TORONTO, (July 12, 2004) — An independent arbitrator ruling on the seven-month standoff between the Ontario Liberals and the operator of Hwy. 407 has concluded that the government doesn’t have the authority to block toll increases.

The ruling confirmed that the company is not required to submit a change request, nor obtain any other government approval, in order to change tolls or fees,” 407 International Inc. — — a private consortium that bought the 108-km highway from the Conservative government in 1999 for $3.1 billion — said in a news release.

The McGuinty government — which campaigned last fall on a promise to roll back toll hikes to 2 per-cent a year, plus inflation — said it would appeal the decision and continue to fight the 99-year lease the company signed with the previous Tory government. “It’s inconceivable that any government would have given a private consortium the unfettered right to raise tolls for 99 years,” Transportation Minister Harinder Takhar said in a statement. “We look forward to pursuing this through the courts.”

Takhar also said the MTO notified the company some months ago of its intention to invoke its unique “Right to Renegotiate” the tolling agreement. As part of the original agreement, the Ministry is legally entitled to re-negotiate every five years, Takhar said.

This past February, the government threatened legal action against the 407 ETR if it went ahead with a planned toll increase without first obtaining government approval — a provision the Liberals contend is included in the original contract.

However, the 407 ETR hiked tolls — two cents extra for single combination trucks and three cents for multiple units — despite the government warning. The company insisted that the existing contract allows the company to raise rates unilaterally, without government interference.

Today’s Trucking reported at the time that the opposition Conservative government — as well several bond-rating agencies familiar with the contract — echoed 407 ETR’s position that the government’s legal argument is weak, and — based on the details of the contract — were puzzled over how the Liberal government expected to win the standoff.

“We’ve been saying for years that we have the sole authority to set rates without authorization and approval from government,” 407 ETR spokesperson Dale Albers told Today’s Trucking earlier this year. “The contract is public. It’s not a secrete. I think most people understand that the (government’s agenda) is a very political one and their legal case is not strong at all, and it all comes at taxpayers expense.”

PC MPP Frank Klees also accused the government of blindly making promises, despite its weak legal position, simply to get votes.

The company also announced Saturday that it had recently filed a judicial application seeking to enforce a settlement agreement made with the province to bring a resolution to disputes regarding annual audited traffic reports for 2001 and 2002.

In the past four years, rates for some peak driving hours on the highway have gone up more than 200 per cent, prompting complaints from truckers and commuters.

— with files from Canadian Press