Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users (SAFETEA-LU); Value Pricing Pilot Program Participation, 970-977 [E6-12]

Agencies

• Federal Highway Administration
• DEPARTMENT OF TRANSPORTATION

[Federal Register Volume 71, Number 4 (Friday, January 6, 2006)]
[Notices]
[Pages 970-977]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E6-12]


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DEPARTMENT OF TRANSPORTATION

Federal Highway Administration


Safe, Accountable, Flexible, Efficient Transportation Equity Act: 
A Legacy for Users (SAFETEA-LU); Value Pricing Pilot Program 
Participation

AGENCY: Federal Highway Administration (FHWA), DOT.

ACTION: Notice; solicitation for participation.

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SUMMARY: This notice invites State and local governments and other 
public authorities to apply to participate in the Value Pricing Pilot 
(VPP) program and presents guidelines for program applications. This 
notice describes the statutory basis for the VPP program and updates a 
notice published in the Federal Register on May 7, 2001 (66 FR 23077), 
by providing revised procedures, process timelines, and guidance for 
program participation.
    A companion notice referring to non-grant programs, entitled 
``Safe, Accountable, Flexible, Efficient Transportation Equity Act: A 
Legacy for Users (SAFETEA-LU); Opportunities for

[[Page 971]]

States and Other Qualifying Agencies to Gain Authority to Toll 
Facilities Constructed Using Federal Funds'' is published elsewhere in 
today's edition of the Federal Register. Both of these notices are 
intended to cover all of the opportunities for States and other 
qualifying transportation agencies to obtain approval to toll their 
respective facilities and to secure funding to implement tolling and 
pricing.

DATES: Formal grant applications must be submitted no later than March 
31, 2006, for FY 2006 funds, October 1, 2006, for FY 2007 funds, and 
each subsequent October 1 for funding through and including FY 2009. To 
be assured of the maximum amount of constructive assistance from FHWA 
in preparing a formal application, Expressions of Interest must be 
submitted two months prior, i.e., by January 31, 2006, for FY 2006 
funds, August 1, 2006, for FY 2007 funds, and each subsequent August 1 
covering the funding period.

FOR FURTHER INFORMATION CONTACT: For questions about this notice, 
please contact Mr. Wayne Berman, Office of Operations, (202) 366-4069, 
or via email at mailto:wayne.berman@fhwa.dot.gov, FHWA, 400 Seventh 
Street, SW., Washington, DC 20590. For specific information about the 
Value Pricing Pilot Program, please contact Mr. Patrick DeCorla-Souza, 
Office of Policy and Governmental Affairs, Highway Pricing and System 
Analysis Team Leader, (202) 366-4076, or via e-mail at patrick.decorla-
souza@fhwa.dot.gov. For legal questions, interpretations and counsel, 
please contact Mr. Michael Harkins, Attorney Advisor, FHWA Office of 
the Chief Counsel, (202) 366-4928, or via e-mail at 
michael.harkins@fhwa.dot.gov. Office hours for the FHWA are from 7:45 
a.m. to 4:15 p.m., e.s.t., Monday through Friday, except Federal 
holidays.

SUPPLEMENTARY INFORMATION:

Electronic Access

    An electronic copy of this document may be downloaded from the 
Federal Register's home page at: https://www.archives.gov and the 
Government Printing Office's database at: https://www.access.gpo.gov/
nara.

