Agenda

1. I-95 Corridor CoalitionMulti-State VMT-Based Charge InitiativeMember Advisory CommitteeSeptember 22, 2010 Note to Webcast Participants:The webcast will begin at 10:00 a.m. Please do not put your telephone on “Hold” (especially if it’s a music hold!); muting the phone is appreciated.Telephone connection:1-888-413-5786 and enter 133253# at the prompt.

2. Agenda • Welcome and Introductions • Draft Final Report • FHWA Briefing • VMT Phase 2 Draft Scope • Wrap-up, Next Steps, Next Meeting

3. BriefingDraft Final ReportMulti-State VMT-Based Charge Institutional and Legal Analysis • General Overview • Legal Findings • Administrative Major Findings • Next Steps

4. General OverviewDraft Final Report • Scope of Project • Define Functionality • Identify Institutional and Administrative Requirements • Identify and Assess Alternative Mechanisms • Assess Current Administrative Systems • Develop Preliminary Cost Estimates • Examine Legal Issues

5. General OverviewDraft Final Report • Executive Summary • Ten chapters linking to scope • Chapters 1 & 2 --- Background • why VMT, other research • Chapter 3 --- Functionality • simple, moderate, advanced • Chapter 4 --- Administrative Requirements • eight key functions

6. General OverviewDraft Final Report • Ten chapters linking to scope (cont’d) • Chapter 5 --- Cost and Cost Drivers • VMT costs in relation to other revenues • Chapters 6 & 7 --- Similar Programs/Institutional Arrangements • interviews, cooperative agreements, data considerations, current structures • Chapters 8 & 9 --- Legal Issues Review • State and Federal • Chapter 10 -- Next Steps

7. Legal and Regulatory Issues

8. State Legal Issues Introducing VMT-based charges is unprecedented at all levels of government and raises several legal issues. States use a range of fuel and vehicle taxes, fees and tolls to raise revenue; these existing regimes will provide relevant precedents. States have requirements and restrictions regarding taxes, fees and tolls relating to use of revenues, rate setting, and administration. Taxes require legislation/authority re: rates, collection, enforcement; tolls & fees require legislation, but greater administrative discretion. Any new charges would be subject to the standard tests of uniformity of application, due process and equal protection.

9. Use of Revenues Current statutes and/or administrative practices limits use of motor fuel taxes: probably applicable to VMT-based charges. In some, fuel tax revenues are dedicated and deposited in a state trust fund. Charges characterized as tolls on federal aid facilities would be constrained by current federal law. Legislation regarding any new revenues would have to be reconciled with existing system in terms of use and distribution.

10. Rate Setting Rates may need to increase to keep pace with the costs for operating, maintaining, and adding to the highway system. Different approaches will be needed for taxes (by the legislature) vs. fees or tolls, which may be delegated. Rate setting procedures should be transparent; may be subject to notice, comment or other public involvement processes.

11. Enforcement and Penalties Enforcement for payment (user) and collection (entity) could involve a civil or criminal penalty, civil administrative more flexible. Administrative procedures can be streamlined and cheaper – and outsourced in most states. Cross border imposition of penalties may be difficult but could be accomplished via multi-state reciprocal agreement.

12. Data Sharing and Privacy Privacy issues: how data is shared for enforcement & protection of personal information from non-governmental uses. The needs of complex VMT charging systems (such as peak periods or facility-specific) raise privacy issues & public concern. Security of data can be established in systems design. Legislation will need to address open records vs. user privacy concerns to supplement existing state & federal protections.

13. Transition Transition to a new VMT-charge system may involve a period of overlap with existing taxes, fees and tolls. VMT charges: supplement vs. replacement? Enabling legislation could allow taxes & fees to continue after implementation of VMT. Superimposition of VMT charges on toll facilities raises bond covenant/credit rating issues -- specific legislative action needed.

14. Multi-state Legal Issues Multi-state collection and redistribution raises issues of federal aid grant conditions, interstate commerce. Congressional consent may be necessary. Available powers and precedents (Compacts clause) -- via a formal interstate compact -- could facilitate implementation. Typically interstate compacts have both congressional authorizing legislation and parallel state legislation. Collection/enforcement/penalties re: out-of-state drivers can probably be handled thru reciprocal agreements (without Congress).

15. Multi-state Legal Issues But given existing regulatory restrictions on Interstate tolling, characterizing charges as tolls may raise legal issues. Technology standardization for interoperability could be handled by a multi-state compact or a federal mandate. Outsourcing of collection/administration – may require state authorizing legislation and/or a multi-state compact.

16. Federal Legal Issues It is unlikely that constitutional restraints could prevent States from implementing a system of VMT-based charges. But given existing regulatory restrictions on Interstate tolling, characterizing charges as tolls may raise legal issues. It may be efficient to collect state and federal VMT-based charges simultaneously via a single system. Collection of federal VMT charges would require federal legislation -- and could be delegated to states (with state law). Feds limited in power to compel collection of federal fees. Grant conditions/incentives could encourage state cooperation.

