Congestion Pricing Next Time

New York Law Journal

April 25, 2008
by Stephen L. Kass and Jean McCarroll

Congestion pricing will be back, and should be, for Manhattan’s central business districts. The recent failure of the New York State Legislature to approve Mayor Michael Bloomberg’s and the City Council’s request for authority to impose an $8 daily fee for vehicles entering a “congestion zone” south of 60th Street elicited sharp criticism of “cowardice” on one side and “elitism” on the other.

In our view, the use of financial incentives (or, in this case, disincentives) to discourage autos and trucks from entering the city’s most-crowded commercial districts during weekdays is both reasonable and fair. Nevertheless, future plans to implement congestion pricing in New York City will need to respond more persuasively to both procedural and substantive objections to the Bloomberg proposal. This column suggests the outlines of such a revised plan.

SEQRA Review

One of the principal weaknesses of the Bloomberg plan was its failure to comply with the State Environmental Quality Review Act (SEQRA), which requires the preparation of an environmental impact statement (EIS), public hearings on that EIS and specific environmental findings for agency and municipal “actions” that may have significant adverse effects on the environment. There is little question that congestion pricing on the scale proposed by Mayor Bloomberg would satisfy this standard in view of its potential for changing existing traffic and parking patterns, with consequent localized transportation, air quality, noise and neighborhood character impacts. The plan sponsors, however, believed that preparation of an EIS was not a feasible option because of the need to secure all state and municipal approvals by the federal deadline of March 31, 2008 (later extended by one week).

There were several options open to plan sponsors to address this problem. First, the Bloomberg administration might have commenced preparation of the required EIS early last fall, concurrently with the plan’s review by the special Traffic Mitigation Commission established by the Legislature to develop the congestion pricing plan. Second, the plan itself could have been treated as a short-term pilot project with no permanent improvements or impacts, likely qualifying it for exception from SEQRA’s EIS requirement, while a long-term plan underwent EIS review. Third, the congestion pricing plan might have been imposed directly by the Legislature, whose actions are exempt from SEQRA.

Unfortunately, the plan sponsors chose none of these alternatives, claiming instead that the commission’s public hearing on its preliminary plan (later revised) and its final report were the substantial equivalent of a full EIS (which it was not) and thus satisfied the “purpose” of SEQRA. They also proposed a “customized” EIS, based on the “principle” of SEQRA, after the congestion pricing plan was approved to evaluate any required mitigation measures. This position had the reluctant and, in our view, short-sighted support of environmental groups that should have known better and will now have to resist similar efforts to circumvent SEQRA for other “urgent” public projects. It also left the congestion pricing plan vulnerable to those who questioned both its legality and its failure to consider fully alternative ways of reducing traffic congestion and pollution (including a special parking surcharge for the congestion zone or license plate traffic rationing for that zone).

The next time around, plan sponsors would be well-advised to incorporate full SEQRA compliance into their schedule so that both the substance of the plan and its approval process can benefit from the detailed analyses and public participation that New Yorkers have come to expect under SEQRA.

Substantive Changes

Beyond undergoing SEQRA review, any revised congestion pricing plan should, in our view, incorporate some or all of the following amendments to the rejected Bloomberg plan:

1. No Credit for Bridge/Tunnel Tolls: The Bloomberg plan proposed permitting drivers who enter Manhattan via the Port Authority’s Hudson River crossings (George Washington Bridge and Lincoln and Holland Tunnels) to credit their E-Z Pass tolls for these crossings against that day’s congestion pricing charge. That would have effectively eliminated any additional charge for most New Jersey drivers bound for the congestion zone, and any remaining difference between the bridge/tunnels and the congestion charge would have been insignificant compared with $4 per gallon fuel costs and commercial parking fees. Moreover, essentially waiving the congestion charge for New Jersey’s mostly higher income drivers while imposing it on drivers from Queens, Brooklyn and Staten Island (as well as Westchester and Long Island) would have been both counterproductive and unfair. Any future plan must therefore treat all such drivers equally, notwithstanding the foreseeable outcry from New Jersey commuters and theatergoers.

2. Taxi/Limousine Surcharges: The Bloomberg plan included modest ($1) surcharges on yellow cabs and black car limousines entering the congestion zone. This seems to us both too much and too little. If private cars are to be limited south of 60th Street, taxis will take on increased public importance, particularly for cross-town trips and for tourists. Moreover, New York City has wisely required the entire licensed taxi fleet to be converted to hybrid vehicles over the next few years, significantly reducing the air emissions from such vehicles. Limousines, on the other hand, serve a highly select business clientele that eschews public transit and can well afford a small surcharge (say, $10 per trip), which could be halved for hybrid, natural gas or fuel cell vehicles.

