Federal transport $-bill produces tiny advances for tolling, worse measures averted

July 2, 2012
By Peter Samuel

2012-07-02: Federal highway and transit funding for the states got "reauthorized" for another two years in a vote June 29 after the usual protracted Washington DC 'gridlock' and political drama. With the latest of a bunch of extensions expiring June 30 majorities suddenly appeared for a compromise. The new law becomes the 'Moving Ahead for Progress in the 21st Century Act' or MAP21.

The earnest grandiosity is slightly less longwinded this time around - a 9 word title vs 11 words. And we are spared the lame lavatory humor of the abbreviation SAFETEA-LU, for 'Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users' which ran from 2005 to 2009, and which has since been extended many times.

Cause for celebration there!

Small improvements too, there are, in the treatment of tolling.

Extra lanes can be tolled

MAP21 grants blanket approval to tolling of additional capacity on established interstates or federal-aid highways. Previously only bridges and tunnels were generally approved for tolling. An extra lane or lanes can be tolled, and also an HOV lane, but the number of untolled lanes must be the same after as before.

COMMENT: this is better than nothing, but not much better. The big need is for the states to have the right to toll existing capacity during rebuilds and modernization. With vehicle-miles traveled per person static or declining there won't be a huge need for extra capacity, and extra capacity is difficult to make serious money from with untolled lanes right alongside. (see a more optimistic take by Dan Dornan at the end)

Relevant passage in the Act:

SEC. 1512. TOLLING.

(a) AMENDMENT TO TOLLING PROVISION.--Section 129(a) of title
23, United States Code, is amended to read as follows:
(a) BASIC PROGRAM.--
(1) AUTHORIZATION FOR FEDERAL PARTICIPATION.--Subject to the provisions of this section, Federal participation shall be permitted on the same basis and in the same manner as construction of toll-free highways is permitted under this chapter in the--

(A) initial construction of a toll highway, bridge, or tunnel or approach to the highway, bridge, or tunnel;

(B) initial construction of 1 or more lanes or other improvements that increase 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 the construction is not less than the number of toll-free lanes, excluding auxiliary lanes, before the construction;

(C) 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;

(D) reconstruction, resurfacing, restoration, rehabilitation, or replacement of a toll highway, bridge, or tunnel or approach to the highway, bridge, or tunnel;

(E) reconstruction or replacement of a toll-free bridge or tunnel and conversion of the bridge or tunnel to a toll facility;

(F) 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;

(G) 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;

(H) conversion of a high occupancy vehicle lane on a highway, bridge, or tunnel to a toll facility; and

(I) preliminary studies to determine the feasibility of a toll facility for which Federal participation is authorized under this paragraph.

Toll facility must get preference in use of funds

There is to be no milking toll profits for slow transit or crony projects, at least not until the toll facility is well looked after, and funds can only go for other aid-eligible projects.

The Act on this:

SEC. 1512. TOLLING.

(a) AMENDMENT TO TOLLING PROVISION.--Section 129(a) of title
23, United States Code, is amended to read as follows:

(a) BASIC PROGRAM.--

(3) LIMITATIONS ON USE OF REVENUES.--

(A) IN GENERAL.--A public authority with jurisdiction over a toll facility shall use all toll revenues received from operation of the toll facility only for--

(i) 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;

(ii) a reasonable return on investment of any private person financing the project, as determined by the State or interstate compact of States concerned;

(iii) any costs necessary for the improvement and proper operation and maintenance of the toll facility, including reconstruction, resurfacing, restoration, and rehabilitation;

(iv) 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

(v) if the public authority certifies annually that the tolled facility is being adequately maintained, any other purpose for which Federal funds may be obligated by a State under this title.

(B) ANNUAL AUDIT.--

(i) IN GENERAL.--A public authority with jurisdiction over a toll facility shall conduct or have an independent auditor conduct an annual audit of toll facility records to verify adequate maintenance and compliance with subparagraph (A), and report the results of the audits to the Secretary.

(ii) RECORDS.--On reasonable notice, the public authority shall make all records of the public authority pertaining to the toll facility available for audit by the Secretary.

(C) NONCOMPLIANCE.--If the Secretary concludes that a public authority has not complied with the limitations on the use of revenues described in subparagraph (A), the Secretary may require the public authority to discontinue collecting tolls until an agreement with the Secretary is reached to achieve compliance with the limitation on the use of revenues described in subparagraph (A).

