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###### Department of Transportation

###### Federal Highway Administration

# AGENCY:

Federal Highway Administration (FHWA), DOT.

# ACTION:

Notice; solicitation for participation.

# SUMMARY:

This notice invites States, along with their local government partners and other public authorities, to apply to participate in the Value Pricing Pilot (VPP) program and presents guidelines for program applications for fiscal years (FY) 2010 and 2011. The notice seeks applications for a variety of types of transportation pricing studies and implementation projects.

# DATES:

1. Applications for tolling authority only may be submitted at any time, however, it is recommended that applicants first submit an Expression of Interest, as detailed in the “Who is Eligible to Apply” section of this notice, to allow FHWA to guide applicants in determining whether the VPP program, or another program, is the preferable program under which to apply for such authority.

2. Formal grant applications, however, must be submitted no later than January 18, 2011, to be assured consideration.

3. For grant applications, applicants may also submit an optional “sketch” or draft proposal by December 3, 2010, which FHWA will review and provide feedback on for the applicant to use in its formal grant application. Sketch or draft proposals received after this date may still be reviewed by and commented upon by FHWA at its discretion.

                        4. For grant applications that had been submitted under the August 5, 2009, (74 FR 39138) solicitation that were not funded (for a list of projects funded from that solicitation, see:                         *http://www.fhwa.dot.gov/​pressroom/​fhwa1029.htm*), and where such applications would still be eligible for funding under the criteria provided by this notice, applicants may submit a letter to the Department by November 18, 2010, requesting comments on their previous applications.                    

*Application Submission:*                         Grant applications may be submitted through                         *http://www.grants.gov*. Applications for tolling authority only should be submitted through an expression of interest at the following Web site:                         *http://ops.fhwa.dot.gov/​tolling_​pricing/​participation.htm.*

# FOR FURTHER INFORMATION CONTACT:

                        For questions about or to provide information to FHWA that responds to this notice, such as to submit a letter or sketch plan, or for general questions related to the VPP program, please contact Ms. Angela Jacobs, FHWA Office of Operations, at (202) 366-0076,                         *angela.jacobs@dot.gov.*                         For technical questions related to the development of pricing projects involving tolls, please also contact Ms. Angela Jacobs, or contact Mr. Patrick DeCorla-Souza, FHWA Office of Innovative Program Delivery, at (202) 366-4076,                         *patrick.decorla-souza@dot.gov.*                         For technical questions related to the development of pricing projects not involving tolls, please contact Mr. Allen Greenberg, FHWA Office of Operations, at (202) 366-2425,                         *allen.greenberg@dot.gov.*                         For legal questions, please contact Mr. Michael Harkins, FHWA Office of the Chief Counsel, at (202) 366-4928,                         *michael.harkins@dot.gov*.                    

# SUPPLEMENTARY INFORMATION:

## Electronic Access

                    An electronic copy of this document may be downloaded from the                     **Federal Register**                    's home page at:                     *http://www.archives.gov*                     and the Government Printing Office's database at:                     *http://www.access.gpo.gov/​nara.*      ( print page 64398)    

## Background

Section 1012(b) of the Intermodal Surface Transportation Efficiency Act (ISTEA) (Pub. L. 102-240; 105 Stat. 1914), as amended by section 1216(a) of the Transportation Equity Act (TEA-21) (Pub. L. 105-178; 112 Stat. 107), and section 1604(a) of the Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users (SAFETEA-LU) (Pub. L. 109-59; 119 Stat. 1144), authorizes the Secretary of Transportation (the Secretary) to create a VPP program. Value pricing encompasses a variety of strategies to manage congestion on highways, including tolling of highway facilities through congestion pricing, as well as other strategies that do not involve tolls, such as mileage-based car insurance and parking pricing. The congestion pricing concept of charging variable fees based upon usage and assessing relatively higher prices for travel during peak periods is the same as that used in many other sectors of the economy to respond to peak-use demands. For example, airlines, hotels, and theaters often charge more at peak periods than at non-peak periods.

