Sep 14


Lockport IDA subsidies likely despite AI fake

A plastics manufacturer misled the agency in July with a false report produced by AI. The IDA has indicated it nevertheless intends to grant the company $312,000 in tax breaks when it meets next month.

In July, a plastics manufacturer gave the Lockport Industrial Development Agency a fake study generated by artificial intelligence to support its request for subsidies.

Thursday, the IDA signaled that it’s prepared to give the company $312,000 in tax breaks anyway.

Two months ago, SRI CV Plastics gave the IDA’s board of directors an abstract and citation for a study that purported to show the safety and benefits of PVC pipes, which the company wanted to manufacture. A group of 48 environmental groups are protesting the project, arguing that a public agency in New York should not be subsidizing a plastics manufacturer as the state moves away from single-use materials.

But at a public hearing about the company’s plans to build a 14,000 square-foot plant in the Lockport Industrial Park, University at Buffalo professor Lourdes Vera claimed the abstract and citation was a fake.

“I do not trust this company and this information that they’re distributing,” Vera said in July.

Vera was correct. The cited study does not exist. Software used to detect material generated by artificial intelligence confirmed that ChatGPT had generated the text of the abstract.

After the hearing, the company’s attorney, Terry Burton, told Investigative Post that the application was on hold until he could figure out what happened with the submission. On Thursday, Burton said he and the company’s CEO, Varun Kumar Velumani, concede that the abstract and citation was a fake. He said Velumani was “embarrassed” and “felt very bad” and had apologized to the board.

“​​It was challenged, and challenged correctly, at the last meeting because it didn’t pass a test,” Burton said. “It was a ChatGPT-generated document.”

The company’s revised plans have been changed in an important way: it no longer intends to produce PVC pipes at the plant.

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Why grant subsidies to a company that provided false information?

Thomas Sy, the IDA’s economic development coordinator, said he was satisfied with Burton’s investigation. Sy said he’d be more concerned if a company submitted false information about the number of people it planned to hire.

“I get the importance of it,” he said. “On the other hand, as an economic development exec, I try to focus a bit more on core, i.e. jobs, i.e. so on.”

The company on Thursday provided the IDA with yet another ChatGPT-generated document. As part of a package of information about the company’s mistake and its future plans, it included a Q&A section about the materials it uses. Burton said the company used ChatGPT to help generate the material, but that it had been “reviewed for factual accuracy and edited where necessary.”

If approved for IDA subsidies, Burton said the company would seek additional grants or tax breaks from Empire State Development Corp. and NYSERDA, the New York State Energy Research and Development Authority, because it plans to power the plant with renewable energy.

In its IDA application, the company estimated that it could receive up to $600,000 in public assistance, including from the IDA. SRI CV Plastics is an India-based firm seeking to establish its first presence in the United States.

Opposition from environmental groups

In July and again this week, a coalition of environmental groups, led by Beyond Plastics, submitted a letter to the Lockport IDA urging them to reject SRI CV Plastics’ application for subsidies.

The groups argue that the ChatGPT-produced study makes the company untrustworthy and that subsidizing a plastics manufacturer runs contrary to New York’s goals to address climate change. The groups noted in their Wednesday letter that while the state has not yet banned all plastic packaging, it has prohibited some and could ban more in the future.

“Producing more of these single-use items is completely contrary to the direction our state is moving in,” the groups wrote.

They pointed to pending legislation in the state Legislature that would require companies using plastic packaging to reduce that use by 50 percent in coming years. In the state Assembly, the legislation is sponsored by 70 lawmakers. In the state Senate, 34 lawmakers support the bill.

Judith Enck, a former regional administrator for the Environmental Protection Agency and the executive director of Beyond Plastics, told Investigative Post in July that a plastics manufacturer was the “last” kind of company an IDA ought to be supporting in 2023.

“It’s one thing if a company wants to come in on their own dime and try to go through a process to site a facility like this,” she said. “It’s another thing for public subsidies to be used to support a facility like this.”

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Velumani and Burton have said the plant will initially produce food packaging and maintain it will not generate any pollution. Burton said Thursday that the facility will require no special wastewater discharge or air pollution permits from New York. The extent of any problems, he said, would be the smell of melted plastic. 

“Does warm plastic smell? Probably. Is it toxic fumes? No. It’s a contained process,” he told the IDA board. 

“I assume if you stuck your head into the machine you would smell more melted plastic smell than you would otherwise, but it’s sealed as much as possible and there’s no need for safety gear, there’s no venting of fumes.”

The company’s initial application with the IDA anticipated a second phase of production that would include the manufacture of PVC pipes, made from polyvinyl chloride resin. Burton said Thursday the company has abandoned those plans. 

Use of ChatGPT 

Burton attributed the fake study submitted in July to a language barrier. He said employees, who are not native English speakers, use tools like ChatGPT to produce information about the company’s products in English and then verify that it’s accurate. 

“They used it like a Wikipedia kind of thing, that they could look at it, see the answers and say, ‘That’s true.’ I couldn’t write that in English but now that I’m reading it in English that’s true,” Burton said.

The problem, he said, arose when the employees used ChatGPT less like Wikipedia and more like a search engine. 

“Apparently, with ChatGPT, if it can’t find anything it will make it up. And they did not know that ChatGPT would make things up,” Burton said. “They didn’t take the second step of pulling the article and reading it themselves. I do not know why they didn’t vet it. Sloppiness, candidly.”

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In a July 26 letter, Burton told Sy and the IDA that the company never meant to mislead the agency.

“I would like to assure you that there was no intent to deceive or mislead the board, and we deeply regret that this incident occurred,” Burton wrote.

Still, Burton said Thursday that in the updated material he supplied to the board, artificial intelligence-produced material was included. The difference, he said, is that the information was properly vetted for accuracy.

“Due to the language barrier, it was much easier for the people in India to review a first draft of the information generated in English and edit it for accuracy rather than compose the Questions and Answers from scratch,” he said. 

The Lockport IDA is scheduled to vote on the company’s application for subsidies at its Oct. 12 meeting.

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