[Federal Register Volume 60, Number 28 (Friday, February 10, 1995)]
[Notices]
[Pages 8109-8111]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-3425]



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DEPARTMENT OF TRANSPORTATION
Federal Highway Administration
[FHWA Docket No. 95-6]


Federal Highway Cost Allocation Study

AGENCY: Federal Highway Administration (FHWA), DOT.

ACTION: Notice; request for comments.

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SUMMARY: This notice requests public comment on issues related to a new 
Federal highway cost allocation study (HCAS) that the FHWA is 
initiating. Comments on recommendations emanating from an October 1994 
cost allocation workshop are requested, in addition to comments on 
other issues that should be considered in planning and conducting the 
new study. Preliminary copies of the workshop proceedings are available 
from Mr. James March, who may be contacted at the phone number shown 
below.

DATES: This docket will remain open until the study is completed. 
However, in order for comments responding to issues raised by this 
notice to be considered during critical early stages of the study, they 
should be received no later than April 11, 1995.

ADDRESSES: Submit written, signed comments to FHWA Docket No. 95-6, 
Federal Highway Administration, Room 4232, HCC-10, Office of the Chief 
Counsel, 400 Seventh Street, SW., Washington DC 20590. All comments 
received will be available for examination at the above address between 
8:30 a.m. and 3:30 p.m., Monday through Friday, except Federal 
holidays. Those desiring notification of receipt of comments must 
include a self-addressed, stamped envelope or postcard.

FOR FURTHER INFORMATION CONTACT: Mr. James March, Office of Policy 
Development, at (202) 366-9237 or Mr. Steven Rochlis, Office of Chief 
Counsel, at (202) 366-0780, Federal Highway Administration, Department 
of Transportation, 400 Seventh Street, SW., Washington, DC 20590. 
Office hours are from 7:45 a.m. to 4:15 p.m., e.t., Monday through 
Friday, except Federal holidays.

SUPPLEMENTARY INFORMATION:

