New Regulatory Policy Development: OMB’s Revised Guidance to Federal Agencies on Standards and Conformity Assessment, by Jeff Weiss

by Guest Blogger — Friday, Feb. 12, 2016

On January 27, 2016, the White House Office of Management and Budget (OMB) published its long-awaited revision of Circular A-119 on “Federal Participation in the Development and Use of Voluntary Consensus Standards and in Conformity Assessment Activities.” The new policy was developed through an interagency process that took into account public input received during two open comment periods since 2012. It is meant to reflect and incorporate lessons learned and experience gained in the nearly two decades since the Circular was last revised in 1998. These include developments in international trade, technology, and U.S. regulatory policy (including with respect to retrospective review, open government, and international regulatory cooperation).

At the same time, the new policy reflects the U.S. “multiple path” approach to standards – namely, that standards should be market driven, globally relevant, and developed through open, transparent, and consensus-based processes. It re-emphasizes the importance of the public-private partnership underlying the U.S. approach to standardization as the key strength of the U.S. standards system and an important driver of economic growth, competitiveness, innovation, and global trade.

Following is a description of some of the major elements of the revised Circular A-119 that are particularly pertinent for rulemaking.

New Guidance on the Use of Voluntary Consensus Standards

Under the National Technology Transfer and Advancement Act (NTTAA), federal agencies are obliged to use voluntary consensus standards in lieu of government-unique standards — except where inconsistent with law or otherwise impractical. Federal use of such standards eliminates costs that agencies would otherwise incur for developing their own standards. It also minimizes transaction costs for suppliers, which will not need to comply with one set of standards for global markets and a different set for governmental purposes. This is especially beneficial for small and medium sized businesses.

The new policy is consistent with this long-standing approach and provides additional guidance to agencies on the use of voluntary consensus standards. For example, it provides more detail on the principles of voluntary consensus standards development to ensure their consistency with both theANSI Essential Requirements — which set out due process requirements for development of American National Standards — and relevant World Trade Organization (WTO) commitments and principles relating to standardization. The policy also lays out factors for an agency to consider when determining which standards to use in rulemaking and other agency activities. Such factors include: the agency’s statutory mandate; the level of protection the standard provides; any use of the standard by other agencies, State and local governments, and the U.S. and global marketplace (to encourage alignment); whether the standard is an international standard; and the process by which the standard was developed and will be maintained.

Another factor that the policy recommends for agencies to consider when determining which standard to use is the “reasonable availability” of the standard. Consistent with ACUS recommendation 2011-5, “Incorporation by Reference,” the new policy sets out a list of factors for an agency to consider when determining reasonable availability in specific regulatory contexts. These include: whether the standards developing body is willing to make read-only access to the standard freely available on its website during the comment period; the cost to parties of accessing a copy of the material; and whether the body can provide a summary that explains the standard’s content in a manner that is understandable to the public. The policy also recommends that an agency provide in the regulatory preamble an explanation of the materials that have been incorporated by reference, how to access the materials, and how incorporation of a standard by reference would advance the agency’s regulatory objective.

The preamble to the revised Circular acknowledged the many commenters who suggested that federal agencies may need the flexibility to use standards that do not precisely follow the traditional voluntary consensus standards development process, particularly in emerging technology sectors where the pace of product life cycles and technological change may lend itself to non-traditional models of standards development. Where no voluntary consensus standards exist or such standards are ineffective or inappropriate for agency use, the new policy allows agencies to use other standards developed by the private sector and in use in the marketplace, rather than creating government-unique standards. Such standards can be used as either the sole, or as an alternative, means of compliance.

The revised policy also encourages agencies to allow suppliers to use more than one standard to demonstrate their compliance with agency regulatory requirements. Provided that alternative standards are fit for regulatory purpose, it may be beneficial for consumers, producers, and/or service providers for an agency to allow the use of more than one standard. Doing so may enhance competition, provide greater choice for consumers, and reduce regulatory burdens. In a world of complex global supply chains that is characterized by increased economic integration and interdependence, allowing the use of more than one standard may also promote interoperability, innovation, agility, and international trade.

New Provisions on Conformity Assessment

The 1998 version of the Circular is mostly silent on conformity assessment, but the revised Circular contains several provisions on the topic in a new section on conformity assessment and elsewhere in the document. The term “conformity assessment” is defined by the new policy as:

“a demonstration, whether directly or indirectly, that specified requirements relating to a product, process, system, person, or body are fulfilled. Conformity assessment includes sampling and testing, inspection, supplier’s declaration of conformity, certification, and management system assessment and registration. Conformity assessment also includes accreditation of the competence of those activities.”

The new policy then sets out an illustrative list of factors for an agency to consider when determining the need for conformity assessment, including: the agency’s objectives; the available scientific and technical information; relevant industry practice, experience, and history of compliance; and the need to reduce duplication and complexity and ensure consistency and coordination. In addition, the policy encourages each agency to consider using existing private sector conformity assessment activities in lieu of a governmental conformity assessment procedure, in whole or in part, if they are fit for purpose. The policy emphasizes, however, that each agency has flexibility to determine the most appropriate conformity assessment procedure that meets its need.

