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Guidance General Tolling Programs


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U.S. Department of
Transportation
Federal Highway
Administration

Memorandum

Subject: INFORMATION: Federal Tolling Programs under the Moving Ahead for Progress in the 21st Century Act Date: September 24, 2012
From: Regina McElroy
Director, Office of Innovative Program Delivery
Reply to Attn. of: HIN-1
To: Division Administrators

On July 6, 2012, the President signed into law P.L. 112-141, the Moving Ahead for Progress in the 21st Century Act (MAP-21). The purpose of this memo is to notify the FHWA Division Offices of some of the key changes being made to the Federal tolling programs under MAP-21. The memo also provides points of contact for obtaining technical assistance from FHWA Headquarters offices with responsibilities for the tolling programs, including the Office of Innovative Program Delivery and the Office of Operations. Revisions to existing guidance documents on the tolling programs are in development and will be forthcoming at a later date.

Attachments


Section 129 General Tolling Program

Section 1512(a) of MAP-21 provides a complete replacement for the statutory language of 23 U.S.C. 129(a). The new language makes a number of significant changes to the program, including tolling eligibilities; requirements for tolling agreements; and requiring audits to ensure compliance with requirements on the use of toll revenues.

Tolling Eligibilities

MAP-21 incorporated some of the key flexibilities from existing pilot programs to Section 129 tolling eligibilities, which include:

Tolling Agreements

Public authorities are currently required to execute a tolling agreement with FHWA prior to imposing tolls on a Federal-aid highway (or to use Federal-aid funds on an existing toll facility). Under MAP-21, such agreements will no longer be statutorily required. For toll facilities that have executed Section 129 tolling agreements prior to October 1, 2012, the terms of those agreements will continue in force.

Use of Tolling Revenue and Compliance Audits

While the requirement for upfront tolling agreements under Section 129 no longer exists, MAP-21 largely continues the restrictions on the use of toll revenues that were in place previously. MAP-21 also imposes a new requirement for annual audits to ensure compliance with these limitations, the results of which must be transmitted to USDOT. If the Secretary concludes that the public authority with responsibility for the toll facility is not in compliance with these restrictions, the Secretary may require that toll collection on the facility be discontinued until an agreement is reached to achieve compliance. Additional guidance will be developed in the future regarding use of toll revenue and compliance.

Section 166 HOV/HOT Lanes

23 U.S.C. 166(b)(4) provides authority for public agencies to allow toll-paying vehicles that do not meet the minimum occupancy standards to use high occupancy vehicle (HOV) lanes. Such authority is continued under MAP-21[1]. Section 166 includes a number of provisions that will thus continue to apply whenever a HOV lane is converted to a high occupancy toll (HOT), including:

Tolling Agreements

Public authorities are currently required to execute a tolling agreement with FHWA prior to converting an HOV facility to a HOT lane under the terms of Section 166. Under MAP-21, such agreements will no longer be required. For toll facilities that have executed Section 166 tolling agreements prior to October 1, 2012, the terms of those agreements will continue in force.

Use of Tolling Revenue and Compliance Audits

The use of tolling revenues from facilities tolled under Section 166 is governed by the requirements of Section 129(a)(3). (23 U.S.C. 166(c)) Such facilities will thus also be subject to the changes made by MAP-21 that were noted previously for Section 129, including the new statutory requirement for annual audits to ensure compliance with the limitations on the use of revenue. MAP-21 also rescinds a prior requirement that public authorities give priority consideration to projects for developing alternatives to single occupant vehicle travel and projects for improving highway safety when using toll revenues for other Title 23 purposes.

Toll Pilot Programs

Each of the four toll pilot programs is treated differently under MAP-21:

Express Lanes Demonstration Program

The Express Lanes Demonstration Program (ELDP) was authorized under Section 1604(b) of the Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users (SAFETEA-LU); it expires on September 30, 2012. The program allows up to 15 toll projects aimed at managing congestion and financing highway capacity expansion by tolling new lanes added to an existing facility. The five tolling agreements that were executed by FHWA and project sponsors under this program will continue in force. Projects for which slots were allocated but still not subject to an agreement should proceed under Section 129.

