Implementing Outcome-Oriented Risk Planning: An Overview

JIEE 98-02

Implementing Outcome-Oriented Risk Planning: An Overview

David J. Bjornstad Donald W. Jones Milton Russell Christine L. Dümmer*

The Joint Institute for Energy and Environment 314 UT Conference Center Building Knoxville, TN 37996-4138 Phone: (423) 974-3939

October 15, 1998

*Hull, Dümmer, and Garland

CONTENTS

PREFACE AND ACKNOWLEDGMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . iii 1. INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 2. THE PATH TO THE PRESENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 3. REGAINING CONTROL—SEVEN STEPS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 4. THE PATH FORWARD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

ii

PREFACE AND ACKNOWLEDGMENTS This paper, supported by the U.S. Department of Energy (DOE), Office of Environmental Management (EM), Office of Science and Risk Policy, is a companion piece to a larger study that examines outcome-oriented risk planning in detail and argues that EM could use risk planning as a foundation for its management structure. It is one of a set of four papers in which we examine this topic. These papers are addressed to the senior manager within EM who must formulate and implement risk management policies within the budget context and business philosophy embodied in Accelerating Cleanup: Paths to Closure.1 They are part of a larger series of reports prepared by the Joint Institute for Energy and Environment intended to probe alternatives to the current EM status quo and to stimulate debate and thought.2 By design, this series adopts a perspective more general than the calculations and databases describing specific sites and facilities and more behavioral than the technical discussions that typically underlie waste cleanup planning. In doing so, it seeks to stimulate a dialogue over how best to implement a least-cost, risk-based cleanup that is realistic about the limitations imposed by technical uncertainties and by regulatory requirements. This paper presents the short version of our analysis. It argues that EM will face continued pressures to accomplish more with fewer resources and to justify each step it takes. To meet this challenge it is proposed that a risk-based planning system be implemented. Such a system would focus on program outputs, measured as progress toward risk reduction/management goals. Adopting this system is a logical next, and final, step in the evolution of the EM management system. Earlier steps included dealing with waste that posed a clear and present danger to human health and the environment, gathering the data needed to plan the cleanup, and imposing budgetary and temporal constraints to what otherwise appeared to be a program without limits. To implement the system, the paper describes seven steps that must be undertaken. The authors are grateful to a number of colleagues. At DOE/EM, Mark Gilbertson, Dan Berkovitz, and James Melillo continue to provide valuable feedback and insights. Colleagues at member institutions of the Joint Institute for Energy and Environment (JIEE) provided comments on earlier versions of this paper and technical assistance in its preparation. Sherry Estep edited the document and offered critical comments, and Kathy Ballew and Glenda Hamlin designed and prepared the document. We offer thanks to these individuals but absolve them of all responsibility for any shortcomings of the final product.

1

U.S. Department of Energy, Office of Environmental Management, Accelerating Cleanup: Paths to Closure (Washington, DC: DOE/EM-0342, 1998). 2

This program is carried out by the Joint Institute for Energy and Environment (JIEE). Other papers in this series are available through the JIEE’s web site at http://www/jiee.org.

iii

Under the terms of our agreement with DOE, the authors are solely accountable for the contents of the document. Neither DOE nor its employees have had control over, nor bear responsibility for, the views expressed herein.

