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entitled 'Interstate Compacts: Transparency and Oversight of Bi-State 
Tolling Authorities Could Be Enhanced' which was released on September 
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United States Government Accountability Office: 
GAO: 

Report to the Chairman, Committee on Commerce, Science and 
Transportation, U.S. Senate: 

August 2013: 

Interstate Compacts: 

Transparency and Oversight of Bi-State Tolling Authorities Could Be 
Enhanced: 

GAO-13-687: 

GAO Highlights: 

Highlights of GAO-13-687, a report to the Chairman, Committee on 
Commerce, Science and Transportation, U.S. Senate. 

Why GAO Did This Study: 

The Northeast is home to some of the most highly traveled interstate 
crossings in the United States, funded by toll revenues collected from 
the traveling public. Since 1921, Congress has provided its consent to 
New York, New Jersey, Pennsylvania, and Delaware to enter into legal 
agreements known as interstate compacts, establishing four bi-state 
tolling authorities to build and maintain toll bridges and tunnels. In 
recent years, bi-state tolling authorities have come under scrutiny 
for toll increases and other concerns, and GAO was asked to review 
their toll-setting decisions and oversight framework. GAO examined: 
(1) the authority of bi-state tolling authorities to set and use tolls 
and the factors that influence toll setting; (2) the extent to which 
the authorities involve and inform the public in toll-setting 
decisions; and (3) the extent to which the authorities are subject to 
external and internal oversight. GAO reviewed federal and state laws, 
bi-state tolling authority documents, and interviewed officials from 
the authorities and state audit offices. GAO does not make 
recommendations to non-federal entities; nonetheless the authorities 
could benefit from greater transparency in public involvement and 
clearer lines of external oversight. DOT had no comments on a draft of 
this report and three authorities provided technical comments, which 
GAO incorporated as appropriate. In addition, the Port Authority of 
New York and New Jersey disagreed, stating its policies constituted a 
documented public involvement process. GAO maintains that these 
policies were not publicly available, or a defined and structured 
process. 

What GAO Found: 

Bi-state tolling authorities have broad authority to set toll rates 
and use revenues for a range of purposes, including maintaining, 
repairing, and improving their infrastructure. In setting tolls, bi-
state tolling authorities are primarily influenced by debt obligations 
and maintain specific operating revenues to repay their debt. A 
federal statute requiring bridge tolls to be “just and reasonable” has 
less influence on tolling decisions, in part, because no federal 
agency has authority to enforce the standard. 

Bi-state tolling authorities are not required to follow federal or 
general state requirements for involving and informing the public; 
they set their own policies that can be less stringent than practices 
of transportation agencies that follow federal or state requirements. 
In their most recent toll increases, the bi-state authorities 
generally provided the public limited opportunities to learn about and 
comment on proposed toll rates before they were approved. For example, 
one bi-state authority did not hold any public toll hearings, while 
another provided one day for hearings. In contrast to federal and 
general state requirements and leading practices, the bi-state 
authorities did not in all cases (1) have documented public 
involvement procedures for toll setting; (2) provide the public with 
key information on the toll proposals in advance of public hearings; 
(3) offer the public sufficient opportunities to comment on toll 
proposals; and (4) provide a public summary of comments received 
before toll increases were approved. 

External oversight of the bi-state authorities is limited as only one 
of the four authorities has been regularly audited by a state audit 
entity. While these audits have uncovered areas of concern, the 
authority of most state audit entities to oversee the bi-state 
authorities is unclear. Differences in states’ laws and disagreements 
between the bi-state authorities and state audit agencies have raised 
questions about the authority of several states to provide oversight. 
Each of the four bi-state authorities provides some internal 
oversight, but one has not established access authority for its 
inspector general, which, as a result, lacks an assurance of 
independence. Because internal auditors are generally not required 
under internal audit standards to report to outside audiences, the 
public may lack knowledge of their efforts to ensure accountability 
for the use of toll revenues. 

Table: Interstate Bridges and Tunnels Owned by Bi-State Tolling 
Authorities: 

Bi-State authority: Delaware River and Bay Authority; 
Tolled interstate bridges and tunnels: 1 toll bridge: Delaware 
Memorial Bridge. 

Bi-State authority: Delaware River Joint Toll Bridge Commission; 
Tolled interstate bridges and tunnels: 7 toll bridges, including the 
I-78, Milford-Montague, Delaware Water Gap, and Portland-Columbia 
Bridges. 

Bi-State authority: Delaware River Port Authority; 
Tolled interstate bridges and tunnels: 4 toll bridges, including the 
Ben Franklin, Betsy Ross, Walt Whitman, and Commodore Barry Bridges. 

Bi-State authority: Port Authority of New York and New Jersey; 
Tolled interstate bridges and tunnels: 4 toll bridges, 2 toll tunnels, 
including the George Washington, Bayonne, and Goethals Bridges; 
Holland, and Lincoln Tunnels. 

Source: GAO. 

[End of table] 

View GAO-13-687. For more information, contact Susan Fleming at (202) 
512-2834 or flemings@gao.gov. 

[End of section] 

Contents: 

Letter: 

Background: 

Bi-State Tolling Authorities Have Broad Authority to Set and Use 
Tolls, and Tolling Decisions Are Primarily Influenced by Debt Rather 
Than Federal Toll Provisions: 

Bi-State Authorities Are Generally Not Subject to Federal or State 
Requirements for Public Involvement and Provided the Public Limited 
Opportunities to Participate in Recent Toll-Setting Decisions: 

External Oversight of Bi-State Tolling Authorities Has Been Limited, 
But Bi-State Authorities Have Established Some Internal Oversight: 

Concluding Observations: 

Agency Comments and Our Evaluation: 

Appendix I: Objectives, Scope, and Methodology: 

Appendix II: Discussion of the Federal "Just and Reasonable" Standard 
and Significant Federal Administrative and Court Decisions Addressing 
Toll Increase Challenges: 

Appendix III: Public Involvement in Toll Increases by Bi-State Tolling 
Authorities: 

Appendix IV: Summary of States' Reported Audit Authority over the Four 
Bi-state Tolling Authorities: 

Appendix V: GAO Contact and Staff Acknowledgments: 

Tables: 

Table 1: Facilities Managed by the Four Bi-State Tolling Authorities 
with Interstate Compacts: 

Table 2: Bi-State Tolling Authorities' Current Passenger-Vehicle Cash 
Toll Rates and 2011 Operating Revenues: 

Table 3: Bi-State Tolling Authorities' Bond Debt Principal and Total 
Debt Service Cost, as of December 2011: 

Figure: 

Figure 1: Timeline of Public Involvement in Most Recent Toll Increases 
by Bi-state Tolling Authorities: 

Abbreviations: 

DRBA: Delaware River and Bay Authority: 

DRJTBC: Delaware River Joint Toll Bridge Commission: 

DRPA: Delaware River Port Authority: 

DOT: Department of Transportation: 

FHWA: Federal Highway Administration: 

FTA: Federal Transit Administration: 

MPO: metropolitan planning organization: 

NJDOT: New Jersey Department of Transportation: 

PANYNJ: Port Authority of New York and New Jersey: 

PATCO: Port Authority Transit Corporation: 

PATH: Port Authority Trans-Hudson: 

[End of section] 

GAO:
United States Government Accountability Office: 
441 G St. N.W. 
Washington, DC 20548: 

August 15, 2013: 

The Honorable John D. Rockefeller IV: 
Chairman: 
Committee on Commerce, Science and Transportation: 
United States Senate: 

Dear Mr. Chairman: 

The Northeast is home to some of the most highly-traveled interstate 
crossings in the United States, including the George Washington and 
Delaware Memorial Bridges, which are funded by toll revenues collected 
from the traveling public. These toll bridges, along with more than a 
dozen others as well as several tunnels, are owned and maintained by 
several entities, which we refer to as bi-state tolling authorities. 
These authorities are created through legal agreements, known as 
interstate compacts, between two or more states to act cooperatively 
to address matters of interest to both states, such as operating ports 
and interstate toll crossings. Congress must give its consent to 
states to enter into interstate compacts that affect the balance of 
power between the federal government and the states or affect a power 
constitutionally assigned to the federal government, such as the power 
to regulate interstate commerce. With Congress' consent, Delaware, New 
Jersey, New York, and Pennsylvania have entered into interstate 
compacts and created four bi-state tolling authorities to build, 
maintain, and operate certain interstate crossings. 

Since 1921, Congress has granted its consent to a total of seven 
interstate compacts to manage toll bridges or tunnels crossing state 
boundaries; four of those compacts are currently administered by bi-
state state tolling authorities: the Delaware River and Bay Authority 
(DRBA), the Delaware River Joint Toll Bridge Commission (DRJTBC), the 
Delaware River Port Authority (DRPA), and the Port Authority of New 
York and New Jersey (PANYNJ).[Footnote 1] These bi-state tolling 
authorities are primarily funded through toll collections or from 
revenues generated by other activities--such as fees and rents from 
airports, maritime ports, or other assets they may own and manage--and 
generally do not receive state funds. For example, the DRBA owns and 
manages the Delaware Memorial Bridge connecting New Jersey and 
Delaware, five regional airports, two ferry lines operating on the 
Delaware Bay and River, and other facilities. As we have reported, 
these authorities operate with congressional consent but are neither 
federal in nature nor state in scope; they occupy what some have 
referred to as a "third tier" of government.[Footnote 2] 

The federal role in reviewing bridge toll rates set by bi-state 
tolling authorities is limited in scope and has diminished over time. 
Since 1906, federal law has required that toll rates for bridges over 
navigable waters be "just and reasonable."[Footnote 3] The Department 
of Transportation's (DOT) Federal Highway Administration (FHWA) 
previously enforced the requirement by conducting administrative 
reviews of toll rates if complaints were made by third parties or 
under the FHWA Administrator's discretion. In 1987, Congress repealed 
DOT's review authority; however, the just and reasonable standard 
remains in law.[Footnote 4] In 2011, legislation was introduced but 
not enacted to reinstate DOT's authority to review toll rates, either 
upon complaint or under the initiative of the Secretary of 
Transportation.[Footnote 5] To date, such legislation has not been 
reintroduced. 

Federal oversight of the bi-state tolling authorities is generally 
limited to those programs receiving federal funding and does not 
include the management of the interstate toll crossings. The Federal 
Transit Administration (FTA) or Federal Aviation Administration may 
provide funding to transit systems or airports that are operated by bi-
state tolling authorities, and oversee those funds to ensure they are 
spent according to federal requirements. To help redevelop the lower 
Manhattan area after 9/11, for instance, the FTA allocated $2.9 
billion to the PANYNJ to construct a transportation hub at the World 
Trade Center. In October 2012, the construction site for the World 
Trade Center transportation hub and portions of the Port Authority 
Trans-Hudson (PATH) commuter rail line were flooded and certain PANYNJ 
facilities were severely damaged by Hurricane Sandy. In response, FTA 
has allocated $1.36 billion to the PANYNJ for emergency repairs, 
restoration, and to increase the resiliency of the PATH system to 
guard against future disasters.[Footnote 6] 

In recent years, certain bi-state tolling authorities have come under 
public scrutiny regarding toll increases and concerns that revenues 
have been used for purposes beyond maintaining critical transportation 
infrastructure. In addition, recent management audits by outside 
consultants and state audit agencies have raised concerns about the 
extent to which these authorities are accountable and transparent to 
the public. You asked us to review the toll-setting and oversight 
framework of the bi-state tolling authorities. We examined: (1) the 
authority of bi-state tolling authorities to set and use tolls and the 
factors that influence toll setting; (2) the extent to which bi-state 
tolling authorities involve and inform the public in their toll-
setting decisions; and (3) the extent to which the bi-state tolling 
authorities are subject to external and internal oversight. 

To examine these issues, we gathered information from the four bi-
state tolling authorities currently operating tolled interstate 
crossings under an interstate compact: the DRBA, DRJTBC, DRPA, and 
PANYNJ. To identify the factors considered in setting toll rates, we 
interviewed officials from each of these authorities and reviewed 
financial statements and related documents describing the factors 
contributing to their toll rates. To assess the purposes for which 
toll revenues can be used, we reviewed the interstate compacts, 
bylaws, and other documentation. While we reviewed the allowable uses 
for toll revenues, due to ongoing litigation between the PANYNJ and 
the American Automobile Association regarding recent toll increases by 
the PANYNJ, we did not assess the specific purposes and projects for 
which the PANYNJ uses its toll revenues. For consistency, we did not 
assess the specific purposes and projects for which the other bi-state 
tolling authorities use their toll revenue. To assess the extent to 
which the bi-state tolling authorities involve and inform the public 
in their toll-setting decisions, we reviewed documentation on their 
most recent toll increases as provided by each of the bi-state tolling 
authorities and collected from their public web sites. We compared 
their public involvement practices to those of federal, state, and 
local transportation authorities, including tolling authorities in 
Michigan and California that were not created by interstate compacts. 
To assess the external and internal oversight of the bi-state 
authorities, we reviewed available audit reports and interviewed and 
collected information from the state audit agencies of each of the 
four states in our review (Delaware, New Jersey, New York, and 
Pennsylvania) and from the internal audit organizations within the bi-
state authorities. We compared the external oversight structure with 
GAO's Government Auditing Standards and other relevant auditing 
standards and other GAO work on oversight of non-federal entities. 
[Footnote 7] We compared the activities of the internal audit entities 
with the International Standards for the Professional Practice of 
Internal Auditing published by the Institute of Internal Auditors and 
related GAO work on internal auditing.[Footnote 8] 

We conducted this performance audit from July 2012 through August 2013 
in accordance with generally accepted government auditing standards. 
Those standards require that we plan and perform the audit to obtain 
sufficient, appropriate evidence to provide a reasonable basis for our 
findings and conclusions based on our audit objectives. We believe 
that the evidence obtained provides a reasonable basis for our 
findings and conclusions based on our audit objectives. Our 
objectives, scope, and methodology are discussed in more detail in 
appendix I. 

Background: 

Interstate compacts are legal agreements between states designed to 
address issues that transcend state lines. Compacts enable states to 
act jointly on matters that are beyond the authority of an individual 
state but are not within the specific purview of the federal 
government. States have entered into interstate compacts to act 
jointly to address a variety of concerns including resolving border 
disputes, allocating interstate waters, enhancing law enforcement, 
disposing of radioactive waste, and developing regional transportation 
systems, among other issues.[Footnote 9] According to the Council of 
State Governments, more than 200 interstate compacts exist today, and 
most of those are for purposes other than managing interstate 
crossings. To form an interstate compact, two or more states typically 
negotiate an agreement, and each state legislature enacts a law that 
is identical to the agreement reached. Once all states specified in 
the compact have enacted such laws, the compact is formed.[Footnote 10] 

In cases where the compact affects the balance of power between the 
federal government and the states, the states must obtain the consent 
of Congress for the compact to be valid. Congress can give its consent 
by passing legislation that specifically recognizes the compact as 
enacted by the states, at which time the compact becomes federal law. 
[Footnote 11] Congress may impose conditions as part of granting its 
consent, and it typically reserves the right to alter, amend, or 
repeal its consent in the compact itself. Congress included such a 
provision in each of the public laws consenting to the four interstate 
compacts in this review. 

