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http://www.cga.ct.gov/2001/rpt/olr/htm/2001-r-0878.htm
December 14, 2001
2001-R-0878
CONSTRAINTS AND CONSEQUENCES UNDER FEDERAL LAW REGARDING REINSTITUTING
TOLLS ON INTERSTATE HIGHWAYS
By: James J. Fazzalaro, Principal Research Analyst
You asked if recent trends for the federal government to pass down to
the states more control of and responsibility for programs previously
controlled at the federal level ("devolution") has changed the
circumstances for states with highways without tolls being able to
make them toll roads without incurring federal penalties. You also
wanted to know if the amount Connecticut has received as a result of
removing tolls, or the amount it would lose if it reinstituted them,
can be quantified.
OLR has written extensively on this and other aspects of the toll
issue over the last several years and, in addition to this report that
updates and revises some of the information, we refer you to OLR
Reports 91-R-1184, 91-R-1253, 95-R-0691, and 95-R-1075, that provide
additional historical background and detail on this issue (copies
included).
SUMMARY
The constraints and consequences under federal law relating to putting
tolls on roads that are part of the Interstate Highway System remain
essentially unchanged since 1998. Federal law expressly prohibits the
placing of tolls on any highways constructed with federal financial
aid, including roads that are part of the Interstate System, but there
are certain exceptions. Some exceptions added in 1991 include
constructing a new non-Interstate highway, bridge, or tunnel as a toll
facility; reconstructing an existing non-Interstate free highway and
converting it to a toll road; reconstructing an existing toll
facility, and reconstructing or replacing a free bridge or tunnel and
converting it to a toll facility. None of these exceptions would allow
Connecticut to unilaterally reinstate the tolls on I-95, or put them
on any other Interstate highway, but under the fourth exception, the
Department of Transportation (DOT) was able to consider, among its
initial options, building the proposed New Haven Harbor crossing as a
toll bridge. It subsequently dropped this alternative based on local
opposition to the idea.
The most recent modifications to the toll prohibition, added in 1998,
allow for (1) up to three "Interstate Toll Pilot Projects" for the
purpose of reconstructing or rehabilitating an Interstate highway that
could not otherwise be maintained or improved without the collection
of tolls and (2) a "Value Pricing Pilot Program," one element of which
could be using a variable toll structure to "value price" the use of a
high occupancy vehicle lane by single occupant vehicles. These seem to
provide the most realistic opportunity for Connecticut to develop some
type of toll-based initiative. But either program involves significant
obstacles to be overcome and is not without some loss of federal funds
eligibility for the roads involved.
Federal funds repayment would almost certainly be part of any other
toll scenario and would require Congressional approval, and even
participation in the toll pilot project program has some funding
implications in that the pilot project would no longer be eligible for
federal funds. However, quantifying all of the funding implications is
extremely difficult to do in the absence of a specific proposal, for
example, putting tolls back on I-95 only or putting them on all
Connecticut Interstate highways. The more comprehensive the proposal,
the more federal funding that likely would be involved.
When I-95 initially became eligible for federal funds as a result of
the toll removal agreement with the Federal Highway Administration
(FHWA), Connecticut began receiving an additional $10-12 million
annually in federal funds for use in resurfacing and rehabilitating
Interstate highways. But, more importantly, any of the funding the
state was already receiving for its Interstate highways could now be
used for projects on I-95. Since 1983, these expenditures have added
up to several hundred million dollars, including an ongoing set of
projects to revise the highway and interchanges in the Bridgeport area
which, when completed, will cost close to $400 million. Also, when the
Mianus River Bridge collapsed in 1983, Connecticut received a
considerable amount of emergency aid from the FHWA. This emergency aid
would also have to be repaid.
There have been no recent estimates of the federal funds repayment
implications of reinstating tolls. Only DOT has the information
necessary to feasibly do such an analysis, but, no doubt, would need a
specific proposal upon which to base it. In 1991, DOT estimated that
putting tolls on all Connecticut Interstate highways could require
repayment of up to $2.6 billion in federal funds received for these
roads since 1960. It would be considerably more now because of the
additional funds received since 1991. An I-95 toll reinstatement
scenario would result in less repayment exposure since it has only
received federal funds since 1983, but as noted above, this
potentially could still involve $500 million or more.
CONSTRAINTS ON USING TOLLS ON FEDERAL-AID HIGHWAYS
Historical Background
Federal law has excluded toll facilities from eligibility for federal
funds since the federal-aid highway program was created in 1916. This
was modified in 1927 to allow federal funds to be used to construct
toll bridges. The Interstate Highway System was created by Congress in
1956 and intended as a toll-free system of highways to connect the
country's major urban centers for movement of personnel and equipment
for military purposes in defense of the country. But Congress also
decided to include some toll facilities in the system-generally major
toll roads built or planned before federal funding for the Interstate
System became significantly available. Including these toll roads
provided desirable connections in the system and eliminated the need
to build competing free roads in the same corridors and made funds
available to develop other free segments of the system sooner. The
Connecticut Turnpike, Pennsylvania Turnpike, New Jersey Turnpike, and
New York Thruway are some examples of toll roads that were included on
the system. A total of about 2,230 miles of the 42,800 mile Interstate
Highway System consists of toll roads brought into the system in this
way.
The Federal Toll Prohibition
The basic federal restriction that affects Connecticut's ability to
reinstitute tolls on previously tolled roads, or to put them up on
roads that did not previously have them is found at 23 U.S.C ? 301.
This law states that, "except as provided in section 129 of this title
with respect to certain toll bridges and toll tunnels, all highways
constructed under the provisions of this title shall be free from
tolls of all kinds." The requirements of this law are unequivocal.
Roads that are paid for predominantly with federal funds are expected
to be toll free. This prohibition has existed in federal law for more
than 80 years in one form or another.
