```

[Senate Hearing 112-762]
[From the U.S. Government Publishing Office]

                                                        S. Hrg. 112-762
 
 PROTECTING COMMUTERS: ENSURING ACCOUNTABILITY AND OVERSIGHT IN TOLLING

=======================================================================

                                HEARING

                               before the

                 SUBCOMMITTEE ON SURFACE TRANSPORTATION

                  AND MERCHANT MARINE INFRASTRUCTURE,

                          SAFETY, AND SECURITY

                                 of the

                         COMMITTEE ON COMMERCE,

                      SCIENCE, AND TRANSPORTATION

                          UNITED STATES SENATE

                      ONE HUNDRED TWELFTH CONGRESS

                             SECOND SESSION

                               __________

                             APRIL 18, 2012

                               __________

    Printed for the use of the Committee on Commerce, Science, and 
                             Transportation

                  U.S. GOVERNMENT PRINTING OFFICE
80-594                    WASHINGTON : 2013
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       SENATE COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION

                      ONE HUNDRED TWELFTH CONGRESS

                             SECOND SESSION

            JOHN D. ROCKEFELLER IV, West Virginia, Chairman
DANIEL K. INOUYE, Hawaii             KAY BAILEY HUTCHISON, Texas, 
JOHN F. KERRY, Massachusetts             Ranking
BARBARA BOXER, California            OLYMPIA J. SNOWE, Maine
BILL NELSON, Florida                 JIM DeMINT, South Carolina
MARIA CANTWELL, Washington           JOHN THUNE, South Dakota
FRANK R. LAUTENBERG, New Jersey      ROGER F. WICKER, Mississippi
MARK PRYOR, Arkansas                 JOHNNY ISAKSON, Georgia
CLAIRE McCASKILL, Missouri           ROY BLUNT, Missouri
AMY KLOBUCHAR, Minnesota             JOHN BOOZMAN, Arkansas
TOM UDALL, New Mexico                PATRICK J. TOOMEY, Pennsylvania
MARK WARNER, Virginia                MARCO RUBIO, Florida
MARK BEGICH, Alaska                  KELLY AYOTTE, New Hampshire
                                     DEAN HELLER, Nevada
                    Ellen L. Doneski, Staff Director
                   James Reid, Deputy Staff Director
                     John Williams, General Counsel
             Richard M. Russell, Republican Staff Director
            David Quinalty, Republican Deputy Staff Director
   Rebecca Seidel, Republican General Counsel and Chief Investigator
                                 ------                                

      SUBCOMMITTEE ON SURFACE TRANSPORTATION AND MERCHANT MARINE 
                  INFRASTRUCTURE, SAFETY, AND SECURITY

FRANK R. LAUTENBERG, New Jersey,     JOHN THUNE, South Dakota, Ranking 
    Chairman                             Member
DANIEL K. INOUYE, Hawaii             JOHN ENSIGN, Nevada
JOHN F. KERRY, Massachusetts         JIM DeMINT, South Carolina
BARBARA BOXER, California            ROGER F. WICKER, Mississippi
MARIA CANTWELL, Washington           JOHNNY ISAKSON, Georgia
MARK PRYOR, Arkansas                 ROY BLUNT, Missouri
CLAIRE McCASKILL, Missouri           JOHN BOOZMAN, Arkansas
AMY KLOBUCHAR, Minnesota             PATRICK J. TOOMEY, Pennsylvania
TOM UDALL, New Mexico                MARCO RUBIO, Florida
MARK WARNER, Virginia                KELLY AYOTTE, New Hampshire
MARK BEGICH, Alaska

                            C O N T E N T S

                              ----------                              
                                                                   Page
Hearing held on April 18, 2012...................................     1
Statement of Senator Lautenberg..................................     1
    Prepared statement...........................................     3
Statement of Senator Wicker......................................     4

                               Witnesses

Bill Baroni, Deputy Executive Director, Port Authority of New 
  York and New Jersey............................................     5
    Prepared statement...........................................     6
Steve Grabell, Chief Financial Officer, NFI, on behalf of the 
  American Trucking Associations (ATA)...........................     8
    Prepared statement...........................................     9
Chris Plaushin, Director, Federal Relations, American Automobile 
  Association (AAA)..............................................    15
    Prepared statement...........................................    17
Hon. Eugene A. Conti, Jr., Secretary, North Carolina Department 
  of Transportation, on behalf of the American Association of 
  State Highway and Transportation Officials (AASHTO)............    19
    Prepared statement...........................................    20

                                Appendix

Response to written questions submitted by Hon. Frank R. 
  Lautenberg to:
    Bill Baroni..................................................    37
    Steve Grabell................................................    43
    Chris Plaushin...............................................    46
Response to written questions submitted by Hon. John D. 
  Rockefeller IV to:
    The Port Authority of New York And New Jersey................    41
    Steve Grabell................................................    42
    Chris Plaushin...............................................    45
    Hon. Eugene A. Conti, Jr.....................................    47
Response to written questions submitted by Hon. Kay Bailey 
  Hutchison to Hon. Eugene A. Conti, Jr..........................    48
Letter dated July 24, 2012 to Patrick Foye, Executive Director, 
  Port Authority of New York and New Jersey and David Samson, 
  Chairman, Port Authority of New York and New Jersey from Hon. 
  John D. Rockefeller IV and Hon. Frank R. Lautenberg............    48
Letter dated August 14, 2012 to Hon. John D. Rockefeller IV and 
  Hon. Frank R. Lautenberg from Patrick J. Foye, Executive 
  Director, The Port Authority of New York and New Jersey........    49
Letter dated September 24, 2012 to David Samson, Chairman, Port 
  Authority of New York and New Jersey and Bill Baroni, Deputy 
  Executive Director, Port Authority of New York and New Jersey 
  from Hon. John D. Rockefeller IV and Hon. Frank R. Lautenberg..    62

                         PROTECTING COMMUTERS:

            ENSURING ACCOUNTABILITY AND OVERSIGHT IN TOLLING

                              ----------                              

                       WEDNESDAY, APRIL 18, 2012

                               U.S. Senate,
         Subcommittee on Surface Transportation and

            Merchant Marine Infrastructure, Safety, and Security,  
        Committee on Commerce, Science, and Transportation,
                                                    Washington, DC.
    The Subcommittee met, pursuant to notice, at 10:06 a.m. in 
room SR-253, Russell Senate Office Building, Hon. Frank R. 
Lautenberg, Chairman of the Subcommittee, presiding.

        OPENING STATEMENT OF HON. FRANK R. LAUTENBERG, 
                  U.S. SENATOR FROM NEW JERSEY

    Senator Lautenberg. Good morning and welcome all of you, 
and I appreciate the fact that our witnesses have joined us 
this morning. We've got a lot to think about in terms of how 
toll revenues are derived. What's the effect on them on the 
present infrastructure? Does it enable us to maintain a 
currency in the functioning of these facilities? So, I'm 
pleased that you're here, and our Subcommittee on Surface 
Transportation is the subcommittee that's holding this hearing, 
and the purpose is examining toll policies throughout the 
country.
    With budgets tight and transportation infrastructure 
crumbling, states are desperately seeking revenues to fund 
transportation programs. For as long as highways have existed, 
tolling has been a source of funding for projects and states 
are increasingly looking to tolling to support new 
infrastructure projects. Tolling, if done in an open and fair 
manner, can have economic benefits for a region; however, as we 
have seen recently, when authorities are not serving the public 
interest, drivers and the public pay dearly.
    We've seen tolling authorities in Maine, Florida, and 
Pennsylvania involved in various scandals and cases of 
corruption, and in my home state, in our home state of New 
Jersey, we have reached crisis levels.
    Now, I'm not against tolling, nor am I against tolling 
authorities. I am proud to be a former commissioner of the Port 
Authority of New York and New Jersey. The Port Authority has 
built some of the greatest transportation projects in our 
country. These projects changed the Northeast, and New Jersey 
would not be the vibrant state it is today if we failed to make 
these investments. But when I was a commissioner, the toll to 
cross our bridges and tunnels was $2. In today's money, it 
would be slightly more than $5. But today, the Port Authority 
tolls are out of control. It now costs $12 to cross between New 
Jersey and New York, and it's short of a mile long, the George 
Washington Bridge.
    When it costs $12 to drive your car across a bridge in 
America, something is wrong. Now, the toll increase that we've 
just seen from the Port Authority took the toll from $8 to $12. 
Now, if one goes to work every day, crossing that bridge, it's 
an $80 a month, roughly, increase in costs, besides the fact 
that people, when they get there have the cost of parking, et 
cetera. It's an enormous cost on those who are working and 
commuting to their jobs.
    Worse yet, there are allegations of patronage and 
dysfunction at the Port Authority that leaves drivers wondering 
what they're paying for. And the process that led to these toll 
hikes took place largely behind closed doors. The public was 
given conflicting information about the reason for the toll 
increase, and at the very least, people deserve to know exactly 
what their money's going for, and that it will be spent well.
    Questions were also raised about who was involved in the 
decision to raise tolls and when they approved the toll 
increase. Voters can't hold elected leaders accountable for 
their unpopular decisions when those leaders are hiding behind 
closed doors.
    There has also been an allegation of out-of-control 
political patronage at the Port Authority where substantial 
positions, with six-figure salaries, were given to former 
political bloggers, local mayors, and others with questionable 
credentials. No wonder an independent auditor called the Port 
Authority of New York and New Jersey, and I quote him, ``a 
challenged and dysfunctional organization.''
    Unfortunately, this isn't the end of the bad news for New 
Jersey commuters. A recent New Jersey comptroller investigation 
revealed major abuses at the Delaware River Port Authority in 
South Jersey. According to the State comptroller, DRPA wasted 
millions of toll revenues by allowing the Authority to be used 
like a personal ATM for those with connections to the 
commissioners. Half a million dollars of toll money went to an 
insurance brokerage firm that did no work for the Authority. 
Half a million dollars, for no work. And millions more were 
directed to economic development projects that provided no 
transportation or economic benefits. As interest in tolling 
expands across the country, we've got to examine the practices 
of these authorities and ensure proper oversight.
    Now, whether it's the ability of commuters to get to work 
or the ability of freight to move on our highways, these tolls 
have an enormous impact on our lives, and should face rigorous 
scrutiny. It's our job to ensure that the tolls are just and 
reasonable, and that future tolls are imposed with proper 
protections in place for commuters. And that's why I called for 
a GAO study to examine the practices of intrastate tolling 
authorities and introduced the Commuter Protection Act to 
restore Federal oversight of tolling practices.
    I look forward to hearing from our witnesses on current 
tolling practices, and what we can do to take steps to improve 
oversight and accountability. And I'm pleased to be joined here 
today with our colleague, Senator Wicker.
    [The prepared statement of Senator Lautenberg follows:]

            Prepared Statement of Hon. Frank R. Lautenberg, 
                      U.S. Senator from New Jersey
    Good morning. I'd like to thank you all for joining us this morning 
for a hearing of the Senate Subcommittee on Surface Transportation to 
examine tolling practices in the United States.
    With budgets tight and transportation infrastructure crumbling, 
states are desperately seeking revenues to fund transportation 
projects.
    For as long as highways have existed, tolling has been a source of 
funding for projects, and states are increasingly looking to tolling to 
support new infrastructure projects.
    Tolling, if done in an open and fair manner, can have economic 
benefits for a region. However, as we have seen recently, when 
authorities are not serving the public interest, drivers and the public 
pay dearly.
    We have seen tolling authorities in Maine, Florida, and 
Pennsylvania involved in various scandals and cases of corruption. And 
in my home state of New Jersey, we have reached crisis levels.
    Don't get me wrong: I am not against tolling, nor am I against 
tolling authorities. I am proud to be a former Commissioner of the Port 
Authority of New York and New Jersey.
    The Port Authority has built some of the greatest transportation 
projects in our country.
    These projects changed the Northeast, and New Jersey would not be 
the vibrant state it is today if we had failed to make those 
investments.
    But when I was commissioner, the toll to cross our bridges and 
tunnels was two dollars. In today's money, that would be slightly more 
than five dollars.
    But today, Port Authority tolls are out of control. It now costs 
twelve dollars to cross between New Jersey and New York.
    When it costs twelve dollars to drive your car across a bridge in 
America, something is wrong.
    Worse yet, there are allegations of patronage and dysfunction at 
the Port Authority that leave drivers wondering what they are paying 
for.
    And the process that led to these toll hikes took place largely 
behind closed doors, and the public was given conflicting information 
about the reason for the toll increase.
    At the very least, people deserve to know exactly what their money 
is paying for, and that it will be spent well.
    Questions were also raised about who was involved in the decision 
to raise tolls, and when they approved the toll increase.
    Voters can't hold elected leaders accountable for their unpopular 
decisions when those leaders are hiding behind bureaucrats.
    There have also been allegations of out-of-control political 
patronage at the Port Authority, where substantial positions with six-
figure salaries were given to former political bloggers, local mayors, 
and others with questionable credentials.
    No wonder an independent audit called the Port Authority of New 
York and New Jersey a ``challenged and dysfunctional organization.''
    Unfortunately, this isn't the end of the bad news for New Jersey 
commuters--a recent New Jersey Comptroller investigation revealed major 
abuses at the Delaware River Port Authority in Southern New Jersey.
    According to the State Comptroller, DRPA wasted millions of toll 
revenue by allowing the Authority to be used like a personal ATM for 
those with connections to the commissioners.
    Half a million dollars of toll money went to an insurance brokerage 
firm that did no work for the Authority, and millions more were 
directed to economic development projects that provided no 
transportation or economic benefits.
    As the interest in tolling expands across the country, we must 
examine the practices of these authorities and ensure proper oversight.
    Whether it's the ability of commuters to get to work or the ability 
of freight to move on our highways, these tolls have an immense impact 
on our lives and should face rigorous scrutiny.
    It is our job to ensure that existing tolls are just and 
reasonable, and that future tolls are imposed with proper protections 
in place to protect commuters.
    This is why I have initiated a GAO study to examine the practices 
of interstate tolling authorities, and introduced the Commuter 
Protection Act to restore Federal oversight of tolling practices.
    I look forward to hearing from our witnesses on current tolling 
practices and how we can take steps to improve oversight and 
accountability.

    Senator Wicker, your opening statement, please.

              STATEMENT OF HON. ROGER F. WICKER, 
                 U.S. SENATOR FROM MISSISSIPPI

    Senator Wicker. Thank you very much, Mr. Chairman. And 
thank you to our distinguished panelists today. Tolling is an 
issue that deserves the attention of this subcommittee, 
particularly as we continue to push for a long-term 
transportation reauthorization. Tolling should be part of this 
discussion, as it is an important part of how we fund and 
maintain some of the nation's most critical transportation 
projects.
    This committee has historic jurisdiction with regard to the 
tolling of bridges and tunnels, and that will be the focus of 
today's hearing. But, clearly tolling and user fees have a much 
wider application in funding transportation infrastructure. 
With an economy that is still struggling to regain its footing, 
it is of the utmost importance that the nation's drivers not be 
subject to unfair or overly burdensome toll rate increases. 
Likewise, our nation's trucking industry has an interest in 
ensuring that toll rates are set at an appropriate level, 
especially as the trucking sector seeks to remain competitive, 
with gas prices continuing to climb upwards.
    I think it's also important that we maintain the states' 
prerogative to set proper toll rates. So, I'm interested in 
hearing perspectives from all the witnesses on this morning's 
panel about the various proposals for tolling regulation.
    I supported the Senate's bipartisan transportation 
reauthorization bill, and I look forward to going to conference 
with the House, we hope, on this critical legislation. Not only 
do major transportation projects generate economic activity for 
decades to come, but they also put people to work immediately 
in the construction industry, an industry that is suffering the 
effects of our slow economic recovery.
    Looking ahead, we must start thinking about a longer term 
bill that will take transportation funding beyond 2013. 
Historically, transportation bills have been 6 years in length, 
and I'm hopeful we will move back to that longer model in the 
next Congress, so that states can once again have the certainty 
for planning that comes with a longer term reauthorization. 
This approach will present challenges and difficult choices for 
lawmakers, particularly, as revenues flowing to the highway 
trust fund flatten and even decline.
    I expect we will continue to have hearings in this 
subcommittee that will inform the many decisions that must be 
made to pass a longer term bill, and today's hearing on tolling 
is a good start.
    Thank you, Mr. Chairman.
    Senator Lautenberg. So, we have today's witnesses. We are 
pleased that you're here, and look forward to hearing from you.
    Mr. Bill Baroni has a significant position in the 
management of the Port Authority of New York and New Jersey. 
It's a great agency. And we're expecting that we'll have a 
chance to discuss the Port Authority's tolling practices. Chris 
Plaushin, Vice President of Public Affairs for AAA, and he'll 
be discussing the impact of tolling on the traveling public. 
Steve Grabell, Chief Financial Officer, National Freight. We 
look to you, sir, for the trucking industry's perspective. And 
Mr. Conti, Eugene Conti, is North Carolina's Secretary of 
Transportation. And we look forward to your testimony on behalf 
of the American Association of State Highway and Transportation 
officials.
    And with that, Mr. Baroni, please.

   STATEMENT OF BILL BARONI, DEPUTY EXECUTIVE DIRECTOR, PORT 
              AUTHORITY OF NEW YORK AND NEW JERSEY

    Mr. Baroni. Thank you, Chairman, and thank you, Senator 
Wicker. Senator Wicker, I have to apologize. It is very rare to 
come to the U.S. Senate and be able to address the Chairman 
with a title even greater than Senator, and that is, of course, 
Commissioner Lautenberg. It is good to see you. Commissioner 
Lautenberg spent 4 years at our great Port Authority. And 
Senator, thank you for giving me the opportunity to be here, 
and I look forward to our discussion on a number of topics that 
you raised.
    But, as you said, back in the summer of 2011, the Port 
Authority did, indeed, face a crisis. We faced a crisis, 
because over the years preceding that, decisions were made and 
the economy reached a point where the revenues at the Port 
Authority were down $2.6 billion. Our activity levels at our 
crossings were down. We had decades of wasteful spending that 
preceded us. Our cost of borrowing was up.
    We'd invested in the decades leading up to my arrival at 
the Port Authority. We'd invested in real estate investments 
that, quite frankly, were either losing money or certainly a 
drain on the agency, and we had a series of Federal mandates, 
largely unfunded, that caused the Port Authority to get to the 
point where we were facing a crisis. And we did everything we 
could to push that decision back.
    We had three straight flat operating budgets. In fact, 
since Governor Christie came into office, the actual operating 
expenses year to year, since I got the Port Authority, is down 
$33 million. We've the lowest number of full-time employees at 
the Port Authority since the 1940s. Since I came into office 
with Governor Christie and Chairman Sampson, we have 243 less 
people working at the Port Authority. We've cut $10 million out 
of the salary line in the--but even with all those decisions, 
we still face looming transportation questions.
    We had a Bayonne Bridge. We have a Bayonne Bridge. And 
Senator, you and Senator Menendez, Senator Schumer, and Senator 
Gillibrand jointly signed a letter urging the Federal 
Government to help us raise that Bayonne Bridge. The Goethals 
Bridge, linking Elizabeth and Staten Island, anybody's who's 
ever driven it knew we needed to work to spend well more than 
$1 billion.
    The Lincoln Tunnel Helix that takes people into the Lincoln 
Tunnel each and every day needed to be rehabbed. It hadn't 
happened in 70 years. The George Washington Bridge, the most 
iconic bridge, perhaps, certainly, in the world, the suspender 
ropes, and the project needed $1.8 billion of capital spending.
    The Harrison PATH station built in 1930s, anyone who's 
traveled--in fact Mayor McDunn and I were there in Harrison. 
You look at that train station. We need to build a new one.
    We are a state of good repair projects. Christopher Street 
PATH Station needed a new substation. We had to do all that. 
And at the same time, we had thousands of men and women, 
construction workers, iron workers, bricklayers, operators, 
laborers who needed jobs. And the projects that we were 
prepared to do, that we didn't have the money to do, would 
employ 16,000 people. So, we were forced to propose a toll 
increase.
    But, we didn't just do a blanket toll increase as agencies, 
and, quite frankly, the Port Authority had done in the past. We 
tried to create a progressive tolling structure that valued the 
things that we look for in New York and New Jersey. We wanted 
to increase E-ZPass driving. We wanted to encourage carpooling. 
We wanted to encourage people to drive green cars. We wanted to 
encourage our truckers to travel off-peak or overnight. So, we 
created a tolling structure that gave discounts.
    Right now, under our tolling structure, if your car, and 
you drive during peak E-ZPass, you get a 21 percent discount. 
If you drive off-peak, it's a 37 percent discount. If you've 
got a green car, 67 percent discount. If you're in a carpool, 
71 percent discount. For people who use the Staten Island 
bridges multiple times, 50 percent. And for our trucks, as we 
know, trucking drives much of our economy in New York and New 
Jersey, if you're a truck today, and you've got an E-ZPass, and 
you drive off-peak, it's a 31 percent discount.
    If you drive during peak, 23 percent discount, with an E-
ZPass. If you drive overnight with an E-ZPass, it's a 42 
percent discount. And if you do more than 100 trips of big 
business, like my friend here, you're going to get an extra 10 
percent. We did that. We did that, because we know how 
difficult this is, and we built a process for that toll, and I 
know, Senator, you mentioned it, the most number of public 
hearings ever for a Port Authority toll increase, we had 10 
public hearings, an online public hearing, more than 1,500 
people turned out, more than 500 people spoke. And what 
resulted? A toll plan that's going to put 16,000 people to 
work, a toll plan that's going to fix that infrastructure, a 
toll plan that values environmental justice, values E-ZPass, 
values green pass, values carpool, and we did it in the most 
open and transparent ever in the history of the Port Authority. 
That is a process that worked.
    It's hard to raise tolls. It's difficult to raise tolls. It 
is harder to have the George Washington Bridge suspender ropes 
needing to be replaced. It's harder not to have the Lincoln 
Tunnel Rehab for the Helix. It's harder to have a Harrison 
train station that's not disabled accessible. That's what we 
did, and we did it in an open and transparent manner.
    I look forward to the questions.
    [The prepared statement of Mr. Baroni follows:]

       Statement of the Port Authority of New York and New Jersey
    The Port Authority of New York and New Jersey is a bi-state agency 
under the leadership of New York Governor Andrew Cuomo and New Jersey 
Governor Chris Christie. The agency was created in 1921 to build, 
operate and maintain many of the busiest and most important 
transportation facilities in the region, including some of the 
country's largest airports, the East Coast's largest seaport, six major 
bridges and tunnels and the PATH rapid transit system linking the two 
states. The agency also owns the 16-acre World Trade Center site.
    As an agency that does not receive tax dollars from either state, 
our primary source of revenue to operate and maintain this interstate 
transportation network is through the tolls we collect on our bridges 
and tunnels, which is the subject of today's hearing along with the 
transparency and accountability issues that come with being a toll-
collecting agency.
    In September 2011, at the request of both governors, the Port 
Authority's Board took unprecedented action by forming a Special 
Committee to conduct a full review of the authority's past and current 
governance, management and financial practices. This comprehensive 
review looked at how this 91-year-old agency could do the public's 
business better, smarter and more cost efficiently. Its overall goal 
was to identify ways for the agency to continue to carry out the 
agency's mission of job creation and economic growth and to meet its 
responsibilities to maintain and operate its critical transportation 
facilities.
    The results of the first phase of this review were made public in 
February 2012--during a very open and transparent process--and resulted 
in significant reforms in how this agency conducts its business.
    These reforms, led by our bi-state and bi-partisan Board of 
Commissioners, have included historic changes in compensation and 
benefits, which will save the agency and its toll payers $41 million 
dollars over the next 18 months; a new Freedom of Information code, 
which streamlines the process of the public receiving information; the 
creation of the Port Authority Transparency Project, which has already 
posted more than 20,000 pages of documents online; a pilot program that 
waives fees for the public to receive public records, something perhaps 
no other government or public agency in the Nation is doing; a complete 
review and restructuring of the Port Authority Security structure to 
ensure our commuters and customers continue to be safe; and the posting 
of all compensation of employees and retirees.
    These and dozens of other reforms are the hallmark of a new Port 
Authority that values its toll payers' hard earned dollars, while also 
ensuring we meet our unique and critical role of building the region's 
infrastructure and providing economic growth and job creation.
    The PA is embarking on an extraordinary period of mission critical 
projects including: a new Goethals Bridge; raising the roadway on the 
Bayonne Bridge; a rehabilitated Lincoln Tunnel Helix; the replacement 
of the George Washington Bridge suspender ropes; a new PATH station in 
Harrison, NJ; a new George Washington Bridge Bus Station in upper 
Manhattan; hundreds of millions of dollars in road and bridge projects 
on both sides of the Hudson; and the completion of the World Trade 
Center.
    Our goal is to accomplish these objectives with full transparency 
to enable our toll payers to measure and judge the progress we are 
making to create a better travel experience for them. We also will 
strive to fulfill our mission as an engine for job creation and 
economic growth, which will benefit the millions of people who live and 
work in this bi-state region.
    This is a new day at the Port Authority, and we will continue our 
ongoing efforts to keep our customers informed every step of the way as 
we do the public's business.

    Senator Lautenberg. You're finished with your testimony?
    Mr. Baroni. Senator, the good folks who talked to me said 
when that five minutes hits, I should stop.
    [Laughter.)
    Mr. Baroni. And I'm going to listen to the directions I'm 
told. When Ian tells me five minutes and shut up, I'm going to 
shut up.
    Senator Lautenberg. We have not said that yet. Anyway, if 
you've completed the testimony that you wanted to bring to it.
    Mr. Baroni. Well, Senator, I'm happy to continue. I wanted 
to condense it.
    Senator Lautenberg. No. I mean, but we----
    Mr. Baroni. They instructed me that you have more questions 
for me.
    Senator Lautenberg. We just used your extra time, so----
    Mr. Baroni. OK. Thank you, Senator.
    [Laughter.]
    Senator Lautenberg. We'll go on now to our next witness.
    Mr. Grabell, we'd like to hear from you, and get your view 
on the trucking industry's perspective.

