Interior Dept Gives Rules Drafted by Oil Industry Force of LawTweet
As the Trump Administration seeks to loosen rules governing offshore drilling, it has proposed adopting safety standards written by the American Petroleum Institute (API), an advocacy group for the oil and gas industry.
The window for the public to comment on the Interior Department’s proposed rewrite of federal drilling safety rules closed on Monday. But anyone trying to assess the Administration’s plan and offer informed input would have found that API largely controls how the public can access the standards that would take on the force of law if the proposed rule is finalized.
In the official legal notice by the Interior Department laying out the rulemaking proposal on drilling safety for the public, the text of the copyrighted API standards is nowhere to be found. Instead of including the API standards in the notice, the Interior Department bureau that oversees offshore drilling merely referred to them and described some of their contents. In legal jargon, it incorporated the standards by reference.
The notice explains that hard copies and printable versions of the API standards “are available for purchase from API,” and it provides an API web address for purchasing them.
According to an API catalog, one of the documents costs $130, another costs $155, and the third costs $160. Combined, they total 227 pages and would cost $445.
When writing regulations, the government is generally required to publish its proposals in the Federal Register, which is available online, and to give the public a chance to comment.
The government’s handling of the offshore drilling proposal could violate the law and could be grounds for the proposed rules to be invalidated if they are adopted, University of Michigan Law School Professor Nina A. Mendelson told the Project On Government Oversight.
Mendelson teaches administrative law and has written about the government’s incorporation of private standards into federal regulations. She reviewed the offshore drilling matter at POGO’s request.
The Interior Department’s “reliance on an incorporated by reference rule that is controlled by the American Petroleum Institute could well be illegal because it violates the federal requirement that the public have a meaningful opportunity to participate in rulemaking,” Mendelson said in an email.
“A person cannot meaningfully comment without access to the substance of the standard,” Mendelson said.
The offshore drilling plan spotlights a broader issue. Federal law allows the government to incorporate by reference private standards into official regulations, and the practice has been used widely.
Industries are often happy to write their own rules. Indeed, they might prefer it. For the government, adopting privately written standards is a way to reduce effort and tap private sector expertise. Incorporating private standards by reference instead of publishing them in the Federal Register is at least partly a relic of the age before the Internet, when it lowered the cost and volume of material printed on paper. It can also be politically expedient.
“The American practice of turning these standards into law is somewhat unusual on the world stage,” said Peter L. Strauss, an emeritus professor at Columbia Law School.
A leading group of the nation’s attorneys has formally raised concerns about the practice of incorporating standards by reference. According to a 2016 American Bar Association report, the Code of Federal Regulations has incorporated thousands of privately drafted standards on subjects as varied as toys, cribs, vehicles, food additives, and offshore drilling. Industry groups drafting the standards may have business interests that diverge from public interests—for example, protecting the environment and the livelihoods of people who depend on fishing or coastal tourism.
Just last month, a judge on the powerful U.S. Court of Appeals for the D.C. Circuit criticized the notion that private organizations should be allowed to control access to and use of their standards when the government gives those standards the force of law.
The Freedom of Information Act mandates that material incorporated by reference in regulations must be “reasonably available to the class of persons affected.”
Whether as a general matter the government is making such standards “reasonably available” has been a point of contention.
The government’s notice of proposed rulemaking on offshore drilling—which would loosen regulations meant to prevent disasters like the Deepwater Horizon blowout—says that the API documents are available to the public for free viewing online at the API website. But there are catches.
To access the documents via the web page the notice identifies, users must create an account with API. That includes giving API the user’s name, company name, country, and email address.
In addition, users must agree to a set of API “terms.” That document explains that it is “a legal agreement” between the user and API, and it warns:
“API may pursue any remedy legally available to it if you fail to comply with any of your obligations hereunder.”
In the event of a lawsuit, the user could be required to appear in a particular court.
“Any legal action, suit, or proceeding arising out of or relating to this agreement or the breach thereof shall be instituted in a court of competent jurisdiction in the District of Columbia, Washington, and each party hereby consents and submits to the personal jurisdiction of such court,” the legal document says.
What’s more, “API may suspend or discontinue providing the Online Document to you with or without cause and without notice,” the agreement says.
The agreement bears more than passing resemblance to the terms of service users frequently encounter as conditions for using commercial products such as apps or websites. However, the API products—which the API agreement describes as “copyrighted and owned by API”—would serve as federal regulations.
Registering with API and accepting its terms get users only so far. The free versions of the API standards are “designed to be viewed online only—there are no ‘cut and paste,’ ‘edit,’ ‘print,’ or ‘save” capabilities,” the terms of service explain. What’s more, “the license granted to you by this agreement does not include the right to download, reproduce, store . . . modify . . . or transmit” the documents, the terms say.
As a practical matter, those restrictions could make it difficult to analyze and effectively use hundreds of pages of technical guides with titles such as “Blowout Prevention Equipment Systems for Drilling Wells” and “Isolating Potential Flow Zones During Well Construction.” It could complicate efforts to compose public comments based on the API documents.
The University of Michigan’s Mendelson said the conditions are “onerous.”
But Columbia Law School’s Strauss said they are consistent with a regulation the Office of the Federal Register issued in 2014. The regulation requires an agency to discuss, in the preamble of a proposed rule, “the ways that the materials it proposes to incorporate by reference are reasonably available to interested parties or how it worked to make those materials reasonably available to interested parties.”
“What API has done is compliant with that, albeit in the narrowest possible way,” Strauss said.
Strauss said he doesn’t think the Office of the Federal Register is going as far as it should under law to make sure standards are reasonably available. He added that no court has spelled out during the Internet age what constitutes “reasonably available.”
