Bistate battle over congestion pricing enters new phase

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As New Jerseyans were enjoying their summer vacations, there were several major developments on a hot-button issue that will be of consequence to many in the state — congestion pricing.

In June, the controversial Central Business District Tolling Program – also known as congestion pricing – under which drivers would pay $9 to $23 a day to enter Manhattan south of 60th Street, moved a step closer to reality when the Federal Highway Administration gave it the green light to proceed by issuing a determination of a Finding of No Significant Impact – putting it on a path to be implemented as early as next spring.

The agency concluded that the project sponsors – the Metropolitan Transportation Authority, the New York State Department of Transportation, and the New York City Department of Transportation – may advance their application to FHWA’s Value Pricing Pilot Program, which provides agencies with options to manage congestion through tolling and other pricing mechanisms.

Project sponsors say that the program will reduce emissions and congestion and help New York achieve climate goals while also raising revenue to fund critical transit projects, such as upgrading signaling systems and improving accessibility. New Jersey leaders see it differently — especially in terms of the revenue raising, viewing it as more of a money grab from the New York side to bail out the cash-strapped MTA.

An FHWA spokesperson confirmed to NJBIZ that the decision was made after the agency conducted a thorough review of all comments received through the Environmental Assessment public comment period alongside the analysis completed by the project sponsors.

That decision was immediately panned by most New Jersey political and business leaders, with the state retaining Randy Mastro and Craig Carpenito of law firm King & Spalding to explore all legal options.

And just a few weeks later, at a July 21 press conference in Fort Lee, Gov. Phil Murphy was joined by lawmakers and stakeholders as he announced the next steps in the Garden State’s fight against the congestion pricing — including filing a lawsuit against the U.S. Department of Transportation and FHWA to block the controversial plan.

In the suit, which is still in its early phases, the state argues that the USDOT and the FHWA violated the National Environmental Protection Policy Act, which requires a full environmental impact review for projects of this scope, as well as the Clean Air Act.

“After refusing to conduct a full environmental review of the MTA’s poorly designed tolling program, the FHWA has unlawfully fast-tracked the agency’s attempt to line its own coffers at the expense of New Jersey families,” Murphy said announcing the lawsuit. “The costs of standing idly by while the MTA uses New Jersey residents to help balance its budget sheets are more than economic. At the MTA’s own admission, its tolling program would divert traffic and shift pollution to many vulnerable New Jersey communities, impacting air quality while offering nothing to mitigate such considerable harm. Today we stand as a unified front against this reckless scheme and reaffirm our commitment to combat the unjust taxation of our hardworking residents by other states.”

“I have made it abundantly clear that it’s unacceptable for New York to try balancing its budget on the backs of New Jersey commuters,” said U.S. Sen. Bob Menendez, a Democrat. “Their proposed congestion tax scheme is nothing more than a shakedown and must be defeated. I am proud to stand with Gov. Murphy, as well as other federal, state, and local leaders, as his administration takes legal actions to protect New Jerseyans who travel into New York every day for work.”

“I want to thank our governor for punching back at a state that decided to use Jersey as their piggy bank to solve their years of criminal mismanagement at the MTA,” said U.S. Rep. Josh Gottheimer, D-5th District. “We just don’t take a punch in Jersey, we punch back.”

Federal officials have declined to comment publicly about the lawsuit, citing pending legislation.

The MTA immediately dismissed the complaint as baseless.

“The 4,000-page Environmental Assessment performed by MTA, New York State DOT and New York City DOT was supervised at every stage and specifically approved by the Biden Administration. Contrary to any claim that there was insufficient study, the EA actually covered every conceivable potential traffic, air quality, social and economic effect, and also reviewed and responded to more than 80,000 comments and submissions,” said MTA Chief of External Relations John McCarthy in a July statement.

McCarthy also pushed back against any assertions that there was not enough opportunity for New Jerseyans to be heard during the outreach process.

