Precautionary Federalism and the Sharing Economy

Abstract

The rise of the sharing economy exposes cracks in legislative and regulatory regimes designed with a different vision of the economy in mind. To date, scholars and policymakers have focused primarily on whether and how the government should regulate the sharing economy — that is, on what form, if any, regulation should take. This Article focuses on a logically antecedent question — who should decide. Using the potentially significant, yet uncertain, environmental impacts of Uber and Lyft as a case study, this Article argues that regulatory authority should be allocated according to the principle of precautionary federalism. Just as the precautionary principle tells us that regulation can proceed in the face of uncertainty about significant environmental, health, or safety risks, precautionary federalism embodies a default presumption in favor of multiple regulatory voices, and against broad exercises of preemption under such conditions. The presumption must be weighed against values favoring uniformity, taking into account trade-offs across different kinds of risks. And precautionary federalism is time-bound — it acknowledges that greater certainty about impacts may warrant a shift from one allocation of authority to another. This precautionary approach can serve an information forcing function about the significance of uncertain impacts, and offers the best way to achieve the kind of rules called for by the precautionary principle.

Keywords: federalism, sharing economy, Uber, Lyft, precautionary principle, environmental law