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Law and Public Policy Beat

February 15, 2017 | Mary Gallagher

Just days after Donald Trump took steps to derail a rule meant to protect retirement investments , a federal court decision has bolstered hopes for its survival.

The regulation, known as the fiduciary rule, was adopted by the Department of Labor (DOL) last April and took effect in June 2016. Compliance was to start on April 10 of this year, with some aspects of the rule not set to kick in until 2018.

The rule requires financial advisers to act in the best interest of the clients who pay them for their professional advice and prohibits them from recommending or selling inferior or more costly investments that will garner them higher commissions.

If you are like me, you were probably surprised to learn that financial advisers were allowed to put their own interests above those of their clients so long as they did not recommend “unsuitable” investments or strategies.  So long as it was suitable, it was okay, even if there was an alternative that was cheaper or a better fit for the client.  The client did not even have to be informed of the better option.

As an attorney—albeit a retired one—I am very uncomfortable with the idea of such a conflict of interest, one that would not be allowed in the legal profession, where .lawyers have a clearly recognized fiduciary duty to their clients. There seems no good reason to apply a lower standard where people are trying to arrange a secure financial future for their old age, a situation in which there is at least as much at stake as in many types of legal services.

Previously, the fiduciary standard was triggered only when retirement investment advice was provided to a consumer on a regular basis and it prohibited advisers from receiving commissions from insurance companies that sold annuities to their clients. They could, however, qualify for an exemption from that prohibition if the sale was as favorable to the consumer as an arm’s-length transaction and the adviser received no more than “reasonable” compensation.

The new rule, however, applies to even one-time advice.

As the DOL explained, the way people plan for retirement has changed since the creation of the fiduciary standard decades ago, when pensions dominated. Today, people have self-directed 401k plans and IRA accounts. Most significantly, it has become common to roll over retirement assets from fiduciary-protected plans into IRAs, a one-time event that did not qualify for fiduciary protection under the old rule even though, as the DOL put it, rollover investments are often “the most important financial decisions that many consumers make in their lifetime.”

Retirement rollovers are expected to affect more than $2 trillion in assets over the next 5 years.

The new rule also replaces the old exemption with a more stringent one, known as BICE—the best interest contract exemption—which allows investment advice fiduciaries, including broker-dealers and insurance agents, to receive commissions and other compensation from third parties that would otherwise be prohibited.

BICE requires a written contract with the retirement investor, agreeing to comply with standards of impartial conduct, act in the customer’s “best interest,” receive no more than “reasonable compensation,” and disclose basic information about conflicts of interest and the cost of advice

Even before Trump’s action, the fate of the fiduciary rule was in doubt, with his chief economic adviser, former Goldman Sachs executive Gary Cohn, saying he wanted to get rid of it.

Then, in a Feb. 3 memo, Trump directed the DOL to review the fiduciary rule because it “may significantly alter the manner in which Americans can receive financial advice, and may not be consistent with the policies of my Administration.” Specifically, he directed it to look at whether the rule could hurt those trying to plan for their retirement by reducing the scope of information or options available to them, by disrupting the industry or spurring an increase in litigation that would drive up the price of retirement services.

If any of those or other problems are found, the DOL is supposed to scrap or at least revise the rule.

The memo did not specifically ask for a delay in implementation but on Feb. 9, the DOL filed a notice to do so with the Office of Management and Budget (OMB).

Just one day earlier, however, the U.S. District Court for the Northern District of Texas rejected a challenge to the rule brought by a group of plaintiffs including the U.S. Chamber of Commerce, the Indexed Annuity Leadership Council, the American Council of Life Insurers and other entities acting on behalf of the financial industry.

Their chosen venue, in Dallas, is part of the Fifth Circuit, which is viewed as less friendly to Obama administration rulemaking. For instance, last November, a judge in that district issued a nationwide injunction blocking a DOL rule expanding eligibility for overtime pay. A year before that, a Fifth Circuit panel blocked a series Obama executive orders on immigration.

Three separate suits challenging the fiduciary rule that were filed there were consolidated and decided by Chief Judge Barbara Lynn in her Feb. 8 opinion. Lynn was appointed to the bench in 1999 by President Bill Clinton  and is the first female judge to lead the district.

Lynn too denied a preliminary injunction and summary judgment for the plaintiffs, while granting the DOL’s cross motion for summary judgment.

Her 81-page opinion addresses questions raised in the Trump memo, which will make it harder for the DOL to base rescission or weakening of the rule on findings that contravene hers.

