Senator: MDOT's handling of gravel study was 'outright fraud'

Paul Egan
Detroit Free Press

LANSING – A Senate committee gave unanimous approval Tuesday to a report that blasts the Michigan Department of Transportation for allowing an industry lobbyist to steer a report on state gravel supplies, rendering the $100,000 report virtually useless.

“This was outright fraud,” Sen. Peter Lucido, R-Shelby Township, said of an MDOT study that pointed to looming gravel shortages, but was heavily influenced by the head of the Michigan Aggregates Association.

“Fraud on every one of us, as well as the taxpayers.”

The Schenkel Gravel Pit off Dryden Road in Metamora Township on Wednesday December 5, 2018.

The report of the Senate Oversight Committee did not go quite that far, but it said the agency ignored procurement guidelines, damaged the public trust and showed a lack of respect for taxpayer dollars.

The Free Press reported June 6 that the president of the Michigan Aggregates Association, Doug Needham, recommended the consultants who wrote both phases of the 2016 report, set out the terms of reference, told MDOT officials how to price the report, and even set out what he expected the major finding would be.

“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,” Needham said in a May 2016 email to then-MDOT director Kirk Steudle, obtained under Michigan's Freedom of Information Act.

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

More:Audit: Michigan taxpayers ripped off with questionable $100K MDOT study

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

Needham and some lawmakers have touted the study, which identified a looming gravel shortage in parts of the state, as partial justification for legislation they are pushing that would severely restrict local governments from denying permits to open or expand gravel mining operations.

Steudle, who retired in 2018 and now works in the private sector, has said he stands by the accuracy of the report.

MDOT spokesman Jeff Cranson said Steudle's successor, MDOT Director Paul Ajegba, is taking steps to make sure the contracting mistakes are not repeated.

John Sellek, a spokesman fo the Michigan Aggregates Association, said the Senate committee report points out that "it is common for departments to ask for and receive input from experts and that is what MDOT did in this situation." In each case, "it is going to be up to the department on what to do with that data." 

Sellek stressed that criticism of the report should not cause anyone to discount concerns about future gravel supplies.

But those fighting expansion of gravel pits saw things differently.

“Investigators have declared again today that the study commissioned to prop up (legislation that would largely strip local controls over gravel operations) was illegitimate, incomplete and unethical,” said Victor Dzenowagis, spokesperson for the Metamora Land Preservation Alliance, which is fighting a massive gravel pit expansion in Michigan's Thumb area.

The Free Press report led to highly critical audits from the State Transportation Commission and the Michigan auditor general. On Tuesday, the Senate Oversight Committee weighed in with a report of its own.

"Not only do these findings call into question the legitimacy of the findings contained in both phases of the Michigan Aggregate Market Study, but jeopardize public and legislative trust in other research, reports, and studies produced by the department," the report said.

The committee called for an MDOT action plan to ensure no repetition, and confirmation of “action taken” against employees involved in the debacle.

"We strongly disagree with the committee’s comments concerning the legitimacy of other MDOT research, which is done largely by our academic partners at the state’s major universities," said Cranson, the MDOT spokesman.

Sen. Ed McBroom, R-Vulcan, drafted the report, which was approved 5-0 in a bipartisan vote.

The report will be sent to MDOT, the governor's office, and to legislative leaders.

It calls for MDOT to produce its action plan by Jan. 30, though McBroom said he may give the agency a little more time.

Sen. Jeff Irwin, D-Ann Arbor, said he was particularly concerned about MDOT splitting the report into two $50,000 phases to avoid contracting rules for six-figure contracts. But he said it's the only report he's aware of where MDOT surrendered its oversight to outside interests, so he does not want to overstate the case about the incident undermining the agency's credibility with respect to other studies.

McBroom said his committee took testimony that showed some MDOT employees were concerned about the process but were afraid of reprisals if they came forward.

That shows the need to pass a bill the committee considered Tuesday and plans to vote on next week, he said. Senate Bill 686 would protect from discipline state employees who communicate with members of the Legislature, or their staff.

In the 2020 budget, Gov. Gretchen Whitmer vetoed similar language, saying state employees are already protected by a state whistleblower protection law.

McBroom and the bill's primary sponsor, Sen. Tom Barrett, R-Charlotte, said the bill will provide broader protections.

Contact Paul Egan: 517-372-8660 or pegan@freepress.com. Follow him on Twitter @paulegan4Read more on Michigan politics and sign up for our elections newsletter.