In Connecticut, most of the expressways with Interstate Highway
designations were built under this restriction. Thus all of I-91,
I-84, and I-95 east of Old Lyme were paid for mostly from federal
funds, as were the newer roads like I-691, I-384, and I-291. Two
former toll roads, the Merritt and Wilbur Cross Parkways (Route 15)
and the Connecticut Turnpike, predate most of the federally-funded
highway program and were built with state, not federal money. The
Connecticut Turnpike was subsequently designated as part of the
Interstate Highway System as part of Routes I-95 and I-395, but no
federal funds were involved until 1983 when the tolls were removed and
by agreement the roads became eligible for federal funding.
EXCEPTIONS TO THE TOLL PROHIBITION
Interstate Highway Resurfacing Agreements
While Congress from time-to-time added exceptions to the toll
prohibition, for example, one that allowed federal funds to be used to
upgrade some two-lane toll roads incorporated in the Interstate System
to the geometric and safety standards of Interstate highways, the
first change with significance for Connecticut occurred in 1978. The
Surface Transportation Assistance Act of 1978 contained a provision
allowing segments of toll roads that were part of the Interstate
System to qualify for Interstate 4R funding-money earmarked for
resurfacing, restoring, rehabilitating, and reconstructing routes on
the Interstate System. To qualify, the state authority responsible for
the facility had to agree to remove all tolls once the costs
associated with its construction, including debt service, had been
satisfied. When such a "secretarial agreement" was signed, the segment
subject to tolls immediately was figured into the state's eligible
mileage and traffic calculations under the apportionment formula for
the resurfacing money (23 USC ? 105, later recodified as ? 119).
Connecticut was one of a few states that executed such an agreement.
On August 30, 1983 the state agreed to remove the tolls from the
Connecticut Turnpike when the remaining bonds were retired and the
costs of removing the tolls were covered by toll revenue. In exchange,
the additional mileage was added to Connecticut's apportionment,
resulting in initially some $11-12 million in additional federal
funds. This mileage has been calculated into Connecticut's federal aid
apportionments ever since. Besides this additional money, the
agreement allowed the state to program other available federal funds
for use on I-95 and it also qualified the state to receive emergency
federal aid when the Mianus River Bridge collapsed.
Since the portion of I-95 that was the Connecticut Turnpike became
federal-funds-eligible in 1983, many major projects have been
undertaken using as much as 90% federal funding. Among other things,
federal funds have paid most of the costs for installing concrete
median safety barriers along most of the highway, building the truck
inspection station at the site of the old toll station in Greenwich,
and rebuilding or replacing several major bridges such as the Yankee
Doodle Bridge in Norwalk and the Mianus River in Greenwich (now known
as the Michael Morano Bridge). Current major projects using mostly
federal funds include the almost $400 million realignment of I-95
through Bridgeport and the $100 million reconstruction of the Moses
Wheeler Bridge between Stratford and Milford.
Additional Exceptions Added in 1991
Congress more recently recognized the increasingly difficult financial
climate for modernizing and rehabilitating the transportation
infrastructure by authorizing limited federal participation in certain
types of toll highway, bridge, and tunnel projects. The Intermodal
Surface Transportation Efficiency Act of 1991 (ISTEA) specified that
notwithstanding the general prohibition on tolls, federal financial
participation is allowed for:
1. initial construction of a toll highway, bridge, or tunnel not
on the Interstate System;
2. reconstructing, resurfacing, restoring, or rehabilitating an
existing toll highway, bridge, or tunnel;
3. reconstructing or replacing a toll-free bridge or tunnel and
converting it to a toll facility;
4. reconstructing a toll-free federal-aid highway, not on the
Interstate System, and converting it to a toll facility; and
5. doing preliminary studies to determine the feasibility of one
of the above (23 U.S.C. ? 129).
For purposes of these exceptions, "initial construction" means
construction of a highway, bridge, or tunnel at any time before it is
open to traffic and excludes any improvement to the facility after it
is opened to traffic.
The major problem with Connecticut being able to take advantage of
these exceptions is that the three that apply to roads either exclude
Interstate highways or apply only to existing toll facilities which
effectively precludes application to the Connecticut expressways that
carry most of its traffic. While some non-Interstate expressways such
as Routes 2 or 9 would fall within the exceptions, they do not
generally carry traffic volumes sufficient to support tolling.
Therefore, it does not seem likely that Connecticut can benefit from
them. Also, since Connecticut has no toll facilities anymore and it
already receives federal funds for its toll-free facilities, this
provision also seems to have little relevance.
The only one of the four exceptions that might be relevant to
Connecticut is the provision allowing the reconstruction or
replacement of a toll-free bridge (whether on or off of the Interstate
System) and its conversion to a toll facility. This provision could
have had limited applicability to Connecticut. In fact, constructing
the planned New Haven Harbor Crossing as a toll bridge was apparently
under early consideration as one of numerous options for the planned
project involving rehabilitation or replacement of the Quinnipiac
River Bridge on I-95. This option, which involved replacing the
existing bridge with a larger one carrying a variable toll rate as
part of a congestion pricing scheme to regulate traffic was initially
identified by DOT among project alternatives, but subsequently
rejected due to local opposition.
Projects undertaken through these exemptions are subject to an
agreement between the FHWA, the state Department of Transportation,
and the toll authority with jurisdiction over the facility. The
agreement must require that all toll revenues first be used for debt
service, reasonable return on any private investment in the project,
and all necessary operation and maintenance costs, including
reconstruction, resurfacing, restoration, and rehabilitation (23 USC ?
129(a)(3)). The agreement may also stipulate that any toll revenue in
excess of these requirements can be used for any highway or transit
purposes federal law authorizes as long as the state can certify
annually that the toll facility is being adequately maintained.