Background

    Section 1012(b) of the Intermodal Surface Transportation Efficiency 
Act (ISTEA) (Pub. L. 102-240; 105 Stat. 1914), as amended by section 
1216(a) of the Transportation Equity Act (TEA-21) (Pub. L. 105-178; 112 
Stat. 107), and section 1604(a) of Safe, Accountable, Flexible, 
Efficient Transportation Equity Act: A Legacy for Users (SAFETEA-LU) 
(Pub. L. 109-59; 119 Stat. 1144), authorizes the Secretary of 
Transportation (the Secretary) to create a Value Pricing Pilot Program. 
Value pricing encompasses a variety of strategies to manage congestion 
on highways, including tolling of highway facilities, as well as other 
strategies that do not involve tolls, such as mileage-based charges for 
insurance, taxes, leasing fees, and car sharing. The value pricing 
concept of assessing relatively higher prices for travel during peak 
periods is the same as that used in many other sectors of the economy 
to respond to peak-use demands. For example, airlines, hotels, and 
theaters often charge more for peak than non-peak times.
    The FHWA is seeking applications for the FY 2006 VPP program. 
According to statute, the FHWA may enter into cooperative agreements 
with up to fifteen State or local governments or other public 
authorities (hereafter, States) to establish, maintain, and monitor 
value pricing pilot programs, each including an unlimited number of 
projects. The FHWA invites interested States to apply to participate in 
the VPP program for FY 2006. There are already fourteen State-led 
programs currently in the VPP program: California, Colorado, Florida, 
Georgia, Illinois, Maryland, Minnesota, New Jersey, North Carolina, 
Oregon, Pennsylvania, Texas, Virginia, and Washington. Therefore, only 
one new State is eligible to participate. Any value pricing project 
included under these programs may involve the use of tolls on the 
Interstate system. This is an exception to the general provisions 
prohibiting tolls on the Interstate system as contained in 23 U.S.C. 
129 and 301.
    A maximum of $12 million is authorized for each of the fiscal years 
2006 through 2009 to be made available to carry out the VPP program 
requirements. A set-aside of $3 million per fiscal years 2006 through 
2009 is authorized only for value pricing pilot projects that do not 
involve highway tolls. The Federal share payable under the program is 
80 percent of the cost of the project. Funds allocated by the Secretary 
to a State or other public entity under this section shall remain 
available for obligation by the State for a period of three years after 
the last day of the fiscal year for which funds are authorized. If, on 
September 30 of any year, the amount of funds made available for the 
VPP program, but not allocated, exceeds $8 million, the excess amount 
will be apportioned to all States as Surface Transportation Program 
funds.
    Funds available for the VPP program can be used to support pre-
implementation study activities as well as to pay for implementation 
costs of value pricing projects. Section 1012(b)(6) of ISTEA provides 
that a State may permit toll-paying vehicles with fewer than two 
occupants to operate in high occupancy vehicle (HOV) lanes if the 
vehicles are part of a local value pricing pilot program under this 
section. SAFETEA-LU Section 1121, ``HOV Facilities,'' among other 
things, also allows for the conversion of HOV lanes to high occupancy 
toll (HOT) lanes. Given that the VPP program has only one more slot 
available for a new program partner to participate, Section 1121 
authority should be used, instead of VPP program authority, for HOV-to-
HOT lane conversions if an application comes from a State that is not 
already in the VPP program.
    Potential financial effects of value pricing projects on low-income 
drivers shall be considered and, where such effects are expected to be 
significant, possible mitigation measures should be identified, such as 
providing new or expanded transit service as an integral part of the 
value pricing project, toll discounts or credits for low-income 
motorists who do not have viable transit options, or fare or toll 
credits earned by motorists on regular lanes which can be used to pay 
for tolls on priced lanes. Mitigation measures can be included as part 
of the value pricing project implementation costs.
    The Secretary is required to report to Congress every two years on 
the effects of all value pricing pilot programs. Annual evaluation data 
and reports shall be provided to the FHWA for use in reports to 
Congress.
    The VPP program is a continuation of the Congestion Pricing Pilot 
Program authorized by section 1012(b) of the ISTEA and amended by 
section 1216(a) of TEA-21. To obtain up-to-date information on the 
status of current projects, please go to: https://www.ops.fhwa.dot.gov/
tolling_pricing/index.htm and go to ``Resources'' and click on ``Value 
Pricing Pilot Program Knowledge Exchange''.
    In addition to the VPP program, SAFETEA-LU offers States broader 
authority to use tolling on a pilot or demonstration basis to finance 
Interstate construction and reconstruction, promote efficiency in the 
use of highways, and support congestion reduction by providing expanded 
flexibility under the following programs: HOV facilities; Interstate 
System Reconstruction & Rehabilitation Pilot; Interstate System 
Construction

[[Page 972]]

Toll Pilot; and Express Lanes Demonstration Program. For more 
information on those programs, please refer to the companion notice in 
today's Federal Register entitled ``Safe, Accountable, Flexible, 
Efficient Transportation Equity Act: A Legacy for Users (SAFETEA-LU); 
Opportunities for State and Other Qualifying Agencies to Gain Authority 
to Toll Facilities Constructed Using Federal Funds.''

What Is Value Pricing?

    ``Value pricing,'' ``congestion pricing,'' ``peak-period pricing,'' 
``variable pricing,'' and ``variable tolling'' are all terms used to 
refer to direct non-constant charges for road use, possibly varying by 
location, time of day, severity of congestion, vehicle occupancy, or 
type of facility. By shifting some trips to off-peak periods, to mass 
transit or other higher-occupancy vehicles, or to routes away from 
congested facilities, or by encouraging consolidation of trips, value 
pricing charges are intended to promote economic efficiency both 
generally and within the commercial freight sector. They also achieve 
congestion reduction, improved air quality, energy conservation, and 
transit productivity goals.
    A ``value pricing project'' means any implementation of value 
pricing concepts or techniques discussed in the ``Potential Project 
Types'' section of this notice and included under a State or local 
``value pricing pilot program,'' where such a program includes one or 
more value pricing projects serving a single geographic area, such as a 
metropolitan area or State. By definition, an entity with one or more 
approved value pricing projects must have a value pricing program. 
While the distinction between ``project'' and ``program'' may appear to 
be merely a technical one, it is significant in that, as described in 
the ``Background'' section of this notice, the number of total VPP 
programs is statutorily limited to fifteen, while there is no limit to 
the number of VPP projects allowed under each VPP program.
    ``Cooperative agreement'' means the agreement signed between the 
FHWA and a State to implement local value pricing pilot programs (See 
49 CFR Part 18). ``Toll agreement'' means the agreement signed between 
the FHWA and a State to grant the authority to collect tolls.

Program Objective

    The overall objective of the VPP program is to support efforts by 
State and local governments or other public authorities to establish 
local value pricing pilot programs, to provide for the monitoring and 
evaluation of value pricing projects included in such programs, and to 
report on these effects. The VPP program's primary focus is on value 
pricing with road tolls, with a secondary focus on other market-based 
approaches for congestion relief that do not involve road tolls, such 
as parking pricing or pay-as-you-drive insurance. All projects should 
incorporate significant pricing mechanisms intended to reduce the level 
of congestion.

