On Jan. 4, the last of what started as nearly a dozen court battles over Congestion Pricing in Manhattan seemed essentially over. There were still a few issues to be resolved in the case that was filed in Federal Court in New Jersey by the State itself and other plaintiffs, but three judges had turned down requests by the plan’s opponents for an injunction that would prevent the Triborough Bridge & Tunnel Authority (TBTA) from collecting the tolls for the benefit of the capital programs for the New York Metropolitan Transportation Authority (MTA).
Judge Leo M. Gordon, who had been assigned to the District of New Jersey to hear the case, had approved the way federal highway officials had handled the matter last year, and he denied the injunction on Jan. 3. The State and other plaintiffs filed an appeal at the Third Circuit Court of Appeals, based in Philadelphia, and that court affirmed the decision below fewer than ten hours before the toll took effect.
The out-of-court truce, not counting the residual issues still before Judge Gordon, lasted for 46 days. As we reported, Transportation Secretary Sean Duffy reversed the Department’s position regarding the congestion toll and ordered it to be terminated. In response, New York Gov. Kathy Hochul and MTA head Janno Lieber blasted Duffy’s directive and promised litigation. Those incidents occurred on Feb. 19, and we reported them the next day. They were good to their word. The case was filed in federal court for the Southern District of New York on the same day. The docket number is 1:25-cv-01413. The document is 51 pages long, including signatures on the final page, but that does not include the exhibits filed with it.
The case was filed by the TBTA and the MTA as Plaintiffs, against Sean Duffy in his official capacity as USDOT Secretary and Gloria M. Shepherd in her official capacity as Executive Director of the Federal Highway Administration (FHWA). The DOT and FHWA were also named parties as federal agencies. We obtained the Complaint, posted by the Civil Rights Clearinghouse. The Exhibits that the TBTA and MTA submitted, including the Nov. 21 Agreement, can be downloaded below.
The Complaint
The TBTA and MTA summarized their case at the outset: “In a matter of weeks, the Program has already achieved remarkable results: traffic congestion and commute times have materially fallen, more people are visiting Manhattan’s commercial districts and supporting the region’s businesses, and the MTA’s vital mass transit system is seeing the benefit of increased funding.” The plaintiffs then blasted the Administration for moving to kill the toll: “Despite its obvious success, however, the [POTUS 47] Administration has precipitously—and for blatantly political motives—purported to ‘terminate’ the program, as the then-candidate proclaimed he would do in his first week in office. The Administration’s efforts to summarily and unilaterally overturn the considered determinations of the political branches—federal, state, and city—are unlawful, and the Court should declare that they are null and void” (at ¶1). The final sentence indicated that plaintiffs are asking for declaratory judgment.
The Complaint continued with historical background on the need for the toll as New York officials saw it, and with some history about how the tolling program was authorized and eventually implemented, under authority of the State’s Traffic Mobility Act (TMA), passed in 2019, and the federal Value Pricing Pilot Program (VPPP)(¶¶ 2-8). They also said: “Already, preliminary data for January 2025 (and simply looking at the roads) shows that the Program is working” (at ¶8).
The document then listed some of the improvements that the tolling plan has already delivered (¶¶9-13). They included less congestion, fewer vehicles on the streets and roads in the tolling zone, faster travel times including on buses, increased bus ridership, more pedestrian traffic, increased attendance at Broadway shows, new support for the program from business leaders, increased investment in transit because of the toll revenue, and a cleaner environment. It mentioned financials briefly (¶14) and new support for the program: “New Yorkers support the program because it is working. According to a poll reported by CBS News, the majority of New Yorkers want the program to continue. On a 2-to-1 basis, New Yorkers say the Program is working. The Program’s biggest supporters are the individuals who drive into the CBD [Central Business District, in downtown and Midtown Manhattan, as far north as 60th Street] frequently. Ultimately, 6 out of every 10 New Yorkers say [POTUS 47] should not take any steps to end the Program” (at ¶15, citations omitted).