Interstate System Construction Toll Pilot Program

The Interstate System Construction Toll Pilot Program (ISCTPP) was authorized under Section 1604(c) of SAFETEA-LU. To date, only one of the three slots authorized under this program has been reserved[3] and no projects have received final acceptance into the program or executed tolling agreements. The ISCTPP, which expires on August 9, 2015, was not directly affected by MAP-21. However, MAP-21 does amend Section 129 to include the initial construction of any highway, whether on or off the Interstate System, as an eligible activity for tolling. As this pilot program has thus been effectively mainstreamed under the general tolling program, FHWA will no longer be accepting applications for this program. Division Offices should direct project sponsors interested in constructing new Interstate highways, bridges, or tunnels as toll facilities to the requirements under Section 129.

Interstate System Reconstruction and Rehabilitation Pilot Program

The Interstate System Reconstruction and Rehabilitation Pilot Program (ISRRPP) was authorized under Section 1216(b) of the Transportation Equity Act for the 21st Century (TEA-21). MAP-21 does not make any changes to this program, which thus continues in force. In order to receive tolling authority under the ISRRPP, project sponsors are required to have their program application approved by FHWA and to execute a tolling agreement. All three of the slots authorized for this program are conditionally reserved at the present time.[4]

Value Pricing Pilot Program

The Value Pricing Pilot Program (VPPP) was first authorized under the Section 1012(b)(8) of the Intermodal Surface Transportation Efficiency Act of 1991 (ISTEA), and was subsequently amended under other laws, most recently in Section 1604(a) of SAFETEA-LU. MAP-21 does not make any changes to this program. While no additional funds are authorized after Fiscal Year 2012 for the discretionary grant component of this program, FHWA's ability to enter into cooperative agreements for tolling projects under the VPPP will continue in force. Of the 15 slots authorized for this program, seven have been permanently reserved for States that have executed tolling cooperative agreements under the VPPP.[5] The remaining eight slots are currently reserved for State agencies that are undertaking studies or non-toll projects under the program. Once these studies or projects have been completed, these slots will become available for use by any States with eligible tolling projects under the program, at the discretion of the Secretary.

A number of congestion pricing strategies, including HOV to HOT conversion and the construction of priced express lanes, can now be accommodated under the Section 129 general tolling program and the Section 166 HOV/HOT lanes program. FHWA prefers that the two mainstream programs be used where possible as opposed to the pilot programs. As a result, requests for tolling authority under the VPPP will be limited to situations that cannot be accommodated under the mainstream tolling programs, such as the pricing of existing toll-free facilities without substantial reconstruction of those facilities.

Tolling Program Administration

The program changes resulting from MAP-21, as noted above, have a number of implications for the administration of these programs by the FHWA program and division offices.

Compliance Audits

The statutes authorizing the ISRRPP and ISCTPP programs require regular audits to ensure compliance with the limitations on the use of toll revenues, which must be transmitted to USDOT. Similar audit requirements have also been included in tolling agreements executed under the Section 129, Section 166, ELDP, and VPPP tolling programs. As noted above, Section 1512 of MAP-21 extends such audit requirements for facilities tolled under Section 129 or Section 166, specifying that such audits be conducted annually and establishing the authority of the Secretary to require that toll collection be discontinued if a public authority is found to be in noncompliance. (23 U.S.C. 129(a)(3)) FHWA Division Offices will be responsible for receiving the annual audits from the tolling operators and ensuring compliance with the statutory requirements. These audit requirements will be furthered addressed in forthcoming guidance.

Tolling Memorandum of Understanding

Although tolling agreements are no longer required under the mainstream tolling programs, State departments of transportation (or other public agencies with responsibilities for toll facilities) may wish to enter into a memorandum of understanding (MOU) with their FHWA Division Offices, particularly in light of the new requirements for audits and the potential consequences of noncompliance (including the discontinuation of toll collection). Suggested elements of the MOU could include establishing the eligibility for tolling a Federal-aid highway facility under Section 129 and outlining how the statutory requirements regarding the use of toll revenues, audits, and other Federal requirements will be met. A sample template for a tolling MOU is provided (see Attachment 1).