She held, among other things, that the DOL did not overstep its authority in adopting the rule nor did it violate federal rulemaking procedures by failing to conduct an adequate cost-benefit analysis to help justify the regulation.

“The court finds the DOL adequately weighed the monetary and non-monetary costs on the industry of complying with the rules, against the benefits to consumers,” wrote Lynn.

The DOL decided, based on the relevant evidence, that fewer conflicts of interest, more transparency, and a more efficient market would “increase the availability of quality, affordable advisory services for small plans and IRA investors,” and that it would not have “unintended negative effects on the availability or affordability of advice,” wrote Lynn. The agency relied in part on data from the United Kingdom, whose more aggressive regulatory approach of banning outright all commissions on retail investment products did not cause advisers to leave the market or negatively impact access to investment advice. Thus, it was reasonable for the DOL to conclude that the less burdensome fiduciary rule would not have that effect.

Lynn also found that the duties of loyalty and prudence imposed by the rule are reasonable given the DOL’s findings on the harm to retirement investors from receiving conflicted advice and its estimate that the new standards could save those investors up to $36 billion over the next ten years, and $76 billion over the next twenty years. That compares with the estimated $10 billion to $31.5 billion cost of compliance over the next ten years.

She rejected the contention that the rule will expose advisers to excessive litigation and liability. To the contrary, the DOL considered those issues and determined that potential litigation would incentive compliance. On top of that, BICE allows mandatory arbitration of individual claims, as well as waivers of the right to seek punitive damages or to rescind for violation of the contract. BICE, however, does not allow waiver or limitation of the investor’s right to take part in a class action.

The Chamber of Commerce and other plaintiffs in the Texas suit released a statement reacting to Lynn’s decision, saying they ccontinue to believe that the DOL exceeded its authority, and they will pursue all of their available options to see that the rule is rescinded. The statement referred to Trump’s Feb. 3 memo as a “welcome development” that reflected“well-founded, ongoing and significant concerns about the rule.”

Better Markets, a group that advocates for Wall Street reform, on the other hand, hailed Lynn’s decision as “a huge win for the American people,” and the best interest fiduciary rule as “a carefully considered and well-crafted rule that helps and protects Americans saving for a safe and secure retirement.”

Lynn is the third federal district judge to turn aside a challenge to the rule.

Judges Randolph Moss of the District of Columbia and Daniel Crabtree in Kansas denied preliminary injunctions that would have blocked the rule in The National Association for Fixed Annuities v. Perez, on Nov. 4, and Market Synergy Group v. U.S. Dept. of Labor, on Nov. 28, respectively.

The plaintiffs in the D.C. case have appealed. Their emergency motion for an injunction pending appeal was denied on Dec. 15.

Another lawsuit challenging the rule, Thrivent Financial for Lutherans v. Perez, was filed in September in federal district court in Minnesota. ‘It targets the requirement that best interest contracts include a provision permitting judicial class actions on the ground that this would interfere with Thrivent’s one-on-one alternative dispute resolution program, described as a “core component” of the governance and member-relations model of the tax-exempt membership-owned and member-governed fraternal benefit society.

February 1, 2017 | Mary Gallagher

An attempt to pass a law that would require equal pay for women in New Jersey was thwarted on Jan. 23 when it became apparent that sponsors did not have the votes to override Gov. Chris Christie’s veto of the same bill last May.

The effort came three days after the Trump inauguration, two days after millions of women marched against him and the same day that Trump re-instated the Reagan-era global gag rule – the prohibition on U.S. funding for international organizations that provide information about abortion, even if none of the American dollars go to pay for abortions.

The New Jersey legislation, S-992, would be a state version of the federal Lilly Ledbetter Fair Pay Act, the first legislation signed into law by President Barack Obama, on Jan. 29, 2009, about a week after he took office.

Lilly Ledbetter was a supervisor at a Goodyear tire plant in Alabama, who complained to the Equal Employment Opportunity Commission in 1998 that she was being paid significantly less than her male counterparts. Her pay had started out as roughly equal but over her nearly 20 years with the company diverged more and more into a stark discrepancy by the time she took action.

She claimed she did not know of the pay discrimination until she received an anonymous note revealing the salaries of three male managers and it was then that she went to the EEOC.

A jury awarded her about $3.3 million in back pay and other compensatory and punitive damages but the verdict was thrown out on appeal on the ground that she was too late because the discriminatory decision to pay her less had occurred years earlier. A divided U.S. Supreme Court upheld that ruling in a majority opinion written by Justice Samuel Alito, who is from New Jersey. Justice Ruth Bader Ginsberg and three other justices dissented.

