Interstate Compacts: Transparency and Oversight of Bi-State Tolling Authorities Could Be Enhanced
Released: 2013-09-13T00:00:00


Highlights: section_title: Why GAO Did This Study
paragraphs: The Northeast is home to some of the most highly traveled interstate crossings in the United States, funded by toll revenues collected from the traveling public. Since 1921, Congress has provided its consent to New York, New Jersey, Pennsylvania, and Delaware to enter into legal agreements known as interstate compacts, establishing four bi-state tolling authorities to build and maintain toll bridges and tunnels. In recent years, bi-state tolling authorities have come under scrutiny for toll increases and other concerns, and GAO was asked to review their toll-setting decisions and oversight framework. GAO examined: (1) the authority of bistate tolling authorities to set and use tolls and the factors that influence toll setting; (2) the extent to which the authorities involve and inform the public in toll-setting decisions; and (3) the extent to which the authorities are subject to external and internal oversight. GAO reviewed federal and state laws, bi-state tolling authority documents, and interviewed officials from the authorities and state audit offices. GAO does not make recommendations to non-federal entities; nonetheless the authorities could benefit from greater transparency in public involvement and clearer lines of external oversight. DOT had no comments on a draft of this report and three authorities provided technical comments, which GAO incorporated as appropriate. In addition, the Port Authority of New York and New Jersey disagreed, stating its policies constituted a documented public involvement process. GAO maintains that these policies were not publicly available, or a defined and structured process.

section_title: What GAO Found
paragraphs: Bi-state tolling authorities have broad authority to set toll rates and use revenues for a range of purposes, including maintaining, repairing, and improving their infrastructure. In setting tolls, bi-state tolling authorities are primarily influenced by debt obligations and maintain specific operating revenues to repay their debt. A federal statute requiring bridge tolls to be "just and reasonable" has less influence on tolling decisions, in part, because no federal agency has authority to enforce the standard.

Bi-state tolling authorities are not required to follow federal or general state requirements for involving and informing the public; they set their own policies that can be less stringent than practices of transportation agencies that follow federal or state requirements. In their most recent toll increases, the bi-state authorities generally provided the public limited opportunities to learn about and comment on proposed toll rates before they were approved. For example, one bistate authority did not hold any public toll hearings, while another provided one day for hearings. In contrast to federal and general state requirements and leading practices, the bi-state authorities did not in all cases (1) have documented public involvement procedures for toll setting; (2) provide the public with key information on the toll proposals in advance of public hearings; (3) offer the public sufficient opportunities to comment on toll proposals; and (4) provide a public summary of comments received before toll increases were approved.

External oversight of the bi-state authorities is limited as only one of the four authorities has been regularly audited by a state audit entity. While these audits have uncovered areas of concern, the authority of most state audit entities to oversee the bi-state authorities is unclear. Differences in states' laws and disagreements between the bi-state authorities and state audit agencies have raised questions about the authority of several states to provide oversight. Each of the four bi-state authorities provides some internal oversight, but one has not established access authority for its inspector general, which, as a result, lacks an assurance of independence. Because internal auditors are generally not required under internal audit standards to report to outside audiences, the public may lack knowledge of their efforts to ensure accountability for the use of toll revenues.

section_title: Letter
paragraphs: The Northeast is home to some of the most highly-traveled interstate  crossings in the United States, including the George Washington and  Delaware Memorial Bridges, which are funded by toll revenues collected  from the traveling public. These toll bridges, along with more than a  dozen others as well as several tunnels, are owned and maintained by  several entities, which we refer to as bi-state tolling authorities. These  authorities are created through legal agreements, known as interstate  compacts, between two or more states to act cooperatively to address  matters of interest to both states, such as operating ports and interstate  toll crossings. Congress must give its consent to states to enter into  interstate compacts that affect the balance of power between the federal  government and the states or affect a power constitutionally assigned to  the federal government, such as the power to regulate interstate  commerce. With Congress’ consent, Delaware, New Jersey, New York,  and Pennsylvania have entered into interstate compacts and created four  bi-state tolling authorities to build, maintain, and operate certain interstate  crossings.

Since 1921, Congress has granted its consent to a total of seven  interstate compacts to manage toll bridges or tunnels crossing state  boundaries; four of those compacts are currently administered by bi-state  state tolling authorities: the Delaware River and Bay Authority (DRBA),  the Delaware River Joint Toll Bridge Commission (DRJTBC), the  Delaware River Port Authority (DRPA), and the Port Authority of New  York and New Jersey (PANYNJ). These bi-state tolling authorities are  primarily funded through toll collections or from revenues generated by  other activities—such as fees and rents from airports, maritime ports, or  other assets they may own and manage—and generally do not receive  state funds. For example, the DRBA owns and manages the Delaware  Memorial Bridge connecting New Jersey and Delaware, five regional  airports, two ferry lines operating on the Delaware Bay and River, and  other facilities. As we have reported, these authorities operate with  congressional consent but are neither federal in nature nor state in scope;  they occupy what some have referred to as a “third tier” of government.

The federal role in reviewing bridge toll rates set by bi-state tolling  authorities is limited in scope and has diminished over time. Since 1906,  federal law has required that toll rates for bridges over navigable waters  be “just and reasonable.” The Department of Transportation’s (DOT)  Federal Highway Administration (FHWA) previously enforced the  requirement by conducting administrative reviews of toll rates if  complaints were made by third parties or under the FHWA Administrator’s  discretion. In 1987, Congress repealed DOT’s review authority; however,  the just and reasonable standard remains in law. In 2011, legislation was  introduced but not enacted to reinstate DOT’s authority to review toll  rates, either upon complaint or under the initiative of the Secretary of  Transportation. To date, such legislation has not been reintroduced.

Federal oversight of the bi-state tolling authorities is generally limited to  those programs receiving federal funding and does not include the  management of the interstate toll crossings. The Federal Transit  Administration (FTA) or Federal Aviation Administration may provide  funding to transit systems or airports that are operated by bi-state tolling  authorities, and oversee those funds to ensure they are spent according  to federal requirements. To help redevelop the lower Manhattan area  after 9/11, for instance, the FTA allocated $2.9 billion to the PANYNJ to  construct a transportation hub at the World Trade Center. In October  2012, the construction site for the World Trade Center transportation hub  and portions of the Port Authority Trans-Hudson (PATH) commuter rail  line were flooded and certain PANYNJ facilities were severely damaged  by Hurricane Sandy. In response, FTA has allocated $1.36 billion to the  PANYNJ for emergency repairs, restoration, and to increase the  resiliency of the PATH system to guard against future disasters.

In recent years, certain bi-state tolling authorities have come under public  scrutiny regarding toll increases and concerns that revenues have been  used for purposes beyond maintaining critical transportation  infrastructure. In addition, recent management audits by outside  consultants and state audit agencies have raised concerns about the  extent to which these authorities are accountable and transparent to the  public. You asked us to review the toll-setting and oversight framework of  the bi-state tolling authorities. We examined: (1) the authority of bi-state  tolling authorities to set and use tolls and the factors that influence toll  setting; (2) the extent to which bi-state tolling authorities involve and  inform the public in their toll-setting decisions; and (3) the extent to which  the bi-state tolling authorities are subject to external and internal  oversight.

To examine these issues, we gathered information from the four bi-state  tolling authorities currently operating tolled interstate crossings under an  interstate compact: the DRBA, DRJTBC, DRPA, and PANYNJ. To identify  the factors considered in setting toll rates, we interviewed officials from  each of these authorities and reviewed financial statements and related  documents describing the factors contributing to their toll rates. To assess  the purposes for which toll revenues can be used, we reviewed the  interstate compacts, bylaws, and other documentation. While we  reviewed the allowable uses for toll revenues, due to ongoing litigation  between the PANYNJ and the American Automobile Association  regarding recent toll increases by the PANYNJ, we did not assess the  specific purposes and projects for which the PANYNJ uses its toll  revenues. For consistency, we did not assess the specific purposes and  projects for which the other bi-state tolling authorities use their toll  revenue. To assess the extent to which the bi-state tolling authorities  involve and inform the public in their toll-setting decisions, we reviewed  documentation on their most recent toll increases as provided by each of  the bi-state tolling authorities and collected from their public web sites.  We compared their public involvement practices to those of federal, state,  and local transportation authorities, including tolling authorities in  Michigan and California that were not created by interstate compacts. To  assess the external and internal oversight of the bi-state authorities, we  reviewed available audit reports and interviewed and collected  information from the state audit agencies of each of the four states in our  review (Delaware, New Jersey, New York, and Pennsylvania) and from  the internal audit organizations within the bi-state authorities. We  compared the external oversight structure with GAO’s Government  Auditing Standards and other relevant auditing standards and other GAO  work on oversight of non-federal entities. We compared the activities of  the internal audit entities with the International Standards for the  Professional Practice of Internal Auditing published by the Institute of  Internal Auditors and related GAO work on internal auditing.

We conducted this performance audit from July 2012 through August  2013 in accordance with generally accepted government auditing  standards. Those standards require that we plan and perform the audit to  obtain sufficient, appropriate evidence to provide a reasonable basis for  our findings and conclusions based on our audit objectives. We believe  that the evidence obtained provides a reasonable basis for our findings  and conclusions based on our audit objectives. Our objectives, scope,  and methodology are discussed in more detail in appendix I.
subsections: section_title: Background
paragraphs: Interstate compacts are legal agreements between states designed to  address issues that transcend state lines. Compacts enable states to act  jointly on matters that are beyond the authority of an individual state but  are not within the specific purview of the federal government. States have  entered into interstate compacts to act jointly to address a variety of  concerns including resolving border disputes, allocating interstate waters,  enhancing law enforcement, disposing of radioactive waste, and  developing regional transportation systems, among other issues.  According to the Council of State Governments, more than 200 interstate  compacts exist today, and most of those are for purposes other than  managing interstate crossings. To form an interstate compact, two or  more states typically negotiate an agreement, and each state legislature  enacts a law that is identical to the agreement reached. Once all states  specified in the compact have enacted such laws, the compact is  formed.

