National Academies Press: OpenBook

Designing Safety Regulations for High-Hazard Industries (2018)

Chapter: 6 Summary Assessment

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Page 140
Suggested Citation:"6 Summary Assessment." National Academies of Sciences, Engineering, and Medicine. 2018. Designing Safety Regulations for High-Hazard Industries. Washington, DC: The National Academies Press. doi: 10.17226/24907.
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Page 140
Page 141
Suggested Citation:"6 Summary Assessment." National Academies of Sciences, Engineering, and Medicine. 2018. Designing Safety Regulations for High-Hazard Industries. Washington, DC: The National Academies Press. doi: 10.17226/24907.
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Page 141
Page 142
Suggested Citation:"6 Summary Assessment." National Academies of Sciences, Engineering, and Medicine. 2018. Designing Safety Regulations for High-Hazard Industries. Washington, DC: The National Academies Press. doi: 10.17226/24907.
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Page 142

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6 Summary Assessment The study committee was asked to offer observations and advice about the design of a safety regulatory approach for high-hazard industries, such as offshore oil and gas and pipelines. This report emphasizes that simple comparisons of the advantages and disadvantages of regulatory designs offer little more than a starting point for regulatory decision making. All regulations, including macro-level regulations that require management systems, can be structured in different ways that affect their advantages and disadvantages. A safety regulator’s primary aim in choosing among regulatory designs should be to select designs that best suit the nature of the safety problem to be addressed. The regulator should take into account its own capabilities and resources for ensuring compliance and the capacity of regulated entities to meet their obligations. If such preconditions are miss- ing or cannot be created, the regulator should be concerned that the type of regulation being considered will be inapplicable to the circumstances and potentially ineffective. Labels given to regulatory types, such as “prescriptive” and “performance-based,” are used inconsistently. They are often applied in a confusing and misleading manner that complicates comparisons of regula- tory tools. Regulatory regimes that require management plans and pro- grams are sometimes referred to as performance-based but are more aptly described as means-based regulation. They call for actions and behaviors aimed at improving the ultimate outcome of concern to the regulator; however, they do not require the achievement of specific performance out- comes. Still, like regulations that impose binding outcomes, requirements for management systems are often flexible in the sense that they allow 140

SUMMARY ASSESSMENT 141 regulated firms to customize their systems according to circumstances. For example, macro-means regulations often give firms considerable latitude in developing and executing internal methods for risk analysis and priori- tization, systems for facility and equipment monitoring and maintenance, and procedures for managing change. The resemblance of the flexibility of this type of regulation to the flexibility afforded by ends-based regulations that mandate performance outcomes but give firms discretion on means of achieving them may have led to the mislabeling of macro-means regulations as “performance-based.” The use of macro-means regulations may be desirable when the sources of risk arise from facets of individual operations and facilities and their interactions. Such sources of risk may be complex and unknown to the regulator. In practice, macro-means safety regulations that require manage- ment systems tend to be used in combination with micro-level regulations that target specific sources of or pathways to overall risk. In consider- ing the use of macro-level regulations that provide firms with flexibility in the means of compliance, regulators must take into account not only their own ability to enforce and motivate acceptable levels of compliance through means like auditing and field inspections but also opportunities for assisting or collaborating with the regulated industry so that all parties can transition more effectively to these regulations. For example, to pro- mote the effectiveness of such regulations for use in high-hazard industries where regulatory impacts on catastrophic risk can be difficult to discern, regulators may work with industry to identify, track, and analyze data on incident precursor events (e.g., near misses) and other conditions that may be indicative of catastrophic risk. Precursor or related data may not be sufficiently correlated to the risk of major incidents for the purpose of creating enforceable ends-based requirements. However, the data may help regulators monitor the effects of their regulatory interventions and inform operator self-assessments of their risk management programs. This report concludes that too much emphasis is placed on simplistic and often misconstrued lists of regulatory advantages and disadvantages. Claims about the advantages and disadvantages of regulatory types are too often anecdotal. Systematic empirical research into the applicability and effectiveness of regulatory types for different problems and under different conditions is lacking. Nevertheless, a safety regulator’s interest in choos- ing among regulatory designs should be to select those best satisfying the regulator’s overall policy criteria, which may include objectives such as effi- ciency, cost-effectiveness, or equity, in addition to risk reduction. To further these objectives, the regulator will want to choose a design that is suited to the nature of the problem and characteristics of the regulated industry, as well as to the regulator’s own capacity to promote and enforce compli- ance. As the case studies in the report show, safety regulatory regimes often

142 DESIGNING SAFETY REGULATIONS FOR HIGH-HAZARD INDUSTRIES contain a mix of regulatory design types, rather than a single type. Regula- tors should therefore consider whether the best approach to achievement of their regulatory goals may be to combine various regulatory designs in addressing the overarching problem of safety in high-hazard industries in different ways. Regulators, analysts, and researchers need clear concepts for regulatory designs. A systematic and commonly accepted regulatory design taxonomy, such as the one offered in this report, will be valuable in guiding future research, analysis, and regulatory decision making.

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TRB Special Report 324: Designing Safety Regulations for High-Hazard Industries, examines key factors relevant to government safety regulators when choosing among regulatory design types, particularly for preventing low-frequency, high consequence events. In such contexts, safety regulations are often scrutinized after an incident, but their effectiveness can be inherently difficult to assess when their main purpose is to reduce catastrophic failures that are rare to begin with. Nevertheless, regulators of high-hazard industries must have reasoned basis for making their regulatory design choices.

Asked to compare the advantages and disadvantages of so-called “prescriptive” and “performance-based” regulatory designs, the study committee explains how these labels are often used in an inconsistent and misleading manner that can obfuscate regulatory choices and hinder the ability of regulators to justify their choices. The report focuses instead on whether a regulation requires the use of a means or the attainment of some ends—and whether it targets individual components of a larger problem (micro-level) or directs attention to that larger problem itself (macro-level). On the basis of these salient features of any regulation, four main types of regulatory design are identified, and the rationale for and challenges associated with each are examined under different high-hazard applications.

Informed by academic research and by insights from case studies of the regulatory regimes of four countries governing two high-hazard industries, the report concludes that too much emphasis is placed on simplistic lists of generic advantages and disadvantages of regulatory design types. The report explains how a safety regulator will want to choose a regulatory design, or combination of designs, suited to the nature of the problem, characteristics of the regulated industry, and the regulator’s own capacity to promote and enforce compliance. This explanation, along with the regulatory design concepts offered in this report, is intended to help regulators of high-hazard industries make better informed and articulated regulatory design choices.

Accompanying the report, a two-page summary provides a condensed version of the findings from this report.

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