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Analysis: Blockbuster Ruling Imperils Hogan’s I-495/I-270 Toll Lanes Timeline

Net Zero Expansion
Traffic on the Capital Beltway near the American Legion Bridge. WTOP News photo by Dave Dildine.

By ordering the Maryland Department of Transportation to reconsider a protest filed by a losing bidder, a Montgomery County judge has made it significantly more likely that lame-duck state leaders — or the next governor — will determine the fate of Gov. Lawrence J. Hogan’s plans to add toll lanes to two Montgomery County highways.

That assessment, from people with ties to the project and close observers of it, comes in the wake of Circuit Court Judge John M. Maloney’s ruling late last week.

Maloney ordered MDOT to consider anew the protest that Capital Express Mobility Partners (CEMP) filed after the agency selected a rival, Accelerate Maryland Partners, for a $54 million “pre-development” contract. The award gives AM Partners the right of first refusal on a multi-billion-dollar construction contract to advance Hogan’s plan to replace the American Legion Bridge and add variably-priced toll lanes to the Capital Beltway and Interstate 270.

AM Partners is headed by two Australian firms, toll-road operator Transurban and financier Macquarie.

CEMP is led by Madrid-based Cintra and Ferrovial.

In making its initial award, MDOT found that CEMP had the best “technical” score. AM Partners was selected after it was judged to have offered more attractive financial terms.

CEMP filed two protests with the agency, but they were denied because MDOT claimed they were filed late.

Having scored a reversal in court, CEMP can now pursue its claims that AM Partners produced its low score based on unrealistically low margins on its subcontracts, as well as its complaint that the winning bidder’s lack of a construction partner makes it unlikely to produce a timely and financially sound project.

The full impact of the judge’s ruling likely won’t be known for months, in large part because the agency must spend the next several weeks — and perhaps longer — re-evaluating the bids it received.

Under almost any scenario Maloney’s ruling represents a threat to Hogan’s bid to cement the project during his remaining 11 months in office.

“I think it means this project’s not going to happen in the governor’s term,” said Montgomery County Executive Marc B. Elrich (D), a longtime critic of the project. “(The judge’s decision) tells you that this is going to go on a while.”

Consultant Gary V. Hodge, a former elected official in Southern Maryland and a longtime project critic, agreed. “Any delay now could push this project into the term of the next governor,” he said.

The day before Maloney’s ruling, Transurban’s Australia-based CEO, Scott Charlton, expressed confidence that the litigation would not imperil the project’s timeline. During a conference call with investors, he said, “We are on track to receive final approval from the Board of Public Works at the end of this calendar year.”

But even that statement appeared to suggest that the timeline put forward last year by the Maryland Transportation Authority, the state’s toll facility owner and operator, has slid. At that time, the agency expected the Board of Public Works to take a vote on the contract this summer, and to sign the contract in the fall.

Now, observers say, there is strong chance that BPW won’t get the contract until after the election, when potentially two of the board’s three members — Hogan and Comptroller Peter V.R. Franchot (D), a candidate for governor — are lames ducks, serving out their final weeks in elected office.

“What sort of optics would that present?,” asked Hodge. “That would be a pretty difficult legacy to leave, especially on a $9 billion to $12 billion project that commits our children and grandchildren to tolls and potentially state subsidies.”

A post-election vote by the BPW would almost certainly push the signing of a final contract until after inauguration day.

“After BPW approval, there’s a further delay until financial close,” said Ben Ross, head of the Maryland Transit Opportunities Coalition, a group that has fought Hogan’s plan from the beginning. “All the schedules I have seen have that in the range of a couple months, not just [a couple] weeks.”

Ross said Hogan’s ability to get the project to a point where it can’t be undone by his successor “is rapidly vanishing and may have already vanished.”

An MDOT spokesperson said late last week that the agency is unable to update its project timeline until it receives the judge’s written order.

She noted that the hearing held by Maloney was focused solely on the timeliness of CEMP’s protest. Now, she said, someone designated by Transportation Secretary James F. Ports Jr. will “hold a hearing and review these bid protest items on the merits.”

Tanya Sheres, a Fairfax County-based spokesperson for Transurban, said the company is “assessing next steps” in light of the judge’s ruling. The order isn’t expected to impact the project’s schedule “at this time,” she added.

Doug Mayer, a political strategist who spent three years as Hogan’s top spokesman and now leads a group that supports the toll lanes project, TrafficReliefNow.com, pushed back on the notion that the timeline is imperiled.

“There doesn’t appear to be any legal reason why the state can’t move forward. They should move forward,” Mayer said. “… And the people trying to derail this project have been trying to derail it for years.”

Editor’s Note: This story was updated to include a comment from Traffic Relief Now.