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Tuesday, June 11, 2024

Can Governor Hochul Use Federal Law to Stall New York’s Congestion Pricing Program?

NY Governor Hochul surprised just about everyone last week by declaring that she would “delay” New York City’s congestion pricing program on account of its impacts on the city’s central business district. This announcement was surprising because of Hochul’s long-standing support for the program. Just last December, for example, the same Gov. Hochul touted congestion pricing as a “nation-leading” component of her “New New York Plan” that would “Make it Easier for New Yorkers to Get to Work,” “generate billions in revenue for the MTA and improve overall regional air quality.” Hochul is not only contradicting herself but also ignoring state law. The congestion pricing policy that Hochul so casually put on hold had been painstakingly planned for five years since New York’s legislature enacted the Central Business District Tolling Program (codified as Vehicle and Traffic Law Chapter 44-C) in 2019. VTL Chapter 44-C commanded the Metro Transit Authority and New York City — not the Governor — to design tolls for roads, bridges, and tunnels leading into New York City’s central business district. Since 2019, thousands of pages of environmental assessment have been approved. Gantries and transponders have been installed. Contracts had been awarded to vendors. Hochul’s announcement, therefore, risked hundreds of millions in wasted expenditures. Even worse, the announcement carved a $15 billion hole into MTA’s capital plan. The consensus reaction to Hochul’s announcement was most accurately captured by Politco’s headline: “dumpster fire.”

Hochul’s pulling the brake on congestion pricing so abruptly — indeed, chaotically — is certainly terrible policy and likely lousy politics as well. But this is a legal blog, so the question we must ask is: Is it legal? Given that state law seems to give the decision to MTA and New York City, where does the governor get the power to scuttle this state policy?

The answer to this question rests on federal law, not state law. Because New York is imposing tolls on federally aided highways, it must abide by federal rules pertaining to tolls. One of those rules, codified at 23 U.S.C. section 129(a)(3), requires the “public authority with jurisdiction over a toll facility” to “ensure that all toll revenues received from…the toll facility are used only for” federally permitted purposes, The Federal Highway Administration (FHWA) has issued a 2012 guidance requiring the state’s “public authority” to enter into a tolling agreement with the federal government governing this and other federal requirements. From a legal standpoint, Hochul presumably hopes to scuttle the congestion pricing program by refusing to sign such an agreement with the FHWA. She apparently reasons that she is the “public authority” whose consent is needed for congestion pricing to go forward.

After the jump, I will explain that Hochul is wrong to think that she speaks for New York on congestion pricing. Moreover, even if she were right, she would have to give a better reason than her claim (ridiculed here by Jeff Maurer) that working-class drivers would otherwise be paying tolls to eat at Manhattan diners and shop at Manhattan hardware stores. But behind these legal technicalities lies a larger issue of federalism: As a matter of constitutional principle, it is perverse to construe a federal statute to give governors the power to shut down state law. Giving such federal vetoes to state officials will just add to the policy-making gridlock that is now discrediting democracy in America.

I. Does the text of either state or federal law give Governor Hochul the power to shut down New York’s congestion pricing program?

Hochul is a state official, not a federal official, so let’s analyze her powers by starting with the relevant state statute. The 2019 state statute that created New York’s congestion pricing program is Chapter 44-C of New York’s Vehicle and Traffic Law. The relevant part of that law (section 1704(3)(a)) provides that, “[n]otwithstanding any law to the contrary, the [MTA Board], pursuant to the memorandum of understanding executed pursuant to subdivision two-a of this section with the city department of transportation shall plan, design, install, construct, and maintain the central business district tolling infrastructure” (emphasis added). That this is a statutory command, not an option, is plain from the use of “shall.” That the MTA and New York City’s Department of Transportation have exclusive power to carry out this command is plain from the enumeration of these two entities (expressio unius, etc.) and the “notwithstanding” clause, which shoves aside any other state laws that Governor Hochul might invoke to impede the tolling program. Judged just by its plain text, therefore, the state congestion pricing statute deliberately carved the governor out of any role in implementing the congestion pricing system.

