“What, Me Maintain Critical Infrastructure?” The Problem With Privatization

Between murder hornets, UFOs, and that whole global pandemic thing, 2020 really can’t catch a break. The latest in this saga is the catastrophic failure on Tuesday of the Edenville Dam, a privately-owned, earth fill dam on the Tittabawasee River in north-central Michigan, some two hours and fifteen minutes north-northwest of Detroit. Downstream, the Sanford Dam has also failed, and more than ten thousand residents have been evacuated. Miraculously, no deaths or major injuries have been reported.

The city of Midland also reports that shelters have sufficient capacity to house displaced residents, even using appropriate control measures given the threat of the COVID pandemic. This is impressive.

Less impressive is the state of our infrastructure in 2020, or the fact that a lot of crumbling infrastructure is actually privately owned.

MESSY REGULATION AND FEDERALISM

FERC revoked the dam’s permit in 2018, basically washing their hands of the issue and transferring it to state authority. EGLE, the department that Governor Gretchen Whitmer rebranded and relaunched following the disastrous mismanagement of the Flint Water Crisis by the DNR under former governor Rick Snyder, was attempting to force the dam to make major improvements.

The Detroit News pointed out that one of the problems with transferring regulatory from FERC to EGLE was the fact that EGLE regulates the environment, first and foremost, rather than energy generation and the safety issues adjacent to it. Regulators tasked with ensuring taxpayers’ access to clean water and air are perhaps less well-suited to tackle questions of big infrastructure. But they did note that Boyce Hydro, the private owner of the dam, balked at the idea of improvements, saying they were too expensive. Boyce also flouted regulations on water discharges, killing a large amount of freshwater mussels.

While it’s unclear whether FERC would have had more aggressive options at its disposal, I’ve written before about the Trump Administration’s push to essentially dismantle the federal bureaucracy piece by piece, so the idea of pushing off authority onto a lower authority less well-equipped to deal with the issue is hardly surprising.

Accordingly, and invariably, deep red districts will blame Whitmer for this failure. This isn’t surprising, considering that protesters angry about their inability to play golf during the worst global pandemic in a century displayed effigies of her with a noose around her neck at the state capitol while brandishing firearms. But it’s disappointing nonetheless, given that this is clearly an issue of an inadequate regulatory mechanism at both state and federal levels that failed to mitigate the laziness of a private, for-profit owner of vital infrastructure.

BUT WAIT– THERE’S MORE!

It gets worse when you learn that the floodwaters from the Edenville Dam breach had in some way breached the Dow compound in Midland, where are stored all manner of toxic chemicals. Dow, which now has a gay CEO so it’s okay that they dump benzene into the river. “The big conservative chemical company with a legacy of making napalm during the Vietnam War has a gay CEO,” Bloomberg wrote. Also, you know, Agent Orange. There’s even a Superfund site there, although it’s unclear exactly what chemicals have been threatened by “comingling” with the floodwaters, according to a press release from Dow yesterday. (Dow’s media team did not immediately respond to a request for comment).

Chemical manufacturing usually requires an ample supply of fresh water and is therefore usually located near such sources. It’s also, accordingly. the reason why most chemical disasters involve contamination of water supplies, as in Cincinnati’s dye manufacturing industry or the chemical industry in Tom’s River, which I wrote about last year.

PRIVATE INFRASTRUCTURE, PUBLIC PROBLEMS

But here’s the crux of the issue. We know that Lee Mueller, the private owner of Boyce Hydro, the company that owned the Edenville Dam, blew off demands by federal and state regulators to improve the dam. The key to these improvements was to demonstrate that it could withstand a major flooding event. (Narrator voice: As it turned out, the dam couldn’t withstand a major flooding event). Boyce argued that it was too expensive. (Whoops). Mueller is, perhaps unsurprisingly, a big Trump fan, as he was quoted in an article referring to the Mueller Report (no relation).

The problem is that when we allow public infrastructure to be privately owned and maintained while also limiting the regulators’ ability to do their jobs, we invite this sort of disaster.

But this is, of course, what Mueller is about. Deregulation means you can collect more money with less scrutiny, potential deaths and floods be damned.

The Las Vegas Republican has donated copiously to Republican candidates, including eight-time election loser Danny Tarkanian, a Nevada attorney who has himself been embroiled in numerous cases of campaign finance violation and a multimillion dollar real estate flop, and Congressional candidate and former Nevada state legislator, Jim Marchant, who boasts an A+ rating from the NRA and brags that the “liberal media can’t stand him.”

Worse, Mueller is connected to the Spark of Freedom Foundation, which is one of those organizations that talks about energy independence and sustainability but they’re really just talking about oil and gas (and I guess nuclear– the one thing you really don’t want deregulated). Spark of Freedom is headed by James Taylor, a senior fellow at the Heartland Institute, a major climate change denial organization. I’ve seen fire and I’ve seen rain, the other James Taylor sang– perhaps the song was a foreshadow of cataclysmic climate change disasters. Both organizations have been connected to aggressive lobbying efforts by Americans for Prosperity against progressive energy policy in the American Southwest. Spark of Freedom’s listed phone number had been disconnected, and also did not immediately respond to a request for comment for this story. But a paucity of recent federal tax filings suggests that it may no longer be in operation.

I’m not writing this to try and spin some conspiracy theory. Rather, I’m trying to illustrate the logical, inevitable conclusion of what happens when we effectively remove any and all regulation while also allowing private individuals to amass unforetold sums of wealth– with no accountability for the potential death and destruction their mismanagement (in the name of profit) could cause.

There is no possibility that Boyce Hydro will be held liable for even a meaningful chunk of the damages caused by the dam collapse, which might well run into the billions of dollars, for all anyone can guess at this point.

REGULATION– TO PROTECT FROM CATASTROPHE?

The same thing might well happen with the Ambassador Bridge, owned by Detroit’s most-hated (or second most-hated– hard to keep track) billionaire.  Chunks of the bridge periodically fall down, and a neverending construction project leaving lanes closed at all hours appears more aimed at stopgap repairs than at a comprehensive refurbishment of the centenarian structure.

How much are repairs worth, though? More than the revenue stream that the bridge produces? Are repairs worth more than, say, saving lives and litigation defense, if a large chunk of the bridge just up and collapsed one day, sending a bus of children to their deaths in the river below? If the bridge suffered a catastrophic failure, it would shut down a double-digit percentage of trade between the US and Canada, crippling the automotive sector and the economies of the five million-strong international metro area. Could the owner be held liable for those billions in damages? Where do you draw the line?

On the flipside, if there is no regulatory mechanism to force the owners to internalize those costs, why would they ever assume them?

Deregulation has been the name of the game at the federal level since Trump took office. He has bragged about cutting red tape. Dump all the benzene into the river you want, Dow, EPA is going to back off. How’s that deregulation working out now that federal, state, and city governments are headed toward bankruptcy and corporations are sitting on piles of cash while tens of millions of Americans are unemployed? Is regulation of critical infrastructure not the kind of red tape we should actually keep in place? Especially as 500-year floods become more like 5-year or 10-year floods, shouldn’t we be thinking about what regulation should be put in place to protect our communities from disasters like this?

Nat Zorach

Nat M. Zorach, AICP is a city planner, community development professional, and MBA candidate at American University's Kogod School of Business, based in Detroit.

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