Background

    The last comprehensive Federal HCAS was conducted from 1978 to 
1982, pursuant to Section 506 of the Surface Transportation Assistance 
Act (STAA) of 1978 (Pub. L. 95-599). That section stipulated that the 
study was to investigate the distribution of Federal highway program 
costs among the various classes of highway vehicles that occasion such 
costs. It also called for an assessment of current Federal user charges 
and recommendations for more equitable user charge alternatives. In 
addition, Section 506 directed the Congressional Budget Office (CBO) to 
develop guidelines for the cost allocation study, including procedures 
to be employed in determining the equitable allocation of highway costs 
and the information needed to apply those procedures.
    Section 506 and the subsequent CBO guidelines established the 
general scope of the 1982 Federal highway cost allocation study. 
Specifically, the study was to focus on evaluating Federal highway 
program costs, not highway costs incurred by State and local 
transportation agencies. Also, the Federal user fee structure was to be 
evaluated on the basis of equity rather than economic efficiency, with 
equity measured in terms of the ratio of Federal user fees payments to 
Federal program costs occasioned by different vehicle classes.
    The CBO guidelines listed several factors underlying the need for 
the 1982 Federal cost allocation study, including the effect of energy 
policies on fuel consumption and tax revenues, the shift in the Federal 
highway program's emphasis away from new construction and toward repair 
and rehabilitation, the long time that had elapsed since the last 
comprehensive Federal cost allocation study, and the fact that methods 
used in previous studies could be improved upon in a number of 
technical aspects and in the way they reflected the new mix of Federal 
highway programs.
    Similar factors are relevant today and suggest that a new Federal 
cost allocation study would be timely. The last comprehensive highway 
cost allocation study was completed over 12 years ago and much of the 
data upon which that study was based are outdated. Energy and 
environmental initiatives continue to affect fuel tax receipts, and 
considerations leading up to reauthorization of the Intermodal Surface 
Transportation Efficiency Act (ISTEA) of 1991, Public Law 102-240, 105 
Stat. 1914, may require changes in current highway user fees. The ISTEA 
made fundamental changes in the structure of the Federal-aid highway 
program that have significant implications for cost allocation. 
Proposals currently being discussed to consolidate Department of 
Transportation programs could have even greater ramifications for 
highway cost allocation.
    The General Accounting Office recommended in its 1994 report, 
Highway User Fees: Updated Data Needed to Determine Whether All Users 
Pay Their Fair Share, (report number GAO/RCED-94-181) that a new 
Federal cost allocation study be conducted as the basis for assessing 
the equity of Federal highway user fees. Without explicit Congressional 
guidance on the scope of a new cost allocation study, and recognizing 
the many changes in the highway program since the last study was 
completed, the FHWA conducted a two-day workshop in October 1994 to 
discuss a range of policy and technical issues that might be considered 
in the study. Over 75 persons representing Federal and State 
transportation agencies, transportation industries, academic 
institutions, consulting firms, and other organizations participated in 
the workshop. Preliminary proceedings of that workshop, which include 
many specific recommendations made by workshop participants, will be 
available for inspection in the docket; copies may be requested by 
calling Mr. James March at the phone number listed above under ``For 
Further Information Contact:''. During the course of the cost 
allocation study, working papers and other interim work products will 
be placed in the docket.
    Among other things, workshop participants recommended that the cost 
allocation study consider:
    (1) External costs of highway use and operation, such as 
congestion, accident costs, and air and noise pollution costs, as well 
as traditional highway agency costs;
    (2) Alternative cost allocation methods, especially a marginal cost 
approach, along with traditional cost allocation methods;
    (3) Highway-related revenues and expenditures for all levels of 
government, not just Federal revenues and expenditures; [[Page 8110]] 
    (4) Implications for highway cost allocation of multi-modal 
investment programs; and
    (5) Life-cycle cost analysis principles for estimating future 
highway investment requirements.
    Participants also recommended that, while many new issues deserve 
consideration in the cost allocation study, a primary focus of the 
study should be on allocating Federal costs using methods consistent 
with the 1982 study.
    Comments are requested on these recommendations and on other 
technical issues and recommendations included in the workshop 
proceedings.
    A preliminary plan for the new cost allocation study has been 
developed. The study will be divided into four phases: (1) Issues 
analysis and workplan development; (2) update and refinement of highway 
cost allocation data and methods; (3) analysis of highway cost 
responsibility and the equity of the user fee structure; and (4) 
evaluation of alternative cost allocation procedures. Work envisioned 
under each phase is summarized below. Comments are requested on this 
plan.

Phase I--Issues Analysis and Workplan Development

    Many issues were raised at the October workshop concerning the 
scope of the next cost allocation study and the advantages and 
disadvantages of pursuing alternative highway cost allocation methods. 
Several issues could have major implications for the direction of the 
next study, including: (1) The extent to which marginal costs can and 
should be reflected in the study; (2) the extent to which revenues and 
expenditures by all levels of government can be estimated and 
incorporated in the study; and (3) the extent to which cost allocation 
can be applied to multi-modal transportation investment programs that 
will replace mode-specific investment programs in the future. White 
papers will be prepared to evaluate issues related to the analysis of 
these and other concerns in the next cost allocation study. An 
important factor that will affect the extent to which these issues can 
be considered is the availability of needed data and analytical 
methods. An assessment of data needs to evaluate the emerging cost 
allocation issues will be conducted during this initial phase of the 
study.
    The FHWA has maintained a continuing research program to update 
highway cost allocation data and methods. Research has focused 
primarily on refining data and methods used in the 1982 study. A review 
of current cost allocation data and methods is already underway. 
Working papers will be prepared which discuss current methods for 
analyzing cost responsibility for: Pavement, bridge, and other highway 
costs; sources of data on vehicle miles of travel, operating weight 
distributions, and registered weight/operating weight distributions; 
estimates of highway user revenue contributions by each vehicle class; 
and other aspects of highway cost allocation. Additional research and 
data needs will be discussed in those working papers.
    At the end of the first phase, the study work plan will be reviewed 
based on analysis and data needs identified in the white papers and 
technical working papers. Input from internal and external review 
committees will be sought.

