Non-competes now a non-starter with TxDOT

May 28, 2008

By Ben Wear | Austin American-Statesman

Non-compete clauses for tollways would be a non-starter under a policy the Texas Transportation Commission will consider Thursday.

Such language in toll road contracts, which generally prohibit a toll road owner (such as the Texas Department of Transportation) from building or expanding a nearby free road, or require compensation for doing so, have been controversial in Texas and elsewhere. TxDOT’s contract with Cintra-Zachry, a Spanish and American consortium that will build and operate a southern section of Texas 130, requires TxDOT to pay up if it makes certain highway improvements within 10 miles of the road.

The commission Thursday will consider approving a “minute order” (what TxDOT calls its version of ordinances) prohibiting “any limitations or prohibitions on improvements needed to existing or future highways.” The new policy, which the commission could amend or eliminate in the future at its choosing, goes farther than a 2007 state law allowing such non-compete clauses to apply only within four miles of a new tollway.

The minute order does not say explicitly that tollway contracts could not require TxDOT to pay compensation, as is the case with current contracts. But at a briefing with transportation reporters today, TxDOT deputy executive director Steve Simmons said the intent of the language is that “we have the right to build any facility.” With no compensation? “No compensation,” Simmons said.

The order, in what appears to be a conciliatory message to the Legislature, also reiterates other provisions the Legislature put into law last session. To wit: TxDOT will own title to tollways, not any private entities hired to build and operate them at a profit; every contract with a private tollway operator must have a “buy back” clause allowing TxDOT to take over a tollway before the end of a lease (although the minute order is silent as to what the terms might be); and “only added capacity to an existing highway” will be subject to tolls.

Also, the order pledges that TxDOT will always consider using existing right of way when setting the route of an expansion. That’s a direct nod to all the unhappiness in rural Texas about the proposed Trans-Texas Corridor supertollways in the I-35 and I-69 corridors.

The language doesn’t mean, of course, that TxDOT won’t build TTC-35 across farmland several miles away from I-35. Simmons, in fact, acknowledged that widening I-35 instead of building a new tollway nearby remains a logistical and financial problem. But he said the language could be more meaningful in the I-69 corridor where widening existing roads would be easier.

The commission, which will be holding its first meeting Thursday with new chairwoman Deidre Delisi and new commissioner Bill Meadows, is expected to approve the minute order.