[Federal Register Volume 82, Number 202 (Friday, October 20, 2017)]
[Notices]
[Pages 48878-48882]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-22775]


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DEPARTMENT OF TRANSPORTATION

Federal Highway Administration

[FHWA Docket No. FHWA-2017-0007]


Fixing America's Surface Transportation (FAST) Act; Solicitation 
for Candidate Projects in the Interstate System Reconstruction and 
Rehabilitation Pilot Program (ISRRPP)

AGENCY: Federal Highway Administration (FHWA), Department of 
Transportation (DOT).

ACTION: Notice; solicitation for applications.

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SUMMARY: The FHWA invites State transportation departments to submit 
applications for candidate projects in the Interstate System 
Reconstruction and Rehabilitation Pilot Program (ISRRPP), authorized in 
the Transportation Equity Act for the 21st Century and amended by the 
Fixing America's Surface Transportation (FAST) Act. Under the ISRRPP, 
FHWA may permit up to three States to collect tolls on a facility on 
the Interstate System for the purpose of reconstructing or 
rehabilitating Interstate highway corridors that could not otherwise be 
adequately maintained or functionally improved without the collection 
of tolls. This notice describes general program provisions, eligibility 
and selection criteria, and the application submission and evaluation 
process.

DATES: Applications are due to FHWA Division Offices by February 20, 
2018. The FHWA will review these submissions and award up to three 
provisional approvals to States that will be expected to fully satisfy 
the ISRRPP criteria within 3 years. Should FHWA award fewer than three 
provisional approvals, it will re-solicit for applications at a future 
date.
    The FHWA will conduct an information session regarding the ISRRPP 
in the form of a Webinar on November 13, 2017 at 2:00 p.m., e.t. For 
more information, please visit: https://www.fhwa.dot.gov/ipd/revenue/road_pricing/tolling_pricing/interstate_rr.aspx.

FOR FURTHER INFORMATION CONTACT: For questions about the pilot program: 
Ms. Cynthia Essenmacher, Center for Innovative Finance Support, Office 
of

[[Page 48879]]

Innovative Program Delivery, Federal Highway Administration, 315 West 
Allegan Street, Room 201, Lansing, MI 48933, (517) 702-1856. For legal 
questions: Mr. Steven Rochlis, Office of the Chief Counsel, Federal 
Highway Administration, 1200 New Jersey Avenue SE., Washington, DC 
20590, (202) 366-1395. Office hours are from 8:00 a.m. to 4:30 p.m. 
E.T., Monday through Friday, except for Federal holidays.

SUPPLEMENTARY INFORMATION: 

Table of Contents

A. Program Description
B. Program Slots
C. Eligibility Information
D. Submission Information
E. Review Information
F. Requirements for Provisionally Approved Projects

A. Program Description

1. Tolling Authority Under the Interstate System Reconstruction and 
Rehabilitation Pilot Program (ISRRPP)

    The FAST Act section 1411(c) amends the ISRRPP authorized under 
section 1216(b) of the Transportation Equity Act for the 21st Century 
(TEA-21). The ISRRPP allows a State to collect tolls on a facility on 
the Interstate System in order to reconstruct or rehabilitate an 
Interstate highway corridor that could not otherwise be adequately 
maintained or functionally improved without the collection of tolls. Up 
to three facilities may participate in the ISRRPP, and each must be 
geographically located in a different State.
    Since the ISRRPP's establishment in 1998, several States have 
requested and received what FHWA has termed ``provisional approval'' of 
pilot projects, also referred to as the reservation of a ``program 
slot.'' The purpose of this step has been to enable States to invest 
the considerable resources needed to fully satisfy the program 
criteria, which are described below, without fear of being superseded 
by a subsequent applicant. To date, however, no State has fully 
satisfied the ISRRPP program criteria.

