Driven by ideology: Outgoing Bush Administration pushes 'market based tolling' nationwide after disastrous results in Texas

Bush road rule takes effect in January- Department of Transportation

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12/18/08

by Lisa Lambert
Reuters
Copyright 2008

WASHINGTON- The Bush administration will finalize changes on toll road regulations on Friday that it says will make privatizing infrastructure more efficient, counter to the view of leading Congressional Democrats that it will rob states of revenue and drive up tolls.

A Department of Transportation spokesman told Reuters on Thursday that details of the rule will be published in the Federal Register and will go into effect on Jan. 18.

The rule will require states to charge public toll authorities fair market value to lease roads built with federal assistance, in the hopes of making the authorities equal competitors with members of the private sector, said Doug Hecox.

"When a company wants to come in and bid for the work, they need to have some idea as to what the value of that would be," Hecox said. The transportation department worked with states on the regulation changes, he said.

"In some states they may give the first pick or first chance to public agencies before they give it out to the private sector. In that case, it's a little risky because there's no guarantee they're going to be choosing the fair market value," he said.

In a letter sent to Transportation Secretary on Monday, Reps. James Oberstar and Peter DeFazio said that relying on fair market values would push up the fees to drive on those roads and that the values "bear no relation to the true financing, construction, operating and maintenance costs of the facility."

Oberstar, a Minnesota Democrat, chairs the U.S. House of Representatives Transportation Committee, and DeFazio, a California Democrat, chairs its Subcommittee on Highways and Transit.

A committee spokesman said they had no comment on the finalization of the rule, which was proposed Oct. 8.

The representatives have said that changes to how toll roads are valued should be made in the upcoming transportation bill, to be written in 2009. But Hecox said the administration is concerned that might delay establishing a standard when the appetite for public-private partnerships is growing and states are looking into alternatives to fund infrastructure projects.

In most of the partnerships, also called "P3s," a corporation leases a road from a state and then recoups its losses through levying tolls. The leases extend for decades so the companies may also deduct depreciation costs from their taxes, according to the Government Accountability Office.

Because the partnerships are fairly new in the United States, the GAO, the nonpartisan congressional investigative office, has not been able to quantify how many exist in the country.

The rule change will provide consistency for the corporations bidding for the contracts in different states, Hecox said.

"The businesses that...are waiting to compete for this kind of work can do so from a position of a level playing field, rather than having to be the best friend of the governor in this state or the best friend of the mayor in that state," he said.

(Reporting by Lisa Lambert) Keywords: MUNIS ROADS/

(lisa.lambert@thomsonreuters.com; +1-202-898-8328; Reuters Messaging: lisa.lambert.reuters.com@reuters.net)

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