PURSUANT TO THE PROVISIONS OF THE State Administrative Procedure Act, NOTICE is hereby given of the following proposed rule:

Amendment of section 101.2, repeal of section 101.4 and addition of new section 101.4 to Title 21 NYCRR.

Toll rate adjustments on the New York State Thruway system.

To provide for toll rate adjustments necessary to support the Authority's financial obligations.

6:00 p.m. – 8:00 p.m., August 16, 2012 at Buffalo & Erie County Public Library, Auditorium (Main Level), One Lafayette Square, Buffalo, NY; 11:00 a.m. – 1:00 p.m., August 17, 2012 at Double Tree by Hilton Hotel, 6301 State Rte. 298, East Syracuse, NY; 10:00 a.m. – 12:00 p.m., August 18, 2012 at Hilton Garden Inn, 15 Crossroads Court, Newburgh, NY.

Interpreter services will be made available to hearing impaired persons, at no charge, upon written request submitted within reasonable time prior to the scheduled public hearing. The written request must be addressed to the agency representative designated in the paragraph below.

All public hearings have been scheduled at places reasonably accessible to persons with a mobility impairment.

The Proposed Rule provides for toll rate adjustments on the controlled system and at fixed barriers along the New York State Thruway to provide the funds necessary to finance the New York State Thruway Authority’s (Authority) multi-year capital plan, to perform necessary maintenance and operations and to comply with the relevant portions of the Authority’s General Revenue Bond Resolution and Fiscal Management Guidelines. These toll rate adjustments will be fully implemented by October 2012.

Jonathan Gunther, Assistant Counsel, New York State Thruway Authority, 200 Southern Boulevard, Albany, New York 12209, (518) 436-2840, email: [email protected]

Same as above.

Five days after the last scheduled public hearing.

Public Authorities Law section 2804 requires that a detailed financial report be submitted to the Governor, Comptroller and the Chairs and Ranking Members of the Legislative Fiscal Committees.

1. Statutory authority:

Public Authorities Law (PAL) section 354 subdivision 5 authorizes the New York State Thruway Authority (Authority) to make rules and regulations for the use of the Thruway and any other facilities under the jurisdiction of the Authority. PAL section 354 subdivision 8, in pertinent part, authorizes the Authority "to fix fees for the use of the Thruway System or any part thereof necessary…to produce sufficient revenue to meet the expense of maintenance and operation and to fulfill the terms of any agreements made with the holders of its notes or bonds…" PAL section 354 subdivision 15 authorizes the Authority to do all things necessary or convenient to carry out its purposes or exercise the powers given in Title 9. Section 1630 of the Vehicle and Traffic Law authorizes the Authority to make rules and regulations to regulate traffic on any highway under its jurisdiction with respect to charging tolls, taxes, fees, licenses or permits for the use of the highway or any property under the Authority's jurisdiction. In addition to the Vehicle and Traffic Law authorization, the Authority is authorized pursuant to section 361 of the PAL to "promulgate such rules and regulations…for the collection of tolls…"

2. Legislative objectives:

In enacting PAL section 353 the legislature found that certain public benefits would accrue from the creation of the Thruway Authority. The Legislature found and declared that the development, operation and maintenance of the Thruway System was a benefit to the people of the State of New York with respect to their health, welfare, safety, recreation, commerce and common defense. That statutory provision declared that the Authority was created for the purpose of and given the power to finance, develop, construct, reconstruct, improve, maintain and operate the Thruway System. As a self-sustaining entity, the proposed toll adjustment will enable the Authority to continue to maintain and operate the Thruway System in furtherance of the health, safety and welfare of the people of the State of New York. The proposed toll adjustment will produce revenues that meet the needs of the multi-year capital program and will allow the Authority to perform necessary operation and maintenance and comply with the relevant portions of the Authority's General Revenue Bond Resolution and Fiscal Management Guidelines.