iv

1. INTRODUCTION The Department of Energy’s Office of Environmental Management (EM) currently finds itself in a situation similar to the center ball in an executive desk toy. The toy consists of five balls suspended by strings aligned in a row, each touching the adjacent balls. Swing the ball on the left outward and it returns, striking a blow through the center ball that sends the ball to the right outward. The right-hand ball, in turn, strikes a somewhat lesser blow that again sets the leftward ball in motion. With time the motion dissipates, awaiting the next shock from an outside source. The center ball remains in place with modest influence on the outside forces. Asserting leadership that will increase its influence on the character of the cleanup is EM’s challenge. To the one side, Congress buffets EM, sending shock waves to EM, through its technology programs, management structures and budgets. The impact is passed through EM via its compliance-driven cleanup agenda to “stakeholders,” who in turn, when conflicts arise, send shock waves back through EM to the Congress. This situation is currently reflected in the reduced current and out-year budgets that EM must now sell to stakeholders, having earlier promised higher budgets. In the recent past, Congress has shocked EM with reductions of headquarters staff, threats to dismantle technology programs, and harsh criticism of privatization. On the other side, stakeholders respond with lawsuits, restrictions on interstate transfers of wastes, and direct Congressional appeals that bypass EM. At present, EM is in a state of calm, but there is every reason to believe that new conflicts will emerge in the future. To prepare, EM should adopt a management philosophy that will increase its ability to explicate and resolve issues rather than merely transmitting them. It can best do this by providing strong leadership centered around a planning and management system directed at a common target. From this platform, EM’s goal should be to lead the debate as new conflicts arise and to argue effectively how increasingly scarce budget dollars should be used to best effect. This paper argues that this target should be risk management and reduction. It introduces a risk-planning system termed outcome-oriented risk planning that refocuses cleanup activities from program inputs to program outputs.3 It also demonstrates how this system could be made operational using currently existing databases and management structures. Implementing this management philosophy requires a series of management steps as follows:

3

This paper summarizes results presented in David J. Bjornstad, Donald W. Jones, Milton Russell, Kenneth S. Redus, and Christine L. Dümmer, “Outcome-Oriented Risk Planning for DOE’s Cleanup” (Joint Institute for Energy and Environment Report No. 98-01, Knoxville, TN, October 15, 1998). See also Christine L. Dümmer, David J. Bjornstad, and Donald W. Jones, “The Regulatory Environment Guiding DOE’s Cleanup: Opportunities for Flexibility” (Joint Institute for Energy and Environment, Knoxville, TN, October 15, 1998); and Donald W. Jones, Kenneth S. Redus, and David J. Bjornstad, “A Non-linear Programming Model of Alternative Risk-Related Goals for DOE’s Weapons Complex Cleanup: A Case Study of the Oak Ridge Site,” (Joint Institute for Energy and Environment Report No. 98-03, Knoxville, TN, October 15, 1998).

1

C

Isolate cleanup decisions from “community development” decisions, achieving productive divorce.

C

Restate cleanup objectives as outputs, measured by progress toward risk management goals.

C

Reaffirm DOE Risk Principles as a guide to outcome-oriented risk planning.

C

Adapt risk principles to EM operations.

C

Demonstrate feasibility through a prototype system.

C

Integrate EM management initiatives—including budgeting, R&D planning, and contract reform—with outcome-oriented risk planning.

C

Recognize and affirm needed breaks from the past.

.

We describe each step in this process systematically. Were EM to implement such a system, it could lead other cleanup participants to frame their own concerns using EM’s format. This would allow EM to consolidate and resolve the multiple concerns of the various cleanup participants using common terms. By doing this EM can recapture leadership of the cleanup program which it has now effectively lost to Congress and the local stakeholders. Regaining control is important because only EM possesses the technical knowledge, plus the dispassionate perspective to place the national interest ahead of local interests, needed to effect an efficient and effective cleanup.

2. THE PATH TO THE PRESENT To understand the task EM faces and the role risk planning can play in helping to prioritize and rationalize activities, it is instructive to consider the task confronting that office at the close of the Cold War. EM was given ownership of a large number of hazardous and toxic materials. These materials were proximate to populations and sensitive environments. Many had “pathways” through which they could potentially reach sensitive populations. Without intervention there was a high probability that some of the materials would have escaped containment, followed a pathway, and caused significant damage to people or to the environment. Think of the “expected value” of this damage at any point in time as the “risk inventory” managed by EM. Were nothing else done, this risk inventory would grow over time as mobile contaminants migrated, disposal media like barrels and tanks deteriorated, and protective barriers were inadvertently or deliberately breached. One can visualize a curve tracing the time path of the risk inventory increasing explosively over time as control was gradually lost. EM’s initial task was to deal with immediate threats and to gather information needed to plan for future activities. At that point, a small number of actions to stabilize, treat, or otherwise isolate wastes from people and/or the environment made significant improvements in the risk time path. 2

