Effective Approaches for Advancing Congestion Pricing in a Metropolitan Region

1. Introduction

For decades, transportation agencies have directed their planning efforts at meeting regional goals of mobility, accessibility, and economic vitality. As metropolitan planning organizations (MPO), and their planning partners at State Departments of Transportation (DOT), transit agencies, and local governments work together to develop metropolitan transportation plans, many agencies are looking for innovative approaches to advance these regional goals, while functioning in economically constrained times.

Congestion pricing approaches – including various forms of road pricing, parking pricing, and mileage-based user fees – offer potential benefits to communities from an economic, environmental, and social perspective. However, these strategies face significant political challenges in gaining acceptance as a viable option in regional planning. While some success has been achieved on individual pricing projects, such as conversion of high occupancy vehicle (HOV) lanes to high occupancy toll (HOT) lanes and demonstration projects funded by Federal grants such as the Value Pricing Pilot Program, many of these efforts have been focused on individual projects, and there has been limited consideration of the broader role that congestion pricing can play in a regional context.

To advance congestion pricing at a regional scale, transportation planners, decisionmakers, and the public need a better understanding of the role of congestion pricing in addressing regional goals and transportation funding needs. They also can benefit from lessons learned from regions that have begun to study and plan for congestion pricing as part of their metropolitan transportation plans.

What Is "Congestion Pricing"? Congestion pricing – sometimes called value pricing – is a way of harnessing the power of the market to reduce traffic congestion and/or maintain free flowing conditions on parts of the transportation system. Congestion pricing works by shifting travel (including purely discretionary rush hour highway travel as well as commuters with flexibility) to other transportation modes or to off-peak periods. By removing even 5 percent of the vehicles from a congested roadway, pricing enables the system to flow much more efficiently, allowing more cars to move through the same physical space. There is a consensus among economists that congestion pricing represents the single most viable and sustainable approach to reducing traffic congestion. Source: Adapted from FHWA, Congestion Pricing, A Primer: Overview, FHWA-HOP-08-039, (Washington, DC: October 2008).

Purpose of the Primer and Intended Audience

As part of the Federal Highway Administration's (FHWA) Congestion Pricing Primer series, this primer is intended to raise awareness among staff at MPOs and their partner agencies about the potential role of congestion pricing in supporting regional goals as well as the most effective approaches for advancing congestion pricing strategies in a region. It draws upon lessons learned from pilot and ongoing programs implemented around the United States as well as efforts to integrate congestion pricing into regional transportation plans. Using illustrative case studies, this primer provides detailed information on how congestion pricing can support various regional planning goals and effective approaches for addressing the challenges of advancing congestion pricing in a regional context.

Based on the common agenda of the four congestion pricing workshops, this primer includes the following key themes around which the discussion and examples are centered.