In establishing an interstate compact, states usually delegate 
authority to an independent entity, such as a bi-state tolling 
authority, that is created to administer and implement the compact's 
provisions. Decision-making for each bi-state tolling authority is the 
responsibility of a board of commissioners composed of representatives 
of the member states, who are appointed by a state's governor, such as 
local government officials, or serve by virtue of their elected 
position, such as a state treasurer. In addition to appointing 
commissioners, state governors may have authority to veto decisions 
made by commissioners from their state if such authority is specified 
in the compact or provided through reciprocal legislation passed by 
the states. The interstate compact includes the terms to which both 
states have agreed, and to which Congress has provided its consent. 
Some compacts include language that enables states to modify a compact 
through reciprocal legislation.[Footnote 12] Unless the bi-state 
authorities engage in programs that receive federal funds, such as 
operating transit systems or airports, they are generally not subject 
to federal oversight.[Footnote 13] 

The four bi-state tolling authorities manage a wide range of 
facilities, but the PANYNJ is significantly larger than the other 
three in terms of assets owned. At the end of fiscal year 2011, the 
PANYNJ reported that the total value of its assets was approximately 
$33.9 billion, which includes its five airports, six tolled crossings 
between New York and New Jersey, the World Trade Center properties, 
and other assets. By comparison, the DRPA's $1.8 billion in total 
assets in 2011 was the next-largest asset value. New Jersey has a 
unique stake in these bi-state tolling authorities as it is the only 
state that is a party to each of the four interstate compacts in our 
review. See table 1 for a summary of the assets maintained by the four 
bi-state tolling authorities in our review. 

Table 1: Facilities Managed by the Four Bi-State Tolling Authorities 
with Interstate Compacts: 

Bi-state tolling authority and location: Port Authority of New York and 
New Jersey (PANYNJ); 
New York City Metropolitan Area; 
Compact states and year of congressional consent: New Jersey and New 
York; 1921; 
Transportation facilities and other properties: 
* 4 toll bridges and 2 
toll tunnels: George Washington, Bayonne, and Goethals Bridges and the 
Outerbridge Crossing; Holland and Lincoln Tunnels; 
* 188 non-toll highway bridges: 109 bridges in New York and 79 bridges 
in New Jersey; 
* 5 airports: John F. Kennedy International, LaGuardia, Newark Liberty 
International, Stewart International, and Teterboro Airports; 
* 7 port terminals: Brooklyn-Port Authority, Elizabeth-Port Authority, 
Greenville Yard-Port Authority, Howland Hook, and Port Jersey-Port 
Authority Marine Terminals; Port Newark and Red Hook Container 
Terminal; 
* Transit and ferry assets: Port Authority Trans-Hudson (PATH) Rail 
Transit System, Journal Square Transportation Center, Port Authority 
Bus Terminal, George Washington Bridge Bus Station, World Trade Center 
Transportation Hub, New York Harbor Commuter Ferry system; 
* Other properties: World Trade Center, Waterfront Development in 
Queens and Hoboken, and several industrial parks and real estate 
developments in the New York metropolitan area; 
Total asset value, fiscal year 2011: $33.9 billion. 

Bi-state tolling authority and location: Delaware River Port Authority 
(DRPA); 
Philadelphia, PA & Camden, NJ; 
Compact states and year of congressional consent: New Jersey and 
Pennsylvania; 1931; 
Transportation facilities and other properties: 
* 4 toll bridges: Ben 
Franklin, Betsy Ross, Walt Whitman, and Commodore Barry Bridges; 
* Transit system and ferry assets: Port Authority Transit Corporation 
(PATCO), RiverLink Ferry; 
* Other properties: Various real estate investments in the Delaware 
River Port District; 
Total asset value, fiscal year 2011: $1.836 billion. 

Bi-state tolling authority and location: Delaware River Joint Toll 
Bridge Commission (DRJTBC); Border of Philadelphia and Bucks Counties, 
PA to NJ/NY state line; 
Compact states and year of congressional consent: New Jersey and 
Pennsylvania; 1935; 
Transportation facilities and other properties: 
* 7 toll bridges: I-78, Milford-Montague, Delaware Water Gap, Portland-
Columbia, Easton-Phillipsburg, New Hope-Lambertville, Morrisville-
Trenton Toll Bridges; 
* 13 non-toll bridges supported by revenues from 7 toll bridges; 
Total asset value, fiscal year 2011: $p.815 billion. 

Bi-state tolling authority and location: Delaware River and Bay 
Authority (DRBA); Delaware and the counties of Gloucester, Salem, 
Cumberland, and Cape May, New Jersey; 
Compact states and year of congressional consent: New Jersey and 
Delaware; 1962; 
Transportation facilities and other properties: 
* 1 toll bridge: Delaware Memorial Bridge; 
* 5 airports: New Castle Airport, Cape May Airport, Millville 
Airport, Civil Air Terminal at Dover AFB, Delaware Airpark; 
* 2 ferries: Cape May-Lewes Ferry, Three Forts Ferry Crossing; 
* Other properties: Salem County Business Park, located in Carney's 
Point Township, New Jersey; Riverfront Marketplace, Wilmington, 
Delaware; 
Total asset value, fiscal year 2011: $0.632 billion. 

Source: GAO analysis of bi-state tolling authority documents. 

Note: Total asset value represents the value of transportation 
facilities and properties as well as other assets. 

[End of table] 

The bi-state tolling authorities primarily fund the operation and 
maintenance of these facilities through tolls and other user fees 
collected from assets they manage. Many of these bridges and tunnels 
require significant renovations due to their age, and the costs of 
maintaining these facilities are substantial. For example, the PANYNJ 
began construction on the George Washington Bridge in 1927 and the 
bridge opened to traffic in 1931. Approximately 270,000 vehicles cross 
it every day, and the PANYNJ plans to spend $544 million to replace 
the suspender ropes on the bridge from 2011 through 2020. Each of the 
bi-state tolling authorities has instituted a toll increase in the 
past 5 years to help fund such renovations, and the toll rates may 
vary based on the type of vehicle crossing the facility (e.g., 
passenger vehicles or commercial trucks), whether cash or electronic 
payment (EZPass) is used, and the time of day. For example, the 
PANYNJ, which collects tolls from eastbound drivers entering New York 
City on its facilities, raised the toll rates for automobiles paying 
cash from $8 to $12 in September 2011, with an additional increase of 
$1 for cash tolls in December 2012 and additional $1 increases 
effective in December 2014 and December 2015. Passenger vehicles using 
EZPass pay less--$8.25 during off-peak hours and $10.25 during peak 
hours. See table 2 for an overview of the passenger vehicle toll rate 
ranges and bi-state tolling authorities' operating revenues and 
expenses in fiscal year 2011. 

Table 2: Bi-State Tolling Authorities' Current Passenger-Vehicle Cash 
Toll Rates and 2011 Operating Revenues: 

Bi-state tolling authority: PANYNJ; 
Passenger vehicle toll rate range as of July 2013[A]: $8.25 to 
$13.00[B]; 
Toll bridge and tunnel operating revenues, 2011: $1.079 billion[C]; 
Other operating revenues, 2011: $2.721 billion; 
Total operating revenues, 2011: $3.800 billion. 

Bi-state tolling authority: DRPA; 
Passenger vehicle toll rate range as of July 2013[A]: $5.00; 
Toll bridge and tunnel operating revenues, 2011: $268 million; 
Other operating revenues, 2011: $32 million; 
Total operating revenues, 2011: $300 million. 

Bi-state tolling authority: DRBA; 
Passenger vehicle toll rate range as of July 2013[A]: $4.00[D]; 
Toll bridge and tunnel operating revenues, 2011: $86 million; 
Other operating revenues, 2011: $29 million; 
Total operating revenues, 2011: $115 million. 

Bi-state tolling authority: DRJTBC; 
Passenger vehicle toll rate range as of July 2013[A]: $.60 to $1.00[E]; 
Toll bridge and tunnel operating revenues, 2011: $103 million; 
Other operating revenues, 2011: $1 million; 
Total operating revenues, 2011: $104 million. 

Source: GAO analysis of bi-state tolling authority data and annual 
reports, 2011. 

[A] Each of the four bi-state tolling authorities collects tolls one-
way. 

[B] The PANYNJ charges an EZPass rate of $10.25 during peak hours 
(weekdays between 6 and 10 AM and between 4 and 8 PM; weekends between 
11 AM and 9 PM) and $8.25 for all other (off-peak) hours on all 6 
crossings. The PANYNJ also offers discounted rate plans for its six 
crossings for eligible carpools ($4.25) and certain low-emission 
vehicles ($4.75); and reduced rates for certain vehicles crossing the 
Goethals Bridge, Outerbridge Crossing or Bayonne Bridge from Staten 
Island ($5.25). 

[C] PANYNJ operating revenues also include the Port Authority Bus 
Terminal and the George Washington Bridge Bus Station. 

[D] The DRBA offers a commuter plan for $25 that allows 25 trips 
across the Delaware Memorial Bridge valid for 30 days. 

[E] The DRJTBC offers an EZPass discounted price of $.60 per trip if 
the vehicle makes 20 or more trips in 35 days. 

[End of table] 

To secure financing for capital improvements to their facilities, bi-
state tolling authorities issue bonds to creditors and pledge tolls 
and other revenues for the repayment of the bond principal and 
interest. The four bi-state tolling authorities are required through 
either their bond agreements with creditors or bylaws to have an 
annual audit of their consolidated financial statements by an 
independent audit firm, which provides assurance that financial 
information reported to the public is accurate and fairly presented. 
These audits are generally not designed to evaluate the effectiveness 
of an entity's internal controls or management's overall performance 
in achieving its objectives, but are meant to provide assurance that 
the financial information provided to creditors and the public--
including assets, liabilities, revenues, and expenditures--are free 
from material misstatement. 

In recent years, the operations of two bi-state tolling authorities, 
the DRPA and the PANYNJ, have been the subject of public scrutiny and 
media attention. In response, the governors of New York, New Jersey, 
and Pennsylvania directed the authorities to allow reviews that 
identified concerns about the management and operations of the two 
authorities. Specifically, as a condition of the governors' approval 
of the PANYNJ's 2011 toll increase, the PANYNJ contracted with two 
consulting firms to undertake a comprehensive review and audit of the 
PANYNJ's finances and operations. Generally, this audit (1) found, 
among other things, concerns with the PANYNJ capital-planning process, 
cost controls, and oversight of the World Trade Center program, and 
(2) summarized reform initiatives undertaken by PANYNJ to address 
concerns.[Footnote 14] In July 2010, the governors of New Jersey and 
Pennsylvania directed the DRPA to agree to an independent 
investigation of its operations by the New Jersey Office of the State 
Comptroller. The State Comptroller found issues with the transparency 
of DRPA's practice of sharing insurance commissions, providing 
unlimited free bridge passes to DRPA employees, and the conduct of its 
economic development program.[Footnote 15] DRPA has passed several 
board resolutions to address concerns. During the course of our 
review, DRPA reported that its economic development program was under 
review by a federal grand jury led by the U.S. Attorney's Office in 
Philadelphia. 

Bi-State Tolling Authorities Have Broad Authority to Set and Use 
Tolls, and Tolling Decisions Are Primarily Influenced by Debt Rather 
Than Federal Toll Provisions: 

Interstate compacts provide the bi-state tolling authorities with 
broad authority to set toll rates and use revenues for a range of 
purposes, including capital improvements for their transportation 
infrastructure and, in certain cases, economic development projects. 
In setting tolls, bi-state tolling authorities are primarily 
influenced by bond agreements, as well as operations and maintenance 
costs and other factors. To obtain financing for capital projects, bi-
state authorities pledge through bond agreements to maintain specific 
revenue required to repay their debt. The bi-state authorities set 
toll rates to meet these revenue requirements, while also accounting 
for the costs of maintaining the infrastructure given economic 
conditions, traffic levels, and other factors. Federal law has less 
influence on tolling decisions because currently no federal agency has 
the authority to enforce the federal requirement that bridge tolls be 
"just and reasonable." In addition, some federal courts have 
questioned whether a private party has the right to challenge toll 
increases in court under this requirement. However, private parties 
also have been able to challenge toll increases in federal court under 
the Commerce Clause of the U.S. Constitution.[Footnote 16] 

Bi-State Tolling Authorities Have Broad Authority to Set Toll Rates 
and Use Toll Revenues: 

The interstate compacts generally provide the bi-state tolling 
authorities with broad authority to set rates and use toll revenues to 
maintain, repair, and improve their transportation infrastructure and 
cover other expenses. Although the specific language in the interstate 
compacts varies, the bi-state authorities are permitted to set tolls 
and use tolls and other revenues for bridges, tunnels, and other 
infrastructure. The bi-state authorities are also generally permitted 
to use tolls and other revenues to cover operations and maintenance 
costs, make capital improvements, repay debt obligations, maintain 
reserve funds to address contingencies, or to make other investments. 
The bi-state tolling authorities prepare capital plans that prioritize 
their large-scale projects to improve and maintain their facilities, 
such as bridge resurfacing, painting and de-leading, and replacing and 
repairing bridge cables and transit cars over a period of several 
years. For example, PANYNJ officials reported that over the past 5 
years, the PANYNJ has spent approximately $2.5 billion on capital 
projects for its "interstate transportation network," which includes 
its bridge, tunnel, PATH train system, and bus and ferry facilities. 
Similarly, DRPA's approved 2013 capital plan identifies more than $746 
million in capital improvement projects for its four bridges, transit 
line, and other facilities over the next 5 years. The DRPA reported 
that in 2010, its board approved two contracts totaling nearly $140 
million to replace the deck of the Walt Whitman Bridge and monitor 
construction of the project. Bi-state authorities are also permitted 
to use toll revenues to subsidize other operations, such as transit 
services. For example, the DRPA reported that in its 2012 capital 
plan, it provided about $33 million to its PATCO train line for 
capital projects, such as rehabilitating tracks and other 
improvements, representing about 26 percent of its total capital 
program for that year. 

In addition to using tolls and other revenues for transportation 
purposes, the PANYNJ, the DRPA, and the DRBA are permitted by either 
their compact, subsequent compact amendments or bi-state legislation 
to use revenues for projects to promote their local economies, such as 
airports, industrial parks, business centers, and waterfront 
development projects.[Footnote 17] In certain cases the compacts 
impose conditions on using revenue for economic development. For 
example, the DRPA is permitted to use revenues for economic 
development only after allocating revenues to fund operations and 
maintenance costs for bridge and other capital facilities.[Footnote 
18] According to DRJTBC officials, its compact does not authorize the 
DRJTBC to use its toll revenues for economic development projects. 