According to the statutory requirements of the VPP program, FHWA may enter into cooperative agreements with up to 15 State or local governments or other public authorities (henceforth referred to only as “States”) to establish, maintain, and monitor VPP programs, each including an unlimited number of projects. The FHWA invites interested States to apply to participate in the VPP program for funds remaining from FY 2010 and provided in FY 2011. While direct submissions by local governments and public authorities are allowable under SAFETEA-LU, FHWA strongly prefers applications to be submitted through State departments of transportation, since that would allow the potential for multiple VPP program projects within a State counting as only 1 of the 15 allowable partnerships.

To comply with the statutory cap on the number of partnering States and other public authorities in a manner that maximizes program participation, FHWA will only consider an “active” cooperative agreement sufficient to hold 1 of the 15 available VPP program slots, as also noted in both the September 16, 2008, and August 5, 2009, notices for VPP program participation (73 FR 53478 and 74 FR 39138, respectively). An agreement will be considered “active” by FHWA under either of the following two conditions: (1) During the period of time between when a cooperative funding agreement for a project or projects has been signed and when the project or projects has or have been completed, and (2) if VPP program tolling authority has been granted and is still needed to toll a new or existing highway. Absent one or both of these conditions being met, an agreement will not be considered active for the purposes of the VPP program. If progress in moving forward to use its VPP program funding or tolling authority is unsatisfactory, FHWA may withdraw its approval for inactive agreements in favor of other applicants seeking to obtain VPP program funding or tolling authority.

                    Congress authorized $12 million for FY 2010 to be made available to carry out the VPP program, and, as of the date of this notice, Congress has also authorized $3 million for FY 2011 for this same purpose. Congress may subsequently choose to authorize additional funds beyond the $3 million for FY 2011. Of the funds that Congress makes available for the VPP program in any fiscal year, at least 25 percent must, according to statute, be spent for projects that do not involve highway tolls. The FHWA most recently solicited for applications for what remained of FY 2009 funds and for FY 2010 funds in an August 5, 2009,                     **Federal Register**                     notice (74 FR 39138). On August 2, 2010, the FHWA announced the awarding of 10 grants totaling $9,768,000, some of which came from FY 2009 funds and, after such funds were exhausted, the rest from FY 2010 funds. After these grants were awarded, and considering the new funds Congress has made available for FY 2011, at least $10.5 million is being made available under this solicitation. If Congress does provide additional VPP program funds for FY 2011 beyond what it has already provided, it is FHWA's intention to subsequently award these funds based upon responses to this solicitation, if merited by the applications that are received.                

The Federal share payable under the VPP program is up to 80 percent of the cost of the project. Funds allocated by the Secretary to a State under this section shall remain available for obligation by the State for a period of 3 years after the last day of the fiscal year for which funds are authorized. If, on September 30 of any year, the amount of funds made available for the VPP program, but not allocated, exceeds $8 million, the excess amount will, to comply with the statutory requirements of the VPP program, be apportioned to all States as Surface Transportation Program funds.

Funds available for the VPP program can be used to support pre-implementation study activities as well as to pay for pricing-specific implementation costs of value pricing projects. Pursuant to section 1012(b)(2) of ISTEA, FHWA may not fund pre-implementation or implementation costs for more than 3 years. Also, section 1012(b)(6) of ISTEA provides that a State may permit vehicles with fewer than two occupants to operate in high occupancy vehicle (HOV) lanes if the vehicles are part of a local VPP program under this section. In addition to this authority under the VPP program, 23 U.S.C. 166 authorizes States to convert HOV lanes into high occupancy toll (HOT) lanes in which vehicles without the number of occupants required for HOV status are permitted to use an HOV lane if such vehicles are charged a toll. Since the authority to establish and operate a HOT lane (including HOT lanes on the Interstate System) is no longer experimental and has been mainstreamed in 23 U.S.C. 166, the provisions of 23 U.S.C. 166 will generally be used for HOT projects in order to more effectively allocate VPP funds and program slots.

