The Current Status of State VMT Fees
August 4, 2023|Garett Shrode
The following is an excerpt from Eno’s new report, Driving Change: Advice for the National VMT Pilot, released last month. Figure numbers have been removed, footnote numbers changed, and stylistic changes made for this format.
Starting in the early 2000’s, interest in VMT fees in the United States has grown significantly and includes research and pilot programs in 37 states and DC. Many of these pilot programs began or expanded with grant funding from the federal Surface Transportation System Funding Alternatives (STSFA) program—a Fixing America’s Surface Transportation (FAST) Act (2015) program that provided funding to state and regional entities interested in researching and piloting VMT fees—with grant recipients in California, Delaware, Hawaii, Kansas, Minnesota, Missouri, New Hampshire, Ohio, Oregon, Texas, Utah, Washington, and Wyoming. [Note 1] Oregon was the first state to pilot a VMT fee in 2006, followed by Minnesota in 2011. Oregon continued to lead with the first enacted (but optional) program in 2015. See below:
State-Led VMT-Fee Timeline
For the means of this research, a pilot is defined as a VMT-fee trial with a limited number of participants and a pre-determined end date. They typically serve as a proof of concept and simulate revenue collection in lieu of collecting revenue, with different iterations often focusing on collecting data from various focus groups or trialing different technologies and program structures. A program goes beyond the scope of a pilot and creates the long-term administrative and operating structure for a VMT fee that does not have an end date. Four states have enacted such programs: Oregon, Utah, Virginia, and Hawaii. None of these states have abandoned their gas taxes. Those that are using a VMT fee as an alternative to a fuel tax for its voluntary participants are so far only bringing in marginal additional revenue, if any, as they have to reimburse fuel taxes paid. Virginia’s program is an alternative to a flat highway use fee paid by owners of fuel-efficient vehicles (25 mpg or higher) and is the only program seeing significant revenue increases for transportation. Hawaii’s program was signed into law July 5, 2023; while too new to evaluate revenues, it also replaces an EV surcharge. [Note 2] None of these programs are mandatory, but legislation has been introduced in the Oregon state house to make participation mandatory for passenger vehicles that have a gas-mileage greater than 30 mpg and are model year 2028 or later. [Note 3] See below:
Map of State Research, Pilots, and Programs
In addition to participation at the state Department of Transportation (DOT) level, two regional level research and piloting entities exist in the United States: RUC America and the Eastern Transportation Coalition (TETC). Both serve as coordinating agencies for a group of states and are uniquely positioned to explore interoperability concerns. Although their membership is growing, RUC America serves mostly western states, and TETC mostly serves states located along the Interstate-95 Corridor on the east coast. See map below. While there are similarities, pilots around the United States vary widely in their design, data exploration, and outcomes. This section explores the various administration structures, interoperability concerns, data collection technologies, and privacy and equity considerations, for both commercial and passenger vehicle pilots.
Map of RUC America and Eastern Transportation Coalition Member States
The various state VMT-fee pilots deploy a range of administrative schemes. While almost all involve their departments of transportation—Virginia’s program is the exception as it is housed under its Department of Motor Vehicles (DMV)—some include other state-level departments and stakeholders. For example, Utah’s program is operated out of their DOT, but their DMV shares data to support essential program functions, such as determination of vehicle type. Minnesota had included their department of revenue in its most recent iteration because they manage their existing fuel tax collection. For almost all of the state pilots and programs, the management of participant accounts is outsourced to a private-sector commercial account manager (CAM), such as Azuga or Emovis. Oregon offers in-house account management to its participants alongside both Azuga and Emovis and is the only program that currently does so.
State leaders saw this outsourcing as successful, because they could leverage technologies and workforce that already existed, remove themselves from data privacy concerns, and provide their participants with value added services that CAMs can offer, such as trip history and fuel usage.
For commercial vehicle pilots, the administrative structure has looked similar. TETC’s Multi-state Truck Pilot (2018-19) and their National Truck Pilot ((2021-21) partnered with EROAD, a transportation technology solutions company based in New Zealand, to leverage the data already collected for their customers through their on-board units. [Note 4] TETC’s partnership with a CAM allowed for the offloading of data collection and data protection to a commercial entity with experience and expertise.
For the federal pilot, IIJA prescribes some of the administrative structure. IIJA stipulates that the U.S. Treasury Department should collect revenue as a part of the pilot, but where the program should be housed at USDOT is not prescribed. Additionally, since the federal government does not have a department of motor vehicles or a national vehicle registration system, the administration of a federal pilot will likely need to look different from that of the state pilots.
The administrative structure of a national pilot will also need to consider how to interface a federal program with an existing state program in an interoperable manner. As of July 2023, there has been no instance where a vehicle owner has been able to participate in two VMT-fee pilots or programs that have been administered by two separate entities.
A RUC has been implemented in New Zealand since 1977. [Note 5] The program only includes vehicles (both passenger and commercial) that use diesel fuel, and any vehicle with a manufacturer’s gross laden weight of 3.5 tonnes or more. Vehicles that use gasoline compressed natural gas, or liquified petroleum gas, are not included because they pay for their road use through fuel taxes. EVs are exempt from the program and do not pay a road user charge. [Note 6]
The RUC is administered through a pre-pay system with the purchase of distance licenses, each license allowing for 1000km of travel.
