SENATE, No. 2181




DATED:  OCTOBER 27, 2014


      The Assembly State and Local Government Committee reports favorably Assembly Bill No. 2181.

      This bill enacts certain reforms to ensure the proper functioning of the Port Authority of New York and New Jersey (“Port Authority”) as an open, transparent, and accountable interstate authority.  The Port Authority’s operations include Newark Liberty, LaGuardia, Kennedy, Stewart, Atlantic City, and Teterboro airports; the Port of New York and New Jersey; the PATH mass transit system; the World Trade Center; and numerous bridges and tunnels, including the George Washington Bridge and the Lincoln and Holland tunnels.


Board Responsibilities

      The bill requires the Port Authority’s board of commissioners to: provide direct oversight of the authority’s chief executive and senior management; oversee the implementation of financial and management controls and operational decisions; establish policies concerning the compensation of officers and employees; adopt a code of ethics; establish policies protecting employees who disclose information concerning acts of wrongdoing; and adopt a defense and indemnification policy.  The bill also requires the Port Authority to establish audit, governance, and finance committees.  The governance committee is to examine professional relationships between those appointed by the Governor of New York and those appointed by the Governor of New Jersey to ensure maximum communication, coordination, and cooperation.


Fiduciary Oath

      The bill requires every member of the Port Authority board to perform each of their duties as a board member in good faith and with that degree of diligence, care, and skill which an ordinarily prudent person in similar position would exercise under similar circumstances.  At the time that the board member takes and subscribes the oath of office, the board member is to execute an acknowledgement of the board member’s role, fiduciary duty, duty of loyalty and care to the organization, and commitment to the authority’s mission and the public interest.


Efficiency Study

      Every two years, the Port Authority is required to have an efficiency study conducted by an outside, independent efficiency expert to identify waste or abuse involving the Port Authority.


Disposal of Property

      The bill establishes various requirements concerning the disposal of property by the Port Authority.  The Port Authority is required to designate a contracting officer to be responsible for complying with the provisions established in the bill, and is required to maintain adequate inventory controls and accountability systems for its property, periodically inventory its property, and dispose of property promptly.  In addition, the Port Authority is required to produce an annual list, including descriptions, of all real property.  Before disposing or contracting for the disposal of property, the bill requires the Port Authority to publicly advertise for bids.  The provisions concerning the disposal of property limit the Port Authority’s ability to dispose of property for less than the property’s fair market value.


Reporting Requirements

      The bill requires the Port Authority to provide, within 90 days of the end of its fiscal year, a complete and detailed report setting forth: the Port Authority’s operations and accomplishments; certified financial reports; charter and by-laws; a schedule of outstanding bonds and notes, a statement of the amounts redeemed and incurred during the fiscal year as part of a schedule of debt issuance, and a detailed list of costs of issuance for such debt; biographical information and titles of commissioners and senior management, including compensation and benefits paid to commissioners and to senior staff; the projects undertaken during the past year; the Port Authority’s code of ethics; an assessment of the effectiveness of the Port Authority’s internal control structure and procedures; a description of the Port Authority and its board structure; a listing of all real property having an estimated fair market value of $15,000 or more that the authority acquired or disposed of; a description of the total amounts of assets and services bought or sold without competitive bidding; a listing of material changes in operations and programs; at a minimum, a four-year financial plan; board performance evaluations; and a list of any pending litigation to which the Port Authority is involved as a party.


Annual Audit

      The Port Authority is required to submit to the governor, the state comptroller, and legislature of each state, a copy of an annual independent audit report, performed by a certified public accounting firm in accordance with generally accepted auditing standards, and management letter and any other external examination of the books and accounts of the authority.  The bill also establishes various restrictions on what other services the auditing firm is allowed to provide to the Port Authority.


Lobbying Restrictions

      The Port Authority is required to maintain a record of all lobbying contacts made with the Port Authority.  Every board member, officer, or employee of the Port Authority who is contacted by a lobbyist is required to make a contemporaneous record of the contact containing the day and time of the contact, the identity of the lobbyist, and a general summary of the substance of the contact. For the purposes of the bill, “lobbying” includes any attempt to influence: the adoption or rejection of any rule or regulation having the force and effect of law by the Port Authority; the authorization, approval, or award of any agreements, contracts, or purchase orders, including any settlement of Port Authority claims; or any extension, amendment, or modification of any existing agreement, contract, or order; and the outcome of any proceeding by the Port Authority to establish, levy, or collect fees, tolls, charges, or fares.