Next, consider the situation EM faces currently. With wastes that were previously “out of control” subject to scrutiny and generally “in control,” EM now faces a risk inventory which is still high enough to warrant further attention and which, if left untended, still would increase over time. But the size of the risk inventory is smaller than before intervention, and the pace of increase is much slower. This has been accomplished partly by reducing the physical inventory of toxic materials, but more generally by ensuring that the toxic materials are properly managed. The product EM has produced can thus be described as a new size and shape of this risk inventory, and the product it will produce in the future is change to the height and shape of this curve. There is clear benefit to continued “cleanup,” broadly defined, because cleanup ensures that control over remaining wastes will be maintained and that risk inventories will continue to be managed. But because the “clear and present danger” from wastes is less than before, other benefits of cleanup became relatively more important to the host communities. In particular, issues of the long term economic viability of local economies, once cleanup is complete, became more important. The Federal government has never officially recognized an obligation to assist communities’ transition to new economic functions once cleanup is complete. For this reason, in addition to genuine concerns over environmental safety and health (ES&H), communities have incentives to see cleanup continue for the indefinite future. The best way for communities to ensure continuation was to convince DOE to sign legally binding agreements committing to a protracted and thorough cleanup, focused on the identification, removal and/or treatment and storage of materials containing toxic substances. Fortunately for the communities, environmental legislation provided the tools needed to persuade DOE to sign up for a long-term cleanup. Through a combination of the Resource Conservation and Recovery Act, the Clean Air Act, Superfund, the Occupational Safety and Health Act, and the Federal Facilities Compliance Act, it was possible to argue that DOE was obligated to conduct a thorough and immediate cleanup to standards ultimately set by local residents.4 However, recognizing that current technologies were inadequate to meet these obligations and that budgets for cleanup would necessarily be allocated over a long period of time, DOE signed a series of consent obligations that effectively defined the terms and timetables DOE would need to meet to be “in compliance” with the law. Hence, the concept of a “compliance-driven” cleanup became a reality. In recent years, Congress has grown impatient with the pace of the cleanup. The first EM strategy, following the Baseline Environmental Management Report (BEMR), viewed planning as a bottom-up process with waste groups first characterized, then matched with technologies or future technologies, and scheduled for treatment over a seventy-year planning horizon. This resulted in a management plan unbounded by time or dollars. With budgetary cuts and Congressional pressures, DOE has implemented a second strategy, in the form of a series of initiatives intended to place budgetary ceilings on expenditures and temporal bounds on operations. The Ten-Year Plan placed a top-down constraint on dollars and time-frame, and was followed by the 2006 Plan which refined the initial ten-year budget 4

We set forth this argument in detail in Bjornstad, et al., “Outcome-Oriented Risk Planning” and in Dümmer, Bjornstad, and Jones, “Regulatory Environment.”

3

estimates. Other initiatives, including “privatization” and the refocusing of the R&D program, sought to produce management efficiencies. Throughout this second phase, shock waves have again abated and EM has increasingly played the role of messenger bearing (often bad) news between Congress and stakeholders. In fact, EM programs are now virtually on auto-pilot, driven by the agreements that govern cleanup standards, techniques, and timetables, and through which EM has almost totally delegated the choice of how much, and in what manner, to spend on cleanup to stakeholders who recognize continued cleanup spending as their lifeblood. This paper proposes outcome-oriented risk planning as a third, and final, strategy that will allow EM to rise from its role as messenger to a role as leader. It is intended to provide a foundation for the strong management initiatives required for EM to regain program control. It examines seven steps that could lead from the “path to the present” to the “path forward.”

