Truckers Ask Federal Appeals Court to Rehear its Decision that the Constitution Does Not Limit the Amount of Highway Tolls a State Can Impose on Interstate Commerce

 

On March 9, 2021, a three-judge panel of the United States Court of Appeals for the Seventh Circuit affirmed a lower court ruling that the Constitution does not limit the amount of highway tolls a state can impose on trucks operating in interstate commerce. The opinion in case no. 20-1445, authored by Circuit Judge Frank Easterbrook, held that the Commerce Clause does not apply to a state raising revenue from “its activities,” which in this case included leasing the Indiana Toll Road to a private concessionaire. On March 23, OOIDA and the other plaintiffs filed a petition asking the full Seventh Circuit Court to rehear the case to resolve conflicts between the panel’s ruling and Supreme Court and other Circuit Court decisions.

OOIDA and several members sue Indiana entities and the Toll Road concessionaire

In 2018, the Indiana Finance Authority (IFA), the entity that owns the Indiana Toll Road, and ITR Concession Company (ITRCC), the private company that leases and operates the Toll Road, amended the long-term lease governing operation of the Toll Road. The amendment was part of Governor Eric Holcomb’s “Next Level Connections” transportation funding program. The amendment permitted ITRCC to raise tolls on heavy trucks by 35% in exchange for a payment of $1 billion. The state had earmarked that money for projects not related to the Toll Road and not beneficial to Toll Road users.

In January 2019, the Owner-Operator Independent Drivers Association, Inc. (OOIDA) and several member trucking companies sued IFA, ITRCC, and several state officials, alleging that the increased tolls, unrelated to the cost of providing the Toll Road, violate the Commerce Clause’s restrictions on undue burdens on interstate commerce.

The lower court dismisses OOIDA’s challenge

In March 2020, the United States District Court for the Southern District of Indiana dismissed the suit. The district court held that Toll Road tolls were not subject to Commerce Clause limits because the tolling of I-90 falls within the “market participant” exception to the Commerce Clause. This exception applies to a state’s activities in a particular economic market and permits a state to conduct itself in that market, as long as it performs only those actions available to private market participants.

The Seventh Circuit affirms the lower court’s dismissal

The plaintiffs appealed the dismissal, and the parties briefed and argued the case in 2020. On March 9, 2021, the Seventh Circuit panel agreed that the tolls were not subject to Commerce Clause restrictions: “We may suppose, as plaintiffs allege, that the $1 billion received for the 2018 toll increase was used for state purposes unrelated to maintenance of the Toll Road. Why should that matter? A state, like any private proprietor, can turn a profit from its activities.”[1] Under this reasoning, the petition explains, states in the Seventh Circuit (Indiana, Illinois, and Wisconsin) can use highway tolls (or other state activities that impact interstate commerce) to raise unlimited funds for any state projects.

The petition describes that this is not true for states in the Second and Ninth Circuits, however. The Second Circuit has expressly disagreed with a previous Seventh Circuit market participant decision and held that that tolls are subject to Commerce Clause limits as expressed in Supreme Court precedent.[2] Similarly, the Ninth Circuit has repeatedly held that a state or local government’s operation of channels of interstate commerce (like pipelines and roads) is not market participation free from the Constitution’s limits on the economic burdens states can impose on interstate commerce.[3] The petition points out that the court decided, contrary to the decisions of other Circuit Courts, that the market participant exception applied to defendants’ tolling even where the state wields unique government authorities not available to private participants.

On March 23, the plaintiffs filed their petition asking the entire Seventh Circuit Court to rehear the case (a petition for rehearing “en banc”) based on these conflicts with the Supreme Court and Second and Ninth Circuit Courts.

The full text of Judge Easterbrook’s opinion can be found here. The plaintiffs’ petition for rehearing can be found here. Comments and questions about this litigation can be sent to: info@cullenlaw.com.

[1] Owner-Operator Indep. Drivers Ass’n, Inc. v. Holcomb, No. 20-1445, 2021 WL 869063, at *2 (7th Cir. Mar. 9, 2021)

[2] Selevan v. N.Y. Thruway Auth., 584 F.3d 82, 94 (2d Cir. 2009) (disagreeing with Endsley v. City of Chicago, 230 F.3d 276, 283-85 (7th Cir. 2000) and citing Evansville-Vanderburgh Airport Auth. Dist. v. Delta Airlines, Inc., 405 U.S. 707 (1972) and Nw. Airlines, Inc. v. County of Kent, 510 U.S. 355 (1994)).

[3] Olympic Pipe Line Co. v. City of Seattle, 437 F.3d 872, 881 (9th Cir. 2006) (citing Shell Oil Co. v. City of Santa Monica, 830 F.2d 1052 (9th Cir. 1987)).

Comments are closed.
Tags: , , ,
Category: News The Cullen Law Firm, PLLC