PHOENIX — Arizona Gov. Doug Ducey wants the federal government to allow Arizona to partner with private businesses to build new facilities at highway rest areas, a move that could lead to new gas stations and fast-food restaurants at lonely roadside stops.
Ducey asked Transportation Secretary Elaine Chao in a letter released Friday to give it an exemption to a 1950s-era law barring private activities at rest stops in all but 14 states.
That would allow Arizona to start a pilot project with private companies that could build businesses at existing interstate rest stops or put in new ones.
Ducey’s letter drew immediate fire from NATSO, the U.S. association of travel plazas and truckstop, which said in a statement that Chao should reject Arizona’s request because to do so would threaten businesses serving travelers at interstate exits.
Ducey pointed to several other states using public-private partnerships to provide “better, safer, more modern rest stop facilities.” A partnership also could bring revenue to the state. Ducey pointed to a Connecticut deal expected to net $100 million in revenue over 35 years.
“You talk about privatization of something and it sounds very innovative, it sounds like you're getting the state out of the business of providing services and you're letting the private sector do it, but that is not at all what is happening," said Lisa Mullings, NATSO’s president and CEO. "What happens is that this is a state-sanctioned monopoly that they're setting up on the shoulder or the median of the road. It's the complete opposite of innovative privatization,” said Mullings, who also questioned whether an exemption is even possible.
The law in question was enacted because community leaders feared local businesses and tax collections would shrink if states were allowed to run commercial operations along the new interstate system, according to the truck stop association. States that had those operations were allowed to keep them, but others were barred from allowing food, fuel or other services along interstates built after January 1, 1960.
Ducey calls the law “an archaic and nonsensical federal prohibition that punishes younger states, especially in the West.”
“Current law allows only states with existing partnerships, most dating back to the late 1950s, to have such activities at interstate rest areas, while the vast majority of states are denied that same benefit,” Ducey wrote.
Running Arizona's 28 highway rest areas costs about $4 million a year. They are bare bones, with parking for commercial trucks and passenger cars, bathrooms and picnic areas.
State transportation officials are more than halfway done with a decadelong effort to upgrade rest areas.
In a letter to congressional leaders in June, the truck stop association joined a dozen other groups urging them to reject efforts by the Trump administration to allow privatization of rest areas.
“This is not privatization, as the governor maintains. In fact, commercialization of rest areas uses government power to establish one business as a monopoly to the detriment of others operating in the free market,” Mullings said. “Rather than privatizing a government function, this proposal would transfer sales away from the private sector to the government.
“We don’t need a pilot program to see the effects of commercial rest areas on local communities and businesses because there are at least a dozen states that oversee commercialized rest areas,” said Mullings. (These state-controlled rest areas were already commercialized when the federal law was passed and were thus allowed to continue.) “We can witness the anti-competitive effect that commercialized rest areas has on Interstate businesses,” she said, citing a study conducted by Virginia Tech. The report found that there are 46 percent fewer gas sales, 44 percent fewer restaurant sales and 35 percent fewer truck service business sales. In total, this is a loss of over $55 billion in annual sales for interchange businesses.
Associated Press sources contributed to this article.