HOT Lanes, no cash toll booths allowed

HOV (high occupancy vehicle) lanes can be converted to HOT (high occupancy free, others tolled)  lanes, that is with non-HOV vehicles tolled, but HOVs continuing to travel toll-free. HOV is defined as a vehicle with two or more persons. The new law has rules that level of service must be maintained by  dynamic pricing or other means. As if this provision was needed HOT lanes must provide for all-electronic ("automatic") toll collection.

The section of the new law:

SEC. 1512. TOLLING.

(a) AMENDMENT TO TOLLING PROVISION.--Section 129(a) of title
23, United States Code, is amended to read as follows:

(4) LIMITATIONS ON CONVERSION OF HIGH OCCUPANCY VEHICLE FACILITIES ON INTERSTATE SYSTEM.--
(A) IN GENERAL.--A public authority with jurisdiction over a high occupancy vehicle facility on the Interstate System may undertake reconstruction, restoration, or rehabilitation under paragraph (1)(G) on the facility, and may levy tolls on vehicles, excluding high occupancy vehicles, using the reconstructed, restored, or rehabilitated facility, if the public authority--
(i) in the case of a high occupancy vehicle facility that affects a metropolitan area, submits to the Secretary a written assurance that the metropolitan planning organization designated under section 5203 of title 49 for the area has been consulted concerning the placement and amount of tolls on the converted facility;
(ii) develops, manages, and maintains a system that will automatically collect the toll; and
(iii) establishes policies and procedures--
(I) to manage the demand to use the facility by varying the toll amount that is charged; and
(II) to enforce sanctions for violations of use of the facility.

(B) EXEMPTION FROM TOLLS.--In levying tolls on a facility under subparagraph (A), a public authority may designate classes of vehicles that are exempt from the tolls or charge different toll rates for different classes of vehicles.

SEC. 1514. HOV FACILITIES.

Section 166 of title 23, United States Code, is amended--

(1) in subsection (b)(5)--
(A) in subparagraph (A) by striking 2009 and inserting 2017;
(B) in subparagraph (B) by striking 2009 and inserting 2017; and
(C) in subparagraph (C)--
(i) by striking subparagraph (B) and inserting this paragraph; and
(ii) by inserting or equal to after less than;
(2) in subsection (c) by striking paragraph (3) and inserting the following:
(3) TOLL REVENUE.--Toll revenue collected under this section is subject to the requirements of section 129(a)(3).; and
(3) in subsection (d)(1)--
(A) in the matter preceding subparagraph (A)--
(i) by striking in a fiscal year shall certify and inserting shall submit to the Secretary a report demonstrating that the facility is not already degraded, and that the presence of the vehicles will not cause the facility to become degraded, and certify; and
(ii) by striking in the fiscal year;

(B) in subparagraph (A) by inserting and submitting to the Secretary annual reports of those impacts after adjacent highways;
(C) in subparagraph (C) by striking if the presence of the vehicles has degraded the operation of the facility and inserting whenever the operation of the facility is degraded; and
(D) by adding at the end the following:
(D) MAINTENANCE OF OPERATING PERFORMANCE.--Not later than 180 days after the date on which a facility is degraded pursuant to the standard specified in paragraph (2), the State agency with jurisdiction over the facility shall bring the facility into compliance with the minimum average operating speed performance standard through changes to operation of the facility, including--

(i) increasing the occupancy requirement for HOV lanes;
(ii) varying the toll charged to vehicles allowed under subsection (b) to reduce demand;
(iii) discontinuing allowing non-HOV vehicles to use HOV lanes under subsection (b); or
(iv) increasing the available capacity of the HOV facility.

(E) COMPLIANCE.--If the State fails to bring a facility into compliance under subparagraph (D), the Secretary shall subject the State to appropriate program sanctions under section 1.36 of title 23, Code of Federal Regulations (or successor regulations), until the performance is no longer degraded.

States must have clear legislative authority to toll

The Act:

(9) STATE LAW PERMITTING TOLLING.--If a State does not have a highway, bridge, or tunnel toll facility as of the date of enactment of the MAP-21, before commencing any activity authorized under this section, the State shall have in effect a law that permits tolling on a highway, bridge, or tunnel.

Interoperability within 4 years

Electronic tolling on all  interstates  and other federal-aid highways must provide for interoperability by mid-2016 as provided in a mercifully short provision of the Act:


SEC. 1512. TOLLING.

(a) AMENDMENT TO TOLLING PROVISION.--Section 129(a) of title
23, United States Code, is amended to read as follows:


(b) ELECTRONIC TOLL COLLECTION INTEROPERABILITY REQUIREMENTS.--Not later than 4 years after the date of enactment of this Act, all toll facilities on the Federal-aid highways shall implement technologies or business practices that provide for the interoperability of electronic toll collection programs.