      STATEMENT OF STEVE GRABELL, CHIEF FINANCIAL OFFICER,

   NFI, ON BEHALF OF THE AMERICAN TRUCKING ASSOCIATIONS (ATA)

    Mr. Grabell. Thank you. And I'll try to subscribe to my 
five-minute limit as well, Bill.
    Chairman Lautenberg, Senator Wicker, thank you for inviting 
me to testify on behalf of the American Trucking Associations. 
As the CFO of a diversified trucking company, with extensive 
operations in the Northeast and the Mid-Atlantic, I'm deeply 
concerned about the significant increases in toll costs that 
have been imposed on NFI and other trucking companies over the 
past few years.
    Last year alone, my company paid $14 million in tolls. 
These added costs have forced us to reroute our trucks to less 
efficient secondary roads, which raises our costs and increases 
congestion and safety concerns.
    In addition to the impact increased tolls have on logistics 
providers, the added costs associated with toll increases 
filter down to the consumer and affect business decisions 
regarding hiring, and facility locations, and equipment, and 
expansion.
    The trucking industry recognizes that the resources 
available for highway maintenance and improvement are well 
short of what is needed, and we are willing to contribute more, 
provided the money is invested wisely. However, we do not 
believe that tolls are necessarily an efficient way to fund 
highway projects, particularly when they're imposed on 
previously toll-free highways.
    We are especially concerned when tolling authorities use 
toll revenue for projects and programs that contribute little 
or no value to the motorists who are paying the fees. 
Unfortunately, some of these authorities have demonstrated a 
disregard for their customers in terms of rate-setting 
practices, governance, and expenditure of toll revenue. At 
least where toll facilities serve interstate traffic, we 
believe that Federal oversight and possible intervention in 
determining toll rates is necessary and appropriate.
    While there are many examples of irresponsible actions by 
tolling authorities that merit Federal attention, I would like 
to cite two examples which have been brought to light by recent 
state audits: The Port Authority of New York and New Jersey, 
and the Delaware River Port Authority.
    Last year, the Port Authority of New York and New Jersey 
announced massive increase in toll rates on its six bridges and 
tunnels connecting New Jersey and New York City. By 2015, the 
cash truck toll rate will increase by 163 percent, to $105. 
This is nearly three times greater than the country's next 
highest bridge toll rate.
    Throughout the process of instituting the rate increases, 
the Port Authority's public involvement and disclosure 
practices were visible. During its so-called public outreach 
process, the Port Authority did not disclose how the additional 
revenue will be spent, and to this date has refused to make 
that information public. It appears, however, that the vast 
majority of the revenue will be directed to projects that have 
no benefit for toll payers. Instead, most of the money will be 
used to benefit seaports and airports, and to complete the 
reconstruction of the World Trade Center office buildings.
    Mr. Chairman, a recent audit described the Port Authority 
as dysfunctional, and questioned management's ability to 
effectively and prudently operate the organization. It's clear 
that Federal oversight of the Authority, which is created 
through interstate compact by Congress, is necessary and 
appropriate.
    If possible, the Delaware River Port Authority, also a 
federally-authorized body, may be even more dysfunctional, and 
similarly in need of Federal oversight, of course, until Bill 
got involved. According to a recent audit, for a period of at 
least 10 years, the Authority violated many of its own policies 
and procedures, particularly those related to its spending 
practices. The audit also suggested that State officials, who 
were supposed to be providing oversight, were instead 
benefiting from these violations, and had little incentive to 
prevent these practices from occurring.
    We are most concerned about the expenditure of $440 million 
in economic development funds at the expense of critical bridge 
maintenance and improvement projects. These expenditures are in 
direct violation of the Authority's compact, which prohibits 
expenditure of funds on economic development projects if 
sufficient money is not available for bridge projects. In fact, 
the Authority actually had to take on additional debt to pay 
for the economic development projects, even as it was cutting 
back on funding for bridge projects.
    Mr. Chairman, we greatly appreciate your introduction of 
the Commuter Protection Act, which was cosponsored by Senator 
Menendez. ATA believes it is a significant step towards 
ensuring better oversight of tolling authorities that serve 
interstate traffic. Congress has an obligation under the 
Constitution's commerce clause to ensure that interstate 
travelers, who may not be represented when rate setting and 
spending decisions are made, to have a voice in these 
processes.
    And as such, since the early part of the 20th century, 
Federal law has required that toll rates for certain bridges 
should be just and reasonable. Unfortunately, and 
unintentionally, the authority to enforce this requirement has 
eroded. The Commuter Protection Act will correct its oversight.
    We look forward to working with the Subcommittee to pass 
Federal legislation that curtails tolling authority abuses and 
ensures that the public is treated fairly, with a transparent 
process that takes the interest of interstate travelers into 
account.
    Thank you.
    [The prepared statement of Mr. Grabell follows:]

 Prepared Statement of Steve Grabell, Chief Financial Officer, NFI, on 
           Behalf of the American Trucking Associations (ATA)
Introduction
    Chairman Lautenberg, Ranking Member Wicker, and members of the 
Subcommittee, thank you for giving me the opportunity to testify on 
behalf of the American Trucking Associations (ATA). The American 
Trucking Associations is the largest national trade association for the 
trucking industry. Through a federation of other trucking groups, the 
industry-related conferences and its 50 affiliated state trucking 
associations, ATA represents more than 35,000 members covering every 
type of motor carrier in the United States.
    My name is Steve Grabell and I am the Chief Financial Officer for 
National Freight, Incorporated, more commonly known as NFI. NFI offers 
a complete range of transportation and distribution services throughout 
the United States and Canada, including dedicated trucking, non-asset 
based transportation services, public and dedicated warehousing, and 
other supply chain and logistics services. NFI is based in New Jersey 
and has total annual revenues of approximately $1 billion. More than 50 
percent of NFI's trucking revenue is generated in the Mid-Atlantic and 
Northeast regions of the U.S., where tolls are most prominent. NFI 
operates approximately 2,000 tractors and 7,000 trailers and about 20 
million square feet of warehouse space.
    Mr. Chairman, we are very concerned about the irresponsible 
behavior of some tolling authorities which, along with complicit state 
officials, seemingly view toll revenue as a slush fund for investment 
in all manner of projects, programs and activities which have nothing 
to do with maintaining their highways, bridges and tunnels. We believe 
that these toll facilities must be subject to Federal oversight, and 
the statutory ``just and reasonable'' toll rate standard that has been 
in effect for nearly a century must be applied to toll facilities that 
serve interstate traffic. Furthermore, Federal enforcement authority, 
whether through judicial review, Executive Branch oversight, or a 
combination of the two, must be restored. Absent such action, consumers 
and businesses will be compromised by unfair costs and a highway system 
that is less efficient and less safe.
The Impacts of Tolls on NFI
    Due to our considerable operations in the Northeast and Mid-
Atlantic, NFI bears a significant toll burden. In 2011 alone, we paid 
approximately $14 million in tolls. Tolls represent the fourth largest 
expense category for our trucking fleet, behind the cost of our 
drivers, trucks and fuel. In the event of increases in tolls, we are 
able to pass on to our customers in any given year, 50 percent to 80 
percent of these increases, depending on contractual commitments, 
market conditions and the particular freight lanes. Regardless, there 
will always be a portion of our toll cost increases that we cannot 
collect from our customers. For example, when the marketplace may not 
accept, or may delay the acceptance of, the additional pricing for 
necessary empty miles run by our trucks without customer freight. The 
additional costs, administrative burdens, as well as customer frictions 
created by the toll increases, compromise margin and customer 
satisfaction in an already low margin, highly competitive business.
    Our customers, ultimately, bear much of the costs of tolls, and of 
course, they attempt to pass the costs on to their customers, which 
eventually filter through to the consumer of the product. This impacts 
the customers' cost of doing business and creates additional 
uncertainty regarding these companies' ability to continue to operate 
in the Northeastern part of the U.S. and other areas of the country 
that impose tolls on major freight routes. It should be no surprise 
that companies have relocated to more business-friendly locations. Toll 
costs certainly contribute to these decisions. It is also important to 
recognize that individual toll facilities do not exist in a vacuum. 
Because of other recent increases in the Northeast, by 2015 a trip from 
Baltimore to New York City will cost a 5-axle truck more than $209 in 
tolls. To put this into perspective, the tolls could represent more 
than 20 percent of the charge to a customer for this move and would 
make tolls as a cost component more expensive than the cost of a 
driver, truck or fuel for this trip. This will be a serious 
consideration for businesses who are considering their future plans, 
including in states served by the I-95 corridor which do not impose 
tolls.
    Due to these recent major toll rate increases in our service area, 
we are in the process of reviewing all of our major lanes in the 
Northeast to evaluate rerouting to avoid tolls. We have some success 
avoiding, for example, the New Jersey Turnpike. We have to measure the 
cost savings of the tolls relative to costs associated with the out-of-
route miles. Unfortunately, to avoid tolls, we are creating additional 
mileage and congestion on non-toll roads which in some cases may be 
less safe. Obviously we prefer to use Interstates as much as possible, 
but we operate in a competitive industry with low average profit 
margins, and when toll authorities raise their rates to a certain 
threshold, we have no choice other than to find a less expensive 
alternative. Tolls distort the marketplace by penalizing those vehicles 
that stay on the toll roads and rewarding those that divert to local 
roads. As a result, efforts to raise money for toll facility 
maintenance and improvement have the unintended, yet predictable, 
effect of adding to the maintenance costs of diversionary routes. In 
some cases these routes are outside of the state where the toll 
facility is located.
Some Toll Authorities Have Abused the Public Trust
    Mr. Chairman, while there is significant evidence of toll authority 
abuse in many locations, we would like to highlight two recent 
examples: the Port Authority of New York and New Jersey (PANYNJ) and 
the Delaware River Port Authority (DRPA).
Port Authority of New York and New Jersey
    A January 31, 2012 audit report \1\ of the PANYNJ found ``a 
challenged and dysfunctional organization suffering from a lack of 
consistent leadership, a siloed underlying bureaucracy, poorly 
coordinated capital planning processes, insufficient cost controls, and 
a lack of transparent and effective oversight of the World Trade Center 
(the ``WTC'') program that has obscured full awareness of billions of 
dollars in exposure to the Port Authority.'' The report found that the 
PANYNJ had accumulated debt of $19.5 billion by the end of 2011, which 
is projected to rise to $20.8 billion by the end of 2012.
---------------------------------------------------------------------------
    \1\ Navigant, ``Phase 1 Interim Report to the Special Committee of 
the Port Authority of New York and New Jersey,'' Jan. 31, 2012.
---------------------------------------------------------------------------
    In order to fund a 10-year, $25.1 billion capital plan, in 2011 the 
PANYNJ announced a massive toll rate increase on the six interstate 
bridges and tunnels between New York and New Jersey under its 
jurisdiction. By 2015 the cash toll rate will increase by 88 percent 
for cars and a whopping 163 percent for 5-axle trucks. This is on top 
of a 75 percent increase in truck tolls passed just three years 
earlier. At $105 per crossing on PANYNJ facilities, the truck toll rate 
will be nearly three times higher than the rate for any other bridge or 
tunnel in the country. In a laughable attempt to mitigate the 
exorbitant increases, the authority recently developed a ``Truck Repeat 
Volume Program,'' which offers a mere 10 percent discount on trucks' 
monthly tolls, provided they take 100 trips or more through Port 
Authority crossings during off-peak hours within 30 days. However, the 
vast majority of truckers entering New York City will not be eligible 
for the program. The fact that a truck has to cross during off-peak 
hours presents a huge problem. The trucking industry does not choose 
when to cross a bridge--that is dictated by our customers. Until 
shippers and receivers allow truck deliveries during overnight hours, 
trucks MUST travel into New York City during high congestion times. 
Furthermore, most trucking companies are small operators and simply do 
not have the necessary volumes to qualify. In addition, in order to 
qualify for the discount, the truck must have either a New York or New 
Jersey E-ZPass transponder. Transponders from other states do not 
qualify.
    Since the PANYNJ has refused to specify how the additional toll 
revenue will be spent, it is unclear how the money generated by the 
toll increases will be invested. Public information made available by 
the Authority lists the projects to be funded, but does not detail the 
amount to be spent on each.\2\ A PANYNJ press release put out prior to 
final approval of the capital budget suggested that only about $3 
billion of the revenue from toll increases will be used for projects 
that directly benefit toll payers.\3\ The remainder will be used to 
raise the Bayonne Bridge to accommodate larger ships, improve security 
at PANYNJ facilities, and fund airport and seaport improvements. 
However, the most egregious use of toll revenue is the approximately 
$11 billion dedicated to the completion of the World Trade Center 
office buildings. It is apparent from the audit report that these costs 
are likely to escalate. It is unclear why trucking companies and 
commuters are being forced to foot the bill for a real estate project. 
Certainly when Congress granted an interstate compact to the PANYNJ, it 
did not envision that the Authority's responsibilities would extend to 
such activities.
---------------------------------------------------------------------------
    \2\ http://www.panynj.gov/press-room/press-
item.cfm?headLine_id=1445.
    \3\ http://www.panynj.gov/press-room/press-
item.cfm?headLine_id=1401.
---------------------------------------------------------------------------
    The manner in which the Authority conducted the public hearings 
associated with the toll increase did not allow commuters and carriers 
with legitimate concerns, and who would likely suffer significant 
hardship as a result of the increases, with sufficient opportunity to 
provide input. The proposal was announced on August 5, 2011, and only 
one day of hearings was scheduled, for August 16, 2011. This allowed 
less than two weeks for the public to analyze the proposal and prepare 
remarks. The hearings were held at locations that were difficult for 
the public to reach, and at inconvenient times of the day. Following 
the hearings, the Port Authority Board met on August 19, 2011 and 
approved a revised toll increase schedule which was apparently 
negotiated with both Governor Cuomo (NY) and Governor Christie (NJ). As 
a result, the public was not even provided an opportunity to comment on 
the final proposal. The approved toll increase was set to go into 
effect on September 18, 2011, providing less than a month for motorists 
to prepare for the exorbitant increases associated with the first phase 
of the 5-year planned increases. This is especially problematic for 
trucking companies, which cannot easily renegotiate contracts with 
customers or, in many cases, cannot effectuate the rate increases with 
customers within such a short period. The result for NFI and other 
truckers is that we will absorb a disproportionate amount of the toll 
increase for a period of time.
    The hearings associated with the proposed increases were frankly 
just window dressing. The way in which the whole process was conducted 
sent a very clear message that the decision to increase tolls had 
already been made, without regard to public input. The increases were 
forced on motorists during a slow recovery from one of the worst 
economic recessions in history, with little to no time for commuters or 
businesses to determine how they would budget for the increased costs. 
The process and the outcome points to an Authority with unchecked power 
that shows little regard for the impacts of its decisions on the 
community which it purports to serve.
Delaware River Port Authority
    Among other responsibilities, DRPA owns and operates four 
interstate bridges serving traffic between Pennsylvania and New Jersey. 
Until the PANYNJ's recent rate increases, DRPA's truck toll rates were 
the highest in the country for a bridge crossing. A March 29, 2012, 
investigative report by the New Jersey Office of the State Comptroller 
found ``wasteful spending and mismanagement of tollpayer funds due to 
misguided priorities as well as weak or ignored DRPA policies, 
procedures and internal controls.'' \4\ The report reveals an 
organization whose flagrant disregard for its customers, misuse of 
public funds and disregard for following even basic tenets of public 
accountability, is a textbook demonstration of the need for greater 
Federal oversight.
---------------------------------------------------------------------------
    \4\ http://www.state.nj.us/comptroller/news/docs/
report_drpa_032912.pdf.
---------------------------------------------------------------------------
    Here are just a few of the report's findings regarding DRPA's 
operations over the past 10 years:

   $1.5 million in payments were made to two insurance firms 
        that provided no service or coverage to DRPA.

   $440 million in ``economic development'' project grants were 
        made, even though the DRPA Compact prohibits such grants if 
        sufficient money is unavailable for bridge projects. Over the 
        same period, DRPA had to cut back on bridge project funding and 
        take on additional debt to fund economic development projects.

   The economic development project selection essentially 
        relied on the recommendations of elected officials from New 
        Jersey or Pennsylvania, and from DRPA commissioners. Projects 
        were accepted without any evaluation of the benefits to DRPA. 
        No project oversight was instituted.

   Contributions from the DRPA's charitable contributions fund 
        were almost all made to organizations in some way affiliated 
        with the commissioners.

   DRPA commissioners, employees and their friends and family 
        members got free passage E-ZPasses, which cost $1.2 million 
        over 10 years.

   DRPA totally ignored all procedures with regard to expense 
        reimbursement, caps on expenses using DRPA credit cards, etc. 
        The report found evident abuse, citing ``meetings'' at 
        expensive restaurants and questionable trips and outings, some 
        for elected officials responsible for Authority oversight.

    It is clear from the report's findings that the obvious abuses at 
DRPA over a long period of time were allowed to continue with the 
knowledge of the state officials who were supposed to provide 
oversight, most likely because these officials were benefitting from 
DRPA's largesse.
    These are just two recent examples of toll agencies' irresponsible 
practices. There are many more. Here is just a sampling:

   The Ohio Turnpike Commission raised toll rates by 82 percent 
        in the mid-1990s, and was subsequently forced to partially roll 
        back the increases when it became apparent that massive 
        diversion of traffic to secondary roads was occurring, a 
        scenario that the Commission was told would likely unfold even 
        before they made the decision to raise rates. The Commission 
        ignored entreaties from the state legislature, local school 
        boards, the trucking industry, local city governments and 
        others, who warned that the rate increase would cause massive 
        evasion with dire consequences. The Commission went ahead with 
        their plans anyway. It is instructive that while the 
        Commission's own rules require public hearings prior to a rate 
        increase, and did indeed schedule hearings, none of the 
        Commissioners actually showed up, having obviously 
        predetermined the outcome.

   In 2003, the Delaware River Joint Toll Bridge Commission 
        voted to increase tolls by 300 percent, partially for economic 
        development, even though Federal law did not allow them to use 
        toll revenue for this purpose. When Commissioners realized they 
        could not spend the money as intended, rather than roll back 
        the increases, they put the money into a slush fund. When ATA 
        challenged the rate increases under the Federal ``Just and 
        Reasonable'' standard, the Court found that although the 
        Commission likely violated the standard, Federal law does not 
        provide a private right of action to enforce the law, and 
        therefore the suit was thrown out.

   The New York Thruway recently approved toll rate hikes of up 
        to 100 percent, in part to finance a continuing subsidy of the 
        state's canal system.

   In 2004, the City of Chicago signed a 99-year lease 
        agreement handing control of the Chicago Skyway--and the toll 
        revenue it generates--to a private consortium in return for a 
        one-time payment to the City of $1.8 billion. Nearly all of 
        this money was used to retire city debt. Skyway users--about 80 
        percent of whom live in Indiana--were forced to endure a 
        doubling of toll rates. Indiana residents will have the 
        satisfaction of knowing that for the next century they will be 
        paying off the debt for a city which they do not even reside 
        in.
ATA Opposes Tolls on Existing Lanes
    Mr. Chairman, a safe, efficient system of highways connecting 
America's cities, towns and rural areas, financed in a fair and 
equitable way, is essential to our country's economic well-being, 
national security, and overall quality of life. Trucks move 67 percent 
of our Nation's freight tonnage and draw 81 percent of freight 
revenue.\5\ Unfortunately, the highway system no longer meets our 
transportation needs. According to the U.S. Department of 
Transportation, highway investment would have to approximately double 
in order to fix the system's deficient pavements and bridges, and 
address serious and growing congestion on highways throughout the 
Nation.\6\
---------------------------------------------------------------------------
    \5\ Global Insight, U.S. Freight Transportation Forecast to . . . 
2023, 2012.
    \6\ U.S. Department of Transportation, 2008 Status of the Nation's 
Highways, Bridges and Transit: Conditions and Performance, 2009.
---------------------------------------------------------------------------
    Disruptions to the movement of freight on our Nation's highway 
system due to congestion jeopardize the tremendous gains the trucking 
industry has made to improve supply chain efficiencies. Congestion 
slows delivery times, creates unpredictability in supply chains, and 
ultimately makes U.S. businesses less competitive and consumer products 
more expensive. If we fail to address congestion, these costs will 
continue to rise, and will translate into higher consumer prices and 
slower job growth, and weaken the United States' ability to compete in 
the global economy. However, the real costs of congestion are largely 
hidden. The supply chain is wound so tightly that any disruption or 
slow-down can cause significant ripple effects.
    Recognizing these serious threats to our Nation's economic 
security, ATA's members have indicated their willingness to support an 
increase in highway user fees, provided the revenue is dedicated to 
projects and programs that will benefit goods movement on the Nation's 
highways. We use the following criteria to determine how this revenue 
should be raised.

   Will produce the level of revenues needed to meet current 
        and future highway infrastructure needs;

   is easy and inexpensive to pay and collect;

   has a low evasion rate;

   is tied to highway use; and

   does not create impediments to interstate commerce.

    Traditional user fees, such as fuel taxes and registration fees, 
meet the above tests, and ATA has been a vocal proponent for an 
increase in the Federal fuel tax. Tolls, on the other hand, fall well 
short of meeting these criteria, and therefore ATA is strongly opposed 
to tolls on existing Interstate highways. While Federal law generally 
prohibits this practice, Congress has, over the years, created a number 
of exceptions. Imposing tolls on existing lanes of the Interstate 
System would have a devastating effect on the trucking industry. The 
industry is highly competitive and tolls cannot easily be passed along 
to shippers. Furthermore, tolls cause diversion of traffic to 
alternative routes, which are usually less safe and were not built to 
handle the additional traffic.
    ATA also opposes the imposition of mileage-based user fees, which 
are a form of tolling. While we recognize that in the future a 
replacement for the fuel tax as the primary source of revenue for 
highway funding will be necessary due to changes in vehicle technology, 
that scenario is likely at least two decades away. It is also important 
to understand that passenger vehicle fleet conversion will precede 
commercial vehicles' transition from internal combustion engines by 
many years. Therefore, it would be illogical to require trucks to 
transition to a mileage-based fee before passenger vehicles. In 
addition, currently available options for implementing vehicle miles 
traveled fees are limited, and these options have extremely high 
collection costs and will experience a very high level of evasion.
Federal Oversight is Needed
    Mr. Chairman, we would like to thank you and Senator Menendez for 
introducing the S. 2006 ``Commuter Protection Act.'' This legislation 
will provide greatly needed oversight for irresponsible tolling 
authorities and protect the public from being gouged in order to fund 
projects and programs that do not benefit them by ensuring that rates 
comply with the long-established ``just and reasonable standard.'' 
Those tolling agencies which set ``just and reasonable'' toll rates 
will not be affected by the legislation and have no reason to be 
concerned with or oppose the bill.
    Title 33, Section 508 of the United States Code requires that 
``Tolls for passage or transit over any bridge . . .'' constructed over 
navigable waterways ``. . . shall be just and reasonable.'' This 
requirement, which was first established in 1906, was amended several 
times over the years. In 1966, Congress gave the U.S. Department of 
Transportation (USDOT) the explicit authority to determine whether 
tolls met the just and reasonable standard, although it was equally 
clear that the law gave the public the right to challenge the agency's 
decisions through the judicial process.
    In a wide-ranging effort to streamline the Federal administrative 
process, in 1985 Congress removed the USDOT's authority to rule on the 
just and reasonable standard. While it is clear from the legislative 
history that Congress' intent was to retain a just and reasonable 
standard that was challengeable through the court system, the new 
language did not explicitly create a private right of action which 
would allow the public to challenge the toll rates in Court. In a 2006 
decision by the United States Court of Appeals for the Third Circuit, 
the Court established that this lack of a specific provision for a 
private right of action prevents the public from challenging toll rates 
through the judicial process. As a result, since Congress removed the 
Federal government from the review process altogether, the Court 
decision essentially rendered Section 508 moot, despite the fact that 
Congress clearly intended to retain the just and reasonable standard.
    The result of this decision is that toll authorities subject to 
Section 508 can, and have, set toll rates which generate revenues that 
are far in excess of what is necessary to maintain and improve the 
tolled bridges. In some cases, the tolls have become a slush fund for 
all manner of activities completely unrelated to the bridges 
themselves, and with little or no benefit to the motorists paying the 
tolls. These toll rates clearly violate the just and reasonable 
standard established by Congress. Yet neither the public nor the 
Federal government has the ability to challenge these rates and enforce 
Federal law. The Commuter Protection Act, a bicameral, bipartisan bill, 
would restore enforcement of the just and reasonable standard and we 
urge its passage.
    Congress has a Constitutional obligation to protect interstate 
commerce. Most of the states that have considered, or are currently 
considering, Interstate tolls, have suggested that they will charge 
tolls at their borders or at other locations designed to place much of 
the financial burden on out-of-state traffic, an act that likely 
violates the Commerce Clause. Multi-state agencies, such as the PANYNJ 
and the DRPA, operate with the consent of the Federal government and 
are subject to Federal requirements.
    Mr. Chairman, as described above, we have witnessed a disturbing 
trend among some tolling authorities. Operating independently, or with 
the support of, or benign neglect from, state officials, these 
authorities seem to view their control over the distribution of toll 
revenue as an opportunity for personal enrichment or accumulation of 
power. Without Federal oversight, such abuses may never be uncovered 
and will not be curtailed.
    Toll facilities that serve significant volumes of interstate 
traffic are particularly in need of Federal oversight. This is 
especially true of bridges and tunnels, which normally do not have 
toll-free alternatives. In these cases, facility users are captured, 
and the normal free market rules which might otherwise hold toll rates 
down do not apply. Under these circumstances, one can characterize 
tolls more as taxes than as user fees, since customers have no choice 
but to pay the toll. Yet out-of-state travelers have no voice with 
regard to whether their toll taxes should be raised since they enjoy no 
political representation. A Federal presence is required to fill that 
void and to be the voice of representation for interstate travelers. 
This is certainly consistent with the Commerce Clause.