Potential Project Types

    The FHWA is seeking applications to use value pricing projects to 
reduce congestion, improve system performance, and promote mobility. 
Value pricing charges are expected to accomplish this purpose by 
encouraging the use of alternative times, modes, routes, or trip 
patterns. As such, value pricing charges need to be targeted at 
vehicles causing congestion, and prices must be set at levels 
significant enough to encourage drivers to use alternative times, 
routes, modes, or trip patterns during congested periods. Conversely, 
proposed projects that contemplate value pricing charges that are not 
significant enough to influence demand, such as minor increases in fees 
during peak-periods, or moderate toll increases instituted primarily 
for financing purposes, will be given low priority. Similarly, value 
pricing concepts that have become mainstream and have been adopted as 
common practice, such as HOV-to-HOT lane conversions, will not be 
funded. To increase the likelihood of generating information on a 
variety of useful value pricing strategies, proposed projects having as 
many of the following characteristics as possible will receive priority 
for Federal support. Projects of interest include:
    1. Applications of value pricing which are comprehensive and 
include pricing of currently free facilities, such as area wide 
pricing, pricing of multiple facilities or corridors, and/or 
combinations of road pricing and parking pricing. The size or extent of 
road pricing programs, ranging from single facilities, to sections of, 
or complete corridors, to comprehensive area- or region-wide 
applications, are of interest, along with their relative effect on 
reducing congestion, altering travel behavior, and encouraging the use 
of other transportation modes. Region-wide pricing applications that 
use technologies that provide drivers with real-time congestion and 
pricing information on alternative routes are especially encouraged.
    2. Pricing at key traffic bottlenecks, of multiple facilities in a 
single travel corridor, or on single highway facilities, including 
bridges and tunnels. Applications to shift from a fixed to a variable 
toll schedule on existing toll facilities are encouraged (i.e., 
combinations of peak-period surcharges and off-peak discounts). Pricing 
of queue jumps is also eligible. A queue jump is defined as a facility 
that can be used by certain types of traffic to bypass points on the 
transportation network where congestion is particularly severe and 
occurs in a predictable pattern (colloquially called ``bottlenecks''). 
Queue jumps can be as elaborate as an elevated facility or as simple as 
an at-grade lane addition.
    3. Innovative parking pricing strategies, including time-of-day 
pricing and charges reflective of congestion conditions, provided the 
level and coverage of proposed parking charges is sufficient to reduce 
congestion. Parking pricing strategies that are integrated with other 
pricing strategies are encouraged. Parking pricing strategies should be 
designed to influence trip-making behavior, and might include 
surcharges for entering or exiting a parking facility during or near 
peak periods, or a range of parking cash-out policies, where cash is 
offered to employees in lieu of subsidized parking, parking operators 
reimburse monthly patrons for unused parking days, or renters or 
purchasers in multi-family housing developments are provided direct 
financial saving for not availing of car parking spaces. Pricing of a 
single parking facility, coverage of a few employee spaces, or pricing 
of parking spaces in a small area, for example, are unlikely to receive 
priority, unless they incorporate a truly unique element which might 
facilitate broader applications of value pricing across local areas or 
States.
    4. Pay-as-you-drive pricing, including car insurance premiums set 
on a per-mile basis and innovative car ownership, leasing, and usage 
arrangements that reduce fixed costs and increase variable usage costs.
    5. Projects that are likely to add to the base of knowledge about 
the various design, implementation, effectiveness, operational, and 
acceptability dimensions of value pricing. The FHWA is seeking 
information related to the impacts of value pricing on the following: 
Travel behavior (e.g., trip lengths, mode use, time-of-travel, trip 
destinations, and trip generation by private and commercial trip 
makers); traffic conditions (e.g., speeds and levels of service); 
implementation issues (e.g., technology, innovative pricing

[[Page 973]]

techniques, public acceptance, administration, operation, enforcement, 
and legal and institutional issues); revenues, their uses and financial 
plans; different types of users and businesses; and low-income 
motorists, including possible mitigation measures and their 
effectiveness. These diverse information needs mean that the FHWA may 
fund different types of value pricing applications in different local 
contexts to maximize the potential of the pilot program.
    6. Projects that do not have adverse effects on alternative routes 
or modes, or on low-income or other transportation-disadvantaged groups 
are encouraged under the VPP program. If such effects are anticipated, 
proposed pricing programs should incorporate measures to mitigate any 
major adverse impacts, including enhancement of transportation 
alternatives for peak period travelers, services such as ``life-line'' 
toll rates aimed at low income travelers, and credit-based tolling 
programs such as toll credits earned by motorists in regular lanes 
which can be used to pay tolls on priced lanes.
    7. Pricing projects that lead to substantial congestion reduction 
and supplant or supplement existing tax-based approaches for generating 
surface transportation revenues.
    8. Pricing projects that result in free-flow peak period roadway 
conditions, and where motorists earn or are provided with limited 
monetary credit for their discretionary use, thereby allowing them a 
limited amount of free or discounted rush hour roadway access or 
transit trips before having to pay full fees.
    While the FHWA is seeking applications that incorporate some or all 
of these project characteristics, these guidelines are intended only to 
illustrate selection priorities, not to limit potential program 
participants from proposing new and innovative pricing approaches for 
incorporation in the program.

