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Improving Regulatory Systems

Recommendations and Actions

REG07: Rank Risks and Engage in "Anticipatory" Regulatory Planning

BACKGROUND

Agency planning tends to be short-range rather than long-range. There is almost always a new crisis demanding immediate attention. The budget cycle is annual. Top agency policymakers often are at the agency for only two years. All of this gives agencies incentives to develop short-term rather than long- term plans.

Nonetheless, long-term strategic planning is needed. Regulatory agencies have limited resources and limited demands they can make on the public. They share responsibility with Congress for ensuring that the nation gets the most for the money it spends on drug safety, the environment, and other matters. This requires agencies not only to set strategic goals, but also to determine whether those goals are being met.

This, in part, is the impetus behind the Government Performance and Results Act of 1993.[Endnote 1] The Act's implementation should do much to advance strategic, performance-based planning by the agencies. But regulatory agencies should take additional steps to plan their future regulatory agendas (especially those relating to regulation of environmental, health, and safety risks). The potential targets of regulations are so many, the implications so large, and regulatory resources so comparatively limited, that prioritization and long-range planning is imperative.

Regulatory agencies have begun to take some steps in this direction. Since 1985, executive agencies have been required to submit their planned significant regulatory actions to the Office of Management and Budget (OMB), which has published compilations annually as the Regulatory Program of the United States.[Endnote 2] Unfortunately, however, this process was not used as a significant planning document within the agencies or within the administration as a whole.[Endnote 3] Moreover, the Program was not published in a timely fashion; for example, the Program for 1992 was not distributed until February of 1993.[Endnote 4] The new regulatory review executive order will place greater emphasis on planning and will make the annual regulatory planning process more meaningful and timely.

The Environmental Protection Agency (EPA) has begun a process that, although still in its early stages, can provide a model for the other 20 or so agencies that regulate environmental, health, or safety risks, including the Food and Drug Administration, the Occupational Safety and Health Administration (OSHA), the Consumer Product Safety Commission, and the Nuclear Regulatory Commission.[Endnote 5] Its 1987 report, Unfinished Business, was based on an effort by 75 senior career managers to compare and rank the relative risks posed by 31 environmental problems regulated by the agency.[Endnote 6] These rankings, while based on professional judgments, were limited by incomplete data and the infancy of risk comparison methodologies. But the effort was a landmark in that it crossed programmatic lines and also explicitly pointed out the disparity between the rankings and the resource allocation at EPA.[Endnote 7] Interestingly, the EPA experts' rankings were almost the reverse of prevailing public opinion about risk.[Endnote 8]

In 1990, EPA turned to its Science Advisory Board to evaluate Unfinished Business and the agency's response to it. The Board's special 39-member Relative Risk Reduction Strategies Committee produced a report, Reducing Risk, that contained a series of recommendations to the administrator on how to undertake risk prioritization so that EPA could "target its environmental protection efforts on the basis of opportunities for the greatest risk reduction."[Endnote 9]

The Carnegie Commission has applauded Unfinished Business and Reducing Risk as a "groundbreaking enterprise."[Endnote 10] It has specifically recommended that "other risk reduction agencies should attempt to incorporate into their own decisionmaking and institutional culture the global perspective on risk that these reports and their implementation embody."[Endnote 11]

As a by-product of its recent focus on risk prioritization, EPA has devoted increasing attention to the identification of future risk. In 1988, the EPA Science Advisory Board produced a report, Future Risk: Research Strategies for the 1990s, that catalogued risk reduction strategies for the future.[Endnote 12] Its first recommendation was that EPA should shift its regulatory strategy "from end-of-pipe controls to preventing the generation of pollution."[Endnote 13] Administrator Carol Browner recently announced her intention to make "pollution prevention the guiding principle for all our programs at the [EPA]."[Endnote 14]

EPA has also employed its Office of Policy Planning and Evaluation (OPPE) to plan for the future. OPPE's Office of Strategic Planning and Environmental Data has a Futures Staff for this purpose.[Endnote 15] The Office also has recently joined with the Science Advisory Board to sponsor a new Environmental Futures Committee at the behest of Administrator Browner.[Endnote 16]

