More Tolls on Interstate Highways?

More Tolls on Interstate Highways?

November 01, 2006
Various states are moving to collect tolls on Interstate 95, the main north-south highway along the eastern seaboard in the United States. Private road developers are hoping the money collected from such tolls will be used to fund public-private partnerships to improve bridges and tunnels and add new lanes along US interstates.

South Carolina applied earlier this year to the Federal Highway Administration to collect tolls on I-95 in South Carolina. North Carolina may also be considering tolls on the part of the road that runs through it. On October 24, Virginia entered into an interim agreement with Fluor and Transurban to add high-occupancy toll lanes on I-95 immediately south of Washington, DC; the state may also be considering collecting tolls on existing portions of I-95 near the border with North Carolina.

US interstate highways are owned by states, but interstate projects are subject to federal review and approval and tolls are generally not permitted on interstates. However, Congress allowed states to apply to collect tolls on I-95 (and other interstates) in a 2005 law called the Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users, or SAFETEA-LU.

Tolls and Interstates

The general ban on tolls is found in title 23 of the United States Code, section 301. Nevertheless, some interstate highways are tolled, including I-95. There are currently tolls on sections of I-95, including the Maine Turnpike, the New Hampshire Turnpike, the New England Thruway (in New York), the George Washington Bridge (linking New York and New Jersey), the New Jersey Turnpike, the Delaware Turnpike, the John F. Kennedy Memorial Highway (in Maryland) and the Fort McHenry Tunnel (in Baltimore, Maryland). There are currently no tolls south of Maryland on I-95 in Virginia, North Carolina, South Carolina, Georgia and Florida.

The tolled portions of I-95 and other interstates are permitted, for the most part, because tolls were being collected before creation of the interstate highway system in 1956. Congress at that time established gas taxes, rather than tolls, as the preferred method for funding the interstate system, but recognized that it would be unfair to the holders of existing toll road debt to eliminate tolls on the toll roads that were going to be incorporated into the interstate system or to build competing roads that would divert traffic from those toll roads. Congress also did not want to use money set aside for road development to buy out the existing bondholders.

SAFETEA-LU created three exceptions to the general rule that tolls are barred on federal roads and it reauthorized a fourth exception.

First, an “interstate system reconstruction and rehabilitation pilot program” permits tolls on three existing interstate facilities - highways, bridges or tunnels - to raise funds for reconstruction or rehabilitation of interstate highway corridors. The three projects must be in separate states. Tolls are allowed only if the interstate highway corridor could not otherwise be adequately maintained or improved. This program is a reauthorization of a program initially adopted in 1998.

Second, a separate “interstate system construction toll pilot program” authorizes tolls on up to three interstate facilities to finance construction of
 new interstate highways. Each
 applicant state must demon
strate that tolls are the most
 efficient and economical way 
to advance the project and the
state is prohibited from enter
ing into non-compete agree
ments with private entities
 that would restrict its ability to
 improve or expand competing
capacity. Automatic toll collec
tion is required for these
projects, and tolls may only be
used for debt service, reasonable returns on private financing and operations and maintenance costs.

Third, an “express lanes demonstration program” allows tolls on existing or new interstate express lanes that help manage congestion, reduce air emissions or finance added interstate lanes to reduce congestion. Variable pricing is required if the existing express lanes are HOV lanes (high-occupancy vehicle lanes); otherwise variable pricing is optional. Up to 15 express lane demonstration projects may be carried out through 2009. Automatic toll collection is required for these projects, and tolls may only be used for debt service, reasonable returns on private financing, operations and maintenance costs or any federally funded facility. SAFETEA-LU also amended the existing federal HOV lanes program by authorizing states to convert HOV lanes into HOT lanes (high-occupancy toll lanes) if the state creates a program to address the selection of certified vehicles and procedures for enforcing restrictions.

Finally, a “value pricing program” that was originally authorized in 1991 as the “congestion pricing program” provides grants for pre-implementation, design, development and start-up costs associated with qualifying value pricing pilot projects developed by states to ease congestion. The 15 authorized pilot projects have already been selected and may include area-wide pricing, tolls or other innovative market- based strategies.

