Key facts
- Colorado's $3 per day congestion impact fee on rental cars has been upheld by the 10th U.S. Court of Appeals.
- The fee was approved in 2024 to fund transit and rail services aimed at reducing traffic congestion.
- The American Car Rental Association (ACRA) challenged the fee, arguing it violates federal law by unfairly burdening airport commerce.
- The appellate court rejected ACRA's challenge, affirming the district court's prior ruling.
- The Washington Legal Foundation (WLF) also filed an amicus brief supporting ACRA's challenge.
The 10th U.S. Court of Appeals has upheld Colorado's $3 per day congestion impact charge on rental cars, rejecting a legal challenge brought by the American Car Rental Association (ACRA). The fee, enacted in 2024, is intended to fund investments in transit and rail services to mitigate traffic congestion caused by rental vehicles.
ACRA, which represents major rental car companies like Avis, Hertz, and Enterprise, argued that the fee violates federal law, specifically the Anti-Head Tax Act. They contended that the fee disproportionately burdens airport commerce by targeting airport auto rentals and that Congress intended to protect interstate air commerce from such levies. The association noted that at least half of the state's rental car transactions occur at airports.
Previously, the U.S. District Court for the District of Colorado had dismissed ACRA's challenge, finding the fee was generally imposed and not specifically targeted at tourists. The Washington Legal Foundation also submitted an amicus brief in support of ACRA's appeal, urging the court to reverse the lower court's decision and strike down the fee.
Colorado's Assistant Attorney General argued that the fee applies to all rental car users, regardless of whether they are tourists or residents, and that it is not solely aimed at airport customers. The appellate judges questioned the assertion that the fee specifically targets airport customers, pressing the ACRA's attorney on how it differs from a general tax.