Another agency now engaged in risk prioritization is the Research and Special Programs Administration in the Department of Transportation, which regulates the safety of gas, offshore, and hazardous liquid pipelines. About 20 to 25 pipeline-related risks will be ranked as high, medium, or low as part of this initiative.[Endnote 17]

NEED FOR CHANGE

As the Carnegie Commission report declared, "the fundamental problem in regulatory decision making at the agency level, as at the presidential and interagency levels, is how to set priorities. It is a great challenge for science-based regulatory agencies to compare and rank individual risks and families of risks within the universe they regulate."[Endnote 18]

The scope of agencies' regulatory mandates far exceeds their rulemaking resources. For example, OSHA, which must issue health and safety standards for thousands of chemicals, carcinogens, and other dangers in most of our nation's workplaces, only has sufficient resources to pursue 15 to 20 rulemaking efforts at any given time.[Endnote 19] Hence the dire need for prioritization. Prioritization by agencies will also help inform Congress about agency resource needs and may help Congress reorder its own thinking while also informing regulated parties about the agency's likely future agenda.

Risk prioritization can help agencies distinguish between regulatory targets that demand immediate attention and those that allow for mid- or long-range corrections. But in this fast-changing technological world, regulatory agencies must also begin to anticipate future problems before it is too late or before an expensive regulatory scheme must be imposed.

For example, EPA is finding solutions now to the potential problem posed by the lithium in batteries used to power electric motor vehicles.[Endnote 21] OSHA, for another example, might have better anticipated the workplace stresses and injuries caused by the computerized office (e.g., non-ergonomic chairs, video display terminal exposure, and carpal tunnel syndrome).

It is a truism to say that tomorrow's regulatory problems will likely differ markedly from today's. Changes in risk prioritizing must be anticipated from numerous sources. New knowledge about the hazards of existing technologies (e.g., chlorofluorocarbons or CFCs) and exposures (e.g., radon) is always being developed. Solutions to one problem may cause another (e.g., increased indoor pollution in offices with improperly designed energy efficient programs). Changes in behavior (e.g., increased use of lawn-care pesticides), introduction of new technologies (e.g., biotechnology), side effects of government intervention (e.g., floodplain management), or changes in societal concerns (e.g., greater concern about costs or fairness of solutions) all bear on future risk regulation. These sorts of changes must be anticipated to the greatest feasible extent.[Endnote 22]

In short, regulatory agencies cannot simply be reactive. They must develop ways of, and devote resources to, anticipating the need for new research or regulatory initiatives--and possibly for new or adjusted statutory mandates to forestall or remedy those problems.

ACTIONS

1. Rank the seriousness of environmental, health, or safety risks. (1)

Heads of regulatory agencies involved in the regulation of environmental, health, or safety risks should direct their agencies to rank the seriousness of those risks to permit better prioritization of their regulatory agendas. This is consistent with the new regulatory review executive order, which will require agencies to consider relative risks of different substances or activities within their jurisdictions. How that prioritization can best be accomplished should be left to individual agencies.

EPA's initial use of its program managers with a review by outside experts assembled by its Science Advisory Board has worked well. An alternate approach was espoused by a recent study by the Administrative Conference of the U.S. The study, done at OSHA's request, urged that agency to establish a formal prioritization committee staffed by politically sensitive technical experts who would serve staggered terms and be eligible for reappointment.[Endnote 23] Agencies should compare their own resource allocations with their internal risk rankings. Agencies should coordinate their development of risk prioritization processes and standards through the Regulatory Coordinating Group. Once risk lists are better developed and tested, they should be compared and possibly even coordinated across agency lines.

