SPN MacIver Institute 2012 National Think Tank of the Year
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No Jobs are Good Jobs?

Comments | Posted in mi perspectives | By MacIverNews | Posted November 21, 2012 8:47 AM

By William Osmulski
MacIver Institute Investigative Reporter

[Madison, Wisc...] There are companies that want to invest millions of dollars in rural Wisconsin communities and create thousands of jobs in the process, but certain residents, their local governments and special interest groups are doing everything they can to stop it.

In Hurley, Gogebic Taconite wanted to open an iron mine and create 2,800 construction jobs and 700 permanent operator jobs with an average compensation of $80,000 annually. Plus, they would bring $1.5 billion in investments and create $20 million in tax revenue over the first two years of operation. Although people in Hurley were very supportive of the mine, critics from other northern communities and throughout the state successfully stopped it.1

And in western Wisconsin, companies are coming in to mine frac sand, a unique type of sand required for oil and natural gas mining. The Wisconsin Industrial Sand Association states, "Companies involved in Wisconsin's sand mining industry employ thousands in family-supporting jobs and are making significant, multimillion-dollar investments in areas across Wisconsin, generating hundreds of millions of dollars in overall economic impact to the state and in local communities." However, job creation opponents have pressured many counties to issue moratoriums against sand mining.2

Critics of economic activity do not limit their crusade to the traditional enemies of the radical environmental lobby. They don't want clean energy businesses coming into their towns either.

A company called Green Energy Partners wants to build facilities that convert discarded food waste into methane for energy. In Maribel, a village of about 350, a proposed plant that would be constructed a mile away from residential neighborhoods would have created up to 20 jobs. All the project needed was a commercial lot rezoned to light industrial status. One resident told the MacIver Institute about half the town was for it, and the other half was against it. The Village Board voted against it in September.3

At the same time, the company was also trying to build a facility in Whitewater. It was asking for tax credits for the project. Whitewater also said no in September. According to one critic, the project would have cost the city more than it was worth.

"A waste digester deal, while foolishly described as 'monumental,' typically involves large sums of public money, from state and federal taxpayers' dollars, for the means to build a waste and garbage processing operation in a town. Those pushing these deals will rely on municipal grants (taxpayer money), community development grants (taxpayer money), municipal or community development loans (taxpayer money), and federal bonds (public debt) to build their plants," wrote the blogger.4

In general, however, job creation opponents rely on an array of stock criticisms they apply to all projects. The categories include strain on infrastructure, environmental risks, quality of life issues and the claim that businesses won't create any jobs or help the economy. Many of their concerns mirror the DNR's criteria for approving a project. These include impacts to health, air quality, ground water, wet lands, rivers and lakes, storm water, erosion, noise, dust, lighting, traffic, forests, endangered species, archeological and historical sites and transportation.5 The critics apparently place no trust in the DNR's ability to assess these risks.

Because they are well motivated, even a few job creation opponents become a major factor in local decision-making. A small group with signs at a city council meeting are enough to create the appearance of universal disapproval.20 Local elected officials, looking to create as few waves as possible, usually succumb. They know there is less fallout from not doing anything to help the community's economic situation than there is from doing something and having some people unhappy with it. No one will sue a city for turning down a project, but there are many willing to sue a city if anything at all goes wrong with it.

The fight against frac sand mining is an excellent example of how certain groups work to fight against economic activity in their communities. The industry has the most to offer Wisconsin in terms of jobs, taxes and investment and is spread throughout a wide area of the state.

Although many places have frac sand deposits, it is most accessible in western Wisconsin, making the region particularly attractive to outside investment. Frac sand mining operations are both simple and lucrative. A company will lease a few acres from a private landowner (usually a farmer) and then shovel up the sand, break it up, dry it, sift it, load it onto trucks and ship it out. Everyone in the general vicinity of this operation makes money: the landowner, the workers at the site, the truckers, local tradesmen, local diners and retailers, etc.6 Even local governments see increases in tax revenues. In short, it's a perfect example of a healthy, free market economy.

