Performance Based Standards
In a previous newsletter (No. 158: Appropriate Inquiry - Please contact us for a copy),
we described the new EPA requirements of “All Appropriate Inquiry
(AAI)” in property transfers. The EPA’s final rule requires more
extensive inquiry. The EPA describes the AAI final rule as being
“performance based” since findings and conclusions rely heavily on the
environmental professional’s own personal judgment.
We thought it behooved us to add few more words on “performance based standards.”
A
performance-based regulatory standard is a rule, regulation, or
standard that specifies the desired outcome but gives discretion in how
that outcome is met.
For
example, the Federal Railroad Administration (FRA) requires that
vegetation adjacent to railroad track be controlled so that it does not
become a fire hazard or obstruct visibility.
FRA
specifies an outcome (not being a fire hazard or an obstruction to
visibility) but not how far from the track vegetation must be removed
nor the methods firms need to use to control it.
Performance-based
standards give discretion to regulated actors or firms. Regulated
targets may meet these standards in whatever way they choose. Such an
approach allows firms to innovate and search for the least costly means
of achieving the desired outcome.
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