Two leading Congressional opponents of public-private partnership (PPP) agreements for transportation have backed off earlier criticisms in a June position paper.
The new paper, from U.S. House Transportation and Infrastructure Committee Chairman Rep. James Oberstar (D-MN) and Highway and Transit Subcommittee Chairman Rep. Peter DeFazio (D-OR), drops earlier threats of possibly undoing state PPP agreements. The paper does, however, confirm the congressmen’s concern that states not undermine opportunities for federal pork projects.
In a May 10 letter sent to governors, state legislators, and state transportation officials, Oberstar and DeFazio had warned against “rushing” into public-private partnerships and threatened, “The Committee will work to undo any state PPP agreements that do not fully protect the public interest and the integrity of the national system.”
The bluntly phrased warning stunned state officials and caused an uproar within the transportation community.
In their June paper, the two powerful lawmakers concede, “under the right circumstances and conditions, public-private partnerships (PPPs) can lead to more efficient and effective construction, management, operation and maintenance of transportation facilities.”
But they added, “where private financing is involved, PPPs can supplement– but not provide a substitute for– public investments in transportation improvements.”
They offered no suggestions as to where the needed additional public funds might come from.
The paper takes the form of a series of recommendations addressed to state transportation agencies and state legislatures. They deal with concerns often expressed by the two congressmen, such as protecting the public from “unreasonably high toll rates and excessive profits”; prohibiting non-compete clauses; avoiding excessively long terms of PPP concessions that “severely limit the ability of future state and local governments to make rational decisions to adapt to changing circumstances”; providing relief from high tolls to low-income drivers; and prohibiting unsolicited PPP proposals “which may undercut or circumvent the planning process or distort open, competitive procurement.”
The final recommendation, titled “Preserving an Integrated National Surface Transportation System,” confirms, perhaps inadvertently, what many observers think is the principal reason for the congressmen’s negative view of public-private partnerships.
The recommendation states PPPs should be pursued only with vigorous federal oversight.
“Unless appropriate planning and public interest protections are incorporated into the procedures of implementing PPPs,” the recommendation says, “these transactions could stimulate and accelerate the devolution of the federal program to the states.”
One seasoned observer of the congressional scene remarked to this author, “Behind all the high-sounding sentiments about ‘preserving the public interest’ lies congressional fear of losing control, power and leverage over the highway program, including the power to earmark funds for local pork barrel projects” as states–through public-private partnerships–assume a dominant role in funding new highway infrastructure, making federal funds less important.
Reaction to Oberstar’s and DeFazio’s May 10 letter was swift and pointed.
“State officials do not need to be warned by U.S. congressmen against signing agreements that are not in the public interest. They make their own judgments of what agreements are in the best interest of their publics. … Federal legislators’ role is to legislate, not to attempt to undo state contracts legitimately entered into,” wrote Robert Poole, director of transportation studies at the Reason Foundation, and Peter Samuel, senior fellow at the Reason Foundation and publisher of TollRoadsNews.com, in a strongly worded commentary posted at the organization’s Web site on May 22.
On May 16 Matthew Brouillette, president of the Pennsylvania-based Commonwealth Foundation, issued a statement in which he said, “What happened to federalism? How or why should Congress step in and prevent the states from making their own decisions regarding transportation and infrastructure needs?”
Pennsylvania Gov. Ed Rendell (D) has been working to lease the Pennsylvania Turnpike. His communications director, Doug Rohanna, responded to the letter with this statement:
“The letter warns against rushing into any deal. We have not rushed in. We have done the opposite. We are taking our time. We are looking at all options and the Governor insists that any solution to the Transportation crisis must be in the best interest of the taxpayers and the driving public.
“The Governor’s goal for this effort mirrors their stated goals–any effort to raise funds for transportation should protect the public interest. What their letter does not address are the ways in which other alternatives could be worse than any of the solutions that involve the turnpike.”
The U.S. Department of Transportation, which came under special criticism from Oberstar and DeFazio for “rushing” to embrace PPPs and drafting model legislation intended to encourage states to adopt PPPs, had no official comment.
For more information …
“Public Interest Concerns of Public-Private Partnerships,” written by House Transportation and Infrastructure Committee Chairman James Oberstar (D-MN) and Highway and Transit Subcommittee Chairman Rep. Peter DeFazio (D-OR), U.S. House of Representatives, is available through PolicyBot™, The Heartland Institute’s free online research database. Point your Web browser to http://www.policybot.org and search for document #21563.
The earlier letter to governors and other state officials by Oberstar and DeFazio is also available through PolicyBot™. Search for document #21564.
“Federal Interference in State Highway Public-Private Partnerships Is Unwarranted: A Response to Oberstar and DeFazio,” by Robert Poole and Peter Samuel, http://www.reason.org/commentaries/poole_20070522.shtml