Can a mileage-based user fee replace fuel taxes?

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Fuel taxes are the primary funding source for America’s Highway Trust Fund, but as cars and trucks get more efficient and governments continue to push toward zero-emission vehicles, vehicles aren’t using as much fuel as what’s needed to fund our infrastructure.

One potential alternative to the fuel tax is a mileage-based user fee, but would that work for trucking?

That’s the big question that the Eastern Transportation Coalition is trying to answer. The coalition has been working since 2018 to make sure the trucking industry’s voice is heard in the national exploration of a MBUF.

Joining Jason and Matt this week is Dr. Trish Hendren, executive director of TETC. Trish last joined us in April 2022 to talk about the third phase of her group’s work. Now, she’s providing an update on the fourth phase of the project, which explored the potential for an MBUF based on vehicles’ registered weights.

Contents of this video

00:00 10-44 intro

00:32 Replacing fuel taxes

03:00 Getting the motor carrier industry involved

06:53 Weight-based distance fee for trucks

09:28 Results of the latest pilot project

13:17 Planning the next phase

16:27 Getting involved


Jason Cannon:
This week's 10-44 is brought to you by Chevron Delo 600 ADF ultra low ash diesel engine oil. It's time to kick some ash.

Matt Cole:
Fuel taxes aren't cutting it for funding America's transportation infrastructure anymore. Can a mileage-based user fee work? If so, what could it look like?

Jason Cannon:
You're watching CCJ's 10-44, a weekly webisode that brings you the latest trucking industry news and updates from the editors of CCJ. Don't forget to subscribe and hit the bell for notifications, so you'll never miss an installment of 10-44.

Hey, everybody, welcome back. I'm Jason Cannon, and my co-host on the other side is Matt Cole.

Fuel taxes are the primary funding source for America's Highway Trust Fund, but as cars and trucks get more fuel efficient and the government keeps pushing us down this path towards zero-emission vehicles, cars and trucks aren't using as much fuel as what's needed to fund our infrastructure. One potential alternative to the fuel tax is a mileage-based user fee, but how would that work for trucking?

Matt Cole:
That's the big question that the Eastern Transportation Coalition is trying to answer. The Coalition has been working since 2018 to make sure the trucking industry's voice is heard in the national exploration of a mileage-based user fee.

Joining us this week is Dr. Trish Hendren, executive director of TETC. Trish last joined us in April 2022 to talk about the third phase of her group's work. Now, she's providing an update on the fourth phase of the project.

Dr. Trish Hendren:
I'm sure everyone out there using our roads. We know that we fund a majority of those roads from a fuel tax. And that fuel tax is having some trouble. Someone described it once. It's the old mule that's in the barn. It's still plowing the fields, but it's getting a little tired. So the reason is a lot of our trucks are going farther than they have in the past, and then that diesel tax that is used to really fund a lot of the roads hasn't been raised since 1993, which I was definitely a lot younger than when that was passed. And with that, it hasn't been increased in that long. Its purchasing power is down. So we're going to have a problem because we want our vehicles to get more efficient. And sometimes, this topic gets shortened by saying that's just passenger vehicles, right? That's those EVs and passenger vehicles. But I think this really is a trucking issue because of just how many miles trucks drive.

So I think last time I looked, it was an average like over 60,000 a year, miles while a passenger car is around 10. So we're driving so many more miles. A little bit of efficiency really is a key problem. So again, why are you and I talking is trying to figure out what are we going to do to replace that fuel tax potentially. And so what the Coalition has been doing is trying to look at that question from the perspective of the motor carry industry because we were seeing a lot of discussion about let's replace the fuel tax with a distance-based fee. So let's just be clear about what we're talking about is to replace the fuel tax with a miles-based approach. And a lot of great work was being done, but it was done really with passenger vehicles.

Jason Cannon:
Trish said that getting the trucking industry involved in discussion, it all was a challenge itself, but it's necessary to ensure the difference in cars and trucks was accounted for.

Dr. Trish Hendren:
Just to be very clear about our motivation here for getting involved in this. And part of that approach was, again, getting the motor carrier industry to this table was a bit tricky. This is not a topic that people really like. I think the old adage, everyone supports transportation until you talk about how you pay for it is pretty darn true. But what we were worried about, and I think is how we got the motor care industry engaged in this work, is if we don't say anything, if we don't raise concerns, we're going to have some legislation passed in states that we'll have designed for passenger vehicles, and they'll add at the end, and trucks. It's we're just too different, right?

So again, going backward out in time a little bit, we started a motor carrier working group. And I wish I could tell you who's in that group, but they would never forgive me if I did because nobody really wants their name known to be talking about this because, again, it's really not a very popular topic. But this group is of the auto manufacturers, the shippers, the associations, the regulators. It's really a pretty diverse, small group. But that group has been essential to guiding what we should look at.

