Judge strikes down Rhode Island's toll system as unconstitutional

BY SourceMedia | MUNICIPAL | 09/27/22 03:16 PM EDT By Caitlin Devitt

A federal judge last week struck down Rhode Island's first-of-its-kind trucks-only tolling program, notching a win for the interstate transportation industry that had sued the state over the law.

The state has 30 days to appeal.

Opponents said the Sept. 21 ruling will send a message to other states considering similar tolling programs to drum up fresh revenue for transportation capital programs. Connecticut is set to implement a similar trucks-only toll program next year.

U.S. District Judge William E. Smith said in his 91-page ruling that Rhode Island's four-year-old toll system was "enacted with a discriminatory purpose," and ordered the state to stop collection within 48 hours.

"Rhode Island has a legitimate ? even compelling ? interest in the maintenance of its ailing bridges," Smith wrote, noting that the busiest highway in the country, the I-95 north/south corridor, bisects Rhode Island and more than 250,000 cars and trucks "speed through the state on I-95 every day, many never stopping to appreciate the charms of the Ocean State."

But, he said, "there is no reason that interest cannot be served by a tolling system that does not offend the Commerce Clause. Indeed, many states have implemented tolling systems that fairly apportion their costs across various users and do not discriminate against interstate commerce."

The state has no bonds backed by the toll revenue, according to a Rhode Island Department of Transportation spokesperson. The state's GARVEE bonds, backed by federal funds, remain unaffected by the decision. Because it applies strictly to the truck-only program, the ruling is not expected to affect the Rhode Island Turnpike and Bridge Authority, said Fitch Ratings analyst Henry Flynn.

The lawsuit was closely watched by toll advocates and the interstate transportation industry and comes as states search for new revenue streams as the value of the gas tax declines.

"We told Rhode Island's leaders from the start that their crazy scheme was not only discriminatory but illegal," American Trucking Association President Chris Spear said in a statement. "To any state looking to target our industry, you better bring your A game, because we're not rolling over."

Rhode Island Trucking Association President Chris Maxwell said the ruling "sends a strong signal to other states that trucking is not to be targeted as a piggy bank."

Enacted in 2018 under then-Gov. Gina Raimondo, the tolling system assesses single-user fees on truck drivers in various amounts when they cross certain interstate bridges, with revenue funding the Rhode Island Bridge Replacement, Reconstruction and Maintenance Fund Act. Also known as RhodeWorks, the program is a 10-year, $4.7 billion investment aimed primarily at repairing the state's bridges, long considered among the worst in the nation.

The ATA and two trucking companies sued the state in 2018 to block the program. Among other things, the ATA argued that it discriminated in particular against out-of-state trucks because they tend to larger and heavier than local vehicles.

The state has collected $101 million in truck tolls since the program's launch. It generates roughly $45 million a year, most of which is used as a local match, along with the state gas tax and motor vehicle fees, to leverage a total of $700 million annually for the capital program, RIDOT Director Peter Alviti said in a Sept. 22 local radio interview.

"First of all, and most importantly, the governor is intent on keeping the momentum of RhodeWorks moving forward," Alviti said. "He is intent on finding a solution."

The state does not have to pay back any of the already collected tolls, Alviti said.

RIDOT is talking with Gov. Daniel McKee and legislative leaders to decide whether to appeal, Alviti said. "Our attorneys are appraising us that we have a good case, they think the decision is wrong and that we should go forward on it," Alviti said. "There's always a debate about how we fund transportation in every state in the country when I talk to other directors are realizing the same kind of financial conditions."

In general the bond market is volatile, and fixed income securities carry interest rate risk. (As interest rates rise, bond prices usually fall, and vice versa. This effect is usually more pronounced for longer-term securities.) Fixed income securities also carry inflation risk and credit and default risks for both issuers and counterparties. Unlike individual bonds, most bond funds do not have a maturity date, so avoiding losses caused by price volatility by holding them until maturity is not possible.

Lower-quality debt securities generally offer higher yields, but also involve greater risk of default or price changes due to potential changes in the credit quality of the issuer. Any fixed income security sold or redeemed prior to maturity may be subject to loss.

Before investing, consider the funds' investment objectives, risks, charges, and expenses. Contact Fidelity for a prospectus or, if available, a summary prospectus containing this information. Read it carefully.

fir_news_article