Letting the Market Drive Transportation

As they have crafted policy, Duvall, Gribbin and other Bush officials have been working closely with private equity funds. The DOT persuaded Congress to change the tax code to make $15 billion in tax-exempt bonds available for private firms to build road and freight projects.

The department waived regulations to speed development of toll road projects and wrote sample laws to help state legislatures permit the lease or sale of their roads to private companies, with laws now enacted in 23 states.

As a consequence, private equity funds focused on transportation attracted an estimated $100 billion to $150 billion in 2006, according to industry analysts.

The new opportunities for private equity have also created job opportunities for government officials. In the past three years, nine current and former top DOT appointees have worked for such funds or for engineering or construction firms interested in tolling projects subject to federal review.

Gribbin is one of those officials.

He came to the department in 2003 from Koch Industries, which has a road-building subsidiary and is owned by a prominent donor to Republican and libertarian causes. As general counsel at the Federal Highway Administration, he wrote a report to Congress praising private-public partnerships, citing a study he commissioned on the benefits of tolling while he was at Koch.

That report also included ideas attributed to Macquarie Holdings, a major toll-road builder based in Australia. Gribbin left the federal government in 2005 to work at Macquarie, where he earned $265,000. He returned to the DOT last year as general counsel.

Peters followed a similar path. She served as federal highway administrator from 2001 to 2005, then worked as a senior vice president at HDR, a construction firm with several tolling projects, where she was paid a salary and bonus of $225,833 to craft its public policy. She returned to federal government as transportation secretary in 2006.

Peters said she sees no conflicts.

"Having someone like D.J. Gribbin who has worked in the private sector helping us decide what kinds of protections [are needed in tolling deals] is a big advantage," she said. "I don't think the policies that we're advocating are premised on the fact that it creates this opportunity for people to go out and work in this industry at all. We're doing so because we firmly believe these are in the best interest of America."

Public distrust of privatization, however, remains high. Republicans lost control of the Indiana state legislature in 2006 partly because of controversy over the governor's lease of a public highway to Macquarie. Political opposition has also forced governors in New Jersey and Pennsylvania to suspend plans to lease roads. Texas lawmakers put a two-year freeze on the governor's strategy to privatize a 4,000-mile network of tolled highways.

Last month, the Government Accountability Office warned that tolls on privatized roads are typically higher than if the roads remain under public control, because of the need to generate steady profits for private investors. The report said the federal government needs to better protect the public interest.