CHICAGO — A judge in Indiana yesterday heard arguments by state officials asking for the imposition of a $3.8 billion surety bond on plaintiffs who wish to continue a lawsuit challenging the constitutionality of the agreement to lease the Indiana Toll Road for that same amount of money.
The state sought the bond or dismissal of the case, arguing that the surety bond equals the amount that the lawsuit could cost the state. St. Joseph County Superior Court Judge Michael Scopelitis adjourned the case until Monday morning.
The state asked Scopelitis to declare the lawsuit by a group of citizens and the Citizens Action Coalition, a statewide consumer group, a “public lawsuit” which under a state law protects against lawsuits that attempt to interrupt or stop public works projects.
The state has said in court papers that the suit was “meritless and harassing.” The state asked the judge to dismiss the suit if he fails to set the bond.
The state argued that it would lose $3.8 billion if the suit were allowed to continue. That is the amount that Australia’s Macquarie Infrastructure Group and Spain’s Cintra Concesiones de Infraestructuras de Transporte, an Australian-Spanish consortium, has agreed to pay the state to operate the 157-mile toll road for 75 years. The lawsuit, which challenges the state’s ability to use the proceeds from the sale primarily for transportation related projects, could delay the payment set for June 30.
Indiana law allows the defendant in a public lawsuit the right to request that the suit be dismissed if the plaintiff does not post a bond. The law states that a bond must be posted if, “at the hearing, the court determines that the plaintiff cannot establish facts that would entitle the plaintiff to a temporary injunction.”
The law also states that “the court shall set the amount of bond to be filed by the plaintiff in an amount found by the judge to cover all damage and costs that may accrue to the defendants by reason of the pendency of the public lawsuit in the event the defendant prevails.”
The attorneys who filed the suit on behalf of Steve Bonney, an Indiana farmer, six other citizens and the Citizens Action Coalition, were expected to argue that the designation of a public lawsuit would not apply. Attorneys were set to argue that the statute regarding public lawsuits does not include the Indiana Finance Authority, the state agency that will lease the toll road.
The state also is seeking an expedited process for the case. That could be halted if Scopelitis rules that the case is not a public lawsuit.
The court still will have to consider the main arguments that the plaintiffs set forth when they filed the suit the same day that Gov. Mitch Daniels’ administration signed the lease agreement, argue that the Indiana Toll Road lease plan is unconstitutional. The Indiana Constitution requires that the proceeds from any sale of state public works be used to pay down state debt. The suit argues that the toll road agreement violates that constitution.
The state argues that the toll road agreement is a lease, not a sale. The Daniels administration plans to use the bulk of the $3.8 billion to fund road projects. The proceeds will also be used to pay down toll road debt and to fund economic development projects.
