When less liability may mean more precaution: the case of nanotechnology.

• Author: Dana, David

1. INTRODUCTION II. FRAMING THE NANOTECHNOLOGY PROBLEM A. The Information Deficit B. Three Components of a Precautionary-Study Approach to Nanotechnology 1. Mandatory Testing and Monitoring Requirements 2. Public Funding 3. Voluntary Testing III. MODELING MANUFACTURER DECISIONMAKING A. Assumptions B. Variables 1. Damages (D) and Standard of Liability (S) 2. Probability of Detection/Attribution (P) and Research Costs (R) C. Comparing the Expected Costs of the Four Options 1. Period One, Pre-Market Investment 2. Period Two, Post-Market Investment 3. Combining Pre-Market and Post-Market Research 4. Comparing the Research Options D. Decreasing the Likelihood of Liability-Driven Avoidance of Post-Market Testing 1. Which Products Will Be the Subject of Voluntary Testing 2. Products Containing Identical or Substantially Identical Materials or Technology 3. Producers of Products Containing the Same General Category of Potentially Risky Materials or Technology IV. FDA PREEMPTION As A MODEL FOR FASHIONING A VOLUNTARY-TESTING-FOR-LIABILITY-RELIEF REGIME FOR NANOTECHNOLOGY A. Genuine Statutory (Rather Than Agency) Preemption B. Preemption Limited to Torts Based on Failures to Test or Monitor C. Government Oversight and Transparency D. Subsidized Insurance as an Alternative Liability-Relief Mechanism E. Features Unique to a Voluntary Regime V. CONCLUSION: NANOTECHNOLOGY AND BEYOND I.

   INTRODUCTION

   Ignorance may be bliss, but it is generally bad policy. This may be especially true with respect to existing and forthcoming products that embody the relatively new, still poorly understood technology called "nanotechnology." Nanotechnology products offer the promise of highly beneficial uses, but also pose uncertain risks of adverse health and environmental effects. For products embodying nanotechnology, there is a powerful normative case for adherence to what I call "the precautionary-study principle." The principle requires that the possible risks from these products be explored before their release to the marketplace. It also would require that possible risks are thereafter continually studied. Continual study after the release of products into the market is important because it allows adverse effects to be isolated and understood using improvements in the background science and real-world observations and reports from consumers and others who have been exposed to the products.

   A central question, therefore, is how to shift the nanotechnology status quo toward greater adherence to a precautionary-study principle. To that end, this Article proposes a federal legislative regime of limited protections from tort liability for nanotechnology product manufacturers who engage in pre market and post-market research and monitoring regarding possible adverse health and environmental effects from their products. The central argument is that less liability may mean more precaution, and, hence, is a good thing.

   Nanotechnology is generally defined as technology that incorporates nanomaterials--engineered, extremely small materials that can be as small as 1/80,000th the width of a human hair. (1) Nanomaterials currently used in products employ common organic elements such as gold, silver, titanium, and carbon, but nanomaterials function very differently than larger materials made up of these same elements. Because of their distinctive size-related functional attributes, nanomaterials may be very useful in areas ranging from cancer treatment to smoothing wrinkles. But the size-related attributes of these materials may translate into significant health risks. Notably, the extremely small nature of nanomaterials may allow them to pass various protective barriers in the human body and ultimately lodge in organs--such as the brain or lungs--where they could do damage. There have been relatively few completed studies, and these studies address only a few of the many forms of possible nanomaterials. While not uniform in their results, these studies suggest that some nanomaterials may have significant adverse health and environmental impacts. (2)

