Federal appeals court hears oral arguments in OOIDA’s Pennsylvania toll suit
July 11, 2019
Attorneys for the Owner-Operator Independent Drivers Association and the Pennsylvania Turnpike Commission presented their oral arguments in front of an appellate panel on Tuesday. In April, a U.S. District Court dismissed OOIDA’s case against the commission that claims the state’s toll are unconstitutional.
On Tuesday, July 9, the Third Circuit Court of Appeals heard arguments from Paul D. Cullen Sr., representing OOIDA; Robert Byer, representing the Pennsylvania Turnpike Commission; and Bruce Merenstein, representing the state government.
OOIDA contends that there are issues arising from the definition of a toll, a burden on interstate commerce, and whether or not Congress authorized toll revenue to be used for projects not related to the turnpike. Defendants claim that the definition is irrelevant if there is no burden on interstate commerce. Furthermore, the constitutional merits of the Commerce Clause is irrelevant if Congress gave the state authorization.
User fee vs. tax
During his arguments, Cullen explained how tolls are user fees and not taxes. He said a user fee is defined as “a compensation paid to a government unit for providing specific facilities to persons who agreed to pay for the use of those facilities, like a toll.”
When the judge panel said the Supreme Court of the United States has defined tolls as a tax numerous times, Cullen countered by pointing out that the ongoing Rhode Island toll case is the first one in 80 years under the Tax Injunction Act where someone called a toll a tax.
Cullen further defined a tax as “a mode of raising revenue by a duly authorized taxing authority, and the revenue is raised from the general public for the needs of the public or for general public purposes.”
The panel asked whether or not that is the crux of the lawsuit, i.e., Pennsylvania is engaged in revenue raising for purposed far beyond simply the use of the Turnpike. That turned into a question of who can impose a tax based on Pennsylvania Supreme Court decisions, which states that lies solely on the General Assembly. The Turnpike Commission is not part of the legislature, therefore it has no authority to impose a tax. Based on that logic, the toll cannot be a tax without violating the state constitution.
From there, the panel pointed out that the Pennsylvania Turnpike Commission is directed by the legislature, who was given the authority. Cullen responded by stating the legislature has limited power regarding how to delegate the authority to impose taxes, usually to counties, municipalities or other entities run by elected official. The legislature has no authority to delegate taxing authority to a nonelected entity like a turnpike commission, which officials are appointed by the governor.
Burden on interstate commerce
Moving away from the definition of a toll, the panel moved to the constitutionality of the tolls. More specifically, whether or not the toll places an undue burden on interstate commerce.
Cullen argued that increased in tolls are limited by the Commerce Clause of the Constitution. Currently, toll revenue reaches 300% of the cost of operating and maintaining the Turnpike. A user fee cannot exceed the approximated cost of providing the facility or the value of the benefits.
However, the appellate panel counter-argued by pointing out precedent dictates that the transportation system is interpreted in a broader way. In other words, the fee is not necessarily only for the use of the Turnpike but for the system on which the Turnpike operates. Cullen reminded the panel that this precedent involved transport to and from the island of Manhattan that included tunnels, bridges and rapid transit. Defined as a single integrated transport, if one tunnel goes down, it affects all tunnels and bridges. The Turnpike is not that, Cullen argued.
The panel asked Cullen how does the court decide what is fair and what is excessive. Again, Cullen pointed to the 300% revenue figure as a clear case of excessiveness.
“In the New York Thruway case, before it was found that Congress consented to helping out the canal system, the tolls were 7 or 12% of the revenue going into the Thruway,” Cullen said. “They found that to be constitutionally excessive. Here, we are at 300%. You don’t have a difficult question here. It is so far over the top that I don’t think the Third Circuit Court of Appeals wants to be the first one to say ‘We’re going to let you off the hook. We don’t care whether they’re 300%. We don’t care whether it’s $500 million a year. We’re allowing the state to take all this money that should be paid by the local residents and pass the cost of all these local goodies that you get scattered around the whole state and pass that off to the interstate trucking industry.’ I don’t think you want to make that decision.”
During his oral arguments, Byer said the courts should take a system wide approach when interpreting which transportation projects are eligible for funding through toll revenues. Byer explained that all transportation systems work together in a symbiotic relationship. For example, projects that increase transit use can reduce congestion on the turnpike.
Therefore, Byer argued, how can projects that help interstate commerce also burden it? Furthermore, Byer argued that there is no discrimination on interstate commerce. Every motorist, whether passing through or driving intrastate, pay the same toll.
Regardless of how a toll is defined and whether or not it puts a burden on interstate commerce, the state argues that congressional authorization of the use of toll revenue supersedes all.
Merenstein stated that OOIDA’s claim is based entirely on tolls being used for nonturnpike projects. However, that is exactly what the congressional statutes allow the Pennsylvania Turnpike Authority to do. After everything is paid for, remaining funds can be used for transportation-related projects.
If the court agrees with congressional authorization, Merenstein argues, then there is no need to explore the constitutionality of the commerce clause.
Cullen’s rebuttal relied on the fact that Congress could not have contemplated what Pennsylvania would do when given such authorization. The statue in question was established in the Intermodal Surface Transportation Efficiency Act of 1991, long before the tolls were implemented. The statue allows excess toll revenue to be used for transportation projects.
OOIDA’s attorney claims that Congress assumed tolls would be collected and imposed in a constitutional manner. Considering it is common for an accumulation of unspent nickels and dimes, such extra cash could be used for such projects. However, Congress never contemplated hundreds of millions of dollars of intentional revenue excess.