In cases where the compact affects the balance of power between the  federal government and the states, the states must obtain the consent of  Congress for the compact to be valid. Congress can give its consent by  passing legislation that specifically recognizes the compact as enacted by  the states, at which time the compact becomes federal law. Congress  may impose conditions as part of granting its consent, and it typically  reserves the right to alter, amend, or repeal its consent in the compact  itself. Congress included such a provision in each of the public laws  consenting to the four interstate compacts in this review.

In establishing an interstate compact, states usually delegate authority to  an independent entity, such as a bi-state tolling authority, that is created  to administer and implement the compact’s provisions. Decision-making  for each bi-state tolling authority is the responsibility of a board of  commissioners composed of representatives of the member states, who  are appointed by a state’s governor, such as local government officials, or  serve by virtue of their elected position, such as a state treasurer. In  addition to appointing commissioners, state governors may have authority  to veto decisions made by commissioners from their state if such  authority is specified in the compact or provided through reciprocal  legislation passed by the states. The interstate compact includes the  terms to which both states have agreed, and to which Congress has  provided its consent. Some compacts include language that enables  states to modify a compact through reciprocal legislation. Unless the bi- state authorities engage in programs that receive federal funds, such as  operating transit systems or airports, they are generally not subject to  federal oversight.

The four bi-state tolling authorities manage a wide range of facilities, but  the PANYNJ is significantly larger than the other three in terms of assets  owned. At the end of fiscal year 2011, the PANYNJ reported that the total  value of its assets was approximately $33.9 billion, which includes its five  airports, six tolled crossings between New York and New Jersey, the  World Trade Center properties, and other assets. By comparison, the  DRPA’s $1.8 billion in total assets in 2011 was the next-largest asset  value. New Jersey has a unique stake in these bi-state tolling authorities  as it is the only state that is a party to each of the four interstate compacts  in our review. See table 1 for a summary of the assets maintained by the  four bi-state tolling authorities in our review.

The bi-state tolling authorities primarily fund the operation and  maintenance of these facilities through tolls and other user fees collected  from assets they manage. Many of these bridges and tunnels require  significant renovations due to their age, and the costs of maintaining  these facilities are substantial. For example, the PANYNJ began  construction on the George Washington Bridge in 1927 and the bridge  opened to traffic in 1931. Approximately 270,000 vehicles cross it every  day, and the PANYNJ plans to spend $544 million to replace the  suspender ropes on the bridge from 2011 through 2020. Each of the bi- state tolling authorities has instituted a toll increase in the past 5 years to  help fund such renovations, and the toll rates may vary based on the type  of vehicle crossing the facility (e.g., passenger vehicles or commercial  trucks), whether cash or electronic payment (EZPass) is used, and the  time of day. For example, the PANYNJ, which collects tolls from  eastbound drivers entering New York City on its facilities, raised the toll  rates for automobiles paying cash from $8 to $12 in September 2011,  with an additional increase of $1 for cash tolls in December 2012 and  additional $1 increases effective in December 2014 and December 2015.  Passenger vehicles using EZPass pay less—$8.25 during off-peak hours  and $10.25 during peak hours. See table 2 for an overview of the  passenger vehicle toll rate ranges and bi-state tolling authorities’  operating revenues and expenses in fiscal year 2011.

To secure financing for capital improvements to their facilities, bi-state  tolling authorities issue bonds to creditors and pledge tolls and other  revenues for the repayment of the bond principal and interest. The four bi- state tolling authorities are required through either their bond agreements  with creditors or bylaws to have an annual audit of their consolidated  financial statements by an independent audit firm, which provides  assurance that financial information reported to the public is accurate and  fairly presented. These audits are generally not designed to evaluate the  effectiveness of an entity’s internal controls or management’s overall  performance in achieving its objectives, but are meant to provide  assurance that the financial information provided to creditors and the  public—including assets, liabilities, revenues, and expenditures—are free  from material misstatement.

In recent years, the operations of two bi-state tolling authorities, the  DRPA and the PANYNJ, have been the subject of public scrutiny and  media attention. In response, the governors of New York, New Jersey,  and Pennsylvania directed the authorities to allow reviews that identified  concerns about the management and operations of the two authorities.  Specifically, as a condition of the governors’ approval of the PANYNJ’s  2011 toll increase, the PANYNJ contracted with two consulting firms to  undertake a comprehensive review and audit of the PANYNJ’s finances  and operations. Generally, this audit (1) found, among other things,  concerns with the PANYNJ capital-planning process, cost controls, and  oversight of the World Trade Center program, and (2) summarized reform  initiatives undertaken by PANYNJ to address concerns. In July 2010,  the governors of New Jersey and Pennsylvania directed the DRPA to  agree to an independent investigation of its operations by the New Jersey  Office of the State Comptroller. The State Comptroller found issues with  the transparency of DRPA’s practice of sharing insurance commissions,  providing unlimited free bridge passes to DRPA employees, and the  conduct of its economic development program. DRPA has passed  several board resolutions to address concerns. During the course of our  review, DRPA reported that its economic development program was  under review by a federal grand jury led by the U.S. Attorney’s Office in  Philadelphia.

section_title: Bi-State Tolling Authorities Have Broad Authority to Set and Use Tolls, and Tolling Decisions Are Primarily Influenced by Debt Rather Than Federal Toll Provisions
paragraphs: Interstate compacts provide the bi-state tolling authorities with broad  authority to set toll rates and use revenues for a range of purposes,  including capital improvements for their transportation infrastructure and,  in certain cases, economic development projects. In setting tolls, bi-state  tolling authorities are primarily influenced by bond agreements, as well as  operations and maintenance costs and other factors. To obtain financing  for capital projects, bi-state authorities pledge through bond agreements  to maintain specific revenue required to repay their debt. The bi-state  authorities set toll rates to meet these revenue requirements, while also  accounting for the costs of maintaining the infrastructure given economic  conditions, traffic levels, and other factors. Federal law has less influence  on tolling decisions because currently no federal agency has the authority  to enforce the federal requirement that bridge tolls be “just and  reasonable.” In addition, some federal courts have questioned whether a  private party has the right to challenge toll increases in court under this  requirement. However, private parties also have been able to challenge  toll increases in federal court under the Commerce Clause of the U.S.  Constitution.
subsections: section_title: Bi-State Tolling Authorities Have Broad Authority to Set Toll Rates and Use Toll Revenues
paragraphs: The interstate compacts generally provide the bi-state tolling authorities  with broad authority to set rates and use toll revenues to maintain, repair,  and improve their transportation infrastructure and cover other expenses.  Although the specific language in the interstate compacts varies, the bi- state authorities are permitted to set tolls and use tolls and other  revenues for bridges, tunnels, and other infrastructure. The bi-state  authorities are also generally permitted to use tolls and other revenues to  cover operations and maintenance costs, make capital improvements,  repay debt obligations, maintain reserve funds to address contingencies,  or to make other investments. The bi-state tolling authorities prepare  capital plans that prioritize their large-scale projects to improve and  maintain their facilities, such as bridge resurfacing, painting and de- leading, and replacing and repairing bridge cables and transit cars over a  period of several years. For example, PANYNJ officials reported that over  the past 5 years, the PANYNJ has spent approximately $2.5 billion on  capital projects for its “interstate transportation network,” which includes  its bridge, tunnel, PATH train system, and bus and ferry facilities.  Similarly, DRPA’s approved 2013 capital plan identifies more than $746  million in capital improvement projects for its four bridges, transit line, and  other facilities over the next 5 years. The DRPA reported that in 2010, its  board approved two contracts totaling nearly $140 million to replace the  deck of the Walt Whitman Bridge and monitor construction of the project.  Bi-state authorities are also permitted to use toll revenues to subsidize  other operations, such as transit services. For example, the DRPA  reported that in its 2012 capital plan, it provided about $33 million to its  PATCO train line for capital projects, such as rehabilitating tracks and  other improvements, representing about 26 percent of its total capital  program for that year.

In addition to using tolls and other revenues for transportation purposes,  the PANYNJ, the DRPA, and the DRBA are permitted by either their  compact, subsequent compact amendments or bi-state legislation to use  revenues for projects to promote their local economies, such as airports,  industrial parks, business centers, and waterfront development projects.  In certain cases the compacts impose conditions on using revenue for  economic development. For example, the DRPA is permitted to use  revenues for economic development only after allocating revenues to  fund operations and maintenance costs for bridge and other capital  facilities. According to DRJTBC officials, its compact does not authorize  the DRJTBC to use its toll revenues for economic development projects.

section_title: Tolling Decisions Are Primarily Driven by Debt Obligations and Other Factors
paragraphs: The bi-state authorities set tolls and other charges primarily to generate  revenues to maintain their operations and infrastructure and meet their  debt obligations. On a year-to-year basis, the bi-state tolling authorities’  annual revenues may not be sufficient to fund the infrastructure projects  in their long-term capital programs. The authorities enter into bond  agreements with creditors in which they pledge the collection of tolls,  among other revenues, to secure financing for capital improvements.  Such bond agreements provide the authorities with the funding they need  to maintain their infrastructure in a state of good repair, but this also can  result in the bi-state tolling authorities incurring substantial debt  obligations, which must be repaid over time. For example, the four bi- state authorities’ total debt service costs, including the principal and cost  of interest, range from $453 million to $30.2 billion over the life of their  bonds, which may extend several decades depending on the bond terms.  See table 3 for a summary of the principal owed by the four authorities on  their bond debt and the total debt service cost over the life of their bonds.

Bi-state tolling authorities maintain specific operating revenue levels to  pay the annual principal and interest on their debt. One measure of an  entity’s ability to repay its debt is the “debt service coverage ratio,” which  compares an entity’s annual operating revenues after operating expenses  (net revenues) to its annual debt service costs. For example, the DRJTBC  is required through a bond agreement to maintain a debt service  coverage ratio of 1.3—meaning that it must generate net revenues that  are at least 130 percent of its annual debt service costs or risk a default  on its debt. Officials from each of the four bi-state tolling authorities  reported that they monitor revenues on an ongoing basis and adjust their  toll rates, in part, to ensure that future revenues will be adequate to meet  their debt coverage requirements. Officials from Moody’s Investors  Service, a credit-rating agency, stated that they use the debt service  coverage ratio as a metric to assess the credit-worthiness of entities  seeking financing through capital markets. Credit-rating agency officials  reported that the ability to set toll rates independently to cover debt  obligations is the most important factor considered in assigning a credit  rating.

