[Federal Register Volume 60, Number 185 (Monday, September 25, 1995)]
[Notices]
[Pages 49435-49437]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-23688]



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DEPARTMENT OF TRANSPORTATION
Federal Highway Administration
[FHWA Docket No. 92-24]


Participation in the Congestion Pricing Pilot Program

AGENCY: Federal Highway Administration (FHWA), Department of 
Transportation.

ACTION: Notice; additional solicitation for participation.

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SUMMARY: This notice further extends FHWA's open invitation to State, 
local governments, or other public authorities, including toll 
authorities, to apply for participation in the Congestion Pricing Pilot 
Program (Pilot Program) established by Section 1012(b) of the 
Intermodal Surface Transportation Efficiency Act of 1991 (ISTEA). This 
notice amends the Pilot Program to support initiatives by toll 
authorities which involve tolls that vary by time of day and level of 
congestion.

DATES: The solicitation for participation in the Pilot Program will be 
held open until further notice.

FOR FURTHER INFORMATION CONTACT: Mr. John T. Berg, Highway Revenue and 
Pricing Team, HPP-13, (202) 366-0570; or Mr. Wilbert Baccus, Office of 
the Chief Counsel, HCC-32, (202) 366-0780; FHWA, 400 Seventh Street 
SW., Washington, DC 20590.

SUPPLEMENTARY INFORMATION: Section 1012(b) of the ISTEA (Pub. L. 102-
240, 105 Stat. 1914) authorizes the Secretary of Transportation (the 
Secretary) to create a Pilot Program by entering into cooperative 
agreements with up to five State or local governments or other public 
authorities, to establish, maintain, and monitor congestion pricing 
pilot projects. This section also provides that three of these 
agreements may involve the use of tolls on the Interstate System 
notwithstanding 23 U.S.C. 129, as amended, and 301. A maximum of $25 
million is authorized for each of the fiscal years 1992 through 1997 to 
carry out this program.
    In advance of completing its plan for implementing this program, 
the FHWA published a Federal Register notice on May 29, 1992 (57 FR 
22857), which presented general information about the Pilot Program and 
solicited public 

[[Page 49436]]
comment on a number of implementation issues [Docket No. 92-94]. The 
comment period closed on June 29, 1992. The FHWA published the initial 
solicitation for the Pilot Program in the Federal Register on November 
24, 1992 (57 FR 55293). The solicitation period closed on January 25, 
1993. The results of the first solicitation were summarized in the 
Federal Register on June 16, 1993 (58 FR 33293). The June 16 notice 
also extended the solicitation period until October 14, 1993. A Federal 
Register notice dated May 25, 1994, extended the solicitation deadline 
for program participation until further notice and broadened the 
program to include pre-project activities and pricing of high-occupancy 
vehicle lanes.
    Since that notice was issued, the FHWA has funded a variety of 
projects involving pre-project studies and implementation projects. 
Pre-project studies are underway in six cities in California, 
Minnesota, Oregon, Texas, and Colorado. An implementation project is in 
the preliminary stages in San Diego, California. In addition, Pilot 
Program funds are being used to support a monitoring and evaluation 
study of a privately funded highway project in California that will be 
the first U.S. toll road using congestion pricing techniques to manage 
demand. Negotiations are currently underway for additional congestion 
pricing projects in other States.

