New York's use of tolls to maintain canals unconstitutional: judge

[August 11, 2016]  By Jonathan Stempel

NEW YORK (Reuters) - A federal judge on Wednesday said the New York State Thruway Authority's practice of diverting toll revenue it collects from commercial truckers to maintain upstate canals is unconstitutional.

Chief Judge Colleen McMahon of the federal court in Manhattan agreed with the American Trucking Associations trade group that the authority unlawfully burdens interstate commerce by contributing more than $61 million annually, or roughly 10 percent of toll revenue, to maintain the canals.

McMahon called the canals a "jewel in the crown" for New York, which benefits from tourism revenue they generate, but said they offered no benefit to truckers.

She said this made the state's use of toll revenue from truckers to maintain the canals a violation of the so-called Dormant Commerce Clause.

"The State of New York cannot insulate the canal system from the vagaries of the political process and taxpayer preferences by imposing the cost of its upkeep on those who drive the New York Thruway in interstate commerce," McMahon wrote.

"To the extent that they are used to maintain and operate the canal system, the thruway tolls are unconstitutionally excessive," she added.

Neither the Thruway Authority nor the office of New York Attorney General Eric Schneiderman, which defended its use of tolls, immediately responded to requests for comment.

"Revenue from tolls must be spent maintaining the roads they're collected on," Chris Spear, chief executive of American Trucking Associations, said in a statement.

"We hope today's ruling will not only end this practice in New York, but dissuade other states from financing their budget shortfalls on the backs of our industry," he added.

The plaintiffs are seeking unspecified damages.

The tolls in question are charged on the Governor Thomas E. Dewey Thruway system, which stretches about 570 miles (917 km).

Truckers said the excess tolls reduced their revenue and raised consumer prices to benefiting a canal system, including the Erie Canal, that was once crucial for transporting goods but is now obsolete, and mainly a tourist attraction.

McMahon had dismissed the lawsuit on other grounds in 2014. The federal appeals court in Manhattan revived the case last August.

The case is American Trucking Associations Inc et al v. New York State Thruway Authority et al, U.S. District Court, Southern District of New York, No. 13-08123.

(Reporting by Jonathan Stempel in New York; Editing by Alan Crosby)

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