    Mr. Chairman, once again, I would like to thank you for holding 
this hearing. We look forward to working with the Subcommittee to 
ensure that the rate-setting practices of tolling authorities are fair, 
transparent, and consistent with the public's interest. We also 
encourage Congress to refrain from granting additional state authority 
to toll existing Interstates, and to consider eliminating existing 
authority.

    Senator Lautenberg. Thank you very much.
    Mr. Plaushin, we'd like to hear from you. I understand 
you're the Vice President for Public Affairs, AAA, and we'd 
like your view on what's happening with tolls.

   STATEMENT OF CHRIS PLAUSHIN, DIRECTOR, FEDERAL RELATIONS, 
             AMERICAN AUTOMOBILE ASSOCIATION (AAA)

    Mr. Plaushin. Thank you very much, Chairman Lautenberg and 
Senator Wicker for the opportunity to testify here today.
    To put our tolling policies and positions in context, AAA 
believes the success of any tolling plan is first that 
motorists must be assured that the tolls they pay are fair and 
equitable, the process for setting these toll rates is 
transparent and open, and that the revenues derived are 
utilized to improve the corridor or facility from which they 
are collected.
    As a general principle, AAA opposes tolling the existing 
interstate, but we also recognize that tolling to provide new 
capacity is among the future solutions that will help us 
increase capacity and manage congestion.
    AAA has done periodic polling on the topic of 
transportation funding and, specifically, on tolling, in 
particular. And naturally, it would come to no one's surprise 
that no one really wants to pay more, but what we found is that 
the public is generally more supportive of the concept of a 
user-paid system, and then that support can translate to 
tolling on the principle that toll revenues collected will be 
solely dedicated toward the transportation improvements for 
that particular facility. But once that direct link is severed, 
the public acceptance will plummet.
    The Office of the New Jersey State Comptroller said as 
much, recently detailing the actions of the Delaware Port 
Authority, stating that toll payers have borne a financial 
burden attributable to years of mismanagement and neglect. Over 
15,000 AAA members registered their complaints to the DRPA 
board for raising tolls and spending revenues on items 
unrelated to transportation improvements.
    If tolling is to fulfill its role as part of the solution 
to financing our infrastructure needs, tolling proposals must 
provide the public with recognizable improvements for their 
traveling experience. Instead, the public is being asked to pay 
more and more, and in return, given less and less. The daily 
commuter, the AAA member, the small businessman, the traveler 
is being squeezed and developing a sense of futility, because 
they feel that they have no voice in the process, and in many 
cases, they don't.
    Going forward, what can we do better, and what kinds of 
safeguards should be in place to ensure the public good is 
being served. Toll rates need to have a sound economic basis to 
reflect the actual costs of improvements to the system, and 
capital plans should be included as part of the overall scope. 
A sufficient amount of time needs to be established between the 
development of the tolling proposal, the public hearings, and 
final approval so that all portions of the plan can be fully 
vetted.
    Public hearings on tolling need to be held at a variety of 
locations and times, especially to ensure that there's broader 
public acceptance. And tolling authorities should make annual 
disclosures of their financial status and the progress of the 
debt retirement for the tolled facilities within their 
jurisdictions.
    Before concluding, Mr. Chairman, I want to take the 
opportunity to state AAA's support for your legislation, the 
Commuter Protection Act, and to thank you for your leadership 
on the issue of toll fairness and revenue protection. Your bill 
will reinforce the definition of ``just and reasonable'' as the 
standard for tolls, and reassert the need for accountability 
and oversight of the process.
    Further, today I'd like to submit a letter sent yesterday 
from AAA's CEO, Bob Darbelnet, to the Executive Director of the 
E-ZPass Interagency Work Group. Various AAA clubs have heard 
from their members with complaints about unfair and unequal 
treatment for those with E-ZPass transponders, and it appears 
that E-ZPass holders are being charged different amounts, based 
on which authority issued their transponder, or which state 
they were issued at.
    [The letter follows:]

                            American Automobile Association
                                       Heathrow, FL, April 17, 2012
Mr. PJ Wilkins,
Executive Director,
E-ZPass Interagency Group,
Wilmington, DE.

Dear Mr. Wilkins:

    I am writing to express AAA's concerns about disparate E-ZPass 
tolling policies being exercised by member agencies of the E-ZPass 
Interagency Group (IAG). AAA represents over 53 million members in 
North America, with 19 million of them residing in the states that make 
up the E-ZPass network.
    AAA clubs have heard from members who utilize E-ZPass technology 
about what they characterize as unequal and unfair treatment of those 
with transponders. Their complaints are based on various toll 
authorities charging different amounts to E-ZPass holders depending on 
which authority issued the transponder.
    We believe this practice is not only unfair and could serve as an 
impediment to interstate travel and commerce, but also flies in the 
face of the underlying promise of E-ZPass, which you state is ``to 
provide the public with a seamless, accurate, interoperable electronic 
method of paying tolls and fees.''
    There is no reason for one authority to charge some E-ZPass holders 
a higher toll, except, unfortunately in our estimation, to take 
advantage of drivers who may be ``from out-of-state.'' The fact is, the 
cost of providing the transportation service and collecting the toll 
are identical for a vehicle with an E-ZPass tag issued by the home 
authority and a vehicle with a tag from an away authority.
    I urge you to work within the IAG to put an end to this practice.
            Sincerely,
                                       Robert L. Darbelnet,
                                                 President and CEO.

    Mr. Plaushin. AAA believes charging out-of-state drivers a 
higher toll rate violates the underlying promise of E-ZPass, 
which is to provide the public with a seamless, accurate, and 
interoperable electronic method of paying tolls and fees.
    And with that, I will conclude my remarks in four minutes. 
And thank you again for the time today.
    [The prepared statement of Mr. Plaushin follows:]

  Prepared Statement of Chris Plaushin, Director, Federal Relations, 
                 American Automobile Association (AAA)
AAA History
    Thank you for the opportunity to testify at today's hearing. My 
name is Chris Plaushin. As the Director of Federal Relations for AAA, I 
oversee AAA's Federal public policy and advocacy agenda on the topic of 
transportation funding.
    By way of background, AAA was founded in 1902 to advocate for 
better roads and motorist safety. AAA is a not-for-profit, fully 
taxpaying federation of motor clubs in the U.S. and Canada serving over 
53 million members. Nearly 24 percent of all North American passenger 
vehicles belong to AAA members. Our members are prime users and 
beneficiaries of the Nation's surface transportation system. They are 
commuters, leisure travelers, business owners, and users of public 
transportation.
Current Needs, Immediate Crisis
    As members of this committee know all too well, our Nation's 
transportation system is woefully underfunded. Opinions differ on how 
to make up this funding shortfall and precisely whose responsibility it 
is to bridge the funding divide. But we should not lose sight of the 
fact that everyone involved in this complex discussion cares about the 
future of our system and wants to create a more functional, efficient, 
sustainable transportation network.
    The U.S. Department of Transportation (USDOT) recently released its 
latest Conditions and Performance report which estimates that $101 
billion, plus increases for inflation, would be needed annually over 
the next 20 years from all levels of government--local, state and 
federal--to maintain the highway system in its current state. 
Investments needed to improve the current state of highways and bridges 
could total up to $170 billion a year, according to the report.
    The most recent American Society of Civil Engineers report card 
gave our Nation's roads a ``D-'' grade and our bridges a ``C''. 
Further, the Congressional Budget Office last month issued its March 
2012 baseline for the Highway Trust Fund that shows it is expected to 
stay solvent through the end of Fiscal Year 2012 but run into a 
negative balance sometime in Fiscal Year 2013.
    All of this data demonstrates that we are on the wrong trajectory 
when it comes to the maintenance of our current system and providing 
adequate funding to expand our system to meet the demands of the 21st 
century.
    AAA has been sounding the alarm on this topic for years. While our 
engagement has brought some successes along the way, unfortunately 
there is still much work to be done and not much time to do it. Which 
brings us to our topic for today's hearing--the role that tolling can 
play as a future funding solution to our Nation's transportation 
funding crisis.
AAA Tolling Policy/Position
    To put our tolling policy and positions in context, AAA believes 
the success of any transportation funding plan or program is that fees 
or taxes collected are fair and equitable, transparent, and used for 
the purposes for which they are collected.
    AAA supports the user-fee concept as the most appropriate and fair 
way to continue to fund our transportation system for the future. 
Tolling, properly implemented, is a part of the solution.
    At the same time, tolling is estimated--even in the most ideal of 
circumstances--to only bring in a small portion of the revenue needed 
to build and maintain our Nation's infrastructure. Despite this, there 
are some who envision a system where tolling is the silver bullet 
solution to all that ails our transportation network.
    As a general principle, AAA opposes tolling existing capacity, but 
tolling new capacity is among the future solutions necessary to 
increase capacity and manage congestion. However, tolls are not the 
panacea proponents often try to paint them to be. As I mentioned 
before, we won't fix the Nation's transportation funding shortfall by 
assuming that tolled projects alone will fill the gap.
    Tolling for some in the transportation community is simply a way to 
engage in the real policy pursuit of congestion pricing. AAA generally 
opposes pricing when it is implemented as a punitive measure to get 
people out of their cars while providing no alternatives. A fairer 
approach is to provide a priced road as an alternative to existing 
congested roads. Many people don't have flexibility with their 
employers to alter their work schedules to non-peak travel times. By 
providing priced lanes as a superior service alternative, motorists can 
choose to use them when time and predictability are most important.
    Key to our support for tolls is that the revenue not be diverted to 
other uses. In a perfect world, toll revenue would only be reinvested 
in the facilities where users are charged, though we are now seeing an 
increasing trend of toll money being used for other transportation 
projects off the tolled-traffic corridor, as well as projects that have 
nothing to do with transportation. These are troubling trends which 
only serve to move us further away from the user-pays/user-benefits 
model.
AAA Public Polling Data
    In terms of public perceptions on tolling, AAA national as well as 
some individual AAA clubs, periodically poll the public on the topic of 
transportation funding, and tolling more specifically. What we have 
found is that the public generally supports the idea of a user-pays 
system and supports tolling on the principle that toll revenue 
collected would be solely dedicated towards transportation improvements 
for that particular facility.
    In 2009, we found that 41 percent favor building new toll roads and 
bridges which polled fairly high against other funding alternatives. 
Similarly, in a telephone survey conducted among 800 New Jersey 
motorists in May, 2011, the AAA New Jersey Automobile Club found that 
67 percent of survey respondents support maintaining existing toll 
rates and planned toll rate increases.
    The public has clear expectations that the tolls they pay will be 
utilized for the purpose of upkeep and proper maintenance for the 
facility on which they were collected. Once that direct link is 
severed, the toll is no longer a direct user fee, it just becomes 
another tax.
AAA Recommendations for Tolling Authorities
    Going forward, what can we do better and what kind of safeguards 
should be in place to ensure the public good is being served?

   Toll rates need to have a sound economic basis to reflect 
        the actual cost of improvements to the system. A capital plan 
        should be included as part of the overall project scope.

   A sufficient amount of time needs to be established between 
        the development of the tolling proposal, the public hearings, 
        and final approval, to ensure that all portions of the plan are 
        fully vetted.

   Public hearings on tolling proposals need to be held at a 
        variety of locations and times, especially to ensure broader 
        public attendance. Further, tolling commissioners should be 
        required to attend such hearings.

   Tolling authorities should make annual public disclosures of 
        their financial status and the progress of the debt retirement 
        for each tolled facility within its jurisdiction.
Commuter Protection Act
    With that in mind, Mr. Chairman, I want to take this opportunity to 
state AAA's support for your legislation, the Commuter Protection Act, 
and thank you for your leadership on the issue of toll fairness and 
revenue protection. AAA endorses the Commuter Protection Act and is 
pleased that you were able to get included within MAP-21 a GAO study of 
tolling authority practices. Hopefully this will improve public 
oversight and accountability of tolling agencies while we continue to 
work towards enacting this important legislation.
    As you know, the Commuter Protection Act would protect commuters 
and interstate travelers from unfair and egregious toll hikes. 
Specifically, your bill would restore USDOT authority to determine 
whether toll increases are `fair and reasonable.' Groups like AAA and 
other affected parties would have an opportunity to protest toll 
revenue diversion, and other unjustified actions, on Federal roads and 
bridges before USDOT.
E-ZPass Letter
    Before closing, I'd like to take a moment to discuss an issue that 
AAA thinks is critical to the future of tolling in the United States--
and that is the interoperability and seamless nature of interstate 
tolling transponder technology. Tolling agencies that utilize E-ZPass 
technology and are members of the E-ZPass Interagency Group (IAG) have 
recently engaged in a harmful, discriminatory practice of charging 
drivers who purchase their transponders out-of-state a higher rate than 
those who purchase their technology in-state.
    This troubling industry trend is the subject of a letter, sent 
yesterday by AAA's President and CEO Robert Darbelnet to the E-ZPass 
IAG which I would like to submit for the record.
    The letter calls on the IAG, which represents toll facilities that 
account for almost 40 percent of all U.S. toll transactions and nearly 
70 percent of all U.S. toll revenue, to immediately end this misguided 
charging practice.
    Technology that was once hailed as being innovative, open, fair and 
transparent, is at risk of becoming perceived as untrustworthy, 
parochial, inconvenient and heavy-handed because of this discriminatory 
business practice. AAA has an interest in protecting the integrity of 
future cashless tolling systems which we believe are important to 
motorists because of their convenience, and accommodation of free-
flowing toll payments. I hope the IAG is able to remedy this troubling 
issue for the benefit of America's motoring public.
Conclusion
    AAA is committed to doing its part to engage our members and raise 
awareness about the transportation funding challenges our Nation faces. 
We're doing so through our ``Making America Stronger'' campaign and 
website, social and traditional media channels as well as club efforts 
at the state and local level. Our research shows Americans understand 
that a free-flowing, safe, efficient transportation system is needed to 
keep us competitive in the global economy. We need to focus our 
collective efforts on building broader public support for all solutions 
that can raise revenue, in a fair and responsible way, for our Nation's 
transportation infrastructure.
    Thank you for the opportunity to testify here today. I look forward 
to any questions you might have.

    Senator Lautenberg. We didn't stop you to pay any tolls.
    [Laughter.]
    Mr. Plaushin. It was a fast trip.
    Senator Lautenberg. You just kept going. Anyway, thanks 
very much.
    Mr. Conti, we look forward to hearing from you now.

   STATEMENT OF HON. EUGENE A. CONTI, JR., SECRETARY, NORTH 
    CAROLINA DEPARTMENT OF TRANSPORTATION, ON BEHALF OF THE 
                 AMERICAN ASSOCIATION OF STATE 
         HIGHWAY AND TRANSPORTATION OFFICIALS (AASHTO)

    Mr. Conti. Thank you, Mr. Chairman and Senator Wicker for 
giving me the opportunity to share the state policy 
perspectives on the use of tolling as part of a menu of revenue 
options for surface transportation. And I have submitted a 
longer statement for the record. I'm testifying on behalf of 
the American Association of Highway and Transportation (AASHTO) 
officials, which represents all the states transportation 
departments.
    Two Federal commissions and a number of recent studies have 
demonstrated and documented that we have a significant 
investment deficit. I think both of you referenced that in your 
opening comments. There is a significant investment deficit in 
surface transportation infrastructure at all levels of 
government.
    We have a sizable portfolio of financing mechanisms that 
could be utilized to supplement more traditional grant funding, 
which supports investments in transportation infrastructure, 
and one of the most useful has proven to be tolling options.
    AASHTO developed the board of directors, which is all the 
states' CEOs. It recommends adopting a diversified portfolio of 
revenue options, including tolling, to meet program funding 
needs, and to this end, we believe the Congress should support 
flexible national policies that use both conventional and 
innovative financing tools. For example, Federal limitations 
should be removed on the ability of state and local governments 
to raise toll revenues, and to apply those revenues to 
transportation projects and activities within the same corridor 
or region as the toll facility. At the same time, we recognize 
that states must continue to deliver on the need for 
accountability and transparency.
    Under the interstate reconstruction and rehabilitation 
pilot program, which was authorized under T-21, the last three 
existing interstate facilities to be tolled, this tool holds 
tremendous promise, given the backlog of reconstruction and 
rehabilitation needs in the interstate system, and three 
states, including my home state of North Carolina, along with 
Missouri and Virginia, have been approved by the Federal 
Highway Administration to proceed with those pilots.
    We have addressed very directly the issues of transparency, 
accountability, and equity in our pilot program, and I know 
Virginia is in particular doing the same thing to make sure 
that we are studying all the issues around tolling Interstate 
95 through North Carolina. We have spent 30 months, two and a 
half years, to reach out to affected communities and users of 
the I-95 corridor through social media, through a dedicated 
website, through editorial board meetings, through structured 
workshops, with stakeholder groups, and the public. Seven 
public hearings. Seven informational workshops. We've gone 
beyond the traditional project development process by adding an 
additional step to assess the economic impact along the 
corridor of the potential tolling of I-95. And let me say very 
directly that our Governor has not decided whether to move 
forward with this imitative, but we are doing the detailed work 
that needs to be done in a transparent way to make that 
decision openly and with all the facts on the table.
    Let me conclude by just commenting on the Commuter 
Protection Act. Our concerns, from a state perspective, are an 
insertion of new Federal oversight and uncertainty into what 
has traditionally been a state and local process for setting 
toll rates. We would resist the idea of direct Federal 
decisionmaking for tolling. We have no problem with the Federal 
involvement as it is, where we work with the Federal Highway 
Administration on new tolling proposals, and to make sure that 
we follow those rules of transparency and accountability that I 
talked about. But to lose the ability of states and localities 
to make these decisions and to have another step in the process 
of Federal approval and decisionmaking we think would 
discourage the role of tolls and innovative finance, and 
particularly create an impediment for private investment in 
infrastructure projects.
    So, we think the most appropriate role for the Secretary is 
to stay within that broader Federal policy framework, and to 
continue to provide the guidance and counsel that we've had in 
the past.
    Thank you, Mr. Chairman.
    [The prepared statement of Mr. Conti follows:]

   Prepared Statement of Hon. Eugene A. Conti, Jr., Secretary, North 
   Carolina Department of Transportation, on Behalf of the American 
   Association of State Highway and Transportation Officials (AASHTO)
Introduction
    Chairman Lautenberg and Members of the Subcommittee, thank you for 
the opportunity to share AASHTO's policy perspectives on the use of 
tolling as part of a menu of revenue options for surface 
transportation. My name is Dr. Eugene Conti, and I serve as Secretary 
of the North Carolina Department of Transportation. Today I am 
testifying on behalf of the American Association of Highway and 
Transportation Officials (AASHTO), which represents the state 
departments of transportation (DOTs) of all 50 states, Washington, D.C. 
and Puerto Rico.
    The federal surface transportation program is at a crossroads. 
While the Highway Trust Fund (HTF) had generally provided stable, 
reliable, and substantial highway and transit funding since its 
inception in 1956, this is no longer the case. According to the 
Congressional Budget Office, HTF spending is estimated to exceed 
receipts by about $13 billion per year on average for the next ten 
years (FY 2013-2022). At the same time, the National Surface 
Transportation Policy and Revenue Study Commission has projected future 
Federal investment needs at $225 billion per year for the foreseeable 
future. When compared to about $90 billion currently spent, there is a 
significant investment deficit in surface transportation 
infrastructure.
    This trend toward flattening or declining revenues at a time of 
increasing investment needs is not something that is limited to just 
the current Federal funding sources. In fact, this funding issue is 
creating deep concern at all levels of government about the outlook for 
adequate resources for maintenance and capacity improvements in highway 
and transit assets in the United States. While addressing the 
transportation investment crisis will require sustained commitment from 
a broad range of stakeholders, a key component in this effort is the 
funding and financing mechanisms that could be utilized to support 
investment in transportation infrastructure. One of the useful proven 
tools is tolling.
Definition and Historical Context
    Generally, roadway tolling can be applied at the state and local 
level in a wide range of fashions, including turnpikes, which are 
individual (generally long-distance) facilities that charge a fee for 
use; ``single links,'' which are facilities such as bridges, tunnels, 
or connector roads; and ``managed lanes,'' or highway lanes that are 
devoted to carpoolers, public transit vehicles, and toll-paying users, 
including but not limited to High Occupancy Toll (HOT) lanes and HOT 
networks, or systems of high-occupancy vehicle lanes.
    The United States has made extensive use of, and has broad 
expertise with facility-based tolling, but the history of toll use has 
also been evolving. Prior to the Interstate era and the Federal Aid 
Highway Act of 1956, many of the major highways and bridges/tunnels in 
the country were funded through toll financing. Examples include the 
turnpikes in Pennsylvania, New Jersey, and Delaware and many of the 
bridges and tunnels in the New York metropolitan area. After 1956, 
however, the number of new facilities built as toll roads declined 
dramatically due to the focus on completing the Interstate system, the 
availability of Federal funding to support investment, and the Federal 
tolling prohibitions that went along with the use of this money.
    In recent years, with the growing gap between highway investment 
needs and available revenues as well as the development of easy-to-use 
automated toll collection technology, toll roads and toll lanes have 
once again become an important means for financing investment in new 
highway capacity--in the last decade about one-third of all new 
limited-access lane miles built in the United States were tolled; in 
states such as Texas and Florida, the share is even higher.
    Modern tolling in the United States has occurred primarily in two 
forms: for new construction and for rehabilitation or conversion of 
existing facilities. Tolling for new construction covers most tolling 
projects currently in development in the country and relates to the use 
of tolling to fund new capacity in the form of either new highways or 
additional lanes for existing facilities. Examples of recent new toll 
alignments (so-called greenfield projects) include the Pocahontas 
Parkway in Virginia and the Inter County Connector in Maryland. The 
State Route 91 Managed Lanes Project in Orange County in California, 
which included the addition of two toll lanes in each direction 
parallel to existing non-tolled lanes, exemplifies the use of tolls to 
add new capacity to existing routes. In North Carolina, we are opening 
this year the state's first modern toll road, around Raleigh, and two 
more toll expressways near Charlotte are close to construction.
    Tolling for rehabilitation or traffic management involves either 
imposing a toll on an existing bridge or roadway to help pay for its 
rehabilitation or replacement or converting High Occupancy Vehicle 
(HOV) lanes to High Occupancy Toll Lanes (HOT) lanes to make better use 
of existing capacity. Examples of these so-called brownfield projects 
include addition of tolls on the Tacoma Narrows Bridge in Washington 
and the Coleman Bridge in Virginia to pay for reconstruction or 
expansion and various HOT lane conversions in California, Colorado, 
Minnesota, and Utah. Again in North Carolina, we are planning 
conversion of HOV lanes to HOT lanes to pay for widening of congested 
Interstate 77 near Charlotte.
    Currently, there are more than 270 state and local toll roads, 
bridges, and tunnels in 32 states, totaling 5,541 miles of roadway. 
Several more toll facilities are either in development or under 
consideration. In 2008, toll revenues of $11 billion represented 9 
percent of total federal, state, and local highway user fee revenues 
(i.e., from motor fuel taxes, vehicles fees, and tolls).
    Toll roads have been widely used to finance important system links 
between large cities by crossing through rural areas in states such as 
Kansas, Oklahoma, Pennsylvania, and New York. While the majority of 
U.S. toll roads (by number of facilities) is in urban areas, 52 percent 
of the country's toll road miles are in rural areas, mostly on the 
parts of the Interstate system as part of statewide tolling programs 
(grandfathered from tolling prohibition in case of Interstates), not as 
part of targeted tolling efforts. In addition, several toll road 
projects have been initiated or developed in recent years in ex-urban 
areas.
AASHTO Recommendation On Federal Tolling Policy
    The AASHTO's Board of Directors recommends adopting a diversified 
portfolio of revenue options, including tolling, to meet program 
funding needs. Furthermore, given the magnitude and diversity of needs 
throughout the country, Congress should develop national policies that 
support flexible use of both conventional and innovative funding and 
financing tools. Under this framework, state DOTs agreed that Federal 
limitations should be removed on the ability of state and local 
governments to raise toll revenues and to apply such revenue to 
multimodal transportation projects and activities within the same 
corridor or region as the tolled facility.
    We recognize that seeking greater Federal flexibility for tolling 
activities entail states and local partners ensuring that such programs 
are implemented with appropriate accountability, transparency, and 
equity. There is no question that states have and will continue to 
deliver on the need for accountability and transparency. States have 
been able to demonstrate many positive benefits of tolling over the 
past decades. Some examples include:

   Raising substantial revenues as non-federal shares and 
        paying for state-only investments, in areas where traffic 
        volumes make it cost-effective to implement;

   Establishing a revenue stream that tends to be stable and 
        well suited to be dedicated to transportation;

   Adjusting toll rates as necessary to account for inflation, 
        including through automatic toll rate adjustment mechanisms;

   Utilizing excess revenues (beyond debt service and 
        operations costs) for transportation purposes at their 
        discretion;

   Encouraging innovation through implementation of electronic 
        toll collection and other tolling technologies to improve 
        compliance enforcement and offering user benefits such as 
        improved travel speeds and toll discounts that, over time, can 
        help offset the associated costs of the technology to the 
        consumer;

   Setting toll rates to manage congestion, which can help 
        maximize the efficiency of the existing network;

   Providing income equity in many instances through provision 
        of non-toll alternatives such as transit;

   Generally establishing a high level of user-beneficiary 
        equity by ensuring that toll rates reflect the benefits derived 
        by the user, and;

   Constructing tolled turnpikes in regional or national goods 
        movement corridors to provide robust highway capacity through 
        rural regions that otherwise could not afford it.

    Furthermore, expanding Federal flexibility and support for tolling 
would continue to build upon a progression of policy changes in the 
last two decades achieved through ISTEA, the NHS Act, TEA-21, and 
SAFETEA-LU that established the following programs:

   Express Lanes Demonstration Program

   High Occupancy Vehicle (HOV) Facilities

   Interstate System Reconstruction & Rehabilitation Pilot 
        Program

   Interstate System Construction Toll Pilot Program

   Title 23 U.S.C. Section 129 Toll Agreements

   Value Pricing Pilot Program

   High Occupancy Toll (HOT) Facilities

    Reflecting the need for program financing beyond the traditional 
pay-as-you-go framework, some of these pilot programs have seen heavy 
demand from states. In particular, the Interstate System Reconstruction 
& Rehabilitation Pilot Program allows up to three existing Interstate 
facilities (highway, bridge, or tunnel) to be tolled to fund needed 
reconstruction or rehabilitation on Interstate highway corridors that 
could not otherwise be adequately maintained or functionally improved 
without the collection of tolls, This tool holds tremendous promise 
given the backlog of reconstruction and rehabilitation needs in the 
Interstate system after 56 years in service.
