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Thursday, April 13, 2006

Ind. Law - Suits filed against Toll Road deal [Updated with complaint]

A number of papers this morning have stories about the suits against the Indiana Toll Road deal. The most comprehensive, insofar as the lawsuit details are concerned, is this story by Jennifer Whitson in the Evansville Courier& Press. Some quotes:

Wednesday midmorning, a group of seven Hoosiers and the Citizens Action Coalition filed a lawsuit in St. Joseph County asking for an injunction barring state officials from signing the lease or turning over the Indiana Toll Road and also asking that a judge void House Enrolled Act 1008, the new law that allows the administration to contract with private firms to run roads.

The lawsuit also specifically requests the Indiana Department of Transportation be barred from changing the proposed route of the Interstate 69 extension.

The suit claims a slew of violations, including that portions of the new law barring I-69 from running through Perry Township on Indianapolis' south side and prohibiting tolls from Martinsville to Indianapolis violate a constitutional ban on special legislation.

In 2003, the Indiana Supreme Court ruled laws must apply generally statewide unless the conditions the law addresses are specific to the geographic area targeted by the legislation.

Other arguments in the filing:

  • The new law breaks a constitutional mandate that any money from the lease or sale of state assets goes toward paying down state debt. The new law instead sets up several funds to spend the Indiana Toll Road lease proceeds to build new roads and give local government entities funds.
  • The Spanish-Australian consortium picked to run the toll road isn't properly registered as a business in Indiana.
  • A property tax exemption included in the legislation and contract runs counter to the state constitution. State officials said the state will retain ownership of the Indiana Toll Road; thus no property taxes will be paid on it. But the plaintiffs argue that the move violates the constitutional mandate for uniform and equal property taxation.
  • The window to sue over the legislation and lease, which was defined in the legislation, was unreasonably short.
  • The new law violates the separation of powers by giving the governor the authority to turn any road into a toll road.
The Louisville Courier Journal's Lesley Stedman Weidenbener has this story, headlined "State signs deal on toll road lease: Two lawsuits filed to block agreement."

Niki Kelly of the Fort Wayne Journal Gazette has this story, headlined "Toll Road lease spurs lawsuit as it’s signed: Farmer, truckers join to fight privatization." Some quotes:

INDIANAPOLIS – Hours before a lawsuit was filed in St. Joseph County challenging the privatization of the Indiana Toll Road, state officials signed the final lease agreement that will give control of the road to a foreign consortium until 2081.

The two actions collided on the same day even though previous plans were to finalize the contract later this week.

“I’m not sure why the governor signed the lease two days early, probably to upstage us,” said Steve Bonney, a West Lafayette farmer who is the lead plaintiff on the suit.

The legislation authorizing the public-private partnership gave opponents of the plan only a 15-day window to dispute the deal – and that deadline was Wednesday. * * *

The defendants in the case include the Indiana Finance Authority, Statewide Mobility Partners, the proposed operator, the Indiana Department of Transportation, Gov. Mitch Daniels and Treasurer Tim Berry.

[State Budget Director Chuck] Schalliol also denied moving up the signing to pre-empt any part of the lawsuit, which included a request for an injunction prohibiting the signing of the lease.

“We had the documents ready so we went ahead and did it,” Schalliol said, comparing it to filing his taxes early. “There was no reason to wait.”

Friday was the deadline for the contract to be signed, and Daniels’ press secretary previously told The Journal Gazette there would be a small public signing Friday at a downtown Indianapolis law firm.

Martin DeAgostino of the South Bend Tribune has this story, headlined "Suit would block Toll Road deal: Indiana state official says law's constitutional basis is sound." A quote:
The suit, filed in St. Joseph Superior Court in South Bend, asks the court to invalidate the law's spending provisions and to enjoin the state from entering the lease.

State officials signed the lease on Wednesday, but it would not take effect until June 30. * * *

Charles E. Schalliol, state director of management and budget, said bond lawyers and others have examined the law's constitutional basis and found it sound. "(The lawsuit) misses the point that this is not a (financial) obligation of the state," he said. "It's an obligation of a quasi(governmental) organization ... and it's not a sale; it's a lease."

He referred to the Indiana Finance Authority, which owns the Toll Road and issues bonds that support new capital investments.

Bill Ruthhart of the Indianapolis Star reports, in a story headlined "Toll Road lease signed, promptly snared in lawsuits":
As the ink was drying on a $3.8 billion agreement to lease the Indiana Toll Road, two lawsuits were filed Wednesday to block the deal.

State Budget Director Charles Schalliol signed the 75-year lease agreement with Macquarie-Cintra, an Australian-Spanish consortium, at 9 a.m. Less than two hours later, lawsuits were filed in St. Joseph and Brown counties.

A group of seven citizens and the Indianapolis-based Citizens Action Coalition of Indiana filed the St. Joseph County lawsuit, arguing that Gov. Mitch Daniels' effort to lease the Toll Road to a private firm was unconstitutional.

A lawsuit filed by Bill Stant in Brown County also questioned the constitutionality of the lease. Stant is running for secretary of state under the Green Party.

Both lawsuits argue that the Indiana Constitution says any proceeds from the Toll Road lease must be used to pay down state debt. * * * State officials have said the Toll Road deal is a lease -- not a sale.

The lawsuits were filed in time to take advantage of a 15-day window that allows challenges to the law that authorizes the Toll Road plan. * * *

Arend Abel, the Indianapolis attorney representing the group, said he's confident the deal to lease the Toll Road, and the law that allows it, will be overturned. "We've researched this, and we feel confident about this moving forward," Abel said. "We think we've done our homework."

In Brown County, Stant said he filed his lawsuit because he's against an I-69 extension. He said his lawsuit was not politically motivated even though he's running for secretary of state. "I'm just a citizen standing up for my rights," said Stant, who said attorneys have donated their services to help his court challenge. Stant said he thinks the legal challenges to the Toll Road lease could go all the way to the Indiana Supreme Court. * * *

Both lawsuits come as the state works to transfer control of the Toll Road to Macquarie-Cintra on June 30. [Budget director] Schalliol said he informed the consortium Wednesday that the lease had been challenged in court.
He acknowledged that any delay caused by court action could keep the current lease agreement from being finalized.

"Come June 30th, if (the lawsuits are) not resolved, we'll have to face some serious questions," Schalliol said. "But it's our belief and intent that this will be resolved by then.

"We're confident we will prevail in these lawsuits."

A Question: The General Assembly here has set a 15-day "window" for suits to be filed challenging this law.

Hypothetically, does this mean that a law that may be unconsitutional is unchallengeable if such a time limit is set by the General Assembly, precluding the Courts from weighing a later-filed challenge? Has the General Assembly found a way around the separation of powers?

[Updated] The ILB has obtained a copy of the 16-page complaint, in Bonney et al v. Indiana Finance Authority et al, as filed in St. Joesph County April 12, 2006. Access it here.

(I've not posted the exhibit to the complaint, the 111-page Indiana Toll Road Concession and Lease Agreement.)

Posted by Marcia Oddi on April 13, 2006 07:56 AM
Posted to Indiana Law