Frequently Asked Questions

What is Congestion Pricing?
Electronic Tolling
Legislative Authority to Toll
Public Acceptance and Equity Concerns
Public-Private Partnerships
- What is the link between tolling and pricing and public-private partnerships (PPP)?
- Does the state allow public-private partnerships (PPP)?

What is Congestion Pricing?

What are pricing strategies?
Increasingly, Americans recognize that gas taxes do not provide adequate funds for the large capital and maintenance needs of the highway network. Tolling refers to charging drivers a fee for use of a highway, and using those fees collected to build, maintain, and improve the highway. "Pricing" refers to varying toll levels by time of day or traffic volume in order to manage congestion.

Won't adjacent free roads get more congested due to diverted traffic?
It is true that when toll rates are raised on tollways, some drivers do divert to free alternatives. However, when pricing is introduced on previously congested highways, some traffic may actually be reduced on parallel arterials because certain travelers who were previously deterred by freeway congestion may shift back to the priced highways once congestion is eliminated and throughput has increased (as explained in an earlier section). Also, introduction of tolls during rush hour will be accompanied by expansion of transit capacity and continued availability of HOV options, so that some solo drivers will use transit or carpool rather than divert to free roadways. And, if rush hour toll revenues are used to pay for freeway widening, the expanded freeway will be able to carry even more traffic, and will further reduce traffic on parallel free arterials.

Do people have flexibility to change the time when they travel?
On average, over half of peak period drivers in metropolitan areas are not commuting (Federal Highway Administration - National Household Travel Survey (NHTS) Briefs (PDF, 42KB)). In other words, there is far more schedule flexibility than commonly understood. Moreover, the rise of the internet, pda's and telecommuting are providing employees with unprecedented flexibility to work outside the four corners of their offices. Giving people the option and incentive to shift trip times even 30-45 minutes can significantly reduce congestion. It is expected that employers would also respond to congestion pricing by offering employees more work schedule options.

How much is the charge?
Prices will vary from project to project due to supply and demand, as well as other regional factors. If all lanes on an existing toll-free facility are priced, charges will be much lower, because there will be more "supply" of premium free-flowing traffic lanes, thus lowering the market-based price that must be charged to fully utilize the available capacity. Some projects do use a preset schedule of tolls. This has the advantage of being predictable and simple. With dynamic pricing, the toll fee is adjusted in real-time until optimal traffic flow is achieved. For example, the express lane fees for an 8-mile section in San Diego typically range from $1 to $4.

Who do I talk to for more information on tolling and pricing strategies?
The Office of Innovative Program Delivery is the designated lead for coordinating all the Tolling and Pricing Programs within the FHWA. The Team serves as a clearinghouse to coordinate all tolling and pricing requests, but does not act to approve any requests. All approvals and program oversight rest with the respective responsible program offices. Any state wishing to begin the conversation of tolling and pricing is encouraged to contact their respective FHWA Division office.

What are the benefits of implementing pricing strategies?
Pricing can significantly increase the capacity of new or existing systems, by spreading out demand and reducing congestion at peak hours.

Where and when should an entity consider a tolling or pricing strategy?
Tolling and pricing are appropriate in states and local regions where funds available to support the construction of highway improvements are constrained and where congestion is impacting economic productivity and quality of life. They can be used on state, county or local highways as well as the Interstate Highway System. Pricing should be used to encourage the efficient and effective use of new and existing transportation infrastructure, with toll revenues providing a supplementary funding source.

How does dynamic pricing work?
With dynamic pricing, tolls are continually adjusted according to traffic conditions to maintain a free-flowing level of traffic. Under this system, prices increase when the tolled lane(s) get relatively full and decrease when the tolled lane(s) get less full. The current price is displayed on electronic signs prior to the beginning of the tolled section. This system is more complex and less predictable than using a fixed-price table, but its flexibility helps to consistently maintain the optimal traffic flow. Motorists are usually guaranteed that they will not be charged more than a pre-set maximum price under any circumstances.

Electronic Tolling

How does electronic tolling work?
Typically, drivers simply put small electronic tags, called transponders, on the windshield inside their cars. In conjunction with using the transponder, they open an account with a toll operator. Tolls are then collected as the tag is read at normal highway speeds by electronic scanners suspended from gantries above the highway. Motorists ensure adequate funding is available in their accounts by linking their accounts to their credit card accounts or through a quick call, trip to a kiosk or office, or visit to a web site. Tags may emit a signal warning consumers when their account is running low, or they may be informed through messages beamed to them as they go by a toll collection point.

Wouldn't electronic tolling invade a motorist's privacy?
All of the operating pricing projects in the United States and more than 250 other toll facilities across the country use electronic toll collection (ETC). Tolling agencies have devised a method to protect the public's privacy by linking the transponder and the driver's personal information with a generic, internal account number that does not reveal the driver's identity and that is not disclosed to other organizations. Also, a motorist can open an anonymous account if he or she so chooses.

How do out-of-town motorists who don't have a transponder pay?
This is handled in several ways. Of course, clear signage is used to show drivers which lane(s) or route to use to avoid the toll. This avoids most of these kinds of problems. Some systems also allow drivers to pay via credit card after-the-fact by calling a toll-free line. Some project sponsors simply let drivers use the tolled lane(s) at no charge the first few times. For instance, a letter may be sent to a non-paying driver identified based on matching of a photo of license plates with State vehicle registration databases. The letter would explain that if the driver wants to continue to use the facility, he or she should get a tag or risk a fine, but that initial usage is being allowed at no cost. The operator of an all-electronic toll facility in Toronto, Canada, simply bills such motorists for the cost of the toll plus an administrative fee. Through these kinds of steps, the chances of tourists, occasional visitors, or inadvertent users being penalized are minimized.

