Under Title 23 of the United States Code (Highways), there is a general prohibition on the imposition of tolls on Federal-aid highways. However, Title 23 and other statutes have also carved out certain exceptions to this general prohibition through special programs. These programs allow tolling to generate revenue to support highway construction activities and/or enable the use of road pricing for congestion management. If Federal funds have been used or will be used on the highway, then the public authority responsible for the facility must qualify for toll authority under one of these Federal toll programs.
Two of the Federal programs are codified in Title 23 and are sometimes referred to as the "mainstream" tolling programs. There are no restrictions on the number of projects or States that may receive tolling authority under these programs, and there are no requirements for State or local public agencies to execute a tolling agreement with the Federal Highway Administration (FHWA) prior to imposing tolls.
Under the General Toll Program, Congress permits Federal participation in certain types of toll-financed construction activities, including new highways, new lanes added to existing highways (so long as the number of existing toll-free lanes is not reduced), reconstruction of highways (non-Interstate only), reconstruction or replacement of bridges or tunnels, and capital improvements to existing toll facilities.
Section 166(c) of Title 23 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 lanes are commonly referred to as high occupancy toll (HOT) lanes. This tolling authority is available for facilities both on and off the Interstate System.
Other tolling programs have been specially authorized by Congress on a pilot basis in various highway authorization acts since 1991. Participation in these programs is limited to a set number of slots that have been authorized for each program. Project sponsors are also required to submit an application and to execute a toll agreement with FHWA to receive authorization to impose tolls under these programs.
Some tolling and pricing strategies could be eligible for implementation under either the mainstream tolling programs or one of the pilot programs. In such cases, FHWA prefers that the two mainstream programs be used where possible, limiting requests for participation in the pilot programs to situations that cannot be otherwise accommodated.
The ISRRPP allows the conversion of free Interstate highways into toll facilities in conjunction with needed reconstruction or rehabilitation that is only possible with the collection of tolls. Congress has authorized up to three slots in the program, which must be used for projects in different states.
The VPPP is an experimental program that is designed to assess the potential of different value pricing approaches for reducing congestion. Under this program, tolls may be imposed on existing toll-free highways, bridges, and tunnels, so long as variable pricing is used to manage demand. Congress has authorized slots for up to 15 value pricing programs, which are allocated to state or local agencies. Seven of these slots have been permanently allocated to States that have executed agreements for tolling projects under the program. Of the remaining eight slots, five are currently reserved by state or city transportation agencies undertaking studies. These slots may become available in the future as those activities are completed. Once an agency holds a slot, there is no limit on the number of value pricing projects that can be implemented under that slot.
The Federal tolling programs also come with restrictions on the use of toll revenues generated by the facilities that receive tolling authority. Under the mainstream tolling programs (Section 129 and Section 166), toll revenue may be used for debt service, to provide a reasonable return on investment to any private party financing a project, for the operations and maintenance (including capital improvements) of the toll facility, and payments between public and private partners involved in a public-private partnership. If the public authority with responsibility for the toll facility certifies that the facility is being adequately maintained, then toll revenues may also be used for other purposes eligible under Title 23. The ISRRPP includes similar restrictions but does not allow toll revenues to be used on other facilities. The VPPP allows toll revenues to be used to mitigate the adverse effects of tolls on low-income drivers, in addition to project-related costs and other Title 23 uses. Toll facilities are required to undergo annual audits to ensure compliance with the limitations on the use of toll revenues. The results of these audits must be transmitted to FHWA.
Section 166 has a number of performance requirements that apply to HOT lanes, including the enforcement of HOV restrictions, automatic collection of tolls (which must be varied to manage demand on the HOV facility), and requirements to ensure that the operational performance of the HOT lanes does not become degraded. The VPPP requires that project sponsors monitor a number of project performance indicators for a period of at least 10 years and that this data be compiled by FHWA for biennial reports to Congress.
Tolling project sponsors are encouraged to seek technical assistance from FHWA on the requirements and eligibilities of tolling programs and how they might apply to individual projects. Many complex projects have parameters that are not explicitly addressed in the tolling statutes and therefore require considerable consideration on the part of FHWA to appropriately apply the legislative language to a particular project. FHWA will also be posting responses to frequently asked questions at the Web site address below to provide additional guidance on the tolling programs. At their discretion, project sponsors may wish to seek FHWA's formal concurrence of a facility's eligibility for tolling under the mainstream programs, even where tolling agreements are no longer required.
More information on these Federal tolling programs can be found at https://www.fhwa.dot.gov/ipd/tolling_and_pricing/.
The Center for Innovative Finance Support is a one-stop clearinghouse for expertise, guidance, research, decision tools, and publications on program delivery innovations. Our website, workshops, and myriad resources support transportation professionals in the delivery of innovative approaches.
The Center for Innovative Finance Support's P3 program focuses on the potential of design-build-operate-finance maintain (DBFOM) concessions funded through tolls or availability payments to reduce project cost, improve quality outcomes, and provide additional financing options.
The Center for Innovative Finance Support's Alternative Project Delivery program provides information on contractual arrangements that allow for greater private participation in infrastructure development by transferring risk and responsibility from public project sponsors to private sector engineers, contractors and investors.
Center for Innovative Finance Support's Project Finance program focuses on alternative financing, including State Infrastructure Banks (SIBs), Grant Anticipation Revenue Vehicles (GARVEEs), and Build America Bonds (BABs).
The Center for Innovative Finance Support's Federal Tolling and Pricing program focuses on the use of tolling and other road user charges as a revenue source to fund highway improvements, and the use of variably-priced tolls as a tool to manage congestion.
The Center for Innovative Finance Support's Value Capture program explores strategies for tapping into the added value that transportation improvements bring to nearby properties as a means to provide new funding for surface transportation improvements.