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.
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. (2) Numerous commentators focused their suggestions on incremental methodological improvements to CBA, expressing unequivocal support for the core practice of evaluating the content of policies based on their predicted overall impacts on human well-being. Several others, however, raised serious practical and ethical objections to the use of CBA. They offered instead a vision of policymaking much more pluralistic in its conception of value and much more pragmatic in its assumptions regarding the availability and certitude of empirical knowledge of policy effects. Although these commentators tended not to invoke the principle by name, their recommendations followed a course that internationally has come to be associated with the Precautionary Principle (PP). (3) In truth, CBA and the PP need not be seen as competing--as opposed to complementary--approaches to environmental, health, and safety policymaking. Nor should they be thought of as exhausting the universe of available and commendable approaches to such policymaking. (4) Nevertheless, despite these important caveats, a rather stylized dichotomy between CBA and the PP has come to dominate much of the academic writing in this area.
This divide between supporters of CBA and the PP is related to a more general split within environmental law and policy circles, one so stark and staunchly policed as to occasionally resemble a world of environmental tribalism. (5) In this world, proponents of "cool analysis" and "moral outrage," (6) or what Christopher Schroeder calls environmental "priests" and "prophets," (7) seem unwilling to alter or compromise their positions, leading to a perception that the debate over environmental, health, and safety regulation is based on philosophical differences that simply cannot be overcome. Daniel Farber, for instance, worries that the conflict between "tree huggers" and "bean counters" reflects an insurmountable divide over whether environmental law and policy should be determined by "willingness to vote" or "willingness to pay." (8) Of late, those on the "moral outrage"/"philosopher"/"tree hugger" side of the environmental law and policy divide have come in for particularly harsh critique and commentary from their opponents. Supporters of CBA, for instance, have dismissed the PP in strident terms, describing the principle as "incoherent," (9) "indeterminate," (10) "paralyzing," (11) and "literally senseless." (12) Indeed, proponents of CBA have begun to declare victory for themselves in the risk regulation debate, describing the "first generation debate" regarding CBA's basic normative desirability as over, and asserting that the important questions today concern "second generation" issues regarding how best to implement CBA in the risk regulation context. (13)
In a recent book, (14) I defend the conceptual coherence and normative desirability of policy approaches, such as those associated with the PP, that reject the idea that environmental, health, and safety law can be adequately addressed from an assumed viewpoint of objectivity. The danger, I argue, is that the attempt to render environmental, health, and safety regulation fully determinable through empirical assessment and formalized decision-making models--an attempt found most influentially in the methodology of CBA, but associated more generally with the economic regulatory reform project of the last three decades--obscures the relation of agency and responsibility that the political community bears to its decisions. Even robust institutional actors such as nation-states confront forces that lie beyond complete prediction and control, such as the operations of natural systems that escape precise probabilistic understanding, the actions of foreign nations and other non-subjects that depend on and impact shared resources, and the future needs and circumstances of unborn generations that are a necessary, but unknowable feature of any policy decision involving intergenerational consequences. I argue that, within such a decisionmaking context, the political community must always in a nontrivial sense stand outside of its tools of policy assessment, maintaining a degree of self-awareness and self-criticality regarding the manner in which its agency is exercised. The PP encourages such conscientiousness by reminding the political community, as it stands poised on the verge of a policy choice with potentially serious or irreversible environmental consequences, that its actions matter, that they belong uniquely to the community and will form a part of its narrative history and identity, helping to underwrite its standing in the community of communities that includes other nations, other generations, and other forms of life. Such considerations, in contrast, hold no clear or secure place within the logic of cost-benefit optimization, which tends to deny the political community a view from within itself, and to ask the community, in essence, to regulate from nowhere.
This Article seeks to make a more modest, but also more grounded contribution: It argues that the turn toward market-based policy instruments in environmental, health, and safety law has focused unduly on the use of pollution taxes and tradable permits, and that a third market-based instrument, the environmental assurance bond, offers features that should commend it both to "tree huggers" and to "bean counters," to "prophets" and to "priests." Especially in the context of a nascent field like nanoscale science and engineering, within which available information regarding potential consequences is highly incomplete and uncertain, the environmental assurance bond is a normatively attractive policy tool because it displays the virtue of symmetric humility. (15) Promoters of CBA support analytical requirements for regulators that presuppose simplicity, predictability, and manipulability in the environment. In essence, they support something like central planning...