The proposed contract to privatize the Pennsylvania Turnpike is available on the Internet, but most people won’t read one word of the 686-page document. Not only is its length intimidating, but it begins with 21 pages of specialized definitions, such as “compensation event,” cross-referenced to other parts of the contract. Might as well post a Keep Out sign.
But average people can — and must — understand this document and its potential impact on life in Pennsylvania for the next 75 years. It is about far more than leasing the turnpike and paying higher tolls to generate billions of dollars for road repairs. When “compensation events” happen, money can flow the other way — from the taxpayers to the turnpike contractor. But even more important, leasing the turnpike could restructure Pennsylvania government.
The turnpike contract is filled with compensation events that could require Pennsylvanians to pay the new owners when they claim to have lost opportunities to make money. Future transportation policy and the ability to act in the public’s interest would need to be screened by considering whether actions might “materially impair” the use of the turnpike as a highway and cause “losses or reduced turnpike revenues.”
Under the contract, the commonwealth in some circumstances would have to pay for the right to enter the turnpike to respond to an emergency. The contract says that police, fire and other emergency services may enter the turnpike if there is “an actual or reported emergency, danger or threat” and if it is “reasonably believed by the commonwealth” that the event creates the imminent potential to cause harm to people, property, the environment or public safety … and if notice “practicable under the circumstances” has been given. The contract is full of such potential compensation events, with subjective words such as “reasonably believed,” “imminent,” and “material” that provide ample opportunity for disagreement. No doubt the state often would have to pay compensation — or spend time and money deciding whether to pay or to litigate differences of opinion.
The state’s liability for compensation events would fundamentally alter the way the Pennsylvania government functions regarding anything related to the turnpike. Even some things with only indirect impact on turnpike revenues could become compensation events. Now, emergency responders react as best they can in a crisis, but the contract would force them to hesitate: Is it clear that this situation is a serious threat worth impeding the flow of traffic and tolls? Could it be proved that it was reasonable to believe there was an imminent threat?
Such situations could arise many times a day, and the private operator could claim that many actions, even new policies and laws, cause them to lose revenue. Decisions now based on choosing the correct course of action would be muddied by the possibility of litigation and compensation. This loss of autonomy and control would persist for the 75 years the commonwealth would be locked into this contract, a contract that would sever one part of government from the rest.
Given the length of the contract and the private company’s desire to guarantee a profit, both parties have tried to anticipate all problems. But there is no way to predict, specify and manage the future technologies and unknown risks for the four generations of Pennsylvanians who will live under this contract.
Furthermore, the private operator’s desire for a steady stream of toll-paying traffic may conflict with the interests of the citizens of Pennsylvania. The Associated Press reported in 2006 that Indiana fire officials challenged the safety of barriers that Indiana Toll Road owners had placed in emergency turnarounds. The officials said the barriers “could hamper their ability to reach crash victims.” If the same conflict occurs in Pennsylvania, who wins and at what price?
The profit guarantee means actions that are now obviously necessary and problems that are easily resolved will become complicated and a source of litigation.
If all this sounds like dealing with an HMO, it should. The reason HMOs have become synonymous with frustration and refused health-care claims is that their bottom line improves when individuals pay more out-of-pocket or receive less health care. A private turnpike operator’s profit will similarly increase with greater traffic, higher tolls and less investment in the roadway — interests at odds with those of the public. To squeeze the most out of its investment, a private operator, you can be sure, would have a team of lawyers looking for compensation-event opportunities.
At least with health care, there is some competition and you can switch insurers once a year. The turnpike deal would forge a 75-year monopoly. Don’t expect private turnpike executives to focus on pleasing Pennsylvanians when they don’t have to worry about a contract renewal until 2084.
Gov. Ed Rendell should be commended for his persistence in seeking solutions to the state’s transportation budget shortfalls. But he shouldn’t be surprised if the Legislature doesn’t play along. How does he think they would react if he asked them to sign their grandchildren to a 75-year health-care contract?