CHICAGO (CN) — The State of Indiana was free to permit the operator of its toll road to increase fees on heavy vehicles, a Seventh Circuit panel ruled Tuesday.
The unanimous three-judge panel issued a short 6-page ruling, finding that a toll road fee increase that specifically targeted heavy vehicles did not run afoul of commerce laws.
“The Constitution does not establish the federal judiciary as a regulatory commission, after the fashion of utility regulators that try to keep natural monopolies’ charges in line with consumers’ benefits,” wrote U.S. Circuit Judge Frank H. Easterbrook, who authored the opinion. “Truckers who want to avoid the tolls can use the many free roads in Indiana (including two toll-free interstate highways that cross the middle and south of the state from east to west.)”
The federal class action lawsuit was filed in 2019 and claimed that a 35% increase in tolls on heavy trucks who use the Hoosier state’s only toll road wrongfully discriminates against interstate commerce.
The lawsuit claimed that the tolls were discriminatory because they targeted heavy commercial vehicles and that the rate increase was excessive.
“The toll increase falls exclusively on the types of trucks that are most likely to be engaged in the interstate transport of cargo. No increase in tolls on other vehicles including automobiles, buses and small trucks that are relatively less likely to be engaged in interstate commerce was imposed,” the lawsuit states.
The road at the center of the lawsuit is Indiana’s lone toll road which runs from across northern Indiana all the way to the state’s border with Ohio. The road is owned by the state, but a company known as the ITR Concession Company leases the road from Indiana.
In 2018, ITR paid Indiana $1 billion in exchange for permission to increase the tolls on heavy commercial vehicles by 35% and the class action suit filed by the Owner-Operator Independent Drivers Association and several other trucking companies was filed soon after.
In March 2020, U.S. District Judge Richard L. Young, a Clinton appointee, relied upon a magistrate judge’s recommendations to dismiss the case for failure to state a claim. The plaintiffs appealed and the Seventh Circuit panel heard arguments in October 2020
Easterbrook was joined on the panel by fellow Reagan appointee U.S. Circuit Judge Ilana D. Rovner, and U.S. Circuit Judge Diane Wood, a Bill Clinton.
During oral arguments, attorney Paul D. Cullen argued on behalf of the plaintiffs and claimed that the case law cited in the lower court’s ruling would improperly allow a public-private partnership to essentially circumvent the Commerce Clause.
However, in their ruling, the Seventh Circuit found that the maintenance of roads is not considered a “state function” and that the state was free to allow the rate increase.
“The idea that transportation necessarily is a state function is untenable,” the ruling states. “Just ask developers of residential subdivisions, and the owners of farms, which are expected to build and maintain their own roads.”
The complaint also claimed that Indiana did not use the $1 billion it gathered from ITR for road improvements and instead used that money on other projects.
The court’s ruling briefly touched on that issue, finding that the state could operate this way because it is acting as proprietor in its owning and leasing of the toll road, and that distinction is important because it allows it to run the toll road as a business.
The court ruling says the “prevailing approach” of courts has been to uphold neutral state laws and strike down those that discriminate against interstate commerce.
“We may suppose, as plaintiffs, allege, that the $1 billion received for the 2018 toll increase was used for state purposes unrelated to the maintenance of the Toll Road. Why should that matter?” the ruling states. “A state, like any private proprietor, can turn a profit from its activities.”
“A three-judge panel of the Seventh Circuit U.S. Court of Appeals decided yesterday that there is no limit to the tolls that a state can impose on highway drivers. This contradicts decades of legal precedent holding that the U.S. Constitution limits how much a state can burden interstate commerce,” Todd Spencer, the president of the Owner-Operator Independent Drivers Association, said in a statement Wednesday.
He added, “According to the Seventh Circuit, states are free to plug budget shortfalls and fund unrelated pet projects from the pockets of interstate truckers. Although the case was focused on recent increases on the tolling of truckers, the court’s legal analysis was not dependent on what type of highway user paid the tolls.”