It is recommended that Division Offices consult with the Office of Innovative Program Delivery in developing tolling MOUs, in order to ensure that tolling program requirements and eligibilities are clearly understood by all parties.

Outstanding Requests for Tolling Authority

At the time of MAP-21's enactment, a number of requests for tolling authority under the Federal programs were outstanding. These requests included Section 129 tolling agreements that had been submitted for FHWA signature but not executed; applications for acceptance into the ELDP; and projects that had been conditionally accepted into the ELDP or ISCTPP but had not executed final tolling agreements. The FHWA Office of Innovative Program Delivery will directly notify the sponsors of these projects of the changes made by MAP-21 (including the expiration and mainstreaming of the ELDP, the mainstreaming of the ISCTPP, and the rescinding of the requirement for Section 129 tolling agreements), and that no further actions will thus be taken on these requests.

Project Implementation Assistance

In light of the changes made to Federal tolling programs in MAP-21, including the mainstreaming of the ELDP and ISCTPP and the elimination of requirements for Section 129 or Section 166 tolling agreements, there is no longer a need for project sponsors to submit a formal tolling Expression of Interest[6] prior to seeking tolling authority. In lieu of such a submission, we would suggest that Division Offices with questions on advancing tolling projects in their States first work through Darren Timothy in the Office of Innovative Program Delivery (HIN), who coordinates the Tolling and Pricing Team in FHWA HQ. He is available to provide assistance on general or cross-cutting questions on the Federal tolling programs, including:

The following points of contact can also provide assistance on specific tolling programs, including questions regarding pre-MAP-21 tolling agreements:

Section 129 General Tolling ProgramDarren TimothyHIN202-366-4051
Section 166 HOV/HOT ConversionNeil SpillerHOP202-366-2188
Value Pricing Pilot ProgramAngela JacobsHOP202-366-0076
Interstate System Reconstruction and Rehabilitation Pilot ProgramDarren TimothyHIN202-366-4051
Express Lanes Demonstration ProgramWayne BermanHOP202-366-4069

Implementation Guidance Revisions

FHWA Program Offices with responsibilities for tolling programs and the Office of Chief Counsel are currently in the process of revising existing guidance documents on the Federal tolling programs to reflect the changes to the programs made by MAP-21. The Division Offices will be notified when this new guidance has been finalized and published in the Federal Register.


[1] MAP-21 makes the conversion of HOV lanes to toll facilities eligible under Section 129. However, since Section 129 does not provide specific authority allowing vehicles not meeting the occupancy limitation to operate on HOV lanes, such authority can only come from Section 166, and its provisions will thus apply to all conversions of HOV lanes to toll operations.

[2] Program guidance on HOV lanes can be found at http://ops.fhwa.dot.gov/freewaymgmt/hovguidance/index.htm

[3] For I-73 in South Carolina

[4] Slots are reserved for projects in Missouri (I-70), Virginia (I-95), and North Carolina (I-95). The conditional reservation is intended to allow the States to undertake the studies necessary to develop a complete application to the program. To date, no final applications have been approved and no tolling agreements have been executed under this program.

[5] States with executed VPPP tolling agreements include California, Florida, Maryland, Minnesota, Texas, Virginia, and Washington.

[6] As described in the January 6, 2006 Federal Register notice titled "Opportunities for State and Other Qualifying Agencies To Gain Authority to Toll Facilities Constructed Using Federal Funds."


ATTACHMENT 1

MEMORANDUM OF UNDERSTANDING (MOU) BETWEEN THE FHWA ________ DIVISION OFFICE (Division) AND THE ______ DEPARTMENT OF TRANSPORTATION (_DOT)

WHEREAS, the _DOT desires to construct (insert description of the project), (insert the toll limits) (hereinafter referred to as the "Toll Facility"); and

WHEREAS, under Section 1512 of the Moving Ahead for Progress in the 21st Century Act (MAP-21), Pub. L. No. 112-141, Congress modified 23 U.S.C. 129(a) to, among other things, eliminate the requirement for a toll agreement to be executed between the State and the FHWA as a prerequisite to toll authority for a Federal-aid highway project; and

