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United States Government Accountability Office: 
GAO: 

Report to the Subcommittee on Transportation, Housing, and Urban 
Development, and Related Agencies, Committee on Appropriations, House 
of Representatives: 

December 2012: 

Highway Trust Fund: 

Pilot Program Could Help Determine the Viability of Mileage Fees for 
Certain Vehicles: 

GAO-13-77: 

GAO Highlights: 

Highlights of GAO-13-77, a report to Subcommittee on Transportation, 
Housing and Urban Development, and Related Agencies, Committee on 
Appropriations, House of Representatives. 

Why GAO Did This Study: 

Federal funding to build and maintain the nation’s highways and 
bridges comes primarily from highway users through federal fuel taxes. 
These revenues have eroded due to improvements in vehicle fuel 
efficiency and other factors contributing to shortfalls in the Highway 
Trust Fund. Experts have proposed alternative means of raising 
revenues by charging drivers fees based on their miles traveled. 
Several states have tested systems that gather vehicle mileage and 
location data, which has raised privacy concerns. GAO examined (1) the 
benefits and challenges of mileage fee initiatives in the United 
States and other selected nations, (2) mileage fee rates necessary to 
replace and supplement current Highway Trust Fund revenues and the 
effect these fees would have on users’ costs, and (3) state DOTs’ 
views on future revenue demands and mileage fees. GAO reviewed five 
domestic pilot projects and programs in Germany, New Zealand, and the 
Netherlands; modeled mileage fees for passenger vehicles and 
commercial trucks; and surveyed 51 state DOTs. 

What GAO Found: 

Mileage-based user fee initiatives in the United States and abroad 
show that such fees can lead to more equitable and efficient use of 
roadways by charging drivers based on their actual road use and by 
providing pricing incentives to reduce road use. Mileage fees for 
passenger vehicles, however, continue to face significant public 
concerns related to privacy as well as cost challenges. Privacy 
concerns are particularly acute when Global Positioning System (GPS) 
units are used to track the location of passenger vehicles. Reliable 
cost estimates for mileage fee systems are not available, but 
implementing a system to collect fees from 230 million U.S. passenger 
vehicles is likely to greatly exceed the costs of collecting fuel 
taxes. Commercial truck user fee systems in Germany and New Zealand 
have achieved substantial revenues and benefits such as reduced road 
damage and emissions with fewer privacy concerns, but ensuring 
compliance in a cost effective manner presents trade-offs. Few 
commercial truck mileage fee pilots have been conducted in the United 
States, but efforts in two states suggest such fees pose fewer privacy 
and cost challenges than passenger vehicle fees. 

Mileage fee rates could be set to replace or supplement current 
Highway Trust Fund revenues. GAO calculated average mileage fee rates 
for passenger vehicles and commercial trucks needed to meet three 
federal revenue targets ranging from $34 billion (replace current 
federal fuel tax revenues) to $78 billion (increase spending to 
maintain existing system conditions and performance). To meet these 
targets, drivers of passenger vehicles with average fuel efficiency 
would pay $108 to $248 per year in mileage fees compared to the $96 
these drivers currently pay in federal gasoline tax. These fees would 
affect users’ costs differently based on each vehicle’s fuel 
efficiency, because drivers of less efficient vehicles now pay more in 
fuel taxes than drivers of vehicles with greater fuel efficiency. 
However, like federal fuel taxes, mileage fees would comprise a small 
portion of users’ overall fuel costs and thus only marginally increase 
users’ overall transportation costs. A mileage fee for commercial 
trucks could also increase users’ costs, particularly for larger 
trucks that log more miles. In 2000, the Federal Highway 
Administration (FHWA) estimated that heavy commercial trucks generally 
pay less in federal taxes than the road damage costs they impose. 
Adjusting mileage fee rates to account for vehicle road damage costs 
would increase rates for commercial truck users. However, FHWA’s 
estimates may not reflect current conditions. Setting rates to cover 
these costs would require updated estimates of vehicles’ 
responsibility for road damage. 

State departments of transportation (DOT) recognize the need for an 
alternative funding mechanism to meet future revenue demands, and many 
would support federal actions to evaluate mileage fees. Few states 
reported that they are likely to introduce such fees in the next 10 
years, but more than half would support federally-led field tests of 
mileage fees for commercial trucks and electric vehicles. Although few 
electric vehicles are on the roads today, their numbers are expected 
to increase, and they do not contribute to the Highway Trust Fund. 
Without a federal pilot program to evaluate (1) options to more 
accurately charge commercial trucks and electric vehicles for their 
road use and (2) the costs and benefits of such systems, Congress 
lacks critical information to assess whether mileage fees for these 
vehicles could be a viable and cost-effective tool to help address the 
nation’s surface transportation funding challenges. 

What GAO Recommends: 

Should Congress further explore mileage fees, it should consider 
establishing a pilot program to test the viability of such fees for 
commercial trucks and electric vehicles. FHWA should update its 
estimates of road damages imposed by all vehicle types compared with 
the tax revenues generated by each. The Department of Transportation 
took no position on GAO’s recommendation but provided technical 
comments which GAO incorporated as appropriate. 

View [hyperlink, http://www.gao.gov/products/GAO-13-77]. For more 
information, contact Susan Fleming at (202) 512-2834 or 
flemings@gao.gov. 

[End of section] 

Contents: 

Letter: 

Background: 

Various Initiatives Demonstrate Mileage Fee Benefits, but Privacy 
Concerns and Cost Challenges Hinder Passenger Vehicle Systems: 

Mileage Fees Could Generate Highway Trust Fund Revenues and Would 
Affect Users Differently: 

States Recognize That Alternative Transportation Revenues Are Needed, 
and Many Would Support Federal Actions to Evaluate Mileage Fee Systems: 

Conclusions: 

Matters for Congressional Consideration: 

Recommendation for Executive Action: 

Agency Comments: 

Appendix I: Objectives, Scope, and Methodology: 

Appendix II: U.S.-based Pilot Projects on Mileage-based User Fees: 

Appendix III: User Fee Design Criteria: 

Appendix IV: The Fair Information Practices: 

Appendix V: Mileage-based User Fee Simulation Model: 

Appendix VI: Results of GAO Survey of State Departments of 
Transportation about Mileage Fees: 

Appendix VII: GAO Contact and Staff Acknowledgments: 

Tables: 

Table 1: Benefits and Challenges of Mileage Fee Systems: 

Table 2: Illustrative Federal Mileage Fee Rates for Three Revenue 
Scenarios: 

Table 3: Values of Key Parameters Used in Simulation: 

Table 4: Summary of Mileage-based User Fee Pilot Projects in the 
United States, as of June 2012: 

Table 5: GAO Criteria for User Fee Design: 

Table 6: The Fair Information Practices: 

Table 7: Description of Key Parameters and Variables Used in 
Simulation Analysis: 

Figures: 

Figure 1: Sources of Revenue for the Highway Trust Fund, Fiscal Year 
2010: 

Figure 2: Federal Gasoline Tax as a Percentage of the Average Retail 
Price per Gallon of Gasoline, 1993 to 2011: 

Figure 3: Projected Highway Trust Fund Balance, 2012 to 2022: 

Figure 4: Average Annual Federal Fuel Taxes Paid by Passenger Vehicles: 

Figure 5: Annual Federal Fuel Taxes Paid by Commercial Trucks in 2010: 

Figure 6: Depiction of Three Passenger Vehicle Mileage Fee Approaches: 

Figure 7: German HGV Enforcement Gantry and Mobile Enforcement Vehicle: 

Figure 8: Average Passenger Vehicle Users' Annual Federal Fuel Taxes 
Paid under Current System Compared with Mileage Fee Scenarios: 

Figure 9: Average Passenger Vehicle Users' Monthly Fuel and Tax Costs 
under Current System and Mileage Fee Scenarios: 

Figure 10: Average Commercial Truck Users' Annual Federal Fuel Taxes 
Paid under Current System Compared with Mileage Fee Scenarios: 

Figure 11: Average Commercial Truck Users' Monthly Fuel and Fuel Tax 
Costs under Current System and Mileage Fee Scenarios: 

Figure 12: Illustrative Federal Mileage Fee Rates for Three Revenue 
Scenarios, Adjusted for Cost Responsibility: 

Figure 13: Number of State DOTs Reporting High Priority on Various 
Transportation Funding Mechanisms, 2012: 

Figure 14: Overview of the Algorithm of Computing Mileage Fees to 
Generate Predetermined Revenue: 

Abbreviations: 

AASHTO: American Association of State Highway Transportation Officials: 

CAFE: Corporate Average Fuel Economy: 

CBO: Congressional Budget Office: 

DOT: department of transportation: 

E-RUC: Electronic Road User Charge: 

FHWA: Federal Highway Administration: 

GPS: Global Positioning System: 

HGV: Heavy Goods Vehicle: 

IFTA: International Fuel Tax Agreement: 

IRP: International Registration Plan: 

MAP-21: Moving Ahead for Progress in the 21st Century Act: 

MPG: miles per gallon: 

NCHRP: National Cooperative Highway Research Program: 

NSTIFC: National Surface Transportation Infrastructure Financing 
Commission: 

PSRC: Puget Sound Regional Council: 

RUC: Road User Charge: 

SAFETEA-LU: Safe, Accountable, Flexible, Efficient Transportation 
Equity Act: A Legacy for Users: 

SUV: sport utility vehicle: 

TRUE: Truck Road Use Electronics: 

VMT: vehicle miles traveled: 

[End of section] 

United States Government Accountability Office: 
Washington, DC 20548: 

December 13, 2012: 

The Honorable Tom Latham:
Chairman:
The Honorable John W. Olver:
Ranking Member:
Subcommittee on Transportation, Housing and Urban Development, and 
Related Agencies:
Committee on Appropriations:
House of Representatives: 

The nation's surface transportation system is critical to the economy 
and affects the daily lives of most Americans. However, the system is 
under growing strain, and the costs of repairs and upgrades to meet 
current and future demands are estimated in the hundreds of billions 
of dollars. For more than 50 years, federal funding to build and 
maintain the nation's vast network of highways and bridges has been 
collected primarily from highway users through federal fuel taxes. 
This system is based on the "user pays" principle in which the costs 
of government programs or services, such as the construction and 
maintenance of roadways, are paid by the individuals and firms that 
use and benefit from the service through taxes or fees. For many 
years, user fees in the form of federal fuel taxes and taxes on 
commercial trucks provided sufficient revenues to the Highway Trust 
Fund, the primary source of federal funding for highway and transit 
programs.[Footnote 1] However, revenues into the fund have eroded over 
time, in part because federal fuel tax rates have not increased since 
1993 and in part because of improvements in vehicle fuel efficiency. 
This trend will continue in the years ahead as more alternative fuel 
vehicles take to the roads. 

To maintain current spending levels and cover revenue shortfalls, 
Congress transferred more than $34 billion in general revenues to the 
Highway Trust Fund from fiscal year 2008 to 2010; in 2012, Congress 
appropriated an additional $18.8 billion in general revenues for 
fiscal years 2013 and 2014.[Footnote 2] This approach has effectively 
broken the link between taxes paid and benefits received by users and 
may not be sustainable given competing demands and the federal 
government's growing fiscal challenge.[Footnote 3] Although the 
President signed a 2-year surface transportation authorization in July 
2012,[Footnote 4] the Highway Trust Fund faces significant shortfalls 
in the years ahead, beginning in fiscal year 2015, to support current 
spending levels. Congress and the Administration have yet to develop a 
long-term plan for funding surface transportation; ultimately, 
increased surface transportation revenues, reduced transportation 
spending levels, or both will be needed to bring revenues and spending 
into balance. For this and other reasons, funding surface 
transportation remains on GAO's High-Risk List.[Footnote 5] 

To address this growing funding problem, transportation experts and 
economists have advocated developing an alternative revenue-generating 
system that preserves the user-pay principle by charging vehicle 
owners based on the number of miles they drive--that is, by their 
vehicle miles traveled. Such fees, commonly known as VMT fees or 
mileage-based user fees, are referred to as "mileage fees" in this 
report. Advocates of mileage fees argue that in addition to raising 
revenues, such fees may offer other benefits that could lead to more 
efficient use of the nation's highways and result in reduced 
congestion for drivers. For example, mileage fees and other forms of 
road pricing such as tolling send clear price signals to road users, 
and provide incentives to drivers to consider alternatives such as 
public transit or carpooling which can reduce congestion, vehicle 
emissions, and overall spending on fossil fuels. The Congressional 
Budget Office (CBO) reported that most drivers currently pay much less 
than the full cost of their highway use, and that mileage fees could 
provide a better incentive for efficient highway use than fuel taxes 
do because the majority of highway costs are related to miles driven. 
[Footnote 6] In addition, we have reported that if those who benefit 
from a program do not bear the full social cost of the service, they 
may seek to have the government provide more of the service than is 
economically efficient.[Footnote 7] Furthermore, two national 
transportation commissions established by Congress have reported that 
reforming highway financing with a mileage fee system could provide a 
more viable, long-term source of federal revenues than the current 
system of fuel and excise taxes.[Footnote 8] 

In recent years, several states have conducted pilot projects to test 
mileage fee systems and other countries have also evaluated or 
implemented mileage fees for light passenger vehicles or heavy 
commercial trucks. Efforts to evaluate mileage fees in the United 
States have been met with concerns from the general public, including 
the fear that installing Global Positioning System (GPS) technology 
into private vehicles to gather mileage data could also potentially be 
used to compromise drivers' personal information, such as locations 
visited. 

In light of these concerns, you asked us to review the issues 
surrounding the possible use of a mileage-based user fee system to 
fund federal surface transportation programs. In this report we 
examine: 

1. the benefits achieved and challenges faced in mileage fee 
initiatives in the United States and selected other nations, 

2. the user fee rates necessary to replace and supplement current 
revenues to the Highway Trust Fund and the effect these fees would 
have on users' costs, and: 

3. the perspectives of state departments of transportation (DOT) on 
addressing future revenue demands using mileage fees. 

To examine these issues, we gathered information on the benefits and 
challenges of several mileage fee pilot projects conducted in the 
United States, including efforts in Oregon and Washington, and a 
national-level evaluation conducted in 12 states that was authorized 
by the Safe, Accountable, Flexible, Efficient Transportation Equity 
Act: A Legacy for Users (SAFETEA-LU).[Footnote 9] We also reviewed 
preliminary results from two ongoing pilot projects in Minnesota and 
Nevada. We interviewed transportation officials involved with all of 
these pilots. To gather information on the benefits and challenges of 
international mileage fee initiatives, we selected programs in 
Germany, New Zealand, and the Netherlands based on criteria that 
included program objectives, administration, and technologies used. We 
reviewed program documents and interviewed transportation officials in 
these countries to gather information on Germany's Heavy Goods Vehicle 
user fee system, New Zealand's Road User Charge system, and a canceled 
user fee program in the Netherlands. To determine the mileage fee 
rates that would be necessary to replace and supplement current 
Highway Trust Fund revenues, we selected three revenue targets and 
simulated the user fee rates for passenger vehicles and commercial 
trucks that would be necessary to achieve those targets using fiscal 
year 2010 data. We also simulated the mileage fees that would be 
required if all vehicles were responsible for the road damage they 
caused according to Federal Highway Administration (FHWA) estimates. 
To obtain states' views on addressing future revenue demands using 
mileage fees, we surveyed the DOTs in all 50 states and the District 
of Columbia and received a 100 percent response rate. 

We conducted this performance audit from December 2011 through 
December 2012 in accordance with generally accepted government 
auditing standards. Those standards require that we plan and perform 
the audit to obtain sufficient, appropriate evidence to provide a 
reasonable basis for our findings and conclusions based on our audit 
objectives. We believe that the evidence obtained provides a 
reasonable basis for our findings and conclusions based on our audit 
objectives. Our objectives, scope, and methodology are discussed in 
more detail in appendix I. 

Background: 

Financing of U.S. Surface Transportation Programs: 

Since Congress established the Highway Trust Fund in 1956 to fund the 
construction of the Interstate Highway System, the federal government 
has financed transportation projects primarily with revenues collected 
through federal fuel taxes. These taxes were established to make the 
federal-aid highway program self-financing--that is, paid for by the 
highway users who directly benefit from the program.[Footnote 10] From 
1956 to 1993, Congress increased the federal gasoline tax from 3 cents 
per gallon to its current rate of 18.4 cents per gallon. The federal 
diesel tax rate was also last increased in 1993 and is currently set 
at 24.4 cents per gallon. In fiscal year 2010, 92.5 percent of almost 
$37 billion in user fee revenues deposited into the Highway Trust Fund 
were generated through federal fuel taxes.[Footnote 11] The remaining 
revenues were collected through several taxes on heavy commercial 
trucks.[Footnote 12] (See figure 1.) 

