[Federal Register Volume 71, Number 248 (Wednesday, December 27, 2006)]
[Notices]
[Pages 77862-77868]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 06-9873]


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DEPARTMENT OF TRANSPORTATION

Federal Transit Administration

[Docket No. FTA-2006-25750]


Final Policy Statement on When High-Occupancy Vehicle (HOV) Lanes 
Converted to High-Occupancy/Toll (HOT) Lanes Shall Be Classified as 
Fixed Guideway Miles for FTA's Funding Formulas and When HOT Lanes 
Shall Not Be Classified as Fixed Guideway Miles for FTA's Funding 
Formulas

AGENCY: Federal Transit Administration (FTA), DOT.

ACTION: Final policy statement.

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SUMMARY: This Final Policy Statement describes the terms and conditions 
on which the Federal Transit Administration (FTA) will classify High-
Occupancy Vehicle (HOV) lanes that are converted to High-Occupancy/Toll 
(HOT) lanes as ``fixed guideway miles'' for purposes of the transit 
funding formulas administered by FTA. The Final Policy Statement also 
describes when HOT lanes shall not be classfied as fixed guideway miles 
in FTA's funding formulas.

DATES: Effective Date: The effective data of this Final Policy 
Statement is January 1, 2007.

ADDRESSES: Availability of the Final Policy Statement and Comments: 
Copies of this Final Policy Statement and comments and material 
received frot he public, as well as any documents indicated in the 
preamble as being available in the docket, are part of docket number 
FTA-2006-25750. For access to the DOT docket, please go to http://dms.dot.gov at any time or to the Docket Management System facility, 
U.S. Department of Transportation, Room PL-401 on the plaza level of 
the Nassif Building, 400 Seventh Street, SW., Washington , DC, between 
9 a.m. and 5 p.m., Monday through Friday, except Federal holidays.

FOR FURTHER INFORMATION CONTACT: David B. Horner, Esq., Chief Counsel, 
Federal Transit Administration, 400 Seventh Street, SW., Washington, DC 
20590-0001, (202) 366-4040, [email protected] or Robert J. Tuccillo, 
Associate Administrator, Office of Budget & Policy, Federal Transit 
Administration, 400 Seventh Street, SW., Washington, DC 20590-0001, 
(202) 366-4050, [email protected]. Office hours are from 8:30 a.. 
to 5 p.m., Monday through Friday, except Federal holidays.

SUPPLEMENTARY INFORMATION:

Background

    On September 7, 2006, the Federal Transit Administration (FTA) 
published in the Federal Register a proposed Policy Statement on When 
High-occupancy Vehicle (HOV) Lanes Converted to High-Occupancy/Toll 
(HOT) Lanes Shall Be Classified as Fixed Guideway Miles for FTA's 
Funding Formulas and When Hot Lanes Shall Not Be Classified as Fixed 
Guideway Miles for FTA'S Funding Formulas and When HOT Lanes Shall Not 
Be Classified as Fixed Guideway Miles for FTA's Funding Formulas 
(Notice of Proposed Policy) (71 FR 528490). In its Notice of Proposed 
Policy, FTA proposed the following terms and conditions on which it 
would classify HOV lanes that are converted to HOT lanes as ``fixed 
guideway miles'' for purposes of the transit funding formulas 
administered by FTA:

    FTA would classify HOT lanes as ``fixed guideway miles'' for 
purposes of the funding formulas administered under 49 U.S.C. 5307 
and 49 U.S.C. 5309, so long as each of the following conditions is 
satisfied: (i) The HOT lanes were previously HOV lanes reported in 
the National Transit Databased as ``fixed guideway miles'' for 
purposes of the funding formulas administered by FTA under 49 U.S.C. 
5307 and 49 U.S.C. 5309; (ii) The HOT lanes are continuously 
monitored and continue to meet performance standards that preserve 
free flow traffic conditions as specified in 23 U.S.C. 166(d); and 
(iii) Program income from the HOT lane facility, including all toll 
revenue, is used solely for `permissible uses.'

    In its Notice of Proposed Policy, FTA also discussed whether it 
would require certain transit and tolling policies with respect to HOT 
lanes classified as fixed guideway miles, and whether FTA would require 
the return of funds made available under Full Funding Grant Agreements 
made available for the construction of HOV lanes that have later 
converted to HOT lanes in accordance with this Final Policy Statement.
    34 parties submitted comments in response to FTA's Notice of 
Proposed Policy. FTA hereby responds to these comments by topic and in 
the folllowing order: (a) Policy Statement Generally; (b) HOT Lanes as 
``Fixed Guideway Miles''; (c) Monitoring and Performance Standards; (d) 
Program Income and Toll Revenues; (e) Transit Fares and Tolls; (f) 
Return of Funds under Full Funding Grant Agreements; and (g) 
Miscellaneous Comments.

