17-737(L)
American Trucking Ass'ns, Inc. v. N.Y. State Thruway Auth.
17‐737 (L)
American Trucking Ass’ns, Inc. v. N.Y. State Thruway Auth.
In the
United States Court of Appeals
For the Second Circuit
________
AUGUST TERM 2017
No. 17‐737 (L), 17‐873 (Con)
AMERICAN TRUCKING ASSOCIATIONS, INC., WADHAMS ENTERPRISES,
INC., LIGHTNING EXPRESS DELIVERY SERVICE INC., WARD TRANSPORT
& LOGISTICS CORP., ON BEHALF OF THEMSELVES AND ALL OTHERS
SIMILARLY SITUATED, AMERICAN BUS ASSOCIATION, DATTCO, INC.,
STARR TRANSIT CO., INC., ON BEHALF OF THEMSELVES AND ALL OTHERS
SIMILARLY SITUATED,
Plaintiffs‐Appellants,
v.
NEW YORK STATE THRUWAY AUTHORITY, NEW YORK STATE CANAL
CORPORATION, THOMAS J. MADISON, JR., IN HIS OFFICIAL CAPACITY AS
EXECUTIVE DIRECTOR OF THE NEW YORK STATE THRUWAY AUTHORITY,
HOWARD MILSTEIN, IN HIS OFFICIAL CAPACITY AS CHAIR OF THE NEW
YORK STATE THRUWAY AUTHORITY/CANAL CORPORATION BOARDS OF
DIRECTORS, DONNA J. LUH, IN HER OFFICIAL CAPACITY AS VICE‐CHAIR
OF NEW YORK STATE THRUWAY AUTHORITY/CANAL CORPORATION
BOARDS OF DIRECTORS, E. VIRGIL CONWAY, IN THEIR OFFICIAL
CAPACITIES AS MEMBERS OF THE NEW YORK STATE THRUWAY
AUTHORITY/CANAL CORPORATION BOARD OF DIRECTORS, RICHARD N.
SIMBERG, IN THEIR OFFICIAL CAPACITIES AS MEMBERS OF THE NEW YORK
STATE THRUWAY AUTHORITY/CANAL CORPORATION BOARD OF
DIRECTORS, BRANDON R. SALL, IN THEIR OFFICIAL CAPACITIES AS
MEMBERS OF THE NEW YORK STATE THRUWAY AUTHORITY/CANAL
2 No. 17‐737 (L)
CORPORATION BOARD OF DIRECTORS, J. RICE DONALD, JR., IN THEIR
OFFICIAL CAPACITIES AS MEMBERS OF THE NEW YORK STATE THRUWAY
AUTHORITY/CANAL CORPORATION BOARD OF DIRECTORS, JOSE
HOLGUIN‐VERAS, IN THEIR OFFICIAL CAPACITIES AS MEMBERS OF THE
NEW YORK STATE THRUWAY AUTHORITY/CANAL CORPORATION
BOARD OF DIRECTORS, BILL FINCH, IN HIS OFFICIAL CAPACITY AS
ACTING EXECUTIVE DIRECTOR OF THE NEW YORK STATE THRUWAY
AUTHORITY, JOANNE M. MAHONEY, IN HER OFFICIAL CAPACITY AS
CHAIR OF THE NEW YORK STATE THRUWAY AUTHORITY/CANAL
CORPORATION BOARDS OF DIRECTORS, ROBERT L. MEGNA, IN HIS
OFFICIAL CAPACITY AS A MEMBER OF THE NEW YORK STATE THRUWAY
AUTHORITY/CANAL CORPORATION BOARDS OF DIRECTORS, STEPHEN
M. SALAND, IN HIS OFFICIAL CAPACITY AS A MEMBER OF THE NEW YORK
STATE THRUWAY AUTHORITY/CANAL CORPORATION BOARDS OF
DIRECTORS,
Defendants‐Appellees.
________
Appeal from the United States District Court
for the Southern District of New York.
Nos. 1:13‐cv‐08123 and 1:17‐cv‐00782 — Colleen McMahon, Chief
District Judge.
