The state of New Jersey’s effort to include federal transportation contractors among those subject to new ethics rules for firms that do business with the state hit a new roadblock Jan. 21. A federal judge in Trenton declined New Jersey’s legal request to free up its federal dollars being held hostage by the Federal Highway Administration, which says the ethics rules violate federal contracting rules for projects partially funded by the U.S. government. New Jersey aims to keep fighting for its rules, but other states looking to reform scandal-plagued construction programs are watching the legal tussle.

U.S. District Court Judge Stanley R. Chesler rejected New Jersey’s push for a temporary restraining order to force FHWA to release about $350 million in current federal highway funds while the state’s Jan. 13 lawsuit challenging the ban proceeds in the courts (ENR 1/24 p. 16).

At a Jan. 21 hearing, Chesler supported the "very laudable motives" of a new executive order reforming New Jersey’s so-called "pay-to-play" practice, but said he was "not persuaded" by the state’s claim that the new ethics rule would not impact road construction competition. Enacted last fall by outgoing Gov. James McGreevey, the order bans award of state contracts to firms that make certain levels of political contribution. Chesler called on the state to exempt federally funded contracts from the rule if it wanted funds released.

CODEY	RELL

Acting Gov. Richard Codey (D) seemed ready to continue the fight. "I absolutely disagree with the idea that banning pay-to-play somehow inhibits competition," he says. Peter Aseltine, a spokesman for the state attorney general’s office, says "we’re definitely continuing with this litigation." The office has not yet decided whether to pursue the case through Chesler or the state appeals court.

Even so, Codey hinted that the state might have to compromise. "As a last resort, we may have to alter the pay-to-pay executive order," he says, in order to keep as much as $1 billion in federal highway money flowing to New Jersey.

Already, a spokesman for the state Dept. of Transportation claims the cutoff is disrupting progress on some 30 state road jobs. "A lot of these would have been bid already," says Marc Lavorgna. He says the state is "handling" the situation now, but the ban on needed federal funds could put jobs in jeopardy and have dire economic impacts in the state.

"This will wreak havoc on construction schedules," says Philip K. Beacham, president of New Jersey Alliance for Action, an infrastructure advocacy group whose 700 members include engineers, contractors and corporations. He also favors removing low-bid contractors from tougher ethics rules. Although his group does not make political contributions, Beacham agrees that state campaign finance is still a grey area. "A lot of firms are continually harassed," he says. "We get a lot of requests for $500 or $1,000-a-dinner tickets" from politicians.

Skip Cimino, senior executive vice president at engineering firm Schoor de Palma, Manalaplan, applauds pay-to-play reform efforts. But he worries that professional services may not get the exemption. "As an employer of 700 people, we have a right and responsibility to participate in the political process," he says. "Just define the playing field."

As legal uncertainties continue in New Jersey, other states are moving to clean up contracting operations rocked by scandal. Connecticut Gov. M. Jodi Rell (R) Jan. 10 announced her "fairness over favoritism" reform proposal to restrict the kind of contracting abuses that implicated her gubernatorial predecessor, John Rowland. The reforms are set for legislative action next month. Rell spokesman Dennis Schain says the state is "assessing the situation in New Jersey."

Kentucky has a blanket ethics law for state officials that has been in effect since 1992. But a bill now in the legislature would specifically cover political contributions and award of construction contracts. It has yet to pass, says a spokesman for the secretary of state.