Welcome to the Chairman’s Corner. Former federal regulator, veteran, professor, and Chairman and Founder of Aii, Brigham McCown will be highlighting what’s been going on in the innovation and infrastructure related industries.
Ask anyone to picture the word regulation and the first thing that will come to mind is red tape. Costly, excessive, restrictive red tape, and an unresponsive government that doesn’t understand that time equals money.
Much has been written on the topic, and a few have even suggested self-regulation is all that is needed. While perhaps working for the majority, there is certainly a need for industry regulation. One need only look to various industries to see where good companies seem to have veered off course. In many instances regulations do ensure public safety, conservation of resources, and in very rare cases, efficiency. Regulations are the “rules of the game” which also provide a level playing field for competition. There is a fine line, however, between reasonable regulation and business-crippling micromanaging. What often starts out as a well-intended exercise, can turn into inefficiency. Even worse, an overly prescriptive and top-down regulatory environment can cripple innovation. As a former federal regulator, I know only too well the delicate balancing act.
For example, how do we ensure regulations covering the movement of goods, people, and services move safely and securely while also being efficient and effective? How do we balance these costs and benefits in a regulatory environment?
The answer is as simple as not creating costs in the first place. Imagine if we could extract all the benefits of regulation and at the same time defray the costs by ensuring both public safety and efficiency. Can you have your cake and eat it too? Yes, but only if we dare to reimagine everything we know about regulations.
Traditional regulation starts out with a premise or statement specifying how things must work. This is well-intentioned, because it ensures a consistent – a known and safe – outcome for all users. But holding to the safe because we know it keeps us from discovering new, safer, cheaper, and better alternatives. Regulatory oversight by its very nature has always been methodical, slow, purposeful, and conservative.
Today’s regulatory environment is the equivalent of an innovation tax. It limits the available avenues for creativity by hamstringing entrepreneurs and making their work more costly. Industry disruption and innovation is occurring all around us, and the pace of that change is accelerating constantly. Gone are the days when your television looked pretty much the same as your parents’ tv. Yet we regulate to the status quo, seeking minor advances or incremental improvements at a time of great achievement. So instead of wading through molasses and dictating what the method should be, regulation should be reimagined into a framework for the desired outcome.
By shifting the paradigm, we should be freeing innovators to find the best way to achieve certain desired outcomes. Rather than telling a designer the exact materials, parameters, and procedures to create something, we should tell them what we want and let them experiment.
Here is an example, think of the difference between: ”Vehicle headlights must be within this size, shape, color, and brightness” versus “Vehicle headlights must effectively illuminate this area.“
The first represents the traditional approach to regulating, and it gets us predictable but slow-evolving results. The second unleashes innovation but safeguards consumers by ensuring the objective of the regulation is still met.
Not every regulation works the same way, and an overhaul of every type of regulation might not be practicable in the short run. But moving toward performance-based regulations and away from prescriptive regulation will rejuvenate innovation and ultimately improve the lives of Americans.
This week marks the return of Infrastructure Week. Held once a year, every infrastructure interest descends on Washington, DC to decry the aging state of our infrastructure. The fix? Spend more money of course! Yet doing an infrastructure bill, and making substantive changes to the way we tax and fund infrastructure is far more complicated. After all, that’s why we’re still talking about it.
Unfortunately, we need less traditional infrastructure spending and more innovation. Asking to look at infrastructure the same way we have since the 1950s is just that, outdated. We have the ability to build 100-year bridges, to create roads that no longer need paint stripping, and we can build intersections that are pedestrian and bicycle friendly. So what’s holding us back? Policymakers and lawmakers have to think outside the box and stop looking at infrastructure as we have for over half a century. If we keep filling potholes the same way, we’re doomed to repeat past mistakes. If however, we dare to dream big, we can transform infrastructure into a 21st reality.