TIFIA loan money funding up

TIFIA funding, or federally supported lending is increased in amount, and made more a matter of right. It goes from the current depressed level of $122m to $750m in FY2013, then $1 billion/year. Eligible credit-worthy projects are now to get TIFIA loans on a first-come-first-served basis with the Feds supposedly having less discretion to pick and choose. Tolls are specified as a revenue stream to support TIFIA lending. TIFIA does not have to be linked to discrete projects but can be made available for a program of projected under an umbrella contract or "master credit agreement"

There are pages on this which we won't reproduce here under

TITLE II--AMERICA FAST FORWARD FINANCING INNOVATION

SEC. 2001. SHORT TITLE.

This title may be cited as the America Fast Forward Financing Innovation Act of 2012.

SEC. 2002. TRANSPORTATION INFRASTRUCTURE FINANCE AND INNOVATION ACT OF 1998 AMENDMENTS.

Half empty, half full

As important as what is in the new Act is what was averted. Senators Bingaman and Kay Bailey Hutchinson both earlier proposed amendments that would have discouraged toll financing. It would have extended from 15 to 45 years the period over which toll assets could be amortized for tax purposes.

And they would have eliminated tolled miles from the state miles eligible for federal aid.

And House transport committee chair John Mica at one point proposed that the law would call for the US Secretary to specify a standard electronic toll system which it would be mandatory for all tollers to use by a certain date.

Strong advocacy on Capitol Hill by IBTTA, ATI and the US Tolling Coalition is credited with heading off or moderating these anti-toll measures.

But there are other ways of viewing this. Mike Johnson executive director of the Kansas Turnpike said in an email to IBTTA:

"On the interoperability issue, I am a bit puzzled on how you could term the language a 'positive outcome'?  Though earlier language may have been more harsh, any federal requirement that may require toll businesses to invest untold sums of money to provide for this outcome by some arbitrary date is not what I would call a positive outcome.  A bit like a condemned person giving thanks for being executed by firing squad rather eaten alive by
ants."

"If this language does survive, we will view the 'federal-aid-highway system' to mean just that the provisions apply to systems that received or receive federal aid.  Since we did not and do not receive federal aid, our view will be that the provisions don't apply to us!"

Value pricing and Interstate reconstruction pilot programs unmentioned


The toll industry of course wanted these programs expanded and increased discretion given to the states, but the "pilot programs" just aren't mentioned in the new Act, so it is unclear whether they go on as before with the limits and rules in place, or whether they end.

IBTTA have useful analysis of the new law at their website ibtta.org

TOLLROADSnews 2012-07-02

FOLLOW-UP: Dan Dornan thought our tone above was too negative. He sees MAP21's liberalization on tolling as cause for celebration and we're happy to publish his take. Dornan has degrees in engineering and business and had a career of 25 years with KPMG. He is now independent.

He is in process of moving to the Tysons Corner area (Vienna) of northern Virginia.

MAP21 - a Boon for State DOTs?

by Dan Dornan

MAP21 may have an interesting and positive twist for the state DOTs. By opening up the Interstate System to tolling all new capacity, the emphasis going forward will now be on building the added capacity so badly needed to accommodate the increased travel demands of the American public. In the past 20 years or so, the emphasis has been on maintaining and rehabilitating existing federally-supported highways since the scarce federal dollars have not been adequate to support a genuine capacity expansion effort.

With tolling new capacity now allowed to break the logjam, we will likely see the states building new tolled lanes which will ultimately be used to cross-subsidize the adjacent non-tolled lanes whose financial support will continue to erode.

While the states will still not be able to put tolls on existing non-tolled lanes (except for rebuilt bridges and tunnels like the Scudder Falls Bridge in New Jersey), the states will be able to use revenues from the new tolled lanes to pay for the capital improvement needs of non-tolled lanes. This is because toll rates for new capacity are not limited to that needed merely to pay for the costs of the new capacity

It would appear that with the passage of MAP21, the pendulum will finally begin to shift for the federal highway program from merely preserving the old to providing for the new. And with a broader use of tolling on an interoperable basis, the door will be opened more to innovative financing approaches which can be used once a continuous source of revenues is defined. This may be the dawn of a new era in highway funding and finance for the United States and the re-birth of the Interstate Highway System.

MAP21 may not be the fastest way to solve the funding crisis impeding the nation's highway program, but it is an elegant solution. Like the "Great Compromise", it accommodates the "ying and yang" of tolled and untolled highways.

Daniel Dornan PE

TOLLROADSnews 2012-07-03

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