Then the Complaint described POTUS 47’s efforts to kill the Program (at ¶¶16-17) and referred to Duffy’s directive as the “Challenged Action.” It alleged that the Challenged Action is “unlawful” (at ¶18) and described why they alleged that (at ¶¶19-26). The TBTA and MTA claimed that there is no basis for the FHWA to unilaterally terminate the agreement underlying the Program, that the agency’s abrupt reversal after supporting it for years had no legal basis, that the termination was done in disregard of the U.S. Constitution, as well as federal statutes and regulations, that the termination order contravened policy to prioritize projects “that utilize user-pay models” and save people time on their commutes, that the Administration is violating its own “states’ rights” policy by interfering with New York’s toll initiative, and finished that section of the document by saying that plaintiffs would continue to collect the toll.
The next section of the Complaint contained allegations about the parties, jurisdiction, and venue (at ¶¶27-34). This is standard subject matter in Complaints, with the addition of citations of federal law (the Constitution and federal statutes), because federal courts only have jurisdiction when there are issues under federal laws or diversity cases (parties from different jurisdictions, which is not the case here).
Next came the Background section. Part A (at ¶¶35-42) described “New York’s Enactment of Congestion Pricing” with a recitation of the problems that street congestion causes, earlier efforts to reduce congestion with a toll, and the Traffic Mobility Act (TMA), passed in 2019 and which authorized the TBTA to establish the regulations needed to charge the tolls. Part B (at ¶¶43-52) described the Federal Value Pricing Pilot Program (VPPP) and the Federal approval needed to implement it, because it constitutes an exception to the rule that tolls are not charged on highways that receive federal funds. Tolls could be charged for congestion reduction under the Intermodal Surface Transportation Efficiency Act of 1991 (ISTEA) (at ¶¶46-47). The Complaint described the VPPP and said that the federal government recognizes the benefits of reducing congestion (at ¶¶ 48-50). noted examples of the policy in other cities (at ¶51) and that none of those programs were rescinded (at ¶52).
The heading for Part C reads: “FHWA and the Project Sponsors Conducted a Lengthy Environmental Review Process” (at ¶¶53-72). The document recounted the history of the environmental review. It included studies about traffic flow, air pollution, noise, specific effects on Environmental Justice (EJ) communities, economic effects of the tolls, and other topics (at ¶¶ 53-56). It then described the comment period (at ¶57), FHWA participation (at ¶58), the preparation of the Final Environmental Assessment (EA) (at ¶¶ 59-63). Paragraph 62 contained a list of ten benefits that the toll would bring, including increased transit ridership, and Paragraph 63 noted that the FHWA had approved the Final EA. The rest of the section described further steps, including the Draft Finding of No Significant Impact (FONSI, a requirement under the National Environmental Protection Act (NEPA)), changes in the plan that resulted from two re-evaluations under NEPA, and final approval. One such change would be the Phase-In Approach toward the amount of the tolls (at ¶69). Part D (at ¶¶73-78) described how the VPPP agreement between the FHWA and Project Sponsors was executed. That happened on Nov. 21, 2024 (at ¶73). The toll was approved as a pilot program, and the TBTA was authorized to operate it (at ¶74). Project sponsors had obligations, too, like reporting data (at ¶75), and both sides agreed to cooperate (at ¶76). Notably, at Paragraph 77, the Complaint stated that only the TBTA, and not the FHWA, could terminate the agreement: “The VPPP Agreement does not include any provision authorizing FHWA to terminate the agreement. Rather, it contemplates that only TBTA could unilaterally decide to discontinue the Program, requiring the Project Sponsors to ‘work with FHWA to return the Project to its original condition if TBTA decides to discontinue tolls on the Project’” (emphasis in original, citation omitted). Paragraph 78 cited regulations that did not grant FHWA the authority to terminate the VPPP Agreement unilaterally.
The Complaint then described “The Successful Implementation of the Program” (at ¶¶79-94). That included a $500 million budget “and much of that budget has been expended” (at ¶79). Gov. Kathy Hochul’s “pause” in the program (at ¶80), the history of the litigations against the toll (at ¶¶ 81-82), the actual start of toll collection (at ¶83), and claims that the toll has been working, with a recitation of the benefits it has brought (at ¶¶ 84-90), and public approval of the plan, as well as approval from business groups and elected officials (at ¶¶ 91-94).
