Can Tennessee's 2011 law restricting red-light cameras be challenged for breaking cities' existing contracts with camera vendors?

Subject

Opinion No. 11-61, Constitutionality of Restrictions on Use of Unmanned Traffic Enforcement Cameras, August 8, 2011

Plain-English summary

Representative Richard Floyd and Senator Jim Tracy asked whether 2011 Public Chapter 425, Tennessee's new restrictions on automated red-light cameras, could survive a Contracts Clause challenge. The factual backdrop: before the law passed, several Tennessee cities had signed multi-year contracts with traffic-camera vendors (American Traffic Solutions, Redflex, and similar companies) that included revenue-sharing arrangements. Cities split each ticket's fine with the vendor. The opinion request said there had been an understanding that a minimum number of those citations would come from right-turn-on-red violations specifically. Chapter 425 then changed the rules on what evidence a camera could supply to support a citation, including a near-total ban on right-turn-on-red citations from unmanned cameras unless the intersection was marked "No Turn on Red." That change predictably reduced the number of issuable tickets, which predictably reduced the revenue split, which predictably angered the vendors.

The AG was asked whether the law could be challenged as unconstitutionally impairing the obligation of contracts. Both the U.S. and Tennessee Constitutions ban laws that impair the obligation of a contract (U.S. Const. Art. I, § 10, cl. 1; Tenn. Const. Art. I, § 20). The AG flagged up front that without seeing a specific contract, the office couldn't give a definitive answer, but it laid out three reasons why the State should win:

First, Chapter 425 is remedial. It changes the rules of evidence governing when a traffic citation can be sustained on camera-only proof. As the Tennessee Supreme Court said in Brewer v. Aetna, quoting Marx v. Hanthorn, "the right to have one's controversies determined by existing rules of evidence is not a vested right." Rules of evidence are not part of any contract and can be changed by the legislature, even retroactively. So vendors who counted on the pre-2011 evidentiary rules to keep ticket numbers high have no vested-right complaint.

Second, Chapter 425 is an exercise of the police power. Tennessee has comprehensive authority to regulate traffic on its highways. The U.S. Supreme Court's decision in Sproles v. Binford says "[c]ontracts which relate to the use of the highways must be deemed to have been made in contemplation of the regulatory authority of the state." Vendors operating in this heavily regulated space entered their contracts knowing that the rules could change. Their reasonable expectations are not defeated by the regulatory update.

Third, the law is reasonable in relation to its purpose. It does not single out particular vendors. It favors motorists who are charged with misconduct by enhancing their ability to confront live witnesses rather than just photographic evidence. The "No Turn on Red" sign requirement gives drivers fair notice. The law does not let the State "simply walk away from its financial obligations," which is the kind of self-dealing the Contracts Clause is designed to police. The State retains the underlying authority to make the conduct lawful or unlawful; it has just changed when the conduct can be proved by camera.

The opinion adds a candid hedge. Without a specific contract to read, the AG cannot calculate the actual financial impact on a particular vendor. If a contract had unusually specific revenue guarantees, the analysis could shift. But on the general showing, the law should hold up.

Currency note

This opinion was issued in 2011. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.

Tennessee's traffic-camera statutes have been amended multiple times since 2011, including further restrictions and reporting requirements. The right-turn-on-red rule discussed here has been the subject of additional legislation. Anyone analyzing a current traffic-camera contract or program should look at the current Tenn. Code Ann. § 55-8-198, related statutes, and any current local ordinances rather than rely on this 2011 framework.

Background and statutory framework

The new provisions added by Chapter 425. The law amended Tenn. Code Ann. § 55-8-198 to add several subsections:

• (g) A traffic engineering study, conducted by an independent professional engineer (not by the camera vendor), must precede new camera deployment.
• (h) A camera-based citation for violation of § 55-8-110(a)(3) (failure to stop before turning right on red) is invalid unless the evidence shows the vehicle's front tires were before the stop line when the signal was red and the same vehicle's rear tires were past the stop line while the signal was red.
• (i) A camera may be used to issue a right-turn-on-red citation only at an intersection clearly marked by a "No Turn on Red" sign. Other camera-based right-turn-on-red citations are invalid.
• (j) Only one citation per distinct violation.
• (k) A camera-based citation is invalid if the vehicle registration information does not match the camera evidence.
• (l) Speed cameras are not permitted within one mile of a speed limit reduction of 10 mph or more, except in marked school zones with flashing warnings.