2. Other Interstate Tolling Authority

    The ISRRPP is not the only authority available to States to toll 
facilities on the Interstate System. Today, the 46,730-mile Interstate 
System includes approximately 2,900 miles of toll roads, most built as 
turnpikes and incorporated into the system in 1957. Current Federal law 
provides several options for States to toll Interstate facilities. The 
authorities in 23 United States Code (U.S.C.) 129(a)(1) now allow for 
the initial construction of an Interstate toll facility; the conversion 
of an Interstate high occupancy vehicle (HOV) lane to a toll facility; 
the expansion of an Interstate highway and tolling of the new capacity 
as long as the current number of toll-free non-HOV lanes is maintained; 
and the reconstruction or replacement of a toll-free Interstate System 
bridge or tunnel and its conversion to a toll facility.
    Additional authorities are provided under 23 U.S.C. 166(c), which 
allows public agencies to permit toll-paying vehicles that do not meet 
minimum occupancy standards to use high-occupancy vehicle (HOV) lanes. 
Such lanes are commonly referred to as high occupancy toll (HOT) lanes. 
Finally, the Value Pricing Pilot Program (VPPP), initially authorized 
in the Intermodal Surface Transportation Efficiency Act of 1991 (ISTEA, 
Pub. L. 102-240) as the Congestion Pricing Pilot Program and 
subsequently amended under other laws, encourages implementation and 
evaluation of value pricing pilot projects to manage congestion through 
tolling and other pricing mechanisms on facilities both on and off the 
Interstate System. All these current tolling authorities are separate 
and distinct from the ISRRPP.

3. FAST Act Amendments to the ISRRPP

    The FAST Act amendments to the ISRRPP create several changes. 
First, acknowledging the key role that State legislative authority has 
in implementing the ISRRPP, the FAST Act adds the specific selection 
criterion that ``a State has the authority required for the project to 
proceed.'' This addresses a common challenge facing those States that 
have held provisional approvals, i.e., securing legal authority from 
their State legislatures to collect tolls on a currently toll-free 
Interstate highway.
    Second, the FAST Act specifies timeframes under which States with 
provisional approvals must complete the program's requirements. Any 
State receiving a provisional approval as a result of this solicitation 
will have 3 years from the date of the approval to fully satisfy the 
program criteria, complete environmental review under NEPA, and execute 
a toll agreement with FHWA. The FAST Act allows for a 1-year extension 
of the 3-year provisional approval if the State demonstrates material 
progress toward implementation of its pilot project.
    Third, the FAST Act gave the States holding provisional approvals 
at the time the FAST Act was enacted 1 year to satisfy the program 
criteria or request an extension for an additional year. On the date of 
enactment, December 4, 2015, three States--Missouri, North Carolina and 
Virginia--held ISRRPP provisional approvals. Since then, all three have 
relinquished their program slots.

B. Program Slots

    In announcing this new ISRRPP solicitation--the first open call for 
pilot projects since 1998--FHWA seeks applications from States for 
candidate projects under the program.
    Based on the program's experience, FHWA believes it unlikely that 
any State would invest the considerable effort to develop an 
application that fully satisfies the program criteria without assurance 
that its efforts would not be superseded by a competing applicant. 
Conversely, FHWA recognizes that provisional approval and the 
reservation of a program slot--while allowing a State to work in 
earnest to meet the program's environmental, financial, public support 
and operational requirements--also inhibits other States from pursuing 
similar projects. Therefore, FHWA will review each candidate project 
thoroughly before making any commitment of provisional approval.
    As provided in section 1411(c) of the FAST Act, FHWA may grant 
provisional approval to up to three projects that will fully implement 
the ISRRPP (reconstruct or rehabilitate an Interstate segment and 
convert it to a toll facility) based on an assessment that eligibility 
and selection criteria can be met. At the present time, all three 
program slots are available.
    This solicitation does not offer any Federal funds for these 
projects. Formula Federal-aid highway funds may be used toward a 
candidate project, subject to the eligibility requirements for these 
funds. In addition, a candidate project may qualify for credit 
assistance under 23 U.S.C. 601-609, the DOT's TIFIA credit program.
    While section 1216(b)(6) of TEA-21 specifically prohibited the use 
of Interstate Maintenance (IM) funds on the Interstate facility covered 
by an ISRRPP project during the period tolls are collected, the IM 
program has since been discontinued. Given the expansion of tolling 
authority under 23 U.S.C. 129, the restriction on use of IM funds is 
not applied to the use of eligible funding sources, including the 
National Highway Performance Program.