Figure 1: Sources of Revenue for the Highway Trust Fund, Fiscal Year 
2010: 

[Refer to PDF for image: pie-chart] 

Highway Trust Fund receipts that come from fuel taxes: 
Gasoline: 67.6%; 
Diesel and special fuels: 24.9%. 

Highway Trust Fund receipts that come from sources other than fuel 
taxes: 
Truck and trailer sales: 4.3%; 
Heavy-vehicle use: 2.4%; 
Tire tax: 0.9%. 

Source: GAO analysis of FHWA data. 

[End of figure] 

Over the past two decades, revenues from federal gasoline and diesel 
fuel taxes have steadily declined in purchasing power. These rates are 
not set to be adjusted for inflation on an annual basis, meaning that 
the 18.4 cents per-gallon tax on gasoline enacted in 1993 is 
effectively worth about 11.5 cents today.[Footnote 13] If federal 
gasoline taxes had been indexed to inflation since they were last 
increased, they would have risen from 18.4 cents per gallon in 1993 to 
approximately 29 cents per gallon in 2011; diesel taxes would have 
risen from 24.4 cents per gallon to 38 cents per gallon. In addition, 
as shown in figure 2, the amount of federal gasoline tax relative to 
the average retail price of gasoline decreased from 17 percent in 1993 
to 5 percent in 2011.[Footnote 14] 

Figure 2: Federal Gasoline Tax as a Percentage of the Average Retail 
Price per Gallon of Gasoline, 1993 to 2011: 

[Refer to PDF for image: vertical bar and line graph] 

Year: 1993; 
Federal gasoline tax: 18.4 cents; 
Average retail price per gallon, minus federal gasoline tax: $0.89; 
Federal fuel tax as a percentage of gasoline price: 17.2%. 

Year: 1994; 
Federal gasoline tax: 18.4 cents; 
Average retail price per gallon, minus federal gasoline tax: $0.89; 
Federal fuel tax as a percentage of gasoline price: 17.1%. 

Year: 1995; 
Federal gasoline tax: 18.4 cents; 
Average retail price per gallon, minus federal gasoline tax: $0.97; 
Federal fuel tax as a percentage of gasoline price: 15.9%. 

Year: 1996; 
Federal gasoline tax: 18.4 cents; 
Average retail price per gallon, minus federal gasoline tax: $1.06; 
Federal fuel tax as a percentage of gasoline price: 14.8%. 

Year: 1997; 
Federal gasoline tax: 18.4 cents; 
Average retail price per gallon, minus federal gasoline tax: $1.06; 
Federal fuel tax as a percentage of gasoline price: 14.8%. 

Year: 1998; 
Federal gasoline tax: 18.4 cents; 
Average retail price per gallon, minus federal gasoline tax: $0.89; 
Federal fuel tax as a percentage of gasoline price: 17.2%. 

Year: 1999; 
Federal gasoline tax: 18.4 cents; 
Average retail price per gallon, minus federal gasoline tax: $0.99; 
Federal fuel tax as a percentage of gasoline price: 15.7%. 

Year: 2000; 
Federal gasoline tax: 18.4 cents; 
Average retail price per gallon, minus federal gasoline tax: $1.34; 
Federal fuel tax as a percentage of gasoline price: 12.1%. 

Year: 2001; 
Federal gasoline tax: 18.4 cents; 
Average retail price per gallon, minus federal gasoline tax: $1.28; 
Federal fuel tax as a percentage of gasoline price: 12.6%. 

Year: 2002; 
Federal gasoline tax: 18.4 cents; 
Average retail price per gallon, minus federal gasoline tax: $1.20; 
Federal fuel tax as a percentage of gasoline price: 13.3%. 

Year: 2003; 
Federal gasoline tax: 18.4 cents; 
Average retail price per gallon, minus federal gasoline tax: $1.42; 
Federal fuel tax as a percentage of gasoline price: 11.5%. 

Year: 2004; 
Federal gasoline tax: 18.4 cents; 
Average retail price per gallon, minus federal gasoline tax: $1.71; 
Federal fuel tax as a percentage of gasoline price: 9.7%. 

Year: 2005; 
Federal gasoline tax: 18.4 cents; 
Average retail price per gallon, minus federal gasoline tax: $2.13; 
Federal fuel tax as a percentage of gasoline price: 8.0%. 

Year: 2006; 
Federal gasoline tax: 18.4 cents; 
Average retail price per gallon, minus federal gasoline tax: $2.43; 
Federal fuel tax as a percentage of gasoline price: 7.0%. 

Year: 2007; 
Federal gasoline tax: 18.4 cents; 
Average retail price per gallon, minus federal gasoline tax: $2.66; 
Federal fuel tax as a percentage of gasoline price: 6.5%. 

Year: 2008; 
Federal gasoline tax: 18.4 cents; 
Average retail price per gallon, minus federal gasoline tax: $3.12; 
Federal fuel tax as a percentage of gasoline price: 5.6%. 

Year: 2009; 
Federal gasoline tax: 18.4 cents; 
Average retail price per gallon, minus federal gasoline tax: $2.22; 
Federal fuel tax as a percentage of gasoline price: 7.7%. 

Year: 2010; 
Federal gasoline tax: 18.4 cents; 
Average retail price per gallon, minus federal gasoline tax: $2.65; 
Federal fuel tax as a percentage of gasoline price: 6.5%. 

Year: 2011; 
Federal gasoline tax: 18.4 cents; 
Average retail price per gallon, minus federal gasoline tax: $3.39; 
Federal fuel tax as a percentage of gasoline price: 5.2%. 

Source: GAO analysis of Department of Energy data. 

[End of figure] 

Surface transportation programs face increasing shortfalls in year-to-
year revenues over the next decade. CBO estimated in August 2012 that, 
to maintain current spending levels from 2012 to 2022, the Highway 
Trust Fund would require an additional $110 billion over what it is 
expected to take in during that period (see figure 3). These 
shortfalls are expected to increase as passenger vehicle fuel economy 
improves and the amount of revenue generated per mile traveled 
decreases. When federal fuel taxes were last increased in 1993, the 
National Highway Traffic Safety Administration's Corporate Average 
Fuel Economy (CAFE) standards required newly manufactured passenger 
cars and light trucks to meet estimated average fuel economy levels of 
27.5 miles per gallon (mpg) and 20.4 mpg, respectively. Current CAFE 
standards will require manufacturers' new passenger cars and light 
trucks to have an estimated combined average fuel economy of 34.1 mpg 
by model year 2016,[Footnote 15] and as high as 54.5 mpg by 2025. 
[Footnote 16] We have previously reported that, over the long term, 
vehicles will become more fuel efficient and increasingly run on 
alternative fuels. Consequently, fuel taxes may not be a long-term 
source of transportation funding.[Footnote 17] 

Figure 3: Projected Highway Trust Fund Balance, 2012 to 2022: 

[Refer to PDF for image: vertical bar graph] 

Fiscal year: 2012; 
Projected Highway Trust Fund Balance: $13.4 billion. 

Fiscal year: 2013; 
Projected Highway Trust Fund Balance: $6.5 billion. 

Fiscal year: 2014; 
Projected Highway Trust Fund Balance: $4.6 billion. 

Fiscal year: 2015; 
Projected Highway Trust Fund Balance: -$9.7 billion. 

Fiscal year: 2016; 
Projected Highway Trust Fund Balance: -$23.7 billion. 

Fiscal year: 2017; 
Projected Highway Trust Fund Balance: -$37.4 billion. 

Fiscal year: 2018; 
Projected Highway Trust Fund Balance: -$51.1 billion. 

Fiscal year: 2019; 
Projected Highway Trust Fund Balance: -$65.1 billion. 

Fiscal year: 2020; 
Projected Highway Trust Fund Balance: -$79.4 billion. 

Fiscal year: 2021; 
Projected Highway Trust Fund Balance: -$94.2 billion. 

Fiscal year: 2022; 
Projected Highway Trust Fund Balance: -$109.6 billion. 

Source: GAO analysis of CBO data. 

Note: This projection assumes no further appropriations after 2014 
from general revenues to the Highway Trust Fund. 

[End of figure] 

Users' Fuel Tax Costs: 

The amount of federal fuel taxes paid by drivers of passenger vehicles 
comprises only a small portion of these users' overall fuel 
expenditures and varies based on fuel economy. More fuel-efficient 
passenger vehicles pay less in fuel taxes per mile because they 
require less fuel to travel the same distance as less efficient 
vehicles. The 2009 National Household Transportation Survey found that 
the average one-vehicle household spends more than $1,400 annually on 
gasoline.[Footnote 18] Drivers of sedans with average fuel efficiency 
(22 mpg) pay about $100 per year in federal fuel taxes. The driver of 
a sport utility vehicle (SUV) with a fuel efficiency of 16 mpg pays 
about $132 a year in federal fuel taxes (see figure 4). 

Figure 4: Average Annual Federal Fuel Taxes Paid by Passenger Vehicles: 

[Refer to PDF for image: illustrated horizontal bar graph] 

Vehicle type: Hybrid (40 mpg); 
Average Annual Federal Fuel Taxes: $53. 

Vehicle type: Sedan (22 mpg); 
Average Annual Federal Fuel Taxes: $96. 

Vehicle type: SUV (16 mpg); 
Average Annual Federal Fuel Taxes: $132. 

Source: GAO analysis of FHWA and Department of Energy data. 

Note: Assuming 11,489 miles driven annually (per FHWA 2010 Highway 
Statistics). 

[End of figure] 

A single commercial truck contributes more to the Highway Trust Fund, 
on average, than a single passenger vehicle for several reasons. The 
federal diesel fuel tax is higher than the gasoline tax, and 
commercial trucks tend to travel more miles annually and are 
considerably less fuel efficient than passenger vehicles. According to 
FHWA highway statistics, the average commercial truck and trailer 
combination (combination truck) traveled nearly 70,000 miles in 2010 
while the average passenger vehicle traveled about 11,000 miles. Also, 
while the average combination truck traveled about 6 miles per gallon 
of diesel fuel in 2010, the average passenger vehicle traveled about 
22 miles per gallon of gasoline. There is also a great deal of 
variation in the amount of fuel taxes paid among different 
configurations of commercial trucks. As shown in figure 5, a 
combination truck with a fuel efficiency of 5 mpg would have paid more 
than 8 times as much in federal diesel fuel tax as a single-unit truck 
with a fuel efficiency of 8 mpg, a difference due primarily to 
combination trucks driving substantially more miles than smaller, 
single-unit trucks.[Footnote 19] 

Figure 5: Annual Federal Fuel Taxes Paid by Commercial Trucks in 2010: 

[Refer to PDF for image: illustrated horizontal bar graph] 

Vehicle type: Single-unit truck (8 mpg, 13,469 miles driven); 
Average Annual Federal Fuel Taxes: $411. 

Vehicle type: Combination truck (5 mpg, 68,907 miles driven); 
Average Annual Federal Fuel Taxes: $3,363. 

Source: GAO analysis of FHWA data. 

[End of figure] 

Although a single commercial truck generally contributes larger 
amounts to the Highway Trust Fund through federal diesel fuel and 
other taxes, FHWA has estimated that commercial trucks pay less than 
their share for their use of our nation's roadways in relation to the 
road damage they impose. According to research conducted by the 
American Association of State Highway Transportation Officials 
(AASHTO), highway wear increases exponentially with the weight of a 
vehicle's axle load.[Footnote 20] To evaluate the equity and 
efficiency of highway user fees, FHWA has compared the Highway Trust 
Fund contributions of different vehicle classes with the costs 
attributable to each class as part of its Highway Cost Allocation 
Study. FHWA completed its most recent cost allocation study in 1997 in 
response to a GAO recommendation and provided an updated addendum in 
2000.[Footnote 21] This study found that in general, lighter vehicles 
pay more than their share of highway costs while heavier vehicles pay 
less than their share. For example, according to FHWA's 2000 study, 
the heaviest combination trucks--those that weigh more than the 
federal interstate gross vehicle weight limit of 80,000 pounds--paid 
50 cents for every dollar's worth of damage they caused.[Footnote 22] 
According to the AASHTO study that is used as the basis for the 
organization's pavement design guides, a commercial truck with five 
axles weighing 80,000 pounds imposes roadway damage equivalent to the 
damage imposed by 24,000 passenger cars. 

Mileage-based User Fee Initiatives in the United States and Abroad: 

In recent years, the federal government and several states have taken 
steps to evaluate mileage fee systems, although none of these U.S.-
based pilot projects has collected fees from drivers based on their 
road use: 

* In 2005, Congress authorized $16.5 million for a field test for 
assessing highway use fees to vehicles based on their mileage driven 
and using satellite-enabled, on-board units.[Footnote 23] Led by 
researchers at the University of Iowa, the National Evaluation of 
Mileage-based Road User Charges (referred to as the "Iowa study" in 
this report) tested mileage fee systems in the vehicles of 2,600 
volunteer study participants in 12 states.[Footnote 24] 

* In 2005 and 2006, respectively, the Puget Sound Regional Council--
the metropolitan planning organization for the Seattle, Washington 
region--and the Oregon DOT each conducted pilot programs that were 
funded in part by FHWA's Value Pricing Pilot Program.[Footnote 25] 
Similar to the Iowa study, both pilots tested GPS-based systems 
installed into the vehicles of paid volunteers to gather mileage data 
and calculate hypothetical user fees. 

At the time of our review, the Minnesota and Nevada DOTs were testing 
different approaches to calculating mileage fees for passenger 
vehicles, discussed later in this report. The Oregon DOT also 
conducted field tests of a system to collect mileage fees from 
commercial trucks and has planned a new pilot project to examine 
mileage fees for electric passenger vehicles. For a summary of U.S.-
based pilot projects, see appendix II. 

Internationally, several countries have implemented distance-based 
user fee programs for commercial trucks, including Germany, New 
Zealand, Switzerland, Austria, the Czech Republic, and Slovakia. 
[Footnote 26] These programs were designed to address a variety of 
policy goals, including raising revenues and reducing harmful 
emissions. The New Zealand system also charges diesel-fueled passenger 
vehicles for distances traveled. The Netherlands attempted to 
implement a nationwide commercial truck and passenger vehicle mileage 
fee system scheduled to begin in 2012, but the program was suspended 
before it was implemented because of privacy concerns discussed later 
in this report. 

Evaluating User Fees: 

Prior GAO work has found that the design of user fee programs can be 
evaluated based on several related criteria: efficiency, equity, 
revenue adequacy, and administrative burden, as discussed in appendix 
III.[Footnote 27] These criteria interact and are often in conflict 
with each other; as such, there are trade-offs to consider among the 
criteria when designing a fee. For example, the current method of 
collecting federal fuel taxes presents little administrative burden 
because these taxes are collected from a small number of companies 
that store or distribute fuel at the wholesale level.[Footnote 28] 
However, according to CBO, fuel taxes also raise efficiency and equity 
concerns in that they: (1) do little to promote the efficient use of 
the nation's roadways because they provide minimal incentive for users 
to drive less and (2) tend to be regressive, in that they impose a 
larger relative burden on low-income than on high-income households. 
[Footnote 29] Consequently, every user fee design will have pluses and 
minuses, and no design will satisfy everyone on all dimensions. 

The implementation of mileage fee systems may also be evaluated 
against several widely accepted principles for protecting the privacy 
and security of personal information. These principles, known as the 
Fair Information Practices, include collection limitation, data 
quality, purpose specification, use limitation, security safeguards, 
openness, individual participation, and accountability.[Footnote 30] 
In prior work, we noted that these principles, with some variation, 
are used by organizations to address privacy considerations in their 
business practices and are also the basis of privacy laws and related 
policies in the United States, the European Union, Australia, and New 
Zealand.[Footnote 31] 

Various Initiatives Demonstrate Mileage Fee Benefits, but Privacy 
Concerns and Cost Challenges Hinder Passenger Vehicle Systems: 

Mileage fee initiatives in the United States and abroad show that 
several approaches are available to gather mileage data and charge 
fees. Some approaches could lead to more equitable and efficient use 
of roadways; however, significant privacy-related concerns from the 
public and cost challenges have been raised in applying mileage fees 
to passenger vehicles. Reliable cost estimates for mileage fee systems 
are not available; but launching and operating a system to collect 
fees from 230 million U.S. passenger vehicles is expected to greatly 
exceed the current costs of collecting federal fuel taxes. Commercial 
truck user fee systems in Germany and New Zealand show that 
considerable revenues and other benefits can be achieved by charging 
these vehicles, but enforcing compliance in a cost-effective manner 
presents trade-offs. Only limited research has been done to evaluate 
commercial truck mileage fees in the United States. Recent efforts in 
two states suggest that charging mileage fees to commercial trucks 
presents several benefits over passenger vehicle fees, including fewer 
privacy-related concerns and cost challenges. 

