Judge Rules Against Toll Plan on Virginia Tunnels

This story appears in the May 13 print edition of Transport Topics. Click here to subscribe today.

A Virginia judge has ruled unconstitutional the state’s plan to begin tolling in February on two existing tunnels between Norfolk and Portsmouth to pay for construction of a third.

In a decision that could affect future public-private projects, Judge James Cales Jr. ruled May 1 in Portsmouth Circuit Court that the Legislature “has exceeded its power by ceding the setting of toll rates and taxes” to the Virginia Department of Transportation.

The two existing tunnels under the Elizabeth River that lead to the Port of Virginia are free.

However, truckers were facing tolls as high as $15 per round trip to help pay for construction by a private developer that would then be allowed to collect tolls for 58 years.

“That’s what bothered us, the contractor setting these tolls for 50-something years,” said one of the plaintiffs , Danny Glover, who with his brother, Charles, owns GTL Transport, a Suffolk, Va.-based intermodal carrier.

“It is a very favorable decision,” added Dale Bennett, president of the Virginia Trucking Association.

The association was not among the 40 businesses and citizen groups that brought the case last year along with the city of Portsmouth.

Gov. Bob McDonnell (R) said he was “disappointed” and said the state will appeal and file a motion to stay the judge’s decision to ensure that construction work, which already has begun, continues.

Brian Gottstein, spokesman for Virginia Attorney General Kenneth Cuccinelli, said: “If this ruling stands and becomes the law of Virginia, it would threaten the commonwealth’s ability to use public-private partnerships to construct major transportation projects.”

Emil Frankel, a visiting transportation scholar at the Bipartisan Policy Center, a Washington think tank, said he hoped the plaintiffs had an alternative plan to pay for  infrastructure projects.

“Certainly, anything that makes it more difficult to establish tolls and user charges is going to inhibit our capacity to meet the transportation infrastructure challenges we face; that’s the bottom line,” said Frankel, who was assistant secretary for transportation policy in the U.S. Department of Transportation from 2002 to 2005.

The impending tolls were part of the $2.1 billion public-private partnership the state has with the development consortium Elizabeth River Crossings, a joint venture between Skanska Infrastructure Development and the Macquarie Group.

ERC said that it would join with Virginia in appealing the decision.

Under the terms of the contract, ERC was to use the toll revenue to help pay for a tunnel alongside the existing Midtown Tunnel, which carries U.S. 58 traffic, and to rehabilitate the existing tunnel. ERC was also to use the toll revenue to help rehabilitate the Downtown Tunnel, which carries Interstate 264 traffic, and extend Martin Luther King Freeway in Portsmouth from London Boulevard to I-264.

There is already a $1 toll to use the existing part of the freeway, and that toll money also was to be used to help pay for the construction project.

In his ruling, Judge Cales said that the “bundling of the [three projects] was a bundling solely to produce revenue” and that the Legislature “has given unfettered power” to VDOT to set toll rates “without any real or meaningful parameters.”

The ruling against the state goes to the heart of a 1996 law that handed the power to toll to the governor and VDOT and allowed them to enter into public-private partnership agreements without legislative approval.

Patrick McSweeney, attorney for the plaintiffs, told Transport Topics that, at the time, legislators were “snowed” by underwriters, bond counsels and transportation experts who told them public-private arrangements with private investors were the only way to build transportation projects in the face of revenue shortages and taxpayer antipathy to taxes.

Public-private partnerships are “likely to be far more expensive than straightforward revenue bond financing,” McSweeney said, because the contracts lock in automatic toll increases and put tolls on existing roads to raise construction money.