The Wisconsin Center for Investigative Journalism reported there were 41 sand mining sites in Wisconsin last year. This year there are 87 in operation or construction, plus another 20 are being proposed. One company, seeking to open a mine in Buffalo County, plans on hiring 100 people in addition to providing work for local contractors. The Center reported another mine has "53 people working full time at Preferred Sands' facility in Blair, a community of 1,300 midway between La Crosse and Eau Claire. According to the company's regional manager, Todd Murchison, entry level wages range from $15 to $20 an hour. Preferred Sands also hires local contractors when possible."7

The Wisconsin Department of Natural Resources recently examined the socio-economic impacts of sand mining. In a January 2012 paper, the DNR reported:

The Wisconsin Economic Development Corporation estimates that the average processing plant will require an investment of between $20-$40 million for equipment, buildings, and infrastructure and up to $100 million for a processing facility that includes resin coating.
Short term secondary impacts will occur in the building and trades sectors as these facilities are being constructed. There is also potential for an increase in sales of mining and other heavy equipment such as dump trucks. There will also be the typical secondary economic impacts that would be expected as a result of any new business coming to Wisconsin and bringing new jobs.8

In fighting this promising industry, job creation opponents turn to their stock concerns, beginning with infrastructure and more specifically, roads. A thriving business means there will be more trucks on certain roads in and out of an area. This lends to a whole host of potential problems. First, more traffic means roads will wear down faster. They apply their concerns to all roads in the area, not just the actual routes the trucks would use. Critics also ignore the fact the community will have increased tax revenue from the mine to maintain the roads. Their argument here is weak, but when added to other concerns it helps build momentum for their cause.

Increased traffic on the roads also means a higher risk for traffic accidents. For this concern, critics will bring up the presence of children or senior citizens, and the need for safe roads. 10.5

Those trucks will also be noisy and will emit exhaust, hurting property values and creating air pollution. This will lead job creation opponents to talk about quality of life in the community. Family supporting jobs and a healthy economy do not fit into their equation, but environmental issues do.

In opposing sand mining in Chippewa County, Dan Masterpole, County Conservationist, spoke of "noise, air, dust or any of those type of nuisance-related impacts."9

In Dunn County, "Cheryl Merrill of Menomonie was one citizen who urged the board not to jump on the sand mining boom until regulations are adopted to protect land, water and air."10

Mike O'Conner, Buffalo County Resident, testified that the county needs to scrutinize effects on groundwater, storm water, water discharge, water usage, wetlands, endangered species, and site reclamation.11

Dani Johnson, a Trempealeau County resident, voiced concerns to the Wisconsin Natural Resources Board about dust that's blown off large sand piles and its affect on air quality. Others told the board that dust particles from the sand can cause lung disease.12 (At a forum in Eau Claire in October, Representative Scott Suder, who served in Iraq, pointed out the entire middle east would be inhabitable if this was a valid argument.)

For sand in particular, opponents try to draw comparisons to mountain top removal in West Virginia. For example, the blog "Save the Hills Alliance, Inc" states, "Sand companies are shipping our land out of state."13

Gary Oppegard, of Hixton in Jackson County, wrote to the Jackson County Chronicle arguing sand is a non-renewable resource. "After all, it took 500 million years to create our sand, so let's not give it up in a matter of weeks or months."14

This raises the issue of private property rights. These operations are conducted on private land. Do landowners have the right to sell some of their land, or does perceived community interest take priority?

Just as they project issues concerning a few specific roads to all roads, job creation opponents paint a picture of the entire regional landscape being stripped bare by sand mining.

Oppegard wrote, "Just because mining companies want our sand, that does not mean we have to let them have it. We live here; we hunt, fish, canoe, hike and bike here; we value our land, so let's protect and enjoy it. Mining companies should not dictate to us what our land will look like."

As Buffalo County Resident Mike O'Connor said, "Many of us are here for Aldo Leopold's sand country. This is a really spectacular piece of the world, so to have it ripped apart is kind of emotional."

Finally, opponents will turn to the business model claiming it will not create any jobs or help the economy. UW-Madison helped their case by publishing a paper in May titled "Frac Sand Mining and Community Economic Development." It represents a flat out rejection of free market economics and its practice.15

The paper explains that Wisconsin has long ceased depending on an extractive based economy and has moved on to a service based one, including tourism. Some argue the two types of economies cannot coexist. The paper points out, "For many rural residents, the economic opportunities presented by the frac sand mines have created a 'classic' jobs versus the environment type of debate."

The paper also addresses how property rights are up for grabs in the debate:

For one community, the notions of private property rights and the ability of a land owner to use their land as they see best, coupled with the creation of employment opportunities, may override any concerns about preserving natural amenities and the environment. For other communities, the opposite may hold true.

Even more concerning is the suggestion that local communities might be better off not participating in the world marketplace. The argument is that the more productive a community is, the more supply is increased. That results in diminishing returns to the community in question.

Sociologists have tended to highlight the inherent interplay between the instability of mining communities and the volatility of commodity prices. In his foundational study, Freudenburg (1992) portrayed quite starkly the relationship between local economic growth and the downward trend in world commodity prices. He suggests that due to "cost-price squeezing," production may cease even with abundantly available supplies of raw materials. That is, world price for the commodity drops below an economically feasible price to extract them, thus stunting local economic growth. What Freudenburg is describing is the "flickering" of the local economy as the mining operations respond to commodity prices.

