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ATTORNEYS FOR APPELLANTS James P. Fenton Alan VerPlanck Kathryn A. Brogan Fort Wayne, Indiana ATTORNEYS FOR AMICUS CURIAE WILLIAM N. STANT James Alexander Tanford Bloomington, Indiana Rudolph Wm. Savich Bloomington, Indiana

ATTORNEYS FOR APPELLEES INDIANA FINANCE AUTHORITY Phillip R. Scaletta Michael A. Wukmer Indianapolis, Indiana ATTORNEYS FOR APPELLEES INDIANA DEPARTMENT OF TRANSPORTATION MITCHELL E. DANIELS, GOVERNOR OF INDIANA, AND TIM BERRY, TREASURER OF INDIANA Steve Carter Attorney General Thomas M. Fisher Solicitor General Julie A. Hoffman Deputy Attorney General Indianapolis, Indiana ATTORNEYS FOR APPELLEES STATEWIDE MOBILITY PARTNERS AND ITR CONCESSION Jeffrey C. McDermott Libby Y. Mote Indianapolis, Indiana ATTORNEY FOR AMICUS CURIAE INDIANA ASSOCIATION OF CITIES & TOWNS Michael A. Howard Noblesville, Indiana

______________________________________________________________________________

In the

Indiana Supreme Court
_________________________________ No. 71S00-0606-CV-204 STEVE BONNEY, JOHN GIBSON, ANITA GIBSON, TOM PIETRZAK, RANDY NACE, CLARINDA NACE, JUNE NACE , AND THE CITIZENS ACTION COALITION OF INDIANA, INC., AN INDIANA NOT FOR PROFIT CORP., Appellants (Plaintiffs below), v. INDIANA FINANCE AUTHORITY, STATEWIDE

MOBILITY PARTNERS, LLC, ITR CONCESSION COMPANY, LLC, THE INDIANA DEPARTMENT OF TRANSPORTATION, MITCHELL E. DANIELS, GOVERNOR OF INDIANA, AND TIM BERRY, TREASURER OF INDIANA, Appellees (Defendants below). _________________________________ Appeal from the St. Joseph Superior Court, No. 71D07-0604-PL-00144 The Honorable Michael P. Scopelitis, Judge _________________________________ On Petition To Transfer Pursuant to Indiana Appellate Rule 56(A) _________________________________ June 20, 2006 Boehm, Justice. The plaintiffs contend that the 2006 law commonly referred to as the "Major Moves" legislation violates several provisions of the Indiana Constitution. The trial court determined that: 1) the claims raised in most counts of the complaint in this case are governed by the Public Lawsuit Statute; 2) the plaintiffs' challenges presented no substantial issue, and therefore the Public Lawsuit Statute requires that a bond be posted before the claims governed by that Statute may proceed; 3) the claims raised in Counts IV and VIII were severable from the remainder of the complaint and were not governed by the Public Lawsuit Statute; and 4) the amount of the potential loss to the public from the pendency of this lawsuit was approximately $1.9 billion. Accordingly, the trial court ordered that the Public Lawsuit portions of the complaint be dismissed unless the plaintiffs posted a bond in that amount. The plaintiffs appeal that order, raising five issues. They contend that this lawsuit is not subject to the Public Lawsuit Statute for two reasons: 1) the Indiana Finance Authority is not a "municipal corporation" as that term is used in the statute; and 2) the statute applies only to acquisitions, not dispositions, of public works.

