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Jamison E. Colburn

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Jamison E. Colburn

Regulators empowered or required to consider the costs of their actions must make formative judgments about which costs to count, how to count them, and the intervals of time and space within which to do so. A range of institutional responses to these challenges has arisen in the modern risk-regulatory world, each one of which entails its own hard questions and often conflicting institutional roles and responsibilities. The US Supreme Court’s jurisprudence interpreting the statutory signals on the weighing of regulatory costs has oscillated over the years between various inducements toward standard welfarism, i.e., cost-benefit balancing, and other, subtler uses of compliance costs. Not surprisingly, what legislation even means when it references “cost” has become a deeply contentious matter with cross-currents and institutional obstacles getting in the way of any clear statement of the law.

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Jamison E. Colburn

Statutes delegating authority to regulators to control risk typically reference the weighing of costs in some fashion. When such statutes do not reference costs, they are notable in exactly that regard. References to the weighing of costs in the setting of risk-regulatory standards, however, vary in their specifics, sometimes explicitly acknowledging the role of technology and technological innovation therein, sometimes ignoring it. In practice, this diversity of references to cost, coupled with the different methods of calculation and their evolutions over time, have led to a range of plausible approaches, each of which is influenced to varying degrees by the scale of its assessments. But a bare legal mandate to weigh costs is not without its own risks. Some of the most consequential collective actions taken have foregone or circumvented such mandates and may never have been feasible had they not done so. Welfarist sensibilities must be informed by that history.

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Jamison E. Colburn

Contemporary micro- and macroeconomics both struggle with the concept of social costs. Costs experienced by society as a whole are, at least presumptively, costs that are not balanced out by equal, opposite benefits in a corresponding or correlated cohort. It has proven quite challenging to identify such costs objectively, however. Likewise, the formative concepts of growth economics depend for their coherence on a range of constraining assumptions and mutually reinforcing methods for identifying and estimating year-over-year progress in an entire economy. Whether focused on social welfare or focused on growth, though, economists have derived precious few general insights into the policy-driven inducement of innovation—leaving practitioners little context-independent guidance with which to tailor legal entitlements. When regulators have the authority to tailor legal entitlements and the duty to consider the costs of their actions, they inevitably confront three questions of scale: the factors of production at issue, the geographic scope of their jurisdiction and actions and whether any lesser included jurisdictional variations are relevant, and the interval of time over which their calculations should range. As their models and other computational tools have grown in sophistication, the basic relationship(s)—or lack thereof—between technological change and economic consequences have grown increasingly obscured. This chapter describes several typical sources of frustration.

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Jamison E. Colburn

The spark combustion engine is what some would call a “general purpose technology,” having generated economic consequences far in excess of its own costs. But spark combustion engine-driven automobiles have entailed equally outsized externalities, yielding a deep regulatory history of risk and the weighing of cost in the governance of those risks in the US and elsewhere. This chapter treats that regulatory story as a case study of evolving cost-calculation methods, of induced technological innovation and consequent reduction of regulatory costs, and ultimately of the onset of regulation controlling globally scaled externalities in the form of greenhouse gas emissions. Fungible public investments in research and development which aided the improvement of emissions technology, combined with the use of long lead times in performance standards allowing varying compliance strategies, dramatically reduced regulatory costs over time. But those strategies also arguably reduced regulated firm litigiousness, enhanced the sector’s competitiveness as to emissions, and facilitated the use of similar tools in the eventual pursuit of fuel efficiency gains and greenhouse gas emissions reductions.

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Jamison E. Colburn

Use of streams and rivers to cool thermoelectric power plants has long constituted an immense use of unpriced natural capital by US electricity generators. Whether this is viewed as a subsidy or as an externality is probably beside the point. It persisted so long that it entrenched its effects in the very markets for electricity services to which these factors contributed, significantly advantaging thermoelectric power-producing technology in certain regions to the exclusion of competing technologies. The Clean Water Act has, since 1972, directed the US Environmental Protection Agency to govern these withdrawals and require them to do everything feasible to reduce their impact on the environment. But this feasibility mandate drew the agency into seemingly interminable rounds of contentious litigation, first in the 1970s when setting a uniform national standard initially, and again in the 2000s when a series of national performance standards was drafted, redrafted, litigated to the Supreme Court, and later drawn into presidential politics, pitting the environment against productivity. Throughout, the precise role that costs of compliance were to play in the stringency of the standards set remained unclear and the agency did little to change that. Indeed, an apparent concern that the performance standards set requires no more than a trivial fraction of the regulated parties’ annual budget in compliance costs seemed to both lurk throughout the rulemakings and to avoid any judicial scrutiny. Ultimately, that lack of external scrutiny allowed the agency to make several basic mistakes in understanding the “feasibility” of producing electricity without very much cooling water.

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Jamison E. Colburn

The transport of crude and other flammable liquids by freight rail faces a hard cost constraint from rail’s modal competitor, pipelines. Regulators have long confronted the freight rail sector’s vulnerability to competition from without, often balancing the costs of compliance with explicit reference to trucking, shipping, and other transportation modes’ replacement costs. In setting a risk reduction standard for flammable liquids by freight rail, US regulators adopted highly specified standards rooted directly in the industry’s own best practice standards. Indeed, the departures from those technologies were minor in comparison with their overlaps. Though not strictly cost-benefit justified as such, the costs of compliance with the standards as finalized were in keeping with the industry’s traditional patterns of capital turnover and offered key risk-reducing benefits to innocent third parties. The industry then found relief from Congress, which enacted a statutory overhaul. In this 2015 statute, Congress ratified much of the administrative rulemaking while ordering a review of the risk benefits of certain braking upgrades. When the testing Congress ordered proved too costly to perform, however, the braking requirement became a casualty of a changed political environment and a changed economic outlook for crude and ethanol by rail.

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Jamison E. Colburn

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The Scales of Weighing Regulatory Costs

Technology, Geography, and Time

Jamison E. Colburn

This book examines the calculation and evaluation of regulatory costs by regulators in accordance with a legislative mandate. A serious limitation in that enterprise, the possibility of technological change and innovation, often compromises those efforts and has long been under-appreciated in standard ‘cost-benefit analysis.’ Regulators who study the inducement of innovation and the avoidance of regulatory costs by the regulated often find significant cost-saving opportunities, leading to more stringent and more effective risk governance. Ultimately, the weighing of costs in this more elaborate model is more than simple welfare maximization. It views regulatory costs as important to society for a range of reasons, some grounded in fairness and some in deliberative process values, as a society seeks to minimize all costs over time.
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Alison McLennan

This book explores the interplay between law and emerging technologies in the synthetic biology context. Synthetic biology is a rapidly developing field which promises transformative benefits, but also poses significant risks. This chapter introduces the key issues to be explored in this book: the debate over the risks and benefits of synthetic biology, the extent to which synthetic biology and its social context are distinctive from those of earlier technologies, the regulatory issues that arise, and whether synthetic biology can be regulated within existing regulatory structures or whether new mechanisms are needed. Chapter 1 explains the goals of regulation of emerging technologies and criteria for assessing the regulatory environment. These are regulatory legitimacy, effectiveness, connection, prudence and cosmopolitanism. The chapter introduces these criteria in the synthetic biology context. It introduces the regulatory challenges posed by synthetic biology in intellectual property, biosecurity, biosafety and environmental law.