    Three states, including my state of North Carolina, along with 
Missouri and Virginia, have been approved for pilot demonstrations. 
This is how we have addressed the issues of transparency, 
accountability and equity in our pilot program studying the feasibility 
of tolling Interstate 95 through North Carolina. Over a period of 30 
months, we have reached out to affected communities along the 182-mile 
I-95 corridor through social media, a dedicated website, editorial 
board meetings, seven citizen informational workshops, seven public 
hearings and numerous public presentations and meetings with 
stakeholder groups. We are also going beyond the traditional project 
development process by conducting an extensive economic analysis on the 
economic impact of the project on local communities.
Commuter Protection Act
    I would also like to take this opportunity to share AASHTO's 
perspective on S. 2006, the Commuter Protection Act, introduced by 
Senator Lautenberg in December 2011. We understand that this 
legislation would provide the U.S. Secretary of Transportation the 
authority to review and regulate tolls for passage over or through any 
bridge or tunnel on any Federal-aid highway.
    Contrary to additional flexibility that tolling affords the states 
in meeting funding needs, this bill would introduce new Federal 
oversight and uncertainty into what has traditionally been a state-and 
locally-managed process of setting toll rates. At a time when new 
infrastructure investment opportunities should be encouraged, this bill 
would introduce direct Federal decision making for tolling, which could 
discourage states and regions from utilizing tolling to expand capacity 
and improve operations of their facilities and the overall 
transportation network.
    Furthermore, the loss of tolling agencies' ability to set their own 
rates would have a deeply unfavorable effect on their credit ratings, 
increasing the cost of capital and making it harder for such agencies 
to borrow money through issuances of bonds for much needed capital 
improvements, maintenance and other essential services. In addition, 
the bill would discourage use of toll-financed public-private 
partnership (PPP) opportunities. Instead of granting maximum access and 
flexibility to a mix of funding and financing tools most appropriate 
for each state including toll-based PPPs, Congress would create new 
impediments to private investment through this legislation.
    We believe that the U.S. Secretary of Transportation's most 
appropriate role with respect to tolling lies in addressing the broader 
Federal policy framework, including how the historically strong Federal 
investments in surface transportation can best be sustained over the 
long term.
Conclusion
    On behalf of AASHTO, I very much appreciate the opportunity given 
to us to offer our views on appropriate tolling policies to support 
transportation funding and financing. Given the tremendous challenges 
we face at all levels of government, the state DOTs are in full support 
of assisting you in your efforts to address our national infrastructure 
investment needs. Thank you and I look forward to answering any 
questions you may have.

    Senator Lautenberg. Thanks very much, Mr. Conti.
    I want to take a look at what's happened, Mr. Baroni, with 
recent toll increases, drivers paying $12 in cash and nearly 
$10 with E-ZPass to cross the Port Authority bridges and 
tunnels. Trucks have to pay as much as $65 to cross. The 
question is: did the size of the increase strike those of you 
who make the decision at the Port Authority as being fair? I 
mean that's a substantial 50 percent increase to cross the 
bridge. That's a lot of money.
    Mr. Baroni. Senator, thank you for the question, and I know 
that the conversation we heard some of my colleagues talking 
about how much it is, but as I described before, Senator, that 
if you are a cash-paying, non-E-ZPass using, rush-hour driving 
truck, you are causing the most challenges physically to our 
crossings. For every fully loaded tractor-trailer that goes 
across our bridges, it's 10,000 times the damage to our bridges 
as one car.
    But one of the reasons we built all of the discounts in, 
Senator, is to be able to--those folks who are commuting, who 
have an E-ZPass, or are driving off-peak. And Senator, 
respectfully, I understand the concerns that people have about 
paying tolls across the Hudson. It is something that commuters, 
as you mentioned, Senator, pay each and every day. But 
respectfully, Senator, you only started paying tolls recently. 
For years, Senator, as a former commissioner of my agency, you 
received free E-ZPass. In fact, I have a copy of your free E-
ZPass. I've got letters from 2001.
    Senator Lautenberg. How often was it used, do you know?
    Mr. Baroni. Yes, actually. 2001, 2002, 2003----
    Senator Lautenberg. But how many times?
    Mr. Baroni. Well, I can tell you. Without----
    Senator Lautenberg. I'm not going to permit you to continue 
with this silliness.
    Mr. Baroni. Well, Senator, you took 284 trips for free in 
the last 2 years you had a pass.
    Senator Lautenberg. I want you to answer this question.
    Mr. Baroni. Sure.
    Senator Lautenberg. Is this fair? Is this toll increase 
fair to the public at large?
    Mr. Baroni. I think, Senator, for the----
    Senator Lautenberg. Talk about the individual cars, and 
then we can talk about truckers.
    Mr. Baroni.--cars. Certainly.
    Senator Lautenberg. I want to keep you on track, so let's 
go.
    Mr. Baroni. Certainly, Senator. It is impossible to argue 
fairness in tolls if you don't pay them. So, the people who are 
driving vehicles across the Hudson River each and every day, we 
give discounts for E-ZPass peak, discounts for E-ZPass off-
peak. We give discounts for carpools. We give discounts for 
green pass.
    Senator Lautenberg. Have the discounts worked?
    Mr. Baroni. It worked.
    Senator Lautenberg. Has it leveled off the usage on the 
facilities?
    Mr. Baroni. It has. We're now up to 81 percent of our 
facilities use E-ZPass. Vehicles that cross the bridges and 
tunnels are 81 percent. We're up 4 percent E-ZPass use since 
August of last year.
    Senator Lautenberg. You've talked about trucks. You've 
talked about----
    Mr. Baroni. Well, you asked me to talk about vehicles.
    Senator Lautenberg. Yes. Vehicles, trucks, I'm talking 
about the whole assemblage of people who use those bridges and 
tunnels and pay tolls.
    Mr. Baroni. Eighty-one percent of the people who will go 
through the tolls at the Port Authority crossings will use an 
E-ZPass that they pay for.
    Senator Lautenberg. How do you get an E-ZPass?
    Mr. Baroni. There are a variety of ways to get an E-ZPass. 
You can go online and get an E-ZPass.
    Senator Lautenberg. What do you pay for an E-ZPass?
    Mr. Baroni. I think the number is, it's $20-some. I can get 
back to you on the exact number, Senator.
    Senator Lautenberg. Yes. The fact of the matter is that if 
you've got the extra money, you get a little bit of privilege.
    Mr. Baroni. I'm not sure what you mean by----
    Senator Lautenberg. I guess it's all right.
    Mr. Baroni. E-ZPass is not a privilege.
    Senator Lautenberg. I'm going to conduct this hearing. And 
I'll give you adequate time to respond.
    Mr. Baroni. Great.
    Senator Lautenberg. I'll promise you that.
    You flooded us with all the things that were wrong in the 
past, and to pull out that little thing that I got after 
serving in the Port Authority for 4 years, I don't even think 
about using it, Mr. Baroni.
    Mr. Baroni. Of course not, because we took it away, 
Senator.
    Senator Lautenberg. Well, what happened, it was there. 
That's what they did, and that's what I took. And I'm not going 
to defend it. That's a silly thing to bring into this. I want 
to discuss your direction of this grand agency, and where the 
money has gone.
    Mr. Baroni. Sure.
    Senator Lautenberg. And why the increases were so large. Is 
that fair play, in your view? Why did the administration that 
we have in office now cancel $6 billion worth of money that we 
raised through this place to build a tunnel and get 22,000 cars 
a day off the road? You want to talk about those things? We 
have to stay on the subject, and I, now Chairman of this 
Subcommittee, will lay the ground rules.
    Mr. Baroni. Senator, I'm prepared to talk about anything 
you'd like.
    Senator Lautenberg. Yes. And you were prepared to talk 
about a lot of things that aren't relevant to this subject. You 
can't hear me? I'll make it louder, I promise you.
    So, is $12 for crossing fair?
    Mr. Baroni. Is $12 for a crossing, if you don't have an E-
ZPass, therefore, you're backing our traffic up? Yes.
    Senator Lautenberg. Yes. If you don't have the money to buy 
an E-ZPass, right.
    Mr. Baroni. If you're traveling on E-ZPass and you're going 
through on peak rush hour, and you don't have an E-ZPass, given 
the fact that 81 percent of the people who do our crossings 
have an E-ZPass, and given the fact--you know, for every 10 
percent that we can move people----
    Senator Lautenberg. How do you go to work?
    Mr. Baroni. Say it again.
    Senator Lautenberg. How do you go to work? You live in New 
Jersey.
    Mr. Baroni. I do live in Hamilton, New Jersey. I take the 
train. Sometimes I drive.
    Senator Lautenberg. Oh. You take the train.
    Mr. Baroni. Sometimes I drive.
    Senator Lautenberg. Because, otherwise, you could wait a 
half an hour or an hour to cross the bridge, or the tunnels, or 
things of that nature.
    Mr. Baroni. That's true, because not enough people are 
using E-ZPass.
    Senator Lautenberg. Instead of taking advantage of the 
opportunity to build more rail transportation there, what you 
did you laid it all over the commuters, the truckers who need 
to have that kind of access.
    So, I want you to answer the question. Do you think it's 
fair?
    Mr. Baroni. Is it fair for someone who doesn't have an E-
ZPass? Is it fair for a truck that's causing 10,000 crossing--
--
    Senator Lautenberg. No. I didn't ask you that. I asked you 
if it's fair for a passenger going to work in a car, is it 
fair----
    Mr. Baroni. A passenger going to work in a car, commuting 
by car, the statistics of E-ZPass users are even higher. 
They're not paying that. They're doing E-ZPass discounts. So, 
Senator, look, for someone who doesn't get an E-ZPass and is 
backing our traffic up at the Lincoln Tunnel this morning, yes, 
it's fair.
    Senator Lautenberg. The person who doesn't have the money 
to buy an E-ZPass----
    Mr. Baroni. Some people don't get them given to them, 
Senator.
    Senator Lautenberg.--is screwing up the works as you cross 
the bridge.
    Mr. Baroni. I didn't understand, sir.
    Senator Lautenberg. Your response to the question is----
    Mr. Baroni. In fact, Senator, I've just been handed some 
information, so I want to correct something I said. You don't 
have to pay for an E-ZPass. All you need is a pre-paid balance 
on E-ZPass for the Port Authority of New York and New Jersey.
    Senator Lautenberg. Are you kidding? What do you mean a 
balance? Where does the balance come from? Does it come out of 
your pocket? Does it come out of your----
    Mr. Baroni. Yes. And when you're done using the E-ZPass, 
you get it back.
    Senator Lautenberg. You get what back? You get the cost of 
the card back?
    Mr. Baroni. The E-ZPass?
    Senator Lautenberg. Yes.
    Mr. Baroni. You put a balance----
    Senator Lautenberg. E-ZPass gives you a $9.50 ride, right?
    Mr. Baroni. Depending on the time of day, but OK.
    Senator Lautenberg. A $12--a $9.50 ride with E-ZPass.
    Mr. Baroni. OK. You're talking a peak-hour E-ZPass.
    Yes?
    Senator Lautenberg. Yes. Yes. $9.50. Is it fair to the 
person who doesn't have an E-ZPass to pay 12 bucks? Is it fair 
to someone who puts up their money in advance to pay $9.50? Is 
it a fair rate, in your judgment?
    Mr. Baroni. Yes.
    Senator Lautenberg. It is?
    Mr. Baroni. Yes.
    Senator Lautenberg. OK.
    Mr. Baroni. Given the world that we inherited. Yes.
    Senator Lautenberg. So you're saying to those who need the 
bridges and tunnels to commute, pay up. Did the Governor 
approve the minutes that raised the toll?
    Mr. Baroni. Yes. Of course.
    Senator Lautenberg. He approved it?
    Mr. Baroni. You know that, Senator.
    Senator Lautenberg. So, he knew about--you didn't surprise 
him with something and say----
    Mr. Baroni. When he got the minutes? No.
    Senator Lautenberg.--``Here's what we got. Tomorrow we'd 
like to raise''----
    Mr. Baroni. When the Governor got the minutes of the 
meeting, no. Both Governor Cuomo----
    Senator Lautenberg. He got advance----
    Mr. Baroni. Governor Cuomo and Governor Christie got the 
minutes of the meeting and they did not veto them. That's 
exactly right. Well, you know that, Senator, because when you 
were on the commission.
    Senator Lautenberg. Don't tell me what I did. I want to 
know what you did.
    Mr. Baroni. Senator, you can't ignore the past.
    Senator Lautenberg. I'm going to keep you on path, whether 
you like it or not. You don't have an E-ZPass. You are there in 
the chair----
    Mr. Baroni. I do have an E-ZPass.
    Senator Lautenberg.--at our request, and we expect you not 
to give us a song and dance, but to answer the questions 
specifically. OK?
    So, I'm asking you: when did the Governor get word of the 
fact that you were going to boost the----
    Mr. Baroni. Well, Senator, I'm not going to get into 
conversations that I have with the administration.
    Senator Lautenberg. No. You have----
    Mr. Baroni. Senator, I'm not going to start having a 
conversation about who I talked to.
    Senator Lautenberg. So, you're refusing to answer the 
question.
    Mr. Baroni. Senator, I'm not going to have a conversation--
--
    Senator Lautenberg. You're refusing to answer the question.
    Mr. Baroni. Senator, I'm not going to talk about 
conversations that I have with different administration 
officials.
    Senator Lautenberg. This isn't a conversation. Are you 
running a protection agency there?
    Mr. Baroni. Excuse me?
    Senator Lautenberg. Talk straight about what went on. And I 
asked you a simple question, and you say you're not going to 
discuss it. You have to discuss it. You're an important 
executive at that agency. You work for the people, whether you 
think so or not. And the fact of the matter is, I want to know 
when the Governor knew when the rates were going to go up.
    Mr. Baroni. Well, as you said before, Senator, and I'll 
clarify it.
    Senator Lautenberg. If that was your private conversation, 
you can't use the private, it's a public effort.
    Mr. Baroni. You asked me the direct question before. The 
Governor and Governor Cuomo received the minutes of the meeting 
and they approved the toll increases by not vetoing them. Yes, 
sir.
    Senator Lautenberg. Yes. OK. So, they knew what was coming. 
That was not what I would call an E-ZPass. The decision to 
raise the toll, of course, was the Governor's decision to raise 
that toll.
    An external audit released after the toll hike went into 
effect called the Authority a dysfunctional organization. Tolls 
are scheduled to rise even higher in the coming years, reaching 
$15 a car to enter Manhattan in 2015. Will you agree to delay 
the additional toll increases until a subsequent external audit 
finds the Port Authority has fully resolved the issues raised 
in the initial audit?
    Mr. Baroni. I can't sit here, Senator, and commit to 
something that the board does or does not do. I can tell you 
that what you're referring to is the Navigant report that was 
called for by Governor Christie and Governor Cuomo at the time 
of the tolls. And in that report, they said the Port Authority 
had become dysfunctional. And it is impossible to argue with 
that conclusion.
    For decades, the Port Authority had moved away in many ways 
from its core mission, investing in projects that don't have to 
do, and this is something the Navigant report points out, 
investing in projects that don't have to do with its core 
mission, had done, over the decades, wasteful reckless 
spending, and had developed a system of compensation and 
benefits that was completely out of whack with the rest of the 
public sector and certainly the private sector.
    And as a result of that, at our last board meeting, 
Chairman Sampson and Vice Chairman Rechler led the board in 
getting rid of all of those compensation and benefit--all of 
them, and over the next 18 months saving $41 million for the 
agency.
    In addition, to a series of reforms that this agency has 
put into place, including the first new outside auditor, 
including the leadership that we've had on making people 
contribute to healthcare. These are the kind of reforms--and 
getting out of these bad real estate deals, and starting to get 
out of deals that we should never have been in the first place, 
and selling and getting rid of these wasteful spending.
    Senator, you know, I came into office in March 2010. We're 
about to celebrate our 90th anniversary of the agency. Over 
those decades, decisions were made at the Port Authority, for 
example, to, as I said before, invest in the teleport, and 
create industrial parks.
    Senator Lautenberg. Let's not talk about all those things 
that were--tell me what you're doing?
    Mr. Baroni. You can't say we're dysfunctional and not let 
me explain why we became dysfunctional.
    Senator Lautenberg. Well, you've blamed it on everybody 
else. The Bergen Record linked Governor Christie in January to 
offering more than 50 positions to people at the Port 
Authority. Now, according to the article, many of these 
employees have six-figure salaries and close ties to the 
Governor, including a former political blogger, a campaign 
worker, and local mayors, prompting questions about the extent 
of political patronage at the Port Authority.
    Mr. Baroni. Yes.
    Senator Lautenberg. I want you to supply this committee the 
names and the positions of these recommendations and their 
qualifications. We'll give you two weeks to do that.
    Mr. Baroni. Well, Senator, I'm not sure how the last time a 
Senator asked for a list of names, but I'm happy to provide a--
--
    Senator Lautenberg. What do I care about--your opinions are 
really----
    Mr. Baroni. You asked me to come here. You asked for my 
opinion.
    Senator Lautenberg. Yes. But you're not going to do--I'm 
asking you to do something.
    Mr. Baroni. Well, Senator----
    Senator Lautenberg. You have----
    Mr. Baroni. Absolutely. I'm happy----
    Senator Lautenberg. You have a direct responsibility to be 
looking at these things in terms of their need.
    Mr. Baroni. Sure.
    Senator Lautenberg. There's a lot of money that the Port 
Authority was originally going to put into the tunnel, which 
was pulled back. $3 billion was the offer that was made to 
match the Federal contribution to the rail tunnel. Nothing 
happened.
    Mr. Baroni. Well, Senator, can I at least address your 
question about patronage, because I think it's a fair one, and 
I appreciate you asking it.
    So, The Bergen Record ran a story back in January, I 
believe, that talked about 50 political hires that were 
directed--the story goes, were directed by the Governor's 
office. If I could make a couple of points.
    First of all, the list that The Bergen Record mentioned--
the number that the Record mentioned, included a list of 
interns. Eleven of them. One of whom is a young man by the name 
of Robert Menendez, Jr., who I understand his dad works around 
here. And he was a graduate of the University of North 
Carolina, for my friend, the secretary, and he worked very 
hard, and clearly, I don't think anyone could say that he's a 
political appointee. But he was on the list.
    But I think philosophically that, as Governor Christie has 
said, governors have the ability--you know, when I showed up at 
the Port Authority, I was the first Christie person there. And, 
you know, governors should be able to put people at these 
agencies who share their values and interest. You may disagree 
with it, but Senator, respectfully, over the 8 years before I 
got there, there were 68 political appointees by Governors 
Codey, McGreevey, and Corzine. Sixty-eight. There was never a 
hearing about that. And one of the reasons I find interesting, 
and one of the criticisms----
    Senator Lautenberg. They weren't called dysfunctional at 
that time.
    Mr. Baroni. Senator, you just criticized me for hiring, 
your words, a campaign staffer. Well, Senator, one of your 
campaign staffers from the 2002 campaign was then hired at the 
Port Authority. On her resume, when she applied to the Port 
Authority, said she ran your U.S. Senate candidate visibility 
throughout the county, and was hired at the Port Authority as 
an energy specialist. What I find interesting is when Chris 
Christie and this Port Authority brings somebody on, it's 
political. When it happens before, it's good government.
    Senator Lautenberg. You're going to pick out these things. 
Robert Menendez, Jr., very smart guy, and you're lucky to 
have----
    Mr. Baroni. Absolutely.
    Senator Lautenberg.--him on the job.
    Mr. Baroni. That's why I brought him on board.
    Senator Lautenberg. Why is 1 out of 50, why does it matter? 
These little tidbits of things that you're trying to score 
points with don't register with me.
    Mr. Baroni. I know they don't register with you.
    Senator Lautenberg. Yes. But you have a responsibility. And 
so, we want straight talk from you. If you want to play little 
games, Robert Menendez, Jr., he's a very qualified young man.
    Mr. Baroni. And that's why I hired him.
    Senator Lautenberg. Oh. So, that justifies the other 49 is 
what you're saying.
    Mr. Baroni. Senator, I'm happy to go through the list. You 
want a list.
    Senator Lautenberg. Well, I've asked you for a list----
    Mr. Baroni. You just did.
    Senator Lautenberg.--of all 50 of those people.
    Mr. Baroni. Sure.
    Senator Lautenberg. And their responsibility.
    Mr. Baroni. Would you like to go through it now?
    Senator Lautenberg. And their backgrounds.
    Mr. Baroni. Sure. Should we go through them now? I'm happy 
to.
    Senator Lautenberg. The impertinence is barely tolerable, 
but no. I'll give you 3 days to provide it here.
    Mr. Baroni. No problem. Look forward to it.
    Senator Lautenberg. I'm sorry?
    Mr. Baroni. I have no problem----
    Senator Lautenberg. OK. Fine. Fine.
    Mr. Baroni.--answering for the people that we hired.
    Senator Lautenberg. Yes. OK. Well, that only took us 15 
minutes to get to.
    In January 2011, both Governors Christie and Cuomo were 
informed of the need to raise cash tolls to $12. January 2011. 
Suddenly, in July, the internal proposal drastically jumped to 
$15. Whose decision was it to raise the toll to $15, when that 
matures?
    Mr. Baroni. I'm not sure what proposal you're talking 
about, Senator.
    Senator Lautenberg. The one that it's going to take the 
tolls up to $15 in the year----
    Mr. Baroni. The toll proposal you're talking about?
    Senator Lautenberg. Yes.
    Mr. Baroni. Well, Senator, the Port Authority did. We put 
it out as a public notice in full page ads in the newspaper. 
Then people came and had public hearings about it, that you 
talked about. And so, I'm not--the Port Authority did.
    Senator Lautenberg. The Port Authority did. With the 
approval of the Governors.
    Mr. Baroni. No. As you asked me before, Senator, the 
Governors approved the minutes after the toll increase.
    Senator Lautenberg. Yes. Oh. So, this was something that 
the Port Authority decided without waiting for any approval.
    Mr. Baroni. As I said before, Senator, I'm not going to go 
back and forth in the conversations that agencies have with 
each other, but it's certainly fair to say, by me sitting here 
today, it's the person you want to ask questions about the 
tolls, so I'm prepared to spend all day talking about them.
    Senator Lautenberg. So what's the significance of what you 
just said? What's the significance of that?
    Mr. Baroni. The significance--it's a great question.
    Senator Lautenberg. You're trying to play----
    Mr. Baroni. It's a great question.
    Senator Lautenberg.--a funny game of table tennis here. I 
don't like it, obviously. I asked you a question. Who raised 
it? You said the Port Authority.
    Mr. Baroni. Port Authority. Sure.
    Senator Lautenberg. I thought you said that the Governors 
hadn't yet seen it. Is that what you're suggesting?
    Mr. Baroni. Well, again, I'm not going to comment about who 
saw what and when, but----
    Senator Lautenberg. Well, you are going to comment.
    Mr. Baroni. Well, Senator.
    Senator Lautenberg. You have a responsibility to comment, 
my friend, whether you like it or not. You're at a table here, 
and you are compelled to tell the truth to the Congress.
    Mr. Baroni. Of course, I'm telling the truth, Senator. I've 
told the truth the whole time.
    Senator Lautenberg. Yes.
    Mr. Baroni. And an implication, Senator, that somehow I had 
not told the truth is offensive to me. I take this body and 
this Senate sacrosanct----
    Senator Lautenberg. No. The game you're playing, with 
picking out these things, a past----
    Mr. Baroni. Senator, you can't----
    Senator Lautenberg.--former Port Authority Commissioner.
    Mr. Baroni.--say that we're dysfunctional, like somehow the 
Port Authority became dysfunctional in the 2 months Chris 
Christie was Governor. Senator, we're cleaning up.
    Senator Lautenberg. Oh. Are you sensitive to that? That 
suddenly it was declared dysfunctional in the last 2 months.
    Mr. Baroni. It was because of Chris Christie and Andrew 
Cuomo called for a Navigant review of the agency that finally 
somebody did call it dysfunctional. And it's dysfunctional----
    Senator Lautenberg. By throwing 50 political appointments 
in there, did that help straighten out the dysfunctionality at 
the agency?
    Mr. Baroni. We brought people to this agency, passionately 
believed in reforming it. And we brought people in who took the 
places, in some cases, of the very political appointees under 
Governor McGreevey, Governor Codey, and Governor Corzine, that 
apparently were, in the world here, good government. But it's 
political when Chris Christie does it, but apparently it's good 
government when John Corzine does it.
    And the dysfunction that we are cleaning up, that we are 
passionate about cleaning up, that we're making people pay for 
their healthcare, that we are getting rid of all these 
benefits.
    Senator Lautenberg. Just get me the list.
    Mr. Baroni. No problem, Senator.
    Senator Lautenberg. Get me the list.
    Mr. Grabell or Mr. Plaushin, to ensure public involvement, 
the Port Authority is required to hold public hearings on toll 
increases. Did drivers in New Jersey and New York have 
sufficient opportunities to air their concerns to the Port 
Authority, Mr. Plaushin and Mr. Grabell?
    Mr. Plaushin. My understanding of the public hearings, from 
talking to our AAA club in New York, was that they were all 
held at the same time during rush hour, and that none of the 
Commissioners actually attended any of the public hearings.
    Senator Lautenberg. And Mr. Grabell?
    Mr. Grabell. With regard to truckers, the best we were able 
to do is to attend via webinar a particular hearing, and our 
attendees found that to be a pretty unproductive exercise, in 
light of not being able to hear information proffered by other 
people on the webinar. So we've generally just looked to rely 
upon the agencies that support us to try to give us the best 
support they can, because, again, we're not just looking at 
this location, but we're looking at dealing with tolling 
authorities elsewhere as well.
