OLR Bill Analysis

sHB 5046

AN ACT CONCERNING THE SUSTAINABILITY OF TRANSPORTATION PROJECTS.

SUMMARY

This bill authorizes the Department of Transportation (DOT) to build, maintain, and operate electronic tolls on state highways, as may be determined by the department.

Under the bill, DOT may set toll rates and collect toll revenue, which must be deposited into the Special Transportation Fund (STF) and spent only as federal law allows (see BACKGROUND). Toll rates may vary based on the time of day or anticipated traffic congestion and may include toll discounts or exemptions for certain users, among other things. DOT must set the rates to cover, at a minimum, the cost of (1) tolled highway construction, maintenance, operation, and improvement and (2) debt service on obligations related to such highways.

The bill allows the department to hire consultants and enter into agreements necessary to implement tolling (e.g., a tolling agreement with the Federal Highway Administration (FHWA)). It also requires that any tolling system comply with all state and federal interoperability requirements.

The bill contains provisions regarding public hearing and notice requirements, toll customer privacy, and toll enforcement and penalties. It also requires the DOT commissioner and motor vehicles (DMV) commissioner to adopt implementing regulations.

EFFECTIVE DATE: Upon passage

TOLL IMPLEMENTATION

The bill allows DOT to construct, maintain, and operate electronic tolling systems on state highways and to contract with a private entity to operate them (toll operator). Under the bill, an “electronic tolling system” records, monitors, collects, and enables payment of tolls. It includes transponders or other electronic transaction or payment technology devices or video toll transaction systems. If transponders or similar devices are used, the bill requires them to be placed in or on motor vehicles in the way DOT or a toll operator prescribes.

Tolling Agreements and Authorizations

Under the bill, DOT may:

1. enter into tolling agreements with the FHWA and other related agreements with other governmental entities to carry out its duties under the bill;

2. retain and spend money for technical, traffic, revenue, financial, legal, and other types of consultants and experts to help develop and implement tolls; and

3. procure, retain, and spend funds for toll operators, vendors, suppliers, designers, engineers, software designers, installers, contractors, and other personnel, and for other equipment, material, staff, and service to help develop and implement the tolling system.

The bill authorizes DOT and DMV to enter into reciprocal agreements with other states and jurisdictions, and with toll operators in other states, to share information on out-of-state vehicle owners who have used a tolled highway, including the name and address of the vehicle owner and the vehicle's make and license plate number. DOT, DMV, and the toll operator may enter into agreements with other states, jurisdictions, and toll operators for additional enforcement mechanisms to efficiently collect tolls from out-of-state residents.

The bill also allows DOT and the Department of Emergency Services and Public Protection to enter into an agreement to have state police enforce laws on tolled highways that they do not enforce elsewhere (e.g., laws on toll evasion). It gives state and local police the same powers on tolled roads as they have in their respective jurisdictions.

TOLL COLLECTION AND REVENUE

Under the bill, DOT may charge, collect, retain, and set the amount of tolls on highways or portions of highways, and retain and employ the assistance it needs to collect the tolls. Toll revenue (1) must be deposited into the STF, (2) cannot be commingled with other funds and revenues, and (3) must be spent only as federal law allows (see BACKGROUND).

The department must set the toll amounts to provide sufficient funding to cover specified costs, but it may consider the availability of funds from other sources in doing so. Under the bill, the revenue generated by tolls, plus such other available funding, must cover, at a minimum, the following costs:

1. owning, maintaining, repairing, rebuilding, improving, rehabilitating, using, administering, controlling, and operating tolled highways;

2. the principal, interest, and any redemption premium on notes or bonds relating to the tolled highways, as they become due and payable; and

3. creating and maintaining reserves established under laws on state highways and bridges to operate and maintain the tolled highways.

DOT must provide drivers with advance notice of tolls, and how to pay them, before the operators enter a tolled highway.

Tolls DOT establishes are not subject to supervision or regulation by any other commission, board, bureau, authority, state agency, or political subdivision, except as otherwise provided by law.

Under the bill, tolls are not subject to, and are exempt from, the sales and use, excise, gross receipts, or similar taxes.

REGULATIONS

Toll Rates, Application, and Exemptions

The bill requires DOT to adopt implementing regulations, which may cover the following:

1. setting variable or dynamic toll rates that consider the day of the week and level of traffic congestion or anticipated congestion;

2. setting different fees depending on the type of vehicle, including its size, weight, occupancy, or number of axles;

3. setting reduced or discounted rates for users registered in Connecticut and equipped with transponders or similar technology whose owners have valid accounts with DOT or the toll operator;

4. exempting (a) law enforcement, (b) emergency personnel responding to emergencies, (c) state-owned or –leased vehicles, (d) public transit vehicles, and (e) high occupancy vehicles;

5. imposing surcharges, premiums, or additional fees on users without a valid transponder or similar technology; and

6. imposing administrative charges and penalties for late payment of, and evading, tolls.

Due Process

DOT's regulations must include procedures for due process that include notice, the right to challenge a toll and associated charges, the opportunity for a hearing and right to appeal, and procedures for enforcing administrative decisions.

DMV

The bill also requires the DMV commissioner, in coordination and consultation with the DOT commissioner, to adopt regulations to carry out its responsibilities under the bill.

PUBLIC NOTICE AND PRIVACY

DOT must hold at least one public informational meeting near the proposed toll location before building a toll system, during which it must receive comments on the proposed toll, rate-setting methodology, and user classifications.

DOT must develop and implement a (1) privacy policy for toll customer information and other data collected, received, maintained, archived, accessed, and disclosed by DOT to a toll operator and (2) protocol to protect and limit access to toll customer information and other data collected, received, maintained, and archived.

