I don't believe I insinuated as such, and if it came across that way, apologies.
That being said, you might have some misplaced assertions on the specific device in question and how they are used in general.
If the device is on public property, it's most likely owned by one of the LE agencies.
With regard to government permitting, that's really not even a thing. If a private entity (tow company, HOA, etc) wants one, they buy it. The images it collects are for their local database, usually managed by the device's manufacturer (i.e. Flock). For example, a tow company would have to enter specific LPs they are looking for (repos), and they would only be notified of those plates. It's really no different than someone standing at a specific spot and using a camera to take a photo of every car that drives by. It's been well established by courts for years that visible LP numbers are public information. No private entities are getting any sort of info restricted for government use. The private entities can share the aggregate data to LE users, who would have access to more restricted information like registered owners, if the vehicle is entered into state and national databases as stolen, etc. There is no big conspiracy, just a simple concept extrapolated exponentially using technology.