Taking Precautions against Innovation, Commerce and Jobs

By February 26, 2009Innovation, Regulations

A House Energy and Commerce subcommittee holds the opening hearing today in what could well be a multiyear effort to establish the “precautionary principle” as the regulatory framework for treatment of all chemicals used in commerce. The precautionary principle requires those who seek to introduce new products into the marketplace to prove conclusively that those products will cause no harm, ever. Applying this unattainable standard to chemicals — prove the negative: NO RISK! — would stifle innovation, invite yet another expansion of the litigation shakedown game, and drive people out of business. (For more on the precautionary principle, see the extended entry section below.)

Think the Consumer Product Safety Improvement Act has had disastrous effects on home-based businesses, thrift stores, the clothing industry, recreational vehicle manufacturers and retailers, libraries and bookstores, artisans, toy makers, Irish step-dancers and, oh yes, consumers? Rewriting the Toxic Substances Control Act of 1976 could be CPSIA tripled.

According to the website of the Subcommittee on Commerce, Trade, and Consumer Protection, the committee’ hearing is, “Revisiting the Toxic Substances Control Act of 1976,” scheduled at 10 today to “address critical gaps in the statute and explore how these gaps hinder effective chemical safety policy in the United States.”

Some commenters have seen the hearing as setting the stage for reintroduction of the Kid Safe Chemical Act, legislation that would “ensure for the first time that all the chemicals used in baby bottles, children’s toys and other products are proven to be safe before they are put on the market” – that’s the description from a news release last year by Sen. Frank Lautenberg (D-NJ). Lautenberg, Rep. Henry Waxman — the full committee chairman — and Rep. Hilda Solis, now Labor Secretary, sponsored the legislation in 2008. (H.R. 6100 and S. 3040). Thankfully, bills that mentions “kids” or “children” in their titles never affect anyone other than children or have unintended consequences.

In attempting to rid the world of all risk, advocates of the precautionary principles create regulatory and economic paralysis. If you’re the manufacturer of plastic bath toys, for example, trying to replace the phthalates banned by the CPSIA, every possible substitute chemical is an invitation to lengthy, expensive and capricious regulatory review followed by cash-seeking litigation. Why bother?

The Subcommittee on Commerce, Trade and Consumer Protection, chaired by Rep. Bobby Rush (D-IL), is the committee with jurisdiction over implementation of the Consumer Product Safety Improvement Act. Rather than holding an oversight hearing into the economic catastrophe caused by the law, the committee is looking to see what other portions of the economy it can intervene in. A more serious, necessary focus would start with a review of the CPSIA.

Beyond the Precautionary Principle

Cass R. Sunstein
Harvard University – Harvard Law School

January 2003

U Chicago Law & Economics, Olin Working Paper No. 149; U of Chicago, Public Law Working Paper No. 38
The precautionary principle has been highly influential in legal systems all over the world. In its strongest and most distinctive forms, the principle imposes a burden of proof on those who create potential risks, and it requires regulation of activities even if it cannot be shown that those activities are likely to produce significant harms. Taken in this strong form, the precautionary principle should be rejected, not because it leads in bad directions, but because it leads in no directions at all. The principle is literally paralyzing – forbidding inaction, stringent regulation, and everything in between. The reason is that in the relevant cases, every step, including inaction, creates a risk to health, the environment, or both. This point raises a further puzzle. Why is the precautionary principle widely seen to offer real guidance? The answer lies in identifiable cognitive mechanisms emphasized by behavioral economists. In many cases, loss aversion plays a large role, accompanied by a false belief that nature is benign. Sometimes the availability heuristic is at work. Probability neglect plays a role as well. Most often, those who use the precautionary principle fall victim to what might be called “system neglect,” which involves a failure to attend to the systemic effects of regulation. Examples are given from numerous areas, involving arsenic regulation, global warming and the Kyoto Protocol, nuclear power, pharmaceutical regulation, cloning, pesticide regulation, and genetic modification of food. The salutary moral and political goals of the precautionary principle should be promoted through other, more effective methods.  


Keywords: burden of proof, behavioral economics

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