3. Needs and benefits:

The Authority last adjusted tolls in January 2010. Section 365 of the PAL authorizes the Authority to issue negotiable notes and bonds necessary to provide sufficient moneys for achieving the corporate purposes of the Authority. The Authority has and will continue to issue negotiable notes and bonds pursuant to its General Revenue Bond Resolution, adopted August 3, 1992 (the, Bond Resolution), as amended, which is the contract between the Authority and its bondholders. Pursuant to Section 608 of the Bond Resolution (the Maintenance covenant) the Authority has covenanted to operate and maintain its Facilities (as defined in the Bond Resolution) "in a sound and economical manner and shall maintain, reconstruct and keep the same…and every part and parcel thereof, in good repair, working order and condition, and shall from time to time, make or cause to be made, all necessary and proper repairs, replacements and renewals so that at all times the operation of the Facilities may be properly and advantageously conducted…" The continuation of the present toll schedule would result in revenues insufficient to allow the Authority to meet its needs for the required Maintenance covenant under the Bond Resolution.

Section 609 (the Rate covenant) of the Bond Resolution requires that that Authority fix, charge and collect tolls sufficient to equal the Authority's Net Revenue Requirement, as that term is defined in the Bond Resolution. In accordance with the Bond Resolution, the Authority requested a study by an independent consultant to recommend a schedule of tolls, fees and charges to provide sufficient net revenues to comply with the Rate covenant and the Maintenance covenant. The report developed by Jacobs Engineering Group, Inc. examined the financial requirements of the Authority to meet the future maintenance, reconstruction and operational needs of the system, excluding the financial needs of the Tappan Zee Hudson River Crossing Project, which will be addressed separately in the future should a build alternative be selected and upon completion of a financial plan to fund the project. See http://www.thruway.ny.gov/news/pressrel/index.html (click on "May 30, 2012 - Download the Independent Traffic Engineer's Report On Thruway Finances"). That report, "New York State Thruway Financial Requirements and Proposed Toll Adjustments" (Jacobs Report), found that current toll levels on the Thruway were insufficient to meet the Thruway's future needs. In order to maintain a serviceable system and a safe facility the Jacobs Report found that a toll adjustment is required to fully implement the Authority's multi-year capital program providing for the needed reconstruction, maintenance and congestion relief improvements. The Jacobs Report concluded that continuation of the present toll schedule will result in operational deficits and very low pay-as-you-go financing. The Jacobs Report further concluded that the continuation of the present toll schedule will result in debt service coverage ratios declining below the limits established in the Authority's Bond Resolution and Fiscal Management Guidelines by the end of 2012. Please see table VI-8 "Flow of Funds with the Existing Toll Schedule," contained in the Jacobs Report, indicating that the Net Balance Available for Working Capital for the period 2012-2016 is projected to be -$238,200,000 without the proposed toll adjustment. Table VIII-1 "Flow of Funds with the Proposed Toll Schedule," contained in the Jacobs Report, indicates that the Net Balance Available for Working Capital for the period 2012-2015 is projected to be $0.0 with the proposed toll adjustment, and will be -$3.0 million in 2016.

The Authority established several goals in developing a proposed toll adjustment, including, preserving the Authority's $1.5 billion multi-year capital program; preserving all discount programs; eliminating any anticipated operational gaps; maintaining debt service coverage ratios of at least 1.6x in 2012; and avoiding any changes to the toll schedules applicable to certain vehicle classes. Through an aggressive operational streamlining program, the Authority will achieve $119.5 million in savings from 2013 through 2016. The proposed toll adjustments achieve the Authority's goals.

4. Costs:

Costs to regulated parties will vary as the Authority employs a multi-classification system for tolls that takes into consideration vehicle class, based upon axles and height, and distance traveled on the Thruway System. Under the proposed plan, tolls for passenger vehicles (class 2L, 3L, 4L) and certain commercial vehicles (class 2H) will remain unchanged. Under the proposed plan, the cash toll for a tractor trailer (class 5H), the most common commercial vehicle, generally will increase by 10.76 cents per mile and the E-ZPass rate will increase by 10.22 cents per mile.