Lilly Ledbetter was left with no remedy for years of gender-based pay discrimination. And the precedent meant that other women would also be blocked from suing no matter how long the discrimination went on and how large the discrepancy, so long as their employers managed to conceal the unequal pay until the statute of limitations expired.

The legislation signed by Obama overturned the Supreme Court decision with regard to the timing of equal pay claims brought under federal law. It resets the time to sue with each discriminatory pay check.

The New Jersey proposal, whose 33 sponsors include Senate President Stephen Sweeney and Loretta Weinberg, D-Bergen, applies the same time reset under state law but goes further in allowing recovery of back pay for the entire period of the discrimination, not just two years, as under the federal law.

It also allows treble damages, bars reprisal against employees for disclosing compensation, job titles and other pertinent information to a lawyer or government agency; prohibits conditioning employment on waiver of employee rights, and requires companies doing work for the state to supply demographic and compensation information on every employee involved in the work.

The measure was introduced in February 2016, passed the Senate a week later and cleared both houses about a month after that. Of the 120 members of the Legislature, only 18 votes were cast against the bill, 4 in the Senate and 14 in the Assembly, with 14 total abstentions. Ten of the “yea” votes were cast by Republicans.

Despite that overwhelming and bipartisan support, Gov. Chris Christie conditionally vetoed the bill in May 2016. He opposed allowing plaintiffs to recover all the pay they were denied on account of discrimination, insisting on the same two-year limit as the federal law, and disapproved of the treble damages proviso.

In addition, Christie thought that employers should be allowed to require job applicants to waive the two-year statute to limitations saying that would align with current law. He was probably referring to the 2014 decision in Rodriguez v Raymours Furniture, where an appeals court found such a waiver enforceable. In that case, it reduced the time to sue from two years to a mere six months.

The Rodriguez ruling, however, was overturned by New Jersey’s Supreme Court one month after Christie’s conditional veto, in June 2016. The court held, 6 to 0, that allowing such a truncation of the time to sue would frustrate the purpose of the New Jersey Law Against Discrimination. The court further indicated that the waiver was probably unconscionable and thus unenforceable for that reason as well.

The Star Ledger reported that Weinberg said there was an attempt to compromise with Christie on the legislation but the negotiations were unsuccessful.

So instead of watering down S-992, the Democrats tried for an override in the Senate on Jan. 23. It required two-thirds of the 40-member chamber–27 votes, which was one fewer than the 28 the bill garnered on original passage.

But after a heated debate, the override had only 23 backers, prompting chief sponsor Weinberg to pull the bill before an official tally and try again for an override at some later date.

According to the Star Ledger, three Democrats were absent, three of the five Republicans who supported the bill the first time voted against the override and there were multiple abstentions.

Sweeney has indicated he will bring the bill up for a vote again when all Democrats are present.

January 18, 2017 | Mary Gallagher

An op-ed piece by Raymond Castro, a senior policy analyst with NJ Policy Perspective, explains why Governor Chris Christie should speak out against repeal of the Affordable Care Act.


Christie’s “most important legacy as Governor” was taking advantage of the ACA to expand Medicaid to cover more than half a million low-income New Jerseyans, but that legacy would be lost with repeal.

Further, repeal would undermine the major behavioral-health and substance-use disorder initiative Christie announced at his State of the State address on January 13, which relies on Medicaid funding.

Castro called on Christie to join with other Republican governors such as John Kasich of Ohio and Rick Snyder of Michigan to press Congress to preserve health care for their constituents.

Castro was urging Christie to act last week while Congress was laying the ground work for repeal but it is not too late.

The question for Castro is whether Christie, during his final year in office, will “seek to protect essential health care for struggling residents of his home state, or will he sit on the sidelines while his party destroys a lifeline for millions of Americans?”

January 17, 2017 | Mary Gallagher

The criminal case against Governor Chris Christie over the Bridgegate lane-closing scandal met with a setback on Jan. 12 when a state judge sent it back down to municipal court for a new hearing on probable cause.