Tolling Decisions Are Primarily Driven by Debt Obligations and Other 
Factors: 

The bi-state authorities set tolls and other charges primarily to 
generate revenues to maintain their operations and infrastructure and 
meet their debt obligations. On a year-to-year basis, the bi-state 
tolling authorities' annual revenues may not be sufficient to fund the 
infrastructure projects in their long-term capital programs. The 
authorities enter into bond agreements with creditors in which they 
pledge the collection of tolls, among other revenues, to secure 
financing for capital improvements. Such bond agreements provide the 
authorities with the funding they need to maintain their 
infrastructure in a state of good repair, but this also can result in 
the bi-state tolling authorities incurring substantial debt 
obligations, which must be repaid over time. For example, the four bi-
state authorities' total debt service costs, including the principal 
and cost of interest, range from $453 million to $30.2 billion over 
the life of their bonds, which may extend several decades depending on 
the bond terms. See table 3 for a summary of the principal owed by the 
four authorities on their bond debt and the total debt service cost 
over the life of their bonds. 

Table 3: Bi-State Tolling Authorities' Bond Debt Principal and Total 
Debt Service Cost, as of December 2011 (Dollars in millions): 

Bond debt principal: Delaware River and Bay Authority: $284 million; 
Delaware River Joint Toll Bridge Commission: $406 million; 
Delaware River Port Authority: $1.333 billion; 
Port Authority of New York and New Jersey: $15.751 billion. 

Total debt service cost: Delaware River and Bay Authority: $453 
million; 
Delaware River Joint Toll Bridge Commission: $674 million; 
Delaware River Port Authority: $1.861 billion; 
Port Authority of New York and New Jersey: $30.219 billion. 

Source: Bi-state tolling authority annual reports, audit reports and/or 
financial statements, December 2011. 

Note: All dollar amounts in table are rounded to the nearest million. 
The total debt service cost varies based on the life of the bonds. 

[End of table] 

Bi-state tolling authorities maintain specific operating revenue 
levels to pay the annual principal and interest on their debt. One 
measure of an entity's ability to repay its debt is the "debt service 
coverage ratio," which compares an entity's annual operating revenues 
after operating expenses (net revenues) to its annual debt service 
costs. For example, the DRJTBC is required through a bond agreement to 
maintain a debt service coverage ratio of 1.3--meaning that it must 
generate net revenues that are at least 130 percent of its annual debt 
service costs or risk a default on its debt.[Footnote 19] Officials 
from each of the four bi-state tolling authorities reported that they 
monitor revenues on an ongoing basis and adjust their toll rates, in 
part, to ensure that future revenues will be adequate to meet their 
debt coverage requirements. Officials from Moody's Investors Service, 
a credit-rating agency, stated that they use the debt service coverage 
ratio as a metric to assess the credit-worthiness of entities seeking 
financing through capital markets. Credit-rating agency officials 
reported that the ability to set toll rates independently to cover 
debt obligations is the most important factor considered in assigning 
a credit rating. 

Bi-state tolling authorities also consider in their toll-setting 
decisions forecasts of traffic and associated toll revenues. These 
forecasts are based upon projections of economic factors that underlie 
traffic demand, such as employment, population, value of goods and 
services, fuel prices, and other factors that can affect traffic 
volume and associated toll revenues. For example, officials from the 
PANYNJ reported that more than 127 million cars, buses, and trucks 
crossed its bridges and tunnels in 2007. The PANYNJ reported that as a 
result of the economic recession, elevated gas prices, and its toll 
increase, traffic declined by about 6 percent to approximately 119 
million vehicle crossings in 2011. Additionally, unforeseen weather 
events that can cause damage to infrastructure can affect revenues and 
expenses; the bi-state tolling authorities maintain a reserve fund and 
insure their assets for such events. 

A Federal Law That Tolls Be "Just and Reasonable" Has Less Influence 
on Toll-Setting Decisions Than Other Factors: 

Although there is a federal statute requiring that bridge tolls be 
"just and reasonable,"[Footnote 20] in practice this requirement has 
less influence on bi-state authorities' toll-setting decisions than 
other factors, in that no federal agency currently has the authority 
to enforce the standard. Since 1906, federal law has required that 
toll rates for bridges over navigable waters be "just and reasonable," 
and until 1987 this provision was enforced by various federal 
agencies. Originally, the Department of War performed this role, and 
later the Department of Transportation's (DOT) Federal Highway 
Administration (FHWA) performed an administrative review of toll rates 
if complaints were made by third parties or at the FHWA 
Administrator's discretion. From 1970 to 1987, the FHWA Administrator 
adjudicated several significant toll increase challenges, finding on 
at least two occasions that proposed toll rates were unjust and 
unreasonable, and on at least one occasion that proposed toll rates 
met the "just and reasonable" standard. In 1987, Congress repealed 
DOT's authority to determine if toll rates were just and reasonable, 
[Footnote 21] but the standard itself remains in statute. While 
several parties have sought to challenge toll increases under this 
federal "just and reasonable" standard in court, certain federal 
courts have questioned whether private parties have the right to raise 
such court challenges. However, private parties also have been able to 
challenge toll increases in federal court under the Commerce Clause. 
[Footnote 22] 

Although no federal agency currently enforces the just and reasonable 
standard, prior administrative decisions and federal court opinions 
have interpreted how the standard is to be applied. Since 1973, 
federal administrative and court decisions have generally found that 
just and reasonable tolls are those sufficient to pay not only the 
reasonable cost of maintaining, repairing and operating facilities, 
but also to establish funds to amortize bridge indebtedness, provide a 
reasonable return on invested capital, and other purposes. These 
decisions have also found other uses of toll revenues--such as 
operating public transportation facilities--to be appropriate. In 
1987, Congress in effect codified these decisions and repealed 
provisions that had expressly limited the use of toll revenues to 
specific purposes, such as maintaining, repairing, and operating a 
bridge. Key federal administrative and court decisions applying the 
"just and reasonable" standard are discussed in greater detail in 
Appendix II. 

Bi-State Authorities Are Generally Not Subject to Federal or State 
Requirements for Public Involvement and Provided the Public Limited 
Opportunities to Participate in Recent Toll-Setting Decisions: 

In general, bi-state authorities are not required to follow federal or 
generally applicable state requirements for involving and informing 
the public, such as open meeting and open records laws. Instead, they 
set their own policies, which may be less stringent than those that 
apply to federal agencies, states, and other organizations. In 
addition, none of the four interstate compacts we reviewed contains 
language establishing specific public involvement requirements for 
toll setting. We found four areas in their most recent toll increases 
in which the bi-state authorities provided the public limited 
opportunities to learn about and provide comment on toll proposals, in 
contrast to federal and state requirements for involving the public, 
as well as practices used by other tolling authorities. See appendix 
III for a detailed timeline of public involvement in the four bi-state 
authorities' most recent toll increases. 

The Bi-State Authorities Are Not Subject to Federal or Generally 
Applicable State Requirements for Public Involvement: 

The bi-state authorities told us that they are not subject to federal 
or generally applicable state requirements for informing the public. 
For example, federal regulations for public participation in 
transportation decisions require regional planning bodies, known as 
metropolitan planning organizations (MPOs), to provide adequate notice 
and time for public review and comment, hold public meetings at 
convenient and accessible locations and times, and demonstrate 
explicit consideration and response to public input received in making 
planning decisions.[Footnote 23] In addition, each of the four states 
has established laws governing open meetings and records for public 
agencies that include requirements such as giving notice before 
holding public meetings, as well as submitting information to the 
state on the rationale for a toll increase, the financial position of 
the agency, and the purposes for which revenues will be used. 
According to bi-state authority officials, none of these generally 
applicable laws applies to the four bi-state authorities. However, New 
York and New Jersey have enacted reciprocal state statutes that 
require the PANYNJ to hold open meetings.[Footnote 24] 

In the absence of federal or state requirements, the bi-state 
authority officials reported that they have established their own 
general policies for public involvement, including making records 
publicly available and holding open board meetings. These internal 
policies, however, have been criticized for being less open or 
accessible than federal or state requirements. For example, in 
September 2011, the New York State Committee on Open Government found 
that the PANYNJ's freedom of information policy--which allows the 
public to request PANYNJ documents--and open meeting policy were more 
restrictive and provided less access than freedom of information and 
open meetings laws that apply to state agencies in New York.[Footnote 
25] 

In addition to federal and state laws for public participation, 
federal agencies and the Transportation Research Board, a non-
government research organization for transportation practice and 
policy, have identified leading practices that transportation agencies 
could use to involve the public in decision-making.[Footnote 26] In 
reviewing state and federal law and leading practices, we identified 
several practices used by transportation agencies that are subject to 
federal and state requirements that provide a useful way to assess 
whether the bi-state authorities are meeting expectations the public 
may have for accountability and transparency from public agencies. 
These practices include: 

* establishing a documented process for public involvement in toll-
setting decisions; 

* requiring sufficient opportunities for public comment before 
approving toll proposals; 

* providing key information to the public to support toll proposals; 
and: 

* summarizing public input for decision makers and the public before 
toll proposals are put to a vote for approval. 

The Bi-State Authorities Provided the Public Limited Opportunities to 
Participate in Recent Toll-Setting Decisions: 

We found that the bi-state authorities' efforts to involve the public 
during their most recent toll increases were limited in comparison 
with requirements for state and local transportation agencies and 
leading practices to involve the public in decision-making. The bi-
state authorities did not in all cases (1) have documented public 
involvement processes for toll-setting; (2) provide the public with 
key information on their toll proposals in advance of public hearings; 
(3) offer the public sufficient opportunities to comment on toll 
proposals; and (4) provide a public summary of comments received 
before toll increases were approved. 

Documented Process for Involving the Public in Toll Setting: 

According to the Transportation Research Board, establishing a 
defined, structured, and transparent process for involving the public 
in key decisions, such as those related to setting tolls, allows the 
public to understand the process and be aware of critical decision 
points where they can have influence if a toll increase is announced. 
[Footnote 27] At the time of their most recent toll increases, the 
four bi-state authorities had general policies for holding open board 
meetings, but these policies did not outline specific steps for 
involving the public in toll increases. We have previously reported 
that having a transparent process for reviewing and updating user 
fees, such as tolls, helps assure payers and other stakeholders that 
user fees are set fairly and accurately and are spent on intended 
purposes. Furthermore, soliciting stakeholder input is particularly 
important in cases where there is a monopoly supplier, where 
alternatives are limited and fees are not fully voluntary.[Footnote 
28] Because the public may have few alternatives to using the tolled 
crossings, having a transparent, documented process specific to toll 
setting could improve the public's understanding of how the tolls work 
and what activities they may fund. 

The four bi-state authorities' general policies do not provide the 
public with information specific to the toll-setting process, 
including: (1) the number of toll hearings the authority will hold, 
along with locations; (2) the amount of time that will be available to 
the public to comment on the proposal before it is voted on; and (3) 
how the authority will use public comments in its decision-making 
process. In addition, three of the four bi-state authorities did not 
have policies that specified the amount of advance notice to the 
public before holding public toll hearings. Only the PANYNJ's policies 
specify the length of advance notice (10 days). In contrast, bridge 
authorities in Michigan are required under state law to hold three 
public hearings and provide advance notice with dates, times, and 
locations prior to any proposed toll increase to allow the public an 
opportunity to comment. A documented process for public involvement 
also demonstrates to the public and to credit-rating agencies that 
toll-setting is taking place within a predictable framework and could 
create institutional memory within the authorities for toll setting in 
the future. Without a documented process for public involvement, the 
public lacks a clear view of the bi-state authorities' decision-making 
process, which could undermine the authorities' ability to win the 
public's support and secure necessary toll revenues. 

In commenting on a draft of this report, the PANYNJ stated that its 
policy is to provide the public with the amount, purpose, and 
estimated revenues of the proposed toll increase 10 days before 
convening toll hearings, and that this policy constitutes a documented 
public involvement process. According to the PANYNJ, this policy was 
established in 1977 through a resolution passed by its board of 
commissioners. However, PANYNJ board resolutions and other PANYNJ 
rules and regulations are generally not available to the public 
through its web site.[Footnote 29] Consequently, at the time of the 
September 2011 toll increase, the public lacked the information needed 
to understand whether the PANYNJ was following its public involvement 
policies and making its toll-setting decisions in a predictable 
framework. In June 2012, the PANYNJ incorporated its 1977 public 
involvement policy into its publicly available bylaws. While this 
policy will be in effect for future toll increases, we do not believe 
that the PANYNJ's policy can be considered a defined and structured 
process for involving the public in key decisions because the policy 
still does not specify the number of toll hearings, the amount of time 
to be made available for the public to comment, and how the authority 
will utilize public comments. 

Opportunities for Public Comment: 

Federal regulations pertaining to public participation require MPOs to 
provide adequate public notice and time for public review and comment 
at key decision points, and to hold any public meetings at convenient 
and accessible locations and times.[Footnote 30] As we have previously 
reported, the public is a key stakeholder in any tolling decision, and 
providing for stakeholder input may affect support for and acceptance 
of a fee and contribute to improved understanding about how the fees 
work and what activities they fund.[Footnote 31] The four bi-state 
authorities provided the public limited opportunities to comment 
before toll proposals were put to a vote for approval. For example, 
the DRJTBC did not hold any public hearings to receive public comment 
before approving its 2011 toll increase during an open board meeting. 
[Footnote 32] The DRPA and the DRBA each held one hearing per state to 
receive comment before approving their respective toll increases in 
open board meetings. Prior to convening toll hearings, the DRBA 
discussed the need for its toll increase in several board meetings 
that were open to the public. The PANYNJ held ten hearings on a toll 
proposal in various locations, including an online forum; however, 
those hearings were held in a single day. In contrast, officials from 
the Blue Water Bridge Authority and Mackinac Bridge Authority in 
Michigan reported that they typically provide 30 days after public 
notice is given for comment on toll proposals before approving an 
increase. Further, officials from the Golden Gate Bridge, Highway and 
Transportation District stated that they engaged the public through 
meetings, hearings, open houses, and other outreach for about 8 months 
prior to its last increase. The Bay Area Toll Authority in California 
began the public involvement process for its toll increase more than 6 
months before the proposal was implemented with three public meetings 
held in locations around the region. 

