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E-Alerts

FHWA Creates Clearinghouse for Tolling Proposals


02/03/06

In the recently passed SAFETEA-LU legislation (Pub. L. No. 109-59, August 10, 2005),[1] Congress expanded the ability of State and local highway agencies to utilize tolling on highways funded under Title 23 of the United States Code, Section 301, which otherwise generally prohibits the imposition of tolls on facilities that use Federal funds. SAFETEA-LU created three new opportunities and one modified opportunity to toll motor vehicles in order to finance Interstate construction and/or reconstruction, promote efficiency in the use of highways, reduce traffic congestion and/or improve air quality. These include:

· Section 1121, which amended 23 U.S.C. 166 to permit the conversion of HOV (High Occupancy Vehicle) lanes into HOT (High Occupancy Toll) lanes.

· Section 1604(b), the Express Lanes Demonstration program, which permits tolling authority for up to fifteen demonstration projects for existing HOV facilities or where toll capacity is added.

· Section 1604(c), the Interstate System Construction Toll Pilot program, which authorizes up to three toll pilot facilities on the Interstate system for the purpose of constructing new Interstate highways.

· Section 1604(a), which modifies and extends the existing Value Pricing Pilot program that was first enacted as the "Congestion Pricing Pilot" program by Section 1012(b) of the Intermodal Surface Transportation Efficiency Act of 1991 (ISTEA).

Tolling and pricing strategies are increasingly emerging as necessary and useful tools to finance projects, manage congestion, improve air quality, and facilitate the creation of public-private partnerships. The term "tolling" refers to any imposition of a fee for the use of a facility. Classic examples of this term include fixed fees that motorists pay (usually per number of axles or based on vehicle weight) to cross a bridge or tunnel, or to enter or exit an express toll facility at a particular location. While tolling involves collection of a fee from motorists for their use of a highway facility, the term "toll pricing" specifically refers to strategies that vary the price of the toll by time of day or traffic volume level in a way designed to manage congestion.

The Federal Highway Administration (FHWA) recently issued two official announcements intended to clarify the process for initiating participation in the these tolling and pricing programs.[2] FHWA issued these two official announcements in order to encourage states and other qualifying transportation agencies to participate in these programs for eligible projects. This E-Alert summarizes the highlights of that new process.

A. FHWA's New Tolling and Pricing Team

FHWA's Office of Operations is responsible for coordinating all tolling and pricing programs under the Federal-aid Highway Program and SAFETEA-LU. The many programs can be potentially confusing, however, because of their number and wide range of specific purposes. In addition, several of the programs have overlapping scopes. In an effort to minimize this potential confusion, the Office of Operations has formed a working group known as the "Tolling and Pricing Team."

The key role for the Tolling and Pricing Team is to act as a clearinghouse to assist public authorities by directing them to the most appropriate program (or programs) among the many options available. Members of the Tolling and Pricing Team represent the FHWA Offices of Operations, Policy and Governmental Affairs, and Infrastructure – the primary offices responsible for administering the tolling and pricing programs – as well as other stakeholder offices within the U.S. Department of Transportation, including the Office of the Secretary and the FHWA Office of Chief Counsel.

The Tolling and Pricing Team has six purposes:

  1. Coordinate all tolling and pricing activity within FHWA to facilitate the implementation and advancement of tolling and pricing projects and standards in the United States;
  2. Receive and review all "Expressions of Interest" submitted to FHWA (this process is discussed further below);
  3. Direct each applicant to the tolling and pricing program (or programs) that is/are most appropriate for accomplishing the goals set forth in an Expression of Interest;
  4. Assist the Office of Operations in the promulgation of a final rule that will include requirements, standards, or performance specifications for the interoperability of automated toll collection systems as directed by SAFETEA-LU;
  5. Support each of the FHWA program offices having responsibility for a tolling and pricing program, in advancing formal proposals to gain approval to implement tolling and pricing programs and in facilitating coordination with the FHWA Division Office; and
  6. Establish program performance goals, monitor achievements, and prepare an annual report to Congress on the status and progress of all tolling and pricing programs, including describing any program successes in meeting congestion reduction and other performance goals.

The Tolling and Pricing Team will review all Expressions of Interest for the various tolling and pricing opportunities contained in current law, but does not have responsibility to approve or disapprove specific projects. That responsibility remains with the respective FHWA program office responsible for administering each specific tolling and pricing program. By reviewing all Expressions of Interest, however, the Tolling and Pricing Team should be better able to guide an applicant to the most appropriate program.

B. Two-Step Application Process: Expression of Interest Followed by a Formal Application

An Expression of Interest is a document – in letter, memo or report format – that provides the rationale for utilizing funding or tolling authority and information about an intended project. A complete Expression of Interest should enable the Tolling and Pricing Team to provide a recommendation to the state or other qualifying transportation agency as to program eligibility, given its intended goals and timeframes as outlined in the application.

The information required to be provided in an Expression of Interest includes:

  1. A description of the requesting authority or authorities that is/are requesting tolling authority;
  2. The name, title, e-mail address, and telephone number of the person who will act as the point of contact on behalf of the requesting authority or authorities;
  3. A statement concerning which action is being sought:
    1. Funding and/or tolling authority via the Value Pricing Pilot Program[3] to support either pre-project study activities or implementation activities as permitted; or
    2. Authorization only to toll either existing or planned facilities;
  4. A description of the subject facility proposed to be tolled;
  5. Whether the subject facility is an Interstate or non-Interstate facility;
  6. Whether construction is involved and, if so, whether this is new construction, expansion, rehabilitation, reconstruction, or other;
  7. Whether an HOV lane or lanes currently exist on the facility;
  8. A timetable to enact tolling (or modify tolling) on the subject facility;
  9. Any expressions or declarations of support from public officials or the public (e.g., at public meetings). If no expressions of support are available, whether there are project plans for ensuring adequate public involvement and support prior to implementation;
  10. A plan for implementing tolls on the facility, where applicable. Where known, the range of anticipated tolls and the strategies to vary toll rates (i.e., the formulae for variable pricing);
  11. The reasons for implementing tolls, such as financing construction, reducing congestion, or improving air quality;
  12. A description of the public agency or agencies that will be responsible for operating, maintaining, and enforcing the tolling program; and
  13. A description of how, if at all, any private entities are involved either in the up-front costs to enact tolling, or the cost sharing or debt retirement associated with toll revenues.

The second step is for the applicant to respond to FHWA's comments on the Expression of Interest, and then to formally apply to the selected program office that offers the desired tolling or pricing authority. This approach will help direct public authorities to the most appropriate program among the many options available. This approach will also help FHWA to coordinate and manage the limited number of participation slots that are available for the different tolling and pricing programs.

C. Conclusion

Although the law generally prohibits the imposition of tolls on Federal-aid highways, Congress has authorized FHWA to implement a number of separate programs that allow tolling. Congress has recognized that tolling and related variable toll pricing programs are increasingly emerging as necessary and useful tools to finance projects, manage congestion, improve air quality, and facilitate the creation of public-private partnerships for infrastructure development. Through its new Expression of Interest application process, FHWA hopes to further encourage states and other qualifying transportation agencies to take advantage of these programs following enactment of SAFETEA-LU.



[1] Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users, Publ. L. No. 109-59, 119 Stat. 1144 (2005).

[2] One of these announcements relates to the Value Pricing Pilot Program; the other one relates to the other types of programs.

[3] See this link for more information on the Value Pricing Pilot Program: http://www.ops.fhwa.dot.gov/tolling_pricing/announcement/vpp_announcement.htm

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