Pursuant to section 1012(b)(7) of ISTEA, the potential financial effects of value pricing projects on low-income drivers shall be considered. Where such effects are expected to be both negative and significant, possible mitigation measures should be identified, such as providing new or expanded transit service as an integral part of the value pricing project, toll discounts or credits for low-income motorists who do not have viable transit options, or fare or toll credits earned by motorists by use of regular lanes which can be used to pay for tolls on priced lanes. Additional measures include methods to facilitate convenient cash payment by those who do not have bank accounts or credit cards, or who choose not to tie their toll accounts to their bank accounts or credit cards. Mitigation measures can be included as part of the value pricing project implementation costs.

Also, section 1012(b)(6) of ISTEA requires the Secretary to monitor the effect of value pricing programs for a period of at least 10 years and report to Congress every 2 years on the effects such programs are having on driver behavior, traffic volume, transit ridership, air quality, and availability of funds for transportation programs. Project partners will be expected to assist FHWA by providing data on their programs for use in these reports throughout the length of the monitoring and reporting period.

                    In addition to the VPP program, other authorities are available that permit States to use tolling to finance highway                           ( print page 64399)                        construction and reconstruction, promote efficiency in the use of highways, and support congestion reduction. Expanded flexibility to toll is provided under the following programs: HOV-to-HOT Conversion Program (23 U.S.C. 166); Interstate System Reconstruction and Rehabilitation Pilot Program; Interstate System Construction Toll Pilot Program; Express Lanes Demonstration Program; and Section 129 toll agreements. For more information on these programs, please refer to the notice in the January 6, 2006,                     **Federal Register**                     entitled, “SAFETEA-LU; Opportunities for State and Other Qualifying Agencies to Gain Authority to Toll Facilities Constructed Using Federal Funds” (71 FR 965).                

## Applicable Terms

“Value pricing” and “congestion pricing” refer to direct and transparent charges for vehicle use and parking, as well as variable charges for road use, possibly fluctuating based upon location, time of day, severity of congestion, vehicle occupancy, or type of facility. By shifting some trips to off-peak periods, to mass transit or other higher-occupancy vehicles, to non-motorized modes, or to alternative routes away from priced facilities, or by encouraging consolidation of trips, congestion pricing promotes economic efficiency. It also helps achieve congestion reduction, reductions in greenhouse gas emissions, improved air quality, energy conservation, transit ridership, and revenue generation goals.

A “value pricing project” means any pre-implementation activities or implementation of congestion pricing concepts or techniques included under a State or local “value pricing pilot program.” A State is considered to have a VPP program if it has one or more approved value pricing projects. While the distinction between “project” and “program” may appear to be merely a technical one, it is significant in that, as described in the “Background” section of this notice, the number of total VPP programs is statutorily limited to 15, while there is no limit to the number of VPP projects allowed under each VPP program.

A “value pricing program” means the combination of all value pricing projects within a State or local government or public authority. Any State or local government or public authority with a cooperative agreement for a value pricing program is deemed to have a value pricing program.

“Cooperative agreement” means the agreement signed between the FHWA and a public agency to establish and implement value pricing pilot projects.

“Toll agreement” means the agreement signed between the FHWA and a State and/or local government or public authority to provide for the statutorily authorized uses of toll revenues. At FHWA's discretion, the toll agreement may be subsumed within the cooperative agreement.

## Program Objective

The overall objective of the VPP program is to support efforts by State and local governments or other public authorities to establish local VPP programs, to provide for the execution, monitoring, and evaluation of value pricing projects included in such programs, and to report on these effects. The effects of interest include impacts on congestion, travel behavior, traffic volumes, transit ridership, air quality, and funding for transportation improvements. The FHWA is seeking applications for funding and/or tolling authority to use congestion pricing to reduce congestion, improve system performance, and advance the Department's priorities of growing the economy, enhancing livability, and promoting environmental sustainability. All proposals should incorporate significant pricing mechanisms that are designed to substantially advance these objectives.

This notice seeks applications focused on less tested, innovative strategies that advance pricing in furtherance of FHWA's livability, sustainability, and other goals. An objective of this solicitation is to provide incentive grants to expand the number of metropolitan areas that are developing innovative approaches that advance congestion pricing.