C. Eligibility Information

    To be selected for provisional approval in the ISRRPP, an applicant 
must be a State transportation department (State DOT) and the project

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must be a facility on the Interstate System.

1. Interstate Facility

    A facility on the Interstate System is considered to be a route on 
the Dwight D. Eisenhower National System of Interstate and Defense 
Highways as described in 23 U.S.C. 103(c). This is the originally 
designated Interstate System and includes those Interstate additions 
under former 23 U.S.C. 139(a).
    Each State may propose only a single Interstate facility as its 
candidate project, and each facility selected by FHWA must be in a 
different State.
    Note that the existing statute in 23 U.S.C. 129(a)(1)(E) already 
allows for reconstruction or replacement of a toll-free Interstate 
bridge or tunnel and its conversion to a toll facility. For the 
purposes of the ISRRPP, the scope of the candidate project must include 
reconstruction or rehabilitation throughout the Interstate facility 
(not solely on bridges or tunnels), where estimated improvement costs 
exceed available funding sources and work cannot be advanced without 
the collection of tolls.

2. Toll Revenue Uses

    The ISRRPP's conditions on toll revenue uses reflect the intent 
that tolls are collected to reconstruct or rehabilitate an Interstate 
facility, not to pursue other projects. The State must execute an 
agreement with FHWA specifying that toll revenues received from 
operation of the facility will be used in accordance with the 
requirements set forth in section 1216(b)(5) of TEA-21. This section 
requires that all toll revenues be used only for (1) debt service, (2) 
reasonable return on investment of any private person financing the 
project, and (3) any costs necessary for the improvement of and the 
proper operation and maintenance of the toll facility, including 
reconstruction, resurfacing, restoration and rehabilitation of the toll 
facility. It is important that applicants understand that these 
conditions are more restrictive than those that apply to projects 
authorized under 23 U.S.C. 129 or 23 U.S.C. 166.
    Additionally, the toll agreement must include a provision that the 
State will conduct regular (e.g., annual) audits to ensure compliance 
with the provisions regarding use of toll revenues, and the results of 
these audits will be transmitted to FHWA.
    The FHWA is concerned that the initiation of new toll collection 
should not occur until it is evident to the traveling public that tolls 
will result in investment on the facility. Accordingly, the earliest 
that tolls may be imposed on an ISRRPP facility is the date of award of 
a contract for the physical reconstruction or rehabilitation of a 
significant portion of the facility. In the case of a design-build 
contract or public-private partnership agreement, this would occur when 
a notice to proceed for the physical construction has been issued or 
when the design-builder otherwise becomes contractually obligated to 
accomplish the physical construction activities of the project.

3. Federal-Aid Requirements

    Regardless of whether Federal-aid funds are to be used in the 
reconstruction or rehabilitation activities, each ISRRPP project must 
satisfy the applicable Federal laws, rules and regulations set forth in 
title 23 U.S.C. and title 23 Code of Federal Regulations.
    A State receiving provisional approval must complete the 
environmental review and permitting process under the National 
Environmental Policy Act of 1969 (NEPA, 42 U.S.C. 4321 et seq.) for the 
candidate project before it can receive final approval. The NEPA 
analysis must take into account not only the impacts of the proposed 
reconstruction or rehabilitation activities but also consider impacts 
associated with converting the toll-free facility to a toll facility.

D. Submission Information

    A State that seeks to participate in the pilot program must submit 
an application that addresses the program's statutory eligibility and 
selection criteria as described below.

1. Address

    A State DOT must submit the application to its respective FHWA 
Division Office. Subsequent application tasks will also be coordinated 
through the Division Office.