(a) Policy Statement Generally

    The intended purpose of the Proposed Statement of Policy was to 
ensure that Federal transit funding for congested urban areas is not 
decreased when HOV facilitates are converted to variably-priced HOT 
lanes. The proposed policy also suggested a uniform approach by the 
Department of Transportation's (the Department's) operating agencies 
concerning HOV-to-HOT conversions, and supported the Department's 
policy of encouraging HOV-to-HOT conversions. Eight commenters agreed 
generally with FTA's Notice of Proposed Policy, Six parties submitted 
general comments. Four commenters asked FTA to defer its final policy 
determination until the impacts are more apparent. One commenter 
articulated four policy principles that discuss ways to integrate 
transit into toll roads and HOT lanes.\1\ Another commenter stated that 
one of FTA's top priorities in developing this policy statement should 
be to foster an increase in alternative transportation ridership, 
whether that alternative is carpool, transit, or other shared-mode, and 
suggested four ways this policy

[[Page 77863]]

statement could better support this end.\2\
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    \1\ The suggested policy principles are as follows: (1) 
Metropolitan areas and states should have greater latitude to use 
roadway tolling; (2) Tolling should be a supplement to and not a 
substitution for existing transportation funding; (3) Local sponsors 
should have the discretion to fund public transportation with toll 
revenues; and (4) Tolling should be permitted as a long-term 
strategy.
    \2\ The four suggestions on how FTA's policy statement could 
foster alternative transportation ridership are as follows: (1) The 
policy statement should support transportation demand management and 
HOV usage; (2) Greater emphasis on enforcement should be considered; 
(3) FTA should tie fixed guideway qualification to integrity of 
lane; and (4) FTA should emphasize language at 23 U.S.C. 166(c)(3), 
which section requests that States, in the use of toll revenues, 
give priority consideration to projects for developing alternatives 
to single occupancy vehicle and projects for improving highway 
safety.
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    FTA Response: The commenters that ask FTA to defer its final policy 
determination until the impacts are more apparent appear to 
misunderstand the scope of FTA's Notice of Proposed Policy FTA's HOV-
to-HOT policy will not result in all HOT lane facilities being 
classified as ``fixed guideway miles'' for purposes of FTA's funding 
formulas. Rather, only those HOT lane facilities converted from HOV 
lanes that have been previously classified as ``fixed guideway miles'' 
shall qualify for continued classification as such, subject to the 
conditions set forth in this Final Policy Statement.
    FTA recognizes the four policy principles summarized at footnote 
(1) and responds by reminding the commenter that without this Final 
Policy Statement transit formula funding for congested urban areas 
would decrease if existing HOV facilities were converted to variably-
priced HOT lanes. For this reason, FTA believes that this policy 
statement (1) Gives states greater latitude to use tolling without 
negatively impacting available transit resources; (2) enhances existing 
transportation funding through the collection of toll revenues; (3) 
grants project sponsors discretion to use toll revenues for any 
``permissible use''; and (4) encourages variably-priced HOT lanes as a 
long-term strategy consistent with the policy of the Department.
    In response to the commenter that believes FTA should consider 
fostering an increase in alternative transportation ridership as one of 
its top priorities in developing this guidance, FTA reemphasizes its 
primary in drafting this guidance--to ensure that Federal transit 
funding for congested urban areas is not decreased when existing HOV 
facilities are converted to HOT lanes. FTA responds to the commenter's 
four suggestions summarized at footnote (2) in turn with respect to the 
first suggestion, this policy statement supports HOV usage, but 
recognizes that many HOV facilities are underutilized; the ability of 
HOT lanes to introduce additional traffic to existing HOV facilities, 
while using pricing and other management techniques to control the 
number of additional motorists, maintain high service levels and 
provide new revenue, make HOT lanes an effective means of reducing 
congestion and improving mobility. With respect to the second and third 
suggestions, FTA will rely on the management, operation, monitoring and 
enforcement provisions of 23 U.S.C. 166(d). with respect to the fourth 
suggestions, this guidance does not modify or enhance language at 23 
U.S.C. 166(c)(3).
    Accordingly, FTA adopts as final the general provisions of its 
Notice of Proposed Policy.

(b) HOT Lanes Were Previously HOV lanes reported in the National 
Transit Database as ``Fixed Guideway Miles''

    In its Notice of Proposed Policy, FTA requested comments on its 
proposal to classify HOT lanes as ``fixed guideway miles'' for purposes 
of the funding formulas administered under 49 U.S.C. 5307 and 49 U.S.C. 
5309, so long as each of three conditions is satisfied. The first 
condition is that the HOT lanes were previously HOV lanes reported in 
the National Transit Database as ``fixed guideway miles'' for purposes 
of the funding formulas administered by FTA under 49 U.S.C. 5307 and 49 
U.S.C. 5309. FTA received thirty five comments on this condition, with 
some parties offering multiple comments. Eight commenters favored FTA's 
proposed policy to classify HOT lanes as ``fixed guideway miles`` for 
purposes of the funding formulas administered by FTA so long as each of 
three conditions is satisfied. Eighteen commenters asked FTA to expand 
its policy to classify all lanes as ``fixed guideway miles0z4 for 
purposes of the funding formulas administered by FTA, regardless of 
whether the HOT lane facility is newly constructed or was converted 
from an existing HOV facility. Seven commenters asked FTA not to fund 
HOT lane facilities at a level that would dilute the pool of transit 
funding available for existing ``fixed guideway'' facilities. Two 
commenters proposed that FTA require converted HOV lanes to have 
operated as HOV lanes for seven years prior to conversion to HOT lanes 
and before FTA would classify them as ``fixed guideway miles'' for 
purposes of its funding formulas.
    FTA Response: FTA recognizes that all HOT lanes provide similar 
benefits to metropolitan areas that are experiencing severe and 
worsening congestion, regardless of whether the facility is newly 
constructed or converted from HOV or general purpose lanes. However, 
the purpose of this policy statement is to ensure that Federal transit 
funding for congested urban areas is not decreased when existing HOV 
facilities are converted to variably-priced HOT lanes in an effort by 
localities to reduce congestion, improve air quality, or maximize 
throughput using excess HOV lane capacity and to promote a uniform 
approach by the Department's operating agencies concerning HOV-to-HOT 
conversions. If FTA were to classify all HOT lanes as ``fixed guideway 
mile'' without a commensurate increase in overall funding levels, it 
could negatively impact the ability of many transit operators to 
finance needed capital maintenance on existing infrastructure. For this 
reason, FTA limited the scope of this policy statement to classify as 
``fixed guideway miles'' only those HOT lane facilities that are 
converted from HOV lanes that previously have been classified as 
``fixed guideway miles.'' In this way, FTA will ensure that Federal 
transit funding for congested urban areas is not decreased when 
existing HOV facilities are converted to variably-priced HOT lanes. FTA 
believes it appropriate to leave for Congress, and not to determine on 
an administrative basis, the question of whether and on what terms 
facilities newly constructed as HOT lanes or general purpose lanes 
converted directly to HOT lanes shall be classified as ``fixed guideway 
miles'' given the substantial reallocation of formula funds among 
transit authorities that might result over time if such facilities were 
classified as ``fixed guideway miles.''
    FTA has added the following language by footnote to section (b)(1) 
of its Final Statement of Policy in response to the recommendation that 
FTA require HOV lanes to have operated as HOV lanes for seven years 
before they may be converted to HOT lanes and remain classified as 
``fixed guideway miles:''

