Designing Safety Regulations for High-Hazard Industries (2018) / Chapter Skim
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4 Considerations for Choosing a Regulatory Design
4 Considerations for Choosing a Regulatory Design
Pages 89-123
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From page 89... ...
In each country, safety regulators use a mix of the four basic types of regulations -- micro-means, micro-ends, macro-means, and macro-ends -- as described in Chapter 2. Table 4-1 gives common labels for regulations conforming to each of these four design types, which are available to the regulators of any industrial sector.
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From page 90... ...
REGULATION AS PROBLEM SOLVING Regulators must decide which combination of the four regulation design types promises to achieve the ultimate goal of the regulatory regime as well as any other policy goals and criteria. For clarity of presentation and analysis, the chapter examines separately the regulator's choices about (a)
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From page 91... ...
Furthermore, as the case studies show in high-hazard industries, regulators often use a combination of different regulatory designs. For example, they may augment their micro-level regulations with FIGURE 4-1 Factors affecting the selection of regulation design.
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From page 92... ...
The result may be a regulatory regime consisting of multiple regulatory design types. Reliance on a mix of regulatory designs was observed in the case studies of Chapter 3.
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From page 93... ...
with a macro-means regulation (requirements for written damage prevention management programs) to address a multifaceted problem ill-suited to a single regulatory design.
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From page 94... ...
Like macro-ends regulations that penalize firms or impose liabilities on them should a harmful incident occur, macro-means regulatory designs are concerned not only with the risks relating to how facilities are designed and equipped but also with how the facilities are operated on a daily basis. These examples from the pipeline and offshore industries show how the nature of the problem can affect the choice of the regulatory design types that make up a regulatory regime.
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From page 95... ...
The case studies in Chapter 3 show that the offshore oil and gas and pipeline industries use a wide range of technologies and practices. BSEE regulates more than 2,000 offshore facilities in the Gulf of Mexico alone.
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From page 96... ...
However, when PHMSA extended its macro-means requirements for integrity management programs to gas distribution systems, hundreds of smaller gas utilities were affected. Many of these pipeline operators complained about the impracticality of developing and implementing management system requirements with small engineering departments and limited staffing resources.
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From page 97... ...
PHMSA's program for ensuring compliance with its pipeline safety regulations illustrates how regulatory design types and regulator capabilities relate, both with one another and with industry characteristics. The agency's enforcement program was established to ensure that pipeline operators comply with a specific type of regulatory design, micro-level regulations.
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From page 98... ...
When integrity management programs were mandated for gas distribution systems, states became responsible for enforcing compliance. Thus, PHMSA must not only make changes to its own inspection workforce but also ensure that dozens of state programs have the requisite enforcement capabilities and resources.4 PHMSA's experience illustrates how a regulator choosing among regulatory designs may want to consider each design's compatibility with the regulatory designs and capabilities of other regulators of the subject industry.
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From page 99... ...
HSE is required by law to work with offshore operators to improve their safety cases, and it functions in part as a "problem solver." When HSE personnel visit offshore facilities to verify conformity with safety case plans, they do not conduct checklist inspections but instead spend days meeting with workers and managers and observing their practices and performance. Before inconsistencies with safety case plans are cited and sanctions imposed, HSE personnel meet with operators to discuss options for resolving them, unless there is an immediate risk of serious harm that warrants a notice to stop the activity immediately.
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From page 100... ...
to help this segment of the industry comply with its integrity management regulations. These examples indicate that the selection of a regulatory design type and its use in combination with other design types can have significant implications for the regulator's enforcement program and for its other supportive activities.
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From page 101... ...
A micro-ends requirement structured so that it can be met with only one available technology is, for practical purposes, just as constraining, in the short term, as if the regulator had imposed a micro-means obligation to use that technology (Coglianese 2016) .6 Much the same can be said of the other regulatory design types.
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From page 102... ...
. In general, the decision to use a micro-means regulation implies that the regulator has a good understanding of the specific hazard, means of mitigation, the capacities of the applicable technologies, and the operations of the regulated firms.
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From page 103... ...
In all countries studied in Chapter 3, pipeline and offshore safety regulators reference industry consensus standards, although the mechanisms for ensuring that the most recent standards are referenced vary. The regulator may consider other modifications to compensate for an overly inclusive micro-means regulation.
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From page 104... ...
