Metro Wash Airports control of Dulles TR challenged in big law suit - toll/tax distinction at issue

April 18, 2011
By Peter Samuel

Under heavy criticism from all quarters for a $325m rail station undergrounding cost to be put on Dulles Toll Road motorists, the Metropolitan Washington Airports Authority (MWAA) is now being challenged in the courts over the legality of its use of tolls for the $6+ billion rail line.  Prominent Virginia attorneys Patrick McSweeney, Robert Cynkar, Christopher Kachouroff have sued MWAA on behalf of John Corr of Great Falls NA and John Grigsby, of Hillsboro VA toll road users.

The 46-page class action suit is filed in US District Court in Eastern Virginia (Alexandria).

The case is based on a  challenge to the constitutionality of MWAA setting tolls and using toll revenues for the rail project. By setting tolls beyond a level needed to pay the costs of the toll road itself the tolls become in essence a tax, and the multi-jurisdictional airports authority does not have the legal power to impose a tax. Under the state of Virginia and US constitutions taxation is a right reserved to elected bodies, they argue.

The 13 member MWAA board is comprised of appointees of four jurisdictions - 5 appointed by the governor of Virginia, 3 appointed by the Mayor of Washington DC, 3 by the US President, 2 by the Governor of Maryland. The Virginia appointees have fixed six year terms and cannot be removed except for "cause" (crimes).

'No taxation without representation' is... an ever-vital principle at the heart of representative government and the liberty such government is established to preserve. It embodies an animating proposition of accountability to citizens for any governmental extraction of money from them that has profoundly shaped the US and Virginia constitutions."

The suit claims that "illegal exactions" began in 2005 when the Virginia Commonwealth Transportation Board - appointees of the Governor - "deliberately set (tolls) at levels of the amounts needed to pay for the operation and maintenance expenses of the Dulles Toll Road plus reasonable payments for the debt incurred to construct or improve the Dulles Toll Road."

By creating this surplus, the suit says, the Board "began the practice of converting what is supposed to be a legitimate user fee into a tax."

MWAA went seriously into raising Dulles rail line money, its whole takeover of the Toll Road at the end of 2008 being built around the rationale of using Toll Road revenues to float debt to fund the multi-billion dollar Dulles Rail line.

The law suit notes that MWAA is run by an unelected board of directors and is independent of governments. Its debt is a call on no government.

Tolls are alleged to be illegal or unconstitutional for overlapping reasons.

Setting rates or fees for a public service can only be delegated by the state General Assembly and the General Assembly never authorized the transfer of the Toll Road and toll setting powers to MWAA. It was done solely with an executive branch agreement. (Dulles Rail enthusiasts including the state Governor Timothy Kaine knew the general assembly would never approve the transfer because the House speaker William Howell was implacably opposed to it.)

The suit says the General Assembly could not in any case constitutionally delegate powers to an entity completely outside of state or local government jurisdiction. But the transfer was never referred to it.

Dulles Toll Road for local use

No US legislation authorizes MWAA to set tolls or taxes either. The 1986 MWAA compact between Virginia and DC and which the US Congress gave formal consent, created MWAA with responsibility for the Dulles and Reagan National Airports. The untolled Dulles Airport Access road came with Dulles Airport. The Dulles Toll Road built by Virginia was designed to serve local trips, not airport related trips. They were already provided for via the Dulles Airport Access Road which had opened with Dulles Airport back in 1962 as a free facility for air travelers.

A principal thrust of the suit is the notion of a republican structure of government adopted to protect against the abuse of the power to tax. Tax powers are too dangerous to be allowed to unaccountable bodies. The US Constitution in Article IV  guarantees to "to every state in this Union a republican form of government" (Corrected for antiquated forms of capitalization) and the 14th Amendment privileges and immunities clause which prohibits abridgments of privileges of any US citizens, one of which is the right to vote for or against those setting taxes.