The Authority is mindful of all people who use the Thruway, including those who use the Thruway to commute to work in rural areas and for small businesses and local governments. The Authority encourages all customers to sign up for E-ZPass to receive a discount. This proposed toll adjustment preserves the commercial E-ZPass and volume discounts, which are available to all Authority commercial customers, including small businesses, that enroll and qualify. Additionally, this proposed toll adjustment preserves passenger E-ZPass discount and commuter programs. For certain classes of customers (passenger vehicles- classes 2L, 3L, 4L, commercial vehicles- class 2H) existing toll rates will remain unchanged. The fee for the Annual Permit Plan, which allows free travel on the controlled portion of the Thruway System for the first 30 miles of every trip, will also remain unchanged. Further, the Thruway is a vital transportation corridor for both intrastate and interstate commerce. Failure to properly maintain the highway could negatively affect all of New York State including rural areas, small businesses and local governments.

5. Local government mandates:

Not applicable.

6. Paperwork:

Not applicable.

7. Duplication:

Not applicable.

8. Alternatives:

The Authority review and the Jacobs Report both looked at the alternative of not implementing toll adjustments. The Jacobs Report has indicated that a toll adjustment is required. The Authority is statutorily required to finance, construct, reconstruct, improve, develop, maintain and operate the Thruway System pursuant to PAL section 353. Leaving the current toll structure in place would result in:

• Revenues insufficient to fund the multi-year capital program;

• Insufficient funds for capital improvements to the infrastructure and routine operations and maintenance, resulting in deterioration of pavement and bridge conditions that would negatively affect safety and service to Thruway customers;

• Insufficient funds for the operation and maintenance of Other Authority Projects (as defined in the Bond Resolution), such as the Canal, resulting in deterioration of canal infrastructure;

• Operational deficits;

• Increased reliance on issuing debt and higher costs to finance projects;

• Debt service coverage ratios in the later years of the forecast period declining below the limits established in the Authority's Bond Resolution and Fiscal Management Guidelines;

• Revenues insufficient to allow the Authority to comply with the relevant portions of the Bond Resolution;

• Deterioration of the Authority's financial condition to the extent that its bond rating would be reduced, leading to greater costs of future debt issuances.

The Authority intends to conduct an extensive public outreach during the public comment period, including holding three public hearings statewide. Authority staff is in the process of reaching out to several interested parties, including AAA, the Motor Truck Association, Associated General Contractors of America, the Business Council and many elected officials. The Authority expects a continuing dialogue with the parties mentioned above, as well as other interested parties, and will consider all comments during the public comment period.

9. Federal standards:

Not applicable.

10. Compliance schedule:

It is anticipated that all regulatory requirements will be scheduled and completed by September 29, 2012 and that such schedule will comply with all of the State statutory and regulatory requirements. Following implementation of the rule, there will be no additional time required for regulated persons to achieve compliance with the rule.

1. Effect of rule:

An estimate as to the number of small businesses or local governments that will be affected by the toll adjustment cannot be provided. However, the Authority is mindful of all people who use the Thruway, including those who use the Thruway to commute to work for small businesses and local governments. The Authority encourages all customers to sign up for E-ZPass to receive a discount. This proposed toll adjustment preserves the commercial E-ZPass and volume discounts, which are available to all Authority commercial customers, including small businesses, that enroll and qualify. Additionally, this proposed toll adjustment preserves passenger E-ZPass discount and commuter programs. For certain classes of customers (passenger vehicles- classes 2L, 3L, 4L, commercial vehicles- class 2H) existing toll rates will remain unchanged. The fee for the Annual Permit Plan, which allows free travel on the controlled portion of the Thruway System for the first 30 miles of every trip, will also remain unchanged. Further, the Thruway is a vital transportation corridor for both intrastate and interstate commerce. Failure to properly maintain the highway could negatively affect all of New York State, including small businesses and local governments. The Thruway System is a user fee supported system. Therefore, only those who use the Thruway System are affected by the toll adjustment.

2. Compliance requirements:

There are no reporting or recordkeeping requirements necessary to comply with this rule.

3. Professional services:

There are no professional services that a small business or local government is likely to need to comply with this rule.

4. Compliance costs:

Costs to regulated parties will vary as the Authority employs a multi-classification system for tolls that takes into consideration vehicle class, based upon axles and height, and distance traveled on the Thruway System. Under the proposed plan, tolls for passenger vehicles (class 2L, 3L, 4L) and certain commercial vehicles (class 2H) will remain unchanged. Under the proposed plan, the cash toll for a tractor trailer (class 5H), the most common commercial vehicle, generally will increase by 10.76 cents per mile and the E-ZPass rate will increase by 10.22 cents per mile.

