Performance Based Standards
In a former newsletter we described the EPA requirements of “All Appropriate Inquiry (AAI)” in property transfers. The EPA requires extensive inquiry and describes the AAI process 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.”
performance-based regulatory standard is a rule, regulation, or
standard that specifies the desired outcome but gives discretion in how
that outcome is met.
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.
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.
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.