1998 Additions-Interstate Toll and Value Pricing Pilot Projects
In the Transportation Equity Act for the 21st Century (TEA-21), the
Congress created a new exception to the toll prohibition and expanded
upon one previously created in ISTEA.
Interstate Toll Pilot Program
Under the newly-established Interstate Toll Pilot Program, Congress
authorized a state to convert an existing free Interstate highway,
bridge, or tunnel to a toll facility in conjunction with needed
reconstruction or rehabilitation of the highway that cannot otherwise
be adequately maintained or functionally improved without the
collection of tolls (23 USC ? 1216(b)). A maximum of three toll pilot
projects are authorized and they must be located in different states.
The program must be conducted for a minimum of 10 years.
State applications must: (1) identify the proposed facility, along
with its age, condition, and intensity of use; (2) if it affects a
metropolitan area, provide assurance that the Metropolitan Planning
Organization (MPO) has been consulted concerning the placement of toll
facilities and amount of tolls; (3) demonstrate through its analysis
that the Interstate facility cannot be maintained or improved from
current and future federal funds and highway funds from any other
sources without toll revenues; and (4) provide a facility management
plan covering an implementation plan for imposing the tolls, a
schedule and financial plan for the toll-financed reconstruction or
rehabilitation of the facility, a description of whether consideration
will be given to privatizing the operational and maintenance aspects
of the toll facility while retaining legal and administrative control,
and other information deemed relevant.
A project application may only be approved if FHWA determines that:
1. the state cannot reconstruct or rehabilitate the facility
using existing federal and other fund apportionments;
2. the facility's age, condition, and intensity of use warrant
collection of tolls;
3. the state's implementation plan takes into account the
interests of local, regional, and interstate travelers;
4. the state's reconstruction or rehabilitation plan is
reasonable; and
5. the state gave reasonable preference to the use of a public
toll agency with demonstrated capacity to build, operate, and maintain
a toll expressway system meeting Interstate System criteria.
An approved project is subject to the same type of FHWA-state
agreement with respect to dedication of toll revenue as noted above.
During the term of the toll pilot, the facility is no longer eligible
to use federal funds under the Interstate Maintenance Program for the
portion of the highway where tolls are being collected.
As of this date, no pilot project applications have been submitted for
FHWA review and approval. The initial deadline for project
applications was March 31, 1999, but, when no applications were
submitted, FHWA made it an open-ended solicitation on a first-come,
first-served basis with no set deadline. Although Arkansas and Texas
have shown some preliminary interest in the program, FHWA still has
not received any formal applications from anyone.
Value Pricing Pilot Program
TEA-21 expands upon the congestion pricing pilot program created under
ISTEA. It allows FHWA to make agreements with up to 15 (instead of
five) states, local governments, or other public authorities to
establish, maintain, and monitor local "value pricing" programs (P.L.
105-178, ? 1216(a)). Value pricing, also known in the transportation
field as congestion or peak-period pricing, is a concept under which
tolls are charged that vary with congestion level. Congress created
this as an experimental program to learn the potential congestion
reduction effects of different value pricing schemes. Besides an
exception to the existing general toll prohibition, the value pricing
program provision of TEA-21 has another exception to permit the use of
high-occupancy-vehicle (HOV) lanes by vehicles with fewer that two
occupants as part of one of these approved value pricing programs.
Federal law otherwise prohibits use of HOV lanes by vehicles with
fewer that two occupants (23 USC ? 102).
While the main thrust of the program is to examine the effects on
variable tolls on roads, other market-based approaches such as parking
pricing will also be considered if they incorporate significant
variations by time, location, or level of congestion. The types of
programs FHWA has expressed interest in examining through this program
include:
1. Areawide Value Pricing
? Fees for entering an area ("cordon crossing charges") using
electronic vehicle identification devices
? Charges for traveling on a network of metered routes within a
defined area
? Areawide parking charges with variable fees targeted toward
congestion reduction, or areawide parking "cash-out" programs which
provide employees the option of trading in employer-provided parking
spaces for cash
2. Value Pricing on a Single Highway Facility, Route, or
Corridor
? Pricing of key traffic bottlenecks, single traffic corridors,
or single highway facilities, including bridges or tunnels
? Conversion of fees on existing toll facilities from fixed to
variable rate structures, for example, the use of peak surcharges
combined with off-peak discounts
3. Value Pricing on Single or Multiple Lane Highways
? Charges for using newly-constructed or existing highway lanes
during peak traffic periods, including fees that allow entry to HOV
lanes by vehicles not meeting prescribed minimum occupancy
requirements
4. Pre-project Studies and Experiments
? Studies that assist governments in carrying out activities
designed to lead to a value pricing project
? Implementing and evaluating small-scale experimental projects
with voluntary participants that are designed to demonstrate a new
pricing technology or generate information about user responses to
value pricing
5. Innovative Pilot Tests
? Program participants are encouraged to develop new and
innovative pricing approaches, including use of innovative electronic
tolling technologies, satellite-based vehicle identification
technologies, incorporating smog fees into variable road pricing
strategies, or using different types of "auction" techniques for
allocating entry permits or determining price levels
FHWA gives the highest priority to project proposals with the greatest
potential to reduce congestion and advance current knowledge of price
effects, operations, enforcement, revenue generation, equity
mitigation, and monitoring or evaluation mechanisms.
Connecticut's ability to participate in the Value Pricing Pilot
Program may grow increasingly limited. Value Pricing Pilot Programs
are currently being implemented in San Diego, San Francisco, Houston,
and Lee County, Florida. Pre-program planning activities are ongoing
in other parts of California and Texas and as many as seven other
states. Should all of these advance to the implementation state, the
program will probably be fully subscribed.
