Maryland PIRG support HB1091, introduced by Del. Jared Solomon to to ensure that we understand the environmental impacts and financial risks of large P3 highway expansion projects before entering into expensive, long-term contracts.
Maryland PIRG Testimony for the Seante Budget and Taxation Committee
April 3, 2019
HB1091: Public-Private Partnerships - Reforms (Del. Solomon)
Highway expansions can cost billions of dollars and have a major impact on the state. Even when undertaken through a public private partnership (P3), significant costs are imposed on the state, often through extraordinarily long contracts. Decades of research have confirmed that highway expansions also bring more cars to the road, meaning more congestion, more greenhouse gas emissions and more unhealthy air pollution. And when P3s do not go as planned, the state suffers. According to a 2016 study by the U.S. DOT on highway P3s, during the past decade, many U.S. highway P3s have experienced financial distress due to lower-than-expected traffic and revenue. This has caused financial problems for the developers and the state DOTs.
Highway expansion often runs counter to our transportation needs. Instead of expanding highways that do not fix congestion problems, we should direct more of our transportation dollars to expanding rail and bus service, and car and van-pooling, and promoting walkable, bikeable communities. Our goal should be getting more people to where they want to be in a reliable, cleaner manner.
We should not rush into long term contracts with contractors without analyzing the financial and environmental risks beforehand. Major transportation investments need to be consistent with our goals to reduce climate, air and water pollution. Currently, there are no laws on the books that require Maryland to review the credit rating of potential P3 contractors or their funding sources, or that require an environmental impact statement be completed before major details on a P3 project are presented for approval to the Board of Public Works.
HB1091 would put these important protections in place. And we need to this session. Gov. Hogan has proposed a massive $9 billion expansion of I-270, I-495 and the Baltimore-Washington Parkway. Decisions will be made on this project in the first half of 2019 that could lock in key aspects of the proposal. Despite significant concerns about the process and substance raised by legislators, local government, and public interest groups, MDOT is moving forward with their plan to solicit contractors for the highway expansion before any credit check of the contractors or an environmental impact statement has been completed. MDOT has stated that they intend to seek approval in April from the Board of Public Works to approve this proposal as a P3.
Before we get too far down the road on Gov. Hogan’s current highway expansion proposal, and to ensure that future expansions are given the scrutiny they deserve, it is important that we implement these commonsense requirements for P3 projects.
HB1091 would ensure that we understand the environmental impacts and financial risks of large public private partnership (P3) highway expansion projects before entering into expensive, long-term contracts:
- Requires an independent credit review of each prime contractor and their funding sources prior to presentation of a P3 proposal to the Board of Public Works.
- Requires that an Environmental Impact Statement be completed prior to presentation of a P3 proposal to the Board of Public Works.
- Requires a separate pre-solicitation report for each individual contract in the P3 project (the Governor’s expansion plan breaks the project into three contracts).
We respectfully request a favorable report on HB1091 to ensure that we understand the environmental impacts and financial risks of large P3 highway expansion projects before entering into expensive, long-term contracts.
 Decades of research confirms that new highway capacity does not necessarily result in less congestion thanks to the phenomenon of “induced demand,” also called the “Fundamental Law of Road Congestion.” It does, however, result in more driving and more of the bad things that come along with more driving.
See Maryland PIRG Report: Highway Boondoggles 4. For example, When I-270 was last expanded to 12 lanes in some stretches, it was supposed to handle growth in traffic for at least 20 years. Less than 8 years after the project was completed in 1991, it was a totally congested again.
 Some P3 projects that experienced difficulty and were restructured include the Dulles Greenway (VA), South Bay Expressway (CA), I-495 Capital Beltway (VA), Pocahontas Parkway (VA), and Indiana Toll Road (IN). Recently, the SH-130 in Texas was reported to be in financial distress and is expected to be restructured.