Rhode Island asks appeals court to rehear truck-only toll lawsuit

January 3, 2020

Tyson Fisher


Nearly one month after the United States Court of Appeals for the First Circuit ruled in favor of the American Trucking Associations in its Rhode Island toll lawsuit, attorneys for the state are asking the appellate court to rehear the case.

On Thursday, Jan. 2, Rhode Island Department of Transportation Director Peter Alviti and the Rhode Island Turnpike and Bridge Authority filed a petition for an en banc rehearing.

An en banc rehearing requires all available judges to hear the case rather than a three-judge panel.

Rhode Island gives two reasons for an en banc rehearing:

  1. Consideration is necessary to maintain uniformity of the court’s previous decisions.
  2. Use of the proper formula to reaching a conclusion based on the Tax Injunction Act “serves a central role in balancing state and federal relations and preventing interference with state taxation and state revenue collection.”

According to the petition, the First Circuit court “has consistently set forth a three-factor analysis with a particular emphasis on ‘the revenue’s ultimate use, asking whether it provides a general benefit to the public, of a sort often financed by a general tax, or whether it provides more narrow benefits to regulated companies or defrays an agency’s cost of regulation.’”

More specifically, Rhode Island is referring to the San Juan Cellular test:

  • The classic “tax” is imposed by a legislature upon many, or all, citizens. It raises money, contributed to a general fund, and spent for the benefit of the entire community.
  • The classic “regulatory fee” is imposed by an agency upon those subject to its regulation. It may serve regulatory purposes directly by, for example, deliberately discouraging particular conduct by making it more expensive. Or, it may serve such purposes indirectly by, for example, raising money placed in a special fund to help defray the agency’s regulation-related expenses.
  • For close cases somewhere in between, the focus should be on the ultimate use of the collected money, whether it is used for a general benefit or simply for defraying the cost of a regulation.

Rhode Island argues that the RhodeWorks Act that established the truck-only tolls “was imposed by the Rhode Island General Assembly to raise desperately needed revenue to maintain and repair public bridges.”

The district court dismissed the case based on the Tax Injunction Act. The lower court found that the tolls “are really a highly targeted and sophisticated tax designed to fund infrastructure maintenance and improvements that would otherwise need to be paid by other forms of tax-generated revenue.”

“The panel, however, not only reversed the district court’s dismissal, but in doing so shifted the (Tax Injunction Act) inquiry from its previous emphasis on the ‘revenue’s ultimate use’ as ‘a general benefit to the public’ to a focus on whether the assessment provides a special benefit to the payer,” the state argues in its petition.

Based on that shift, the state argues, the appellate court should grant an en banc rehearing.

During oral arguments in October, Rhode Island claimed that the truck-only toll is a tax under the San Juan Cellular test, arguing a “general public purpose” for the tolls. However, the panel was not satisfied with that argument.

“Here’s the problem with that argument,” Judge Sandra Lynch said. “Every time the government raises money by any mechanism whatsoever, almost by definition it’s for a public purpose. That’s just impossibly broad. That cannot be the test. That is not what Congress said in the Tax Injunction Act.”

If the court grants the petition, a new hearing will be scheduled. However, if the First Circuit denies the petition, the case will either go back to the district court as ordered in the original opinion or the state can petition to the Supreme Court.