AUTOMOBILE CLUB OF NEW YORK v. Port Authority, 87 Civ. 2419 (MP).
| Decision Date | 15 February 1989 |
| Docket Number | No. 87 Civ. 2419 (MP).,87 Civ. 2419 (MP). |
| Citation | 706 F. Supp. 264 |
| Parties | AUTOMOBILE CLUB OF NEW YORK, INC. and AAA Clubs of New Jersey, Plaintiffs, v. The PORT AUTHORITY OF NEW YORK AND NEW JERSEY, Philip D. Kaltenbacher, Robert F. Wagner, Richard C. Leone, James G. Hellmuth, Henry F. Henderson, Jr., William K. Hutchinson, H. Carl McCall, John G. McGoldrick, William J. Ronan, Howard Schulman, Robert Van Buren, Hazel Frank Gluck, as Commissioners of the Port Authority of New York and New Jersey, Defendants. |
| Court | U.S. District Court — Southern District of New York |
Kissam & Halpin by Anthony S. Genovese, New York City, for plaintiffs.
Joseph Lesser by Milton H. Pachter, Arthur P. Berg, Sholem Friedman, New York City, for defendants.
The central issue in this case is whether it is "just and reasonable" for the Port Authority to include its investment in and the mounting operating losses of the Port Authority Trans-Hudson (PATH) Railroad in the Port Authority's rate base for determining the tolls to be charged for passage over the bridges owned by the Port Authority between New York and New Jersey.
This is an action for declaratory judgment and injunctive relief.
Plaintiffs, Automobile Club of New York, Inc. and five member AAA Clubs of New Jersey ("the Auto Clubs"), sue for a declaratory judgment that the 1987 Port Authority increase in its bridge tolls violates section 135(i) of the Federal-Aid Highway Act of 1987 (the "Highway Act"), 33 U.S.C. § 508 (Supp.V.1987), 42 U.S.C. § 1983 (1982), and the Commerce Clause of the federal Constitution. Plaintiffs seek imposition of a constructive trust on alleged excess charges collected by the Port Authority as a result of the increase, and for restitution thereof.
The Auto Clubs filed an Amended Complaint on October 7, 1988 adding twelve Port Authority Commissioners as defendants in response to the Port Authority's contention that the Agency enjoys immunity from suit in federal court under the Eleventh Amendment of the Constitution. Jurisdiction of the First, Second, and Fifth Claims for Relief is posited under 28 U.S.C. §§ 1331(a) and 2201-02; jurisdiction of the Third and Fourth Claims for Relief is asserted under principles of pendent jurisdiction.
The action now before the Court is not unlike the one brought by the Auto Clubs in 1977 attacking a 1975 toll increase on the Authority's bridges, which resulted in denial by this Court of relief to the Auto Clubs. Automobile Club of New York, Inc. v. Cox, 444 F.Supp. 174 (S.D.N.Y.1978) (Pollack, J.), aff'd, 592 F.2d 658 (2d Cir.1979).
The witnesses were heard and the evidence was received in this case at a Bench Trial on November 28 and 29, 1988. Most of the facts were stipulated by the parties. At the close of the plaintiffs' case the Port Authority moved for a directed verdict dismissing the amended complaint for failure to establish a prima facie case. The Auto Clubs claimed that they had presented sufficient facts from which to draw an inference that the tolls were unreasonable and unjust to users of the bridges. The Auto Clubs urged that the PATH operations should not form a part of the Port Authority rate base in the absence of statutory authorization therefor. However, they conceded that if PATH were included in the rate base the Port Authority's overall rate of return on its Interstate Transportation Network ("ITN") facilities would be "within the zone of reasonableness." The Court reserved decision on the motion to dismiss.
At the close of the entire case, the Port Authority renewed its motion for dismissal of the amended complaint, asserting that the Auto Clubs had completely failed to make out a prima facie case and had adduced no credible evidence why PATH should not be included in the Port Authority rate base. The Port Authority argued that it had established by unrefuted testimony that PATH should be included in the toll base as an essential and integral part of the Port Authority's ITN. The Court again reserved decision.
For the reasons appearing hereafter, the Auto Clubs are not entitled to relief herein and the motions to dismiss the amended complaint and for judgment in favor of the defendants will be granted.
Plaintiffs, the Automobile Club of New York, Inc. and the AAA Clubs of New Jersey, are non-profit organizations organized with the intention of promoting the interest and welfare of motor vehicle users.