Some non-toll pricing applications, such as carsharing, have already proven their success and are in wide use, and thus do not require VPP program funding for their success to be sustained. Deployment of other non-toll pricing strategies, such as pricing of parking meters to achieve a certain parking space utilization level, are much newer in the U.S., but the advancement of such strategies has already secured substantial funding under the VPP and other programs (e.g., in San Francisco), and thus other non-tolling strategies, discussed below, will instead receive priority consideration under this solicitation.

For both tolling and non-tolling projects, FHWA is interested in tests that advance the state of the practice in behavioral economics. Specifically, applications are sought that strive to improve the understanding of the ways that the structure, timing and salience of pricing, and how payments themselves are handled, affect responses to pricing.

## Types of Projects Being Sought That Do Not Involve Tolls

The FHWA is especially interested in grant applications for projects that do not involve highway tolls. As discussed earlier, SAFETEA-LU sets aside a minimum of 25 percent of VPP program funds for such projects and FHWA may choose to make available more of the VPP program funds for this purpose. The FHWA in particular seeks tests of non-toll pricing strategies that will substantially improve livability in an area and advance environmental sustainability in a major way, either directly through the benefits the project itself brings, or by demonstrating especially promising strategies such that their implementation will likely be replicated broadly.

                    Examples of strategies that FHWA believes would meet this test include: (1) Pay-per-mile or pay-per-minute car insurance, where insurance premiums are converted from an annual or bi-annual charging scheme to one that is instead based primarily on miles or minutes of driving (with rates that still reflect actuarial risks and the coverages that are selected); and (2) highly innovative parking pricing strategies, provided that the level and coverage of parking charges is sufficient to bring about substantial and measurable reductions in congestion. For pay-per-mile or pay-per-minute insurance, FHWA is especially interested in applications that cover areas not included in previous VPP program-funded projects, such as actuarial studies of the potential benefits of pay-as-you-drive pricing models, tests of previously untested pricing protocols, and explorations of pricing approaches that utilize both mileage or time in operation and other usage-based factors that would affect per-mile or per-minute claims' risks. For parking pricing, FHWA seeks applications for: (1) Citywide surcharges for entering or exiting parking facilities during or near peak travel periods; and (2) parking cash-out, where a city or State passes, and then requests financial support to implement, a local ordinance or State law requiring employers to offer cash to their employees in lieu of subsidized parking, or provides substantial incentives for employers to offer such cash-out options. As mentioned above, pricing of parking meters to influence parking space utilization levels has already received substantial funding and will receive lower priority in considering grant applications.                          ( print page 64400)    

Applications are also encouraged that utilize appropriate technologies and provide sufficient participation incentives to deploy dynamic ridesharing (flexible, single-trip carpooling) with the necessary critical mass of users to succeed. To be considered eligible, dynamic ridesharing applications must be coupled with some transportation pricing, such as parking pricing or direct financial incentives for ridesharing, thereby expanding affordable transportation options while mitigating equity issues associated with pricing.

## Pre-Implementation Studies

The intent of the pre-implementation study phase is to support efforts to identify and evaluate value pricing project alternatives, and to prepare the necessary groundwork for relatively near-term implementation. The FHWA will not fund purely academic studies of congestion pricing, or studies that involve major expansions of existing facilities, or areawide or regionwide planning studies covering many topics besides pricing and incorporating congestion pricing only as one of a number of options. Such studies may be funded with regular Federal-aid highway or transit planning funds. Applications for pre-implementation studies will be evaluated based on the likelihood that they will lead to relatively near-term implementation of congestion pricing conforming to the objectives described in the section on Program Objectives.

## Project Costs Eligible for Grant Funding

The FHWA will provide up to the statutorily allowable 80 percent share of the estimated costs of an approved project. Funds available for the VPP program can be used to support pre-implementation study activities and also to pay for implementation costs of value pricing projects. Costs of planning for, setting up, managing, operating, monitoring, evaluating, and reporting on local congestion pricing pilot projects are eligible for reimbursement, but neither pre-implementation study costs nor implementation costs may be reimbursed for longer than 3 years. The 3-year funding limitation will begin on the date of the first disbursement of Federal funds for project activities. Examples of specific pre-implementation and implementation costs eligible for reimbursement include the following:

                    1.                     *Pre-Implementation Study Costs*                    —Covered activities include those for foundation building, such as public participation, consensus building and marketing, modeling, and technology assessments.                

