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# MEMORANDUM LawDepartment PR/VILEDGEDAND CONFIDENTIAL
To: From: Data: Subject: Copy To: Christopher Hartwyk Carlene Mcintyre March 28, 20·11 NJDOT Projects



### J. Introduction 

### New Jersey Departrrierit ofTransportation ("NJDOT")

## l1as requested the 

## Port Authority's help in funding transportation projects that NJDOT must perj'orm In the State ofNewJersey. The PortAuthority has reviewed threespecific projects, namely tile Pulaski Skyway, Wittpenn Bridge and New Road (collectively, the "Projects"), which the PortAuthority believes it can undertake as a PortAuthorityfacility project. As we have previously advised, in order to receive Port Authority funding, projects are required to fall within the scope ofthe PortAuthority's statutory authority and comply with the contractual requirements· under which the Port Authority operates. As a matter of certainty, projects thatfall outside·the scope of the Port Authority's mandat<;l would be 

### ultra vires, and c'annot, therefore, be undertaken. bythe

._Port_

**,1\Utllo~ity** ('lS ajJ_ort A1Jjhori!}'_fJ.rojec_t_()r fl]ll_decj_})y

**.t.h~.** Pg_rt.

**A_uthor~y,** __

## i!l. partnership with another governmental agency, even 

### ifto do so would support, in a general sense, the goals underlyingthe PortALithority's creation. 

### II. Auti:Jorityto 

### Undertakethe Projects Identifiedby NJDOT 

### A. HollandTunnel and MarineTerminals The PortAuthorityrecognizesthat it is in thebest interestofthe Port Districtto

.. alleviatethe NewJersey infrastructure issueswithin the Port Districtand it is desirous of aiding in that effort. In this regard, the Port Authority has reviewed its bi-state legislation 

### to determinewhether any legislative authority exists thatwould allow 

### itto undertake the Projects. The Projects serve as a lcey component in the NJDOT "Partway Corridor," allowing traffic to gain access to the Holland Tunnel. In 1931,the "control, operation, tolls and other revenues ofthe

... the Holland tunnel"wasvested in the Port Authority under bi-state bridge and tunnel legislation unifying the operations of trans-Hudson vehicular crossings in the agency. N.J.S.A. 32:1-119; N.Y. Unconsol. Laws 6502. However, although the Projects are being designed, inpart, to improve access to the Holland Tunnel, the PortAuthority has no authority in such unification statutes to construct, own, maintain or operate any of the approaches to the Holland Tunnel. In stark contrast are other provisions ofthe bistate statutes that give the Port Authorityexpress rights to construct approaches with respectto the Midtown Hudson Tunnel (Lincoln Tunnel) and the George Washington Bridge (GWB).
The GWB legislation after setting forth the parameters ofthe approaches to the GVVB on the NewYork side, states: "Except as so limited, the Port Authority may effectuate such approaches, connections, highway extensions or highway improvements as it shall deem necessary or desirable in relation to the George Washington Bridge, located in or extending acrossthe counties in which such bridge is located, and in its discretion, may do so by agreement with any other public agency; such agreement may provide for the .construction, .ownership, maintenance. or. operation 

### ·Of .such approaches, connections or highway extensions · or highway improvements bysuch otherpublic agency. " N.J.S.A..32:1-119; N.Y. Unconsol. Laws 6502. Leaving aside, for now, whether the Projects could be appropriately categorized as an approach, connection or highwayextension or improvementto the Holland Tunnel, as stated above, there Is no similar authorization with respect to the Holland Tunnel as was setforth forthe GWB. Of particular note is the fact that the GWB provision cited above, expressly provides that such approaches may be undertaken by agreement with other public agencies that may also construct, own,

.... maintain such approaches

.... Also of. note is the language in the same paragraph granting authority to operate the Holland Tunnel that gives the Port Authority the authorityto construct and operate the Lincoln Tunnel. Similartothe GWB legislation, the Lincoln Tunnel statutory language provides that "the Port Authority is hereby authorized and empowered to construct, own, maintain and operate the [Lincoln Tunnel] togetherwith such approachesthereto and connections with highways as the PortAuthority may deem necessaryordesirable." N.J.SA 32-1-119; N.Y. Unconsol. Laws 6502. Therefore, there is no clearstatuiory authority underthe HollandTunnel legislation to perform the Projects as approaches to the HollandTunnel. Moreover, although the Projects will clearly have a positive impact on ingress and egress to Port Newark and Port Elizabeth, the airport and marine terminal legislation expressly prohibits the construction of highways by the Port Authority without legislative approval. Specifically, N.J.SA 32-35.30 provides that "[m]arine terminals shall mean