Additional information on participating in the Value Pricing Pilot
Program can be found at several locations on the Internet including:
FHWA Discretionary Programs - Value Pricing Pilot Program Information,
fhwa.dot.gov/policy/13-hmpg, and http://www.hhh.umn.edu/centers/slp/conpric..
FEDERAL FUNDS IMPLICATIONS FOR REINSTATING TOLLS
Pursuing Toll Reinstitution Through the Pilot Program Exceptions
Essentially, the only way in which Connecticut might realistically be
able to entertain the idea of reinstituting tolls on I-95 or on some
or all of its other highways and avoid many of the negative federal
funding implications it would otherwise encounter would probably be to
try to participate in either of the two pilot programs authorized in
TEA-21 and explained above. However, there are obstacles to
participating in either program.
In the case of the Interstate Toll Pilot Program, the state would have
to couple the toll reinstatement with a needed reconstruction or
rehabilitation of the road. It would also have to present a convincing
case that this cannot be achieved with existing and projected federal
and state funding and thus requires toll revenue. The selected road
would also have to meet the other selection criteria with respect to
age, condition, and intensity of use and, perhaps more significantly,
that all the affected MPOs have been consulted regarding the placement
and nature of the tolls. While this might not be impossible, the
burden would probably be significant. It is also likely that, even if
it could meet these requirements, Connecticut would be able to select
only one road for consideration, which would almost certainly mean
that it would encounter a number of difficult political, legal, and
other hurdles. Finally, the selected road would be ineligible for the
use of any federal Interstate Maintenance funds the state receives.
The Value Pricing Pilot Program presents another possible opportunity,
but the program's 15-project limit may be reached before Connecticut
could advance a viable proposal, even if it wanted to. Another
difficulty is that Connecticut has relatively few existing HOV lanes
(I-91 north and east of Hartford) from which it could develop a
variable rate toll lane proposal and these may not be the corridors
that would provide the greatest benefit from a value pricing project.
Reinstating Tolls Under Other Conditions
Any toll reinstatement scenario that could not qualify under one of
the existing exceptions to the federal law would carry with it
significant federal funding implications. While there are relatively
few precedents in this regard, they show that two things likely would
be required: (1) a specific authorization from Congress to convert the
road to a toll facility and (2) repayment of all federal funds used on
the facility prior to initiation of toll collection or apportioned to
the state as a result of the toll-free mileage being used in the
apportionment formula for the state. There is also the possibility
that the Congressional authorization could require repayment of
federal funds before toll collection could begin.
Assuming that Congress would authorize such an action--which could
have significant national implications--it is likely that the
authorization would contain extensive repayment provisions requiring
the state to "buy out" the federal financial interests in the roads it
chooses to make toll-captive. Prior examples of these buy-out
requirements relating to the Maine Turnpike and the Kennedy Memorial
Highway (I-95 in Delaware and Maryland), both of which involved
considerably less money than would be involved for Connecticut, are
discussed in detail in OLR Report 91-R-1184. The report also contains
the specific statutory repayment provisions and some correspondence
from the FHWA division administrator outlining the federal
government's position with respect to Connecticut's situation. While
this information predates the changes made by ISTEA and TEA-21, the
federal position outlined in the correspondence seems to still be an
accurate appraisal of what Connecticut should expect if it pursues
reinstitution of tolls under these conditions.
Congressional approval might be required even if tolls are only
reinstated on the portion of I-95 covered by the 1983 secretarial
agreement because the state would be unilaterally abrogating the terms
of the agreement. While limiting tolls to this segment would reduce
the possible repayment exposure, this still appears to be several
hundred million dollars. The financial and other issues related to
toll reinstitution are discussed in OLR Report 95-R-0691. The exposure
continues to grow as significant amounts of additional federal money
are programmed each year for I-95 projects. Also, any consideration of
putting tolls back on I-95 must also consider reinstituting tolls on
the Merritt and Wilber Cross parkways because of the potential for
significant traffic diversion between the toll-captive and toll-free
expressways.
Putting an exact dollar amount on the potential federal funds
repayment liability is extremely difficult to do in the absence of a
specific plan since it depends on the extensiveness of the toll
system. For example, putting tolls back only on the parts of I-95 and
I-395 that were the Connecticut Turnpike would carry less of a
repayment responsibility than putting tolls on all Connecticut's
Interstate highways. Putting tolls back on the three Hartford area
bridges (Charter Oak, Putnam, and Bissell) from which they were
removed in the 1980's would increase the burden even more because toll
removal from these three structures allowed the use of federal funds
for the Charter Oak Bridge replacement, the I-291 connector, and the
Route 2/3 connector. These three projects involved $350-400 million.
Ultimately, the DOT is the entity best-suited to doing such an
analysis. In 1991 it estimated that a plan involving putting "gateway"
tolls at the borders on all of Connecticut's Interstate highways could
require repayment of $2.6 billion in federal funds received for these
roads since the 1960s. DOT also speculated that possibly as much as
$600 million of almost $1 billion in Interstate Trade-In funds might
also be scrutinized for possible repayment. (Interstate Trade-In funds
were made available to states that withdrew proposed segments of
planned Interstate Highway from the system and received equivalent
funding for alternate highway and transit projects in the affected
corridors.)
DOT has conducted no analyses since its 1991 estimate. But because the
state has continued to receive and expend large amounts of federal
funding since then, the amounts would almost certainly exceed $3
billion for the entire Interstate System and probably exceed $500
million for a
more restricted scenario involving only I-95. Currently, under TEA-21,
Connecticut averages more than $56 million annually under the
Interstate Maintenance Program and over $87 million annually in the
Bridge Program, significant portions of which are spent for bridges on
the Interstate System. Total annual apportionments for all the
programs under TEA-21 are more than $412 million (Source: 2001 Master
Transportation Plan, p. V-5).
