Adam White on Black Swans and the Threat of Low-Probability, High Impact Events

January 13th, 2012

Adam White–who is someone to keep an eye on–has a cool piece in Engage about the National Environmental Policy Act and how government approaches “black swans.”

Here are some good chunks:

The National Environmental Policy Act1 requires federal agencies to ascertain and evaluate the possible environmental effects of federally regulated energy infrastructure proposals. But this broad statutory requirement leaves great uncertainty as to which hypothetical risks of environmental harm must be evaluated, and which risks may be set aside as too contingent or otherwise improbable to merit review. Recent events—the Japanese tsunami that disrupted a nuclear power plant, for example, or the deepwater Gulf of Mexico oil spill—remind us that seemingly unthinkable disasters can occur, posing a significant threat of harm to the environment. But two recent court of appeals decisions have created a circuit split on the question of precisely how agencies should approach the possibility of low-probability, high-impact events—or, as they have come to be known, “Black Swans.” . . .

The petitioners challenging NRC’s approval of the Oyster Creek relicense did not seek further review at the Supreme Court. Thus, for the time being, the Court will have no opportunity to resolve the circuit split. Nevertheless, in light of the heightened public awareness of the unexpected threats to nuclear facilities and other infrastructure that has followed the Gulf oil spill and Japanese tsunami, we can expect critics of energy infrastructure projects to cite the possibility of “Black Swan” events—terrorism, natural disasters, or otherwise—as necessary considerations in NEPA analyses. And the fundamental uncertainty of such hypothetical threats, if they are required to be considered in NEPA analyses, will only lengthen the agencies’ process for reviewing infrastructure proposals, and offer litigants greater opportunity to overturn federal approvals of challenged projects.

The answer is neither to require agencies to attempt to predict and analyze the truly unpredictable, nor to give agencies carte blanche to ignore the possibility of such events. Rather, it is incumbent upon agencies to do their best, in good faith, to separate the reasonably foreseeable from the truly unknowable; to analyze the former as rigorously as possible; and to act prudently in light of the latter. We cannot pretend to be perfectly protected against Black Swan events, nor can we allow an exaggerated application of the Precautionary Principle to paralyze federal agencies and the development of energy infrastructure.

I think I’ll turn next to writing something about black swans. It’s been on my mind long enough. Then maybe something about the healthcare challenge and social movements.

Update: More from Adam here.