Does the state allow the use of Electronic Toll Collection (ETC)?
State legislation is also needed to establish the terms and conditions governing the use of ETC systems and requirements for account holders. This legislation provides ETC operators with access to data maintained by state registries of motor vehicles and allows toll operators to use video technology to identify toll violators.

Legislative Authority to Toll

How can a state get federal authorization to implement a tolling or pricing project on a federally-funded facility?
Congress has created a number of programs under which States can obtain authority to use tolling and pricing on Federal-aid routes. Eligibility varies depending on type of route (Interstate, non-Interstate), HOV lane status, past and current Federal funding, and other factors. To facilitate project development, FHWA has created a tolling and pricing project team that matches proposed projects to the appropriate program or programs.

Is Federal authorization all that is needed to implement a project?
In some cases, states may not need Federal authorization to implement a tolling or pricing project. In all cases, however, states or other project sponsors will need to have or obtain the state legal authority to levy tolls. Project sponsors may also need to obtain the power to issue bonds, obtain loans or other forms of financing, and engage in partnerships with the private sector.

Does the state have the ability to toll?
State and local laws provide the authority to toll other highways and crossings. In many states this authority does not exist, and when it does exist, it may be limited to roads operated by a designated turnpike or toll road authority. Legislative provisions may be required to enable the collection of tolls on a new or existing facility.

Does the project sponsor have the ability to issue debt for revenue producing facilities?
While private entities do not require this legislative authority, state and local agencies must have the legislative authority to issue bonds of different kinds. Such legislation is also likely to established caps on the amount of debt that can be outstanding at any given time. It may also establish parameters for using a combination of different funding sources to develop tolling and pricing projects.

Public Acceptance and Equity Concerns

Isn't pricing inequitable towards low-income motorists?
Results from surveys conducted for projects in operation show that drivers of all income levels use priced express lanes. Although many low-income users don't choose to use the tolled facility every day, they support having the option. For instance, a low-income parent racing to avoid the financial penalty associated with being late for pick-up at a day care facility, or for work, is often pleased to have the option of paying a fee to bypass gridlock in the regular lanes. In fact, a high level of support for San Diego's HOT lanes comes from the lowest income users (70 percent support). Moreover, low-income bus riders may benefit significantly from toll-financed transit improvements. Finally, a well-designed value pricing plan can be less burdensome to low-income citizens than current systems that are based on regressive taxes, such as car registration fees, sales taxes and the gas tax. For example, a proposal for pricing the San Francisco-Oakland Bay Bridge included life-line discounts for low-income motorists. The Bridge also currently provides free service for carpool vehicles during rush hours.

If road pricing enables reductions in current regressive fuel tax rates, low-income drivers will be better off, especially if the quality of public transport is improved and free alternative roads are available for those who do not choose public transport.

For more information on equity towards low income motorists, see the one page brief Congestion Pricing: Equity and the white paper Low-Income Equity Concerns of U.S. Road Pricing Initiatives

Isn't congestion pricing "double taxation"?
The prices road users currently face include only the value of their own travel time plus vehicle operating costs (including a small part that represents fuel taxes and occasional tolls). But the costs they impose during peak travel hours also include the value of the delays they impose on other users by slowing travel speeds. Speeds slow until the delays that vehicles impose on one another temporarily balance demand and supply, but only by deterring travelers (and shipments) whose time is most valuable, while wasting large amounts of others' time. Besides wasting their own and others' time, drivers sitting in congested traffic also impose pollution costs not covered by gas taxes.

Despite the magnitude of these costs imposed on others, rush hour vehicle users are currently not charged for these costs. Thus, separate congestion charges are appropriate. Gas taxes paid by a motorist amount to just two cents per mile driven. To avoid the claim of "double taxation," gas taxes already paid can be tallied separately and reimbursed to the driver, as is already done for toll road users in a few States.

Will the public support a tolling or pricing concept?
Tolling and pricing are often new concepts, and public outreach for these types of projects involves a greater focus on education than those for traditional roadway projects. Outreach efforts need to communicate the critical function that user fees play in providing these benefits, as well as information on how and by whom tolls will be collected, and how toll revenues will be used.

Public-Private Partnerships

What is the link between tolling and pricing and public-private partnerships (PPP)?
Not all tolling and pricing projects will be undertaken as public private partnerships (PPPs), and not all PPPs involve tolls. Yet incorporating tolls into a project definitely expands the type and potential benefits of PPPs that can be implemented. PPP models for tolling and pricing projects range from long-term concessions for design, build, finance, and operation of a facility to short-term operation and maintenance contracts. These models can provide accelerated project completion, cost savings, improved efficiency, quality, and system performance. PPPs can also provide access to new sources of private capital, substituting private personnel and resources for constrained public resources.

Does the state allow public-private partnerships (PPP)?
Use of private financing mechanisms for transportation facilities can occur only when the necessary legal authority exists and governing legal principles and restrictions are observed. Almost half of the states in the U.S. have passed legislation providing the legal authority for private sector participation in transportation projects to varying degrees.

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