Port Authority Shakeup: What Will Future of Agency Look Like with Degnan Gone?

John Reitmeyer | August 2, 2017 | Transportation
Former NJ Sen. O’Toole named as new chairman, but with two major projects underway, this is a critical time at Port

Port Authority chairman John Degnan
The Port Authority of New York and New Jersey is getting two new top leaders under a major reorganization announced by Govs. Chris Christie and Andrew Cuomo. This is a shakeup that could affect significant transportation projects like the planned replacement of the Port Authority’s flagship bus terminal and the future of the agency’s own governance structure.

A joint statement issued yesterday by the two governors officially announced the resignation of John Degnan as chairman of the Port Authority’s board of commissioners, and the selection of former New Jersey Sen. Kevin O’Toole to replace him as New Jersey’s highest-ranking official at the bistate agency.

Also leaving the Port Authority is longtime executive director Pat Foye, the governors said, with Cuomo administration lawyer Rick Cotton named to fill that role at the agency, which is the top post designated for a New York official under a long-held power-sharing agreement.

The leadership change comes as the Port Authority is making major infrastructure investments like the long-planned replacement of the midtown Manhattan bus terminal, as well as the proposed Gateway project, which is a plan to build a new trans-Hudson rail tunnel that involves the federal and state governments.

The leadership shakeup, meanwhile, also comes as New Jersey is getting ready to elect a new governor, which could result in a renewed effort to find a chief executive officer to lead the agency under a revised governance proposal that Christie and Cuomo first floated in the wake of the 2013 scandal involving lane closures at the Port Authority’s George Washington Bridge.

Fighting for funding

New Jersey senators who’ve served as Port Authority watchdogs in recent years following the Bridgegate scandal praised Degnan yesterday for bringing back accountability to the agency, and for fighting to make sure significant funding for the new bus terminal made it into the multibillion capital plan that the agency’s commissioners adopted earlier this year.

The two governors suggested the agency’s new leaders should make finding a suitable CEO candidate a top priority in the months ahead.

Degnan is a former New Jersey attorney general and insurance executive who Christie sent to the Port Authority in the wake of the Bridgegate scandal in 2014. He replaced David Samson, a Christie loyalist who resigned amid a cloud of unethical behavior, including using his position at the agency to force United Airlines into providing a special flight between the Port Authority’s Newark Airport and South Carolina, where he maintained a vacation home. Samson ultimately pleaded guilty to a federal conspiracy to commit bribery charge, and was sentenced to one year of house arrest and four years of probation in March.

Adding transparency

Under Degnan’s leadership, the Port Authority adopted a more transparent approach, exemplified by a lengthy public-hearing process that was followed earlier this year before the agency adopted its $32 billion capital plan.

State Senate Majority Leader Loretta Weinberg (D-Bergen) said in an interview yesterday that it’s been easy to overlook the contributions that Degnan made in the wake of Bridgegate, but she doubted the agency would be able to roll back improvements that were made to ethics and governance standards during Degnan’s watch.

“I think a lot of that went unnoticed during his tenure there,” Weinberg said.

Degnan also showed he wasn’t afraid to be a forceful advocate for commuters, especially as competing factions from the two states jockeyed over the issue of the bus terminal, including how much funding the project would receive in the capital plan and whether the facility itself would even remain in New York. Degnan was steadfast in his support for keeping the bus terminal in midtown Manhattan — even amid personal attacks from some New York officials — and it will likely be replaced at its current location, with $3.5 billion set aside to get the project started in the agency’s capital plan.

‘Big shoes to fill’

Weinberg said she believes her former colleague, O’Toole, is “well aware that he has very big shoes to fill.” And state Sen. Robert Gordon (D-Bergen) said he expects O’Toole will carry on the high standards that have been established by Degnan.

“I think Kevin O’Toole will be a strong voice and will be fully engaged, and I will be shocked if he is not,” Gordon went on to say.

Yet it’s still not clear exactly what will happen to the Port Authority’s leadership next. The governance overhaul endorsed by both Christie and Cuomo in the wake of Bridgegate calls for the current board chairman-executive director power-sharing agreement between the two states to come to an end. Instead, the agency would be led by a CEO who would report directly to the Port Authority board of commissioners, with the chairman’s role rotated between the two states on a regular basis. But a lengthy search for a CEO has failed to result in the hiring of someone to fill the proposed position, leaving the current leadership structure in place.

Factoring in next NJ governor

Adding more uncertainty to the leadership picture is what happens after New Jersey voters elect a new governor in the fall, especially if the governor’s office changes over to the Democratic party as many expect. New Jersey’s next governor could choose to go in an entirely different direction, with yet another new agency chairman.

And since New York is due to assume the chairman’s role first under the proposed governance change, lawmakers in New Jersey have been holding back final approval of Port Authority reform legislation that would require the CEO position to be filled by the agency as a matter of law. They’ve done so over concerns that Cuomo, who recently convinced New York lawmakers to create a new inspector general’s position to police the Port Authority, could monopolize his power at the agency as Christie gets ready to leave office.

Gordon said yesterday that he doesn’t anticipate moving the Port Authority bill until after this year’s gubernatorial election, and both Gordon and Weinberg said they’re hoping Democratic frontrunner Phil Murphy, who has promised to be a forceful advocate for New Jersey transportation priorities, will be elected in the fall. Murphy is running against Republican Kim Guadagno, who has served as Christie’s lieutenant governor throughout his two terms in office.

“I’m confident we’re going to get a bill done,” Gordon said.

O’Toole was considered one of Christie’s top Republican allies in the Democratic-controlled Legislature, and it was O’Toole who came to Christie’s defense in the wake of Bridgegate, going so far as to issue a press release that initially supported the false claim that the lane closures were part of a legitimate traffic study. But O’Toole was not charged in the federal corruption plot that ultimately took down three former close Christie allies, and he went on to serve alongside Weinberg on the special legislative committee that investigated the Bridgegate scandal.

O’Toole could not be reached for comment yesterday, but Christie said in the statement that O’Toole is “the right person at the right time” to take on the Port Authority leadership role.

“I can think of no one better than Kevin O’Toole to assume the Port Authority chairmanship at this point, with New Jersey and New York moving forward with the most important project in generations to impact commuters and the economy in the Northeast Corridor, the Gateway Program,” Christie said.

He also praised Degnan for “extraordinary service,” including recommitting the agency to its core mission of maintaining the region’s transportation infrastructure.