Role of Inspector General

      The bill creates an Office of the Inspector General.  The Inspector General is to be appointed by, and report to, the board of commissioners of the Port Authority.  The Inspector General may appoint one or more deputy inspectors general to serve at the Inspector General’s pleasure, who shall be responsible for conducting audits and investigations in the Port Authority. The Inspector General has the duty and responsibility to: (1) receive and investigate complaints from any source concerning allegations of corruption, fraud, criminal activity, conflicts of interest, or abuse; (2)  inform the board of commissioners and executive director of allegations and the progress of investigations related thereto, unless special circumstances require confidentiality; (3) determine with respect to allegations whether disciplinary action, civil or criminal prosecution, or further investigation by an appropriate federal, state, or local agency is warranted, and to assist in these investigations; (4) prepare and release to the public written reports of investigations; (5) review and examine periodically the policies and procedures of the Port Authority with regard to the prevention and detection of corruption, fraud, criminal activity, conflicts of interest, or abuse; (6) recommend remedial action to prevent or eliminate corruption, fraud, criminal activity, conflicts of interest, or abuse; and (7) establish programs for training Port Authority officers and employees regarding the prevention and elimination of corruption, fraud, criminal activity, conflicts of interest, or abuse.

      The Inspector General shall have the power to: subpoena and enforce the attendance of witnesses; administer oaths or affirmations and examine witnesses under oath; require the production of any books and papers; examine and copy or remove documents or records of any kind prepared, maintained, or held by the Port Authority and its subsidiaries; require any officer or employee of the Port Authority or its subsidiaries to answer questions concerning any matter related to the performance of the officer or employee’s official duties; monitor the implementation by the Port Authority of any recommendations made by the Inspector General; and perform any other functions that are necessary or appropriate to fulfill the duties and responsibilities of that office.

      The bill also requires every officer or employee in the Port Authority and its subsidiaries to report promptly to the Inspector General any information concerning corruption, fraud, criminal activity, conflicts of interest, or abuse by another Port Authority officer or employee relating to the officer or employee’s office or employment, or by a person having business dealings with the Port Authority relating to those dealings.  The knowing failure of any officer or employee to so report shall be cause for removal from office or employment or other appropriate penalty.


Whistleblower Protections

      The bill requires the Port Authority Inspector General, after consultation with the Attorneys General of both states, to develop a whistleblower access and assistance program which shall include, but not be limited to: evaluating and commenting on whistleblower programs and policies; establishing toll-free telephone and facsimile lines available to employees; offering advice regarding employee rights under applicable state and federal laws and advice and options available to all persons; and offering an opportunity for employees to identify concerns regarding any issue at the port authority.  The Port Authority is prohibited from firing, demoting, suspending, threatening, harassing, or discriminating against an employee because of the employee’s role as a whistleblower, insofar as the actions taken by the employee are legal.


Subsidiary Corporations

      With certain exceptions, this bill limits the ability of the Port Authority to organize additional subsidiary corporations unless the legislatures of both states shall have enacted a law granting the power for the organization of a specific corporation.  A subsidiary corporation may be organized if the purpose for which the subsidiary corporation is to be organized is for a project or projects which the Port Authority has the power to pursue pursuant to its corporate purposes; the primary reason for the subsidiary corporation is to limit the potential liability impact of the subsidiary’s project or projects on the Port Authority or because state or federal law requires that the purpose of a subsidiary be undertaken through a specific corporate structure; and the subsidiary corporation makes the reports and other disclosures as are required by the Port Authority.


Financial Disclosure Statements

      The bill requires the Port Authority commissioners appointed by the governor from the State of New York to file annual financial disclosure statements pursuant to the Public Officers Law of New York.  Employees of the Port Authority who hold policy-making positions, as determined by the Port Authority, or whose annual salary equals or exceeds the salary rate of SG-24 as set forth in the Civil Service Law of New York, are also required to file annual financial disclosure statements pursuant to the Public Officers Law of New York.  The commissioners appointed by the Governor of the State of New Jersey are required to file annual financial disclosure statements as required by New Jersey State law or Executive Order.


Needs Assessment

      The Port Authority is required to have a needs assessment conducted by an independent entity prior to any increase in fees, tolls, charges, or fares.  The assessment is to be presented by the independent entity to the board of commissioners at a public meeting to be held at least 120 days prior to any meeting of the commissioners to vote to increase any fees, tolls, charges, or fares.


Hearings Before Toll or Fare Increase

      Under the bill, the Port Authority is required to hold at least six public hearings not less than 30 days and not more than 90 days prior to any vote or action taken by the board of commissioners relating to any increase in the tolls for the use of any Port Authority bridge or tunnel, or fares for the use of the Port Authority Trans-Hudson Corporation rail system.  The locations for public hearings are to be selected in such a way as to be geographically accessible to a majority of users of the facility or facilities to be impacted by the toll or fare increase, as determined by Port Authority data, provided that at least one hearing shall be held in each state.

      In addition, at least 72 hours before the first hearing, the Port Authority is required to make available to the public: the amount of revenue expected to be generated from the increase in tolls or fares; a detailed explanation of how the revenue raised from the increase in tolls or fares is expected to be spent; and a written explanation of why the increase in tolls or fares is necessary.

