A car rental company shuttle picks up customers at Denver International Airport. (Courtesy DIA)
The rental car industry wants a federal judge to throw out Colorado’s new fee on car rentals before it can take effect New Year’s Day, claiming the law is unconstitutional.
Senate Bill 184 was approved by two-thirds majorities of the Colorado Senate and House in April and May, respectively, and signed by Gov. Jared Polis. The fee of up to $3 per day on rental cars is forecast to raise $147 million in its first three years, the state says.
The fee was created “so that out-of-state visitors who contribute to wear and tear and congestion on Colorado’s roads help pay for transportation,” according to the state. The money will be spent on the Front Range and mountain rail projects, along with bus services.
But first, the new law must overcome a legal challenge from the industry it is billing.
The American Car Rental Association sued the state’s revenue and transportation departments on Sept. 5 and asked Judge Kathryn Starnella to render the law void. Whether she does may depend on how closely she considers the link between car rentals and airports to be.
Because the airline industry is federally regulated, states are generally prohibited from taxing businesses at airports and using the collected money for non-airport purposes. The American Car Rental Association claims that SB 184 is attempting to do so.
“The fee is collected and paid by car rental businesses located at a commercial service airport or operating as a permittee of such an airport,” its lawsuit states. And “There is no provision requiring the fee collected at airports to be used for airport or aeronautical purposes.”
“Plaintiff’s members will suffer harm unless a permanent injunction is issued because they will be forced to collect an illegal fee from their customers or face civil and criminal penalties,” the American Car Rental Association wrote in its appeal to Judge Starnella.
The fee also applies to rental car companies that are not located at airports, so it’s uncertain how the judge will weigh its constitutionality. No hearing has been scheduled yet.
“The Department of Revenue does not comment on pending litigation,” a spokeswoman said. A spokesman for the Department of Transportation also declined to weigh in this week.
The ACRA is represented by attorneys Jeffrey Friedman and Daniel Schlueter in the Washington, D.C. office of Eversheds Sutherland, one of the world’s largest firms.
CDOT and CDOR will be represented by the Colorado Attorney General’s Office.
A car rental company shuttle picks up customers at Denver International Airport. (Courtesy DIA)
The rental car industry wants a federal judge to throw out Colorado’s new fee on car rentals before it can take effect New Year’s Day, claiming the law is unconstitutional.
Senate Bill 184 was approved by two-thirds majorities of the Colorado Senate and House in April and May, respectively, and signed by Gov. Jared Polis. The fee of up to $3 per day on rental cars is forecast to raise $147 million in its first three years, the state says.
The fee was created “so that out-of-state visitors who contribute to wear and tear and congestion on Colorado’s roads help pay for transportation,” according to the state. The money will be spent on the Front Range and mountain rail projects, along with bus services.
But first, the new law must overcome a legal challenge from the industry it is billing.
The American Car Rental Association sued the state’s revenue and transportation departments on Sept. 5 and asked Judge Kathryn Starnella to render the law void. Whether she does may depend on how closely she considers the link between car rentals and airports to be.
Because the airline industry is federally regulated, states are generally prohibited from taxing businesses at airports and using the collected money for non-airport purposes. The American Car Rental Association claims that SB 184 is attempting to do so.
“The fee is collected and paid by car rental businesses located at a commercial service airport or operating as a permittee of such an airport,” its lawsuit states. And “There is no provision requiring the fee collected at airports to be used for airport or aeronautical purposes.”
“Plaintiff’s members will suffer harm unless a permanent injunction is issued because they will be forced to collect an illegal fee from their customers or face civil and criminal penalties,” the American Car Rental Association wrote in its appeal to Judge Starnella.
The fee also applies to rental car companies that are not located at airports, so it’s uncertain how the judge will weigh its constitutionality. No hearing has been scheduled yet.
“The Department of Revenue does not comment on pending litigation,” a spokeswoman said. A spokesman for the Department of Transportation also declined to weigh in this week.
The ACRA is represented by attorneys Jeffrey Friedman and Daniel Schlueter in the Washington, D.C. office of Eversheds Sutherland, one of the world’s largest firms.
CDOT and CDOR will be represented by the Colorado Attorney General’s Office.
