Md. Sierra Club: Will the Senate Co-Own Hogan’s Highway Boondoggle?

Boondoggle
Gov. Lawrence J. Hogan Jr. (R) announcing plans to widen Interstates 270 and 495 on Sept. 21, 2017. Behind him is then-MDOT Secretary Pete K Rahn. Maryland Governor's Office photo by Steve Kwak.

Last month, the Maryland Department of Transportation announced, to no one’s surprise, the selection of Australian highway giant Transurban to undertake its $11 billion project to widen I-495, I-270 and the American Legion Bridge and operate them for 50 years or more. The final step for approving a contract with Transurban will be a vote by the Board of Public Works expected in May.

That vote will lock in a proposal wrought with massive financial, environmental and economic risks. The Maryland General Assembly, which enabled all of this with the passage of the large public-private partnerships, or P3, law in 2013, has four days left to take action to intervene. There have been many legislative attempts to address specific environmental or economic issues related to this project or improve the P3 process.

Many have passed the House. None have moved out of the Senate Budget and Taxation Committee. And sadly, it looks like we’re on the same track this year. Two bills, the MDOT Promises Act (HB67/SB843) introduced by Del. Marc Korman and P3 Reform (HB485/SB361) from Del. Jared Solomon, passed the House and sit in the Budget and Taxation Committee, waiting for a vote that may never come.

I am sharing this history not to persuade, but to bear witness, and to ensure that when this project implodes (and it will!) that no legislator will attempt to claim “we didn’t know.” They are not only complicit, but culpable.

For over four years, there have been hundreds of articles, official letters and comments, research and even official reports provided directly to the General Assembly, highlighting the environmental, economic and procedural folly of this project. If they fail to act, let history remember that they knew.

General Assembly creates P3 process

Let’s start at the beginning.

In 2013, the General Assembly passed HB560, which enabled the state to pursue large public-private partnerships. A key motivation was to enable the state to seek private capital to help build the Purple Line light rail, or to identify projects already in the pipeline, for which P3 might be an advantageous model for supplemental funding.

The law lays out a process for evaluating specific projects to assess if there is a benefit to pursuing specific projects as a P3 versus other procurement models and assessing environmental and financial risks. The law leaves final decision making to the agencies and the Board of Public Works, but with a catch. According to Congressman Anthony Brown, who headed the task force that proposed the P3 bill, if a project didn’t pass muster, the General Assembly “could scrutinize or stop any P3 by conducting public hearings or cutting off MDOT funding for it.”

In sum, the General Assembly created the P3 law. If it is broken, it is their job to fix it or own it.

Hogan fast-tracks highway project at P3, cuts corners on P3 process

On Sept. 21, 2017, Gov. Larry Hogan announced his “traffic relief plan” with great fanfare, promoting his vision for a public-private partnership toll lane expansion of Maryland’s highways. From the start, it was clear the governor and MDOT had no intention of honoring the P3 law’s aspirational notion of collaboration. Gov. Hogan had chosen the solution, the process was just pro-forma.

Within days of Gov. Hogan’s 2017 announcement, Montgomery County and Prince George’s County raised red flags, claiming that they had not been notified and were not being consulted about the project. Montgomery County Councilmember Roger Berliner mused, “I don’t get why the governor would go about his business in that matter … this is a huge issue, huge, massive, and we have the greatest stake in it, I think, of almost anybody.”

For the next two years, the governor and MDOT pursued an aggressive marketing campaign, attempting to strong-arm, not engage, local government. This peaked in 2019 with the governor labeling anyone with concerns with the project as “pro-traffic activists.”

MDOT submits sloppy presolicitation report; DLS calls foul; Senate balks

On Dec. 12, 2018, MDOT submitted its “presolicitation report” which is supposed to show a rigorous analysis of a different way to procure a specific project and assess the risk. At that time, they had just started the NEPA environmental review, and MDOT was supposed to be evaluating the 15 alternatives considered in the review. Instead they selected Gov. Hogan’s favorite and submitted it for consideration.

The Department of Legislative Services circulated the report, along with its analysis, to the budget committees on Jan. 7, 2019. They did not pull any punches, noting that the project was not sufficiently developed to do proper analysis, and the analysis it had done was insufficient. 

“There are two main issues raised by the submission of the presolicitation report for the I-495 and I-270 Program. The first issue is the lack of specificity for what will actually be procured … There are 15 alternatives being considered for the corridor … the difference could lead to different conclusions on the costs and benefits … The second issue … is the lack of a rigorous effort to evaluate the possibility of MDTA constructing any toll lanes chosen as the preferred alternative.”

