[Federal Register Volume 83, Number 191 (Tuesday, October 2, 2018)]
[Notices]
[Pages 49624-49627]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-21340]


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DEPARTMENT OF TRANSPORTATION

Federal Highway Administration


Fixing America's Surface Transportation (FAST) Act; Solicitation 
for Candidate Projects in the Interstate System Reconstruction and 
Rehabilitation Pilot Program (ISRRPP)

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

ACTION: Notice; solicitation for applications.

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SUMMARY: The FHWA invites State transportation departments to submit 
applications for candidate projects in the Interstate System 
Reconstruction and Rehabilitation Pilot Program (ISRRPP), authorized in 
section 1216(b) of the Transportation Equity Act for the 21st Century 
and amended by section 1411(c) of the Fixing America's Surface 
Transportation (FAST) Act. Under ISRRPP, FHWA may permit up to three 
States to collect tolls on a facility on the Interstate System for the 
purpose of reconstructing or rehabilitating Interstate highway 
corridors that could not otherwise be adequately maintained or 
functionally improved without the collection of tolls. This notice 
describes general program provisions, eligibility and selection 
criteria, and the application submission and evaluation process.

DATES: Applications will be considered on a first-come, first serve 
rolling basis until further notice. The FHWA will review submissions in 
the order that they are received and award provisional approvals to 
States that will be expected to fully satisfy ISRRPP criteria within 3 
years. The FHWA will conduct regular information sessions regarding 
ISRRPP. Regular program updates will be available as to how many 
provisional slots are available. For more information, please visit: 
https://www.fhwa.dot.gov/ipd/tolling_and_pricing/.

FOR FURTHER INFORMATION CONTACT: For questions about the pilot program: 
Ms. Cynthia Essenmacher, Center for Innovative Finance Support, Office 
of Innovative Program Delivery, Federal Highway Administration, 315 
West Allegan Street, Room 201, Lansing, MI 48933, (517) 702-1856. For 
legal questions: Mr. Steven Rochlis, Office of the Chief Counsel, 
Federal Highway Administration, 1200 New Jersey Avenue SE, Washington, 
DC 20590, (202) 366-1395. Office hours are from 8:00 a.m. to 4:30 p.m. 
E.T., Monday through Friday, except for Federal holidays.

SUPPLEMENTARY INFORMATION: 

Table of Contents

A. Program Description
B. Program Slots
C. Eligibility Information
D. Submission Information
E. Review Information
F. Requirements for Provisionally Approved Projects

A. Program Description

1. Tolling Authority Under ISRRPP

    The FAST Act Section 1411(c) amends ISRRPP authorized under Section 
1216(b) of the Transportation Equity Act for the 21st Century (TEA-21). 
The ISRRPP allows a State to collect tolls on a facility on the 
Interstate System in order to reconstruct or rehabilitate an Interstate 
highway corridor that could not otherwise be adequately maintained or 
functionally improved without the collection of tolls. Up to three 
facilities may participate in ISRRPP, and each must be geographically 
located in a different State.
    Since ISRRPP's establishment in 1998, several States have requested 
and received what FHWA has termed ``provisional approval'' of pilot 
projects, also referred to as the reservation of a ``program slot.'' 
The purpose of this step has been to enable States to invest the 
considerable resources needed to fully satisfy the program criteria, 
which are described below, without fear of being superseded by a 
subsequent applicant. To date, however, no State has fully satisfied 
ISRRPP criteria.

2. Other Interstate Tolling Authority

    The ISRRPP is not the only authority available to States to toll 
facilities on the

[[Page 49625]]