________
ARGUED: MARCH 6, 2018
DECIDED: MARCH 29, 2018
3 No. 17‐737 (L)
Before: CALABRESI, CABRANES and LOHIER, Circuit Judges.
Plaintiffs‐Appellants American Trucking Associations, Inc. and
all those similarly situated appeal from the judgment of the U.S.
District Court for the Southern District of New York (Colleen
McMahon, Chief District Judge) granting a motion to dismiss of
Defendants‐Appellees New York State Thruway Authority and its
aligned state entities. Plaintiffs‐Appellants claim that the New York
State Thruway Authority violated the Dormant Commerce Clause
when it used surplus revenue from highway tolls to fund the State of
New York’s canal system. The District Court dismissed this claim,
concluding that Congress authorized the Thruway Authority to
allocate highway tolls to canal uses.
We AFFIRM the District Court’s judgment.
________
CHARLES A. ROTHFELD, Evan M. Tager, Matthew
A. Waring, Mayer Brown LLP, Washington, DC;
Richard Pianka, ATA Litigation Center, Arlington,
VA, for Plaintiffs‐Appellants.
ANDREW W. AMEND, Senior Assistant Solicitor
General, of counsel, (Barbara D. Underwood,
Solicitor General, Steven C. Wu, Deputy Solicitor
General, on the brief), for Eric T. Schneiderman,
4 No. 17‐737 (L)
Attorney General, State of New York, for
Defendants‐Appellees.
________
JOSÉ A. CABRANES, Circuit Judge:
The questions presented are: (1) whether the District Court
correctly dismissed the Dormant Commerce Clause claims of
plaintiffs, challenging the authority of defendants to allocate surplus
highway toll revenues to New York’s canal system; and (2) whether
the District Court properly determined that defendants did not waive
the argument that Congress authorized them to depart from the
Dormant Commerce Clause.
American Trucking Associations, Inc. and its fellow plaintiffs
(jointly, “ATA”) claim that the New York State Thruway Authority
and its aligned state entities (jointly, the “Thruway Authority”)
violated the Dormant Commerce Clause when it used surplus
revenue from highway tolls to fund New York State’s Canal System
(“the Canal System”). The District Court dismissed this claim, finding
that Congress specifically authorized the Thruway Authority to
allocate highway tolls to canal uses. ATA further claims that the
District Court abused its discretion in reaching the question of
congressional authorization because the Thruway Authority did not
discover or raise this argument until several years into the litigation.
5 No. 17‐737 (L)
We conclude that Congress evinced unmistakably clear intent
to authorize the Thruway Authority to allocate highway tolls to
support the Canal System. We also conclude that the District Court
had discretion to reach the question of congressional authorization.
Accordingly, we AFFIRM the judgment of the District Court.
I. BACKGROUND
A. The Thruway Authority’s Tolling Powers
The New York State Thruway Authority is a public benefit
corporation, created in 1950 by the New York State Legislature to
construct and operate transportation facilities.1 Since its
establishment, it has operated the Governor Thomas E. Dewey
Thruway System (the “Thruway”), a 570‐mile cross‐state highway
that is a “major artery of interstate commerce in the Northeast”
United States and a “critical route for commercial truckers serving the
region.”2
New York originally funded the Thruway through bond
issuances, and authorized the Thruway Authority to charge tolls both
to repay the bonds and to support maintenance and operations.3 In
1 See N.Y. Public Authorities Law (“PAL”) §§ 352‐353.
2 Am. Trucking Ass’ns, Inc. v. N.Y. State Thruway Auth., 795 F.3d 351, 354 (2d Cir.
2015).
3 PAL § 354(8); see also Ch. 143, § 1, 1950 N.Y. Laws 653, 655, 659 (enacting PAL
§ 359(1)). See generally ROBERT A. CARO, THE POWER BROKER 15‐19, 615‐31, 633‐34
(1974) (discussing Robert Moses’s use of public authorities to shape
infrastructure in New York, his utilization and expansion of the concept of public
6 No. 17‐737 (L)
1956, Congress passed the Federal‐Aid Highway Act, which
incorporated existing toll highways, including the Thruway, into the
Interstate Highway System, but prohibited the use of any federal
funds to construct or improve such highways.4 The Thruway and
other toll highways became eligible for federal financial support only
when, in 1978, Congress enacted the Surface Transportation
Assistance Act (“STAA”).5 Section 105 of that statute mandated that,
in order to receive federal financial aid, state public authorities
responsible for toll highways in the Interstate Highway System had
to discontinue levying tolls once they had collected sufficient
revenues to retire outstanding bonds.6 If those authorities failed to
make a toll road free once they had collected sufficient tolls to retire
authorities, the role of bond issuances in raising financing for and perpetuating
public authorities, and the role of tolls in sustaining public authorities).