One of the more stunning conclusions the paper makes is that communities where mines shut down would have been better off if there was never a mine in the first place. It does concede, however, that there is "evidence that mining has a positive impact on employment and income growth rates."

The paper's general themes, which call into question whether well-paying jobs are worth the trouble, lend well to local critics' arguments.

From their comments and concerns, there are several general characteristics that can be deduced about job creation opponents. First of all, they themselves are financially secure and don't particularly care if their neighbors are. Some are retirees, who moved to rural areas to get away from the cities and relax. Others are environmentalists, who don't believe humans should use natural resources for industrial purposes, even when done in a responsible manner. None of them has respect for the property rights of others, and see all land as belonging to the community.

Regardless, county governments in western Wisconsin have sided with the job creation opponents. Buffalo County's health department wants a moratorium extended until March 2014 while it conducts an air quality study.16 (The DNR says there's not a problem.) Dunn County voted in July to continue its moratorium that was about to expire.17 Eau Claire and Pepin counties also have moratoriums in place.

When arguments aren't enough, opponents to this economic activity turn to other avenues. In Jackson County, the Franklin Town Board voted down a mining company's rezoning request 2-1, after one of the Board Supervisors was threatened over the phone.19

It is impossible to gauge what percentage of the Wisconsin population shares these views. The opponents are always the more vocal, while supporters are more likely to keep their heads down. It is important to consider the possibility that job creation opponents hold the dominant view, and a majority of the population is opposed to expanding economic activity. Whether or not that is the case, the job creation opponents in rural Wisconsin have added many recent successes to their record. Going forward, if these job creation opponents are in the minority, then job creation supporters would do well to make their presence known to local officials along with their desire for the creation of good-paying, family supporting jobs in their communities.

Sources:

1. Osmulski, Bill. Mine Shaft. MacIver Institute: 2012.

2. http://wisconsinsand.org/economic-impact/

3. Ledge Guardians: Protecting the Wisconsin Ledge. www.ledgeguardians.com

4. "The Whitewater Community Development Authority Meeting for 9.27.12." www.freewhitewater.com September 28, 2012.

5. "Silica Sand Mining in Wisconsin." Wisconsin Department of Natural Resources. January 2012.

6. Interview with Paul Salt, Panther Creek Sand owner. September 12, 2012.

7. Prengaman, Kate. "Sand boom creates jobs; opponents fear frac rush threatens rural qualify of life." Wisconsin Center for Investigative Journalism. La Crosse Tribune, August 19, 2012.

8. "Silica Sand Mining in Wisconsin." Wisconsin Department of Natural Resources. January 2012.

9. Prengaman, Kate. "Frac sand mining sites more than double in one year." Wisconsin Center for Investigative Journalism. The Chippewa Herald, July 23, 2012.

10. Powers, Pamela. "Dunn County sand mining moratorium extended." Eau Claire Leader-Telegram. July 25, 2012.

10.5. "Frac Sand Mine Proposed Near School." http://www.wivoices.org/2012/09/20/frac-sand-mine-planned-next-to-school-says-glenwood-city-man/ September 20, 2012.

11. O'Connor, Mike. "Testimony IN FAVOR of extending the frac sand Moratorium - Mikey." September, 18, 2012. www.fracsandfrisbee.com

12. "Franc-sand mining opponents speak out at listening session in Eau Claire." WTAQ: September 26, 2012.

13. http://wisair.wordpress.com

14. Oppegard, Gaylord. "LETTER: Too many questions with sand mines." Jackson County Chronicle: September 5, 2012.

15. Deller, Steven C. and Schreiber, Andrew. "Frac Sand Mining and Community Economic Development." University of Wisconsin-Madison Department of Agriculture and Applied Economics. May 2012.

16. Gallagher, Jerry. "Buffalo County eyes extending sand moratorium to 2014." WQOW-TV. September 25, 2012.

17. "Dunn County board extends moratorium on frac-sand mining." WTAQ. July 26, 2012.

18. Syverson, Kent. "Benefits of frac sand mining outweigh the negatives." Dunn County News. January 10, 2012.

19. Colson, Cassandra. "Franklin sand mine left in limbo." Jackson County Chronicle. September 19, 2012.

20. "City Council rejects sand transfer facility in Eau Claire." WQOW-TV. Oct. 10, 2012. http://www.wqow.com/story/19778374/city-council-votes-rejects-developers-agreeement-with-muskie-proppant