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Virginia Supreme Court Rules in Favor of $2.1 Billion P3 Project

On October 31, 2013, the Virginia Supreme Court unanimously overruled a lower court’s decision to strike down the Virginia Public Private Transportation Act (“P3”)

In December 2011 the Virginia Department of Transportation (“VDOT”) and Elizabeth River Crossings OpCo, LLC (“ERC”) entered into an agreement pursuant to Virginia’s P3 legislation for the design and construction of a new Midtown Tunnel and the Martin Luther King Freeway Extension.  Additionally, the agreement provided for the continual maintenance of the existing Midtown and Downtown Tunnels for 58 years.  The total cost for completing the project was estimated to exceed $2.04 billion dollars.  To assist in financing the project, the agreement provided for the imposition of tolls.  Danny Meeks, along with other users of the Downtown Tunnels, filed a six-count complaint against ERC and VDOT in the Circuit Court for the City of Portsmouth, claiming, in part, that tolls on the Tunnels and MLK Freeway are unconstitutional taxes in violation the Due Process Clause of the Constitution.  The Circuit Court ruled in favor of Meeks.

Elizabeth River Crossings OpCo, LLC v. Meeks, The Virginia Supreme Court overruled the lower court decision in a fifty-five page opinion, and held that “the tolls on the Midtown Tunnel, Downtown Tunnel and MLK extension, which are (1) paid in exchange for a particularized benefit, (2) not compelled by government, and (3) collected solely to fund the Project are user fees, not taxes.”  You can read the full text of the opinion here.

The American Road & Transportation Builders Association (“ARTBA”), who filed a “friend of the court” brief arguing for the overturn of the lower court’s decision, issued a statement following the Court’s ruling.  ARTBA stated, “[t]he ruling represents an unqualified victory for the U.S. transportation construction and Virginia’s P3 community in that it allows work on a major infrastructure improvement project to proceed and preserves the states existing tolling methods. Also, ARTBA hopes the Court’s decision sends a signal that unwarranted challenges to P3 legislation in other states will be overturned in a similarly swift and absolute manner.”  You can read the full text of ARBTA’s statement here.

This case will certainly be viewed as a major victory for those in the construction industry who believe the future of highway construction rests with P3 projects.