Phase II--Update and Refine Highway Cost Allocation Data and 
Methods

    Based upon the revised study plan developed in Phase I, data and 
analytical tools will be updated and refined. Among the areas where 
significant work already can be foreseen are improving pavement cost 
models, improving the consideration of life cycle costs, improving 
estimates of highway travel by different vehicle classes, improving 
operating weight distributions for different vehicle classes, improving 
estimates of operating weight/registered weight distributions, and 
improving other data needed to estimate revenues generated by different 
highway user fees. Data and information needed to apply alternative 
cost allocation approaches identified at the workshop will be 
collected, consistent with the relative importance of each approach and 
the resources available.

Phase III--Analyze Highway Cost Responsibility and the Equity of 
Alternative User Fee Structures

    In this phase information from Phase II will be used to analyze the 
highway cost responsibility and user fee contributions of different 
vehicle classes and to evaluate the equity of the current user fee 
structure. Alternative user fee structures will be analyzed to evaluate 
improvements in equity and efficiency that potentially could be 
realized through changes in highway user fees. Sensitivity analyses 
will be performed throughout the course of this phase to evaluate the 
most critical factors that affect cost allocation results.

Phase IV--Evaluate Alternative Cost Allocation Procedures

    In this phase alternative approaches to highway cost allocation 
will be evaluated, including application of a marginal cost approach, 
analysis of the responsibility of different vehicle classes for 
external highway costs and benefits, estimates of the overall 
responsibility of different vehicle classes for highway costs at all 
levels of government, evaluation of the overall equity of highway user 
fees imposed by all levels of government, and consideration of applying 
cost allocation principles to costs and revenues for all surface 
transportation modes. The level of analysis for these issues will 
depend on several factors, including the availability of data, the 
relevance of each issue to broader policy objectives, and the time and 
resources available to analyze the issues. Docket comments will be 
considered in evaluating the type and level of analysis required for 
these and other emerging cost allocation issues.
    In addition to comments on this broad study plan, comments also are 
requested on the following questions that arose from the cost 
allocation workshop:
    1. ISTEA provides greater flexibility in the use of Federal-aid 
highway funds for transit and other expenditures not directly related 
to the construction, operation, and maintenance of the highway system. 
Many of these newly eligible costs are intended to promote broad 
societal goals that extend beyond transportation goals. Should 
expenditures of Federal-aid highway funds for such non-transportation 
costs be allocated to highway users, and if so how? Is there a 
rationale for allocating certain transit expenditures to highway users 
and not others? Should all highway users share equally in such costs? 
Should fuel taxes for deficit reduction be considered in cost 
allocation, and if so, how?
    2. Previous cost allocation studies have been criticized for using 
different approaches to allocate different types of costs. Should cost 
allocation methods be varied according to the types of costs and 
differences in the incidence of those costs among highway users or 
should the same approach be used for all types of costs?
    3. The workshop did not explicitly consider alternative user fees, 
but user fee issues will be important considerations in the cost 
allocation study. Several alternative highway user fees were analyzed 
in the 1982 cost allocation study and in subsequent FHWA studies. 
Comments are requested on the advantages and disadvantages of potential 
modifications to the existing user fee structure including new types of 
fees that might be imposed, on the desirability of maintaining current 
tax exemptions such as for various [[Page 8111]] alternative fuels, and 
on other user fee issues.

    Authority: 23 U.S.C. 315; 49 CFR 1.48.

    Issued on: February 3, 1995.
Rodney E. Slater,
Federal Highway Administrator.
[FR Doc. 95-3425 Filed 2-10-95; 8:45 am]
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