3. REGAINING CONTROL—SEVEN STEPS The control EM should seek should be that of an arbitrator, rather than that of a dictator. The Federal government is bound—through environmental laws and regulations, past agreements, and treaties with tribal governments—to carry out the best and most cost-effective cleanup for which the American people are willing to pay. To lead arbitration over budgets, time-frames, endstates, and long-term stewardship, EM must be able to place individual issues within a common framework, relate them to other relevant aspects of the cleanup, and demonstrate the tradeoffs that accompany alternative choices and the effects they will have on cleanup progress. In this sense, regaining control means defining the process that will lead to program decisions and not to making the decisions themselves. Step 1—Productive Divorce: The first step in grasping control is to separate community desires for additional dollars from community desires for effective cleanup, thereby obtaining what we call “productive divorce.”5 The necessity for this step is easy to see. To the extent that risks from wastes are “in control,” communities may view cleanup activities as desirable substitutes for the research, development, and production activities that created the wastes but that have been since discontinued. Communities may also have the opportunity to “lock-in” these “secondary benefits” by arguing in favor of continued cleanup activities over long time periods. This is possible because environmental and other regulations governing risks from toxic material inventories tend to be process-oriented rather than outcome-oriented. That is, while based on the goal of preventing harm to populations and the environment, they describe the steps that must be taken to prevent harm, rather than the outcome, measured by risk levels or risk reduction, that must be achieved. They do this because they were derived from EPA rules which were developed to regulate a large 5

Milton Russell, “Toward a Productive Divorce: Separating DOE Cleanups from Transition Assistance” (Joint Institute for Energy and Environment Report No. 97-03, Knoxville, TN, 1997. Also available at http://www.jiee.org). See also Annual Review of Energy and Environment 23, forthcoming.

4

number of relatively small waste streams dispersed throughout the nation, for which individual studies to measure and target risk levels would not be cost-effective, and for which parties to cleanup were typically averse to spending large sums on cleanup. The DOE situation is different, which makes the process basis of these rules inappropriate. Nonetheless, EM has been a willing partner in increasing cleanup scope, because it has tended to view the cleanup as a technical task, one of matching the best available technologies to individual cleanup tasks. The problem with this is that it is an unbounded exercise. There are, for practical purposes, an unlimited number of cleanup tasks that EM could undertake and that would occupy huge amounts of resources over long time periods. And this is precisely what communities affected by cleanup want. Separating cleanup as risk management from government spending to assist communities’ new economic roles would allow each function to be better targeted. It would avoid excessive cleanup, measured by risk management objectives, and allow savings to be shared between communities for development activities and EM for additional risk management. Step 2—Committing to Outcome-Orientation Measured by Risk: The second step in grasping control is for EM to reorient its cleanup in terms of outputs, rather than inputs. The most logical choice of an output is the reduction and management of risks that arise from the hazardous and toxic materials that are the targets of cleanup. Doing this would solve several problems. First, risk reduction/management is a logical target for EM to address because risk is the single element in cleanup that most directly affects human welfare. While we defer a detailed discussion of risk, it is important to note that risk is the expected harm that hazardous or toxic materials bring about, rather than the existence of toxicity itself. For harm to occur, hazardous materials must find their way to human or ecological receptors through physical pathways, like air, water, and soil. Once at the receptor, they cause damages that can be valued by humans. Risks are typically stated as expected values, because they occur probabilistically. Most importantly, targeting risks rather than “cleanup” offers a broad array of tools (sequestration, dilution, etc.) for meeting its goals now not fully available to EM. Second, there is precedent for using risk as a means of organizing policies, plans and budgets. The Environmental Protection Agency has done this with success. The tools of risk analysis, risk management, and risk communication, developed by EPA, form a foundation for an EM program. They are also familiar on Capitol Hill. We do not believe, however, that simply adopting the EPA system would be appropriate. EPA is largely concerned with regulations that govern the creation of new risks. Examples include risks from adding pollution to water, to air, or to soils. In contrast, DOE is largely concerned with how to deal with existing risk inventories. The problem is sufficiently different to require fresh insights. It is true that EPA also deals with some risk inventories, such as those controlled by the Resource Conservation and Recovery Act (RCRA). But, as we argue below, a case can be made for modifying the application of RCRA to the DOE cleanup, based on the special attributes of the DOE cleanup.