Several Different Passenger Vehicle Mileage Fee Approaches Exist: 

The five U.S.-based pilot projects that we reviewed and New Zealand's 
passenger vehicle mileage fee program illustrate three general 
approaches that are currently available to gather mileage data and 
charge drivers user fees.[Footnote 32] The approaches vary in terms of 
the specificity of the mileage data collected as well as the 
procedures used to charge drivers fees. The three approaches are a GPS-
based system; a pay-at-the-pump system; and a prepaid, manual system, 
as depicted in figure 6 and described in more detail below. 

Figure 6: Depiction of Three Passenger Vehicle Mileage Fee Approaches: 

[Refer to PDF for image: illustration] 

GPS-based mileage fee system: 
An on-board GPS receiver determines vehicle location and, depending on 
functionality, transmits either (1) a summary of fees incurred by 
jurisdiction or (2) specific vehicle coordinates. The central office 
then prepares and sends a bill to the driver. 

Pay-at-the-pump system: 
No GPS receiver is required. Vehicles and fuel pumps are equipped with 
wireless transponders to communicate odometer mileage to a central 
office, which determines mileage fee and charges the driver in the 
cost of fuel purchased. 

Prepaid manual mileage fee system: 
Driver purchases prepaid number of miles from a registered location 
and displays paper license with permitted mileage on vehicle 
windshield. No information on the location of the vehicle's mileage 
driven is collected. 

Source: GAO analysis of mileage fee initiatives. 

[End of figure] 

GPS-based Mileage Fee Systems: 

To implement mileage fees using GPS, the vehicle must be installed 
with an on-board unit with a GPS chip to receive signals from a 
satellite to determine the vehicle's location. Two types of GPS-based 
systems can be used to calculate mileage fees. One system has 
sufficient processing capability to calculate mileage fees in the 
vehicle (known as a "thick client"); the other system (known as a 
"thin client") has less processing capability and sends the location 
data to a central office where mileage fees are calculated. Three of 
the five U.S.-based pilot projects we reviewed tested on-board thick-
client units, one used a thin-client unit, and one did not use GPS. 
[Footnote 33] Thick-client systems transmit summary information on the 
total miles driven by jurisdiction and the amount due to a central 
office, which then prepares the participant's mileage fee invoice. 
[Footnote 34] Thin-client systems work similarly, but rather than 
sending a summary of the mileage traveled to a central office, they 
send detailed vehicle location and time-of-day data. The central 
office uses the data to calculate and prepare the participant's 
mileage fee invoices. 

Pay-at-the-Pump Mileage Fee Systems: 

Two states, Nevada and Oregon, have designed mileage fee collection 
systems that resemble the way in which fuel taxes are currently paid--
at the filling station. The Nevada DOT is currently conducting a pilot 
project that does not require an on-board GPS system and that 
estimates a driver's mileage fee based on the fuel efficiency of the 
vehicle and the amount of fuel purchased at the pump. To do so, a 
wireless transponder is installed in the participant's vehicle and 
connected to the vehicle's on-board diagnostics unit to gather the 
total mileage of the vehicle. When a vehicle pulls up to a fuel pump 
at a gas station participating in the pilot, the transponder in the 
vehicle sends the vehicle's mileage information to a transponder 
installed at the fuel pump. The vehicle's mileage information is then 
transmitted to a central office where a mileage fee is calculated and 
transmitted back for inclusion in the price of fuel and shown on the 
participant's fuel receipt. In 2006, the Oregon DOT tested a similar 
pay-at-the pump system, but its system also required a GPS receiver 
[Footnote 35] in participant vehicles to charge drivers different fee 
rates based on the jurisdiction of travel (in state, out of state, or 
within the Portland metropolitan area).[Footnote 36] 

Prepaid Manual Mileage Fee Systems: 

A prepaid manual system is a nonautomated mileage fee system where 
drivers purchase a license that permits them to drive for the 
purchased number of miles, as used in New Zealand's Road User Charge 
(RUC) system. The RUC system was originally designed to collect user 
fees from commercial trucks, but it also applies to diesel-fueled 
passenger vehicles, which comprise 15 percent of all light vehicles in 
the country. New Zealand does not tax diesel fuel at the pump because 
a significant amount is used for off-road purposes that do not impose 
costs on public highways--such as agriculture, construction, fishing, 
and logging. Vehicle owners purchase a RUC license for a range of 
kilometers (such as 5,000 to 10,000 kilometers) based on their 
odometer reading, and the RUC license shows the distance the vehicle 
is permitted to drive. Vehicle owners must display the RUC license on 
the windshield to verify compliance during safety inspections or if a 
vehicle is pulled over for traffic a violation. RUC licenses are 
purchased in 1,000-kilometer increments at a variety of locations 
including post offices, some filling stations, and through the New 
Zealand Transport Agency, which manages the program. Unlike the pay-at-
the-pump system, New Zealand's RUC system can be used to collect 
mileage fees from electric and alternative fueled vehicles that do not 
visit fuel pumps but do use roads.[Footnote 37] The RUC system was the 
only passenger vehicle system we reviewed that collects actual 
revenues and the only national mileage fee system that applies to 
passenger vehicles. 

Benefits and Challenges of Passenger Vehicle Mileage Fee Systems: 

The three approaches offer different benefits and challenges and 
present trade-offs to policymakers in evaluating mileage-based user 
fees. GPS-based systems can lead to more equitable and efficient use 
of roadways by charging drivers based on their actual road use and by 
providing pricing incentives to reduce road use. However, public 
perception of privacy risks raised by these systems significantly 
limits acceptance of the program. Conversely, because pay-at-the-pump 
and prepaid manual systems do not collect location data on drivers 
they present fewer privacy-related challenges, but the trade-offs are 
reductions in the efficiency and equity of the proposed systems. For 
example, they are unable to improve the efficiency of road use by 
charging drivers different rates for travel on specific roadways or 
during congested periods. Manual systems could also be subject to 
odometer fraud and evasion, with compliant drivers paying more than 
noncompliant drivers. Because reliable cost estimates for implementing 
any of these systems are not available, the ability to weigh the costs 
of implementing and operating a system is a challenge that applies 
across each of the options. See table 1 for a summary of the benefits 
and challenges. 

Table 1: Benefits and Challenges of Mileage Fee Systems: 

Mileage fee systems: GPS systems; 
Benefits: Opportunity to improve the efficiency of road use through 
variable pricing, or charging road users a higher rate during peak 
traffic times and a lower rate during times with light traffic; 
Ability to improve equity by accurately pricing road use for all users 
and vehicle types consistent with the costs imposed; 
Challenges: Perception of government intrusion on privacy by tracking 
privately owned vehicles and risk of data being compromised or 
disclosed for unauthorized uses; 
High start-up and ongoing costs associated with unit installation, 
implementation, billing, revenue collection, and enforcement. 

Mileage fee systems: Pay-at-the-pump systems; 
Benefits: Alleviates some privacy-related concerns of tracking 
privately owned vehicles by not requiring the use of a GPS system; 
Challenges: Cost and logistical challenges associated with the 
installation and management of equipment at gas stations nationwide 
and installation of transponders in vehicles; 
Unable to gather driving data needed to implement variable pricing 
based on congestion to encourage efficient road use; 
Not compatible with alternative fuel vehicles that do not use gas 
stations. 

Mileage fee systems: Prepaid manual systems; 
Benefits: Alleviates privacy-related concerns of tracking privately 
owned vehicles by not requiring the use of GPS system; 
Limits administrative costs by eliminating the need to outfit vehicles 
or fuel pumps with the necessary technology to collect total miles 
traveled; 
Challenges: Unable to gather driving data needed to implement variable 
pricing to encourage efficient road use; 
Increased risk of evasion through odometer tampering creates equity 
issues. 

Source: GAO analysis. 

[End of table] 

Privacy Challenges: 

Using a GPS device to charge passenger-vehicles mileage fees raises 
significant privacy-related concerns among the public. In the surveys 
conducted through the Iowa study, researchers found that after 
completing the pilot, 60 percent of the volunteer participants 
believed that the government would use the information collected to 
track their movements. In addition, state DOT officials conducting 
public outreach and opinion research in Minnesota, Texas, and Nevada 
found that the public expressed a variety of privacy-related concerns, 
including that the government would use a GPS system to track a 
driver's movements and that the personal information collected could 
be vulnerable to security breaches or shared with law enforcement 
agencies and private companies. According to our survey of state DOTs, 
45 of 51 officials reported that addressing privacy-related concerns 
would present a great challenge to developing a mileage fee program in 
their state. Several state DOT officials have proposed that using the 
private sector to manage mileage fee programs would alleviate public 
perception of privacy risks by limiting the government's role in 
collecting and managing personal information. However, we have 
previously reported that by allowing private companies access to 
location data, users can be exposed to privacy risks, including 
disclosure of the location data to unknown third parties for 
unspecified uses, consumer tracking, identity theft, threats to 
physical safety, and surveillance.[Footnote 38] 

Because of public perception of privacy risks, Oregon and Nevada 
adopted an approach that does not require the use of GPS-based systems 
in future pilots and the Netherlands suspended its mileage fee 
initiative. Oregon DOT officials stated that a government-mandated GPS 
device installed in a vehicle to track and charge for the vehicle 
miles traveled is no longer feasible because of public privacy-related 
concerns. As a result, the Oregon DOT is conducting an alternative 
pilot program that does not mandate the use of a GPS device and 
provides users several options of reporting and paying for miles 
traveled.[Footnote 39] In designing its pilot project, the Nevada DOT 
received negative public feedback over the use of GPS devices to 
determine miles driven. As a result, Nevada DOT is testing a pay-at-
the-pump system which, according to officials, alleviates the public's 
privacy-related concerns. Similarly, a commercial truck and passenger 
vehicle user fee system that was scheduled to begin in 2012 was 
suspended by the Dutch government before it could be implemented. 
Dutch officials stated that negative media coverage of the program's 
potential to invade personal privacy led to public uncertainty about 
the program and subsequent opposition from a number of political 
parties. Consequently, the government deemed the user fee program too 
controversial and suspended it. Furthermore, concerns with mileage fee 
systems have informed congressional debate. In June 2012, the House of 
Representatives included a provision in its fiscal year 2013 
appropriations bill for the U.S. Department of Transportation that 
would have prevented the Secretary of Transportation from using any of 
the funds made available under that legislation to research or 
implement a system that would levy a fee on a vehicle user based on 
the distance traveled.[Footnote 40] 

Pay-at-the-pump or prepaid manual systems address privacy-related 
concerns to some extent by not tracking a driver's location; however, 
these systems can reduce some of the efficiency and equity benefits of 
mileage fee systems. For example, variable pricing programs that 
charge road users a higher rate during peak traffic times and a lower 
rate during times with light traffic can be facilitated through the 
use of GPS systems. In theory, GPS could also be used to charge 
drivers different rates based on the type of road or the location of 
travel, such as higher rates on urban Interstates and lower rates on 
rural roads. The system in place in New Zealand and the one being 
tested in Nevada only collect total mileage driven by the vehicle and 
are unable to apply different fees based on time and location. In 
addition, pay-at-the pump systems cannot charge electric fuel vehicles 
since they do not need to use gas stations to power their vehicles. 
Also, equity issues caused by odometer fraud exist in prepaid manual 
systems. For example, New Zealand officials reported that when a 
passenger vehicle is pulled over for a violation, the police have no 
way to determine whether an odometer has been disabled and that 
mileage is not being recorded. An independent review of the RUC 
program conducted in 2008 estimated that about $10 million (U.S.), or 
6 percent of the light vehicle RUC revenue, was lost because of 
evasion.[Footnote 41] New Zealand government officials noted that as a 
result, compliant drivers pay higher RUC rates than they otherwise 
would to replace the revenues lost from noncompliant drivers. 

Cost Challenges: 

Reliable estimates for start-up and ongoing administrative costs of a 
passenger vehicle mileage fee system in the United States are 
currently unknown but are likely to be substantial. 

* Start-up costs: Installing on-board units in 230 million U.S. 
passenger vehicles would almost certainly be a significant cost 
challenge. Reliable estimates for the current cost of purchasing and 
installing on-board units for all U.S. passenger vehicles are not 
available, but such costs are likely to greatly exceed the current 
costs of collecting fuel taxes, estimated at about 1 percent of the 
revenues collected. A May 2009 study, prepared for U.S. Department of 
Transportation on the administrative costs of collecting highway 
revenues, found that the costs of purchasing and implementing a GPS-
based mileage fee system could range from roughly 8 percent to 33 
percent of the revenues generated over a 20-year period, depending on 
the type of system used. The German government estimated the current 
cost of the GPS-enabled on-board units used in its commercial truck 
user fee system to be about $240 per unit, with additional costs for 
installation.[Footnote 42] These start-up costs would likely be 
prohibitive if the goal of the fees is to replace current federal fuel 
tax revenues, which are about $100 per year for the driver of a sedan 
with average fuel efficiency. Similarly, retrofitting thousands of gas 
stations to support a pay-at-the pump system would be costly and 
challenging. For example, the Oregon and Nevada pay-at-the-pump pilot 
programs cited difficulties finding and recruiting gas stations to 
participate in their pilot programs. 

* Ongoing administrative costs: The costs of managing, maintaining, 
and enforcing any mileage fee system are also unknown but likely to be 
substantial. For example, a 2011 report analyzing cost estimates from 
the proposed mileage fee system in the Netherlands estimated the total 
operating costs to be about 7 percent of the revenues projected to be 
generated by that system.[Footnote 43] However, the report found that 
operating costs as a percentage of revenues could be substantially 
higher in the United States because U.S. drivers pay substantially 
less in transportation costs than drivers in the Netherlands. 
Furthermore, the ongoing maintenance of on-board units could be costly 
and present technical challenges. In the Iowa study, approximately 24 
percent of the 2,600 participants experienced at least one study-
related problem with their vehicle or installed equipment over the 2-
year study period, and a total of 618 incidents required at least one 
service visit to correct. Of these incidents, 79 percent were due to a 
problem with the performance of installed on-board units. The 
principal researcher on the project stated that this level of error 
would have been "disastrous" and would have jeopardized the success of 
a national mileage fee rollout with millions of vehicles involved. The 
Iowa study recommended that the federal government should fund a 
larger, national mileage fee study that would generate the 
efficiencies needed to provide an accurate estimate for back-office 
operational costs. 

Commercial Truck User Fee Programs in Germany and New Zealand Have 
Raised Substantial Transportation Revenues and Produced Other Benefits: 

Revenues and Benefits from Germany's Heavy Goods Vehicle User Fee 
System: 

Germany's Heavy Goods Vehicle (HGV) system was implemented in January 
2005 and is the first distance-based user fee system in Europe to use 
GPS technology.[Footnote 44] The program was developed through a 
public-private partnership between the German government and a private 
sector company, which manages and collects tolls for the German 
government. The HGV system charges all trucks weighing more than 
12,000 kilograms (over 26,000 pounds), regardless of national origin, 
a per-kilometer fee to travel on the 12,700-kilometer (almost 8,000-
mile) national motorway, or autobahn. Currently, about 700,000 trucks 
across Europe are equipped with GPS-based on-board units that meter 
all travel on the autobahn. The on-board units use cellular 
communications to transmit mileage data to the private toll operator, 
which is responsible for billing trucking firms and collecting the 
fees. Approximately 700,000 other commercial trucks without on-board 
units are charged user fees through a manual booking system maintained 
by the private toll operator. Users of this system must prepay for 
their travel through the Internet or at 3,500 electronic toll 
terminals located at various entry points and service areas across the 
autobahn. 