2. Content and Form of Application

    Although the State DOT may determine the appropriate form, the 
application package is limited to no more than 25 pages. The FHWA 
recommends that the project narrative be prepared with standard 
formatting preferences (i.e., a single-spaced document, using a 
standard 12-point font such as Times New Roman, with 1-inch margins). 
The project narrative may not exceed 25 pages in length, excluding 
cover pages and table of contents. The only substantive portions that 
may exceed the 25-page limit are supporting documents to support 
assertions or conclusions made in the 25-page project narrative. If 
necessary, FHWA may request supplemental or clarifying information from 
the State.
    The application should include information required for FHWA to 
assess each of the criteria specified in section E (Review 
Information). The State should demonstrate the responsiveness of a 
project to any pertinent selection criteria with the most relevant 
information it can provide, regardless of whether such information has 
been specifically requested, or identified, in this notice. The 
application should describe all critical project milestones and the 
State's current progress toward achieving them.
    The FHWA recommends that the application adhere to the following 
basic outline and the project narrative include a table of contents, 
maps, and graphics as appropriate to inform the review. The specific 
statutory references from section 1216 of TEA-21 (as amended by section 
1411 of the FAST Act) are noted in brackets after each item:
    i. Project Description: An identification of the facility on the 
Interstate System proposed to become a toll facility, including the 
age, condition, and intensity of use of the facility [1216(b)(3)(A)].
    ii. MPO Consultation: In the case of a facility that affects a 
metropolitan area, a description of the State's current consultations 
regarding the candidate project with that area's metropolitan planning 
organization (MPO) established under 23 U.S.C. 134. Full satisfaction 
of this eligibility criteria requires an assurance that the MPO for the 
area has been consulted concerning the placement and amount of tolls on 
the facility [1216(b)(3)(B)].
    iii. Financial Analysis: An analysis demonstrating that the 
facility could not be maintained or improved to meet current or future 
needs from the State's Federal-aid apportionments and allocations and 
from revenues for highways from any other source without toll revenues 
[1216(b)(3)(C)].
    iv. Facility Management Plan:
    (a) A plan for implementing tolls on the facility 
[1216(b)(3)(D)(i)]. Note that an approved plan must take into account 
the interests of local, regional, and interstate travelers 
[1216(b)(4)(C)].
    (b) A proposed schedule and finance plan for the reconstruction or 
rehabilitation of the facility using toll revenues [1216(b)(3)(D)(ii)]. 
The plan should give extensive focus to the development phase 
requirements, including among its milestones the completion of NEPA, 
the acquisition of tolling authority from the legislature,

[[Page 48881]]

and the issuance of any debt backed by toll revenues.
    (c) A description of the public transportation agency that will be 
responsible for implementation and administration of the candidate 
project [1216(b)(3)(D)(iii)].
    (d) A description of whether consideration will be given to 
privatizing the maintenance and operational aspects of the facility, 
while retaining legal and administrative control of the portion of the 
Interstate route [1216(b)(3)(D)(iv)]. Note that the ISRRPP selection 
criteria require the State to give preference to the use of a public 
toll agency with demonstrated capability to build, operate and maintain 
a toll expressway system meeting criteria for the Interstate System 
[1216(b)(4)(E)].
    (e) A statement as to whether the State currently has the authority 
required for the toll project to proceed and, if not, a plan and 
timetable for when such authority will be obtained [1216(b)(4)(F)].

3. Submission Date

    A State DOT must submit the application to its FHWA Division Office 
by local close of business on February 20, 2018. States are strongly 
encouraged to work closely with their respective Division Offices 
throughout the preparation of the application.

E. Review Information

1. Review and Selection Process

    The FHWA will perform an initial eligibility review of an 
application received by the submission date. Based on its knowledge of 
the proposed project and the State's highway program, FHWA will 
evaluate the project's technical and financial feasibility, risks, 
planning approvals, NEPA and other environmental reviews/approvals, 
tolling authority, agreements to operate and maintain a toll expressway 
system, and other implementation agreements. The FHWA staff will review 
and compare all applications received from the States. Candidate 
projects will be rated as Not Recommended, Recommended, or Highly 
Recommended. The projects will be advanced to the FHWA Administrator 
who will select projects to award provisional approvals.

