Decision Analysis Working Paper Abstract Archive
WP030014

Title: Environmental Regulation: Developments in Setting Requirements and Verifying Compliance
Authors:  Rex Brown George Mason Universtiy
Date: January 2003
Status: UNESCO Encyclopedia forthcoming

Current regulation often promotes safety management practices that are neither economical nor sound environmental protection, but a promising paradigm shift is under way. The growing appreciation by nuclear and other regulatory agencies of personal decision analysis, as a guide to rational action, is driving the shift.  However, progress is slowed by key players’ conflicting priorities. For example, regulatory agencies may be charged only with protecting the environment, whereas the public wants that protection to be balanced against economic and other social concerns.

The effectiveness of environmental regulation depends on causal connections between means and end. The end is the advancement of social welfare; the means are the concrete steps a regulated facility takes to meet this end (such as a maintenance regime). Means have consequences, in a hierarchy of “tiers”, through which they act on the end. For example, maintenance regime affects equipment reliability; which affects accident risk; which affects pollutant release; which affects public health; which ultimately affects overall social welfare. Uncertainty at lower tiers produces uncertainty at higher tiers.

Regulatory requirements can be set anywhere in this hierarchy. The facility can be given detailed direction on means. Or it can be required to simply “serve the public interest”, i.e. the end. Or it can be required to assure that accident risk is acceptable (say, less than one in ten thousand), i.e. somewhere in-between. The closer the requirement is to means (and further from ends), the easier it is to check compliance; but the harder it is to be confident that it serves the public interest.

Requirements are normally set at more than one tier (“defense-in-depth”). However, currently they are usually more stringent on means than on higher tier consequences.  This preoccupies facilities with onerous prescriptions, so they tend to neglect risks that the prescriptions ignore. Regulators are now seriously considering the reverse strategy, that of making requirements progressively tighter at higher tiers, since it makes the ultimate goal of safety the facility’s dominant priority. The facility can use its discretion to determine how best to achieve the goal, subject to meeting minimal lower tier equirements.

Those requirements are themselves set comparably, i.e. looser below than above.  A requirement can only be enforced if compliance can be checked, and this demands realistic safety assessment. The prevailing form of “probabilistic risk assessment” (PRA) suffers as a decision aid, in ways that newer “comprehensive safety assessment” (CSA) may avoid. In particular:
 

• CSA formulates uncertainty as a regulator’s personal probability; whereas PRA
produces frequency, which is difficult for regulators to interpret and act upon,
especially for unique events.
• CSA draws on all available knowledge, however soft, including the regulator’s
experience and judgments, and on multiple approaches to an assessment,
including PRA; whereas PRA draws only on well-documented data (such as
experiments or panels of experts) in a single model.
• CSA addresses all recognized sources of risk (including intangibles, such as
safety culture); whereas PRA addresses only those risks that can be documented
(such as equipment failure).
On the other hand, the overtly subjective element in CSA often makes it more vulnerable than PRA to accusations of bias and manipulation in controversial cases.  Fortunately, subjectivity in CSA should decline over time, as more impersonal methods for documenting elusive risks are developed. This would reduce, and perhaps eventually close, the gap between CSA and PRA. However for now decider-specific subjective judgment in responsible regulatory decisions is unavoidable.

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