Since FY2008, federal highway user taxes and fees have been inadequate to fund the surface transportation program authorized by Congress. Although the 2015 surface transportation act addressed the revenue shortfall through FY2020 by authorizing the use of general funds for transportation purposes, the Congressional Budget Office (CBO) projects that after FY2020 the gap between dedicated surface transportation revenues and spending will average $20 billion annually. The search for ways to fill this gap may revive congressional interest in tolling as a means of financing transportation projects without federal expenditures. States are free to impose tolls on roads, bridges, and tunnels that have been built and maintained without federal assistance. New federally assisted roads, bridges, and tunnels may be tolled. The vast majority of existing federally assisted roads, bridges, and tunnels may be converted to toll facilities but must meet reconstruction or replacement requirements. There remains a ban on the tolling of existing Interstate System highway surface lane capacity. Lifting or retaining this ban is one of the main policy issues regarding tolling of federally assisted roads. This report explains current federal policies governing tolling and discusses issues related to increasing the use of tolls as a source of revenue for surface transportation projects. In some states, mostly in the Northeast and the mid-Atlantic region, many of today's highways were originally toll roads, often built and operated by private investors. While tolling often made it possible to build or improve roads at minimal cost to taxpayers, many of these roads failed due to overly optimistic revenue expectations, inability to attract sufficient investment to pay for improvements, competing capacity, and toll avoidance and the related cost of enforcement. Over time, toll roads came to be regarded as obstacles to the free flow of commerce. When it established the forerunner of today's federal-aid highway program in 1916, Congress emphasized the principle that roads should be free. Section 1 of the Federal-Aid Road Act (39 Stat. 355) provided that "all roads constructed under the provision of this Act be free from tolls of all kinds." The Oldfield Act of 1927 (44 Stat. 1398) opened the door to tolls by permitting the use of federal funds to build toll bridges as long as they were operated by the states or their political subdivisions. However, the federal Bureau of Public Roads continued to oppose the use of federal funds on toll roads. Consequently, when states, mainly in the Northeast, undertook expressway construction in the decade after World War II, they built toll roads without federal aid. By January 1, 1955, there were 1,239 miles of completed "arterial toll roads" in the United States, another 1,382 miles were under construction, and 3,314 miles were being planned or studied. Many of these roads were on routes of the planned Interstate System. Although the Bureau of Public Roads supported the building of new Interstate highways as free roads, it did recommend that existing toll roads that met its engineering standards and followed the routes of proposed Interstate highways be incorporated into the new network. The tolling prohibition was reiterated in the Federal-Aid Highway Act and Highway Revenue Act of 1956 (P.L. 84-627; 70 Stat. 374), which authorized 13 years of funding for construction of the Interstate Highway System, created the Highway Trust Fund (HTF) as the source of federal funds for state road construction, and raised tax rates on motor fuels to help fund it. The fuel and other highway taxes that were now dedicated to the HTF were seen as a close proxy for a user-payer system of financing federal-aid roads. The increased flow of federal funds, heavily weighted toward the Interstate highways, effectively stopped the development of new toll roads by the states. Thirty-five years later, the Intermodal Surface Transportation Efficiency Act of 1991 (ISTEA; P.L. 102-240 ) opened non-Interstate federal-aid highways to tolling, but allowed existing roads or bridges to be tolled only after being reconstructed. This effectively linked tolling to capacity additions or road improvements. Both the 1998 Transportation Equity Act for the 21 st Century (TEA-21; P.L. 105-178 , as amended by P.L. 105-206 ) and the Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users ( P.L. 109-59 ; SAFETEA) allowed tolling on high-occupancy vehicle (HOV) lanes, established pilot projects for tolling of a limited number of Interstate System routes, and allowed limited use of tolls that vary according to the level of traffic, known as congestion pricing. The Moving Ahead for Progress in the 21 st Century Act (MAP-21; P.L. 112-141 ), enacted in 2012, reinforced the encouragement of tolls on HOV lanes and congestion pricing. It allowed tolling of new Interstate System routes, route extensions, and additional lane capacity, but continued to block tolling of most existing Interstate highway lane capacity. MAP-21 retained two pilot programs, one encouraging the use of pricing to control congestion and another allowing Interstate route