Sometimes it seems like Groundhog Day. After all, last year we were having the same discussion, “Are we ready for the infrastructure bill?” The truth is this country has needed a comprehensive infrastructure policy for decades. And while politicians love to talk about infrastructure, they seem to come up short year after year.
Throughout the Nineteenth Century, the economic success of our country was made possible by our unrelenting zeal to building structure. We became a connected people. A place where you could take trains to any part of the country, where you could simply cruise on highways and byways and newly minted interstates courtesy Pres. Eisenhower’s vision 40 connected America. We also took to the sky in great numbers as commercial air transportation became affordable for almost everyone and our energy infrastructure brought cheap electricity and gas from far away production sites to our cities, homes, and factories.
And then it stopped.
Now don’t get me wrong, our infrastructure is still among the best in the world. But we are no longer leading in this area. Somewhere we convinced ourselves we had built it all. Americans used to mobility, however, continued to relocate around the country in search of a brighter future. Areas in the West and South lagged in being able to keep up with shifting population centers. Urban corridors became congested. As America has grown, we have simply not kept pace with that growth.
In 1950 America’s population was 152.3 million. Today, our population stands at 327.16 million. That’s right, we’ve more than doubled our population during the last seven decades. It’s no wonder that what was abundant in 1950 or even in 2000, is nowhere near sufficient for today.
When it comes to infrastructure, everybody agrees it is important. Transportation infrastructure empowers Americans with unprecedented mobility, and it is also a key lynchpin in commerce for the efficient movement of goods. Our information infrastructure keeps us connected and is the backbone of our world-class service industry. Energy infrastructure delivers electricity made from renewables and fossil fuels, gasolines, propane, and natural gas that make modern life possible for every person living here. Our water and sewer systems make life possible in urban centers and in small towns alike.
If infrastructure enjoys broad bipartisan support, why can’t we seem to get our act together? Part of the answer lies in the outdated way in which we fund public infrastructure projects and oversee private infrastructure. Unlike most countries, vast swaths of our infrastructure is not owned by the government. Here, we have to better incentivize growth. With respect to public, or government-owned infrastructure, we have to completely overhaul how we fund projects. I commented on this latter fact recently for NPR’s Marketplace. You can listen to their story which appeared on Morning Edition here.
Why Infrastructure Matters
Growing up in Appalachia meant seeing trucks move along US-52, hearing the reverberations of train whistles bouncing back and forth between the hills, and seeing the barge traffic moving commerce up and down the Ohio River. I didn’t think about it then, but I was watching our infrastructure supplying the raw materials and finished goods needed for the American dream. Americans have always been synonymous with exploring, with doing. Speaking of doing, a little over 80 years ago, President Franklin Delano Roosevelt dedicated the Boulder Dam (now the Hoover Dam) calling it, “an engineering victory of the first order – another great achievement of American resourcefulness, American skill and determination.”
Indeed, it was.
But this architectural and engineering wonder of the world was built in an era where the government looked favorably on massive national infrastructure projects. Washington’s bureaucratic morass of overly complex and stifling regulations enacted at the behest of special interests, and opposition from those same groups, could make building something as grand as the Hoover Dam today, well, impossible.
Routine infrastructure projects have now become fodder for environmental activists, anti-development activists, and anti-fossil fuel advocates, who in some cases, have attempted to turn heretofore unknown projects into referendums on climate change. Other groups have been misled or are opposed to any development. Known as the Build Absolutely Nothing Anywhere, the Banana crowd is opposed to all development, yearning for a return to a simpler life. I get that, and also miss growing up in a small town. Yet turning the clock back does not address fundamental challenges facing us. Worse, it can really be a step backwards toward dependence on foreign commodity suppliers like OPEC, and lead to higher prices on everything we buy.