.... highway projects in the vicinity of a marine terminal providing improved access to such marine terminal as shall be designated in legislation adopted bythe two states." This statute was the result of a "friendly" suit.

pago2brought by the New Jersey Department of Transportation and the New Jersey Turnpike Authority against the Port Authority seeking a declaratory judgment as to whetherthe Port Authority had the authority to commit funds to the Route 81 project for construction ofthe Turnpike Interchange 13A and a new highway connection with North Avenue and Routes 1 and 9 in Elizabeth, New Jersey. The Court found that the Port Authority did not have the authority under the bi-state legislation to commit funds to the Route 81 project, although this project would serve as asouthern access to Newark Liberty International Airport. State ofNew Jersey v. PortAuthority, 151 N.J. Super. 127 (1977), aff'd, 159 N.J. Super. 102 (A.D. 1978). In addition, the Court, interpreting the Compact provisions authorizing the Port Authority to participate in "transportation" or "terminal" facility projects and the transportation goals setforth in those provisions, determined that the words could not be expanded to include a highwayproject:
There is, however, no authority under this principle [avoidance o'f congestion, conflicting currents and long truck hauls] for the

.PortAuthorityto engage in the actual construction of highways. " ·

State of New Jersey v. Port Authority, 151 N.J. Super. 127 (1977), aff'd, 159 N.J. Super. 102 (A.D. 1978). [The court continued:] [t]o grantthe reliefwhich plaintiffs seekwould be, in effect, to sanction the Port Authority building, without bi-state approval, not merely the Route 81 project·. but as many highways as itdeems beneficial tothe publicand in accord with the comprehensive plan. Certainly, this is notthe plain intentof the legislatures, especially where, as here,.they have remained silent. Not even an inference ofthe delegation of powerto the Port Authority to construct Route 81 is permissible under the existing legislation. 151 N.J. Super. at138. As a result of the lawsuit, the legislatures of both states enacted expli9it legislative authority for the Port Authority to enter into agreements with New Jersey state agencies to fund such projects. In 1977 and 1978, legislation authorized the Port Authority to undertake two projects for improved access to the air and marine terminals. Those projects were: 1) "Highway access improvement project relating to Newaik International Airport and the Elizabeth-PortAuthority MarineTerminal" and2) "Construction of that p01tion of New Jersey Route 81 in.the city ofElizabeth

... extending generally north westward from and including a new inter change with the New Jersey turnpike across and connecting with North Avenue, to and including a new Interchange with U.S. Route 1." N.J.S.A. 32:1

..35.26; N.Y. Unconsol. Laws 6631, note. The legislation alsospecified that the Port Authority could enter into agreements relating to such access ·projects providing for the construction, ownership, maintenance of such projects by the State of New Jersey or a state agency (commission etc.) thereof. N.J.S.A. 32:1-35.27; N.Y. Unconsol. Laws 6631, note.

pago3In a similarfashion, other legislation makes clear thatthe Newark bay-Hudson County extension was a "turnpike projectofthe NewJerseyTurnpike Authority." The legislation provides:
The Pott Authority is hereby authorized and empowered, in its discretion, to enter into an agreement or agreements upon such terms and conditions as it rnay deern in the public interest, with the New Jersey Turnpike Authority, or the New Jersey state highway department, or both, whereby the port authority may undertake to pay to such other party or parties to such agreement or agreements such portion or portions of the costs of construction either or both of said Newark bay-Hudson county extension terminal connections as the port authority shall determine to be proportionate to the benefit to facilities owned or operated by the port authority from such connections, whether or not such connections shall constitute approaches or connections to such portaUtl]ority facilities. N,J.S.A. 32:2-35; N.Y. Unconsol. Laws 6752
The latter enactments would not have been necessary should the existing legislation, giving the PortAuthority the authority to operate the Holland "funnel, the marine terminals and the airports been sufficient to allow the Port Authority to fund the New Jersey state projects. These enactments thus bolster the conclusion that there is insufficient existing authority forthe Port Authorityto undertake the Projects pursuant to the Holland Tunnel legislation and the marine and airport legislation, despitethebenefits ofthe Projects to s.uchfacilities. 