Pre-Implementation Studies

    The VPP program funds may also be used to assist State and local 
governments in carrying out pre-implementation study activities 
designed to lead to implementation of a value pricing project. The 
intent of the pre-implementation study phase is to support efforts to 
identify and evaluate value pricing project alternatives, and to 
prepare the necessary groundwork for possible future implementation. 
Purely academic studies of value pricing (not designed to lead to 
possible project implementation), or broad, area wide planning studies 
which incorporate value pricing only as one option, will not be funded 
under this program. Broad planning studies can be funded with regular 
Federal-aid highway or transit planning funds. Applications for pre-
implementation studies will be selected based on the likelihood that 
they will lead to implementation of pilot tests of value pricing 
conforming to the objectives described in the previous section.
    In cases where the FHWA has made funds available to a State for 
pre-implementation studies, but the State decides not to implement the 
project and has no other value pricing projects, the FHWA may proceed 
to remove that State from the program and replace it with another State 
in the pilot program. Since section 1012(b)(1) of ISTEA limits 
participation in the pilot program to only fifteen slots (specifically, 
``States, local governments or public authorities,'' colloquially 
termed States), the fifteen participating States must intend to 
implement value pricing projects and proceed accordingly.

Project Costs Eligible for Grant Funding

    The FHWA will provide up to the statutorily allowable 80 percent 
share of the estimated costs of an approved project. Funds available 
for the VPP program can be used to support pre-implementation study 
activities and also to pay for implementation costs of value-pricing 
projects. Costs eligible for reimbursement include costs of planning 
for, setting up, managing, operating, monitoring, evaluating, and 
reporting on local value pricing pilot projects. Costs cannot be 
reimbursed for longer than three years. The three-year funding 
limitation will begin on the date of the first disbursement of Federal 
funds for project activities. Examples of specific costs eligible for 
reimbursement include the following:
    1. Pre-Implementation Study Costs--Allowable pre-implementation 
study costs include: Planning, public participation, consensus 
building, marketing, impact assessment, modeling, financial planning, 
technology assessments and specifications, and other pre-implementation 
work that relates to the establishment of the value pricing project 
including meeting Federal or State environmental or other planning 
requirements.
    2. Implementation Costs--Allowable costs include those for setting 
up, managing, operating, evaluating, and reporting on a value pricing 
project, including:
    a. Necessary salaries and expenses, or other administrative and 
operational costs, such as installation of equipment for operation of a 
pilot project (e.g., Electronic Toll Collection (ETC)) technology, 
video equipment for traffic monitoring, and other instrumentation), 
enforcement costs, costs of monitoring and evaluating project 
operations, and costs of continuing public relations activities during 
the period of implementation.
    b. Costs of providing transportation alternatives, such as new or 
expanded transit or ridesharing services provided as an integral part 
of the value pricing project. Funds are not available to replace 
existing sources of support for these services.
    Project implementation costs can be supported until such time that 
sufficient revenues are being generated by the project to fund such 
activities without Federal support, but in any case for no longer than 
three years. Each implementation project included in a local value 
pricing pilot program will be considered separately for this purpose.
    Funds may not be used to pay for activities conducted prior to 
approval for VPP program participation. Also, funds made available 
through the VPP program may not be used to construct new highway lanes 
or bridges, even if those facilities are to be priced, but toll ramps 
or minor pavement additions needed to facilitate toll collection or 
enforcement are eligible. Complementary actions, such as lane 
construction or the implementation of traffic control systems or 
transit projects can be funded through other highway and transit 
programs eligible under SAFETEA-LU and from new revenues raised as a 
result of a pilot. Those interested in participating in the VPP program 
are encouraged to explore opportunities for combining funds from these 
other programs with VPP program funds. Nevertheless, Federal funds may 
not be used to match VPP program funds unless permitted under specific 
statutory authority.

Eligible Uses of Revenues

    Sections 1012(b)(2) and (3) of ISTEA provide that revenues 
generated by any value pricing pilot project must be used for the 
project's operating costs and for projects that are eligible for 
assistance under Title 23, United States Code. Also, since section 
1012(b)(2) requires the Secretary to fund a pilot project until such 
time that sufficient revenues are being generated to fund its operating 
costs, any revenues generated by a pilot project must be applied first 
to pay for pilot project operating costs. Any project revenues in 
excess of pilot project operating costs may be used for any projects 
eligible under Title 23, U.S. Code. A project's operating (or

[[Page 974]]

implementation) costs include any costs necessary for a project's 
implementation; mitigation measures to deal with adverse financial 
effects on low-income drivers; the proper maintenance of the facility; 
any construction (including reconstruction, rehabilitation, 
restoration, or resurfacing) of the facility; any debt service incurred 
in implementing the project; and a reasonable return on investment by 
any private entity financing the project. Uses of revenue are 
encouraged which will support the goals of the VPP program, 
particularly uses designed to provide benefits to those traveling in 
the corridor where the project is being implemented.
    Furthermore, for toll projects, the FHWA and the public authority 
(including the State transportation department) having jurisdiction 
over a facility shall enter into a toll agreement concerning the use of 
toll revenue to be generated under a value pricing project. The toll 
agreement will merely provide for the public authority's commitment to 
use the revenues in accordance with the applicable statutory 
requirements of the VPP program and to annually audit its use of toll 
revenues for compliance with such requirements. The execution of a toll 
agreement is consistent with the requirements of other toll programs, 
such as contained in 23 U.S.C. 129, and will facilitate adequate 
oversight of a State's compliance with revenue use requirements of the 
VPP program. The FHWA Division Administrator, in coordination with the 
Office of Policy and Governmental Affairs and Office of Chief Counsel, 
will execute value pricing toll agreements.