    Senator Lautenberg. The New Jersey comptroller issued a 
scathing report on the practices at the Delaware River Port 
Authority. Again, for Mr. Grabell and Mr. Plaushin. According 
to the report, the Authority was treated like an ATM for those 
who had connections to the board. Do you have any concerns 
about the diversion of nearly half a million dollars in toll 
revenue that was given to an insurance service company, even 
though the company did no direct work for the Authority?
    Mr. Plaushin. In reading some of that report, I know there 
were many things listed in terms of diversion of funds to non-
transportation-related items. I think the most important item 
that comes out of that report is that the Port Authority 
basically ignored its primary responsibility, which was to 
address the backlog in transportation and infrastructure 
improvements.
    Any sort of diversion of funds from toll payers is 
unacceptable and needs to be addressed, and I think that's 
why--you know, AAA is not anti-tolling, but we do believe that 
some accountability in the process is needed.
    Senator Lautenberg. Mr. Grabell?
    Mr. Grabell. We would share those thoughts. I mean, 
obviously, the challenge today is the escalating costs of 
tolls. And, obviously, if money is being used for inappropriate 
purposes, it gives us great concern, because this cost 
escalation dramatically impacts both us and our shipping 
customers, and ultimately, the consumers. So, we are very 
concerned. We recognize that there needs to be revenue to 
support the highways, and the bridges, and the tunnels, but 
certainly diverting money to other inappropriate places does 
not help the cause at all.
    Senator Lautenberg. The Delaware River Port Authority 
borrowed money and delayed needed infrastructure repairs to 
fund non-transportation economic development projects. Do you 
think that that is appropriate to use those toll revenues for 
non-transportation projects?
    Mr. Grabell. Chairman, from our perspective, we find that 
to be very inappropriate. I mean the challenge that we have is 
that we see that there is obviously a need for funds to be 
raised to support the infrastructure, but for people that are 
paying those tolls, to then have money used for purposes that 
have nothing to do with helping to make their highways, 
bridges, tunnels, and other facilities both safer and more 
efficient really is, you know, essentially burdening them with 
expenses that probably should be borne by a different universe 
of people.
    Senator Lautenberg. Mr. Plaushin?
    Mr. Plaushin. Yes. I mean I would agree. I mean AAA would 
argue that tolls, you know--we know that localities are 
strapped. We know that, as Secretary Conti pointed out, that, 
you know, the need for revenue is great, and tolls can be a 
part of that solution. They're not a panacea. They're not a 
silver bullet. But they need to be implemented in a way that's 
fair and reasonable, and the tolling authorities need to be 
accountable and transparent to those that are paying the rates.
    Senator Lautenberg. Mr. Baroni, the Port Authority cited 
declining revenues as one of the major reasons for the drastic 
toll hike.
    Mr. Baroni. Yes, sir.
    Senator Lautenberg. Shortly before the toll hike, the Port 
Authority redirected $1.8 billion that was slated for the ARC 
Tunnel, as you know, to fund the non-Port Authority road 
projects. How much revenue will be generated by these road 
projects?
    Mr. Baroni. Essentially the same amount that ARC would have 
generated for the Port Authority.
    Senator Lautenberg. The same way?
    Mr. Baroni. For the Port Authority's revenue? You know, 
when you look at the projects that, we call it the Lincoln 
Tunnel Access project, because, you know, there are four of 
them that are part of the program, but the one that most folks 
talk about, of course, is the Pulaski Skyway. And Senator, you 
and I have both many times driven across the Pulaski Skyway, 
and it was built to be the missing link between the Holland 
Tunnel and the Port. In fact, it wasn't even built by the Port 
Authority. It was given to the Port Authority after we were 
founded. It was the first vehicular crossing across the Hudson.
    The problem is that Pulaski, nearly as soon as it was 
built--in fact, there's a great book, and Senator, I'll get you 
the name of the book. Well, actually, one of my former law 
students read it.
    Senator Lautenberg. Well, you'll probably finish it here, 
but please go ahead.
    Mr. Baroni. Well, you're talking about Pulaski. I was just 
saying I would recommend the book to you about Pulaski Skyway, 
that as nearly as soon as it was built, it became obvious that 
it couldn't take trucks. So we have Truck 1/9, that winds its 
way through. But you look at Pulaski built in the same manner 
that the I-35 bridge in Minneapolis, and Governor after 
Governor, Senator Lautenberg, you've certainly spoken about 
this repeatedly, the need to replace Pulaski.
    The reason why Pulaski will assist the Port Authority is it 
will do a couple things. It will make a smoother trip to 
Lincoln, it will help at Holland, and certainly will help at 
the Helix. So, it is a direct link to our facilities, which has 
been the law in New Jersey forever and New York forever and a 
day. So, it's an important project for our interstate network.
    Senator Lautenberg. But, I detect that through all of this 
discussion that we've just heard is that the non-Port Authority 
road projects, how will they generate the revenue that you said 
would be the same as that, which would be----
    Mr. Baroni. Well, the ARC was a $3 billion contribution 
from the Port Authority to the project. The Port Authority's 
contribution was $3 billion, but the Port Authority was not 
really going to get revenue out of that project, as you know, 
but the Pulaski project, Whit Penn, Pulaski 1/9, we believe 
will have a benefit to the current crossings, certainly, at 
Lincoln, and at Holland. So, we believe, you know, it will be a 
marginal improvement there. But, no one has made an argument 
that--Senator, you're not arguing we should toll the Pulaski.
    Senator Lautenberg. That wasn't the only non-Port Authority 
project.
    Mr. Baroni. It's four projects in the same--they're all 
linked. It's Whit Penn. It's Pulaski. It's 1/9. And I'll get 
the fourth one. I think it's 139. They're all connected to the 
Lincoln Tunnel. They're all linked to the Lincoln Tunnel.
    Senator Lautenberg. What's does the transportation trust 
fund look like in New Jersey right now?
    Mr. Baroni. Senator, it's been 2 years since I've been in 
the State Senate, so I'm not necessarily the person you should 
ask that question to.
    Senator Lautenberg. Well, if the Port Authority was 
prepared to give $3 billion to the ARC Tunnel, and the state 
committed to do the program, I discussed this directly with the 
Governor, Governor Christie, and he was much behind it as a 
candidate and then as Governor. And then suddenly, the climate 
changed, and he killed the tunnel project. And some of that, I 
think, might have been given to the transportation trust fund. 
Are you aware of that at all?
    Mr. Baroni. Senator, all I can speak to is the Port 
Authority dollars that are going to these four projects. Beyond 
that it's----
    Senator Lautenberg. But is that the only place that the--
you're talking about the $3 billion?
    Mr. Baroni. Right. The four projects that the Port 
Authority is participating in are designated for specific 
projects.
    Senator Lautenberg. How much money?
    Mr. Baroni. $1.8 billion.
    Senator Lautenberg. $1.8 billion.
    Mr. Baroni. Right.
    Senator Lautenberg. So, how did the four projects get 
designated?
    Mr. Baroni. We spent a lot of time with engineers. We spent 
a lot of time looking----
    Senator Lautenberg. But, these were approved in the minutes 
of the Port Authority by Governor Christie and Governor Cuomo.
    Mr. Baroni. My recollection at the time that this was 
probably done under Governor Patterson, but I'd have to go back 
and check.
    Senator Lautenberg. The ARC Tunnel would have taken an 
estimated 22,000 cars off the road, double the number of 
households in New Jersey that are within 50 minutes of 
Manhattan. Will the $1.8 billion that was redirected from the 
ARC Tunnel to fund the road projects provide the same levels of 
benefits for commuters?
    Mr. Baroni. Well, again, Chairman, I'm not an expert about 
it. I can tell you this, that clearly, fixing Pulaski, Whit 
Penn, 139 will make the flow, and traffic, and delay in and out 
of Lincoln, and less so, in and out of Holland, better. But, in 
addition to that, and I think you raise you a very, very good 
point about cross-Hudson Rail, and there was a lot of 
discussion about when it comes to ARC and Gateway, but the 
first four tunnels that take trains under the Hudson were built 
by us, well, built by the Hudson and Manhattan, that we bought 
in the late 1960s and made it the PATH. And because of the 
commitment that previous Governors, and Governor Christie, and 
Governor Cuomo, we've had an extraordinary investment in PATH, 
that I think often gets--and I know we're talking about tolls, 
but I think since we brought up crossings, we've seen the last 
couple of weeks on a project that--and the folks who know me at 
the Port Authority has been one of the projects I spend a lot 
of time pushing, and pushing, and pushing, and that's a new 
train station in Harrison.
    Mayor McDonough, working across party lines, Mayor 
McDonough, in Harrison, points out that the Harrison train 
station needed work, but not only did it need a new station----
    Senator Lautenberg. Thank you very much.
    Mr. Baroni. OK, Senator.
    Senator Lautenberg. Thank you.
    Mr. Baroni. I thought this was important.
    Senator Lautenberg. Yes. The terminal at Harrison was 
important. Thank you.
    Mr. Baroni. But if I could just finish up, because it's 
very exciting.
    Senator Lautenberg. Well, I thought you were finished.
    Mr. Baroni. I just wanted to talk about the 10-car 
platforms, because we talk about increasing capacity across the 
Hudson. One of the challenges at Harrison is not just the 
station, it's the physical head houses, but the platforms 
themselves can only today accommodate eight cars. Under the 
plan, we're going to be able to go to 10 cars, and that's going 
to help us bring more rail----
    Senator Lautenberg. Thank you very much. This hearing is 
over. I expect from you, Mr. Baroni, the list of the 50 that 
were appointed to the jobs, including their salaries, and 
including their backgrounds and experience.
    Mr. Baroni. Certainly, sir.
    Senator Lautenberg. Thank you all for your being here. We 
know one thing, that we have to be careful about how we use 
these toll revenues. And again, I think it's agreed that, look, 
at some places they're desperately needed, but we want them to 
be just and reasonable, and I express a point of view that 
perhaps hasn't come across yet.
    I thought that a 50 percent increase at one moment was an 
outrage, and we're going to continue to talk to and with the 
Port Authority, and we'll ask for particular documents, and I'm 
sure that you'll be quick to furnish them. The mail's good, 
rather than verbal. I think we'll just condense it that way.
    Thank you all very much for being here.
    [Whereupon, at 11:15 a.m., the hearing was adjourned.]
                            A P P E N D I X

Response to Written Questions Submitted by Hon. Frank R. Lautenberg to 
                              Bill Baroni
    Question 1. It has come to the Committee's attention that from 
January to early July 2011 the Port Authority worked to finalize a toll 
increase that was approximately $12 for cash payers and $10 for E-ZPass 
users. The Committee understands that, in July 2011, you and David 
Wildstein, Director of Interstate Capital Projects, directed that the 
proposal be changed to $15 for cash payers and $12 for E-ZPass users. 
The Port Authority announced the redesigned proposal publicly on August 
5, 2011. Who specifically made the decision to change course shortly 
before the announcement and propose this higher toll increase?
    Answer. In the summer of 2011, the Port Authority of New York and 
New Jersey was faced with the difficult decision to raise tolls and 
fares. The decision was made as a result of numerous factors, which 
included the effects of the 2008 economic crisis, which dramatically 
affected Port Authority revenue; the resulting effect of that crisis on 
our ability to access capital markets and the need to keep our aging 
facilities--many built in the 1920s--in a state of good repair through 
major capital projects. In addition, the Port Authority's mission of 
transportation and economic growth required the investment of billions 
in new and rebuilt infrastructure.
    These projects include the raising of the Bayonne Bridge to 
accommodate the world's largest cargo ships; a new Goethals Bridge; a 
rehabilitated Helix leading into the Lincoln Tunnel; the replacement of 
the suspender ropes on the George Washington Bridge; a new PATH train 
station at Harrison; a refurbished George Washington Bridge Bus 
Station; and hundreds of other infrastructure projects that would have 
been further delayed in the absence of a revenue enhancement.
    The Port Authority did much to forestall this increase. The Port 
Authority is in its third straight year of flat operating budgets; the 
Port Authority is at its lowest employee headcount in decades; the Port 
Authority has implemented reforms to compensation and benefits saving 
millions and the Port Authority has actually reduced the number of 
employees by hundreds since 2010. Raising tolls and fares was a last 
resort.
    The process of the consideration and proposal of a toll and fare 
increase is an internally collaborative one. All internal work product 
and communications within the Port Authority on this--or any--matter is 
therefore inappropriate for release as part of this Question For the 
Record. Similarly, any communications between the Port Authority and 
the offices of the Governors of New York or New Jersey on this--or 
any--matter would similarly be inappropriate for release.

    Question 2. After months of planning for a smaller toll increase, 
what was the reason for drastically increasing the proposed tolls just 
weeks before the announcement?
    Answer. Please see one (1), above.

    Question 3. When was Governor Christie's office first aware that 
the proposal was being changed as described in Question 1? Who in the 
Governor's office was made aware that the proposal would be changed?
    Answer. Please see one (1), above.

    Question 4. Please provide the Committee with all communications--
including, but not limited to, memoranda, briefing materials, 
electronic mail, and letters--between the Port Authority and the 
Governor Christie's office regarding the toll increase from January 1, 
2011 to August 19, 2011.
    Answer. Please see one (1), above.

    Question 5. Please provide the Committee with a description of each 
toll proposal that was considered, proposed, or adopted by the Port 
Authority, including the dates these plans were created, internally 
approved, discussed with Board Members, and discussed with Governors 
Christie's and Cuomo's offices from January 1, 2011 to August 19, 2011.
    Answer. Please see one (1), above.

    Question 6. Please provide any analysis the Port Authority 
conducted to determine the economic impacts of the initial internal 
toll proposal, the August 5 proposal, and the approved August 19 toll 
increase on the region, including impacts to businesses and commuters.
    Answer. Please see one (1), above.

    Question 7. In January, the The Record newspaper linked Governor 
Christie to dozens of high-paying positions at the Port Authority. For 
each individual with a salary in excess of $90,000 on the list you 
provided to my office, please provide the Committee their job 
description and job duties, their resume and/or application, and their 
letter of recommendation from the Governor and/or his office. If there 
have been additional hires at the Governor's recommendation since this 
article, please include their information as well. Also, please provide 
details on whether their positions were publicly posted and how many 
additional individuals were considered for the positions.
    Answer. Please find attached the resumes of employees hired by the 
Port Authority since January 2010 whose salaries are $90,000 or greater 
[resumes retained in Subcommittee files]. The following employees were 
directly hired without resumes: Patrick J. Foye, Executive Director; 
William Baroni, Deputy Executive Director; William DeGraaff, Program 
Manager, Regional Airport Programs, Aviation; Paula Dow, First Deputy 
General Counsel, Law; Anthony Greco, Senior Writer/Editor, Media 
Relations; Erik Horvat, Assistant Director, Development, World Trade 
Center Redevelopment; Diana Lopez, Senior Advisor, Port Commerce; John 
Ma, Chief of Staff; David Wildstein, Director, Interstate Capital 
Projects; Eddie Malave, Senior Safety Engineer, Operations Services; 
and Mark Pucci, General Manager, Retail, World Trade Center 
Redevelopment.

    Question 8. Damon DiMarco is the coauthor of your book Fat Kid Got 
Fit: And So Can You. When did the Port Authority hire Mr. DiMarco?

  a.  Is Mr. DiMarco a full-time or part-time employee? How many hours 
        per week does he work and what is his work schedule?

  b.  What was your role in Mr. DiMarco's hiring?

  c.  Did you and Mr. DiMarco have a written or oral agreement relative 
        to Mr. DiMarco's compensation for this book project? When was 
        that agreement signed or otherwise agreed to? Please describe 
        the agreement in detail or provide a copy to the Committee.

  d.  On what date did you sign the contract with the publisher of this 
        project?

  e.  Did the Port Authority legal department review the ethics of 
        hiring your business partner? If so, did that include a review 
        of all agreements between you and Mr. DiMarco?

    Answer. Damon DiMarco was hired in the office of Public and 
Government Affairs in June of 2010. He was hired to work part-time. The 
book project was undertaken in 2008. Prior to the entrance into a 
publishing contract, Mr. DiMarco and Mr. Baroni received an opinion 
from an attorney in Governance and Ethics Unit of the Port Authority 
Law Department that the entrance into the book contract would be 
consistent with the Port Authority's Code of Ethics and Financial 
Disclosure.

    Question 9. When did the Port Authority hire Gretchen DiMarco? What 
was your role in Ms. DiMarco's hiring?
    Answer. Gretchen DiMarco was hired as a special assistant in the 
Office of the Deputy Executive Director in April 2010.

    Question 10. What are David Wildstein's specific job duties? Please 
provide a copy of his official job description and duties.

  a.  When was Mr. Wildstein first approached about employment at the 
        Port Authority?

  b.  It has come to the Committee's attention that Mr. Wildstein 
        played a lead role in coordinating and setting the rates of the 
        proposed toll increases. Please describe why Mr. Wildstein, as 
        Director of Interstate Capital Projects, played this role.

  c.  Who tasked Mr. Wildstein with his role in the toll increases?

    Answer. David Wildstein is the Director of Interstate Capital 
Projects. He joined the Port Authority in May 2010. A description of 
his professional background is attached [see below].

        David Wildstein served as Vice President and Shareholder of 
        Apache Mills, Inc., a family-owned textile manufacturing 
        company, from 1988 to 2007. With more than 600 employees, the 
        company has offices in six states, a 750,000 square foot 
        manufacturing facility, and had an international customer base. 
        From 2007 to 2010, he was the Executive Director of the 
        Observer Media Group.
        He served on the Livingston Township Council from 1985 to 1989 
        and was the Mayor of Livingston from 1987 to 1988. He served as 
        Chairman of the Livingston Redevelopment Authority, as Chairman 
        of the Board of Health, and as Member of the Livingston Free 
        Public Library Board of Trustees. He was the Chairman of the 
        Essex County Conference of Mayors' Solid Waste Subcommittee.
        He was a member of the Essex County Vocational and Technical 
        Board of Education from 1987 to 1990. He was Vice President 
        from 1988 to 1990, and served as Chairman of the Personnel and 
        Labor Relations Committee and as Vice Chairman of the Finance 
        Committee. He was a member of the Essex County Board of School 
        Estimate.
        He was the Deputy Clerk of the New Jersey General Assembly from 
        1987 to 1990. He served as Chief of Staff to Assembly Minority 
        Leader Chuck Hardwick, as a legislative aide to State Senator 
        Louis Bassano, and as a staff assistant to Congressman 
        Christopher Smith.
        He served on the Board of Directors of the Livingston Community 
        Hospital, the Essex County Association for Retarded Citizens, 
        the Livingston Babe Ruth League, and the Livingston Youth 
        Service Bureau.

    Question 11. The Port Authority was criticized for giving 
misleading reasons for needing the toll hike--including funding non-
transportation, economic development projects. Please provide the 
Committee with all of the specific projects and activities that will be 
funded by the toll increase, the projected cost of each project, and 
the scheduled completion date of each project.
    Answer. As stated in one (1), above, the Port Authority was forced 
to raise revenue as a result of difficult economic situations caused by 
the 2008 recession. The Port Authority operates facilities supported by 
toll revenues and the Port Authority Trans-Hudson (PATH) fares as an 
integrated, interdependent transportation network system (Interstate 
Transportation Network). All of the revenues from the toll increase are 
needed to fund the needs of the Interstate Transportation Network. 
Please find attached the filings of the Port Authority on the 
litigation filed by the AAA on this matter [go to http://
www.panynj.gov/press-room/pdf/AAA-v-PA-USDC-Memorandum-Opinion-and-
Order-020612.pdf ]. The response by the Port Authority provides a 
detailed explanation of that issue.

    Question 12. The Port Authority cited declining revenues as one of 
the major reasons for the toll hike. Yet, shortly before the increase, 
the Port Authority redirected $1.8 billion that was slated for the ARC 
Tunnel project to roads that were previously maintained by the state of 
New Jersey. Under what legal authority did the Port Authority direct 
funds to these projects?

  a.  The Committee has been made aware that the General Counsel's 
        Office does an extensive review of projects that expand the 
        Port Authority's role. Did the General Counsel's office review 
        these projects? If so, please provide the Committee with the 
        General Counsel's analysis and determination.

  b.  Were these projects part of the capital plan or annual budget? If 
        so, when were these projects added?

    Answer. On December 7, 2010, the Board of Commissioners adopted a 
budget for 2011. Attached is a copy of that budget, which includes a 
2011 Capital Plan Project List [go to http://www.panynj.gov/corporate-
information/pdf/budget-2011.pdf. For minutes attached to the budget, go 
to http://panynj.info/corporate-information/pdf/
board_minutes_dec_7_2010.pdf ]. On March 29, 2011, the Board of 
Commissioners approved Access Infrastructure Improvement Projects. 
Attached is a copy of the Board item [go to http://www.panynj.gov/
corporate-information/pdf/special_ops_minutes_mar_29_2012.pdf ].

    Question 13. The Port Authority is charged with providing 
transportation services for the traveling public, yet has faced severe 
criticism for being unaccountable to the public. Does the Port 
Authority Inspector General review the agency's transparency efforts; 
if not, will you commit to having the Inspector General issue an annual 
report analyzing the Port Authority's transparency efforts?
    Answer. The Port Authority has recently updated its Transparency 
Policy, allowing for greater transparency of the Agency's activities. 
The Board of Commissioners on March 29, 2012 passed the attached item 
[go to http://www.panynj.gov/corporate-information/pdf/
special_ops_minutes_mar_29_2012.pdf ]. That policy is regularly 
reviewed by the Board of Commissioners. The Inspector General provides 
reports directly to the Audit Committee of the Board of Commissioners, 
chaired by Commissioner David Steiner.

    Question 14. Please provide the Committee with the number of 
vehicles that travel on average in each of the toll categories as well 
as the revenue generated by each of these categories. What are the 
expected revenue and driver diversion rates versus actual based on the 
September 2011 toll increase for each of these categories? What are the 
expected revenues and driver diversion rates for each category for the 
scheduled December 2012 toll increase?
    Answer. Please see attached memorandum from Cedrick Fulton, 
Director of Tunnels, Bridges and Terminals [see ``Memorandum'' 
following this set of responses].

    Question 15. The Port Authority Bus Terminal capacity expansion 
project would have been one of the only current projects to provide 
real congestion relief for New Jersey commuters, yet it has been 
removed from the capital plan. With New Jersey paying a 
disproportionate portion of the tolls, why has this commuter project 
not been prioritized? Please provide the Committee with the Port 
Authority's plan for this project.
    Answer. The Port Authority is committed to providing greater cross-
Hudson capacity for commuters. Investments in PATH, including a new 
station in Harrison, an entirely new fleet of PATH cars, and enhanced 
signaling will assist in handling the growing use of PATH. The 
rehabilitation of the Lincoln Tunnel helix will reduce unnecessary and 
unplanned repairs, a new Goethals Bridge will alleviate congestion over 
the 1-278 corridor, and the investments in a refurbished George 
Washington Bridge Bus Station and the 42nd Street bus terminal are 
ongoing. In addition, the Port Authority is undergoing a detailed and 
thorough review of bus transportation at the 42nd Street terminal to 
increase capacity and parking for buses on the West Side of Manhattan.
                               Memorandum
                              The Port Authority of NY & NJ
 Tunnels, Bridges & Terminals Department--Director's Office

To: Patrick J. Foye, Executive Director
Bill Baroni, Deputy Executive Director
From: Cedrick T. Fulton
Date: June 7, 2012

Subject: 2011 and 2012 Toll Increase

    In the seven months since the September 2011 toll increase, the 
average monthly traffic has been 9,586,425 vehicles, which represented 
an average monthly toll revenue of $100,732,886. The breakdown by 
vehicle type for these averages is as follows:

------------------------------------------------------------------------
                         Avg. Monthly  Traffic    Avg. Monthly  Revenue
------------------------------------------------------------------------
Auto                                  8,727,188              $76,680,791
Bus                                     244,221               $2,564,608
Small Trk                               288,725               $6,385,111
Large Trk                               326,291              $15,102,376
------------------------------------------------------------------------
Total                                 9,586,425             $100,732,886
------------------------------------------------------------------------

    In comparison, the average monthly traffic and revenue in 2010 
(i.e., the full year prior to the toll increase) was:

------------------------------------------------------------------------
                         Avg. Monthly  Traffic    Avg. Monthly  Revenue
------------------------------------------------------------------------
Auto                                  9,206,809             $ 62,462,671
Bus                                     260,158              $ 1,112,880
Sm Trk                                  292,388              $ 4,766,364
Lg Trk                                  341,123             $ 11,784,755
------------------------------------------------------------------------
Total                                10,100,479             $ 80,126,669
------------------------------------------------------------------------

    We expected the September 2011 toll increase to reduce total 
vehicular traffic by 1,417,159 vehicles (--1.2%) from original 2011 
Plan of 122,408,652 vehicles prior to the toll increase. What we 
actually experienced in 2011 since 9/18/2011 was a decline of 1,841,708 
vehicles (-1.5%) below the original 2011 plan. The breakdown for these 
variances by vehicle type is as follows:

----------------------------------------------------------------------------------------------------------------
                                 Sept 2011 Toll Increase                   September 2011 Increase
                                  Expected Change  vs.         Pctg.     Actual Change  vs. Original     Pctg.
                                   Original 2011 Plan         Change              2011 Plan             Change
----------------------------------------------------------------------------------------------------------------
Auto                                           (1,300,537)       -1.2%                   (1,584,720)       -1.4%
Bus                                                 34,553        1.1%                     (149,542)       -4.6%
Sm Trk                                              27,476       -0.8%                      (85,768)       -2.4%
Lg Trk                                           (123,699)       -3.0%                      (21,677)       -0.5%
----------------------------------------------------------------------------------------------------------------
Total                                          (1,417,159)       -1.2%                   (1,841,708)       -1.5%
----------------------------------------------------------------------------------------------------------------

    We expected the September 2011 toll change to increase total toll 
revenue by $99,001,015 (9.2%) from the original 2011 Plan of 
$982,789,667 prior to the to increase. What we actually experienced in 
2011 since 9/18/2011 was an increase of $48,741,732 (4.5%) above 
original 2011 plan. The breakdown for these variances by vehicle type 
is as follows:

----------------------------------------------------------------------------------------------------------------
                               Expected Change  vs. Orig.   Pctg. Chg.    Actual Change  Orig. 2011   Pctg. Chg.
