WASHINGTON — The Northern Virginia Transportation Authority’s ability to impose taxes and issue bonds remained uncertain yesterday after the Virginia Supreme Court heard oral arguments in a case that could have a far-reaching effect on other regional authorities in the state.
The case pits the NVTA, supported by Virginia’s governor, state attorney general, and speaker of the House, against the Loudoun County Board of Supervisors and a group of 18 Virginia residents, which claim that the authority’s proposals to levy taxes and issue debt violates the state’s constitution. The residents are called the Marshall defendents because they are led by Republican House Delegate Robert Marshall.
At stake is the authority’s proposal to issue up to $130 million of bonds, its first ever, to finance infrastructure improvements to relieve the region’s saturated traffic system. The case is being closely watched by the Hampton Roads Transportation Authority and state lawmakers who are considering establishing a similar authority for the Richmond area.
At the hearing yesterday, the seven high court justices asked pointed questions of both sides and expressed concerns about the ramifications of ruling either way in the case.
The Loudoun County Board of Supervisors and 18 Virginia residents claimed that the Virginia General Assembly, which passed legislation creating the NVTA, cannot delegate the ability to impose taxes or issue bonds to an authority whose officials are not elected to it. Furthermore, Wesley Russell of McSweeney, Crump, Childress, and Temple PC, who argued on behalf of the Marshall defendants, contended that the Virginia Legislature is giving the NVTA a power that it does not possess — the ability to issue debt that has not been approved by voters in a statewide referendum.
“The General Assembly is trying to give to the NVTA powers that it does not itself have,” he said. “That would make no sense.”
But Chief Justice Leroy Rountree Hassell Sr. pressed Russell about the broader implications of ruling against the NVTA. He asked whether such a ruling would extend to Virginia industrial development authorities that issue debt in similar situations.
“Are you saying that if we agree with your argument ... then an IDA would be constitutionally prohibited from issuing bonds?” Hassell asked the attorney.
Russell said it was a possible, but unnecessary, consequence.
John Roberts, Loudoun County’s attorney, argued that Virginia’s Constitution restricts the General Assembly from imposing taxes that are local and not statewide.
But William G. Broaddus of McGuireWoods LLP, the lawyer representing the NVTA, said Virginia has created hundreds of similar authorities over the years, and a ruling against the NVTA “would be in the face of the long history of this commonwealth.”
He added that since the General Assembly “made the law and maintains control over the law [that created the NVTA and gave it bonding and taxing authority] ... there is no unconstitutional delegation.”
But Justice Barbara Milano Keenan queried Broaddus about the larger implications of siding with the NVTA, particularly as it relates to extending the power to impose taxes to entities apart from the Legislature.
“Is there any limitation at all on the General Assembly when it comes to the imposition of taxes?” she asked, wondering if a pro-NVTA decision would permit the creation of “hundreds and thousands” of new authorities with taxing power. “Isn’t that the necessary conclusion we have to reach under your argument?”
Broaddus conceded that the NVTA’s argument would allow the creation of additional taxing authorities, but said, “If the people don’t like it, they can go to the General Assembly.”
Joining Broaddus, Francis S. Ferguson, Virginia’s deputy attorney general, who appeared on behalf of Virginia’s governor, attorney general, and speaker of the House, argued that the state constitution is “only a document of limitation” and does not explicitly prohibit lawmakers from giving revenue collecting and bonding powers to authorities such as the NVTA.
Justices G. Steven Agee and Cynthia D. Kinser asked several pointed questions of both sides, but it was not entirely clear which way they were leaning. Justices Lawrence L. Koontz Jr., Donald W. Lemons, and S. Bernard Goodwyn also posed questions to both lawyers, but their inclinations were unknown.
Overall, though, it appeared that the lawyers for the NVTA faced a much more scrutiny from the high court justices than from Judge Benjamin N.A. Kendrick in the Arlington Circuit Court, who easily ruled in its favor on all counts.
After the arguments, neither side could predict how the justices would rule.
Patrick McSweeney, a partner at the McSweeney firm who listened to the debate before the high court and represented the Marshall defendants before the Arlington Circuit Court, said: “It went about how we expected, but it’s hard to read the court. I can’t tell from the questions whether we have a majority in support of our position.”
He noted the justices were concerned both that a ruling for the NVTA could give innumerable authorities the power to impose taxes and that a ruling against the authority could prohibit IDAs from issuing bonds.NVTA officials were also unsure of which way the court was leaning. The authority is currently functioning under the ruling from the lower court that validated its taxation and borrowing powers, and will continue to do so unless told otherwise by the high court. However, no bonds will be issued prior to the high court’s ruling, NVTA officials said.
Although it is unclear when the court will issue a ruling, NVTA officials said it could come as early as Feb. 29. McSweeney said the case is a top priority for the justices. “There have been very few cases where a case has been expedited like this,” he said. “This is unprecedented.”