Who Is Eligible To Apply?

    Qualified applicants include local, regional and State government 
agencies, as well as public tolling authorities. The VPP program term 
``States'' and the Tolling and Pricing Team term ``public authorities'' 
may be used interchangeably for purposes of identifying that a 
responsible entity will enter into process of applying to the VPP 
program or another tolling program. Although project agreements must be 
with public authorities, a local VPP program partnership may also 
include private tolling authorities and non-profit organizations.

Program Coordination and Assistance--The Tolling and Pricing Team

    The Federal Highway Administration, Office of Operations is 
responsible for coordinating all tolling and pricing programs that now 
exist under the Federal-aid Highway Program. In order to reduce 
confusion among interested applicants, given both the number and 
differing structures of the various tolling and pricing programs, the 
Office of Operations has formed a working group known as the ``Tolling 
and Pricing Team.''
    The key role for the Tolling and Pricing Team is to assist public 
authorities by directing them to the most appropriate program (or 
programs), including to the VPP program, among the many options 
available. Members of the Tolling and Pricing Team represent the FHWA 
Offices of Operations, Policy and Governmental Affairs, and 
Infrastructure--the primary offices responsible for administering each 
of the tolling and pricing programs--and other oversight offices within 
the U.S. DOT and the FHWA, including, but not limited to the Office of 
the Secretary, and the FHWA Office of the Administrator and Office of 
Chief Counsel. Members participate on the Tolling and Pricing Team 
because of their direct program responsibilities or because they are 
interested stakeholders in tolling and pricing programs within the U.S. 
DOT.
    The Tolling and Pricing Team has six purposes:
    1. Coordinate all tolling and pricing activity within FHWA to 
facilitate the implementation and advancement of tolling and pricing 
projects and standards in the United States;
    2. Receive and review all Expressions of Interest submitted to the 
FHWA from public authorities;
    3. Direct the public authority or partnerships designated by the 
State to the tolling and pricing program (or programs) that can enable 
them to accomplish the goals set forth in the ``Expression of 
Interest'' section of this notice;
    4. Assist the Office of Operations in the promulgation of a final 
rule including requirements, standards, or performance specifications 
for the interoperability of automated toll collection systems as 
directed by SAFETEA-LU Section 1604(b)(6);
    5. Support each of the FHWA program offices that have 
responsibility for a tolling and pricing program, in advancing formal 
proposals to gain approval to toll or price motor vehicles and 
facilitating coordination with the appropriate FHWA Division Office; 
and
    6. Establish program performance goals; monitor achievements, and 
prepare an annual report to Congress on the status and progress of all 
tolling and pricing programs, including describing program successes in 
meeting congestion reduction and other performance goals.
    The Tolling and Pricing Team reviews all Expressions of Interest 
for the various tolling opportunities contained in current law but does 
not have responsibility to approve or disapprove specific projects. 
That responsibility will remain with each of the respective FHWA 
program offices responsible for administering a specific tolling or 
pricing program. By requesting and reviewing all Expressions of 
Interest, the Tolling and Pricing Team can effectively guide an 
applicant to the most appropriate program.

The ``Expression of Interest''

    A public authority that wants to request tolling or pricing 
authority, or funding, is asked to submit an Expression of Interest to 
the Tolling and Pricing Team in care of the FHWA Office of Operations 
in Washington, DC. An Expression of Interest template can be downloaded 
via the Internet by going to the Tolling and Pricing Opportunities 
webpage within the FHWA Office of Operations Web site at https://
www.ops.fhwa.dot.gov/tolling_pricing/index.htm. Use of the template is 
optional. The Expression of Interest may be attached as an e-mail to 
TollingandPricingTeam@fhwa.dot.gov, or a hardcopy can be mailed to Mr. 
Wayne Berman, FHWA Office of Operations, Room 3404, 400 Seventh Street, 
SW., Washington, DC 20590. Concurrently, the Expression of Interest 
should be copied to the respective State FHWA Division Office.
    The Expression of Interest is a document--in letter, memo, or 
report format--that provides the rationale for funding or tolling 
authority and information about the intended project. A complete 
Expression of Interest, based upon the information items listed below, 
will enable the Tolling and Pricing Team to provide the best assistance 
and identify the range of options possible to meet intended goals and 
timeframes.
    The information items requested for a complete Expression of 
Interest are as follows:
    (a) A description of the agency or requesting authority or 
authorities that is/are requesting this tolling authority where 
applicable;
    (b) The name, title, email address, and phone number of the person 
who will act as the point of contact on behalf of the requesting 
authority or authorities;
    (c) A statement concerning the action being sought:
    (i) Funding and/or tolling authority via the Value Pricing Pilot 
program to support either pre-project study activities or 
implementation activities as permitted; or