Bi-state tolling authorities also consider in their toll-setting decisions  forecasts of traffic and associated toll revenues. These forecasts are  based upon projections of economic factors that underlie traffic demand,  such as employment, population, value of goods and services, fuel prices,  and other factors that can affect traffic volume and associated toll  revenues. For example, officials from the PANYNJ reported that more  than 127 million cars, buses, and trucks crossed its bridges and tunnels in  2007. The PANYNJ reported that as a result of the economic recession,  elevated gas prices, and its toll increase, traffic declined by about 6  percent to approximately 119 million vehicle crossings in 2011.  Additionally, unforeseen weather events that can cause damage to  infrastructure can affect revenues and expenses; the bi-state tolling  authorities maintain a reserve fund and insure their assets for such  events.

section_title: A Federal Law That Tolls Be “Just and Reasonable” Has Less Influence on Toll- Setting Decisions Than Other Factors
paragraphs: Although there is a federal statute requiring that bridge tolls be “just and  reasonable,” in practice this requirement has less influence on bi-state  authorities’ toll-setting decisions than other factors, in that no federal  agency currently has the authority to enforce the standard. Since 1906,  federal law has required that toll rates for bridges over navigable waters  be “just and reasonable,” and until 1987 this provision was enforced by  various federal agencies. Originally, the Department of War performed  this role, and later the Department of Transportation’s (DOT) Federal  Highway Administration (FHWA) performed an administrative review of  toll rates if complaints were made by third parties or at the FHWA  Administrator’s discretion. From 1970 to 1987, the FHWA Administrator  adjudicated several significant toll increase challenges, finding on at least  two occasions that proposed toll rates were unjust and unreasonable, and  on at least one occasion that proposed toll rates met the “just and  reasonable” standard. In 1987, Congress repealed DOT’s authority to  determine if toll rates were just and reasonable, but the standard itself  remains in statute. While several parties have sought to challenge toll  increases under this federal “just and reasonable” standard in court,  certain federal courts have questioned whether private parties have the  right to raise such court challenges. However, private parties also have  been able to challenge toll increases in federal court under the  Commerce Clause.

Although no federal agency currently enforces the just and reasonable  standard, prior administrative decisions and federal court opinions have  interpreted how the standard is to be applied. Since 1973, federal  administrative and court decisions have generally found that just and  reasonable tolls are those sufficient to pay not only the reasonable cost of  maintaining, repairing and operating facilities, but also to establish funds  to amortize bridge indebtedness, provide a reasonable return on invested  capital, and other purposes. These decisions have also found other uses  of toll revenues—such as operating public transportation facilities—to be  appropriate. In 1987, Congress in effect codified these decisions and  repealed provisions that had expressly limited the use of toll revenues to  specific purposes, such as maintaining, repairing, and operating a bridge.  Key federal administrative and court decisions applying the “just and  reasonable” standard are discussed in greater detail in Appendix II.

section_title: Bi-State Authorities Are Generally Not Subject to Federal or State Requirements for Public Involvement and Provided the Public Limited Opportunities to Participate in Recent Toll-Setting Decisions
paragraphs: In general, bi-state authorities are not required to follow federal or  generally applicable state requirements for involving and informing the  public, such as open meeting and open records laws. Instead, they set  their own policies, which may be less stringent than those that apply to  federal agencies, states, and other organizations. In addition, none of the  four interstate compacts we reviewed contains language establishing  specific public involvement requirements for toll setting. We found four  areas in their most recent toll increases in which the bi-state authorities  provided the public limited opportunities to learn about and provide  comment on toll proposals, in contrast to federal and state requirements  for involving the public, as well as practices used by other tolling  authorities. See appendix III for a detailed timeline of public involvement  in the four bi-state authorities’ most recent toll increases.
subsections: section_title: The Bi-State Authorities Are Not Subject to Federal or Generally Applicable State Requirements for Public Involvement
paragraphs: The bi-state authorities told us that they are not subject to federal or  generally applicable state requirements for informing the public. For  example, federal regulations for public participation in transportation  decisions require regional planning bodies, known as metropolitan  planning organizations (MPOs), to provide adequate notice and time for  public review and comment, hold public meetings at convenient and  accessible locations and times, and demonstrate explicit consideration  and response to public input received in making planning decisions. In  addition, each of the four states has established laws governing open  meetings and records for public agencies that include requirements such  as giving notice before holding public meetings, as well as submitting  information to the state on the rationale for a toll increase, the financial  position of the agency, and the purposes for which revenues will be used.  According to bi-state authority officials, none of these generally applicable  laws applies to the four bi-state authorities. However, New York and New  Jersey have enacted reciprocal state statutes that require the PANYNJ to  hold open meetings.

In the absence of federal or state requirements, the bi-state authority  officials reported that they have established their own general policies for  public involvement, including making records publicly available and  holding open board meetings. These internal policies, however, have  been criticized for being less open or accessible than federal or state  requirements. For example, in September 2011, the New York State  Committee on Open Government found that the PANYNJ’s freedom of  information policy—which allows the public to request PANYNJ  documents—and open meeting policy were more restrictive and provided  less access than freedom of information and open meetings laws that  apply to state agencies in New York.

In addition to federal and state laws for public participation, federal  agencies and the Transportation Research Board, a non-government  research organization for transportation practice and policy, have  identified leading practices that transportation agencies could use to  involve the public in decision-making. In reviewing state and federal law  and leading practices, we identified several practices used by  transportation agencies that are subject to federal and state requirements  that provide a useful way to assess whether the bi-state authorities are  meeting expectations the public may have for accountability and  transparency from public agencies. These practices include: establishing a documented process for public involvement in toll- requiring sufficient opportunities for public comment before approving  toll proposals; providing key information to the public to support toll proposals; and  summarizing public input for decision makers and the public before  toll proposals are put to a vote for approval.

section_title: The Bi-State Authorities Provided the Public Limited Opportunities to Participate in Recent Toll- Setting Decisions
paragraphs: We found that the bi-state authorities’ efforts to involve the public during  their most recent toll increases were limited in comparison with  requirements for state and local transportation agencies and leading  practices to involve the public in decision-making. The bi-state authorities  did not in all cases (1) have documented public involvement processes  for toll-setting; (2) provide the public with key information on their toll  proposals in advance of public hearings; (3) offer the public sufficient  opportunities to comment on toll proposals; and (4) provide a public  summary of comments received before toll increases were approved.

According to the Transportation Research Board, establishing a defined,  structured, and transparent process for involving the public in key  decisions, such as those related to setting tolls, allows the public to  understand the process and be aware of critical decision points where  they can have influence if a toll increase is announced. At the time of  their most recent toll increases, the four bi-state authorities had general  policies for holding open board meetings, but these policies did not  outline specific steps for involving the public in toll increases. We have  previously reported that having a transparent process for reviewing and  updating user fees, such as tolls, helps assure payers and other  stakeholders that user fees are set fairly and accurately and are spent on  intended purposes. Furthermore, soliciting stakeholder input is particularly  important in cases where there is a monopoly supplier, where alternatives  are limited and fees are not fully voluntary. Because the public may  have few alternatives to using the tolled crossings, having a transparent,  documented process specific to toll setting could improve the public’s  understanding of how the tolls work and what activities they may fund.

The four bi-state authorities’ general policies do not provide the public  with information specific to the toll-setting process, including: (1) the  number of toll hearings the authority will hold, along with locations; (2) the  amount of time that will be available to the public to comment on the  proposal before it is voted on; and (3) how the authority will use public  comments in its decision-making process. In addition, three of the four bi- state authorities did not have policies that specified the amount of  advance notice to the public before holding public toll hearings. Only the  PANYNJ’s policies specify the length of advance notice (10 days). In  contrast, bridge authorities in Michigan are required under state law to  hold three public hearings and provide advance notice with dates, times,  and locations prior to any proposed toll increase to allow the public an  opportunity to comment. A documented process for public involvement  also demonstrates to the public and to credit-rating agencies that toll- setting is taking place within a predictable framework and could create  institutional memory within the authorities for toll setting in the future.  Without a documented process for public involvement, the public lacks a  clear view of the bi-state authorities’ decision-making process, which  could undermine the authorities’ ability to win the public’s support and  secure necessary toll revenues.

In commenting on a draft of this report, the PANYNJ stated that its policy  is to provide the public with the amount, purpose, and estimated revenues  of the proposed toll increase 10 days before convening toll hearings, and  that this policy constitutes a documented public involvement process.  According to the PANYNJ, this policy was established in 1977 through a  resolution passed by its board of commissioners. However, PANYNJ  board resolutions and other PANYNJ rules and regulations are generally  not available to the public through its web site. Consequently, at the  time of the September 2011 toll increase, the public lacked the  information needed to understand whether the PANYNJ was following its  public involvement policies and making its toll-setting decisions in a  predictable framework. In June 2012, the PANYNJ incorporated its 1977  public involvement policy into its publicly available bylaws. While this  policy will be in effect for future toll increases, we do not believe that the  PANYNJ’s policy can be considered a defined and structured process for  involving the public in key decisions because the policy still does not  specify the number of toll hearings, the amount of time to be made  available for the public to comment, and how the authority will utilize  public comments.

