Elizabeth River Crossings Opco, LLC v. Meeks

• Decision Date: 31 October 2013
• Docket Number: 130955.,Record Nos. 130954
• Citation: 286 Va. 286,749 S.E.2d 176
• Parties: ELIZABETH RIVER CROSSINGS OPCO, LLC v. Danny MEEKS, et al. Virginia Department of Transportation v. Danny MEEKS, et al.
• Court: Virginia Supreme Court

286 Va. 286

749 S.E.2d 176

ELIZABETH RIVER CROSSINGS OPCO, LLC

v.Danny MEEKS, et al.

Virginia Department of Transportation

v.Danny MEEKS, et al.

Record Nos. 130954, 130955.

Supreme Court of Virginia.

Oct. 31, 2013.

Stuart A. Raphael, McLean (Robert M. Tata, Norfolk; Marina J. Liacouras; Dane H. Butswinkas; Kannon K. Shanmugam; Hunton & Williams & Connolly, on briefs), for appellant Elizabeth River Crossings OPCO, LLC.

George A. Somerville, Richmond; E. Duncan Getchell, Jr., Solicitor General (Kenneth T. Cuccinelli II, Attorney General; Patricia L. West, Chief Deputy Attorney General; Michael H. Brady, Assistant Solicitor General; Timothy J. St., Richmond; Troutman Sanders, on brief), for appellant Virginia Department of Transportation.

Patrick M. McSweeney (Christopher l., Lake Ridge; Robert J. Cynkar; Cueno, Gilbert & LaDuca; Dominion Law Center, on brief), for appellees.

Amicus Curiae: County of Fairfax, Virginia and The Board of Supervisors of Fairfax County (David P. Bobzien, Fairfax; Gail P. Langham; James V. McGettrick, on briefs), in support of appellants.

Amicus Curiae: Chesapeake Bay Bridge & Tunnel Commision (Wiley F. Mitchell, Jr.; Hugh L. Patterson; Gary A. Bryant; Norfolk, Wilcox & Savage, on brief), in support of appellants.

Amici Curiae: National Conference of State Legislatures and the American Road & Transportation Builders Association (James J. O'Keeffe, IV; Abigail E. Murchison; Gentry Locke Rakes & Moore, Raonoke, on brief), in support of appellants.

Amici Curiae: Virginia Chamber of Commerce, Virginia Transportation Construction Alliance, and Old Dominion Highway Contractors Association (S. Miles Dumville, Richmond; Reed Smith, on brief), in support of appellants.

Present: KINSER, C.J., MILLETTE, MIMS, McCLANAHAN, and POWELL, JJ., and RUSSELL and KOONTZ, S.JJ.

OPINION BY Justice LEROY F. MILLETTE, JR.

In this appeal we hold that the General Assembly did not unconstitutionally delegate its power of taxation to the Virginia Department of Transportation (“VDOT”) and Elizabeth River Crossings OpCo, LLC (“ERC”) under the terms of the Public–Private Transportation Act of 1995, Code § 56–556 et seq. (“PPTA”), and that the Comprehensive Agreement between VDOT and ERC does not abridge the Commonwealth's police power.

I. Facts and Proceedings

A. History of Tunnels Crossing the Elizabeth River

A branch of the Elizabeth River separates the City of Portsmouth from the City of Norfolk. The first tunnel crossing the Elizabeth River between Portsmouth and Norfolk was the two-lane Downtown Tunnel, which opened in 1952. The Downtown Tunnel experienced “steadily increasing traffic ... at levels substantially higher than those originally projected.” In response, the General Assembly authorized the construction of an additional crossing in 1956. The Midtown Tunnel was subsequently built a short distance northwest of the Downtown Tunnel and was opened in 1962. By 1973, the General Assembly was made aware that traffic through the Downtown Tunnel had reached capacity, with substantial congestion being commonplace and likely to get worse. Further, the Midtown Tunnel was projected to reach capacity within a few years. The Downtown Tunnel was therefore expanded so that a second, two-lane tube, parallel to the original two-lane tube, was opened in 1987.

Despite these earlier projects, traffic crossing the Elizabeth River remained a substantial problem. In 1996, a Final Environmental Impact Statement submitted by the United States Department of Transportation and VDOT noted that transportation projects completed within the region have not “lessen [ed] or alleviate[d] traffic congestion within the project area.” The Final Environmental Impact Statement went on to recognize that a proposed project to “improve traffic movement between Portsmouth and Norfolk at the Midtown Tunnel crossing and to alleviate long traffic queues and delays which currently exist” would “result in significant benefits to the local and regional transportation network.”