4 See Pub. L. No. 84‐627, § 113(a), 70 Stat. 374, 384 (1956).
5 Pub. L. No. 95‐599, 92 Stat. 2689 (1978).
6 § 105, 92 Stat. at 2692‐93. Section 105’s requirements were effectuated through
“tripartite agreements” between the relevant state public authority, the state
highway department, and the U.S. Secretary of Transportation. Pursuant to
section 105, the Thruway Authority, the New York State Department of
Transportation, and the U.S. Department of Transportation’s Federal Highway
Administration entered into a Tripartite Agreement in July 1982. Among other
provisions, the Agreement provided that the Thruway Authority could continue
to collect tolls until it paid off its outstanding debt, projected to occur in 1996. See
J.A. 167‐72.
7 No. 17‐737 (L)
those bonds, STAA required them to repay the federal government
for the financing it had provided them.7
Against this background, Congress enacted the Intermodal
Surface Transportation Efficiency Act of 1991 (“ISTEA”), the statute
at issue here.8 Through ISTEA, Congress sought to foster “a National
Intermodal Transportation System,” consisting of “all forms of
transportation in a unified, interconnected manner.”9 To do so, ISTEA
freed states from their obligation under the STAA to repay the federal
government should they continue to collect tolls after retiring
outstanding debts, and granted them greater flexibility to operate toll
facilities and use toll revenues for a variety of transportation projects.
Two provisions of ISTEA stand at the heart of this case. The
first, section 1012(a), authorized state public authorities to collect
highway tolls without repaying the federal government, so long as
those funds “will be used first for debt service, for reasonable return
on investment of any private person financing the project, and for the
costs necessary for the proper operation and maintenance of the toll
facility.”10 Once a state certified adequate maintenance, it could use
7 § 105, 92 Stat. at 2693 (“[I]f, for any reason, a toll road receiving Federal
assistance under this section does not become free to the public upon collection
of sufficient tolls, as specified in the preceding sentence, Federal funds used for
projects on such toll road pursuant to this section shall be repaid to the Federal
Treasury[.]”).
8 23 U.S.C. § 129; Pub. L. No. 102‐240, 105 Stat. 1914 (1991).
9 § 2, 105 Stat. at 1914.
10 § 1012(a)(3), 105 Stat. at 1936‐37.
8 No. 17‐737 (L)
any excess toll revenues “for any purpose for which Federal funds
may be obligated by a State under [Title 23].”11
As part of ISTEA, Congress simultaneously broadened the list
of purposes for which states could use federal funds under Title 23.
The expanded list included “transportation enhancement activities,”
such as “historic preservation, rehabilitation and operation of historic
transportation buildings, structures, or facilities (including historic
railroad facilities and canals) .”12
In the second provision, section 1012(e), Congress enacted a
“Special Rule” that largely paralleled section 1012(a) but added
specific conditions regarding two toll facilities: the New York State
Thruway and the Fort McHenry Tunnel in Maryland. Regarding the
Thruway, it provided that the Thruway Authority could use excess
toll revenues to cover “costs associated with transportation facilities
under [its] jurisdiction . . . , including debt service and costs related to
the construction, reconstruction, restoration, repair, operation and
maintenance of such facilities.”13
11 Id.
23 U.S.C. § 101(a); ISTEA § 1007(c), 105 Stat. at 1931 (emphasis added).
12
Although the text of 23 U.S.C. § 101 has been amended from time to time, as the
District Court stated, “none of the amendments eliminated the statutory
authorization allowing the Thruway Authority to spend excess toll revenues (i.e.,
toll revenues not needed for Thruway maintenance) on the canals.” Am. Trucking
Ass’ns, Inc. v. N.Y. State Thruway Auth., 238 F. Supp. 3d 527, 534 (S.D.N.Y. 2017).
