Transportation safety is a top priority in America, whether it’s passenger travel by air, rail, or vehicle or moving commercial freight where it needs to go. The best way regulators in Washington can help ensure safety is to set safety goals and make sure businesses and industries achieve those goals. Unfortunately, regulators too often try to micromanage the process. This perversely prevents innovation and technology gains that can improve safety and provide it at a lower cost.
Today, the Competitive Enterprise Institute released my policy brief, “Toward Performance-Based Transportation Safety Regulation: Focus on Results Instead of Rigid Rules to Improve Safety and Promote Innovation.” The paper discusses the safety regulatory environment of five transportation modes regulated by sub-agencies of the U.S. Department of Transportation: automobiles, pipelines, aircraft, motor carriers, and railroads.
The difference between prescriptive and performance-based rules is important. Prescriptive rules specify rigid means of compliance, ordering regulated entities to design their products, or implement practices in a particular way. In contrast, performance-based rules set a risk-informed safety goal and then leave it to the regulated entities to figure out how to meet that goal.
Performance-based safety regulations allow regulated entities to decide on the particular technologies and practices needed to achieve a performance standard. That incentivizes regulated entities to continually develop new technologies and practices to meet a given safety performance goal in ways that work best and are cost effective.
The good news is this performance-based approach is bipartisan. It’s been a cornerstone of federal regulatory policy since the Clinton administration, which issued Executive Order 12866 in 1993. The order required regulatory agencies to “specify performance objectives, rather than specifying the behavior or manner of compliance that regulated entities must adopt.” This policy was subsequently reaffirmed by Presidents George W. Bush and Barack Obama.
The bad news is that despite this being official federal policy for more than two decades, the safety regulatory agencies under the Department of Transportation have made uneven progress in adopting a performance-based regulatory approach. The report provides some examples to illustrate this point:
- Autos. The National Highway Traffic Safety Administration (NHTSA) generally provides a performance-based regulatory framework. However, even though NHTSA comes closest to embracing a performance-based philosophy, some of its rules are still inhibiting innovation that could provide superior safety outcomes. For instance, the agency requires automakers to install rear view mirrors on vehicles. In recent years as technology has advanced, cameras have become capable of providing drivers superior rear-viewing functions relative to mirrors. Unfortunately, current regulations do not allow automakers to replace their rear view mirrors with cameras and displays.
- Pipelines. Given the volatile nature of the gases and liquids being moved through many pipelines, it is unsurprising that U.S. pipeline safety regulations have generally been highly prescriptive. Despite this, efforts are under way to investigate possible reforms to pipeline regulations in a performance-based direction, including the launch of a study committee at the Transportation Research Board of the National Academies.
- Aircraft. The Federal Aviation Administration’s (FAA) aircraft airworthiness certification rules have been extremely onerous and prescriptive for decades. This means bringing a new aircraft design to market can take many years. Recognizing that these regulations risk inhibiting rapid changes in the aviation industry—from new airframe materials to drones—the agency in recent years has sought to move its certification regime in a performance-based direction. Under the Obama administration, a positive shift occurred with respect to small aircraft certification. There is still much work to be done, and Congress is likely to take up this issue in the forthcoming FAA reauthorization.
- Trucking. The prescriptive labor safety regulations in the trucking industry have been controversial for decades. In an attempt to move the Federal Motor Carrier Safety Administration toward adopting a performance-based safety regulatory philosophy, legislation was introduced in the last Congress to require the agency to conduct regular reviews of its regulations, determine if those regulations continue to be necessary, and focus on outcomes rather than means of compliance.
- Rail. The Federal Railroad Administration’s (FRA) approach to performance-based regulation may be the most uneven of all the Department of Transportation’s safety agencies. While the FRA has laudably proposed rules for passenger rail cars that would allow manufacturers to utilize new technologies, freight rail has been hit with a proposal that would in effect prohibit them from making full use of new safety technologies—technologies that themselves have been mandated.
The report concludes with recommendation for Congress on how to encourage the Department of Transportation’s evolution toward a performance-based safety regulatory philosophy.