Truckers’ Suit Over High NY Tolls Revived

     MANHATTAN (CN) – A federal appeals court gave truckers another chance to argue that New York’s high highway tolls, which also help maintain recreational waterways, impede interstate commerce.
     The Second Circuit on Tuesday vacated dismissal of the truckers’ complaint by a Manhattan District Court judge, who had faulted their failure to name the state as a defendant.
     New York’s toll roads, known formally as the Gov. Thomas E. Dewey Thruway, include various interstates that stretch 570 miles across the state from New York City’s suburbs to the shores of Lake Erie. The roads are part of the U.S. National Interstate Highway System and provide a critical link to population centers in the state and across the Northeast.
     Overseeing the roads is the New York State Thruway Authority, a public-benefit corporation that, despite its name, is not an agency or arm of the state.
     By law, the authority is responsible for upkeep and maintenance of the thruway; it can build and finance roads, borrow money, and make contracts.
     The authority receives no appropriations from the state for its operations. Rather, tolls paid by highway users provide the bulk of revenue.
     Since 1992, the authority has also overseen the New York canal system, a once-vital commercial water link between Midwestern and East Coast markets but more recently promoted as an attraction for recreational boaters and tourists.
     The five canals used to be the responsibility of the state Department of Transportation, but lawmakers created the New York Canal Corp. as a subsidiary of the Thruway Authority to manage and maintain the waterways although the state retained constitutionally mandated ownership.
     Like other Thruway projects, the canals’ upkeep is funded by the tolls. Estimates put some 10 percent to 12 percent of the tolls collected annually going to canal-related development projects, or up to $100 million a year.
     In 2010, the American Trucking Associations and a handful of trucking firms sued the Thruway Authority over the tolls, claiming they were “excessive” because of the canals. The high tolls violated the Commerce Clause of the U.S. Constitution by “unduly burdening” interstate commerce, the plaintiffs claimed.
     The complaint did not name the state as a defendant. Instead, it named the Thruway Authority, the Canal Corp., and the head of each organization and their board members.
     The Thruway Authority moved to dismiss the complaint for failure to join the state as a necessary party, which was granted. U.S. District Court Judge Colleen McMahon ruled last year that New York was both a necessary and indispensable party.
     A three-judge panel of the Second Circuit disagreed, finding that the state’s interests were not threatened by the case.
     The judges brushed aside one Thruway Authority argument that contended the state’s constitutional obligation not to abandon the canal would be violated if it were not a party and the toll structure were changed.
     “No judgment in this case would require New York to ‘sell, abandon or otherwise dispose of’ the canal system,” wrote Circuit Judge Dennis Jacobs.
     Likewise, the panel discounted the contention that the state had a financial interest in the case, because it would have to find another way to fund canal operations if toll revenue could not be used.
     “An adverse judgment in this case would run only against the Thruway Authority, and ‘the state is not legally obligated to pay for the Thruway Authority’s debt,'” Jacobs noted, citing circuit precedent on authority autonomy.
     “The state’s interest in having another entity fulfill its constitutional obligation to support the canal system is assuredly significant, but it is too remote and indirect to make it a necessary party,” he added.
     But even assuming the state had an interest in the case, the fact that New York’s top law officer, Attorney General Eric Schneiderman, has represented the defendants offers any needed protection, Jacobs wrote.
     “Whatever interest New York has in the outcome of this lawsuit, we are confident that Mr. Schneiderman will keep it in mind,” he noted.
     “As we recognized in a recent Rule 19 decision, ‘prejudice to absent parties approaches the vanishing point when the remaining parties are represented by the same counsel, and when the absent and remaining parties’ interests are aligned in all respects,'”
     Circuit Judge Guido Calabresi concurred.
     In a separate opinion, Circuit Judge Jon Newman concurred with the result, but disagreed with the reasoning that put New York’s financial interest as “remote,” since “If toll receipts cannot be used to maintain the canal system, New York will have an obligation to arrange for replacement funding.”
     But, he added, “Rather than resolve the debatable issue of whether a financial obligation of that sort creates an interest that renders New York necessary, I prefer to reject joinder on the clear basis that New York is not an indispensable party because its interests are fully protected by the appearance of the attorney general.”
     A spokesman for the Thruway Authority did not return an email Wednesday seeking comment on the decision.

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