Federal regulations pertaining to public participation require MPOs to  provide adequate public notice and time for public review and comment at  key decision points, and to hold any public meetings at convenient and  accessible locations and times. As we have previously reported, the  public is a key stakeholder in any tolling decision, and providing for  stakeholder input may affect support for and acceptance of a fee and  contribute to improved understanding about how the fees work and what  activities they fund. The four bi-state authorities provided the public  limited opportunities to comment before toll proposals were put to a vote  for approval. For example, the DRJTBC did not hold any public hearings  to receive public comment before approving its 2011 toll increase during  an open board meeting. The DRPA and the DRBA each held one  hearing per state to receive comment before approving their respective  toll increases in open board meetings. Prior to convening toll hearings,  the DRBA discussed the need for its toll increase in several board  meetings that were open to the public. The PANYNJ held ten hearings on  a toll proposal in various locations, including an online forum; however,  those hearings were held in a single day. In contrast, officials from the  Blue Water Bridge Authority and Mackinac Bridge Authority in Michigan  reported that they typically provide 30 days after public notice is given for  comment on toll proposals before approving an increase. Further, officials  from the Golden Gate Bridge, Highway and Transportation District stated  that they engaged the public through meetings, hearings, open houses,  and other outreach for about 8 months prior to its last increase. The Bay  Area Toll Authority in California began the public involvement process for  its toll increase more than 6 months before the proposal was  implemented with three public meetings held in locations around the  region.

According to state and federal requirements and leading practices,  agencies should provide key information to the public in advance of a toll  proposal to give the public the opportunity to understand the agency’s  rationale for a toll increase and provide meaningful input to the decision- making process. However, the three bi-state authorities that held public  toll hearings provided only limited information such as short descriptions  of the capital projects they intended to implement using revenue from  their proposed toll increases. The PANYNJ reported that at the time of its  most recent toll proposal, it had not made a long-term capital plan  available to the public detailing the full uses of the proposed toll and fare  increases for the public to review. In prior work, we found that leading  organizations prepare long-term capital plans that usually cover a 5- to  10-year period to document specific planned projects, plan for resource  use, and establish priorities for implementation, and those plans are  updated on an annual or biennial basis.

The PANYNJ reported that the June 2012 policy changes to its bylaws  give the public information on the purposes for which tolls and fares are  being adjusted and an estimate of the overall increase in revenues  resulting from the change at least 10 days prior to holding public toll  hearings. However, this policy is less stringent than a requirement  applicable to state tolling authorities in New York, which must provide the  governor, state comptroller, and legislators a special report supporting the  proposed toll increase at least 120 days in advance. This report must  include the authority’s operation, debt service, and capital construction  costs for the next 5 years, as well as estimates of the impact that  revenues from the toll increase will have on the authority. Similarly, the  public notice for the Golden Gate Bridge, Highway and Transportation  District’s 2010 toll increase proposal included information on its budget  shortfall and need for new revenue, the proposed toll schedule and dates  of implementation, revenues anticipated from the increase, and a  comparison of the District’s toll rates with similar bridge authorities around  the country. Additionally, the Transportation Research Board has reported  that those who are proactive in providing information are better able to  guide public dialogue about the authority and its activities.

According to the Transportation Research Board, one goal of a good  public involvement process in transportation decisions is the incorporation  of citizen input into decision making. Providing the public the opportunity  to voice its opinion on toll increases is important, and the ideas,  preferences, and recommendations contributed by the public should be  documented and seriously considered by decision makers. Additionally,  federal regulations require that MPOs demonstrate explicit consideration  and response to public input received during the transportation planning  process. Final toll-setting decisions should be communicated to the  public with a description of how public input was considered and used.  According to the Transportation Research Board, a decision-making  process that has public involvement inputs but no clear effect on the  outputs is not a successful program.

Only one of the four bi-state authorities created a summary of public input  received during toll hearings and made it available to decision makers  and the public. The PANYNJ provided a report to its commissioners  summarizing the oral comments received at each of its ten public  hearings, as well as written comments submitted, and made a transcript  of each hearing publicly available on its website. After receiving public  comment, the PANYNJ received a letter from the governors of New York  and New Jersey voicing their disapproval of the initial increase, and  modified its toll proposal to provide for more gradual toll increases over  several years. The Mackinac Bridge Authority in Michigan also prepares a  summary of public comments it receives at each hearing that categorizes  responses according to those in favor of and opposed to the toll increase.  This analysis distills the viewpoints of the public into a format that is  readily useful to decision makers. Without evidence that decision-makers  are considering the public’s input before voting, the public lacks an  assurance that its participation affects the tolling decision.

The Transportation Research Board has found that ongoing two-way  communication is essential to a good public involvement program and  that successful strategies provide continuous opportunities for the public  to learn about and engage in the process. Organizations that maintain  an ongoing conversation with the public through the media, open houses,  and outreach efforts may improve the public’s buy-in and understanding  of toll increases and how revenues will be used. Officials from the Golden  Gate Bridge, Highway and Transportation District reported that regardless  of whether a toll increase is being considered, engaging with the media  regularly to discuss maintenance and capital projects is important so that  the public is continually aware of the needs of the Golden Gate Bridge  and how toll revenue is being used. By engaging the public in an ongoing  conversation on how toll revenues are put to use, bi-state authorities have  an opportunity to make a more convincing and transparent case for their  toll proposals to secure necessary revenues.

section_title: External Oversight of Bi-State Tolling Authorities Has Been Limited, but Bi-State Authorities Have Established Some Internal Oversight
subsections: section_title: States Have Conducted Few Audits of Bi-State Tolling Authorities, and States’ Audit Authorities Are Unclear
paragraphs: The external oversight of the bi-state authorities has been limited as only  one of the four bi-state authorities has been regularly audited by a state  audit entity. Specifically, the Office of the New York State Comptroller has  conducted three audits of the PANYNJ in the past 5 years. The New  Jersey Office of the State Comptroller conducted an investigation of the  DRPA at the request of the governors of New Jersey and Pennsylvania in  2010, and with the approval of the DRPA board. Neither the DRJTBC nor  the DRBA has been subject to an audit by state audit entities in their  respective states. New Jersey State Comptroller and New Jersey State  Auditor officials stated that they have authority to audit the four state bi- state authorities, but have not prioritized further audits of the authorities  due to limited staffing resources and competing demands, such as  auditing state agencies that receive state funds.

The few audits conducted have identified areas of concern in two bi-state  tolling authorities. For example, in its July 2011 report on the PANYNJ’s  use of consulting, construction management, and other contracted  services, the New York State Comptroller found that the PANYNJ lacked  supporting documentation for 57 of the 75 contracts it reviewed, with a  total value of $1.18 billion in contracts lacking justification that the  services were needed. Although the New York State Comptroller made  several recommendations to improve the transparency of PANYNJ  contracting, the PANYNJ does not have the same requirements as New  York state agencies to report its progress in implementing  recommendations, and it has not done so for this audit. As a result, the  status of any actions taken by the PANYNJ to address the New York  State Comptroller’s recommendations is not publicly available. New York  State Comptroller officials stated that in May 2013 it initiated a follow-up  audit of the PANYNJ’s contracting procedures in which it will report on the  status of any reforms taken by the PANYNJ.

The New Jersey State Comptroller’s investigation found that the DRPA  did not follow its own policies for approving and monitoring economic  development projects and raised questions as to whether selected  projects were properly vetted. The report also found that insurance  brokers in New Jersey and Pennsylvania shared more than $1.5 million in  commissions from the purchase of DRPA insurance policies, regardless  of whether the brokers actually placed the policies “or performed any  service at all.” Although the sharing of insurance commissions is legal in  New Jersey, the report noted that the practice was potentially wasteful of  toll-payer funds. In response, the DRPA has adopted new competitive  procurement policies to select insurance brokers to reduce the potential  waste of toll-payer revenues. DRPA officials also reported that the board  passed a resolution in August 2010 that prohibited the use of DRPA  revenues for projects that are not directly connected to the assets under  the board’s direct control; however, another resolution in December 2011  permitted the allocation of DRPA’s remaining economic development  funds to complete seven economic development projects.

The authority of state audit agencies to oversee the bi-state authorities is  in many cases unclear. Prior work by GAO and others has found that  audit authorities should be clearly established to ensure that those  authorities are widely understood by the agencies responsible for  oversight and among the communities they oversee. However,  differences in states’ laws and disagreements between the bi-state  authorities and the state audit agencies have prompted questions about  the authority of several states to provide oversight. Some of the states  with bi-state tolling authorities have similar, but not identical legislation  pertaining to their audit authorities, and some could not point to any  concurring language in their state laws. For example, New Jersey State  Comptroller officials stated that the office has standing authority to  provide oversight of each of the bi-state tolling authorities under the New  Jersey state law that enables it to audit New Jersey public agencies and  independent state authorities. The New Jersey State Auditor—a  separate office from the New Jersey State Comptroller—also reported  that its office has standing authority to audit the four bi-state authorities  under a separate New Jersey state law. Nonetheless, officials in both  offices could not point to reciprocal legislation in Delaware and  Pennsylvania establishing their authorities in those states.

In some cases, state audit agencies and bi-state authorities expressed  disagreements over the extent of the state’s audit authority, or stated that  audit authority was not established. Specifically, New Jersey State  Auditor officials reported that the office attempted to initiate an audit of the  DRJTBC in July 2013, but the DRJTBC rejected the request stating in a  letter that the audit was not authorized by the DRJTBC interstate compact  or by state laws in New Jersey and Pennsylvania. DRJTBC officials also  stated that the New Jersey State Comptroller does not have standing  audit authority. In addition, the Delaware Office of Auditor of Accounts  reported that it does not have the authority to audit the DRBA, and the  Pennsylvania Auditor General reported that it does not have the authority  to audit the DRPA and the DRJTBC. The DRBA and the DRPA took no  position as to whether New Jersey or the other states have standing audit  authority. Appendix IV provides additional information about oversight  authorities for the four bi-state authorities in the four states.