5

Third, there would be a natural inclination for Congress to accept risk as a basis for planning and managing the cleanup. Through the Government Performance and Results Act, Congress has mandated that agencies of government recast their missions in terms of outcomes rather than inputs. Congress, in reviewing EM’s agency-wide plan, has criticized EM’s own statement of the cleanup mission (“to be good and faithful stewards...of the cleanup of our facilities”). Congress is on record that it would be receptive to a more concrete cleanup objective. Moreover, DOE has already invested heavily in a risk database. It would be a logical next step to integrate this database more fully into the cleanup planning process. Step 3—Use DOE Risk Principles as a Guide: DOE has already committed to a set of risk principles and developed extensive databases describing the physical attributes of waste that give rise to risk. It has also used risk as a minor component for project prioritization. It is a straightforward task to build upon these actions and the body of risk literature developed by other agencies. Risks are the expected damages to human health and the environment that occur when a population is susceptible to exposure to some physical hazard through physical and/or human pathways. In general, risk planning involves three related activities—risk analysis, risk management, and risk communication.6 These consist of measuring risks (i.e., the expected value of damages), developing policies and practices to reduce risks, and engaging in dialogue with affected populations over how risks are measured and what policies are appropriate. In risk analysis, the potential or expected damages associated with a hazard are measured, usually probabilistically, using metrics such as statistical lives lost or statistical incidences of disease. Because the steps of analysis must consider the complex linkages among hazard, pathway, exposure, and response to exposure, measuring expected damages can be quite difficult and the resulting measurements imprecise. Higher levels of precision are not required, however, as guides to action. For the overall cleanup program, populations at risk may be current area residents, cleanup workers, or future residents or users of the site, as well as environmental and cultural attributes. There are a number of ways to express expected damages. For example, a starting point is counting the expected number of lives (or years of life) lost. However, a more useful measure would be the loss of welfare or well-being that the relevant population associates with the damage. As a first step, the “numbers of lives lost” measure could be refined, using value of life coefficients. Next, damages that result in death could be combined with those that result in illness or injury. To human damages could be added environmental damages; for example, values for deaths of wildlife, contamination of land or water, and numerous other assaults. The more heterogenous the damages, the more useful would be a common metric, such as dollars. Many complicating factors arise as methodologies to create comparable measures of value are

6

Additional information on DOE risk principles and risk databases is available from the DOE Center for Risk Excellence, Chicago, IL. See http://www.doe.gov/riskcenter.

6

evaluated. For example, some cultures, such as those of the Native American population, view environmental assaults in ways more spiritual than economic. While there is clear value in pursuing more refined measures of risk based on human sentiments of loss, reaching consensus over such measures is challenging. But again, precise measurements are not required for the broad decisions involved. Risk management consists of choosing what level of risk to allow and what tools to use to achieve this level. Typically, risk management starts from a risk “baseline” and the reductions from this baseline that can be achieved from different levels of mitigation. It then chooses an appropriate level of risk to allow. The decision process may or may not explicitly include consideration of costs, but at some level, costs always play a role in the final choice. To the extent that costs do matter, risk management commonly notes that when few measures are in place to control risks, i.e., when risks are large, risk reductions can typically be purchased at relatively low costs. In contrast, when stringent controls are already in place, buying additional increments of risk reduction is relatively costly. Conceptually, balancing costs and risks suggests that risk reduction should be pursued to the point at which the benefit and cost of risk reduction just offset one another. Risk analysis can highlight when there is “too much” risk reduction for some risk targets and “too little” for others. To the extent that moving some risk reduction efforts from one waste target to another can reduce overall risks, a “better” cleanup is purchased for the same volume of dollars. Finally, a structured approach to dialogues among risk analysts, risk managers, and relevant populations is referred to as risk communication. Risk communication encompasses a variety of specific elements, from the decisions that drive risk measurement and analysis to the decisions over the appropriate level of risk abatement to pursue. Because of concerns over concentrating risks on small elements of the population, the law often requires that “stakeholders” be consulted over the various elements of the risk planning process that affect them. Step 4—Adapt Classical Risk Principles to EM Operations: Combining the risk principles with the specific attributes of the EM mission would give rise to a risk-planning system uniquely tailored to the needs of the DOE cleanup. Creating such a system is necessary because the DOE cleanup differs from other Federal environmental programs in significant ways. The principal difference between EPA and DOE is that, whereas EPA focuses largely on the creation of new risks, DOE manages inventories of existing risks. As a starting point, it is useful to view EM as managing three waste “inventories,” each of which possesses distinct attributes that give rise to risks. These inventories comprise waste products in three management states: (1) storage, (2) treatment, and (3) disposal. Storage is a form in which risks are controlled without substantively altering the toxicity of the hazard. Treatment usually changes the form and volume of the wastes and often reduces the toxicity of the treated materials. Disposal is the longterm emplacement of treated wastes. It is important to note that risk management activities potentially can be targeted at any or all of these three states. Toxicity or other attributes of the waste product can be altered through treatment. Mobility of the hazard can be reduced. Pathways can be disrupted by the construction of protective barriers. Affected populations can be distanced 7