User fees are distinct from taxes in that they are levied to pay for a particular service and to defray approximately its costs, the suit says. Tolls as the prices for use of a road facility which is a particular service and so long as the price has some relationship to costs of that road facility, are not by this reasoning, a tax.

The interstate Compact clause of the constitution doesn't provide for any delegation of taxing powers.

The Virginia Constitution is very clear that people "cannot be taxed without their consent or that of their representatives duly elected." Its taxing powers cannot be delegated, so MWAA cannot constitutionally tax, the suit reasons.

The state constitution allows executive agencies of the executive branch pledging the credit of the state of Virginia to pledge revenues "for specific revenue producing capital projects...which shall be distinctly specified in the (authorizing) law..." (art X, par 9)

But that prohibits delegation beyond the executive branch and to any multi-state agency like MWAA.

Chances of winning

Many of these issues were litigated unsuccessfully to the Virginia Supreme Court in 2007/2008 (Plaintiffs Patrick Gray and James Nagle)  with Patrick McSweeney a lead attorney as in this case. Asked why he thinks he has a better chance this time, McSweeney told us that the Gray & Nagle case was a strong one, but never got past procedural issues and fizzled out due to lack of funds.

He says this case has more backing and he hopes to see the case through to the US Supreme Court. He hopes that MWAA will be prevented from issuing more toll revenue bonds until the case is resolved.

The Corr, Grigsby suit 46 pages:

http://www.tollroadsnews.com/sites/default/files/CorrGrigsby.pdf

COMMENT: we think Corr & Grigsby have right on their side. The various modes need to each pay their way. The days of one mode botching off another needs to be put behind us. The McSweeney case raises bigger constitutional issues than one tollroad/rail project west of Washington DC. We're skeptical about their chances for success in the courts, but you never really know unless you try.

The consequences of success could be huge. Toll revenues are frequently tapped to support loss-making rail operations: at the in New York PANYNJ tollpayers on the GW Bridge, Lincoln Tunnel support PATH rail, and MTAB&T tollpayers help pay NYC subway losses, in Philadelphia DRPA tollpayers on the Ben Franklin, and Walt Whitman bridges underwrite the losses on a rail line named PATCO. The Golden Gate Bridge subsidies loser buses and ferries, Bay area toll bridges the BART. It's quite a long list.

Our guess is that the financial profligacy of MWAA and loss of political support will bring it down, not law courts.

HISTORY

1962: Dulles Airport opens served by Dulles Airport Access Road in a wide right of way, both under the US Government's Federal Aviation Administration.

1980  Virginia department of highways asked Federal Aviation Administration for the right to build Dulles Toll Road in wide federal right of way used at the time only for Dulles Airport Access Road (DAAR) -  an untolled 2x2 lane expressway with ramps set up to prevent use by commuters for local travel

1982 December: construction begins after sale of $57m in bonds

1984 Oct: Dulles Toll Road opened for traffic serving communities on either side of the corridor, the state's Commonwealth Transportation Board having the power to set tolls, toll revenues solely to pay operations costs (by VDOT) and service $57m in debt incurred in financing the 16 mile road

1989: Commonwealth of Virginia Transportation Facilities Bond, allowing tolls to be set to provide for improvements to the tollroad, along with operations costs and debt service (no provision for financing other projects)

1990: General Assembly amended 1989 Bond Act to allow "to the extent permitted by law" diversion of toll revenues to "mass transit and capacity enhancing treatments such as high occupancy vehicle lanes", interchange improvements, commuter parking lots..." and that tolls "shall not be used for any purpose other then" improvements to the road, debt service, and mass transit" in the corridor

1995: Bond Act authorized Commonwealth Transportation Board to issue $45m extra bonds to widen the tollroad and to set and collect tolls for the tollroad and improvements, reiterating the possible addition of "mass transit, including rail" from surplus net revenues of the tollroad

