Executive Summary

As vehicles become more fuel efficient, the reliability and adequacy of the motor fuel tax (MFT) as a primary source for transportation infrastructure funding is a critical issue that Congress is interested in identifying viable solutions. Recognizing this trend, the Fixing America’s Surface Transportation Act of 2015 established the Surface Transportation System Funding Alternatives (STSFA) Program. The purpose of the program is to provide grants to States or groups of States to demonstrate user based alternative revenue mechanisms that employ a user-fee structure to maintain the long term solvency of the Highway Trust Fund.

In Federal fiscal year (FFY) 2016, the U.S. Department of Transportation awarded eight STSFA grants to seven lead States (California, Delaware, Hawaii, Minnesota, Missouri, Oregon [project lead for two grants], and Washington) totaling $14,235,000. The types of proposals included both pre-deployment and deployment activities, and two represented multi-State partnerships. This report evaluates Phase Ⅰ of STSFA-funded projects. Staff from the Federal Highway Administration (FHWA) headquarters in the Office of Operations have the overall responsibility for administering the program and conducting the independent evaluation. FHWA Division office staff provide direct support by monitoring program activities of participating States.

The FHWA sponsored an evaluation of the work conducted by the eight grantee sites that received funding in FFY 2016. Topics addressed include lessons learned from initial pilot and planning efforts, the role of education and outreach, the potential for any negative impacts on constituents, and initial findings on administrative fees, among others.

This report presents cross-cutting findings from all Phase Ⅰ STSFA project sites. The report is limited in scope to reporting key findings of activities that were directly executed with STSFA funds. However, wherever relevant, references are made to how the STSFA-funded activities fit within the overall approach of the grantee site to examine alternative user based revenue sources.

Major Findings

Mileage Reporting Approaches

Of the eight 2016 STSFA grantees, six grantees—Oregon, Washington, California, Hawaii, Interstate 95 Corridor Coalition, and Road Usage Charge (RUC) West—are exploring or continuing to explore the concept of an RUC that assesses a fee based on mileage driven for individual drivers/users of the transportation system. Minnesota is exploring an approach that establishes an RUC for shared fleet vehicles, while Missouri is exploring a vehicle registration fee structure that accounts for vehicle fuel efficiency.

The mileage recording approaches evaluated by Phase Ⅰ sites fall into the following major categories:

• Odometer-based approaches.
• Vehicle onboard diagnostics-based approaches that do not include location.
• Location-based approaches.
• Alternative approaches, including a fleet-based approach, registration fee-based approach, and pay-at-the-pump approach.

Towards the end of Phase Ⅰ, sites also began efforts to explore emerging technology-based approaches. Key findings regarding the multiple mileage reporting options follow:

• Several pilot sites’ approach to testing both technology- and nontechnology-based mileage reporting methods align with the goal of providing more options to the public and enhancing the ease of use. However, these attempts are in the early phases.
• Significant future changes in transportation usage patterns are likely, given the current growth in mobility on demand (MOD) and mobility-as a-service (MaaS). These not only present new opportunities to explore a variety of scenarios, but also present challenges of uncertainty about future travel behaviors and patterns.
• While exploring emerging technology approaches is in line with the current projection of adoption of both electric and connected vehicle technologies, data access, ownership, and privacy issues are likely to continue to pose challenges.

The attributes of the specific mileage recording approaches based on Phase Ⅰ activities evaluated by STSFA project partners include:

• Accuracy, precision, reliability, and repeatability: These terms refer primarily to the measurement of miles driven and the system’s ability to assess fees consistently.
• Transparency and ability to audit: The ability of the system to provide information on how the fee was assessed or will be assessed prior to travel; the amount assessed is the essence of transparency.
• Flexibility and user choice: From a user perspective, there are two primary interactions that occur regularly with each of the proposed systems that will influence their ease of use—mileage reporting and payment of fees. Mileage reporting includes installation, operation, and maintenance of the mileage recording method or device. For each interaction, providing more options and minimizing required actions, including the incremental effort and frequency of such actions, goes towards enhancing flexibility and user choice.

The pilot sites did not significantly investigate additional attributes, like enforcement and compliance, during Phase Ⅰ execution.

Table 1 presents key findings Phase Ⅰ pilot sites explored regarding attributes of mileage reporting options.

Table 1. Attributes of mileage recording approaches explored in Phase Ⅰ.