In addition to administrative interoperability between the federal and state pilots, cooperation is needed between states to properly charge vehicle owners who traverse state lines. In its simplest form, federal fuel tax replacement only requires an odometer reading and can be location agnostic. However, more is needed to accurately administer a state-level VMT fee, especially for states that experience large amounts of interstate travel. The federal government will likely need to consider and regulate these interstate transactions of data and funds. In some programs, pilot participants who drove out of state could apply for a refund for those miles driven. This manual process will become overly burdensome when VMT-fee program participation is made mandatory. Oregon and California have explored what complimentary programs could look like through an interoperability study as part of the OReGO program and California RUC pilot; a cloud-based clearinghouse was used to reconcile funds across state lines. [Note 7] However, it is important to note that this reconciliation requires a GPS reporting method, which many pilots found some of their participants felt unease toward due to privacy concerns.
The current fuel tax agreement with heavy vehicles may provide a model for interoperability when driving across state lines. The International Fuel Tax Agreement (IFTA) was created in 1991 with the passage of the Intermodal Surface Transportation Efficiency Act (ISTEA). Before IFTA, each state had its own fuel tax system for heavy vehicles and a truck needed to buy permits for each state that it drove through. IFTA simplified this system by allowing truck operators to file and pay in their home state, and then the money would be redistributed based on where fuel had been purchased and miles had been driven.
The International Registration Plan (IRP) also simplified the commercial vehicles registration process. [Note 8] While there are aspects of this system that would become more complicated with the introduction of private vehicles, IFTA and IRP’s coordination structures and redistributions can act as a model for state-to-state interoperability.
Nine European Union (EU) countries have deployed RUC programs, including Austria, Czechia, Germany, and Switzerland, with an additional 11 evaluating a possible scheme. These programs are primarily aimed at “heavy goods vehicles” (HGVs), and use on-board devices to administer the RUC. [Note 9]
The EU has established a framework to encourage member states to “use taxation and infrastructure charging in the most effective and fair manner in order to promote the ‘user pays’ and ‘polluter pays’ principles, as enshrined in the treaties.” [Note 10] Germany attempted to implement a road user charge for passenger vehicles on its federal roadways, but it was rejected by the European Court of Justice as it would have penalized non- residents by charging them more. [Note 11] Norway piloted a RUC for passenger vehicles, but it has not yet been implemented. [Note 12]
Note 1: Federal Highway Administration, “Surface Transportation System Funding Alternatives (STSFA) Program Funding Awards,” U.S. Department of Transportation, February 9, 2022. https://ops.fhwa.dot.gov/stsfa/funding_awards.htm
Note 2: Hawaii State Legislature, S.B. 1534, 32nd Legislature, 2023. https://www.capitol.hawaii.gov/session/measure_indiv.aspx?billtype=SB&billnumber=1534&year=2023
Note 3: Oregon State Legislature, H.B. 3297, 82nd Oregon Legislative Assembly, 2023. https://olis.oregonlegislature.gov/liz/2023R1/Measures/Overview/HB3297
Note 4: The Eastern Transportation Coalition, “Exploration of Mileage-Based User Fee Approaches for All Users,” February 2022 https://tetcoalitionmbuf.org/wp-content/uploads/2022/02/Exploration-of- Mileage-Based-User-Fee-Approaches-for-All-Users_Condensed-1.pdf
Note 5: Susan J. Binder, “Road User Charge: Applying Lessons Learned in New Zealand to the United States,” Cambridge Systematics Inc, February 2019. https://onlinepubs.trb.org/Onlinepubs/NCHRP/docs/NCHRP2024(121)_NZ_RUC_Lessons_Learned _Report.pdf
Note 6: New Zealand Transport Agency, “About RUC.” Accessed June 30, 2023. https://www.nzta.govt.nz/vehicles/road-user-charges/about-ruc/
Note 7: RUC West, “Measuring Miles Beyond State Borders.” Accessed July 3, 2023. https://www.rucwest.org/wp-content/uploads/2018/07/RUC_Interoperability_folio_final-LTR.pdf
Note 8: International Registration Plan Inc, “Mission of IRP, Inc.” Accessed July 3, 2023. https://www.irponline.org/page/Missionpage
Note 9: Saeeda Malik, “RUC: Learning from the European experience,” Ptolemus Consulting Group, August 31, 2022. https://www.ptolemus.com/insight/ruc-learning-from-the-european- experience/#:~:text=Where%20in%20Europe%20is%20RUC,Czech%20Republic%2C%20Belgium%2 0and%20Bulgaria
Note 10: Directorate-General for Mobility and Transport, “Road charging,” European Commission. Accessed June 20, 2023. https://transport.ec.europa.eu/transport-modes/road/road-charging_en
Note 11: Deutsche Welle, “EU Court Rules Against Autobahn Tolls,” June 18, 2019. Accessed June 30, 2023. https://www.dw.com/en/eu-court-rules-against-autobahn-tolls/a-49243318
Note 12: Adam Hill, “Kapsch Pilots Norway RUC Project,” ITS International, November 15, 2022. Accessed June 30, 2023. https://www.itsinternational.com/its1/news/kapsch-pilots-norway-ruc-project