The Two Boundaries: Why Behavioral AI Governance Fails Structurally

arXiv cs.AI / 5/1/2026

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Key Points

  • The paper argues that effect-capable AI systems have two distinct boundaries—what they can express and what governance covers—and that treating them independently creates “governed,” “ungoverned,” and “theater” regions, two of which are structural failure modes.
  • It focuses specifically on governance of effects (e.g., API calls, database writes, and tool invocations), separating this from governance of model outputs like quality and fairness, which requires different mechanisms.
  • Using Rice’s theorem, the authors claim the structural gap is undecidable in the general case for Turing-complete architectures, meaning no algorithm can reliably determine whether arbitrary programs’ effects comply with governance policies.
  • They propose “coterminous governance,” where the expressiveness boundary matches the governance boundary, and argue this can only be achieved via an architectural separation of computation from effects rather than by adding governance as an afterthought.
  • The authors further suggest that, under this separation, governance checks become part of the execution pipeline (subsuming separate governance infrastructure) and they present mechanized proofs in Coq as a testable criterion for governance systems.

Abstract

Every system that performs effects has two boundaries: what it can do (expressiveness) and what governance covers (governance). In nearly all deployed AI systems, these boundaries are defined independently, creating three regions: governed capabilities (the only useful region), ungoverned capabilities (risk), and governance policies that address non-existent capabilities (theater). Two of the three regions are failure modes. We focus on the governance of effects: actions that AI systems perform in the world (API calls, database writes, tool invocations). This is distinct from the governance of model outputs (content quality, bias, fairness), which operates at a different level and requires different mechanisms. We present a formal framework for analyzing this structural gap. Rice's theorem (1953) proves the gap is undecidable in the general case for any Turing-complete architecture that attempts to govern effects behaviorally: no algorithm can decide non-trivial semantic properties of arbitrary programs, including the property "this program's effects comply with the governance policy." We define coterminous governance: a system property where the expressivenessboundary equals the governance boundary. We show that coterminous governance requires an architectural decision (separatingcomputation from effect) rather than a governance layer added after the fact. We show that structural governance under this separation subsumes separate governance infrastructure: governance checks become part of the execution pipeline rather than a second system running alongside it. We propose coterminous governance as the testable criterion for any AI governance system: either the two boundaries are provably identical, or risk and theater are structurally inevitable. Proofs are mechanized in Coq (454 theorems, 36 modules, 0 admitted).