segments in three states to be converted to tolling as part of their reconstruction. The Fixing America's Surface Transportation Act (FAST Act; P.L. 114-94 ), enacted in December 2015, clarified that public authorities generally, as opposed to solely state agencies, may impose tolls on single-occupant vehicles using HOV lanes. It modified the TEA-21 pilot program allowing existing Interstate highway segments in three states to be subject to tolls to finance reconstruction by providing that federal approval lapses if the selected states have not started construction within three years of approval. With minor exceptions (see " The Setting of Toll Rates ," below), the Federal Highway Administration (FHWA) does not have a role in setting toll rates. MAP-21 also eliminated the requirement that a toll agreement be negotiated by the tolling authority (including the state transportation departments) with the U.S. Department of Transportation prior to federal participation in construction of a toll facility. Any highway owner (a state, public authority, or other eligible entity) has the right to implement tolling, provided the facility is eligible to be tolled under 23 U.S.C. Sections 129 or 166, or under congressionally authorized pilot toll programs. However, federal law does impose restrictions on the use of toll revenue. The legal ability to toll is based on exceptions to the 1958 "Freedom from Tolls" provision of 23 U.S.C. Section 301. The exceptions are set forth in 23 U.S.C. Section 129. Over the years, the exceptions and their conditions have expanded to the point where the only absolute prohibition is the requirement that the toll-free surface lane count on any existing Interstate System highway must be retained. The decision to convert a free facility to a tolled facility must be made prior to completion of the qualifying reconstruction project. According to FHWA, once physical construction is completed, it is too late to make the decision to toll, unless an additional qualifying reconstruction or rehabilitation project is undertaken. The earliest that toll collection may be initiated is when the contract has been awarded for the physical construction activities that render the facility eligible for conversion to a toll facility. The only way that an existing toll-free federal-aid highway may be converted without being reconstructed or replaced is if the conversion occurs under the Value Pricing Pilot Program. Under 23 U.S.C. Section 166, high occupancy vehicle (HOV) lanes built with federal participation may be converted to high occupancy toll facilities. When this occurs, single-passenger vehicles may be allowed to access the HOV facility only if those users pay a toll for access. The tolls must be collected electronically and must be variably priced to manage travel demand to help prevent degradation of the facility's performance. FHWA does not regulate the toll rates users pay on toll roads. Setting toll rates is the responsibility of the toll road owner or operator of the facility. The Regulation of Tolling provision of the Surface Transportation and Uniform Relocation Assistance Act of 1987 ( P.L. 100-17 ) requires that bridge tolls "shall be just and reasonable." However, "just and reasonable" is not defined. Conference report language (H.Rept. 100-27) specifically directs that bridge tolls are not subject to review by the Department of Transportation. The FAST Act involved the federal government in toll rates for the first time, mandating that intercity buses serving the public have the same access to and pay the same rates as public transportation buses, and requiring public authorities operating high-occupancy toll lanes on the Interstate System to consult with affected metropolitan planning organizations on the placement and amount of tolls Although the requirement for upfront tolling agreements under Section 129 no longer exists, there continue to be restrictions on the use of toll revenues. FHWA provides oversight of the "limitations on the use of revenues" under 23 U.S.C. Section 129(a)(3), which requires that the public authority with jurisdiction over a toll facility use toll revenues only for debt service with respect to the projects on or for which the tolls are authorized, including funding of reasonable reserves and debt service on refinancing; a reasonable return on investment of any private person financing the project, as determined by the state or interstate compact of states concerned; any costs necessary for the improvement and proper operation and maintenance of the toll facility, including reconstruction, resurfacing, restoration, and rehabilitation; payments that the party holding the right to toll revenues owes another party under a public-private partnership agreement; or any other purpose for which federal funds may be obligated by a state under Title 23 (including certain transit projects), provided the public authority certifies annually that the tolled facility is being adequately maintained. MAP-21 imposed a requirement for annual audits to ensure adherence to these limitations, the results of which must be transmitted to the Secretary of Transportation.