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Automobile Club of New York, Inc. D/B/A Aaa New York and North v. the Port Authority of New York

February 6, 2012

AUTOMOBILE CLUB OF NEW YORK, INC. D/B/A AAA NEW YORK AND NORTH JERSEY, INC., PLAINTIFF,
v.
THE PORT AUTHORITY OF NEW YORK AND NEW JERSEY DEFENDANT.



The opinion of the court was delivered by: Richard J. Holwell, District Judge

MEMORANDUM OPINION AND ORDER

Before the Court is an application by plaintiffs AAA New York and AAA North Jersey (together, "AAA") for a preliminary injunction against defendant the Port Authority of New York and New Jersey ("Port Authority"). AAA seeks to enjoin the Port Authority from collecting certain tolls on its bridges and tunnels, claiming that its September 2011 toll increases are in violation of both the Commerce Clause and the Surface Transportation and Uniform Relocation Assistance Act of 1987 (the "Highway Act"), 33 U.S.C. § 508 (1987).

Also before the Court is a November 4, 2011 motion by the Port Authority for judgment under Fed. R. Civ. P. 12(c) for failure to state a claim under the Commerce Clause or 33 U.S.C. § 508. (ECF Docket No. 11). The Court heard oral argument from both parties on December 8, 2011, but reserved ruling on the application and motion. The court now denies AAA's application, for the reasons stated below. Further, the Court converts the Port Authority's motion into a Motion for Summary Judgment, but reserves ruling pending discovery.

BACKGROUND

The following facts are drawn from AAA's Complaint and the Port Authority's Opposition Memorandum and are uncontested, unless otherwise noted.

AAA New York and AAA North Jersey are non-profit corporations which purport to represent the interests of nearly two million member drivers. The Port Authority is a bi-state governmental agency, created by an interstate compact between the States of New York and New Jersey and approved by Congress in 1921. The Port Authority operates a variety of facilities in the greater New York City area, including: four interstate bridges, two interstate tunnels, the interstate Port Authority Trans-Hudson railroad ("PATH"), three bus terminals, two truck terminals, seven marine terminals, four airports, two heliports, and the sixteen-acre World Trade Center site. The four interstate bridges are the Outerbridge Crossing, the Goethals Bridge, the Bayonne Bridge, and the George Washington Bridge; each crosses the Hudson River, which separates New York from New Jersey. Congress consented to the construction of all four bridges on March 2, 1925, on the express condition that construction and operation of the bridges be in accordance with the provisions of the federal General Bridge Act of 1906 (now codified at 33 U.S.C. §§ 491-98).

The Port Authority is authorized to collect tolls at its bridge and tunnel facilities. See McKinney's N.Y. Unconsol. Law § 6501 et seq.; N.J.S.A. 32:1-118 et seq. In a press release of August 5, 2011, the Port Authority proposed toll increases on its tunnels and bridges, and a fare increase for PATH. On August 19, 2011, the Port Authority Board of Commissioners held a meeting to approve a modified toll increase schedule. At that meeting, Michael Fabiano, Chief Financial Officer for the Port Authority, identified mounting financial pressures on the Port Authority, including: the economic recession, increased security costs since the attacks of September 11, 2001, a 11 billion dollar investment to rebuild the World Trade Center site, and a need to overhaul aging facilities, including the Bayonne, Goethals, and George Washington Bridges. (November 4, 2011 Affidavit of Michael Fabiano ("Fabiano Aff.") Ex. F ("August 19, 2011 Board Meeting Minutes") at 5-10.) The Board of Commissioners subsequently approved the toll and fare increases, and the meeting minutes were forwarded to the Governors of New York and New Jersey for review. A ten-business-day gubernatorial period expired without a veto by either Governor, so the increases went into effect on September 18, 2011.

