New York’s lawsuit against the federal government over congestion pricing took a bizarre turn after the federal government’s own attorneys suggested they have no case.
In a late filing on the evening of Wednesday, April 23, U.S. attorneys in the Southern District of New York representing Transportation Secretary Sean Duffy seemingly accidentally submitted a letter to the docket explaining to the Department of Transportation that the federal government’s case holds “considerable litigation risk.” The private, internal communication between the DOJ and the DOT was publicly available for hours before the court sealed the document.
In the 11-page letter, three U.S. attorneys lay out how the federal government has little chance of succeeding in the lawsuit challenging Duffy’s decision to revoke approval for New York City’s congestion pricing program. However, the attorneys suggest an alternate route by which the federal government can end the program.
In February, Duffy told New York to shut down congestion pricing after determining the program is unlawful for two reasons.
First, he claimed that the Value Pricing Pilot Program that authorizes New York’s program does not allow “cordon pricing” projects that do not offer a toll-free option. He also argued toll rates are based on Metropolitan Transportation Authority funding needs rather than an aim to relieve congestion.
Regarding a toll-free option and cordon pricing, the U.S. attorneys admit in the letter that “congestion pricing” is broadly defined by design, giving states flexibility to find solutions. Even more damaging, the DOJ could not find any support for Duffy’s claim that a toll-free route is required.
“Furthermore, we have not identified a provision that requires there to be a non-Interstate route to a particular location, or a requirement that that route not be tolled (presumably if the route is not part of the federal highway system and not constructed with federal funds, the states would be making the decision about whether it is tolled),” the letter states. “As outlined above, the legislative history and FHWA’s prior guidance implementing the VPPP undercut this assertion.”
As for the toll rates and revenue: The DOJ attorneys acknowledge that the goals of congestion pricing are two-fold: to reduce congestion and fund transit.
Although Duffy claimed in his February letter that having a stated goal of funding transit is unlawful, the attorneys admit that nowhere in the statute does it state that New York cannot have a two-fold goal, nor does it limit how tolls can be set.
“It is very unlikely that Judge Liman or further courts of review will uphold the Secretary’s decision on the legal grounds articulated in the letter,” the DOJ attorneys state in the letter. “Defending the case on this basis, with the most likely outcome being vacatur of the Secretary’s decision or remand to the agency for further administrative process, will only serve to delay FHWA’s elimination of (congestion pricing). The agency will have to answer the MTA’s and intervenors’ complaints, compile and produce the administrative record, and then the parties will engage in briefing, likely oral argument, and await a decision from Judge Liman – which is exceedingly likely to be averse to the agency.”
A different path forward
Despite admitting defeat with the current strategy, the U.S. attorneys explain a different way to achieve the goal of eliminating congestion pricing.
According to the letter, the Federal Highway Administration can end congestion pricing through an Office of Management and Budget procedure. OMB regulations allow an agency to terminate an award or cooperative agreement if it no longer aligns with the agency’s priorities. This could allow Duffy to make the same arguments without showing they are supported by statute.
As explained in the letter, this avenue to end congestion pricing is also problematic. To start, FHWA’s approval of the project may not be a cooperative agreement.
A cooperative agreement is defined as “a legal instrument of financial assistance between a federal agency and a recipient” in order to “transfer anything of value.” However, New York never received federal funding in the congestion pricing agreement.
The U.S. attorneys argue that FHWA’s approval of congestion pricing is itself “clearly a transfer of a thing of value,” thereby making it a cooperative agreement. Furthermore, the Value Pricing Pilot Program explicitly uses the term “cooperative agreement.”
Even if considered a cooperative agreement, the OMB rule states that FHWA “must clearly and unambiguously specify all termination provisions in the terms and conditions” of the congestion pricing agreement. No such provision exists. However, DOJ attorneys are not deterred.
“Even if FHWA cannot point to explicit termination provisions that are incorporated within the (congestion pricing) agreement, it is plain that the ‘pilot project’ agreement can be terminated at some point by FHWA,” the letter states. “Moreover, as noted, the MTA, NYS DOT and NYC DOT have argued in their complaints that the (congestion pricing) agreement is a ‘cooperative agreement’ and can only be terminated pursuant to the OMB regulations.”
The U.S. attorneys note in the letter that following OMB termination regulations “will provide alternative and more defensible grounds” to end congestion pricing without abandoning Duffy’s rationale.
What’s next?
The DOJ’s letter highlights Duffy’s struggle to end congestion pricing, with New York’s deadline to shut the cameras off moved to May 21.
As of Monday, April 28, the lawsuit was proceeding as usual. According to The New York Times, the DOT immediately replaced the U.S. attorneys on the case. In a statement, a DOT spokesperson said the accidental filing was “legal malpractice” and asked if the attorneys are “incompetent or was this their attempt to RESIST?”
“(Southern District of New York lawyers’) memo doesn’t represent reality,” a DOT spokesperson said. “Kathy Hochul’s congestion pricing war against the working class was hastily approved by the Biden Administration after Donald Trump was elected. Taxpayers already financed the highways that Hochul is now shutting down to the driving public and there is no free alternative. This is unprecedented and illegal. If New York doesn’t shut it down, the Department of Transportation is considering halting projects and funding for the state.”
There is no indication whether the new attorneys will stay the course or adopt the suggested OMB route. Meanwhile, the Trump administration is trying to end congestion pricing outside the courtroom.
On April 21, Duffy gave Gov. Kathy Hochul “one last chance” to end the toll. He is threatening to pull funding and approval for projects in New York City if it does not end by May 21. Hochul has stayed firm on her stance that she will not shut the cameras off without a court order. LL
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