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VALUE PRICING PILOT PROGRAM

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PROGRAM INFORMATION

BACKGROUND:

Section 1216(a) of the Transportation Equity Act for the 21st Century (TEA-21, Public Law 105-178) authorizes the Secretary of Transportation (the Secretary) to create a Value Pricing Pilot Program by entering into cooperative agreements with up to fifteen State or local governments or other public authorities, to establish, maintain, and monitor local value pricing pilot programs. This program replaces the Congestion Pricing Pilot Program that was authorized by the Intermodal Surface Transportation Efficiency Act of 1991.

TEA-21 amends ISTEA Pub L. 102-240, 105 Stat. 1914, by providing that any value pricing project included under these local programs may involve the use of tolls on the Interstate system. This is an exception to the general provisions concerning tolls on the Interstate system as contained in 23 U.S.C. 129 and 301. Section 1216 (a)(5) of TEA-21 amends section 1012(b) of ISTEA by adding subsection (6) which provides that a State may permit vehicles with fewer than two occupants to operate in high occupancy vehicle (HOV) lanes if the vehicles are part of a local value pricing pilot program under this section. This is an exception to the general provision contained in 23 U.S.C. 102, that no fewer than two occupants per vehicle be allowed on HOV lanes. The Secretary is to report to Congress every two years on the effects of local value pricing pilot programs. TEA-21 continues the program through FY 2003.

The Congress has mandated this program as an experimental program aimed at learning the potential of different value pricing approaches for reducing congestion. Value pricing, also known as congestion pricing or peak-period pricing, entails fees or tolls for road use which vary by level of congestion. Fees are typically assessed electronically to eliminate delays associated with manual toll collection facilities. This concept of assessing relatively higher prices for travel during peak periods is the same as that used in many other sectors of the economy to respond to peak-use demands. Airlines offer off-peak discounts and hotel rooms cost more during peak tourist seasons. Road-use charges that vary with the level of congestion provide incentives to shift some trips to off-peak times, less-congested routes, or alternative modes, or to cause some lower-valued trips to be combined with other trips, or eliminated. A shift in a relatively small proportion of peak-period trips can lead to substantial reductions in overall congestion. And, while congestion charges create incentives for more efficient use of existing capacity, they also provide improved indicators of the potential need for future capacity expansion and are generating revenues that can be used to further enhance urban mobility.


STATUTORY REFERENCES:

23 U.S.C. 129 & 301; ISTEA Pub.L. 102-240, 105 Stat 1914, Section 1012 (b) TEA-21 Section 1216(a)(4&5)


FUNDING:


Fiscal Year19992000200120022003
Authorization$ 7 M$11 M$11 M$11 M$11 M

TEA-21 provides a total of $51 million for Fiscal Years 1999-2003 for the Value Pricing Pilot Program. Of this amount $7 million is authorized for FY 1999 and $11 million is authorized for each of fiscal years 2000 through 2003. Funds allocated by the Secretary to a State under this section shall remain available for obligation by the State for a period of three years after the last day of the fiscal year for which funds are authorized. If, on September 30 of any year, the amount of funds made available for the Pilot Program, but not allocated, exceeds $8 million, the excess amount will be apportioned to all States for purposes of the Surface Transportation Program. Funds available for the Pilot Program can be used to support pre-project study activities and to pay for implementation costs of value pricing projects.

VALUE PRICING

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For further information contact Mr. Patrick Decorla-Souza or visit the Value Pricing Home Page operated by the University of Minnesota's State and local Policy Program for the Federal Highway Administration and the Minnesota Department of Transportation.

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