Opinion: Twisted Tango Over the Hudson — the Stalemate Over Port Authority Reform

Despite how legislators try to spin it, there’s no meaningful difference between the NJ and the NY port authority reform bills

Andrew Sidamon-Eristoff
Time passes when you’re having fun waiting for legislative action.

It’s been almost two-and-a-half years since Bridgegate detonated and laid bare the urgent need for governance reform at the Port Authority of New York and New Jersey. It’s been almost a year-and-a-half since the governors of New York and New Jersey vetoed reform legislation passed by both the New York and New Jersey state legislatures, while embracing slightly more modest reforms recommended by their jointly appointed special panel. It’s been about six months since New York Gov. Andrew Cuomo signed compromise legislation based in part on the special panel’s recommendations. Despite Gov. Chris Christie’s public support for similar legislation in New Jersey, as is required for the reforms to take effect since the Port Authority is a bi-state agency, the New Jersey Legislature’s majority has steadfastly refused to take up the New York legislation and has instead insisted on a more aggressive version that neither Cuomo or Christie have endorsed.

In short, the near-term prospects for Port Authority governance-reform legislation look bleak.

Given the broad consensus in favor of governance reform on both sides of the Hudson, and the fact that bipartisan compromise is within easy reach, why the stalemate? Do the differences between the New York and New Jersey bills reflect an honest intellectual disagreement over important principles of governance, or do they in reality amount to little more than an artificial obstruction that conveniently imparts a political or economic benefit to some interest or another? Let’s take a closer look, and then you can decide.

The New York and New Jersey bills are almost identical in incorporating a profusion of “usual suspect” transparency and accountability reforms. For example, they both create a single management structure under a new chief executive officer, impose new oversight and public notice requirements with respect to the Port Authority’s capital program and toll/fare setting processes, require the adoption of a new mission statement and a code of ethical conduct, establish a new office of inspector general, bolster whistleblower protections, clarify the board of commissioners’ fiduciary obligations, extend managers’ financial disclosure obligations, and provide that the chair rotate between the two states every two years.

The New York and New Jersey bills differ with respect to only a handful of provisions. Specifically:

  • Whereas both the New York and New Jersey bills contain new requirements with respect to the Port Authority’s adoption of a 10-year capital plan, including annual reporting and debt issuance, the New Jersey bill goes further in requiring the Port Authority to: (a) hire independent engineering consultants to monitor and report on performance, costs, and schedules with respect to major capital projects costing in excess of $500 million; (b) notify the two state legislatures 60 days in advance of adopting or revising a capital plan; (c) conduct public hearings on the capital plan or revised capital plan in both states within 60 days of the notification; and (d) conduct a “capital [plan] status update hearing” in each state at least once every three years.
  • Whereas both the New York and New Jersey bills require the Port Authority to give 60 days notice to the two governors and legislative leadership in advance of creating a subsidiary corporation, the New Jersey bill goes further in requiring 60 days’ notice to the governors and legislative leadership in advance of issuing any debt by or on behalf of a subsidiary.
  • Whereas the New York bill does not touch on the subject of subpoena power, the New Jersey bill contains provisions that would compel the appearance of Port Authority executives before the two state legislatures twice each year at their request.
  • The New York bill states that the power of the new inspector general to interview officers or employees “on any matter related to the performance of such officer or employee’s official duties” is not applicable if inconsistent with any current contractual obligations. The New Jersey bill goes further in making it clear that this provision applies to employee collective-bargaining agreements and does not expire upon the expiration of the most recent agreement.
  • That’s it. There are no other differences. Are they worth the delay in achieving real reform? For what it’s worth, I think not. And here’s why:

    The New Jersey bill’s added requirements regarding the Port Authority’s adoption of a 10-year capital plan are wonderful examples of the bipartisan tendency to market new bureaucratic process as genuine progress. Holding public hearings and giving appropriate notice are basic standards of public governance. It really shouldn’t be necessary to legislate such matters but, alas, our political culture says otherwise and few legislators care that new statutory requirements will likely impose extra, albeit minor, delays on the capital-planning process. That said, however, moving the New York bill without these “reforms” will hardly constitute an offense against good government and thus should not qualify as a deal-breaker.