The goals of the HGV system were to (1) raise transportation revenues 
through the user pays principle and to (2) reduce harmful emissions 
from commercial trucks. The program has generally achieved its goal of 
raising new revenues by ensuring that both foreign and domestic trucks 
on the autobahn are charged equitably for their travel. According to 
German transportation officials, foreign trucks account for more than 
35 percent of the country's truck travel. Prior to the launch of the 
HGV system, foreign trucks could purchase diesel fuel in neighboring 
countries to avoid Germany's significant fuel taxes, and thus use 
German roadways without contributing revenues for their maintenance. 
The HGV tolling system addresses this by charging all trucks subject 
to the tolls, regardless of national origin, the same per-kilometer 
fees to travel on the autobahn. From fiscal year 2007 through 2011, 
the HGV system raised almost $25 billion (more than 20 billion euros) 
in dedicated surface transportation revenues from an estimated 1.4 
million commercial truck users.[Footnote 45] 

The program also achieved its second goal of creating incentives for 
operators to invest in lower emission vehicles, which has resulted in 
reduced emissions across the German and European trucking fleet. User 
fee rates are variable and based on the truck's emission class, number 
of axles, and distance traveled on the roads subject to the fee. 
Trucks with lower emissions pay significantly less than trucks with 
higher emissions, with rates ranging from 28 to 57 U.S. cents per 
mile. The composition of the HGV trucking fleet has changed 
dramatically over the course of the program as a result of the 
variable pricing incentives. In 2005, the lowest emission commercial 
truck classes, known as the Euro 5 and enhanced environmentally-
friendly vehicle emissions categories, comprised less than 1 percent 
of the commercial trucking fleet. By the end of 2011, those classes 
comprised about 70 percent of the commercial truck fleet. German 
transportation officials reported that while this outcome was a 
positive environmental benefit, the fast turnover of the vehicle fleet 
resulted in slightly lower-than-expected revenues because lower 
emission vehicles pay lower rates. Consequently, the German government 
reviewed and raised the rates across all categories while maintaining 
the incentives for lower emission vehicles. 

Revenues and Benefits from New Zealand's RUC Program: 

The New Zealand RUC program was established in 1977 and requires that 
owners of vehicles over 3,500 kilograms (7,700 pounds), including 
trucks and their trailers, prepurchase a RUC license for all miles 
traveled on the nation's 94,000-kilometer (58,000-mile) public roadway 
system. As with diesel passenger vehicles, commercial trucks purchase 
RUC licenses in 1,000-kilometer increments and must display the 
license and the kilometers permitted on their windshield. The 
government has provided an option for vehicle owners to install 
electronic RUC (E-RUC) systems that are provided by private sector 
firms certified by the New Zealand government to collect fees and 
remit revenues to the government. The E-RUC system uses on-board GPS 
units to keep track of the status of each vehicle's RUC license and 
whether additional kilometers need to be purchased. Trucking firms 
that subscribe to the system can track their fleet's RUC licenses 
online and may purchase additional applications enabled by GPS to 
track the location, speed, and fuel efficiency of their trucks. 
Commercial trucks, rather than passenger vehicles, are the vast 
majority of E-RUC users because of the higher cost of subscribing to E-
RUC systems compared with lower costs of purchasing prepaid paper RUC 
licenses directly from retailers. 

The primary goal of the RUC program is to generate surface 
transportation revenues from heavy vehicles by charging users fees 
that reflect the maintenance costs that these vehicles impose on the 
roadways. Because highway wear increases exponentially with the weight 
of a vehicle's axle load, the RUC system uses variable pricing to 
charge higher rates to heavy trucks with fewer axles, and lower rates 
to heavy trucks with more axles. For example, a three-axle truck 
weighing more than 18 tons (almost 40,000 pounds) is charged almost 43 
U.S. cents per mile, while a truck of the same weight with five or 
more axles is charged 35 U.S. cents per mile.[Footnote 46] All miles 
for light passenger diesel vehicles are charged at a flat rate of less 
than 6 U.S. cents per mile regardless of the actual vehicle weight. 
This is because an individual light vehicle causes only very limited 
amounts of wear on the road compared with heavy trucks, and the 
variation in wear among light vehicles of different weights is also 
minimal. From 2007 through 2011, the RUC system generated about $3.4 
billion (U.S.) in dedicated surface transportation revenues, with 74 
percent coming from heavy trucks and 26 percent from light passenger 
vehicles.[Footnote 47] 

The New Zealand RUC program has achieved a related program benefit of 
promoting the use of trucks that cause less damage to roadways, an 
outcome that may reduce road maintenance costs. According to New 
Zealand government officials, the variable pricing incentives have 
influenced the composition of the commercial truck fleet so that 
trucks with more axles per vehicle weight represent a greater portion 
of the vehicle fleet than in most other countries. For example, 
according to 2010 New Zealand Transport Agency data, combination 
trucks with eight axles represented about 35 percent of all trucks on 
New Zealand roadways. In contrast, according to FHWA data, eight-axle 
combination trucks were estimated to account for less than 1 percent 
of the U.S. truck fleet in 2000.[Footnote 48] New Zealand trucking 
association representatives reported that operators in New Zealand use 
trucks and trailers with as many as nine axles in combination in order 
to pay lower RUC fees. New Zealand government officials reported that 
this altered vehicle fleet is considered to reduce road maintenance 
costs due to reduced pavement damage, although no estimate is 
available for the overall value of the savings. 

Commercial Truck Mileage Fee Systems Face Trade-Offs between Cost and 
Enforcement While Acting to Mitigate Privacy Concerns: 

The different approaches taken by Germany and New Zealand illustrate 
the trade-offs involved in designing a mileage fee system for trucks 
that provides adequate enforcement in a cost-effective manner. The 
German system employs an extensive but costly roadside enforcement 
infrastructure; New Zealand's RUC program does not, but it has higher 
estimated evasion rates and revenue leakages than the German system. 

The German government and its private sector toll operator ensure 
compliance with the HGV system through significant roadside 
infrastructure and enforcement. The HGV system includes 300 gantries, 
or overhead structures, deployed across the autobahn to ensure that on-
board units are operating correctly and that manual users of the 
system have registered for their travel. Each gantry is equipped with 
enforcement cameras and short-range, wireless devices that signal to 
each passing truck's on-board unit to ensure it is activated and 
functioning properly.[Footnote 49] The German government staffs a 
fleet of 250 mobile enforcement vehicles equipped by the toll 
operator, which is used to patrol the autobahn and respond to 
suspected violations.[Footnote 50] (See figure 7.) According to 
officials, this approach has resulted in an estimated evasion rate 
that is less than 1 percent, meaning that less than 1 percent of all 
HGVs on the system were out of compliance in 2011. 

Figure 7: German HGV Enforcement Gantry and Mobile Enforcement Vehicle: 

[Refer to PDF for image: 2 photographs] 

Sources: German Ministry of Transport, Building and Urban Development 
and the Federal Office for Goods Transport. 

[End of figure] 

Although the German government reported that the HGV system 
experiences very little revenue leakage from evasion, the system is 
costly to implement. All of the start-up costs for implementing the 
HGV system were incurred by the toll operator, which owns the 700,000 
on-board units installed across Europe, as well the roadside 
infrastructure and back-office equipment used to monitor and enforce 
the system.[Footnote 51] From fiscal years 2007 through 2011, the 
German government paid the system operator approximately $664 million 
per year to manage the system. These administrative costs averaged 
about 13 percent of the $5 billion in average revenues generated 
annually over that time period. The German government also spends 
almost $62 million per year to staff the mobile enforcement vehicles 
with German police. In addition, Germany allocates $740 million 
annually in HGV revenues for several programs to assist German 
trucking firms in complying with the system. Although these compliance 
programs are not considered to be part of the administrative costs of 
operating the HGV system, they further reduce the net revenues 
generated.[Footnote 52] 

New Zealand's RUC fees are collected and enforced manually with little 
roadside enforcement technology and lower costs than the HGV system, 
but with higher estimated evasion rates. The New Zealand national 
police enforce RUC compliance with eight inspection stations across 
the country, staffed with a total of 90 officers nationwide. 
Commercial trucks are required to stop at these stations, and police 
manually inspect and compare the mileage limit on the displayed RUC 
license with the vehicles' current mileage on special odometers that 
are mounted on the hubs of trucks and trailers.[Footnote 53] According 
to the New Zealand trucking association, compliance with these manual 
inspections is inefficient and costly to operators because of time 
lost. The government reported that the costs of managing the RUC 
program are nearly $18 million (U.S.) per year, or 2.5 percent of the 
estimated $700 million (U.S.) generated annually by the system. 
[Footnote 54] Although these administrative costs are substantially 
lower than the 13 percent costs of the German system, implementing the 
RUC system comes with higher estimated evasion rates than the 1 
percent of revenues estimated lost in Germany. According to the New 
Zealand Ministry of Transport, roughly 4 percent of the commercial 
truck revenues on average are lost annually because of evasion by 
trucks. This equates to an estimated loss of about $21 million (U.S.) 
per year from fiscal years 2007 to 2011, or slightly more than the 
amount that the New Zealand government spends annually to manage the 
program.[Footnote 55] 

Germany and New Zealand officials reported they have safeguards in 
place to limit the collection and use of mileage data, and as a 
result, privacy concerns for commercial trucks are not a significant 
challenge. The officials reported that the respective laws that 
authorize these programs stipulate several data protection provisions 
consistent with internationally recognized Fair Information Practices. 
[Footnote 56] Both programs are required to clearly define and limit 
the data to be collected, the purpose for its collection, the limits 
for its use, as well as the security safeguards that are in place. For 
example, in Germany, the government and its contracted toll operators 
are permitted to collect, use, and process only limited information to 
enforce the tolls, including a picture of the vehicle, the place and 
time the tolled road was used, and features of the vehicle (number of 
axles) necessary to process the toll. This data must be deleted 
immediately after the toll is paid. Because of the legal safeguards in 
place, commercial trucking associations in Germany and New Zealand 
both reported that the invasion of personal privacy or the loss of 
proprietary business information are not significant concerns among 
their firms. Because the New Zealand RUC system is largely a prepaid 
manual system in which most users do not have an on-board unit, 
privacy-related concerns do not arise. Moreover, safeguards are in 
place to protect the data of the commercial truck fleet using the E-
RUC system. According to New Zealand government officials, the private 
companies applying to become E-RUC providers are subjected to a 
stringent series of tests to ensure the security of data before the 
government approves them to act as agents for the RUC system. Tests 
include verification of the providers' data security systems, the 
accuracy of the data collected, and their systems' ability to identify 
efforts to tamper with E-RUC units. 

Commercial Truck Mileage Fee Pilot Projects in the United States Also 
Suggest Benefits: 

Although U.S. initiatives to evaluate mileage fees have focused 
primarily on passenger vehicles, two recent efforts focused on fees 
for commercial trucks. Specifically, the Oregon DOT and several 
metropolitan planning organizations and a consulting firm in New York 
recently evaluated ways to electronically collect existing weight-
distance taxes that apply to commercial trucks in those states. 
[Footnote 57] 

* In 2010, the Oregon Truck Road Use Electronics (TRUE) pilot project 
tested GPS-based units in 25 trucks operated by three trucking firms 
to automate the collection of Oregon's truck weight-mile tax. Oregon 
officials reported that the devices successfully tracked the miles 
traveled in their state and sent the data to Oregon DOT to produce a 
monthly weight-mile tax statement for the trucking firms participating 
in the pilot, to facilitate their payment of the state's weight-mile 
tax. 

* In a separate 2010 study, researchers collected GPS routing data 
provided by several trucking firms in New York to test the feasibility 
of using existing GPS-based technology to implement a truck mileage 
fee system that would replace existing state truck fees and taxes. 
[Footnote 58] The study found that a mileage fee system could more 
accurately track vehicle mileage than the current system, which relies 
on self-reported mileage from trucking firms, and could generate an 
additional $150 million in revenue annually that is estimated to be 
lost because of underreporting of mileage and weight. 

The results of these U.S. pilots suggest that charging mileage-based 
user fees to commercial trucks presents several benefits over 
passenger vehicle fees: 

* Reduced privacy concerns. Some of the privacy-related concerns 
discussed previously with regard to using GPS-based systems for 
passenger vehicles may not be as troublesome if applied to commercial 
trucks because the right of privacy would belong to the company that 
owns the truck. Trucking companies can be required to meet reasonable 
conditions and pay appropriate taxes in exchange for using the public 
highways. They can also set the conditions of employment for their 
employees, who have limited privacy rights because employers may 
establish the policies that govern their workplaces and allow the 
monitoring of the use of any company assets, including trucks. 
Employers may also establish policies that inform employees about 
information collected as a condition of employment. The New York 
commercial truck mileage fee study reported that a significant portion 
of large trucks already have fleet management systems that include the 
GPS technology needed to support mileage fees. These fleet management 
systems are used by trucking firms to monitor mileage traveled, driver 
speed, estimated delivery times, and other business performance 
information. 

* Reduced implementation costs. First, because there are significantly 
fewer commercial trucks than passenger vehicles in the United States, 
the overall costs of implementing a truck mileage fee system would 
almost certainly be significantly lower for these vehicles. According 
to FHWA data, commercial trucks represent 4 percent of the U.S. 
vehicle fleet, with a total of about 10 million single-unit and 
combination vehicles on the roadways in fiscal year 2010. Equipping 
trucks with on-board units would be significantly less costly than 
equipping the 230 million passenger vehicles with the same equipment. 
In addition, because combination commercial trucks average 
significantly more miles per year (almost 70,000) than the average 
passenger vehicle (more than 11,000 miles), commercial truck mileage 
fee systems could generate significantly more revenue per vehicle than 
passenger vehicles systems. As such, the costs to the government to 
implement a commercial truck system could be recovered faster than 
costs of implementing a passenger vehicle system. 

* Reduced reporting burden on trucks. Mileage fees for commercial 
trucks could be designed to consolidate existing requirements for 
interstate commercial trucks to report their miles traveled in most 
states. Currently, companies registered in states that have 
established, maintained, or enforced the International Fuel Tax 
Agreement (IFTA),[Footnote 59] or in states participating in the 
International Registration Plan (IRP),[Footnote 60] are required to 
track and report their miles traveled in each state to their state of 
registry.[Footnote 61] IFTA and IRP provide for the distribution of 
state fuel and registration taxes among the contiguous 48 U.S. member 
states and all 10 Canadian provinces based on the number of miles 
driven by trucks in each state or province. According to Oregon DOT 
officials, the reporting requirements for these agreements can be 
administratively time-consuming, particularly for smaller firms that 
may not have GPS units on board to track their mileage by location. 
Furthermore, because states have different fuel tax rates, firms may 
inaccurately report their mileage traveled, particularly in states 
with higher fuel tax rates than other states. Oregon DOT officials 
reported that the system tested in that state, or other systems 
currently available on the commercial market, could be used to assess 
mileage fees and simplify IFTA and IRP reporting requirements for 
commercial trucks. 

Despite the benefits, opponents of commercial-truck mileage fees in 
the United States reported that such fees would be burdensome on 
trucking firms, costly to collect, and difficult to enforce. 
Specifically, trucking firms would likely incur costs to install 
mileage fee technology in their vehicles. Trucking industry 
representatives reported that mileage fees would need to be collected 
from more than 500,000 firms operating trucks--90 percent of which 
operate six or fewer trucks--and the cost of compliance could be 
particularly burdensome to smaller firms. In addition, fees based 
primarily on self-reported data can be difficult to verify, 
particularly if the data is not collected electronically. Such fees 
would also require the state or federal government to monitor and 
audit trucking firms to ensure the fees reflect the actual mileage 
logged by each vehicle. Furthermore, trucking industry representatives 
reported that taxes, such as mileage fees, that require the government 
to keep proprietary business data without rigorous data protection 
safeguards in place would be unacceptably intrusive. Commercial truck 
mileage fee opponents also reported that the fees could result in 
inequities among trucking firms, with compliant firms paying more than 
their share of the fees because of any noncompliant competitors. 

Mileage Fees Could Generate Highway Trust Fund Revenues and Would 
Affect Users Differently: 

We modeled the average mileage fee rates that would be needed for 
passenger vehicles and commercial trucks to meet three illustrative 
Highway Trust Fund revenue targets ranging from about $34 billion to 
$78.4 billion per year. To meet these targets, a driver of a passenger 
vehicle with average fuel efficiency would pay from $108 to $248 per 
year in mileage fees compared to the $96 they currently pay annually 
in federal gasoline tax. However, these results do not include the 
initial start-up or ongoing administrative costs of a national mileage 
fee system in the United States, which are unknown. Mileage fees, like 
federal fuel taxes, would comprise a small portion of users' overall 
fuel costs and thus would only marginally increase users' overall 
transportation costs. For example, drivers of passenger vehicles with 
average fuel efficiency would pay 7 percent more than their current 
costs to achieve the highest revenue target of $78.4 billion. Such a 
change to the fee system, however, would affect users' costs 
differently based on their vehicle's fuel efficiency, because drivers 
of less efficient vehicles currently pay more in fuel taxes than 
drivers of vehicles with greater fuel efficiency. Mileage fees for 
commercial trucks would also affect users differently because larger 
trucks tend to be driven more miles and smaller trucks are marginally 
more fuel efficient. Currently, heavier commercial trucks generally 
contribute less to the Highway Trust Fund than the costs of their road 
use. Adjusting the illustrative mileage fee rates to reflect the road 
damage caused by different vehicles would notably increase commercial 
truck rates and modestly decrease passenger vehicle rates. However, 
setting rates that reflect the current costs that different users 
impose on the system would require up-to-date estimates of vehicles' 
responsibility for road damage, which are not available. 

