US Appeals Court Upholds Colorado's $3 Daily Fee on Rental Cars

A U.S. appeals court has upheld a Colorado law imposing a $3 per day fee on rental car transactions, rejecting a challenge from an industry group representing major operators including Avis, Hertz, and Enterprise.

The Court's Decision

The 10th U.S. Court of Appeals on Monday affirmed the legality of Colorado's "congestion impact charge," according to court documents. The ruling concludes the legal battle initiated by the rental car industry against the fee, which was first approved by the state in 2024.

The surcharge applies to all vehicle rentals with a duration of 30 days or less. The industry group had argued against the legality of the fee, but the court's decision allows the state to continue its collection.

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Background and Implications

Colorado implemented the fee to generate revenue for public infrastructure projects aimed at mitigating traffic. State officials contend that the funds, directed toward transit and rail services, will help reduce the road congestion to which the high volume of rental cars contributes.

For publicly traded rental car companies such as Avis Budget Group (NASDAQ: CAR) and Hertz Global Holdings (NASDAQ: HTZ), the ruling solidifies a cost of doing business in Colorado. This fee is typically passed directly to consumers, appearing as a line item on rental agreements within the state.