    FTA apportions amounts made available for fixed guideway 
modernization under 49 U.S.C. 5309 pursuant to fixed guideway 
factors detailed at 49 U.S.C. 5337. One of these fixed guideway 
factors, located at 49 U.S.C. 5337(a)(5)(B), apportions a percentage 
of the available fixed guideway modernization funds to `fixed 
guideway systems placed in revenue service at least 7 years before 
the fiscal year in which amounts are made available.' For purposes 
of 49 U.S.C. 5337(a)(5)(B), (i) no HOV facility that has been in 
revenue service at least 7 years shall forfeit its eligibility for 
fixed guideway modernization funds because it is converted to a HOT 
lane facility in accordance with this Final Policy Statement; and 
(ii) no HOV facility that has been in revenue service for less than 
seven years shall forfeit the years it has accrued thereunder 
because it is converted to a HOT lane facility and for so

[[Page 77864]]

long as the HOT lane facility maintains its ``fixed guideway'' 
classification in accordance with this policy statement, it shall 
continue to accrue years thereunder.

    Accordingly, FTA will not require that converted HOV lanes operate 
as HOV lanes for seven years before they may be converted to HOT lanes 
and remain classified as ``fixed guideway miles'' Pursuant to this 
Final Policy Statement.

(c) Monitoring and Performance Standards

    In its Notice of Proposed Policy, FTA requested comments on its 
proposal to classify HOT lanes as ``fixed guideway miles'' for purposes 
of the funding formulas administered under 49 U.S.C. 5307 and 49 U.S.C. 
5309, so long as each of three conditions is satisfied. The second 
condition is that the HOT lanes are continuously monitored and continue 
to meet performance standards that preserve free flow traffic 
conditions as specified in 23 U.S.C. 166(d). FTA received twenty 
comments on this topic. Four commenters favored FTA's proposed 
position. Seven commenters proposed that FTA require a minimum level of 
transit service on a HOT land facility before its lanes could be 
classified as ``fixed guideway miles'' for purposes of the funding 
formulas administered by FTS. Five commenters requested that FTA adopt 
more exacting performance standards. One commenter requested that FTA 
state explicitly that local agencies may increase HOV occupancy levels 
as necessary to ensure free-flow conditions needed for transit bus 
service. Another commenter asked FTA to amend its policy to state that 
single occupant vehicles may be permitted on HOT lanes that are 
classified as ``guideway miles,'' provided that the lanes satisfy the 
conditions set forth FTA's Final Policy Statement. One commenter 
requested that FTA acknowledge that compliance with state law governing 
performance standards for HOT lanes suffices in terms of meeting the 
condition that the HOT lanes are continuously monitored and continue to 
meet performance standards that preserve free fow traffic conditions as 
specified in 23 U.S.C. 166(d). One commenter asked FTA to require a 
study on degradation of transit service before an HOV facility may 
convert to a HOT lane facility and be classified as ``fixed guideway 
miles'' for purposes of funding formulas administered by FTA.
    FTA Response: A number of commenters recommend a more exacting 
performance standard, including a minimum level of transit service. FTA 
recognizes that a more exacting standard would be necessary if all HOT 
land facilities were eligible for classification as ``fixed guideway 
miles,'' for under this scenario rural or suburban HOT lane facilities 
with little or no transit service could receive a portion of the 
Federal transit funds needed by the Nation's largest transit providers 
to maintain their current infrastructure. For this reason, FTA has 
limited the benefits of this policy to HOV lanes that have already been 
classified as ``fixed guideway miles.'' Current designation as a 
``fixed guideway mile'' indicates that a facility has a minimum level 
of transit service. FTA believes that compliance with the performance 
standards codified at 23 U.S.C. 166(d) is sufficient to ensure free 
flow traffic conditions and to avoid degradation of transit service on 
these facilities when converted from HOV lanes to HOT lane facilities. 
Moreover, HOV facilities constructed using capital funds available 
under 49 U.S.C. 5309(d) and (e) could be required, when an HOV facility 
converts to a HOT lane facility, to achieve a higher performance 
standard than required under 23 U.S.C. 166(d). In all circumstances, 
FTA shall require real-time monitoring of traffic flows to ensure on-
going compliance with 23 U.S.C. 166(d).
    FTA will not acknowledge that compliance with state law governing 
HOT land performance standards will satisfy FTA's requirements in all 
circumstances. Rather, FTA shall require all HOT land facilities to 
comply with the statutory requirements of 23 U.S.C. 166 to be 
classified as ``fixed guideway miles'' for purposes of FTA's funding 
formulas. It may be the case that the laws of certain states require a 
higher level of performance than the Federal standard articulated here. 
In these instances, the lesser Federal standard should present no 
obstacle to HOT conversion.
    With respect to the request that FTA require a study on the 
degradation of transit service before an HOV facility may convert to a 
HOT facility, FTA (i) believes that compliance with the free flow 
traffic requirements of 23 U.S.C. 166 is sufficient to avoid the 
degradation of transit service on these facilities and (ii) will not 
require that project sponsors incur the additional expense of a formal 
study on the degradation of transit service.