      Each public hearing is to be attended by at least three commissioners from the State of New York and three commissioners from the State of New Jersey and no more than one public hearing may be held in a single day.  At least one-half of the public hearings are to be scheduled to begin after 6:30 p.m., Eastern Standard Time, on a weekday.  The public is to be allotted a period of time, not less than 60 minutes, to speak at each hearing.

      The Port Authority is to ensure that each of these requirements are complied with before placing on the meeting agenda of the board of commissioners, any item or matter relating to an increase in tolls, fees, or other charges.


Open Public Meetings

      The bill provides that all meetings of the Port Authority are to be open to the public at all times unless a majority of the commissions votes that a portion of the meeting may be conducted in closed session.  The Port Authority may only exclude the public if the discussion concerns: a matter in which the release of information would impair a right to receive funds from the government of the United States; material the disclosure of which constitutes an unwarranted invasion of individual or personal privacy; a collective bargaining agreement; a matter involving the purchase, lease, or acquisition of real property with Port Authority funds, the proposed acquisition of securities, or sale or exchange of securities held by the Port Authority, or investment of Port Authority funds, if it could adversely affect the public interest if discussion of the matters were disclosed; matters which will imperil the public safety if disclosed; pending or anticipated litigation or contract negotiation in which the Port Authority is, or may become, a party, or matters falling within the attorney-client privilege, to the extent that confidentiality is required in order for the attorney to exercise the attorney’s ethical duties as a lawyer; a matter involving the employment, appointment, termination of employment, terms and conditions of employment, evaluation of the performance of, promotion, or disciplining of any specific prospective officer or employee or current officer or employee employed or appointed by the Port Authority; or deliberations of the Port Authority occurring after a public hearing that may result in the imposition of a specific civil penalty upon the responding party or the suspension or loss of a license or permit belonging to the responding party as a result of an act or omission for which the responding party bears responsibility.

      The Port Authority is required to keep reasonably comprehensible minutes of all its meetings showing the time and place, the members present, the subjects considered, the actions taken, the vote of each member which shall be promptly available to the public.  Minutes of each meeting are to be available to the public within two weeks from the date of the meeting.

      The minutes are to indicate for each item on the agenda, the vote of each board member in attendance at an open meeting or an executive session of the board or a committee of the board.  Each item on the agenda is to be voted on separately.

      Finally, the board is to make or cause to be made all reasonable efforts to ensure that meetings are held in facilities that permit barrier-free physical access to people with disabilities.  If the board determines to use videoconferencing or similar technology to conduct its meetings, it shall provide an opportunity for the public to attend, listen.


Public Participation at Meetings/Notice Provisions

      The bill requires that the public be given not less than 60 minutes to speak at each public meeting of the Port Authority.

      In addition, the Port Authority is required to make available to the public meeting agendas at least 72 hours before each meeting of the board and each meeting of each committee.  Public notice of the time and place of a meeting is to be provided to appropriate media outlets, conspicuously posted in one or more designated areas at least 72 hours before such meeting, and conspicuously posted via the port authority’s official internet website at least five business days before the meeting.



      The bill prohibits a board member from voting on, or participating in any board or committee discussions with respect to, any agenda item if the board member, a member of the board member’s immediate family, or a business organization in which the board member has an interest, has a direct or indirect financial involvement that may reasonably be expected to impair the board member’s objectivity or independence of judgment or to create the appearance of impropriety.  The board member is to be recused from any discussions or voting on the agenda item.  A board member is to clearly indicate the board member’s recusal from voting on an agenda item and the minutes are to clearly reflect that recusal.


Operating Budget/Capital Strategy Plan

      The Port Authority is required to prepare a detailed annual operating budget.  It is to be the policy of the Port Authority that its annual operating budget be balanced in accordance with generally-accepted accounting principles, provided, however, special circumstances may permit that deficits be covered with accrued reserves or other resources.

      The Port Authority is also required to prepare a long-range capital strategy plan and revise the long-range plan every four years.  The capital strategy plan is to specify the projects to be initiated and the expected cost of those projects.  The plans are also to include a financing plan that identifies the source of funding for each project.  The Port Authority is required to prepare quarterly reports with the status of each project in the capital strategy plan. 

      The Port Authority is required to provide that major capital projects are monitored by independent engineering consultants.  A major capital project is defined to mean certain projects with a cost in excess of $500,000,000.


Appearing Before Legislatures

      Finally, the Port Authority, at the request of either house of the state legislature of New York or New Jersey, is required to appear before a committee of the requesting state legislature to present testimony on any topic or subject requested by the committee or to respond to questions by members of the committee.


      The bill takes effect when New Jersey and New York have enacted substantively identical legislation.


      Senate Bill No. 2181 is identical to Assembly Bill No. 3417 of 2014.