Contracts Clause analysis framework. Federal and Tennessee contracts clauses (U.S. Const. Art. I, § 10, cl. 1; Tenn. Const. Art. I, § 20) ban laws that impair the obligation of a contract. The threshold inquiry is whether the law operated as a "substantial impairment" of a contractual relationship. Energy Reserves Group v. Kansas Power & Light, 459 U.S. 400, 411 (1983). "The severity of the impairment is said to increase the level of scrutiny." Id. Every case must be determined on its own circumstances. Von Hoffman v. City of Quincy, 71 U.S. 535, 554 (1866).

The remedial exception. Retrospective application of remedial legislation does not unlawfully impair contracts. Remedial legislation adjusts "the means or methods whereby a cause of action may be effectuated, wrongs redressed, and relief obtained." Caudill v. Foley, 21 S.W.3d 203, 208 (Tenn. Ct. App. 1999) (quoting Doe v. Sundquist, 943 F. Supp. 886, 893 (M.D. Tenn. 1996)).

The police power exception. All contracts are subject to subsequent statutes that are enacted in the government's bona fide exercise of its police power. Energy Reserves Group, 459 U.S. at 411; Profill Development v. Dills, 960 S.W.2d 17, 33 (Tenn. Ct. App. 1997). The police power is "an exercise of the sovereign right of the government to protect the lives, health, morals, comfort, and general welfare of the people, and is paramount to any rights under contracts between individuals." Home Bldg. & Loan Ass'n v. Blaisdell, 290 U.S. 398, 437 (1934). Tennessee's police power exception extends to retrospective laws made in furtherance of the police power. Shields v. Clifton Hill Land Co., 28 S.W. 668, 674 (Tenn. 1894).

Rules of evidence are not part of a contract. Brewer v. Aetna Life Insurance Co., 490 S.W.2d 506, 511 (Tenn. 1973), quoting Marx v. Hanthorn, 148 U.S. 172, 181 (1893): "[T]he right to have one's controversies determined by existing rules of evidence is not a vested right. These rules pertain to the remedies which the state provides for its citizens … they neither enter into and constitute a part of any contract, nor can they be regarded as being of the essence of any right which a party may seek to enforce."

Highway-use contracts and regulatory authority. Sproles v. Binford, 286 U.S. 374, 379 (1932): "Contracts which relate to the use of the highways must be deemed to have been made in contemplation of the regulatory authority of the state."

Common questions

Did Tennessee actually have to honor existing camera contracts?

According to this opinion, yes, but the new restrictions on what those cameras can capture for citation purposes don't break those contracts. The contracts themselves remain. What changes is the legal effect of the photographs taken, and that's an evidentiary question the legislature can adjust.

What happens to vendor revenue under a fixed share contract?

If revenue is calibrated as a share of citation revenue, and the law makes some citations unsustainable, the vendor's share of a smaller pot is smaller. Vendors expecting a particular revenue level may not get it. But the AG said any expected revenue stream was always contingent on citizens violating the law, and that contingency means the parties had no "vested right" in a particular revenue level.

What about contracts that promised minimum ticket counts or guaranteed revenue?

The opinion does not have a specific contract in front of it, but it hints that "if a contract had unusually specific revenue guarantees" the analysis might shift. A contract reading more like a minimum-revenue guarantee could be substantially impaired in a way that triggers heightened scrutiny. Even there, however, the police-power and remedial-evidence exceptions would still apply.

Does this protect cities from being sued by vendors after enacting the new rules?

Not directly. The opinion addresses constitutional defensibility of the statute, not contract-breach exposure for cities that signed deals. Cities facing vendor claims have additional defenses (the legislative-act-of-state defense, frustration of purpose, change in law, impossibility) that depend on the specific contract terms. They should consult counsel.

Why ban speed cameras within a mile of a speed-limit drop?