New Section on Retrospective Review

Executive Orders 13563 (“Improving Regulation and Regulatory Review”) and 13610(“Identifying and Reducing Regulatory Burdens”) require federal agencies to undertake retrospective review of regulations to ensure that regulations are revised or eliminated when they have become outdated or ineffective. The revised Circular recommends that agencies conduct standards- and conformity assessment-specific retrospective reviews to ensure that any standards incorporated by reference in regulation, as well as conformity assessment procedures used in regulation, remain up-to-date. This will reduce regulatory burdens, enhance interoperability, reflect the latest technological advancements, and improve protection of health, safety, security, the workplace, and the environment.

The policy provides the following guidance with respect to retrospective review for standards, which should take place every 3-5 years:

when updating a standard that has been incorporated by reference or substituting a new standard would be non-controversial, an agency should consider issuing a standards-specific direct final rule, and seek to consolidate all proposals to update or substitute standards in order to promote efficiency;

in other cases when a standard needs to be updated or substituted, an agency should consider issuing a Notice of Proposed Rulemaking (NPRM) and seek to consolidate all such proposals; and

when updating or substituting standards would require re-opening of an existing rule, an agency should address it under a broader-scope retrospective review NPRM, as opposed to a standards-specific NPRM.

In addition, if an agency decided not to adopt the most recent version of a standard in a particular rulemaking, the agency should explain its rationale in the final rule.

With respect to conformity assessment, the policy encourages each agency to review its use of conformity assessment in regulation on a periodic basis, evaluating the effectiveness of different conformity assessment approaches and the burden on regulated entities. It also encourages agencies to consider joint rulemaking in cases where two or more agencies’ conformity assessment requirements are the same or similar, since doing so could reduce redundancy, complexity, and cumulative effects on regulated parties.

New Provisions on International Aspects of Standards and Conformance

The revised policy also summarizes or references many of the core international obligations governing the use of standards and conformity assessment in rulemaking. These include:

relevant provisions ofthe Trade Agreements Act of 1979, as amended;

the WTO Agreement on Technical Barriers to Trade (TBT Agreement). The TBT Agreement covers “technical regulations” (i.e., product regulations, including labeling and marking requirements, with certain exceptions), standards, and conformity assessment procedures, and among other things, requires the use of relevant international standards, guides, and recommendations as a basis for technical regulations and conformity assessment procedures, except when such standards would be ineffective or inappropriate to fulfill a legitimate objective; and mandates the use of international systems of conformity assessment where practicable;

a Decision of the WTO Committee on Technical Barriers to Trade (TBT Committee) that articulates principles for the development of international standards (e.g., openness, transparency, impartiality and consensus, effectiveness and relevance) that any standards developing body can follow to develop such standards;

the WTO Agreement on Sanitary and Phytosanitary Measures, which covers principally food safety and pest control regulations; and

relevant provisions of other U.S. free trade agreements, including those requiring federal agencies to treat testing laboratories and other conformity assessment bodies located outside U.S. territory no less favorably than they treat conformity assessment bodies located in the United States, when it comes to recognizing their competence to conduct testing, inspection, certification, or other services.

The policy also encourages agencies to address unnecessary regulatory differences on global commerce. For example, it encourages federal agencies to allow suppliers to demonstrate conformance to standards and conformity assessment procedures in use in the market of a trading partner as sufficient for meeting U.S. regulatory requirements, provided that such a demonstration would provide an equivalent level of protection. It also reminds agencies to take into account their obligations under Executive Order 13609 (“Promoting International Regulatory Cooperation”) when they engage in standards and conformity assessment activities.

 

Important Provisions to Enhance Agency Implementation

The revised policy also emphasizes the importance of robust federal participation in standards development. If agencies do not actively participate in standards development, including by making technical contributions to standards and serving on the boards of standards developing organizations, it will be less likely that the standards developed will meet agency needs, and more likely that agencies will need to develop government-unique standards, which is contrary to the intent of U.S. law and policy.

The policy also provides guidance to agencies on how they should discuss implementation of the Circular in their rulemakings and guidance documents, and seeks to strengthen the role of federal Standards Executives within their agencies to enhance their ability to drive implementation of the Circular and the standards provisions of the NTTAA. And it encourages agencies to advise the public through the Federal Register, their public websites, or other appropriate mechanisms regarding ongoing or planned participation in standards development – for example, when they are doing so to address a national priority, or to support significant rulemaking or international regulatory cooperation activities.

Lastly, the Circular encourages greater collaboration among the Interagency Committee on Standards Policy (ICSP) and interagency bodies on regulation and international trade to help ensure coordinated and strategic USG policymaking at the intersection of standards, regulation, and trade.

The ICSP will work with OMB, USTR, and the private sector to implement the new Circular. NIST will also be revising its Guidance on Federal Conformity Assessment Activities to take into account lessons learned and experience gained since the last publication of the NIST guidance and in light of the new Circular. Stay tuned for more on both of those fronts in 2016.

 

Jeff Weiss is Senior Advisor for Standards and Global Regulatory Policy to U.S. Secretary of Commerce Penny Pritzker and the executive branch liaison to the ABA Section of Administrative Law and Regulatory Practice. He previously served as Associate Administrator of the Office of Information and Regulatory Affairs and Senior Director for Technical Barriers to Trade at USTR.

Cite As: Author Name, Title, 36 Yale J. on Reg.: Notice & Comment (date), URL.

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