The next two sections of the Complaint described the roll of POTUS 47 in the DOT effort to kill the tolling plan. The heading for Part F said: “Then-Candidate [POTUS 47’s] Repeated Threats to ‘Kill’ Congestion Pricing and ‘Slash’ Environmental Regulations” (at ¶¶ 95-103). There were examples of POTUS 47’s posts opposing the toll and environmental regulations generally, and another by Rep. Nicole Malliotakis, a Republican from Staten Island who shares POTUS 47’s views. Part G described “The Administration’s Moves to ‘Terminate’ Congestion Pricing’ (at ¶¶104-08). The Plaintiffs said that USDOT would support programs with “user-pay models” but linked the “Challenged Action” to POTUS 47’s campaign promise (at ¶106), also mentioning “other apparently lawless actions taken in the first two weeks of the Second [POTUS 47] Administration” with a list of five recent cases demonstrating that point in a footnote (Id., n.59).
Paragraph 107 reads in its entirety: “On Feb. 19, 2025, DOT followed through with the President’s promise to attempt to ‘terminate’ congestion pricing by purporting to terminate approval for the VPPP. In the announcement of its action, DOT cited ‘two reasons’ for termination: (1): that ‘the scope of the CBDTP is unprecedented and provides no toll-free option for many drivers’ and (2): that ‘the toll rate was set primarily to raise revenue for transit, rather than at an amount needed to reduce congestion’ and ‘so it runs contrary to the purpose of the VPPP, which is to impose tolls for congestion reduction – not transit revenue generation.’”
Paragraph 108 reads in its entirety: “This is the definition of arbitrary and capricious – not to mention hypocrisy. DOT did not cite any basis in the statute authorizing it to reverse the approval it had provided just three months earlier, following a four-year intensive review process, let alone explain how the fact that the Program obviously imposes a toll (as DOT admits is authorized under the VPPP) or is aimed at congestion reduction by way of reducing vehicular congestion and promoting mass transportation—facts DOT has known all along—render the Program impermissible.”
Part H, the final section of the “Background” portion of the Complaint, argues: “The MTA, TBTA, and the Region’s Economy and Public Transit System will be Irreparably Harmed if Plaintiffs are Forced to End the Program” (at ¶¶109-121). Paragraph 109 alleged that the Plaintiffs had budgeted $500 million to implement the tolls, and how much of it had already been spent, expenses of $12 million per month would continue for the system (at ¶110), and that the agencies would lose revenues of more than $40 million per month, based on projected revenue of $500 million per year from the tolls (at ¶111). The final allegations concerned non-monetary losses that would result if the toll were terminated: increased traffic and congestion (at ¶112), loss of capital improvements that would help the MTA provide service (at ¶113), the loss to the local economy and, consequently, to the national economy (at ¶114), a list of the capital projects that would be endangered without the toll (at ¶¶115-17), an increase in the debt that the MTA must pay (at ¶118), and “the unabated continuation of the severe congestion in the CBD, with its concomitant economic, environmental, and public health and safety costs to businesses, residents, commuters, workers and visitors in this area, without any evaluation of these and other environmental impacts, opportunity for public participation, or consideration of alternatives required by NEPA” (at ¶119). Before claiming that there is an actual controversy before the Court (at ¶121), the Complaint said at Paragraph 120, in its entirety: “Plaintiffs will continue to operate the Program as required by New York law until and unless Plaintiffs are directed to stop by a court order.”
Six Complaint Counts
In accordance with standard practice, the final portion of the Complaint set forth the Causes of Action. These are the specific allegations that the Plaintiffs make against the Defendants, alleging improper conduct on their part. The allegations include statutory and case citations to demonstrate that they have precedents to back up their claims for relief. The TBTA and MTA recited six counts in the Complaint.