December 14, 2001
2001-R-0878
CONSTRAINTS AND CONSEQUENCES UNDER FEDERAL LAW REGARDING REINSTITUTING
TOLLS ON INTERSTATE HIGHWAYS
By: James J. Fazzalaro, Principal Research Analyst
You asked if recent trends for the federal government to pass down to
the states more control of and responsibility for programs previously
controlled at the federal level ("devolution") has changed the
circumstances for states with highways without tolls being able to
make them toll roads without incurring federal penalties. You also
wanted to know if the amount Connecticut has received as a result of
removing tolls, or the amount it would lose if it reinstituted them,
can be quantified.
OLR has written extensively on this and other aspects of the toll
issue over the last several years and, in addition to this report that
updates and revises some of the information, we refer you to OLR
Reports 91-R-1184, 91-R-1253, 95-R-0691, and 95-R-1075, that provide
additional historical background and detail on this issue (copies
included).
SUMMARY
The constraints and consequences under federal law relating to putting
tolls on roads that are part of the Interstate Highway System remain
essentially unchanged since 1998. Federal law expressly prohibits the
placing of tolls on any highways constructed with federal financial
aid, including roads that are part of the Interstate System, but there
are certain exceptions. Some exceptions added in 1991 include
constructing a new non-Interstate highway, bridge, or tunnel as a toll
facility; reconstructing an existing non-Interstate free highway and
converting it to a toll road; reconstructing an existing toll
facility, and reconstructing or replacing a free bridge or tunnel and
converting it to a toll facility. None of these exceptions would allow
Connecticut to unilaterally reinstate the tolls on I-95, or put them
on any other Interstate highway, but under the fourth exception, the
Department of Transportation (DOT) was able to consider, among its
initial options, building the proposed New Haven Harbor crossing as a
toll bridge. It subsequently dropped this alternative based on local
opposition to the idea.
The most recent modifications to the toll prohibition, added in 1998,
allow for (1) up to three "Interstate Toll Pilot Projects" for the
purpose of reconstructing or rehabilitating an Interstate highway that
could not otherwise be maintained or improved without the collection
of tolls and (2) a "Value Pricing Pilot Program," one element of which
could be using a variable toll structure to "value price" the use of a
high occupancy vehicle lane by single occupant vehicles. These seem to
provide the most realistic opportunity for Connecticut to develop some
type of toll-based initiative. But either program involves significant
obstacles to be overcome and is not without some loss of federal funds
eligibility for the roads involved.
Federal funds repayment would almost certainly be part of any other
toll scenario and would require Congressional approval, and even
participation in the toll pilot project program has some funding
implications in that the pilot project would no longer be eligible for
federal funds. However, quantifying all of the funding implications is
extremely difficult to do in the absence of a specific proposal, for
example, putting tolls back on I-95 only or putting them on all
Connecticut Interstate highways. The more comprehensive the proposal,
the more federal funding that likely would be involved.
When I-95 initially became eligible for federal funds as a result of
the toll removal agreement with the Federal Highway Administration
(FHWA), Connecticut began receiving an additional $10-12 million
annually in federal funds for use in resurfacing and rehabilitating
Interstate highways. But, more importantly, any of the funding the
state was already receiving for its Interstate highways could now be
used for projects on I-95. Since 1983, these expenditures have added
up to several hundred million dollars, including an ongoing set of
projects to revise the highway and interchanges in the Bridgeport area
which, when completed, will cost close to $400 million. Also, when the
Mianus River Bridge collapsed in 1983, Connecticut received a
considerable amount of emergency aid from the FHWA. This emergency aid
would also have to be repaid.
There have been no recent estimates of the federal funds repayment
implications of reinstating tolls. Only DOT has the information
necessary to feasibly do such an analysis, but, no doubt, would need a
specific proposal upon which to base it. In 1991, DOT estimated that
putting tolls on all Connecticut Interstate highways could require
repayment of up to $2.6 billion in federal funds received for these
roads since 1960. It would be considerably more now because of the
additional funds received since 1991. An I-95 toll reinstatement
scenario would result in less repayment exposure since it has only
received federal funds since 1983, but as noted above, this
potentially could still involve $500 million or more.
CONSTRAINTS ON USING TOLLS ON FEDERAL-AID HIGHWAYS
Historical Background
Federal law has excluded toll facilities from eligibility for federal
funds since the federal-aid highway program was created in 1916. This
was modified in 1927 to allow federal funds to be used to construct
toll bridges. The Interstate Highway System was created by Congress in
1956 and intended as a toll-free system of highways to connect the
country's major urban centers for movement of personnel and equipment
for military purposes in defense of the country. But Congress also
decided to include some toll facilities in the system-generally major
toll roads built or planned before federal funding for the Interstate
System became significantly available. Including these toll roads
provided desirable connections in the system and eliminated the need
to build competing free roads in the same corridors and made funds
available to develop other free segments of the system sooner. The
Connecticut Turnpike, Pennsylvania Turnpike, New Jersey Turnpike, and
New York Thruway are some examples of toll roads that were included on
the system. A total of about 2,230 miles of the 42,800 mile Interstate
Highway System consists of toll roads brought into the system in this
way.
The Federal Toll Prohibition
The basic federal restriction that affects Connecticut's ability to
reinstitute tolls on previously tolled roads, or to put them up on
roads that did not previously have them is found at 23 U.S.C ? 301.
This law states that, "except as provided in section 129 of this title
with respect to certain toll bridges and toll tunnels, all highways
constructed under the provisions of this title shall be free from
tolls of all kinds." The requirements of this law are unequivocal.
Roads that are paid for predominantly with federal funds are expected
to be toll free. This prohibition has existed in federal law for more
than 80 years in one form or another.
