Emails show MDOT let lobbyist steer report on gravel shortage for Michigan roads

LANSING – When Michigan gravel companies wanting to open or expand a mine are opposed by neighbors objecting to the noise and dust, they point to a 2016 consultant's study, commissioned by the Michigan Department of Transportation, that says the state is running out of gravel to rebuild its busted roads.

But in fact, the Michigan Aggregates Association (MAA) — the lobbying organization for the sand and gravel industry, which is pushing for legislation that would severely restrict the ability of local governments to deny permits for new or expanded gravel mines  — was behind the study, records show.

The group recommended the consultant MDOT hired, set out the scope of work and how to price the study, and even spelled out the expected findings, according to emails and other records obtained under Michigan's Freedom of Information Act and provided to the Free Press. The group also had a role in initiating the study, which an MDOT official repeatedly described in emails as a report "the Director commissioned after talking with the Michigan Aggregate(s) Association."

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MDOT’s major contribution was paying for the nearly $50,000 study with taxpayer dollars, records show.

“We presume it goes without saying (but we’ll say it anyway!) that we expect the conclusion to be that there is, in certain definable regions of the state, a looming shortage of aggregates that needs to be addressed,” Michigan Aggregates Association President Doug Needham said in a May 2016 email to then-MDOT director Kirk Steudle.

That's exactly what the hastily assembled report, the first phase of MDOT's Michigan Aggregates Market Study, concluded.

Many Michigan communities angry about losing local control over mining operations

Access to sand and gravel in and around residential neighborhoods is a growing flash point across Michigan, with current or recent permit applications producing strife in Kalamazoo, Lapeer, Jackson, Berrien, and Washtenaw counties, to name a few.

Such controversies are only expected to increase as MDOT anticipates a major funding boost that will require more supplies of these materials close to the crumbling roads it wants to repair. Part of the problem, according to one expert, is that Michigan hasn't mapped its geology since 1915, so developers, often unwittingly, continue to build homes on top of valuable and needed aggregate resources.

Some experts are critical of the 17-page report, which found that the state faces looming shortages in southeast Michigan and the middle of the state, including the Thumb area.

But ever since its release, Needham has pointed to the report as an objective basis for expanding gravel operations over local objections.

"I'm astounded," said Ronald Barnard, a resident of Metamora Township in Lapeer County. Barnard testified last December against expanding a nearby gravel pit at a Senate hearing where Needham cited the MDOT report in his testimony.

"That's really underhanded political dealing, I think. I find it disgusting that they're able to utilize the power of MDOT to give them a leg up on legislation that would allow them to be just the robber barons of gravel."

In Washtenaw County's Lyndon Township, which dodged the opening of a mine in one of the community's recreation areas when the developer opted for a land swap, Supervisor Marc Keezer said he's not surprised to hear that MDOT sees its interests as aligned with the gravel industry, over residents.

"MDOT does road and transportation networks," Keezer said. "Why would they want to restrict their ability to do that at affordable prices? I think it all comes down to money."

Questioned by the Free Press on Friday about his involvement in the preparation of the MDOT report, Needham hesitated for several seconds when asked who recommended FMI Corp. of North Carolina, the company MDOT hired to prepare the report.

"I'm trying to remember," Needham said.

"Wasn't it you?" a reporter asked.

"Yes," he said. "I gave them a list of (two) companies that we thought could do this kind of work."

Needham agreed the MDOT stamp gave the report more credibility.

"If we do a report and put it out, everyone would say, 'Hey, it's an aggregates (association) study,'" and give it less weight, Needham said. "It's nice to have an independent third-party review of what we are saying."

"If we do a report and put it out, everyone would say, 'Hey, it's an aggregates (association) study,' " and give it less weight, Needham said. "It's nice to have an independent third-party review of what we are saying."

Asked whether MDOT acted as an independent third party in the way it commissioned the report, Needham said: "When we were offered or asked for advice we gave it," but "we did not write it, we did not proof it, we did not finalize it, we did not pay for it."

MDOT defends study even as one official  says it promotes a 'hostile land grab'

MDOT spokesman Tim Fischer said the study was a specialized one, so it made sense for the agency to turn to the industry to identify potential consultants and work parameters.

Steudle, the former MDOT director who now works in private industry, did not respond to an email. But he sent a May 28 letter to lawmakers in which he rejected unspecified criticisms of the report, which he described as "fully accurate."

But one MDOT official pushed back in 2017, when his bosses were preparing to commission a second phase of the report — only to be shot down.

“Forgive my ideology, but I have been under the longstanding impression that our research monies are intended for scientific study,” MDOT concrete operations and material engineer John Staton said in a Sept. 21, 2017, email to his supervisor, Jason Gutting.