3. Energy-Efficient Cars and Trucks With Advanced Pollution Controls: More generally, while New York City cannot ban the entry of gas-guzzling cars or highly polluting but lawful trucks, it ought to be able to waive or reduce that portion of its congestion charge related to air pollution and climate-change impacts (as opposed to traffic congestion) for vehicles that incorporate state-of-the-art pollution controls and energy-efficient engines. For cars, this means hybrid, electric or fuel cell engines, which conserve energy, reduce urban smog and limit greenhouse gases. For trucks, this means advanced diesel engines of the sort now used in Europe or trucks with diesel particulate filters (DPFs). Vehicles meeting these requirements could pay, for example, 50 percent of the normal congestion charge.

4. FDR/Route 9A: The Bloomberg plan originally proposed to exempt the Franklin D. Roosevelt Drive and the Route 9A extension of the West Side Highway from the congestion charge, which would have applied only to vehicles entering the congestion zone street grid. The commission’s final plan changed that by imposing the congestion charge on all vehicles using these peripheral roads south of 60th Street, perhaps in an effort to recapture some of the charges excused for trans-Hudson drivers. However, both the FDR Drive and Route 9A also serve many Brooklyn and Bronx residents and businesses with destinations outside of the Manhattan congestion zone, and it hardly seems appropriate to penalize them for using these arterial roadways if they do not impinge on local traffic.

5. Non-E-Z Pass Vehicles: Any congestion pricing plan must, of necessity, rely heavily on the E-Z Pass system to collect a daily congestion charge. (To encourage E-Z Pass use, the Bloomberg plan also included an additional $1 fee for non-E-Z Pass vehicles.) This will likely work for taxis, vans and regular commuters who need E-Z Pass for other purposes. However, it is not entirely clear how charges can be collected from either short-term visitors or regular drivers (including FDR Drive and Route 9A drivers between Brooklyn and the Bronx) who do not use E-Z Pass. The most practical method would probably be to send vehicle owners bills that, unless paid within 48 or 72 hours, would be treated like parking tickets, the nonpayment of which can prevent registration renewals. Whether that would prove feasible for large numbers of daily drivers remains to be seen, and provides another reason to exempt FDR and Route 9A users from the congestion charge.

6. City Placards: Since the primary goal of congestion pricing is to discourage unnecessary driving by New Yorkers and visitors, it is incongruous for the city to actively encourage its employees to drive by issuing official placards entitling “key” employees to disregard on-street parking regulations - a subsidy that (convenience aside) saves the favored employees the exorbitant rates charged by congestion zone garages. It now appears that there are between 125,000 and 150,000 such placards in circulation, most of them duly issued by city departments but some of them counterfeit or simple photocopies of genuine placards. Since neither Mayor Bloomberg nor his successor can reasonably ask New York residents to give up driving to work while subsidizing large numbers of city employees to do the opposite, elimination or substantial curtailment of the placard “perk” must accompany (or precede) any new congestion pricing program.

7. Transit Trust Fund: The Bloomberg congestion pricing plan recognized that no such program is feasible without significantly, and promptly, expanded transit capacity to serve commuters who give up their cars. The plan therefore allocated the largest share of congestion pricing proceeds to the Metropolitan Transportation Authority (MTA) for expanded commuter bus routes. Nevertheless, opponents feared that, as with other “dedicated” revenue streams (such as those for environmental facilities or legal services), future state administrations might seek to “raid” these funds to meet other budgetary shortfalls. To counter this concern (and to facilitate the use of congestion fees to support transit bonds for new buses and expanded subway and rail service), congestion pricing revenues should be placed in a trust fund that cannot be used for any other purpose without both MTA and New York City Council approval.


Congestion pricing is an important traffic management tool that New York City should seek to implement in the future, despite its rejection by the Legislature this year. Future proposals, however, should be reviewed in compliance with SEQRA (and other applicable laws) in order to provide meaningful impact analysis, mitigation commitments, comparison of alternatives and public participation. Such proposals should also address the issues of trans-Hudson tolls, arterial roadways, taxis and limousines, low-polluting vehicles, non-E-Z Pass drivers, transit trust funds and the anomaly of city-issued parking placards as discussed above. If these procedural and substantive challenges are forthrightly addressed the next time around, congestion pricing may yet become a reality for New York.

Stephen L. Kass and Jean M. McCarroll, together with Clifford P. Case and Michael C. Davis, direct the environmental practice group at Carter Ledyard & Milburn.

Reprinted with permission from the April 25, 2008 edition of The New York Law Journal  © 2008 ALM Properties, Inc. All rights reserved. Further duplication without permission is prohibited.

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