B-149811, DEC. 22, 1967

B-149811, DEC. 22, 1967

TO MR. SECRETARY:

BY LETTER RECEIVED SEPTEMBER 6, 1967, YOU TRANSMITTED A COPY OF AN OPINION OF YOUR GENERAL COUNSEL CONCLUDING THAT AUTHORITY EXISTS UNDER TITLE 23 OF THE U.S.C. TO APPROVE AS A FEDERAL-AID HIGHWAY PROJECT A CERTAIN PROPOSAL MADE BY THE STATE OF WEST VIRGINIA. WHILE YOU STATE AGREEMENT WITH THE CONCLUSION REACHED IN THE OPINION, IT IS YOUR DESIRE, IN LIGHT OF THE IMPORTANCE OF THE ISSUE INVOLVED, TO HAVE US CONSIDER THE QUESTION BEFORE YOUR DEPARTMENT PROCEEDS UNDER THE PROPOSAL.

FROM THE INFORMATION SET FORTH IN THE OPINION ACCOMPANYING YOUR LETTER, THE FACTS IN THE MATTER MAY BE SUMMARIZED AS FOLLOWS:

THE WEST VIRGINIA TURNPIKE COMMISSION WAS CREATED IN 1947 FOR THE PURPOSE OF CONSTRUCTING HIGHWAYS TO BE FINANCED BY REVENUE BONDS WHICH THE COMMISSION WAS AUTHORIZED TO ISSUE. TO FINANCE THE WEST VIRGINIA TURNPIKE, A CURRENTLY EXISTING TWO-LANE TOLL HIGHWAY RUNNING FROM CHARLESTON TO PRINCETON, WEST VIRGINIA, THE COMMISSION ISSUED CALLABLE REVENUE BONDS TOTALLING $133 MILLION WHICH MATURE DECEMBER 1, 1989. THE PROJECT WAS ORIGINALLY CONTEMPLATED AS A FOUR-LANE DIVIDED HIGHWAY. HOWEVER, ALTHOUGH THE COMMISSION ACQUIRED SUFFICIENT RIGHT-OF WAY TO BUILD A FOUR-LANE HIGHWAY, FINANCING CONSIDERATIONS MADE IT POSSIBLE TO CONSTRUCT ONLY A TOW-LANE FACILITY WITHOUT A MEDIAN.

IN 1963 THE TURNPIKE AS A TOLL ROAD, WAS APPROVED FOR INCLUSION AS PART OF THE FEDERAL INTERSTATE SYSTEM PURSUANT TO AUTHORITY CONTAINED IN SUBSECTION 129 (B) OF TITLE 23, UNITED STATES CODE. UNDER PRESENT STATUTORY STANDARDS CALLING FOR A MINIMUM OF FOUR LANES ON INTERSTATE HIGHWAY PROJECTS, THE TURNPIKE WOULD NOT BE ELIGIBLE FOR INCLUSION ON THE INTERSTATE SYSTEM. SEE 23 U.S.C. 109 (B).

THE FEDERAL HIGHWAY ADMINISTRATION AND THE HIGHWAY DEPARTMENT OF THE STATE OF WEST VIRGINIA HAVE AGREED UPON THE NEED FOR A FOUR-LANE DIVIDED HIGHWAY TO SERVE ESSENTIALLY THE SAME GENERAL CORRIDOR NOW SERVED BY THE TWO-LANE TURNPIKE CONSIDERED TO BE INADEQUATE. THE ACCIDENT DEATH RATE ON THE TURNPIKE IS REFERRED TO AS "ALARMING.'

TOLL REVENUES HAVE NOT MET EXPECTATIONS AND THE TURNPIKE REVENUE BONDS ARE IN DEFAULT BOTH AS TO PRINCIPAL AND INTEREST. UNDER THE TERMS OF THE BONDS, HOWEVER, THE OBLIGATIONS REPRESENTED THEREIN MAY BE ENFORCED ONLY AGAINST THE TOLL AND OTHER REVENUES OF THE COMMISSION AND DO NOT CONSTITUTE A DEBT OF THE STATE OF WEST VIRGINIA. UNTIL THE BONDS ARE PAID, THE COMMISSION IS OBLIGATED TO MAINTAIN THE HIGHWAY AS A TOLL FACILITY AND APPLY THE TOLLS TO PAYMENT OF THE BONDS.