“The MAA approach is simply to use a hastily assembled report (to be commissioned by MDOT) to engage in legislation that takes permitting authority away from local agencies so that the current aggregate producers … can expand their current footprint via hostile land grab," Staton wrote.

Instead of paying for a study themselves, the gravel companies "need MDOT to commission the work in order to provide them political cover," he wrote in the email, which called for a more scientific approach to the second phase of the report.

Staton’s supervisor, Gutting, the administrator of MDOT's construction field services division, emailed back that “your points are all valid,” and “I think your path was the right way to go." However, “industry is requesting something different."

The Phase 2 report is expected to be released in three to four weeks, Fischer said. It is based in part on the findings of the Phase 1 report and is being conducted by the second consulting firm recommended by the MAA — Public Sector Consultants of Lansing — records show.

Lobbying organization has repeatedly touted the report as an objective look at its needs

Needham has frequently touted the Phase 1 report without disclosing his association's involvement in its genesis.

"Read the MDOT report because that is a company that went in and actually investigated this industry across the state," Needham told the House Transportation Committee on May 21.

In June 2018, interviewed in Aggregates Manager magazine, Needham said "we are faced with increased local resistance at opening and expanding mining operations," which is contributing to a looming shortage. MDOT "initiated a study and corroborated industries' concerns," he said.

 On Nov. 28 of last year, Needham cited the study when testifying before the Senate Natural Resources Committee in favor of Senate Bill 1210, which would have limited local governments' ability to prohibit or restrict gravel-mining operations.

"Municipalities ... continue to engage in a variety of tactics that have resulted in both the prevention of new mines, and increased costs in the operation of existing mines throughout Michigan," Needham testified.

Testimony on SB 1210 centered on the project Barnard is worried about — a proposed 500-acre gravel mining operation on property in Metamora Township leased from the Boy Scouts of America.

The bill's sponsor, former state Sen. Tom Casperson, R-Escanaba, withdrew the bill during the lame-duck session in the face of strong opposition.

But similar legislation is expected to be introduced by state Rep. Triston Cole, R-Mancelona. He confirmed Tuesday he is working on legislation, but couldn't say when it would be introduced.

Though the legislation has mostly been associated with the Metamora project, it would apply statewide. Needham said there are examples across the state of local governments refusing to grant permits to gravel operations without good reasons. He cited pending applications in Jackson County's Grass Lake, Berrien County's Oronoko Township and Kalamazoo County's Richland Township as examples.

Lawmaker touts study in support of bill to ease the granting of gravel permits

Cole, too, has touted the MDOT report to justify the legislation he plans to introduce that would restrict the ability of local governments to stop owners from mining sand or gravel on their property.

He shrugged off questions about the MAA's involvement in preparing the study, saying: "We need as much access to sand and gravel as possible ... to fix our roads."

Bear Priest, clerk of Richland Township, said his municipality is required to allow the mining in certain areas, despite strong public opposition. His concern is that a state law could take away the site plan controls the township still has, including ones controlling issues such as hours of operation.

For MDOT to pay for a study over which a lobbying organization had such influence "seems a little odd," Priest said.

A review of the MDOT study, commissioned by the Metamora Land Preservation Alliance and conducted by Arizona geologist William Langer, said it is "overly simplistic" and "fatally flawed" because it considers only future production from sand and gravel mines that now have permits, without considering new mines that will come on-line. The study includes no data on how many new permits have been granted in recent years, or how many denied.

"If one assumes that no new sand and gravel operations will be permitted, it is inevitable that predictions based on that assumption will demonstrate that an area will eventually run out of sand and gravel reserves," Langer said.

John Yellich, director of the Michigan Geological Survey at Western Michigan University, said the study is OK as far as it goes, but it relies on unverified information from existing producers. A better way to go — and what Yellich proposed to MDOT — would be to survey and map the state, at least in areas close to major transportation routes such as highways, to determine where the aggregates are and in what quantity. Then, residential development could be restricted close to undeveloped reserves, he said.

The geological maps Michigan uses today are based on a state survey from 1915 because the state has not wanted to pay the millions needed to update it, Yellich said.

Wallace Marshall, a senior consultant with FMI Corp., the Raleigh, North Carolina, company that wrote the report, said his company has an excellent reputation and he has no concerns about undue industry influence over the report.

Emails show how lobbying organization influenced the study MDOT commissioned

The emails released by MDOT show the study first came up in May 2016. Needham emailed Steudle on May 18. He said he was following up on a discussion they had May 13 to set out "issues/questions/concepts that should be addressed" in a request for proposals for an Aggregate Market Study.

