Va. Supreme Court reverses ruling on tunnel tolls

By Dave Forster, The Virginian-Pilot – 11/1/2013

The Supreme Court of Virginia on Thursday unanimously swatted down a legal challenge to the Downtown and Midtown tunnel tolls, clearing the way for the fees to begin Feb. 1.

The decision spelled the end of a lawsuit by residents and business owners who had hoped they could stop the tolls, which they viewed as unfair, illegal and harmful to commerce and motorists. The court case began in July 2012, when the group sued the Virginia Department of Transportation and its private partner, Elizabeth River Crossings, over the terms of their $2.1 billion contract.

Charles Greenhood, a Portsmouth restaurant owner and one of the plaintiffs, found it appropriate that the ruling came on Halloween:

“This is a perfect horror story – a real-life horror story.”

The justices concluded that the tolls are user fees and not unconstitutional taxes, as a Portsmouth judge had ruled last spring.

The justices concluded that the tunnels are part of an integrated network and that users will receive a benefit not shared by the general public.

The all-electronic tolls will start at $1.84 for passenger vehicles and $7.36 for trucks during peak travel times, with Elizabeth River Crossings able to increase the amount by at least 3.5 percent a year beginning in 2016. The fees will be higher for motorists who decline to sign up for an E-ZPass account.

Gov. Bob McDonnell applauded the court decision, saying in a statement that it will allow work to continue on the Midtown Tunnel expansion project, a longtime regional priority to relieve congestion in Hampton Roads. He said it also confirmed his long-held stance that the state law governing public-private projects, including this one, is a critical tool to get otherwise impossible projects done by drawing on private-sector capital and innovation.

With their decision, the justices reversed Portsmouth Circuit Judge James A. Cales’ ruling that the General Assembly had exceeded its constitutional authority by giving “unfettered power to the Department of Transportation to set toll rates without any real or meaningful parameters.”

At a court hearing in May, Cales dismissed an assertion by a lawyer for Elizabeth River Crossings that the Gilmerton and High-Rise bridges in Chesapeake provided “reasonable alternatives” for motorists who did not want to pay the tunnel tolls.

The High-Rise Bridge is about 12 miles from the Downtown Tunnel in Portsmouth via the interstate. Congestion there and at the Gilmerton Bridge is predicted to worsen as trucks divert to them to avoid the tunnel tolls, according to a study by the Hampton Roads Transportation Planning Organization.

“They’re not really reasonable alternatives,” Cales had said. “You know that. I know that. Everyone knows that.”

The Supreme Court justices in Richmond disagreed, calling each a reasonable alternative, without explanation.

Steve Emmert, an appellate attorney from Virginia Beach who analyzes Supreme Court opinions, noted in his recap of the decision that none of the seven justices who considered the appeal lives in South Hampton Roads.

Pat McSweeney, the attorney representing the toll opponents, was befuddled and disappointed.

“I’m having a hard time absorbing the logic of the opinion. It’s going to take me awhile,” he said minutes after the decision was announced in court.

McSweeney maintains that under the law, elected officials should impose tolls, not bureaucrats, and said the court decision clears the way for that to continue going forward:

“Expect elected officials to use non-elected people to make the hard decisions. That’s really what has been at the bottom of this case from the beginning.”

Virginia Attorney General Ken Cuccinelli said he understands that some people in Hampton Roads dislike the tolls, but that it’s his job to defend the laws of the commonwealth. His office represented VDOT against the lawsuit.

“Those projects are needed to decrease congestion on our roads, which is critical to keeping business and commuters moving throughout the commonwealth,” he said.

Elizabeth River Crossings officials waited for news of the decision at their offices near the Midtown Tunnel in Portsmouth. The company had pressed ahead with construction of the project while the fate of the tolls – their primary revenue stream – was hung up in the courts.

“We really didn’t know which way it was going to go,” spokeswoman Leila Rice said. “We’re able to focus 100 percent on delivering the project now.”

McSweeney said his side has no recourse to appeal to a higher court.

Word of the decision came shortly after 9 a.m. to about two dozen people at Brutti’s restaurant in Olde Towne Portsmouth. Greenhood, the owner, shook his head, grabbed a cup of coffee and sat down, resting his head on his hand.

No one screamed. No one yelled. They took in the news quietly. A bottle of champagne sat uncorked.

A few feet from Greenhood, Councilwoman Elizabeth Psimas struggled to find words.

“I’m not shocked,” she said. “You didn’t really know which way this would go. I don’t know where we go from here. … It’s certainly not for a lack of trying on the part of this group and the city.”

The plaintiffs and their supporters have paid their legal bills with fundraisers and donations, including a $50,000 contribution by the Portsmouth City Council. Their black, white and red “No Tolls” bumper stickers have become a common sight in the city and elsewhere.

Nettie Fischer, another of the plaintiffs, owns a retail store on High Street.

“I think there are broad ramifications,” she said. “It’s bad for citizens. It’s bad for business.”

Asked where the lawsuit goes from here, Greenhood said they needed to consult with legal advisers.

“I’m just not sure what road we’re going to take,” he said. “All I can tell you is the fight is not over.”

State Sen. Kenny Alexander, D-Norfolk, jump-started the lawsuit in 2012 with a $7,500 payment to retain McSweeney and draft a complaint. He said Thursday that he would introduce legislation this year to try to either delay the tolls until the new Midtown Tunnel opens in 2016 or use new tax revenue from a transportation bill the General Assembly approved last session to buy down the price of the tolls.

Norfolk Mayor Paul Fraim issued a statement in which he called on the governor and state lawmakers to consider amending the financing plan or look for other funds to create a “less onerous, more reasonable toll” for people and businesses in the region. He called the construction project crucial to economic growth but said its tolls are excessive and “greater than commercially reasonable.”

VDOT contributed about $420 million to the project, while Elizabeth River Crossings has committed $272 million in private equity. The company’s 58-year contract allows it to make an average annual profit of 13.5 percent on its investment.

The work is also supported by a federal loan and bonds.

The project involves construction of a second Midtown tube to relieve some of the worst congestion in the region, rehabilitation of the Downtown and Midtown tunnels, extension of a freeway in Portsmouth and the private maintenance and operation of the roads until 2070. Construction, including the fabrication of the new tunnel at a Maryland plant, is well under way.

The project’s costs have already surpassed $687 million, according to Elizabeth River Crossings’ September report to investors.

Terry Danaher, one of the plaintiffs’ main organizers, said her group might consider filing a federal lawsuit that contends the state didn’t properly consider the environmental and economic ramifications of such a toll. On Thursday, she was exhausted from the fight.

“I just want to sleep,” she said. “Everybody is tired and, I’d say, disheartened, but not defeated.”