In addition to state audit agencies, other state agencies may also have  limited authority to review the activities of bi-state authorities. In one case  we found that these limits posed risks to the accountability of federal  transportation programs because the federal government lacked  assurance that credits claimed by New Jersey to waive federal-aid  matching fund requirements were in fact eligible and accurate. Under the  federal-aid highway program, which provides about $40 billion annually to  states to build and improve highways and bridges, states are typically  required to provide a 20-percent funding match. However, a state may  receive “toll credits” to reduce its matching requirement if it can  demonstrate that toll revenues were spent on facility improvements and  met other requirements. According to FHWA officials, from fiscal year  2008 through 2011, FHWA approved over $334 million in federal toll  credits from the four bi-state tolling authorities. New Jersey applied  these toll credits and others earned from other tolling authorities in the  state to eliminate the state’s entire required match for highway and transit  projects from fiscal year 2008 through 2011. FHWA officials in New  Jersey stated that they rely on the state to self-certify the accuracy and  eligibility of its own toll credits. However, New Jersey Department of  Transportation (NJDOT) officials stated that NJDOT does not request or  review underlying project documentation, such as contract awards or  project schedules, from the bi-state authorities to support their eligibility  certifications. NJDOT officials stated that they would have authority to  conduct audits and spot checks of the bi-state authorities but they could  not provide any documentation to that effect. The officials also stated that  NJDOT has never conducted an audit or spot-check of any of the bi-state  authorities’ expenditures to confirm their eligibility for toll credits. As a  result of states’ limited oversight of bi-state tolling authorities, FHWA  lacks assurance that the states are able to fully verify the information  collected from the bi-state authorities before it is provided to FHWA for  approval.

Officials from certain bi-state tolling authorities told us that the states  exercise oversight through the governor’s veto of the voting decisions of  the commissioners from that state. This veto authority may provide an  important check and balance on the boards’ decisions with regard to the  governors’ priorities. However, such a veto power is limited to the voting  decisions of the board and does not provide the public insight into the  internal activities of the bi-state authorities that would otherwise be  provided by an independent auditor. Moreover, this veto power is not  always available to both governors. Specifically, according to DRJTBC  and DRPA officials, the governor of Pennsylvania does not have veto  authority over the DRJTBC or the DRPA because its state legislature has  not provided that authority in state law. According to the New Jersey  Governor’s office, New Jersey state law provides that the New Jersey  Governor may veto actions of DRJTBC commissioners representing that  state; however, that authority has not been exercised because  substantially similar legislation has not been passed in Pennsylvania.  DRJTBC reported that the New Jersey Governor may not unilaterally  enforce its veto authority without reciprocal legislation enacted in  Pennsylvania, as well as an act of Congress to amend the compact. In  contrast, New Jersey and New York governors both have veto authority  over the PANYNJ, and New Jersey and Delaware governors have veto  authority over the DRBA.

section_title: Bi-State Tolling Authorities Have Established Internal Oversight Mechanisms, but One Internal Audit Entity Lacks Assurance of Independence
paragraphs: Each of the four interstate bi-state tolling authorities has established  internal oversight mechanisms with responsibilities that vary based on the  size and complexity of the organization. The four bi-state tolling  authorities each have an audit committee comprised of board  commissioners that is charged with activities such as overseeing the  auditing and financial reporting processes of the authority, coordinating  external financial or management audits, and directing the activities of  internal audit departments, if applicable. For example, every 2 years  DRPA’s audit committee selects an independent firm to conduct a  management performance audit of DRPA business activities, which is  intended to enhance transparency and enable the DRPA to more quickly  identify issues that require the attention of the board and management.  DRJTBC officials reported that the audit committee coordinates the  annual audit of its financial statements and directs the auditors to perform  stress tests of various functional areas, including management controls.

In addition to the activities of the audit committees, the two largest  authorities, the PANYNJ and the DRPA, have also established separate  inspectors general and internal audit departments that conduct their own  performance and financial audits and respond to public or internal  allegations of waste, fraud, and abuse. In general, internal audit entities  are organizations that are accountable to senior management and those  charged with governance of the audited entity. Internal audit entities  typically follow audit procedures and practices based on the standards  established by the Institute of Internal Auditors, and they are generally  not subject to the standards that guide federal or state external auditors  or inspectors general. For example, they do not generally report the  results of their work to the public, Congress, or to their state’s  legislature. However, like external audit agencies, internal audit entities  are expected to be free from impairments to their independence and must  avoid the appearance of any impairment to independence to meet  professional auditing standards.

Although auditor independence is required by professional internal  auditing standards, the DRPA has yet to establish clear access  authorities for its inspector general. As a result, the DRPA office of  inspector general lacks an assurance of independence. DRPA officials  reported that the DRPA inspector general’s office was established in 2012  in response to a 2010 bill introduced in the House of Representatives that  called for Congress to withdraw its consent from DRPA’s interstate  compact if certain reforms, including creating the position, were not  made. However, the DRPA resolution establishing the inspector general  did not establish authorities for it to access DRPA records and personnel,  and according to DRPA officials, such written authorities did not exist at  the time of our review. The DRPA inspector general reported that he had  drafted standard operating procedures for his office based on standards  for state or local inspectors general, which included audit authorities and  oversight responsibilities, and submitted those procedures to DRPA’s  audit committee for its review. Although the DRPA inspector general  maintains that he does not need the board’s approval for these standard  operating procedures, the inspector general reported that members of the  DRPA board attempted to weaken the authorities, including inserting a  provision to require that the inspector general report any potential criminal  activity to DRPA management rather than directly to legal authorities. The  DRPA inspector general reported that he would not abide by this  provision if enacted by the DRPA board. We requested from DRPA a  copy of the standard operating procedures prepared by the inspector  general; however, DRPA officials stated that these procedures have not  been approved by the board and did not make them available for our  review. As a result, we were unable to verify whether the authorities  pursued by the DRPA inspector general were sufficient to enable the  office to independently conduct its oversight responsibilities. In addition,  the DRPA and PANYNJ declined our request to meet independently with  officials from their respective inspectors general and internal audit  departments without DRPA and PANYNJ management officials present.

By design, internal audit entities do not generally publically report their  findings, and thus the public is usually not aware of the accountability  efforts taken by these entities. For example, in 2011 the PANYNJ’s  internal audit department office completed 271 audits of PANYNJ  activities and reported $12.9 million in estimated savings as a result of its  audits. However, the PANYNJ audit department does not publically report  findings. While the PANYNJ provided us with summaries of several audit  reports, it declined our request to provide selected full audit reports for  our review. DRPA’s inspector general reported that it has conducted  several audits and investigations and has released one report to the  public. Although the Institute of Internal Auditors standards do not require  internal audit departments to report audit results to the public, by not  doing so, the public may be unaware of the efforts taken by bi-state  authorities to safeguard toll payer revenues and improve management  performance and operations.

section_title: Concluding Observations
paragraphs: Congress has given wide latitude to four states to address infrastructure  needs in the Northeast by consenting to the creation of bi-state tolling  authorities that operate some of the most highly traveled interstate  crossings in the United States. These public authorities have broad  authority to manage their operations without the same constraints,  requirements, and oversight to which state and federal agencies are  subject. Because these authorities are neither federal nor state entities,  and because GAO does not make recommendations to non-federal  entities, we are not making any recommendations in this report. The bi- state tolling authorities have recognized that the traveling public pays for  these facilities, and that they must be accountable to the public. However,  issues of transparency and accountability could undermine the  authorities’ ability to win the public’s support and secure necessary toll  revenues. As such, states have both the incentive and the opportunity to  enhance the transparency and accountability of the bi-state tolling  authorities.

Specifically, the bi-state tolling authorities would benefit from clear and  consistent requirements for public involvement in decision-making to  ensure a documented process for public involvement and meaningful and  sufficient opportunities for the public to comment, among other measures.  In addition, the states have the incentive to work together to clarify the  lines of external oversight over the bi-state tolling authorities, so that each  state’s audit entity has sufficient standing authority and access to conduct  audits and investigations of the operations of the bi-state tolling  authorities. Furthermore, the internal audit entities of the bi-state tolling  authorities are uniquely positioned to provide ongoing oversight and  accountability. The DRPA established its inspector general in response to  congressional concerns, and has the opportunity to more fully address  those concerns by assuring the independence of its inspector general by  establishing clear authorities for it to perform its work.

section_title: Agency Comments and Our Evaluation
paragraphs: We submitted a draft of this report to the DOT and the four bi-state tolling  authorities for review and comment. The DOT and the DRPA had no  comments on the draft. We received technical comments from the DRBA,  the DRJTBC, and the PANYNJ, and we incorporated those comments as  appropriate. We also provided sections of the draft report relating to the  external oversight of the bi-state tolling authorities to state audit agencies  in Delaware, New Jersey, New York, and Pennsylvania and received  technical comments, which we incorporated as appropriate.

In addition to providing technical comments, the PANYNJ disagreed with  our finding that it did not have a documented and structured public  involvement process for setting tolls. The PANYNJ stated that its policy of  providing 10-days advance notice before convening toll hearings and  providing the public with the amount and purpose of proposed toll rates  constituted a documented public involvement process. According to the  PANYNJ, this policy was established in 1977 through a resolution passed  by its board of commissioners. However, PANYNJ board resolutions and  its other rules and regulations are generally not available to the public.  Consequently, at the time of the September 2011 toll increase, the public  lacked the information needed to understand the PANYNJ’s public  involvement policy, and whether the PANYNJ was following that policy  and making its toll-setting decisions in a predictable framework. In June  2012, the PANYNJ incorporated its 1977 policy into its publicly available  by-laws. While this policy will be in effect for future toll increases, we do  not believe that it can be considered a defined and structured process for  involving the public in key decisions because, as stated in our report, the  policy does not specify the number of toll hearings, the amount of time to  be made available for the public to comment, and how the authority will  utilize public comments. The PANYNJ also disagreed with our finding that  it did not offer the public sufficient opportunities to comment during its  most recent toll increase, and stated that as a matter of practice, it has  held multiple toll hearings in both states prior to toll increases. Our draft  report recognized that the PANYNJ held 10 hearings in various locations  for its proposed 2011 toll increase, including an online forum. However,  because those hearings were held in a single day—and only 3 days prior  to the board of commissioners’ vote to approve toll increases—we believe  that the accelerated schedule did not provide sufficient, convenient and  accessible opportunities for the public to comment on the proposal.

As agreed with your offices, unless you publicly announce the contents of  this report earlier, we plan no further distribution until 30 days from the  report date. At that time, we will send copies of this report to  congressional committees with responsibilities for surface transportation  issues and the Secretary of Transportation. In addition, this report will be  available at no charge on GAO’s website at http://www.gao.gov.