Using Mileage Fees to Generate Highway Trust Fund Revenues: 

We modeled three scenarios of average mileage fee rates for passenger 
vehicles and commercial trucks to replace or augment the Highway Trust 
Fund revenues currently generated through federal fuel taxes. These 
scenarios assume that the other federal taxes paid by commercial 
trucks remain in place and do not include start-up or ongoing 
administrative costs:[Footnote 62] 

1. Replace federal gasoline and diesel fuel tax receipts: In fiscal 
year 2010, the latest year for which complete data were available, 
federal gasoline and diesel fuel tax receipts produced nearly $34 
billion in revenue.[Footnote 63] 

2. Meet current spending levels: Highway Trust Fund user fee revenues 
have been insufficient to meet authorized spending levels since 2008, 
and further shortfalls are expected in the years ahead. Using fiscal 
year 2010 as an example--a year in which Congress augmented the fund 
with $19.5 billion in general revenues--this scenario models mileage 
fee rates that could support $53.5 billion in spending.[Footnote 64] 
This revenue target is also roughly equivalent to the average annual 
authorizations for highway and transit programs provided in MAP-21. 
[Footnote 65] 

3. Maintain existing conditions and performance levels: According to 
the National Surface Transportation Infrastructure Financing 
Commission, current funding levels will result in further 
deterioration of the nation's roadways and transit infrastructure. The 
commission estimated that maintaining the existing infrastructure 
would require an annual federal contribution of about $78.4 billion 
for highways and transit.[Footnote 66] 

Mileage fee rates for passenger vehicles and commercial trucks would 
vary based on the amount of revenue they are set to generate. To meet 
the federal revenue targets set under the three scenarios we modeled, 
the average passenger vehicle mileage fee rate would range from less 
than 1 cent to more than 2 cents per mile and the average commercial 
truck rate would range from greater than 3 cents to more than 8 cents 
per mile (see table 2). Converting these mileage fee rates to per-
gallon charges to illustrate their approximate relation to current 
federal fuel tax rates shows that significantly higher fuel taxes 
would be needed to generate the revenue targets we modeled. For 
example, converting the mileage fee rates needed to meet current 
spending levels ($53.5 billion) would translate to a federal gasoline 
tax of nearly 32 cents per gallon and a federal diesel fuel tax of 
almost 35 cents per gallon, increases of roughly 72 percent and 43 
percent, respectively. For technical details on our modeling, see 
appendix V. 

Table 2: Illustrative Federal Mileage Fee Rates for Three Revenue 
Scenarios: 

Revenue scenario: Replace federal fuel tax receipts; ($34 billion); 
Average passenger vehicle mileage fee (cents per mile): 0.9¢; 
Comparison with federal gasoline tax[A](18.4 cents/gal): n/a; 
Average commercial truck mileage fee (cents per mile): 3.2¢; 
Comparison with federal diesel fuel tax[B](24.4 cents/gal): n/a. 

Revenue scenario: Meet current spending levels; ($53.5 billion); 
Average passenger vehicle mileage fee (cents per mile): 1.5¢; 
Comparison with federal gasoline tax[A[A](18.4 cents/gal): 31.6¢; 
(72% increase); 
Average commercial truck mileage fee (cents per mile): 5.4¢; 
Comparison with federal diesel fuel tax[B](24.4 cents/gal): 34.8¢; 
(43% increase). 

Revenue scenario: Maintain existing conditions and performance; 
($78.4 billion); 
Average passenger vehicle mileage fee (cents per mile): 2.2¢; 
Comparison with federal gasoline tax[A](18.4 cents/gal): 46.6¢; 
(153% increase); 
Average commercial truck mileage fee (cents per mile): 8.4¢; 
Comparison with federal diesel fuel tax[B](24.4 cents/gal): 53.8¢; 
(120% increase). 

Source: GAO analysis. 

Note: These results do not include the initial start-up or ongoing 
administrative costs of a national mileage fee system in the United 
States. Because the results are intended to illustrate the average 
mileage fees that would be needed to replace federal fuel tax 
receipts, we assumed that all other federal commercial truck taxes 
remain in place. 

[A] Based on 21.6 mpg average passenger vehicle fuel economy. 

[B] Based on 6.4 mpg average commercial truck fuel economy. 

[End of table] 

These results do not include the initial start-up or ongoing 
administrative costs of a national mileage fee system in the United 
States, which are unknown but would result in increased rates. To 
estimate how such costs would affect mileage fees, we modeled rates 
that assumed annual fixed costs of 5 percent and 20 percent of current 
federal fuel tax receipts across all scenarios.[Footnote 67] We found 
that the percentage increase in mileage fee rates required to account 
for costs of implementation is greater with a lower revenue target 
than with a higher revenue target. For example, assuming 20 percent 
administrative costs, mileage fee rates for passenger vehicles would 
need to increase by 27 percent (from 0.9 cents to 1.2 cents per mile) 
to generate $34 billion and by 13 percent (from 2.2 cents to 2.4 cents 
per mile) to generate $78.4 billion. 

Effects of Mileage Fees on Users: 

Passenger Vehicles: 

Mileage fees for passenger vehicles would affect users differently 
based on their vehicle's fuel efficiency because drivers of less fuel 
efficient vehicles currently pay more in fuel taxes, as they have to 
purchase more gasoline to travel the same distance as more efficient 
vehicles. A system that charges all passenger vehicles the same rate 
would lead to drivers of more fuel efficient vehicles paying 
proportionately more in mileage fees than they currently pay in 
federal fuel taxes. As illustrated in figure 8, a driver of a hybrid 
with a fuel efficiency of 40 mpg would pay twice as much in mileage 
fees under the scenario to replace fuel tax receipts and over 4 times 
as much under the scenario to augment Highway Trust Fund revenues to 
maintain current conditions and performance. In contrast, a driver of 
an SUV with a fuel efficiency of 16 mpg would pay less in mileage fees 
under the scenario to replace federal fuel tax receipts and less than 
twice as much (88 percent more) under the scenario to augment Highway 
Trust Fund revenues to maintain current conditions and performance. 

Figure 8: Average Passenger Vehicle Users' Annual Federal Fuel Taxes 
Paid under Current System Compared with Mileage Fee Scenarios: 

[Refer to PDF for image: illustrated table] 

Vehicle example: illustration; 
Vehicle type: Hybrid; 
Average miles per gallon: 40 mpg; 
Costs (assuming 11,489 miles driven annually): 
Current amount paid in federal fuel taxes: $53; 
Percentage change: Baseline; 
Mileage fees replace federal gasoline and diesel fuel tax receipts 
($34 billion): $108; 
Percentage change: +105%; 
Mileage fees meet current spending levels ($53.5 billion): $168; 
Percentage change: +218%; 
Mileage fees maintain existing conditions and performance levels 
($78.4 billion): $248; 
Percentage change: +369%. 

Vehicle example: illustration; 
Vehicle type: Sedan; 
Average miles per gallon: 22 mpg; 
Costs (assuming 11,489 miles driven annually): 
Current amount paid in federal fuel taxes: $96; 
Percentage change: Baseline; 
Mileage fees replace federal gasoline and diesel fuel tax receipts 
($34 billion): $108; 
Percentage change: +13%; 
Mileage fees meet current spending levels ($53.5 billion): $168; 
Percentage change: +75%; 
Mileage fees maintain existing conditions and performance levels 
($78.4 billion): $248; 
Percentage change: +58%. 

Vehicle example: illustration; 
Vehicle type: SUV; 
Average miles per gallon: 16 mpg; 
Costs (assuming 11,489 miles driven annually): 
Current amount paid in federal fuel taxes: $132; 
Percentage change: Baseline; 
Mileage fees replace federal gasoline and diesel fuel tax receipts 
($34 billion): $108; 
Percentage change: -18%; 
Mileage fees meet current spending levels ($53.5 billion): $168; 
Percentage change: +27%; 
Mileage fees maintain existing conditions and performance levels 
($78.4 billion): $248; 
Percentage change: +88%. 

Source: GAO analysis of mileage fee simulation results. 

[End of figure] 

Although cost increases for passenger vehicle users appear significant 
under some mileage fee scenarios, increases in their overall 
transportation costs would be relatively minor because fuel taxes 
comprise a small portion of the amount that they spend on fuel. For 
example, under the scenario to maintain current conditions and 
performance, the owner of a sedan that averages 22 mpg would pay 158 
percent more in mileage fees than they pay currently in federal 
gasoline taxes. However, this represents a relatively small (7 
percent) increase in this user's overall transportation costs. 
Although cost increases under a change to mileage fees are greater for 
users of more fuel efficient vehicles, a hybrid owner would pay $128 
less per month for the combined cost of fuel and mileage fees than the 
owner of a less efficient SUV in the scenario to meet current 
conditions and performance, as shown in figure 9. As such, mileage 
fees would not negate the economic incentives to drive a more fuel 
efficient vehicle since users would have significantly lower overall 
fuel costs. 

Figure 9: Average Passenger Vehicle Users' Monthly Fuel and Tax Costs 
under Current System and Mileage Fee Scenarios: 

[Refer to PDF for image: illustrated horizontal bar graph] 

Vehicle type: Hybrid (40 mpg); 
Current amount paid for fuel, including federal fuel taxes: $90 (+5%); 
Mileage fees replace federal gasoline and diesel fuel tax receipts 
($34 billion): $94
Mileage fees meet current spending levels ($53.5 billion): $99 (+10%); 
Mileage fees maintain existing conditions and performance levels 
($78.4 billion): $106 (+15%). 

Vehicle type: Sedan (22 mpg); 
Current amount paid for fuel, including federal fuel taxes: $163 (+1%); 
Mileage fees replace federal gasoline and diesel fuel tax receipts 
($34 billion): $164
Mileage fees meet current spending levels ($53.5 billion): $169 (+4%); 
Mileage fees maintain existing conditions and performance levels 
($78.4 billion): $176 (+7%). 

Vehicle type: SUV (16 mpg); 
Current amount paid for fuel, including federal fuel taxes: $224 (-1%); 
Mileage fees replace federal gasoline and diesel fuel tax receipts 
($34 billion): $222 (+1%); 
Mileage fees meet current spending levels ($53.5 billion): $227
Mileage fees maintain existing conditions and performance levels 
($78.4 billion): $234 (+4%). 

Source: GAO analysis of mileage fee simulation results. 

Note: The "current amount paid for fuel" projection assumes a retail 
gasoline price of $3.75 per gallon, including all state and federal 
fuel taxes. The three mileage fee scenarios also assume an initial 
retail gasoline price of $3.75 per gallon, but then replace the 18.4 
cent per-gallon federal gasoline tax with mileage fee costs for 
vehicles of varying fuel efficiency that are based on rates simulated 
using the average retail gasoline price in 2010. All scenarios assume 
11,489 miles driven annually. 

[End of figure] 

Commercial Trucks: 

A flat-rate mileage fee for commercial trucks could also increase 
users' costs compared with current diesel fuel taxes but would affect 
users differently, in part, because larger (combination) trucks are 
less fuel efficient than smaller (single-unit) trucks. Similar to the 
passenger vehicle simulation, less fuel efficient combination trucks 
would pay considerably (35 percent) less under the scenario to replace 
current federal fuel tax receipts; more fuel efficient single-unit 
trucks would pay slightly (4 percent) more than they currently pay in 
federal diesel taxes.[Footnote 68] In the other two scenarios, single-
unit truck costs would increase between 78 percent and 176 percent, 
while users of combination trucks would pay from 11 percent to 72 
percent more. However, just as combination trucks pay far more in 
diesel fuel taxes in absolute terms, they would pay more in mileage 
fees than single-unit trucks because they tend to travel significantly 
more miles annually (see figure 10). 

Figure 10: Average Commercial Truck Users' Annual Federal Fuel Taxes 
Paid under Current System Compared with Mileage Fee Scenarios: 

[Refer to PDF for image: illustrated horizontal bar graph] 

Vehicle type: Single-unit truck (8 mpg, 13,469 miles driven); 
Current amount paid for fuel, including federal fuel taxes: $411; 
Mileage fees replace federal gasoline and diesel fuel tax receipts 
($34 billion): $428 (+4%); 
Mileage fees meet current spending levels ($53.5 billion): $732 (+78%); 
Mileage fees maintain existing conditions and performance levels 
($78.4 billion): $1,132 (+176%). 

Vehicle type: Combination truck (5 mpg, 68,907 miles driven); 
Current amount paid for fuel, including federal fuel taxes: $3,363; 
Mileage fees replace federal gasoline and diesel fuel tax receipts 
($34 billion): $2,189 (-35%); 
Mileage fees meet current spending levels ($53.5 billion): $3,747 
(+11%); 
Mileage fees maintain existing conditions and performance levels 
($78.4 billion): $5,792 (+72%). 

Source: GAO analysis of mileage fee simulation results. 

Note: These results assume that the federal heavy vehicle use tax and 
the federal tire, truck, and trailer excise taxes paid by commercial 
trucks remain in place. 

[End of figure] 

Similar to passenger vehicles, drivers of commercial trucks would 
likely pay more in mileage fees than they currently pay in fuel taxes; 
however, these cost increases represent a smaller portion of their 
overall costs.[Footnote 69] For example, while a driver of an average 
combination truck would pay 72 percent more in mileage fees than he or 
she currently pays in federal diesel taxes under the scenario to 
maintain current conditions and performance, this represents a small 
(4 percent) increase in the driver's monthly costs (see figure 11). 

Figure 11: Average Commercial Truck Users' Monthly Fuel and Fuel Tax 
Costs under Current System and Mileage Fee Scenarios: 

[Refer to PDF for image: illustrated horizontal bar graph] 

Vehicle type: Single-unit truck (8 mpg, 13,469 miles driven); 
Current amount paid for fuel, including federal fuel taxes: $561; 
Mileage fees replace federal gasoline and diesel fuel tax receipts 
($34 billion): $563 (+0%); 
Mileage fees meet current spending levels ($53.5 billion): $588 (+5%); 
Mileage fees maintain existing conditions and performance levels 
($78.4 billion): $621 (+10%). 

Vehicle type: Combination truck (5 mpg, 68,907 miles driven); 
Current amount paid for fuel, including federal fuel taxes: $4,594; 
Mileage fees replace federal gasoline and diesel fuel tax receipts 
($34 billion): $4,496 (-2%); 
Mileage fees meet current spending levels ($53.5 billion): $4,626 
(+1%); 
Mileage fees maintain existing conditions and performance levels 
($78.4 billion): $4,796 (+4%). 

Source: GAO analysis of mileage fee simulation results. 

Note: The "current amount paid for fuel" projection assumes a retail 
diesel fuel price of $4.00 per gallon, including all state and federal 
diesel fuel taxes. The mileage fee scenarios remove the 24.4-cent 
federal gasoline tax and replace it with mileage fees. All scenarios 
assume that other federal taxes paid by commercial trucks remain in 
place. 

[End of figure] 

Although mileage fees could increase costs for owners of commercial 
truck users, these users would have the ability to defray some of 
these increases by building the fees into the cost of their services. 
For example, officials from a German trucking association and a small 
trucking firm reported that the introduction of HGV tolls has not 
negatively affected trucking firms because the cost of tolls can be 
passed along to the consumers of the firm's services. In prior work, 
we noted that user fees should be charged to the direct user, even if 
that payer then passes the cost of the fee on to others.[Footnote 70] 
We have also noted that, to the extent that costs are not covered by 
taxes or fees levied on freight providers or consumers, governments 
would be providing a subsidy to the industry, which is paid by other 
taxpayers.[Footnote 71] Although mileage fees could affect the cost of 
shipping goods, they could, if set at a rate that reflects the cost of 
road use, promote economic efficiency and minimize the need for the 
federal government to subsidize transportation funding. 

