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Bacon's Rebellion

Wolf in Sheep's Clothing

Congressman Wolf's anti-Greenway rhetoric threatens to drive away private investment in Virginia highways

Leonard Gilroy
October 29, 2007

Whether motivated by campaign season or a sincere desire to "protect" the public interest, Congressman Frank Wolf's increasingly vocal opposition to the recent toll increase on the Dulles Greenway is unfortunately misguided. Worse, it could harm the Commonwealth's ability to provide the transportation infrastructure needed to reduce congestion and improve mobility for years to come.

In reaction to the toll increases, Congressman Wolf has convinced Attorney General Robert McDonnell to review the Greenway operator's recently approved toll rate increase, and has called for the General Assembly to undo the law that created the Greenway in the first place.

The reality is the privately financed and operated Greenway is regulated like any other private utility — gas, electric, and telecommunications — in Virginia. Rates and toll increases are vetted and approved or disapproved by the State Corporation Commission (SCC), which has the responsibility of ensuring that the public interest is protected in such increases.

After more than a dozen years of regulating the Greenway, there's no reason to think that the SCC failed to protect the public interest when approving the new toll rates. In fact, the SCC recently determined that the road has operated at a loss since construction began in 1993, and that the toll increase, "will, as required by Virginia law, provide [the operator] no more than a reasonable return while not discouraging use of the Dulles Greenway."

More than 55,000 commuters daily choose to avoid the congested parallel Route 7 and pay $3.00 to use the Greenway. The Greenway is a form of congestion insurance, giving commuters an option if they need to get somewhere fast. It's reasonable to expect that users will continue to value their time and will pay a little extra for the convenience and time savings associated with using the Greenway. Remember, this is a voluntary decision on the part of the commuters — to pay for avoiding congestion.

In his request to Attorney General McDonnell, Congressman Wolf states that "the outcome [of his review] also could have a bearing on future state transportation agreements, such as the High Occupancy Toll (HOT) lanes project on the Capital Beltway" (Note: for a detailed overview of this privately financed project, see "Loosening the Beltway.")

Wolf is right about one thing: the legal review, along with Wolf's own heated rhetoric, could scare away private investors if these investors conclude the political climate in Virginia is too risky. That could mean that vital transportation projects go unfunded while other states like Georgia and Florida, with their open arms to private investment, reap the benefits of these private investments. These other states will reap increased mobility as Virginia commuters struggle in unnecessary congestion.

Wolf appears to have abandoned fundamental principles that underlie our system of governance, rule of law, and free market economy. First, the Greenway is a state road subject to review and oversight by state utility regulators, making interference in rate-setting decisions by a federal representative unwarranted. Wolf may have forgotten that the agreement between the Commonwealth and the Greenway operator is a contractual one and cannot be amended by legislation, only through negotiation between the two parties. Even if the General Assembly attempted to undo the contract through legislative action, it is highly doubtful that the courts would allow this to occur, given that the legal sanctity of contracts is a crucial underpinning of our free market economy.

Second, Congressman Wolf needs to revisit the benefits of private investment in infrastructure delivery. Government has proven itself unwilling and unable to provide the infrastructure Virginia needs to meet the needs of the 21st century economy. Taxpayers benefit when the private sector provides congestion relief by financing and building new roads. The Commonwealth could not afford to build the Greenway, for example, and today it lacks the resources to make many of the investments needed throughout the state. Without private financing, many of these projects may never come to fruition.

Third, one of the all-too-often forgotten advantages that toll financing offers over general taxes is that tolls give the user the choice of whether or not to pay the toll. There are numerous un-tolled alternatives to the Greenway on Routes 7, 28, and 50. Yet, 55,000 commuters choose to pay the toll, free of government involvement, each and every day.

Also misguided is Congressman Wolf's suggestion that the Commonwealth expropriate the Dulles Greenway using its eminent domain authority. A state takeover of a road financed, built, and operated by a private company is, frankly, an idea more suited to Hugo Chavez's Venezuela than it is to modern America. Hopefully, Congressman Wolf will re-evaluate his position.

A vast majority of Americans realize that strong private property rights are key to freedom, progress, and a dynamic market economy. To propose a state takeover of the Greenway is just as egregious as it would be to propose expropriating assets from Verizon, Dominion Virginia Power, Roanoke Gas, or any other private sector, investor-owned utility that faces stringent state regulation. Government's role is to protect private property rights whenever possible, not selectively undermine them.

Far from helping commuters, Congressman Wolf may be harming them. By turning up the heat on the Greenway, he increases the perceived political risk of investing dollars in Virginia's infrastructure. The greater the risk, the greater the likelihood that private investors interested in expanding and modernizing Virginia's transportation infrastructure will shift their focus to states where they are welcomed by innovative policymakers. The fact that Virginia's nationally-regarded public-private partnership law has survived intact the shifting political winds over the last 12 years is a testament to its efficacy in protecting the public interest.

Rep. Wolf should embrace — not oppose — tolling and public-private partnerships, as they're a proven way to get traffic moving again and deliver needed infrastructure where government is clearly falling short.


Leonard Gilroy is Director of Government Reform


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