THE STATE HAS PROPOSED, WITH 90 PERCENT FEDERAL PARTICIPATION UNDERSUBSECTION 120 (C) OF TITLE 23, U.S.C. TO SUBSTANTIALLY REBUILD THE TURNPIKE BY ADDING TWO 12-FOOT LANES RUNNING ESSENTIALLY PARALLEL TO THE EXISTING ROADWAY AND SEPARATED FROM THE EXISTING TWO-LANE CONCRETE STRIP BY A 40-FOOT DEPRESSED MEDIAN. THE ESTIMATED COST OF THE STATE'S PROPOSAL IS $178,500,000 WHICH INCLUDES $94,000,000 FOR ACQUISITION OF THE OUTSTANDING INTERESTS OF THE HOLDERS OF THE REVENUE BONDS. (WE UNDERSTAND THAT THE $94,000,000 FIGURE IS SOMETHING LESS THAN THE FULL OUTSTANDING BONDED INDEBTEDNESS AND IS BASED UPON ESTIMATED VALUE OF THE ASSETS MAKING UP THE TURNPIKE.)

THE ONLY ALTERNATIVE TO THE STATE'S PROPOSAL IS TO BUILD A TOTALLY NEW FOUR-LANE INTERSTATE HIGHWAY SEGMENT TO SERVE THE SAME GENERAL CORRIDOR NOW ALREADY SERVED BY THE TURNPIKE. THE ESTIMATED COST OF SUCH A FACILITY IS $203,800,000, WHICH, CONSIDERING THE 90 PERCENT FEDERAL PARTICIPATION, WOULD RESULT IN A FEDERAL EXPENDITURE OF $22,700,000 MORE THAN UNDER THE STATE'S PROPOSAL.

THE BASIC QUESTION FOR CONSIDERATION IN CONNECTION WITH THE STATE'S PROPOSAL IS WHETHER AUTHORITY EXISTS FOR FEDERAL PARTICIPATION IN THE COST TO THE STATE OF ACQUIRING AND EXTINGUISHING THE BONDHOLDERS' INTERESTS, IN VIEW OF THE GENERAL POLICY UNDER THE FEDERAL-AID HIGHWAY LAWS AGAINST REIMBURSEMENT TO STATES FOR THEIR INDEPENDENT INVESTMENTS IN HIGHWAYS LATER INCLUDED IN FEDERAL-AID SYSTEMS AND OF THE SPECIFIC PROHIBITION IN SUBSECTION OF 129 (B) AND SECTION 301 OF THE TITLE 23 AGAINST THE EXPENDITURE OF FEDERAL-AID HIGHWAY FUNDS ON TOLL HIGHWAYS INCORPORATED INTO THE INTERSTATE SYSTEM.

THE OPINION ACCOMPANYING YOUR LETTER REACHES AN AFFIRMATIVE CONCLUSION WITH RESPECT TO THE QUESTION POSED, ON THE BASIS OF A PERSUASIVE ANALYSIS OF THE UNDERLYING ISSUES INVOLVED. SINCE A PARAPHRASING OF THE RATIONALE FOLLOWED MAY NOT FAIRLY REPRESENT THE FULL FORCE OF THE ARGUMENTS MADE PERTINENT PORTIONS OF THE OPINION ARE QUOTED IN FULL: "SINCE IT IS OUR UNDERSTANDING THAT THE PROJECT WILL BE OPERATED AS A FREE ROAD AT SUCH TIME AS ANY FEDERAL FUNDS ARE PAID TO WEST VIRGINIA, WE DO NOT VIEW 23 U.S.C. SEC. 129 (B) AND 301 AS AFFECTING THE DEPARTMENT'S AUTHORITY TO APPROVE THE STATE'S PROPOSAL. WE CONSTRUE THESE PROVISIONS TO PROHIBIT THE EXPENDITURE OF FEDERAL AID HIGHWAY FUNDS FOR THE CONSTRUCTION OR RECONSTRUCTION OF A ROAD ON WHICH TOLLS WOULD BE CHARGED SUBSEQUENT TO THE EXPENDITURE OF FEDERAL MONEY. THE POLICIES ENUNCIATED IN THESE SECTIONS ARE NOT CONTRAVENED AS LONG AS THE FACILITY BECOMES TOLL-FREE AT THE TIME FEDERAL FUNDS ARE EXPENDED. FOR EXAMPLE, WE WOULD FIND NO PROHIBITION IN THESE SECTIONS TO THE USE OF FEDERAL-AID HIGHWAY FUNDS TO REIMBURSE A STATE FOR THE STATUTORILY AUTHORIZED PERCENTAGE OF THE COST OF ACQUIRING A PRIVATELY-OWNED TOLL ROAD OR TOLL BRIDGE WHICH WAS NECESSARY TO THE CONSTRUCTION OF A FREE FEDERAL-AID HIGHWAY PROJECT. "DISCUSSION