So, as you said when we talked last April, that group had asked us to look at how would you set rates based on the efficiency of a truck, because that seems like that makes some sense. We have one-per-mile rate for every truck. That doesn't seem to be very good, and we did try that in our first multi-state pilot. And what that does is it makes winners and losers. Basically, if you've got a new truck, you actually are harmed. If you have a really older truck, you're actually get a rebate, which I'm sure there's people out there with old rigs or thinking that's a great idea. But as we're looking at a national approach, we're like, "Okay, what? How should we do this? One rate not such a good idea."

So the report you and I talked about last April said, "Okay, let's do rates based on how efficient the truck is." That didn't work either. Talk about picking winners and losers, I don't know about you guys, but having with all due respect, state legislators decide where your brackets are of who pays what based on efficiency rate. That is, if you're right on the edge of that line, you have to pay thousands of dollars more. That doesn't seem very logical, doesn't seem very fair.

Matt Cole:
Because of flat rate nor a rate based on efficiency would work, the coalition tested a user fee based on vehicle weight. We'll hear more about TETC's goals for its latest pilot after a word from 10-44 sponsor, Chevron Lubricants.

Jason Cannon:
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Dr. Trish Hendren:
So this motor carrier working group said, "Okay, Coalition, we want you to use a four-letter word, weight. And I understand that that's not four letters, but how do we bring in weight into a rate-based topic?" And I'm sure everyone wants to hang up or shut down the computer now because that is really tough. So we wanted to end this last international pilot focused on weight-based rates. Would that make sense? How would we do that? So that was a big focus of that most recent pilot, which ended at the end of 2022. We just released that report. So we wanted to look at weight-based rates. We wanted to look at international travel and some more diversity in the trucking world. So we looked at some diversity of weights of trucks. So we looked at some trucks over 10,000 pounds below 26. We looked at some intrastate trucks, and we looked at, again, just the different types of trucks and movement, hauling that they're due to really try to get the diversity of the industry reflected in this last pilot.

Our other, I would say, key focus of that was to think through, if a distance-based approach was implemented, how could we enable states to have their sovereignty? They're going to want to set their own rates but have that consistency uniformity of an approach that I think we've heard from the trucking industry. We want to have that because that will enable companies that are moving across multiple states to have that uniform approach. We balanced or looked at uniformity and sovereignty.

And then the fourth objective of that last pilot was we have IFTA and IRP right now. So could those clearing houses handle an MBUF, a distance-based approach fee? We replaced the fuel tax with distance-based approach. Could those clearing houses handle it? And we also brought in a third clearing house to say, "Okay, let's not pre-select the answer." So we brought in a private company that does work in Europe to look at some of your weight distance fees in Europe and said, "Okay, could you handle this in the US?" So that was our objective of that pilot. Again, how do we show that diversity? Let's think about rate-setting. Could that work? How that uniform approach, that simple approach that we've heard is really going to be important? And then, how do we actually do it? How would we have a clearinghouse to process that information?

Jason Cannon:
Trish said the results of the latest pilot project show that there is capability for the weight-based distance fee for trucks, but all the pieces aren't in place just yet.

Dr. Trish Hendren:
But what we did find is you can really reflect that diversity of the motor care industry. So in this pilot, we had 14 companies. We had a range of types of companies, with a couple of mega haulers that had over 400 vehicles in their fleet to a couple of mom-and-pop kind owner-operator types of company, and then some mid-range in between, again, to show... And we've got to think through this is a national way or funding and transportation, how would that impact a large company versus a smaller company. So we made sure we had that diversity in the fleet that was participating in the pilot, as well as different weights as well as different types of movement. So the bottom line is I think one of the first findings of the work was that that diversity of the motor carrier industry can be handled. A mileage-based approach can be applied to that diverse industry.

Again, to be very clear, that does not mean we should, but I think what we wanted to say is, if we have a national approach, could we include in that national approach intrastate trucks, not just interstate trucks? The answer is yes. If we had this national approach and Canada didn't have it, would that work? The answer is yes. So part of it is math, and just data and some algorithms. But again, even though we can show that a common approach can be used with a wide variety of trucks and companies, again, does not mean that we should go forward. So that's finding number one.

Finding number two on the weight-based approach is it actually worked. And when I say worked, the results were logical. The results that we brought to the motor carrier working group did not have the reaction of we cannot do it that way. But with key is how weight is defined.

