By Reed Black
The Federal Highway Administration – which dispenses billions of dollars for road and bridge projects each year – has a new top dog who is proving to be a best friend to the Bush administration and its push to privatize America’s roads.
Just as many truckers rely on their four-footed companions for loyalty and friendship on the road, President Bush is relying heavily on the loyalty of the new administrator of the Federal Highway Administration, Richard Capka.
And that loyalty is likely well- placed, considering Capka repeatedly voiced his support for leasing and selling U.S. infrastructure during his four years as deputy administrator of FHWA.
Before that, Capka oversaw Boston’s “Big Dig” project for nearly two years – before being dismissed. And before that, he spent 29 years in the U.S. Army Corps of Engineers, having retired at the rank of brigadier general.
After only two weeks at his new job as head of the FHWA, he agreed to an interview with “Land Line Now” on XM Satellite Radio.
Our questions, as you might imagine, focused on to what extent Capka will direct the FHWA to encourage the private sector to get involved in public roads and transportation.
We specifically asked Capka about the recent deal to lease the Indiana Toll Road to a Spanish/Australian consortium for 75 years and sought his explanation of how for-profit businesses can operate anything cheaper than government entities, which don’t have to answer to shareholders.
We also asked him to comment on a recent court ruling in Canada involving the same two foreign companies that are operating the Indiana Toll Road. In the Canadian case, the Ontario provincial government was told to go fish when it sought judicial intervention regarding drastic toll increases on the 407 Express Toll Route.
Here are highlights from our Q & A with the new top roads man in America.
LL: Recently the secretary of transportation was quoted as having said that it is time to unleash the private sector on the U.S. infrastructure. As the head of the Federal Highway Administration, what does that mean to you?
CAPKA: I think all of us would recognize that safe, reliable and uncongested means of moving folks and commerce around really is at the heart of our ability to maintain the quality of life that we enjoy, the strength of our economy, and I would say our competitiveness in the rapidly changing global economy.
And, I think a lot of us, particularly those of us in the metropolitan areas, but in other parts of the country, too, will recognize the congestion is kind of getting worse. We are still suffering 43,000 fatalities on the highways and we’ve really got to attack these problems without the delay.
But the problem is these kinds of requirements are more rapidly outpacing our ability to raise the resources and means that we have done in the past.
Transportation Secretary Norman Mineta (who resigned effective July 7) looked at this disparity of requirements and resources and recognized that the private sector has an opportunity to join in a partnership with a public sector to solve some of these problems, by bringing resources to the table, by bringing capability, by bringing other assets to the table.
LL: In Indiana, the state’s toll road has been leased to private foreign investors despite public opinion polls that showed two-thirds of the people were opposed to such deals. Should that kind of opposition be taken into consideration and do you anticipate that kind of opposition elsewhere in the country?
CAPKA: There may be some misperceptions about what privatization means or how that’s being applied … As examples of these toll ways and how these concessionaire agreements are set up and are executed, folks are going to be able to look over and see what’s actually happening and become more comfortable with it.
It is certainly something that is occurring very frequently overseas and we’ve seen examples of how well these concessionaire arrangements are delivering quality transportation to the public, reliable transportation to the public, integrating technology at a rapid pace, providing, I think, the benefit the public would expect from an operation like that.
LL: A Canadian court recently ruled against the Ontario provincial government when it tried to fight what many called “drastic” toll rate increases on the 407 Express Toll Route, which is operated by the same foreign group that just leased the Indiana Toll Road. Is that sort of thing likely to happen in the U.S.?
CAPKA: As in any arrangement, both parties need to be careful and use due diligence in the construct of that agreement. I think we are certainly learning lessons from others who have gone before us and incorporated those lessons very well.
LL: What some critics of privatization can’t understand is this: If private companies can turn a profit operating things like toll roads, then why can’t the state or another government agency operate them and break even and better yet, keep tolls from increasing as much?
CAPKA: That’s a very good question, but I would say that the private sector concessionaire is not encumbered by as many of the rules and regulations that you might find at the state level. Not rules and regulations that govern the safety and the reliability of the infrastructure, but other rules and regulations that kind of hamstring the efficient operation of a roadway.
So, I think there is an advantage there that the private sector can turn to their advantage without putting additional burden on the user of the facility. And there are other examples, as well.
The fact that the concessionaire has a guaranteed funding stream coming in and understands the toll structures, is not subject to the same kind of pressures that the public sector might be under with respect to toll adjustments and, therefore, be able to provide a more efficient operation.
They are probably a lot more adept at integrating technology into the structure – into the system there – that would enable a more efficient operation.
So, there are a number of opportunities for the private sector to capture efficiencies that would not necessarily be available to the public sector operators.
LL: What does Indiana, or any other state or local government, do in 15 years or so when another multi-billion dollar infusion is needed but there isn’t any more infrastructure left to lease or sell – after all, other states are looking at this $3.85 billion upfront cash payment to Indiana and thinking that money looks pretty good right now, but isn’t that kind of short-term thinking?
CAPKA: Well, I don’t necessarily think that the leasing of these facilities is necessarily driven solely by the thought of the concession fee that they receive up front.
LL: Turning to federal incentives – in the federal highway funding legislation called SAFETEA-LU there is a program to allow tolling on interstates in up to three states. Do you anticipate that there will be more federally sanctioned interstate tolling beyond those three states to, for example, all 50?
CAPKA: I think we’ll put those tools in toolboxes and make them available to use and each individual state will have to decide on their own whether it’s the right tool for them in that particular situation.
LL: In light of these deals that are allowing for tolling on interstates and increasing toll rates on privately operated roads, is anyone giving any thought to giving truckers some kind of break because of all of the fuel taxes and other fees they already pay?
CAPKA: Certainly that issue of tolls and gas tax and the right mix and perhaps maybe separating them will be part of that discussion of how do we ... collect the resources that would be required to operate.
LL: Do you foresee a day when truckers and other motorists who are traveling from coast to coast will be on all toll roads all the way?
CAPKA: That’s hard to forecast ... we want to make sure that the state decision-makers have the complete array of tools in their toolbox and depending on which one best fits, I think you’ll see more and more of an integration of the public and private sector to solve our surface transportation needs.
What that means in the way of tolls and going from coast to coast – it’s hard to forecast right now.
But I would say that regardless, in the future, in order to maintain our competitive place in the global marketplace, we are going to have to have the most efficient surface transportation system available.