Bergen County Assignment Judge Bonnie Mizdol vacated the probable cause determination made last October by Roy McGeady, the county’s Presiding Municipal Judge, on the ground that Christie was denied his constitutional right to counsel

The case was already out of the ordinary in that a citizen activist had succeeded in launching the case against Christie after state legislative hearings and a federal criminal investigation failed to achieve that result, though many were left wondering if Christie was one of the unindicted co-conspirators referred to in the federal prosecution whose names were never made public. The federal trial judge ordered release of the list but the Third Circuit Court of Appeals overturned her decision. ,

The case took another strange turn when the prosecutors to whom McGeady entrusted the case sided with Christie’s criminal defense counsel in attacking the probable cause decision.

Mizdol ruled in their favor, holding Christie was “improperly denied counsel at a critical stage,” mandating reversal of the probable cause finding.

Christie’s lawyer, Craig Carpenito of Alston & Bird, was present in court for the Oct. 13 probable cause hearing and had submitted a nine-page letter on Christie’s behalf. But McGeady told Carpenito that he had read only the conclusion and would not allow him to participate because until probable cause was found to exist, Christie was not yet a defendant and thus had no standing.

Mizdol did not address the merits of the case, which was brought as a citizen complaint by Bill Brennan of Wayne, a retired firefighter who has a history of trying to hold elected officials accountable and recently announced he intends to run for governor.

Brennan alleged that Christie knew of the local lane closures to the George Washington Bridge while they were underway in September 2013, and of the resulting traffic nightmare in Fort Lee, but failed to remedy the situation despite having a duty to act.

That conduct allegedly constituted official misconduct under N.J.S.A. 2C:30-2b, a second-degree crime punishable by a minimum five- year prison term and as much as ten years. There must be proof that the act or failure to act was for the purpose of obtaining a benefit for oneself or to injure or deprive another of a benefit.

In his complaint, Brennan contended that Christie sought to benefit by obtaining endorsements for his reelection from Democratic mayors, to deprive Fort Lee Mayor Mark Sokolich, a Democrat who withheld endorsement, from being able to meet the needs of his constituents, and also “to injure the citizens of the State of New Jersey by forcing them to sit in traffic that was created by his appointees with malicious intent.”

McGeady found that the threshold for probable cause was met based on transcripts Brennan submitted of sworn testimony from the federal Bridgegate trial.

That trial, still ongoing at the time of the first probable cause hearing, concluded in early November with guilty verdicts for two Christie appointees: Bill Baroni, former Port Authority Deputy Executive Director, and Bridget Kelly, former Christie Deputy Chief of Staff for Legislative and Intergovernmental Affairs. Both were found guilty of conspiring to shut down the local access lanes to the George Washington Bridge, the nation’s busiest.

Brennan relied on testimony from David Wildstein, Director of Interstate Capital Projects for the Port Authority and also a Christie appointee, who orchestrated the lane closures and pleaded guilty in 2015 to two related conspiracy counts.

Brennan also testified at the hearing and was questioned by McGeady but was not subject to cross-examination by Carpenito.

McGeady concluded that the probable cause standard — which he characterized as low but more than just suspicion – had been met and referred the matter to the Bergen County Prosecutor.

Brennan then asked Mizdol to disqualify the Bergen Prosecutor and Attorney General, both Christie appointees, as tainted by conflicts of interest and to name a special prosecutor to handle the case but Mizdol rebuffed the request.

When Christie appealed the probable cause finding based on denial of counsel, the Bergen County Prosecutor filed supporting papers and joined him in asking Mizdol to vacate the finding.

Some have taken note of how unusual it is to see the prosecution siding with defense counsel to throw out a criminal case.

For example, Star Ledger columnist Paul Mulshine in a Jan. 5 piece entitled “Bergen Prosecutor Comes to Christie’s Defense in Bridgegate Case” marveled “That was a new one on me. I’ve been writing about various legal proceedings for years. In every case I’ve covered the prosecution prosecutes and the defense defends. . . . Not in this case.”

Mulshine referred to the alignment as a “defense/prosecutor tag team” and quoted state senator Ray Lesniak, himself a lawyer, as saying he had “never seen a prosecutor make a move like this.”

However unusual such a move might be, it has happened before and in perhaps the most pertinent instance, in a case involving Christie, politics and official misconduct charges.

Last year, the state of New Jersey paid $1.5 million to settle Barlyn v. Dow, a whistleblower suit brought by Bennett Barlyn, who claimed the Christie Administration quashed a Hunterdon County case in which the sheriff and two others, political allies of Christie and Lieutenant Governor Kim Guadagno, were indicted by a grand jury on multiple counts of official misconduct.

The indictments included charges that the defendants provided law enforcement ID cards to unauthorized people, including Dr. Robert Hariri, the chairman of Celgene Cellular Therapeutics, who with his wife donated more than $10,000 to Christie’s 2009 campaign and was appointed to Christie’s transition team.

