Virginia Supreme Court Upholds SCC’s Denial of Dulles Greenway Toll Hike
Toll Road Investors P’ship II v. State Corporation Commission, Record No. 250002 (Va. July 17, 2025)
The Dulles Greenway is a 14-mile private toll road connecting Leesburg to the Dulles Toll Road in Loudoun County, currently operated by Toll Road Investors Partnership II, L.P. (TRIP II). It has been plagued by financial difficulties since opening in 1995. Originally projected to cost $146 million, the road ultimately cost $315 million to build. More problematically, traffic projections proved wildly optimistic—developers expected 20,000 vehicles per day initially, rising to 87,000 by 2010. In reality, the road averaged only about 37,000 trips per day in 2022.
This disappointing traffic led to multiple debt restructurings in 1999 and 2005 and repeated toll increases. By 2022, TRIP II’s debt had ballooned to $1.1 billion, largely in zero-coupon bonds that accumulate interest until maturity. Despite previously approved toll increases and a 20-year franchise extension, TRIP II has continued to draw on reserves to meet debt obligations and has not made equity distributions since 2006.
In 2023, TRIP II applied to the State Corporation Commission to increase tolls. The request would impose a 40% increase to tolls paid by regular commuters. Under Code § 56-542(D), as amended in 2021, the Commission must ensure that toll rates are (1) reasonable to users in relation to benefits obtained, (2) not materially discouraging to roadway use, and (3) provide no more than a reasonable return to the operator. The statute requires a “forward-looking analysis” considering anticipated traffic levels and socioeconomic conditions. To justify its requested increase under the amended statutory criteria, TRIP II submitted a detailed analysis from the Steer Group attempting to quantify user benefits including travel time savings, reliability improvements, vehicle operation savings, and safety benefits.
The Commission received over 900 public comments, overwhelmingly opposing the increase. Loudoun County and the Attorney General’s Division of Consumer Counsel participated as opponents. Their experts challenged the Steer report’s methodology, data, and conclusions. After hearings and extensive briefing, both the Hearing Examiner and full Commission found that TRIP II failed to prove the increased tolls would be “reasonable to the user in relation to the benefit obtained” or would “not materially discourage use of the roadway.” The Commission explicitly credited expert testimony challenging the Steer report’s methodology. TRIP II appealed to the Supreme Court of Virginia, contending first that the Commission misapplied the relevant statutory criteria, and second that denying the increase constituted an uncompensated taking in violation of the United States and Virginia Constitutions.
The Supreme Court disagreed on both points.
First, the Court affirmed the Commission’s conclusion that TRIP II’s application did not satisfy the “reasonable benefit to the user” prong of the statute. Recognizing that resolution of this question involved a “quintessential battle of the experts for the Commission to resolve,” the Court deferred to the Commission’s credibility findings. The Court stated that it would not “reweigh the evidence that the Commission found credible” and noted that the Commission’s decision was “based upon the application of correct principles of law.” (Since this was sufficient to deny the application, the Court did not decide whether the application satisfied the “reasonable benefit to the user” prong.)
Second, the Court rejected TRIP II’s constitutional arguments, distinguishing the Greenway’s situation from typical utility rate cases. The Court emphasized several key factors: TRIP II chose to build a toll road knowing it would compete with free public roads; unlike captive utility ratepayers, drivers have alternatives; the business was built on flawed traffic projections from the start; the Commission has repeatedly acted to keep the struggling business afloat; and market conditions, including remote work and improved alternative routes, have eroded. Crucially, the Court held that constitutional protections do not guarantee profits for businesses with flawed business models. The Court noted that “ a ‘reasonable’ rate of return is not an ironclad guarantee of profit” but rather “one that is reasonable under the circumstances.”
The Court’s decision leaves TRIP II with the option to reapply for toll increases annually but suggests that without fundamental changes to either the value proposition or the analytical methodology, future applications may face similar challenges.