"1. THE EXPENSE OF ACQUIRING THE BONDHOLDERS' INTERESTS AND OTHER ASSETS OF THE COMMISSION NECESSARY FOR CONSTRUCTION OF THE PROJECT MAY BE PROPERLY TREATED AS COST OF RIGHT-OF-WAY ACQUISITION.

"THE COST OF ACQUISITION OF THE REVENUE BONDHOLDERS' INTERESTS AND OTHER NECESSARY ASSETS OF THE TURNPIKE COMMISSION IS A PART OF THE COST OF - CONSTRUCTION- WHICH, UNDER 23 U.S.C. SEC. 120 (C), THE FEDERAL GOVERNMENT MAY SHARE TO THE EXTENT OF 90 PERCENT. -CONSTRUCTION- IS DEFINED IN 23 U.S.C. SEC. 101 (A) TO INCLUDE -ALL EXPENSES INCIDENTAL TO THE CONSTRUCTION OR RECONSTRUCTION OF A HIGHWAY, INCLUDING ... COSTS OF RIGHTS -OF-WAY ...- RIGHT-OF-WAY, FOR HIGHWAY PURPOSES, MAY INCLUDE EQUITABLE AS WELL AS LEGAL INTERESTS; IT HAS BEEN DEFINED AS A GENERAL TERM DENOTING LAND, PROPERTY, OR INTEREST THEREIN ...- (AASHO HIGHWAY DEFINITIONS, PUBLISHED BY AMERICAN ASSOCIATION OF STATE HIGHWAY OFFICIALS, WASHINGTON, D.C., 1962, P. 8.) IN ADDITION, 23 U.S.C. SEC. 107, DEALING WITH ACQUISITION OF RIGHTS-OF-WAY, AUTHORIZES THE ACQUIRING OF LANDS OR - INTERESTS IN LANDS.- THERE CAN BE NO SERIOUS ARGUMENT THAT THE BONDHOLDERS DO NOT HAVE AN -INTEREST- IN THE WEST VIRGINIA TURNPIKE. WHATEVER ARGUMENTS ARE ADVANCED ON THE NICETIES OF TITLE AND WHETHER THE BONDHOLDERS' RIGHTS ARE CHARACTERIZED AS A LIEN, EASEMENT OR OTHERWISE, NEITHER THE STATE NOR THE COMMISSION CAN DEVOTE THE PROPERTY TO ANY USE EXCEPT IN CONFORMANCE WITH THE BONDHOLDERS' RIGHTS AND INTERESTS. UNDER WEST VIRGINIA LAW THE BONDHOLDERS' INTEREST IS APPARENTLY AN "EQUITABLE LIEN" WHICH IS SUBJECT TO ACQUISITION BY THE STATE IN EMINENT DOMAIN PROCEEDINGS. SEE OPINION OF THE WEST VIRGINIA STATE ROAD COMMISSION, FEBRUARY 6, 1967.

"THE TEST OF WHAT MAY PROPERLY BE CONSIDERED AS -RIGHT-OF-WAY- FOR A PARTICULAR HIGHWAY PROJECT SHOULD INCLUDE THE REAL ESTATE AND THOSE LEGAL AND EQUITABLE INTERESTS TO WHICH THE REAL ESTATE IS SUBJECT, WHICH MUST BE ACQUIRED IN ORDER TO COMPLETE THE PROPOSED HIGHWAY PROJECT. THE RIGHTS OF THE BONDHOLDERS, WHETHER CONSIDERED AS EQUITABLE OR LEGAL INTERESTS IN THE EXISTING WEST VIRGINIA TURNPIKE; MEET THIS TEST; FOR, IF THE STATE DOES NOT ACQUIRE THESE INTERESTS, IT CANNOT PROCEED WITH THE CONSTRUCTION OF THE PROJECT WHICH IT HAS PROPOSED.