### B. LincolnTunnel
As previously noted, while the Port Authority has broad authoritytoengage in certain projects related to transportation and commerce in the region, Its authority to do so is tied directly to the bi-State legislation that gave the P<>rt Authority those powers. The Port Authority's participation in certain projects, and thus the expenditure of Port Authority funds, mustfind an anchor in such powers, and absent such anchor, the exercise ofauthoritywould be deemed to be ultra vires. We have therefore taken a further look to see what facility, ifany, we can tiethe Projects to, otherthanthose most closely related which do not give the necessary authority. We have determined that we can link the Projects to the existing authority under the Lincoln Tunnel legislation. As stated earlier, the bi-state legislation authorizing the Lincoln Tunnel providesthat "the PortAuthority is hereby authorized and empowered to construct, own, maintain and operate the [Lincoln Tunnel] together with such approaches thereto and connections with highways as the Port Authority may deem necessary or desirable." N.J.SA. 32-1-119; N.Y. Unconsol. Laws 6502. In other words, the bi-state legislation expresslyauthorizesthe PortAuthorityto undertakethe design, planning and construction of projects that concern the roadways that

page4approach the Lincoln Tunnel. It can be argued that the Wittpenn Bridge, New Road and Pulaski Skyway are all roadways which approach and feed into the Lincoln Tunnel. Moreover, in court decisions upholding the Port Authority's 

### 1987 toll increase, it was found that the "PortAuthority's bridges, tunnels, bus terminal, PATH, .and bus programs form a integrated interdependent transportation system." Automobile Club v. The PortAuthotilyofNew YorkandNewJersey, 706 F. Supp. 264, 280 (S.D.N.Y. 

### 1989), affd

### 887 F.2d417 (1989). Studies introduced in the litigation cited specifically to the relationship between the Holland Tunnel and the Lincoln Tunnel and demonstrated that increased traffic atthe Holland Tunnel results. in traffic diversion to the Lincoln Tunnel. lei. ("[t]he Lincoln Tunnel provides an alternativeforthe users of the HollandTunnel"). The PortAuthority engineering departmentwill perform atraffic studyto update and augmentthis analyses. However, it is important to note, that this statutory construction is notwithout doubt-and may·raise ·questions·intheminds ofsome. The analysisveers 'away from the traditional model used by the Port Authority in determining whether it can undertake

## a project pursuanttoexisting PortAuthority bi-state legislation. The looser the statutory construction means the greaterthe risk 

### of asuccessful challengebythe bondholders and investors. 

### Ill. Accesstothe Region's Cor.e andthe Meadowlands PassengerRail Facility NJDOT inquiredwhetherThe PortAuthority of NewYork and NewJersey (the "PortAuthority") is able to form a partnership with NJDOT for the undertaking ofthe Projectssimilartothe partnership formed betweenthe.PortAuthority and NewJersey

· ·Transit ("NJT") in ·connection-witl>.tl'i'i'n;ccess-toth7fRegioJ1's·core··("ARC'T

.. The ·· scope of ARC was significantly different then the scope of the Projects. ARC involvedthe construction ofa commuter expresstunnel connecting the States ofNew Jersey and New York. The Port Authority and NJT created a partnership to undeJtake the construction and development of ARC. NJT served as the lead agency and federal sponsor forARC. Both the Port Authority and NJT committed significant resources to ARC, inclLtdlng both staffand funds required to complete the project. The parties formed a Project ManagementCommittee to overseethe project that consisted of members from each partner. NJT was in charge of procuring and maintaining the design and construction management contracts and the Project Team, also consisting of members from each entity, was in charge ofmanaging the contracts. NJT was responsible for handling all of the necessary property acquisitions in New Jerseyandthe PortAuthoritywas responsibleforhandling all the necessary property acquisitions in New York. Each party would retain title to the respective property itacquired.

