A federal official and the vice chairman of a congressionally mandated panel drafting a report to help shape the nation’s transportation policy squared off yesterday over the role the federal government should play in regulating the growing market for private investments for publicly owned toll roads. The government should play “a minimal” role in such regulation “at least in the near future,” David B. Horner, DOT deputy assistant secretary for transportation policy, said during a panel discussion at a meeting of the International Bridge, Tunnel and Turnpike Association. “Frankly, the federal government doesn’t know a lot about the subject — this is an esoteric subject matter,” Horner said. “State transportation agencies are just beginning to acquaint themselves with [the workings] of these transactions — there is a steep learning curve up which everyone needs to scramble.” “I think it would be absolutely premature to insist on the application of certain federal requirements before we understand how this market can evolve. I think that we should await the development of the market; allow the innovation that is delivered customarily by the market place to address” concerns that have been raised, he added. If a burdensome regulation for so-called public-private partnerships, or P3s, is implemented, there is a danger that “we lose the benefit of the creativity of the marketplace,” Horner said. But Jack Schenendorf, the vice chairman of the National Surface Transportation Policy and Revenue Study Commission and a lawyer with Covington & Burling LLP, responded that federal regulation is needed in order to prevent P3 deals that do not benefit the public. “I’m stunned,” Schenendorf, who was on the panel with Horner, said immediately after DOT official’s comments. “The federal government has an enormous interest in [the nation’s various modes of transportation networks] and the idea that we are going to experiment [with P3 financing] … I just don’t think that is sound policy.” Shenendorf was particularly critical of the idea that New Jersey may allow a private consortium to invest in its existing toll roads in order to help pay down its $32 billion of debt and other obligations, including pension liabilities. “You are taking a piece of the interstate system and you are basically saying that you are going to use those funds for other purposes,” Schenendorf said. “The users of the New Jersey Turnpike are going to be paying for maybe a pension fund bailout with interest for many, many years, which is going to hurt our global productivity. If every jurisdiction along the interstate system is able to use the interstate to finance whatever they want for that is non-transportation it is going to hurt our global competitiveness, and frankly the American people are not going to tolerate it.” Another panelist said government must better articulate its case that it can protect the public interest as well as the public sector in such projects. Others on the panel said the nation’s transportation needs are so great that an increase in both private and public dollars is needed.

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