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Plaintiffs also contend that even if the Public Lawsuit Statute applies to their claims, that statute permits a lawsuit to go forward without a bond if the plaintiffs present substantial issues for trial. Plaintiffs contend they have presented three substantial challenges to House Enrolled Act 1008 under the Indiana Constitution: 1) the provisions granting funding to seven counties constitute "special" legislation in violation of Article IV, Section 23; 2) the provisions for the proceeds of the lease of the Indiana Toll Road to be applied to purposes other than retirement of "public debt" violate Article X, Section 2; and 3) the exemption of the Toll Road from property taxes violates the requirement of Article X, Section 1 that the system of taxation be "uniform and equal" subject only to exemptions for specified purposes. The first two contentions turn solely on the language of the Public Lawsuit Statute, and we conclude that the General Assembly intended the statute to apply to lawsuits such as this. We also conclude that no substantial issue is raised by the plaintiffs' three contentions that HEA 1008 violates the Indiana Constitution. The trial court's decision as to the severability of counts IV and VIII is not challenged on appeal. Accordingly, we affirm the order of the trial court. Facts and Procedural History The Indiana Toll Road runs through the seven Indiana counties along Michigan's southern border. The road is a major artery connecting Chicago and points west with destinations in the Northeast. It was originally constructed in the 1950s by the Indiana Toll Road Commission, which is a predecessor of one of several statutory entities that were consolidated to form the Indiana Finance Authority (IFA) in 2005. As a result of that consolidation, IFA is the current owner of the road. In 2005 IFA began to explore leasing the Toll Road to a private entity and ultimately it solicited bids from potential lessees through an auction process. The ITR Concession Company LLC (ITR) submitted the highest bid of $3.8 billion. The transaction was contingent upon authorizing legislation, and Governor Daniels signed House Enrolled Act 1008 (HEA 1008), popularly known as "Major Moves," into law in late March 2006. On April 12, 2006, ITR and IFA executed the "Indiana Toll Road Concession and Lease Agreement." Pursuant to its terms, IFA agreed to terminate the current lease to the Indiana Department of Transportation (INDOT) and

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to lease the toll road lands and facilities to ITR for a term of seventy-five years. ITR agreed to pay rent in the amount of $3.8 billion to be paid in full on the date of closing. HEA 1008 includes a number of provisions addressing the use of the lease proceeds. The Act directs that any lease proceeds first be applied to retire IFA's existing bond debt and to pay any expenses incurred by IFA in connection with the execution and performance of the lease. After payment of these obligations, IFA is to allocate $500 million to a "Next Generation Trust Fund" and the remainder to a "Major Moves Construction Fund." The Next Generation Trust Fund is a charitable trust created by the Act to fund long-term road, highway, and bridge projects. Money in the Major Moves Construction Fund is allocated first in specific amounts to the seven counties that the Toll Road traverses. The five counties at the eastern end of the Toll Road (Steuben, LaGrange, Elkhart, Saint Joseph, and LaPorte) are each to receive $40 million. Lake and Porter counties each would receive a smaller allocation because these two counties are members of the Northwest Indiana Regional Developmental Authority, which receives separate distributions totaling $120 million. The Act also provides that total distributions from the Major Moves Fund for projects or purposes benefiting the seven northern counties may not be less than 34% of the lease proceeds after two adjustments. The Act allocates $179 million to the state highway fund for preliminary engineering, purchase of right-of-ways, or construction of highways and bridges, and $150 million to the motor vehicle highway account. In addition to these specific required allocations, the Act authorizes additional distributions from the Major Moves Fund to the state highway fund for funding any project in INDOT's transportation plan. Based on testimonial evidence presented by the defendants, the trial court made a factual finding that the largest portion of the Major Moves money is allocated to INDOT to complete its ten-year plan, which includes upgrades to U.S. Highway 31, and construction of the Ports to Ports Road, the Hoosier Heartland Highway, and the Interstate 69 extension into southern Indiana. On April 12, 2006 the plaintiffs filed their complaint in St. Joseph Superior Court seeking a declaratory judgment and a permanent injunction invalidating HEA 1008 on a variety of state constitutional grounds. The complaint named as defendants the IFA, Mitch Daniels, in his official capacity as Governor of Indiana, Tim Berry, in his official capacity as Treasurer of Indiana,

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INDOT, ITR, and Statewide Mobility Partners, LLC (SMP). 1 Under section 9.1(g) of the Lease Agreement IFA made the following representation and warranty to ITR: There is no action, suit or proceeding, at law or in equity, or before or by any Governmental Authority, pending nor, to the best of IFA's knowledge, threatened against the IFA, which would have a Material Adverse Effect on (i) the operations of the Toll Road or (ii) the validity or enforceability of this Agreement. If there is any such litigation pending on June 30, 2006, the date of closing, and the failure to close is not attributable to ITR, the Lease Agreement authorizes ITR to terminate the Agreement and seek indemnification from IFA for any losses occasioned by IFA's breach of this warranty. Expressing concern that the plaintiffs' complaint might trigger section 9.1(g) of the Lease Agreement, the defendants petitioned the court to certify the plaintiffs' complaint as a public lawsuit under Indiana's Public Lawsuit Statute or alternatively to dismiss the complaint. After a hearing held May 11 and 15, 2006, the court issued an order certifying as a public lawsuit Counts I, II, III, V, VI, and VII and the portion of Count IV challenging the establishment of local construction funds and the transfer of highway operations. The court required plaintiffs to post a