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l.n contrast, with respect to the Projects, the Port Authority would not own any of the assets comprising the Projects. Upon completion of the Projects, NJDOT would continue to own and operate the assets. In addition, the Port Authority would be the only party funding the Projects. Therefore, conversely to ARC, here, the Port Authority would be the sole party funding the Projects notwtthstanding the fact that NJDOTwould retain titleto all ofthe assets. But to the legal point, the ARC project was grounded in bi-state legislation which gave the Port Authority the requisite authority to effectuate the project and acquire the property needed

- namely the Port Development Acts, as amended. Underthose Acts, the Port Authority is empowered to effectuate a Port Development project, consisting ofthe World Trade Center and "railroad facilities", referred to as the "Hudson tubes", and the "Hudson tubes extensions". The latterwere defined as certain "improvementsto passenger railroad lines connection withthe Hudson tubes" including-

.... (v) improvements'tciPeilfisYivahia slaticiri'int!le'city

### o(

.. NewYorl<, stateofNewYork, and to its railroad approaches From the state ofNewJersey, as necessary or desirable to improve operations and toincreasetrain and passenger handling capacity.

. . · N.J.S.A. 32:1-35.51: N.Y. Unconsol. Laws 6602 Falling within this definition, the ARC project proposed to increase transHudson commuter rail capacityfrom Secaucus Junction stationtotwo tunnels under the Palisades and the Hudson River connecting to a new station directly.aqjac<>nt and connected to Pennsylvania station. The environmental st,tp_pgrtfoLthe

**proJ<>VL~** indicatedihanhewewstation would relieve severeiy''overcrowded and inadequate conditions at Pennsylyania Station in NewYork. Moreover, support for the PortAuthority's participation in ARC was bolstered by legislative history ofthe Port DevelopmentActs. That history made clear thatthe Port Development Acts were meant to facilitate, in part, a bi-state plan whose aim was to consider trans-Hudson transportation options to meet the growth ·and development anticipated for the region, including a rail tunnel into mid-town Manhattan. Similar to ARC, the Meadowlands Passenger Rail Facility ('Rail Link") was grounded in bi-state legislation as itwas directly related to the Port DevelopmentAct. The Rail Link project extended the PascackValley Rail Line in East Rutherford, New Jersey to a new station for the Meadowlands Sports Complex and the Xanadu Redevelopment Project. This passenger rail connection encourages greater usage of PATH .because NJ Transit runs a shuttle service at peale times from Hoboken, New Jersey to the rail link. In addition, providing enhanced mass transit access to the

page 6.Meadowlands Sports Complex site via PATH and other rail lines relieves traffic congestion on the Po1tAuthority Hudson River crossings. IV. Howthe PortAuthority Can Participate inthe Projects As stated above, the Port Authority determined that it would undertake the Projects pursuant to the Lincoln Tunnel legislative authority. It is long standing policy that the Port Authoritymust control Port Authority projects connected to aPort Authority facility. The Port Authority cannot simply write a check to the Transportation Trust Fund. Further, allowing NJDOT to construct the Projects on behalfof the Port Authority would bejust another way to fund the Transportation Trust Fund. The undertaking ofthese Projects is of a unique nature and outside the realm ofthe typical Port Authority undertaking. The PortAuthority does not generally participate in large-scale projectsthat do not involve an existing PortAuthority asset, or the acquisition of a Port Authority asset. Therefore, to take these Projects and handle them in a way contrary to the Port Authority norm wollld make an already questionable projectin the eyes ofsome (i.e.; bondholders) even morequestionable. · However, the PortAuthority understands that NJDOThas already performeda great amount ofwork on each of the Projects, and most certainly, with respect to Wtttpenn Bridge, which is in the design phase ofthe Project and the initial contract is ready to be awarded. Recognizing the immediate need for these Projects, the Port Authoritydoes notwantto cause delay orslowdownthe processes already in place. In reviewing the ARC project. as requested, the Port Autl1ority could, with .certain modifications, utilize certain aspects ofthe ARC partnership model between the Port Authorityand NJT. The Port Authority is amenable to entering into mobility and project managementa[1reeme11t (the ,;PMA")

..with··NJDOT:-The·PMAwoUid provide for the·-·- creation of a project team consisting of Port Allthority employees .and NJDOT employees. The NJDOT employees would serve as Port Authority employees and report 

## to work at a centrally located Port Authority facility for the duration of the Projects. The Port Authority would reimburse NJDOTthe staff costs and expenses associatedwith theemployees'workon the Projects.. The PMAwould further provide that the Port Authority and NJDOT would proceed with the Projects based on the existing plans and specifications, as well as the existing planning, design and engineering contracts. Finally, under the PMA, NJDOT would indemnify the Port Authority for all losses, damages, and third party lawsuits arising out of the plans, specification and contracts utilizedforthe Projects. ·

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