"IT IS MY CONCLUSION THAT WEST VIRGINIA'S COSTS OF ACQUISITION AND EXTINGUISHMENT OF THE REVENUE BONDHOLDERS' INTERESTS, INTERESTS WHICH MUST BE ACQUIRED IN ORDER TO PROCEED WITH THE PROPOSED FEDERAL-AID PROJECT, CAN BE PROPERLY CONSIDERED AS A COST OF RIGHT-OF-WAY ACQUISITION FOR WHICH THE STATE MAY BE REIMBURSED (TO THE EXTENT OF 90 PERCENT OF SUCH COSTS) PURSUANT TO 23 U.S.C. SEC. 120 (C). THE FACT THAT THE DEBT TO THE BONDHOLDERS MAY BE PARTIALLY SATISFIED BY THE ACQUISITION OF THEIR INTERESTS IS NOT OF SIGNIFICANCE TO THE LEGAL ISSUE BEFORE US. AUTHORITY EXISTS UNDER TITLE 23 FOR FEDERAL PARTICIPATION IN THE COST OF ACQUIRING RIGHT-OF-WAY SUBJECT TO THE LIEN OF A MORTGAGE OR THE LIEN OF A JUDGMENT CREDITOR, EVEN THOUGH THE DEBTS TO THE MORTGAGEE AND THE CREDITOR ARE SATISFIED IN THE TRANSACTION. AS POINTED OUT ABOVE, THE PROJECT PROPOSED BY WEST VIRGINIA ACHIEVES ALMOST A $23 MILLION SAVING IN FEDERAL FUND EXPENDITURE AS AGAINST ANY ALTERNATIVE APPROACH--A SIGNIFICANT BENEFIT FOR THE GOVERNMENT AND THE TAXPAYERS.

"2. THE PROPOSED PROJECT IS NOT INCONSISTENT WITH ANY GENERAL POLICY AGAINST REIMBURSEMENT TO THE STATES FOR THEIR PRIOR EXPENDITURES IN EXISTING HIGHWAYS.

"AS INDICATED IN THE PREVIOUS DISCUSSION, I BELIEVE THAT AUTHORITY EXISTS UNDER TITLE 23 TO APPROVE THE PROPOSED PROJECT. HOWEVER IT MAY BE ARGUED THAT APPROVAL WOULD CONFLICT WITH A GENERAL POLICY, MANIFESTED IN THE LEGISLATIVE HISTORY OF THE FEDERAL-AID HIGHWAY ACT OF 1956 AND SUBSEQUENTLY INTRODUCED LEGISLATION AGAINST REIMBURSEMENT OF THE STATES FROM THE HIGHWAY TRUST FUND FOR THEIR INVESTMENT IN HIGHWAYS LATER INCLUDED IN FEDERAL-AID SYSTEMS. UNDER THE SPECIFIC CIRCUMSTANCES PRESENTED IN THIS CASE, I WOULD NOT CONSIDER SUCH A CONTENTION TO BE VALID.

"WHATEVER MAY BE THE PRECISE PERIMETERS OF SUCH A POLICY, IT MUST HAVE AS ITS RATIONALE, NOT A DETERMINATION THAT REIMBURSEMENT TO THE STATES FOR THEIR CONTRIBUTION TO THE INTERSTATE SYSTEM IS PER SE AGAINST PUBLIC POLICY, BUT RATHER A DESIRE TO CONSERVE THE HIGHWAY TRUST FUND IN ORDER THAT A MAXIMUM NUMBER OF ADEQUATE AND SAFE HIGHWAYS CAN BE CONSTRUCTED. CERTAINLY THAT OBJECT IS SERVED WHERE THE NEED FOR A HIGHWAY IN THE TURNPIKE CORRIDOR WHICH MEETS PRESENT INTERSTATE SYSTEM STANDARDS HAS BEEN CLEARLY ESTABLISHED AND THE CHEAPEST OF THE ALTERNATIVES TO THE PROPOSAL ADVANCED BY WEST VIRGINIA WILL DRAIN THE HIGHWAY TRUST FUND BY ALMOST $23 MILLION MORE THAN THE STATE'S PROPOSAL. ADOPTION OF THE ALTERNATIVE APPROACH TO WEST VIRGINIA'S PROPOSAL (I.E., BUILDING A SEPARATE FREE INTERSTATE HIGHWAY IN THE SAME CORRIDOR SERVED BY THE TURNPIKE) WOULD ALSO APPEAR INCONSISTENT WITH A GENERALLY FOLLOWED POLICY OF AVOIDING, WHERE PRACTICABLE, THE CONSTRUCTION OF FEDERAL-AID HIGHWAYS SO LOCATED "AS TO BE IN DIRECT COMPETITION WITH TOLL ROADS" INCLUDED ON THE INTERSTATE SYSTEM. SEE, E.G., P. 15, REPORT OF THE COMMITTEE ON PUBLIC WORKS OF THE HOUSE OF REPRESENTATIVES, HOUSE REPORT NO. 2022 (1956).