from the toxic either by moving the toxic or moving or restricting the population. Risk management at EM, then, can be viewed as making choices to distribute wastes among these inventory states to control the expected damage to relevant populations. The first step in outcome-oriented risk planning is to choose an overall goal or strategy to guide risk management choices. This goal should address a desirable end-state at some specific point in the future. For present purposes, we use the ten-year planning environment embodied in Accelerating Cleanup. Within this time horizon, a number of different goals could guide planning. For example, EM could seek to: (1) minimize the sum of risks in each year, (2) minimize the risk inventory at the end of the time period (i.e., storage plus disposal risks), or (3) given compliance requirements, minimize life-cycle costs. Other goals are also possible, but whatever goal is chosen should be explicit. The next step is recognizing that pursuit of the chosen goal is inhibited by constraints. For practical purposes, EM faces compliance constraints, technical constraints, and budgetary constraints. It must manage these constraints in light of its chosen goal. Step 5—Demonstrate the Feasibility of the New System: To overcome the natural inertia within EM, as well as to anticipate possible analytical pitfalls, a demonstration phase should precede formal implementation of a new risk-planning system. As a first step to demonstrating that outcome-oriented risk planning is a feasible means to restructure planning for DOE cleanup, we have constructed a computerized model using the cleanup data from the Oak Ridge National Laboratory. In doing so, we have made use of the steps outlined above, that is, we have examined the three alternative goals just mentioned over a ten-year planning horizon using mathematical equations to summarize cleanup technologies and the current risk database.7 We find that the system provides a straightforward means to illustrate the implications of alternative cleanup goals and impacts of changes in budgets, technology, or compliance requirements. We find, as would be expected, that different goals lead to different priorities among waste groups, that less extensive treatment leads to lower current expenditures but greater stewardship costs, and that specific decisions implied by life-cycle costing analysis depend on the rates with which one discounts the future. Our admittedly rough calculations suggest that dollar savings from flexibility are significant, but not dominating. This is because smaller expenditures for treatment actions tend to be offset by greater future charges for stewardship. Ultimately, the desirability of one strategy relative to another may depend on how one discounts the future and on other choices of specific values. These are among the policy choices for which EM should prepare itself to act as arbitrator by developing and communicating a clear understanding of the tradeoffs. By incorporating the variables important to EM within the risk planning system, it is possible to obtain quantitative estimates of the impacts of exogenous shocks, like budget changes,

7

This analysis is reviewed in Bjornstad, et al., “Outcome-Oriented Risk Planning,” and presented in detail in Jones, Redus, and Bjornstad, “A Non-linear Programming Model.”