That’s why Hochul has to reach for a federal emergency brake: She is invoking federal law to kill a program created by state law, because state law otherwise gives her no role to play. The federal law in question is the requirement that New York comply with federal conditions on federal money used to build federally financed highways when tolling the use of those highways. One of those conditions is imposed by a federal statute known as “MAP-21,” part of a long series of federal statutes with equally annoying acronyms governing interstate highways. MAP-21 continues a program known as the “Value Pricing Pilot Project” (“VPP”) program, under which states can enter into agreements with the Federal government to toll highways at peak hours to see whether and how such charges reduce traffic congestion.

Hochul claims that she speaks for “the state” when negotiating and entering into agreements with the federal government. That’s why she believes she has the right to withhold her state department of transportation commissioner’s signature from any agreement with the FHWA.

Put aside for a moment the weirdness of a governor’s invoking federal law to scuttle the state statute that the governor is charged with faithfully executing by Article IV, section 3 of the New York Constitution. Focus, for now, only on the text of state and federal law: What law justifies Hochul’s claim to be able to destroy a program painstakingly created by the state legislature, the MTA, and NYC?

It cannot be state law: As noted above, state law provides no role for Hochul to play in creating or implementing congestion pricing.

So what about federal law? MAP-21 is silent on this question: Unlike ISTEA, the 1991 statute that was updated by MAP-21, MAP-21 says nothing about any requirement that states enter into agreements with the FHWA. The obligation to sign any such agreement comes from the FHWA’s 2012 guidance document, which says nothing whatsoever about who speaks for the state. Section 129(a)(3) of ISTEA had imposed the obligation on “the public authority (including a state department of transportation) having jurisdiction over the highway, bridge, or tunnel,” while MAP-21 replaced this section with an obligation that the “public authority having jurisdiction over the tolled facility…ensure” that toll revenue was spent for federally specified purposes. The phrase used in both statutes — “public authority having jurisdiction over” infrastructure — suggests that each state gets to define for itself which “public authority” has the right to sign any tolling agreement with the federal government, because each state’s legislature defines “jurisdiction” over tolled infrastructure.

Under this reading of federal law, the New York legislature has plainly designated the MTA as the appropriate body to do any signing, because the MTA is in charge of the facilities being tolled.

II. Do principles of federalism suggest that Governor Hochul cannot use federal law to shut down New York’s congestion-pricing program?

Suppose, however, that you were unconvinced by my reading of the statutory text. There is a background principle of statutory construction presuming that the powers of state officials to carry out federal law are defined by state law. As SCOTUS noted in City of Columbus v. Ours Garage more than twenty years ago in construing cities’ power to regulate towtruck prices, “federal courts should resist attribution to Congress of a design to disturb a State's decision on the division of authority between the State's central and local units over safety on municipal streets and roads.” The same goes for states’ decisions about dividing power among executive institutions: Whether the MTA or the governor speaks on behalf of New York is really none of the FHWA’s business. Because the state legislature has given the MTA authority over the tolled infrastructure, the FHWA should deal with the MTA, not the governor.

There is a good reason for that traditional presumption that state law defines state officers’ powers to bargain with the federal government: As I argued twenty-five years ago, this presumption is part of the normal division of labor required by sensible federalism: Each level of government designs its own institutions and takes the other level’s institutions as each level finds them. Otherwise, Congress might create a Frankenstein’s monster in a fit of absent-minded statutory drafting, accidentally conferring federal power on state officials that no one ever foresaw. Congress lacks the personnel, experience, or flexibility to design good state institutions: Gridlocked by partisan division and distracted by a giant federal bureaucracy and budget, congresspersons have neither the time nor inclination to figure out what sorts of powers can be exercised by the thousands of state officials in the fifty different political cultures of the states. Likewise, the President cannot control federally empowered governors who serve a distinct constituency and, unlike cabinet members or other federal agency chiefs, do not serve at the president’s pleasure.

