Commercial: Private toll road owner denied permission to significantly increase tolls

Where the State Corporation Commission’s decision denying a toll road owner’s request to significantly increase tolls was not contrary to the evidence or without evidentiary support, it was affirmed.

Background

Toll Road Investors Partnership II LP, or TRIP II, the operator of a toll road in Loudoun County, appeals from a decision of the State Corporation Commission denying a toll increase. TRIP II contends that the Commission misapplied the relevant statutory criteria and, further, that denying it a toll increase would constitute an uncompensated taking in violation of the United States and Virginia Constitutions.

Code § 56-542(D)

To prevail on its request for a toll increase, TRIP II was required to establish (1) that the proposed toll rates “will not materially discourage use of the roadway by the public,” as that concept is defined in the statute and (2) that the “proposed toll rates will be reasonable to the user in relation to the benefit obtained.” TRIP II argues that the Commission erred in holding that TRIP II did not satisfy either the “material discouragement” prong or the “reasonable benefit to the user” prong of the statute.

To satisfy the statute, a toll increase must be “reasonable to the user in relation to the benefit obtained.” In support of its requested toll increase, TRIP II, which bore the burden of proof, presented highly credentialed and experienced expert witnesses who defended the Steer report and its methodology. The County and Commission staff responded with their own highly credentialed and experienced expert witnesses who challenged the Steer report on a number of technical grounds. These expert witnesses challenged the data and findings upon which TRIP II relied in support of its proposed toll increase.

This was a quintessential battle of the experts for the Commission to resolve. Much of TRIP II’s brief is devoted to stressing the credibility of its experts and attacking the credibility of Commission staff and the experts offered by the County. When the evidence does “little more than show that the parties’ experts disagreed,” this “does not render the Commission’s findings contrary to the evidence.”

Credible evidence supported the conclusion that the centerpiece of TRIP II’s application, the Steer report, was unpersuasive on a number of grounds. Expert witnesses from the Commission staff and the County offered cogent criticisms of the report. The Commission also could consider the overwhelmingly negative response from the public comments. This court declines to reweigh the evidence that the Commission found credible.

TRIP II further argues that the Commission’s decision is arbitrary and capricious because it found certain evidence credible in this proceeding when that evidence differs from evidence it found credible in a prior toll rate proceeding. The court finds this argument unconvincing. Evidentiary presentations are not static. Parties to a concluded proceeding can offer new or refined evidence in later proceedings. Just because the Commission found certain evidence credible several years ago does not forever bind the Commission to accept that evidence in future proceedings. Such factfinding is in no way arbitrary or capricious.

The Commission’s conclusion that TRIP II’s application did not satisfy the “reasonable benefit to the user” prong of the statute is affirmed. That alone is sufficient to affirm the Commission’s denial of TRIP II’s application under Code § 56-542(D). In light of that holding, the court need not address the “material discouragement” prong.

Takings

TRIP II next argues that the Commission’s refusal to grant its requested toll increase infringes the prohibition on uncompensated takings of private property. Marshaling a line of cases from the United States Supreme Court, TRIP II contends that its investors are entitled to a reasonable rate of return and to cover their expenses, including debt service, and stresses that a regulatory body is forbidden from using its power to destroy, without compensation, the value of a legal business.

The Supreme Court has noted that states have “no duty to impose unreasonable transit fares in order simply that stockholders may earn dividends.” The “stockholders are not the only persons whose rights or interests are to be considered. The rights of the public are not to be ignored.” It is undisputed that these principles apply to companies operating toll roads.

The takings cases from the United States Supreme Court in this area nowhere require approval of rates and tolls that guarantee a return on investment, or even shield an entity from insolvency, no matter how flawed the entity’s business plan turned out to be.

Affirmed.

Toll Road Investors Partnership II LP v. State Corporation Commission, Record No. 250002, July 17, 2025 (McCullough). From the State Corporation Commission. VLW 025-6-020. 18 pp.