Key Information to Support Toll Proposals in Advance of Public 
Hearings: 

According to state and federal requirements and leading practices, 
agencies should provide key information to the public in advance of a 
toll proposal to give the public the opportunity to understand the 
agency's rationale for a toll increase and provide meaningful input to 
the decision-making process. However, the three bi-state authorities 
that held public toll hearings provided only limited information such 
as short descriptions of the capital projects they intended to 
implement using revenue from their proposed toll increases. The PANYNJ 
reported that at the time of its most recent toll proposal, it had not 
made a long-term capital plan available to the public detailing the 
full uses of the proposed toll and fare increases for the public to 
review. In prior work, we found that leading organizations prepare 
long-term capital plans that usually cover a 5-to 10-year period to 
document specific planned projects, plan for resource use, and 
establish priorities for implementation, and those plans are updated 
on an annual or biennial basis.[Footnote 33] 

The PANYNJ reported that the June 2012 policy changes to its bylaws 
give the public information on the purposes for which tolls and fares 
are being adjusted and an estimate of the overall increase in revenues 
resulting from the change at least 10 days prior to holding public 
toll hearings. However, this policy is less stringent than a 
requirement applicable to state tolling authorities in New York, which 
must provide the governor, state comptroller, and legislators a 
special report supporting the proposed toll increase at least 120 days 
in advance. This report must include the authority's operation, debt 
service, and capital construction costs for the next 5 years, as well 
as estimates of the impact that revenues from the toll increase will 
have on the authority. Similarly, the public notice for the Golden 
Gate Bridge, Highway and Transportation District's 2010 toll increase 
proposal included information on its budget shortfall and need for new 
revenue, the proposed toll schedule and dates of implementation, 
revenues anticipated from the increase, and a comparison of the 
District's toll rates with similar bridge authorities around the 
country. Additionally, the Transportation Research Board has reported 
that those who are proactive in providing information are better able 
to guide public dialogue about the authority and its activities. 
[Footnote 34] 

Summary of Public Input for Decision Makers and the Public: 

According to the Transportation Research Board, one goal of a good 
public involvement process in transportation decisions is the 
incorporation of citizen input into decision making.[Footnote 35] 
Providing the public the opportunity to voice its opinion on toll 
increases is important, and the ideas, preferences, and 
recommendations contributed by the public should be documented and 
seriously considered by decision makers. Additionally, federal 
regulations require that MPOs demonstrate explicit consideration and 
response to public input received during the transportation planning 
process.[Footnote 36] Final toll-setting decisions should be 
communicated to the public with a description of how public input was 
considered and used.[Footnote 37] According to the Transportation 
Research Board, a decision-making process that has public involvement 
inputs but no clear effect on the outputs is not a successful program. 
[Footnote 38] 

Only one of the four bi-state authorities created a summary of public 
input received during toll hearings and made it available to decision 
makers and the public. The PANYNJ provided a report to its 
commissioners summarizing the oral comments received at each of its 
ten public hearings, as well as written comments submitted, and made a 
transcript of each hearing publicly available on its website. After 
receiving public comment, the PANYNJ received a letter from the 
governors of New York and New Jersey voicing their disapproval of the 
initial increase, and modified its toll proposal to provide for more 
gradual toll increases over several years. The Mackinac Bridge 
Authority in Michigan also prepares a summary of public comments it 
receives at each hearing that categorizes responses according to those 
in favor of and opposed to the toll increase. This analysis distills 
the viewpoints of the public into a format that is readily useful to 
decision makers. Without evidence that decision-makers are considering 
the public's input before voting, the public lacks an assurance that 
its participation affects the tolling decision. 

The Transportation Research Board has found that ongoing two-way 
communication is essential to a good public involvement program and 
that successful strategies provide continuous opportunities for the 
public to learn about and engage in the process.[Footnote 39] 
Organizations that maintain an ongoing conversation with the public 
through the media, open houses, and outreach efforts may improve the 
public's buy-in and understanding of toll increases and how revenues 
will be used. Officials from the Golden Gate Bridge, Highway and 
Transportation District reported that regardless of whether a toll 
increase is being considered, engaging with the media regularly to 
discuss maintenance and capital projects is important so that the 
public is continually aware of the needs of the Golden Gate Bridge and 
how toll revenue is being used. By engaging the public in an ongoing 
conversation on how toll revenues are put to use, bi-state authorities 
have an opportunity to make a more convincing and transparent case for 
their toll proposals to secure necessary revenues. 

External Oversight of Bi-State Tolling Authorities Has Been Limited, 
but Bi-State Authorities Have Established Some Internal Oversight: 

States Have Conducted Few Audits of Bi-State Tolling Authorities, and 
States' Audit Authorities Are Unclear: 

The external oversight of the bi-state authorities has been limited as 
only one of the four bi-state authorities has been regularly audited 
by a state audit entity. Specifically, the Office of the New York 
State Comptroller has conducted three audits of the PANYNJ in the past 
5 years. The New Jersey Office of the State Comptroller conducted an 
investigation of the DRPA at the request of the governors of New 
Jersey and Pennsylvania in 2010, and with the approval of the DRPA 
board. Neither the DRJTBC nor the DRBA has been subject to an audit by 
state audit entities in their respective states. New Jersey State 
Comptroller and New Jersey State Auditor officials stated that they 
have authority to audit the four state bi-state authorities, but have 
not prioritized further audits of the authorities due to limited 
staffing resources and competing demands, such as auditing state 
agencies that receive state funds. 

The few audits conducted have identified areas of concern in two bi-
state tolling authorities. For example, in its July 2011 report on the 
PANYNJ's use of consulting, construction management, and other 
contracted services, the New York State Comptroller found that the 
PANYNJ lacked supporting documentation for 57 of the 75 contracts it 
reviewed, with a total value of $1.18 billion in contracts lacking 
justification that the services were needed.[Footnote 40] Although the 
New York State Comptroller made several recommendations to improve the 
transparency of PANYNJ contracting, the PANYNJ does not have the same 
requirements as New York state agencies to report its progress in 
implementing recommendations, and it has not done so for this audit. 
As a result, the status of any actions taken by the PANYNJ to address 
the New York State Comptroller's recommendations is not publicly 
available. New York State Comptroller officials stated that in May 
2013 it initiated a follow-up audit of the PANYNJ's contracting 
procedures in which it will report on the status of any reforms taken 
by the PANYNJ. 

The New Jersey State Comptroller's investigation found that the DRPA 
did not follow its own policies for approving and monitoring economic 
development projects and raised questions as to whether selected 
projects were properly vetted.[Footnote 41] The report also found that 
insurance brokers in New Jersey and Pennsylvania shared more than $1.5 
million in commissions from the purchase of DRPA insurance policies, 
regardless of whether the brokers actually placed the policies "or 
performed any service at all." Although the sharing of insurance 
commissions is legal in New Jersey, the report noted that the practice 
was potentially wasteful of toll-payer funds. In response, the DRPA 
has adopted new competitive procurement policies to select insurance 
brokers to reduce the potential waste of toll-payer revenues. DRPA 
officials also reported that the board passed a resolution in August 
2010 that prohibited the use of DRPA revenues for projects that are 
not directly connected to the assets under the board's direct control; 
however, another resolution in December 2011 permitted the allocation 
of DRPA's remaining economic development funds to complete seven 
economic development projects. 

The authority of state audit agencies to oversee the bi-state 
authorities is in many cases unclear.[Footnote 42] Prior work by GAO 
and others has found that audit authorities should be clearly 
established to ensure that those authorities are widely understood by 
the agencies responsible for oversight and among the communities they 
oversee.[Footnote 43] However, differences in states' laws and 
disagreements between the bi-state authorities and the state audit 
agencies have prompted questions about the authority of several states 
to provide oversight. Some of the states with bi-state tolling 
authorities have similar, but not identical legislation pertaining to 
their audit authorities, and some could not point to any concurring 
language in their state laws.[Footnote 44] For example, New Jersey 
State Comptroller officials stated that the office has standing 
authority to provide oversight of each of the bi-state tolling 
authorities under the New Jersey state law that enables it to audit 
New Jersey public agencies and independent state authorities.[Footnote 
45] The New Jersey State Auditor--a separate office from the New 
Jersey State Comptroller--also reported that its office has standing 
authority to audit the four bi-state authorities under a separate New 
Jersey state law.[Footnote 46] Nonetheless, officials in both offices 
could not point to reciprocal legislation in Delaware and Pennsylvania 
establishing their authorities in those states. 

In some cases, state audit agencies and bi-state authorities expressed 
disagreements over the extent of the state's audit authority, or 
stated that audit authority was not established. Specifically, New 
Jersey State Auditor officials reported that the office attempted to 
initiate an audit of the DRJTBC in July 2013, but the DRJTBC rejected 
the request stating in a letter that the audit was not authorized by 
the DRJTBC interstate compact or by state laws in New Jersey and 
Pennsylvania. DRJTBC officials also stated that the New Jersey State 
Comptroller does not have standing audit authority. In addition, the 
Delaware Office of Auditor of Accounts reported that it does not have 
the authority to audit the DRBA, and the Pennsylvania Auditor General 
reported that it does not have the authority to audit the DRPA and the 
DRJTBC. The DRBA and the DRPA took no position as to whether New 
Jersey or the other states have standing audit authority. Appendix IV 
provides additional information about oversight authorities for the 
four bi-state authorities in the four states. 

In addition to state audit agencies, other state agencies may also 
have limited authority to review the activities of bi-state 
authorities. In one case we found that these limits posed risks to the 
accountability of federal transportation programs because the federal 
government lacked assurance that credits claimed by New Jersey to 
waive federal-aid matching fund requirements were in fact eligible and 
accurate. Under the federal-aid highway program, which provides about 
$40 billion annually to states to build and improve highways and 
bridges, states are typically required to provide a 20-percent funding 
match. However, a state may receive "toll credits" to reduce its 
matching requirement if it can demonstrate that toll revenues were 
spent on facility improvements and met other requirements.[Footnote 
47] According to FHWA officials, from fiscal year 2008 through 2011, 
FHWA approved over $334 million in federal toll credits from the four 
bi-state tolling authorities.[Footnote 48] New Jersey applied these 
toll credits and others earned from other tolling authorities in the 
state to eliminate the state's entire required match for highway and 
transit projects from fiscal year 2008 through 2011.[Footnote 49] FHWA 
officials in New Jersey stated that they rely on the state to self-
certify the accuracy and eligibility of its own toll credits. However, 
New Jersey Department of Transportation (NJDOT) officials stated that 
NJDOT does not request or review underlying project documentation, 
such as contract awards or project schedules, from the bi-state 
authorities to support their eligibility certifications. NJDOT 
officials stated that they would have authority to conduct audits and 
spot checks of the bi-state authorities but they could not provide any 
documentation to that effect. The officials also stated that NJDOT has 
never conducted an audit or spot-check of any of the bi-state 
authorities' expenditures to confirm their eligibility for toll 
credits. As a result of states' limited oversight of bi-state tolling 
authorities, FHWA lacks assurance that the states are able to fully 
verify the information collected from the bi-state authorities before 
it is provided to FHWA for approval. 

Officials from certain bi-state tolling authorities told us that the 
states exercise oversight through the governor's veto of the voting 
decisions of the commissioners from that state. This veto authority 
may provide an important check and balance on the boards' decisions 
with regard to the governors' priorities. However, such a veto power 
is limited to the voting decisions of the board and does not provide 
the public insight into the internal activities of the bi-state 
authorities that would otherwise be provided by an independent 
auditor. Moreover, this veto power is not always available to both 
governors. Specifically, according to DRJTBC and DRPA officials, the 
governor of Pennsylvania does not have veto authority over the DRJTBC 
or the DRPA because its state legislature has not provided that 
authority in state law.[Footnote 50] According to the New Jersey 
Governor's office, New Jersey state law provides that the New Jersey 
Governor may veto actions of DRJTBC commissioners representing that 
state;[Footnote 51] however, that authority has not been exercised 
because substantially similar legislation has not been passed in 
Pennsylvania. DRJTBC reported that the New Jersey Governor may not 
unilaterally enforce its veto authority without reciprocal legislation 
enacted in Pennsylvania, as well as an act of Congress to amend the 
compact.[Footnote 52] In contrast, New Jersey and New York governors 
both have veto authority over the PANYNJ, and New Jersey and Delaware 
governors have veto authority over the DRBA. 

Bi-State Tolling Authorities Have Established Internal Oversight 
Mechanisms, but One Internal Audit Entity Lacks Assurance of 
Independence: 

Each of the four interstate bi-state tolling authorities has 
established internal oversight mechanisms with responsibilities that 
vary based on the size and complexity of the organization. The four bi-
state tolling authorities each have an audit committee comprised of 
board commissioners that is charged with activities such as overseeing 
the auditing and financial reporting processes of the authority, 
coordinating external financial or management audits, and directing 
the activities of internal audit departments, if applicable. For 
example, every 2 years DRPA's audit committee selects an independent 
firm to conduct a management performance audit of DRPA business 
activities, which is intended to enhance transparency and enable the 
DRPA to more quickly identify issues that require the attention of the 
board and management. DRJTBC officials reported that the audit 
committee coordinates the annual audit of its financial statements and 
directs the auditors to perform stress tests of various functional 
areas, including management controls. 

In addition to the activities of the audit committees, the two largest 
authorities, the PANYNJ and the DRPA, have also established separate 
inspectors general and internal audit departments that conduct their 
own performance and financial audits and respond to public or internal 
allegations of waste, fraud, and abuse. In general, internal audit 
entities are organizations that are accountable to senior management 
and those charged with governance of the audited entity.[Footnote 53] 
Internal audit entities typically follow audit procedures and 
practices based on the standards established by the Institute of 
Internal Auditors,[Footnote 54] and they are generally not subject to 
the standards that guide federal or state external auditors or 
inspectors general. For example, they do not generally report the 
results of their work to the public, Congress, or to their state's 
legislature.[Footnote 55] However, like external audit agencies, 
internal audit entities are expected to be free from impairments to 
their independence and must avoid the appearance of any impairment to 
independence to meet professional auditing standards.[Footnote 56] 

Although auditor independence is required by professional internal 
auditing standards, the DRPA has yet to establish clear access 
authorities for its inspector general. As a result, the DRPA office of 
inspector general lacks an assurance of independence. DRPA officials 
reported that the DRPA inspector general's office was established in 
2012 in response to a 2010 bill introduced in the House of 
Representatives that called for Congress to withdraw its consent from 
DRPA's interstate compact if certain reforms, including creating the 
position, were not made.[Footnote 57] However, the DRPA resolution 
establishing the inspector general did not establish authorities for 
it to access DRPA records and personnel, and according to DRPA 
officials, such written authorities did not exist at the time of our 
review. The DRPA inspector general reported that he had drafted 
standard operating procedures for his office based on standards for 
state or local inspectors general, which included audit authorities 
and oversight responsibilities, and submitted those procedures to 
DRPA's audit committee for its review.[Footnote 58] Although the DRPA 
inspector general maintains that he does not need the board's approval 
for these standard operating procedures, the inspector general 
reported that members of the DRPA board attempted to weaken the 
authorities, including inserting a provision to require that the 
inspector general report any potential criminal activity to DRPA 
management rather than directly to legal authorities. The DRPA 
inspector general reported that he would not abide by this provision 
if enacted by the DRPA board. We requested from DRPA a copy of the 
standard operating procedures prepared by the inspector general; 
however, DRPA officials stated that these procedures have not been 
approved by the board and did not make them available for our review. 
As a result, we were unable to verify whether the authorities pursued 
by the DRPA inspector general were sufficient to enable the office to 
independently conduct its oversight responsibilities. In addition, the 
DRPA and PANYNJ declined our request to meet independently with 
officials from their respective inspectors general and internal audit 
departments without DRPA and PANYNJ management officials present. 

By design, internal audit entities do not generally publicly report 
their findings, and thus the public is usually not aware of the 
accountability efforts taken by these entities. For example, in 2011 
the PANYNJ's internal audit department office completed 271 audits of 
PANYNJ activities and reported $12.9 million in estimated savings as a 
result of its audits. However, the PANYNJ audit department does not 
publicly report findings. While the PANYNJ provided us with summaries 
of several audit reports, it declined our request to provide selected 
full audit reports for our review. DRPA's inspector general reported 
that it has conducted several audits and investigations and has 
released one report to the public. Although the Institute of Internal 
Auditors standards do not require internal audit departments to report 
audit results to the public, by not doing so, the public may be 
unaware of the efforts taken by bi-state authorities to safeguard toll 
payer revenues and improve management performance and operations. 

