The law is clear: The state acted within its authority.
The latest salvo in the battle over congestion pricing was fired the other day by the newly appointed federal secretary of transportation. If the courts perform as expected, this 13th-hour attempt to unravel New York’s first-in-the-nation policy should fall flat on its face.
In a four-page letter to New York Gov. Kathy Hochul, Transportation Secretary Sean Duffy purported to withdraw the federal government’s previously issued approval for the mobility-enhancing, pollution-reducing, economy-boosting motor vehicle tolling program that has been in effect in Manhattan south of 60th Street since Jan. 5.
Fortunately, state officials seemed ready for the transportation secretary’s attack. Within hours, Hochul held a press conference in Grand Central Terminal to denounce the federal government’s attempted termination of the program. At the event, New York’s indefatigable MTA chair and CEO Janno Lieber noted that the transportation secretary’s letter arrived just as preliminary data were demonstrating that congestion pricing is working: traffic into Manhattan’s Central Business District is down 9%; bus and car speeds are up; vehicle accidents and injuries have been cut in half; there have been fewer cars but more people entering the district; restaurant reservations and Broadway ticket sales are climbing; and two-thirds of frequent Manhattan drivers are now supportive of the program.
That same day, lawyers for the MTA filed a complaint in federal court seeking a declaration that the secretary’s attempt to upend the program violates the federal-state congestion pricing agreement, federal law and the United States Constitution.
The MTA’s court filing appears to have a strong likelihood of success.
Why the feds even have a say
But, you may wonder, why is the federal government even involved in decision-making questions involving New York City road usage and tolls to begin with? It begins with the fact that for decades, the federal government has provided funding (primarily from the federal gasoline tax) for the construction, maintenance and operation of highways and local roadways. While states and local governments cover some of the costs and are in charge of roadway construction and maintenance, the federal government’s financial contribution has given it, by law, a legal say in many operational issues, including areas like roadway design and safety.
As for why New York State is involved in the debate over congestion pricing on New York City roadways, that answer is found in the U.S. Constitution. The Tenth Amendment declares that all powers not delegated to the federal government are reserved for the states or the people. The Constitution doesn’t talk about cities. It divides power between the federal and state governments. New York City’s powers are derived from the state, which also provides highway and transit funding to the city. For many governmental actions that New York City wishes to take, including the establishment of a congestion pricing tolling program, it must first secure “permission” from the State Legislature.
Having said all that, the establishment of a congestion pricing program by New York is fully consistent with federal law. In 1991, Congress enacted a major transportation reform statute – the Intermodal Surface Transportation Efficiency Act. The new law recognized that after nearly four decades of federally funded interstate highway building, it made sense to provide more flexibility in transportation spending and allow federal monies to be used for a broader range of roadway and transit projects.
Among the provisions of that law was one creating a “Congestion Pricing Pilot Program.” It opened the door to federal-state demonstration projects designed to reduce traffic bottlenecks through the use of congestion pricing strategies. In 1998, Congress revised the statute, expanding the scope of the congestion pricing pilot initiative and retitling it the “Value Pricing Pilot Program.”
This is crucial to understand: New York State’s actions were not at odds with federal principles or policy. They were wholly consistent with a framework set up by Washington itself.
A solid state rationale, a kosher process
What prompted New York State to put the congestion pricing strategy in motion in 2019, when the idea of tolling to reduce congestion and fund public transit had been around since the 1970s? In recent years, the problems of traffic congestion in Manhattan’s CBD had been going from bad to worse. A 2018 analysis by The Partnership for New York City found that the annual costs of delay in commuting time and work-related travel were over $9 billion a year. Average traffic speeds south of 60th Street from 2011 to 2019 declined from 9 to 7 mph; crosstown streets were even slower. The traffic data company INRIX ranked New York the nation’s most congested city.
Meanwhile, the decades-long failure to invest sufficient sums and keep New York’s subway, bus and commuter rail system in a state of good repair was taking a toll of its own. Transit breakdowns, derailments and other service disruptions peaked during 2017, dubbed by the media as the “summer of hell,” but they’ve continued to dog straphangers ever since.
It was in this context — with congestion worsening and transit in decline — that New York State finally enacted the Traffic Mobility Act in 2019. Signed by then Gov. Andrew Cuomo, the law directed an MTA affiliate — the Triborough Bridge and Tunnel Authority — to establish a congestion pricing program designed to reduce bumper-to-bumper congestion in the Manhattan central business district and funnel billions into the region’s beleaguered subway, bus and commuter rail network.
Since the New York congestion pricing initiative would place a toll on Manhattan roadways that received federal funding, federal approval was required prior to the start-up of the tolling program.
The approval came, through the proper channels. In 2019, the New York State and New York City Transportation Departments, with the Triborough Bridge and Tunnel Authority, submitted a request to the Federal Highway Administration seeking to advance a congestion pricing project in the Manhattan central business district, as envisioned under the federal Value Pricing Pilot Program.
