Caltrans Chief’s Role in Lawsuit Under Scrutiny

The director of Caltrans put off safety improvements on the Riverside Freeway for at least 15 years by settling a controversial lawsuit without following the normal practice of consulting his bosses, including the governor and the secretary of transportation.

The improvement project, in the planning stages for more than two years, would have added two westbound lanes and one eastbound lane on the freeway near existing toll lanes, where dangerous weaving had been noticed. In one area, for example, accidents had increased 124% since the private toll lanes had opened on the freeway’s median. More than $30 million had already been secured to do the work.

But Jose Medina scrapped the plans in October, delaying work originally scheduled to start later this year. Now, because of the settlement, Caltrans must wait until traffic on the freeway increases 53%--not expected until 2015--before adding the new lanes near the border of Riverside and Orange counties.

Lawmakers have asked Medina to appear at a special Feb. 1 legislative hearing to explain why he rejected the safety improvements in order to settle a $100-million lawsuit with the operator of the private 91 Express Lanes. Settling that lawsuit cleared the way for the lanes to be sold to a nonprofit group, a deal that later was scuttled by top state officials after numerous questions arose. That proposed sale--and Medina’s approval of it--also is under legislative review.

Caltrans spokesman Jim Drago said Medina agreed to the settlement because the agency believed it was bound by previous contracts with the operator, which promised the state would not compete for business with the toll lanes.

Engineers within Caltrans already were divided over whether the addition of lanes could be classified as a safety improvement, Drago said. Medina has declined numerous requests for comment, including one made Monday.

“The director made the determination to settle based on the facts--that in our judgment our chances of prevailing were not very good,” Drago said.

But his decision has troubled many state and local officials and cast new scrutiny on Medina, the little-known former San Francisco supervisor who had scant transportation experience before Gov. Gray Davis tapped him a year ago to lead a state agency of 20,000 employees and a $6-billion budget.

“There should have been a lot of eyes looking at this. . . . There should have been more notice given,” said Assemblyman Dick Ackerman (R-Fullerton). “But nobody really looked at this until basically it was a done deal.”

At issue is why Medina approved the sale, which had been rejected by the previous administration after months of debate and study, and settled the lawsuit without consulting those in the best position to advise him, including:

* Davis, the man who appointed him. Davis is known for insisting his appointees consult him on matters of importance.

“Obviously, Caltrans settled the lawsuit without running it through the normal agency channels,” said Hilary McLean, the governor’s spokeswoman.

“The administration is still sorting out what happened and the implications,” she said.

* The secretary of the Business, Transportation & Housing Agency, Medina’s direct boss, Maria Contreras-Sweet.

“[Medina] made the decision and we were not involved in it,” said Bill Sessa, spokesman for the agency.

Medina’s failure to inform Contreras-Sweet is curious, officials say, because her predecessor, Dean Dunphy, studied the transfer of the 91 Express Lanes to the same nonprofit company for months. The prior administration even hired an outside consultant to review the deal, which Medina never did.

Internal memos released Friday to The Times and to legislators looking at the 91 toll lanes deal make it clear that under Dunphy, then-Director James van Loben Sels had involved his superiors every step of the way. Dunphy, who ultimately rejected the deal, even insisted the deal be screened by then-Gov. Pete Wilson’s office.

* Caltrans’ chief legal counsel of seven years, William McMillan. He could not say why the settlement was not run by him, but those who work in his office say he should have been consulted on a case of that magnitude. Under the previous Caltrans director, McMillan said he was included in every important legal case.

He was told he was being removed from his position as the agency’s top attorney on the same day Medina approved the sale. McMillan, who still works at Caltrans, said he was given no specific reason for his removal, but he does not believe it was related to the toll lane deal. He declined further comment.

Joe Montoya, McMillan’s predecessor, said that when he served as chief counsel under three Caltrans directors, he was involved in reviewing every major legal decision.

“The directors I worked under decided they wanted it done that way,” Montoya said. “But each director has his own style. That may be normal for this administration but it was never done in my time.”

* Caltrans’ then-top financial officer Craig House, who had raised concerns about the 91 toll lanes deal in 1998. House, a Caltrans deputy director for two years, said Medina would not meet with him to discuss the matter when it resurfaced the following year.

“I never got the chance,” House said.

House was fired in August. He said he did not think his dismissal was related to the 91 deal.

* Local officials who had pushed for the safety improvements. Riverside and Orange county officials were kept in the dark about the legal settlement and sale negotiations at the insistence of 91 Express Lanes operators. When the sale was first proposed in 1998, Dunphy objected to “springing it” on the locals at the last minute. But local officials say they were kept out of the loop under Medina.

* Mike McManus, then Orange County’s Caltrans director pushing for the safety improvements. McManus was told his input was no longer needed five months after Medina took office, according to a source close to him. McManus had been unpopular with the toll lanes operator, the California Private Transportation Co. In a November 1998 letter to Caltrans, the operator’s lawyer said McManus was promoting road work that they believed violated their agreement. They called McManus’ attempts to circumvent the contract “feeble,” and complained that his efforts were hampering their plans to refinance the debt on the private toll lanes.

McManus also had strong objections to the transfer of the 91 Express Lanes to the nonprofit group, but was never consulted by Medina on that issue, according to those close to McManus.

McManus, who declined interview requests, was demoted the week after Medina settled the lawsuit, the first and so far only district director to be reassigned by Medina. A source close to McManus said McManus believes his position on the 91 contributed to the demotion.

Officials from both Caltrans and the toll lanes said Medina did not operate alone when making his decisions to settle and approve the transfer. He relied upon three people: Carl Williams, Roy W. Nagy and attorney William Bassett, who were central in the negotiations and settlement of the lawsuit.

Williams, a top transportation advisor under Dunphy, has long promoted the privatization of road building in the state and has since returned to work at Caltrans as federal projects coordinator. Nagy heads Caltrans’ public-private partnership program. Bassett has been a Caltrans attorney for more than 30 years and helped draft the original private road agreements, although he is not the top legal advisor for the department.

All three declined comment. Internal documents show, however, they all were centrally involved in the debate when the issue came before Wilson’s administration. Those documents make it clear that Williams, Nagy and Bassett were all privy to the debate and sometimes raised questions themselves.

Numerous Caltrans officials say the agency was in an awkward position when it came to the safety improvements local officials said were needed. The agency, some believed, was hamstrung by agreements reached a decade ago in which the agency surrendered its right to make improvements to certain state highways to entice private companies to build roads.

Internal documents show that Caltrans may have had difficulty defending its position that it needed to widen the road in the name of safety. A notation next to a sketch of the plans urges Caltrans “to get around franchise document” by not calling it a road widening and saying carpool lanes would be built instead.

The California Private Transportation Co. described as “laughable” Caltrans’ assertions that there was a serious safety problem on the road, according to a letter from the operator’s attorney to a Caltrans lawyer written in November 1998. And, they wrote, even if a “real safety issue” existed, it would not justify building any new lanes under the contract.