                    2.                     *Implementation Costs*                    —Allowable costs for reimbursement under this area include those for setting up, managing, operating, evaluating, and reporting on a value pricing project, including:                

a. Necessary salaries and expenses, or other administrative and operational costs, such as installation of equipment for operation of a pilot project, costs of monitoring and evaluating project operations, and costs of continuing public relations activities during the period of implementation;

b. Mitigation measures to deal with any potential adverse financial effects on low-income drivers, per section 1012(b)(7) of ISTEA as amended, including costs of providing transportation alternatives, such as new or expanded transit or ridesharing services provided as an integral part of the value pricing project. Funds are not available to replace existing sources of support for these services.

Project implementation costs can be supported until such time that sufficient revenues are being generated by the project to fund such activities without Federal support, but in no case for longer than 3 years. Each implementation project included in a VPP program will be considered separately for this purpose.

Funds may not be used to pay for activities conducted prior to approval for VPP program participation. Complementary actions, such as lane construction, the implementation of traffic control systems, or transit projects can be funded through other highway and transit programs under SAFETEA-LU and from new revenues raised as a result of a pilot. The VPP program applicants are encouraged to explore opportunities for combining VPP program funds with other funds. Federal funds may not, however, be used to match VPP program funds unless there is specific statutory authority to do so.

## Eligible Uses of Toll Revenues

Section 1012(b)(2) of ISTEA as amended provides that toll revenues generated by any congestion pricing pilot project must be applied first to pay for pilot project operating costs. Any project revenues in excess of pilot project operating costs may, according to section 1012(b)(3) of ISTEA as amended, be used for any projects eligible under Title 23, U.S.C. A project's operating costs include, but are not limited to, any costs necessary for a project's execution; mitigation measures to deal with adverse financial effects on low-income drivers; the proper maintenance of the facility; any construction (including reconstruction, rehabilitation, restoration, or resurfacing) of the facility; any debt service incurred in implementing the project; and a reasonable return on investment by any private entity financing the project. States are encouraged to consider using excess toll revenue for projects designed to provide benefits to those traveling in the corridor where the project is being implemented.

For VPP toll implementation projects, FHWA and the public authority (including the State transportation department) having jurisdiction over a facility must enter into a cooperative agreement concerning the use of toll revenue to be generated under a value pricing project. The cooperative agreement will provide that the public authority use the revenues in accordance with the applicable statutory requirements. The execution of a cooperative agreement is necessary to the establishment of an implementation project under the VPP program, and will facilitate oversight of a State's compliance with revenue use requirements of the VPP program. Additionally, the toll collection system must meet FHWA requirements for interoperability at 23 CFR part 950.

## Who is eligible to apply?

Qualified applicants for either tolling authority or grants (or both) include State or local governments or public authorities, such as toll agencies. Although project agreements must be with the aforementioned public entities, and preferably with State departments of transportation in order to preserve participation slots, a VPP program partnership may also include private tolling authorities, for-profit companies, and non-profit organizations.

                    In many cases where only tolling authority is being sought, it may be preferable to secure such authority through a Federal program other than the VPP program even if such authority could also be granted through the VPP program. This issue was covered in detail in a January 6, 2006,                     **Federal Register**                     notice covering non-grant tolling programs, which remains in effect. That notice was entitled “Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users (SAFETEA-LU); Opportunities for States and Other Qualifying Agencies to Gain Authority to Toll Facilities Constructed Using Federal Funds” (71 FR 965). The notice established a process whereby applicants seeking only tolling authority from FHWA (not grant funding) were requested to first                           ( print page 64401)                        submit an Expression of Interest document to allow FHWA to guide applicants in determining whether the VPP program, or another program, is the preferable program under which to apply for such authority. The Expression of Interest is a document—in letter, memo, or report format—that provides the rationale for funding or tolling authority and information about the intended project. A complete Expression of Interest will enable the DOT Tolling and Pricing Team to provide the best assistance and identify the range of options possible to meet intended goals and timeframes. For details, please see:                     *http://www.fhwa.dot.gov/​ipd/​revenue/​road_​pricing/​tolling_​pricing/​index.htm.*

