Audit: State gave gravel industry influence in faulty study

David Eggert
Associated Press

Lansing – The Michigan Department of Transportation gave the gravel industry considerable influence in a state-funded study that found looming shortages in materials used to build highways, potentially undermining the report’s credibility and wasting taxpayers’ money, auditors said Friday.

An investigative audit issued by the state Office of Auditor General also concluded that the agency inappropriately split the study into two separate contracts and did not ensure that the terms were met. Auditors flagged “numerous deficiencies” with the rushed study that cost approximately $100,000, including poor project scoping.

A gravel-train semi leaves the Mid Michigan Crushing & Recycling facility in Highland Park.

The audit came to similar conclusions as one issued three weeks ago by the Transportation Department. It was done after a complaint was filed in June following a Detroit Free Press report that the Michigan Aggregates Association – a lobbying group for the gravel, sand and crushed stone industries – was behind the commissioning of the study in 2016 and 2017.

Needham has cited the report in legislative testimony about road building and to push legislation, which died last year, to restrict local governments’ ability to deny mining permits. The industry has been frustrated by local “not-in-my-backyard” fights against mining operations that could lower construction costs.

The latest audit included a review of emails and other documents indicating that former Transportation director Kirk Steudle communicated with several industry officials about the aggregates supply in Michigan and related issues, and ordered staff to involve an “industry stakeholder” in a market study – Michigan Aggregates Association President Doug Needham, according to the Free Press.

“MDOT allowed industry stakeholders considerable influence in the commissioning and scoping of the study,” the audit said. “This may have undermined the study’s credibility and usefulness to MDOT and policymakers because of the industry stakeholders’ previously disclosed position in favor of expanding permitted mining for aggregates in local communities.”

The audit said department employees were aware that dividing the study into two phases was inappropriate. The manager for phase 1 informed Needham that he did not mention phase 2 in the project scope “since we cannot give the impression that we are attempting to circumvent the 50K max contract by splitting it up into two 50K scopes. Questionable whether this will even fly.”

A manager told auditors that he and other senior managers were displeased with the study and felt it provided little value.

Jeff Cranson, a spokesman for the department, said director Paul Ajegba and State Transportation Commission Chairman Todd Wyett asked for the audit of the study that was initiated under Gov. Rick Snyder’s administration.

“The director will examine the findings to see what can be learned from this and what kind of safeguards can be implemented as a result to ensure the department is spending taxpayer dollars effectively,” Cranson said.

Michigan Aggregates Association spokesman John Sellek said the audit “vindicates” the industry because there is “zero evidence” that those who wrote the study’s findings were affected in their work.

“All state departments rightly seek input from stakeholders but only they can decide how to use that input, as was the case here,” he said. “It is unfortunate for all taxpayers that internal MDOT disputes between its staff and management resulted in decisions which are now under fire.”

But Matt Resch, a spokesman for the Metamora Land Preservation Alliance, which opposes a proposed gravel pit east of Flint, said the auditor general’s investigation “finds the aggregates association corrupted the state contracting process to produce a flawed study to justify their self-interested and unnecessary legislative agenda. It is our hope that lawmakers don’t let them get away with it.”

A new bill that would make it harder for local governments to block mining companies is pending in the Senate Transportation and Infrastructure Committee.