Our courts and legislatures are bought and paid for — the laws they’ve made with respect to oil spills prove it.

In March, I emphasized — not for the first time — the insanity of considering corporate and other business entities as rational actors of the sort many economists consider people to be. The problem is that corporate decisions are made by individuals and are therefore driven to benefit those individuals, not the corporations (and their shareholders).”

One reason corporations focus on short-term profits is that the individuals making the decisions for a company will often take the cash made in the short term out of the company (by paying special dividends, for example) and then sell there stock, evading the long-term loss. Even if they hold onto their stock, they may have taken so much cash out of the company before the stock crashes in value that they’ve profited mightily from their holdings regardless of the company’s failures.

But still another reason is the idiocy of the regulation that is in place, regulation that instead of imposing responsibility on the companies for problems they cause limits that responsibility.

10 days ago David Leonhardt wrote about the  perversity of the federal limitations on corporate liability for oil spills and how they made BP’s oil spill, in retrospect, no great surprise:

In a little-noticed provision in a 1990 law passed after the Exxon Valdez spill, Congress capped a spiller’s liability over and above cleanup costs at $75 million for a rig spill. Even if the economic damages — to tourism, fishing and the like — stretch into the billions, the responsible party is on the hook for only $75 million. (In this instance, BP has agreed to waive the cap for claims it deems legitimate.) Michael Greenstone, an M.I.T. economist who runs the Hamilton Project in Washington, says the law fundamentally distorts a company’s decision making. Without the cap, executives would have to weigh the possible revenue from a well against the cost of drilling there and the risk of damage. With the cap, they can largely ignore the potential damage beyond cleanup costs. So they end up drilling wells even in places where the damage can be horrific, like close to a shoreline. To put it another way, human frailty helped BP’s executives underestimate the chance of a low-probability, high-cost event. Federal law helped them underestimate the costs.

We shouldn’t be surprised, then, at BP’s pathetic safety record and the retrospective inevitability of the Gulf spill:

Years before the Deepwater Horizon rig blew, BP was developing a reputation as an oil company that took safety risks to save money. An explosion at a Texas refinery killed 15 workers in 2005, and federal regulators and a panel led by James A. Baker III, the former secretary of state, said that cost cutting was partly to blame. The next year, a corroded pipeline in Alaska poured oil into Prudhoe Bay. None other than Joe Barton, a Republican congressman from Texas and a global-warming skeptic, upbraided BP managers for their “seeming indifference to safety and environmental issues.”

BP was only acting rationally!

Unsurprisingly, the Supreme Court has teamed with Congress in being an accessory to the corporate rape of the country. Even if compensatory damages are capped, conceivably courts can impose punitive damages in civil lawsuits to deter particularly egregious conduct. And, indeed, courts reacted precisely that way to the Exxon Valdez oil spill — that is, until the Supreme Court stepped in. In 1994, a jury imposed $5 billion in punitive damages on ExxonMobil for the Exxon Valdez  oil spill. 12 years later an appellate court reduced that amount to $2.5 billion, half the original amount.

2 years later, in a 5-3 vote (Sam Alito recused himself from the case because he owned Exxon stock), the Supreme Court reduced the amount to $507.5 million, about 10% of the jury’s award. The Court ruled that punitive damages (intended to punish bad behavior, not to compensate a plaintiff for his losses caused by that behavior) cannot be greater than compensatory damages (which compensate victims for their economic losses). As reported at the time, the reduced amount represented “about 12 hours of revenue for [Exxon], which reported record profits of $40.6 billion in February.” Justice Souter, writing for the Court, explained that “a penalty should be reasonably predictable in its severity, so that even Justice Holmes’s ‘bad man’ can look ahead with some ability to know what the stakes are in choosing one course of action or another. See The Path of the Law, 10 Harv. L. Rev. 457, 459 (1897). Exxon Shipping Co. v. Baker (U.S. 2008)(hyperlink added).

Of course, one might argue pretty cogently that neither the Exxon Valdez spill nor the BP Gulf spill were conceivable in the minds of the people who made the decisions that resulted in disasters and that it is precisely that failure to conceive of, much less consider, those consequences that is what the courts should retain the power to punish.

Wind of Change: Education and democracy are the ways to wind power.

Legal disputes may be arguments over the meaning of laws, but they are even more importantly disputes over different views of what is right, what is just, what is fair.  And the practice of law is, above all else, the practice of problem solving and dispute resolution.  The laws and the procedures are really only vehicles for solving the problems created by those disagreements about values.  There may be no more concise a way to sum up why yesterday I wrote that the most difficult part of practicing law isn’t learning the laws and the procedures but,  rather, learning how to apply the law in an infinitely complex world.

So I could pretend that there’s some deep significance in the fact that four weeks ago an appellate court in New York rejected the lawsuit instituted by the Wind Power Ethics Group (WPEG) — a citizens’ organization based in upstate New York — in an effort to stop the proposed construction of a series of wind-powered generators by St. Lawrence Windpower, LLC.  According to WPEG, the project is one of a four wind projects that, if completed, will “create a continuous swath approximately 25-30 miles east to west . . . where wind turbines will be ubiquitous.”  The result, WPEG continues, “amounts to an unacceptable sudden and uncontrolled environmental transformation of an entire region of New York State driven by corporate greed and questionable ethics.”  The court rejected WPEG’s claim (opinion, pdf)  that the local zoning board had been mistaken in ruling that St. Lawrence Windpower’s project “qualified as a utility and that the project therefore was a permitted site plan use in that district.”