First, they claimed that USDOT and FWHA acted arbitrarily and capriciously in terminating the VPPP Agreement, which violated the Administrative Procedure Act (APA) (at ¶¶ 122-131). They said that the Defendants are not authorized by law to terminate the VPPP and that the FHWA is not allowed to rescind its approval of its prior agreement with the Plaintiffs unilaterally (at ¶125). They said that only TBTA could discontinue the agreement, and that a ten-year period was contemplated (at ¶127). The Plaintiffs also claimed that the Defendants were depriving them of their contractual rights (at ¶¶ 129-30) and requested that the Challenged Action be set aside (at ¶131).
The Second Count (at ¶¶132-39) alleged that the Challenged Action was ultra vires, which means it was beyond the scope of the Defendants’ official authority. Paragraph 135 states: “The Challenged Action is ultra vires because it purports to unilaterally terminate the VPPP Agreement and rescind TBTA’s authority to implement tolls under the VPPP for the Program without statutory authority and contrary to the applicable agency regulations and the terms of the VPPP Agreement.”
The Third Count (at ¶¶ 140-46) alleges that the Defendants violated the APA by their conduct, which was “procedurally arbitrary and capricious” and contrary to regulations. The Complaint cited rules under which a “cooperative agreement” could be terminated (at ¶143), that those conditions were not met (at ¶144), that the Defendants did not give the required notice and hearing before terminating the Agreement (at ¶145), and that violating the Agreement was “arbitrary and capricious” (at ¶146).
The Fourth Count (at ¶¶147-54) claims that the Challenged Action violated the Due Process Clause of the Fifth Amendment to the U.S. Constitution. That clause (cl. 3) does not allow a government agency to deprive anyone of “life, liberty, or property without due process” under the Fifth Amendment if applied to the federal government or its agencies, or the Fourteenth Amendment if applied to a State or its agencies. Plaintiffs claimed a “property interest” in the toll money that would be collected (at ¶149), that the Challenged Action violated that interest (at ¶150), and that the Defendants did not give TBTA and MTA “due process” by not giving them notice and a hearing before ordering termination (at ¶151).
The Fifth Count (at ¶¶155-68) said that the Defendants’ action was “Substantively Arbitrary and Capricious” because the Defendants gave insufficient explanation of its action. They cited an APA provision and said (at ¶158): “Under the APA, an agency ‘changing its course’ by rescinding a prior rule or order ‘is obligated to supply a reasoned analysis for the change beyond that which may be required when the agency does not act in the first instance.’” They alleged that the Defendants “did not examine or rely on relevant data (at ¶160), did not consider the economy, the environment, or the effects of congestion (at ¶161), the costs of terminating the Agreement (at ¶162), the Plaintiffs’ “legitimate reliance interest” (at ¶163), “alternative approaches that would have allowed at least some of the Program to continue” (at ¶164), “more-limited policies than complete termination of the Agreement (at ¶166), and that terminating the Agreement was solely a political decision: “Defendants acted entirely based on political considerations. Defendants had made no indication that it was reconsidering the Program until [POTUS 47] took office last month. But [POTUS 47] has long indicated his desire to ‘kill’ or terminate the Program, both in conversation with Republican lawmakers and in social media posts. Defendants, bearing under this political pressure, did not undertake any analysis or provide any explanation before revoking its prior decision to enter into the VPPP or approve the Program” (at ¶167).
Finally, the Plaintiffs alleged that the termination of the VPPP Agreement violated NEPA and the APA (at ¶¶169-83). They claimed that the processes required by those statutes were completed (at ¶¶170-71) and that “the purported termination of the VPPP Agreement constitutes a new final agency action (at ¶172), which requires the preparation of a new Environmental Impact Statement (EIS)(at ¶173) or at least a new Environmental Assessment (EA) (at ¶174). A new Finding of No Significant Impact (FONSI) might be required (at ¶175), which “Either level of review requires public participation opportunities and consideration of alternatives to the proposed action” (at ¶176). The Complaint set out the sort of review that the Defendants are required to conduct (at ¶¶177-82) and called on the Court to set aside the purported termination as unlawful (at ¶183).