## The Value Pricing Pilot Program Applications

                    Formal grant applications shall be submitted through Grants.gov at                     *http://www.grants.gov*                     by close of business January 18, 2011. Projects requesting tolling authority only should submit an Expression of Interest to FHWA. For details, see:                     *http://www.fhwa.dot.gov/​ipd/​revenue/​road_​pricing/​tolling_​pricing/​index.htm.*

No particular format is required for tolling authority applications or grant applications, although specific information is requested in Grants.gov. Applications should include the following background information: (a) The name, title, e-mail address, and phone number of the person who will act as the point of contact on behalf of the requesting agency, authority, or authorities; (b) A description of the agency, authority, or authorities requesting funding and/or tolling authority; (c) A statement as to whether only funding, both funding and tolling authority, or only tolling authority via the VPP program is being sought to support either pre-implementation or implementation activities as permitted; and (d) A description of the public agency or agencies that will be responsible for operating, maintaining, and enforcing the tolling program, if applicable.

The core of the application should include the following:

1. A description of the congestion problem being addressed (current and projected);

2. A description of the proposed pricing program and its goals;

3. An identification and description of the facilities, systems, or area that will be covered;

4. Anticipated effects of the pricing program on reducing congestion, altering travel behavior, and encouraging the use of other transportation modes;

5. An identification of how the proposal addresses goals related to livability, sustainability, equity, congestion reduction, safety, and state of good repair as outlined in the Evaluation Criteria section below;

6. Preliminary estimates of the social and economic effects of the pricing program, including potential equity impacts, and a plan or methodology for further refining such estimates;

7. The role of alternative transportation modes in the project;

8. A description of the tasks to be carried out as part of each phase of the project;

9. A detailed project timeline broken down by tasks and phases;

                    10. An itemized budget broken down by task and funding year (                    *i.e.,*                     Year 1, Year 2, etc.), which is only required for grant applications;                

11. Plans for monitoring and evaluating implementation projects, including plans for data collection and analysis, before and after assessment, and long-term monitoring and documenting of project effects;

12. A detailed finance and revenue plan, including (for implementation projects) a budget for capital and operating costs; a description of all funding sources, planned expenditures, and proposed uses of revenues; and a plan for projects to become financially self-sustaining (without Federal support) within 3 years of implementation, all of which is only required for grant applications;

13. A discussion of previous public involvement, including public meetings, in the development of the proposed pricing program; any expressions or declarations of support from State or local government officials or the public; future plans for involving key affected parties, coalition building, and media relations, and more broadly for ensuring adequate public involvement prior to implementation;

14. Plans for meeting all Federal, State, and local legal and administrative requirements for project implementation, including relevant Federal-aid planning and environmental requirements;

15. A description of how, if at all, any private entities are involved in the project, either in spending grant funds or in cost sharing or debt retirement associated with revenues; and

16. If tolling authority is sought, an explanation about how electronic toll collection project components will, if applicable, be compatible with other electronic toll collection systems in the region and allow motorists to pay toll charges incurred on any regional facility through a single account.

If some of these items are not available or fully developed at the time a formal application for grant funding is submitted, applications will still be considered for funding support if they meet the interests of FHWA and if there is a strong indication that these items will be completed within a short time.