13 § 1012(e), 105 Stat. at 1939.
9 No. 17‐737 (L)
Following the passage of ISTEA, in 1992 the New York State
Legislature directed the Thruway Authority to assume management
of the Canal System.14 At all times relevant to these appeals, the
Thruway Authority managed the Canal System.
B. The Canal System
The rise of the Interstate Highway System, a marvel of
American infrastructure, cemented the decline of perhaps the most
awesome earlier such marvel: the New York Canal System. That
system is “a network of waterways that stretches across upstate New
York, including the Erie, Oswego, Champlain, Cayuga, and Seneca
Canals.”15 In the nineteenth century, it served as “the model for canal‐
building throughout the world” and fueled “the unprecedented
development and prosperity that came not alone to New York State
but to . . . the whole country.”16 In the words of Senator Daniel Patrick
Moynihan of New York—then chairman of the Water Resources,
Transportation, and Infrastructure Subcommittee of the Senate
Committee on Environment and Public Works, and the principal
architect of ISTEA—the Canal System is “what has made America
great.”17
14 N.Y. Canal Law § 6.
15 Am. Trucking Ass’ns, 795 F.3d at 355 (internal quotation marks omitted).
Roy G. Finch, The Story of the New York State Canals 4 (rev. ed. 1998),
16
https://www.canals.ny.gov/history/finch_history_print.pdf.
Field Hearings Before the S. Comm. on Env’t & Public Works and the Subcomm. on
17
Water Res., Transp., & Infrastructure, 102nd Cong. 305 (Apr. 5, 1991) (statement of
10 No. 17‐737 (L)
As road and air transportation proliferated, however, the Canal
System largely became “a recreational byway, drawing pleasure
boats, fishing lines and the occasional canal fan.”18 Traditionally
supported through taxpayer funds and managed by the New York
Department of Education, the Canal System, as noted, was
transferred to the management of the Thruway Authority in 1992.19
The Thruway Authority began funding the Canal System principally
through excess highway toll revenues. Between 1992 and 2016, it
expended approximately 9 to 14 percent of Thruway tolls to the Canal
System.20
Sen. Daniel Patrick Moynihan, member, S. Comm. on Environment and Public
Works), J.A. 210. Legislators from both parties credited Senator Moynihan “with
masterminding much of the legislation.” Lindsey Gruson, Transit Bill Seen as Boon
to Metro Area, N.Y. TIMES, Nov. 27, 1991,
https://www.nytimes.com/1991/11/27/nyregion/transit‐bill‐seen‐as‐boon‐to‐
metro‐area.html. For the history of ISTEA’s passage, see Richard F. Weingroff,
Creating a Landmark: The Intermodal Surface Transportation Act of 1991, PUB. ROADS,
Nov.‐Dec. 2001,
https://www.fhwa.dot.gov/publications/publicroads/01novdec/istea.cfm.
Jesse McKinley, Afloat on the Erie Canal: Sonar Gear, Ferris Wheel Parts and Beer
18
Tanks, N.Y. TIMES, May 28, 2017,
https://www.nytimes.com/2017/05/28/nyregion/erie‐canal‐rebound‐commercial‐
shipping.html. In recent years, however, the Canal System has experienced an
uptick in commercial shipping thanks to its “use as a niche waterway for cargo
whose size or weight make it impossible, impractical or too expensive to haul
any other way,” including electrical turbines, Navy equipment, pedestals for a
Ferris wheel under construction in Staten Island, and even giant tanks of beer. Id.