So, Matt, you know that people don't understand what weight means. They'll be like, "Oh, it's that little thing on the side of the road, and that's what the weight is of a truck or laden weight, unladen weight, registered weight, gross vehicle weight." It's all these terms that unfortunately are not understood by some of our policymakers, but we use registered weight because that was something that is. We can have a dialogue and discussion, I'm sure about, if that's the rate one, but that is one that is consistent. And so I think that the motor care working group thought was a logical place to begin. A rate-setting discussion is that uniformity that you get from a registered weight.

For finding number three, looking at those clearinghouse approaches so they can work, right? Again, capable, not ready, is what I want to keep saying that word. So IFTA and IRP, as well as the company that we use, again doing that work in Europe. Clear Road, three different approaches. They took the data, ingested the data from the pilot, and they could process a weight-based rate. So that's encouraging, right? That we don't have to reinvent something. But again, that doesn't mean they're ready for plug-and-play.

And then I think the final finding that we really tried to emphasize is this uniformity versus state sovereignty. So from the work that we're doing, we can show that if Canada doesn't have a distance-based approach and the US does, that can be handled. So you can have uniqueness, sovereignty of states and countries, of course. We're going to have to have that. But if we can have this consistent approach across, that, I think, is what's going to lower the burden on the trucking industry.

Matt Cole:
Knowing that weight could potentially be used in a distance-based fee, the coalition is now planning out its next steps.

Dr. Trish Hendren:
So we are getting ready to start our next phase of the work, so we have another grant. So to continue, again, that focus is making sure the concerns of the trucking industry. The uniqueness of the trucking industry is part of this national discussion. So we're going to keep doing that. Keeping the trucking industry at that this mileage base, usually fee table, shall we say? What we're going to focus on in this next component of the work is, again, going back to your weight point and what in the world is weight. We're going to try to use a week in the life of a truck to explain what these different weights mean and actually take data and say, "Okay, if we had to actually weigh that puppy throughout its trip, how hard would that be? If we used unladen weight, how hard would that be registered weight if we bring in axles into it?"

So we want to have a little experiment to use, again, this real-world data, data from trucks that are volunteering to be in these pilots, is enabling us to go to policymakers and say, "Look, this is what it looks like out there. So when you're making policy, take this into consideration." So we're going to have a little week in the life of a truck to try to demystifying clarify what in the world weight means for trucks, because everyone thinks it means something different. So how do we try to clarify and dispel the myths about truck? This may one part of the work.

So far, we've done a multi-state truck pilot, a national truck pilot, and an international truck pilot really focused on what would make sense for a trucking company, how would it work. Looking at the data, what is it telling us? Trying to figure out some preliminary ideas for rate setting, but we haven't really talked to the public agencies that would be responsible for managing this potential change. So we want to bring in some public agencies this time who are currently either collecting IFTA and IRP or some of the states that have a weight-based or weight-distance tax, excuse me. And really talk to them and be like, "Okay, if we had this change, what would that mean for your agency?" So I want to bring that perspective in.

We also want to have a more direct conversation with several trucking companies to say, "Okay, we have data participating in a pilot, but let's get down to what it would mean for your business, what would mean for reporting burden." And as I highlighted, our last pilot included trucks that are outside of IFTA and IRP, or at least outside of IFTA, so that's 10,001 pounds to 26,000. So that could be potentially a big change for those companies. So if that is a huge burden, then we want to bring that burden forward, and similar with intra-trucks. So we want to think through a bit more of the motor carrier, the burden on the motor carrier itself.

Jason Cannon:
The biggest thing the trucking industry can do, Trish said, is to help guide policy when it comes to highway use taxes. Whether that's a fuel tax or a mileage tax, you just need to get involved.

Dr. Trish Hendren
Congress is paying attention. There's emphasis on changing how we fund transportation. And hopefully, the motivation of the Coalition being involved is to again bring that voice of the truckers to bring that complexity into this national discussion. My request is for each person listening to this to get engaged. So stay informed. You can volunteer for a Coalition pilot. For example, we can have my contact information. You're welcome to reach out to me. Go to our website. I know that's hard to do, but if you have a chance to do that and we have information there. There's also going to be a national pilot that is authorized by Congress, which will probably won't start for a couple years, but again, volunteer for these pilots. And if you hated this idea as even bigger reason to volunteer. So come into the pilots and share what you think is not working. The request is stay informed, and get engaged, and bring the stuff you like about this and the stuff you hate about this because that's how I think we'll get to a better outcome.

Jason Cannon:
That's it for this week's 10-44. You can read more on While you're there, sign up for our newsletter and stay up to date on the latest in trucking industry news and trends. If you have any questions or feedback, please let us know in the comments below. Don't forget to subscribe and hit the bell for notifications, so you can catch us again next week.