## VPP Program Process

### A. Requests for Funding

                    To ensure that all projects receive fair and equal consideration for the limited available funds, FHWA requires formal grant applications to be submitted to                     *http://www.grants.gov*                     by close of business January 18, 2011 to be assured consideration for available FY 2010 and FY 2011 funds. Applicants may also submit an optional “sketch” or draft proposal, in a format selected by the applicant, to                     *angela.jacobs@dot.gov*                     by December 3, 2010, which FHWA will review and provide feedback on for the applicant to use in its formal grant application. Sketch or draft proposals received after this date may still be reviewed by and formally commented upon by FHWA at its discretion. For applications that had been submitted under the August 5, 2009, (74 FR 39138) solicitation that were not funded (for a list of projects funded from that solicitation, see:                     *http://www.fhwa.dot.gov/​pressroom/​fhwa1029.htm*), and where such applications would still be eligible for funding under the criteria provided by this notice, applicants may submit a letter to                     *angela.jacobs@dot.gov*                     at FHWA by November 18, 2010, requesting comments on their previous applications.                

### B. Projects for Which No Funds Are Requested

                    Although most projects under the VPP program involve program funds, some projects do not, and instead only seek tolling authority under the program. In such cases, and especially where a State is not already part of the VPP program, FHWA recommends that the public authority investigate the other opportunities to gain authority to toll that are listed in the notice in the January 6, 2006,                     **Federal Register**                    , entitled “SAFETEA-LU; Opportunities for State and Other Qualifying Agencies to Gain Authority to Toll Facilities Constructed Using Federal Funds” (71 FR 965).                

### C. Proposal Evaluation Criteria

                    All proposals will be evaluated based on these core outcome measures, with                           ( print page 64402)                        pre-implementation proposals evaluated based upon their projected effects on these measures if they are later to lead to implementation:                

## Livability

*To what extent will the project directly enhance livability by:*
    - Improving neighborhood design and facilitating compact form ( e.g.,                      if parking pricing curtails demand, thus allowing alternative uses for land dedicated to surface parking).                

*To what extent will forecasted reductions in traffic make available:*
    - An opportunity for traffic calming and human-scale design enhancements.
    - More road space to accommodate pedestrians and bicyclists by reducing the amount of road space needed to accommodate motor vehicles in motor vehicle travel lanes.
    - Faster bus travel and better bus stop designs.

*To what extent will revenue from pricing contribute to:*
    - Infrastructure costs for pedestrian and bicycle improvements.
    - Transit infrastructure and operations.
    - Ridesharing programs.

## Sustainability

*To what extent will forecasted reductions in traffic:*
    - Reduce greenhouse gas emissions, improve energy efficiency, and reduce dependence on fossil fuels.
    - Reduce air, water, and noise pollution and damage to ecosystems.
    - Support transit-oriented land development.

*To what extent will revenue from pricing contribute to:*
    - Funding of a multimodal transportation system that meets the sustainability objectives listed immediately above.

## Equity

*To what extent will costs and benefits be distributed so that:*
    - Low-income travelers or other transportation disadvantaged groups pay less on average for their travel or have a better travel experience at the same cost.

*To what extent will revenues be used to:*
    - Provide accommodations that are especially important to low-income travelers or other transportation disadvantaged groups.

*To what extent are equity impacts mitigated so that:*
    - Concerns of low-income or other transportation disadvantaged groups are addressed.

## Congestion Reduction

*To what extent will forecasted reductions in traffic:*
    - Reduce traffic congestion and delay experienced by the freight sector.
    - Reduce traffic congestion and delay experienced by personal travelers.
    - Maximize economic return on existing investment by optimizing use of the existing transportation infrastructure.

*To what extent will revenue from road pricing:*
    - Provide signals for where new multimodal transportation capacity (including transit, bike, pedestrian, ridesharing, etc. ) is really needed and provide revenues to pay for it, while at the same time reducing the need for highway expansion.                

## Safety

*To what extent will direct safety benefits be provided by:*
    - Shifts from driving alone to safer modes of travel.
    - Reduced driving overall, and unsafe driving in particular, for example by rewarding drivers with reduced insurance premiums for cutting exposure to crashes and insurance claims.

*To what extent will forecasted reductions in traffic:*
    - Reduce collisions, including secondary crashes caused by stalled traffic.
    - Make more road space available to provide safer pedestrian and bicycle accommodations.

*To what extent will revenue from pricing contribute to:*
    - Costs for roadway safety improvements.
    - Costs for pedestrian and bicycle improvements.

