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DOT LogoMemorandum
U.S. Department of Transportation
Federal Highway Administration

ACTION: Interstate Highway Reconstruction/Rehabilitation Pilot Program Section 1216(b) of TEA-21 Solicitation for Candidate Proposals (Reply Due: March 31, 1999) December 24, 1998
Associate Administrator for Program Development


Division Administrators


Section 1216(b) of the Transportation Equity Act for the 21st Century (TEA-21) establishes a new pilot program to allow conversion of a free Interstate highway to a toll facility in conjunction with needed reconstruction or rehabilitation of the Interstate highway that is only possible with the collection of tolls. The following is implementing guidance for this provision as well as a call for candidate proposals from the States for consideration under the pilot program.

The selection process and the accompanying submittal of required information for candidates under this pilot program will be conducted in two phases. In Phase 1, we are seeking candidates from the States for the Interstate toll pilot program. In submitting candidates, the States are required to submit general information on the candidate(s), as described below. A State may submit more than one candidate; however, any one State will not have more than one candidate selected in that State. Candidates are due to FHWA Headquarters by March 31, 1999. Based on the information submitted and the criteria outlined below, up to three pilot projects will be selected (to be called "provisional" acceptance) to proceed to Phase 2.

In Phase 2, a candidate project will be required to satisfy compliance with the National Environmental Policy Act (NEPA) process, as described below. Although no specific time limits are established for this phase, it is expected the States will accomplish this task in a timely manner. If this does not occur, a candidate's "provisional" acceptance may be withdrawn and offered to another candidate submitted during Phase 1.


  • The purpose is to provide for the reconstruction or rehabilitation of Interstate highway corridors where estimated improvement costs exceed available funding sources, and work cannot be advanced without the collection of tolls.

  • It is expected that candidate projects will involve tolling of sections of highways that, in general, have identified reconstruction or rehabilitation needs throughout the section proposed for tolling.

  • The FHWA may select up to three candidate projects to participate in the pilot program. Each project selected must be in a different State.

  • There is no special Federal funding specifically authorized for this program. Regular Federal-aid highway funds, except for Interstate Maintenance funds, may be used to fund improvements to a designated pilot project, subject to the normal eligibility requirements for these funds. Section 1216(b)(6) of TEA-21 specifically prohibits use of Interstate Maintenance funds on the Interstate facility covered by the pilot project during the period tolls are collected. In addition, an Interstate reconstruction/rehabilitation project may qualify for credit assistance under 23 U.S.C. 181-189.

  • The State must execute an agreement with the FHWA specifying that toll revenues received from operation of the facility will be used in accordance with the requirements set forth in Section 1216(b)(5) of TEA-21. This requires that all toll revenues be used only for (1) debt service, (2) reasonable return on investment of any private person financing the project, and (3) any costs necessary for the improvement of and the proper operation and maintenance of the toll facility, including reconstruction, resurfacing, restoration and rehabilitation of the toll facility. Additionally, the agreement must include a provision that the State will conduct regular (annual suggested) audits to ensure compliance with the provisions regarding use of toll revenues, and the results of these audits will be transmitted to the FHWA.

  • Toll collection must occur for at least 10 years. There is no maximum time limit concerning the duration of toll collection; however, tolls that are collected can only be used for the purposes set forth in the previous paragraph.

  • The FHWA is concerned that the initiation of toll collection on a facility that is being converted from free use to tolls should not occur until it is evident to the traveling public that tolls will result in improvements to the facility. Accordingly, the earliest that tolls may be imposed on a pilot project is the date of award of a contract for the physical construction to reconstruct or rehabilitate a significant portion of the proposed toll facility.

  • A pilot project, regardless of whether Federal-aid funds are to be used in subsequent reconstruction or rehabilitation activities, must satisfy the requirements of the NEPA process before final approval is given to the project. The analysis of the project must take into account not only the impacts of the proposed reconstruction or rehabilitation activities but also consider impacts associated with converting the free facility to a toll facility.


Eligible Interstate routes under the pilot program are those included in the Interstate system as described in 23 U.S.C. 103(c). This is the originally designated Interstate system and includes those Interstate additions under former 23 U.S.C. 139(a).