2. Rating Criteria

    The FHWA Headquarters evaluation team will use the information in 
the application to assess the State's readiness and capability to fully 
satisfy the ISRRPP program criteria in order to deliver the candidate 
project. Based upon this evaluation, FHWA will provide up to three 
provisional approvals to States that will be expected to fully satisfy 
the following selection criteria within 3 years. These criteria are set 
forth (in italics) in section 1216(b)(4) of TEA-21 as amended by 
section 1411(c)(1) of the FAST Act:
    A. The State is unable to reconstruct or rehabilitate the proposed 
toll facility using existing apportionments. Because Federal-aid 
formula apportionments can support municipal bond issues (i.e. 
GARVEEs), the State must demonstrate that toll revenue financing 
(whether through the TIFIA program or another capital market source) is 
essential to raising the needed funds.
    B. The facility has a sufficient intensity of use, age, or 
condition to warrant the collection of tolls. A State should use its 
asset management process or life cycle planning analysis to support 
this criterion. This effort should include conducting a performance gap 
analysis to identify deficiencies hindering progress toward improving 
or preserving the facility and achieving and sustaining the desired 
state of good repair. The FHWA will give preference to those facilities 
with a greater gap between current/projected and target performance.
    C. The State plan for implementing tolls on the facility takes into 
account the interests of local, regional, and interstate travelers. The 
FHWA will give priority consideration to candidate projects that have 
already been considered for tolling as a strategy in their State and 
MPO long-range plans, which should also take into account the impact of 
tolling on local, regional, and interstate freight movement.
    D. The State plan for reconstruction or rehabilitation of the 
facility using toll revenues is reasonable. A reasonable plan will 
balance the estimated sources and uses of funds in accordance with the 
requirements on toll revenue use set forth in section 1216(b)(5) of 
TEA-21. Likewise, the estimated cost of the candidate project must be 
matched by a financial plan that includes traffic and revenue 
projections sufficient to secure the needed debt component.
    E. The State has given preference to the use of a public toll 
agency with demonstrated capability to build, operate, and maintain a 
toll expressway system meeting criteria for the Interstate System. 
Should a State determine that its public toll agencies lack the 
capability or resources to take on the candidate project, a public-
private partnership may well provide a viable alternative.
    F. The State has the authority required for the project to proceed. 
The lack of such authority has previously prevented provisionally 
approved projects from fully satisfying the program criteria. The FHWA 
will give priority consideration to candidate projects that have 
already obtained statutory authority to toll the candidate project or, 
lacking that, demonstrate the likelihood of obtaining the authority to 
toll the candidate project as evidenced by expressions of support for 
the project from State and local governments, community interests, and 
the public. The FHWA will also give priority consideration to candidate 
projects that demonstrate the likelihood of completing the 
environmental review and permitting process under the NEPA within 3 
years of provisional approval.
    In addition, the FHWA Headquarters evaluation team will also 
consider the geographic distribution of candidate projects selected and 
will give priority consideration to projects critical to the national 
and regional movement of people and goods.

F. Requirements for Provisionally Approved Projects

    Should FHWA provisionally approve a candidate project, a State will 
have 3 years from the date the provisional approval is granted in which 
to:
    <bullet> Submit a complete application that fully satisfies the 
eligibility and selection criteria noted above [1216(b)(6)(A)(i)].
    <bullet> Complete environmental review and permitting process under 
the National Environmental Policy Act of 1969 (NEPA, 42 U.S.C. 4321 et 
seq.) for the project [1216(b)(6)(A)(ii)].
    <bullet> Execute a toll agreement [1216(b)(6)(A)(iii)].
    Further, FHWA may allow for a 1-year extension of the provisional 
approval if the State demonstrates material progress toward 
implementation of the project as evidenced by:
    <bullet> Substantial progress in completing the environmental 
review and permitting process for the pilot project under NEPA 
[1216(b)(6)(B)(i)].
    <bullet> Funding and financing commitments for the project 
[1216(b)(6)(B)(ii)].
    <bullet> Expressions of support for the project from State and 
local governments, community interests, and the public 
[1216(b)(6)(B)(iii)].
    <bullet> Submission of a facility management plan as noted under 
the eligibility criteria above [1216(b)(6)(B)(iv)].
    Given the extensive State DOT and FHWA collaboration needed to 
implement a project under the ISRRPP, FHWA will regularly assess the 
progress of each provisionally approved project.

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Should it become evident that the project will not meet the statutory 
deadline, FHWA reserves the right to revoke the provisional approval 
prior to the deadline and re-offer the program slot to other State 
DOTs.

Brandye L. Hendrickson,
Acting Administrator, Federal Highway Administration.
[FR Doc. 2017-22775 Filed 10-19-17; 8:45 am]
 BILLING CODE 4910-22-P