• Building Public and Decisionmaker Acceptability: This involves addressing concerns about equity and fairness, revenue use, credibility of the agencies involved in implementation, privacy, and user perceptions about being charged to use roads already paid for through fuel taxes . Ensuring an early, ongoing, and broad engagement process involving planners, decision makers, stakeholders, and the public, while communicating the role of congestion pricing in solving severe regional problems is crucial. Including congestion pricing in a bundle of complementary strategies acceptable to a range of stakeholders, using data from existing projects and modeling studies, and implementing a short-term pilot program to prove the effectiveness of the strategy are other effective measures to build acceptability. Finding allies among decisionmakers and local leaders, and engaging experts and businesses also helps build broad-based support for a congestion pricing program.
• Linking Congestion Pricing to Regional Goals and Objectives: The objectives of the planned congestion pricing program must be clearly linked to regional planning goals such as environmental sustainability and economic development and this understanding must be communicated to the public and to decisionmakers. This helps planners in developing pricing programs as part of a comprehensive approach to achieving regional goals. When pricing programs are implemented, ongoing monitoring and evaluation must ensure that the program is achieving previously identified goals, objectives and system performance targets.
• Achieving Interagency Collaboration: This involves coming to an agreement between agencies and jurisdictions on how best to achieve regional goals and objectives, how to allocate the costs and revenues of a congestion pricing program, how to manage and operate the program, and how to work across cultural differences and silos between and within agencies. Early in the process, it is critical to establish regional partnerships that clearly identify regional roles and responsibilities, while drawing on the unique strengths of each agency. High level political leadership and support can also be important for achieving collaboration among agencies.
• Analyzing Congestion Pricing Impacts as Part of the Planning Process: Analyzing the full regional or project-level traffic, economic, and social impacts of a congestion pricing program requires significant technical capability and data. Potential changes in travel behavior are often difficult to predict. However, the use of improved travel demand models and other tools has helped many regions analyze these impacts in a robust way at different stages of planning. In addition, the use of data based on observed impacts and pilot projects, collection of new data where needed, the use of cost-benefit analysis and revenue estimation tools, as well as an early focus on analyzing potential equity impacts have proved to be effective practices in several regions.
• Addressing Implementation Challenges and Sustaining User Support: Legislative barriers, such as the lack of authority to implement tolling on previously free facilities and limits on the use of revenues, have been a key challenge in many regions. Obtaining funding for pricing projects and limited user experience with the pricing concept and technology have also been common implementation challenges. Establishing a supportive policy framework for implementing regional pricing programs, involving the private sector, establishing conditions for revenue use, and managing how prices may be adjusted it he future have proved effective. In addition, ensuring that the user experience is seamless, creating opportunities for the public to test and become familiar with the technology, and developing ways to enforce occupancy requirements without burdening users are important for sustaining user support.

The discussion of these themes draws directly from practitioner experiences and effective strategies that were employed in planning and implementing congestion pricing programs. This primer is designed for transportation planners at the State, regional, and local levels as well as for key stakeholders in the planning process, such as transit agency officials and decisionmakers involved in regional transportation planning and policy making. It is also meant to support the broader audience of stakeholders involved in all aspects of transportation and community decisionmaking, from elected officials and interested citizens to practitioners in related fields such as the environment and land use.

Process of Developing the Primer

As part of the Congestion Pricing Primer series, FHWA's Office of Operations published "Congestion Pricing – A Primer: Metropolitan Planning Organization Case Studies" in 2011. Pricing programs have often come about separate from the traditional metropolitan planning process through pilot projects and demonstrations. Given that the federally funded pricing demonstration projects have shown congestion pricing to be an effective tool in addressing regional goals, there is a growing interest in incorporating such programs into metropolitan transportation plans.

The case studies examine how congestion pricing was incorporated into metropolitan transportation plans in four regions: Dallas/Fort Worth, the Puget Sound region, Minneapolis/St. Paul, and the San Francisco Bay area. The progression of congestion pricing through the planning process follows a unique path in each of these regions, based on each region's own history of attitudes towards pricing, jurisdictional relationships, and politics that influence how pricing is perceived. The case studies thus offer valuable lessons to support other MPOs seeking to do the same.

This primer builds on those four case studies, drawing on discussions from a series of four peer-to-peer practitioner workshops organized by FHWA. These one-day workshops were held in September 2011 in Atlanta, Chicago, Denver, and Washington, DC and involved presentations and discussions about challenges and opportunities for advancing congestion pricing in a regional context. The objective of the workshops was to provide technical assistance to help transportation practitioners understand the technical, institutional, political, and public involvement issues associated with planning and implementing congestion pricing strategies to advance regional goals. Participants at the workshops included MPO planners, Federal and State DOT staff, and representatives from transit agencies, tolling authorities, and consulting firms. The content of this primer has been developed primarily from the discussions that took place at these workshops.