The opinion does not parse the legislative rationale for that specific provision, but the surrounding analysis (fair notice to motorists) fits the same theme. A speed camera right after a sudden 10+ mph reduction looks like a trap. The exclusion is consistent with the AG's framing that the act protects motorists' ability to receive notice of when their conduct is sanctionable.

Citations

• Tenn. Code Ann. §§ 55-8-110(a)(3), 55-8-110(a)(3)(A), 55-8-198
• 2011 Tenn. Pub. Acts, ch. 425
• U.S. Const. Art. I, § 10, cl. 1; Tenn. Const. Art. I, § 20
• Energy Reserves Group, Inc. v. Kansas Power & Light Co., 459 U.S. 400 (1983)
• Von Hoffman v. City of Quincy, 71 U.S. 535 (1866)
• Home Bldg. & Loan Ass'n v. Blaisdell, 290 U.S. 398 (1934)
• Sproles v. Binford, 286 U.S. 374 (1932)
• Marx v. Hanthorn, 148 U.S. 172 (1893)
• Estate of Bell v. Shelby County Health Care Corp., 318 S.W.3d 823 (Tenn. 2010)
• Brewer v. Aetna Life Insurance Co., 490 S.W.2d 506 (Tenn. 1973)
• Caudill v. Foley, 21 S.W.3d 203 (Tenn. Ct. App. 1999)
• Doe v. Sundquist, 943 F. Supp. 886 (M.D. Tenn. 1996), aff'd, 106 F.3d 702 (6th Cir. 1997)
• Profill Development, Inc. v. Dills, 960 S.W.2d 17 (Tenn. Ct. App. 1997)
• Shields v. Clifton Hill Land Co., 28 S.W. 668 (Tenn. 1894)

Source

• Landing page: https://www.tn.gov/attorneygeneral/opinions.html
• Original PDF: https://www.tn.gov/content/dam/tn/attorneygeneral/documents/ops/2011/op11-061.pdf

Original opinion text

August 8, 2011
Opinion No. 11-61
Constitutionality of Restrictions on Use of Unmanned Traffic Enforcement Cameras

QUESTION

Whether Chapter 425 of the 2011 Tennessee Public Acts is defensible against a challenge that it unconstitutionally impairs the obligations of contracts.

OPINION

Yes. The opinion request received by the Office states that, prior to the passage of Public Chapter 425, several local governments executed contracts with vendors to install and maintain traffic enforcement camera systems to assist the local governments in the issuance of traffic citations. The local governments under these contracts would pay a certain percentage of revenues from all traffic citations issued by the traffic enforcement camera system. Per the opinion request, there was an understanding that a minimum number of traffic citations would be based on right-turn-on-red violations. Although this Office has not been provided with a particular contract against which to measure the impact of Chapter 425, compelling arguments can be made that Chapter 425 does not unlawfully impair any contractual relationship. Such arguments include that the passage of Chapter 425 is remedial in nature, represents a legitimate exercise of the State's police power, and is reasonable in relation to its purpose.

ANALYSIS

Effective July 1, 2011, Tenn. Code Ann. § 55-8-198 was amended as follows:

(g) Prior to implementation of any new unmanned traffic enforcement camera used to enforce or monitor traffic violations, the local governing body shall conduct a traffic engineering study for the area being considered. The study shall follow standard engineering practices as determined by the Institute of Transportation Engineers (ITE) and shall be stamped by a professional engineer specializing in traffic engineering and licensed to practice in this state. A vendor of traffic enforcement camera systems shall not be allowed to conduct the traffic engineering study, or to participate in the selection of such traffic engineer, to document the need for a traffic enforcement camera.

(h) No citation shall be issued based solely upon evidence obtained from a traffic enforcement camera that has been installed to enforce or monitor traffic violations of § 55-8-110(a)(3), or any municipal law or ordinance that mirrors, substantially duplicates or incorporates by cross-reference the language of § 55-8-110(a)(3), unless the evidence collected shows the target vehicle with its front tire or tires before the stop line when the signal is red, and subsequently shows the same vehicle with its rear tire or tires past the stop line while the signal is red.

