Holding hands across America – Greenberg Traurig

Iberian companies looking for projects opportunities in the US need to understand not only the complex regulatory issues but also the need to help guide public agencies through the process

“Like any other endeavour, what is important is to have the right team and experience to plan, develop and execute your project, and the insight to know how to make it happen. A major advantage of Iberian companies is that they have the expertise to help public agencies develop P3 (public-private partnership) projects and bring them to financial close,” says Miguel Huarte, partner with Greenberg Traurig.

Such expertise can allow agencies to focus their efforts on realistic projects, he believes, so that limited resources are spent efficiently. In a global marketplace, agencies have to compete with projects around the world for finance and know how, but to attract the best technical talent it is important to consider all the aspects, not just the design.

“It is vital to divide responsibilities where sensible and to move in a coordinated way. As with any enterprise, you must also focus on the proper allocation of risk, be it financial, traffic or political, so that the partner best able to bear it is the one assigned to address it.”

Besides the structural elements, significant emphasis must inevitably also be placed on the regulatory framework governing it – in the US it is critical to understand the interrelation between the federal government and the distinct local and state governmental authorities.

“The US has 51 states and there are idiosyncracies and varying degrees of comfort with P3 across all of them. They are in effect all different jurisdictions with different infrastructure strategies and frameworks,” says Huarte. Spanish and Iberian companies may have had experiences dealing with the interplay of European, national and local regulation, but the difference in the US is that large infrastructure projects by private entities are a new phenomenon, and public opinion is still being shaped.

He notes, as an example, the failure of the 75-year $12.8bn concession on the Pennsylvania Turnpike awarded in 2008 to a consortium led by Abertis (alongside Citi Infrastructure Investors and Criteria Caixa) – at the time the largest US infrastructure privatisation ever. It was however abandoned after heavy opposition from within the state legislature as well as the Pennsylvania Turnpike Commission, which had been excluded from the initial bidding process.

“It is very important that clients understand who the stakeholders are for each project and be proactive about reaching out to them, to make sure they all understand the benefits of private participation in public projects,” says Huarte.

Of course, to successfully reach out to stakeholders, you have to know who they are, how they work together, and what their interests are. For that, you need local partners and advisers that know the intricacies of these constituencies, says Diane Blagman, Senior Director of Governmental Affairs at Greenberg Traurig in Washington DC.

In Europe, companies may not be accustomed to working with governmental affairs advisers, but in the US, it can be beneficial to gain both an understanding of local political processes and who are the influential players, she believes.

“It is extremely important for companies to understand the legislative process – Congressional hearings are held prior to the drafting of major legislation and it is important to know how Bills may affect your business – it also helps to be able to counter potentially adverse legislative amendments.”

P3 is still a new concept in the US and there is always the potential to encounter serious opposition even for those projects that apparently have all the necessary funding and legislation in place, she says. Congress is currently considering two different transportation Bills, the Transportation Appropriations Bill – the annual funding for all US transportation programmes – and the Transportation Authorisation Bill, which provides for the “authorisation” of programmes for the next six years.

“This latter legislation must be passed to continue present funding, to continue upgrading and maintaining our transportation systems. It has its challenges, not least because Congress will likely recess in October for elections in November – every Congress member is up for re-election, so the pressure is on,” says Blagman.