8

or internal decisions, like R&D. Virtually all important decisions can be presented in this manner. Were EM to do this, it could lead the debate over important decisions by forcing others to make use of its logic, vocabulary, and databases. Step 6—Implement the System: The sixth step in grasping control is for EM to begin systematically to integrate the risk planning system within the EM management system. This means it would use the system to help (1) prioritize activities, (2) manage constraints—budgets, technology base, and compliance—and (3) integrate ongoing internal programmatic and management initiatives like contract reform. EM now has a workable plan embodied in Paths to Closure that sets forth current priorities. Outcome-oriented risk planning would provide a means to analyze departures from this baseline, using tradeoff analysis. An example of a departure would be a decision to move dollars among field offices to maximize the cleanup goal. The risk planning system could analyze the degree to which this or any other change in policy would affect the cleanup, vis-á-vis its stated objective. The system would provide a means to examine how changes in its constraints would speed up or slow down progress toward its goal. It would be of particular use in budgetary discussions where DOE must argue clearly and consistently, over time, and with repetition, how cleanup dollars are contributing to the EM mission and the consequences of additional or fewer cleanup dollars on this mission. Unless cleanup dollars can be clearly linked with program outputs, Congress will tend to view cleanup cutbacks as costless. If risk were established as a basis for budgeting, EM would also have a strong tool to organize its arguments in favor of R&D activities. Why have an R&D program? Because it will contribute to future risk reduction to a greater extent than would the same dollars spent for immediate cleanup. How should this be measured? Much as an investment would be evaluated by a business. Does it matter when technologies come on line? Certainly. A technology that becomes available after significant cleanup efforts are completed is clearly less valuable. In a sense, EM can purposefully and independently reduce the technical constraints that bound cleanup through its R&D efforts. A risk-based analysis system would also help EM negotiate (or renegotiate) compliance agreements. Compliance agreements are based largely on EPA rules and place significant bounds on cleanup, because they tend to be prescriptive. That is, while based on the goal of preventing harm to populations and the environment, they describe the steps that must be taken to prevent harm, rather than the outcome, measured by risk levels or risk reduction, that must be achieved. They do this because, like other EPA rules, they were developed to regulate a large number of relatively small waste streams dispersed throughout the nation, for which individual studies to measure and target risk levels would not be cost-effective, and for which parties to cleanup were typically averse to spending large sums on cleanup. These circumstances do not characterize the EM complex. The EM waste cleanup problem is large, unique, and well-funded. It requires a specific, risk-based planning system to design a cleanup based on a “desirable” path for the risk 9

inventory over time, rather than a prescriptive set of activities that define proper inputs, while ignoring outputs. Outcome-oriented risk planning would accomplish this by creating new, riskbased goals as the primary EM mission, recognizing the constraints that cleanup must respect, and choosing activities to ensure that the goal is accomplished to the highest degree that the constraints permit. Internal management practices and innovations should be evaluated in a similar manner, that is, according to their contribution to risk management and reduction. Viewed in this light there must be a clarification as to what constitutes ES&H risk as opposed to financial risk. When DOE says it wants to transfer ES&H risk responsibilities to its contractors, it must also link financial risks to ES&H risks, so that privatized contractors have incentives to behave safely as well as cost-effectively.8 As importantly, the benefits of privatization, when translated into risk terms, mean that if privatization saves dollars, the same budget will support a greater level of risk reduction and management. Step 7—Acknowledge Needed Breaks from the Past: The final step in adopting outcomeoriented risk planning is to recognize that some breaks from the past would be required. The first break from the past is a reorientation from cleanup as hazard elimination to cleanup as risk management. In fact, this is merely to ratify a process that has been ongoing at EM for some time under the rubric of long-term stewardship. Long-term stewardship, in part, means recognizing that managing toxic materials in a manner that prevents risks to the public and the environment is a necessary and acceptable substitute for processing materials in such a way as to render them non-toxic. In many cases technologies to process wastes fully are either unavailable, or so costly as to prohibit other needed cleanup activities were they undertaken. The second necessary break from the past is to reorient the cleanup planning process from one of matching toxic material inventories with best available technologies, as was done in early EM plans, to one in which individual toxic material inventories are associated with appropriate risk levels. When budgets are limited, applying “technological overkill” to some waste groups may mean that treatment of other waste groups is delayed. As a corollary, R&D planning should be similarly carried out to match technical enquiries with technical needs. In summary, a switch to outcome-oriented risk planning would significantly alter the overall orientation of the EM management system, because it would call for systematically relating all EM activities to a common logic, vocabulary, and accounting system. It would be compatible with current practices and with initiatives already underway within EM. EM is already guided by risk principles and has developed a sizable risk database. It has already begun consideration of long-term stewardship. It has done likewise with R&D planning. EM already has well established stakeholder communication channels, and it must confront stakeholders in any 8