19 Ante, note 14.
Am. Trucking Ass’ns, Inc. v. N.Y. State Thruway Auth., 199 F. Supp. 3d 855, 879
20
(S.D.N.Y. 2016), vacated, 238 F. Supp. 3d 527 (S.D.N.Y. 2017). In 2016, the New
York State Legislature transferred jurisdiction over the Canal System to the New
11 No. 17‐737 (L)
C. Procedural History
In November 2013, ATA, a trucking industry trade group, and
three of its members brought a class action suit against the Thruway
Authority, the New York State Canal Corporation, and certain
Thruway officials, alleging that they violated the Dormant Commerce
Clause by using Thruway tolls to fund the Canal System.21 In August
2014, the District Court dismissed the complaint for failure to join the
State of New York as a necessary party.22 The following year, we
vacated that judgment and remanded for further proceedings.23
On remand, in August 2016, the District Court granted partial
summary judgment to the ATA, finding that the allocation of
Thruway tolls to the Canal System violated the Dormant Commerce
Clause.24 At the time, the Thruway had not yet contended that
Congress had expressly authorized the use of Thruway tolls for canal
York Power Authority, which is not a party to these appeals. See N.Y. Canal Law
§ 5. The Legislature shifted control as a means of providing financial relief to the
Thruway Authority, which had been spending roughly $87 million annually for
canal operations and debt. See Rick Karlin, NY Power Authority to Absorb Canal
System, TIMES UNION (Albany), Apr. 6, 2016,
https://www.timesunion.com/local/article/NY‐Power‐Authority‐to‐absorb‐canal‐
system‐7233185.php.
21 J.A. 22‐45.
Am. Trucking Ass’ns, Inc. v. N.Y. State Thruway Auth., No. 13 Civ. 8123, 2014 WL
22
4229982, at *6‐7 (S.D.N.Y. Aug. 6, 2014).
23 Am. Trucking Ass’ns, 795 F.3d at 360‐61.
24 Am. Trucking Ass’ns, 199 F. Supp. 3d at 878.
12 No. 17‐737 (L)
purposes, and neither the District Court nor the parties considered
any such authorization.
Before the District Court could rule on ATA’s class‐certification
motion or hold a damages trial, however, the Thruway Authority
discovered information indicating that Congress had indeed
authorized it to devote surplus highway toll revenue toward the
Canal System.25 It moved to dismiss plaintiffs’ action for failure to
state a claim. On February 28, 2017, the District Court granted that
motion, finding that “Congress decided, with great specificity, to
exempt the New York State Thruway Authority’s expenditure of
excess toll revenues on the New York State Canal System from the
reach of the Dormant Commerce Clause.”26 The District Court
expressed displeasure with the fact that the Thruway Authority failed
to discover its defense of congressional authorization for so long, but
it ultimately rejected ATA’s claim that the Thruway Authority had
waived that argument by raising it too late.27 Accordingly, the District
Court vacated its order of August 10, 2016 granting ATA’s motion for
partial summary judgment and denying defendants’ cross‐motion for
summary judgment.28
On February 1, 2017, while the ATA case was pending, the
American Bus Association (“ABA”) and several of its members filed
25 Am. Trucking Ass’ns, 238 F. Supp. 3d at 532.
26 Id. at 541.
27 Id. at 540‐41.
28 Id. at 541.
13 No. 17‐737 (L)
a parallel action against the Thruway Authority and the other
defendants, raising the same Dormant Commerce Clause claims.
Soon after the District Court dismissed ATA, it entered an order
dismissing the ABA case “[f]or substantially the reasons discussed by
the court” in ATA.29
II. DISCUSSION
A. Standard of Review
We review a district court’s grant of a motion to dismiss de
novo.30 We review for abuse of discretion a district court’s decision
that a party did not waive an argument by failing to raise it earlier in
the proceedings.31
B. Whether Congress Authorized the Thruway Authority to
Allocate Excess Highway Tolls to the Canal System
ATA contends that Congress did not evince an “unmistakably
clear” intent to authorize the Thruway Authority to allocate excess
revenues from highway tolls to the Canal System.32 The Thruway
29 J.A. 272.
30 Miller v. Wolpoff & Abramson, L.L.P., 321 F.3d 292, 300 (2d Cir. 2003).
31 Brown v. City of New York, 862 F.3d 182, 187 (2d Cir. 2017).
32 See S.‐Cent. Timber Dev., Inc. v. Wunnicke, 467 U.S. 82, 91 (1984).
14 No. 17‐737 (L)
Authority, on the other hand, argues that Congress did expressly
authorize it to do so. We agree with the Thruway Authority.