Governors who invoke obscure phrases in obscure federal statutes to set aside limits on their own powers are, therefore, likely to assume powers that no one in either the state or federal government ever dreamed that such governors should exercise. Governor Hochul’s car-jacking of the congestion pricing process at the last minute is a case in point. Hochul claims the authority to overturn a program that the New York State legislature, the MTA, the City of New York, and the thousands of individuals in and out of government have spent years designing. It took decades — dating back to the Lindsay Administration — for the various stakeholders in New York to build the consensus in favor of the program. That consensus-building process included multiple trips to Albany for statutory authority finally resulting in the 2019 statute signed by Cuomo. It also included years-long environmental review resulting in a four-thousand-page Environmental Assessment. A state-chartered citizen panel chaired by Carl Weisbrod, one of NYC’s most reputable policy-makers who has served in multiple mayoral administrations, devised fees based on input from dozens of interest groups.

Hochul claims that she knows better than all these people what will serve the interests of commuters and New York City. Who gave her this final say? No one. Not the FHWA, which has never considered the question. Not Congress, which is silent on who speaks for the state. Not the state legislature, which deliberately sidelined the office of the governor. Citing exactly zero delegations of power beyond a signature line on the bottom of a bureaucratic form, Hochul trashes a hard-built consensus with justifications so ridiculous—working-class drivers need to enter Manhattan free of fees so that they can patronize diners and hardware stores, as if there are none such in New Jersey — that they invited parody (by, for instance, Jeff Maurer, who ridiculed Hochul’s claim that “car loads full of plain ol’ blue collar folk” will be deterred from driving into Manhattan by a $15 fee to “enjoy a $35 seared tuna nicoise paired with an $18 glass of rioja crianza” at the Pershing Square “diner”).

It seems pretty plain, therefore, neither state nor federal law gives Governor Hochul the power to shut down the congestion pricing program by withholding her signature. What, then, should the remedy be? If the FHWA refuses to proceed without the signature of the NY Department of Transportation commissioner’s signature on a tolling agreement, then a state court ought to command the commissioner to sign that document. Ordinarily, courts cannot order executive officials to take affirmative actions unless those actions are “ministerial” (meaning precisely defined by law). The signing of a document, however, is about as precisely defined as an action can be. If the commissioner’s duties under state law are truly clerical in nature because all substantive policy-making has been reserved for MTA and NYC, then a writ of mandamus commanding the required signature would seem to be an appropriate judicial order. (Alternatively, Polly Trottenberg, Deputy Secretary of USDOT, could save everyone a lot of trouble just by sending a tolling agreement with only three signature lines — one each for the MTA, the City of New York, and the FHWA).

III. Can NYSDOT refuse to sign an agreement with the FHWA without giving some sort of intelligible reason for changing its mind?

Suppose, however, that you do not agree with my reading of the federal and state statutes and constitutional principle. Suppose you still somehow believe that federal law, for some mysterious reason, wants to confer power on Hochul even against the wishes of the New York state legislature. Even so, the federal government normally assumes that state institutions are governed by various procedures defined by state law. One such procedure is Article 78 of New York’s Civil Practice Law & Rules Procedure. That Article is roughly analogous to section 706 of the federal Administrative Procedure Act: It gives jurisdiction to state courts to review decisions by state agencies to ensure that they are not arbitrary, capricious, or otherwise not in accordance with law. To satisfy this provision, state agencies are expected to give reasons for their decisions. Judicial review of those reasons is extremely deferential, but such deference has its limits. As noted in Matter of Charles A. Field Delivery Service, 66 NY2d 516, 525 (1985), if an agency were make a decision that contradicted its own earlier position while offering zero justification for the change, then this switch would ordinarily be regarded as arbitrary and capricious.

It is hard to regard Governor Hochul’s weirdly sudden, almost manic, switch as anything but such an arbitrary — indeed, erratic and impulsive — change of mind. Only months earlier, Hochul touted the congestion pricing program as essential to save NYC’s downtown. Now somehow, the same program is a threat to the downtown’s economy. The first position was part of Hochul’s own comprehensive plan for a “New New York.” The second position was a sudden about-face, explicable only by Hochul’s sudden epiphany that commuters do not like paying tolls. Her claim that working stiffs drive into Manhattan to shop at hardware stores and eat at diners was not only comical but inconsistent with all available data on who drives privately owned cars into New York City’s Central Business District. It hardly seems likely that cutting $15 billion from the subway system to reduce the costs of driving private cars into Manhattan will benefit working-class commuters. (For USDOT’s summary of who pays the most for congestion pricing, see this report).