Further, stymieing new infrastructure projects built with the best available technologies and engineering practices forces us to rely on outdated infrastructure, which undermines public safety, resulting in more injuries and deaths. There is a dire need to modernize or replace legacy infrastructure assets. Doing so will lead to fewer trucks on the road, reducing risks to cities and towns located along highways from transporting large volumes of energy supplies via alternative transportation methods through their communities.
Lacking in this discourse, however, is the fact that oil, natural gas, propane, diesel, and gasolines are just a few of the materials transported each and every day through America’s pipeline network. Pipelines actually transport two-thirds of all of the energy supplies we as a nation consume on a daily basis. A fact few of us think about on a daily basis – or at all. Just like flipping on a light switch, we assume the light will come on. When we turn on the heat, we assume our furnaces or hot water tanks powered by natural gas will work. Even though I used to be in charge of the federal government’s Pipeline and Hazardous Materials Safety Administration in Washington, D.C. (an agency responsible for the transportation of all energy supplies by air, land, sea, and pipeline), I rarely stop to consider the pipeline that brought gasoline to a local distribution center, which is then placed on an 18-wheeler and brought to the gas station, and ultimately through the pump and into my vehicle. We don’t think about it when we get to the gas station, but we should.
We need infrastructure to move the resources and supplies needed via the safest, most reliable and efficient means possible. Failing to do so undermines safety, restrains our economy, and increases prices on everything we purchase and use. Take for example recent efforts to oppose a natural gas pipeline running through Virginia and North Carolina. The Alamance County, North Carolina Board of Commissioners recently voted en masse against a much needed Mountain Valley natural gas pipeline project citing the need for “green energy.” Speaking of green energy, groups are popping up to oppose renewables as well. Take the Friends of Maine’s Mountains, who has voiced strong opposition to that wind energy project and a group in Lincoln County, South Dakota has opposed a referendum that would allow a 300-megawatt wind farm.
Some of these efforts are simply misguided or symbolic, and these groups are unlikely to prevent projects from being completed. For example, in case of the Mountain Valley Pipeline, the County Board of Commissioners has no authority over the permitting of lines, that’s up to the federal government.
Regardless of the project, these actions are ill-advised as the science and data tells us we need to be using fossil fuels and renewables. Much like tools in a toolbox, different tools are needed for different projects, and our success has thus far hinged on a true “all of the above” approach to energy infrastructure. The world is changing, and America is well positioned to emerge as a global leader in energy and innovation.
Like the Hoover Dam, building infrastructure supports economic development, provides jobs, and provides energy to millions of Americans, especially at a time when reliable, stable sources of oil for energy are needed more than ever.
Time to Update 811
I was honored to speak at the summer meeting for all of the state public utility commissioners in Arizona this week. #NARUCSummer18 was a big success, and NARUC does a terrific job of bringing state regulators together to discuss issues. One of the main themes of my talk with State PUC Commissioners is the need to leverage technology and innovation into our energy grids. Electric and gas could benefit greatly from using artificial intelligence and data coupled to IOT devices.
That said, we have to understand potential cyber threats that come from modernization efforts as well.
One item I’d like to mention is the dire need to upgrade our current call before you dig safety system. 811 was a terrific program when we introduced it and it has worked well. That said, our one-call system simply hasn’t evolved with technology. We don’t still carry around bag phones or Blackberries, so why are we still using outdated technology to prevent excavation damages?
We must –and can– do better, and a great place to start is with an overhaul of this system. Let’s use GPS technology and GIS mapping to identify, catalog, and store underground utility information, and let’s get rid of drawing lines on paper and move to virtual white-lining. Augment the telephone with electronic communications. Doing so could cut excavation damage by 66%. That’s a huge number and one that saves lives, eliminates injuries, reduces environmental and property damage, and dramatically cuts the economic cost of these incidents.