For example, a passenger vehicle paying cash traveling between Exit 24 (Albany) and Exit 25 (Schenectady) currently pays $0.30, and will remain unchanged. Please note, tolls are calculated by multiplying the distance traveled by the per-mile cost and rounded to the nearest nickel for cash tolls. The same trip with E-ZPass currently costs $0.29 and will remain unchanged. For participants in the Annual Permit Plan, this trip is within thirty miles and therefore has no additional charge. A commercial vehicle (Tractor Trailer-Class 5H) paying cash for the same trip currently pays $1.45 and will pay $2.10 upon adoption of the proposed toll adjustment. With E-ZPass, the same commercial vehicle currently pays $1.38 and will pay $2.00 upon adoption of the proposed toll adjustment. A passenger vehicle traveling between Exit 24 (Albany) and Exit 50 (Williamsville) currently pays $12.85 if paying by cash and $12.21 if using E-ZPass. These rates will remain unchanged. A commercial vehicle (Tractor Trailer-Class 5H) paying cash for the same trip currently pays $65.15 and will pay $94.45 upon adoption of the proposed toll adjustment. With E-ZPass, a commercial vehicle currently pays $61.89 and will pay $89.73 upon adoption of the proposed toll adjustment.

5. Economic and technological feasibility:

Technological feasibility is not applicable to the proposed rule. Economic feasibility cannot be assessed as outlined in responses 1 and 4 above.

6. Minimizing adverse impact:

The Authority is mindful of all people who use the Thruway, including those who use the Thruway to commute to work for small businesses and local governments. The Authority encourages all customers to sign up for E-ZPass to receive a discount. This proposed toll adjustment preserves the commercial E-ZPass and volume discounts, which are available to all Authority commercial customers, including small businesses, that enroll and qualify. Additionally, this proposed toll adjustment preserves passenger E-ZPass discount and commuter programs. For certain classes of customers (passenger vehicles- classes 2L, 3L, 4L, commercial vehicles- class 2H) existing toll rates will remain unchanged. The fee for the Annual Permit Plan, which allows free travel on the controlled portion of the Thruway System for the first 30 miles of every trip, will also remain unchanged. Further, the Thruway is a vital transportation corridor for both intrastate and interstate commerce. Failure to properly maintain the highway could negatively affect all of New York State, including small businesses and local governments.

7. Small business and local government participation:

The Authority will be conducting an extensive public outreach process as part of this toll adjustment, including publication in the State Register pursuant to SAPA and publication in two newspapers of daily circulation in each of the areas where public hearings are to be held pursuant to Public Authorities Law Section 2804. In addition to holding three public hearings to be held across the State, the Authority also plans to accept public comment via mail or electronic mail until at least five days after the final public hearing is held. This will permit any interested party, including small businesses and local governments to participate in the rule making process.

1. Types and estimated numbers of rural areas:

An estimate as to the number of rural areas that will be affected by the toll adjustment cannot be provided. However, the Authority is mindful of all people who use the Thruway, including those who use the Thruway to commute to work in rural areas. The Authority encourages all customers to sign up for E-ZPass to receive a discount. This proposed toll adjustment preserves the commercial E-ZPass and volume discounts, which are available to all Authority commercial customers, including small businesses, that enroll and qualify. Additionally, this proposed toll adjustment preserves passenger E-ZPass discount and commuter programs. For certain classes of customers (passenger vehicles- classes 2L, 3L, 4L, commercial vehicles- class 2H) existing toll rates will remain unchanged. The fee for the Annual Permit Plan, which allows free travel on the controlled portion of the Thruway System for the first 30 miles of every trip, will also remain unchanged. Further, the Thruway is a vital transportation corridor for both intrastate and interstate commerce. Failure to properly maintain the highway could negatively affect all of New York State, including rural areas. The Thruway System is a user fee supported system. Therefore, only those who use the Thruway System are affected by the toll adjustment.

2. Reporting, recordkeeping and other compliance requirements; and professional services:

There are no reporting, recordkeeping or professional service requirements necessary to comply with this rule.