In 2010, on the day the indictments were unsealed, the Attorney General’s office took over the Hunterdon Prosecutor’s office, had the case files moved to Trenton and a few months later got a judge to dismiss the indictments, claiming they had factual and legal deficiencies.

Barlyn, then an Assistant Hunterdon County prosecutor, did not work on the case but protested that the dismissals were improper and politically corrupt. He was suspended the next day and subsequently fired without explanation, according to his wrongful termination suit.

In February 2015, Barlyn was interviewed by two federal investigators, at least one of whom was part of the Bridgegate investigation.

Barlyn said a “heavy focus” of the conversation was a statement that appeared in the Hunterdon County Democrat at the time of the indictments.  The newspaper reported that a Sheriff’s Department employee claimed one of the defendants had said Christie would “step in (and} have this whole thing thrown out.” The investigators were interested in why that defendant “would specifically identify Christie as a person who would intervene and dismiss the case,” according to Barlyn.

He was subsequently informed by letter that it was “not apparent on the face of your submission that there have been potential violations of federal criminal law.”

In 2014, the state Legislative Select Committee looking into Bridgegate also expressed an interest in looking into Barlyn’s allegations but then decided against it without explanation.

The Christie administration fought Barlyn for years, paying more than $3 million in legal fees before agreeing to pay the $1.5 million.

So, yes, there is precedent for prosecutors scuttling a case, though it can prove very costly.

In a radio interview right after Mizdol made her probable cause decision, Brennan expressed confidence that he will prevail once again at the new probable cause hearing, set for Feb. 2. He noted that with more Bridgegate trial testimony having been given since the date of the first hearing, he will have even more evidence than last time.

January 3, 2017 | Mary Gallagher

Despite the human and fiscal harm that would result from repeal, Republicans have pronounced it a priority and on Jan. 4, the Senate took an initial step toward that goal, approving a budget resolution that would clear the way for such legislation. The House is expected to follow suit next week.

In its last frenzied voting session before the end-of-year break, the New Jersey Legislature passed a resolution that calls on Congress not to repeal the Affordable Care Act, or ACA, also commonly referred to as Obamacare. The complete text of Assembly Concurrent Resolution 222 can be found at http://www.njleg.state.nj.us/2016/Bills/ACR/222_I1.HTM

The ACA, the most significant government overhaul of the U.S. healthcare system in the more than 50 years since the passage of Medicare and Medicaid in 1965, is under serious threat from the incoming administration of President-Elect Donald Trump, who vowed during his campaign to repeal it.

His nominee for Secretary of Health and Human Services is Rep. Tom Price, a Georgia Republican and avowed ACA opponent, who has sought in the past to repeal the law and replace it with tax credits and expanded health savings accounts

Since the ACA took effect in 2010, the law has enabled as many as 20 million Americans to obtain health insurance through the subsidized marketplace it created and its expansion of Medicaid. Many more have benefited from the elimination of annual and lifetime limits on coverage and of barriers to care based on pre-existing conditions.

On top of that, the ACA required preventive services, such as immunizations and screenings, to be free of charge to consumers and enabled millions of young adults to stay on their parents’ health plans until age 26. Its cost control provisions have helped slow the rate of health care cost increases.

In New Jersey alone, hundreds of thousands of people have gained coverage and millions of others have benefited from strengthened coverage.

Repeal would not only deprive millions of their coverage but would carry a high economic price tag, according to a report released on Jan. 4 by The Committee for a Responsible Federal Budget, a bipartisan nonprofit whose stated mission is “educating the public on issues with significant fiscal policy impact.” Utilizing Congressional Budget Office figures, the Committee calculated that a full repeal could cost as much as $350 billion through 2027. The money saved by the federal government on coverage subsidies and Medicaid expansion would be more than offset by the loss of various ACA-created taxes and fees, including insurance mandate penalties, as well as the reversal of savings on Medicare and Medicaid.

Despite the human and fiscal harm that would result from repeal, Republicans have pronounced it a priority and on Jan. 4, the Senate took an initial step toward that goal, approving a budget resolution that would clear the way for it. The House is expected to follow suit next week.

The New Jersey resolution did not draw much notice when it passed on Dec. 19 because attention was focused on two other contentious pieces of legislation. One would have enabled Gov. Chris Christie to profit from a book deal while still in office by removing strictures on outside income and the other would strike a serious blow to the state’s newspapers–and by extension, government accountability–by allowing legal notices to be posted on government websites rather than in newspapers, as is now required. Both of those bills failed, fortunately, in the face of public outcry.