In Connecticut, most of the expressways with Interstate Highway
designations were built under this restriction. Thus all of I-91,
I-84, and I-95 east of Old Lyme were paid for mostly from federal
funds, as were the newer roads like I-691, I-384, and I-291. Two
former toll roads, the Merritt and Wilbur Cross Parkways (Route 15)
and the Connecticut Turnpike, predate most of the federally-funded
highway program and were built with state, not federal money. The
Connecticut Turnpike was subsequently designated as part of the
Interstate Highway System as part of Routes I-95 and I-395, but no
federal funds were involved until 1983 when the tolls were removed and
by agreement the roads became eligible for federal funding.
EXCEPTIONS TO THE TOLL PROHIBITION
Interstate Highway Resurfacing Agreements
While Congress from time-to-time added exceptions to the toll
prohibition, for example, one that allowed federal funds to be used to
upgrade some two-lane toll roads incorporated in the Interstate System
to the geometric and safety standards of Interstate highways, the
first change with significance for Connecticut occurred in 1978. The
Surface Transportation Assistance Act of 1978 contained a provision
allowing segments of toll roads that were part of the Interstate
System to qualify for Interstate 4R funding-money earmarked for
resurfacing, restoring, rehabilitating, and reconstructing routes on
the Interstate System. To qualify, the state authority responsible for
the facility had to agree to remove all tolls once the costs
associated with its construction, including debt service, had been
satisfied. When such a "secretarial agreement" was signed, the segment
subject to tolls immediately was figured into the state's eligible
mileage and traffic calculations under the apportionment formula for
the resurfacing money (23 USC ? 105, later recodified as ? 119).
Connecticut was one of a few states that executed such an agreement.
On August 30, 1983 the state agreed to remove the tolls from the
Connecticut Turnpike when the remaining bonds were retired and the
costs of removing the tolls were covered by toll revenue. In exchange,
the additional mileage was added to Connecticut's apportionment,
resulting in initially some $11-12 million in additional federal
funds. This mileage has been calculated into Connecticut's federal aid
apportionments ever since. Besides this additional money, the
agreement allowed the state to program other available federal funds
for use on I-95 and it also qualified the state to receive emergency
federal aid when the Mianus River Bridge collapsed.
Since the portion of I-95 that was the Connecticut Turnpike became
federal-funds-eligible in 1983, many major projects have been
undertaken using as much as 90% federal funding. Among other things,
federal funds have paid most of the costs for installing concrete
median safety barriers along most of the highway, building the truck
inspection station at the site of the old toll station in Greenwich,
and rebuilding or replacing several major bridges such as the Yankee
Doodle Bridge in Norwalk and the Mianus River in Greenwich (now known
as the Michael Morano Bridge). Current major projects using mostly
federal funds include the almost $400 million realignment of I-95
through Bridgeport and the $100 million reconstruction of the Moses
Wheeler Bridge between Stratford and Milford.
Additional Exceptions Added in 1991
Congress more recently recognized the increasingly difficult financial
climate for modernizing and rehabilitating the transportation
infrastructure by authorizing limited federal participation in certain
types of toll highway, bridge, and tunnel projects. The Intermodal
Surface Transportation Efficiency Act of 1991 (ISTEA) specified that
notwithstanding the general prohibition on tolls, federal financial
participation is allowed for:
1. initial construction of a toll highway, bridge, or tunnel not
on the Interstate System;
2. reconstructing, resurfacing, restoring, or rehabilitating an
existing toll highway, bridge, or tunnel;
3. reconstructing or replacing a toll-free bridge or tunnel and
converting it to a toll facility;
4. reconstructing a toll-free federal-aid highway, not on the
Interstate System, and converting it to a toll facility; and
5. doing preliminary studies to determine the feasibility of one
of the above (23 U.S.C. ? 129).
For purposes of these exceptions, "initial construction" means
construction of a highway, bridge, or tunnel at any time before it is
open to traffic and excludes any improvement to the facility after it
is opened to traffic.
The major problem with Connecticut being able to take advantage of
these exceptions is that the three that apply to roads either exclude
Interstate highways or apply only to existing toll facilities which
effectively precludes application to the Connecticut expressways that
carry most of its traffic. While some non-Interstate expressways such
as Routes 2 or 9 would fall within the exceptions, they do not
generally carry traffic volumes sufficient to support tolling.
Therefore, it does not seem likely that Connecticut can benefit from
them. Also, since Connecticut has no toll facilities anymore and it
already receives federal funds for its toll-free facilities, this
provision also seems to have little relevance.
The only one of the four exceptions that might be relevant to
Connecticut is the provision allowing the reconstruction or
replacement of a toll-free bridge (whether on or off of the Interstate
System) and its conversion to a toll facility. This provision could
have had limited applicability to Connecticut. In fact, constructing
the planned New Haven Harbor Crossing as a toll bridge was apparently
under early consideration as one of numerous options for the planned
project involving rehabilitation or replacement of the Quinnipiac
River Bridge on I-95. This option, which involved replacing the
existing bridge with a larger one carrying a variable toll rate as
part of a congestion pricing scheme to regulate traffic was initially
identified by DOT among project alternatives, but subsequently
rejected due to local opposition.
Projects undertaken through these exemptions are subject to an
agreement between the FHWA, the state Department of Transportation,
and the toll authority with jurisdiction over the facility. The
agreement must require that all toll revenues first be used for debt
service, reasonable return on any private investment in the project,
and all necessary operation and maintenance costs, including
reconstruction, resurfacing, restoration, and rehabilitation (23 USC ?
129(a)(3)). The agreement may also stipulate that any toll revenue in
excess of these requirements can be used for any highway or transit
purposes federal law authorizes as long as the state can certify
annually that the toll facility is being adequately maintained.