Adjusting Mileage Fees to Account for the Damage Users Impose on 
Roadways: 

Although commercial trucks represent 4 percent of the U.S. vehicle 
fleet, they are responsible for 40 percent of the costs that the 
federal government spends on highway preservation and maintenance, 
according to FHWA's Highway Cost Allocation Study, published in 2000. 
[Footnote 72] However, commercial trucks contributed less than 33 
percent of Highway Trust Fund user fee revenues in fiscal year 2010 
through federal diesel fuel and other truck taxes.[Footnote 73] We 
have previously reported that the current federal highway user fee 
structure is considered inequitable because it does not effectively 
capture vehicles' weight per axle or number of miles traveled, the two 
key components of travel that cause damage.[Footnote 74] Heavier 
trucks generally pay less than their share of damage costs because the 
current federal tax structure does not fully account for the increased 
road wear caused by heavy trucks based on their miles traveled and 
weight.[Footnote 75] The federal diesel fuel tax--the primary source 
of commercial trucks' Highway Trust Fund contributions--charges all 
trucks the same rate of 24.4 cents per gallon, regardless of vehicle 
weight or number of axles. Additionally, the federal heavy vehicle use 
tax is capped at $550 for trucks weighing more than 75,000 pounds, 
meaning that all trucks above this weight pay the same fee despite the 
increased damage costs the heavier trucks impose.[Footnote 76] In 
1994, we recommended that Congress consider a national weight-distance 
user fee to increase equity and promote a more efficient use of the 
nation's highways.[Footnote 77] Based on FHWA's 2000 estimates, 
commercial trucks would need to contribute 40 percent of the revenues 
deposited in the Highway Trust Fund--as opposed to less than 33 
percent in fiscal year 2010--to cover the costs they impose on the 
nation's roadways, leaving passenger vehicles to contribute about 60 
percent. 

Adjusting the illustrative mileage fee rates so that users' 
contributions to the Highway Trust Fund reflect FHWA's 2000 cost 
estimates would result in substantial rate increases for commercial 
trucks and modest decreases for passenger vehicles. As shown in figure 
12, adjusted commercial truck rates would range from approximately 4 
cents to 11 cents per mile, compared with the original range of about 
3 cents to 8 cents per mile--increases of approximately 30 percent in 
each scenario.[Footnote 78] These rate increases are large because the 
increase in Highway Trust Fund contributions would be spread across 10 
million commercial trucks, or 4 percent of the U.S. vehicle fleet. 
Conversely, the adjusted passenger vehicle mileage fee rates would 
decrease modestly because the savings would be spread across the U.S. 
fleet of 230 million passenger vehicles. The adjusted rates account 
for the $2.8 billion paid in fiscal year 2010 by commercial trucks in 
federal truck taxes, which would still be needed to ensure that trucks 
contribute 40 percent of Highway Trust Fund revenues. Mileage fees 
would continue to represent a small portion of users' overall 
transportation costs. 

Figure 12: Illustrative Federal Mileage Fee Rates for Three Revenue 
Scenarios, Adjusted for Cost Responsibility: 

[Refer to PDF for image: multiple line graph] 

Rate projections (in cents per mile): 

Revenue scenario: $34.0 billion; 
Commercial truck mileage fee: 3.2 cents; 
Commercial truck mileage fee, adjusted for cost responsibility: 4.2 
cents; 
Passenger vehicle mileage fee: 0.9 cents; 
Passenger vehicle mileage fee, adjusted for cost responsibility: 0.8 
cents. 

Revenue scenario: $53.5 billion; 
Commercial truck mileage fee: 5.4 cents; 
Commercial truck mileage fee, adjusted for cost responsibility: 7.1 
cents; 
Passenger vehicle mileage fee: 1.5 cents; 
Passenger vehicle mileage fee, adjusted for cost responsibility: 1.3 
cents. 

Revenue scenario: $78.4 billion; 
Commercial truck mileage fee: 8.4 cents; 
Commercial truck mileage fee, adjusted for cost responsibility: 10.8 
cents; 
Passenger vehicle mileage fee: 2.2 cents; 
Passenger vehicle mileage fee, adjusted for cost responsibility: 1.9 
cents. 

Source: GAO mileage fee simulation results. 

Note: Our simulation produced mileage fee rates specific to three 
revenue targets and did not produce rates for any revenue amounts 
between the targets. As such, the lines in the figure above are meant 
to illustrate the degree of change between the rates in each of the 
three scenarios. The adjusted rates account for the $2.8 billion paid 
in fiscal year 2010 by commercial trucks in federal truck taxes, which 
would still be needed to ensure that trucks contribute 40 percent of 
Highway Trust Fund revenues. 

[End of figure] 

Establishing user fee rates that reflect the current costs that 
different users impose on the system would require up-to-date 
estimates of vehicles' responsibility for road damage. FHWA conducted 
its most recent full revision of its Highway Cost Allocation Study in 
1997 in response to a GAO recommendation,[Footnote 79] and it issued 
an addendum to the study in 2000 with updated results. However, FHWA 
officials reported that it is likely that the estimated share of 
commercial trucks' responsibility for road damage has changed over the 
last 12 years because of increases in miles traveled by heavy trucks 
relative to smaller trucks and cars, shifts in federal spending, and 
other factors. In addition, trucking industry representatives told us 
that an updated Highway Cost Allocation Study would better reflect 
current conditions and show that commercial truck revenues to the 
Highway Trust Fund have increased in recent years relative to 
passenger vehicle revenues. This is because of improvements in 
passenger vehicles' fuel efficiency, while commercial truck fuel 
efficiency has remained flat. Moreover, some states have been granted 
waivers to permit larger and heavier commercial trucks to travel on 
Interstate highways, which could increase the amount of damage caused 
by the vehicles. Prior GAO work has shown that designing a user fee 
system with unreliable cost information can skew fee-setting 
decisions.[Footnote 80] Furthermore, up-to-date information on the on 
the costs imposed by different users in relation to the revenues they 
contribute to the Highway Trust Fund could be used to evaluate whether 
the rates paid by users through federal motor fuel or truck taxes are 
sufficient. FHWA officials said they do not periodically update the 
Highway Cost Allocation Study and have no plans to resume work on a 
new study at this time. 

States Recognize That Alternative Transportation Revenues Are Needed, 
and Many Would Support Federal Actions to Evaluate Mileage Fee Systems: 

Fifty of the 51 state DOTs we surveyed agreed that it is important 
that an alternative federal funding mechanism be identified in the 
next 10 years in order to meet surface transportation revenue needs. 
[Footnote 81] However, only 8 of the 51 states reported that they are 
likely to introduce some type of mileage fee program in the next 10 
years. Of these, 7 reported that they are likely to introduce mileage 
fees for electric vehicles in the next decade and fewer reported that 
they are likely to introduce programs for passenger vehicles (4) or 
commercial trucks (3). Although such efforts could produce 
transportation revenues for these states, they would not generate 
federal revenues for the Highway Trust Fund. However, more than half 
of all states responded that they would support federally-led field 
tests to evaluate mileage fees. There are currently no federal pilot 
programs or other efforts to evaluate the viability and cost of 
implementing such a system in the United States. 

The majority of state DOTs responded that they would support federal 
field tests of mileage fees for electric vehicles and commercial 
trucks. Proponents of mileage fees have suggested that charging 
drivers of these vehicles for their road use could improve the equity 
and sustainability of Highway Trust Fund revenues: 

* Electric vehicles. Two-thirds of state DOTs (34 of 51) reported they 
would support federally-led field tests of mileage fees for electric 
vehicles; none reported that they would be opposed to field tests for 
these vehicles. Electric vehicles can help achieve important policy 
goals to reduce emissions and limit U.S. dependence on foreign oil; 
however, these vehicles do not use gasoline or diesel fuel or 
contribute to the Highway Trust Fund through any other federal fees or 
taxes. The Department of Energy estimated that there were fewer than 
60,000 electric vehicles in the United States in 2010. Although 
charging electric vehicle mileage fees would produce minimal revenues 
in the immediate future, the Department of Energy estimates that more 
than 1.2 million electric vehicles may be produced by 2015.[Footnote 
82] In focus groups conducted by the Texas Transportation Institute, 
participants recognized that a potentially large segment of the future 
vehicle fleet may pay nothing aside from state vehicle registration 
and title fees for their road use and strongly preferred mileage fees 
for this class of vehicles.[Footnote 83] An Oregon DOT official 
reported that the state is planning to introduce legislation to pilot 
user fees for electric vehicles in 2013. 

* Commercial trucks. Almost 60 percent of state DOTs (30 of 51) 
reported that they would support federally-led field tests of mileage 
fees for commercial trucks. To date, very few states have evaluated 
mileage fees for commercial trucks. In a March 2011 report to 
Congress, FHWA reported that additional technical research would be 
required to assess methods to charge heavy trucks based on their 
infrastructure wear. According to FHWA, charging trucks based on 
weight and distance traveled has been recognized as the best way to 
reflect the road damages caused by different types of trucks.[Footnote 
84] Although the trucking industry has resisted weight-distance taxes, 
FHWA reported that many of their objections, including administrative 
burden, can be overcome if linked with a mileage fee system. However, 
other technological issues would need to be resolved, such as how to 
measure the weight of combination vehicles that pull different types 
and numbers of trailers. FHWA reported that the federal government has 
a leadership role to play to prevent different systems from being 
established across states that later could not be reconciled into a 
national mileage fee. Such a role could include field tests to 
determine how and whether a mileage fee system should be implemented, 
including at least one trial for commercial trucks, and the evaluation 
of the costs and benefits of various approaches. 

While states broadly supported federal actions to explore mileage 
fees, more states placed a high priority on increasing federal fuel 
taxes to meet surface transportation revenue needs. As shown in figure 
13, 23 states reported that they place a high level of priority on 
increasing federal fuel taxes; 21 states place a high priority on 
introducing a federally-led mileage fee. Prior GAO work has shown that 
a higher gasoline tax could encourage drivers to reduce fuel 
consumption by driving less, reduce the nation's dependence on oil, 
relieve highway congestion, and decrease emissions of gases that 
pollute the air.[Footnote 85] However, as vehicles become more fuel 
efficient and increasingly run on alternative fuels, fuel taxes may 
not be a long-term source of transportation funding. 

Figure 13: Number of State DOTs Reporting High Priority on Various 
Transportation Funding Mechanisms, 2012: 

[Refer to PDF for image: vertical bar graph] 

Transportation funding mechanism: Increasing federal fuel taxes; 
Number of states: 23. 

Transportation funding mechanism: Introducing federally-led VMT fee; 
Number of states: 21. 

Transportation funding mechanism: Increasing state fuel taxes; 
Number of states: 18. 

Transportation funding mechanism: Increasing use of tolling; 
Number of states: 17. 

Transportation funding mechanism: Increasing state vehicle fees; 
Number of states: 11. 

Transportation funding mechanism: Introducing state-led VMT fee; 
Number of states: 10. 

Source: GAO survey of 51 state departments of transportation. 

[End of figure] 

Conclusions: 

The nation's surface transportation system is under growing strain, 
and the costs of repairs and upgrades to meet current and future 
demands are estimated in the hundreds of billions of dollars. The 
ongoing erosion of federal fuel tax revenues will worsen in the years 
ahead with the introduction and adoption of more fuel efficient and 
alternative fuel vehicles. Users of the surface transportation system 
pay less for their use of roadways in federal fuel taxes and user fees 
than the federal government now spends to maintain and improve the 
system. The use of general revenues to cover Highway Trust Fund 
spending breaks the link between highway taxes paid and benefits 
received by users and may not be a sustainable strategy, given 
competing demands for federal funds and the federal government's 
growing fiscal challenge. 

Technologies are currently available to gather mileage data and charge 
users mileage fees, should Congress wish to explore such fees as a 
means to help address shortfalls in surface transportation funding. 
However, the perception that these technologies will be used to track 
privately-owned vehicles and infringe upon individual privacy 
currently appears to be an insurmountable challenge. Because the 
public perception of privacy risks would be particularly acute in 
mileage fee systems that mandate the use of GPS technologies, the 
widespread implementation of such a system to cover all U.S. passenger 
vehicles appears unlikely at this time. Although technology evolves 
rapidly and public perception can change over time, it may be 
impractical for the federal government to pursue mileage fees for all 
vehicles through a system that collects and reports information on 
people's movements for the purpose of assessing taxes. 

Nonetheless, there may be opportunities to evaluate mileage fees for 
certain types of vehicles that could improve the equity of highway 
funding and begin to address Highway Trust Fund shortfalls. The 
current U.S. fuel tax system does not reflect the costs of road use 
and the anticipated future changes in the U.S. vehicle fleet. Germany 
and New Zealand have demonstrated that variable rate, distance-based 
user fees for commercial trucks can generate substantial revenues 
linked to road damage costs and help reduce emissions while posing 
fewer privacy concerns than passenger vehicle systems. In the United 
States, commercial trucks' contributions to the Highway Trust Fund 
through federal diesel fuel and related truck taxes do not reflect the 
relationship between truck weight and road damage. In addition, 
although few alternative fuel vehicles are on the roads today, their 
numbers are expected to increase significantly in the coming years, 
which could provide environmental and foreign policy benefits to the 
country by reducing U.S. dependence on foreign oil. However, drivers 
of these vehicles do not currently contribute to the Highway Trust 
Fund through user fees or fuel taxes for their road use. State DOTs 
reported broad support for federal initiatives to evaluate federal 
mileage fees, including federally-led field tests for electric 
vehicles and commercial trucks. State pilot programs have shown the 
feasibility of assessing mileage fees, but the programs have not shed 
light on how mileage fees could be implemented in an integrated 
fashion across states to provide revenues to the federal Highway Trust 
Fund. Furthermore, state efforts to evaluate mileage fees for 
commercial trucks have yet to determine the best approaches to address 
trucking industry concerns regarding administrative burden and 
compliance costs. A federal pilot program provides the opportunity to 
assess balancing those concerns with the goal of ensuring that federal 
fees cover the costs of users' road use. In the absence of any current 
federal pilot programs or efforts to evaluate (1) options to more 
accurately charge commercial trucks and electric vehicles for their 
road use and (2) the cost to launch and administer such systems, 
Congress lacks critical information to assess whether mileage fees for 
these vehicles could be a viable and cost-effective tool to begin to 
address federal surface transportation funding challenges. 

Congress and the Administration have yet to develop a long-term plan 
for funding surface transportation; ultimately, increased surface 
transportation revenues, reduced transportation spending levels, or 
both will be needed to bring revenues and spending into balance. 
Consideration of new revenues--whether through mileage fees, fuel 
taxes, or other fees--would benefit from accurate and up-to-date 
information on the damage different vehicles impose on the roadways 
and whether all vehicles are currently paying their fair share. The 
most recent FHWA estimates from 2000 suggest that many commercial 
trucks underpay, but these estimates may not reflect current 
conditions. In the absence of periodically updated estimates from 
FHWA, Congress lacks the information necessary to determine whether 
revenues collected from different users are sufficient to cover the 
costs of their road use. Should Congress wish to explore mileage fees, 
or other sources of revenue, updated information would allow it to 
consider the costs imposed by different users in setting appropriate 
rates. 

Matters for Congressional Consideration: 

Should Congress wish to explore mileage fees as a mechanism for 
funding surface transportation, it should consider establishing a 
pilot program to evaluate the viability, costs, and benefits of 
mileage fee systems for: 

* commercial trucks--to ensure that fees paid by the owners of these 
vehicles cover the costs of their use of the nation's roads and 
bridges, and: 

* electric vehicles--to develop a mechanism through which the owners 
of these vehicles can contribute to the Highway Trust Fund for their 
use of the nation's roadways. 

Recommendation for Executive Action: 

To ensure that up-to-date data are available on the road damages 
imposed by all vehicles types compared with the revenues each 
contributes to the Highway Trust Fund, we recommend that the Secretary 
of Transportation direct the FHWA Administrator to revise and publish 
the agency's Highway Cost Allocation Study and update it periodically 
as warranted. 

Agency Comments: 

We submitted a draft of this report to the Department of 
Transportation for review and comment. The department did not take a 
position on our recommendation to revise and publish the Highway Cost 
Allocation Study and update it periodically as warranted. The 
department provided technical comments via email which we incorporated 
as appropriate. 

As agreed with your offices, unless you publicly announce the contents 
of this report earlier, we plan no further distribution until 30 days 
from the report date. At that time, we will send copies of this report 
to congressional committees with responsibilities for surface 
transportation issues and the Secretary of Transportation. In 
addition, this report will be available at no charge on GAO's website 
at [hyperlink, http://www.gao.gov]. 

If you or your staff have any questions about this report, please 
contact me at (202) 512-2834 or flemings@gao.gov. Contact points for 
our Offices of Congressional Relations and Public Affairs may be found 
on the last page of this report. GAO staff that made significant 
contributions to this report are listed in appendix VII. 

