The 10th U.S. Circuit Court of Appeals on Monday upheld Colorado's $3-per-day congestion impact charge on rental cars, turning down a challenge from an industry group representing Avis (CAR.O), Hertz (HTZ.O), Enterprise and others.
Colorado approved the fee in 2024 on rentals of 30 days or less to address the impact of rental cars on public roads. The state said the funding would support investments in transit and rail services, reducing traffic congestion.
The fee is raised annually to adjust for inflation and applies to car-sharing programs and larger vehicles like moving trucks.
The American Car Rental Association, which brought the legal challenge, did not immediately respond to a request for comment. The appeals court upheld a lower court ruling that previously found the fee legal.
At issue are laws passed by Congress since 1972 that expanded prohibitions on local taxes on air passengers and air commerce to businesses located at commercial service airports and businesses. A 2018 law said local taxes could not be imposed for airport businesses unless wholly utilized for airport or aeronautical purposes.
The court in a 2-1 ruling found the fee was valid since the payers are the people who rent vehicles and not car rental businesses, and added that the travelers are those who will benefit from the services provided by surface transportation infrastructure projects funded by the fee.
In March, a U.S. judge in New York said the U.S. Transportation Department's effort to force an end to Manhattan's congestion pricing program was illegal, a blow to President Donald Trump's attempts to eliminate the charge.