The public notice about the proposed offshore drilling rule includes an additional offer:
“For the convenience of members of the viewing public who may not wish to purchase copies or view these incorporated documents online, they may be inspected at BSEE's office, 45600 Woodland Road, Sterling, Virginia 20166, or by sending a request by email to email@example.com.” (Italics in original)
BSEE, pronounced “Bessie,” is Interior’s Bureau of Safety and Environmental Enforcement, the regulator responsible for the proposed rules.
The option of inspecting documents at BSEE’s office in Sterling, Virginia, might not be much of a convenience for people who live more than a short distance from Sterling, Virginia.
It is unclear what members of the public can obtain by sending a request to firstname.lastname@example.org. POGO wrote to the BSEE email address Monday requesting all the documents incorporated by reference. POGO has not received a response. If the government can provide copies of the copyrighted API documents on request, that would beg the question: Why can’t it publish them for all to see?
POGO asked the API a set of questions for this story, including why it charges members of the public for hard copies and printable versions of its standards, whether it would allow the government to publish the documents, whether the government has asked if it could publish them, why API requires users seeking free access to identify themselves, and why it requires such users to accept legal terms.
The API did not answer those questions. It provided a wide-ranging statement that said, in part, “Industry is focused on effectively managing risk and ensuring the safety of workers and the environment while also fostering robust offshore development that’s critically important to the nation’s future.”
“The U.S. oil and natural gas industry is well regulated, and our industry supports smart, effective regulation,” the statement attributed to the API’s Upstream Group Director Erik Milito said.
In an email, API spokesman Reid Porter added that, “to purchase one of the below standards, please go to API’s Standards Section.”
POGO also asked questions of BSEE. Bureau spokeswoman Tiffany Gray wrote that BSEE was “working to respond.”
In 2016, the American Bar Association passed a resolution urging Congress to strengthen the Administrative Procedure Act and the Freedom of Information Act to ensure “meaningful free public availability” of the texts incorporated by reference in both proposed rules and those ultimately adopted.
“Current law as implemented has failed to ensure sufficient public access to the law,” according to the ABA report accompanying the resolution. The “lack of access” to proposed rules “undermines the public’s right to comment” on them, the ABA report argued. “Ready access to standards that have been incorporated by reference is necessary for citizens to know what their government is doing and to hold the government accountable for serving – or not serving – the public interest.”
The fees charged for access to the standards can prevent members of the public from reading them, the ABA report said. When the standards are made available for free online, readers have been required “to identify themselves, waive a variety of rights, and even agree to objectionable conditions,” the report said.
The ABA report said the government’s use of private standards “without meaningful public access” was “constitutionally suspect” and arguably in violation of existing law. The report said Congress should act because the Office of the Federal Register, which serves as gatekeeper for regulatory notices, has not done enough to ensure that material incorporated by reference is “reasonably available.”
Another point of contention has been the definition of exactly who is entitled to reasonable access. Is it only the regulated industry? Is it everyone who might be affected by the industry’s conduct—for instance, when it comes to offshore drilling, anyone who might be harmed by an oil spill? Or does it include anyone with an interest in what their government is doing—say, to prevent offshore drilling disasters?
In response to questions for this story, Miriam Kleiman, a spokeswoman for the Office of the Federal Register’s parent agency, the National Archives and Records Administration, referred POGO to the 2014 notice in the Federal Register laying out the office’s rule on “incorporation by reference.”
Last month, the Office of the Federal Register issued a handbook on the subject of material incorporated by reference.
“We interpret ‘reasonably available’ in a flexible, case-by-case manner that takes specific situations into consideration,” the handbook says.
“Remember: Read-only access, on its own, may not meet the reasonable availability requirement at the final rule stage of rulemaking,” the handbook says. “If the regulated parties aren’t able to use the material (which may be different [than] simply reading or accessing it) throughout the life of the rulemaking, this could lead to enforcement issues.”
Nonetheless, the handbook cited as a model a disclosure about API standards explaining that they are available for purchase from API or for free online viewing in read-only form.
Meanwhile, a federal appeals court opinion last month raised questions about the constitutionality of “permitting private ownership of standards essential to understanding legal obligations.” The opinion didn’t resolve that question; it focused on whether the organizations that write standards that are incorporated into regulations can use copyright law to prevent others from distributing the standards to the public. A trial court had said organizations could block public dissemination of their copyrighted standards, but the appeals court for the District of Columbia reversed that ruling and sent the case back to the lower court for further action.
As noted above, in a concurring opinion, appeals court Judge Gregory G. Katsas, who was appointed last year by President Trump, criticized the notion that copyrights could be used to prevent anyone from copying, distributing, or accessing binding legal texts.
“As a matter of common-sense, this cannot be right: access to the law cannot be conditioned on the consent of a private party,” Katsas wrote.
But Judge Katsas’s views were not a legal holding—agencies do not have to change their practices.
Nor does Katsas’s opinion affect the proposed offshore drilling safety rules drafted by BSEE. The BSEE proposal would roll back various safety standards adopted during the Obama Administration.
“This proposed rule is a deregulatory action,” the notice in the Federal Register says. Taking its cue from an executive order issued by President Trump, it is intended to remove regulatory provisions that “create unnecessary burdens,” the notice says. BSEE estimates that it would “save the regulated industry” almost $100 million annually over 10 years. BSEE also says it would not compromise safety or environmental protection.
This is hardly the first time BSEE has adopted industry standards. The safety rule the Obama Administration finalized in 2016 also incorporated API standards. It explained that the standards could be purchased or viewed for free on the API website.