A weird thing happened a few weeks ago that I would never have noticed had I not been putting the final touches on a feature story for National Journal magazine on public-private partnerships. (See this week's issue for that story.)
In what locals hailed as a victory against 58 years of toll hikes, a circuit judge in Portsmouth, Va., ruled unconstitutional a $2.1 billion agreement between Virginia's Department of Transportation and two global infrastructure firms to create a new under-river tunnel connecting Portsmouth and Newport. Under the deal, tolls to traverse the tunnel were set to increase from $1.59 to $1.84 per car in 2014, although that tolling schedule is now in doubt.
The ruling left the lawyers and government officials who negotiated the agreement scratching their heads. No one saw it coming. It was a classic case of David and Goliath. The deal with the Australian firm MacQuarie and Swedish firm Skanska had been in the works for years. Former Gov. Tim Kaine, a Democrat, and the current Gov. Bob McDonnell, a Republican, both wanted it to happen. Virginia's transportation department and the attorney general's office are preparing an appeal, which will likely wind up in the Supreme Court of Virginia.
Meanwhile, the plaintiffs--including one flamboyant city council member and several business owners--are still trying to figure out how to pay their attorney, Patrick McSweeney. That kind of situation is not unusual, McSweeney told me last week, fresh off his victory. Locals often don't know where to go or who to fight when big infrastructure deals like this one are announced in their area.
The judge reasoned that the public-private partnership under question had exceeded the bounds of allowable government because it imposed a financing system on travelers and residents that could not be rectified for decades to come. That's a lot of electoral cycles. The Virginia law on which the deal was based "gave unfettered power to the Department of Transportation to set toll rates without any real or meaningful parameters," said Judge James A. Cales, Jr.
I have argued that private-sector deals like this one are the wave of the future as federal funding for infrastructure continues to shrink. But now I'm starting to wonder. What if the laws in this country, and perhaps its citizens, stubbornly won't let that kind of privatization happen?
Should tolls be subject to public referendum? Does it make sense to go to court, as Portsmouth residents did, to stop a major public-private deal from going forward? How can public-private partnerships be crafted such that they don't run afoul of public opinion and/or the law? How much freedom should government have to negotiate with the private sector?