Section 1216(b)(1) of TEA-21 permits the pilot program to include highways, bridges and tunnels on the Interstate system. Since existing 23 U.S.C. 129(a)(1)(C) already allows for the reconstruction or replacement of a free Interstate bridge or tunnel and its subsequent conversion to a toll bridge or tunnel, for the purposes of the Interstate pilot program we are only seeking candidates that involve reconstruction/rehabilitation of a free Interstate "highway"and its subsequent conversion to a toll facility. Bridges and/or tunnels may be included within the "highway" segment.


An application from a State must address those items set forth in Section 1216(b)(3) of TEA-21, as follows:

  • An identification of the facility on the Interstate system proposed to be a toll facility, including the age, condition, and intensity of use of the facility.

  • In the case of a facility that affects a metropolitan area, an assurance that the metropolitan planning organization established under 23 U.S.C. 134 for the area has been consulted concerning the placement and amount of tolls on the facility.

  • An analysis demonstrating that the facility could not be maintained or improved to meet current or future needs from the State's apportionments and allocations made available by the TEA-21, including amendments to the act, and from revenues for highways from any other source without toll revenues.

  • A facility management plan that includes:

    • A plan for implementing the imposition of tolls on the facility.

    • A schedule and finance plan for the reconstruction or rehabilitation of the facility using toll revenues.

    • A description of the public transportation agency that will be responsible for implementation and administration of the pilot project.

    • A description of whether consideration will be given to privatizing the maintenance and operational aspects of the facility, while retaining legal and administrative control of the portion of the Interstate route.

In addition, the application should:

  • Show how the plan for implementing tolls takes into account the interests of local, regional and interstate travelers.

  • Provide an environmental scoping analysis of the proposed project's impacts to the social, economic, and environmental resources located in the vicinity of the project. The analysis should show what effect the proposed construction, as well as the imposition of tolls, may have on such resources as:

    • current or planned land uses,
    • historic, cultural, natural, or recreational resources,
    • economic or community resources,
    • safety and livability,
    • ambient light, noise, and air quality levels,
    • sensitive receptors, and
    • minority and low-income populations.

    This scoping analysis should form the basis for the more detailed environmental evaluation done in Phase 2.

The States are also welcome to include with their application whatever additional information they feel would assist us in understanding the merits of their proposal.


In selecting up to three candidate projects, the criteria set forth in Section 1216(b)(4) of TEA-21 will be used to evaluate candidates. These criteria are:

  • The State is unable to reconstruct or rehabilitate the proposed toll facility using existing apportionments.

  • The facility has a sufficient intensity of use, age, or condition to warrant the collection of tolls.

  • The State plan for implementing tolls on the facility takes into account the interests of local, regional and interstate travelers.

  • The State plan for reconstruction or rehabilitation of the facility using toll revenues is reasonable.

  • The State has given preference to the use of a public toll agency with demonstrated capability to build, operate, and maintain a toll expressway system meeting criteria for the Interstate system.

In addition to the above, the environmental scoping analysis information submitted will be used in evaluating candidate projects. A candidate project perceived to have lesser environmental impacts may be given preference.


It is recognized that the NEPA impacts of a proposed pilot project under this program, not only involve those associated with the proposed reconstruction/rehabilitation activities themselves but also those associated with converting a free Interstate facility to a toll facility, such as potential changes in travel patterns, construction of toll collection facilities, and economic equity issues. The impacts associated with conversion from a free to toll facility as well as the impacts of the physical construction activities of the reconstruction/rehabilitation project need to be addressed before a candidate pilot project is given final approval as a pilot project.

Accordingly, in Phase 2 a State will be required to develop, for FHWA acceptance, appropriate NEPA documentation for the pilot project. Although no specific time limits are established for the NEPA process to be completed for a pilot project, it is expected a State will accomplish it in a timely manner. If this does not occur, a candidate's "provisional" acceptance may be withdrawn and offered to another candidate submitted during Phase 1.


A Phase 1 application from a State is to be submitted to the division office. Applications are to be received in Headquarters by March 31, 1999.

The division office is to ensure the application is complete and fully addresses the items noted above for a Phase 1 application. Incomplete applications received by Headquarters will be returned to the division office. In addition, the division office should review the application based on their knowledge of the proposed candidate project and the State's program and provide detailed comments for Headquarters consideration.

Phase 2 tasks will also be coordinated through the division office. We will provide additional guidance on this later.

Questions concerning this memorandum should be directed to Jim Overton (202-366-4653) of the Federal-Aid and Design Division.

Signed by
Thomas J. Ptak

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