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Safe Harbors, Sure Shipwrecks

46 Pages Posted: 3 Jun 2015 Last revised: 22 Apr 2016

Susan C. Morse

University of Texas at Austin - School of Law

Date Written: June 2, 2015

Abstract

In law, a safe harbor describes behavior that complies with the law, and leaves other facts that fall outside the safe harbor to be judged case-by-case. A sure shipwreck, as I call it, is the mirror image. It describes behavior that violates the law as a matter of rule, and leaves other conduct to be judged by a standard. Prior literature analyzes rules and standards at length. But it has largely missed safe harbors and sure shipwrecks, even though these hybrids are everywhere in statutory, regulatory and case law.

The analysis in this Article reveals that safe harbors and sure shipwrecks produce asymmetrical incentives. Safe harbors encourage those affected by them to converge on the safe harbor boundary from both directions. Under a first-order analysis, sure shipwrecks only encourage bunching immediately on the compliant side of the sure-shipwreck boundary as a result of the incentive to move out of the noncompliant space. But considerations such as market coordination can cause convergence on lines drawn by sure shipwrecks as well. Overinclusion and underinclusion risks, ex ante versus ex post costs, and interest group influence are some of the considerations that affect safe harbor and sure shipwreck policies.

Keywords: safe harbors, sure shipwrecks, rules, standards

JEL Classification: K10, K20, K23, K34, H20

Suggested Citation

Morse, Susan C., Safe Harbors, Sure Shipwrecks (June 2, 2015). UC Davis Law Review, Vol. 49, 2016; U of Texas Law, Law and Econ Research Paper; U of Texas Law, Public Law Research Paper No. UTPUB630. Available at SSRN: https://ssrn.com/abstract=2613543

Susan Morse (Contact Author)

University of Texas at Austin - School of Law ( email )

727 East Dean Keeton Street
Austin, TX 78705
United States

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