We examine these issues in some detail in David J. Bjornstad, Ronald C. Cummings, Christine L. Dümmer, Donald W. Jones, Milton Russell, and Gabriel Valdez, “Risk Reduction and the Privatization Option: First Principles,” (Joint Institute for Energy and Environment Report No. 97-04, Knoxville, TN, September 1997).

10

event over impending budgetary cuts. The Department is under Congressional mandate to switch to an outcome orientation. Outcome-oriented risk planning provides a means to compare all of these existing initiatives using a common metric.

4. THE PATH FORWARD It was suggested above that EM has been through two management phases. The first was the BEMR phase in which wastes were characterized, matched to technologies and scheduled for cleanup under legally binding compliance agreements. This phase resulted in a management schedule that spanned some seventy years and committed hundreds of billions of dollars. During this phase most hazards posing clear and present dangers were eliminated. With these actions taken, EM prepared itself to be manager of a long-term cleanup, even as Congress was beginning to question the pace of, and even the need for, the cleanup effort. Responding to Congressional pressures, EM now finds itself in its second management phase, the “closure” phase, which introduced a ten-year planning horizon, and a sense of budget constraints and cost-effectiveness. Within this phase cost-saving initiatives such as “privatization,” mortgage reduction, and “management and integration contractors” have been the subject of experimentation. Increasingly, it has become clear that “closure” is not synonymous with “clean” and that most major cleanup sites will require significant resource commitments over time for “stewardship services,” essentially continued monitoring, surveillance, and management to ensure that no harm results from remaining toxics and hazards. An uneasy calm pervades the cleanup at this writing, as budgets, while declining, have not yet constrained the cleanup in significant ways. The cleanup will be forced to enter its third management phase when Congress reduces funding to the point that serious tradeoffs must be confronted. Such tradeoffs might include substituting “iron fence” cleanup for cleanup that produces useable end-states, moving funds from site to site, reducing or eliminating EM’s R&D programs, or simply leaving some tasks undone. EM has the opportunity to gain control of its agenda and to avoid a disruptive reorientation imposed from without by moving swiftly on its own to implement a vision and policies which will carry the cleanup mission to completion. To do this, EM must be prepared to lead the decisionmaking dialogue if it is to maintain its role as public steward of the cleanup. The final phase of cleanup will not be calm. For example, it may require renegotiation of “compliance” implemented through the legally-binding, yet potentially infeasible, agreements that now govern the pace and scope of the cleanup. One way for EM to prepare for this challenge is to develop a management system that defines the programs outputs and facilitates tradeoff analysis. Using risk reduction as a measure of output and implementing outcome-oriented risk planning as a vehicle for tradeoff analysis is a feasible response to this challenge. Implementing this system would not be simple, yet the basic tools are already in place. In particular, a significant, though largely unexplored, risk database currently exists and could be refined for this purpose. We have demonstrated that virtually all EM programs could be integrated through a planning system organized around this database. 11

The effort required to implement such a system should not be minimized. Starting with strong support from the highest levels of DOE management, it would also require intra-Complex cooperation in ways never before seen. The payoff from undertaking such a management initiative would be to increase the likelihood that DOE will continue to oversee the cleanup of the complex and that decisions over budget allocations would be based on the data internally consistent with the toxic and hazardous materials that are the targets of cleanup. Such continuity and rationality would be to the benefit of both local stakeholders and the public at large.

12