"CERTAINLY THE FACT THAT IN THIS CASE A USEABLE CONCRETE STRIP EXISTS ON THE RIGHT-OF-WAY WITH RESPECT TO WHICH THE NECESSARY INTERESTS ARE TO BE ACQUIRED CANNOT BE VIEWED AS RELEVANT TO THE ISSUE OF WHETHER ACQUISITION OF A PARTICULAR PARCEL OF REAL ESTATE OR INTEREST IN IT IS PROPERLY CLASSED AS -RIGHT-OF-WAY- ACQUISITION. IN ACQUIRING RIGHT-OF-WAY FOR HIGHWAY PURPOSES, STATES MAY RECOGNIZE AND PAY FOR THE VALUE OF IMPROVEMENTS UPON THE LAND. THIS IS SO SINCE IT IS THE NATURE OF THE INTEREST BEING ACQUIRED WHICH IS CRUCIAL RATHER THAN THE NATURE OF THE LAND OR THE NATURE OF THE IMPROVEMENTS UPON THE LAND. THIS WOULD BE THE CASE EVEN WHERE THE IMPROVEMENT WAS A PRIVATELY BUILT AND OWNED ROAD SUCH AS ONCE WERE COMMON IN THE UNITED STATES; AND WE WOULD FIND AMPLE AUTHORITY FOR FEDERAL PARTICIPATION IN A STATE'S COST OF ACQUISITION AS RIGHT-OF-WAY OF A PRIVATELY-OWNED ROAD WHICH WAS TO BE INCORPORATED BY THE STATE INTO ONE OF THE FEDERAL AID HIGHWAY SYSTEMS. IT FOLLOWS THAT NO COGENT ARGUMENT CAN BE MADE FOR THE PROPOSITION THAT A DETERMINATION AS TO WHETHER A PARTICULAR PROJECT CONFLICTS WITH SOME GENERAL POLICY AGAINST REIMBURSEMENT OF THE STATES FOR THEIR PRIOR INVESTMENT IN EXISTING PUBLIC HIGHWAYS CAN REST MERELY ON THE CHARACTER OF THE IMPROVEMENTS ON THE RIGHT -OF-WAY ACQUIRED FOR THE PROJECT.