Concluding Observations: 

Congress has given wide latitude to four states to address 
infrastructure needs in the Northeast by consenting to the creation of 
bi-state tolling authorities that operate some of the most highly 
traveled interstate crossings in the United States. These public 
authorities have broad authority to manage their operations without 
the same constraints, requirements, and oversight to which state and 
federal agencies are subject. Because these authorities are neither 
federal nor state entities, and because GAO does not make 
recommendations to non-federal entities, we are not making any 
recommendations in this report. The bi-state tolling authorities have 
recognized that the traveling public pays for these facilities, and 
that they must be accountable to the public. However, issues of 
transparency and accountability could undermine the authorities' 
ability to win the public's support and secure necessary toll 
revenues. As such, states have both the incentive and the opportunity 
to enhance the transparency and accountability of the bi-state tolling 
authorities. 

Specifically, the bi-state tolling authorities would benefit from 
clear and consistent requirements for public involvement in decision-
making to ensure a documented process for public involvement and 
meaningful and sufficient opportunities for the public to comment, 
among other measures. In addition, the states have the incentive to 
work together to clarify the lines of external oversight over the bi-
state tolling authorities, so that each state's audit entity has 
sufficient standing authority and access to conduct audits and 
investigations of the operations of the bi-state tolling authorities. 
Furthermore, the internal audit entities of the bi-state tolling 
authorities are uniquely positioned to provide ongoing oversight and 
accountability. The DRPA established its inspector general in response 
to congressional concerns, and has the opportunity to more fully 
address those concerns by assuring the independence of its inspector 
general by establishing clear authorities for it to perform its work. 

Agency Comments and Our Evaluation: 

We submitted a draft of this report to the DOT and the four bi-state 
tolling authorities for review and comment. The DOT and the DRPA had 
no comments on the draft. We received technical comments from the 
DRBA, the DRJTBC, and the PANYNJ, and we incorporated those comments 
as appropriate. We also provided sections of the draft report relating 
to the external oversight of the bi-state tolling authorities to state 
audit agencies in Delaware, New Jersey, New York, and Pennsylvania and 
received technical comments, which we incorporated as appropriate. 

In addition to providing technical comments, the PANYNJ disagreed with 
our finding that it did not have a documented and structured public 
involvement process for setting tolls. The PANYNJ stated that its 
policy of providing 10-days advance notice before convening toll 
hearings and providing the public with the amount and purpose of 
proposed toll rates constituted a documented public involvement 
process. According to the PANYNJ, this policy was established in 1977 
through a resolution passed by its board of commissioners. However, 
PANYNJ board resolutions and its other rules and regulations are 
generally not available to the public. Consequently, at the time of 
the September 2011 toll increase, the public lacked the information 
needed to understand the PANYNJ's public involvement policy, and 
whether the PANYNJ was following that policy and making its toll-
setting decisions in a predictable framework. In June 2012, the PANYNJ 
incorporated its 1977 policy into its publicly available by-laws. 
While this policy will be in effect for future toll increases, we do 
not believe that it can be considered a defined and structured process 
for involving the public in key decisions because, as stated in our 
report, the policy does not specify the number of toll hearings, the 
amount of time to be made available for the public to comment, and how 
the authority will utilize public comments. The PANYNJ also disagreed 
with our finding that it did not offer the public sufficient 
opportunities to comment during its most recent toll increase, and 
stated that as a matter of practice, it has held multiple toll 
hearings in both states prior to toll increases. Our draft report 
recognized that the PANYNJ held 10 hearings in various locations for 
its proposed 2011 toll increase, including an online forum. However, 
because those hearings were held in a single day--and only 3 days 
prior to the board of commissioners' vote to approve toll increases--
we believe that the accelerated schedule did not provide sufficient, 
convenient and accessible opportunities for the public to comment on 
the proposal. 

As agreed with your offices, unless you publicly announce the contents 
of this report earlier, we plan no further distribution until 30 days 
from the report date. At that time, we will send copies of this report 
to congressional committees with responsibilities for surface 
transportation issues and the Secretary of Transportation. In 
addition, this report will be available at no charge on GAO's website 
at [hyperlink, http://www.gao.gov]. 

If you or your staff have any questions about this report, please 
contact me at (202) 512-2834 or flemings@gao.gov. Contact points for 
our Offices of Congressional Relations and Public Affairs may be found 
on the last page of this report. GAO staff that made significant 
contributions to this report are listed in appendix V. 

Sincerely yours, 

Signed by: 

Susan Fleming: 
Director, Physical Infrastructure Issues: 

[End of section] 

Appendix I: Objectives, Scope, and Methodology: 

Our three objectives were to assess: (1) the authority of bi-state 
tolling authorities to set and use tolls and the factors that 
influence toll setting, (2) the extent to which bi-state tolling 
authorities involve and inform the public in their toll-setting 
decisions, and (3) the extent to which bi-state tolling authorities 
are subject to external and internal oversight. 

To assess the authority of bi-state tolling authorities to set and use 
tolls and the factors that influence toll setting, we reviewed the 
interstate compacts of the four bi-state tolling authorities: the Port 
Authority of New York and New Jersey (PANYNJ), the Delaware River Port 
Authority (DRPA), the Delaware River and Bay Authority (DRBA), and the 
Delaware River Joint Toll Bridge Commission (DRJTBC). We also 
interviewed bi-state tolling authority officials for their 
perspectives of the key drivers that influence their tolling 
decisions. We corroborated testimonial evidence by (1) reviewing of 
the bi-state tolling authorities' most recent financial statements and 
annual reports, as well as recent official statements and related 
documentation provided by the bi-state tolling authorities; and (2) by 
interviewing credit rating agency officials and reviewing information 
that evaluates the financial standing of the bi-state tolling 
authorities. To assess the purposes for which toll revenues can be 
used, we reviewed the interstate compact agreements, including any 
amendments, and interviewed authority officials on their permitted use 
of toll revenues. We reviewed the allowable uses for toll revenues, 
but due to ongoing litigation between the PANYNJ and the American 
Automobile Association regarding recent toll increases by the PANYNJ, 
we did not assess the specific purposes and projects for which the 
PANYNJ uses its toll revenues. For consistency, we did not assess the 
specific purposes and projects for which the other bi-state 
authorities use their toll revenues. To determine the extent to which 
bi-state tolling authorities are influenced by the federal requirement 
that tolls be just and reasonable, we interviewed bi-state tolling 
authority officials and reviewed the federal "just and reasonable" 
standard for evaluating toll increases, in section 508 of title 33, 
U.S. Code and conducted a legal review of how this standard has been 
interpreted and enforced by federal courts and federal agencies. The 
results of our legal review are provided in appendix II. 

To assess the extent to which the bi-state tolling authorities involve 
and inform the public in their toll-setting decisions, we interviewed 
officials from each of the bi-state authorities regarding their 
efforts to involve the public in recent toll increases. We also 
reviewed documentation on each authority's most recent toll increase--
such as public notices, newspaper articles, meeting minutes, board 
resolutions, and official statements--as provided by the authorities 
and collected from their public websites. We also examined the bi-
state authorities' interstate compacts and bylaws to determine whether 
their policies for public involvement met several practices that 
incorporate federal and state requirements for involving the public, 
as well as practices used by other tolling authorities. These 
practices include: (1) establishing a documented process for public 
involvement, (2) requiring sufficient opportunities for public 
comment, (3) providing key information to the public, and (4) 
summarizing public comments. We selected these practices through 
analysis of federal requirements for public participation by 
metropolitan planning organizations, state laws for public involvement 
in tolling decisions, guidance on involving the public in 
transportation decisions from the Transportation Research Board, and 
our previous work on designing user fees.[Footnote 59] We also 
interviewed officials from five bridge toll authorities in California 
and Michigan that were not created by interstate compacts regarding 
their efforts to involve and inform the public in recent toll-setting 
decisions. We selected these authorities because they manage and 
operate tolled bridges that are similar in scale to the bi-state 
authorities, have similar governance structures, and recently 
implemented a toll increase. 

To assess the extent to which bi-state tolling authorities are subject 
to external and internal oversight, we reviewed available audit 
reports and interviewed and collected information from the state audit 
agencies of each of the four charter states in our review (New Jersey, 
New York, Pennsylvania, and Delaware) and from the audit organizations 
within the bi-state tolling authorities. To assess external oversight, 
we reviewed the results of recent audits and investigations of the bi-
state tolling authorities, including an investigation of DRPA 
completed by the New Jersey Office of the State Comptroller in 2012, 
and several audits of the PANYNJ conducted by the Office of the New 
York State Comptroller. We also reviewed relevant state laws in New 
Jersey, New York, and Pennsylvania regarding the oversight of the bi-
state tolling authorities in those states and we interviewed officials 
with the New Jersey Office of the State Comptroller, the New Jersey 
State Auditor, the Office of the New York State Comptroller, the 
Pennsylvania Department of the Auditor General, and the Delaware 
Office of Auditor of Accounts in order to describe statutory audit 
authorities pertaining to the bi-state tolling authorities. Because 
this is a discussion of state law, we are not providing an independent 
analysis as to whether these laws establish audit authority over the 
bi-state authorities. To assess the internal oversight of the bi-state 
authorities, we collected information on the internal audit mechanisms 
in place in each of the bi-state tolling authorities and we 
interviewed the officials from the offices of the inspector general 
within the PANYNJ and DRPA. We compared the external oversight 
structure with GAO's Government Auditing Standards and other relevant 
GAO work on oversight of non-federal entities,[Footnote 60] and we 
compared the activities of the internal audit entities with the 
International Standards for the Professional Practice of Internal 
Auditing published by the Institute of Internal Auditors and related 
GAO work on internal auditing.[Footnote 61] 

We conducted this performance audit from July 2012 through August 2013 
in accordance with generally accepted government auditing standards. 
Those standards require that we plan and perform the audit to obtain 
sufficient, appropriate evidence to provide a reasonable basis for our 
findings and conclusions based on our audit objectives. We believe 
that the evidence obtained provides a reasonable basis for our 
findings and conclusions based on our audit objectives. 

[End of section] 

Appendix II: Discussion of the Federal "Just and Reasonable" Standard 
and Significant Federal Administrative and Court Decisions Addressing 
Toll Increase Challenges: 

In order to describe the current federal oversight environment, we 
provide this summary of the development of the just and reasonable 
standard for setting tolls on bridges, of significant federal 
administrative and court decisions interpreting it, and of whether 
courts have found there is a private right of action to enforce it. In 
addition, we discuss several cases challenging toll increases brought 
under the Commerce Clause of the U.S. Constitution.[Footnote 62] As 
detailed below, the federal standard for the setting of bridge tolls 
by states--that tolls be "just and reasonable"--was established in 
federal law in 1906.[Footnote 63] While the standard has remained 
unchanged to the present day, the federal government no longer has an 
oversight role in its implementation.[Footnote 64] The Secretary of 
War initially had responsibility for enforcing the standard, and this 
responsibility was transferred to the Secretary of Transportation in 
1968, where it remained until the Department of Transportation's (DOT) 
oversight authority was repealed in 1987. Since that time, a handful 
of lawsuits have been filed in the federal courts in effect seeking to 
enforce the just and reasonable standard. Rather than addressing what 
that standard means, however, most of these cases have grappled with 
who has the right to enforce it, that is, whether the statute creates 
a "private right of action" for private individuals or entities to 
bring suit to enforce the standard. The U.S. Court of Appeals for the 
Third Circuit has ruled that the statute does not provide a private 
right of action.[Footnote 65] The U.S. Court of Appeals for the Second 
Circuit has issued a ruling applying the "just and reasonable" 
standard, but did not address whether a private right of action to 
enforce the standard exists.[Footnote 66] Lower federal courts have 
not formally decided the issue but have discussed it generally. 
[Footnote 67] A few of these courts also analyzed a challenge to a 
toll increase using a Constitutional "dormant commerce clause 
analysis," which focuses on whether state taxation discriminates 
against or unduly burdens interstate commerce and thereby impedes free 
private trade in the national marketplace.[Footnote 68] These cases 
are discussed in more detail below. 

The Three Federal Bridge Statutes: 

The General Bridge Act of 1906 (1906 Act)[Footnote 69] sought "to 
establish uniform regulations with regard to the construction and 
operation of bridges authorized by Congress."[Footnote 70] The 1906 
Act also authorized the Secretary of War to fix the rates of tolls and 
stated that: 

"if tolls shall be charged for the transit over any bridge constructed 
under the provisions of said sections,…such tolls shall be reasonable 
and just and the Secretary of War may, at any time, and from time to 
time prescribe the reasonable rates of tolls for such transit over 
such bridge..." 

It was not until 1926 that informal congressional guidance specified 
what was entailed in the "reasonable and just" standard. As 
articulated by key House and Senate members,[Footnote 71] the standard 
meant that tolls for bridges should be limited to those necessary to 
provide a fund sufficient to pay for the cost of maintaining, 
repairing and operating the bridge, and to provide a sinking fund to 
amortize the cost of the bridge, including reasonable interest and 
financing costs, as soon as possible under reasonable charges. After 
the sinking fund had been provided, the bridge was to be operated toll-
free or with tolls adjusted so as not to exceed its operating and 
maintenance costs. It would take another 20 years before these 
principles were put into legislation under the General Bridge Act of 
1946 (1946 Act).[Footnote 72] 

The Secretary of War issued very few decisions during the period he 
was responsible for overseeing and enforcing the 1906 and 1946 Acts. 
However, one of the more significant cases involved a complainant who 
argued that it was unjust and unreasonable to divert automobile users' 
tolls for the purpose of paying the costs of port development and 
improvements. The Secretary ruled against the complainant saying that 
because Congress had approved the bi-state compact establishing the 
Delaware River Port Authority, which authorized the Authority to pool 
revenues from all of its income-producing activities, and authorized 
the expenditure of revenues so pooled for port development and port 
promotion purposes, the Authority's decision to use toll revenues for 
those purposes was within its sound managerial discretion. Hence, the 
Secretary determined, the higher tolls could not be said to be unjust 
or unreasonable simply because they contributed to financing 
operations that did not directly benefit highway users.[Footnote 73] 

The duties for administering the 1906 and 1946 Acts were transferred 
to the Secretary of Transportation by the Department of Transportation 
Act of 1966.[Footnote 74] In addition, the Secretary was given 
jurisdiction over international bridges in the International Bridge 
Act of 1972 (1972 Act).[Footnote 75] The 1972 Act also included a 
"just and reasonable" clause where tolls could be collected for 
amortization of the construction or acquisition costs of the bridge, 
including interest and financing costs, and for earning a reasonable 
return on invested capital.[Footnote 76] 

Significant Federal Administrative and Court Decisions During DOT 
Oversight of Toll Increases from 1970-1987: 

From 1970 until 1987, the Federal Highway Administration (FHWA) 
Administrator, to whom the Secretary of Transportation delegated his 
toll-oversight authority,[Footnote 77] determined whether bridge toll 
increases were "just and reasonable" under the 1906, 1946, and 1972 
Acts. The first significant case in which a court reviewed FHWA's 
determinations occurred in 1973. The U.S. Court of Appeals for the 
Eighth Circuit, in the Burlington v. Turner case,[Footnote 78] 
reviewed a decision of the Federal Highway Administrator that the toll 
structure set by the City of Burlington, Iowa for its toll bridge over 
the Mississippi River was unjust and unreasonable under the 1906 Act. 
[Footnote 79] The court found that toll rates for the Macarthur Bridge 
between Iowa and Illinois should be limited to an amount sufficient to 
pay the reasonable cost of maintaining, repairing and operating the 
bridge and its approaches under economical management; to provide a 
sinking fund for amortization of the bridge indebtedness; and to 
provide a reasonable return on invested capital. In 1974, the year 
after the Burlington decision, the FHWA administrator, in the Keokuk 
Bridge Tolls case, applied the principles of the Burlington case and 
found that an 8 percent rate of return with added operating and 
maintenance expenses was reasonable. However, because half of the toll 
revenues went to municipal programs and projects unrelated to the 
bridge, the Administrator determined that the rates were not 
reasonable and just.[Footnote 80] Then in 1979, the U.S. Court of 
Appeals for the Second Circuit, in Automobile Club of New York v. 
FHWA, 592 F. 2d 658 (2d Cir. 1979), upheld the decision of the FHWA 
Administrator and a lower court allowing inclusion of complementary 
capital improvements to highways or transit systems in the rate base 
for setting tolls for bridges for the Port Authority of New York and 
New Jersey (PANYNJ). 

