Back on the Grid: Rethinking American Infrastructure

By Isaac Greenwood

In the early morning of April 16, 2013, two unknown assailants fired shots from high-powered sniper rifles for over 19 minutes at an electrical substation near San Jose, CA. Officials quickly responded to the scene, and while they were unsuccessful in apprehending the gunmen they were able to successfully reroute electricity from another station and prevent a mass blackout in Silicon Valley. The incident nonetheless incurred $15 million in damages. Two years later, officials in Bakersfield, CA responded to reports of men with flashlights and found slashed wires and equipment at an electrical substation which serves over 16,000 people. Rather than single incidents, these attacks represent a significant trend of vulnerability amongst the American electrical system and infrastructure at-large.

        Political candidates from both sides of the aisle have long lamented the woe-stricken traditional or American infrastructure. Planes, trains, and automobiles are all subject to crumbling networks of airports, railways, and highways which have not been maintained since their creation years ago. In its annual Infrastructure Report Card, the American Society for Civil Engineers gave American infrastructure at-large a D+ grade  and suggested an additional $3.6 trillion in investment by 2020. However, projects to renovate existing problems have long stalled as states, who fund over 90% of local projects, continue to pay off debt incurred during the Recession. State and local spending on infrastructure fell from 2.5% of GDP in the mid-2000’s to less than 2% today, a 30-year low. Even the main federal source of funding, the federal gas tax, has not seen an increase since 1993, remaining at just 18.4 cents per gallon.

        In response to magnified calls for improvement, the Treasury Department unveiled new policies last year which would encourage regulators to incentivize infrastructure investments after revising for risk structure and factors. These policies have come under criticism from Republicans such as Senator Phil Gramm, Chair of the Senate Banking Committee, for their similarity to the Community Reinvestment Act (CRA) of 1977 which proliferated subprime mortgages and the private funding of the public sector. The law, which has evolved significantly over its 39-year lifespan, brought credit to many low income areas and municipalities that would have otherwise struggled in acquiring funding. The role of the act in the Financial Crisis remains contested, however, as some like economist and Nobel laureate Paul Krugman cite faulty mortgage-backed securities as the prime instigator. Regardless, politicians in Washington should propose revamped funding guidelines and re-examine the CRA as states continue to deal with outstanding debt.

        In addition to accounting for traditional forms of infrastructure, contemporary funding for infrastructure must also include renovations to the exposed electrical grid.  The American electrical grid, largely created over the past 125 years, remains fragile and at-risk to third party assaults. An 11-minute blackout in San Diego, CA in late 2011 resulted in a power loss for 2.7 million residents across three states as sewage and airports failed. A 2012 report by the National Research Council of the National Academies of Sciences found electrical substations the most subject to terrorist attack within the grid. In response to the 2013 attack, the Federal Energy Regulatory Commission conducted a survey which found nine substations had been attacked in similar manners, as well as thousands of disruptions from rodents. These substations are often guarded by no more than wire fence and padlock.

        Attacks like the aforementioned will become more common in the increasingly sophisticated technological environment. Russian hackers successfully created a power outage last December in a coordinated cyber-attack which affected more than 80,000 residents in Eastern Ukraine. As demonstrated by the 2010 Stuxnet incident, in which an Israeli virus destroyed various Iranian nuclear centrifuges, cyber warfare presents an ever-growing threat and American infrastructure should be well-prepared to defend itself against threats from state and non-state actors.

        The U.S. currently invests less than 2% of GDP in infrastructure, paled in comparison to Europe’s 5% and China’s whopping 8.6%. While the state model may have worked in the past, current economic situations dictate the federal government must take an increased role in providing for much-needed infrastructure improvements. Military spending currently accounts for over 50% of discretionary spending and future budgets should be revised to include certain infrastructure projects under the scope of national defense. Redefining infrastructure to include the electrical and “cyber” grid, Stuxnet and other instances reflect the need for continued spending on infrastructure security given their exposure to this newfound form of war. From this perspective, infrastructure, in addition to the widely relied upon electrical grid, could classify as defense spending in order to receive more annual aid.

        Another proposal involves the creation of a Department of Infrastructure to oversee the various projects from a federal level. Instead of the current system in which maritime, highway, and other areas are separated across administrations, the newly created and unified department could coordinate spending and include the Army Corps of Engineers in addition to the Environmental Protection Agency. This would improve the efficiency through which potential projects are evaluated in a manner similar to the British Infrastructure and Projects Authority.

 

The federal government should act swiftly in aiding states on local projects to help alleviate the burden of debt. Rather than fall prey to partisan politics, President-Elect Donald Trump and Congress should make these costly yet necessary reforms rather than continue to let the American grid crumble.