As of this week, a single violation of prohibitions on watering your lawn in California can cost $500. I recently picked up a tourist brochure for Sierra County California which cautioned me that a medical emergency in the mountainous, rural county was likely to require air evacuation, that my insurance probably wouldn't cover it and that the bill would begin at $15,000. I’ve also read that the rescue price tag for a climber who needs evacuation by air from Yosemite's cliff's can easily run $85,000. But that's fair—we ought to pay for the costs we create.
So how much did the Occupational Safety and Health Administration fine Freedom Industries, the company whose sloppy handling of the toxic chemical MCHM caused 10,000 gallons to spill into the Elk River, poisoning the water supply of hundreds of thousands of Charleston, West Virginia residents? Pathetically, a measly $11,000, less than the cost of a single burst appendix helicopter ambulanced in Sierra County. This when 300,000 people had to find alternative water supplies for ten days.
Clearly Freedom Industries isn't even beginning to pay the cost of what they created. In fact, this fine is probably smaller than what it would have cost them to run their facility correctly and avoid the spill in the first place, since one of the problems that OSHA fined them for was a leaky wall that needed to be replaced.
Freedom Industries is not alone in facing regulatory incentives that make short-cuts and safety violations economically attractive. Even giant BP, after running its refinery in Texas City for six years with repeated releases of lethal gasses, and then knowingly running for 40 days with its pollution control system out of operation and no notification of pollution control officials or the neighbors, got away with a $50 million fine, $22,000/day, that almost certainly made running the refinery and releasing hundreds of thousands of pounds of toxic air pollutant the profitable decision.
It’s not like we don’t know how to encourage most people to play by the rules without intrusive inspections or a police state. Many bus and tram systems in Europe don’t check your ticket—except once every ten rides. But the fine for riding without a ticket is, say, 25 times the fare—so even passengers who might be inclined to cheat quickly see that it doesn’t pay—and buy a ticket. But if a bus system checked every ten rides, and the fine was five times the fare—well, do that math. You get a different answer. Lots of free riders.
But we seem to lose track of what we know about human behavior when it comes to those artificial human beings we call corporations. It’s almost as if we take what we know would be an appropriate penalty to make sure you didn’t damage your neighbors and divide it by the size of the corporation—the bigger the company, the weaker the incentive we create for following the rules.
Statute after statute sets penalty limits too small to make compliance the right call for profits. The maximum fine for an auto company that fails to report a safety defect and implement a required recall is only $35 million—that might have gotten Freedom Industries to repair its wall, but it is a tiny fraction of what a timely recall would have cost GM in its current lethal ignition switch scandal. (And remember, many of the vehicles with the defect are no longer on the road, so the current recall is actually costing GM less than a timely one would have.)
And if low penalties aren’t enough, business allies in Congress are busily making it harder to collect penalties once levied—the House Appropriations Committee just voted to block U.S. Environmental Protection Agency from garnishing wages to collect fines from recalcitrant violators.
Do we have some reason to believe that corporations are somehow MORE virtuous than individuals? Not really. Indeed, many of our most prominent business voices argue that a corporation’s only duty is to make money. How does this play out when it comes to following the rules? Early in my work as an environmentalist, I was slipped an internal oil company memo, discussing whether to inform the federal government that a portion of one of its natural fields in the Gulf of Mexico was in federal waters and subject to federal price controls. The memo boasted a complex decision tree complete with % estimates of how likely the feds were to discover the liability on their own, what the oil company’s chances of winning in court were (less than half) and finally what were the odds of jail terms for company employees. Each of these had a dollar value attached, and the final conclusion was—don’t report. I shared the leaked document with federal energy regulators. The oil company observed the price controls.
No company executives went to jail, and at least on the public record, no fine was paid.
Some companies, it seem, are just too big to punish.
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Kevin T. Smiley
When hurricanes and other extreme storms unleash downpours like Tropical Storm Beta has been doing in the South, the floodwater doesn't always stay within the government's flood risk zones.
New research suggests that nearly twice as many properties are at risk from a 100-year flood today than the Federal Emergency Management Agency's flood maps indicate.