(d) Program Income and Toll Revenues

    In its Notice of Proposed Policy, FTA requested comments on its 
proposal to classify HOT lanes as ``fixed guideway miles'' for purposes 
of the funding formulas administered under 49 U.S.C. 5307 and 49 U.S.C. 
5309, so long as each of three conditions is satisfied. The third 
condition is that program income from the HOT lane facility, including 
all toll revenue, is used solely for ``permissible uses.'' FTA received 
twenty five comments on this condition. Five commenters favored FTA's 
proposed policy. Seven commenters requested that FTA expressly state in 
its final policy that grantees may use toll revenues for transit 
operating costs. Four commenters stated that FTA funds should not be 
used for the maintenance and/or construction of HOT lane facilities. 
Four commenters asked that FTA require all Federal transit funds 
generated by HOT lane facilities because of their classification as 
``fixed guideway miles'' be directed to the ``designated receipt'' for 
Federal transit funding. Three commenters stated that FTA should not 
permit the operators of HOT lane facilities to finance a HOT lane 
facility's operating losses with Federal funds generated by the 
facility's operating losses with Federal funds generated by the 
facility's classification as ``fixed guideway miles.'' One commenter 
asked that FTA not limit the use of HOT lane toll revenues to transit. 
Another commenter asked FTA to require that priority of payment be 
provided for in the project implementation documents.
    FTA Response: Based on the recommendation of several commenters 
that FTA expressly state that grantees may use toll revenues for 
transit operating costs, and pursuant to CFR 18.25, which states that 
FTA ``grantees may retain program income for allowable capital or 
operating expenses,'' FTA as added transit operating costs to its 
description of ``permissible uses'' at section (iii)(b) of its Final 
Policy Statement.
    FTA disagrees with the comment that its grantees should not use 
Federal transit funds for the maintenance and/or construction of HOT 
lane facilities. The commenter did not indicate whether it referred to 
the use of grant funds or program income. While FTA recognizes both HOV 
and HOT lanes as permissible incidental uses of FTA-funded assets, FTA 
grant funds shall not be used to construct a HOT lane facility beyond 
what is allowed by 49 U.S.C. 5302(a)(4), as implemented by FTA's 
regulations, as amended from time to time.\3\ Any facility that 
converts from an HOV to a HOT facility, and retains its classification 
as a ``fixed guideway'' by satisfying the conditions of this policy 
statement, may use program income in accordance with this Final Policy 
Statement, the Department's regulation at 49 CFR 18.25, and other 
applicable statutes, regulations and requirements.

[[Page 77865]]

Similarly, FTA disagrees with the comment that it should limit the use 
of HOT lane toll revenues to transit. In many cases, a HOT lane 
facility may have received (or receives) funding from FTA and another 
Federal agency, such that use of the facility's program income is 
governed by more than one Federal program. In these instance, FTA's 
restrictions concerning permissible use shall not apply to more than 
transit's allocable share of the facility's program income, as 
described elsewhere in this Final Policy Statement. FTA will not 
require recipients to assign priority in payment to any permissible 
use.
    Federal transit law requires FTA to disburse certain funds to the 
designated recipient. The designated recipient for FTA formula funds 
shall not be changed because the grantee converted an HOV facility to a 
HOT facility, so long as the facility maintains its classification as a 
``fixed guideway'' by satisfying the conditions of this Final Policy 
Statement. FTA shall not prevent such designated recipients from using 
the funds for eligible activities in accordance with the process for 
programming transit funds described at 23 CFR 450.324(1) of the joint 
FTA-FHWA planning regulations.

(e) Transit Fares and Tolls

    In its Notice of Proposed Policy, FTA requested comments on transit 
fares and tolls on HOT lane facilities. FTA stated that it would not 
condition the receipt of Federal transit funds by a qualifying HOT lane 
facility on the tolling authority's adoption of policies concerning the 
price of transit services on the HOT lane facility or the tolls payable 
by single occupant vehicles. FTA would allow grantees and tolling 
authorities to develop their own fare structures for transit services 
and tools on HOT lane facilities. FTA received sixteen comments on this 
topic. Without further comment, five commenters agreed with FTA's 
proposed policy not to regulate toll prices. Ten commenters stated that 
transit vehicles should be exempt from tolls charged on federally-
funded HOT lane facilities for its lanes to be classified as ``fixed 
guideway miles'' for purposes of the funding formulas administered by 
FTA. One commenter asked FTA to require that transit fares and tolls 
remain competitive.
    FTA Response: Federal transit law prohibits FTA from regulating the 
``rates, fares, tolls, rentals, or other charges prescribed by any 
provider of public transportation.'' 49 U.S.C. 5334(b)(1). Accordingly, 
FTA shall not condition the receipt of Federal transit funds by a 
qualifying HOT lane facility on the tolling authority's adoption of 
policies concerning the price of transit services on the HOT lane 
facility or the tolls payable by single occupant vehicles. FTA will 
allow grantees and tolling authorities to develop their own fare 
structures for transit services and tolls, respectively, on HOT lane 
facilities. Transit fares shall remain subject to 49 U.S.C. 5332 
(Nondiscrimination) and 49 U.S.C. 5307 (Urbanized area formula grants).