“Not only were there six public hearings lasting a total of 38 hours, there were 19 outreach sessions, in which dozens of officials from New Jersey agencies participated,” McCarthy noted. “We’re confident the federal approval – and the entire process – will stand up to scrutiny.”

New York Gov. Kathy Hochul has also reiterated her support of congestion pricing.

“Well, congestion pricing is going to happen,” Hochul said during a July event after New Jersey filed the lawsuit. “It has gone through a long process of review at the federal level. The environmentals have already been studied. That’s why it was delayed another year last year. The State of New York is committed. The reasons are simple. We have to make sure that we have the resources, the funding mechanism, to ensure that we can continue the capital investments that have not been there in the past.”

“It’s going to mean cleaner air, less congestion,” Hochul added.

In addition to filing suit, Murphy also signed legislation (Senate Bill 3128/Assembly Bill 4694) on that July day that brings New Jersey’s tax code in line with New York’s and allows New Jersey to tax remote employees who live out of state but work at New Jersey companies – if that state has a similar tax rule. It also provides tax credits for New Jersey residents who dispute aggressive tax policies imposed on them by other states. And finally, it creates a $35 million grant program to encourage companies that primarily operate outside the state to properly assign their employees that live in New Jersey to offices here.

“New York State’s ‘convenience of the employer rule’ is an onerous initiative – similar to the congestion pricing mandate – that unfairly targets New Jersey and its people and uses their tax dollars to help prop up New York’s programs, operations and infrastructure,” said state Sen. Joe Lagana, D-38th District, a prime sponsor. “This law is our way of punching back, Jersey-style. It helps level the playing field and provides employee equity, while also bringing more convenience and job opportunities to New Jersey residents.”

“For too long, out-of-state politicians have taken advantage of employees who live here but work across state lines,” said state Sen. Jon Bramnick, R-21st District, another sponsor. “This law is a much needed first step to end the current tax imbalance and put money back into the pockets of our residents.”

In applauding those actions, the New Jersey Chamber of Commerce stressed its consistent opposition to the congestion pricing plan and appreciated efforts by state leaders to fight back. “Congestion pricing unfairly hurts New Jersey’s economy, especially small businesses, by taking money out of the hands of our hardworking residents that could otherwise be spent on goods and services here in the Garden State,” said state Chamber President and CEO Tom Bracken. “The Chamber supports the bill signing because after years of unfair tax treatment toward New Jersey commuters, the state is recognizing the need to end the current tax imbalance by treating New York commuters who work in the Garden State similarly. Finally, we support NJEDA’s pilot program to incent New York businesses to assign New Jersey resident employees to locations within our state.”

Pressing ahead

Meanwhile, project sponsors have continued to move forward with the CBD Tolling Program, which would be the first congestion pricing program in the United States. The next part of the process centers around the Traffic Mobility Review Board, the six-member panel that will issue a recommended tolling structure for the program.

Under the MTA Reform and Traffic Mobility Act, the CBD Tolling Program must charge passenger vehicles only once each day for entering or remaining in the CBD; change the toll rates at set times or days – known as variable tolling; allow residents of the CBD making less than $60,000 to get a New York State tax credit for CBD tolls paid; and exempt authorized emergency vehicles and qualifying vehicles transporting people with disabilities

Commitments made in the Final EA include special tolling rules for taxis and FHVs (for-hire vehicles); keeping overnight tolls at or below 50% of the peak toll from at least 12:00 a.m. to 4:00 a.m.; and a discount for frequent low-income drivers.

The TMRB held its first two public meetings over the summer – on July 19 and Aug. 17 – which featured presentations, feedback and considerations of different scenarios and tolling structures, as well as potential carveouts and exemptions.

“I think there’s a clear sentiment that we want to keep the base rate as low as we can,” said Carl Weisbrod, who serves as chair of the TMRB, during the July meeting.