Interstate System. Today, the 46,730-mile Interstate System includes 
approximately 2,900 miles of toll roads, most built as turnpikes and 
incorporated into the system in 1957. Current Federal law provides 
several options for States to toll Interstate facilities. The 
authorities in 23 United States Code (U.S.C.) 129(a)(1) now allow for 
the initial construction of an Interstate toll facility; the conversion 
of an Interstate high occupancy vehicle (HOV) lane to a toll facility; 
the expansion of an Interstate highway and tolling of the new capacity 
as long as the current number of toll-free non-HOV lanes is maintained; 
and the reconstruction or replacement of a toll-free Interstate System 
bridge or tunnel and its conversion to a toll facility.
    Additional authorities are provided under 23 U.S.C. 166(c), which 
allows public agencies to permit toll-paying vehicles that do not meet 
minimum occupancy standards to use high-occupancy vehicle (HOV) lanes. 
Such lanes are commonly referred to as high occupancy toll (HOT) lanes. 
Finally, the Value Pricing Pilot Program (VPPP), initially authorized 
in the Intermodal Surface Transportation Efficiency Act of 1991 (ISTEA, 
Pub. L. 102-240) as the Congestion Pricing Pilot Program and 
subsequently amended under other laws, encourages implementation and 
evaluation of value pricing pilot projects to manage congestion through 
tolling and other pricing mechanisms on facilities both on and off the 
Interstate System. All these current tolling authorities are separate 
and distinct from ISRRPP.

3. FAST Act Amendments to ISRRPP

    The FAST Act amendments to ISRRPP create several changes. First, 
acknowledging the key role that State legislative authority has in 
implementing ISRRPP, the FAST Act adds the specific selection criterion 
that ``a State has the authority required for the project to proceed.'' 
This addresses a common challenge facing those States that have held 
provisional approvals, i.e., securing legal authority from their State 
legislatures to collect tolls on a currently toll-free Interstate 
highway.
    Second, the FAST Act specifies timeframes under which States with 
provisional approvals must complete the program's requirements. Any 
State receiving a provisional approval as a result of this solicitation 
will have 3 years from the date of the approval to fully satisfy the 
program criteria, complete environmental review under the National 
Environmental Policy Act of 1969 (NEPA), and execute a toll agreement 
with FHWA. The FAST Act allows for a 1-year extension of the 3-year 
provisional approval if the State demonstrates material progress toward 
implementation of its pilot project.
    Third, the FAST Act gave the States holding provisional approvals 
at the time the FAST Act was enacted 1 year to satisfy the program 
criteria or request an extension for an additional year. On the date of 
enactment, December 4, 2015, three States--Missouri, North Carolina and 
Virginia--held ISRRPP provisional approvals. Since then, all three have 
relinquished their program slots.

B. Program Slots

    In announcing this ISRRPP solicitation, FHWA seeks applications 
from States for candidate projects under the program.
    Based on the program's experience, FHWA believes it unlikely that 
any State would invest the considerable effort to develop an 
application that fully satisfies the program criteria without assurance 
that its efforts would not be superseded by a competing applicant. 
Conversely, FHWA recognizes that provisional approval and the 
reservation of a program slot--while allowing a State to work in 
earnest to meet the program's environmental, financial, public support 
and operational requirements--also inhibits other States from pursuing 
similar projects. Therefore, FHWA will review each candidate project 
thoroughly before making any commitment of provisional approval.
    As provided in Section 1411(c) of the FAST Act, FHWA may grant 
provisional approval to up to three projects that will fully implement 
ISRRPP (reconstruct or rehabilitate an Interstate segment and convert 
it to a toll facility) based on an assessment that eligibility and 
selection criteria can be met. At the present time, all three program 
slots are available.
    This solicitation does not offer any Federal funds for these 
projects. Formula Federal-aid highway funds may be used toward a 
candidate project, subject to the eligibility requirements for these 
funds. In addition, a candidate project may qualify for credit 
assistance under 23 U.S.C. 601-609, DOT's Transportation Infrastructure 
Finance and Innovation Act (TIFIA) credit program.
    While Section 1216(b)(6) of TEA-21 specifically prohibited the use 
of Interstate Maintenance (IM) funds on the Interstate facility covered 
by an ISRRPP project during the period tolls are collected, the IM 
program has since been discontinued. Given the expansion of tolling 
authority under 23 U.S.C. 129, the restriction on use of IM funds is 
not applied to the use of eligible funding sources, including the 
National Highway Performance Program.

C. Eligibility Information

    To be selected for provisional approval in ISRRPP, an applicant 
must be a State DOT and the project must be a facility on the 
Interstate System.

