How Hogan Botched the Purple Line

On January 26, Maryland’s Department of Transportation (MDOT) announced some good news—and some bad news. The good news was that the Purple Line, a 16-mile light rail project to connect working-class Black and Latino suburbs immediately northeast of Washington, D.C., to job centers in the more affluent northwestern suburbs, was back on track. During the previous year and a half, most construction halted because the private companies that Governor Larry Hogan’s administration had originally hired to build the line walked away from the job. But a new consortium of contractors had now been approved, MDOT proclaimed. Construction would soon resume, and the Purple Line would open, an official said, “as soon as possible.”

The bad news? The new contract will cost taxpayers $1.4 billion more than the original deal would have and won’t be completed until late 2026, more than four and a half years behind schedule. 

The ballooning costs, MDOT explained, were the result of “supply chain issues, rising material costs, labor shortages and insurance increases” that “could not have been foreseen prior to the pandemic.” It seems like a reasonable explanation—who hasn’t felt the effects of COVID-drf ven inflation? The Maryland and D.C. press corps dutifully reported the assertion without question. But it turns out not to be true.

There certainly were events outside the governor’s control that contributed mightily to the project’s delays and cost overruns. Among these were a nuisance lawsuit by wealthy homeowners, a dispute with a freight rail monopoly over right-of-way, and changing environmental regulations—the kinds of factors that dog infrastructure projects all over the country.

In the case of the Purple Line, however, a series of decisions by the Hogan administration compounded the problem. Early in his tenure as governor, Hogan, a Republican who had opposed the Purple Line as a candidate in 2014, demanded that the project be redesigned and its costs cut to free up money for road construction. Some of that road building would benefit real estate ventures in which Hogan, a developer, had invested, as the Washington Monthly has previously reported. The redesign delayed the start of the light rail line’s construction by almost two years. 

Hogan’s administration also negotiated a contract with a group of private construction firms that contained an unusual provision: In the case of delays lasting more than a year, the companies could abandon the work, no questions asked. When the inevitable delays ensued and the contractors threatened to walk, Hogan’s hand-picked transportation secretary negotiated a new arrangement in which the companies agreed to stay and finish the project for less than $175 million. Then, on the eve of signing the deal, the administration backed away. 

Had it gone through with the transportation secretary’s deal, the contractors, not Maryland taxpayers, would have had to absorb the pandemic-related cost increases. And the Purple Line, according to MDOT projections in the spring of 2020, with COVID-19 already raging, would have been up and running, partially by 2022 and fully by the early summer of 2023—giving commuters, hit by high gas prices, more mass transit options. 

“We are very excited to begin a new chapter for the Purple Line to deliver a world-class transit system to the people of Maryland,” MDOT spokesperson David Abrams wrote in an email in early June in response to questions from the Washington Monthly. (The agency largely did not answer the Monthly’s queries.) Meanwhile, Hogan, whose second term as governor ends next January, is eyeing a 2024 presidential run. The exorbitant cost overruns won’t be his problem. His successor will inherit his mess.

Though mass transit projects are notoriously difficult to complete on time and within budget, the Purple Line should have been relatively easy. Much of the land needed to build it had been purchased by farsighted elected officials back in the 1980s. Because the whole line would lie within Maryland, it would not be subject to the multi-jurisdictional disputes over funding and governance that have long hobbled the Washington Metro, the D.C.-Maryland-Virginia mass transit system to which the Purple Line will connect. All the basic planning for the line had been completed, and the needed state and federal financing had been secured by Hogan’s predecessor, Democrat Martin O’Malley, whose two terms as governor ended in 2015.

Hogan won the race to succeed O’Malley in part by vowing to kill the Purple Line and another mass transit project, the Red Line in Baltimore, and to spend the freed-up funds on more road building. That position was popular with Republican voters in rural and small-town Maryland. Once in office, however, Hogan took six months before announcing his decision on the two projects: He would keep his campaign promise to kill the Red Line but allow the Purple Line to go forward so long as the counties and the contractors paid more of the costs and reduced the budget overall. His stated reason for the flip-flop was that the project would create construction jobs. But according to Annapolis insiders, Hogan also understood that the Purple Line was further along in the process and trying to stop it would put him crosswise with developers in the Greater Washington area whose political support and campaign contributions he would need. 

The Hogan administration then began to whittle away at the Purple Line’s expected costs. This included cutting some items that would have been good to have but weren’t strictly necessary, like using environmentally friendly materials for track beds. It also meant axing features that would have made the rail line more functional. For instance, the Silver Spring connection from the Purple Line to the Red Line—one of the D.C. Metro’s highest-volume lines—would no longer be on the same platform. Instead, riders would have to cross a long walkway to transfer from the Purple Line to the Red and vice versa. Hogan’s team also lengthened the times commuters would have to wait between trains from six minutes to seven and a half minutes during peak hours. 

These changes preserved funds that Hogan could route elsewhere—mainly to highway, road, and bridge projects. The Washington Monthly has learned through FOIA requests that from 2015 to 2017, MDOT spent $196 million less on the Purple Line than what was budgeted under the O’Malley administration. 

Changing the Purple Line’s procurement halted the project for almost two years. During that time, many of the road projects Hogan advanced in his transportation budget were near or adjacent to properties owned by his real estate firm—from which he did not divest. (After the Washington Monthly revealed these connections, the state legislature unanimously passed a law tightening up conflict of interest requirements for future governors and other officeholders. Hogan let the law go into effect without his signature.) 