    The New Jersey bill’s requirement that the Port Authority hire independent engineering consultants to monitor its major projects is much more troublesome. At first blush, this sounds entirely reasonable: Why not have an extra set of eyes and ears on these huge publicly funded projects? If such a consultant had been in place, maybe we would have avoided the embarrassment of spending $4 billion on a glorified subway station for the PATH at the World Trade Center!

    There are a couple of reasons why not. First, just in case it was in fact the inspiration for this provision, the new World Trade Center Transportation Hub, featuring Santiago Calatrava’s Oculus, is more a testament to soaring ambition and unbridled monumentalism than to bad engineering and construction management per se. There is nothing to suggest that an independent engineering consultant would have had any beneficial impact on the end result.

    Second, engineering consultants aren’t cheap. Although the legislation doesn’t specify fee levels, it’s worth noting that a fee of two percent of project costs — sounds reasonable, right? — would add $200 million to the estimated $10 billion cost of building a new Port Authority Bus Terminal. That’s a lot of bridge tolls. In addition to the added cost for each major project, the process of procuring consulting services, as well as reviewing and responding to the consultants’ work product, will inevitably lengthen project schedules.

    Third, and perhaps much more important, there are only a handful of engineering firms in the New York – New Jersey region that have the capacity and expertise to conduct such monitoring assignments, and they are already busy working for the Port Authority and its sister public infrastructure agencies in the region. Any firm that takes on an “independent” consulting assignment for the Port Authority will (or should) be conflicted from working on other projects for the Port Authority. The end result will be an even more complicated, conflicted, and anti-competitive web of firms that make up the region’s exclusive and self-perpetuating transportation planning/engineering/construction cartel, leading inevitably to higher public construction costs.

    The New Jersey bill’s provisions requiring the Port Authority to give notice to the two governors and legislative leadership in advance of a subsidiary corporation’s issuance of debt is likely a reaction to the Port Authority’s recent creation of the Gateway Development Corp. to coordinate and help finance Amtrak’s $20 billion Gateway rail-tunnel project. It is also a trivial legislative power grab. By virtue of their existing authority to review and veto the Port Authority’s board minutes, the two governors already receive such advance notice. I guess you can’t blame legislators for trying to horn in on the action if that floats their boat, but holding up important reforms for virtually meaningless notice requirements is — to use a technical term — silly.

    The New Jersey bill’s provision compelling the Port Authority’s senior officers and staff to appear before the two legislatures twice a year at the request of their respective presiding officers is little more than press-release reform in the politically unimpeachable name of “accountability,” whatever that means in this context. As has been noted repeatedly in the popular press, the two legislatures already have subpoena power. Yes, the new provision might provide a slightly simpler process than currently exists, but that doesn’t make it necessary or justify holding up more important substantive reforms.

    Finally, the New Jersey bill’s provision that purports to clarify that even expired collective-bargaining agreements might restrict the new inspector general’s ability to interview officers or employees was reportedly a last-minute add to the New Jersey bill at the behest of the Port Authority’s politically active unions. Although I have no firsthand knowledge, I wouldn’t be surprised if their approach was in the nature of “Hey, if you’re going to amend the bill anyway, could you do us a favor and stick this in for us?” In reality, a clarification isn’t critically necessary. I have absolutely no doubt that, if the issue were tested, judges would interpret the original New York language in a manner favorable to the unions. Regardless, and once again, the issue hardly justifies holding up the larger reform process.

    In sum, upon fair and close examination, the New Jersey bill’s add-ons simply don’t qualify as critical “must haves” from a public policy or governance point of view. So something else must explain the New Jersey legislature’s reluctance to take Door Number One and declare victory.

    Could it be politics?

    Here’s my theory, take it or leave it. In politics, sometimes it’s a lot better to keep an issue alive than it is to secure a genuine policy achievement. From the standpoint of individual legislators who are getting great press for loudly advocating transparency and accountability at the Port Authority, it makes absolutely no tactical political sense to agree to a comprise and thereby kill the golden goose of publicity, especially with the Bridgegate trials rescheduled, and rescheduled again, for later this year. The sad truth is that, with a topic of this complexity and notoriety, there is little risk of being called out for gumming up the process with legislative red herrings cynically presented within a plausible narrative of reform and good government. I hope I am wrong, but I doubt it.

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