Finally, as is customary in all Complaints that are filed to initiate civil actions, the Plaintiffs stated their request for relief, that the Court should: “Declare that the Defendants’ purported termination of the VPPP Agreement was undertaken in violation of the terms of the VPPP Agreement and is in excess of statutory authority and ultra vires, in violation of Plaintiff’s Fifth Amendment right to Due Process, without observance of procedure required by law in violation of the APA, arbitrary and capricious in violation of the APA, and violates NEPA” with a further request to “vacate the Challenged Action and Defendants’ decision to purportedly terminate the VPPP Agreement” (exact quotes from the Complaint). As is customary for Complaints, there were also requests for further relief as might be deemed just and proper, and for costs, which could include attorney’s fees.
Closing Comments
This article is long. As with legal reporting generally, preparation for it required a thorough review of the document at issue, a prerequisite to summarizing it for you in this report. The Defendants, federal agencies and the heads of those agencies, are now required to file an Answer to the allegations set forth in the Complaint. Typically, defendants have 21 days to do that, so the deadline for the Answer to be filed is on or before Thursday, March 13. Judges often allow defendants more time if they request it (one extension for the asking, and further extensions usually require an explanation of why more time would be needed), but custom does not accurately predict what a judge would do 100% of the time. So, an answer is forthcoming before long, and we will review it and report to you about it.
The arguments made by the TBTA and MTA in the Complaint appear colorable on their face. There are citations of statutes and regulations that I did not have time to check while preparing this report, but we can be sure that the parties’ lawyers will check them, and so will the judge and the judge’s clerks. The Plaintiffs did not ask for Summary Judgment, which means that they did not allege that there are no issues of fact that would require a trial. The Defendants could request it with their Answer, along with any other Motions that they might decide to make. Is a long litigation coming, with trials over factual matters, or will the judge decide based on papers that describe the facts, as happened during the multiplicity of litigations that occurred last year? Time will tell, and we will know more when the DOT and FHWA’s Answer and supporting papers are filed.
It was widely reported on Feb. 27 that federal transportation officials had ordered that the tolling program be shut down by March 21. The Federal Highway Administration reported that Gloria M. Shepherd, Executive Director of the FHWA, wrote to New York State officials on Feb. 20: “In order to provide NYSDOT and its project sponsors time to terminate operations of this pilot project in an orderly manner, this rescission of approval and termination of the Nov. 21, 2024 Agreement will be effective on March 21, 2025. Accordingly, NYSDOT and its project sponsors must cease the collection of tolls on Federal-aid highways in the CBDTP area by March 21, 2025.”
With this deadline, imposed after the New York agencies filed their Complaint, the case could become more complicated procedurally. In situations like this, a plaintiff must file a motion before the judge to issue a stay that would prevent federal transportation officials from enforcing a shutdown on or before the March 21 deadline.
This case could become an important part of the effort, led by Democrats, to fight initiatives that POTUS 47 has unleashed at an unprecedentedly rapid rate. While his supporters cheer him on, others say that he is turning the country, and perhaps the entire world, upside down and transforming both into an unprecedently scary landscape, at least unprecedented for the United States.
It is Administration agencies like USDOT and its component FHWA that enforce and implement the decisions that the POTUS orders. Republicans have relatively consistently positioned themselves as the champions of states’ rights. Their critics say that they make exceptions when states choose to do something that Republicans don’t like. This is one such situation, at least as far as the State of New York and its agency, the MTA and its component, the TBTA), are concerned. There are other cases with allegations along similar lines that have been filed elsewhere and are going through the legal process. The present case is another of them.
As this series began, we placed a question mark at the end of the subhead: An Idea Whose Time Has Come (?). We eliminated the question mark when the tolling plan was implemented on Jan. 5. It might be time to put it back, but I still suggest waiting until we hear from the judge who has the case.
The next article in this series is coming soon. It will not be a news report, but a commentary on the Congestion Pricing toll, and how it is doing toward achieving its stated goals.