(f) Return of Funds under Full Funding Grant Agreements

    In its Notice of Proposed Policy, FTA requested comments on its 
proposed policy that, in the event that an HOV facility is converted to 
a HOT facility and the HOV facility has received funds through FTA's 
New Starts program, FTA would not require the grantee to return such 
funds so long as the facility complied with the conditions set forth in 
the Notice of Proposed Policy. FTA received one comment on this topic. 
The commenter expressed concern that, when the grantee is not also the 
tolling authority, the tolling authority may make business decisions 
contrary to the interest of the grantee/transit provider, thus forcing 
the grantee/transit provider to repay New Starts funding to FTA.
    FTA Response: It appears that the commenter misunderstands the 
scope of FTA's proposed policy, which states that ``in the event that 
an HOV facility is converted to a HOT facility and the HOV facility has 
received funds through FTA's New Starts program, FTA would not require 
the grantee to return such funds so long as the facility complied with 
the conditions set forth in this guidance.'' If a grantee wishes to 
convert an existing HOV facility to a HOT lane facility and maintain 
the classification of its facility as a ``fixed guideway for purposes 
of FTA's funding formulas, it must comply with the conditions set forth 
in this Final Policy Statement. To the extent that the facility is 
subject to a Full Funding Grant Agreement, the grantee is obligated to 
abide by the requirements thereof, just as it is bound to any other 
contractual or legal obligation.''

(g) Miscellaneous Comments

    FTA received seven miscellaneous comments in response to its Notice 
of Proposed Policy. One commenter asked FTA to address a circumstance 
where a previously eligible HOV lane (or a portion of an HOV lane) is 
temporarily or permanently taken out of service in order to be 
reconstructed and expanded into an improved HOT lane facility in the 
same corridor. A second commenter requested that FTA indicate whether 
it would classify as ``fixed guideway miles'' bus-only shoulders 
converted to HOT lanes when the bus-only shoulders are currently 
classified as ``fixed guideway miles.'' Another commenter asked FTA to 
clarify its policy with respect to variable-priced express lanes. Two 
commenters asked FTA to require coordination between privately operated 
HOT lane facilities and public transportation agencies. One commenter 
asked FTA to connect this policy with transit supportive land use. And 
another commenter argued that FTA'[s policy should not affect New 
Starts project eligibility criteria.
    FTA Response: FTA recognizes that it may be necessary to 
temporarily remove an HOV lane from service in order to convert it into 
a HOT lane facility. South a HOT lane facility will not lose its 
classification as a ``fixed guideway'' so long as it satisfies the 
conditions of this Final Policy Statement.
    FTA agrees with the proposal that it classify as ``fixed guideway 
miles'' bus-only shoulders converted to HOT lanes as long as the bus-
only shoulders are currently classified as ``fixed guideway miles'' and 
satisfy the conditions of this Final Policy Statement. Accordingly, FTA 
has added the following language to its Final Policy Statement by 
footnote at section (b)(1):

    FTA shall classify HOT lane facilities converted from bus-only 
shoulders as ``fixed guideway miles,'' so long as such HOT lanes 
satisfy conditions (ii) and (iii) of this Final Policy Statement and 
were bus-only shoulders previously reported in the National Transit 
Database as ``fixed guideway miles'' for purposes of the funding 
formulas administered by FTA under 49 U.S.C. 5307 and 5309.

    The commenter that asked FTA to consider variably-priced express 
lanes did not provide enough information for FTA to determine whether 
such facility could satisfy the conditions of its Proposed Statement of 
Policy. FTA responds by reiterating its statement at section (b)(i) of 
the Final Policy Statement, that with the exception of bus-only 
shoulders, ``neither non-HOV facilities nor facilities constructed as 
HOT lanes would be eligible for classification as fixed `guideway 
miles.' ''
    The comment requesting that FTA require coordination between 
privately operated HOT lane facilities and public transportation is 
beyond the scope of this policy statement. FTA's Planning and 
Assistance Standards are located at 49 CFR part 613.
    Similarly, the comments requesting that FTA connect this policy 
with transit supportive land and that this policy not affect FTA's New 
Starts

[[Page 77866]]

project eligibility criteria are beyond the scope of this policy 
statement, which is limited to the classification of HOT lane 
facilities as ``fixed guideway miles'' for purposes for FTA's funding 
formulas.

Final Policy Statement on HOV-to-HOT Conversion

    The following Final Policy Statement explains when FTA shall 
classify HOV lanes converted to HOT lanes as ``fixed guideway miles'' 
for FTA's funding formulas and when FTA shall not classify HOT lanes as 
``fixed guideway miles'' for its funding formulas.