No one can pretend, however, that this will be an easy task. Analytical methodologies and basic data must be improved, and public perceptions of risk (which often differ markedly from that of scientists) must be factored into the equation.[Endnote 24] Comparing various types of health risks with disparate impacts on different populations (or human health concerns with degradation of ecosystems) requires value judgments that may be impossible to quantify. Thus, precision in rankings may be unattainable. But ranking of risks into high, medium and low categories is realistic. The payoffs from such prioritization should far exceed the cost of the undertaking. It would inform the legislative process (since agency priorities are largely statute-driven), the budget process, the interagency coordination process, and ultimately, the public's understanding of risk.[Endnote 25]

2. Develop long-range future plans and anticipatory approaches to regulatory problems. (1)

The heads of regulatory agencies should develop long- range future plans and anticipatory approaches to regulatory problems within their jurisdiction. Because of the differences in organizational structures among agencies, it is not possible to dictate just how such anticipatory planning can best be built into agency decision-making. Agencies should consider creating a staff to address long-range planning. Agency officials who serve in such offices should also meet under the sponsorship of the Regulatory Coordinating Group to discuss approaches to the problem.

CROSS-REFERENCES TO OTHER NPR ACCOMPANYING REPORTS

Department of Transportation, DOT01: Measure Transportation Safety; and DOT11: Improve Intermodal Transportation Policy Coordination and Management.

Environmental Protection Agency, EPA03: Shift EPA's Emphasis Toward Pollution Prevention and Away from Pollution Control; and EPA07: Establish Measurable Goals, Performance Standards and Strategic Planning within EPA.

Federal Emergency Management Agency, FEMA02: Develop a More Anticipatory Customer-Driven Response to Catastrophic Disasters.

Mission-Driven, Results-Oriented Budgeting, BGT02: Effectively Implement the Government Performance and Results Act of 1993.

Creating Quality Leadership and Management, QUAL02: Improve Government Performance Through Strategic and Quality Management.

ENDNOTES

1. Pub. L. 103-62 (1993). The Act authorizes 10 three-year pilot projects to test program performance measures and requires Congress to vote in 1997 on mandatory government-wide implementation of five-year strategic planning, annual program goal-setting, and annual program performance reporting beginning in fiscal year 1998.

2. E.O. No. 12498, Federal Register 1036 (1985).

3. Discussions with regulatory officials from various agencies convened at Department of Transportation, May 13, 1993, Elliott, Donald, "TQMing OMB: Or Why Regulatory Review under Executive Order 12291 Works So Poorly and What President Clinton Can Do About It," draft, August 17, 1993, p. 24, Law and Contemporary Problems (Durham, North Carolina: forthcoming 1994).

4. Regulatory Program of the United States Government (April 1, 1992-March 31, 1993), officially transmitted to Congress on January 15, 1993, but not available to agencies or to the public until February.

5. Other risk regulatory agencies include the Animal and Plant Health Inspection Service, the Food Safety and Inspection Service, and the Forest Service (Department of Agriculture); National Oceanic and Atmospheric Administration (Department of Commerce); Army Corps of Engineers (Department of Defense), Office of Surface Mining, and the Fish and Wildlife Service (Department of Interior); Mine Safety and Health Administration (Department of Labor); and Coast Guard, the Federal Aviation Administration, the National Highway Traffic Safety Administration, and the Research and Special Programs Administration (DOT).

6. Environmental Protection Agency, Unfinished Business: A Comparative Assessment of Environmental Problems (Washington, D.C., 1987).

7. Of course, to a large extent, EPA's budgetary priorities are set by legislation. See Environmental Protection Agency, Reducing Risks (Appendix B.4), SAB-EC-90-021B (Washington, D.C., 1990).

8. For example, while the public ranked nuclear accident radiation and industrial pollution of waterways as among the highest risks, EPA experts ranked them among the lowest. Conversely, the public was not very concerned about radon and indoor air pollution, which were ranked as high risks by the EPA experts. See Breyer, Stephen, Breaking the Vicious Circle: Toward Effective Risk Regulation (Harvard University Press 1993), Chart 7, "Rating Risks --How the Public and EPA Rate Health Risks Associated with Environmental Problems," derived from Russell, "What, Me Worry?" American Health 47 (June 1990). This problem may be affected by the media's perception of risk as well. See "Stories on Cancer's Causes Are Said to Be Misfocused: Media Overplay Minor Environmental Threats to Health, Experts Contend," Washington Post (July 27, 1993), p. A6.

