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Indiana Sets the Pace on Toll-Financed Interstate Reconstruction

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Back in May, Pat Jones, CEO of the International Bridge, Tunnel & Turnpike Association issued the following statement:

“Giving states flexibility to toll their Interstates for the purpose of reconstruction is consistent with two principles outlined in Transportation Secretary Elaine Chao’s recent testimony before the Senate EPW Committee: long-term reform on how infrastructure projects are regulated, and broadening and expanding participation in infrastructure funding so that more projects can be undertaken overall.”

Judging by its recent transportation legislation and subsequent actions, Indiana is leading the way toward this new model.
Compared with the very limited constraints of the current three-state federal toll-financed Interstate reconstruction pilot program, what Indiana has underway is far more sweeping:

  • It calls for a systematic phased plan to rebuild and widen all the state’s Interstate highways;
  • It distinguishes between long-distance, mostly rural routes and urban freeways (specifically I-465 around Indianapolis), where a congestion-pricing approach is called for;
  • It believes it has found a legal way around the general federal ban on Interstate tolling, by erecting electronic toll-collection gantries adjacent to reconstructed or replaced bridges on each corridor; and,
  • It seriously contemplates the use of long-term P3 concessions as a procurement model for this ambitious plan.

The legislation enacted this spring (HEA 1002) calls for an initial feasibility study—under way by HDR, Inc.—on toll-financed Interstate reconstruction and modernization, to be delivered by Oct. 31, 2017. The study is to include planning-level traffic & revenue studies for I-64, I-69, I-74, I-94, and I-465. Indiana DOT has already done such studies for I-65 and I-70, and HDR will do a risk-assessment for those corridors. The study also includes a statewide tolling survey, a review of legal issues, and economic impact modeling. In parallel with the HDR study, INDOT will study issues related to using long-term DBFOM P3 concession agreements for the Interstate modernization projects.

The potential legal breakthrough is the idea of linking the electronic tolling to reconstruction or replacement of bridges on each Interstate corridor. A summary document from American Structurepoint, Inc. quotes the language as follows:

“Under 23 USC 129(a), an existing toll-free bridge or tunnel may be converted into a toll facility as part of a project to reconstruct or replace the existing facilities. This applies to bridges and tunnels that are located both on and off the Interstate System.” FHWA last year approved a controversial Rhode Island program to charge (only) trucks for using a set of reconstructed bridges both on and off the Interstates, and that appears to have inspired the new Indiana approach.

I have only one concern about what Indiana is doing. The HEA 1002 legislation requires the feasibility study that is now under way to review “the ability to provide discounts, credits, or otherwise lessen the impact of tolling on local, commuter, and in-state operators,” while also estimating “the number and impact of out-of-state operators expected to use Interstate highways in Indiana.” This is a predictable political ploy to use non-residents as cash cows to pay for Interstate reconstruction and modernization. This is questionable for at least two reasons.

First, it may well be illegal. Last year the American Trucking Associations won an important lawsuit against the New York State Thruway Authority. The U.S. District Court ruled that the long-standing practice of diverting Thruway toll revenues to the New York State Canal System is unconstitutional. Why? Because it unduly burdened interstate commerce in violation of the so-called Dormant Commerce Clause of the Constitution. The same logic could apply to (a) border tolls, and (b) different in-state and out-of-state toll rates.

Second, a provision such as this would be lawsuit bait for the trucking industry. Late last decade, a major four-state study of modernizing I-70 was carried out under a large federal Corridors of the Future grant. Participating in the study were the DOTs of Missouri, Illinois, Indiana, and Ohio and the state trucking association of each state. The preferred alternative the study recommended was to reconstruct the four-state corridor adding dedicated truck lanes along its entire length. Since the cost of this was far beyond what current transportation funding could provide, the consensus was that all lanes should be tolled and that a long-term P3 procurement approach would make sense. The four state trucking associations did not dissent from these recommendations. Setting up long-distance trucking companies to pay higher tolls than in-state firms would lead to large scale trucking industry lobbying against Indiana’s otherwise commendable program.

(This article first ran in the August issue of Surface Transportation Innovation)

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