Except as required by law or an administrative or court proceeding, all information relating to a specific transaction of a toll customer or to a “toll customer account” that specifically identifies the toll customer must be destroyed. In the case of a specific transaction, this information must be destroyed within one year after the later of the tolling transaction or toll collection, whether through normal processes or enforcement. In the case of a customer account, such information must be destroyed within one year after the collection of all tolls and fees the customer incurred, whether through normal processes, enforcement, or the account's closing. “Toll customer account” apparently refers to a billing account the customer establishes.

The bill prohibits DOT or a toll operator from selling or using any toll customer information or other data for commercial purposes unrelated to the charging, collection, and enforcement of tolls, administrative fees, and penalties. It exempts toll customer data and information from disclosure under the Freedom of Information Act and subjects toll operators to laws that apply to state contractors who receive confidential information. However, DOT may release customer information or other data that does not directly or indirectly identify a customer and is used only for department-authorized research purposes.

ENFORCEMENT AND PENALTIES

Under the bill, DOT, after notice and a hearing, may impose a civil penalty of up to $100 for each violation of the regulations related to not paying a toll, toll evasion, or any related fees. It may impose the penalty on (1) a vehicle's driver or (2) its owner or lessee if the vehicle was operated by someone else with the owner's or lessee's permission. The penalty also may be imposed on a vehicle's lessor. A copy of a motor vehicle rental agreement, lease, or other contract or affidavit identifying the lessee at the time of the tolling transaction is prima facie evidence that the person named in the agreement was operating the vehicle at all relevant times related to the toll.

The bill requires vehicle lessors to cooperate with DOT or the toll operator in providing any information about the lessee that DOT or the toll operator requests from the lessor's record (presumably, the lease agreement or contract). DMV must provide DOT or the toll operator any information it needs to collect tolls and enforce penalties for nonpayment, toll evasion, or other violations, including information on the vehicle's owner and his or her address, and the vehicle's make and license plate number.

TOLL SYSTEM INTEROPERABILITY

The bill requires that the tolling system be compatible with other electronic tolling systems in the state and comply with all state and federal interoperability requirements and standards, including system technology and fund transfers. (Interoperability refers to the ability of computer systems to exchange and use information.) The DOT and DMV commissioners must consult with the administrative services commissioner to ensure coordination and compatibility of information system technology and data.

The bill specifies that, for purposes of interoperability, state laws on state information and telecommunications systems and geospatial information systems do not apply to electronic tolling systems. These include laws on, among other things, interagency agreements, legislative access to state agency records, and hiring of state employees by, and disqualification of, contractors and subcontractors.

BACKGROUND

Tolling and Federal Law

Although states are free to toll roads, bridges, and tunnels built without federal funds, federal law limits the imposition of tolls on existing federal-aid highways, especially interstate highways. But recent federal laws have expanded states' abilities to allow tolling in certain instances, such as when building new interstate routes or when adding a new lane to an existing interstate highway (23 U.S.C. 129).

Federal law also has several pilot programs, such as the Value Pricing Pilot Program, in which participating states use “congestion pricing” to try to manage traffic flow and reduce traffic congestion. (Congestion pricing is the practice of charging higher tolls when traffic is heaviest and lower or no tolls at other times.) Connecticut is participating in the Value Pricing Pilot Program.

Toll Revenue Restrictions

Under federal law, toll revenue must be used first on the facility being tolled, including (1) debt service for the tolled road; (2) a reasonable return on investment of any private person financing the road; (3) road maintenance, operating, and improvement costs; and (4) if applicable, payments that the entity that controls tolling revenue owes to another party under a public-private partnership agreement (23 U.S.C.  129(a)(3)(A)).

If the public authority with jurisdiction over the toll road has met the annual financial obligations related to the toll road and certifies that the road is adequately maintained, any additional toll revenue may be used for other roads and other uses allowed under federal highway law (e.g., maintenance and improvement of other highways, congestion mitigation and air quality improvements, highway safety initiatives, and certain public transit improvements).

Special Transportation Fund

The STF is a dedicated fund used to finance the state's transportation infrastructure program and operate DOT and DMV (CGS 13b-68). The law requires specified tax revenue (e.g., fuel taxes and a portion of sales and use tax revenue) and various transportation-related fees, fines, and charges to be credited to the STF. By law, STF revenue is pledged to STO bonds issued for transportation projects through DOT's capital program (CGS 13b-74 to 13b-77), and its resources must be used first to pay off STO bond debt service.

Connecticut statutes contain a “lockbox” provision, which makes the STF a perpetual fund, requires its current revenue sources to continue to be placed in the fund as long as the state collects them, and restricts the use of its resources to transportation purposes (CGS 13b-68(b)). In 2017, the legislature approved a constitutional amendment to provide these “lockbox” protections in the constitution. The amendment will be placed on the November 2018 general election ballot.

Related Bills

Several bills favorably reported by the Transportation Committee contain provisions related to tolling:

1. sHB 5391 (File 366) requires DOT to conduct federally-required toll studies and develop a tolling proposal to submit to the legislature for approval;

2. SB 389 (File 392) creates the quasi-public Connecticut Transportation Authority and authorizes it to implement tolls on I-84, I-91, I-95 and the Merritt and Wilbur Cross Parkways; and

3. sHB 5393 (File 368) creates a framework for a quasi-public Connecticut Transportation Finance Authority, which would be established if the General Assembly authorizes tolls.

COMMITTEE ACTION

Transportation Committee

Joint Favorable Change of Reference - FIN

Yea

20

Nay

16

(03/23/2018)

Finance, Revenue and Bonding Committee

Joint Favorable

Yea

26

Nay

25

(04/05/2018)