1. Interstate Facility

    A facility on the Interstate System is considered to be a route on 
the Dwight D. Eisenhower National System of Interstate and Defense 
Highways as described in 23 U.S.C. 103(c). This is the originally 
designated Interstate System and includes those Interstate additions 
under former 23 U.S.C. 139(a).
    A State may propose only a single Interstate facility as its 
candidate project, and each facility selected by FHWA must be in a 
different State.
    Note that the existing statute in 23 U.S.C. 129(a)(1)(E) already 
allows for reconstruction or replacement of a toll-free Interstate 
bridge or tunnel and its conversion to a toll facility. For the 
purposes of ISRRPP, the scope of the candidate project must include 
reconstruction or rehabilitation throughout the Interstate facility 
(not solely on bridges or tunnels), where estimated improvement costs 
exceed available funding sources and work cannot be advanced without 
the collection of tolls.

2. Toll Revenue Uses

    The ISRRPP's conditions on toll revenue uses reflect the intent 
that tolls are collected to reconstruct or rehabilitate an Interstate 
facility, not to support other surface transportation projects. The 
State must execute an agreement with FHWA specifying that toll revenues 
received from operation of the facility will be used in accordance with 
the requirements set forth in Section 1216(b)(5) of TEA-21. This 
section requires that all toll revenues be used only for (1) debt 
service, (2) reasonable return on investment of any private person 
financing the project, and (3) any costs necessary for the improvement 
of and the proper operation and maintenance of the toll facility, 
including reconstruction, resurfacing, restoration and rehabilitation 
of the toll facility. It is important that applicants understand that 
these conditions are more restrictive than those that apply to projects 
authorized under 23 U.S.C. 129 or 23 U.S.C. 166.
    In addition, the toll agreement must include a provision that the 
State will conduct regular (e.g., annual) audits to ensure compliance 
with the provisions

[[Page 49626]]

regarding use of toll revenues, and the results of these audits will be 
transmitted to FHWA.
    The FHWA is concerned that the initiation of new toll collection 
should not occur until it is evident to the traveling public that tolls 
will result in investment on the facility. Accordingly, the earliest 
that tolls may be imposed on an ISRRPP facility is the date of award of 
a contract for the physical reconstruction or rehabilitation of a 
significant portion of the facility. In the case of a design-build 
contract or public-private partnership agreement, this would occur when 
a notice to proceed for the physical construction has been issued or 
when the design-builder otherwise becomes contractually obligated to 
accomplish the physical construction activities of the project.

3. Federal-Aid Requirements

    Regardless of whether Federal-aid funds are to be used in the 
reconstruction or rehabilitation activities, each ISRRPP project must 
satisfy the applicable Federal laws, rules and regulations set forth in 
title 23 U.S.C. and title 23 Code of Federal Regulations.
    A State receiving provisional approval must complete the 
environmental review and permitting process under (NEPA, 42 U.S.C. 4321 
et seq.) for the candidate project before it can receive final 
approval. The NEPA analysis must take into account not only the impacts 
of the proposed reconstruction or rehabilitation activities but also 
consider impacts associated with converting the toll-free facility to a 
toll facility.

D. Submission Information

    A State that seeks to participate in the pilot program must submit 
an application that addresses the program's statutory eligibility and 
selection criteria as described below.

1. Address

    A State DOT must submit the application to its respective FHWA 
Division Office. Subsequent application tasks will also be coordinated 
through the Division Office.