(i) A traffic enforcement camera system may be used to issue a traffic citation for an unlawful right turn on a red signal at an intersection that is clearly marked by a "No Turn on Red" sign erected by the responsible municipal or county government in the interest of traffic safety in accordance with § 55-8-110(a)(3)(A). Any other traffic citation for failure to make a complete stop at a red signal before making a permitted right turn as provided by § 55-8-110(a)(3)(A) that is based solely upon evidence obtained from an unmanned traffic enforcement camera shall be deemed invalid.

(j) No more than one (1) citation shall be issued for each distinct and separate traffic offense in violation of a municipal ordinance or a traffic offense as provided in this Chapter 8.

(k) A traffic citation that is based solely upon evidence obtained from an unmanned traffic enforcement camera shall be deemed invalid if the registration information of the motor vehicle for which such traffic citation is issued is not consistent with the evidence recorded by such enforcement camera.

(l) Unmanned traffic enforcement cameras that monitor speed shall not be permitted on any public road or highway within one (1) mile of a reduction of speed limits on such public road or highway of ten miles per hour (10 mph) or greater. Provided, this subsection shall not apply to unmanned traffic enforcement cameras within the designated distance of a marked school zone when a warning flasher or flashers are in operation.

2011 Tenn. Pub. Acts, ch. 425 (to be codified at Tenn. Code Ann. § 55-8-198(g)-(l)).

In essence, Chapter 425 places additional restrictions on how unmanned traffic enforcement cameras may be used as evidence to support the issuance of a traffic citation.

Since this Office has not been provided with a copy of any contract that might be affected by the passage of Chapter 425, we cannot provide a definitive answer to the question presented given that claims that a legislative enactment unconstitutionally impairs the obligation of contracts are necessarily fact-intensive. Cf., e.g., Energy Reserves Group, Inc. v. Kansas Power & Light Co., 459 U.S. 400, 411 (1983); Von Hoffman v. City of Quincy, 71 U.S. 535, 554 (1866).

Nevertheless, based on the information set forth in the opinion request, this Office finds compelling arguments exist to support the position that the passage of Chapter 425 does not unlawfully impair any contractual relationship. The Tennessee Constitution and the Constitution of the United States both prohibit laws that impair the obligation of a contract. U.S. Const., Art. I, § 10, cl. 1; Tenn. Const., Art. I, § 20. The threshold inquiry under federal and state law is whether the challenged law has, in fact, operated as a substantial impairment of a contractual relationship. Energy Reserves Group, 459 U.S. at 411. The obligations of a contract are impaired by a law that renders them invalid, or releases or extinguishes them. Home Bldg. & Loan Ass'n v. Blaisdell, 290 U.S. 398, 431 (1934). As the Tennessee Supreme Court recently recognized, a retrospective substantive legal change may not "take away or impair vested rights acquired under existing laws or create a new obligation, impose a new duty, or attach a new disability in respect of transactions or considerations already passed." Estate of Bell v. Shelby County Health Care Corp., 318 S.W.3d 823, 829 (Tenn. 2010).

It is equally well established under federal and state law that a contract is not unlawfully impaired by the retrospective application of laws that are remedial in nature. Remedial legislation is intended to adjust the means or methods whereby a cause of action may be effectuated, wrongs redressed, and relief obtained. See Caudill v. Foley, 21 S.W.3d 203, 208 (Tenn. Ct. App. 1999).

Federal and state law further recognize that all contracts are subject to be interfered with, or otherwise affected by, subsequent statutes that are enacted in the government's bona fide exercise of its police power. Energy Reserves Group, 459 U.S. at 411; Profill Development, Inc. v. Dills, 960 S.W.2d 17, 33 (Tenn. Ct. App. 1997); see also Shields v. Clifton Hill Land Co., 28 S.W. 668, 674 (Tenn. 1894). The police power "is an exercise of the sovereign right of the government to protect the lives, health, morals, comfort, and general welfare of the people, and is paramount to any rights under contracts between individuals." Home Bldg. and Loan Ass'n, 290 U.S. at 437.