WHEREAS, the Division and _DOT desire to enter into this MOU in order to reflect the mutual understanding that 23 U.S.C. 129(a), as amended by MAP-21, applies to the Toll Facility; and

WHEREAS, this project to construct the Toll Facility meets the following toll eligibility requirement in 23 U.S.C. 129(a)(1):

(insert applicable toll authority from list below)

  1. initial construction of a toll highway, bridge, or tunnel or approach to the highway, bridge, or tunnel;
  2. initial construction of 1 or more lanes or other improvements that increase the capacity of a highway, bridge, or tunnel (other than a highway on the Interstate System) and conversion of that highway, bridge, or tunnel to a tolled facility, if the number of toll-free lanes, excluding auxiliary lanes, after construction is not less than the number of toll-free lanes, excluding auxiliary lanes, before the construction;
  3. initial construction of 1 or more lanes or other improvements that increase the capacity of a highway, bridge, or tunnel on the Interstate System and conversion of that highway, bridge, or tunnel to a tolled facility, if the number of toll-free non-HOV lanes, excluding auxiliary lanes, after such construction is not less than the number of toll-free non-HOV lanes, excluding auxiliary lanes, before such construction;
  4. reconstruction, resurfacing, restoration, rehabilitation, or replacement of a toll highway, bridge, or tunnel or approach to the highway, bridge, or tunnel;
  5. reconstruction or replacement of a toll-free bridge or tunnel and conversion of the bridge or tunnel to a toll facility;
  6. reconstruction of a toll-free Federal-aid highway (other than a highway on the Interstate System) and conversion of the highway to a toll facility;
  7. reconstruction, restoration, or rehabilitation of a highway on the Interstate System if the number of toll-free non-HOV lanes, excluding auxiliary lanes, after reconstruction, restoration, or rehabilitation is not less than the number of toll-free non-HOV lanes, excluding auxiliary lanes, before reconstruction, restoration, or rehabilitation;
  8. conversion of a high occupancy vehicle lane on a highway, bridge, or tunnel to a toll facility;

NOW THEREFORE, the Division and _DOT hereby agree as follows:

  1. _DOT shall comply with 23 U.S.C. 129(a) (also insert "and 23 U.S.C. 166" here if an HOV lane is involved), as amended by MAP-21, with respect to project and the operation of the Toll Facility.

  2. As provided at 23 U.S.C. 129(a)(3), as amended by Section 1512 of MAP-21, _DOT shall use the toll revenues collected from the operation of the Toll Facility only for:
    1. debt service with respect to the projects on or for which the tolls are authorized, including funding of reasonable reserves and debt service on refinancing;
    2. a reasonable return on investment of any private person financing the project, as determined by the State or interstate compact of States concerned;
    3. any costs necessary for the improvement and proper operation and maintenance of the Toll Facility, including reconstruction, resurfacing, restoration, and rehabilitation;
    4. if the Toll Facility is subject to a public-private partnership agreement, payments that the party holding the right to toll revenues owes to the other party under the public-private partnership agreement; and
    5. if _DOT certifies annually that the Toll Facility is being adequately maintained, any other purpose for which Federal funds may be obligated by a State under title 23, United States Code.
  3. As provided under 23 U.S.C. 129(a)(3)(B), as amended by Section 1512 of MAP-21, _DOT shall, upon reasonable notice, make all its records pertaining to the toll facility subject to audit by the FHWA. Also, _DOT agrees to annually audit the records of the Toll Facility for compliance with the toll revenue use restrictions of 23 U.S.C. 129(a)(3), as amended by MAP-21, and report the results thereof to the Division. In lieu of the _DOT performing said audit, a report of an independent auditor furnished to the Division may satisfy the requirements of this section.

  4. _DOT will submit the annual maintenance certification and audit report to the Division by the end of each fiscal year.

IN WITNESS THEREOF, the parties hereto have caused this MOU to be duly executed, on the date of the last signature below.

STATE OF ________
________ DEPARTMENT OF TRANSPORTATION

BY: __________________________,

DATE: __________________________

FEDERAL HIGHWAY ADMINISTRATION
_______ DIVISION

BY: __________________________,

DATE: __________________________

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