1998 Additions-Interstate Toll and Value Pricing Pilot Projects
In the Transportation Equity Act for the 21st Century (TEA-21), the
Congress created a new exception to the toll prohibition and expanded
upon one previously created in ISTEA.
Interstate Toll Pilot Program
Under the newly-established Interstate Toll Pilot Program, Congress
authorized a state to convert an existing free Interstate highway,
bridge, or tunnel to a toll facility in conjunction with needed
reconstruction or rehabilitation of the highway that cannot otherwise
be adequately maintained or functionally improved without the
collection of tolls (23 USC ? 1216(b)). A maximum of three toll pilot
projects are authorized and they must be located in different states.
The program must be conducted for a minimum of 10 years.
State applications must: (1) identify the proposed facility, along
with its age, condition, and intensity of use; (2) if it affects a
metropolitan area, provide assurance that the Metropolitan Planning
Organization (MPO) has been consulted concerning the placement of toll
facilities and amount of tolls; (3) demonstrate through its analysis
that the Interstate facility cannot be maintained or improved from
current and future federal funds and highway funds from any other
sources without toll revenues; and (4) provide a facility management
plan covering an implementation plan for imposing the tolls, a
schedule and financial plan for the toll-financed reconstruction or
rehabilitation of the facility, a description of whether consideration
will be given to privatizing the operational and maintenance aspects
of the toll facility while retaining legal and administrative control,
and other information deemed relevant.
A project application may only be approved if FHWA determines that:
1. the state cannot reconstruct or rehabilitate the facility
using existing federal and other fund apportionments;
2. the facility's age, condition, and intensity of use warrant
collection of tolls;
3. the state's implementation plan takes into account the
interests of local, regional, and interstate travelers;
4. the state's reconstruction or rehabilitation plan is
reasonable; and
5. the state gave reasonable preference to the use of a public
toll agency with demonstrated capacity to build, operate, and maintain
a toll expressway system meeting Interstate System criteria.
An approved project is subject to the same type of FHWA-state
agreement with respect to dedication of toll revenue as noted above.
During the term of the toll pilot, the facility is no longer eligible
to use federal funds under the Interstate Maintenance Program for the
portion of the highway where tolls are being collected.
As of this date, no pilot project applications have been submitted for
FHWA review and approval. The initial deadline for project
applications was March 31, 1999, but, when no applications were
submitted, FHWA made it an open-ended solicitation on a first-come,
first-served basis with no set deadline. Although Arkansas and Texas
have shown some preliminary interest in the program, FHWA still has
not received any formal applications from anyone.
Value Pricing Pilot Program
TEA-21 expands upon the congestion pricing pilot program created under
ISTEA. It allows FHWA to make agreements with up to 15 (instead of
five) states, local governments, or other public authorities to
establish, maintain, and monitor local "value pricing" programs (P.L.
105-178, ? 1216(a)). Value pricing, also known in the transportation
field as congestion or peak-period pricing, is a concept under which
tolls are charged that vary with congestion level. Congress created
this as an experimental program to learn the potential congestion
reduction effects of different value pricing schemes. Besides an
exception to the existing general toll prohibition, the value pricing
program provision of TEA-21 has another exception to permit the use of
high-occupancy-vehicle (HOV) lanes by vehicles with fewer that two
occupants as part of one of these approved value pricing programs.
Federal law otherwise prohibits use of HOV lanes by vehicles with
fewer that two occupants (23 USC ? 102).
While the main thrust of the program is to examine the effects on
variable tolls on roads, other market-based approaches such as parking
pricing will also be considered if they incorporate significant
variations by time, location, or level of congestion. The types of
programs FHWA has expressed interest in examining through this program
include:
1. Areawide Value Pricing
? Fees for entering an area ("cordon crossing charges") using
electronic vehicle identification devices
? Charges for traveling on a network of metered routes within a
defined area
? Areawide parking charges with variable fees targeted toward
congestion reduction, or areawide parking "cash-out" programs which
provide employees the option of trading in employer-provided parking
spaces for cash
2. Value Pricing on a Single Highway Facility, Route, or
Corridor
? Pricing of key traffic bottlenecks, single traffic corridors,
or single highway facilities, including bridges or tunnels
? Conversion of fees on existing toll facilities from fixed to
variable rate structures, for example, the use of peak surcharges
combined with off-peak discounts
3. Value Pricing on Single or Multiple Lane Highways
? Charges for using newly-constructed or existing highway lanes
during peak traffic periods, including fees that allow entry to HOV
lanes by vehicles not meeting prescribed minimum occupancy
requirements
4. Pre-project Studies and Experiments
? Studies that assist governments in carrying out activities
designed to lead to a value pricing project
? Implementing and evaluating small-scale experimental projects
with voluntary participants that are designed to demonstrate a new
pricing technology or generate information about user responses to
value pricing
5. Innovative Pilot Tests
? Program participants are encouraged to develop new and
innovative pricing approaches, including use of innovative electronic
tolling technologies, satellite-based vehicle identification
technologies, incorporating smog fees into variable road pricing
strategies, or using different types of "auction" techniques for
allocating entry permits or determining price levels
FHWA gives the highest priority to project proposals with the greatest
potential to reduce congestion and advance current knowledge of price
effects, operations, enforcement, revenue generation, equity
mitigation, and monitoring or evaluation mechanisms.
Connecticut's ability to participate in the Value Pricing Pilot
Program may grow increasingly limited. Value Pricing Pilot Programs
are currently being implemented in San Diego, San Francisco, Houston,
and Lee County, Florida. Pre-program planning activities are ongoing
in other parts of California and Texas and as many as seven other
states. Should all of these advance to the implementation state, the
program will probably be fully subscribed.
