Build Big Without Wasting Billions
An obsolete law from the 1800s costs taxpayers billions every year.
By Philip K. Howard
New York is at the cusp of a major infrastructure building boom, but an obsolete New York statute from the 19th century called the Scaffold Law has already wasted $200 million on one project — the new Mario Cuomo (Tappan Zee) Bridge.
With the $25 billion Gateway rail tunnel project under the Hudson River potentially nearing approval, it is vital that the Scaffold Law be repealed in order to avoid wasting as much as $300 million on that project. That’s the Port Authority’s estimate, which is part of a fuller analysis of the Scaffold Law recently released by Common Good.
Overriding the Scaffold Law should be the first step in a larger legislative effort to repeal obsolete laws that cause waste in infrastructure projects.
Delays in permitting, caused by unnecessary red tape, can double the effective cost of a project. Our report on the Gateway tunnel, “Billions for Red Tape,” found that an 18-month delay would raise costs by over $3 billion. Partly as a result of that analysis, permitting for the tunnel portion of the Gateway Project was accelerated and is almost complete.
Obsolete laws burn up taxpayer money. After Hurricane Maria devastated Puerto Rico, relief agencies pointed out that an obscure 1920 law called the Jones Act — forbidding international flag ships from participating in domestic shipping — raised the cost of goods sent to Puerto Rico by 15% to 20%.
President Trump temporarily suspended the Jones Act for relief shipments to Puerto Rico, but the law operates as a hidden tax on all other Americans — for example, raising the price of gasoline up to15 cents per gallon.
Billions can be saved through such simple changes. Common Good has drafted legislative amendments that would permit major infrastructure projects to be approved in two years, rather than often 10 years.
These amendments — a total of three pages long — create clear lines of authority to make needed decisions. The savings over 10 years would be hundreds of billions, adding up to more than $1,000 for each American family.
But as sensible as these reforms are, inertia is a more powerful force. All obsolete laws have powerful interest groups working on the inside to keep things the way they are. None of these changes is likely to happen without public pressure.
For example, over many years, the New York State Legislature has resisted all efforts to eliminate the Scaffold Law, which is a favorite of trial lawyers because it creates absolute liability, with no limits on damages, for many construction injuries.
Construction workers are already covered by workers’ compensation with their employer, but the Scaffold Law imposes unlimited liability on property owners and others who have little or no supervisory authority.
In 2012, 16 out of the 30 largest settlements in New York involved the Scaffold Law. Largely as a result, New York’s general liability insurance costs for construction are the highest among the 50 states.
Recently, Rep. John Faso (R-Kinderhook) introduced a bill that would prohibit application of the Scaffold Law to any projects receiving federal funding. New Yorkers should rally behind that measure, which will reap immediate savings.
Even better, the Scaffold Law should be finally repealed. It operates as a hidden tax on New Yorkers, adding $5,000 to $10,000 to the cost of each new house. It is tolerated by voters only because modern government is so opaque, with laws piled upon laws for over 100 years, that almost no one understands what’s there.
The Scaffold Law is a symptom of a systemic problem. Government needs a spring cleaning. The goal should be not to remove good programs, but to make it possible for good programs to work — such as rebuilding decrepit infrastructure without wasting billions.
Modern government fails not because the goals of, say, environmental review or worker safety are invalid, but because it tries to meet the goals with outmoded dictates that prescribe actions that make no sense, and, worse, prevent anyone in government from doing anything about it.
And that breeds a broader cynicism about bureaucracy that erodes trust in the public sector when we needit badly.
It’s time for taxpayers to let their elected officials in Congress and the state Legislature know that they don’t want to pay for the waste from obsolete laws. Scrap the Scaffold Law for starters.
A version of this article originally appeared in the New York Daily News on October 23, 2017.