The application process for federal authority to collect tolls on an interstate facility is initiated by submitting an “expression of interest” to the tolling and pricing team at the Federal Highway Administration. The Federal Highway Administration will send back comments on the expression of interest. After responding to the comments, the applicant must formally apply to the program office that offers the best fit tolling or pricing authority.

Future Tolls on I-95

The South Carolina expression of interest to collect tolls on I- 95 said that, without innovative financing, the “much needed reconstruction and rehabilitation” of the state’s portion of I- 95 is beyond the financial capability of the South Carolina Department of Transportation. If tolls are authorized, SCDOT said it may decide to finance, construct and operate the project as a public-private partnership, or PPP. The project would involve reconstructing, rehabilitating and collecting tolls on 201 miles of I-95, which runs north-south through South Carolina.

South Carolina wants to put the project on a fast track and be collecting tolls within 24 to 36 months. Reducing congestion and increasing safety are primary concerns for the I-95 corridor. I-95 leads all South Carolina interstates in fatalities over the last five years with 128, and crash rates on I-95 are the highest among South Carolina interstates. The state wants to widen the highway to six lanes for its full length (10 miles of I-95 in South Carolina have already been expanded to six lanes, but the corridor has only four lanes for 95% of its length), create electronic toll plazas and improve bridges throughout the corridor - 17 of 162 bridges on I-95 in South Carolina are substandard and would be widened or replaced as part of the project. Given the extent of the work needed, South Carolina concluded that “the I-95 facility cannot be adequately maintained or improved without an alternative revenue source, like the collection of tolls.”

States are attracted to collecting tolls on I-95, in part, because it shifts some of the costs of highway maintenance to road users from other states. I-95 is a 1,927-mile interstate running the length of the east coast, from Miami, Florida in the south to the US-Canadian border in northern Maine. I-95 is one of the most well-known and well-traveled interstates in the country, passing through or around New York City, Washington, DC, Boston, Miami, Philadelphia, Baltimore, Richmond and other major cities. Because of its proximity to so many major cities along the east coast, I-95 is heavily used by trucks, buses and other out-of-state traffic that often rolls through South Carolina without stopping.

In its application, South Carolina said it would be willing to join neighboring states if they express similar interest in collecting tolls. In fact, North Carolina and Virginia have expressed such interest.

In 2005, the North Carolina legislature authorized tolls on interstates, subject to any required federal authorization. The legislature directed the North Carolina Department of Transportation to apply for federal authorization to collect tolls on interstate highways and set I-95 as the priority project. The 182-mile stretch of I-95 in North Carolina requires an estimated $4 billion in capital improvements, including overhauls of bridges and construction of additional lanes.

North Carolina is considering an interstate tolling compact with Virginia pursuant to which the two states would agree, upon adoption of the compact, to charge tolls for use of I-95 within their respective boundaries. Revenue from the tolls, which would be capped at $5.00 per car, would be split evenly between the neighboring states. The two states would also coordinate efforts “to establish welcome centers, rest areas, and facilities where travelers may obtain food, fuel, souvenirs, and vehicle repairs and service.” The compact has already been adopted by the Virginia legislature. The North Carolina legislature failed this year to act on the compact.

Virginia is also applying for federal authorization to collect tolls on I-81.

Rep. Jon Porter (R.-Nevada) is proposing privately-built toll lanes for I-15, which connects Las Vegas, Nevada with California. Jeff Fontaine, the head of the Nevada Department of Transportation, plans to work with California for I-15 toll lanes and may submit an expression of interest to the Federal Highway Administration to collect tolls. According to Porter, voluntary tolls along I-15 would be attractive to motorists, especially truckers. “There are seven-, eight-, nine- hour delays at times for Californians, and one out third of the vehicles on the road are trucks . . . . We want to make sure that main artery to the Vegas community is a fast and enjoyable trip for our customers and for our residents.” Eighty percent of trucks on I-15 are either from out of state or on their way out.

The I-95, I-81 and I-15 projects would be significant, but are a drop in the bucket. Only 2,900 miles of the 46,730-mile interstate system are subject to tolls today.