[[Page 975]]

    (ii) Only authority to toll either existing or planned facilities;
    (d) A description of the subject facility or facilities proposed to 
be tolled;
    (e) Whether the subject facility is an Interstate or non-Interstate 
facility;
    (f) Whether construction is involved and, if so, whether this is 
new construction, expansion, rehabilitation, reconstruction, or other;
    (g) Whether an HOV lane or lanes currently exist on the facility;
    (h) A timetable to enact tolling (or modify tolling) on the subject 
facility;
    (i) Any expressions or declarations of support from public 
officials or the public, i.e., specifically, any public meetings that 
were held. If no public meetings or expressions of support are 
available, please indicate if there are project plans for ensuring 
adequate public involvement and support prior to implementation;
    (j) A plan for implementing tolls on the facility, where 
applicable. Where known, the range of anticipated tolls and the 
strategies to vary toll rates (i.e., the formulae for variable 
pricing);
    (k) The reasons for implementing tolls, such as financing 
construction, reducing congestion, or improving air quality;
    (l) A description of the public agency or agencies that will be 
responsible for operating, maintaining, and enforcing the tolling 
program; and
    (m) A description of how, if at all, any private entities are 
involved either in the up-front costs to enact tolling, or the cost 
sharing or debt retirement associated with revenues.

Program Participation--Overview of the Process

    Submitting an Expression of Interest initiates a review process by 
the Tolling and Pricing Team that leads to a recommendation as to which 
tolling or pricing program (or programs) will be appropriate and 
available to meet the goals of the public authority. In some cases, if 
more than one tolling program is available, the Tolling and Pricing 
Team will work with the public authority to help select the one program 
that is most appropriate and is most likely to lead to project 
approval. If the public authority prefers applying to a tolling program 
other than the one recommended, the Tolling and Pricing Team will defer 
to this request; however, the Tolling and Pricing Team will also 
provide advice as to the pros and cons of the decision.
    Once there is agreement between the public authority and the 
Tolling and Pricing Team as to the most appropriate program, the 
applicant will be referred to the specific FHWA program office 
responsible for administering that tolling and pricing initiative. The 
FHWA program office will then provide the public authority with the 
necessary information on how to formally apply for authority to toll 
motor vehicles and, in the case of the VPP program, request funding.
    Once a formal application is submitted, the appropriate FHWA 
program office will review the application and determine whether or not 
to approve the proposed project. The public authority will then be 
notified as to the determination. If approved, a formal tolling 
agreement and/or cooperative agreement will be prepared between the 
FHWA and the public authority. The toll agreement must be executed with 
the FHWA and address the use of revenues that are collected from the 
operation of the toll facility. While program elements may vary, the 
restrictions generally require the revenues to be used first for debt 
service, reasonable return on the investment for private parties, and 
the operations and maintenance of the facility. In addition, if the 
facility is being adequately maintained, any revenues in excess of 
these uses may be used for other title 23 U.S.C. eligible purposes. The 
FHWA, the State Department of Transportation, and the relevant toll 
authority or local governmental entity, if any, will execute the toll 
agreement, and in the case of the VPP, also a ``cooperative agreement'' 
that defines the scope of work that will be funded.

Summary of the Two-Step Review Process

    The entire review process, resulting in the execution of a toll 
agreement and/or a cooperative agreement, can be summarized in two 
steps as follows:
    Step #1: Submit an Expression of Interest to the Tolling and 
Pricing Team. The Tolling and Pricing Team will review the Expression 
of Interest, advise the applicant as to which program or programs are 
candidate to their project, and provide counsel as to which of those is 
most appropriate to pursue. The applicant will be directed to contact 
the selected program office, wherein, the program office will then 
inform the public authority as to the procedures required for 
submitting a formal application for tolling authority and/or value 
pricing funding.
    Step #2: Submit a formal application for tolling or pricing 
authority or value pricing funding to the FHWA program office for 
formal review, ultimately leading to a decision on approval. The public 
authority will then be notified of the decision. If the project is 
approved, a formal tolling agreement (and in the case of the VPP 
program, also a cooperative agreement) will then be prepared.

The Value Pricing Pilot Program Application

    As stated under the DATES section in this notice, in order to be 
assured of the maximum amount of constructive assistance from FHWA in 
preparing a formal application, Expressions of Interest for tolling and 
pricing projects seeking VPP program funding must be submitted two 
months prior to the application deadline that applies to the fiscal 
year for which funds are being sought. Once the Tolling and Pricing 
Team provides feedback on the Expression of Interest submittal, and 
once the public authority has confirmed its course of action is to 
pursue VPP program approval, the formal application should be submitted 
directly through the State Department of Transportation to the 
appropriate FHWA Division Administrator, with a copy sent concurrently 
to Mr. Patrick DeCorla-Souza, FHWA's Highway Pricing and System 
Analysis Team Leader, c/o the Office of Policy and Governmental 
Affairs, 400 Seventh Street, SW., Washington, DC 20590, or via e-mail 
at mailto:patrick.decorla-souza@fhwa.dot.gov.
    Formal VPP program applications (i.e., step 2) will be 
reviewed by a Federal Interagency Review Group,\1\ which provides 
support to the FHWA in evaluating program applications (see the ``VPP 
Program Application Review Process'' section below). Ideally, the 
refined formal application will include:
---------------------------------------------------------------------------