Hochul is entitled to take political realities of angry car commuters into account when making policy. At the very least, however, she must provide a rationale of why the congestion toll’s impacts on auto commuters and businesses that may depend on them are somehow weightier than the impacts of blowing an unexpected $15 billion hole in MTA’s transit budget while also leaving endemic New York-area congestion unabated. The fact that car commuters would have to pay tolls was not, after all, some weirdly unpredictable fact about congestion pricing that Hochul suddenly discovered: The whole point of congestion pricing is to reduce congestion by deterring a number of drivers from using bridges, highways, and tunnels into the congestion zone. To say that the fees’ reducing traffic is a bug rather than a feature is not just bad policy: It is incoherent policy, akin to arguing against stop lights because they induce cars to stop.

The remedy for an arbitrary and capricious decision is presumably to reverse that decision. For a decision to withhold a signature, the remedy, then, is to require the NYSDOT to sign the agreement proffered by the FHWA. Again, writs of mandamus ordinarily can be used by judges to require only “ministerial” (meaning unambiguously defined) actions from agencies. But the signing of a document for which an agency has no good reason not to sign seems pretty “ministerial.” By definition, agencies lack discretion to abuse their discretion by acting capriciously. Put another way, the judge can require the NYSDOT to provide some minimally sufficient reason justifying the agency’s change of mind. The judge does not have to agree with the reason: The judge merely has to regard that reason as supplying a rational basis for the switch. If no such reason is forthcoming, then NYSDOT has to provide the signature that cannot be non-capriciously withheld.

IV. Federally derived gubernatorial powers are just more vetoes in an already gridlocked federal system

Put to one side rational policy-making, constitutional principle, and statutory text. Even if you care nothing about legalities, consider how conferring federal statutory powers on officials like Hochul threatens to mire our political system in yet more red tape. As a number of scholars and public intellectuals have noted, from Nick Bagley to Ezra Klein and Howell & Moe, our political system has become so incapable of doing anything that it increasingly is discrediting democracy. Laden with procedural mandates like environmental assessment, endless hearings, judicial requirements for ever-more articulated reason-giving, our system of democracy has become a “vetocracy” in which everyone can say “no” but no one can say “yes.”

Giving governors like Hochul one more federally derived veto just makes this problem worse. Governors who claim federal statutory powers to override state law do not assert any general power to make things happen, because federal statutes generally do not delegate any such powers to governors. Instead, these governors are using obscure little snippets of power hidden in the recesses of interminable federal statutes and bureaucratic guidance documents, using those snippets to stall action that state law requires the governor to take.

Again, consider how Hochul’s power play in New York is just another example of the vetocracy plaguing our system. It took years of divisive, difficult debate for New Yorkers finally to reach consensus about the need to toll roads. After this herculean effort to overcome the gridlock inherent in a democracy governing a heterogenous and quarrelsome constituency, Hochul has swept in at the last minute, and, apparently panicking over the electoral threat from angry commuters, stalled the program one more time. Those commuters and their allies have had multiple opportunities to have their voices heard in a process that has lasted (depending on how you count) decades. The extra little power that Hochul discovered in the obscure recesses of a federal statute nevertheless is akin to toppling a bicycle by thrusting a stick into the spokes.

Even if you do not care about statutory text or constitutional principle, you should still worry about this use of a document-signing power of uncertain legal provenance to upend New York democracy. Hochul’s use of this alleged power — a power to withhold a signature from a document that has already been approved by every statutorily specified stakeholder and that no written law says is even legally necessary—is just more democracy-killing vetocracy at its intergovernmental worst. Intergovernmental relations are sometimes described with the metaphor of a marble cake, with each level permeating the others. A marble cake of endless mutual vetoes, however, is just a lot of empty, flavorless calories. One can only hope that some courageous judge will stop Governor Hochul from making us swallow this concoction that she cooked up.

Posted by Rick Hills on June 11, 2024 at 05:22 PM | Permalink


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