regulatory requirements

“Is a company allowed to do this under the regulations?” “What does that regulation mean?” These may seem like simple questions, but in reality they may have only expensive, uncertain answers.

Regulation is not necessarily like code that anyone with the appropriate capabilities can copy, interpret, and execute. In an case concerning the U.S. Environmental Protection Agency (EPA), a court noted:

The phenomenon we see in this case is familiar. Congress passes a broadly worded statute. The agency follows with regulations containing broad language, open-ended phrases, ambiguous standards and the like. Then as years pass, the agency issues circulars or guidance or memoranda, explaining, interpreting, defining and often expanding the commands in the regulations. One guidance document may yield another and then another and so on. Several words in a regulation may spawn hundreds of pages of text as the agency offers more and more detail regarding what its regulations demand of regulated entities.[1]

One might calls this the modern administrative state, or the ancient patron-client system. This system does not produce a closed set of texts (black letter law) that clearly defines what a subject may do.

This system is most likely to develop under particular circumstances. Where political interests and moral sentiments have force at a relatively abstract level, showing concern by generating details is likely to be more important than the specific details and their actual effects. If only a few companies are of primary concern, and the activities of these companies are well-established, than regulation can feasibly be made highly complex while still supporting claims of relevance. If narrowly specialized lawyers, economists, consultants, regulatory-affairs departments, and regulatory agencies largely shape an area of regulation, they are likely to shape it so as to enhance their claims to expertise. That means fostering regulatory circumstances that require long study and considerable previous experience to understand.

The modern administrative client-patron ancient system is not a historical inevitability. Just as in considering the importance of federalism and subsidiarity, vague invocations of the “scale of modern societies” does not explain the necessity of the “modern administrative state.”[2] The scope of interests relevant to a field of regulation can broaden over time and innovation increase. As a large number of persons gain the capability to engage in an activity, they may form new, specific moral sentiments about what they should be able to do in that field of regulation. Broader, more dynamic moral, political, and business interests can be powerful forces for making regulation simpler, clearer, and less expensive to interpret.

Recent developments in copyright regulation indicate regulatory effects of broader, more dynamic moral, political, and business interests. Prior to the rise of the Internet, narrow interests elaborated a rather obscure and unintelligible copyright regime. The Internet has greatly broadened interests in that regime. In practice, many persons copy materials on the Internet in ways that violate copyright or that aren’t meaningfully analyzed in terms of copyright. How copyright regulation will evolve is quite uncertain. But certainly it will not evolve primarily through the narrow administrative process of the past.

Note:

[1] Appalachian Power Co. v. EPA, 208 F.3d 1015, 1020 (D.C Cir. 2000).

[2] See, e.g. Colburn, Jamison E., “The Jurisprudence of Notice and Comment” (November 1, 2007). WNEC School of Law Legal Studies Research Paper No. 07-01 Available at SSRN: http://ssrn.com/abstract=1027001, pp 1 (fn. 2), 3, 45.