The focus of the workshops was on the role of congestion pricing in supporting funding and regional goals and how to integrate pricing into metropolitan transportation plans. The workshops included sessions on lessons learned from experience with congestion pricing and metropolitan planning and included presentations and panel discussions by practitioners from different regions of the country who have implemented, planned, or conducted studies for congestion pricing programs. Through these sessions, workshop participants shared their perspectives and presenters provided insights from their experiences. This information forms the basis for this document and has been supplemented by a literature review, case studies of congestion pricing programs, and the results of the research on the impacts of these programs.

Types of Congestion Pricing Strategies to Consider in Regional Planning

There are a variety of ways to use price signals to reduce congestion in the transportation network. This primer defines five types of congestion pricing strategies, each of which works slightly differently, and a number of which can be used in combination. For a pricing strategy to be considered congestion pricing, it must vary by time of day or level of congestion or reward the use of higher occupancy vehicles so as to impact traffic flow directly. Some forms of congestion pricing only charge on individual lanes or segments of the system, providing an option for faster travel time for those willing to pay.

Variably Priced Lanes

Variably priced lanes are separated lanes on a roadway that involve variable tolls. The amount paid depends on the level of congestion in the area or the time of day (this is usually linked to expected levels of congestion), and may also vary based on the number of occupants in the vehicle.

The two main types of priced lanes are express toll lanes and high occupancy toll (HOT) lanes. Express toll lanes involve tolls that are set at a level to maintain a target speed or level of traffic flow. HOT lanes also consider the number of occupants in the vehicle, reducing or eliminating tolls for carpools, vanpools, or transit vehicles using the lane. Vehicles that do not meet the occupancy requirement may choose to use HOT lanes, but will have to pay a toll.

Lanes that were previously high occupancy vehicle (HOV) lanes can be converted to HOT lanes to allow vehicles not meeting the occupancy requirements to take advantage of the reduced travel time if they are willing to pay a higher toll. Transportation agencies can also choose to add express toll lanes or HOT lanes to existing highways.

Examples of Variably Priced Lanes State Route 91 in Orange County, California, began to price two lanes in 1995, with tolls varying by time of day, day of the week, and direction. Tolls can range from $1.20 to $10.00. The I-30 corridor in Dallas has two reversible express lanes allowing single occupancy vehicles (SOVs) to pay a fee and HOVs to pay up to 50 percent less than the SOV rate, with tolls set dynamically based on congestion.

Variably Priced Highways, Bridges, or Tunnels

In this approach, rather than pricing one lane of a general use highway, the entire highway, bridge, or tunnel facility is priced with variable tolls. Some portions of the facility might have minimal or no tolls at off-peak times, with these tolls increasing significantly at peak periods.

At present, no free roads within the United States have been fully converted to priced highways with all lanes tolled. However, new toll roads with variable pricing have been constructed (e.g., the Intercounty Connector in Maryland) and some bridges (e.g., bridges connecting New York City and New Jersey) have introduced variable pricing to help smooth the flow of traffic, allowing the road to move more vehicles per hour than it would under congested conditions. Under U.S. DOT's Urban Partnership Agreement program, regional partners in the Seattle area – the Puget Sound Regional Council (PSRC), the Washington State Department of Transportation (WSDOT) and King County – have introduced new tolls on State Route 520, setting toll rates on the facility based on demand.

Priced Zones

A priced zone levies a charge on vehicles entering or driving within a particular area – usually a central business district (CBD). This can be used to reduce traffic within a CBD by shifting trips to other modes or encouraging carpooling. There are two main ways to design a priced zone:

1. Cordon pricing involves setting a fee for all vehicles entering a CBD. The fee can be fixed or can be variable by time of day, congestion levels, vehicle type, or occupancy, as with other types of congestion pricing (e.g., lowering fees for commercial delivery trucks during off-peak hours or charging more during events or other particularly congested periods). Once the vehicle crosses into the zone and has paid the fee, the vehicle may move freely within the cordoned area.
2. Areawide pricing involves charging a vehicle a trip-based or distance-based fee (e.g., per mile) for driving within a designated area. This type of pricing charges drivers for how much they drive within a congestion pricing zone, not just for entering it. As with cordon pricing, the charge under area pricing may vary by time of day or vehicle characteristics. Although congestion reduction is often the primary objective, cities also seek to reduce emissions, noise, traffic accidents, and improve pedestrian access and enjoyment of public spaces and businesses.