The Commerce Clause gives Congress the power “to regulate
Commerce . . . among the several states.”33 The Supreme Court has
long recognized that the Commerce Clause “also limits the power of
the States to erect barriers against interstate trade”—the so‐called
Dormant Commerce Clause.34 Under the Dormant Commerce Clause,
a highway toll is constitutional only if it is “based on some fair
approximation of use or privilege for use . . . and is neither
discriminatory against interstate commerce nor excessive in
comparison with the governmental benefit conferred.”35
The Supreme Court has also recognized, however, that
“[w]here state or local government action is specifically authorized by
Congress, it is not subject to the [Dormant] Commerce Clause even if
it interferes with interstate commerce.”36 In issuing such an
authorization, “Congress must manifest its unambiguous intent.”37
Put another way, “Congress’ intent and policy to sustain state
legislation from attack under the Commerce Clause [must be]
33 U.S. CONST. art. I, § 8, cl. 3.
34 Lewis v. BT Inv. Managers, Inc., 447 U.S. 27, 35 (1980).
35 Evansville‐Vanderburgh Airport Auth. Dist. v. Delta Airlines, Inc., 405 U.S. 707,
716‐17 (1972); see also Nw. Airlines, Inc. v. Cty. of Kent, Mich., 510 U.S. 355, 362‐63
(1994).
36 White v. Mass. Council of Constr. Emp’rs, Inc. 460 U.S. 204, 213 (1983).
37 Wyoming v. Oklahoma, 502 U.S. 437, 458 (1992).
15 No. 17‐737 (L)
‘expressly stated.’”38 That said, “[t]here is no talismanic significance
to the phrase ‘expressly stated,’” which “merely states one way of
meeting the requirement that for a state regulation to be removed
from the reach of the [D]ormant Commerce Clause, congressional
intent must be unmistakably clear.”39 In other words, Congress need
not expressly state that it is authorizing a state to engage in activity
that would otherwise violate the Dormant Commerce Clause; it need
only clearly allow the state to engage in such activity.
The plain language of ISTEA manifestly contains such
“unmistakably clear” evidence of an intent to authorize the Thruway
Authority to use excess highway toll revenues for canal purposes.
ISTEA section 1012 permitted the Thruway Authority to
allocate excess toll revenues (1) to any transportation facilities under
the Thruway Authority’s jurisdiction or (2) for any project eligible to
receive federal assistance under Title 23.40 The Canal System meets
both conditions. On the first score, the New York State Legislature in
1992 transferred jurisdiction of the Canal System to the Thruway
Authority, which maintained jurisdiction at all times relevant to this
appeal. And on the second score, as part of ISTEA, Congress modified
Title 23 to define canals as eligible for federal assistance. ATA
acknowledges this fact—thereby conceding that Congress plainly
38 Sporhase v. Nebraska, ex rel. Douglas, 458 U.S. 941, 960 (1982).
39 S.‐Cent. Timber Dev., 467 U.S. at 91 (emphasis added).
40 23 U.S.C. § 101(a); ISTEA § 1012(e), § 1007(a)‐(c).
16 No. 17‐737 (L)
authorized the Thruway Authority to use at least some excess highway
toll revenues for canal purposes.41
Having (quietly) made this concession, ATA is left to argue
that, while Congress authorized the Thruway Authority to devote
some excess toll revenue to the Canal System, it still meant to limit the
amount of such allocations. Read in context, ATA contends, section
1012(e) is best understood to lift the prior statutory limit on state tolls,
permitting the Thruway Authority merely to continue tolling regimes
as they existed at the time of ISTEA’s enactment.
To support its interpretation, ATA points to phrases in the
statute, such as “allow for the continuance of tolls.”42 The ordinary
meaning of “continuance,” according to ATA, is “[t]o remain in the
same state.”43 And its use thus indicates that Congress expected any
post‐ISTEA tolls to be substantially similar in nature and purpose.
