Ecologic: Nanotechnology, Environmental Assurance Bonding, and Symmetric Humility

ABSTRACT To date, the turn toward market-based regulatory tools in the environmental, health, and safety context has tended to focus on taxes, tradable permits, and information disclosure rules, With comparatively little attention devoted to environmental assurance bonds. This paper argues that environmental assurance bonding offers a particularly attractive regulatory approach for contexts--such as the present state of nanoscale science and engineering--in which both the risk and the benefit sides of the regulatory equation are characterized by great uncertainty. Historical examples and existing scholarly analyses of environmental assurance bonding are reviewed, and the resulting lessons are situated within the larger debate over economic cost-benefit balancing and precautionary approaches to environmental law and policy. In particular, the paper argues that environmental assurance bonding displays the virtue of symmetric humility, paying due heed to the dynamism and complexity both of sociolegal systems such as markets and of biophysical systems such as aquatic ecosystems. ********** I. INTRODUCTION II. UNCERTAINTY AND COMPLEXITY IN THE ENVIRONMENT A. Sociolegal Systems B. Biophysical Systems III. UNCERTAINTY AND COMPLEXITY IN THE MIND A. Rationality in Social Choice B. Rationality in Individual Choice IV. THE PROMISE OF ENVIRONMENTAL ASSURANCE BONDING A. Environmental Assurance Bonding B. Symmetric Humility V. CONCLUSION I. INTRODUCTION Human history becomes more and more a race between education and catastrophe. H.G. Wells, Outline of History (1920) On January 30, 2009, U.S. President Barack Obama issued a memorandum to the heads of executive departments and agencies expressing an intention to study and revise the manner in which the Office of Information and Regulatory Affairs (OIRA) within the Office of Management and Budget (OMB) conducts regulatory impact review, including economic cost-benefit analysis of proposed rules. He wrote: The fundamental principles and structures governing contemporary regulatory review were set out in Executive Order 12866 of September 30, 1993. A great deal has been learned since that time. Far more is now known about regulation--not only about when it is justified, but also about what works and what does not. Far more is also known about the uses of a variety of regulatory tools such as warnings, disclosure requirements, public education, and economic incentives. Years of experience have also provided lessons about how to improve the process of regulatory review. In this time of fundamental transformation, that process--and the principles governing regulation in general--should be revisited. I therefore direct the Director of OMB, in consultation with representatives of regulatory agencies, as appropriate, to produce within 100 days a set of recommendations for a new Executive Order on Federal regulatory review. Among other things, the recommendations should offer suggestions for the relationship between OIRA and the agencies; provide guidance on disclosure and transparency; encourage public participation in agency regulatory processes; offer suggestions on the role of cost-benefit analysis; address the role of distributional considerations, fairness, and concern for the interests of future generations; identify methods of ensuring that regulatory review does not produce undue delay; clarify the role of the behavioral sciences in formulating regulatory policy; and identify the best tools for achieving public goals through the regulatory process. Under pressure from nongovernmental organizations such as the Center for Progressive Reform, (1) the Executive Order review process was opened up for broader public comment. The resulting input suggested that, despite the President's suggestion that "a great deal has been learned" about the design and impact of regulations, civil society remains deeply split regarding the desirability of regulatory cost-benefit analysis (CBA) as a tool for evaluating proposed policies. …