Although cordon and areawide pricing approaches do not currently exist in any U.S. city, they have been proposed in New York City, Los Angeles, and San Francisco and have been implemented in cities internationally.

Examples of Priced Zones Stockholm has a cordon around the city center with charges to enter and leave the zone. In the initial trial period, there was a 22 percent drop in vehicle trips and bus ridership rose 9 percent. London's congestion pricing scheme charges £8 (about $12) to enter the central business district between 7 a.m. and 6:30 p.m., with exemptions for motorcycles, taxis, the disabled, alternative fuel vehicles, buses, and emergency vehicles. However, the fee does not vary based on congestion or time of day. Congestion reduced by 30 percent consistently in the first two years after implementation. Source: TRB Report 686, "Road Pricing: Public Perceptions and Program Development," Transportation Research Board, 2011.

Priced Road Networks

Pricing a road network can mean applying any of the strategies described above to a network of roadways, which may include freeways and arterials. This allows for the road network to be variably priced throughout the day, leading to a systemwide improvement in performance.

Pricing a network of roadways minimizes diversion effects (e.g., increased traffic on arterials from travelers trying to avoid tolls on the freeways can be prevented by setting charges on both to achieve optimal traffic flow). By pricing a larger number of facilities, a greater number of people are encouraged to change their travel behaviors.

The Puget Sound Regional Council (PSRC), the MPO for the Seattle region, studied the implications of a fully priced regional road network, and its long-range metropolitan transportation plan calls for full highway system tolling by approximately 2030.

Pricing not Involving Tolls (e.g., Variable Parking Pricing, Vehicle Miles Traveled Fees)

Transportation facilities can be priced using other methods besides tolls to manage congestion and increase incentives to shift the time of travel or mode used. Parking pricing can be implemented so that parking in congested areas at peak times is more costly, which increases the incentive to take alternative forms of transportation and frees up parking spots for those who are willing to pay, thereby reducing time (and driving) required to find a spot. Rates can also change based on length of time (e.g., charging by the minute or quarter hour, or increasing rates after the first hour) to encourage people to stay for shorter periods. For instance, SFPark in San Francisco is a program that aims to reduce congestion from cruising for parking by providing users with real-time information about parking availability both through a website as well as through smartphone applications and adjusting parking prices based on demand. Pricing based on vehicle miles traveled (or VMT-based fees) can involve a fee levied on a per-mile basis that can vary by location, time or day, or congestion levels. For instance, the State of Oregon has studied the application of mileage-based fees through a pilot project and tested technologies that allow higher rates within a designated congestion zone or when driving during peak-periods.¹

Organization of the Primer

This section described the common types of congestion pricing strategies that may be considered at the regional level along with examples of each, where available. Section 2 describes how each of the above types of congestion pricing strategies can be applied to support and advance planning goals in a region.

Following that, Section 3 addresses the important challenges related to planning and implementing congestion pricing and discusses public and decisionmaker acceptability, achieving regional collaboration, analytical limitations, legislative barriers, as well as a variety of other challenges discussed at the four workshops.

Section 4 provides potential solutions to these challenges using case examples from regions that have implemented them, with a focus on effective approaches for integrating congestion pricing into metropolitan transportation plans.

Section 5 provides insights on steps for getting started with advancing congestion pricing in regional plans and programs, which may be helpful for regions that want to get started in considering congestion pricing in a regional context.

The Resources section lists useful Federal, State, and local technical studies and guidance documents for further reference.