Signed by: 

Susan Fleming: 
Director, Physical Infrastructure Issues: 

[End of section] 

Appendix I: Objectives, Scope, and Methodology: 

To assess the benefits achieved and challenges faced in mileage-based 
user fee (mileage fee) initiatives in the United States and selected 
other nations, we reviewed academic literature to identify the range 
of mileage fee pilot projects conducted in the United States and 
distance-based user fee programs introduced internationally. We 
interviewed the lead researchers and reviewed the reported results of 
all U.S.-based mileage fee pilot projects conducted as of June 2012 
including: (1) a National Evaluation of Mileage-based Road User 
Charges, conducted in 12 states from 2008 to 2010 by the University of 
Iowa, as authorized by Congress through the Safe, Accountable, 
Flexible, Efficient Transportation Equity Act: A Legacy for Users 
(SAFETEA-LU)[Footnote 86]; (2) the Oregon Road User Fee Pilot Program 
Oregon, conducted by the Oregon Department of Transportation (DOT) 
from 2006 to 2007; and (3) the Traffic Choices Study, conducted by the 
Puget Sound Regional Council in Washington state from 2005 to 2006. We 
also reviewed preliminary results from two on-going pilot projects 
conducted by the Minnesota DOT and Nevada DOT and interviewed 
transportation officials involved in these pilots.[Footnote 87] 

Through our literature review, we identified distance-based user fee 
initiatives in Germany, New Zealand, the Czech Republic, Switzerland, 
Austria, Slovakia, and the Netherlands. We selected three 
international programs for our review: (1) the German Heavy Goods 
Vehicle (HGV) Tolling system, which charges commercial trucks over 
26,000 pounds a distance-based fee for travel on the national 
motorway, or autobahn; (2) the New Zealand Road User Charge (RUC) 
system, which charges all commercial trucks over 7,700 pounds and all 
diesel-fueled passenger vehicles for distances traveled on that 
nation's public roadways; and (3) a proposed user fee initiative in 
the Netherlands that was suspended before it was implemented that 
would have charged all commercial trucks and passenger vehicles 
distance-based fees. We selected these programs using criteria that 
included the primary objectives of each program as described in the 
literature, the types of technology used, the classes of vehicles 
covered, and the administration of the program, such as the use of the 
private sector to implement the system. We included the suspended 
initiative in the Netherlands in our review to assess the challenges 
of implementing a national user fee program. Because we used a 
nongeneralizable sample to select the programs to review, our findings 
are not representative of all countries with distance-based user fee 
programs. We reviewed data on the benefits achieved by these programs, 
including revenues raised, and the challenges faced in the programs, 
including their costs of implementation. We conducted a site visit in 
Berlin, Germany and interviewed government officials and private 
sector representatives from New Zealand and the Netherlands via 
teleconference. 

To determine the mileage fee rates necessary to replace and supplement 
current fuel tax revenues deposited in the Highway Trust Fund and the 
effect these fees would have on users' costs, we conducted an economic 
simulation to produce illustrative rates for passenger vehicles and 
commercial trucks, an approach that is commonly used in relevant 
existing studies. To estimate the mileage fee rates, we focused the 
hypothetical scenarios on three target levels of revenue, namely: (1) 
scenario 1, in which mileage fee revenues would simply replace federal 
gasoline and diesel fuel tax receipts deposited in the Highway Trust 
Fund ($34 billion in fiscal year 2010); (2) scenario 2, in which 
mileage fees would generate revenues sufficient to meet current 
spending levels ($53.5 billion in fiscal year 2010); and (3) scenario 
3, in which mileage fees would generate the $78.4 billion necessary to 
maintain existing level of conditions and performance, assuming a 2 
percent inflation rate going forward. In all three scenarios, we 
assume that the federal heavy vehicle use tax and the federal tire, 
truck and trailer excise taxes paid by commercial trucks ($2.8 billion 
in fiscal year 2010) would remain in place. 

We also simulated mileage fee rates that assumed ongoing 
administrative costs of 5 percent of revenues and 20 percent of 
revenues. To do so, we increased the revenue target in scenario 1 by 5 
percent ($1.7 billion) and 20 percent ($6.8 billion) and simulated 
mileage fee rates using the same process described in this appendix 
and in appendix V. We then applied the same cost assumptions--$1.7 
billion and $6.8 billion--to the revenue targets in scenarios 2 and 3 
so that the ongoing administrative costs would be fixed in all 
scenarios and simulated mileage fee rates using the same process 
described above. 

The target revenues in scenario 1 were based on fiscal year 2010 
federal gasoline and diesel fuel tax receipts as reported in the 
Federal Highway Administration's (FHWA) Highway Statistics 2010 
report, the most current available data at the time of our review. 
[Footnote 88] In 2010, Congress directed $19.5 billion from the 
General Fund to the Highway Trust Fund and we used this to compute the 
$53.5 billion revenue target in scenario 2. For scenario 3, we relied 
on a forecast estimate by the National Surface Transportation 
Infrastructure Financing Commission (NSTIFC) report that $78.4 billion 
in federal revenues (in 2008 dollars) would be required to maintain 
the existing conditions and performance of the nation's highway and 
transit system.[Footnote 89] Using NSTIFC's assumption of a constant 
inflation rate of 2 percent, we estimated it would have required 
approximately $81.2 billion to maintain the existing conditions and 
performance of the nation's highway and transit system in fiscal year 
2010.[Footnote 90] To be consistent with the first two scenarios, in 
which we excluded the $2.8 billion of federal heavy vehicle use tax 
and the federal tire, and truck and trailer excise taxes paid by 
commercial trucks in fiscal year 2010 from the revenue targets, we 
subtracted $2.8 billion from the forecast revenue ($81.2 billion) to 
obtain a final target revenue of $78.4 billion. 

To determine the respective shares of mileage fee revenues that 
passenger vehicles and commercial trucks would need to contribute, we 
looked to the amount each group contributed in federal fuel taxes in 
fiscal year 2010. First, we added the $2.8 billion that commercial 
trucks paid in the federal heavy vehicle use tax and the federal tire, 
and truck and trailer excise taxes in fiscal year 2010 to the federal 
diesel fuel tax revenues in the revenue targets to reflect the total 
amount of federal taxes these vehicles pay for their road use. Doing 
so temporarily increased the revenue targets to $36.7 billion in 
scenario 1, $56.2 billion in scenario 2, and $81.2 billion in scenario 
3. Next, because the $36.7 billion deposited in the Highway Trust Fund 
in 2010 was comprised of $24.8 billion (67.6 percent) of federal 
gasoline tax revenues and $11.9 billion (32.4 percent) of federal 
diesel fuel tax revenues and other commercial truck taxes, we applied 
a ratio of 67.6 percent (passenger vehicles) and 32.4 percent 
(commercial trucks) to the overall revenue targets in scenarios 2 and 
3. We then subtracted $2.8 billion from the resultant commercial truck 
figures to arrive at their revenue contribution, producing the 
following total revenue targets: $34 billion in scenario 1, $53.5 
billion in scenario 2, and $78.4 billion in scenario 3. This final 
step ensured that the $2.8 billion in non-diesel tax revenues that 
commercial trucks contribute to the Highway Trust Fund are not 
considered in our simulation. Our results are intended to illustrate 
the average mileage fees that would be needed to replace federal fuel 
tax receipts and we assume that all other federal commercial truck 
taxes remain in place. 

In theory, it would be possible to set mileage user fee rates to vary 
within different classes of vehicles and by location, time of day, or 
type of road. Targeted, variable mileage user fees could provide 
financial incentives for users to change their existing behavior to 
reduce what economists call externality costs, such as traffic 
congestion and vehicle emissions. If designed appropriately, finely 
targeted mileage fees could also maintain or even augment the 
incentive for motorists to buy more fuel efficient vehicles if less 
efficient vehicles were charged greater rates. However, as a result of 
our decision to consider only two general types of vehicles, our 
simulation model only generates two flat mileage fee rates that 
represent an average rate across each of the two vehicle types in each 
revenue scenario: one for passenger vehicles and one for commercial 
trucks. 

To adjust our simulation's illustrative mileage fees for passenger 
vehicles and commercial trucks to reflect the respective road damage 
costs they impose, we used the cost responsibility ratio from the 2000 
update to the 1997 Highway Cost Allocation Study compiled by FHWA to 
adjust each scenario's revenue targets for passenger vehicles and 
commercial trucks.[Footnote 91] FHWA's cost responsibility ratio 
measures the responsibility of different vehicle classes for highway 
program costs paid from the Highway Trust Fund to the federal user 
fees paid by the different vehicle classes. To adjust the revenue 
targets for passenger vehicles and commercial trucks in each of the 3 
scenarios, we first added back the federal tire tax, truck and trailer 
excise tax, and heavy vehicle use tax ($2.8 billion in total) to the 
commercial truck revenue targets to reflect the amount of federal 
taxes that these vehicles pay, in total, for their road use. This 
increased the overall revenue targets to $36.7 billion in scenario 1, 
$56.2 billion in scenario 2, and $81.2 billion in scenario 3. We then 
applied FHWA's cost responsibility ratios of 59.7 percent (passenger 
vehicles) and 40.3 percent (commercial trucks) to the each scenario's 
overall revenue target to obtain the total amount of Highway Trust 
Fund revenues that would be required from each group. This ensured 
that the amount commercial trucks paid in federal taxes in addition to 
federal diesel fuel tax revenues in fiscal year 2010 were considered 
as part of their overall contribution. We then subtracted $2.8 billion 
from the resultant figures for trucks to identify their revenue 
contribution through only federal diesel fuel tax and arrive at the 
adjusted revenue targets. Adding $2.8 billion to any of the three 
commercial truck revenue targets would then result in this group's 
total contribution equaling 40.3 percent of each scenario's overall 
revenue target; each corresponding passenger vehicle revenue target 
would comprise the other 59.7 percent of each scenario's overall 
target. We recognize that the 40.3 percent cost responsibility ratio 
is an average across all commercial truck configurations and weights. 
To more accurately charge trucks fees that reflect the damages they 
impose, variable mileage fees would need to be applied based on 
vehicle weight and number of axles. 

To ensure that the key assumptions we made were reasonable, we 
calibrated the simulation using existing literature and data from 
government or other credible sources. We used data on vehicle miles 
traveled (VMT), fuel consumption, and federal gasoline and diesel tax 
receipts from FHWA Highway Statistics 2010 report, and utilized 2010 
data on the average retail gasoline and diesel fuel price compiled by 
the U.S. Department of Energy's Energy Information Agency. 

Table 3 provides the key parameters used in our simulation as well as 
all passenger vehicle and commercial truck revenue targets, including 
those adjusted to reflect cost responsibility. 

Table 3: Values of Key Parameters Used in Simulation: 

Parameters: Average fuel efficiency[A]; (miles per gallon); 
Scenario: All; 
Passenger vehicles: 21.6; 
Commercial Trucks: 6.4. 

Parameters: Fuel tax[A]; (cents per gallon); 
Scenario: All; 
Passenger vehicles: 18.4; 
Commercial Trucks: 24.4. 

Parameters: Vehicle miles traveled[A] (VMT); (miles); 
Scenario: All; 
Passenger vehicles: 2,647,659,000,000; 
Commercial Trucks: 286,585,000,000; 
Total: 2,934,244,000,000. 

Parameters: Average fuel price[B]; (dollars per gallon); 
Scenario: All; 
Passenger vehicles: 2.84; 
Commercial Trucks: 2.99. 

Parameters: VMT elasticity to fuel price[C]; 
Scenario: All; 
Passenger vehicles: -0.40; 
Commercial Trucks: -0.24. 

Parameters: Revenue targets[D]; 
Scenario: Scenario 1; 
Passenger vehicles: $24,836,919,000; 
Commercial Trucks: $9,135,819,000[E]; 
Total: $33,972,738,000. 

Parameters: Revenue targets[D]; 
Scenario: Scenario 2; 
Passenger vehicles: $38,019,301,988; 
Commercial Trucks: $15,453,436,012; 
Total: $53,472,738,000. 

Parameters: Revenue targets[D]; 
Scenario: Scenario 3; 
Passenger vehicles: $54,859,805,044; 
Commercial Trucks: $23,524,195,956; 
Total: $78,384,001,000. 

Parameters: Revenue targets[F]; (adjusted for cost responsibility); 
Scenario: Scenario 1; 
Passenger vehicles: $21,933,742,389; 
Commercial Trucks: $12,038,995,611; 
Total: $33,972,738,000. 

Parameters: Revenue targets[F]; (adjusted for cost responsibility); 
Scenario: Scenario 2; 
Passenger vehicles: $33,575,242,389; 
Commercial Trucks: $19,897,495,611; 
Total: $53,472,738,000. 

Parameters: Revenue targets[F]; (adjusted for cost responsibility); 
Scenario: Scenario 3; 
Passenger vehicles: $48,447,266,400; 
Commercial Trucks: $29,936,734,600; 
Total: $78,384,001,000. 

Source: GAO analysis of FHWA data. 

[A] FHWA, Highway Statistics 2010, Table VM1, (Washington, D.C., 
2012). We did not include VMT for motorcycles or buses, which are not 
included in the FHWA definitions of light duty vehicles, single-unit 
trucks, or combination trucks. In addition, buses are exempt from most 
highway user taxes. 

[B] U.S. Energy Information Agency data (2010). 

[C] Parry, Ian and Kenneth Small, Does Britain or the United States 
Have the Right Gasoline Tax?, American Economic Review, Vol. 95. No.4, 
page 1283 (2005). Elasticity measures the extent VMT may change as a 
percentage in response to a one-percent increase in fuel price. For 
example, a VMT elasticity to fuel price of -0.40 means that a one 
percent increase in fuel price will induce a decrease of 0.40 in VMT. 

[D] FHWA, Highway Statistics 2010, Table FE10, (Washington, D.C., 
2012). 

[E] According to FHWA, illegal evasion of the diesel fuel tax might 
have resulted in sizable loss of revenue from $1 billion to as much as 
25 percent of total revenue. 

[F] Cost responsibility ratio from FHWA, Addendum to the 1997 Highway 
Cost Allocation Study, Table 4, (Washington, D.C., May 2000). 

[End of table] 

To conduct our analysis, we made a few simplifying assumptions: 

1. All the light duty vehicles reported in FHWA's Highway Statistics 
2010 are passenger vehicles to facilitate comparison with FHWA's 
Highway Cost Allocation Study;[Footnote 92] 

2. All federal gasoline tax receipts are generated by passenger 
vehicles; 

3. All federal diesel fuel tax receipts are generated by commercial 
trucks;[Footnote 93] 

4. If implemented, all users would pay the mileage fees (no evasion). 

We anticipated the effects of these assumptions on revenues and 
mileage fee rates to be small. For example, according to the 
Environmental Protection Agency, only 0.74 percent of all model year 
2010 light duty vehicles in the United States ran on diesel fuel and, 
as result, the amount of federal diesel fuel tax receipts contributed 
to the Highway Trust Fund by passenger vehicles is minimal.[Footnote 
94] 

To ensure that the simulation analysis generated reasonable results, 
we conducted a sensitivity analysis to examine how the mileage fees 
would have changed with respect to three key parameters: (1) fuel 
price, (2) VMT elasticity to fuel price, and (3) average vehicle fuel 
efficiency. The results of the analysis do not indicate any unexpected 
or significant changes in mileage fees within the examined range of 
parameter values. 

In addition, we compared our analysis results with findings from other 
existing studies of mileage fees and found our results to be 
consistent with the existing literature.[Footnote 95] Please refer to 
appendix V for a detailed description of the simulation analysis and 
its limitations. 

To examine the effect that the illustrative mileage fee rates produced 
by our simulation would have on users' costs, we compared the annual 
costs that average drivers of passenger vehicles and commercial trucks 
currently pay in federal fuel taxes with the costs each would expect 
to pay in each of the three revenue scenarios. For passenger vehicles, 
we first divided the federal gasoline tax of 18.4 cents per gallon by 
varying levels of vehicle fuel economy to establish different users' 
effective mileage fee rates under the current system. We then 
multiplied each of these rates--as well as the illustrative mileage 
fee rates from our simulation--by the average number of miles driven 
annually by a passenger vehicle (11,489) to determine the average 
amount different users would pay in federal fuel taxes under the 
current system or in mileage fees in the three revenue scenarios. In 
addition, we also divided the average number of miles driven annually 
by varying levels of vehicle fuel economy to determine how many 
gallons of gasoline different users would expect to purchase each 
year. We then multiplied this number by $3.57 to calculate users' 
average fuel costs without federal taxes or mileage fees, having 
assumed a retail price of gasoline of $3.75 and subtracted the federal 
gasoline tax of 18.4 cents. To examine the effect of mileage fees for 
drivers of commercial trucks, we repeated the same steps using the 
federal diesel tax rate of 24.4 cents per gallon; the commercial truck 
mileage fee rates produced by our simulation; estimates for fuel 
economy and number of miles driven annually for single-unit trucks (8 
mpg; 13,469 miles per year) and combination trucks (5 mpg; 68,907 
miles per year) from the National Academy of Sciences[Footnote 96] and 
FHWA's Highway Statistics 2010 report; and an assumed retail diesel 
fuel price of $4.00 per gallon. 