"NOR CAN THE STATUS OF TITLE TO THE REAL ESTATE ON WHICH THE WEST VIRGINIA TURNPIKE RUNS BE CONSIDERED RELEVANT IN DETERMINING WHETHER FEDERAL PARTICIPATION IN THE EXPENSE OF ACQUIRING THE INTERESTS OF THE BONDHOLDERS, WITH RESPECT TO THAT SAME REAL ESTATE, IS PROPER REIMBURSEMENT UNDER TITLE 23 FOR RIGHT-OF-WAY ACQUISITION COSTS OR WOULD BE INCONSISTENT WITH A GENERAL POLICY AGAINST REPAYMENT OF THE STATES FOR PREVIOUS INVESTMENTS IN PUBLIC ROADS. AS PREVIOUSLY MENTIONED, THE DEED TO THE WEST VIRGINIA TURNPIKE SHOWS THE GRANTEE AS THE "WEST VIRGINIA TURNPIKE COMMISSION AS AN AGENCY OF, FOR AND IN THE NAME OF THE STATE OF WEST VIRGINIA.' THE TITLE ISSUE IS FURTHER CONFUSED BY A COURT DECISION HOLDING THAT THE COMMISSION DOES NOT ENJOY THE STATE'S SOVEREIGN IMMUNITY FROM SUIT AND MAY, IN FACT, HAVE THE STATUS OF A SEPARATE AND "INDEPENDENT AGENCY.' HOPE NATURAL GAS COMPANY V. WEST VIRGINIA TURNPIKE COMMISSION, 143 W.VA. 913, 105 S.E. 2D 630 (1958). WHATEVER MAY BE ARGUED AS TO THE PRECISE STATUS OF TITLE TO THE FEE INTEREST IN THE REAL ESTATE, THE INTERESTS OF THE BONDHOLDERS ARE PRIVATELY-OWNED AND THE STATE HAS NO RIGHTS WITH RESPECT TO THOSE INTERESTS. THE SITUATION CAN BE COMPARED TO A CASE WHERE A STATE HOLDS TITLE TO LAND WHICH IT HAS LEASED TO A PRIVATE CITIZEN OR ON WHICH A PRIVATE CITIZEN HOLDS AN EASEMENT. IN SUCH CIRCUMSTANCES WE WOULD FIND AUTHORITY FOR THE STATE'S ACQUISITION OF THE OUTSTANDING LEASEHOLD OR EASEMENT AS RIGHT-OF-WAY IN CONNECTION WITH A FEDERAL-AID HIGHWAY PROJECT. IT MAY BE NOTED THAT THE BUREAU OF PUBLIC ROADS HAS FOR SEVERAL YEARS VIEWED THE POLICY AGAINST "REIMBURSEMENT" AS NOT PROHIBITING THE PARTICIPATION OF FEDERAL FUNDS IN THE COSTS OF ACQUIRING RIGHTS-OF-WAY OVER LANDS ALREADY OWNED BY THE STATE "WHEN SUCH COSTS ACTUALLY RESULT IN DISBURSEMENTS FROM PUBLIC HIGHWAY FUNDS OF THE ACQUIRING AGENCY.' (BPR POLICY AND PROCEDURE MEMORANDUM 21-4. 1 DATED DECEMBER 30, 1960, SECTION 3A (3) ). THUS, THE MERE FACT THAT LEGAL TITLE TO THE LAND AND ROADWAY MAY BE IN THE STATE NO MORE SERVES TO BRING THIS CASE IN CONFLICT WITH ANY GENERAL POLICY AGAINST REIMBURSEMENT OF THE STATES FOR PRIOR HIGHWAY INVESTMENTS THAN WOULD THE FACT THAT LEGAL TITLE TO UNIMPROVED LAND TO BE USED FOR HIGHWAY PURPOSES IS ALREADY IN THE STATE. "CONCLUSION

"I CONCLUDE THAT THE STATE'S REASONABLE EXPENSES FOR ACQUISITION OF THE REVENUE BONDHOLDERS' INTERESTS AND OTHER REQUIRED ASSETS OF THE COMMISSION SHOULD BE TREATED UNDER TITLE 23 U.S.C. AS AMOUNTS EXPENDED FOR THE ACQUISITION OF RIGHT-OF-WAY NECESSARY AND INCIDENT TO THE CONSTRUCTION OF A TOLL-FREE FEDERAL-AID PROJECT, AND THAT THE APPROVAL OF WEST VIRGINIA'S PROPOSED PROJECT AND THE PARTICIPATION OF FEDERAL FUNDS IN THE PROJECT IS AUTHORIZED.

"I NOTE WITH SPECIAL EMPHASIS THE PRESENCE OF THE FOLLOWING ELEMENTS IN REACHING THIS CONCLUSION:

"1. IN ORDER TO PROCEED WITH THE PROPOSED PROJECT THE STATE MUST ACQUIRE THE OUTSTANDING PRIVATELY-HELD INTERESTS RELATING TO THE LAND AND ROADWAY.

"2. THE ACQUISITION OF THESE INTERESTS AS RIGHT-OF-WAY IS IN CONNECTION WITH AND INCIDENT TO THE CONSTRUCTION OF A SUBSTANTIALLY NEW HIGHWAY FACILITY. FEDERAL FUNDS WILL NOT BE PAID MERELY IN CONSIDERATION FOR THE INCORPORATION OF THE HIGHWAY ONTO A FEDERAL-AID SYSTEM.

"3. THE NEW CONSTRUCTION IN THE CONTEMPLATED PROJECT IS SUBSTANTIAL IN NATURE AND CANNOT BE VIEWED AS MINOR IN PROPORTION TO THE TOTAL FUNDS TO BE EXPENDED SO AS TO CONSTITUTE A PATENT EVASION OF ANY POLICY AGAINST - REIMBURSEMENT- OF THE STATES FOR THEIR PREVIOUS INVESTMENT IN EXISTING PUBLIC HIGHWAYS.

"4. THE PAYMENTS IN WHICH THE FEDERAL GOVERNMENT WILL PARTICIPATE WOULD BE PAID OUT BY THE STATE AS PART OF THE COST OF ACQUIRING PRIVATELY-HELD INTERESTS.