It wasn’t until March 2016 that Hogan chose a team of private companies, Purple Line Transit Partners (PLTP), to build, operate, and maintain the project. As part of the contract, the consortium included Purple Line Transit Constructors (PLTC), led by the construction behemoth Fluor Corporation, to design and construct the rail line. A month later, the Maryland Board of Public Works unanimously approved the contract for $5.6 billion. But the contract had an odd provision that allowed either party to walk away from the deal if there were more than 365 days of extended delays. “That doesn’t make sense,” says Joseph Schofer, a professor at Northwestern University’s McCormick School of Engineering and an expert on public transportation projects. Sources familiar with the matter say the highly unusual stipulation was demanded by PLTP, and was included because of the possibility of a lawsuit that had been looming over the project for years. 

Sure enough, in August 2016, a U.S. District Court judge halted construction of the project—the first of several outside events that would delay the line’s construction and swell its cost. Judge Richard Leon claimed that the state did not conduct an adequate survey of the environmental impacts of the line. Almost immediately, the Purple Line’s advocates, as well as Hogan himself, noted a potential conflict of interest for Leon, who lived in Chevy Chase, not far from the proposed transit line. His wife was a member of advocacy organizations that had been trying to kill the line for years. That ruling set the project back almost a year and a half, until a U.S. Court of Appeals judge overruled Leon in December 2017 in favor of the Purple Line. 

The existence of the lawsuit also made it harder for the state during that year and a half to close deals with landowners to acquire the final 600 parcels of land needed to build the line. That caused further delays to the project even after the case was dismissed. A technical dispute with CSX Transportation, which would be sharing a portion of its freight rail right-of-way with the Purple Line, added an additional five months and $187.7 million in cost.

Then came the largest and most substantial delay. The Maryland Department of the Environment (MDE) changed regulations for transit projects based on a law that had been passed before Hogan was governor. The new rules classified embankments and associated culverts as “unintentional dams.” That forced the contractor to institute a series of redesigns, many of which Hogan’s MDE shot down. These back-and-forths over compliance with the new rules delayed the project by 976 calendar days, worth $519,112,360 in costs, according to the PLTC contractor consortium. 

By mid-2019, the consortium had had enough. It informed the state that it would exercise its right to leave the deal because far more than 365 days of delay had occurred, unless the state provided additional compensation to make up for some of the cost overruns associated with those delays. Maryland Transportation Secretary Pete Rahn, a Hogan appointee, then quietly scrambled to strike a deal with the contractors to stay on, Rahn told the Washington Monthly. “It was the very last thing I did,” said Rahn, who shortly thereafter left the administration. The consortium also thought it had a deal. “In December 2019, after six months of intense negotiations, all parties came to an agreement in principle on a settlement,” the consortium wrote in documents it later filed with the Maryland Circuit Court. 

But soon after Rahn resigned from the department, the Hogan administration rejected the deal its own transportation secretary had negotiated. (When asked by the Washington Monthly why the administration made this decision, MDOT did not reply.) The administration then made new demands, which the consortium rejected. 

On May 1, 2020, the consortium informed the state that it was exercising its right to walk away from the contract. Instead of continuing to negotiate, the Hogan administration took PLTC to court. But it didn’t take long for Maryland Circuit Court Judge Jeffrey Geller to determine it an open-and-shut case. On September 10, 2020, Geller ruled that the “clear, direct, and absolute” language of the contract gave PLTC the right to walk away from the project—which it proceeded to do. By the end of the year, the Hogan administration reached a settlement to pay the former design-build team $250 million after they left the project. 

With the original contractor consortium out of the picture, the Hogan administration had to find another design-build team to complete the project, and then negotiate a new contract with it. The process took a year and a half—an enormous additional delay. When, on January 26, the administration finally announced that it had selected a new construction consortium, led by the American subsidiaries of the Spanish firms Dragados and OHL, it blamed the delay on the pandemic—ignoring the fact that in the spring of 2020, with the pandemic fully under way and PLTC still on the job, MDOT was publicly predicting that the Purple Line would partially open in 2022 and fully in 2023. 

MDOT also blamed much of the $1.4 billion higher price tag on the pandemic, a charge it repeated in its emailed response to the Monthly, writing that “certain other claims [by the contractors], including those related to Covid-19, would have remained open, potentially exposing the State to further delay and costs.” According to the language of the original contract with PLTP, however, the contractors, not the state, would have been obliged to assume the higher material and other costs associated with the pandemic, since the concessionaire would have been responsible for any additional expenses under a force majeure event.  

In its response to the Monthly, MDOT also pointed to news articles reporting that the lead contractor, Fluor, had other business-related reasons for seeking to get out of the risky government contracting business. But when the lawyer for the state brought up that exact argument before the Maryland Circuit Court, Geller ruled it irrelevant to the case. Indeed, whatever Fluor’s larger business strategy may have been, it agreed to Rahn’s December 2019 negotiated offer to stay on the job.

The bottom line is that what was once one of the most promising mass transit projects in the country will now deliver less than what its planners originally envisioned, at far more cost to taxpayers, and years later than was promised. And instead of paying less than $175 million for the old contractors to finish the job, Maryland will cough up $1.4 billion (plus the $250 million settlement with PLTC) to finish the project. 

But it won’t be Hogan’s problem. After the term-limited governor leaves office next January, dealing with the extra costs, delays, and disruptions of the Purple Line fiasco will be left to his successor.