                                        2011 Plan                                   Plan
----------------------------------------------------------------------------------------------------------------
Auto                                           $72,822,073        8.7%                   $41,708,839        5.0%
Bus                                             $6,647,748       32.1%                    $2,024,420        9.8%
Sm Trk                                         $ 5,186,638        8.1%                      $471,834        0.7%
Lg Trk                                         $14,344,557        9.0%                    $4,536,639        2.9%
----------------------------------------------------------------------------------------------------------------
Total                                          $99,001,015        9.2%                   $48,741,732        4.5%
----------------------------------------------------------------------------------------------------------------

    When we developed the impact of the toll increases in August of 
2011, we expected a traffic decrease of 563,891 vehicles (-0.5%) to 
result from the full-year effect of the planned December 2012 toll 
increase compared to 123,743,906 vehicles in the original traffic plan 
for 2012. We expected an increase in toll revenue of $143,374,747 
(10.6%) to result from the full-year effect of the planned December 
2012 toll increase compared to $1,352,432,579 in the original revenue 
plan for 2012. The breakdown for these variances by vehicle type is as 
follows:

----------------------------------------------------------------------------------------------------------------
                                 Full-Year Dec 2012 Toll                   Full-Year Dec 2012 Toll
                                Increase Expected Traffic    Pctg. Chg   Increase  Expected Revenue   Pctg. Chg.
                               Change vs. Orig. 2012 Plan                Change vs. Orig. 2012 Plan
----------------------------------------------------------------------------------------------------------------
Auto                                              -507,844       -0.5%                   $85,207,503        8.3%
Bus                                                      -        0.0%                    $2,607,625        6.7%
Sm Trk                                             -26,879       -0.7%                   $15,840,176       19.0%
Lg Trk                                             -29,169       -0.7%                   $39,719,443       19.6%
----------------------------------------------------------------------------------------------------------------
Total                                             -563,891       -0.5%                  $143,374,747       10.6%
----------------------------------------------------------------------------------------------------------------

    We are currently in the process of updated the Port Authority 
traffic and toll revenue forecasts . This will include an update of the 
impacts on the estimated traffic and revenue for 2012 The revised 
forecasts will include new elasticities for cash payment and E-ZPass 
adoptions, updated economic drivers, the revised PA Staten Island 
Bridge discount plan, the new truck volume discounts, and anticipated 
losses from the NY Container Terminal in Staten Island. The update will 
be completed by the end of June 2012.
                                         Cedrick T. Fulton,
                                                          Director.
                                 ______
                                 
Response to Written Questions Submitted by Hon. John D. Rockefeller IV 
            to The Port Authority of New York And New Jersey
    The Port Authority of New York and New Jersey fundamentally agrees 
that the public should have the greatest possible level of transparency 
to see how their toll and fare dollars are being spent. The Port 
Authority has made great strides to ensure that transparency and 
oversight. At the direction of the Board of Commissioners, under the 
leadership of Chairman David Samson, we have embarked on a wholesale 
reform of the agency's transparency policies.
    As a result of our initial review, the Board of Commissioners 
adopted a new Freedom of Information (FOI) Code in March of this year 
to provide greater accountability and transparency, and an ongoing, 
proactive Transparency Project that will identify agency records for 
public release.
    The Port Authority Transparency Project is an ongoing, proactive 
review of agency policy, documents, and financial information to 
determine what steps can be taken to ensure that the Port Authority 
remains at the forefront of open government initiatives. At the time of 
its launch in March, the Transparency Project posted roughly 22,000 
pages of documents including a one-year archive of FOI requests, a one 
year archive of board and committee meeting presentations, and more 
than 300 pages of toll and fare hearing transcripts.
    Since March, a significant number of strides have been made to 
further increase Port Authority transparency and accountability. A 
dedicated search feature has been added to our FOI request web page, 
making it easier for the public to find documents for which they are 
looking. The agency has voluntarily posted nearly 2,400 pages of Port 
Terminal leases and over 4,300 pages of new FOI requests--all free of 
charge. The agency recently updated Port Authority and Port Authority 
Trans-Hudson Rail Corporation (PATH) total payroll information setting 
forth total compensation, including base salary and all additional 
compensation for all employees to reflect the first quarter of 2012, 
adding to the four year archive, and for the first time, a breakdown of 
agency overtime hours by department and category. This information is 
updated quarterly. The Transparency Project is and will remain a key 
Port Authority initiative going forward.
    In addition, the Board of Commissioners passed a new FOI Code that 
includes clarification of what documents are and are not exempt from 
release, allowing for a faster, more streamlined process. All documents 
released through the FOI process are posted online in real time so that 
all members of the public can review documents that have been deemed 
public. On a one-year trial basis, fees related to the FOI process will 
be waived.
    Following the most recent toll and fare increases that were adopted 
in 2011, Governors Chris Christie and Andrew Cuomo charged the Special 
Committee of the Board to undertake a comprehensive review and audit of 
the agency. The Phase I interim report was released in January of 2012, 
and Phase II, focusing on the hundreds of projects in the agency's 
capital plan, will be released later this year.
    This is all in addition to a longstanding Port Authority commitment 
to ensuring that public documents at a public agency are available to 
the public. Examples include: Port Authority budgets going back to 
2008, Board Minutes going back to 2006, financial statements going back 
to 2003, and the annual reports that are provided each year to the 
Governors and Legislatures of both states going back to 2001.
    Under the leadership of Governors Christie and Cuomo and the Board 
of Commissioners, the Port Authority is quickly becoming a model for 
transparency and good governance for Authorities around the Nation. The 
Port Authority is committed to making the agency more open, 
accountable, and transparent so that it may better serve the public 
interest. Please find attached a copy of the resolution of the Board of 
Commissioners from March of this year.
                                 ______
                                 
Response to Written Questions Submitted by Hon. John D. Rockefeller IV 
                            to Steve Grabell
    Question 1. I'm troubled by reports of mismanagement, misuse of 
funds, and a general lack of accountability at multiple tolling 
entities around the country recently, several of which operate as 
interstate compacts. Given the Federal government's role in 
establishing interstate compacts, what should the Federal role be in 
overseeing these organizations to ensure that they act with the 
traveling public's best interests in mind?
    Answer. It is apparent in certain cases that toll authorities, 
particularly those which serve a significant percentage of interstate 
traffic, may not be fully accountable to toll payers, and therefore 
require additional oversight. While in some cases oversight can be 
provided by the state, this is often insufficient, since the authority 
may be working in concert with state officials to establish unfair or 
discriminatory toll rates. This is particularly true when the state 
relies on toll revenue to meet its own fiscal needs. In those cases 
where the public has nowhere else to turn for relief, Federal 
intervention may be necessary. ATA believes that the longstanding Title 
33 Federal toll rate standard requiring tolls on certain bridges to be 
``just and reasonable'' should be preserved and its enforcement 
mechanism should be restored, through either a Federal administrative 
process, or by giving the public a ``private right of action,'' which 
would allow the public to challenge toll rates through the judicial 
system. The standard should, at a minimum, be applied to those bridges 
currently subject to the Title 33 standard, to federal-aid bridges and 
tunnels on the Interstate Highway System, and to other bridges and 
tunnels established under an interstate compact. These are clearly 
facilities on which the Federal government has an interest under the 
Constitution's Commerce Clause.

    Question 2. Your organization has spoken against tolls on existing 
roads, bridges, and tunnels. Beyond increasing the gas tax, what other 
methods do you support to increase funding for transportation projects? 
Does your organization support tolling as a means to finance new 
transportation projects?
    Answer. ATA has explored many different mechanisms for funding 
transportation projects. We have found that the most successful are the 
fuel tax and state registration fees. There are various other state-
level revenue sources that are viable, but inferior to fuel taxes and 
registration fees. These include sales taxes, property taxes, 
development fees, and local option taxes.
    At the Federal level, increasing the three non-fuel taxes--Heavy 
Vehicle Use Tax, excise tax on new equipment and tire tax--are viable 
options, but they tend to create cash flow challenges for carriers and, 
in the case of the excise tax, a disincentive for carriers who wish to 
purchase new equipment, which is likely to be safer and cleaner. We 
have looked at a variety of other proposals, such as container fees, 
freight waybill taxes, and other methods to more directly charge the 
ultimate beneficiaries of freight transportation for these services. 
All of these options faced extremely difficult or insurmountable legal 
or administrative challenges and were therefore dismissed.
    ATA has looked extensively at the viability of vehicle miles 
traveled fees. While we are not opposed to VMT fees on their face, we 
believe that challenges associated with collection costs, the potential 
for evasion, and a lack of institutional certainty with regard to how 
rates will be set and collected, are unlikely to be overcome in the 
foreseeable future. We also believe that public concerns with regard to 
privacy will likely doom these proposals even if all other issues are 
resolved.
    In short, the fuel tax is, by far, the best source of revenue for 
transportation projects, and is likely to remain so well into the 
future.
    We believe that toll financing of new capacity projects is inferior 
to traditional financing through a combination of fuel taxes, 
registration fees, etc. and municipal bonding, primarily because of the 
additional costs associated with toll collection. However, we have not 
opposed tolls provided they offer an additional option, i.e., a toll-
free alternative is available, and existing lanes (other than HOV) are 
not tolled.

    Question 3. The public has the right to see exactly how tolling 
entities use their revenues in order to ensure that these organizations 
are spending funds with the public interest in mind. In your opinion, 
how can tolling authorities best achieve this?
    Answer. Tolling authorities should issue annual reports showing a 
detailed accounting of how much revenue was collected from tolls and 
other sources, and exactly how the revenue was spent. The authority 
should also provide an estimate of future needs.
    The report should include salary information and board/commission 
members' compensation, including any in-kind contributions. If any 
contracts are awarded, or contributions made, to a company with a 
relationship to a senior employee or board/commission member, or to a 
member of their family, that information should be disclosed. 
Furthermore, if a relative of a board/commission member is hired, that 
information should be disclosed as well.
    Any proposed increase in toll rates should include a public 
outreach process, with hearings to be held at convenient times and 
locations. Board/commission members should be required to attend at 
least some of these hearings. In addition, any votes taken to increase 
toll rates should be public. The public should be given the opportunity 
to review rate increase proposals, including projected revenue and how 
the money is intended to be spent, well in advance of the public 
hearings. In addition, at least 1/3 of voting members should be from 
organizations which represent the interests of facility users.
    Finally, ATA believes that privatization of toll facilities would 
largely eliminate public accountability and transparency, and we 
therefore oppose these types of schemes. A long-term lease to a private 
company is often seen as a way for elected officials to avoid public 
scrutiny when toll rate increases are considered. Under a long-term 
contract, any actions by the leaseholder cannot be undone, even in the 
face of public opposition, without severe penalties that will 
ultimately be borne by taxpayers.
                                 ______
                                 
Response to Written Questions Submitted by Hon. Frank R. Lautenberg to 
                             Steve Grabell
    Question 1. At the hearing, Mr. Baroni referenced many discounts 
that the Port Authority of New York and New Jersey has provided for 
truck traffic. Have the ``discounts'' provided by the Port Authority 
mitigated the effects of the toll rates? To what extent are you able to 
take advantage of reduced rates?
    Answer. The PA offers discounts for E-ZPass, off-peak and overnight 
hours. Most carriers routinely operating in the area are likely using 
E-ZPass. However, many carriers do not have flexibility in their pick-
up and delivery schedules, and are unable to take advantage of the off-
peak or overnight discounts. The PA's ``Truck Repeat Volume Program'' 
offers a 10 percent discount on trucks' monthly tolls, provided they 
take 100 trips or more through Port Authority crossings during off-peak 
hours within 30 days. Many truckers entering New York City will not be 
eligible for the program because if their customers do not give them 
the flexibility to enable deliveries during overnight hours. In these 
cases, trucks MUST travel into New York City during high congestion 
times. Furthermore, most trucking companies are small operators and 
simply do not have the necessary volumes to qualify. In addition, in 
order to qualify for the discount, the truck must have either a New 
York or New Jersey E-ZPass transponder. Transponders from other states 
do not qualify. This is complicated by the fact that many other states 
follow the same practice of only allowing discounts for home-state 
transponders, and using multiple transponders is impractical. This 
situation prevents carriers operating multi-state fleets from fully 
utilizing available discounts.
    It is important to note that even if carriers are able to take 
advantage of these discounts, the rate increase is still unacceptably 
high. The lowest rate for a 5-axle truck that takes advantage of all 
available discounts will be approximately $70 in 2015. This is nearly 
twice as high as the highest rate for any other bridge or tunnel 
crossing in the country.

    Question 2. With tolls increasing annually, what alternative routes 
will your company consider? What additional impacts could these 
diversions have on New Jersey?
    Answer. NFI is currently utilizing the following alternative 
routes:

        I-295 instead of the NJ Turnpike

        Route 422 instead of I-476 through PA

        I-68 and I-70 through Maryland instead of the PA Turnpike 
        between Pittsburgh and Philadelphia area

    Unfortunately, because of the PANYNJ's monopolization of routes 
between New York City and New Jersey, there are no feasible alternative 
routes.
    Diversion of vehicles, particularly trucks, from Interstate and 
other primary highways to lower-order roads could pose severe 
consequences for New Jersey and other affected states. Roads are built 
to engineering standards commensurate with anticipated traffic levels, 
including the projected number of ESALs. It is likely, therefore, that 
a significant, unanticipated increase in heavy traffic will increase 
pavement wear on these alternative routes, resulting in additional 
maintenance costs or even the need to reconstruct the roadway to a 
higher standard. Similarly, the life of bridges on diversion routes 
could be shortened, resulting in unanticipated maintenance, 
strengthening or replacement costs.
    Furthermore, alternative routes would likely see an increase in 
traffic, with higher levels of congestion. This will result in 
additional air quality impacts. This will be further exacerbated by the 
fact that many of these routes are likely to include intersections that 
force vehicles into acceleration-deceleration modes that are not 
present on most toll roads.
    We are also very concerned about the safety impacts of toll 
evasion. Toll roads such as the New Jersey Turnpike and Garden State 
Parkway are generally far safer than their alternative routes. While on 
average Interstates have a fatal crash rate that is four times lower 
than the rate for surface streets, in some cases the disparity is much 
greater. For example, the fatal crash rate of one alternative route 
used by vehicles avoiding high tolls on the Ohio Turnpike was 17 times 
higher than the Turnpike's rate, according to an Ohio DOT report.

    Question 3. Mr. Baroni claimed that the hearings leading up to the 
recent toll increase were the most open and transparent in its history. 
Was that your experience and the experience of the trucking industry in 
general?
    Answer. The manner in which the Authority conducted the public 
hearings associated with the toll increase did not allow commuters and 
carriers with legitimate concerns, and who would likely suffer 
significant hardship as a result of the increases, with sufficient 
opportunity to provide input. The proposal was announced on August 5, 
2011, and only one day of hearings was scheduled, for August 16, 2011. 
This allowed less than two weeks for the public to analyze the proposal 
and prepare remarks. The hearings were held at locations that were 
difficult for the public to reach, and at inconvenient times of the 
day. Following the hearings, the Port Authority Board met on August 19, 
2011 and approved a revised toll increase schedule which was apparently 
negotiated with both Governor Cuomo (NY) and Governor Christie (NJ). As 
a result, the public was not even provided an opportunity to comment on 
the final proposal. The approved toll increase was set to go into 
effect on September 18, 2011, providing less than a month for motorists 
to prepare for the exorbitant increases associated with the first phase 
of the 5-year planned increases. This is especially problematic for 
trucking companies, which cannot easily renegotiate contracts with 
customers or, in many cases, cannot effectuate the rate increases with 
customers within such a short period. The result for NFI and other 
truckers is that we will absorb a disproportionate amount of the toll 
increase for a period of time.
    The hearings associated with the proposed increases were frankly 
just window dressing. The way in which the whole process was conducted 
sent a very clear message that the decision to increase tolls had 
already been made, without regard to public input. The increases were 
forced on motorists during a slow recovery from one of the worst 
economic recessions in history, with little to no time for commuters or 
businesses to determine how they would budget for the increased costs. 
The process and the outcome points to an Authority with unchecked power 
that shows little regard for the impacts of its decisions on the 
community which it purports to serve. Mr. Baroni's characterization of 
this process as ``the most open and transparent'' in the PA's history 
certainly does not speak well of past Authority practices. The PA has a 
long way to go to fulfill its responsibilities as a public institution, 
and as long as it continues to operate with impunity, it is likely to 
continue to place its own goals ahead of the public's interest.
                                 ______
                                 
Response to Written Questions Submitted by Hon. John D. Rockefeller IV 
                           to Chris Plaushin
    Question 1. I'm troubled by reports of mismanagement, misuse of 
funds, and a general lack of accountability at multiple tolling 
entities around the country recently, several of which operate as 
interstate compacts. Given the Federal government's role in 
establishing interstate compacts, what should the Federal role be in 
overseeing these organizations to ensure that they act with the 
traveling public's best interests in mind?
    Answer. Mr. Chairman, AAA supports S. 2006, ``The Commuter 
Protection Act,'' introduced by Senator Lautenberg that would protect 
commuters, truckers and other highway users from paying tolls that go 
to non-transportation related purposes. This bill restores the U.S. 
Department of Transportation's (USDOT) ability to determine whether 
toll rates on bridges and tunnels imposed by local authorities are 
``just and reasonable.'' Up until 1987, USDOT had the authority to 
determine whether any tolls charged to drivers were ``just and 
reasonable'' upon a complaint. Under the ``Commuter Protection Act,'' 
if the tolls were deemed unfair, USDOT could prescribe a more 
reasonable maximum toll that could be charged. This authority served to 
protect Interstate commerce and facilitate Interstate travel.
    As background, in the summer of 2011, dramatic toll hikes took 
effect in the New York and New Jersey region, where revenues were 
planned to be diverted to non-transportation related real estate 
development projects. While and Senator Lautenberg introduced the 
``Commuter Protection Act'' in response this particular egregious 
action, there now exists a troubling new precedent whereby drivers 
using Interstate facilities are being forced to pay for non-
transportation related costs, such as real estate development and 
athletic stadiums. The bill is also endorsed by the American Trucking 
Associations, American Highway Users Alliance, American Motorcyclist 
Association, Owner-Operator Independent Drivers Association and NATSO.

    Question 2. When done responsibly, tolling can be a useful and 
necessary method of raising revenue for needed transportation 
improvements. However, tolls can also disproportionately impact some 
citizens, such as those required to commute on tolled facilities during 
peak hours to and from work on a daily basis. With this in mind, beyond 
congestion pricing schemes, what options are there for tolling entities 
to lessen the burden on those who must commute during peak hours?
    Answer. Mr. Chairman, AAA's position remains that tolling can be a 
part of the solution for our funding problems if the fees charged are 
just and reasonable and the revenue is directed to improving the 
facility where the tolls are applied. We would evaluate other similar 
proposals or pricing schemes on a case-by-case basis.

    Question 3. Your organization has spoken against tolls on existing 
roads, bridges, and tunnels. Beyond increasing the gas tax, what other 
methods do you support to increase funding for transportation projects? 
Do your organizations support tolling as a means to finance new 
transportation projects?
    Answer. Mr. Chairman, AAA will support a gas tax increase, provided 
it's tied to a significantly restructured program that is performance 
based, and ensures accountability and transparency. We agree with the 
experts who have concluded that, at least for the next decade, the 
Federal gas tax remains the best way available to generate significant 
amounts of revenue. It is fraud-resistant, easy to administer, and it 
maintains the user-fee principle that has served as the backbone of the 
transportation program for over 50 years.
    AAA acknowledges that additional revenue sources will be needed now 
and into the future, and that we will need to begin transitioning to a 
successor funding system. We're willing to consider all funding 
options, including vehicle miles traveled tax systems, tolling and 
public-private partnerships. But for AAA, protecting the public 
interest will continue to be paramount, and all funding options will be 
evaluated in this context.
    Tolling and pricing are among future solutions to increase capacity 
and manage congestion. However, they are not a panacea. We won't fix 
the Nation's transportation funding shortfall by assuming that tolled 
or priced projects will fill the gap. Expansion of tolling and pricing 
projects must be thoughtfully and carefully implemented. Every project 
must be judged on its merits. Motorists must be assured that tolls are 
fair and equitable, transparent, and are used for the purposes for 
which they are collected.
    Private investment has been touted as a simple, ``tax free'' way to 
raise large amounts of money for transportation. But the reality is 
private investment will likely only constitute a small portion of 
revenue for transportation in the near term, and it is not ``free'' 
money. Transportation users will be paying private investors back in 
the form of tolls or some other method of taxation for years.
    AAA has significant concerns about how private investment has been 
portrayed in recent years, particularly with regards to the long-term 
lease of existing assets. These are complex financial and operational 
arrangements and they warrant close scrutiny. The problems we now face 
have been years, if not decades, in the making. We are kidding 
ourselves if we think there is a quick or easy fix.
    Our roads and bridges are not financial assets to be sold to the 
highest bidder. AAA recommends creating a Federal framework for public-
private partnerships that ensures the public interest is not ignored in 
the quest to receive the highest bid price. In any of these 
arrangements, motorist fees must be fair and equitable, up-front lease 
payments should not be diverted for non-transportation purposes, and 
high levels of public oversight must be maintained, among other 
protections.

    Question 4. The public has the right to see exactly how tolling 
entities use their revenues in order to ensure that these organizations 
are spending funds with the public interest in mind. In your opinion, 
how can tolling authorities best achieve this?
    Answer. Mr. Chairman, there are a few practices and procedures that 
can help protect motorists in the context of tolling arrangements. A 
capital plan should accompany all tolling proposals so that the public 
is clear as to why additional funds are required and what exactly they 
will be spent on. Authorities should conduct an evaluation of the 
impact tolls will have on those who live and work along the affected 
corridor. Hearings on tolling proposals should be held at a variety of 
locations, times and days in order to generate the highest public 
attendance possible. There should be a reasonable period of time, 
months not weeks, between the unveiling of a tolling proposal and 
subsequent hearings and legislative votes on the proposal. Tolling 
commissioners (some or all) should be required to be present at public 
hearings. Authorities should explore creating ``citizens advisory 
committees'' which represent the community and have an opportunity to 
communicate their ideas and suggestions, seek information, and question 
decisions being made through regularly scheduled meetings with 
officials who set toll rates.
                                 ______
                                 
Response to Written Questions Submitted by Hon. Frank R. Lautenberg to 
                             Chris Plaushin
    Question 1. At the hearing, Mr. Baroni referenced many discounts 
that the Port Authority of New York and New Jersey has provided for 
commuters. Have the ``discounts'' provided by the Port Authority 
mitigated the effects of the toll rates? To what extent are your 
members able to take advantage of reduced rates?
    Answer. Mr. Chairman, it is important to note that the discount 
plan was announced after the huge public uproar over the Port 
Authority's proposal. The discount represents a small decrease if you 
have an E-ZPass, and a slightly larger discount if you have a Port 
Authority-issued E-ZPass. Though while the discount does help mitigate 
the costs for some commuters, it is important to remember that all 
tolls went up by such a large rate that the savings from those 
discounts likely served as cold comfort to commuters. Even with the 
discounts, the toll rate increases are putting a significant burden on 
commuters.

    Question 2. Mr. Baroni claimed that the hearings leading up to the 
recent toll increase were the most open and transparent in its history. 
Did your members believe this was the case?
    Answer. Mr. Chairman, AAA does not believe this to be the case. The 
hearings seemed to serve as a ``check-box'' for the Port Authority as 
the hearings were all held on one day, the bare minimum required, and 
no commissioners personally attended the hearings. Also, the hearings 
were in the dead of summer with little notice, at inconvenient times 
and locations for the working public. This is hardly the type of 
transparency commuters are looking for.
    The most recent hikes were announced August 5, and implemented on 
Sept 18, providing motorists a little more than six weeks to formulate 
questions regarding the proposal. By way of comparison, the prior toll 
fare hike was announced on November 19, 2007 and implemented March 8, 
2008--a window of more than 3 months. Also, in 2008 the public hearings 
were spread over a nearly two week period--much more accommodating for 
the general public.
    Finally, it is important to remember that the previous toll fare 
hikes were accompanied by a Capital Plan detailing the projects to be 
financed. As of today the Port Authority still has not released a 
Capital Plan for their latest toll increases but rather only released a 
``preliminary budget''.

    Question 3. What issues have your members had with transparency at 
the Port Authority?
    Answer. There exists a widespread concern that the Port Authority 
is operating under little oversight and the public cannot be guaranteed 
that their toll money is being utilized in a wise, responsible manner. 
Therefore, we are pleased to see the inclusion of a General 
Accountability office (GAO) report in MAP-21 that will provide further 
information on the transparency and accountability practices of tolling 
authorities.
                                 ______
                                 
Response to Written Questions Submitted by Hon. John D. Rockefeller IV 
                      to Hon. Eugene A. Conti, Jr.
    Question 1. I'm troubled by reports of mismanagement, misuse of 
funds, and a general lack of accountability at multiple tolling 
entities around the country recently, several of which operate as 
interstate compacts. Given the Federal government's role in 
establishing interstate compacts, what should the Federal role be in 
overseeing these organizations to ensure that they act with the 
traveling public's best interests in mind?
    Answer. The State transportation agencies recognize the importance 
of transparency and the need to ensure the public that facilities 
operated under Interstate compacts are well-managed and accountable. 
The establishment of tolling authorities under interstate compacts, 
which are provided for in the Constitution, generally include 
provisions to ensure that the public's interest for which such 
facilities are provided are fully protected. Because these compacts are 
created at the behest of the affected States, we believe that it is 
more appropriate for those States to maintain--and improve as 
necessary--procedures to ensure protection of the public, oversight and 
accountability, and resolution of disputes that best fit each state's 
context. With such procedures in place, heavy Federal oversight would 
be duplicative and is therefore not necessary.

