The Biden administration Friday granted long-awaited federal approval to New York’s Metropolitan Transportation Authority’s first-in-the-nation congestion pricing plan.
The Federal Highway Administration approved the MTA’s environmental assessment for the Central Business District Tolling Program, commonly known as congestion pricing, and released a draft “finding of no significant impact” that will be up for public review for 30 days, after which the FHWA will make its final determination.
The approval, which comes after years of delay, marks the final federal hurdle before the MTA can move forward with its plan, which would toll drivers south of 60th Street in Manhattan. The MTA has said it aims to launch the plan in early 2024.
A six-member Traffic Mobility Review Board will shape key factors like toll rates and exemptions.
Federal approval is required because some of the roads are part of the National Highway System and receive federal funding.
While a number of U.S. states have implemented High-Occupancy Vehicle lanes with dynamic tolls depending on the level of traffic, New York City would be the first to charge all motorists for driving into its core. The cities of London and Singapore have similar plans.
Transit agencies across the country, including the MTA, are struggling with low ridership and insufficient traditional funding sources.
Passed by the state in 2019, the MTA’s Central Business District Tolling program would charge tolls ranging from $9 to $23 for vehicles.
The MTA is one of the largest issuers in the muni market, with roughly $41 billion of outstanding bonds. The congestion tax is projected to generate $1 billion a year. The agency has said it would issue up to $15 billion muni bonds backed by the new revenue, which would be in a lockbox, to generate $15 billion toward a $55 billion capital plan.
New York Gov. Kathy Hochul is a key supporter, saying tolls would cut traffic, improve air quality and support public transit.
“We will continue to work with our partners to move congestion pricing forward,” said Hochul spokesperson John Lindsay in an email.
Prominent critics include New Jersey Gov. Phil Murphy, who said Friday that his administration is looking into legal options — and working with the newly formed Congressional Anti-Congestion Tax Caucus — to halt the plan.
“Since day one, I’ve stood against the disproportionate negative impacts of congestion pricing on New Jerseyans – a greater financial burden on New Jersey commuters, double tolling, toll shopping, a lack of revenue for NJ TRANSIT, outsized environmental burdens on certain North Jersey communities, and financial impacts on the Port Authority’s capital budget,” Murphy said. “As a conceptual matter, I support congestion pricing, but it must be structured in a way that is fair to all sides.”
The MTA released its environmental assessment in August 2022. The assessment found that 85% of trips made to the central business district are made by transit, 5% by car from New York City, 3% by car from New York suburban counties, 3% by car from New Jersey, and 4% by other modes like taxis or bicycles. The congestion pricing plan would reduce the number of vehicles entering the CBD by 15.4% to 19.9%, depending on the final tolling scenario, and prompt a 1% to 2% increase in transit ridership, the assessment said.