## State of Good Repair

*To what extent will forecasted reductions in traffic:*
    - Reduce highway expansion needs thereby making more existing revenues available to repair, reconstruct and rehabilitate the existing system.

*To what extent will revenue from pricing be used to:*
    - Repair, reconstruct, and rehabilitate the existing highway, transit, bikeway, and pedestrian systems.

In addition to these outcome-oriented goals, FHWA will also evaluate proposals based on the following criteria:

(1) The degree to which new, innovative value pricing approaches are included;

(2) The degree to which stakeholder groups, including (among others) business groups, environmental groups, and advocates for social equity, are involved in and supportive of the project, and the project is likely to win broad public support;

(3) The degree to which the project is likely to lead to relatively near-term implementation; and

(4) The degree to which it is demonstrated that the project is testing especially promising strategies such that their implementation will likely then be replicated broadly.

## Post-Selection Process

If a proposal is approved, a formal cooperative agreement will be prepared between the FHWA and the State. The cooperative agreement will include a refined scope of work developed from the original funding application and subsequent discussions with FHWA. Federal statutes will govern the cooperative agreement. Regulations cited in the agreement, and 49 CFR Part 18, Uniform Administrative Requirements for Grants and Cooperative Agreements to State and Local Governments, will also apply. Each value pricing project must have a separate cooperative agreement. Although in the past the FHWA has allowed some States to have a master cooperative agreement that is subsequently amended for each approved project, in the future the FHWA will execute a separate agreement for each project. For value pricing projects that involve only toll authority and that do not involve requests for Federal funds, a cooperative agreement must still be executed.

                    Where the implementation of tolling is part of the VPP project, Federal tolling authority is required. To secure such authority for a VPP project, a cooperative agreement will be executed, regardless of whether VPP program funding is being provided. The cooperative agreement must include all of the information normally required as part of a tolling agreement (stipulating the terms of the tolling, providing details on the dispensation of revenues,                     *etc.*). A separate tolling agreement will generally not be required unless the FHWA determines that a separate agreement is the most efficient mechanism in light of the particular circumstances of the project. As discussed previously, revenues must generally first be used to cover the project's operating costs, including debt service, provide reasonable return on private party investments, and be used for the costs necessary to properly operate and maintain the facility. Any remaining revenues may then be used                           ( print page 64403)                        for other Title 23, U.S.C. eligible purposes.                

Where tolling authority is secured through a VPP program cooperative agreement, such an agreement will be signed by the Executive Director of FHWA. If tolling authority is not required, the cooperative agreement will be signed by the FHWA Division Administrator of the State Division Office. All cooperative agreements will be administered jointly by FHWA's Office of Operations and FHWA's State Division Office.

## Other Requirements

Prior to FHWA approval of pricing project implementation, congestion pricing programs must be shown to be consistent with Federal metropolitan and statewide planning requirements (23 U.S.C. 134 and 135; and, if applicable, 49 U.S.C. 5303 and 5304).

Implementation projects involving tolls outside metropolitan areas must be included in the approved statewide transportation improvement program and be selected in accordance with the requirements set forth in section 1204(f)(3) of TEA-21.

Implementation projects involving tolls in metropolitan areas must be: (a) Included in, or consistent with, the approved metropolitan transportation plan (if the area is in nonattainment for a transportation-related pollutant, the metropolitan plan must be in conformance with the State air quality implementation plan); (b) included in the approved metropolitan and statewide transportation improvement programs (if the metropolitan area is in a nonattainment area for a transportation related pollutant, the metropolitan transportation improvement program must be in conformance with the State air quality implementation plan); (c) selected in accordance with the requirements in section 1203(h)(5) or (i)(2) of TEA-21; and (d) consistent with any existing congestion management system in Transportation Management Areas, developed pursuant to 23 U.S.C. 134(i)(3).

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

Issued on: October 12, 2010.

Víctor M. Mendez,

Federal Highway Administrator.

[FR Doc. 2010-26298 Filed 10-18-10; 8:45 am]

BILLING CODE 4910-22-P