New America Foundation

01/22/2025 | News release | Distributed by Public on 01/22/2025 09:20

Technical Standards: A Path Forward for Policymaking Post-Loper Bright

Jan. 22, 2025

As Donald Trump begins his second presidential term, his push to roll back regulations and overhaul federal agencies to 'dismantle federal bureaucracy' signals a turning point for regulatory rulemaking. Elon Musk, who will lead a newly formed initiative the current administration is calling the Department of Government Efficiency, has publicly detailed his intent to use one of the Supreme Court's latest rulings for 'regulatory rescissions.' That ruling is Loper Bright Enterprises v. Raimondo (2024).

The June 2024 Supreme Court ruling in the case of Loper Bright severely weakened federal agencies' regulatory power by overturning the long-established Chevron doctrine. In the Supreme Court's landmark ruling in Chevron U.S.A., Inc. v. NRDC (1984), agencies were accorded deference in determining how to implement ambiguous statutory authority so long as their interpretations were reasonable. Loper Bright removes that deference to agencies, leaving it to judges to determine whether agencies are engaged in authorized regulatory activity. The ruling is expected to have an inordinate impact on administrative law-especially given that, per Justice Kagan, Chevron has been cited as a legal precedent in more than 18,000 cases over the years since its initial inception. Although the Loper Bright decision itself isn't retroactive, the Supreme Court's subsequent ruling in Corner Post, Inc., v. Board of Governors of the Federal Reserve System (2024) allows courts to review challenges to older regulations. This move broadens the impact of Loper Bright and increases the chances of a regulated private entity successfully challenging an agency's action.

The Loper Bright ruling signals a major shift that could reshape daily life in areas that many Americans now take for granted, like clean air and water, safe food, or healthcare standards. This shift is especially likely when paired with an incoming presidential administration that has been vocal in its aims to dismantle existing regulatory governance. The impact on the courts has already been apparent since the judgment was handed down. A mere two months after the ruling, a decision by the United States District Court for the Northern District of Texas cited the decision when they ruled against a Federal Trade Commission (FTC) rule banning non-compete agreements in employer contracts. Further, long-standing federal regulations have faced a series of challenges by major corporations, including in the recent ruling against net neutrality that specifically cited Loper Bright.

The decision leaves us with a pressing question: How can federal agencies and policymakers find pathways for regulation in a post-Chevron world? Overturning Chevron has given judges far more discretion to overrule regulations instituted by federal agencies, thereby shifting decision-making from policy and subject-matter experts to the judiciary. While judges are experts in certain areas of law, it's unrealistic to expect them to be experts on every highly technical issue they encounter on the bench. When agencies are at constant risk of judicial scrutiny for even reasonable interpretations of the law, their purview of regulatory function is severely impeded.

To avoid having their rulemaking overturned, federal agencies may now need an explicit, unambiguous statutory mandate to act to withstand judicial scrutiny of their regulatory and enforcement efforts. Legislation that includes a specific delegation of authority for agencies to develop technical standards could provide the legal basis for their regulations to survive in a post-Chevron world, ensuring that agencies have clear legislative mandates and preserving some of their regulatory autonomy. A statutory directive to establish technical standards would be subject to review. However, the nature of technical standard-setting might make it a more palatable area for Congress to grant explicit but still flexible authority to agencies.

Why Technical Standards?

Technical standards outline requirements, specifications, and guidelines that can be used consistently to achieve a shared goal. Technical standards are currently used to standardize data security, accessibility standards, and even hardware requirements that aim to prevent market fragmentation. Because they can be updated as needed, technical standards are especially well-suited for regulating rapidly evolving technologies without needing to amend the legislation that initially called for their creation. In a Congress frequently slowed by partisan gridlock, this adaptability is advantageous. If Congress were to direct federal agencies to develop a technical standard as part of a bill, this would expressly delegate authority to the named agencies in the regulatory process, leaving them less open to Loper Bright challenges.

Technical standards can be set by federal agencies, such as the Environmental Protection Agency (EPA); by non-regulatory federal agencies, such as the National Institute of Standards and Technology (NIST); or by independent standards development organizations (SDOs) like the Internet Engineering Task Force (IETF). Both NIST and IETF work with technical experts to develop actionable and relevant standards across sectors to support safety and innovation and to prevent foreseeable problems from arising. The types of standards set by such organizations have often governed the unseen specifics of the world around us. For example, the letters "http" written before web addresses in a search bar refer to the HyperText Transfer Protocol (HTTP), which is the technical standard that defines how data is formatted and transmitted on the web. Adding an "s" refers to yet another protocol: Transport Layer Security, which encrypts that http traffic, enabling sensitive data to be hidden as individuals use the internet.

Standard setting can integrate agency expertise into legislative and regulatory frameworks under the new status quo established by Loper Bright. Legislators can include specific directives for agencies to develop technical standards in legislative packages. Unlike directing a particular rule, legislation that tasks an agency with developing technical standards preserves greater autonomy and flexibility while leveraging subject-matter expertise. Assigning technical standards to agencies via explicit Congressional direction reduces ambiguity about the legitimacy of agency action, which is critical post-Chevron. For a divided Congress, technical standards can reduce the burden of debating detailed legislation as they allow for greater specificity and easier updates than laws. Technical standards provide a useful framework for congressional agreement on specific, discrete subjects while retaining oversight of agency action.

The tech sector is widely regarded as difficult to regulate precisely because of the high level of expertise required to understand the technologies. Indeed, those who understand the field best are often employed by the same companies that regulators seek to constrain with more consumer-protective rules. In this environment, technical standards can better leverage the expertise of practitioners to shape regulation and governance. Standards are valuable for regulating technology for three primary reasons: they are collaborative, are flexible, and provide clear compliance guidance to industry.

