While the focus in this paper is on environmental regulation, there appear to be sympathetic vibrations in other policy areas that may similarly suffer from the same type of minoritarian undertow. The development of regulations governing financial institutions, for example, may parallel the failure of toxic regulation in the US.75 In a paper that preceded the market crash, the authors describe evidence
of what appears to be a minoritarian undertow eroding implementation in the US:
We have found that those with the least technical expertise— namely the users of financial statements (mostly investors, who additionally face collective action problems)—play hardly any role in the domestic and global governance on accounting standards. This is particularly striking since, at least in the United States, public regulatory authority over financial reporting was established in the 1930s precisely to safeguard the interests of investors. In such situations, some of the procedures of administrative law—such as openness of the standards-setting process to input from all interested parties during notice-and-comment periods—will, by themselves, do little to improve the governance output for the previously disadvantaged group. Such administrative law procedures might be instituted with great fanfare in response to a shift in what we have called the macro-political climate, but they may be quite ineffective.76
More recent work demonstrates the minoritarian undertow taking hold even in the few years after passage of majoritarian legislation intended to place greater regulatory oversight over the financial industry.77
C. Summary
CIA highlights both the existence and the reasons for institutional failure in much environmental regulation in the U.S. The complexity of the information increases with the minoritarian undertow, making the issues effectively impenetrable to the diffuse majority. Even for those who can keep up
72 See generally Thomas McGarity, Administrative Law as Blood Sport: Policy Erosion in a Highly Partisan Age, 61 DUKE
L.J. 1671 (2012).
73 These statutes include the Paperwork Reduction Act, the Data Quality Act, and the Data Access Act. The latter two were
passed as appropriation riders and drafted by an industry consultant. See generally CHRIS MOONEY,THE REPUBLICAN
WAR ON SCIENCE (2006). 74 McGarity, supra note 72.
75 Lawrence Baxter, symposium article, Wake Forest L. Rev. (forthcoming 2012).
76 Walter M. Attli & Tim Buthe, Global Private Governance: Lessons from a National Model of Setting Standards in
Accounting, 68LAW &CONTEMP.PROBS.225,261(2006).
77 See Kim Krawiec, “Don’t Screw Joe the Plumber”, available on SSRN at
with the complicated and time-consuming rulemaking process, however, the resulting fragmentation and layered complexity impedes the ability of catalytic subgroups to make many of the issues accessible to the diffuse public. The result is a systemic failure across institutions that becomes increasingly vulnerable to the undertow and offers little hope for informational breakthroughs that can spark the dormant majority into action.
An examination of basic administrative process in the US, moreover, reveals that there are effectively no structures in place to buffer this minoritarian undertow. Instead, each step of the rulemaking process provides only reinforcement for this inevitable erosion by a high stakes coalition that was the initial target of the majoritarian activity.
III. Modular CIA to the Rescue
At this point the reader may be thinking “CIA focuses on institutional comparisons, but what good is this analysis when all institutions fail – perhaps miserably – together?” Yet, beyond identifying the least imperfect of the failing institutions, CIA also assists the analyst in identifying viable reform possibilities in the search for the “least imperfect” institutional option.
Yet the least imperfect institution need not be a wholesale comparison between the political process, the courts, and the markets. CIA also provides a method for analysts to design hybrid institutions by breaking them into smaller units and then conducting CIA on the discrete institutional slices. Key steps in an institutional process are spliced out and in their place, alternative institutional approaches are inserted to provide a decision process that, in the end, is more able to counteract predictable problems of minoritarian (or other) bias.
A good illustration of this modular CIA is found in Komesar’s discussion of the use of custom in tort cases. The question explored in this short excerpt, located within a larger chapter on courts, is when or whether reference to industry custom provides a useful presumption of reasonableness in tort law. In a duel with Posner, Komesar concludes that in highly technical areas that are fraught with complications and risks if a jury arrives at the wrong conclusions, industry custom via the market is a better gauge of reasonableness than raw jury assessments. Conversely, in areas where juries encounter few obstacles in assessing the reasonableness of industry practices (e.g., the existence of radios on barges), basic jury intuitions of what constitutes reasonable behavior is superior to industry custom in evaluating industry behavior.
While Komesar’s custom analysis is intended primarily to showcase the importance of the relative nature of the inquiry (i.e., which institution - the market or the jury - is better able to determine reasonableness in tort cases involving potentially complex institutional practices), his application of CIA also exposes the core methods of modular CIA -- namely a relative assessment of the attributes and deficiencies of institutional alternatives nested within a larger, essentially noncontroversial institutional choice. Komesar is not suggesting that for complex cases we should defer only to the market for regulating safety. Rather, he is suggesting that in identifying the best measure of reasonableness within a tort case, the market in some cases may produce the more reliable standard than a raw jury assessment of reasonable behavior.
In this illustration, two distinct steps become evident in deploying the methods of modular CIA. The first is the identification of key decisions within a larger, singular institutional approach that can be extracted and institutionally changed-out. If the institution of choice for the overall implementation of a reform is the political process, for example, this first step identifies discrete steps nested within the political process where important choices are made with respect to regulatory requirements that could conceivably be based instead on the market, common law, or other institutional options. Similarly, if the institution of choice is the common law or judicial system, important substeps to determining liability would be broken out for further investigation using CIA. The second step of modular CIA then involves comparing alternative institutions at these key junctures. In applying these
two steps, a completely new, hybrid institution can be formed in place of the existing monolithic institutional approach, much like the creation of hybrid animals in a child’s flap-book. See Figure below.
The identification of substeps within a decision process that can be changed out and replaced with alternative institutions is an important methodological attribute of modular CIA. At least in environmental law, for example, analysts generally assume a mutual exclusivity between institutional approaches.78 Even market-based and liability-based approaches to environmental law, which depend
on legislation for their creation, are built in large part on singular institutional approaches; the choice is an all-or-nothing selection of one institutional approach over another, which excludes more elaborate, hybridized models.79 Modular CIA forces reform-minded analysts to identify each substep
of a decision process and to consider viable institutional alternatives at each step.80
IV. Applying Modular CIA to US Toxics Regulation
In settings where all institutions are likely to fail together, modular CIA allows the analyst to slice the decision-making steps into finer increments to identify whether there are joints that can be shifted institutionally to produce more representationally balanced outcomes. In the case of toxics regulation, while the political process may tend to be subject to minoritarian bias and hence fail in a direction similar to the market, there may be steps within the political process that can be adjusted to make it less likely to fail. Each of these steps involves more discrete and fine-tuned comparative institutional analyses.
78 See, e.g., David Driesen, Robert Adler, and Kirsten Engel, E
NVIRONMENTAL LAW: A CONCEPTUAL AND PRAGMATIC
APPROACH (2005)
79 Climate change regulatory discussions, for example, tend to follow this singular institutional approach and rarely if ever
consider more hybrid approaches, beyond “market based” trading regimes.
80 In a market context, this more fine-grained approach, for example, might break regulatory permits into multiple smaller
steps that involve CIA at each substep. The resulting hybridized institution might involve a more limited use of markets that play a more constrained role in regulatory options, by for example, first allowing regulators to identify which polluters may buy permits (and how many permits) to avoid hot spots.
This section applies modular CIA to reform chemical regulation – a particularly extreme example of the minoritarian undertow. While the methods are inevitably soft, the analysis presented here reveals at least one discrete step within the political process – setting the standard for acceptable toxic products – that can be spliced out of the current regulatory process. Using CIA, a different, better institutional approach can then be substituted in its place.