Additional Solicitation for Participation

    This notice expands the offer of Federal support currently 
available to toll authorities and others for initiatives that would 
make use of variable tolls as part of a demand management strategy. 
Through this notice, the Pilot Program is being amended to make Federal 
funds available for use as a revenue reserve fund to replace revenue 
losses associated with adoption of a congestion pricing toll strategy.
    The preferred method of charging tolls on existing toll facilities 
is to set a fixed toll per passenger vehicle and a fixed toll per axle 
for commercial vehicles. Fixed tolls may be favored because they 
clearly satisfy bond trust agreements and rate covenants regarding 
revenue to service debt. Another reason for this method of tolling may 
be an equity concern that all toll customers in the same vehicle class 
be charged the same fixed fee.
    However, fixed tolls do not necessarily account for the importance 
of the trip to the user or the additional cost responsibility of peak-
period users. They also preclude the possibility of using tolls that 
vary by time of day or level of congestion for demand management 
purposes.
    Although much remains to be learned about the response of travelers 
to congestion pricing practices, the use of variable tolls has the 
potential of both improving service on congested toll facilities and 
reducing the need for capacity expansion. To help overcome barriers to 
the testing and use of variable tolls and to encourage congestion 
pricing initiatives by toll authorities, the FHWA is modifying the 
existing offer of support from the Pilot Program. The Pilot Program can 
already provide support for efforts designed to lay the groundwork for 
congestion pricing applications, such as the development of public-
involvement programs, activities designed to overcome institutional 
barriers to implementing congestion pricing, and funding for automated 
vehicle identification or tolling equipment and operational costs for 
pricing applications.
    The new feature being offered through this notice is the 
availability of Pilot Program funds in the amount of up to $10 million 
to a participating toll authority, either directly or as an ISTEA 
Section 1012 loan of Federal funds from the State to the toll 
authority, to be used to establish a revenue reserve fund that would be 
available to replace potential revenue loss that might be associated 
with adoption of a congestion pricing toll strategy. The purpose of 
this new feature is to help provide assurance to the toll authority and 
others that the revenue stream associated with a toll facility would 
not be jeopardized by the adoption of a congestion pricing toll 
strategy. For example, a toll authority might propose a revenue-neutral 
pricing strategy with peak-period surcharges and/or off-peak discounts 
that would be designed to influence demand patterns to provide improved 
customer service or reduce the need for future capacity expansion. A 
revenue-neutral pricing strategy would also respond to the negative 
perception of congestion pricing as simply a new tax designed to raise 
additional revenue. An example from a toll road in France provides an 
interesting illustration where certain peak period tolls are set 25 to 
50 percent higher than the base rates and off-peak rates are reduced by 
25 to 50 percent. The new toll structure has significantly reduced 
congestion during the most congested periods and has been viewed as a 
successful strategy by users of the tollway. The toll authority 
designed the pricing strategy to be revenue neutral, and while modest 
revenue losses were noted initially, it appears that overall revenue 
impacts were low. Alternatively, a toll authority might propose to 
increase tolls to raise additional revenue to support capacity 
expansion or otherwise improve service, but through the adoption of a 
combination of peak-period surcharges and off-peak discounts the toll 
authority may be able to influence demand patterns to provide improved 
customer service or may be able to reduce the level of capacity 
expansion needed.
    In either case, because of the innovative pricing strategy being 
proposed, toll authorities need to be able to assure bondholders and 
rating agencies that revenues would not decrease or be lost as a result 
of the pilot test. The FHWA recognizes that forecasting traffic and 
revenue changes that might result from adoption of a peak-period 
pricing initiative is inherently uncertain, even if the objective of 
the initiative is to maintain revenue neutrality. For this reason, FHWA 
is offering toll authorities the possibility of using Pilot Program 
funds to establish a revenue reserve fund that could be drawn upon if 
revenues do fall below projected levels.
    The exact details of the funding arrangement of the Pilot Program 
would be worked out to suit the unique circumstances of individual 
proposers, but, in general, the proposer must provide to FHWA an 
estimate of the expected revenue stream expected to result from a 
variable toll strategy (based on an estimate by an independent traffic 
and revenue forecasting firm), assign a downside risk of revenue loss 
that might occur (e.g., if traffic projections prove to be overstated), 
and propose to establish a revenue reserve fund that would cover that 
potential amount of revenue loss. The maximum amount of Federal funds 
to be available to any proposer for a revenue reserve fund is $10 
million. The proposer would be required to provide the non-Federal 
share of not less than 20 percent as the initial deposit in the fund. 
At the time the agreement is executed between FHWA and the proposer, 
the Federal share of project funds will be obligated. Federal funds 
will be deposited in the revenue reserve fund immediately after the 
non-Federal share is deposited.
    Any revenue reserve funds that are unused after completion of the 
congestion pricing initiative may be used for other congestion relief 
projects, including capacity additions to the facility included in the 
pilot project or related facilities, transit improvements in the area 
of the pricing project, other congestion pricing initiatives, or other 
related uses. Proposals should identify specific plans for use of any 
excess funds, or describe how such use will be determined at a later 
date. The 

[[Page 49437]]
effectiveness of the proposed uses of these funds will be a 
consideration in the evaluation of proposals.
    The selection criteria contained in the FHWA's November 24, 1992, 
Federal Register notice will continue to be used as general selection 
criteria for implementation. However, clear priority will be given to 
projects that can be implemented during fiscal year (FY) 1996 so that 
the FHWA can evaluate data prior to expiration of ISTEA. Therefore, 
applications for FY 1996 revenue reserve funding for toll roads should 
be submitted by October 31, 1995, or as soon thereafter as possible. 
Proposals should include a brief discussion of the tolling strategy, 
expected timing of implementation, proposed fund management plan, and 
approvals needed. Any remaining program funds would continue to be 
available for pre-project and implementation efforts that would come 
later than FY 1996. To obtain further information or discuss potential 
revenue reserve fund projects contact Mr. John T. Berg at the address 
provided under FOR FURTHER INFORMATION CONTACT.

    Authority: 23 U.S.C. 315; 49 CFR 1.48; Sec. 1012(b), Pub. L. 
102-240, 105 Stat. 1914, 1938.

    Issued on: September 19, 1995.
Rodney E. Slater,
Federal Highway Administrator.
[FR Doc. 95-23688 Filed 9-22-95; 8:45 am]
BILLING CODE 4910-22-P