The 1987 Act and Significant Federal Court Decisions since Enactment: 

The Surface Transportation and Uniform Relocation Act Assistance Act 
of 1987 (1987 Act) repealed DOT's authority to review bridge toll 
increases, but maintained the requirement that tolls on bridges 
constructed under the authority of the 1906, 1946 and 1972 Acts must 
be "just and reasonable."[Footnote 81] The 1987 Act also repealed the 
1946 Act's express limitation of the use of toll revenues to specific 
bridge-related purposes such as maintaining, repairing, and operating 
a bridge. Since DOT's authority for reviewing bridge toll increases 
was repealed in 1987, the federal courts have become the sole forum 
for challenges to tolls both under the statutory "just and reasonable" 
standard of the 1987 Act as well as under the Commerce Clause of the 
U.S. Constitution.[Footnote 82] A handful of federal court cases have 
applied the "just and reasonable" standard and addressed whether 
private parties can bring suit to enforce it. As summarized below, 
courts in different circuits have reached different conclusions or 
expressed different views regarding whether private parties have the 
right to raise such challenges in court under the "just and 
reasonable" standard. This has not been an issue for those cases 
brought under the Commerce Clause. 

(1) Automobile Club of New York, Inc. v. Port Authority of New York 
and New Jersey, 887 F. 2d 417 (2d Cir. 1989) -The central issue of 
this case was whether it was "just and reasonable" for the PANYNJ to 
include losses from the Port Authority Trans-Hudson (PATH) Railroad in 
the Port Authority's rate base for determining the tolls to be charged 
for passage over the bridges owned by the PANYNJ between New York and 
New Jersey. The plaintiffs contended that the bridge toll increases 
violated both the statutory "just and reasonable" standard in the 1987 
Act and the Constitution's Commerce Clause. The federal district court 
dismissed the "unjust and unreasonable" argument, [Footnote 83] 
finding that the statutory standard had sufficient "flexibility" to 
allow inclusion of functionally-related but non-bridge (PATH) costs in 
the PANYNJ's rate base. The court also rejected the argument that 
including non-bridge costs in setting bridge tolls imposed an 
excessive and unconstitutional burden on interstate commerce, Applying 
a three-part test previously established by the Supreme 
Court,[Footnote 84] the lower court found that (1) the challenged 
state action regulated evenhandedly, with only "incidental" effects on 
interstate commerce; (2) the state action served a legitimate local 
purpose; and (3) there were no alternative means to promote this local 
purpose that would not also affect interstate commerce. On appeal, the 
Second Circuit, in a 2-1 decision, upheld the lower court's ruling 
that PATH was sufficiently related to the PANYNJ's bridges and tunnels 
to warrant its inclusion in the rate base on which "just and 
reasonable" bridge tolls were based. The Commerce Clause challenge was 
not raised on appeal. Neither the district court nor the Court of 
Appeals, however, explicitly addressed the issue of whether the 1987 
Act creates a private right of action. 

(2) Wallach v. Brezenoff, 930 F. 2d 1070 (3d Cir. 1991) -In this case, 
New Jersey citizens brought suit against the PANYNJ challenging toll 
increases both under the "just and reasonable" standard found in the 
1987 Act and the Commerce Clause. At the district court level, the 
court granted the PANYNJ's motion for summary judgment and the 
plaintiffs appealed solely based on the Commerce Clause issues. The 
Third Circuit court rejected the appeal by pointing to the reasons 
given by the district court in Automobile Club of New York, Inc. v. 
Port. Auth. of New York and New Jersey, 706 F. Supp. 264 (S.D.N.Y. 
1989), i.e., that (1) the challenged state action regulated 
evenhandedly, with only "incidental" effects on interstate commerce; 
(2) the state action served a legitimate local purpose; and (3) there 
were no alternative means to promote this local purpose that would not 
also affect interstate commerce. 

(3) Molinari v. New York Triborough Bridge and Tunnel Authority, 838 
F.Supp. 718 (E.D.N.Y. 1993) -The plaintiffs in Molinari brought suit 
against the New York Triborough Bridge and Tunnel Authority, 
challenging the 1989 and 1993 toll increases on the Verrazano-Narrows 
Bridge. They maintained that the tolls were "unjust and unreasonable" 
within the meaning of the 1987 Act solely because they were used to 
subsidize the mass transportation components of the Metropolitan 
Transportation Authority. The district court granted the Authority's 
motion for summary judgment, finding that "plaintiffs have failed to 
create even a triable issue of fact on their claim that the challenged 
toll increases on the Verrazano-Narrows Bridge are unjust and 
unreasonable."[Footnote 85] "[I]f a bridge toll generates more revenue 
than necessary to provide a fair profit or rate of return," the court 
continued, "the toll may not be challenged successfully if it is used 
to support a single integrated transportation system in which the 
successful operation of the bridge is dependent in whole or in part on 
the operation of the other related facilities."[Footnote 86] The court 
also raised serious questions regarding whether a private right of 
action exists under the 1987 Act, finding that not only does the 
statute not explicitly create such a right, it also lacks the kind of 
"right-or duty-creating language" that has generally been the most 
accurate indicator of the propriety of implication of a cause of 
action."[Footnote 87] Finally, the court noted that the "Supreme Court 
has ... been 'especially reluctant to imply causes of action under 
statutes [such as section 508 of the 1987 Act] that create duties on 
the part of persons for the benefit of the public at large"[Footnote 
88] and that there was a compelling case to be made that a private 
right of action should not be implied.[Footnote 89] 

(4) American Trucking Association v. Delaware River Joint Toll Bridge 
Commission, 458 F.3d 291 (3d Cir. 2006) -In this case, the U.S. Court 
of Appeals for the Third Circuit found that the 1987 Act's "just and 
reasonable" provision did not create a private right of action for 
truck drivers to challenge the reasonableness of tolls on bi-state 
bridges operated by the Delaware River Joint Toll Bridge Commission. 
The court ruled that the statute contained no language that might 
suggest a congressional desire to allow a private suit to enforce the 
"just and reasonable" provision. In the absence of explicit language 
conferring a private right of action, the court addressed whether a 
private right of action could be implied under the Supreme Court's 
four-factor test in Cort v. Ash: (1) does the statute create a federal 
right in favor of the particular plaintiff?; (2) is there any 
indication of legislative intent either to create such a remedy or to 
deny one?; (3) is it consistent with the underlying purposes of the 
legislative scheme to imply such a remedy for the particular 
plaintiff?; and (4) is the cause of action one traditionally relegated 
to state law so that it would be inappropriate to infer a cause of 
action based solely on federal law?[Footnote 90] Under the Supreme 
Court's first factor, the Third Circuit found that the 1987 Act was 
designed to benefit the public at large, not truckers specifically. 
Under the second factor, the Third Circuit found legislative history 
on both sides of the issue and thus no clear expression of legislative 
intent that a private right of action was supported. This was 
sufficient for the court to find that there was no private right of 
action under the 1987 Act. The Court noted, as an aside, that the 
truckers had not raised any constitutional challenge in this case. 

(5) Auto Club of New York, Inc. v. Port Authority of New York and New 
Jersey, 842 F. Supp. 2d 672 (S.D.N.Y. 2012) -In this case, the Auto 
Clubs of New York and New Jersey (together AAA) sought to halt toll 
increases proposed by the PANYNJ for its bridges and tunnels, arguing 
that they violated the Constitution's Commerce Clause and the just and 
reasonable standard of the 1987 Act. In particular, AAA argued that 
2011 toll increases on PANYNJ bridges and tunnels which were earmarked 
to fund cost overruns in the PANYNJ's real estate development at the 
World Trade Center violated the statutory "just and reasonable" 
standard because the increases were not functionally related to the 
PANYNJ's integrated, interdependent transportation network and so 
should not have been included in the rate base. AAA also claimed the 
toll increases were unreasonable under the Constitution's so-called 
dormant Commerce Clause because the tolls were not "based on a fair 
approximation of…use" of the bridges and tunnels and are "excessive in 
relation to the benefits conferred" on the users.[Footnote 91] AAA 
sought to stop the toll increases both temporarily--on an emergency 
basis--and permanently. 

The district court rejected AAA's request for immediate relief to stop 
the toll increases, finding that AAA did not show, as required, that 
it would likely win the case when all the facts are heard (the case is 
still ongoing). The court stated that it did not need to reach the 
question of whether AAA had a private right of action under the 1987 
Act. It did, however, raise questions about the Third Circuit's 
reasoning in the American Trucking case (discussed above) saying that 
it "leaves no means of enforcement [for the 1987 Act], making the 
words 'just and reasonable' mere surplusage and conflicting with the 
text and structure of the rest of the act."[Footnote 92] The district 
court also questioned American Trucking's suggestion that "the state 
political process could be the venue that Congress had in mind for the 
airing of toll grievances" since one state's legislature cannot 
unilaterally modify tolls on a bi-state bridge without impinging on 
the rights of the other state's citizens in violation of the Commerce 
Clause. Further, the district court questioned the American Trucking 
court's use of legislative history to justify its decision, since it 
"waived away Committee reports from two earlier (but unpassed) 
versions of the Highway Act containing similar 'just and reasonable' 
language, reports which stated that 'the Committee has created a basis 
for which a user may commence a suit in Federal Court' upon belief 
'that actions of a toll authority are not just and reasonable.'" 
[Footnote 93] 

The parties agreed that a 3-prong test applied by the Supreme Court in 
1994[Footnote 94] was applicable to determine the reasonableness of 
fees for the use of state-provided facilities by those engaged in 
interstate commerce.[Footnote 95] Under this test, a fee is 
reasonable, and thus constitutionally permissible, "if it (1) is based 
on some fair approximation of the use of the facilities, (2) is not 
excessive in relation to the benefits conferred, and (3) does not 
discriminate against interstate commerce."[Footnote 96] Applying this 
test, the district court found that AAA failed to show it likely will 
succeed on either on its Commerce Clause claim or its claim under the 
Highway Act, even assuming a private right of action exists under the 
1987 Act. 

[End of section] 

Appendix III: Public Involvement in Toll Increases by Bi-State Tolling 
Authorities: 

Figure 1: Timeline of Public Involvement in Most Recent Toll Increases 
by Bi-state Tolling Authorities: 

[Refer to PDF for image: timeline] 

PANYNJ: 

2011: 

August 5: The Port Authority of New York and New Jersey (PANYNJ) 
proposes toll and fare increases for its 6 crossings and commuter 
rail. Round-trip cash toll rate for passenger vehicles is $8.00. 

August 16: 10 public hearings (5 in NY, 4 in NJ, 1 online) to receive 
comment. 

August 18: Governors of New York and New Jersey submit a letter to the 
PANYNJ disapproving of the proposed increase and provide an 
alternative proposal with the condition that the PANYNJ conduct a 
comprehensive management audit. 

August 19: PANYNJ board approves the governors’ alternative toll and 
fare increase proposal. 

September 18: First toll and fare increase takes effect, with 
additional increases scheduled for December 2012, 2013, 2014, and 
2015. Current cash toll rate for passenger vehicles is $13.00. 

DRJTBC: 

2011: 

May 2: The Delaware River Joint Toll Bridge Commission (DRJTBC) board 
approves a $0.25 increase in tolls on its 7 tolled bridges during its 
monthly open board meeting without toll hearings and issues press 
release announcing new toll rates. Cash toll rate for passenger 
vehicles is $0.75. 

June 30: Toll increase takes effect. Current cash toll rate for 
passenger vehicles is $1.00. 

DRBA: 

2011: 

April 19: The Delaware River and Bay Authority (DRBA) proposes a toll 
increase for the Delaware Memorial Bridge. Cash toll rate for 
passenger vehicles is $3.00. 

April 27-28: 2 public hearings in DE and NJ to receive comment. 

May 17: DRBA board approves proposed toll increase. 

July 1: Toll increase on Delaware Memorial Bridge takes effect. 
Current cash toll rate for passenger vehicles is $4.00. 

DRPA: 

July 10, 2008: The Delaware River Port Authority (DRPA) proposes toll 
and fare increases for its 4 bridges and commuter rail. Cash toll rate 
for passenger vehicles is $4.00. 

July 22-23, 2008: 2 public hearings in PA and NJ to receive comment. 

August 20, 2008: In response to public comment, DRPA board approves 
toll and fare increases in 2 phases for September 2008 and September 
2010. 

September 14, 2008: First toll and fare increase takes effect. 

December 9, 2009: DRPA board approves delay in second toll and fare 
increase. 

July 1, 2011: Second toll and fare increase takes effect. Current cash 
toll rate for passenger vehicles is $5.00. 

Source: GAO analysis of bi-state tolling agency documentation. 

[End of figure] 

[End of section] 

Appendix IV: Summary of States' Reported Audit Authority over the Four 
Bi-state Tolling Authorities: 

Delaware River and Bay Authority (DRBA), New Jersey and Delaware 
[Footnote 97]: 

Officials from the New Jersey Office of the State Comptroller stated 
that, the office, established in 2007, has standing oversight 
authority over DRBA--and the three other bi-state authorities--under 
the New Jersey state law that enables it to audit and investigate New 
Jersey "public agencies" and "independent state authorities."[Footnote 
98] However, it has not been firmly established in state law or state 
judicial cases that these bi-state authorities are considered "public 
agencies" or "independent state authorities" for the purposes of this 
law. The New Jersey State Auditor--a separate agency from the New 
Jersey Office of the State Comptroller--also reported that it has 
authority to audit the four bi-state tolling authorities under a New 
Jersey state law that provides for a performance audit of "any 
independent authority, or any public entity or grantee that receives 
state funds."[Footnote 99] However, the New Jersey State Auditor also 
stated that receiving state funds is not necessarily a precondition 
for its audit authority over DRBA or any of the bi-state tolling 
authorities.[Footnote 100] Nonetheless, officials with the New Jersey 
Office of the State Comptroller and the New Jersey State Auditor were 
unaware of reciprocal legislation in Delaware recognizing their 
offices' audit authority over DRBA. The Delaware Office of the Auditor 
of Accounts stated that it does not have audit authority over DRBA 
because it is not a state agency and does not receive state funds. 
Neither New Jersey nor Delaware has audited DRBA. DRBA officials took 
no position as to whether either state had standing audit authority, 
but stated that DRBA would entertain a request for audit if contacted 
by either state auditor. Although the New Jersey Office of the State 
Comptroller has not been refused access by any of these entities there 
remains an open question as to the applicability of these provisions 
to these bi-state authorities. 