If you or your staff have any questions about this report, please contact  me at (202) 512-2834 or flemings@gao.gov. Contact points for our  Offices of Congressional Relations and Public Affairs may be found on  the last page of this report. GAO staff that made significant contributions  to this report are listed in appendix V.

section_title: Appendix I: Objectives, Scope, and Methodology
paragraphs: Our three objectives were to assess: (1) the authority of bi-state tolling  authorities to set and use tolls and the factors that influence toll setting,  (2) the extent to which bi-state tolling authorities involve and inform the  public in their toll-setting decisions, and (3) the extent to which bi-state  tolling authorities are subject to external and internal oversight.

To assess the authority of bi-state tolling authorities to set and use tolls  and the factors that influence toll setting, we reviewed the interstate  compacts of the four bi-state tolling authorities: the Port Authority of New  York and New Jersey (PANYNJ), the Delaware River Port Authority  (DRPA), the Delaware River and Bay Authority (DRBA), and the  Delaware River Joint Toll Bridge Commission (DRJTBC). We also  interviewed bi-state tolling authority officials for their perspectives of the  key drivers that influence their tolling decisions. We corroborated  testimonial evidence by (1) reviewing of the bi-state tolling authorities’  most recent financial statements and annual reports, as well as recent  official statements and related documentation provided by the bi-state  tolling authorities; and (2) by interviewing credit rating agency officials and  reviewing information that evaluates the financial standing of the bi-state  tolling authorities. To assess the purposes for which toll revenues can be  used, we reviewed the interstate compact agreements, including any  amendments, and interviewed authority officials on their permitted use of  toll revenues. We reviewed the allowable uses for toll revenues, but due  to ongoing litigation between the PANYNJ and the American Automobile  Association regarding recent toll increases by the PANYNJ, we did not  assess the specific purposes and projects for which the PANYNJ uses its  toll revenues. For consistency, we did not assess the specific purposes  and projects for which the other bi-state authorities use their toll  revenues. To determine the extent to which bi-state tolling authorities are  influenced by the federal requirement that tolls be just and reasonable,  we interviewed bi-state tolling authority officials and reviewed the federal  “just and reasonable” standard for evaluating toll increases, in section 508  of title 33, U.S. Code and conducted a legal review of how this standard  has been interpreted and enforced by federal courts and federal  agencies. The results of our legal review are provided in appendix II.

To assess the extent to which the bi-state tolling authorities involve and  inform the public in their toll-setting decisions, we interviewed officials  from each of the bi-state authorities regarding their efforts to involve the  public in recent toll increases. We also reviewed documentation on each  authority’s most recent toll increase—such as public notices, newspaper  articles, meeting minutes, board resolutions, and official statements—as  provided by the authorities and collected from their public websites. We  also examined the bi-state authorities’ interstate compacts and bylaws to  determine whether their policies for public involvement met several  practices that incorporate federal and state requirements for involving the  public, as well as practices used by other tolling authorities. These  practices include: (1) establishing a documented process for public  involvement, (2) requiring sufficient opportunities for public comment, (3)  providing key information to the public, and (4) summarizing public  comments. We selected these practices through analysis of federal  requirements for public participation by metropolitan planning  organizations, state laws for public involvement in tolling decisions,  guidance on involving the public in transportation decisions from the  Transportation Research Board, and our previous work on designing user  fees. We also interviewed officials from five bridge toll authorities in  California and Michigan that were not created by interstate compacts  regarding their efforts to involve and inform the public in recent toll-setting  decisions. We selected these authorities because they manage and  operate tolled bridges that are similar in scale to the bi-state authorities,  have similar governance structures, and recently implemented a toll  increase.

To assess the extent to which bi-state tolling authorities are subject to  external and internal oversight, we reviewed available audit reports and  interviewed and collected information from the state audit agencies of  each of the four charter states in our review (New Jersey, New York,  Pennsylvania, and Delaware) and from the audit organizations within the  bi-state tolling authorities. To assess external oversight, we reviewed the  results of recent audits and investigations of the bi-state tolling  authorities, including an investigation of DRPA completed by the New  Jersey Office of the State Comptroller in 2012, and several audits of the  PANYNJ conducted by the Office of the New York State Comptroller. We  also reviewed relevant state laws in New Jersey, New York, and  Pennsylvania regarding the oversight of the bi-state tolling authorities in  those states and we interviewed officials with the New Jersey Office of  the State Comptroller, the New Jersey State Auditor, the Office of the  New York State Comptroller, the Pennsylvania Department of the Auditor  General, and the Delaware Office of Auditor of Accounts in order to  describe statutory audit authorities pertaining to the bi-state tolling  authorities. Because this is a discussion of state law, we are not providing  an independent analysis as to whether these laws establish audit  authority over the bi-state authorities. To assess the internal oversight of  the bi-state authorities, we collected information on the internal audit  mechanisms in place in each of the bi-state tolling authorities and we  interviewed the officials from the offices of the inspector general within the  PANYNJ and DRPA. We compared the external oversight structure with  GAO’s Government Auditing Standards and other relevant GAO work on  oversight of non-federal entities, and we compared the activities of the  internal audit entities with the International Standards for the Professional  Practice of Internal Auditing published by the Institute of Internal Auditors  and related GAO work on internal auditing.

We conducted this performance audit from July 2012 through August  2013 in accordance with generally accepted government auditing  standards. Those standards require that we plan and perform the audit to  obtain sufficient, appropriate evidence to provide a reasonable basis for  our findings and conclusions based on our audit objectives. We believe  that the evidence obtained provides a reasonable basis for our findings  and conclusions based on our audit objectives.

section_title: Appendix II: Discussion of the Federal “Just and Reasonable” Standard and Significant Federal Administrative and Court Decisions Addressing Toll Increase Challenges
paragraphs: In order to describe the current federal oversight environment, we provide  this summary of the development of the just and reasonable standard for  setting tolls on bridges, of significant federal administrative and court  decisions interpreting it, and of whether courts have found there is a  private right of action to enforce it. In addition, we discuss several cases  challenging toll increases brought under the Commerce Clause of the  U.S. Constitution. As detailed below, the federal standard for the setting  of bridge tolls by states—that tolls be “just and reasonable”—was  established in federal law in 1906. While the standard has remained  unchanged to the present day, the federal government no longer has an  oversight role in its implementation. The Secretary of War initially had  responsibility for enforcing the standard, and this responsibility was  transferred to the Secretary of Transportation in 1968, where it remained  until the Department of Transportation’s (DOT) oversight authority was  repealed in 1987. Since that time, a handful of lawsuits have been filed in  the federal courts in effect seeking to enforce the just and reasonable  standard. Rather than addressing what that standard means, however,  most of these cases have grappled with who has the right to enforce it,  that is, whether the statute creates a “private right of action” for private  individuals or entities to bring suit to enforce the standard. The U.S. Court  of Appeals for the Third Circuit has ruled that the statute does not provide  a private right of action. The U.S. Court of Appeals for the Second Circuit  has issued a ruling applying the “just and reasonable” standard, but did  not address whether a private right of action to enforce the standard  exists. Lower federal courts have not formally decided the issue but have  discussed it generally. A few of these courts also analyzed a challenge to  a toll increase using a Constitutional “dormant commerce clause  analysis,” which focuses on whether state taxation discriminates against  or unduly burdens interstate commerce and thereby impedes free private  trade in the national marketplace. These cases are discussed in more  detail below.
subsections: section_title: The Three Federal Bridge Statutes
paragraphs: “f tolls shall be charged for the transit over any bridge constructed under the  provisions of said sections,…such tolls shall be reasonable and just and the  Secretary of War may, at any time, and from time to time prescribe the  reasonable rates of tolls for such transit over such bridge…”

It was not until 1926 that informal congressional guidance specified what  was entailed in the “reasonable and just” standard. As articulated by key  House and Senate members, the standard meant that tolls for bridges  should be limited to those necessary to provide a fund sufficient to pay for  the cost of maintaining, repairing and operating the bridge, and to provide  a sinking fund to amortize the cost of the bridge, including reasonable  interest and financing costs, as soon as possible under reasonable  charges. After the sinking fund had been provided, the bridge was to be  operated toll-free or with tolls adjusted so as not to exceed its operating  and maintenance costs. It would take another 20 years before these  principles were put into legislation under the General Bridge Act of 1946  (1946 Act).

The Secretary of War issued very few decisions during the period he was  responsible for overseeing and enforcing the 1906 and 1946 Acts.  However, one of the more significant cases involved a complainant who  argued that it was unjust and unreasonable to divert automobile users’  tolls for the purpose of paying the costs of port development and  improvements. The Secretary ruled against the complainant saying that  because Congress had approved the bi-state compact establishing the  Delaware River Port Authority, which authorized the Authority to pool  revenues from all of its income-producing activities, and authorized the  expenditure of revenues so pooled for port development and port  promotion purposes, the Authority’s decision to use toll revenues for  those purposes was within its sound managerial discretion. Hence, the  Secretary determined, the higher tolls could not be said to be unjust or  unreasonable simply because they contributed to financing operations  that did not directly benefit highway users.