Since the tolls that Congress permitted to continue in 1992 were
41 Pls. Br. at 18 n.4 (“The district court concluded that the Canal System was a
project eligible for assistance under Title 23 . . . , a determination that is not at
issue in this appeal.”). It is true that “[w]e do not consider an argument
mentioned only in a footnote to be adequately raised or preserved for appellate
review.” United States v. Restrepo, 986 F.2d 1462, 1463 (2d Cir. 1993). Here,
however, ATA makes an admission, not an argument. And ATA concedes this
point again in its main brief. Pls. Br. at 33‐34 (noting that the second sentence of
ISTEA section 1012(e) provides that revenues collected from tolls in excess of
those needed for debt service and operation and maintenance can be used for
“specified purposes (including various transportation‐related projects and
facilities, among them the canals)”).
42 Pls. Br. at 33‐34 (quoting ISTEA section 1012(e)) (emphasis in original).
43 Id. at 34 (quoting Webster’s II New Riverside University Dictionary 305 (1984)).
17 No. 17‐737 (L)
calculated to pay for highway maintenance, they could not have been
used to fund unrelated projects at any substantial level.
In our view, there is no basis to interpret the word
“continuance” as freezing in place the tolling regime at the time of
ISTEA’s enactment. Instead, a plain reading of the statute reveals that
Congress meant to permit the Thruway Authority to continue
collecting tolls of whatever amount without having to repay federal
funds—something that it was previously barred from doing once it
satisfied its debt obligations. If and when the Thruway Authority did
so, it would have surplus revenue on hand to devote to other
transportation projects, an outcome that ISTEA not only
contemplated but expressly sanctioned.
Here, too, ATA makes a critical admission. It acknowledges
that the District Court’s conclusion that “nothing in ISTEA caps the
amount of excess toll revenue that can be used to support
transportation enhancement activities,” such as canals, is “perhaps
true as a literal matter.”44 Inasmuch as ATA concedes that Congress
authorized the Thruway Authority to allocate excess toll revenues for
canal purposes, and likewise concedes that it is “true as a literal
matter” that ISTEA contains no language limiting the amount of
44 Am. Trucking Ass’ns., 238 F. Supp. 3d at 536; Pls. Br. at 39‐40.
18 No. 17‐737 (L)
revenue for allocation, its argument necessarily relies merely on
context, not text.45
45 But if anything, the context militates in favor of recognizing that Congress
intended to authorize the Thruway Authority to devote excess highway toll
revenue to the Canal System.
Senator Moynihan, who, as noted above, was the mastermind of ISTEA,
sought as a general matter to devolve transportation policy to states and cities.
Ante, note 17. As The New York Times put it, the bill gave states “freedom in how
they spend Federal transportation money,” for the first time allowing them “to
choose the projects they think they most need rather than hav[ing] to follow a
Federal model.” Richard L. Berke, Senate Approves Bill to Overhaul Transportation,
N.Y. TIMES, June 20, 1991, https://www.nytimes.com/1991/06/20/us/senate‐
approves‐bill‐to‐overhaul‐transportation.html. To achieve that goal, Senator
Moynihan proposed that highway money be “fungible,” such that states could
use funds on other modes of transportation, such as mass transit. See Weingroff,
ante note 17. It is worth noting that ATA opposed the measure for precisely this
reason, fearing that by permitting states to devote resources to other
transportation projects, the bill would “threaten[] the future of America’s
highways.” Id.
More specifically, Senator Moynihan pressed from the beginning for
language specific to New York that would permit the state to maintain tolls as a
source of revenue, declaring that he would “be responsible” for coordinating the
bill’s passage. Tolls on Thruway May Not Disappear, State Will Keep Fees and U.S.
Aid if Congress Passes Pending Bill, BUFFALO NEWS, Feb. 22, 1991, at A1, available at
1991 WLNR 956953. As the drafting process began, he conducted several Field
Hearings in which he urged the Commissioner of the New York State
Department of Transportation not to “forget that canal system,” and called the
Canal System “just a treasure.” Field Hearings, ante note 17, at 304; J.A. 209.
Moynihan’s interest in finding financing for the Canal System is hardly
surprising; he was widely known as a “longtime aficionado of the canal and its
lore.” Joseph Berger, U.S. Allots $120 Million for Banks of Erie Canal, N.Y. TIMES,
Nov. 26, 1996, http://www.nytimes.com/1996/11/26/nyregion/us‐allots‐120‐
million‐for‐banks‐of‐erie‐canal.html.