The enactment of Public Chapter 425 is both remedial in nature and a legitimate exercise of Tennessee's police power. Initially, Chapter 425 does not, by its terms, change the rights or responsibilities of the vendors with respect to any contract. Chapter 425 instead merely alters the rules of evidence to determine when a person has violated the traffic laws of Tennessee. The Legislature's changing of the rules of evidence is remedial in nature, and does not impair the vendors' contracts with local government. As the Tennessee Supreme Court recognized in Brewer v. Aetna Life Insurance Co., 490 S.W.2d 506 (Tenn. 1973):

It must be evident that the right to have one's controversies determined by existing rules of evidence is not a vested right. These rules pertain to the remedies which the state provides for its citizens, and, generally in legal contemplation, they neither enter into and constitute a part of any contract, nor can they be regarded as being of the essence of any right which a party may seek to enforce. Like other rules affecting the remedy, they must, therefore, at all times be subject to modification and control by the legislature; and the changes which are enacted may lawfully be made applicable to existing causes of action, even in those states in which retrospective laws are forbidden. … Courts of high authority have held that mere rules of evidence do not form part of contracts entered into while they are in force, and that it is competent for the legislature to, from time to time, change the rules of evidence, and to make such change applicable to existing causes of action.

Brewer, 490 S.W.2d at 511 (quoting Marx v. Hanthorn, 148 U.S. 172, 181 (1893)).

Chapter 425 only changes the circumstances under which valid traffic citations may be sustained upon evidence obtained from unmanned traffic enforcement cameras and thus, as a remedial act, should withstand constitutional scrutiny. In any event, while Chapter 425 might arguably diminish the income received under a revenue-sharing agreement by reducing the number of traffic citations issued, any expected revenue stream was always necessarily contingent on the citizens of the State violating the law in certain numbers. That contingency tends to suggest that the parties have no "vested right" in a particular level of revenue.

Finally, notwithstanding the remedial nature of Chapter 425, the existence of pervasive State regulation on the subject of the operation of motor vehicles would likewise suggest that the vendors entered their contracts knowing that regulatory change was foreseeable, see Energy Reserves Group, 459 U.S. at 416, and hence that their reasonable expectations have not been defeated by the enactment of Public Chapter 425. Traffic enforcement is, in general, a matter within the police power. See, e.g., Sproles v. Binford, 286 U.S. 374, 379 (1932) ("Contracts which relate to the use of the highways must be deemed to have been made in contemplation of the regulatory authority of the state."). Chapter 425 does not favor one vendor over another, nor does it favor local governments at the expense of the vendors (since both parties might lose income under a revenue-sharing agreement). Rather, Chapter 425 would appear to favor motorists who are charged with misconduct. It enhances their ability to confront a live witness, instead of photographic evidence, at any contested hearing on the matter. Moreover, by restricting the use of unmanned traffic enforcement cameras to intersections that are "clearly marked by a 'No Turn on Red' sign," Chapter 425 provides motorists better notice of when their conduct is likely to result in sanction. These considerations, each of which relates to notions of fairness in the administration of the law, amount to "significant and legitimate state interests." Energy Reserves Group 459 U.S. at 416. The means chosen to implement these purposes would further appear likely to survive a reasonableness challenge. The State does not seek to "simply walk away from its financial obligations," id. at 412 n.14, by the enactment of Chapter 425, but rather to impose conditions upon which traffic citations may be issued, when it is free either to proscribe or not to proscribe the underlying conduct of its citizens.

Although we again emphasize that it is impossible to determine the extent, if any, to which Chapter 425 adjusts the rights and responsibilities of contracting parties in the absence of a particular contract, we are of the opinion that Chapter 425 is defensible against a claim that it violates the contract clauses of the Tennessee or United States Constitutions.

ROBERT E. COOPER, JR.
Attorney General and Reporter

JOSEPH F. WHALEN
Associate Solicitor General

JAMES E. GAYLORD
Assistant Attorney General

Requested by:
The Honorable Richard Floyd
State Representative
Suite G-24 War Memorial Building
Nashville, TN 37243

The Honorable Jim Tracy
State Senator
Suite 2, Legislative Plaza
Nashville, Tennessee 37243