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HARRISBURG—On May 10, 2007, Chairman James Oberstar (D-MN) of the U.S. House Committee on Transportation and Infrastructure, and Chairman Peter DeFazio (D-OR) of the Subcommittee on Highways and Transit, issued a letter to governors, state legislators, and state transportation officials warning of the dangers of road privatization.

The letter stated “We write to strongly discourage you from entering into public-private partnership (“PPP”) agreements that are not in the long-term public interest in a safe, integrated national transportation system that can meet the needs of the 21 st Century.”

Perhaps casting doubt on the status of a future deal, the Chairmen cautioned states that, “the Committee will work to undo any state PPP agreements that do not adequately protect the public interest and the integrity of the national system.”

“Investors are unlikely to commit to a deal if the federal government is likely to void it,” noted Jim Swoyer, a public interest advocate with the Pennsylvania Public Interest Research Group (PennPIRG). “Governor Rendell will have to be able to demonstrate very clearly that his proposal protects the public if he hopes to sell it to potential investors. PennPIRG has identified several key areas in which the public could be harmed by Turnpike privatization.”

In March, PennPIRG released a paper outlining the potential problems of privatizing the Pennsylvania Turnpike. PennPIRG is concerned that a turnpike sell-off would harm the long-term financial health of the Commonwealth, while ceding public control of transportation planning. Governor Rendell has proposed privatizing the Pennsylvania turnpike as a way to fund road and bridge repair.

Chairmen Oberstar and DeFazio specifically warned against agreements similar to the one being contemplated by Governor Rendell and the General Assembly: “These agreements raise revenues for public entities by engaging in long-term leases of existing toll facilities with private companies. These deals make good business sense to the companies that are investing in the projects, but we have serious concerns about whether these transactions offer a net balance of benefits for the American public.”

PennPIRG stressed that any potential deal must guarantee public participation, transparency, and high standards for safety and maintenance. In order to ensure that Pennsylvania will not be stuck with a bad deal, these and other conditions must be reflected in any authorization-to-negotiate law that the General Assembly enacts.

Chairmen Oberstar and DeFazio indicated that their concerns regarding road privatizations “…initially stemmed from non-complete clauses that are frequently included in concession agreements that make it extremely difficult – if not impossible – for public transportation agencies to address safety and congestion problems on highways and streets adjacent to private toll roads.”

These non-compete clauses significantly impact a state’s ability to engage in sensible transportation planning, and are only one example of how privatization agreements can cede control over transportation policy to insular private entities.

“The Pennsylvania Turnpike should be managed for the public interest, not private profit,” said Swoyer, “This is a major public asset, and decisions on what maintenance needs to be done, what safety standards must be observed, and what tolls to charge should all be made based on Pennsylvania’s needs, not a company’s profit margin.” Added Swoyer, “We completely agree with the concerns of the Chairmen, and are glad that Congress is putting some brakes on the rush to privatize.”

The Subcommittee on Highways and Transit has conducted three hearings on road privatization since last year, and has another hearing scheduled for the end of May. The Chairmen announced that the Committee on Transportation and Infrastructure would be releasing a paper outlining factors to be considered when contemplating privatization agreements.

PennPIRG’s paper on the potential problems of Turnpike privatization can be found online here.
Click here to download our letter to the Governer discouraging the PPP.
Read the T&I Committee Press Release on PPP's.