Murphy gave his own feedback: submitting a letter to the board ahead of the Aug. 17 meeting, urging several recommendations. The governor said all commuters who cross into Manhattan through the Holland or Lincoln tunnels, or across the George Washington Bridge, should be provided full credits without caps for crossing tolls. In addition, he wants all commuter buses to be exempted from CBD tolls and suggested that CBD tolls should not be collected during off-peak hours. Murphy also argued that any CBD tolls should reflect the extent to which a vehicle actually contributes to congestion by remaining and operating within the CBD. And he called for CBD toll credits for all low-income commuters.

“Undeterred by the MTA’s failure to allow for significant public input regarding its misguided tolling program, my administration has delivered an array of carefully formulated recommendations that will promote the fair and equitable treatment of New Jerseyans entering Manhattan’s Central Business District,” Murphy said Aug. 17. “To be clear, my administration remains steadfast in its lawsuit challenging the Federal Highway Administration’s approval of the MTA’s Environmental Assessment and issuance of a Finding of No Significant Impact (FONSI). Nonetheless, while we remain resolutely opposed to the MTA’s discriminatory congestion pricing scheme, our recommendations will help prevent the MTA from balancing its budget on the backs of hardworking New Jerseyans.”

At the TMRB meeting in August, Weisbrod acknowledged the difficult balancing act that will be required to complete the task his board is being asked to.

“This is like a Rubik’s Cube. We can’t decide on one element of this until we decide on all elements of this – because it all has to fit together,” said Weisbrod. “It all has to fit together to produce a result. And all of these levers and all of the various increases or decreases and the ranges that were presented should be really followed by the sentence – all of the things being equal. And all of the things are not equal because we have a lot of variables to play with. And the goal here for all of us is to end up with a result that meets as many of our goals as we possibly can, including the ones that are statutory and including the equity goals. And that is a goal that really is within – not only our power – but our responsibility to do.”

On his most recent “Ask Gov. Murphy” show on News 12 News Jersey, the governor was asked about the issue by host Eric Landskroner.

“This is the bane of your existence – no doubt right now,” Landskroner joked. “Where does New Jersey’s lawsuit stand to stop the congestion pricing plan? When do you expect the law team to pursue an injunction here? And why only sue the federal government as opposed to New York also?

Murphy reiterated that the lawsuit is calling for a full Environmental Impact Study, which he said will put everyone at the table to conduct a full, thorough examination of potential impacts. He also pointed out that while he has a great relationship with the current federal administration, he has told them he does not agree about this issue.

“That’s the suit that’s been filed. I don’t have a sense of timing on that – but we’re pursuing it aggressively,” Murphy explained. “The reason why we haven’t taken action, at least yet – and I’m not suggesting that this won’t happen – against the MTA is because our lawyers have at least advised us that we need to know the specific plan as opposed to some discussion point that’s going around in some sort of a commission that they’ve established. By the way, which doesn’t include anyone from New Jersey.”

In addition to Weisbrod, that board includes John Banks, president emeritus of the Real Estate Board of New York; John Durso, president of the Long Island Federation of Labor; John Samuelsen, international president of the Transport Workers Union; Elizabeth Velez, president and principal of the Velez Organization; and Kathryn Wylde, president and CEO of the Partnership for New York City.

On his show, Murphy noted that the letter he submitted to the TMRB was essentially saying that the state does not want this to happen and is going to do everything it can to prevent it.

“But if it does, these are the things that we need. And they are obvious things,” said Murphy. “The MTA – bless their hearts – this is to solve their fiscal calamity a lot more than it is about the environment. No state has a stronger environmental record, I’m proud to say in our time here, than New Jersey. With all due respect, they’re finding a way to try to solve their fiscal meltdown on the back of New Jersey commuters. And, by the way, it will also add pollution in New Jersey. We’re not going to let that happen.”

While the next TMRB meeting is not on the calendar, the panel is expected to conduct at least one more session before making its recommendations to the MTA’s Triborough Bridge and Tunnel Authority Board. That group must adopt a toll structure before collections can begin, which officials on the New York side are aiming to have up and running as early as the spring.