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Wednesday, June 14, 2006

Ind. Decisions - More on: Coverage of the oral arguments in the toll road case

Niki Kelly of the Fort Wayne Journal Gazette has good coverage today of the oral arguments yesterday in the toll road case. Some quotes:

One of the more interesting legal tangents that arose Tuesday was whether the General Assembly’s decision to give the counties along the Toll Road – including Steuben and LaGrange – $40 million each from the proceeds of the lease equals unconstitutional special legislation.

The Indiana Constitution requires laws to be of a general nature, and the Supreme Court has struck down statutes passed by the legislature that treat one part of the state differently than another.

Justice Frank Sullivan Jr. asked what evidence is available to explain the money given to various counties, saying he believed the precedent on special legislation requires such a justification.

Michael Wukmer – arguing on behalf of the state – tried to differentiate between creating a law that is specific to one county versus making decisions on how to appropriate money.

But Sullivan countered, saying the legislation says to non-Toll Road counties, “you are going to be treated fundamentally different.”

Fort Wayne attorney James Fenton – who represents the seven citizens and one non-profit group challenging the law that authorizes the lease – said there were no reasons given as to why these counties deserved more money, such as road usage data.

“It looks like it was legislative log-rolling to get the bill through,” he said, referring to lawmakers putting popular concepts in a bill to secure votes.

Justice Sullivan was formerly, under Governor Bayh, the state budget director, a position now held by Charles Schalliol.

The story continues:

The other major constitutional question is whether the state is required to use surplus revenue from the lease of the Indiana Toll Road to pay off public debt before reinvesting it into a highway building program.

Fenton specifically said the framers of Indiana’s Constitution, “barred future legislators from ignoring existing debt and instead spending their windfall on other things.”

He estimated the state owes $2.5 billion on bonds that have been taken out over the years for various public improvements.

It is in the discretion of the remaining four justices whether to rule on those items – which are the basis of the legal challenge – or focus their decision on the narrower question of whether the case should be considered a public lawsuit.

St. Joseph Superior Judge Michael Scopelitis found on May 26 that the case does constitute a public lawsuit and required the plaintiffs to post a $1.9 billion bond for the case to continue – a virtual impossibility for the group of Hoosier citizens.

They appealed and Fenton argued his clients have shown substantial constitutional issues that should allow the challenge to proceed in a normal fashion without the bond.

That is the only matter he wants them to rule on.

Meanwhile, Wukmer asked the justices to affirm the earlier judges’ opinion and quickly decide all possible issues in the case, removing any legal hurdles to the 75-year lease of the Indiana Toll Road.

Reporter Kelly reiterates some important points near the end of the story:
Chief Justice Randall T. Shepard said the panel will respond as “promptly as we can.”

Fenton noted that the emergency exists because the state structured the law in such a way to limit challengers from fully litigating the issues.

“This case has moved way too fast for a $3.8 billion issue to be resolved this rapidly,” he said.

Only four justices will consider the matter after Justice Brent E. Dickson removed himself from the case. The plaintiffs in the case filed a request to halt the Supreme Court proceedings and instead send the case to the Indiana Court of Appeals.

The lawsuit had skipped the appeals court process and went directly to the Indiana Supreme Court at the request of the state.

But now a 2-2 tie is possible at the Supreme Court level – which would automatically affirm the original order of the St. Joseph Superior Court.

The Indiana Supreme Court denied the request Tuesday morning.

The "debt" question. If you listened to the oral argument, you heard much mention of the use of the word "debt" in the Indiana Constitution: references to "public debt", "state debt", and "municipal debt." In that regard, I was pleased last evening when a reader sent me a copy of the amicus brief filed by IU Law Prof. James Tanford, which I have posted here. The argument in the brief is 7-pages long, and can be summarized as:
“Public Debt” and “State Debt” are not the same things in the Indiana Constitution. State Debt cannot be used for public works, and income from public works must be used to pay down the principle of the Public Debt. The Major Moves legislation is unconstitutional in that it seeks to use income from public works for something other than the retirement of public debt while there is outstanding public debt.

Moreover, the imposition of a $1.8 billion dollar bond deprives all plaintiffs of access to courts and the due course of law, as it is patently obvious that no citizens of the State can challenge the constitutionality of this legislation if the bond is allowed to stand. * * *

Stant does not contest the lease of the Toll Road, or any one of the dozens of
construction projects that might flow from it, and therefore raises different issues than were raised in Bonney v. IFA. Stant is only objecting to the use to which the Legislature and the officers of the State intend to put the proceeds. As long as there is any outstanding Public Debt which has been created and assumed for the construction of Public Works of the State, income from those Public Works must be used first to retire the principle of such Public Debt. By its erroneous decision that Bonney is a public lawsuit against a municipal corporation and its imposition of a $1.8 billion bond, the lower court threatens to deprive both Plaintiffs of due course of law in violation of the Indiana Constitution, and renders a potentially unconstitutional act of the government immune from judicial review.

One brief missing. By my count, the ILB has now posted online all the briefs in the toll road case except for the one filed on behalf of the Association of Cities and Towns. I'm hoping a reader will email me a copy of that brief.

[More] Lesley Stedman Weidenbener of the Louisville Courier Journal has this story this morning. Some quotes:

[Fort Wayne attorney James] Fenton spent little time yesterday discussing whether the lawsuit is public. Instead, he focused on persuading the justices that the lease opponents had a credible case, even though he said they'd had little time to develop their arguments.

The law approving the deal forced opponents to file their suit almost immediately and then — because the deal is to close this month — led the courts to set an expedited schedule.

Fenton said the state "scheduled this deal in such a way to make it impossible for my clients — citizens and taxpayers of this state — to have time to fully litigate the issues."

The opponents' suit argues that an obscure provision of the Indiana Constitution bars the state from selling or leasing one of its assets without using the proceeds to pay down debt.

Fenton told the justices yesterday that the constitution therefore bars the state from spending the $3.8 billion on new road projects. Instead, he said, the state would have to use the money to eliminate debt it has incurred for past projects.

He quoted Daniels' 2005 State of the State Address, in which the governor said the state was in financial distress. He used data from the Indiana Finance Authority to show that the quasi-public agency was carrying $2.5 billion in debt for the state and a state auditor's report showing $3.85 billion in long-term debt from bonds.

"Those are our credit-card statements," Fenton said. "And we take the governor at his word that these credit cards are maxed out."

He told the justices that the framers of the Indiana Constitution were the "ultimate fiscal conservatives" and intended for the state to use its available cash to pay off debts.

But Thomas Fisher, an attorney representing the Indiana Finance Authority, which is handling the toll-road lease, argued that the framers of the constitution meant only for the state to be forced to repay the debt from its failed canal project.

That disastrous project led to the 1851 Constitution that the justices will be interpreting. Fisher said the constitution forbids the state from taking on new debt, and therefore its requirement that the sale of assets be used to pay down debt obviously referred to the canal project.

Today the state issues bonds only through quasi-public agencies, including the Indiana Finance Authority.

PERHAPS MORE

Posted by Marcia Oddi on June 14, 2006 07:17 AM
Posted to Ind. Sup.Ct. Decisions