3. Costs:

Costs to regulated parties will vary as the Authority employs a multi-classification system for tolls that takes into consideration vehicle class, based upon axles and height, and distance traveled on the Thruway System. Under the proposed plan, tolls for passenger vehicles (class 2L, 3L, 4L) and certain commercial vehicles (class 2H) will remain unchanged. Under the proposed plan, the cash toll for a tractor trailer (class 5H), the most common commercial vehicle, generally will increase by 10.76 cents per mile and the E-ZPass rate will increase by 10.22 cents per mile.

For example, a passenger vehicle paying cash traveling between Exit 24 (Albany) and Exit 25 (Schenectady) currently pays $0.30, and will remain unchanged. Please note, tolls are calculated by multiplying the distance traveled by the per-mile cost and rounded to the nearest nickel for cash tolls. The same trip with E-ZPass currently costs $0.29 and will remain unchanged. For participants in the Annual Permit Plan, this trip is within thirty miles and therefore has no additional charge. A commercial vehicle (Tractor Trailer-Class 5H) paying cash for the same trip currently pays $1.45 and will pay $2.10 upon adoption of the proposed toll adjustment. With E-ZPass, the same commercial vehicle currently pays $1.38 and will pay $2.00 upon adoption of the proposed toll adjustment. A passenger vehicle traveling between Exit 24 (Albany) and Exit 50 (Williamsville) currently pays $12.85 if paying by cash and $12.21 if using E-ZPass. These rates will remain unchanged. A commercial vehicle (Tractor Trailer-Class 5H) paying cash for the same trip currently pays $65.15 and will pay $94.45 upon adoption of the proposed toll adjustment. With E-ZPass, a commercial vehicle currently pays $61.89 and will pay $89.73 upon adoption of the proposed toll adjustment.

4. Minimizing adverse impact:

The Authority is mindful of all people who use the Thruway, including those who use the Thruway to commute to work in rural areas. The Authority encourages all customers to sign up for E-ZPass to receive a discount. This proposed toll adjustment preserves the commercial E-ZPass and volume discounts, which are available to all Authority commercial customers, including small businesses, that enroll and qualify. Additionally, this proposed toll adjustment preserves passenger E-ZPass discount and commuter programs. For certain classes of customers (passenger vehicles- classes 2L, 3L, 4L, commercial vehicles- class 2H) existing toll rates will remain unchanged. The fee for the Annual Permit Plan, which allows free travel on the controlled portion of the Thruway System for the first 30 miles of every trip, will also remain unchanged. Further, the Thruway is a vital transportation corridor for both intrastate and interstate commerce. Failure to properly maintain the highway could negatively affect all of New York State, including rural areas.

5. Rural area participation:

The Authority will be conducting an extensive public outreach process as part of this toll adjustment, including publication in the State Register pursuant to SAPA and publication in two newspapers of daily circulation in each of the areas where public hearings are to be held pursuant to Public Authorities Law Section 2804. In addition to holding three public hearings to be held across the State, the Authority also plans to accept public comment via mail or electronic mail until at least five days after the final public hearing is held. This will permit any interested party, including those in rural areas, to participate in the rule making process.

1. Nature of impact:

The toll adjustment is designed, among other things, to support the Authority's multi-year $1.5 billion capital program. According to data from the Federal Highway Administration (FHWA) and the White House Council of Economic Advisors (CEA), each $1 billion of highway investment supports approximately 13,000 full-time jobs. Applying the FHWA and CEA statistics, it is estimated that the multi-year capital plan will support approximately 19,500 full-time jobs over the course of the multi-year capital plan.

2. Categories and numbers affected:

According to data from the Association of General Contractors, for every $1 billion of highway investment approximately 4,400 Direct jobs, 2,100 Indirect jobs and 6,500 Induced jobs are supported. Direct jobs are those held by workers employed at the highway construction site, including laborers, specialists, engineers and managers. Indirect jobs are those held by workers in industries that supply highway construction manufacturers with materials, including those involved in lumber, steel, concrete and cement products, and by offsite construction industry workers, including administrative, clerical and managerial workers. Induced jobs are those jobs supported throughout the economy when highway construction industry employees spend their earnings.

3. Regions of adverse impact:

Not applicable.

4. Minimizing adverse impact:

Not applicable.

5. Self-employment opportunities:

Not applicable.