The Port Authority is an agency of the States of New York and New Jersey, created in 1921 by an interstate compact between them with the consent of Congress. 42 Stat. 174 (1921). Its principal purpose was to effectuate "a better coordination of the terminal, transportation and other facilities of commerce in, about and through the Port of New York." N.Y.Unconsol.Law § 6401 (McKinney 1979). The term "transportation facility" was in turn defined to include, inter alia, "railroads, steam or electric ... tunnels, bridges, boats, ferries ... and every kind of transportation facility now in use or hereafter designed for use for the transportation or carriage of persons or property." Id. at § 6423.
Pursuant to its powers under the compact and amendments and supplements thereto, the Port Authority owns and/or operates in its Interstate Transportation Network, four interstate bridges (the George Washington Bridge, the Bayonne Bridge, the Goethals Bridge, and the Outerbridge Crossing), two interstate tunnels (the Lincoln Tunnel and the Holland Tunnel), the PATH system, and the Port Authority Bus Programs.
The Port Authority's bridges, tunnels, terminals, PATH and Bus Programs are involved in the movement of people and freight across and under the interstate waters of the Port of New York District, which encompasses the area lying within a 25-mile radius of the Statue of Liberty.
The number of passengers travelling eastbound during a typical weekday peak period (7:00-10:00 a.m.) by auto, rail, and bus via Port Authority facilities over the interstate waters between New York and New Jersey has increased since 1967 as follows:
1967 1977 1987
Automobile 55,200 66,900 78,500
Bus 75,100 63,400 81,500
PATH* 43,700 48,200 69,400
All four Port Authority bridges were constructed in accordance with the provisions of the General Bridge Act of 1906, 33 U.S.C. § 494 (1982), which required that the tolls for transit over them be "just and reasonable." Until 1987, the Federal Highway Administrator ("the Administrator") determined whether such toll increases were in fact "just and reasonable." 49 C.F.R. § 1.48(i)(1).
On April 2, 1987, Congress enacted the Federal-Aid Highway Act of 1987, 33 U.S. C. § 508 (Supp.V.1987) ("the Highway Act"). The Highway Act repealed the Administrator's authority to review Port Authority toll increases and also provided that:
Tolls for passage or transit over any bridge constructed under the authority of the ... Bridge Act of 1906 ... shall be just and reasonable.
33 U.S.C. § 508 (Supp.V.1987).
Effective April 12, 1987, the Port Authority increased the non-discounted, eastbound passenger car tolls on its bridges and tunnels from $2.00 to $3.00. Bus tolls were increased from $2.00 to $3.00 and truck tolls rose from $1.50 per axle to $3.00 per axle. These tolls are charged only in the eastbound direction. In addition, the price of the Commuter Discount Ticket Book of 20 tickets increased from $20.00 to $40.00. PATH fares are charged for service in each direction (east or west), and were raised from $.75 to $1.00 each way, or $2.00 a round-trip.1
The history of the April 1987 toll and fare increases was established without controversy as follows.
On November 24, 1986, the Port Authority's Executive Director submitted a report entitled "Capital Needs and Planning for the Port Authority Interstate Crosswater Facilities" ("the Port Authority Report") to the Port Authority's Commissioners. The report outlined the sharp growth in usage of the Port Authority's Interstate Transportation Network of cross-water facilities, the actions taken by the Port Authority to meet this growth, the magnitude of the need for rehabilitation and modernization of the Port Authority ITN facilities and the inability of the system to provide sufficient revenues to cover the cost of the required capital improvements to the network.
The Port Authority Report projected that nearly $1.5 billion would have to be expended between 1987-1991 for capital improvements and additions to Port Authority facilities to continue the safe, reliable operation of the ITN and to meet projected demands for increased ridership. The Port Authority's plans were to add capacity through a PATH system capacity improvements program, a proposed implementation of a ferry service from Hoboken, New Jersey to Lower Manhattan and a possible expansion at the Staten Island Bridges.
The Port Authority Report also indicated that the ITN required substantial additional revenues to support the funding of these and other capital expenditures, since the ITN could not "generate" the required additional revenues under its then-existing current fare and toll structure. In fact, the report indicated that the network was generating insufficient revenues to cover its operating expenses, and that the gap between operating expenses and revenues was projected to widen significantly in the future.2 The report made clear that the deteriorating service on PATH had led (and, no doubt, would continue to lead) to intolerable crowding on the vehicular crossings.
Four months after the Executive Director submitted that report, the Port Authority's Board of Commissioners adopted a resolution effective April 12, 1987, increasing the tolls which are under attack here and stating, among other things:
it has become necessary for the Port Authority, as a self-supporting agency, to readjust the rates of toll charged for use of its bridges and...
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