bond to cover anticipated damages and costs of the public lawsuit to the defendants if the defendants ultimately prevail. The amount of the bond was set at $1.9 billion, 2 and the plaintiffs were required to post the bond within ten days of the order or risk dismissal with prejudice of their certified counts. The court concluded that the portion of Count IV challenging provisions of HEA 1008 related to the proposed construction of Interstate 69 and Count VIII were severable from the remaining claims and therefore did not threaten the validity of the Act or Lease Agreement. These were permitted to proceed without bond. Plaintiffs appealed the order to the Court of Appeals on June 5, 2006. The same day, on defendants' motion, this Court accepted jurisdiction over the appeal under Indiana Appellate Rule 56(A).
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ITR made its bid on behalf of SMP. SMP is a joint venture for Cintra Concesiones de Infraestructuras de Transporte, SA and Macquarie Infrastructure Group. 2 The trial court determined defendants' anticipated damages and losses to be the difference between the $3.8 billion rental payment under the proposed Lease Agreement and the estimated value of the Toll Road for the next seventy-five years if operated by IFA. Defendants' expert testified that the value of the Toll Road for the next seventy-five years if operated by IFA would be $1.92 billion. The court used this figure to calculate defendants' anticipated damages and losses and rejected the alternative $5.35 billion figure offered by plaintiffs' expert.

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Complaints challenging the Act and the Lease Agreement were filed by other plaintiffs in LaPorte and Brown counties. The LaPorte County complaint was dismissed with prejudice on June 8, 2006. After we accepted jurisdiction over this case, William Stant, the Brown County plaintiff, moved for leave to appear as an amicus curiae. That motion was granted, as was the motion of the Indiana Association of Cities and Towns. I. Application of the Public Lawsuit Statute

The Public Lawsuit Statute, Indiana Code sections 34-13-5-1 through 34-13-5-12 (2004), has been in place since 1967. It reflects the General Assembly's recognition that the mere pendency of a lawsuit can frustrate a project even if the claims are eventually found to be without merit. The statute acknowledges that litigation can be deployed to delay and sometimes even defeat public projects, and can be driven by a variety of motivations, some of which may have little to do with the merits of the project from the perspective of the general public. 3 Indeed the testimony of these plaintiffs offers interesting anecdotal evidence on that point. The trial court found that one plaintiff opposed HEA 1008 because he owns a farm in Greene County (presumably approximately 200 miles from the Toll Road) and does not want the proposed extension of Interstate 69 from Indianapolis to Evansville to go forward through his land. Of course these plaintiffs, and all citizens, have every right to deploy whatever tools the law gives them to challenge legislation with which they disagree for whatever reason. But the General Assembly has prudently provided for a means of quickly separating the legal wheat from the chaff to prevent opponents of a public project from achieving by the passage of time more than the law would give them. The statute imposes a number of procedural rules governing public lawsuits, including provisions that are designed to consolidate all litigation in one forum and the requirement that a

The purpose of the statute "is to protect the public against a `flood of harassing litigation' which obstructs and delays public improvement at prohibitive costs and from the `financial damage of completely non-meritorious litigation.'" Johnson v. Tipton Comty. Sch. Corp., 253 Ind. 460, 464, 255 N.E.2d 92, 94 (1970) (quoting State ex rel. Haberkorn v. DeKalb Circuit Court, 251 Ind. 283, 288, 241 N.E.2d 62, 65 (1968)). See also Jay M. Zitter, Annotation, Constitutionality, Construction, & Application of Statutes Requiring Bond or Other Security In Taxpayers' Action, 41 A.L.R. 5th 47, 2a (1996).

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bond be posted if, as occurred in this case, the trial court determines that the claims do not meet the statutory requirements to avoid the bond request. "Public lawsuit" is defined by statute as: (1) any action in which the validity, location, wisdom, feasibility, extent, or character of construction, financing, or leasing of a public improvement by a municipal corporation is questioned directly or indirectly, including but not limited to suits for declaratory judgments or injunctions to declare invalid or to enjoin the construction, financing, or leasing; and (2) any action to declare invalid or enjoin the creation, organization, or formation of any municipal corporation. Ind. Code

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