Over the next four years, the Federal Highway Administration cooperated with the New York agencies in conducting an extensive environmental review — 4,000 pages of analysis and commentary! — and a public participation process to ensure the project’s compliance with the National Environmental Policy Act. The Federal Highway Administration formally approved New York’s congestion pricing environmental review process in May 2023.
At the end of the long, long road, — one made longer by a last-minute, six-month “pause” put in place by the governor herself — in November 2024, Hochul announced that implementation of the tolling program would be getting the green light. As part of the re-start, the program’s tolls would be reduced by 40% from the earlier plan, with the original tolling rates phased in over time.
Crucially, that same month, the Federal Highway Administration performed a reevaluation of the new tolling structure. It projected that New York’s final tolling scenario would result in a reduction of vehicle miles traveled in the Manhattan CBD by 6.4% initially and by 8.9% after six years, following the projected phase-in of the original tolling rates. And it officially agreed that New York’s congestion pricing implementation could move forward, consistent with the 1991 federal statute and the Value Pricing Pilot Program.
Green light, red light
After all this, the feds now want to turn on a dime — presumably because of President Trump’s stated opposition to the program — despite the years it took to secure all necessary federal approvals. In his recent letter to Hochul, Duffy claims that the New York program is inconsistent with federal law. The two reasons he offers are unsupported by the laws and the facts.
First, he asserts that the state’s congestion pricing program does not provide a “toll-free option” for drivers to enter the Manhattan Central Business District. But nothing in the applicable federal law requires that a congestion pricing program like New York’s must have a toll-free option in the first place. (And of course, the obvious toll-free option for drivers who want to come into the Manhattan CBD is to ride public transit, as roughly 9 out of 10 CBD commuters already do.)
Second, Duffy argues that the New York tolling program “appears to be driven primarily by the need to raise revenue” for the MTA subway, bus and commuter rail network.
But the Federal Highway Administration’s own document — its November 2024 review of the final version of the New York tolling plan — refutes that claim. It notes that Hochul’s phased-in tolling approach has “Reduc[ing] daily vehicle-miles traveled within the Manhattan CBD” as “Objective 1”; “Reduc[ing] the number of vehicles entering the Manhattan CBD daily” as “Objective 2”; and “Creat[ing] a funding source for capital improvements” for the MTA as “Objective 3.”
To be sure, one benefit of New York’s congestion pricing program is that it generates funds to bond $15 billion in much-needed transit capital investments. So what? There is nothing about that purpose which is inconsistent with federal law. To the contrary, using toll revenues for capital transit expenditures is an approved use of federal transportation monies. And these are investments that will help maintain current transit ridership and that can attract motorists to switch to public transit for their commutes, further reducing motor vehicle congestion in the Manhattan CBD.
The fact that the Federal Highway Administration gave final approval to New York’s congestion pricing scheme only three months ago presents another hurdle for Duffy.
Federal courts appropriately place a heavy burden on agencies seeking to reverse their position on policy actions they have previously taken. As a rule, the agency must provide a reasoned analysis and set forth solid reasons for its reversal, such as changed circumstances that justify the turnabout. Duffy’s letter does not appear to meet that standard.
Instead, the letter highlights the secretary’s concerns “about the impacts to working-class Americans who now have an additional financial burden to account for in their daily lives.” But such concerns, to the extent they exist, were known to the Highway Administration when the agency gave approval to the New York tolling program.
Besides, available facts suggest that, contrary to the Trump administration’s claims, working-class commuters — who overwhelmingly ride subways, buses and commuter rails into the Manhattan CBD — will benefit from the congestion pricing program. A 2022 analysis by the non-profit Community Service Society, for example, concluded that only 2% of the city’s outer-borough working residents in poverty would be asked to pay the congestion fee as part of their daily commute, and that for every low-income New Yorker who will regularly pay the congestion toll, “50 workers will benefit from the mandated investments of congestion revenues in transit upgrades.”
Significantly, Duffy did not assert authority to immediately halt New York’s congestion pricing enterprise. Rather, the secretary noted that the Federal Highway Administration would be contacting New York’s Department of Transportation and the MTA “to discuss the orderly cessation of toll operations.”
Fortunately, it doesn’t appear that Hochul or Lieber are in the mood for such discussions. At least for the moment, their attorneys from the Kaplan Martin and Sive, Paget & Riesel law firms are doing the talking.
Hochul and Lieber have made clear to New Yorkers that the tolling system will remain in operation unless and until a federal court directs otherwise.
Hopefully, such a federal court ruling will never come. While it is always difficult to predict the outcome of litigation, in previously filed cases, three respected judges — Lewis Liman, Leo Gordon and Cathy Seibel — have on virtually every issue rejected opponents’ efforts to derail New York’s congestion pricing program.
To be sure, other efforts from the Administration or Congress to strangle New York’s congestion pricing program are not out of the question.
But with respect to this attack by the transportation secretary, New York State and the MTA appear to be in the driver’s seat.