Congestion pricing toll digicam in Manhattan close to the Brooklyn Bridge.
Picture by Lloyd Mitchell
The long-running authorized battle over New York Metropolis’s congestion pricing program reached a essential milestone on March 3 when U.S. District Choose Lewis J. Liman of the Southern District of New York dominated in favor of the Metropolitan Transportation Authority and its companions, upholding the federal approval of this system and rejecting an try by the U.S. Division of Transportation to rescind it.
At its core, Metropolitan Transportation Authority v. Duffy presents a elementary and more and more related query: to what extent can an outgoing presidential administration bind its successor via discretionary regulatory actions?
The dispute traces again to Nov.21, 2024, simply 16 days after the presidential election. At the moment, the Federal Freeway Administration, below President Joe Biden’s administration, executed a cooperative settlement with New York State and native companies to authorize the implementation of congestion pricing below the federal Worth Pricing Pilot Program (VPPP). That timing was not incidental. Donald Trump, then the president-elect, had made his opposition to congestion pricing clear, calling it a “massive business killer” and pledged to terminate this system upon taking workplace. The FHWA settlement was extensively considered as an effort by the outgoing administration to cement the coverage earlier than the transition of energy.
One month into the brand new administration, newly confirmed Transportation Secretary Sean P. Duffy tried to do exactly that. In a February 19, 2025, letter to New York Gov. Kathy Hochul, Duffy presupposed to rescind FHWA’s prior approval and terminate the settlement, arguing that this system exceeded statutory authority and deviated from the supposed function of congestion pricing.
The MTA and the Triborough Bridge and Tunnel Authority instantly filed swimsuit, asserting that the rescission violated the Administrative Process Act and different constitutional and statutory provisions.
Liman’s resolution finally turned on administrative legislation ideas slightly than broader constitutional claims. The court docket held that U.S. DOT tried termination was “arbitrary and capricious” below the Administrative Process Act and due to this fact illegal.
First, the court docket rejected the transportation secretary’s central argument that this system’s “cordon pricing” mannequin — imposing tolls on all automobiles coming into an outlined zone with out a toll-free various — fell exterior the scope of the VPPP. The court docket discovered no statutory foundation for distinguishing cordon pricing from different congestion pricing fashions, nor any requirement to supply a toll-free various.
Second, the court docket dismissed the competition that this system was impermissibly designed to lift income slightly than cut back congestion. Whereas income era could also be a consequence of congestion pricing, the court docket discovered no authorized requirement that toll proceeds be used solely for highways or immediately tied to congestion mitigation.
Maybe most importantly, the court docket held that the company couldn’t depend on shifting coverage priorities to justify terminating the settlement. Duffy’s letter cited authorized deficiencies in this system, however the authorities later tried to defend the rescission based mostly on broader coverage disagreements. The court docket rejected this strategy, emphasizing that company motion should stand or fall on the explanations articulated on the time it was taken.
The choice additionally underscores the significance of reliance pursuits. By the point the Trump administration tried to rescind federal approval, New York had invested substantial time, assets, and political capital into growing and implementing this system. The court docket discovered that the transportation division did not adequately contemplate these reliance pursuits earlier than making an attempt to unwind the settlement.
However essentially the most consequential facet of the ruling could lie in its interpretation of the settlement itself. Liman concluded that the VPPP settlement may solely be terminated pursuant to its categorical phrases, and that none of these phrases licensed the transportation secretary’s unilateral motion. That conclusion displays a strategic resolution made by the outgoing administration. Federal rules governing grant agreements enable termination in sure circumstances, together with the place a program not aligns with company priorities. Nevertheless, these rules additionally require that termination provisions be “clearly and unambiguously” acknowledged within the settlement.
On this case, the FHWA settlement didn’t embody a provision permitting termination based mostly on a change in coverage priorities. By omitting that language, the Biden administration successfully restricted its successor’s skill to unwind this system. This drafting alternative proved decisive within the litigation.
The court docket finally vacated Duffy’s rescission letter and declared it illegal, although it stopped in need of issuing a everlasting injunction. The sensible impact is that congestion pricing stays in place for now. An attraction to the U.S. Courtroom of Appeals for the Second Circuit is probably going, and the case may finally attain america Supreme Courtroom.
Whatever the final result on attraction, the choice has broader implications for administrative legislation and presidential transitions. Particularly, it highlights how outgoing administrations could leverage the mechanics of federal agreements to entrench coverage choices, limiting incoming administrations’ flexibility to reverse course. As political polarization deepens and regulatory priorities shift extra dramatically between administrations, such techniques could grow to be more and more frequent.
In that sense, MTA v. Duffy is about greater than congestion pricing. It’s a case research within the evolving steadiness of energy throughout the administrative state and a preview of the authorized battles that will outline future transitions of energy.
Matthew Daus is the transportation expertise chair for the College Transportation Analysis Heart, Area 2 (NY/NJ) on the Metropolis College of New York
