It’s a scenario exposed over and over in Crumbling Infrastructure, Crumbling Democracy: Infrastructure Privatization Contracts and Their Effects on State and Local Governance, an in-depth article into the many intricacies of the issue published in Northwestern Journal of Law and Social Policy earlier this year.
Its author, Ellen Dannin, Fannie Weiss Distinguished Faculty Scholar and professor of law at Penn State Dickinson School of Law, tells the Press the physical contracts for some of these privatization deals are so voluminous sometimes municipal officials don’t even know what they’re signing into. They’re also loaded with protections for the private companies, not the taxpayers.
“Key arguments for privatizing public infrastructure range from providing money so cash-strapped governments can fix crumbling infrastructure and build much needed new infrastructure to shifting future financial risk from the public to a private contractor,” she writes. “The reality, though, is far different. Provisions commonly found in infrastructure privatization contracts make the public the guarantor of private contractors’ expected revenues. Indeed, were it not for provisions that protect contractors from diminution of their expected returns, the contracts would be far shorter and much less complex. An effect of those contract provisions is to give private contractors a quasi-governmental status with power over new laws, judicial decisions, propositions voted on by the public, and other government actions…”
Dannin’s article examines three provisions commonly found in infrastructure contracts: “compensation events,” “noncompetition provisions” “and the contractor’s right to object to and receive compensation for legislative, administrative, and judicial decisions.
“The operation of these provisions gives private contractors power over decisions that affect the public interest and are normally made by public officials and subject to oversight, disclosure, and accountability—none of which apply to private contractors,” she writes.
Dannin’s research also highlights the effects of little-known and little-read “adverse action” provisions, which in the case of Colorado’s Northwest Parkway, according to her article, gave its private contractors the legal right to object to road improvements and even mass transit systems. Additionally, Dannin found, “the contractors had the right to receive compensation for lost anticipated revenues if those roads or transit systems were built during the term of the 99-year contract.”
Longtime environmentalist Morris Kramer of Atlantic Beach, Point Lookout Civic Association board member Gerald Ottavino and Scott Bochner of Long Beach—the guy who documented Bay Park’s sludge excretions into popular swimming and fishing grounds and posted it on YouTube—say studies coming out next month into the poor water quality of the Western Bays could eventually lead to mandates for remediation, including such major projects as an outflow pipe to the Atlantic Ocean or a directive demanding more stringent tertiary treatment at the sewage plants.
“How can someone who just paid $1.3 billion pay another half billion to comply with those types of standards?” asks Ottavino. And would these initiatives constitute an “adverse action” that would trigger more costs for taxpayers?
For Franco, the Cedar Creek advocate, the more he learns the angrier and more frustrated he becomes. He already works two, sometimes three jobs, he says, and already pays an average of $150 a month on his water bill due to private operator Aqua New York, when friends in neighboring towns pay as little as $12. He questions what would happen to the community and the environment should the private workers strike—something public workers are prevented from doing. After all, people won’t stop flushing their toilets.
“When it comes to the safety part of it and the sewage backing up and a plant going down, Wantagh-Seaford is going to take the brunt of it,” he says. “We’re going to be the disaster area. We’re going to be the ones that FEMA’s going to have to be [helping]… This is going to be ground zero if this plant backs up like that.”
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