By 2009, the General Assembly recognized the Midtown Tunnel to be the “most heavily traveled two-lane road” in all of Virginia, creating “both safety and congestion problems.” The General Assembly learned that during peak hours both the Downtown Tunnel and the Midtown Tunnel experience the worst possible levels of congestion, with traffic backups that extend more than two miles.

Although other alternatives were initially explored, the next project to address this continuing problem of traffic crossing the Elizabeth River arose under the framework of the PPTA.

B. The Public–Private Transportation Act

The General Assembly enacted the PPTA in 1995 ¹ to allow “private entities to develop and/or operate one or more transportation facilities ... in a more timely, more efficient, or less costly fashion, thereby serving the public safety and welfare.” Code § 56–558(A)(3). In enacting the PPTA, the General Assembly was motivated by “a public need for timely development and/or operation of transportation facilities.” Code § 56–558(A)(1). The General Assembly indicated that the development and operation of transportation facilities would meet the public's needs by “improving safety, reducing congestion, increasing capacity, and/or enhancing economic efficiency.” Id. The General Assembly recognized that the PPTA was necessary because these public needs would “not be wholly satisfied by existing methods of procurement in which qualifying transportation facilities are developed and/or operated [, or] by existing ways in which transportation facilities are developed and/or operated.” Code § 56–558(A)(1)–(2).

Under the terms of the PPTA, a “public entity that is an agency or institution of the Commonwealth” may accept proposals from private entities “to develop and/or operate a transportation facility.” Code § 56–559(A)–(B). The public entity may approve a private entity's proposal only after the private entity provides statutorily-specified material and information to the public entity. Code § 56–560(A). Once this material and information is submitted, the public entity may approve “the development and/or operation of the transportation facility or facilities as a qualifying transportation facility.” Code § 56–560(C).

However, such approval is dependent upon the public entity determining that such development and/or operation of the transportation facility “serves the public purpose of [the PPTA].” Id. The development and/or operation of the transportation facility or facilities serves the public purpose of the PPTA if: “[t]here is a public need for the transportation facility or facilities;” “the transportation facility or facilities ... are, in the opinion of the ... public entity, reasonable and will address the needs identified in the ... transportation plan by improving safety, reducing congestion, increasing capacity, and/or enhancing economic efficiency;” “[t]he estimated cost of developing and/or operating the transportation facility or facilities is reasonable in relation to similar facilities;” and “[t]he private entity's plans will result in the timely development and/or operation of the transportation facility or facilities or their more efficient operation.” Code § 56–560(C)(1)–(4).

The PPTA also requires the public entity to “develop guidelines that establish the process for the acceptance and review of a proposal from a private entity,” Code § 56–560(D), and adopt guidelines “that are consistentwith procurement through ‘competitive sealed bidding,’ ” Code § 56–573.1(1).

Once the public entity selects a private entity's proposal under the PPTA, but before development or operation of the qualifying transportation facility begins, the public and private entities must enter into a comprehensive agreement. Code § 56–566(A). The comprehensive agreement shall provide the basic terms of the cooperative agreement between the public entity and private entity. Code § 56–566(A)(1)–(10). The comprehensive agreement shall also include a provision for user fees, set forth the duties and obligations of the private entity, and provide for the distribution of any earnings in excess of the negotiated maximum rate of return as negotiated in the agreement. Code § 56–566(B), (D), (E). Finally, upon request by a member of the public, the private entity shall make available a “schedule of the current user fees.” Code § 56–566(B).

C. The Project: The Downtown Tunnel / Midtown Tunnel / MLK Extension

In the 2007 Acts of Assembly, the General Assembly created the Hampton Roads Transportation Authority “as a political subdivision of the Commonwealth” and named it a “responsible public entity as defined in the [PPTA].” 2007 Acts ch. 896. The General Assembly gave the Transportation Authority the authority to “impose and collect tolls in amounts established by the [Transportation] Authority for the use of any new or improved highway, bridge, tunnel, or transportation facility to increase capacity on such facility.” Id. Additionally, the General Assembly allowed the “Midtown and Downtown tunnels located within the Cities of Norfolk and Portsmouth” to be “tolled if improvements are made to either tunnel.” Id.

The General Assembly directed the Transportation Authority to “phase construction of the transportation projects that are included in the federally mandated 2030 Regional Transportation Plan.” Id. The “Downtown Tunnel / Midtown Tunnel / MLK Extension” project (the “Project”) was one of the first phase projects that the Transportation Authority was directed to pursue. Id. The Project is the subject of the current litigation before this Court.

In 2008, VDOT, an agency of the Commonwealth of Virginia, and thus a “public entity,” requested conceptual proposals from private entities for financing, design, construction, operation, and maintenance of the Project under the PPTA. ERC, a “private entity,” responded to this request by submitting such a proposal. ERC's proposal for the Project was accepted...