Flooding Outside the Zones<p>About <a href="https://furmancenter.org/files/Floodplain_PopulationBrief_12DEC2017.pdf" target="_blank">15 million</a> Americans live in FEMA's current 100-year flood zones. The designation warns them that their properties face a 1% risk of flooding in any given year. They must obtain flood insurance if they want a federally ensured loan – insurance that helps them recover from flooding.</p><p>In Greater Houston, however, <a href="https://doi.org/10.1111/j.1539-6924.2012.01840.x" target="_blank">47% of claims</a> made to FEMA across three decades before Hurricane Harvey were outside of the 100-year flood zones. Harris County, recognizing that FEMA flood maps don't capture the full risk, now <a href="https://www.hcfcd.org/floodinsurance" target="_blank" rel="noopener noreferrer">recommends that every household</a> in Houston and the rest of the county have flood insurance.</p><p>New risk models point to a similar conclusion: Flood risk in these areas outstrips expectations in the current FEMA flood maps.</p><p>One of those models, from the <a href="https://firststreet.org/flood-lab/research/2020-national-flood-risk-assessment-highlights/" target="_blank">First Street Foundation</a>, estimates that the number of properties at risk in a 100-year storm is 1.7 times higher than the FEMA maps suggest. Other <a href="https://doi.org/10.1088/1748-9326/aaac65" target="_blank" rel="noopener noreferrer">researchers</a> find an even higher margin, with 2.6 to 3.1 times more people exposed to serious flooding in a 100-year storm than FEMA estimates.</p>
What FEMA’s Flood Maps Miss<p>Understanding why areas outside the 100-year flood zones are flooding more often than the FEMA maps suggest involves larger social and environmental issues. Three reasons stand out.</p><p>First, some places rely on relatively old FEMA maps that don't account for recent urbanization.</p><p>Urbanization matters because impervious surfaces – think pavement and buildings – are not effective sponges like natural landscapes can be. Moreover, the process for updating floodplain maps is locally variable and can take years to complete. Famously, New York City was updating its maps when Hurricane Sandy hit in 2012 but hadn't finished, meaning flood maps in effect <a href="https://projects.propublica.org/nyc-flood/" target="_blank">were from 1983</a>. FEMA is required to assess whether updates are needed every five years, but the <a href="https://www.fema.gov/cis/nation.html" target="_blank" rel="noopener noreferrer">majority of maps</a> <a href="https://www.oig.dhs.gov/sites/default/files/assets/2017/OIG-17-110-Sep17.pdf" target="_blank" rel="noopener noreferrer">are older</a>.</p><p>Second, binary thinking can lead people to an underaccounting of risk, and that can mean communities fail to take steps that could protect a neighborhood from flooding. The logic goes: if I'm not in the 100-year floodplain, then I'm not at risk. Risk perception <a href="https://doi.org/10.1088/1748-9326/ab195a" target="_blank" rel="noopener noreferrer">research</a> backs this up. FEMA-delineated flood zones are the major factor shaping flood mitigation behaviors.</p><p>Third, the era of climate change scuttles conventional assumptions.</p><p>As the planet warms, extreme storms are becoming <a href="https://nca2018.globalchange.gov/" target="_blank">more common and severe</a>. If greenhouse gas emissions continue to increase at a high rate, computer models suggest that the chances of a severe storm dropping 20 inches of rain on Texas in any given year will increase from about 1% at the end of the last century to 18% at the end of this one, a chance of <a href="https://doi.org/10.1073/pnas.1716222114" target="_blank" rel="noopener noreferrer">once every 5.5 years</a>. So far, <a href="https://www.rstreet.org/wp-content/uploads/2020/02/195.pdf" target="_blank" rel="noopener noreferrer">FEMA hasn't taken into account the impact climate change is having</a> on extreme weather and sea level rise.</p>
Racial Disparities in Flooding Outside the Zones<p>So, who is at risk?</p><p>Years of research and evidence from storms have highlighted social inequalities in areas with a high risk of flooding. But most local governments have less understanding of the social and demographic composition of communities that experience flood impacts outside of flood zones.</p><p>In analyzing the damage from Hurricane Harvey in the Houston area, I found that <a href="https://doi.org/10.1088/1748-9326/aba0fe" target="_blank">Black and Hispanic residents disproportionately experienced flooding</a> in areas beyond FEMA's 100-year flood zones.</p><p>With the majority of flooding from Hurricane Harvey occurring outside of 100-year flood zones, this meant that the overall impact of Harvey was racially unequal too.</p><p>Research into where flooding occurs in Baltimore, Chicago and Phoenix points to some of the potential causes. <a href="https://www.nap.edu/read/25381/chapter/4#16" target="_blank" rel="noopener noreferrer">In Baltimore and Chicago</a>, for example, aging storm and sewer infrastructure, poor construction and insufficient efforts to mitigate flooding are part of the flooding problem in some predominantly Black neighborhoods.</p>
What Can Be Done About It<p>Better accounting for those three reasons could substantively improve risk assessments and help cities prioritize infrastructure improvements and flood mitigation projects in these at-risk neighborhoods.</p><p>For example, First Street Foundation's risk maps account for <a href="https://firststreet.org/flood-lab/research/flood-model-methodology_overview/" target="_blank">climate change</a> and present <a href="https://floodfactor.com/" target="_blank" rel="noopener noreferrer">ratings</a> on a scale from 1 to 10. FEMA, which works with communities to update flood maps, is <a href="https://www.fema.gov/media-library-data/1521054297905-ca85d066dddb84c975b165db653c9049/TMAC_2017_Annual_Report_Final508(v8)_03-12-2018.pdf" target="_blank" rel="noopener noreferrer">exploring rating systems</a>. And the National Academies of Sciences, Engineering and Medicine recently <a href="https://www.nationalacademies.org/news/2019/03/new-report-calls-for-different-approaches-to-predict-and-understand-urban-flooding" target="_blank" rel="noopener noreferrer">called for a new generation of flood maps</a> that takes climate change into account.</p><p>Including recent urbanization in those assessments will matter too, especially in fast-growing cities like Houston, where <a href="https://authors.elsevier.com/a/1boBRyDvMFW6W" target="_blank" rel="noopener noreferrer">386 new square miles</a> of impervious surfaces were created in the last 20 years. That's greater than the land area of New York City. New construction in one area can also <a href="https://scalawagmagazine.org/2018/01/city-in-a-swamp-as-houston-booms-its-flood-problems-are-only-getting-worse/" target="_blank" rel="noopener noreferrer">impact older neighborhoods downhill</a> during a flood, as some Houston communities discovered in Hurricane Harvey.</p><p>Improving risk assessments is needed not just to better prepare communities for major flood events, but also to prevent racial inequalities – in housing and beyond – from <a href="https://www.npr.org/2019/03/05/688786177/how-federal-disaster-money-favors-the-rich" target="_blank" rel="noopener noreferrer">growing</a> after the unequal impacts of disasters.</p>
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