    Question 2. When done responsibly, tolling can be a useful and 
necessary method of raising revenue for needed transportation 
improvements. However, tolls can also disproportionately impact some 
citizens, such as those required to commute on tolled facilities during 
peak hours to and from work on a daily basis. With this in mind, beyond 
congestion pricing schemes, what options are there for tolling entities 
to lessen the burden on those who must commute during peak hours?
    Answer. Many tolling entities make special provisions for frequent 
users by providing special discounts based on their residency and/or 
income. While toll rates are generally set to meet bond coverage ratios 
as required by bond covenants to cover the operating and maintenance 
costs of the facilities, states are fully cognizant of equity issues 
associated with tolling, and continue to strive to ensure access for 
all users in a financially responsible manner

    Question 3. The public has the right to see exactly how tolling 
entities use their revenues in order to ensure that these organizations 
are spending funds with the public interest in mind. In your opinion, 
how can tolling authority's best achieve this?
    Answer. There are many approaches to ensure tolling entities are 
open and transparent about how the money that is collected is spent. 
For example, most tolling entities require periodic audits or budget 
reviews, the results of which are available to the public. In addition, 
toll increases generally require a public process at which details of 
toll increases are provided and public comment is obtained. Such public 
involvement opportunities hold toll agencies accountable by providing 
regular avenues of public input and engagement.
                                 ______
                                 
Response to Written Questions Submitted by Hon. Kay Bailey Hutchison to 

                       Hon. Eugene A. Conti, Jr.
    Question 1. What is the anticipated timeline, including major 
milestones, for final approval of North Carolina's I-95 Federal tolling 
application?
    Answer. Following is the anticipated time and major milestones for 
final approval:

   Completion of the Economic Assessment--early 2013

   In-depth funding assessment can be done concurrently with 
        Economic Assessment

   Phasing & Finance Plan--3 to 4 months after economic 
        assessment

   Final environmental document (for concept of tolling)--3-6 
        months after Economic Assessment

   FHWA could potentially grant final approval by summer 2013.

    Question 2. What, if any, is the anticipated net increase in 
crashes, and in road maintenance and improvement costs, associated with 
traffic diversion as a result of tolls on I-95?
    Answer. When we have a final Phasing & Finance plan that determines 
the number and location of gantries, it then will be possible to 
estimate traffic diversion. When we are able to accurately estimate 
diversion, we will estimate maintenance costs based on the anticipated 
traffic volumes and current roadway conditions.

    Question 3. Since both North Carolina and Virginia are applying for 
I-95 tolling authority, will your traffic and revenue and economic 
impact analyses factor in the effects of the combined tolls?
    Answer. Once we have the final details of their plan, including 
toll locations and rates, traffic volumes, etc., we intend to consider 
the effects of the combined tolls.

    Question 4. What process will NCDOT use to receive input from the 
public as it works towards approval of the application?
    Answer. NC DOT intends to use traditional and cutting-edge public 
outreach methods, including public hearings/workshops, e-mail 
notification, project website, social media, radio, newspaper, TV news, 
bilingual hotline, virtual meetings, charrettes, town hall meetings, 
community involvement.
                                 ______
                                 
                                                      July 24, 2012
Patrick Foye,
Executive Director,
Port Authority of New York and New Jersey,
New York, NY.

David Samson,
Chairman,
Port Authority of New York and New Jersey,
New York, NY.

Dear Mr. Foye and Chairman Samson:

    Since the United States Congress ratified the interstate compact 
that created the Port Authority of New York and New Jersey in 1921, the 
United States Senate Commerce Committee has exercised oversight of the 
Port Authority and its impact on interstate commerce. Pursuant to this 
power, on April 18, 2012, the Surface Transportation Subcommittee of 
the Senate Commerce Committee held a hearing entitled ``Protecting 
Commuters: Ensuring Accountability and Oversight in Tolling.'' The 
purpose of this hearing was to gather information on the Authority's 
use of tolls, in particular the toll increases that the Authority 
announced on August 19, 2011.
    As you know, the executive who appeared on behalf of the Authority 
at the April 18 hearing, Mr. Bill Baroni, was argumentative and 
unresponsive to the Subcommittee's questions about how the Port 
Authority's toll rate decisions impact consumers in New York and New 
Jersey. Mr. Baroni also failed to meet the basic standards of civility 
and decorum that the Committee expects from its witnesses.
    Following the hearing, the Committee gave the Port Authority 
another opportunity to answer the questions posed in the hearing by 
responding to written questions to be included in the record. 
Unfortunately, the Port Authority again failed to provide serious, 
complete responses to the Committee. The answers we received were 
largely incomplete or did not respond to the questions posed and, at 
least in one case, the Port Authority asserted--without any legal 
authority--that providing requested information would be 
``inappropriate.''
    This repeated failure to respond to the Committee's questions not 
only shows a lack of respect for legitimate congressional oversight; it 
also directly contradicts repeated assertions by Port Authority 
officials that the agency is increasing its transparency. Port 
Authority Chairman Samson recently stated that the Authority was 
attempting to be ``the national leader in transparency and open 
government,'' but our Committee has experienced the opposite, which we 
find highly disappointing given the issue of the hearing. Transparency 
about tolling decisions is particularly important because tolls have a 
serious impact on hundreds of thousands of commuters in the region.
    Leadership at the Port Authority has stated that, despite the fact 
that he was asked to respond on behalf of the agency, Mr. Baroni's 
responses to the written questions for the record do not reflect the 
official position of the Port Authority. If this is the case, it is 
hard to understand how an accountable and transparent organization 
would allow a rogue actor to behave in such an unbecoming way without 
correcting the record.
    Due to the important subject matter of this hearing and the 
Committee's ongoing oversight responsibilities, it is important that 
the congressional record be complete. If the answers that Mr. Baroni 
provided or failed to provide do not reflect the official position of 
the Port Authority, then we ask the Port Authority to correct the 
record or provide a legitimate legal basis for any specific instances 
that it cannot provide the requested information. With that in mind, 
please provide this information to the Committee no later than August 
14, 2012.
            Sincerely,

John D. Rockefeller IV,
Chairman, U.S. Senate Committee on Commerce, Science, and 
Transportation
  
Frank R. Lautenberg,
Chairman, U.S. Senate Commerce Subcommittee on Surface Transportation 
and Merchant Marine Infrastructure, Safety, and Security

cc:
Scott Rechler, Vice-Chairman
Richard Bagger, Board Member
H. Sidney Holmes III, Board Member
Jeffrey Lynford, Board Member
Jeffrey Moerdler, Board Member
Raymond Pocino, Board Member
Rossana Rosado, Board Member
James Rubin, Board Member
Anthony Sartor, Board Member
William Schuber, Board Member
David Steiner, Board Member
William Baroni, Jr., Deputy Executive Director
                                 ______
                                 
                                                    August 14, 2012

Hon. John D. Rockefeller IV,
Chairman,
U.S. Senate Committee on Commerce, Science, and Transportation.
  
  
  

Hon. Frank R. Lautenberg,
Chairman,
U.S. Senate Commerce Subcommittee on Surface Transportation and 
Merchant Marine Infrastructure, Safety and Security,
Washington, DC.

Dear Chairman Rockefeller and Chairman Lautenberg:

    Thank you for your letter to Chairman David Samson and me, 
regarding the matters raised at the April 18, 2012 hearing held by the 
United States Senate Commerce Committee entitled: ``Protecting 
Commuters: Ensuring Accountability and Oversight in Tolling.'' The Port 
Authority greatly appreciates the opportunity to supplement the 
responses previously provided to the questions for the record (QFRs) 
issued following the April 2012 hearing. We take this opportunity to 
set forth in detail answers, which we sincerely hope, will clarify our 
positions on the issues you have raised. We offer these responses in 
the spirit of continued collaboration and partnership, which we 
recognize is vital to ensuring that the Port Authority fulfills its 
mission of providing the highest level of service to the public.
    Please be assured that the Port Authority appreciates and respects 
the significant role that Congress and the Federal government have 
played in the history of this agency, from the Congressional approval 
of the Compact that gave birth to this agency, to the Federal role in 
the development of the Port Authority. For over 90 years, the Port 
Authority has benefited from an alliance with the Federal government 
and it is because of this strong alliance that the Port Authority has 
become one of the largest providers of transportation services in the 
world, as well as a critical provider of transportation at the heart of 
this region's transportation and commercial interests. We hold the 
Senate Commerce Committee and its members, particularly Chairmen 
Rockefeller and Lautenberg, and Senators Hutchison and Wicker, in the 
highest regard, and we welcome the support and guidance that the 
Committee can provide as the Port Authority works to further its 
mission to provide efficient and safe transportation for people and 
goods in the bi-state region.
The 2011 Toll and Fare Increase--Questions 1 through 6
    The following information responds to the first six questions, 
which all relate to the most recent toll and fare increase adopted by 
the Port Authority.
The Interstate Transportation Network
    The Port Authority owns, operates and maintains the Interstate 
Transportation Network (``ITN''), a critical component of the 
transportation infrastructure of the New York and New Jersey 
Metropolitan Region. The ITN consists of four vehicular bridges (the 
George Washington, Bayonne and Goethals bridges as well as the 
Outerbridge Crossing), two vehicular tunnels (the Holland and Lincoln), 
the Port Authority Trans-Hudson rail system (``PATH''), two bus 
terminals and a bus station (the Port Authority Bus Terminal, the 
Journal Square Transportation Center and the George Washington Bridge 
Bus Station) and the Trans-Hudson Ferry Service.
    The Port Authority does not receive tax revenue and, while it has 
received select funds from the United States Department of Homeland 
Security for security and seismic improvements and funds under 
discretionary programs for promotion of commuter bus alternatives, the 
toll and fare structure is the Port Authority's primary means of 
funding the region's ITN.
    While the Port Authority raised tolls in 2008, the severe recession 
in that same year significantly impacted all of the Port Authority's 
transportation facilities, including the ITN, in the form of 
substantial declines in usage and traffic across all vehicle classes. 
Those declines resulted in operating revenues and financial capacity 
far lower than the original projections. Specifically, the aggregate 
toll revenue variance resulting from recessionary traffic declines for 
the 2008-2016 forecast marked a shortfall of $789 million from the 
revenues expected prior to the recession. In addition, the effects of 
age and extensive usage on these ITN facilities have generated further 
and significant capital needs for the ITN. In short, the ITN was 
producing revenues that were insufficient to fund its needs, and the 
Port Authority therefore had to increase tolls. The extent of the ITN 
deficit is borne out by financial analyses, which, as described further 
below, demonstrate that the recent toll increase will reduce the 
deficit but not eliminate it. In fact, even with the revenues from the 
recent toll increase, which will be used only to fund ITN-related 
projects, the ITN will continue to run a deficit until 2020 and its 
capital needs will not be fully met.
    That the revenue from the 2011 toll and fare increases is needed to 
reduce the ITN deficit, will be used to pay for only ITN-related 
expenses and projects and to contribute to statutorily required reserve 
funds demonstrates that the increases are just and reasonable and 
satisfy Constitutional requirements. Furthermore, in assessing the 
reasonableness of the Port Authority's toll structure, it is 
significant that Port Authority tolls remain in line with those for 
similar bridges and tunnels in the region.
The Capital Investment Needs of the ITN
    The inability of the then-existing ITN toll and fare structure to 
support the current and future capital needs of the ITN facilities 
caused the Port Authority to adopt the 2011 toll and fare increases. 
The projected capital spending for the ITN over the next 10 years 
amounts to $10.786 billion. Even with this level of spending and with 
the revenue generated by the 2011 toll and fare increases, the ITN will 
have unmet capital needs totaling $4.3 billion.
    Over the next decades, the Port Authority must begin work on 
critical infrastructure projects in order to continue to provide the 
region with safe and reliable transportation at the highest level of 
service. During 2010, the Port Authority bridges and tunnels handled 
121.2 million vehicles, while the PATH system served 73.9 million 
passengers at an average of 247,000 passengers per weekday. In 2011, 
the bridges and tunnels handled 119.2 million vehicles, while PATH 
ridership rose to 76.6 million trips or an average of 256,000 per 
weekday--the highest ridership since the Port Authority took over PATH 
operations in 1962. In 2010, the bus terminals had 3.3 million bus 
movements serving 75.4 million passengers, which rose to 3.4 million 
bus movements serving 76.5 million passengers in 2011. As ridership and 
traffic increases, so does the age of our ITN facilities, most of which 
are more than eighty years old and, thus, the ITN infrastructure now 
requires significant ongoing maintenance and regular capital investment 
to sustain operational safety and a state of good repair. Given the age 
and wear of the ITN facilities, many of the bridges and tunnels are 
outdated, compromising their ability to serve the volume and vehicle 
designs of this century. Deferral of large state-of-good-repair 
projects only creates more frequent and costly emergency and corrective 
repairs that adversely affect service levels and travel reliability for 
customers.
    During the next ten years, the Port Authority is planning to expend 
$10.786 billion on capital improvements to maintain the ITN. The Port 
Authority is strategically programming asset replacement projects 
designed to deal with critical state-of-good-repair needs and 
infrastructure obsolescence. The ongoing PATH safety program includes 
installation of improved tunnel and station ventilation systems. Port 
Authority investment in the George Washington Bridge Bus Station will 
be used to construct new bus platforms and a new passenger waiting 
area. The Port Authority Bus Terminal and Journal Square Transportation 
Center will receive investments for state-of-good-repair projects, 
security enhancements and rehabilitation.
    The following are highlights of the major projects planned for the 
ITN for 2011-2020:

   Replacement of the George Washington Bridge Suspender Ropes: 
        The George Washington Bridge opened more than 80 years ago in 
        1931. Its suspender ropes have never been replaced and have 
        reached the end of their useful life. The Robert F. Kennedy 
        Bridge, the Bronx-Whitestone Bridge and the Verrazano-Narrows 
        Bridge were all built after the George Washington Bridge and 
        have had some or all of their suspender ropes replaced. The 
        total cost of replacing the suspenders is more than one billion 
        dollars with $544 million of planned expenditures through 2020.

   The Bayonne Bridge Navigational Clearance Program 
        (``BBNCP''): The Bayonne Bridge roadway over the Kill Van Kull 
        will be rehabilitated to increase its vertical clearance to 
        meet modern highway and structural design standards. In 
        addition, the raising of the roadway will provide enough 
        vertical clearance to allow access to larger container vessels 
        calling on the port as a result of the Panama Canal expansion 
        in 2015. The acceptance of the Port Authority's application for 
        expedited review of the BBNCP under the Federal Infrastructure 
        Dashboard (the ``Dashboard'')--believed to be the first 
        submitted application in the nation--was supported by all 
        members of the New York/New Jersey Senatorial delegation. On 
        July 19, 2012, the White House announced the President's 
        inclusion of the BBNCP on the Dashboard, now known as the 
        administration's ``We Can't Wait Initiative''. The total cost 
        of the BBNCP project is more than $1.28 billion.

   The Goethals Bridge Replacement Project: The Goethals Bridge 
        Replacement Project will replace the existing structure, which 
        is functionally obsolete, with a new six-lane bridge. This 
        bridge serves as a critical crossing on the congested I-287 
        corridor, important to regional mobility, yet has obsolete ten 
        foot wide lanes and no shoulders or medians, making it 
        susceptible to severe traffic congestion in the case of even 
        minor accidents or inclement weather. The Port Authority will 
        expend $294 million for planning and construction. The balance 
        of the cost of this program of approximately $1.37 billion will 
        be financed by the Port Authority through a private financing 
        arrangement rather than the issuance of Consolidated Bonds. To 
        be clear, the contemplated private financing arrangement 
        requires that the Port Authority make annual payments to the 
        private developer, creating a financial obligation requiring 
        Port Authority toll revenue to cover.

   The Lincoln Tunnel Helix Restoration: The Lincoln Tunnel 
        Helix is a bridge structure that connects New Jersey highways 
        and local roads to the Lincoln Tunnel in New Jersey. It was 
        constructed in 1937 and is in need of rehabilitation due to age 
        and deterioration. The Lincoln Tunnel Helix Restoration Program 
        will address the interim need for pavement replacement and 
        maintenance, the mid-term need for structural rehabilitation 
        and repaving, and the long-term need for Helix replacement. The 
        Port Authority has begun an $88 million project to perform a 
        rehabilitation of the deck and supporting structure as an 
        interim measure until the Lincoln Tunnel Helix can be replaced. 
        The mid-term structural rehabilitation and repaving 
        improvements only serve as a temporary solution, but are 
        necessary in order to maintain the helix in an operational 
        condition while a plan is developed for its replacement. The 
        extensive engineering analysis and design work required for the 
        Helix replacement has begun in order to develop a feasible plan 
        for reconstructing the Helix while maintaining traffic flow. 
        The estimated cost of the Helix Replacement is $1.5--$2.0 
        billion.

   The Lincoln Tunnel Access Roadway Infrastructure Projects: 
        Expenditures for three projects to improve roadway approaches 
        to the Lincoln Tunnel will total $1.8 billion.

   PATH Improvements: Planned expenditures for capital 
        improvements and safety enhancements in PATH facilities will 
        cost more than $3.1 billion.

    In addition, the 2012 Preliminary Capital Budget lists expenditures 
for the following projects for the ITN:

   Holland Tunnel Electrical/Mechanical Rehabilitation of 
        Ventilation Systems Upgrade: Providing for upgraded and 
        modernized tunnel ventilation, fan blowers and motors in all 
        four vent buildings, a new automatic control system, and a new 
        low-and-high-voltage switch gear. The project will rehabilitate 
        an existing ventilation system that is currently beyond its 
        useful life. Replacement of the system's fans and motors will 
        prevent the Port Authority from having to shut down the tunnel 
        to all vehicles in order to address a non-functioning system. 
        The 2011-2020 spending to complete this project is estimated at 
        $60 million, of which $13 million is planned to be spent in 
        2012. The total cost of this project, including prior spending, 
        is $160 million.

   George Washington Bridge Upper Level Deck Rehabilitation: 
        Rehabilitation of the structural steel of the George Washington 
        Bridge's Upper Level roadway deck and support structure to 
        maintain structural integrity, ensure state of good repair, and 
        extend useful life. This project will extend the useful life of 
        the deck another 15-20 years and reduce maintenance costs. The 
        2011-2020 spending for this project is estimated at $137 
        million, with $26 million planned for 2012. The total cost of 
        this project, including prior spending, is $143 million.

   George Washington Bridge Bus Station Redevelopment: 
        Modernize bus operations on the upper level of the existing 
        George Washington Bridge Bus Station, as well as develop 
        approximately 120,000 square feet of retail space creating a 
        new revenue stream for the agency. Provide a modernized 
        intermodal transportation facility and services that promote 
        reliable travel and seamless connectivity among modes, and more 
        attractive transit alternatives for users of the George 
        Washington Bridge Bus Station. The Port Authority's share of 
        the spending for this project is estimated to be $82 million, 
        of which $34 million was budgeted to be spent in 2012.

   Toll Collection System Replacement: Provide a new toll 
        collection system to replace the current system, which is 
        beyond its useful life. Deploy a system that has the capability 
        for All-Electronic Tolling, which will enable the Port 
        Authority to eliminate cash payments in toll lanes, thereby 
        enhancing system capacity and traffic flow at the interstate 
        crossings. Replacement of the aging toll collection system and 
        equipment will serve to protect toll revenue and help to recoup 
        revenue loss as a result of the antiquated system. The 2011-
        2020 spending for this project is estimated at $162 million, 
        with $15 million planned for 2012. The total cost of this 
        project, including prior spending, is $177 million.

    It is also important to note that, in addition to addressing the 
critical needs of the ITN, the $10.786 billion of ITN capital spending 
included in the preliminary 2011-2020 capital plan is expected to 
result in nearly 21,000 direct job-years. Including indirect and 
induced effects (purchases by both workers and suppliers to the 
project), the total economic impact amounts to an estimated 47,000 job-
years, $2.8 billion in wages and $10.9 billion in economic activity 
over the ten-year period. The important impact that the full 
implementation of this plan will have for the people of this region in 
terms of both services and jobs cannot be underestimated.
Public/Private Partnerships
    In order to meet its mandate of providing the highest level of 
service for the public using the ITN facilities, the Port Authority has 
increased its capacity to serve those needs through the implementation 
of ITN projects using a public/private partnership model. In addition 
to the Goethals Bridge Replacement Project, mentioned above, the Port 
Authority has also embarked on the following ITN projects, also 
mentioned above, partnering with private entities:

   George Washington Bridge Bus Station (``GWBBS'') 
        Redevelopment: As noted above, the Port Authority has executed 
        a long-term 49-year lease agreement with a private developer as 
        part of a public-private partnership that will result in the 
        investment of $180 million for redevelopment of the GWBBS. 
        Through this creative partnership arrangement, the majority of 
        the total investment will come from the developer helping to 
        keep the agency's capital expenditures to a minimum. The 
        redevelopment will provide complete modernization of the bus 
        operating and passenger areas along with extensive retail 
        development, which will revitalize both the GWBBS and the 
        surrounding Washington Heights community. The project is 
        currently in the final phase of design.
   The Goethals Bridge Replacement Project: As noted above, the 
        Port Authority will be expending $294 million for the planning 
        and construction of the Goethals Bridge replacement project. 
        The balance of the cost of this program of approximately $1.37 
        billion will be financed by the Port Authority through a 
        private financing arrangement rather than the issuance of 
        Consolidated Bonds. Nevertheless, as described above, the 
        private financing obligation will create a financial obligation 
        by the Port Authority to repay the developer if they meet 
        certain asset delivery and performance obligations.
Unmet Capital Needs
    Even with the revenue generated by the September 2011 toll and fare 
increases, there remain many unmet capital investment needs for aging 
ITN facilities. While life-safety, state-of-good repair, and security 
projects have been given priority treatment, there are projects within 
these categories that will not be funded under the current preliminary 
ten-year capital plan and consequently must be deferred due to the lack 
of sufficient investment capacity generated by projected revenues. Such 
deferred projects include replacing the bridge decks for the George 
Washington Bridge and Outerbridge Crossing, rehabilitating the Hudson 
River ramps for the George Washington Bridge, and replacing the 
traffic-bearing slabs for the Port Authority Bus Terminal. The 
projected future unmet needs for such projects total a sizeable $4.3 
billion, with an additional $3.6 billion programmed for beyond 2020. 
Additionally, given the cost constrained environment the Port Authority 
has been working under, only 76 percent of all priority preventative 
routines scheduled for 2011 were completed in that year, increasing the 
risk of more costly repairs as these maintenance routines are deferred.
Past and Projected ITN Revenues and Expenses Will Result in a Deficit
    A cash flow analysis of the sources of past and future revenues and 
operating and capital expenses for the ITN shows it will run a deficit 
until 2020. For the period 2011-2020, even after the toll and fare 
increases approved by the Board of Commissioners in August of 2011, the 
ITN will generate a net loss of $51 million by 2020. The cash flow 
analysis is appended to the Affidavit of Michael Fabiano, Exhibits B-E, 
which was provided to the Committee as an attachment to the June 7, 
2012 letter.
    For the four-year period from 2007-2010, the ITN generated actual 
net operating revenues of $1.193 billion. The ITN, however, showed a 
cumulative net loss of $636 million over that period, after deducting 
direct payments for capital expenditures and debt service allocated to 
the Port Authority's Consolidated Bonds issued for capital 
expenditures, and payments into the General Reserve Fund, which are 
statutorily required because of the issuance of Consolidated Bonds for 
the ITN. As stated earlier, for the period 2011-2020, the cash flow 
analysis, which incorporates the toll and fare increases, shows a net 
loss of $51 million for the ITN by 2020.\1\
---------------------------------------------------------------------------
    \1\ This cash flow analysis is based on the historical Port 
Authority practice of using equal amounts of debt and direct payments 
to finance capital expenditures. The use of a mixture of debt and 
direct payment of capital expenditures is an efficient way to finance 
these projects as evidenced by a comparison between the all cash method 
and the 50 percent cash (direct payment)--50 percent debt method. 
Assuming the Port Authority paid $10.786 billion in ITN capital 
expenditures all cash (direct payment) method, the ITN cash flow to the 
Port Authority at the end of 2020 would result in a loss of $2.854 
billion in contrast to the $51 million net projected loss of the ITN at 
year-end 2020 with the 50 percent cash--50 percent debt method.
---------------------------------------------------------------------------
    The cash flow schedules clearly demonstrate that every dollar of 
the toll and fare increase is and will be devoted to payment of ITN 
operating expenses and capital improvements and contributions to 
statutorily required reserve funds. The revenue from the September 2011 
toll and fare increases will not be utilized outside of ITN-related 
projects.
Comparison to Similar Regional Tolls
    It is also important to note that Port Authority tolls continue to 
be in line with those for similar bridges and tunnels in the region. 
The Port Authority's average toll is 4.5 percent lower than the average 
toll for the major crossings operated by the region's other toll bridge 
and tunnel operator--the Metropolitan Transportation Authority 
(``MTA''). The MTA's network includes the Verrazano Narrows, Robert F. 
Kennedy, Bronx-Whitestone and Throgs-Neck bridges and the Brooklyn 
Battery and Queens Midtown tunnels. Round trip tolls for comparable MTA 
bridges and tunnels (i.e., the Verrazano-Narrows, Robert F. Kennedy, 
Bronx-Whitestone and Throgs Neck bridges as well as the Brooklyn-
Battery and Queens-Midtown tunnels) are set forth in Exhibit A. The 
round-trip toll rates for the Port Authority's tunnels and bridges for 
the years 1970-2011 are set forth in Exhibit B. This schedule reflects 
the discounts offered to E-ZPass account holders, registered 
carpoolers, truckers traveling during weekday overnight hours and green 
pass vehicles, which are E-ZPass customers driving qualifying low-
emission, high-efficiency vehicles in off-peak hours.