19 No. 17‐737 (L)
The text is clear: Congress manifested its unambiguous intent
to authorize the Thruway Authority to allocate excess toll funds to the
Canal System. Although ISTEA does not expressly invoke the
Commerce Clause or state its intent to abrogate Dormant Commerce
Clause limitations, it need not do so if congressional intent is
unmistakable—as it is here.
C. Whether the Thruway Authority Forfeited Its Argument
That Congress Authorized It to Depart from the Commerce Clause
We next address whether the Thruway Authority forfeited its
argument that Congress authorized it to allocate excess highway toll
revenues to the Canal System.46
Later, when the bill that would become ISTEA emerged from the Senate
Committee on Environment and Public Works without any New York‐specific
language, Senator Moynihan proposed an amendment, which would eventually
become section 1012(e). The amendment allowed the state agencies in charge of
the New York State Thruway and the Fort McHenry Tunnel in Maryland to use
excess highway toll revenues to cover transportation facilities under Title 23, as
well as those “under the jurisdiction” of those agencies. 137 Cong. Rec. 14774,
14883 (June 13, 1991). In introducing the amendment, Senator Moynihan
highlighted how Maryland could allocate tolls raised from the Fort McHenry
Tunnel. He explained that section 1012(e) was designed to “make possible the
movement of toll receipts on and off the particular systems in such a way that the
State, in this case Maryland, can optimize its transportation choices and
provision thereof.” Id. at 14774. “We very much want Maryland to do with
Maryland money what Maryland thinks is best.” Id.
46 The forfeiture question applies only in ATA, not in ABA. The plaintiffs in ABA
filed suit only in February 2017, after the Thruway Authority had discovered its
congressional‐authorization defense. In ATA, however—originally filed in
2013—the Thruway Authority failed to raise that defense for over three years.
20 No. 17‐737 (L)
ATA argues that the Thruway Authority failed to raise its
argument regarding congressional authorization for more than three
years after ATA filed its complaint and for almost six months after the
District Court granted partial summary judgment on liability in favor
of ATA. That failure, according to ATA, constitutes forfeiture.
Yet ATA concedes that, regardless of whether the Thruway
Authority indeed forfeited its argument, the District Court had
discretion to reach the merits to correct a clear error.47 As we have
explained, Congress’s intent in ISTEA section 1012(e) to exempt the
Thruway Authority from the Dormant Commerce Clause was
unmistakably clear. Thus, regardless of whether the District Court
relied on the proper standard for forfeiture, it had discretion to reach
the merits of the Thruway Authority’s defense.48
47 Pls. Br. at 56.
48 ATA argues that the District Court applied an erroneous legal standard by
reasoning that because the Thruway Authority did not know of its defense
previously, it could not have waived or forfeited it. Id. That standard, according
to ATA, does not apply to waivers or forfeitures of legal arguments, and, instead,
the District Court should have asked whether “’the need to correct a clear error
or prevent manifest injustice’ justified considering defendants’ belated
argument,” Id. at 57 (quoting Kolel Beth Yechiel Mechil of Tartikov, Inc. v. YLL
Irrevocable Tr., 729 F.3d 99, 104 (2d Cir. 2013)). Since the District Court had
discretion to reach the merits, we need not reach the question of whether it
applied the proper legal standard.
21 No. 17‐737 (L)
III. CONCLUSION
In summary, we hold as follows:
(1) Congress evinced an “unmistakably clear” intent to
authorize the Thruway Authority to depart from the strictures
of the Dormant Commerce Clause by allocating surplus
highway toll revenues to New York’s Canal System;
(2) Congress placed no limits on the amount of such surplus
highway toll revenue that the Thruway Authority could
allocate to the Canal System;
(3) The District Court correctly granted defendants’ motion to
dismiss on the basis of Congressional authorization and
vacated its previous order granting plaintiffs’ motion for partial
summary judgment; and
(4) The District Court had discretion to reach the merits of the
Thruway Authority’s defense that Congress had authorized it
to devote surplus highway toll revenues to the Canal System.
For the foregoing reasons, we AFFIRM the judgment of the
District Court.