In other words, MDOT failed in the central, fundamental goal of the process, which was to compare a P3 solicitation to a traditional procurement to ensure it was advantageous. The so-called intended balance of the P3 law collapsed from the start when Gov. Hogan skipped the entire first step. This step is an essential one for securing baseline information and a strong bargaining position.

For the Purple Line, MDOT properly waited until they had completed a Draft Environmental Impact Statement to submit a presolicitation report, providing more robust data for the analysis. The report for the highway expansion lacked almost any financial analysis.

Finally, DLS recommends that the budget committees urge MDOT to “withdraw this presolicitation report and re-submit it only after the MLS draft EIS has been adopted” and they then recommend the General Assembly amend the P3 statute to enact this condition into law.

In no uncertain terms, DLS informs the General Assembly that this project is not following the process as intended, has not met the conditions set forth in the law, and that changes in the law are needed.

The House drafted and passed HB1091, which included general P3 reform and some important fixes to the specific highway proposal. This became the first of many bills to pass the House and languish in the Senate Budget and Taxation Committee waiting for a vote.

In the following two years, some 20 pieces of legislation have been introduced to address issues with the specific highway project and the P3 law overall, offering a menu of options for any legislator to address P3 law defects. A few passed the House. As of April 2021, none have moved in the Senate.

Red flags, broken promises litter Hogan’s highway proposal

From the start, this project has focused more on marketing than management. Promises have been made and then broken left and right. At first the cost was billed at $7 billion to $9 billion, then increased to $11 billion. The governor promised the project would not take any homes and then backtracked on that. MDOT promised to share traffic data with local governments and reneged.

Numerous state and federal agencies have been raising serious concerns about the execution of the environmental impact review required by the National Environmental Policy Act. Some even hinted that they were headed toward litigation. In November 2020, the U.S. Navy wrote to MDOT tersely stating “the Navy will not cede any property for the construction of this toll road.” The Maryland-National Capital Parks and Planning Commission voted to officially reject Maryland’s Draft Environmental Impact Statement, noting (as it has many times before) the failure to evaluate alternatives, lack of transparency and potential environmental impacts. Sound familiar? No bother for MDOT, full speed ahead.

Josh Tulkin, state director of the Maryland Sierra Club. Md. Sierra Club photo.

The Sierra Club, in collaboration with over 50 environmental, civic associations, civil rights and transportation advocates, drafted over 200 pages of expert comments in response to the DEIS. Despite Gov. Hogan and MDOT’s verbal commitments to transparency, our comments document MDOT’s attempt to charge over $300,000 for access to information statutorily required in the process.

The project has been plagued by ethics issues as well, beginning in April 2018 with MDOT Secretary Pete Rahn’s attempt to steer a no-bid contract to a firm he used to work for. The contract was scrapped after the story broke. However, six months later, the Board of Public Works approved a contract of almost $100 million for engineering support for the project, despite the promise that the project wouldn’t cost the state a penny. The justification was that a future concessionaire would pay that state back. However, this decision was made before the proposal was even brought to the budget committees to review.

In 2020, as MDOT moved closer to officially starting the solicitation process, multiple articles helped shine a light on the lack of transparency of the P3 process and Gov. Hogan’s relationship with Transurban. It started with Gov. Hogan’s trip to Australia to cozy up to Transurban. A few months later he announced the so-called Capital Beltway Accord, which purportedly lays out a plan to collaborate on fixing the American Legion Bridge, but which has never been released. Later that year, Transurban announced to its shareholders that they had locked up the Maryland toll project, well before any RFP was issued, let alone a contract secured. Add to the mix a top Gov. Hogan aide leaving the administration to join Transurban, and it doesn’t paint a picture of an unbiased competitive process.

The Senate’s last chance

The P3 law assumes transparency and collaboration between the legislative and executive branches.

Instead, what we have seen is one agency running roughshod over county government, state entities and federal partners, with a cloak of secrecy and disregard for the concerns of impacted communities. The project was billed as being “shockingly innovative,” but what was shocking is the extent to which Gov. Hogan will bend or break the law to push the project. 

In the next four days we will find out, does the Maryland Senate care? Will it continue to enable the misuse of the law it enacted or will it pass bills in the public interest to help correct loopholes and defects in Maryland’s P3 process they put into place?

But one thing this piece should make clear is that the Senate cannot pass the buck. If they fail to act, they will co-own Hogan’s highway project and the chaos that is coming with it.

–JOSH TULKIN

The writer is the state director of the Maryland Sierra Club.