A Collaborative, Consensus-Driven Process

The development of technical standards typically entails a great deal of input from experts from a wide variety of backgrounds, making it an inherently collaborative and consensus-driven process. Suche development can allow standards to be more comprehensive and more attuned to the reality of the regulated sector than what legislation can achieve alone-a feature that becomes especially relevant post-Chevron.

By developing technical standards, agencies can effectively leverage expertise from both industry and civil society organizations to shape regulation and governance in more representative ways. NIST recently produced a set of technical standards to deal with the potential challenges of quantum computing and cryptography. These standards safeguard privacy and cybersecurity in the face of potential risks that would be associated with breakthroughs in quantum computing. The standards, produced as part of holistic proceedings that gathered expert recommendations and evaluations over a two-year period, serve as an example of how policy can begin to map a highly technical space. Incorporating industry partner feedback, technologists' assessments, and the input of policymakers is emblematic of an inclusive and representative process of standard development.

Of course, regulators must also be diligent in ensuring that industry is not empowered to take advantage of a collaborative standard-setting process to further their priorities at the expense of consumers. Technical standards can be mechanisms of purely private ordering, or self-regulation, when they are self-imposed by industry actors and unsupervised by public bodies. In these situations, the standards would be outside of the legislative scope. Such self-regulatory mechanisms often go unenforced, and, without any measures of public accountability or oversight, they are typically ineffectual. If standard development, however, is sanctioned or directed by a public entity and implemented alongside external oversight mechanisms, the standards would be bound to the public interest while retaining the same benefits of collaborative expertise and evaluation.

In a congressional landscape actively prioritizing deregulation and emphasizing the role of the private sphere, technical standards are a useful bridge between the public and private spheres and offer a path toward more inclusive governance. They can also take on outsized importance as an avenue for inclusive collaboration between private entities and civil society to take shape in governance efforts. This role is crucial in the context of this administration's strong deregulatory position of rolling back a range of protections for people and communities.

Dynamic, Flexible Measures

Apart from the need for technical expertise, another often-cited challenge of regulating technology is the need for dynamic, flexible measures that can keep pace with the rate of technological innovation. It is an often-stated concern of policymakers and industry alike that tech regulation might become outdated too quickly to keep pace with emerging technologies. While it is important to note that this concern is often used as a way for the tech sector to evade regulation altogether, there is a clear need for technology regulation to be highly responsive to rapid changes. One key benefit of technical standards is that they can be routinely updated without affecting the legislation that directed their use, especially if a specified standards body is tasked with ensuring their continued relevance.

Historically, federal agencies could establish technical standards that regulate how the United States approaches different issues to great effect. For example, the Clean Water Act's 1972 amendments gave the Environmental Protection Agency (EPA) the authority to implement the statute's outlined goals by setting standards for industry to follow. The resulting pollution control programs set wastewater standards for industry while also setting water quality standards for all contaminants in surface waters. Though more than 50 years have passed since the Clean Water Act's 1972 amendments were initially enacted, the EPA has continuously updated its standards, allowing them to remain applicable today.

It is important to note that standards are primarily effective for addressing specific and bounded issues within well-defined parameters. For example, NIST's recent quantum cryptography standards are narrowly tailored and outline specific algorithms for encryption that attempt to safeguard cybersecurity against the potential dangers of quantum computing. For broader issues that require more contextual judgments, such as algorithmic bias and discrimination, technical standards are likely not the most effective path forward. Standards are not a replacement for good lawmaking but rather a tool that might help executive agencies enforce legislative goals and priorities in specific areas. In a legislative landscape that faces constant gridlock, the flexibility that standards provide can be particularly useful in effectively regulating technologies that are constantly evolving.

Clarifying Government Expectations

In addition to protecting consumers, technical standards also provide benefits for regulated industries by reducing uncertainty and opacity. When legislation is effectively paired with standard-setting to specify the precise requirements of compliance with the law, industry implementation of Congress's objectives can be improved. A collaborative process of standard development that incorporates both industry expertise and the public interest provides much-desired clarity for industry in terms of regulatory implementation.

The creation of concrete guidelines for industry to follow facilitates compliance with the law and, therefore, can better achieve broader legislative goals and objectives. It is key, however, to prevent industry involvement in standard-setting processes from resulting in a system that merely appears to have regulatory scrutiny but is, in fact, simply friendly to industry. Incorporating industry expertise into standard-setting must be balanced by the incorporation of public interest perspectives and expertise and the maintenance of oversight authority by regulatory agencies.

Regulating in a Post-Chevron World

In the wake of the Loper Bright judgment, federal agencies-including those most responsible for protecting the interests of internet users, like the Federal Communications Commission (FCC) and Federal Trade Commission (FTC)-are more vulnerable to challenges of their statutory authority. These agencies will face a higher burden of proving their rulemaking and enforcement actions are justified. Navigating this new judicial and regulatory environment without Chevron's dominant precedent will present significant challenges.

Technical standards offer a promising path forward, bridging the gap between legislative objectives and regulatory implementation in a way that balances flexibility with accountability. By leveraging the collaborative expertise of industry leaders, public agencies, and civil society, technical standards can help preserve essential protections while fostering innovation. In a world where the Chevron doctrine no longer provides a guiding framework, these standards may serve as a vital tool to navigate the complexities of modern governance, ensuring that progress and public welfare are not jeopardized by judicial review.

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