On September 27, 2011, AAA brought an action in this Court, seeking inter alia a declaratory judgment that the toll increases are illegal. AAA alleges that the toll increases are being used to fund real estate development at the World Trade Center site. (Compl. ¶ 42.) AAA submits that the increases are therefore "unreasonable" under the dormant Commerce Clause, both because the tolls are not "based on a fair approximation of . . . use" of the bridges and tunnels, and because the tolls are "excessive in relation to the benefits conferred" on the users. (Sep. 26, 2011 Mem. of Law in Supp of Pl.'s Mot. for Prelim. Inj. ("PI Mem.") at 10) (citing Bridgeport and Port Jefferson Steamboat Co. v. Bridgeport Port Auth., 567 F.3d 79, 86 (2d Cir. 2009) ("Bridgeport II")). AAA further submits that funding the World Trade Center site renders the tolls increases neither "just" nor "reasonable" under the Highway Act, because portions of the tolls will support uses that are not part of the Port Authority's "integrated, interdependent transportation system." (Id. at 6) (citing Automobile Club of New York, Inc. v. Port Authority of New York and New Jersey, 887 F.2d 417, 423 (2d Cir. 1989) ("Automobile Club").

On that same date, AAA applied for a preliminary injunction to reverse the toll increases. In addition to arguing that its complaint was likely to succeed on the merits, AAA alleged that the continued collection of the increased tolls would cause irreparable harm to the motoring public, with "no practical way of refunding . . . the cost of the toll increases once they have been determined to be improper." (Id. at 4-5).

In opposition to AAA's application, the Port Authority provided preliminary capital plan and cash-flow analyses for its Integrated Transportation Network*fn1 ("ITN"). (Fabiano Aff. Exs. A ("Preliminary Capital Plan"), D ("Summary of Cash Flows - 2011-- 2020 Projected Data - Cash Basis"), E ("Summary of Cash Flows - 2011-- 2020 Projected Data -- 50% Cash / 50% Debt Basis").) These analyses show that the ITN had negative cash flow for the past four years, and that the Port Authority expects the ITN to have negative cash flow for the next ten years, even with increased tolls. The Port Authority also provided a comparison between its average toll and the average toll for major crossings operated by the Metropolitan Transportation Authority ("MTA"), New York City's other regional toll bridge and tunnel operator; this showed that even with the toll increases, the Port Authority tolls are the same or lower than the round-trip tolls for the MTA facilities. (November 4, 2011 Affidavit of Mark Muriello, Exs. A, B.) Based on these affidavits, the Port Authority argued that AAA was unlikely to succeed on the merits, and therefore that no injunction should issue. (Nov. 4, 2011 Mem. of Law in Opp'n to Pl.'s Appl. For a Prelim. Inj. And in Supp. of Def.'s Mot. to Dismiss ("Opp'n Mem.") at 8.) The Port Authority also argued that AAA failed to show irreparable harm, because "78.9% of drivers traveling the affected bridges and tunnels use E-Z Pass*fn2 and could have their accounts credited," while the remaining cash users "could receive a discount on the cash tolls as reimbursement." (Id.)

With its opposition filing, the Port Authority also moved for judgment on the pleadings, asking that AAA's complaint be dismissed for failure to state a claim under the Commerce Clause or the Highway Act, and for lack of a private right of action under the Highway Act. (Id. at 18.)

In its reply papers, and again at the December 8, 2011 oral argument, AAA alleged that past public statements by Port Authority officials undermine the validity and completeness of the Port Authority's capital plan and cash flow analyses. AAA did not provide any financial documentation directly contradicting the Port Authority's analyses, but argued that it was "difficult to reconcile" them with publicly available financial documents. (November 18, 2011 Affidavit of Robert Walters at 2.) In its reply papers, AAA also proposed three lesser injunctions. (See Nov. 18, 2011 Reply Mem. of Law in Supp. of P.'s Mot. for a Prelim. Inj. And in Opp'n to Def.'s Mot. to Dismiss ("AAA Reply Mem.") at 5.) One would prohibit the Port Authority from collecting increased tolls until the Port Authority Commissioners review the analyses provided to the Court; a second would partially reduce the toll increases; and a third would enjoin the Port Authority from spending toll increase funds outside of the ITN. The Port Authority then challenged the belatedness of AAA's request for alternative relief, and repeated its arguments in support of dismissal. (See Reply Mem. of Law In Further Supp. of Def.'s Mot. to Dismiss ("PA Reply Mem.").)

DISCUSSION

I. AAA's Application for Preliminary ...


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