City of Burlington v. Turner

• Decision Date: 12 January 1972
• Docket Number: Civ. No. 5-104-D.
• Citation: 336 F. Supp. 594
• Parties: The CITY OF BURLINGTON, an Iowa Municipal Corporation, Plaintiff, v. Francis C. TURNER, as Administrator, Federal Highway Administration, and John A. Volpe, as Secretary, United States Department of Transportation, Defendants.
• Court: U.S. District Court — Southern District of Iowa

336 F. Supp. 594

The CITY OF BURLINGTON, an Iowa Municipal Corporation, Plaintiff, v. Francis C. TURNER, as Administrator, Federal Highway Administration, and John A. Volpe, as Secretary, United States Department of Transportation, Defendants.

Civ. No. 5-104-D.

United States District Court, S. D. Iowa, Davenport Division.

January 12, 1972.

COPYRIGHT MATERIAL OMITTED

COPYRIGHT MATERIAL OMITTED

Robert E. Stine, Springfield, Ill., J. C. Riley, and James Fisch, Burlington, Iowa, for plaintiff, City of Burlington.

Allen L. Donielson, U. S. Atty., and John B. Grier, Asst. U. S. Atty., Des Moines, Iowa, for defendants.

Don A. Petruccelli, Davenport, Iowa, Lyman R. Fort, Stronghurst, Ill., for intervening petitioners, Lucy Olson et al.

Donald H. Sitz, Davenport, Iowa, for International Bridge, Tunnel & Turnpike Assn.

MEMORANDUM AND ORDER

HANSON, Chief Judge.

This is an action for a declaratory judgment and for injunctive relief brought under the Administrative Procedure Act, 5 U.S.C. § 501 et seq., in which this Court is asked to review a decision of the Federal Highway Administrator ("Administrator") that the toll structure set by plaintiff City of Burlington for its toll bridge over the Mississippi River is unreasonable and unjust under the Bridge Act of 1906, 33 U.S.C., §§ 491-498.

I. STATEMENT OF FACTS AND ADMINISTRATIVE DECISIONS REVIEWED.

There is no disagreement as to the background facts of this case. The MacArthur Bridge, focus of this dispute, is a two lane, all-weather, 1000 foot cantilever span, that carries U. S. Highway 34 over the Mississippi River, a navigable waterway, between Iowa and Illinois at Burlington, Iowa. It was constructed in 1917 at a cost of $200,000 by the Citizens' Bridge Company, a private corporation, pursuant to a Congressional consent granted in 1915, 39 Stat. 1. This consent expressly made the MacArthur Bridge subject to the Bridge Act of 1906, 33 U.S.C., § 491 et seq., which among other things, provides in 33 U.S.C., § 494 that:

If tolls shall be charged for the transit over any bridge constructed under the provisions of said sections, of engines, cars, street cars, wagons, carriages, vehicles, animals, foot passengers, or other passengers, such tolls shall be reasonable and just, and the Secretary of the Army may, at any time, and from time to time, prescribe the reasonable rates of toll for such transit over such bridge, and the rates so prescribed shall be the legal rates and shall be the rates demanded and received for such transit.¹

The right to amend, alter or repeal this provision was reserved in both the 1915 consent and in the 1906 Act itself, 33 U.S.C., § 498, but has never been exercised.

In 1923, the bonds of Citizens' Bridge Company were paid off, and title to the MacArthur Bridge was transferred to the City of Burlington, an Iowa municipal corporation, and plaintiff here. Congressional consent to this transfer was given in 1951, 65 Stat. 193, and again the bridge was expressly made subject to the Bridge Act of 1906, with the right to amend, alter or repeal the consent again reserved. This consent was preparatory to a major reconstruction of the MacArthur Bridge undertaken in 1954. For this, $900,000 in bonds were issued, of which $167,000 are yet outstanding, but covered by a $200,000 reserve. At present, the piers of the Burlington bridge are undergoing reinforcement.

Tolls have been charged on the MacArthur Bridge from the date of its completion. From 1933 until 1968 these remained unchanged, at a rate of 25¢ per car, with a non-transferable receipt available, good for a toll-free return passage within twenty-four hours. These rates sufficed to produce $4.5 million in revenue prior to 1954, and another $4,145,838 in the years from 1957 to 1968. Of this latter sum, $1,724,088 was applied to debt service, operating and maintenance expenses, and other bridge expenses, while $2,394,926 was openly transferred to the plaintiff's operating fund, to help defray the expenses of various municipal services. No complaint was made of the rates of tolls, or of the diversion to municipal use of some $269,000 annually, prior to 1968.

