What if we charged drivers by the miles they drove rather than the gallons of fuel their cars consume? Perhaps more importantly, how would such a system work and what would the challenges be if we scaled it to a system that spanned the country? Eno will be exploring these questions in a new research program aimed at informing a national pilot that could be the foundation for a future transportation funding paradigm.

For years, advocates have promoted replacing the fuel tax with a vehicle miles traveled (VMT) fee, also known as a mileage-based user fee (MBUF). A VMT fee is a user charge based on miles driven in a specific vehicle. The fee could be applied based on distance travelled and potentially vary based on geography, whether the vehicle was personal or commercial, vehicle weight, and time of day. Such a tool could be a practical replacement for fuel taxes, which have not been raised at the federal level since 1993, and the purchasing power of these user fees has fallen significantly, particularly with the growth of electric vehicles.

Several states and regions have implemented VMT pilot programs, including Utah, Oregon, the Eastern Transportation Coalition, and others. But none yet have tested the concept at the federal level. But now with the passage of the Infrastructure Investment and Jobs Act (2021), the U.S. Secretary of Transportation is required to establish a national VMT pilot to “test the design, acceptance, implementation, and financial sustainability” of such a system.

Advancement of a national VMT system will require adequate system development, promotion of national awareness and improvement of public opinion, combining state and federal efforts into a unified national concept, demonstration of national leadership, and resolution of the key issues learned from the initial pilot programs. A national VMT pilot is a valuable effort to test the effectiveness and acceptability of a potential future VMT system.

Eno will lead research to create a series of key performance indicators that can measure how well the pilot works in terms of administrative costs, participant satisfaction, social equity, and other factors as determined through our previous work. The performance indicators will include a discussion of the rationale, the data needed to evaluate them, and benchmarks to determine success.

To do this work, Eno will convene a project advisory panel (distinct and independent from the U.S. DOT Advisory Panel) that will include relevant stakeholder groups and experts to help inform the research, provide feedback on draft reports, and direct Eno staff to other relevant subject matter experts from around the world. Other perspectives and expertise not on the Eno project advisory panel will be identified and participate in the research through interviews, round tables, and other engagements.

The goal of the research is not to recommend a permanent VMT fee structure, but rather inform the ongoing pilot. Having smart, data-driven performance indicators and parameters in the pilot will be critical to making an informed policy decision in the next surface transportation law about whether to make sure a fee permanent. This work will build on existing knowledge and expertise from the industry to address some of the following questions:

• Governance and administration: What institution(s) should be responsible for administering the pilot, setting rates, and collecting the fees? If multiple agencies are needed to administer (e.g., U.S. DOT and IRS) what recommendations are there to best coordinate and share data in a timely and efficient way?
• Data collection: Transitioning to a VMT will require revenue and data collection unlike the current motor fuel taxes. Who will ultimately be responsible for collecting the data? How will this data be collected? How do states facilitate an interoperable system that accounts for inter-state/ out-of-state driving? How can the system be auditable and prevent fraud?
• Participation: Motor fuel taxes are an indirect user fee that require almost all users of the system to pay. Who should participate in the pilot so that it studies a reliable cross-section of the driving public and provides a reasonable proxy for a future national VMT system?
• Equity: Equity in all its forms must be fully vetted in any transition to a VMT user fee system. How does the pilot address potential unintended consequences on Americans in rural areas? What are the specific impacts on low-income households? Is a differing per-mile rate needed that accounts for vehicle weight and emissions? Should a maximum fee or “opt-out” annual fee be established? Are the impacts to commercial vehicles different than privately-owned passenger vehicles?
• Efficiency: The motor fuels taxes are collected from very few sources, therefore there is very little administrative overhead involved. How does the pilot program address the collection efficiency? When does the burden on the taxpayer much less the agencies responsible for the collection outweigh the additional precision of the data/collections?
• Privacy: How does the pilot address the privacy concerns?

This work is supported by a contribution from the Transportation Construction Coalition and the Americans for Transportation Mobility Coalition.