Indeed, an executive order on regulation adopted during the Clinton administration and is still in force directs federal agencies to specify performance objectives when new regulations are developed wherever feasible. The Chapter 3 case studies describe micro-ends regulations that are targeted to specific aspects of the ultimate safety problem of preventing harmful failures in pipelines and offshore facilities.
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From page 105... ...
• Should a facility be able to bank or trade, within the facility or with other regulated entities, any desirable performance achieved in excess of minimally required ends? • What kind of recordkeeping or reporting requirements should be imposed on facilities to document their performance?
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From page 106... ...
The relevant causal pathways or network may be relatively clear for ascertaining how certain intermediate outcomes such as levels of pollutants can adversely affect human health, which is the ultimate regulatory concern. In other cases, such as problems arising in complex industrial systems, these relationships may not be well understood (Coglianese 2016)
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From page 107... ...
. Offshore facilities are dispersed and in remote locations.
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From page 108... ...
These regulations seek to harness the special information advantage that a regulated firm possesses about the details of its operations and facilities. They are premised on two beliefs.
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From page 109... ...
Many of these questions have been addressed by the regulators studied in Chapter 3. For example, the question about the level of detail of management requirements is being considered by PHMSA as it revises its integrity management regulations in response to concerns about the safety performance of some operators.
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From page 110... ...
that their safety plans are based on rigorous analysis before they can begin the planned activity. In contrast, PHMSA's integrity management regulations do not require advance approval, but inspectors may review the program's content and execution once the program is in place.
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From page 111... ...
Officials at the two agencies indicate that this approach requires the employment of personnel with extensive knowledge of industry procedures. Audit-like reviews of planning documents and records, which is characteristic of PHMSA's inspections of operator integrity management programs, do not verify the execution of plans in the same direct manner that, say, inspection of installed safety devices can verify compliance.
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From page 112... ...
or as a result of specific statutory liability, such as under the Clean Water Act's provisions providing penalties for polluting spills. Unlike the other three regulation design types, the legal obligation contained in a macro-ends regulation imposes no explicit prospective requirements, either means or ends, related to any of the nodes or links on the causal pathway leading to the harm.
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From page 113... ...
Norway, the United Kingdom, and Canada also have highly developed liability systems for claims from pipeline and offshore oil and gas incidents (Bennear 2015; BIO by Deloitte and Stevens and Bolton 2014)
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From page 114... ...
In some cases, these subsidiary considerations will help determine which main design to deploy. In principle, certain design types may have great appeal, such as those often associated with flexibility, namely micro-ends (performance)
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From page 115... ...
Under this procedure, an agency publishes a proposed rule in the Federal Register, invites the public to submit input on that proposal, and takes any comments into consideration in developing its final rule. Beyond this minimal role for public involvement in rulemaking, agencies can involve the public in regulatory decision making in a range of ways.
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From page 116... ...
When an agency issues a "notice of proposed rulemaking" in the Federal Register, it formally announces its proposed rule and provides the public with an opportunity to comment.b During the comment period, the agency may hold public hearings to improve understanding of the proposed rule's coverage and requirements and to provide additional opportunities for interested parties to make statements and submit data. When it drafts the final rule, the agency must explain its reasoning and demonstrate that it has taken the comments, scientific data, expert opinions, and other feedback obtained during the rulemaking process into account.
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From page 117... ...
Other transparency rules and procedural constraints can affect the ability of regulatory officials to engage in dialogue with the regulated industry and other interests, including labor, consumer, and environmental representatives. Regulatory Impact Analysis For many significant rules, governmental procedure in the United States requires the conduct of certain types of analyses before a regulatory decision.
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From page 118... ...
Under the arbitrary and capricious test, agencies are expected to consider alternatives and choose among them on the basis of available evidence or expert judgment. Finally, litigation periodically arises with respect to each of the four types of regulatory designs.
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From page 119... ...
As summarized in Chapter 2, the various regulatory designs are associated with certain advantages and disadvantages. The following sets forth some of the claimed advantages by design type: Micro-means (prescriptive)
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From page 120... ...
Regulatory design types are also often associated with certain disadvantages. The following sets forth some of the potential disadvantages by design type: Micro-means (prescriptive)
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From page 121... ...
In Chapter 5, the application of macro-means safety regulation to highhazard industries is discussed on the basis of insights from this chapter. In that context, regulators must choose among regulatory designs to develop a regulatory approach that will reduce the risk of low-frequency, highconsequence events.
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From page 122... ...
2012. Final Rule.
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From page 123... ...
2014. A Study on the Impact of Excavation Damage on Pipeline Safety.
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