In 1968, however, plaintiff abolished the free return receipt, avowedly to produce an additional $140,000 per year to give raises to its police and firemen.² Since approximately two-thirds of the traffic over the bridge each day is local, consisting primarily of local Illinoisans seeking access to Burlington for employment and services, since the nearest alternate bridge is at Fort Madison, 18 miles distant, and since certain vehicles are compelled to use the MacArthur Bridge because of route restrictions, there were numerous and exceptionally vehement protests that the tolls charged for passage over the bridge were unlawful, since bridge revenues were being diverted by plaintiff for general municipal purposes. Implicitly at issue here is plaintiff's right to do so.

Certain complainants brought the matter of the Burlington bridge tolls to the attention of the Federal Highway Administrator, asserting that the new toll structure was unreasonable and unjust, and requesting that the Administrator prescribe reasonable rates. These complainants, Lucy Olson, et al., have appeared in this proceeding and have been permitted by the Court to file briefs and to present oral argument.

On January 8, 1970, the Federal Highway Administrator, in 35 F.R. 399, assigned the matter of the MacArthur Bridge tolls to a Hearing Examiner, Mr. Robert N. Burchmore, for hearings under the Administrative Procedure Act, 5 U.S.C., §§ 554-558, on the question of the reasonableness and justness of plaintiff's toll structure. Hearings were accordingly held on April 6 and 7, 1970. Those present included various Illinois citizens and communities, four trucking companies, and the City of Burlington.

Mr. Burchmore filed his report on September 10, 1970. Therein, he first considered the issue of plaintiff's authority under Iowa law to impose tolls in excess of that needed for maintenance, operation, bond interest and bond retirement, and properly concluded that this issue was beyond the scope of the Administrator's permissible inquiry.³ He recognized that the toll rate charges of 1968 may have been impolitic and infuriating, but further noted that the burden of proving them unreasonable rested on complainants, as required by 5 U.S.C., § 556. Considering briefs, precedents, the legislative history of bridge acts and enabling acts, as well as current federal and state law, the Hearing Examiner concluded that the case was one of first impression under the Bridge Act of 1906. He proceeded to compare the tolls charged by plaintiff with tolls charged elsewhere, and such conditions and circumstances of their assessment as the structure of the bridge, whether it was a draw span, replacement cost, etc. He then calculated net annual percentage return at 7%, and concluded that this was not unreasonable in the light of the definition of "reasonable and just" given in Banton v. Belt Line Ry. Corp., 268 U.S. 413, 422-423, 45 S.Ct. 534, 537, 69 L.Ed. 1020 (1925):

A commission or other legislative body, in its discretion, may determine to be reasonable and just a rate that is substantially higher than one merely sufficient to justify a judicial finding in a confiscation case that it is high enough to yield a just and reasonable return on the value of the property used to perform the service covered by the rate. The mere fact that a rate is nonconfiscatory does not indicate that it must be deemed to be just and reasonable. It is well known that rates substantially higher than the line between validity and unconstitutionality properly may be deemed to be just and reasonable, and not excessive or extortionate.

The Hearing Examiner found no limitation on this concept, or on the diversion of bridge revenues on bridges subject to the 1906 Bridge Act in any other bridge act or enabling act. Accordingly, ruling that the complainants had not sustained their burden of proof, he concluded that plaintiff's toll schedules were not unreasonable or unjust.

Complainants accordingly filed exceptions and resistance to the Hearing Examiner's report with the Federal Highway Administrator. In his Opinion and Order, dated April 30, 1971, he, too, found that the authority of the City of Burlington to charge tolls producing revenue greater than needed for bridge costs was an inappropriate state law issue, and likewise noted that this was a case of first impression, without a body of prior formal interpretative rulings, merely two ad hoc proceedings under a different statute, the General Bridge Act of 1946, 33 U.S.C., §§ 525-533.⁴

The Opinion of the Administrator rejected the use of some comparison test for a determination of reasonableness, holding that the evidence in the record was insufficient to support the conclusions reached under the test used by the Hearing Examiner, that reliance upon In re Camden Bridge Tolls⁵ and In the Matter of Walt Whitman and Benjamin Franklin Bridge Tolls⁶ was misplaced, both because the Whitman/Franklin opinion expresssly stated that the comparison test was only one of many factors to be considered, and because both administrative opinions were premised upon Clarksburg-Columbus Short Route Bridge Co. v. Woodring,⁷ which held that determinations of reasonableness and justness under the Bridge Act of 1906 were to be governed by the same standards used by the Interstate Commerce Commission in its railroad freight rate cases. The Administrator dismissed Woodring out of hand as a "dubious rationale,"⁸ and likewise rejected the Hearing Examiner's conclusion that the Bridge Act of 1906 precluded scrutiny of the uses of bridge toll revenues, holding that the uses of bridge toll revenues are a proper subject of scrutiny in determining whether a particular set of tolls are reasonable and just.

Noting that "reasonable and just" is not specifically defined in the 1906 Bridge Act,...