2001, September: the state's Commonwealth Transportation Board (CTB) directed that beginning in 2003 85% of surplus revenues on the DTR be dedicated for "public transportation initiatives" in the Dulles corridor

2002 November: referendum to implement a sales tax in northern Virginia to generate $350m for Dulles rail voted down

2004: tolls still 1984 rates of 35c at mainline plaza and 25c at ramps generating $41m

2004 June: Virginia Dept Rail & Public Transp (VDRPT) signed comprehensive development agreement with Dulles Transit Partners LLC to develop, design and build Dulles Rail in right of way of DAAR, 25% of cost to be borne by Virginia with tollroad money

2004 December: Final Environmental Impact Statement for Dulles Rail says 20% of project cost to be from tolls, also said a preliminary analysis showed the one would need a 75c/50c toll structure for Phase 1 to Wiehle Av

2005 Feb 17: CTB set new 75c/50c toll structure to take effect in May expressly to generate the extra revenue needed for Dulles Rail Phase 1 and to partially fund Phase 2.  VDOT 2006-2011 "business plan" said the entire increase in toll revenue earmarked for Dulles Rail, about $25m of total tolls of $65m/year

2005 July VDOT got an unsolicited proposal to privatize the DTR Dulles Corridor Mobility Consortium under the 1995 Public Private Transportation Act

2005 October: following RFP for competing bids for toll road concession got four more

2005 December announced four of five wd be advanced for selection of a longterm concessionaire for the DTR, while MWAA threatened to use its powers over the right of way to prevent any transfer to a private concessionaire and submitted its own proposal

2005 Dec 20: MWAA announces its proposal to take over the DTR and construct Dulles Rail because access to the Airport and the rail line were a high priority, so-called 2006 Proposal MWAA said would provide $361m toward Phase 1 and $1.4b in toll revenues for Phase 2

2006 Jan 17: Rail project not to require higher real tolls "The Airports Authority's plan would keep average real toll rates flat on an inflation-adjusted basis until capacity constraints are reached or improvements are needed," p15 of Proposal to Operate the Dulles Toll Road and Build Rail to Loudoun County, Dulles Corridor Proposal, MWAA.

2006 March 24: VDOT and MWAA signed MOU to negotiate transfer of the tollroad to MWAA with MWAA to "assume control of (toll) rate setting" provided it was "an open public process" with MWAA taking over VDRPT's contract with Dulles Transit Partners LLC.

2006 December 29: VDOT and MWAA entered into agreements to transfer the tollroad to MWAA for 50 years with the purpose being to provide toll revenues for construction of Dulles Rail. MWAA having the right to "impose, charge, collect, use and enforce payment" of tolls. It included financial projections showing 2009 tolls $78m, costs incl debt service of $30m, surplus of $48m for Dulles Rail, 2010 tolls $93m, costs $29m for surplus for Dulles Rail of $63m.

2007 June 6: MWAA established a Dulles Corridor Enterprise Fund with bonds "payable solely from revenues derived from ... the Dulles Toll Road"

2008 Financial Plan scaled back expectations of surplus: projecting 2009 tolls $66.3m, $51.7m costs including debt, surplus of only $14.5m, 2010 tolls $89.2m, costs $50.7m, surplus of $38.4m. By 2018 the plan projected tolls of $153.4m costs $85.8m, surplus $67.6m.

2008 November 1: MWAA takes over control of DTR and borrows $150m in short term finance

2009 August 5:  four series of DTR revenue bonds issued to raise $972m

2009 Nov 4: MWAA votes three years of toll increases 2010 Jan 1  to $1.00/75c, 2011 to $1.25/75c, 2012 $1.50/75c, said would be issuing $2.7b of toll revenue bonds over next seven years, with gross toll revenue needing to rise from $65m in 2008 to $87m in 2010, $220m in 2020 to cover debt service

TOLLROADSnews 2011-04-18

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