Attribute	Key Reported Findings
Accuracy, precision, reliability, and repeatability	Technology-based approaches that are installed in the vehicle and have the ability to measure and communicate directly with an account manager are likely to provide more accurate, precise, reliable, and repeatable fee assessments. While smartphones offer flexibility and locational measurement, the user must have them present and powered on in the vehicle while driving, potentially creating issues of reliability and repeatability. Additional testing and pilot demonstrations are needed to establish the accuracy, precision, reliability, and repeatability of mileage recording approaches, particularly for operations at scale.
Transparency and ability to audit	Most technologies tested or considered offer transparency comparable to the motor fuel tax. The key difference is that mileage and fee accumulation data are accessible to the driver after the trip is made in the case of road usage charge as opposed to motor fuel tax, which is paid at the time of fuel purchase. With an active screen, cellular connectivity, and the ability to measure and display vehicle position and fee structure based on vehicle position, the transparency potential for (location-enabled) smartphone-based fee reporting is high. The registration fee-based approach has a high degree of transparency, where the fee has no relation to a trip and, therefore, is a “pay and forget” experience for the driver. The pilots that generated invoices (real or fictitious) largely demonstrated that transparency and ability to audit are achievable with most mileage recording approaches.
Flexibility and user choice	Most mileage reporting options require various levels of additional user effort for mileage reporting and payment as compared to the fuel tax. Location-enabled onboard diagnostics devices offer an easy-to-use method for mileage reporting once the device is turned on Odometer reading varied in its ease of use, with some approaches requiring regular images of the odometer to be captured with a smartphone, and others incorporating the odometer reading into regular vehicle inspection. Registration-based fee, fleet-usage fee, and pay-at-the-pump strategies potentially offer a streamlined experience for the user, reducing the steps necessary to pay a fee, and reducing the complexity and actions required for the driver to manage the system. Registration fee-based and fleet-based approaches require little effort from the driver/rider as fees are paid alongside an existing activity. The ability to pair new activities with existing activities currently needed for driving can reduce the additional effort required of the user.

Program Structure and System Costs

As compared with the MFT, a vehicle-miles-based transportation revenue system can be associated with higher administrative costs due to a high number of (mileage) data collection points and significant front-end technology and back-end operations requirements. In addition to evaluating costs of proposed program structures, pilot sites explored a variety of options including:

• Cost savings from organizational efficiencies.
• Benefits of economies of scale on system costs.
• Emerging technologies for approaches that can minimize procedural overheads for collecting, storing, and processing mileage data in a secure fashion.

Interoperability

Measuring the location of mileage driven is a key capability that enables accurate collection and reconciliation of fees across jurisdictional boundaries. Several pilot States and RUC West have begun developing the mechanisms to facilitate fee reconciliation between States and have worked to create a standardized data set and process to simplify the data exchange and fee reconciliation.

For simpler methods of mileage reporting (i.e., odometer reading), the reconciliation of fees based on actual, measured mileage is not likely to be possible. Some pilot sites have explored methods of estimating out-of-State travel, which may address a fee imbalance between States.

Data Security and Privacy Protection

The Phase Ⅰ grantees are generally early in their development of security-related objectives, design, and deployment; therefore, security is not yet a principal focus. Security or privacy needs in the central systems were addressed using current best practices in network security, application/host security, data management, and privacy management typically found in most enterprises.

Phase Ⅰ sites conducted initial investigations into the following key privacy-related considerations:

• Providing choice with mileage reporting options and account managers so privacy concerns about a single option or a provider would not preclude individuals from participating in RUC.
• Providing drivers with control and information about how their data are collected and used.
• Limiting the purpose and retention period of the collected data and defining the extent and circumstance for sharing collected data with other entities.
• Defining personally identifiable information (PII) and ensuring it is secure from unauthorized or unlawful processing.

Public Outreach and Communication

Pilot sites that engaged in public outreach and communication activities recognized the need for ongoing public and stakeholder education as well as a need for developing a targeted communications strategy involving:

• Messaging around key motivators.
• Communicating to address public concerns.
• Implementing a multi-pronged approach to outreach and communications.

The sites also realized the need to develop a framework for regional support, including:

• Key motivators: Based on public feedback collected through surveys, focus groups, and other forms of outreach, the most effective motivators for exploring alternative transportation revenue solutions are:
  • The need to find solutions to transportation funding challenges.
  • The concept of “fairness;” implying everyone pays their fair share of the use of the transportation system.
• Communication to address public concerns: Although the above may be effective “conversation-starters,” the messaging needs to be evidence-based and targeted to address public and stakeholder concerns about equity, privacy, and data security.
• Pilot sites also recognized a need to employ a multi-pronged approach to outreach and communication, utilizing a multitude of platforms and approaches to inform and educate the stakeholders.

Equity

Analysis-driven messaging around equity would first involve identifying equity concerns of the stakeholders through engagement and outreach, and then analyzing impacts on target populations. Several grantee sites have begun the process of outreach through phone interviews, surveys, and focus group activities to ascertain perceptions of RUC among different demographic groups. Such outreach provides valuable insight into the potential concerns of the various stakeholders to RUC as a concept and specific approaches to fee structuring and collection.

Common themes regarding the perception of RUC being fair or equitable that have emerged with several pilot sites include the following:

• RUC may penalize people driving longer distances, particularly low-income drivers that are disadvantaged in being unable to afford to live in close proximity to work centers.
• RUC may penalize highly fuel-efficient vehicles, ignoring the environmental benefits such vehicles provide.
• RUC may penalize rural drivers who tend to drive longer distances than urban commuters.

To date, individual studies and analyses conducted by some of the pilots indicate that more data is needed to understand the impact of RUC. Additional studies could help demonstrate how an RUC can be designed to be an equitable form of transportation tax that puts into practice the principle of “user pays.”