"5. THE CONSTRUCTION IS URGENTLY REQUIRED IN ORDER TO BRING THE HIGHWAY UP TO THE PRESENT SAFETY AND OTHER GEOMETRIC STANDARDS FOR THE INTERSTATE SYSTEM.

"6. THE PROJECT RESULTS IN A SUBSTANTIAL SAVING IN HIGHWAY TRUST FUND EXPENDITURES AS AGAINST ANY ALTERNATIVE PLAN.'

WHILE THE VALIDITY OF THE ARGUMENTS PRESENTED IS NOT FREE FROM DOUBT, THE ISSUE INVOLVED IS OF SUFFICIENT IMPORT IN TERMS OF THE DESIGN AND SAFETY OF THE INTERSTATE SYSTEM TO COMPEL US TO SEEK THE MOST LIBERAL POSSIBLE CONSTRUCTION OF THE AUTHORITIES INVOLVED.

THE DOUBT WE HAVE RESTS PRIMARILY IN WHETHER IT MAY BE PROPERLY SAID THAT THE COST OF EXTINGUISHING THE BONDHOLDERS' INTERESTS (FOR THAT IS WHAT IS ULTIMATELY INVOLVED) IS A COST OF UNDERTAKING THE NEW FOUR-LANE HIGHWAY TO BE CONSTRUCTED RATHER THAN A COST OF LIQUIDATING AN INDEBTEDNESS FOR STATE HIGHWAY CONSTRUCTION ALREADY ACCOMPLISHED. AS SUGGESTED EARLIER, THE OPINION ACCOMPANYING YOUR LETTER MAKES A PERSUASIVE CASE FOR AN AFFIRMATIVE CONCLUSION IN THIS REGARD. NEVERTHELESS, AFTER CAREFUL CONSIDERATION WE HAVE SOME DIFFICULTY IN CONCLUDING THAT THESE COSTS MAY PROPERLY BE VIEWED, IN THIS CONTEXT ALONE, AS ASSOCIATED WITH THE COSTS OF THE NEW CONSTRUCTION TO BE UNDERTAKEN.

HOWEVER, THERE ARE SECONDARY CONSIDERATIONS WHICH RELATE TO THE GENERAL SPIRIT OF THE FEDERAL-AID HIGHWAY LAWS AND THE OVERALL PURPOSES TO BE ACCOMPLISHED THEREUNDER WHICH CAUSE US TO LOOK FURTHER THAN THE QUESTION OF WHETHER THERE IS INVOLVED A COST OF CONSTRUCTION AS SUCH.

MOST PERTINENT ARE THE CONSIDERATIONS OF SAFETY AND OF ROUTE DESIGNATION FROM THE STANDPOINTS OF ECONOMY, TRAVELER CONVENIENCE, INTEGRATION OF VARIOUS HIGHWAY SEGMENTS, ETC. STARTING FROM THE PROPOSITION THAT THE FEDERAL GOVERNMENT IS CLEARLY AUTHORIZED TO PARTICIPATE IN THE COST OF CONSTRUCTING A TOTALLY NEW FOUR-LANE HIGHWAY FACILITY TO SERVE THE NEEDS FOR WHICH IT IS DESIRED TO EXPAND THE EXISTING TWO-LANE TOLL FACILITY, QUESTION ARISES AS TO WHETHER SUCH A SOLUTION SHOULD BE FORCED EVEN THOUGH IT MIGHT WELL BE RECOGNIZED THAT THE OVERALL OBJECTIVES OF THE FEDERAL-AID HIGHWAY PROGRAM ARE NOT BEST SUBSERVED THEREBY.

IT IS TRUE THAT UNDER THE PROPOSED PLAN THE STATE OF WEST VIRGINIA AND THE TURNPIKE BONDHOLDERS WILL IN SOME MEASURE BENEFIT THROUGH LIQUIDATION OF WHAT APPEARS TO BE A NONPROFITABLE HIGHWAY VENTURE. BUT WE DO NOT BELIEVE THAT SUCH INCIDENTAL BENEFIT NEED NECESSARILY DETER FULFILLMENT OF THE DESIRED HIGHWAY OBJECTIVES IN THE MOST ECONOMICAL AND PRACTICAL MANNER POSSIBLE.

