OOIDA Urges Federal Appeals Court to Stop States From Using Truck-Only Tolls to Balance Their Budgets

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OOIDA and five of its members recently filed a brief in a federal appeals court challenging the October 2018 35% increase in heavy truck tolls on the Indiana Toll Road. The brief explains that the truck tolls violate the U.S. Constitution because they unreasonably burden and discriminate against interstate commerce. The full appeal brief can be found at the link below.

Background

In January 2019, Plaintiffs filed a lawsuit in the United States District Court for the Southern District of Indiana in Indianapolis against Indiana Governor Eric Holcomb, the Commissioner of the Indiana Department of Transportation, the Indiana Finance Authority (IFA, the owner of the Indiana Toll Road) and its officers, and the ITR Concession Company (ITRCC, a private company who contracted with the IFA to operate and maintain the Toll Road).

The lawsuit challenged Governor Holcomb’s “Next Level Connections Program,” a plan to raise $1 billion dollars for statewide infrastructure projects from increased truck toll revenues. In exchange for a $1 billion payment, IFA gave ITRCC the authority to increase tolls on heavy trucks by 35%; IFA did not permit ITRCC to raise tolls on other vehicles. None of the money raised on the backs of interstate truckers was slated for improvements to the Toll Road. This massive increase in truck tolls went into effect in October 2018.

Plaintiffs alleged that the trucks-only tolls violate the Constitution because they dwarf the costs of operating the Toll Road and disproportionately fall on interstate trucks.

The district court dismissed Plaintiffs’ claims, holding that Defendants’ tolls were exempt from Commerce Clause scrutiny under the “market participant doctrine” because Defendants “participated” in the real property leasing market. The court also found that, despite the Governor’s stated intent and practical effect of extracting money from out-of-state sources (most heavy truck traffic on the Toll Road is interstate), the court also found that the truck tolls did not discriminate against interstate commerce.

Appeal

In March, Plaintiffs appealed the district court’s decision to the United States Court of Appeals for the Seventh Circuit. On May 28, 2020, Plaintiffs filed their appeal brief outlining the district court’s errors, including its incorrect application of the “market participant doctrine.” This doctrine permits states and other government actors to choose how they operate in a specific market, but it does not apply to Defendants’ operation of an interstate highway.

For instance, states or cities can choose to favor local companies when they enter into contracts for public construction projects. Or they can produce goods and choose to sell these state-produced goods to only in-state purchasers. In these situations, government actors behave like private parties and can choose how to deal in that specific market.

Plainly, these principles do not apply to the operation of an interstate toll road, and Plaintiffs argued this case to the Court of Appeals. First, only “proprietary” conduct—that is, conduct that is not governmental/regulatory—can ever be “participation” protected by the doctrine. The doctrine permits states to act like private parties but does not help them when they act like governments. Tolling highways, channels of interstate commerce, is not “proprietary” conduct and is instead quintessentially governmental.

Indiana’s statutes expressly consider operating the Toll Road to be an essential public function, and federal and state courts nationwide have repeatedly recognized that providing these corridors of interstate commerce is traditionally governmental.

Moreover, Defendants’ tolling does not occur in any relevant “market.” Whether IFA is participating in the real property leasing market (as the district court held) is irrelevant to whether Defendants’ heavy truck tolls violate the Constitution. Tolling highway users is not “participation” in the real estate leasing market. Finally, there is no “market” for tolling a channel of interstate commerce like the Toll Road. Providing this highway is government conduct for which there exists no private marketplace.

The district court also erred when it ignored the publicly-stated discriminatory purpose (and the would-be effects) of the increased truck tolls when it dismissed Plaintiffs’ discrimination claim. The Governor himself touted these truck tolls as a way to finance Indiana projects “with other people’s money” and indeed the tolls fall disproportionately on out-of-state truckers.

Future Action

Defendants’ response to Plaintiffs’ brief is currently due on June 28. Plaintiffs will file a brief in reply to Defendants’ response, and the parties will likely argue their case to a 3-judge panel of the Seventh Circuit Court of Appeals.

If you have any questions or comments, please do not hesitate to contact TCLF attorneys at info@cullenlaw.com.

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