Delaware River Joint Toll Bridge Commission (DRJTBC), New Jersey and 
Pennsylvania: 

As with the other three bi-state authorities, New Jersey Office of the 
State Comptroller officials reported that they have standing oversight 
of DRJTBC under New Jersey state law.[Footnote 101] However, DRJTBC 
officials reported that the New Jersey Office of the State Comptroller 
does not have authority to audit or investigate DRJTBC because its 
audit authority is limited to entities within its state and does not 
extend to bi-state authorities. The New Jersey Office of the State 
Comptroller has not audited the DRJTBC, and it could not point to 
reciprocal legislation in Pennsylvania recognizing the New Jersey 
State Comptroller's audit authority. The Pennsylvania Department of 
the Auditor General reported that under Pennsylvania state law, the 
DRJTBC must submit biennially to a performance audit jointly conducted 
by the Auditor General of Pennsylvania and the State Auditor of New 
Jersey with a report to be issued every odd-numbered year. [Footnote 
102] The first report was to be completed by December 31, 1997. 
Similar legislation was passed in New Jersey that would require the 
Pennsylvania Auditor General and the New Jersey State Auditor to 
jointly conduct annual financial and management audits.[Footnote 103] 
However, an official of Pennsylvania's Department of the Auditor 
General reported there is a conflict between the two states' laws with 
regard to the joint authority and audit schedule, and that this 
conflict needs to be resolved in order for the audit authority to be 
clear.[Footnote 104] DRJTBC officials stated that neither state's laws 
amended DRJTBC's interstate compact because the laws were not 
identical and the two separate requirements for annual and biennial 
audits and different work products cannot be reconciled, and any 
amendments to the compact would require an act of Congress. As such, 
DRJTBC reported that neither New Jersey nor Pennsylvania state audit 
entities have authority to audit or investigate DRJTBC. The 
Pennsylvania Department of the Auditor General and the New Jersey 
State Auditor officials stated that none of the annual or biennial 
audits of DRJTBC cited in the state laws have been conducted by their 
offices either separately or jointly. During the course of our review, 
New Jersey State Auditor officials reported that its office sent the 
DRJTBC a letter to initiate an audit in July 2013, but DRJTBC rejected 
the request stating in a letter that the audit was not authorized by 
the DRJTBC interstate compact or by state laws in New Jersey and 
Pennsylvania. This disagreement between the DRJTBC and the State 
Auditor of New Jersey was yet to be resolved at the time of our report. 

Delaware River Port Authority (DRPA), Pennsylvania and New Jersey: 

According to officials from Pennsylvania's Department of the Auditor 
General, it does not have the authority to audit or investigate DRPA 
because DRPA is an independent authority and not a state agency. A 
Pennsylvania Department of the Auditor General official also stated 
that because the Auditor General holds a standing, ex officio position 
as a voting member of the DRPA's Board of Commissioners, he or she 
cannot use his office to audit or investigate the DRPA, and has not 
conducted any audits of DRPA. According to New Jersey Office of the 
State Comptroller officials, the comptroller has standing oversight 
authority over DRPA, and exercised that authority in its 2012 
investigative report. However, this investigation was conducted in 
response to the request of the governors of both states and with the 
approval of the DRPA board. Furthermore, New Jersey State Comptroller 
officials could not point to any reciprocal legislation in 
Pennsylvania recognizing standing authority to conduct future audits 
of DRPA. DRPA officials took no position as to whether New Jersey or 
Pennsylvania have standing audit authority and that any decision as to 
whether to adhere to any state audit requests would be a matter for 
its board to decide. 

Port Authority of New York and New Jersey (PANYNJ), New York and New 
Jersey: 

Officials with the Office of the New York State Comptroller and the 
New Jersey Office of the State Comptroller officials stated that their 
offices have audit authority over the PANYNJ. The PANYNJ confirmed 
this audit authority; and while the Office of the New York State 
Comptroller has conducted several audits, the New Jersey Office of the 
State Comptroller has yet to do so. However, because the access 
authorities claimed by the New Jersey Office of the State Comptroller 
over PANYNJ in its enabling legislation[Footnote 105] differ from the 
access authorities recognized by the PANYNJ,[Footnote 106] it is 
unclear what specific authorities would be available to the New Jersey 
Office of the State Comptroller if it attempted to conduct an audit of 
PANYNJ. Furthermore, according to officials with the Office of the New 
York State Comptroller, the PANYNJ does not have the same requirements 
as New York state agencies to report its progress in implementing 
recommendations to the Office of the New York State Comptroller. 

[End of section] 

Appendix V: GAO Contact and Staff Acknowledgments: 

Contact: 

Susan Fleming, (202) 512-2834 or flemings@gao.gov: 

Acknowledgments: 

In addition to the contact named above, Steve Cohen, Assistant 
Director; Matt Barranca; Melissa Bodeau; Mya Dinh; Dave Hooper; Joah 
Iannotta; Hannah Laufe; Josh Ormond; and Justin Reed made key 
contributions to this report. 

[End of section] 

Footnotes: 

[1] In addition to DRBA, DRJTBC, DRPA, and PANYNJ, the three other 
congressionally consented interstate compacts are the (1) New Jersey-
Pennsylvania Turnpike Bridge Compact, (2) Missouri River Toll Bridge 
Compact, and the (3) Portsmouth-Kittery Bridge Compact. These three 
were not included in our review because their facilities are either 
not currently in operation (as is the case in the Missouri River Toll 
Bridge Compact) or the facilities are not managed by bi-state tolling 
authorities, but rather by the departments of transportation for the 
respective states entering into the compacts. 

[2] See GAO, Interstate Compacts: An Overview of the Structure and 
Governance of Environment and Natural Resource Compacts, [hyperlink, 
http://www.gao.gov/products/GAO-07-519] (Washington, D.C.: Apr. 3, 
2007). 

[3] The current requirement that tolls on bridges be just and 
reasonable is found at 33 U.S.C. § 508. Appendix II discusses the 
evolution of the "just and reasonable" standard and how it has been 
applied. 

[4] Surface Transportation Uniform Relocation and Assistance Act of 
1987; Pub. L. No. 100-17, § 135, 101 Stat. 132, 173 (1987). 

[5] Commuter Protection Act, S. 2006 and H.R. 3684 112th Cong. (2011). 
This legislation would have reinstated DOT's authority to review toll 
rates for any bridge or tunnel constructed under the authority of 
several federal bridge acts--the Bridge Act of 1906 (33 U.S.C. § 491 
et seq.), the General Bridge Act of 1946 (33 U.S.C. § 525 et seq.) or 
the International Bridge Act of 1972 (33 U.S.C. § 535 et seq.)--and 
over or through any bridge or tunnel constructed on a federal-aid 
highway (as defined in 23 U.S.C. § 101(a)). 

[6] The Disaster Relief Appropriations Act, 2013 (Pub. L. No. 113-2, 
div. A, 127 Stat. 4, 35 (2013)) provided $10.9 billion to FTA's 
Emergency Relief Program for recovery, relief, and resiliency efforts 
in areas affected by Hurricane Sandy. However, as a result of the 
Budget Control Act of 2011 (Pub. L. No. 112-25), 5 percent of the 
$10.9 billion made available under the Appropriations Act 
($545,000,000) is subject to the significant spending cuts known as 
sequestration and is unavailable for Hurricane Sandy Disaster Relief. 
See 78 Fed. Reg. 19357 (Mar. 29, 2013). As of May 29, 2013, FTA had 
allocated about $5.7 billion for transit relief in New York and New 
Jersey. 

[7] GAO, Government Auditing Standards: 2011 Revision, [hyperlink, 
http://www.gao.gov/products/GAO-12-331G] (Washington, D.C.: December 
2011); International Organization of Supreme Audit Institutions, 
General Standards in Government Auditing and Standards with Ethical 
Significance, ISSAI 200 (Vienna, Austria: 2001); GAO, Inspectors 
General: Proposals to Strengthen Independence and Accountability, 
[hyperlink, http://www.gao.gov/products/GAO-07-1021T] (Washington, 
D.C.: June 20, 2007); and GAO, United Nations: Status of Internal 
Oversight Services, [hyperlink, 
http://www.gao.gov/products/GAO/NSIAD-98-9] (Washington, D.C.: Nov. 
19, 1997). 

[8] The Institute of Internal Auditors, Professional Practices 
Framework, International Standards for the Professional Practice of 
Internal Auditing, (Altamonte Springs, FL: Oct. 2012); [hyperlink, 
http://www.gao.gov/products/GAO/NSIAD-98-9]; [hyperlink, 
http://www.gao.gov/products/GAO-07-1021T]. 

[9] [hyperlink, http://www.gao.gov/products/GAO-07-519]. 

[10] [hyperlink, http://www.gao.gov/products/GAO-07-519]. 

[11] Congress may also recognize an interstate compact in advance by 
passing legislation encouraging states to enter into a specified 
compact or compacts for specified purposes, or by implication after 
the fact, when actions by the states and the federal government 
indicate that Congress has granted its consent even in the absence of 
a specific legislative act. [hyperlink, 
http://www.gao.gov/products/GAO-07-519]. 

[12] The DRPA, PANYNJ, and DRBA compacts include this type of 
language, while the DRJTBC compact does not. See Int'l Union of 
Operating Eng'rs, Local 542 v. Del. River Joint Toll Bridge Comm., 311 
F3d 273 (3d Cir. 2002) for a discussion of how various courts have 
interpreted this type of language. 

[13] The DRJTBC's 1992 agreement with the U.S. Department of 
Transportation, the New Jersey Department of Transportation, and the 
Pennsylvania Department of Transportation under 23 U.S.C. § 129 
permits the use of federal-aid highway funding to pay for the 
construction and upkeep of the I-78 Toll Bridge and requires that all 
toll revenues are used for debt service, reasonable return on private 
investment, and operation and maintenance. The Moving Ahead for 
Progress in the 21st Century Act (MAP-21) imposes a new requirement 
for annual audits to ensure compliance with these limitations, the 
results of which must be transmitted to the Department of 
Transportation. Pub. L. No. 112-141, § 1512, 126 Stat. 405, 567 (2012). 

[14] Navigant, Phase I Interim Report: Presented to the Special 
Committee of the Board of Commissioners, PANYNJ (Jan. 31, 2012). Also 
see Navigant, Phase II Report: Presented to the Special Committee of 
the Board of Commissioners, PANYNJ (Sept. 2012); also see Rothschild, 
Final Report: Presented to the Special Committee of the Board of 
Commissioners, PANYNJ (Sept. 2012). 

[15] New Jersey Office of the State Comptroller, Investigative Report: 
Delaware River Port Authority (Trenton, NJ: Mar. 29, 2012). 

[16] The Commerce Clause provides Congress with the power to "regulate 
Commerce… among the several states…" U.S. Const. art. 1, § 8, cl. 3. 

[17] As previously noted, we reviewed the allowable uses for toll 
revenues, but due to ongoing litigation between the PANYNJ and the 
American Automobile Association regarding recent toll increases by the 
PANYNJ, we did not assess the specific purposes and projects for which 
the PANYNJ uses its toll revenues. For consistency, we did not assess 
the specific purposes and projects for which the other bi-state 
tolling authorities use their toll revenues. 

[18] DRPA reported that its board passed a resolution in 2011 that 
limited its economic development spending to the completion of seven 
existing projects. This is discussed further later in this report. 

[19] DRJTBC reported that it has adopted a policy in consultation with 
credit-rating agencies to maintain a debt-service coverage ratio of 
1.5, or risk a downgrade of its credit ratings and less favorable 
terms on future debt. 

[20] 33 U.S.C. § 508. 

[21] Surface Transportation and Uniform Relocation Assistance Act of 
1987, Pub. L. No. 100-17, § 135, 101 Stat. 132, 173 (Jan. 14, 1987). A 
Senate report accompanying the act stated in a section-by-section 
analysis of the act that, "Federal oversight of the reasonableness of 
tolls has proven to be administratively burdensome [and] legally 
unproductive." Section-by-Section Analysis of S. 312--Essential 
Highway Reauthorization Amendments of 1987, 133 Cong. Rec. S778 (Jan. 
14, 1987). 

[22] See, e.g., Wallach v. Brezenoff, 930 F.2d 1070 (3d Cir. 1991); 
Automobile Club of New York, Inc. v. Port Authority of New York and 
New Jersey, 706 F. Supp. 264 (S.D.N.Y 1989). 

[23] GAO, Metropolitan Planning Organizations: Options Exist to 
Enhance Transportation Planning Capacity and Federal Oversight, 
[hyperlink, http://www.gao.gov/products/GAO-09-868] (Washington, D.C.: 
Sept. 9, 2009). 

[24] N.Y. Unconsol. Laws 6416-A; N.J. Stat. § 32: 1-6.1 

[25] The New York State Committee on Open Government is a unit in the 
New York Department of State that oversees and advises the government, 
public, and news media on Freedom of Information, Open Meetings, and 
Personal Privacy Protection Laws. On September 6, 2011, the Committee 
issued an advisory opinion stating that the PANYNJ's policies for open 
records and open meetings fall short of the requirements in New York's 
Freedom of Information and Open Meetings Laws. 

[26] Transportation Research Board of the National Academies, 
Effective Public Involvement Using Limited Resources, National 
Cooperative Highway Research Program Synthesis 407 (Washington, D.C.: 
2010). Also see FHWA, Public Involvement Techniques for Transportation 
Decision-Making, Publication No.FHWA-PD-96-031 (Washington, D.C.: Dec. 
1996). 

[27] Transportation Research Board of the National Academies, 
Committee on Public Involvement, State of the Practice: White Paper on 
Public Involvement (Washington, D.C.: 2000). 

[28] GAO, Federal User Fees: A Design Guide, [hyperlink, 
http://www.gao.gov/products/GAO-08-386SP] (Washington, D.C.: May 29, 
2008). 

[29] The PANYNJ general counsel stated that members of the public may 
request a copy of PANYNJ resolutions from the Office of the PANYNJ's 
Secretary. 

[30] 23 C.F.R. § 450.316. 

[31] [hyperlink, http://www.gao.gov/products/GAO-08-386SP]. 

[32] The DRJTBC reported that it did not hold toll hearings for its 
2011 toll increase in which it raised passenger vehicle tolls to $1.00 
because that toll rate remains less than a previously approved toll 
increase to $1.25 which was implemented in 2001. The DRJTBC reduced it 
to $.75 in 2003. 