Background

    Since the early 1980s, transportation officials have sought to 
manage traffic congestion and increase vehicle occupancy by means of 
High-Occupancy Vehicle (HOV) lanes--highway lanes reserved for the 
exclusive use of car pools and transit vehicles. Today, there are over 
130 freeway HOV facilities in metropolitan areas in the US,\4\ of which 
approximately 10 have received funding through FTA's Major Capital 
Investment program and approximately 80 are counted as ``fixed guideway 
miles'' for purposes of FTA's formula grant programs.\5\ Since 1990, 
however, HOV mode share in 26 of the 40 largest metropolitan areas has 
steadily declined,\6\ while both excess capacity on HOV lanes and 
congestion on general purpose lanes have increased.\7\
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    \4\ Office of Operations, Federal Highway Administration, U.S. 
Department of Transportation.
    \5\ National Transit Database.
    \6\ Journey to Work Trends in the United States and its Major 
Metropolitan Areas 1960-2000, Publication No. FHWA-EP-03-058 
Prepared for: US Department of Transportation, Federal Highway 
Administration, Office of Planning, Prepared by: Nancy McGuckin, 
Consultant, Nanda Srinivasan, Cambridge Systematics, Inc.
    \7\ Office of Operations, Federal Highway Administration, U.S. 
Department of Transportation. Demand for highway travel by Americans 
continues to grow as population increases, particularly in 
metropolitan areas. Construction of new highway capacity to 
accommodate this growth in travel has not kept pace. Between 1980 
and 1999, route miles of highways increased 1.5 percent while 
vehicle miles of travel increased 76 percent. The Texas 
Transportation Institute estimates that, in 200, the 75 largest 
metropolitan areas experienced 3.6 billion vehicle-hours of delay, 
resulting in 5.7 billion gallons in wasted fuel and $67.5 billion in 
lost productivity. And traffic volumes are projected to continue to 
grow. The volume of freight movement alone is forecast to nearly 
double by 2020. Congestion is largely thought of as a big city 
problem, but delays are becoming increasingly common in small cities 
and some rural areas as well.
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    An increasing number of metropolitan areas are considering new 
demand management strategies as alternative to HOB lanes. One emerging 
alternative is the variably-priced High-Occupancy/Toll (HOT) lane. HOT 
lanes combine HOV and pricing strategies by allowing Single-Occupant 
Vehicles (SOVs) to access HOV lanes by paying a toll. The lanes are 
``managed'' through pricing to maintain free flow conditions even 
during the height of rush hours.
    HOT lanes provide multiple benefits to metropolitan areas that are 
experiencing severe and worsening congestion and significant 
transportation funding shortages. First, variably-priced HOT lanes 
expand mobility options in congested urban areas by providing an 
opportunity for reliable travel times for users prepared to pay a 
premium for this service. HOT lanes also improve the efficiency of HOV 
facilities by allowing toll-paying SOVs to utilize excess lane capacity 
on HOVs. In addition, HOT lanes generate new revenue which can be used 
to pay for transportation improvements, including enhanced transit 
service.
    In August of 2005, recognizing the advantages of HOT lanes, 
Congress enacted Section 112 of the Safe, Accountable, Flexible, 
Efficient Transportation Equity Act: A Legacy for Users (SAFETEA-LU), 
codified at 23 U.S.C. 166, to authorize States to permit use of HOV 
lanes by SOVs, so long as the performance of the HOV lanes is 
continuously monitored and continues to meet specified performance 
standards. The U.S. Department of Transportation (Department) has 
strongly endorsed the conversion of HOV lanes to variably HOT lanes, 
most recently in its Initiative to Reduce Congestion on the Nation's 
Transportation Network. It is the Department's policy to encourage 
jurisdictions to consider ``HOV-to-HOT'' conversion as a means of 
congestion relief and possible revenue enhancement.
    The ability of HOT lanes to introduce additional traffic to 
existing HOV facilities, while using pricing and other management 
techniques to control the number of additional motorists, maintain high 
service levels and provide new revenue, make HOT lanes an effective 
means of reducing congestion and improving mobility. For this reason, 
and given the new authority enacted by Congress to promote ``HOV-to-
HOT'' conversions, many States, transportation agencies and 
metropolitan areas are seriously considering applying variable pricing 
to both new and existing roadways. For example, the current long-range 
transportation plan for the Washington, DC, metropolitan area includes 
four new HOT lanes along 15 miles of the Capital Beltway in Virginia, 
and six new variably lanes along 18 miles on the Inter-County Connector 
in Montgomery and Prince george's Counties in Maryland.\8\ Virginia ia 
also exploring the possibility of converting existing HOV lanes along 
the I-95/395 corridor into HOT lanes.\9\ Maryland is considering 
express toll lanes along I-495, I-270, as well as along other 
facilities.\10\ Similarly, in San Francisco, the Metropolitan 
Transportation Commission's Transportation 2030 Plan advocates 
development of a HOT network that would convert that region's existing 
HOV lanes to HOT lanes;\11\ Houston's 2025 Regional Transportation Plan 
includes plans to implement peak period pricing within the managed HOT 
lanes of the major freeway corridors in the region;\12\ and the Miami-
Dade, Florida 2030 Transportation Plan includes conversion of existing 
HOV lanes to reversible HOV/HOT lanes to provide additional capacity to 
I-95 in Miami-Dade County.\13\ Other jurisdictions are exploring the 
potential for HOT lanes with grants provided by the Department's Value 
Pricing Pilot Program.\14\ These include the Port Authority of New 
York/New Jersey; San Antonio, Texas; Seattle, Washington; Atlanta, 
Georgia; and Portland, Oregon.\15\
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    \8\ Letter to U.S. Department of Transportation, August 28, 
2006, from National Capital Region Transportation Planning Board.
    \9\ Letter to U.S. Department of Transportation, August 28, 
2006, from National Capital Region Transportation Planning Board.
    \10\ Letter to U.S. Department of Transportation, August 28, 
2006, from National Capital Region Transportation Planning Board.
    \11\ A Vision for the Future Transportation 2030, February 2005, 
Chapter 1, Page 6.
    \12\ 2025 Regional Transportation Plan Houston-Galveston Area, 
June 2005, Page 31.
    \13\ Miami-Dade Transportation Plan (to the Year 2030) December 
2004, FINAL DRAFT, Page 24.
    \14\ Federal Highway Administration, U.S. Department of 
Transportation. The Department's Value Pricing Pilot Program (VPPP), 
initially authorized by the Intermodal Surface Transportation 
Efficiency Act as the Congestion Pricing Pilot Program and continued 
as the VPPP under SAFETEA-LU, encourages implementation and 
evaluation of value pricing pilot projects, offering flexibility to 
encompass a variety of innovative applications including areawide 
pricing, pricing of multiple or single facilities or corridors, 
single lane pricing, and implementation of other market-based 
strategies.
    \15\ Federal Highway Administration, U.S. Department of 
Transportation.
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    While an increasing number of metropolitan planning organization 
and State departments of transportation are study the HOT lane concept 
as a strategy to improve mobility, six HOT lane facilities currently 
operate in the United States: State Route 91 (SR 91) Express Lanes in 
Orange County, California; the I 15 FasTrak in San Diego, California; 
the Katy Freeway