"The basic question to be addressed in the study is: Are there enough 'permitted' aggregates (sand, gravel and limestone) to meet the intermediate to long-term demand (10-50 years) anticipated as a result of needed infrastructure improvements in the state, especially as a result of the road funding package and other major projects already planned?" Needham wrote Steudle.

On May 22, Steudle forwarded Needham's email to some of his top officials, including Gutting, saying he was concerned about "the availability of reasonably priced aggregates in the future," and wanted to quickly prepare a report to present to then-Gov. Rick Snyder's 21st Century Infrastructure Commission, which released its report in November 2016.

"I asked MAA to send me their thoughts on what a study would look like from their vantage point," Steudle told his officials. "Please use this as a starting point and put out an RFP for a quick study of this issue. We need a final or draft final by the end of Sept or early Oct," and "I would guess MAA might have some thoughts on who has the background for this type of work."

Steudle's officials took that directive to heart, records show.

On May 31, Gutting emailed Steudle, saying discussions with Needham had produced an outline for a two-phase report, based on dialogue Needham had with potential researchers. The first phase would define the major aggregate suppliers and detail how much supply they had left, based on present permits and MDOT construction needs, Gutting said. The second phase would examine the impact of aggregate companies not being able to expand into newly permitted areas to supply material.

"Sounds like a great plan," Steudle replied. "Fast track the process please."

On June 7, while working on the request for proposals, Staton forwarded a draft to Needham and asked: "Doug, can you take a look at the attached draft and see whether or not I perverted your intent? Some of what you provided was a little overlapping so I took liberties to do some creative editing." However, "I may have took it in the wrong direction, though," Staton wrote.

Needham recommended two firms — FMI, which was selected, and Public Sector Consultants, which did not submit a Phase 1 proposal but was later selected for the Phase 2 report. MDOT needed a third company and added the Michigan Geological Survey, but found its Phase 1 proposal "went in a distinct different direction than the focus of the study," and "FMI was considered by our selection team to be the only viable vendor for this work," Staton said in an Aug. 26 email.

On June 13, Staton asked Needham how he should price the study, informing Needham that the cost had to be kept below $50,000 so the job could be fast-tracked, without the need for additional and time-consuming state administrative approvals.

"John, let’s go with a rough assumption of 200 hours at a blended/average rate of $245.00/hour," Needham emailed back.

On June 14, Staton again asked Needham for help, this time on what the required qualifications for the consultant should be.

After making some edits to the list of qualifications Needham sent him, Staton emailed Needham a copy of those changes, asking: "Sound OK?"

Needham periodically queried MDOT officials on the progress of the report.

"John, any word on when this report will be ready for distribution??? Thanks, Doug," Needham emailed Staton on Nov. 16.

Tensions rise over the scope of the second phase of the study being released shortly

Tensions arose in July, August, and September, when it was time to define the scope of work for the second phase of the study.

Staton told his supervisors he wanted to use "scientific mapping technology," and not just surveys of existing aggregate producers engaged in a "simple land grab."

"I discussed this research proposal with MAA," Gutting responded the same day. "This is not what they had in mind so unless we specifically want this research completed I would recommend we withdraw the submittal. They are going to send something ... on Phase II."

As Staton was edged out of the work on the second phase, Needham on Feb. 8, 2017, sent a proposed scope of work for the Phase 2 study to another MDOT official, Kim Avery, the director of bureau field services.

"As highlighted in phase I, Michigan is facing a looming shortfall with permitted local aggregate supplies and this phase will help determine both the potential short and long-term impacts if the foreseeable shortfall is not addressed," Needham told Avery.

Staton, Gutting, and Avery did not respond to emails seeking comment.

Jeff Williams, CEO of Public Sector Consultants, said he was unaware that the MAA had recommended his company as a consultant. Williams said PSC decided not to bid on the first phase of the report because it would be too difficult to get the required data from the industry. He said he trusts the company that did the first phase was able to do so, because PSC's second phase report builds on the work done in the first phase.

"We've not felt any influence or pressure in any adverse way," Williams said.

MDOT Director Paul Ajegba, who was appointed by Gov. Gretchen Whitmer to take over the helm of the agency on Jan. 1, said the emails illustrate "robust discussion and debate" that MDOT employees are encouraged to engage in.

"Having said that, our responsibility is to the taxpayers, and we will review our internal processes to validate or correct our approach," Ajegba said.

Contact Paul Egan: 517-372-8660 or pegan@freepress.com. Follow him on Twitter @paulegan4.  Read more on Michigan politics and sign up for our elections newsletter.