2. Content and Form of Application

    Although the State DOT may determine the appropriate form, the 
application package is limited to no more than 25 pages. The FHWA 
recommends that the project narrative be prepared with standard 
formatting preferences (i.e., a single-spaced document, using a 
standard 12-point font such as Times New Roman, with 1-inch margins). 
The project narrative may not exceed 25 pages in length, excluding 
cover pages and table of contents. The only substantive portions that 
may exceed the 25-page limit are supporting documents to support 
assertions or conclusions made in the 25-page project narrative. If 
necessary, FHWA may request supplemental or clarifying information from 
the State.
    The application should include information required for FHWA to 
assess each of the criteria specified in Section E (Review 
Information). The State should demonstrate the responsiveness of a 
project to any pertinent selection criteria with the most relevant 
information it can provide, regardless of whether such information has 
been specifically requested, or identified, in this notice. The 
application should describe all critical project milestones and the 
State's current progress toward achieving them.
    The FHWA recommends that the application adhere to the following 
basic outline and the project narrative include a table of contents, 
maps, and graphics as appropriate to inform the review. The specific 
statutory references from Section 1216 of TEA-21 (as amended by Section 
1411 of the FAST Act) are noted in brackets after each item:
    i. Project Description: An identification of the facility on the 
Interstate System proposed to become a toll facility, including the 
age, condition, and intensity of use of the facility [1216(b)(3)(A)].
    ii. Metropolitan Planning Organization (MPO) Consultation: In the 
case of a facility that affects a metropolitan area, a description of 
the State's current consultations regarding the candidate project with 
that area's MPO established under 23 U.S.C. 134. Full satisfaction of 
this eligibility criteria requires an assurance that MPO for the area 
has been consulted concerning the placement and amount of tolls on the 
facility [1216(b)(3)(B)].
    iii. Financial Analysis: An analysis demonstrating that the 
facility could not be maintained or improved to meet current or future 
needs from the State's Federal-aid apportionments and allocations and 
from revenues for highways from any other source without toll revenues 
[1216(b)(3)(C)].
    iv. Facility Management Plan:
    (a) A plan for implementing tolls on the facility 
[1216(b)(3)(D)(i)]. Note that an approved plan must take into account 
the interests of local, regional, and Interstate travelers 
[1216(b)(4)(C)].
    (b) A proposed schedule and finance plan for the reconstruction or 
rehabilitation of the facility using toll revenues [1216(b)(3)(D)(ii)]. 
The plan should give extensive focus to the development phase 
requirements, including among its milestones the completion of NEPA, 
the acquisition of tolling authority from the legislature, and the 
issuance of any debt backed by toll revenues.
    (c) A description of the public transportation agency that will be 
responsible for implementation and administration of the candidate 
project [1216(b)(3)(D)(iii)].
    (d) A description of whether consideration will be given to 
privatizing the maintenance and operational aspects of the facility, 
while retaining legal and administrative control of the portion of the 
Interstate route [1216(b)(3)(D)(iv)]. Note that ISRRPP selection 
criteria require the State to give preference to the use of a public 
toll agency with demonstrated capability to build, operate and maintain 
a toll expressway system meeting criteria for the Interstate System 
[1216(b)(4)(E)].
    (e) A statement as to whether the State currently has the authority 
required for the toll project to proceed and, if not, a plan and 
timetable for when such authority will be obtained [1216(b)(4)(F)].

3. Submission Date

    A State DOT may submit an application to its FHWA Division Office 
at any time. Applications will be considered on a first-come, first 
serve rolling basis until further notice. States are strongly 
encouraged to work closely with their respective division offices 
throughout the preparation of the application.

E. Review Information

1. Review and Selection Process

    The FHWA will perform an initial eligibility review of an 
application. Based on its knowledge of the proposed project and the 
State's highway program, FHWA will evaluate the project's technical and 
financial feasibility, risks, planning approvals, NEPA and other 
environmental reviews/approvals, tolling authority, agreements to 
operate and maintain a toll expressway system, and other implementation 
agreements.
    The FHWA Headquarters evaluation team will use the information in 
the application to assess the State's readiness and capability to fully 
satisfy the ISRRPP criteria in order to deliver the candidate project. 
Based upon this evaluation, FHWA may provide a provisional approval to 
the applicant State if it is expected to be able to fully