[[Page 77867]]

QuickRide and the Northwest Freeway (US 90) in Harris County, Texas; I 
394 in Minneapolis and St. Paul, Minnesota; and I 25 in Denver, 
Colorado.

Prior FTA Policy

    Since 2002, FTA's policy has been to continue to classify the lanes 
of an HOV facility converted to HOT lanes as ``fixed guideway miles'' 
for funding formula purposes on the condition that the facility meets 
two requirements: (i) the HOT facility manages SOV use so that it does 
not impede the free-flow and high speed of transit and high-occupancy 
vehicles and (ii) toll revenues collected on the facility will be used 
for mass transit purposes.\16\ FTA has considered requiring as an 
additional condition for eligibility that the lowest toll payable by 
SOVs on a HOT facility be not less than the fare charged for transit 
services on the HOT facility.
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    \16\ In a Letter to U.S. Representative Randall Cunningham, 
dated June 10, 2002, concerning the I-15 FasTrak facility in San 
Diego, FTA stated: ``* * * FTA will recognize, for formula 
allocation purposes, exclusive fixed guideway transit facilities 
that permit toll-paying SOVs on an incidental basis (often called 
high occupancy/toll (HOT) lanes) under the following conditions: the 
facility must be able to control SOV use so that it does not impede 
the free flow and high speed of transit and HOV vehicles, and the 
toll revenues collected must be used for mass transit purposes.''
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Final FTA Policy