   There is no consensus as to whether nanotechnology and nanotechnology products should be approached within a precautionary framework. Some commentators--including representatives of industry--have argued that there is an insufficient basis for the regulation of risks from nanotechnology, and have emphasized the great need to secure the potentially vast commercial benefits of nanotechnology. (3) These commentators have argued, in effect, against a precautionary approach to nanotechnology. In sharp contrast, other commentators and non-governmental organizations (NGOs) have called for a moratorium on the release of nanotechnology products until product manufacturers can affirmatively demonstrate the safety of their products. (4) In effect, these commentators have called for the application of a strong form of the precautionary principle to nanotechnology products. This might be called the precautionary-certification principle whereby new technologies may not be deployed in the marketplace unless and until the manufacturer first certifies that they are risk-free or "safe." (5)

   These two positions are both too extreme. There are sound theoretical reasons to believe that, absent some commitment to precautionary action, insufficient attention will be paid to the downsides from nanotechnology products. For social welfare as well as pragmatic political reasons, however, the precautionary focus with regard to nanotechnology products should be consistent with a less demanding, more flexible precautionary-study principle. The credible risk posed by most nanotechnology products is not qualitatively great enough--and our scientific abilities to fully evaluate the risks in a reasonable time frame are too limited--to justify a blanket moratorium approach.

   Given the marked gaps in research regarding the environmental, health and safety risk posed by nanotechnology products that is detailed in Part II, what is justifiable is greater realization of a precautionary-study principle with respect to nanotechnology products. There are many obstacles to achieving wider use of the precautionary-study principle. First, current laws and regulations in the United States (as well as other nations) do not provide a clear basis for requiring precautionary study by nanotechnology product manufacturers. (6) Second, there is little public funding for research regarding nanotechnology's health and environmental risks. (7) Third, even if there were a political consensus in support of new mandatory testing requirements and dramatically increased public funding, voluntary testing and monitoring by manufacturers would be an important component of any comprehensive precautionary-study approach. Industry actors have special access to knowledge about emerging technology and product development and products. They can change and adapt quickly to follow a commercial marketplace that may move too fast for legislators and regulators to understand and react to on their own with mandatory testing requirements.

   The heart of the Article is an exploration of the possible role of common law tort liability in both encouraging and deterring voluntary, precautionary study of new products generally and nanotechnology products in particular. A key variable in considering liability's role as an incentive or deterrent to testing is the manufacturer's subjective assessment of the probability that any injuries from its product would be detected by the injured parties and successfully attributed to the product absent research by the manufacturer itself on the adverse effects of the product. Another key variable is the legal standard for tort liability and, specifically, how the applicable standard falls on a spectrum from the imposition of liability on manufacturers only for known risks on the one hand to the imposition of liability even for risks the manufacturer could not have reasonably foreseen on the other. The lower the perceived probability of detection without manufacturer research and the more the applicable liability standard veers toward requiring actual knowledge of risks on the part of the manufacturer, the more likely it is that the ex ante threat of liability will lead a manufacturer to choose not to conduct research into possible adverse effects, either before the product is marketed or once it is on the market. Consideration of these two variables in the nanotechnology context would tend to suggest that liability considerations indeed may be discouraging research into possible adverse effects of nanotechnology products under development and already on the market.

   The closest precedent for the regime of limited liability relief that I propose is the regime of federal preemption of state torts that is afforded manufacturers of certain FDA-approved medical devices under federal law. FDA preemption of common law tort claims is controversial, to say the least. In order to avoid the disadvantages and problems of the FDA preemption regime, any regime of liability relief for nanotechnology manufacturers who voluntarily engage in testing needs a number of components that would help ensure political accountability, scientific integrity, transparency, and a reasonable pool of compensation for injured people. The scope of preemption of state tort law claims would have to be specified by federal statute, not agency promulgation or interpretation. Any such preemption should not include claims based on allegations that a manufacturer violated a tort duty by acting or failing to act in response to actual knowledge of adverse health or environmental effects. There must also be vigorous government oversight of both voluntary pre-market and post-market testing and monitoring, and the public must have reasonable access to the key information provided regulators. Finally, in order to prevent drastic denials of compensation while encouraging voluntary study...