IT IS OUR OPINION THAT THE ANSWERS TO THE QUESTION OF WHETHER OR NOT YOU ARE AUTHORIZED TO PROCEED AS PROPOSED IN YOUR LETTER MAY WELL BE DEPENDENT UPON THE RESOLUTION OF MANY FACTUAL AND JUDGMENT ASPECTS. FOR EXAMPLE, IT IS NOT MADE CLEAR AS TO HOW THE FIGURE OF $94 MILLION FOR THE COST OF EXTINGUISHING THE BONDHOLDERS' INTERESTS HAS BEEN DETERMINED. YOUR ESTIMATED SAVINGS OF $22,700,000 IS, OF COURSE, DEPENDENT UPON THE ACCURACY OF THIS FIGURE. WE UNDERSTAND THE $94 MILLION TO BE BASED UPON AN ESTIMATE OF THE UNDERLYING ASSET VALUE OF THE TURNPIKE ITSELF. MIGHT WELL TURN OUT THAT THE BONDHOLDERS WILL BE ABLE TO COMMAND CONSIDERABLY IN EXCESS OF SUCH AMOUNT AS THE PRICE OF ELIMINATING THEIR RIGHT TO INSIST UPON THE ASSESSMENT AND COLLECTION OF TOLLS. AND IT IS NOT BEYOND POSSIBILITY THAT THE BONDHOLDERS COULD SUCCESSFULLY ESTABLISH THEIR ENTITLEMENT TO THE FULL OUTSTANDING INDEBTEDNESS ON THEIR BONDS IN THE EVENT THE STATE OF WEST VIRGINIA OR THE UNITED STATES, ON ITS BEHALF, ATTEMPTED TO ACQUIRE THE RIGHT TO ELIMINATE TOLLS. INDEED, WE WOULD RECOMMEND THAT YOU CONSIDER LIMITING FEDERAL PARTICIPATION IN THE COST OF ELIMINATING THE BONDHOLDERS' INTERESTS TO A STATED PERCENTAGE OF MARKET VALUE AT SOME PREVIOUS DATE. OF COURSE, THE RISKS INHERENT IN THIS REGARD, AND WITH RESPECT TO OTHER FACTORS THAT WILL AFFECT ULTIMATE COSTS, MUST BE WEIGHED IN REACHING THE FINAL DETERMINATION TO BE MADE. BUT NOTWITHSTANDING SUCH RISKS, IF THE SITUATION WITH RESPECT TO THE WEST VIRGINIA TURNPIKE IS SUCH AS TO DICTATE A SOLUTION ALONG THE LINES YOU PROPOSE AS BEST MEETING THE OVERALL OBJECTIVES OF THE FEDERAL-AID HIGHWAY PROGRAM, PARTICULARLY CONCERNING THE INORDINATELY HIGH ACCIDENT RATE EXPERIENCE, WE HESITATE TO ENJOIN THAT SOLUTION SOLELY ON THE BASIS OF OUR DOUBTS AS TO YOUR AUTHORITY.

ORDINARILY WHERE THE QUESTION OF LEGAL AUTHORITY TURNS UPON QUESTIONABLE FACTUAL AND JUDGMENT ASPECTS, WE WOULD CONCUR IN A PROPOSAL PRESENTED FOR OUR CONSIDERATION SUBJECT, OF COURSE, TO THE REQUISITE ADMINISTRATIVE DETERMINATIONS BEING MADE BY THE HEAD OF THE AGENCY INVOLVED. HOWEVER, IN THE CIRCUMSTANCES HERE INVOLVED THE FACTUAL AND JUDGMENT ASPECTS ARE SO INTERWOVEN WITH OUR DOUBTS CONCERNING THE PROPRIETY OF PROCEEDING WITHOUT LEGISLATIVE APPROVAL BEYOND WHAT MIGHT POSSIBLY BE INTERPRETED AS BEING EMBODIED IN TITLE 23 OF THE UNITED STATES CODE, THAT WE BELIEVE THAT SOME INDICATION OF CONGRESSIONAL APPROVAL MUST BE OBTAINED.

ACCORDINGLY, YOU ARE ADVISED THAT WE WILL NOT OBJECT TO IMPLEMENTATION OF THE PROPOSAL IN QUESTION PROVIDED THE COMMITTEES ON PUBLIC WORKS OF BOTH THE SENATE AND HOUSE OF REPRESENTATIVES ARE GIVEN AN OPPORTUNITY TO REVIEW THE PROPOSAL AND INDICATE THEIR AGREEMENT THEREWITH.

COPIES OF THIS LETTER ARE BEING FURNISHED TO THE RESPECTIVE CHAIRMEN OF THE COMMITTEES REFERRED TO. ..END :