The resolution states: “The Congress and President of the United States are respectfully urged not to repeal the Patient Protection and Affordable Care Act, and to ensure that any revisions or modifications to the law adequately maintain continuing health coverage for those individuals who would otherwise lose their health benefits upon repeal and preserve the significant gains that have been realized through the law in the years following its enactment.”

In a party-line vote, it was approved 46-30 in the Assembly and 22-14 in the Senate.

It was to be filed with the Secretary of State and transmitted by the Clerk of the Assembly or Secretary of the Senate to House of Representatives Speaker Paul Ryan and Senate Majority Leader Mitch McConnell, and to every member of the New Jersey Congressional delegation.

New Jersey is not alone in pushing back against a repeal.

The Democratic Governors Association, whose members include Andrew Cuomo of New York, Dan Malloy of Connecticut, Terry McAuliffe of Virginia and Kate Brown of Oregon, conveyed a similar message to Ryan and McConnell in a Dec. 21 letter. https://democraticgovernors.org/wp-content/uploads/DGA-ACA-letter-12.21.16-FINAL.pdf

And on Dec. 28, three leading Democrats—Senators Bernie Sanders of Vermont and Chuck Schumer of New York, along with Representative Nancy Pelosi of California, circulated a Dear Colleague letter designating Jan. 15 a day of action to oppose repeal of the ACA along with anticipated attacks on Medicare and Medicaid. https://berniesanders.com/wp-content/uploads/2016/12/161222-Dear-Colleague-Health-Care-SIGNED.pdf



December 16, 2016 | Mary Gallagher

It is hard to believe now but in the decades following its creation in 1921, the Port Authority of New York and New Jersey was considered a prime example of an effective and efficient public agency that truly operated in the public interest.

That reputation has been sullied in recent years and not just by the Bridgegate lane-closing scandal and the ensuing criminal convictions of some of those involved. There is also former Port Authority chairman David Samson, who was convicted of misusing his position to shake down United Airlines so that it would reinstate direct flights from Newark to his weekend home. On a broader scale are revelations of how New Jersey Gov. Chris Christie used the agency’s resources to reward political allies, while tolls at Port Authority crossings and fares hikes on PATH trains have been repeatedly hiked.

Robert Hennelly describes the agency’s fall from grace in “Beyond Bridgegate: How to Pull the Partisan Politics Out of the Port Authority,” published Dec. 12 on City and State, an online news magazine focused on New York

Hennelly describes a Port Authority in its heyday that does not at all resemble the political patronage pit and goody bag into which it has devolved.

“Its successful and nearly simultaneous completion of no fewer than four bridges in the late 1920s and early 1930s (the Goethals Bridge, the Outerbridge Crossing, the Bayonne Bridge and the George Washington Bridge) all ahead of schedule and well under budget, established the agency’s reputation for avoiding the pitfalls of petty partisan politics,” writes Hennelly. “The Port Authority was a shining example to a nation in need of a can-do spirit, an agency whose utility was demonstrated with every trip over one of its bridges or through one of its tunnels.”

Hennelly asks the crucial question: “So what changed in the almost century-long arc of the Port Authority that it went from transcending partisan politics to being a tool of it, to the point that it was involved in criminality that preyed on the very public it was supposed to serve?”

The problems began well before Bridgegate as the agency’s “early ability to complete projects ahead of schedule and below cost estimates had become a distant memory” and worsened in the aftermath of Sept. 11, as cost overruns on the new World Trade Center complex sank the agency deeper into debt, according to Hennelly.

He cites a report finding that in just 10 years, that debt spiked form $9 billion to $21 billion, a development that coincided with the agency boosting gross compensation for its own workforce by 19 percent in just five years. Today, the average Port Authority employee makes more than $143,000 in salary and benefits, Hennelly reports.

Hennelly quotes historian Jameson Doig, who points fingers, not just at Christie but also at New York Gov. Andrew Cuomo, and at former New York Gov. George Pataki for appointing as executive director George Marlin, who Doig claims undermined the agency in various ways, including demolishing the planning staff.

One suggested fix for the situation is a more diverse board.

As Baruch College professor Doug Muzzio told Hennelly: “What you have is all white guys in real estate, the law or money management. This has created a very insular worldview. Where’s the representation of the New York or New Jersey commuter? You just need more voices.”

The entire article can be read here:


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