17. Bottom Line VMT-based charges would benefit from authorizing legislation to avoid controversy, litigation and to gain public confidence. Authorizing legislation will be needed to address: characterization of VMT-based charges and use of VMT-based revenues administrative authority rate setting and use of revenues enforcement provisions adjudication processes and mechanisms user privacy

18. Bottom Line An interstate compact probably necessary for out-of-state collection/distribution/enforcement issues. Creation of a specific oversight body may require Congressional consent. Federal-aid related incentives and incentives and forms of regulation could encourage a cooperative uniform approach. Legislation will need to address open records vs. user privacy concerns to supplement existing state & federal protections. No legal or constitutional issue that cannot be overcome by properly drafted legislation. 

19. Key Administrative Findings

20. Functionality Options • Simple • Collect at pump • Moderate • OBDII/Cellular – some geographic capabilities • Advanced • GPS, full geographic capabilities • Study focused on advanced functionality

21. Key Operating Findings • Data and administrative requirements will differ based on geographic specificity • Vehicle registration files are a key foundation for VMT and state DMV involvement is essential • Data management challenge will be large • Billing and payment collection will require re-engineering

22. Key Operating Findings • Customer interface will be important and costly • New enforcement processes will be required • Calculating and reconciling mileage will be a key function • Federal function will be “easier” managed at the state level

23. Institutional Arrangements • Potential operating platforms range from DMVs, IAG, IRP to new operating entities or vendors • Sole government institutional arrangements are unlikely without some private sector involvement

24. Preliminary Cost Estimates • Actual experience is nonexistent; best current information is from Dutch vendor bids • Dutch bids for operating a VMT charge system ranged from $51 to $115 per vehicle per year • Our study estimates a US minimum of $40 with advanced functionality and $30 at lower functionality

25. VMT System Costs in Relation to Total Revenues • Average light-duty US vehicle pays $200+ per year in state/federal motor fuel taxes • Administrative costs will constitute a much lower percentage of total revenues if VMT charges replace other revenue sources or if new fees, e.g., congestion pricing, are instituted

26. Legal Issues • No state/federal constitutional issues • Legislation will be needed to address many other issues

27. Issues Requiring Additional Review • Assessment of current interagency arrangements and administrative requirements • Develop an administrative system concept of operations • Refine cost estimates • Identify federal government interface issues

28. FHWA Briefing

29. Phase 2 Draft Scope

30. Phase 2 Draft ScopePresentation • General Overview • Key Objectives • Task Considerations • Proposed Tasks • Key Deliverables • Team and Schedule • Coalition Benefits

31. Phase 2 Draft ScopeGeneral Overview • Builds on Phase 1 Foundation • Considers Actual State/Agency Operating Environments • Three Contiguous States Work Group • Maryland, Delaware, PA

32. Phase 2 Draft ScopeGeneral Overview • Focuses on consideration of current state operating conditions and alignment to and gaps with VMT administrative functions • Produces a Concept of Operations • Results in Transition Plan components • Assumes complex functionality

33. Phase 2 Draft ScopeKey Objectives • Refine administrative requirements • Identify specific state and agency functions • Detail current interagency agreements • Complete a multi-state concept of operations • Complete model state legislative language

34. Phase 2 Draft ScopeKey Objectives • Assess potential of NMVTIS as model • Refine costs based on actual state and agency data • Keep Coalition members informed on VMT research • Explore federal charge collection interface in multi-state environment

35. Phase 2 Draft ScopeTask Considerations • Nine tasks identified for consideration • A project work group guides the project and provides input and information • On-site interviews, observations and assessments • Outreach to private sector, service contractors, associations and federal government

36. Phase 2 Draft ScopeProposed Tasks • Task 1 - Coordination and Communication • Task 2 – Current State and Agency Operating Environments • Task 3 – Stakeholder Outreach • Task 4 – NMVTIS • Task 5 – Federal Collections Considerations

37. Phase 2 Draft ScopeProposed Tasks • Task 6 - Model State Legislation • Task 7 - Transition Strategy • Task 8 - Cost Estimation • Task 9 - Final Report

38. Phase 2 Draft ScopeKey Deliverables • Operational assessments in three project states • Analysis of “as is” operating environments, identification of “to be” VMT environment (gap assessment) • Analysis and recommendations based on existing institutional arrangements

39. Phase 2 Draft ScopeKey Deliverables • Industry perspective on specific requirements • Electronic data exchange infrastructure considerations – technical memo • Federal role considerations, and state/agency impact analysis • Model state legislation

40. Phase 2 Draft ScopeKey Deliverables • Transition strategy technical memo • Cost estimation technical memo • Final Report

41. Phase 2 Draft ScopeTeam and Schedule • Cooperative effort between work group states and consulting team • Current team proposed for project with addition of NMVTIS subject matter expert • State participation and involvement is key – state engagement expectations • With approvals, project would start in January 2011

42. Phase 2 Draft ScopeCoalition Benefits • Deeper understanding of VMT impacts and issues • Path to proof of concept and potential test bed environment • Readily available resource for response • Establishes the Coalition as a fact-based “honest broker” • Continued leadership in VMT research

43. VMT Project – Next Steps • Member comments on Draft Final Report and Draft Phase 2 Scope due by Sept. 30 • Next Steps: • Final Report: finalize and distribute • Phase 2 Scope: finalize and submit through project review process: • Policy & Strategic Planning Committee (Oct. 20) • Leadership Meeting (Oct. 25) • Steering Committee (Nov. 9) • Executive Board (Dec.)

44. Send Comments or Questions to:Patty Reichpatty.reich@telvent.com301-354-4665