    \1\ The Federal Interagency Review Group was established to 
assist the FHWA in assessing the likelihood that proposed local 
value pricing programs will provide valid and useful tests of value 
pricing concepts. The Review Group is composed of representatives of 
the Tolling and Pricing Team, along with representatives of the 
Federal Transit Administration, the U.S. Environmental Protection 
Agency, and the U.S. Department of Energy.
---------------------------------------------------------------------------

    1. A description of the congestion problem being addressed (current 
and projected);
    2. A description of the proposed pricing program and its goals, 
including description of facilities included, and, for implementation 
projects, expected pricing schedules, technology to be used, 
enforcement programs, and operating details;
    3. Preliminary estimates of the social and economic effects of the 
pricing program, including potential equity impacts, and a plan or 
methodology for further refining these estimates for all

[[Page 976]]

pricing project(s) included in the program;
    4. The role of alternative transportation modes in the project, and 
anticipated enhancements proposed to be included in the pricing 
program;
    5. A time line for the pre-implementation study and implementation 
phases of the project (applications indicating early implementation of 
pricing projects that will allow evaluation during the life of SAFETEA-
LU will receive priority);
    6. A description of tasks to be carried out as part of each phase 
of the project, and an estimate of costs associated with each;
    7. Plans for monitoring and evaluating value pricing implementation 
projects, including plans for data collection and analysis, before and 
after assessment, and long term monitoring and documenting of project 
effects;
    8. A detailed finance and revenue plan, including (for 
implementation projects) a budget for capital and operating costs; a 
description of all funding sources, planned expenditures, proposed uses 
of revenues, and a plan for projects to become financially self-
sustaining (without Federal support) within three years of 
implementation.
    9. Plans for involving key affected parties, coalition building, 
media relations, and related matters, including either demonstration of 
previous public involvement in the development of the proposed pricing 
program or plans to ensure adequate public involvement prior to 
implementation;
    10. Plans for meeting all Federal, State and local legal and 
administrative requirements for project implementation, including 
relevant Federal-aid planning and environmental requirements. Priority 
will be given to applications where projects are included as a part of 
(or are consistent with) a broad program addressing congestion, 
mobility, air quality and energy conservation, where an area has 
congestion management systems (CMS) for Transportation Management Areas 
(urbanized areas with over 200,000 population or those designated by 
the Secretary).
    11. An explanation about how ETC project components will be 
compatible with other ETC systems in the region.
    If some of these items are not available or fully developed at the 
time the formal application is submitted, applications will still be 
considered for support if they meet some of the priority interests of 
the FHWA, and related project characteristics, as described earlier in 
the section entitled ``Potential Project Types,'' and if there is a 
strong indication that these items will be completed within a short 
time.

VPP Program Application Review Process

A. Requests for Funding

    After completion of an Expression of Interest, and upon subsequent 
receipt of the formal, refined application, the FHWA's Office of Policy 
and Governmental Affairs will engage the Federal Interagency Review 
Group and proceed with final evaluation.
    To ensure that all projects receive equal and fair consideration 
for the limited available funds, the FHWA requires formal grant 
applications to be submitted no later than March 31, 2006, for FY 2006 
funds, October 1, 2006, for FY 2007 funds, and each subsequent October 
1 for funding through and including FY 2009. To be assured of the 
maximum amount of constructive assistance from FHWA in preparing a 
formal application, Expressions of Interest must be submitted by 
January 31, 2006, for FY 2006 funds, August 1, 2006, for FY2007 funds, 
and each subsequent August 1 thereafter. This timeline will allow for a 
fair comparison among formal applications received and will also allow 
the FHWA to make timely recommendations to the Secretary with regard to 
allocation of available funds in accordance with the criteria discussed 
in this notice. Based on the recommendations of the Federal Interagency 
Review Group, the U.S. DOT will identify those VPP program applications 
that have the greatest potential for promoting the objectives of the 
VPP program, including demonstrating the effects of value pricing on 
congestion, driver behavior, traffic volume, ridesharing, transit 
ridership, air quality, and availability of funds for transportation 
programs. The Secretary will make selections of applications based on 
the recommendations of the Federal Interagency Review Group and 
criteria contained in this notice.

B. Projects for Which No Funds Are Requested

    Although most projects under the VPP program involve requests for 
value pricing funds, some projects do not. In such cases, and 
especially where a State is not already part of the VPP program, the 
FHWA recommends that the public authority investigate the other 
opportunities to gain authority to toll that are listed in the 
companion notice in today's Federal Register, entitled ``Safe, 
Accountable, Flexible, Efficient Transportation Equity Act: A Legacy 
for Users (SAFETEA-LU); Opportunities for State and Other Qualifying 
Agencies to Gain Authority to Toll Facilities Constructed Using Federal 
Funds.''

