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US appeals court upholds Colorado congestion fee on rental cars

Created at 27 Jul · 4:17 PM1 source↑ Market-relevant
IN SHORT

The 10th U.S. Court of Appeals upheld Colorado's $3 per day congestion impact charge on rental cars, rejecting a challenge from an industry group. The fee, approved in 2024, aims to fund transit and rail services to reduce traffic congestion.

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Key Numbers

$3per day congestion impact charge on rental cars
2024year Colorado approved the fee
30 daysmaximum rental period for the fee
43 statesstates that put new taxes on rental cars between 1990 and 2010
115new taxes on rental cars between 1990 and 2010

Who's Involved

10th U.S. Court of Appeals
upheld Colorado's rental car congestion fee
Colorado
state that approved the congestion fee on rental cars
American Car Rental Association
industry group that challenged the fee
Avis, Hertz, Enterprise
companies represented by the industry group
Washington Legal Foundation
filed an amicus brief supporting the challenge
Cory L. Andrews
WLF General Counsel & Vice President of Litigation
Daniel Schlueter
represented the American Car Rental Association
Pawan Nelson
Assistant Attorney General representing Colorado
Donald Trump
appointed U.S. District Judge Daniel Domenico
U.S. District Judge Daniel Domenico
dismissed the initial complaint
U.S. Circuit Judge Allison Eid
pressed the rental car group's attorney
U.S. Circuit Judge Scott Matheson
part of the appellate panel
U.S. Circuit Judge Joel Carson
part of the appellate panel
US appeals court upholds Colorado congestion fee on rental cars

↳ Why This Matters

The ruling allows Colorado to continue collecting the congestion fee, which aims to fund transportation infrastructure improvements. It also sets a precedent for how state-level fees on rental cars are viewed under federal preemption laws, potentially impacting similar challenges in other states.

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.

Frequently asked questions

It is a $3 per day fee imposed on short-term vehicle rentals in Colorado, approved in 2024, to fund transit and rail projects aimed at reducing traffic congestion.

The American Car Rental Association (ACRA), representing companies like Avis, Hertz, and Enterprise, challenged the fee.

ACRA argued the fee violates federal law, specifically the Anti-Head Tax Act, by unfairly burdening airport commerce and targeting airport rentals.

The 10th U.S. Court of Appeals upheld the fee, rejecting ACRA's challenge and affirming a lower court's decision.

What Happens Next

01The court did not indicate when or how it would issue its final decision.

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Cadence

How It Developed

Colorado approved a $3 per day congestion impact fee on rental cars in 2024.
The American Car Rental Association (ACRA) sued Colorado, challenging the fee.
ACRA argued the fee disproportionately burdens airport commerce and violates federal law.
The U.S. District Court for the District of Colorado upheld the fee.
ACRA appealed the district court's decision to the 10th U.S. Court of Appeals.
The 10th U.S. Court of Appeals upheld Colorado's congestion fee on rental cars.

Sources

T1
US appeals court upholds Colorado congestion fee on rental carsReuters
T2
Rental car group asks 10th Circuit to greenlight challenge to Colorado ...courthousenews.com
T2
WLF Urges Tenth Circuit to Declare Colorado's Rental-Car Fee Preempted ...wlf.org

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