In lieu of a general policy, the most popular way of evaluating the adequacy of private standards, when agencies have to decide, is to scrutinize compliance rates. Standards that do not engender "high enough" compliance are considered suspect. This perspective provides two omnipresent justifications for public regulation. First, public standards have the force of law. Unlike "voluntary" standards, they command the authority of the state. Second, at the federal level agencies can enforce standards nationwide. This is an important advantage if problems are national in scope or if states might otherwise engage in undesirable competition to lower regulatory requirements. Business interests sometimes support federal regulation as a method of eliminating conflicting state or local requirements, which are often taken directly from private standards.
The perceived advantages of the mandatory and national nature of certain government standards, more than anything specific about their content, underpin many public policies concerning private standards. In neither of the consumer product cases was the CPSC trying to improve the content of private standards so much as the enforcement. The real hope for the woodstove labeling rule was that it would increase certification to UL 1482. The CPSC standard depended heavily on UL for its
content. The oxygen depletion sensor was already an "optional requirement" in Z21.11.2. The CPSC simply sought to make it mandatory, again leaving technical specifications and details to the private sector. These do not seem to be isolated examples of the government seeking to combine its enforcement power with the standards written by the private sector. HUD turned NFPA's standard for mobile homes into a federal regulation (much to the dismay of NFPA), and OSHA did likewise with hundreds of ANSI standards shortly after the agency was created. This enforcement-based strategy is popular because the public agency has a standard to work with, rather than starting from scratch. The government acts more as an editor than as an author, taking existing provisions and (sometimes) tinkering with them. Starting with a private standard is not only more convenient for government, it also provides the built-in credibility that distinguishes first guesses from second ones. The importance of such credibility cannot be understated in the case of "trans-scientific" issues. What a government agency may not be able to justify alone can attain instant credibility with the right private sector credentials. UL decisions are practically accepted as gospel. How many provisions of the Uniform Building Code, for example, are ever challenged on safety grounds?
Although persuasive in some contexts, the enforcement rationale does not always provide a sound reason for government intervention. First, the cases demonstrate that the marginal benefits of making private standards mandatory are often overestimated. Public standards are only as good as the incremental benefit they add to existing private ones. The size of this increment is no problem if the private standard generates very few benefits (as in the case of NFPA 61B) and the government version is both stronger and better enforced. More commonly, however, compliance with so-called voluntary standards is practically mandated through a combination of local codes and other incentives. Before government took any action, at least 50 percent of the airlines complied with the FAA's advisory circular, upward of 85 percent of the woodstove market was in compliance with UL 1482, and close to 100 percent of the unvented gas space heater market was in compliance with the "requirements" in Z21.11.2. In the latter two cases, the marginal benefit of perfect compliance would be minuscule. Both the FAA and the CPSC made the mistake of calculating the benefits of their own proposals without subtracting the existing benefits of private standards. In the case of woodstoves, the marginal benefit of the CPSC standard was very close to zero. Ironically, the CPSC justified its standard under a
statute intended to force deference to the private sector "whenever appropriate." Beneath the irony, these cases reveal a major shortcoming in basing standards policy on compliance rates.
A second problem with current efforts is that nationwide standards are not always better than regional ones. In the case of gas space heaters, some states and localities wanted to take a stricter approach than the CPSC by banning the product altogether. Their petitions for exemption from preemption were the undoing of the CPSC standard. The topic of regulatory federalism is just emerging, and there is no comprehensive theory about when the federal government should preempt state efforts. But the CPSC's experience in both cases suggests federal intervention was the wrong approach.
Given these problems, it would probably be best if government minimized the use of the "enforcement rationale." What is needed instead is a standards policy that builds on the comparative advantages of public standards-setting. Two major components of such a policy are discussed below: (1) identifying uniquely public objectives and policy instruments and (2) defining niches for public standards that complement private ones.