More specifically, the court ruled “that the classification by the [zoning board] of the series of wind-powered generators as a utility within the meaning of section 315 of its Zoning Law is neither irrational nor unreasonable, and that the determination is supported by substantial evidence.”  But if you think that the important parts of this court case were the meaning of the word “utility,” how courts distinguish between rational and irrational classifications, and how much evidence is “substantial” evidence, you’re sadly mistaken.  I’m not at all suggesting that lawyers don’t need to understand these matters; rather, what I’m suggesting is that these legal issues are merely vehicles in which what really is being decided is the justice of placing a series of wind power projects in an area extending 30 miles in one of the most beautiful parts of our continent. In short, the real issue (which might have been, but likely was not, most readily shown through the events leading up to and resulting in the zoning board’s decision) is whether the opponents of the wind power projects should (as a matter of justice) prevail over the proponents of the projects.

It is plain that one source of opposition is the NIMBY syndrome.  People will protest — and sue — to keep whatever they fear and loathe away from where they live.  But they will also protest and use the law to fight whatever is imposed on them without any consideration of their views.

The Danish Wind Industry Association has looked closely at attitudes to wind power, observing, in a paper entitled “Public Attitudes Towards Wind Power” (pdf), that in general opposition to wind power comes from people who do not think it is a practical solution to our energy problems because it is too expensive and unreliable (because of its dependence on the wind) and because wind turbines are ugly and noisy.  Supporters of wind power, on the other hand, believe it is a practical solution to our energy needs, that climate change poses risks that must be addressed, and that wind power is limitless, non-polluting, and safe.

But when confronted with the prospect of wind turbines in their own neighborhood, supporters tend to lose their enthusiasm:

There is a great difference between wind energy as an idea and wind turbines as acceptable structures in the landscape. As we have seen people support the general idea of renewables and wind power. But when it comes to actual projects in a local area, the acceptance of wind power seems to vanish. This pattern is called the “Not In My Back Yard” syndrome or in short just the NIMBY syndrome (Paul Gipe, 1995). The basic theory is that people support wind energy on an abstract level but object to specific local projects because of the expected consequences concerning primarily noise and visual impact. The NIMBY syndrome is not a special feature for wind power. It can be detected in many other situations. New highways, bridges, tunnels, hospitals, airports, nuclear power plants, and other energy generating plants all face resistance at the local community level.

Nevertheless, the support returns among people who actually do live with wind turbines in their back yards.  The “latest study done in Denmark (Andersen et al., 1997) . . . shows “some interesting results.”  The study was conducted in the town of Sydthy, which has a population of 12,000.  98% of Sydthey’s energy iis provided by wind power.  Many of Sydthey’s turbines date from the early 1980′s and therefore are smaller and noisier than more modern turbines.  The study shows “that people with a high degree of knowledge about energy generation and renewables tend to be more positive about wind power than people with little knowledge.”

First, proximity to turbines has no significant correlation to support or opposition to them (though, surprisingly, the people with wind turbines almost literally in their back yards are more positive about wind power than people living further away):

The distance to the nearest turbine has no effect on people’s attitudes towards wind turbines in general. This indicates that people living close to wind turbines do not consider noise and visual impact to be significant problems. As a matter of fact people living closer to the nearest wind turbine than 500 meters tend to be more positive about wind turbines than people sited further away from the turbines.

In addition, the visibility of turbines seemed to have no effect on attitudes toward wind power (but  increased numbers of turbines seem as surprisingly attractive as turbines next door: “people who could see between 20 and 29 turbines tended to be more positive about wind energy than people being able to see only a smaller number of turbines.”)  Perhaps confirming the stereotypical rural contempt for the tendency of city dwellers to romanticize nature, “people living in a city zone (defined by speed limits) tend to be more negative than those living in a country zone.”   Four out of five Sydthey residents “do not feel bothered at all by noise made by turbines,” and “[a]s expected, the longer people live near the turbines the fewer experience noise inconveniences.”  Finally, middle-aged people are most sensitive to the noise of turbines, men perceive the noise to be louder than do women, and people who have a more favorable view of the utility of wind power feel less inconvenience.

One might conclude that the solution to the NIMBY problem, then, is increased information, but the Danish Wind Industry Association recognizes that inference may be too simplistic or, at least, incomplete.  As is apparent from WPEG’s assertion, mentioned above, that its opposition to the wind power projects in the Thousand Island region is based on its opposition to “corporate greed and questionable ethics,”

people in areas with significant public resistance to wind projects are not against the turbines themselves, they are primarily against the people who want to build the turbines. Often the local people are kept out of the decision making process. Some have hostile attitudes against the developers, the bureaucracy or the politicians on beforehand. Those factors have a significant effect on public attitudes in a specific area. Attitudes towards concrete projects are site specific. They are primarily formed by the interaction with central actors and the extent of involvement of local interests are a major explanatory factor.

So the answer is no merely to educate people on the practicality, aesthetic quality, and relative quiet of wind turbines.  It is to get people involved.  Another recent study shows that “85 per cent of the population wants to be kept informed about plans for new windpower. . . . 49 per cent said they would definitely go to public meetings if such meetings were arranged.”

Unfortunately, wind power developers may not have yet gotten the message.  “[I]n less than 50 percent of German wind power projects local inhabitants were given opportunities to articulate their opinion during planning phase. And in only 8 per cent of the cases where people were actually heard, did the developers hold information meetings. In one out of three cases the public had actual influence on the siting process typically through legally prescribed access to present formal objections.”

As Steffan Damborg, the author of the Danish Wind Industry Association’s article concludes, “Decision making over the heads of the local people is the direct way to protests.”  I would add only this: decision making over the heads of people affected by the decisions is the direct way to lawsuits.  The lawyers representing the parties to the lawsuits probably don’t mind, but the rest of us should.