The duties for administering the 1906 and 1946 Acts were transferred to  the Secretary of Transportation by the Department of Transportation Act  of 1966. In addition, the Secretary was given jurisdiction over  international bridges in the International Bridge Act of 1972 (1972 Act).  The 1972 Act also included a “just and reasonable” clause where tolls  could be collected for amortization of the construction or acquisition costs  of the bridge, including interest and financing costs, and for earning a  reasonable return on invested capital.

section_title: Significant Federal Administrative and Court Decisions During DOT Oversight of Toll Increases from 1970-1987
paragraphs: From 1970 until 1987, the Federal Highway Administration (FHWA)  Administrator, to whom the Secretary of Transportation delegated his toll- oversight authority, determined whether bridge toll increases were “just  and reasonable” under the 1906, 1946, and 1972 Acts. The first  significant case in which a court reviewed FHWA’s determinations  occurred in 1973. The U.S. Court of Appeals for the Eighth Circuit, in the  Burlington v. Turner case, reviewed a decision of the Federal Highway  Administrator that the toll structure set by the City of Burlington, Iowa for  its toll bridge over the Mississippi River was unjust and unreasonable  under the 1906 Act. The court found that toll rates for the Macarthur  Bridge between Iowa and Illinois should be limited to an amount sufficient  to pay the reasonable cost of maintaining, repairing and operating the  bridge and its approaches under economical management; to provide a  sinking fund for amortization of the bridge indebtedness; and to provide a  reasonable return on invested capital. In 1974, the year after the  Burlington decision, the FHWA administrator, in the Keokuk Bridge Tolls  case, applied the principles of the Burlington case and found that an 8  percent rate of return with added operating and maintenance expenses  was reasonable. However, because half of the toll revenues went to  municipal programs and projects unrelated to the bridge, the  Administrator determined that the rates were not reasonable and just.  Then in 1979, the U.S. Court of Appeals for the Second Circuit, in  Automobile Club of New York v. FHWA, 592 F. 2d 658 (2d Cir. 1979),  upheld the decision of the FHWA Administrator and a lower court allowing  inclusion of complementary capital improvements to highways or transit  systems in the rate base for setting tolls for bridges for the Port Authority  of New York and New Jersey (PANYNJ).

section_title: The 1987 Act and Significant Federal Court Decisions since Enactment
paragraphs: The Surface Transportation and Uniform Relocation Act Assistance Act of  1987 (1987 Act) repealed DOT’s authority to review bridge toll increases,  but maintained the requirement that tolls on bridges constructed under  the authority of the 1906, 1946 and 1972 Acts must be “just and  reasonable.” The 1987 Act also repealed the 1946 Act’s express  limitation of the use of toll revenues to specific bridge-related purposes  such as maintaining, repairing, and operating a bridge. Since DOT’s  authority for reviewing bridge toll increases was repealed in 1987, the  federal courts have become the sole forum for challenges to tolls both  under the statutory “just and reasonable” standard of the 1987 Act as well  as under the Commerce Clause of the U.S. Constitution. A handful of  federal court cases have applied the “just and reasonable” standard and  addressed whether private parties can bring suit to enforce it. As  summarized below, courts in different circuits have reached different  conclusions or expressed different views regarding whether private  parties have the right to raise such challenges in court under the “just and  reasonable” standard. This has not been an issue for those cases brought  under the Commerce Clause.  (1) Automobile Club of New York, Inc. v. Port Authority of New York  and New Jersey, 887 F. 2d 417 (2d Cir. 1989) – The central issue of this  case was whether it was “just and reasonable” for the PANYNJ to include  losses from the Port Authority Trans-Hudson (PATH) Railroad in the Port  Authority’s rate base for determining the tolls to be charged for passage  over the bridges owned by the PANYNJ between New York and New  Jersey. The plaintiffs contended that that the bridge toll increases violated  both the statutory “just and reasonable” standard in the 1987 Act and the  Constitution’s Commerce Clause. The federal district court dismissed the  “unjust and unreasonable” argument, finding that the statutory standard  had sufficient “flexibility” to allow inclusion of functionally-related but non- bridge (PATH) costs in the PANYNJ’s rate base. The court also rejected  the argument that including non-bridge costs in setting bridge tolls  imposed an excessive and unconstitutional burden on interstate  commerce, Applying a three-part test previously established by the  Supreme Court, the lower court found that (1) the challenged state  action regulated evenhandedly, with only “incidental” effects on interstate  commerce; (2) the state action served a legitimate local purpose; and (3)  there were no alternative means to promote this local purpose that would  not also affect interstate commerce. On appeal, the Second Circuit, in a  2-1 decision, upheld the lower court’s ruling that PATH was sufficiently  related to the PANYNJ’s bridges and tunnels to warrant its inclusion in the  rate base on which “just and reasonable” bridge tolls were based. The  Commerce Clause challenge was not raised on appeal. Neither the  district court nor the Court of Appeals, however, explicitly addressed the  issue of whether the 1987 Act creates a private right of action.  (2) Wallach v. Brezenoff, 930 F. 2d 1070 (3d Cir. 1991) – In this case,  New Jersey citizens brought suit against the PANYNJ challenging toll  increases both under the “just and reasonable” standard found in the  1987 Act and the Commerce Clause. At the district court level, the court  granted the PANYNJ’s motion for summary judgment and the plaintiffs  appealed solely based on the Commerce Clause issues. The Third Circuit  court rejected the appeal by pointing to the reasons given by the district  court in Automobile Club of New York, Inc. v. Port. Auth. of New York and  New Jersey, 706 F. Supp. 264 (S.D.N.Y. 1989), i.e., that (1) the  challenged state action regulated evenhandedly, with only “incidental”  effects on interstate commerce; (2) the state action served a legitimate  local purpose; and (3) there were no alternative means to promote this  local purpose that would not also affect interstate commerce.  (3) Molinari v. New York Triborough Bridge and Tunnel Authority,  838 F.Supp. 718 (E.D.N.Y. 1993) – The plaintiffs in Molinari brought suit  against the New York Triborough Bridge and Tunnel Authority,  challenging the 1989 and 1993 toll increases on the Verrazano-Narrows  Bridge. They maintained that the tolls were “unjust and unreasonable”  within the meaning of the 1987 Act solely because they were used to  subsidize the mass transportation components of the Metropolitan  Transportation Authority. The district court granted the Authority’s motion  for summary judgment, finding that “plaintiffs have failed to create even a  triable issue of fact on their claim that the challenged toll increases on the  Verrazano-Narrows Bridge are unjust and unreasonable.” “f a bridge  toll generates more revenue than necessary to provide a fair profit or rate  of return,” the court continued, “the toll may not be challenged  successfully if it is used to support a single integrated transportation  system in which the successful operation of the bridge is dependent in  whole or in part on the operation of the other related facilities.” The court  also raised serious questions regarding whether a private right of action  exists under the 1987 Act, finding that not only does the statute not  explicitly create such a right, it also lacks the kind of “right- or duty- creating language” that has generally been the most accurate indicator of  the propriety of implication of a cause of action.” Finally, the court noted  that the “Supreme Court has . . . been ‘especially reluctant to imply  causes of action under statutes  that  create duties on the part of persons for the benefit of the public at large”  and that there was a compelling case to be made that a private right of  action should not be implied.  (4) American Trucking Association v. Delaware River Joint Toll  Bridge Commission, 458 F.3d 291 (3d Cir. 2006) – In this case, the U.S.  Court of Appeals for the Third Circuit found that the 1987 Act’s “just and  reasonable” provision did not create a private right of action for truck  drivers to challenge the reasonableness of tolls on bi-state bridges  operated by the Delaware River Joint Toll Bridge Commission. The court  ruled that the statute contained no language that might suggest a  congressional desire to allow a private suit to enforce the “just and  reasonable” provision. In the absence of explicit language conferring a  private right of action, the court addressed whether a private right of  action could be implied under the Supreme Court’s four-factor test in Cort  v. Ash: (1) does the statute create a federal right in favor of the particular  plaintiff?; (2) is there any indication of legislative intent either to create  such a remedy or to deny one?; (3) is it consistent with the underlying  purposes of the legislative scheme to imply such a remedy for the  particular plaintiff?; and (4) is the cause of action one traditionally  relegated to state law so that it would be inappropriate to infer a cause of  action based solely on federal law? Under the Supreme Court’s first  factor, the Third Circuit found that the 1987 Act was designed to benefit  the public at large, not truckers specifically. Under the second factor, the  Third Circuit found legislative history on both sides of the issue and thus  no clear expression of legislative intent that a private right of action was  supported. This was sufficient for the court to find that there was no  private right of action under the 1987 Act. The Court noted, as an aside,  that the truckers had not raised any constitutional challenge in this case.  (5) Auto Club of New York, Inc. v. Port Authority of New York and  New Jersey, 842 F. Supp. 2d 672 (S.D.N.Y. 2012) – In this case, the  Auto Clubs of New York and New Jersey (together AAA) sought to halt  toll increases proposed by the PANYNJ for its bridges and tunnels,  arguing that they violated the Constitution’s Commerce Clause and the  just and reasonable standard of the 1987 Act. In particular, AAA argued  that 2011 toll increases on PANYNJ bridges and tunnels which were  earmarked to fund cost overruns in the PANYNJ’s real estate  development at the World Trade Center violated the statutory “just and  reasonable” standard because the increases were not functionally related  to the PANYNJ’s integrated, interdependent transportation network and  so should not have been included in the rate base. AAA also claimed the  toll increases were unreasonable under the Constitution’s so-called  dormant Commerce Clause because the tolls were not “based on a fair  approximation of…use” of the bridges and tunnels and are “excessive in  relation to the benefits conferred” on the users. AAA sought to stop the  toll increases both temporarily—on an emergency basis—and  permanently.

The district court rejected AAA’s request for immediate relief to stop the  toll increases, finding that AAA did not show, as required, that it would  likely win the case when all the facts are heard (the case is still ongoing).  The court stated that it did not need to reach the question of whether AAA  had a private right of action under the 1987 Act. It did, however, raise  questions about the Third Circuit’s reasoning in the American Trucking  case (discussed above) saying that it “leaves no means of enforcement  , making the words ‘just and reasonable’ mere  surplusage and conflicting with the text and structure of the rest of the  act.” The district court also questioned American Trucking’s suggestion  that “the state political process could be the venue that Congress had in  mind for the airing of toll grievances” since one state’s legislature cannot  unilaterally modify tolls on a bi-state bridge without impinging on the rights  of the other state’s citizens in violation of the Commerce Clause. Further,  the district court questioned the American Trucking court’s use of  legislative history to justify its decision, since it “waived away Committee  reports from two earlier (but unpassed) versions of the Highway Act  containing similar ‘just and reasonable’ language, reports which stated  that ‘the Committee has created a basis for which a user may commence  a suit in Federal Court’ upon belief ‘that actions of a toll authority are not  just and reasonable.’”

