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    • 21200-01
    • Catastophe-Avoiding Regulation: Power, Offshore Production, Finance
    • Sabel
    • Thu 4:10 PM-6:00 PM
    • 2
    • -
    • limited enrollment
    • paper required

    Catastrophe-Avoiding Regulation: Nuclear Power, Offshore Production, Finance (21200). 2 units. In the late twentieth century the focus of regulation was efficient harm reduction: the allocation of the burden of reducing the risk of known harms to those who could mitigate those risks at the lowest cost. Its characteristic intervention was the cap-and-trade regime. Increasingly the problem for regulation is not harm reduction but catastrophe avoidance. As supply chains lengthen and the pace of innovation (and with it the rate of introduction of incompletely tested products and production processes) increases, it has become clear that catastrophes can result from the unforeseeable concatenation of abnormal or out-of-control sequences of events, many themselves relatively innocuous. This class examines regulatory systems in domains such as nuclear power generation, offshore drilling in the North Sea, food safety in the United States, European Union, and globally and—incipiently—financial-market regulation that are successfully responding to this potential for catastrophe. Introductory readings explain why, under these circumstances, regulators do not attempt to write detailed rules whose application will ensure safe operation, and why it cannot be assumed that imposition of unlimited tort liability for damages will induce private actors to take requisite precautions. Case studies show how, instead, error detection and correction methods (similar to, and sometimes directly inspired by those developed in the Toyota production system) induce continuous, joint learning about potential hazards and effective responses to them that neither the regulator nor the regulated entities could have identified ex ante. These continuous-improvement systems mesh awkwardly with the notice-and-comment rulemaking at the heart of US administrative law; and the class explores reform possibilities, some already present as leitmotifs in administrative practice. A final unit considers the effect of applying catastrophe-avoiding regulation to global supply chains from the vantage point of developing countries. Paper required. Enrollment limited to fifteen. C. Sabel.

    Location: SLB - 112 (Thu)
    Grade mode: graded
    CRN: 20351