Additional information on participating in the Value Pricing Pilot
Program can be found at several locations on the Internet including:
FHWA Discretionary Programs - Value Pricing Pilot Program Information,
fhwa.dot.gov/policy/13-hmpg, and http://www.hhh.umn.edu/centers/slp/conpric..
FEDERAL FUNDS IMPLICATIONS FOR REINSTATING TOLLS
Pursuing Toll Reinstitution Through the Pilot Program Exceptions
Essentially, the only way in which Connecticut might realistically be
able to entertain the idea of reinstituting tolls on I-95 or on some
or all of its other highways and avoid many of the negative federal
funding implications it would otherwise encounter would probably be to
try to participate in either of the two pilot programs authorized in
TEA-21 and explained above. However, there are obstacles to
participating in either program.
In the case of the Interstate Toll Pilot Program, the state would have
to couple the toll reinstatement with a needed reconstruction or
rehabilitation of the road. It would also have to present a convincing
case that this cannot be achieved with existing and projected federal
and state funding and thus requires toll revenue. The selected road
would also have to meet the other selection criteria with respect to
age, condition, and intensity of use and, perhaps more significantly,
that all the affected MPOs have been consulted regarding the placement
and nature of the tolls. While this might not be impossible, the
burden would probably be significant. It is also likely that, even if
it could meet these requirements, Connecticut would be able to select
only one road for consideration, which would almost certainly mean
that it would encounter a number of difficult political, legal, and
other hurdles. Finally, the selected road would be ineligible for the
use of any federal Interstate Maintenance funds the state receives.
The Value Pricing Pilot Program presents another possible opportunity,
but the program's 15-project limit may be reached before Connecticut
could advance a viable proposal, even if it wanted to. Another
difficulty is that Connecticut has relatively few existing HOV lanes
(I-91 north and east of Hartford) from which it could develop a
variable rate toll lane proposal and these may not be the corridors
that would provide the greatest benefit from a value pricing project.
Reinstating Tolls Under Other Conditions
Any toll reinstatement scenario that could not qualify under one of
the existing exceptions to the federal law would carry with it
significant federal funding implications. While there are relatively
few precedents in this regard, they show that two things likely would
be required: (1) a specific authorization from Congress to convert the
road to a toll facility and (2) repayment of all federal funds used on
the facility prior to initiation of toll collection or apportioned to
the state as a result of the toll-free mileage being used in the
apportionment formula for the state. There is also the possibility
that the Congressional authorization could require repayment of
federal funds before toll collection could begin.
Assuming that Congress would authorize such an action--which could
have significant national implications--it is likely that the
authorization would contain extensive repayment provisions requiring
the state to "buy out" the federal financial interests in the roads it
chooses to make toll-captive. Prior examples of these buy-out
requirements relating to the Maine Turnpike and the Kennedy Memorial
Highway (I-95 in Delaware and Maryland), both of which involved
considerably less money than would be involved for Connecticut, are
discussed in detail in OLR Report 91-R-1184. The report also contains
the specific statutory repayment provisions and some correspondence
from the FHWA division administrator outlining the federal
government's position with respect to Connecticut's situation. While
this information predates the changes made by ISTEA and TEA-21, the
federal position outlined in the correspondence seems to still be an
accurate appraisal of what Connecticut should expect if it pursues
reinstitution of tolls under these conditions.
Congressional approval might be required even if tolls are only
reinstated on the portion of I-95 covered by the 1983 secretarial
agreement because the state would be unilaterally abrogating the terms
of the agreement. While limiting tolls to this segment would reduce
the possible repayment exposure, this still appears to be several
hundred million dollars. The financial and other issues related to
toll reinstitution are discussed in OLR Report 95-R-0691. The exposure
continues to grow as significant amounts of additional federal money
are programmed each year for I-95 projects. Also, any consideration of
putting tolls back on I-95 must also consider reinstituting tolls on
the Merritt and Wilber Cross parkways because of the potential for
significant traffic diversion between the toll-captive and toll-free
expressways.
Putting an exact dollar amount on the potential federal funds
repayment liability is extremely difficult to do in the absence of a
specific plan since it depends on the extensiveness of the toll
system. For example, putting tolls back only on the parts of I-95 and
I-395 that were the Connecticut Turnpike would carry less of a
repayment responsibility than putting tolls on all Connecticut's
Interstate highways. Putting tolls back on the three Hartford area
bridges (Charter Oak, Putnam, and Bissell) from which they were
removed in the 1980's would increase the burden even more because toll
removal from these three structures allowed the use of federal funds
for the Charter Oak Bridge replacement, the I-291 connector, and the
Route 2/3 connector. These three projects involved $350-400 million.
Ultimately, the DOT is the entity best-suited to doing such an
analysis. In 1991 it estimated that a plan involving putting "gateway"
tolls at the borders on all of Connecticut's Interstate highways could
require repayment of $2.6 billion in federal funds received for these
roads since the 1960s. DOT also speculated that possibly as much as
$600 million of almost $1 billion in Interstate Trade-In funds might
also be scrutinized for possible repayment. (Interstate Trade-In funds
were made available to states that withdrew proposed segments of
planned Interstate Highway from the system and received equivalent
funding for alternate highway and transit projects in the affected
corridors.)
DOT has conducted no analyses since its 1991 estimate. But because the
state has continued to receive and expend large amounts of federal
funding since then, the amounts would almost certainly exceed $3
billion for the entire Interstate System and probably exceed $500
million for a
more restricted scenario involving only I-95. Currently, under TEA-21,
Connecticut averages more than $56 million annually under the
Interstate Maintenance Program and over $87 million annually in the
Bridge Program, significant portions of which are spent for bridges on
the Interstate System. Total annual apportionments for all the
programs under TEA-21 are more than $412 million (Source: 2001 Master
Transportation Plan, p. V-5).