The parties agreed that a 3-prong test applied by the Supreme Court in  1994 was applicable to determine the reasonableness of fees for the  use of state-provided facilities by those engaged in interstate  commerce. Under this test, a fee is reasonable, and thus constitutionally  permissible, “if it (1) is based on some fair approximation of the use of the  facilities, (2) is not excessive in relation to the benefits conferred, and (3)  does not discriminate against interstate commerce.” Applying this test,  the district court found that AAA failed to show it likely will succeed on  either on its Commerce Clause claim or its claim under the Highway Act,  even assuming a private right of action exists under the 1987 Act.

section_title: Appendix III: Public Involvement in Toll Increases by Bi-State Tolling Authorities

section_title: Appendix IV: Summary of States’ Reported Audit Authority over the Four Bi-state Tolling Authorities
subsections: section_title: Delaware River and Bay Authority (DRBA), New Jersey and Delaware
paragraphs: Officials from the New Jersey Office of the State Comptroller stated that,  the office, established in 2007, has standing oversight authority over  DRBA—and the three other bi-state authorities—under the New Jersey  state law that enables it to audit and investigate New Jersey “public  agencies” and “independent state authorities.” However, it has not been  firmly established in state law or state judicial cases that these bi-state  authorities are considered “public agencies” or “independent state  authorities” for the purposes of this law. The New Jersey State Auditor—a  separate agency from the New Jersey Office of the State Comptroller— also reported that it has authority to audit the four bi-state tolling  authorities under a New Jersey state law that provides for a performance  audit of “any independent authority, or any public entity or grantee that  receives state funds.” However, the New Jersey State Auditor also stated  that receiving state funds is not necessarily a precondition for its audit  authority over DRBA or any of the bi-state tolling authorities.  Nonetheless, officials with the New Jersey Office of the State Comptroller  and the New Jersey State Auditor were unaware of reciprocal legislation  in Delaware recognizing their offices’ audit authority over DRBA. The  Delaware Office of the Auditor of Accounts stated that it does not have  audit authority over DRBA because it is not a state agency and does not  receive state funds. Neither New Jersey nor Delaware has audited DRBA.  DRBA officials took no position as to whether either state had standing  audit authority, but stated that DRBA would entertain a request for audit if  contacted by either state auditor. Although the New Jersey Office of the  State Comptroller has not been refused access by any of these entities  there remains an open question as to the applicability of these provisions  to these bi-state authorities.

section_title: Delaware River Joint Toll Bridge Commission (DRJTBC), New Jersey and Pennsylvania
paragraphs: As with the other three bi-state authorities, New Jersey Office of the State  Comptroller officials reported that they have standing oversight of  DRJTBC under New Jersey state law. However, DRJTBC officials  reported that the New Jersey Office of the State Comptroller does not  have authority to audit or investigate DRJTBC because its audit authority  is limited to entities within its state and does not extend to bi-state  authorities. The New Jersey Office of the State Comptroller has not  audited the DRJTBC, and it could not point to reciprocal legislation in  Pennsylvania recognizing the New Jersey State Comptroller’s audit  authority. The Pennsylvania Department of the Auditor General reported  that under Pennsylvania state law, the DRJTBC must submit biennially to  a performance audit jointly conducted by the Auditor General of  Pennsylvania and the State Auditor of New Jersey with a report to be  issued every odd-numbered year.  The first report was to be completed  by December 31, 1997. Similar legislation was passed in New Jersey that  would require the Pennsylvania Auditor General and the New Jersey  State Auditor to jointly conduct annual financial and management audits.  However, an official of Pennsylvania’s Department of the Auditor General  reported there is a conflict between the two states’ laws with regard to the  joint authority and audit schedule, and that this conflict needs to be  resolved in order for the audit authority to be clear. DRJTBC officials  stated that neither state’s laws amended DRJTBC’s interstate compact  because the laws were not identical and the two separate requirements  for annual and biennial audits and different work products cannot be  reconciled, and any amendments to the compact would require an act of  Congress. As such, DRJTBC reported that neither New Jersey nor  Pennsylvania state audit entities have authority to audit or investigate  DRJTBC. The Pennsylvania Department of the Auditor General and the  New Jersey State Auditor officials stated that none of the annual or  biennial audits of DRJTBC cited in the state laws have been conducted  by their offices either separately or jointly. During the course of our  review, New Jersey State Auditor officials reported that its office sent the  DRJTBC a letter to initiate an audit in July 2013, but DRJTBC rejected the  request stating in a letter that the audit was not authorized by the  DRJTBC interstate compact or by state laws in New Jersey and  Pennsylvania. This disagreement between the DRJTBC and the State  Auditor of New Jersey was yet to be resolved at the time of our report.

section_title: Delaware River Port Authority (DRPA), Pennsylvania and New Jersey
paragraphs: According to officials from Pennsylvania’s Department of the Auditor  General, it does not have the authority to audit or investigate DRPA  because DRPA is an independent authority and not a state agency. A  Pennsylvania Department of the Auditor General official also stated that  because the Auditor General holds a standing, ex officio position as a  voting member of the DRPA’s Board of Commissioners, he or she cannot  use his office to audit or investigate the DRPA, and has not conducted  any audits of DRPA. According to New Jersey Office of the State  Comptroller officials, the comptroller has standing oversight authority over  DRPA, and exercised that authority in its 2012 investigative report.  However, this investigation was conducted in response to the request of  the governors of both states and with the approval of the DRPA board.  Furthermore, New Jersey State Comptroller officials could not point to  any reciprocal legislation in Pennsylvania recognizing standing authority  to conduct future audits of DRPA. DRPA officials took no position as to  whether New Jersey or Pennsylvania have standing audit authority and  that any decision as to whether to adhere to any state audit requests  would be a matter for its board to decide.

section_title: Port Authority of New York and New Jersey (PANYNJ), New York and New Jersey
paragraphs: Officials with the Office of the New York State Comptroller and the New  Jersey Office of the State Comptroller officials stated that their offices  have audit authority over the PANYNJ. The PANYNJ confirmed this audit  authority; and while the Office of the New York State Comptroller has  conducted several audits, the New Jersey Office of the State Comptroller  has yet to do so. However, because the access authorities claimed by the  New Jersey Office of the State Comptroller over PANYNJ in its enabling  legislation differ from the access authorities recognized by the  PANYNJ, it is unclear what specific authorities would be available to the  New Jersey Office of the State Comptroller if it attempted to conduct an  audit of PANYNJ. Furthermore, according to officials with the Office of the  New York State Comptroller, the PANYNJ does not have the same  requirements as New York state agencies to report its progress in  implementing recommendations to the Office of the New York State  Comptroller.

section_title: Appendix V: GAO Contact and Staff Acknowledgments
subsections: section_title: Contact

section_title: Acknowledgments
paragraphs: In addition to the contact named above, Steve Cohen, Assistant Director;  Matt Barranca; Melissa Bodeau; Mya Dinh; Dave Hooper; Joah Iannotta;  Hannah Laufe; Josh Ormond; and Justin Reed made key contributions to  this report.


Question-summary annotations: questions: question: What authority do bi-state tolling authorities possess?
answer: Bi-state tolling authorities have broad authority to set toll rates and use revenues for a range of purposes, including maintaining, repairing, and improving their infrastructure.
child_questions: question: What factors affect how tolls are set?
answer: In setting tolls, bi-state tolling authorities are primarily influenced by debt obligations and maintain specific operating revenues to repay their debt.

question: To what extent does the statute requiring tolls to be "just and reasonable" affect tolling decisions?
answer: A federal statute requiring bridge tolls to be "just and reasonable" has less influence on tolling decisions, in part, because no federal agency has authority to enforce the standard.

questions: question: What policies must bi-state tolling authorities follow regarding transparency?
answer: Bi-state tolling authorities are not required to follow federal or general state requirements for involving and informing the public; they set their own policies that can be less stringent than practices of transportation agencies that follow federal or state requirements.
child_questions: question: To what extent are bi-state tolling authorities transparent about toll increases?
answer: In their most recent toll increases, the bi-state authorities generally provided the public limited opportunities to learn about and comment on proposed toll rates before they were approved. For example, one bistate authority did not hold any public toll hearings, while another provided one day for hearings.
child_questions: question: How do the actions of the bi-state polling authorities compare to federal and state requirements?
answer: In contrast to federal and general state requirements and leading practices, the bi-state authorities did not in all cases (1) have documented public involvement procedures for toll setting; (2) provide the public with key information on the toll proposals in advance of public hearings; (3) offer the public sufficient opportunities to comment on toll proposals; and (4) provide a public summary of comments received before toll increases were approved.

questions: question: How was the creation of bi-state tolling authorities authorized?
answer: The Northeast is home to some of the most highly traveled interstate crossings in the United States, funded by toll revenues collected from the traveling public. Since 1921, Congress has provided its consent to New York, New Jersey, Pennsylvania, and Delaware to enter into legal agreements known as interstate compacts, establishing four bi-state tolling authorities to build and maintain toll bridges and tunnels.
child_questions: question: Why have bi-state tolling authorities come under scrutiny in recent years?
answer: In recent years, bi-state tolling authorities have come under scrutiny for toll increases and other concerns, and GAO was asked to review their toll-setting decisions and oversight framework.

question: What did GAO examine in this review?
answer: GAO examined: (1) the authority of bistate tolling authorities to set and use tolls and the factors that influence toll setting; (2) the extent to which the authorities involve and inform the public in toll-setting decisions; and (3) the extent to which the authorities are subject to external and internal oversight.
child_questions: question: How did GAO collect data for this review?
answer: GAO reviewed federal and state laws, bi-state tolling authority documents, and interviewed officials from the authorities and state audit offices.

question: Why didn't GAO provide recommendations?
answer: GAO does not make recommendations to non-federal entities; nonetheless the authorities could benefit from greater transparency in public involvement and clearer lines of external oversight.

question: How did stakeholders respond to the review?
answer: DOT had no comments on a draft of this report and three authorities provided technical comments, which GAO incorporated as appropriate. In addition, the Port Authority of New York and New Jersey disagreed, stating its policies constituted a documented public involvement process.
child_questions: question: What is GAO's stance on these responses?
answer: GAO maintains that these policies were not publicly available, or a defined and structured process.