Cooperative Agreement

    The VPP program candidates approved for funding will be invited to 
enter into negotiations with the FHWA to develop a cooperative 
agreement under which the scope of work for the value pricing project 
will be defined. Federal statutes will govern the cooperative 
agreement. Regulations cited in the agreement, and 49 CFR part 18, 
Uniform Administrative Requirements for Grants and Cooperative 
Agreements to State and Local Governments, will also govern as they 
relate to the acceptance and use of Federal funds for this program. As 
a practical matter, each VPP program project should have a separate 
cooperative agreement. Although, in the past, the FHWA has allowed some 
States to have a master cooperative agreement that is subsequently 
amended for each approved project, in the future the FHWA will execute 
a separate agreement for each project. For value pricing projects that 
do not involve requests for Federal funds, a cooperative agreement must 
still be executed. The FHWA Division Administrator will sign the 
cooperative agreement on behalf of FHWA.

Other Requirements

    Prior to the FHWA approval of pricing project implementation, 
value-pricing programs must be shown to be consistent with Federal 
metropolitan and statewide planning requirements (23 U.S.C. 135 (c)(1), 
(e)(2)(B), (f)(1)(B)(ii)(I) and (II), (f)(3)(A) and (B); 49 U.S.C. 
5323(1)).
    Implementation projects involving tolls outside metropolitan areas 
must be included in the approved statewide transportation improvement 
program and be selected in accordance with the requirements set forth 
in section 1204(f)(3) of the TEA-21.
    Implementation projects involving tolls in metropolitan areas must 
be: (a) Included in, or consistent with, the approved metropolitan 
transportation plan (if the area is in nonattainment for a 
transportation related pollutant, the metropolitan plan must be in 
conformance with the State air quality implementation plan); (b) 
included in the approved metropolitan and statewide transportation 
improvement programs (if the metropolitan area is in a nonattainment 
area for a transportation related pollutant, the metropolitan 
transportation improvement program must be in conformance with the 
State air quality

[[Page 977]]

implementation plan); (c) selected in accordance with the requirements 
in Section 1203(h)(5) or (i)(2) of TEA-21; and (d) consistent with any 
existing congestion management system in Transportation Management 
areas, developed pursuant to 23 U.S.C. 134(i)(3).

Frequently Asked Questions

    1. Who will make up the Tolling and Pricing Team? The Office of 
Operations is the lead office and will undertake responsibility to 
gather and distribute the Expressions of Interest for preliminary 
evaluation and to maintain the aforementioned website. The Tolling and 
Pricing Team has representation from all of the relevant program 
offices that have tolling and pricing oversight responsibilities, 
including the FHWA Offices of Operations, Policy and Governmental 
Affairs, and Infrastructure. In addition, other stakeholder offices 
within FHWA and the U.S. Department of Transportation are represented, 
including the FHWA Offices of Public Affairs and Chief Counsel, and the 
Office of the Secretary of Transportation.
    2. How often will the Tolling and Pricing Team meet? The group will 
meet as often as necessary in person, but mostly will communicate via 
e-mail contact and access to a File Transfer Protocol (FTP) Web site, 
which will serve to post the Expressions of Interest for private review 
by the team almost immediately upon submittal. The Office of Operations 
will act promptly to engage the Tolling and Pricing Team to review a 
project proposal, discuss project eligibility under different programs, 
and recommend the project for further consideration under the most 
appropriate program.
    3. If I have any questions, whom should I contact? Any general 
questions concerning the tolling and pricing programs should be 
directed to Mr. Wayne Berman, Transportation Specialist, in the Office 
of Operations at 202-366-4069. His e-mail address is 
wayne.berman@fhwa.dot.gov. Alternatively, there is an e-mail 
``mailbox'' on the tolling and pricing Web site (address below). At the 
time of this notice, the direct points of contact are:
    a. Web site: https://www.ops.fhwa.dot.gov/tolling_pricing/index.htm
    b. Tolling and Pricing Team--Wayne Berman, HOP. (202) 366-4069; 
wayne.berman@fhwa.dot.gov.
    c. Value Pricing (SAFETEA-LU 1604(a))--Patrick DeCorla-Souza. (202) 
366-4076; patrick.decorla-souza@fhwa.dot.gov.
    d. HOV to HOT lane (1121)--Jessie Yung. (202) 366-4672; 
jessie.yung@fhwa.dot.gov.
    e. Express Lanes Demonstration (SAFETEA-LU 1604(b))--Wayne Berman 
(contact info above).
    f. Interstate System Construction (SAFETEA-LU 1604(c))--Greg Wolf. 
(202) 366-4655; greg.wolf@fhwa.dot.gov.
    g. Interstate Reconstruction and Rehabilitation (TEA-21 1216(b))--
Greg Wolf (contact info above).
    h. 23 U.S.C. 129 Agreements--Greg Wolf (contact info above).

    Authority  23 U.S.C. 315; sec. 1216(a), Pub. L. 105-178, 112 
Stat. 107; Pub. L. 109-59; 117 Stat. 1144 49 CFR 1.48.

    Issued on: December 28, 2005.
J. Richard Capka,
Acting Federal Highway Administrator.
 [FR Doc. E6-12 Filed 1-5-06; 8:45 am]
BILLING CODE 4910-22-P