A classic Supreme Court case highlights the impact and importance of private standards for regulated entities.
Standards developed by private organizations play a central role in governing economic activity. Although these standards by themselves are voluntary, the U.S. Congress and federal agencies have “incorporated” such private standards into many binding public laws. Yet despite their prevalence and importance, the world of private standards has been virtually overlooked in law school courses. It is time to correct this oversight.
One opportunity to do so is in the treatment that law school courses give to Industrial Union Department v. American Petroleum Institute—often referred to as the “Benzene Case.” Although leading legal casebooks in administrative law, statutory interpretation, and environmental law feature this case, they make no mention of its connection to private standards. This absence continues even though many casebooks include an excerpt from the U.S. Supreme Court’s opinion in the case that contains explicit—but, tellingly, incorrect—references to private standards.
The Benzene Case involved a dispute over a revision to an Occupational Safety and Health Administration (OSHA) rule on workplace exposure to benzene fumes. In 1970, Congress passed the Occupational Safety and Health Act, which established OSHA and gave it the authority to regulate workplace conditions.
Prior to this legislation, employers seeking information about safe workplace conditions had to turn either to state laws or to private standards. For example, organizations such as the American Industrial Hygiene Association (AIHA) and the American Conference of Governmental Industrial Hygienists (ACGIH)—two private nonprofit professional organizations of industrial hygienists—had issued their own private standards for workplace exposure to benzene. As with all private standards, these standards were voluntary, applying only to those organizations that chose to follow them.
In 1971, however, in response to mounting evidence about adverse health effects from exposure to benzene, OSHA issued a regulation that adopted AIHA’s benzene standard as federal law, limiting concentrations of benzene in workplaces to 10 parts per million (ppm) of air. Then, in May 1977, the head of OSHA issued an emergency temporary rule tightening the benzene exposure limit still further to 1 ppm. In February 1978, OSHA issued a final rule that permanently lowered the permissible exposure limit to 1 ppm.
The American Petroleum Institute (API), the national trade association for the petroleum industry, filed a lawsuit and the U.S. Court of Appeals for the Fifth Circuit held that OSHA had exceeded its statutory authority in promulgating its permanent rule in 1978 because its findings were not supported by the administrative record. In 1980, the Supreme Court, by a vote of five to four—with only three other justices signing onto Justice John Paul Stevens’s plurality opinion—affirmed the Fifth Circuit’s ruling, reasoning that “the burden was on the Agency to show, on the basis of substantial evidence, that it is at least more likely than not that long-term exposure to 10 ppm of benzene presents a significant risk of material health impairment.”
Although private standards played an important role in the early development of OSHA regulation over benzene, neither the court opinion issued by the Fifth Circuit court nor the Supreme Court’s opinion included any background information on what such standards are, where they come from, or the roles they play in regulation. What information the Supreme Court did provide, interestingly, was incomplete and even erroneous in parts.
For instance, Justice Stevens mentioned that, “in 1969, the American National Standards Institute (ANSI) adopted a national consensus standard of 10 ppm.” Yet contrary to Justice Stevens’s characterization, ANSI did not then, nor does it now, actually develop or adopt standards itself. Rather, it oversees other organizations that develop private standards. As noted above, the 10 ppm benzene standard was actually developed by AIHA—a separate organization that was never mentioned in Justice Stevens’s opinion. In fact, ANSI did not even exist as an organization in 1969 when the initial 10 ppm standard Justice Stevens attributed to the Institute was adopted. ANSI’s predecessor at the time was the United States of America Standards Institute.
The errors in Justice Stevens’s opinion do not affect the Court’s holding in the Benzene Case. But they do illustrate how much lawyers and judges need to learn about the world of private standards. The Benzene Case provides an excellent opportunity for law faculty to teach their students about what private standards are, how they are developed, and the extent to which the government should rely on private standards.
Toward that end, as part of the Penn Program on Regulation’s project on voluntary codes and standards, we have developed a suite of curricular materials—including a teaching guide, PowerPoint slides, discussion questions, and videos—that law faculty can use to introduce their students to the world of private standards in their existing courses, one set of which uses the Benzene Case as a pedagogical hook. These materials offer flexibility to instructors, with suggested lesson plans ranging from a 10-minute “teachable moment” to an entire class session.
The process used in 1969 to develop the 10 ppm benzene standard bears many similarities to the process used today by ANSI-accredited standards developers—a process that many practicing attorneys interacting with or advising regulated firms should understand.
Some aspects of the standards-development process will feel familiar to attorneys who understand administrative law, while other aspects will differ. For example, when accrediting private standard-setting organizations, ANSI expects those organizations to ensure that their standards emerge from a process that includes a balanced set of interested individuals and experts—a requirement that parallels a legal requirement under the Federal Advisory Committee Act. Faculty can use private standards procedures as an opportunity to engage students in comparative, critical reflection on the legal procedures for public rulemaking.
The Benzene Case also provides an opportunity for students to reflect on how much the government relies on private standards, and to assess the promise and pitfalls associated with such reliance. In adopting the benzene standard as law, OSHA engaged in what is known as “incorporation by reference”—that is, it adopted the private standard by referring only to the name or number given to it by the standards-development organization.
This practice of incorporation by reference is quite common. As of 2016, the last time the National Institute of Standards and Technology updated its database on standards incorporated into the Code of Federal Regulations, over 24,000 voluntary standards had become binding federal law addressing a wide array of regulatory issues, including toy safety, nuclear power plant operations, water sampling, and off-label uses of prescription medications.
Interestingly, OSHA’s initial adoption of private standards in establishing its original benzene regulations relied on a quirk in U.S. administrative procedure: OSHA never followed the normal notice-and-comment process in adopting those standards. This process occurred because the 1970 Occupational Safety and Health Act expressly authorized OSHA to bypass the Administrative Procedure Act when adopting standards during the two years following the effective date of the Occupational Safety and Health Act. In fact, OSHA incorporated a number of standards as law during this time without ever complying with notice-and-comment rulemaking.
Congress authorized this exception from normal procedures “so that OSHA would have a mechanism to begin immediately protecting the nation’s workers through mandatory standards.” Yet as a former chairman of the Occupational Safety and Health Review Commission, Richard Moran, later lamented, OSHA’s quick incorporation of hundreds of voluntary standards may have led to a series of unintended consequences, because many of the incorporated standards were designed to be advisory only and were too vague to be enforceable.
The forgotten history of the Benzene Case raises important questions about the role of standards in governing today’s economy. What advantages and disadvantages do private standards offer over government regulations? What types of procedures should standards-development organizations be required to follow when creating new standards or modifying existing ones? What values or interests are served—or undermined—by federal agencies’ practice of incorporation by reference?
Given the ubiquity of private standards today and the extent to which they are woven into the fabric of many regulations, it is important that law students begin to grapple with these questions.
This essay is part of a six-part series entitled Codes-and-Standards.org.
