In last month’s Public Works Financing column, I reviewed the trucking industry’s four primary concerns about tolling and concluded that three of the four have merit. The trucking industry’s concerns could be addressed in future toll projects via legislative changes that would prevent the diversion of toll revenues to non-highway purposes, begin tolling only after a new or rebuilt highway or bridge was opened to traffic, and provide refunds or rebates of fuel taxes for the miles driven on newly tolled facilities.
The industry’s fourth concern greatly exaggerates the cost of toll collection as a fraction of revenue, which is very low for over-the-road big rigs.
Looking to the future, the trucking industry has begun to acknowledge the impending decline of fuel-tax revenues and the need to plan for a replacement roadway user charge. For several years, the American Transportation Research Institute, the trucking industry’s research arm, has tried to come up with alternatives (such as having all electric vehicle owners pay for roads as part of their vehicle electric bills—which would be very complex to implement), or greatly exaggerating the cost of collecting per-mile charges.
What has changed significantly over the last several years is the growing participation by trucking companies in mileage-based user-fee pilot projects. Going beyond isolated cases, such as California’s mileage-based user-fee pilot in which trucks took part, The Eastern Transportation Coalition (TETC) carried out the first multi-state truck pilot project in 2018-2019. The program included 50 trucks of various sizes traveling 1.4 million miles across 27 states.
That initial pilot project set truck per-mile charges so that each participating truck would pay a rate per mile aimed at generating the same revenue as the state’s diesel tax, based on an assumed average heavy-truck efficiency of six miles per gallon. That produced disparities, such as trucks with lower miles per gallon (mpg) paying less than more fuel-efficient trucks, in effect penalizing the latter and subsidizing fuel-guzzlers. Industry participants concluded that this was unfair and would be unworkable. The trucking participants concluded that future commercial vehicle trials should explore setting mileage-based user fee (MBUF) rates based on each truck category’s registered weight.
This is a revolutionary change. For decades, whenever I talked about tolls at trucking conferences, the response was along the lines of, ‘That’s just another word for a weight-distance tax,’ which truckers despise and consider unworkably complex in the six states that have them (with Oregon as the best-known). But a mileage-based user fee that charges per mile based on the truck’s registered weight category is what the truckers themselves put on the table, assuming that a transition to MBUFs is needed.
The Eastern Transportation Coalition, which describes itself as “a partnership of 17 states and the District of Columbia focused on connecting public agencies across modes of travel to increase safety and efficiency,” followed up with the first national truck MBUF pilot project in 2020-2021. This larger trial included all 48 contiguous states, and 21 trucking companies traveling 11 million miles, 73% of which were outside their home states. The national trial increased awareness that using multiple miles per gallon categories did not work for mileage-based user fee rate setting for trucks, leading to a decision that a future MBUF pilot should explore charging trucks based on registered weight categories rather than miles per gallon.
This recommendation was reached by the Rate Setting Task Force of the Motor Carrier Working Group (MCWG) that was formed during the first TETC trucking pilot. The MCWG includes representatives of trucking companies, trucking organizations, freight shippers, truck manufacturers, and regulators.
A second contribution from MCWG was to better acquaint the MBUF community with two institutions that assist the trucking industry with multi-state operations. The International Fuel Tax Agreement (IFTA) simplifies paying truck fuel taxes among U.S. states and Canadian provinces. Trucks buy fuel in some states but travel across others without buying fuel. IFTA enables trucking companies to report their miles in each state, enabling each fleet’s fuel tax to be apportioned based on how many miles they drove in each jurisdiction that month. The International Registration Plan (IRP) carries out functions similar to IFTA, dividing up registration fees among the states where the trucks operate.
The Motor Carrier Working Group and The Eastern Transportation Coalition agreed that these long-established institutions provide example frameworks on which a nationwide mileage-based user fee could be based, as they manage diesel taxes and registration fees nationally today. TETC released a background paper on IFTA and IRP in Feb. 2022 and has introduced the broad mileage-based user fee/road user charge community to these little-known, outside of the trucking industry, organizations. TETC is working with both organizations to begin discussions on how to leverage their mutual experience and systems to define what a national MBUF approach could look like as this country moves further toward replacing fuel taxes with per-mile charges.
The Eastern Transportation Coalition’s Phase IV International Truck Pilot took place from June 1 through Nov. 30, 2022, adding trucks in the registered weight range of 10,001-26,000 pounds, and including exploration of using IFTA, IRP and a private company, ClearRoad, as part of operating a future mileage-based user fee system. Following the recommendation of the MCWG, the registered weight was used to determine MBUF rates. The report on this trial is expected to be released later this spring.
The Eastern Transportation Coalition, in 2021, conducted additional non-truck pilot projects in cooperation with Transurban, a leading toll road operator, testing such ideas as using toll road back offices for MBUF collection as a strategy to lower administrative costs. An additional pilot will be conducted by Transurban in partnership with TETC in 2023.
Let’s sum up what this means. Despite about a decade of opposition to the need for a transition from fuel taxes to mileage-based user fees, a growing fraction of the trucking industry is not only taking part in pilot projects but is actively working to devise policies to make MBUF charges fair and consistent and to achieve economies of scale in the revenue collection. While the motor carrier industry has yet to endorse mileage-based user fees, they recognize that a new kind of weight-distance charge could actually be a workable replacement for per-gallon diesel taxes, as ever-tougher federal truck miles per gallon requirements and the growing market penetration of electric trucks shrinks the revenue generated by per-gallon fuel taxes.
A per-mile charge based on vehicle registered-weight category is very similar to how tolled Interstates charge trucks. But as pointed out in my previous column, a new per-mile charge needs to become a dedicated user fee, just as our water bills, gas bills, electric bills, and other utility bills are dedicated to the capital and operating expenses of the infrastructure providing those services.
As the Motor Carrier Working Group put in feedback to the national truck mileage-based user fee pilot program, “Participants expressed a strong belief that any funds collected from an increase in fuel tax or an MBUF should be spent on the trucker’s workplace: roads and bridges.”
I second the motion.
A version of this column first appeared in Public Works Financing.