    (a) Purpose of Final Policy. This Final Statement of Policy will 
help ensure that Federal transit funding for congested urban areas is 
not decreased when existing HOV facilities are converted to variably-
priced HOT lanes in an effort by localities to reduce congestion, 
improve air quality, and maximize throughput using excess HOV lane 
capacity. The revised FTA policy will also promote a uniform approach 
by the Department's operating agencies concerning HOV-t0-HOT 
conversions. In particular, FTA's policy will be coordinated with the 
statutes enacted by Congress under Section 112 of SAFETEA-LU applicable 
to the Federal Highway Administration intended to simplify conversion 
of HOV lanes to HOT lanes. The policy statement will also support the 
Department's policy of encouraging HOV-to-HOT conversions.
    Final Policy. FTA shall classify HOT lanes as ``fixed guideway 
miles'' for purposes of the funding formulas administered under 49 
U.S.C. 5307 and 49 U.S.C. 5309, so long as each of the following 
conditions is satisfied:
    The HOT lanes were previously \17\ HOV lanes reported in the 
National Transit Database as ``fixed guideway miles'' for purposes of 
the funding formulas administered by FTA under 49 U.S.C. 5307(b) and 49 
U.S.C. 5309(a)(E).\18\ Facilities that were not eligible HOV lanes 
prior to being converted to HOT lanes will remain ineligible for 
inclusion as fixed guideway miles in FTA's funding formulas. Therefore, 
neither non-HOV facilities converted directly to HOT facilities nor 
facilities constructed as HOT lanes will be eligible for classification 
as ``fixed guideway miles.'' \19\
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    \17\ With respect to whether HOT lanes were previously HOV lanes 
reported in the National Transit Database (``HTD'') as ``fixed 
guideway miles,'' HOV facilities classified as ``fixed guideway 
miles'' in the NTD on or before data of the publication of this 
Final Policy Statement shall satisfy this requirement. With data of 
publication of this Final Policy Statement, such HOV lanes may not 
be converted to HOT lanes and maintain their classification as 
``fixed guideway miles'' unless: (i) the HOV lanes have reported to 
the NTD as ``fixed guideway miles'' for three years to their 
conversion to HOT lanes, (ii) users of public transportation have 
accounted for at least 50% of the passenger miles traveled on the 
HOV lanes in their last twelve months of service (or once the HOV 
lanes are converted to HOT lanes, users of public transportation are 
reasonably expected to account for at least 50% of the passenger 
miles traveled on the HOT lanes in their twelve months of service), 
or (iii) in his or her discretion, the Administrator so approves.
    \18\ FTA apportions amounts made available for fixed guideway 
modernization under 49 U.S.C. 5309 pursuant to fixed guideway 
factors detailed at 49 U.S.C. 5337. One off these fixed guideway 
factors, located at 49 U.S.C. 5337(a)(5)(B), apportions a percentage 
of the available fixed guideway modernization funds to `fixed 
guideway systems placed in revenue service at least 7 years before 
the fiscal year in which amounts are made available.' For purposes 
of 49 U.S.C. 5337(a)(5)(B), (i) no HOV facility that has been in 
revenue service at least 7 years shall forfeit its eligibility for 
fixed guideway modernization funds because it is converted to a HOT 
lane facility in accordance with this Final Policy Statement; and 
(ii) no HOV facility that has been in revenue service for less than 
seven years shall forfeit the years it has accrued thereunder 
because it is converted to a HOT lane facility and for so long as 
the HOT lane facility maintains its ``fixed guideway'' in accordance 
with this Final Policy Statement, it shall continue to accrue years 
thereunder.
    \19\ FTA recognizes one exception to this statement--bus-only 
shoulders. Accordingly, FTA shall classify HOT lane facilities 
converted from bus-only shoulders as ``fixed guideway miles,'' so 
long as such HOT lanes satisfy conditions (ii) and (iii) of this 
Final Policy Statement and were bus-only shoulders previously 
reported in the National Transit Database as ``fixed guideway 
miles'' for purposes of the funding formulas administered by FTA 
under 49 U.S.C. 5307 and 5309.
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    (ii) The HOT lanes are continuously monitored and continue to meet 
performance standards that preserve free flow traffic conditions as 
specified in 23 U.S.C. 166(d) 23 U.S.C. 166(d) provides operational 
performance standards for an HOV facility converted to a HOT facility. 
It also requires that the performance of the facility be continuously 
monitored and that it continue to meet specified performance standards. 
Due to original project commitments, HOV facilities constructed using 
capital funds available under 49 U.S.C. 5309(d) or (e) may be required, 
when converted to HOT lanes, to achieve a higher performance standard 
than required under 23 U.S.C. 166(d). Standards for operational 
performance and determining degradation of operational performance for 
facilities constructed with funds from FTA's New Starts program shall 
be determined by FTA on a case-by-case basis. FTA will require real-
time monitoring of traffic flows to ensure on-going compliance with 
operational performance standards.
    (iii) Program income from the HOT lane facility, including all toll 
revenue, is used solely for ``permissible uses.'' ``Permissible uses'' 
means any of the following uses with respect to any HOT lane facility, 
whether operated by a public or private entity: (a) Debt service, (b) a 
reasonable return on investment of any private financing, (c) the costs 
necessary for the proper operation and maintenance of such 
facility,\20\ and (d) if the operating entity annually certifies that 
the facility is being adequately operated and maintained (including 
that the permissible uses described in (a), (b) and (c) above, if 
applicable, are being duly paid), any other purpose relating to a 
project carried out under Title 49 U.S.C. 5301 et seq. In cases where 
the HOT lane facility has received (or receives) funding from FTA and 
another Federal agency, such that use of the facility's program income 
is governed by more than one Federal program, FTA's restrictions 
concerning permissible use shall not apply to more than transit's 
allocable share \21\ of the facility's program income. FTA shall not 
require recipients to assign priority in payment to any permissible 
use.
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    \20\ The costs necessary for the proper operation and 
maintenance of a HOT lane facility may include reconstruction, 
rehabilitation, and the costs associated with operating transit 
service on the facility.
    \21\ Transit's allocable share of the facility's program income 
shall be an amount equal to the facility's total program income, for 
any period, multiplied by a ratio, (a) the numerator of which shall 
be the cumulative amount of funds contributed to the facility 
through a program established by transit law, and (b) the 
denominator of which shall be the cumulative amount of all Federal, 
State and local capital funds contributed to the facility, in each 
case at the time transit's allocable share is calculated. For 
purposes of 49 CFR 18.25, (i) amounts other than transit's allocable 
share shall not constitute program income and (ii) any expenditure 
of transit's allocable share that is not deducted from outlays made 
under transit law shall be deemed an ``alternative'' under 49 U.S.C. 
18.25(g) and deemed by FTA a term of the grant agreement.
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    (c) Transit Fares and Tolls on HOT Lane Facilities. FTA shall not 
condition

[[Page 77868]]

the classification of HOT lanes converted from HOV lanes as ``fixed 
guideway miles,'' or condition any approval or waiver under a Full 
Funding Grant Agreement, on a grantee's adopting transit fare policies 
or a tolling authority's adopting of tolling policies concerning, 
respectively, the price of transit services on the HOT lane facility 
and the tolls payable by SOVs. Instead, FTA shall permit grantees and 
tolling authorities to develop their own fare structures for transit 
services and tolls, respectively, on HOT lane facilities. Transit fares 
shall remain subject to 49 U.S.C. 5332 (Nondiscrimination) and 49 
U.S.C. 5307 (Urbanized area formula grants).
    (d) No Return of Funds under Full Funding Grant Agreements. In the 
event that an HOV facility is converted to a HOT facility and the HOV 
facility has received funds through FTA's New Starts program, FTA shall 
not require the grantee to return such funds so long as the facility 
complies with the conditions set forth in this guidance and the 
original grant agreement or Full Funding Grant Agreement, as 
applicable.

    Issued on the 21st day of December, 2006.
James S. Simpson,
Administrator.
[FR Doc. 06-9873 Filed 12-26-06; 8:45 am]
BILLING CODE 4910-57-M