[33] GAO, Executive Guide: Leading Practices in Capital Decision-
Making, [hyperlink, http://www.gao.gov/products/GAO/AIMD-99-32] 
(Washington, D.C.: December 2008). 

[34] Transportation Research Board of the National Academies, Public 
Participation Strategies for Transit, Transit Cooperative Research 
Program Synthesis 89 (Washington, D.C.: 2011). 

[35] Transportation Research Board, State of the Practice: White Paper 
on Public Involvement (2000). 

[36] 23 C.F.R. § 450.316 (a)(1)(vi). 

[37] Institute for Local Government, Principles of Local Government 
Public Engagement (Sacramento, CA: June 10, 2010). 

[38] Transportation Research Board, State of the Practice: White Paper 
on Public Involvement (2000). 

[39] Transportation Research Board, State of the Practice, 5. 

[40] Office of the New York State Comptroller, Port Authority of New 
York and New Jersey: Contracts for Personal and Miscellaneous 
Services, Report 2009-S-54 (Albany, New York: July 19, 2011). 

[41] New Jersey Office of the State Comptroller, Investigative Report: 
Delaware River Port Authority (Trenton, NJ: Mar. 29, 2012). 

[42] Because this is a discussion of state law, we are not providing 
an independent analysis as to whether these laws establish audit 
authority over the bi-state authorities. 

[43] See GAO, United Nations: Status of Internal Oversight Services, 
[hyperlink, http://www.gao.gov/products/GAO/NSIAD-98-9] (Washington, 
D.C.: Nov. 19, 1997); also see International Organization of Supreme 
Audit Institutions, General Standards in Government Auditing and 
Standards with Ethical Significance, ISSAI 200 (Vienna, Austria: 2001). 

[44] Some compacts include language that enables states to modify the 
compact through reciprocal legislation. The DRPA, PANYNJ, and DRBA 
compacts include this type of language, while the DRJTBC compact does 
not. See Int'l Union of Operating Eng'rs, Local 542 v. Del. River 
Joint Toll Bridge Comm., 311 F3d 273 (3d Cir. 2002) for a discussion 
of how various courts have interpreted this type of language. 

[45] N.J. Stat. § C52: 15C. 

[46] N.J. State § C52: 24-4. 

[47] As provided by federal law, and contingent upon meeting certain 
requirements, a state may be permitted reduce the amount of funds it 
is required to contribute to receive federal surface transportation 
funds by claiming credit for toll revenues generated and used to 
build, improve, or maintain highways, bridges, or tunnels that serve 
the public purpose of interstate commerce. 23 U.S.C. §120(j). 

[48] New Jersey was the only state in our review that claimed toll 
credits for expenditures made by the bi-state tolling authorities in 
the past 5 fiscal years. According to FHWA officials, from fiscal year 
2008 through 2011, New Jersey requested about $342 million in toll 
credits based on bi-state tolling authority expenditures. FHWA 
approved almost $1.8 billion in toll credits from four other tolling 
authorities in the state which are not bi-state entities, including 
the New Jersey Turnpike Authority, Burlington County Bridge 
Commission, Cape May County Bridge Commission, and the South Jersey 
Transportation Authority. Overall, FHWA has approved more than $7 
billion in toll credits to New Jersey since the program was put in 
place in 1992; and New Jersey maintains a balance of approximately 
$3.2 billion in approved but unused toll credits as of August 2012 
that can be used to eliminate its matching requirements in future 
years. 

[49] From 2008 through 2011, NJDOT applied an average of almost $150 
million in toll credits for highway projects, and New Jersey Transit 
applied an average of almost $90 million per year in toll credits for 
transit projects to eliminate the state matching requirements for 
those years. 

[50] The DRPA reported that its compact provides that the state 
legislatures of New Jersey and Pennsylvania may establish a veto 
authority for each governor over the decisions of the commissioners 
appointed from his or her state. The New Jersey governor has veto 
authority over its DRPA commissioners and, according to a DRPA 
official, has recently exercised that authority to encourage revisions 
to DRPA resolutions on open meetings and open records. 

[51] N.J. Stat. § 32: 8-15.6-15.8. 

[52] House Bills 619 and 621 have been introduced in the Pennsylvania 
General Assembly, which would provide the Pennsylvania governor the 
authority to veto certain actions of DRJTBC Pennsylvania Commissioners. 

[53] [hyperlink, http://www.gao.gov/products/GAO-12-331G]. 

[54] Institute of Internal Auditors, International Standards for the 
Professional Practice of Internal Auditing (2012). 

[55] [hyperlink, http://www.gao.gov/products/GAO-07-1021T]. 

[56] See [hyperlink, http://www.gao.gov/products/GAO-12-331G]; also 
see IIA, International Standards for the Professional Practice of 
Internal Auditing (2012); and see [hyperlink, 
http://www.gao.gov/products/GAO-07-1021T]. 

[57] H.R. 6202, 111TH Cong. (2010). 

[58] According to the DRPA IG, its draft operating procedures are 
based on the Principles and Standards for Offices of Inspector General 
prepared by the Association of Inspectors General. 

[59] See 23 C.F.R. § 450.316. See also Transportation Research Board 
of the National Academies, Effective Public Involvement Using Limited 
Resources, National Cooperative Highway Research Program Synthesis 407 
(Washington, D.C.: 2010); Transportation Research Board of the 
National Academies, Committee on Public Involvement in Transportation 
Planning, State of the Practice: White Paper on Public Involvement 
(Washington, D.C.: 2000); FHWA, Public Involvement Techniques for 
Transportation Decision-Making, Publication No.FHWA-PD-96-031 
(Washington, D.C.: Dec. 1996); Institute for Local Government, 
Principles of Local Government Public Engagement (Sacramento, CA: June 
10, 2010); and GAO, Federal User Fees: A Design Guide, [hyperlink, 
http://www.gao.gov/products/GAO-08-386SP] (Washington, D.C. May 29, 
2008). 

[60] GAO, Government Auditing Standards: 2011 Revision, [hyperlink, 
http://www.gao.gov/products/GAO-12-331G] (Washington, D.C.: Dec. 
2011); International Organization of Supreme Audit Institutions, 
General Standards in Government Auditing and Standards with Ethical 
Significance, ISSAI 200 (Vienna, Austria: 2001); GAO, Inspectors 
General: Proposals to Strengthen Independence and Accountability, 
[hyperlink, http://www.gao.gov/products/GAO-07-1021T] (Washington, 
D.C.: Jun. 20, 2007); GAO, United Nations: Status of Internal 
Oversight Services, [hyperlink, 
http://www.gao.gov/products/GAO/NSIAD-98-9] (Washington, D.C.: Nov. 
19, 1997). 

[61] The Institute of Internal Auditors, International Standards for 
the Professional Practice of Internal Auditing, (Altamonte Springs, 
FL: Oct. 2012); [hyperlink, 
http://www.gao.gov/products/GAO/NSIAD-98-9]; [hyperlink, 
http://www.gao.gov/products/GAO-07-1021T]. 

[62] The Commerce Clause provides Congress with the power to "regulate 
Commerce… among the several states…." U.S. Const. art. I, § 8, cl. 3. 

[63] Act of March 23, 1906, Ch. 113, § 4, 34 Stat. 85. 

[64] The current requirement that tolls on bridges be just and 
reasonable is found at 33 U.S.C. § 508. 

[65] American Trucking Ass'n v. Delaware River Joint Toll Bridge 
Comm'n, 458 F.3d 291 (3d Cir. 2006). 

[66] Automobile Club of New York, Inc. v. Port Authority of New York 
and New Jersey, 887 F.2d 417 (2d Cir. 1989). 

[67] Molinari v. New York Triborough Bridge and Tunnel Auth., 838 
F.Supp. 718 (E.D.N.Y. 1993); Auto Club of New York, Inc. v. Port Auth. 
of New York and New Jersey, 842 F. Supp.2d 672 (S.D.N.Y. 2012). . 

[68] Auto Club of New York, Inc. v. Port Auth. of New York and New 
Jersey, 842 F. Supp. 2d 672 (S.D.N.Y. 2012). 

[69] Act of March 23, 1906, Ch. 113, § 4, 34 Stat. 85. 

[70] H.R. Rep. No. 59-182, at 1-2 (1906). See A Study of Federal 
Statutes and Regulations Governing Toll Bridges", U.S. Department of 
Transportation (July 1974). 

[71] A new bridge policy was agreed to by members of the Senate 
Committee on Commerce and the House Committee on Interstate and 
Foreign Commerce as conveyed in statements made on the House and 
Senate floors. 67 Cong. Rec. 8531 (House--April 30, 1926); 67 Cong. 
Rec. 8572 (Senate--May 1, 1926). 

[72] Act of August 2, 1946, Ch. 753, Title V, 60 Stat. 847. 

[73] Camden Bridge Toll, Secretary of the Army, May 4, 1954. 

[74] Pub. L. No. 89-670, 80 Stat. 931 (1966). 

[75] Pub. L. No. 92-434, 86 Stat. 731 (1972). 

[76] Pub. L. No. 92-434, §6(1), 86 Stat. 731 (1972). 

[77] 49 C.F.R. § 1.48(i), 35 Fed. Reg. 4960 (March 21, 1970). 

[78] 471 F.2d 120 (8th Cir. 1973). 

[79] The FHWA decision was reviewed first by a district court, 336 F. 
Supp. 594 (S.D. Iowa 1972), where the action was brought pursuant to 
the Administrative Procedure Act. 

[80] In the Matter of Keokuk Bridge Tolls, Federal Highway 
Administration, April 23, 1974. 

[81] Pub. L. No. 100-17, § 135, 101 Stat. 132, 174 (April 2, 1987). 
The just and reasonable requirement is codified at 33 U.S.C. § 508. 

[82] The Commerce Clause provides Congress with the power to "regulate 
Commerce… among the several states…." U.S. Const. art. I, § 8, cl. 3. 

[83] Automobile Club of New York, Inc. v. Port Auth of New York and 
New Jersey, 706 F. Supp. 264 (S.D.N.Y. 1989). 

[84] See Hughes v. Oklahoma, 441 U.S. 322, 336 (1979). 

[85] 838 F. Supp. 718, 724 (E.D.N.Y. 1993). 

[86] Id. at 725. 

[87] Id. at 724. 

[88] Id. at 724. 

[89] Legislative history accompanying the 1987 Act shows that Congress 
was divided over how the "just and reasonable" standard was to be 
enforced following repeal of DOT's oversight responsibility. Senate 
reports accompanying two bills that preceded the 1987 Act and which 
contained language similar to that found in the 1987 Act (the Federal 
Aid Highway Act of 1984 and the Interstate Highway Funding Act of 
1985) contained language indicating that the federal courts would be 
the proper forum for challenges pursuant to the 1987 Act's just and 
reasonable standard. Both reports stated that "[by] placing this 
requirement in the statute, the Committee has created a basis for 
which a user may commence suit in federal Court if he or she believes 
actions of a toll authority are not just and reasonable." See S. Rep. 
No. 98-524 (1984); S. Rep. No. 99-2 (1985). The Chairman of the House 
Committee on Public Works and Transportation stated, in regard to the 
Surface Transportation and Uniform Relocation Assistance Act of 1987, 
that "[the] only thing we have changed is the forum for making the 
determination. Toll increases will no longer be subject to review by 
the Department of Transportation; instead the decision will be left to 
the courts in the event of a challenge." Congressional Record, March 
31, 1987. However, a section-by-section analysis of the bill stated 
that "State and toll authorities would be given greater flexibility in 
operating toll facilities. Federal oversight of the reasonableness of 
tolls has proven to be administratively burdensome, legally 
unproductive, and has interjected the Federal Government in the role 
of a mediator in disputes which could more appropriately be settled at 
the State and local level." Section-by-Section Analysis of S. 312--
Essential Highway Reauthorization Amendments of 1987, 133 Cong. Rec. 
S778. 

[90] Cort v. Ash, 422 U.S. 66 (1975). 

[91] The courts have interpreted the Commerce Clause to include a 
"dormant Commerce Clause," meaning that by negative implication under 
the Clause, the federal government has power to "prohibit[] state 
taxation or regulation that discriminates against or unduly burdens 
interstate commerce and thereby impedes free private trade in the 
national marketplace." See, e.g., Selevan v. New York Thruway 
Authority, 584 F.3d 82 (2d Cir. 2009). 

[92] 842 F. Supp. 2d 672, 679 (S.D.N.Y. 2012). 

[93] Id. at 679. 

[94] Northwest Airlines, Inc. v. County of Kent, 510 U.S. 355 (1994). 

[95] The Commerce Clause provides Congress with the power to "regulate 
Commerce… among the several states…" U.S. Const. art. 1, § 8, cl. 3. 
From this federal grant of regulatory power flows the negative or 
dormant implication that the Commerce Clause "prohibits state taxation 
or regulation that discriminates against or unduly burdens interstate 
commerce and thereby impedes free private trade in the national 
marketplace." 

[96] Northwest Airlines, above, 510 U.S. at 369, quoting Evansville-
Vanderburgh Airport Authority Dist. v. Delta Airlines, Inc., 405 U.S. 
707 at 716-717. 

[97] Because this is a discussion of state law, we are not providing 
an independent analysis as to whether these laws establish audit 
authority over the bi-state authorities. 

[98] N.J. Stat. § C52: 15C. 

[99] N.J. State § C52: 24-4. 

[100] New Jersey State Auditor officials reported that the DRBA has 
received almost $1.7 million in New Jersey state funds since fiscal 
year 2003, primarily for ferry and airport projects, and that the 
Delaware River Port Authority is the only other bi-state tolling 
authority that has received funds from the State of New Jersey--less 
than $1 million since fiscal year 2004 primarily for emergency 
services. 

[101] N.J. Stat. § C52: 15C. 

[102] 36 P.S. § 3401, Article IX. 

[103] N.J. Stat. § 32: 8-10, Article IX, which states that "the 
Auditor General of Pennsylvania and the State Auditor of New Jersey 
shall jointly conduct annual financial and management audits of 
expenditures and operations of the commission and shall submit a 
report of those audits to the Governors and Legislatures of the 
Commonwealth of Pennsylvania and the State of New Jersey." 

[104] In February 2013, House Bill 620 was introduced in the 
Pennsylvania General Assembly that would amend this audit requirement. 

[105] N.J. Stat. § C52: 15C would provide the New Jersey Comptroller 
with "complete access to all government records of public agencies." 

[106] The PANYNJ recognizes the New York and New Jersey Comptrollers' 
audit authority under state law in New York (McKinney's Unconsolidated 
Laws of New York, § 7071) and state law in New Jersey (New Jersey 
State Law 32: 2-31, 32). The New York state statute states that "the 
comptroller of the state of New York and the comptroller of the state 
of New Jersey and their legally authorized representatives are hereby 
authorized and empowered from time to time to examine the accounts and 
books of the port of New York authority, including their receipts, 
disbursements, contracts, leases, sinking fund, investments and such 
other items referring to their financial standing and receipts and 
disbursements as such comptroller may deem proper. Such examination 
may be made by either comptroller at any time or by both comptrollers 
acting together." 

[End of section] 

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