[[Page 49627]]

satisfy the following selection criteria within 3 years. The selection 
criteria are set forth (in italics) in Section 1216(b)(4) of TEA-21 as 
amended by Section 1411(c)(1) of the FAST Act:
    A. The State is unable to reconstruct or rehabilitate the proposed 
toll facility using existing apportionments. Because Federal-aid 
formula apportionments can support municipal bond issues (i.e., 
GARVEEs), the State must demonstrate that toll revenue financing 
(whether through the TIFIA Program or another capital market source) is 
essential to raising the needed funds. This information should be 
provided in the Financial Analysis section of the application.
    B. The facility has a sufficient intensity of use, age, or 
condition to warrant the collection of tolls. A State should use its 
asset management process or life cycle planning analysis to support 
this criterion. This effort should include conducting a performance gap 
analysis to identify deficiencies hindering progress toward improving 
or preserving the facility and achieving and sustaining the desired 
state of good repair. The FHWA will give preference to a facilities 
with a greater gap between current/projected and target performance. 
This information should be provided in the Project Description section 
of the application.
    C. The State plan for implementing tolls on the facility takes into 
account the interests of local, regional, and Interstate travelers. The 
FHWA will give preference to candidate projects that have already been 
considered for tolling as a strategy in their State and MPO long-range 
plans, which should also take into account the impact of tolling on 
local, regional, and Interstate freight movement. This information 
should be provided in the Facility Management Plan section of the 
application.
    D. The State plan for reconstruction or rehabilitation of the 
facility using toll revenues is reasonable. A reasonable plan will 
balance the estimated sources and uses of funds in accordance with the 
requirements on toll revenue use set forth in Section 1216(b)(5) of 
TEA-21. Likewise, the estimated cost of the candidate project must be 
matched by a financial plan that includes traffic and revenue 
projections sufficient to secure the needed debt component. This 
information should be provided in the Facility Management Plan section 
of the application.
    E. The State has given preference to the use of a public toll 
agency with demonstrated capability to build, operate, and maintain a 
toll expressway system meeting criteria for the Interstate System. 
Should a State determine that its public toll agencies lack the 
capability or resources to take on the candidate project, a public-
private partnership may well provide a viable alternative. This 
information should be provided in the Facility Management Plan section 
of the application.
    F. The State has the authority required for the project to proceed. 
The lack of such authority has previously prevented provisionally 
approved projects from fully satisfying the program criteria. The FHWA 
will give preference to candidate projects that have already obtained 
statutory authority to toll the candidate project or, lacking that, 
demonstrate the likelihood of obtaining the authority to toll the 
candidate project as evidenced by expressions of support for the 
project from State and local governments, community interests, and the 
public. The FHWA will also give preference to candidate projects that 
demonstrate the likelihood of completing the environmental review and 
permitting process under the NEPA within 3 years of provisional 
approval. This information should be provided in the Facility 
Management Plan section of the application.

F. Requirements for Provisionally Approved Projects

    Should FHWA provisionally approve a candidate project, a State will 
have 3 years from the date the provisional approval is granted in which 
to:
     Submit a complete application that fully satisfies the 
eligibility and selection criteria noted above [1216(b)(6)(A)(i)].
     Complete environmental review and permitting process under 
the National Environmental Policy Act of 1969 (NEPA, 42 U.S.C. 4321 et 
seq.) for the project [1216(b)(6)(A)(ii)].
     Execute a toll agreement [1216(b)(6)(A)(iii)].
    Further, FHWA may allow for a 1-year extension of the provisional 
approval if the State demonstrates material progress toward 
implementation of the project as evidenced by:
     Substantial progress in completing the environmental 
review and permitting process for the pilot project under NEPA 
[1216(b)(6)(B)(i)].
     Funding and financing commitments for the project 
[1216(b)(6)(B)(ii)].
     Expressions of support for the project from State and 
local governments, community interests, and the public 
[1216(b)(6)(B)(iii)].
     Submission of a facility management plan as noted under 
the eligibility criteria above [1216(b)(6)(B)(iv)].
    Given the extensive State DOT and FHWA collaboration needed to 
implement a project under the ISRRPP, FHWA will regularly assess the 
progress of each provisionally approved project. Should it become 
evident that the project will not meet the statutory deadline, FHWA 
reserves the right to revoke the provisional approval prior to the 
deadline and re-offer the program slot to other State DOTs.

    Issued on: September 24, 2018.
Brandye L. Hendrickson,
Deputy Administrator, Federal Highway Administration.
[FR Doc. 2018-21340 Filed 10-1-18; 8:45 am]
 BILLING CODE 4910-22-P