9. Environmental Protection Agency, Reducing Risks: Setting Priorities and Strategies for Environmental Protection, SAB-EC-90-021 (Washington, DC, 1990), p. 6.

10. Carnegie Commission on Science, Technology and Government (Carnegie Commission), Risk and the Environment: Improving Regulatory Decision Making (Washington, D.C., 1993), p. 81.

11. See also the favorable review "Developing a Mindset for Risk Prioritization," American Industrial Health Council Quarterly (Fall 1990), p. 3.

12. Environmental Protection Agency, Future Risk: Research Strategies for the 1990s, SAB-EC-88-040 (Washington, D. C., 1988).

13. Ibid., at pp. 5, 8-9.

14. Carol M. Browner, Administrator, Environmental Protection Agency, Memorandum to EPA employees, "Pollution Prevention Policy Statement: New Directions for Environmental Protections," June 15, 1993, p. 1.

15. Interview with David Rejelski, Futures Staff Chief, Office of Strategic Planning and Environmental Data, Office of Policy, Planning and Evaluation, EPA, June 24, 1993.

16. The Charter of the new committee will be to conduct a short-term (five-year horizon) and long- term (20-year horizon) "scan of future developments that will affect environmental quality and the Nation's ability to protect the environment." The final report is scheduled for September 1994. Interview with Donald G. Barnes, Director, Science Advisory Board, July 7, 1993; Environmental Protection Agency, Draft Charter, Science Advisory Board, Environmental Futures Project (undated).

17. Telephone interview with Judith S. Kaleta, Chief Counsel, Research and Special Programs Administration (RSPA); RSPA FY 1994 Budget Submission, pp. 145-149 (detailing its "Risk-Based Prioritization Plan").

18. Carnegie Commission, p. 73.

19. Shapiro, Sidney A., and Thomas McGarity, "Reorienting OSHA: Regulatory Alternatives and Legislative Reforms," Yale Journal on Regulation, vol. 6, no. 1 (Winter 1989), p. 14, n. 85.

20. Interview with David Rejelski.

21. Because of increasingly strict air quality rules in California, electric vehicles are expected to become more prevalent there in the next decade.

22. The foregoing paragraph is adapted from Andrews, Richard, "Long-Range Planning in Environmental, Health, and Safety Regulatory Agencies," (draft background paper for Carnegie Commission, supra note 10, prepared May 4, 1991), pp. 6-7.

23. Administrative Conference of the U.S., Recommendation 87-1, "Priority Setting and Management of Rulemaking by the Occupational Safety and Health Administration," 1 C.F.R. 305.87-1, 52 Federal Register 23,629 (June 24, 1987); derived from Shapiro and McGarity, supra note 19, pp. 18-23.

24. See note 8 above.

25. Congress and agencies often complain that long- range plans cannot be followed because the crisis of the day dictates congressional policy, which in turn establishes regulatory mandates.

Political responsiveness to mood swings in the American Public, coupled with paralysis in the institutions of government, makes it very difficult to address problems requiring a steady, sustained, and unphotogenic response.

A panel of The National Academy of Public Administration, Beyond Distrust: Building Bridges Between Congress and the Executive (Washington, D.C., January 1992), p. 76.

To move away from a situation where the crisis of the minute dictates long-term policy, the public needs to be better educated about the problems facing the country. Reports of a study done by the Public Agenda Foundation, founded by Cyrus Vance, demonstrated that when members of the public were given short, balanced presentations on solid waste and global warming issues, they were able to grasp the scientific issues. Exposure to these presentations changed their views on how the issues should be handled to parallel the experts' views more closely. Carnegie Commission on Science, Technology, and Government, Risk and the Environment: Improving Regulatory Decision Making (Washington, D.C., June 1993), p. 92-93.

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