Sadly, just last week a firefighter lost his life and a dozen were injured after an explosion caused by an excavator who didn’t even call 811. The resulting explosion leveled two buildings and the road and area remain closed. Regrettably, that accident was virtually 100% preventable. Even more disturbing was a company that I had hired failed to even call 811. The company was not allowed onto the property to place underground wires. When I called them the day before they were to start digging to tell them the property hadn’t been marked yet, they said that they “normally” call 811 but not to worry, they wouldn’t be digging very deep. Such conduct is deeply disappointing. Not only is such an attitude dangerous, in most states (including the one where I live) it’s also against the law.
Here at Aii we’ve worked hard to raise awareness because most accidents involving underground utilities are preventable. Take a look at our studies on how dig laws and damage prevention can be improved and help spread the word. By utilizing off-the-shelf commercially available technology, and a little common sense, we can save lives and protect the environment while also saving the country billions in damage and lost productivity. There’s no downside, so what are we waiting for?
Infrastructure Package Prospects
The likelihood of an infrastructure package seems a little less certain after the departure of several high-level administration officials including NEC Chair Gary Cohn and President Trump’s infrastructure advisor, D.J. Gribbin. DJ and I started at the USDOT at the exact same time back in 2003, although DJ likes to say he was sworn in 3 minutes before me. DJ’s loss will be especially felt as he served as the front man for coordinating all of the federal government’s infrastructure efforts. That said, people come and go, as it is a fact of life in D.C. The system outlives any individual personality, and Transportation Secretary Elaine Chao has a firm grasp of the issues facing the transportation sector. That said, the infrastructure plan was not only a transportation plan.
Perhaps even more significant though is that while everyone on Capitol Hill seems to agree about the need to reinvest in infrastructure, the Congress has been unable to come up with a sufficient funding mechanism to do so despite this bi-partisan support. After all, the real elephant in the corner of the room is the pay for. The lack of a funding mechanism coupled with approaching mid-term elections means that passing an infrastructure package before the end of the year seems to be as elusive as ever.
We must have the political courage to address the importance of modernizing our infrastructure system. While we wait, our systems age. The only good news is that our private infrastructure – infrastructure that’s not government owned – has been benefiting from re-investment and innovation. Even so, government regulation and the need to secure permits to update infrastructure is getting more and more difficult to obtain, often resulting in unnecessary and costly delays.
What can you do? You can make water, rural broadband, transportation, and other infrastructure an important topic for every politician running for office. Until their feet are held to the fire, the prospects for an infrastructure breakthrough remain cloudy as a Washington, D.C. cigar lounge.
New Advisory Council
Welcome to the inaugural edition of the Chairman’s Corner. I’ll be highlighting what’s been going on in the innovation and infrastructure related industries. With so many things to talk about, the “Chairman’s Corner” will also serve as a way for us to keep in touch with our many supporters and stakeholders.
Originally envisioned as a non-profit – and bi-partisan “think tank” from the back of a napkin, I’m really proud of what Aii has accomplished since our founding in San Francisco in 2014. The reason for our existence is as relevant today as it was then, when we recognized the need to move away from partisan politics, in order to address pressing public policy issues facing our nation.
While we’ve physically moved to Northern Virginia in order to be closer to Washington, D.C., Aii has remained a virtual NGO. By leveraged technology, we are able to effectively work remotely, and that has allowed our leadership and staff to collaborate in ways unimaginable only a decade ago. Keeping our brick and mortar presence to a minimum, we maximize our fiscal efficiency by ensuring that donations are spent on program delivery.
Speaking of technology, we are mindful that while it helps us all stay in touch, the sheer amount of information that can be shared is sometimes overwhelming. Our goal is to always cut through the noise and competing special interests and provide factual information and recommendations in a straightforward manner.
In order to remain on the leading edge of innovation, we’re also announcing the establishment of an Advisory Council to serve as Aii’s eyes and ears, helping us frame up important issues. By weighing in on important public policy matters, these civic leaders and technical experts will help ensure Aii remains a thoughtful, non-partisan educational outlet for policymakers and the public.
Brigham A. McCown
Founder & Chairman