    A comparison of the Port Authority and MTA bridge and tunnel tolls 
shows that the Port Authority's 2011 tolls are the same as, or lower 
than, the round-trip tolls for these comparable MTA facilities as set 
in 2010. The lower tolls charged by the Port Authority are demonstrated 
by comparing the tolls charged by each agency for cars. The MTA charges 
$13.00 round trip for cash customers and $9.60 round trip for E-ZPass 
customers at all times. By comparison, the Port Authority 2011 round-
trip toll for vehicles is $12.00 for cash customers (i.e., 7.7 percent 
lower than the MTA), $9.50 for E-ZPass customers during peak hours 
(i.e., 1.0 percent lower than the MTA), and $7.50 for E-ZPass 
customers during off-peak hours (i.e., 21.9 percent lower than the 
MTA). The Port Authority provides a toll discount for all E-ZPass 
transactions, without limitations as to where one's account is 
established. This policy provides discounts to the largest population 
of users possible. The MTA offers E-ZPass discounts only to account 
holders of their New York Customer Service Centers, limiting the value 
of E-ZPass discounts to a smaller population.
    Similarly, a comparison of PATH fares to MTA subway and NJ Transit 
fares shows that, based on full fare rates, PATH fares are the lowest, 
with PATH riders paying $2.00 per trip, MTA riders paying 2.25 per trip 
and NJ Transit riders, at the least expensive NJ Transit fare, paying 
$4.00 per trip.
Toll and Fare Increase Hearings
    In conformance with its policy to facilitate public input into the 
process for consideration of toll and fare adjustments, the Port 
Authority held an extensive public notice and comment process 
undertaken in connection with the 2011 toll and fare increases during 
which almost 600 speakers or comments were received. The Port Authority 
received more than twice the public participation that it had during 
the hearings in December of 2007 for the last toll increase proposal. 
In accordance with the Port Authority's policy, adopted on June 9, 
1977, and pursuant to the By-Laws, on August 16, 2011, nine public 
hearings (four in each state and one via the Internet) and one public 
meeting were held in the Port District to solicit public comments on 
proposed changes in the toll structure for the Port Authority's six 
vehicular crossings and a proposed increase in the fare charged on the 
PATH system. Notices of the hearings were published in The Daily News, 
Newsday and The Staten Island Advance in accordance with Port Authority 
policy of publishing such notices ten days prior to the hearings. In 
addition, arrangements were also made for the New York Times, The Star 
Ledger and The Bergen Record to publish the notice at a later date. 
Proof of publication was placed on file with the Port Authority and was 
made part of the record of the toll and fare proceedings. Michael 
Francois, Chief of Real Estate & Development, Ernesto L. Butcher, Chief 
Operating Officer, Michael DePallo, Director/General Manager of PATH, 
Cedrick Fulton, Director of Tunnels, Bridges & Terminals and Kirby 
King, Director of Technology Services, presided at the hearings.
    The hearings were held at: (1) Newark Liberty International 
Airport, 1 Conrad Road, Building 157, Bay 3, Newark, New Jersey from 
8:00 a.m. to 9:09 a.m.; (2) Port Authority Technical Center, 241 Erie 
Street, Room 212, Jersey City, New Jersey from 8:00 a.m. to 9:16 a.m.; 
(3) Port Ivory/Howland Hook, 40 Western Avenue, Staten Island, New York 
from 8:15 a.m. to 10:30 a.m.; (4) Port Authority Bus Terminal, 625 8th 
Avenue, Times Square Conference Room--2nd Floor, New York, New York 
from 8:00 a.m. to 9:25 a.m.; (5) George Washington Bridge 
Administration Building, 220 Bruce Reynolds Way, Fort Lee, New Jersey 
from 6:00 p.m. to 7:52 p.m.; (7) Holland Tunnel Administration 
Building, 13th Street & Provost Street, Jersey City, New Jersey, from 
6:00 p.m. to 7:58 p.m.; (8) George Washington Bridge Bus Station, 4211 
Broadway, Lower Level Conference Room, New York, New York from 6:00 
p.m. to 7:16 p.m.; (9) John F. Kennedy International Airport, Port 
Authority Administration Building 14, 2nd Floor Conference Room, 
Jamaica, New York, from 6:00 p.m. to 7:02 p.m.; and (10) via the 
Internet from 2:00 p.m. to 3:05 p.m.
    At the opening of each session, the hearing officers made a brief 
statement outlining the purpose of the hearings--to solicit the 
comments and opinions of the public--as well as the procedural rules 
governing the conduct of the hearings, which were adopted to provide 
maximum opportunity for all views to be heard without interruption or 
dispute. In addition, at the opening of each hearing, the hearing 
officers provided a statement setting forth the reasons for the 
proposed changes in the Port Authority toll structure and the PATH fare 
structure. Copies of the statements were placed in the record.
    Additionally, at the request of James Molinaro, the Borough 
President of Staten Island, Mr. Butcher attended an August 16, 2011 
public meeting in Staten Island at the Michael J. Petrides Educational 
Complex, from 6:00 p.m. to 8:40 p.m., at which members of the public 
provided additional comments.
Summary of Testimony
    During the course of the hearings and at the public meeting, a 
total of 589 speakers and/or commenters testified and/or submitted 
written comments. This represents almost twice the public participation 
received during the hearings held for the last toll increase held in 
December of 2007 where 255 speakers and/or commenters testified and/or 
submitted written comments. Of those who testified or commented in the 
August 2011 hearings, 211 opposed the toll increase and 199 opposed the 
PATH fare increase, 306 supported the toll increase without commenting 
on the PATH fare increase and 10 took no position on the toll increase 
or on the PATH fare increase.
    The principal concern expressed by those who either testified and/
or submitted comments in opposition was that the proposed increases in 
the tolls and fares were too high. Those who testified at the hearings, 
including many public officials, also raised concerns that revenues 
generated by the toll increase would not be used to benefit those 
bridge and tunnel users who were being asked to pay the higher tolls. 
They also raised concern that increased toll revenues would be used for 
Port Authority airports, the World Trade Center and marine terminals. 
While many speakers expressed general support for the proposed Ten-Year 
Capital Plan (``Capital Plan'') supported by the toll and fare 
proposal, they questioned the use of toll revenues as an appropriate 
source to fund the Capital Plan. Many speakers in Staten Island 
testified about the lack of investment in mass transit on Staten 
Island.
    Finally, several commenters also suggested that PATH should offer a 
discount for seniors, the disabled and students. Several groups 
representing truckers testified that the tolls pricing plan did not 
recognize the fact that their schedules were dictated by their 
customers. Hudson County officials and residents were against the PATH 
fare increase, with some testifying that the proposal would discourage 
mass transit ridership and fall on those who could ill afford its 
impact.
    However, speakers at all venues offered support for the toll and 
fare proposals. The Capital Plan to be funded by the pricing plan drew 
praise from transportation planning organizations who commented on the 
need to invest in the region's transportation network. Associations and 
unions also offered support and praise for the new Capital Plan 
proposals, recognizing that it would lead to the creation of jobs and 
stimulate the regional economy. Some officials on Staten Island spoke 
favorably of the new Capital Plan while urging the Port Authority to 
reexamine the proposal's impact on low-income families and captive 
Staten Island commuters. A few speakers also argued for a more gradual 
increase in the toll schedule and for a more modest increase in the 
PATH fare.
    The written comments raised issues identical in most respects to 
those raised during the testimony at the nine hearings and at the one 
public meeting. Those identifying themselves as commuters wrote that 
the increases would impose an economic hardship on people with limited 
incomes and no other transportation alternatives. The PATH fare 
increase was criticized as both unfair and ineffective in meeting the 
goals of alleviating road congestion and encouraging the use of mass 
transit. A number of commenters expressed concern that the revenue from 
increased tolls and fares would be used to subsidize unrelated Port 
Authority projects rather than to improve PATH service and bridge and 
tunnel maintenance. On the other hand, as during the hearings, many 
commenters did not oppose a modest increase in PATH fares if it would 
result in improved PATH service.
    A report on the public input received during the notice and comment 
process was provided to the Port Authority Board of Commissioners in 
connection with its consideration of the recommended toll increase. The 
Commissioners were also provided with the actual transcripts of the 
public hearings.
The Port Authority's Procedure for Toll and Fare Adjustments
    While the public hearings and meeting leading up to the 2011 toll 
and fare increases produced a large volume of public responses, we 
continue to seek better ways of conducting our affairs. To that end, as 
part of a continuing review of governance enhancements, the Chairman 
and Vice Chairman recommended in June of this year that the By-Laws of 
the Port Authority (and its wholly owned subsidiary corporations) be 
amended to address several areas. The resulting amendments to the By-
Laws include codification of procedural requirements for public 
hearings in connection with toll and fare adjustments as well as a 
requirement that Commissioners attend toll and fare hearings. The 
relevant excerpt from those By-Laws, which was approved unanimously by 
the Board of Commissioners, is set forth below:
VI. Public Hearings
A.  Public hearings shall be held on matters requiring public 
        consideration or public comment and information and may be held 
        upon the request of (i) the Chairman of the Port Authority or 
        (ii) any two Commissioners, one from each State.

B.  Pursuant to direction by the Board of Commissioners, the Executive 
        Director shall have authority to arrange for public hearings, 
        in connection with the budgeting, planning, and programming of 
        the Port Authority, including proposals for instituting or 
        changing tolls and fares imposed for use of the Port 
        Authority's vehicular tunnels and bridges and passenger rail 
        facilities. In connection therewith, the Executive Director 
        shall:

    (1)  determine the dates, times, and locations in each of the two 
            States for the conduct of such hearings, which shall be 
            designed to encourage the broadest possible attendance and 
            participation, and which, in the case of each hearing 
            pertaining to proposals for instituting or changing tolls 
            and fares imposed for use of the Port Authority's vehicular 
            tunnels and bridges and passenger rail facilities, shall 
            include the attendance of at least two Commissioners, one 
            from each State;

    (2)  provide for appropriate notice to be given not less than ten 
            days in advance of such hearings, with notice to be 
            published within the Port District in one or more 
            newspapers of general circulation in each State, on the 
            Port Authority Internet site or any successor electronic 
            media designated by the Executive Director, and through 
            other available electronic media used by the Port 
            Authority, and which, in the case of each hearing 
            pertaining to proposals for instituting or changing tolls 
            and fares imposed for use of the Port Authority's vehicular 
            tunnels and bridges and passenger rail facilities, shall 
            include the charge or charges proposed to be instituted or 
            changed, shall set forth a comparison of the existing 
            charges with the proposed charges, and shall state the 
            purpose or purposes for which such tolls, fares or other 
            charges are to be instituted or changed and an estimate of 
            the overall increase or decrease in revenues to the Port 
            Authority resulting from such proposed charges;

    (3)  designate hearing officers (if any) in connection therewith;

    (4)  arrange for transcripts and reports of the hearings, which 
            shall be made available to all Commissioners prior to the 
            consideration of any proposal; and

    (5)  take such other action as will effectuate the Port Authority's 
            policy, as established by the Board of Commissioners, for 
            the conduct of public hearings.
The Toll Increase is Consistent with Applicable Law
    The Port Authority believes that the toll and fare increases that 
went into effect in September of 2011 are ``just and reasonable'' under 
The Federal-Aid Highway Act of 1987 (the ``Highway Act''), the Commerce 
Clause of the United States Constitution and New York and New Jersey 
law.
The Highway Act
    The establishment and maintenance of tolls on the Port Authority 
bridges is governed by the Highway Act which provides that:

        Tolls for passage or transit over any bridge constructed under 
        the authority of the Act of March 23, 1906 (34 Stat. 84; 33 
        U.S.C. 491-498), commonly known as the ``Bridge Act of 1906'', 
        the General Bridge Act of 1946, and the International Bridge 
        Act of 1972 shall be just and reasonable.

    33 U.S.C. Sec. 508. In Automobile Club of New York, Inc. v. Port 
Authority, 887 F.2d 417 (2d Cir. 1989), the United States Court of 
Appeals for the Second Circuit articulated the standard for ``just and 
reasonable'' tolls on the Port Authority bridges. The court held that 
such tolls were ``just and reasonable'' if the revenues produced by the 
Port Authority were used to fund the operating and capital needs of the 
ITN, including those of PATH, the Port Authority bus terminals and 
stations and Port Authority bus program. Id. at 423. The Second Circuit 
affirmed the finding of the District Court finding ``that the Port 
Authority's bridges, tunnels, bus terminals, bus programs and PATH 
constitute an `integrated, interdependent transportation system.' '' 
Id. (quoting Automobile Club v. Port Authority, 706 F. Supp. 264, 280 
(S.D.N.Y. 1989)). As described above, the operating and capital needs 
of the ITN are greater than the revenue produced by the tolls. 
Specifically, even with the toll increase, the ITN will still lose $51 
million by the end of 2020. Accordingly, the Port Authority 2011 toll 
rates are clearly ``just and reasonable'' under the Highway Act.
The Commerce Clause
    The tolls for the Port Authority interstate bridges and tunnels 
must also satisfy the test established by the United States Supreme 
Court for tolls levied for the use of interstate transportation 
facilities governed by the Commerce Clause of the United States 
Constitution. The Commerce Clause grants Congress the power ``[t]o 
regulate Commerce . . . among the several States.'' U.S. Const. Art. I, 
Sec. 8, cl. 3. The Supreme Court has long held that this power contains 
negative implications, commonly referred to as the ``dormant Commerce 
Clause'' restricting States' power to regulate interstate commerce. CTS 
Corp. v. Dynamics Corp. of Am., 481 U.S. 69, 87 (1987).
    The Supreme Court first articulated the rule for determining the 
constitutionality of user fees charged by states for use of interstate 
transportation facilities under the dormant Commerce Clause in 
Evansville-Vanderburgh Airport Authority District v. Delta Airlines, 
Inc., 405 U.S. 707 (1972). In this case, the Supreme Court stated that:

        [A] charge designed only to make the user of state-provided 
        facilities pay a reasonable fee to help defray the costs of 
        their construction and maintenance may constitutionally be 
        imposed . . . so long as the toll is based on some fair 
        approximation of use or privilege for use . . . and is neither 
        discriminatory against interstate commerce nor excessive in 
        comparison with the governmental benefit conferred.

Id. at 714, 716-17.
    In Northwest Airlines, Inc. v. County of Kent, 510 U.S. 355 (1994), 
the Supreme Court formulated a three-pronged test to determine the 
reasonableness of fees for the use of state-provided facilities under 
the Evansville rule. Under the Court's test, a fee is reasonable and 
constitutionally permissible ``if it (1) is based on some fair 
approximation of use of the facilities, (2) is not excessive in 
relation to the benefits conferred and (3) does not discriminate 
against interstate commerce.'' Id. at 369 (citing Evansville-
Vandenburgh Airport Auth. Dist., 405 U.S. 707).\2\
---------------------------------------------------------------------------
    \2\ In 2009, the Second Circuit endorsed the Northwest Airlines 
test for determining the constitutionality of highway tolls. See 
Selevan v. N.Y. Thruway Auth., 584 F.3d 82, 98 (2d Cir. 2009).
---------------------------------------------------------------------------
    The current Port Authority bridge and tunnel tolls satisfy all 
three elements of the Northwest Airlines test. The tolls do not 
discriminate against interstate commerce because each vehicle within 
the same classification is subject to the same toll. As revenues from 
the tolls are being used to support the ITN and the ITN will continue 
to operate at a deficit following the increases, the toll revenues are 
based on a fair approximation of use of those facilities and are not 
excessive in relation to the benefits conferred. As the tolls increase 
adopted will result in the collection of no more revenue than is needed 
to meet the ITN's capital, operations and maintenance needs and its 
share of the reserve requirements--the tolls plainly satisfy that test.
State Law
    By legislation adopted in both New York and New Jersey, the Port 
Authority is authorized to establish, levy and collect such tolls and 
other charges sufficient to meet expenses of construction, operation 
and maintenance, as well as debt service on obligations, in connection 
with the ITN vehicular bridges and tunnels as it may deem necessary, 
proper or desirable. Furthermore, the two States have pledged that they 
will not impair the power of the Port Authority to establish, levy and 
collect rentals, tolls, fares, fees, or other charges on facilities 
whose revenues have been pledged as security for outstanding bonds. In 
addition, the Port Authority has agreed with the holders of its 
Consolidated Bonds to establish and collect fees, rents, tolls, fares 
and other charges to produce sufficient net revenues to provide for 
debt service on such bonds. That all of the ITN's revenues will be 
expended to pay ITN operating expenses and for capital improvements and 
contributions to statutorily required reserve funds satisfies the 
applicable state law regarding the assessment of tolls on the Port 
Authority bridges and tunnels.
Question 11
    The tolls at the Port Authority interstate bridges and tunnels and 
PATH fares were raised to generate additional revenue needed for ITN 
expenditures. In summary, as stated above, (1) the Port Authority 
operates ITN facilities supported by toll revenues and PATH fares as an 
integrated, interdependent transportation network system; (2) major ITN 
capital projects will be funded over the next ten years; and (3) all of 
the ITN revenues, including those produced by the 2011 toll and fare 
increases, are needed to fund the operating expenses and capital needs 
of the ITN. Further, ITN revenues will not be used for ``non-
transportation, economic development projects.'' The ITN will operate 
at a deficit, so that ITN revenues will not fund non-ITN activities. To 
the contrary, the ITN will require funding from non-ITN activities in 
order to meet ITN needs, continuing past practice. Descriptions of the 
major ITN capital projects to be funded over the decade have been set 
forth above. To comprehensively respond to the request for ``all of the 
specific projects and activities that will be funded by the toll 
increase'', we respectfully refer you to the entire preliminary capital 
plan (2011-2020) for the ITN which was appended to the Affidavit of 
Michael Fabiano, as Exhibit A, and provided as an attachment to the 
June 7, 2012 letter. Those ITN capital projects will require the 
expenditure of a total amount of $10.78 billion.
Question 12
    In March 2011, in view of the ongoing needs of the Port Authority's 
facilities for efficient transportation access and egress for goods and 
people, the Port Authority Board of Commissioners authorized the 
Executive Director, in consultation with the Chairman of the Committee 
on Operations, to effectuate the Port Authority's participation in 
cooperation with the New Jersey Department of Transportation (NJDOT) on 
the Route 1 & 9 Pulaski Skyway; Route 139 (Hoboken and Conrail 
Viaducts); Route 7 Hackensack River (Wittpenn) Bridge; and Route 1 & 9 
(New Road) projects. Port Authority participation in these projects (or 
suitable replacement projects mutually agreed upon with NJDOT) is 
consistent with the Port Authority's Capital Infrastructure Fund 
provided for in the Port Authority's Annual Budget and its Capital 
Plan. The Executive Director was authorized to enter into an agreement 
or agreements with NJDOT relating to such Port Authority participation. 
Improvements to the main routes in the area of the approaches and 
connections for these facilities to the Port Authority facilities will 
improve and strengthen access to and between the Hudson River 
crossings.
    The Preliminary 2012 Budget dated December 11, 2011 includes the 
following expenditures for these projects:

   Pulaski Skyway: Infrastructure design and construction of 
        improvements to the existing bridge structures and its 
        approaches, including replacing the entire concrete deck of the 
        bridge and all ramp structures, repairing/replacing structural 
        steel members and connections, rehabilitating the substructure 
        and other elements of the bridge such as safety, security, and 
        aesthetics. ($164 million)

   Route 7 Wittpenn Bridge Infrastructure: Replace bridge over 
        the Hackensack River and roadway realignment on the west side 
        of the river. The new bridge will be located north of the 
        existing bridge with an increase in vertical clearance to a 
        minimum of 70 feet in the closed position. ($174 million)

   Route 1 & 9 New Road: Infrastructure design and construction 
        of an extension of Route 1 & 9 from St. Paul's Avenue to 
        Secaucus Road in Jersey City, New Jersey. ($5 million)
Question 13
    As recognized in the By-Laws, it is the goal and policy of the Port 
Authority to conduct its business and activities in the public interest 
and therefore the public should have access to the records of the Port 
Authority consistent with the freedom of information laws of New York 
and New Jersey. In order for the goal of greater transparency in 
governance to be achieved, a more efficient and clear policy statement, 
both for the guidance of staff and for the expectations of the public, 
was adopted in March 2012, to provide a streamlined process, with 
timely results and subject to judicial recourse in the States of New 
York and New Jersey. In addition, we will be utilizing the ever-
expanding resources of the electronic information age to take advantage 
of the ability to disseminate information through the Port Authority's 
Website and other similar tools, and, as such, the fee provisions of 
the Freedom of Information Code were suspended, on a trial basis, to 
determine whether the proposed posting of information on the Port 
Authority's Website may preclude the necessity for imposing such fees.
    The Governance and Ethics Committee of the Port Authority's Board 
of Commissioners, after consulting with General Counsel, will review on 
a regular basis the Port Authority's transparency efforts.
Question 14
    For 2011, taking into account the partial year toll increase 
(implemented September 18, 2011), the Port Authority's bridges and 
tunnels handled 119.1 million vehicles, or 2.1 million vehicles less 
than were handled in 2010. Total revenues were $1.03 billion and 
increased by $71.5 million, 7.4 percent higher than 2010 revenues. The 
average toll paid for all vehicles (autos, buses and trucks) in 2010 
was $7.93 and the average in 2011 will be $8.67.
    For 2012, the estimated toll revenue for the full year is $1.265 
billion reflecting an anticipated increase of $304.1 million or (31.67 
percent) above 2010. The estimated traffic change is 600,000 fewer 
vehicles relative to 2010 (2.2 percent).
    Toll revenue overall for 2013, the full year during which the 
December 2012 toll increase will be in effect is expected to be $1.38 
billion--an increase of $113 million in revenues (9.0 percent) over the 
comparable 2012 estimated toll revenue. A decline in traffic, relative 
to 2012 of 2.1 million vehicles (1.8 percent) is expected. By vehicle 
category, on average, autos would pay an extra 69 cents or 7.7 percent, 
trucks will add $7.17 or 20.4 percent and buses will pay an additional 
75 cents or 7.2 percent.
    While Question 14 asks for driver diversion rates, presumably due 
to increased tolls, the projected traffic decreases for 2012, as 
compared to 2011 and 2013 provided above, are attributable to the 
regional economic outlook and the toll increases.
Question 15
    The Port Authority is committed to providing greater cross-Hudson 
capacity to benefit all commuters using ITN cross-Hudson facilities. 
The growing number of PATH riders will benefit from investments in a 
new rail station in Harrison, an entirely new fleet of PATH cars, and 
enhanced system signaling. Commuters who use the Lincoln Tunnel will 
benefit from the rehabilitation of the Lincoln Tunnel Helix, which will 
reduce the need to interfere with traffic by conducting interim and 
emergency repairs. Bus riders will benefit from investments in a 
refurbished George Washington Bridge Bus Station and ongoing 
improvements to the Port Authority Bus Terminal at 42nd Street. In 
addition, the Port Authority is undertaking a detailed and thorough 
review of bus transportation at the 42nd Street terminal to achieve 
increased bus usage and parking capacity on the west side of Manhattan.
          *                  *                  *
    The Port Authority believes the responses provided to the Committee 
on June 7, 2012 as supplemented by the responses enclosed herein 
adequately reflect the position of the Port Authority, and provide a 
thorough and complete summary as to why the Port Authority raised tolls 
and fares. Again, on behalf of the agency, I thank you for the 
opportunity to provide this supplemental response to the QFRs. In 
closing, I also wish to reiterate the agency's appreciation and 
recognition of the ongoing support of the Congress and Federal 
government. If you should have any further questions, please let me 
know. If it would be of assistance to the Committee, I can arrange to 
meet with you and/or your staffs to discuss these matters further.
            Sincerely,
                                           Patrick J. Foye,
                                                Executive Director.
cc: Hon. David Samson, Chairman
Hon. Richard H. Bagger
Hon. H. Sidney Holmes III
Hon. Jeffrey H. Lynford
Hon. Jeffrey A. Moerdler
Hon. Raymond M. Pocino
Hon. Scott H. Rechler
Hon. Rossana Rosado
Hon. James P. Rubin
Hon. Anthony J. Sartor
Hon. William Schuber
Hon. David S. Steiner
William Baroni, Jr., Deputy Executive Director
                               Exhibit A

                               Exhibit B

                                 ______
                                 
                                                 September 24, 2012
David Samson,
Chairman,
Port Authority of New York and New Jersey
New York, NY.

Bill Baroni,
Deputy Executive Director,
Port Authority of New York and New Jersey,
New York, NY.

Dear Chairman Samson and Mr. Baroni:

    We write to express continued disappointment with the Port 
Authority's failure to answer several questions raised as part of the 
Surface Transportation Subcommittee of the Senate Commerce Committee's 
hearing entitled ``Protecting Commuters: Ensuring Accountability and 
Oversight in Tolling.''
    As you know, the Port Authority failed to sufficiently respond to 
the Committee's written questions following the hearing, and the 
Committee provided the Port Authority additional time to amend the 
record. On August 14, the Port Authority sent an updated response, 
which once again failed to respond in whole or respond at all to many 
of the Committee's questions.
    It is unacceptable that the Port Authority is unable to answer 
straightforward inquiries or supply information about the toll 
increases in question and this behavior raises serious concerns about 
the agency's reform efforts. While the Port Authority has publicly 
committed to being a transparent and accountable agency, there are 
growing concerns that these efforts are being subverted by 
obstructionists who appear to put politics above the people and 
Authority they serve.
    We understand that Mr. Foye, Executive Director of the Port 
Authority, worked in good faith to answer the Committee's questions. It 
is regrettable that a similar good faith effort apparently was not made 
by all of Port Authority's leadership.
    Decisions about tolls have serious ramifications for interstate 
commerce in the region, and we are disappointed that prominent Port 
Authority officials continue to shirk the oversight of the Committee 
and the commuters that use their facilities every day.
            Sincerely,

John D. Rockefeller IV,
Chairman, U.S. Senate Committee on Commerce, Science, and 
Transportation
  

Frank R. Lautenberg,
Chairman, U.S. Senate Commerce Subcommittee on Surface Transportation 
and Merchant Marine Infrastructure, Safety, and Security

cc:
Scott Rechler, Vice-Chairman
Richard Bagger, Board Member
H. Sidney Holmes III, Board Member
Jeffrey Lynford, Board Member
Jeffrey Moerdler, Board Member
Raymond Pocino, Board Member
Rossana Rosado, Board Member
James Rubin, Board Member
Anthony Sartor, Board Member
William Schuber, Board Member
David Steiner, Board Member
Patrick Foye, Executive Director

                                  
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