To identify states' views on addressing future revenue demands using 
mileage fees, we surveyed the DOTs in all 50 states and the District 
of Columbia and received a 100 percent response rate. We pretested the 
survey with officials from four state departments of transportation 
and obtained feedback from FHWA officials to ensure that questions 
were clear, unbiased, comprehensive, and that terminology was used 
correctly. We made changes to the content of the questions in response 
to the pretests and FHWA review. Because we administered the survey to 
the complete universe of potential respondents, there are no sampling 
errors. However, the practical difficulties of conducting any survey 
may introduce errors, commonly referred to as non-sampling errors. For 
example, difficulties in how a particular question is interpreted, in 
the sources of information that are available to respondents, or in 
how the data is entered into a database or analyzed can introduce 
unwanted variability into the survey results. To minimize these types 
of errors, we employed recognized survey design practices in 
developing the questionnaire during pretesting and throughout the 
collection, processing, and analysis of the survey data. For example, 
in reviewing the survey data, we performed checks to identify missing 
or ambiguous responses and we addressed these errors by contacting the 
officials involved to clarify their responses. We conducted our survey 
from March 22 through April 24, 2012. See Appendix VI for a summary of 
survey results. 

We conducted this performance audit from December 2011 through 
December 2012 in accordance with generally accepted government 
auditing standards. Those standards require that we plan and perform 
the audit to obtain sufficient, appropriate evidence to provide a 
reasonable basis for our findings and conclusions based on our audit 
objectives. We believe that the evidence obtained provides a 
reasonable basis for our findings and conclusions based on our audit 
objectives. 

[End of section] 

Appendix II: U.S.-based Pilot Projects on Mileage-based User Fees: 

Table 4: Summary of Mileage-based User Fee Pilot Projects in the 
United States, as of June 2012: 

Pilot name and location(s): National Evaluation of a Mileage-based 
Road User Charge (Iowa study); Field tests in 12 states: California, 
Florida, Idaho, Illinois, Iowa, Kansas, Maine, Maryland, Montana, New 
Mexico, North Carolina, and Texas; 
Type of vehicles: Passenger vehicles; 
Summary of methodology: Researchers from the University of Iowa Public 
Policy Center tested a prototype mileage fee system in the vehicles of 
approximately 2600 volunteer participants. The tests were conducted in 
two 10-month test phases from October 2008 through June 2010. 
Participants were surveyed before, during, and after the tests to 
gauge their acceptance of the fees. 
The system used a Global Positioning System (GPS)-based, on-board unit 
that computed hypothetical mileage fees for federal, state, and, where 
applicable, local jurisdictions and periodically uploaded charges over 
a cellular communications link to a central office billing center. The 
billing center created monthly mileage charge invoices that were sent 
to participants. Officials reported that the system did not retain or 
transmit any GPS coordinates or other specific information regarding 
vehicle location or routes raveled. According to the final report, 
researchers found that mileage-based road-user charging is technically 
feasible using currently mature technologies; however, the 
installation of charging equipment into existing vehicles may pose a 
significant challenge. 

Pilot name and location(s): Oregon Road User Fee Pilot Program; 
Portland, Oregon; 
Type of vehicles: Passenger vehicles; 
Summary of methodology: In April 2006, the Oregon DOT conducted a 12-
month field test with 285 volunteer vehicles, using a prototype, pay-
at-the-pump mileage fee system. This study equipped vehicles with a 
GPS receiver to determine hypothetical mileage charges based on 
several zones (in-state, out-of-state, and within the Portland 
metropolitan area) and a wireless transmitter used to transmit mileage 
information to the fueling station's point-of-sale system at a 
participating gas station equipped with wireless receivers. When 
participants filled their tanks with fuel, the fueling station's point 
of sale system sent total mileage by zone to Oregon State University 
for processing. Participants' fuel receipts showed the difference in a 
hypothetical payment in a mileage fee system. According to the final 
report, the zone pricing strategy applied in the pilot program 
produced a 22 percent decline in driving during peak periods. 

Pilot name and location(s): Puget Sound Regional Council (PSRC), 
Traffic Choices Study; Seattle, Washington; 
Type of vehicles: Passenger vehicles; 
Summary of methodology: From July 2005 through February 2006, PSRC 
installed GPS tolling meters in the vehicles of 275 volunteer 
households to observe driving patterns before and after hypothetical 
tolls were charged for the use of major freeways and arterials in the 
Seattle metropolitan area. The on-board unit displayed the specific 
toll rates applicable based on the road type and time-of-day. The 
meter stored latitude and longitude coordinates and toll data, and 
periodically transmitted it to a central office using cellular 
communications. The central office deducted hypothetical charges from 
a user account populated with funds to cover the costs of travel based 
on their typical driving habits. If participants varied their travel 
to avoid congestion charges, they would be charged a lower rate for 
their travel and could keep the balance of their accounts after the 
testing period. According to the study's summary report, participants 
made small-scale adjustments in travel that, in aggregate, would have 
a major effect on transportation system performance. The study 
suggests there is an opportunity to significantly reduce traffic 
congestion and raise revenues for investment using road charging. 

Pilot name and location(s): Minnesota Department of Transportation 
Road Use Test; St. Paul, Minnesota; 
Type of vehicles: Passenger vehicles; 
Summary of methodology: At the time of our review, Minnesota DOT was 
in the process of testing a mileage fee system that uses commercially-
available, smart phones with GPS receivers and mileage-metering 
applications developed by Minnesota DOT. Minnesota DOT installed the 
smart-phones in a total of 500 vehicles in three 6-month test phases. 
Drivers received funds from Minnesota DOT near the beginning of their 
test period based upon their typical driving habits and used those 
funds to pay monthly mileage fee bills sent by Minnesota DOT. The 
project does not collect actual revenues from participants as they do 
not pay any mileage fees that may be incurred in excess of the amount 
in their Minnesota DOT accounts. If participants drive fewer miles 
than expected, they are allowed to keep any remaining funds. Rates per 
mile vary based on location from: (a) 3-cents per mile inside the 
Minneapolis-St. Paul metropolitan area during peak, time-of-day travel 
periods; (b) 1-cent per mile during off-peak travel in the Minneapolis-
St. Paul metropolitan area and during any time outside the region but 
in-state; and (c) no charges for out-of-state travel. Participants can 
turn off the smart phone at any time to not have their mileage 
metered. However, Minnesota DOT reads participant odometers at the mid-
point and at the end of the study, and participants are charged 3 
cents per mile for any mileage on the odometer that was not captured 
on the smart phone system. Minnesota DOT plans to complete the tests 
by the end of 2012 and issue a final report of the results soon after. 

Pilot name and location(s): Nevada Department of Transportation VMT 
Fee Study; Las Vegas, Nevada; 
Type of vehicles: Passenger vehicles; 
Summary of methodology: At the time of our review, Nevada DOT was 
conducting a mini-test with 35 vehicles using a pay-at-the pump system 
to prepare for a larger pilot to be conducted in 2013. The system to 
be tested does not use GPS. Instead, a wireless transponder is 
connected to vehicle's on-board diagnostics unit to gather mileage 
data and transmit it to a wireless receiver at the fuel pump. The 
information is sent via an Internet connection to a central office 
computer, which calculates mileage fee based on the total, 
undifferentiated miles traveled. The central office sends back the 
hypothetical mileage fee which is included in the fuel receipt. 

Pilot name and location(s): Oregon Truck Road Use Electronics (TRUE) 
Project; Oregon; 
Type of vehicles: Commercial trucks; 
Summary of methodology: In 2010, Oregon DOT conducted field tests of 
an electronic payment system for Oregon's existing weight-mile tax. 
Twenty-five participating trucks from three Oregon-based trucking 
firms were equipped with a smart phone and weight-distance tax 
application. Drivers input the vehicle weight and axle configuration 
at the onset of the trip into the smart phone, which recorded the 
vehicle's mileage data. The device sent the information via cellular 
connection to Oregon DOT, which used the data to populate a website 
from which a participating motor carrier could view their own data 
only and create and transmit their monthly highway use tax bills to 
the state of Oregon. 

Source: GAO summary of pilot project documentation. 

[End of table] 

[End of section] 

Appendix III: User Fee Design Criteria: 

Prior GAO work has found that the design of user fee programs can be 
evaluated based on several related criteria: efficiency, equity, 
revenue adequacy, and administrative burden.[Footnote 97] These 
criteria interact and are often in conflict with each other; as such, 
there are trade-offs to consider among the criteria when designing a 
fee (See Table 5.) 

Table 5: GAO Criteria for User Fee Design: 

Criteria: Efficiency; 
Description: By requiring identifiable beneficiaries to pay for the 
costs of services, user fees can simultaneously constrain demand and 
reveal the value that beneficiaries place on the service. If those 
benefiting from a service do not bear the full social cost of the 
service, they may seek to have the government provide more of the 
service than is economically efficient. User fees may also foster 
production efficiency by increasing awareness of the costs of publicly-
provided services, therefore increasing incentives to reduce costs 
where possible. 

Criteria: Equity; 
Description: Equity means that everyone pays their fair share, but the 
definition of fair share can have multiple facets, in part because 
beneficiaries and users may not be the same. Under the beneficiary-
pays principle, the beneficiaries of a service pay for the cost of 
providing the service from which they benefit. Under the ability-to-
pay principle, those who are more capable of bearing the burden of 
fees should pay more for the service than those with less ability to 
pay. 

Criteria: Revenue adequacy; 
Description: Revenue adequacy is the extent to which the fee 
collections cover the intended share of costs. It encompasses the 
extent to which collections may change over time relative to the cost 
of the program. For the purposes of our work, revenue adequacy also 
incorporates the concept of revenue stability, which generally refers 
to the degree to which short-term fluctuations in economic activity 
and other factors affect the level of fee collections. 

Criteria: Administrative burden; 
Description: This is the cost of administering the fee, including the 
cost of collection and enforcement, as well as the compliance burden 
(the administrative costs imposed on the payers of the fee). 

Source: GAO-08-386SP. 

[End of table] 

[End of section] 

Appendix IV: The Fair Information Practices: 

The following Fair Information Practices, with some variation, are 
used by organizations to address privacy considerations in their 
business practices and are also the basis of privacy laws and related 
policies in the United States, the European Union, and countries 
including Australia and New Zealand. These practices are not precise 
legal requirements. Rather, they provide a framework of principles for 
balancing the need for privacy with other public policy interests, 
such as national security, law enforcement, and administrative 
efficiency.[Footnote 98] 

Table 6: The Fair Information Practices: 

Principle: Collection limitation; 
Description: The collection of personal information should be limited, 
should be obtained by lawful and fair means, and, where appropriate, 
with the knowledge or consent of the individual. 

Principle: Data quality; 
Description: Personal information should be relevant to the purpose 
for which it is collected, and should be accurate, complete, and 
current as needed for that purpose. 

Principle: Purpose specification; 
Description: The purposes for the collection of personal information 
should be disclosed before collection and upon any change to that 
purpose, and its use should be limited to those purposes and 
compatible purposes. 

Principle: Use limitation; 
Description: Personal information should not be disclosed or otherwise 
used for other than a specified purpose without consent of the 
individual or legal authority. 

Principle: Security safeguards; 
Description: Personal information should be protected with reasonable 
security safeguards against risks such as loss or unauthorized access, 
destruction, use, modification, or disclosure. 

Principle: Openness; 
Description: The public should be informed about privacy policies and 
practices, and individuals should have ready means of learning about 
the use of personal information. 

Principle: Individual participation; 
Description: Individuals should have the following rights: to know 
about the collection of personal information, to access that 
information, to request correction, and to challenge the denial of 
those rights. 

Principle: Accountability; 
Description: Individuals controlling the collection or use of personal 
information should be accountable for taking steps to ensure the 
implementation of these principles. 

Source: Organization for Economic Cooperation and Development. 

[End of table] 

[End of section] 

Appendix V: Mileage-based User Fee Simulation Model: 

An Overview: 

This appendix describes the algorithm of the simulation model that we 
used to estimate mileage-based user fees (mileage fees) for various 
hypothetical scenarios with different target revenues. 

Methodology: 

The simulation model comprises four parameters and four variables (see 
table 7), and the algorithm of the simulation mainly involves 
repetition of three steps of computation until a desired target 
revenue is achieved. While the values of the parameters do not change, 
the variables in the model change from step to step. As described in 
appendix I, we calibrated the four parameters using existing 
literature, government data or other credible data sources. We then 
computed values of variables as formulated in the following equations. 
For expositional purpose, the algorithm and its steps are shown as a 
flow chart in figure 14. 

Table 7: Description of Key Parameters and Variables Used in 
Simulation Analysis: 

Description: Parameters; Symbol: [Empty]; Remark: [Empty]. 

Description: Vehicle miles traveled (VMT) elasticity to fuel price; 
Symbol: â; 
Remark: Measures the extent VMT would change in response to change in 
fuel price. 

Description: Fuel tax (dollars per gallon); 
Symbol: tf; 
Remark: Federal tax on gasoline or diesel fuel, and does not include 
state or other fuel taxes. 

Description: Average fuel efficiency of vehicles (miles per gallon); 
Symbol: FE; 
Remark: [Empty]. 

Description: Per-mile fuel tax; 
Symbol: ì; 
Remark: Measures how much the current federal fuel tax costs per mile 
for a vehicle with average fuel economy, and is, mathematically, a 
dividend of tax per gallon (i.e., fuel tax (tf)) and average miles per 
gallon (i.e. fuel economy) and can be expressed as ì= tf/FE. 

Variables: 

Description: Mileage fee (dollars per mile); 
Symbol: Ö; 
Remark: [Empty]. 

Description: Fuel revenue (dollars); 
Symbol: Ù; 
Remark: Pre-determined revenue denoted as (Ù*). 

Description: VMT (miles); 
Symbol: VMT; 
Remark: [Empty]. 

Description: Retail fuel price (dollars per gallon); 
Symbol: P; 
Remark: Includes federal and state fuel tax, and is the effective cost 
of fuel users pay. 

Source: GAO. 

[End of table] 

Step One: We first computed the mileage fee rates for passenger 
vehicles and commercial trucks using the pre-determined target revenue 
(Ù*) and VMT. For example, for the first iteration of the first 
scenario to replace the fuel tax revenue in 2010, we computed the 
initial mileage fee rates (Ö0) using gasoline and diesel tax receipts 
(Ù* = Ù2010) and total number of vehicle miles traveled in 2010 
(VMT2010) as described in equation (1a). 

Equation (1a) Ö0= Ù 2010/VMT2010; 

Next, we computed the new retail fuel price (P1). Since fuel price is 
expressed on a per gallon basis, we converted the mileage fee (Ö0) 
into a new per-gallon fuel tax (mathematically, this can be expressed 
as (Ö0*FE)). We first subtracted the existing per-gallon fuel tax (tf) 
from the 2010 fuel price and added back the new per-gallon fuel tax 
(Ö0*FE) to get to the new fuel retail price. For example, using the 
retail fuel price for 2010, the new retail fuel price was computed as 
follows: 

Equation (1b) P1=[P2010 -(tf -Ö0*FE)]; 

Step Two: We used the new retail fuel price (P1) computed in step one 
to compute the number of total miles traveled (VMT1) as we assumed 
that users would respond to the fuel price change by changing the 
amount of driving. For example, using the VMT2010 for fiscal year 
2010, the new VMT1 was derived as follows: 

Equation (2) VMT1=VMT2010 *(1+â*(P1-P2010)/P2010): 

Step Three: Lastly, we computed the fuel tax revenue (Ù1) by 
multiplying the new VMT1 and mileage fee (Ö0) as follows. 

Equation (3) Ù1 = VMT1* Ö0; 

The algorithm repeats itself by feeding the new tax revenue (Ù1) into 
equation (1a) until the final mileage fee, when multiplied by the 
final VMT, generates a pre-determined target revenue (Ù*) within a set 
level of approximation. 

Equation (1a) Ö1= Ù1/VMT2010: 

Figure 14: Overview of the Algorithm of Computing Mileage Fees to 
Generate Predetermined Revenue: 

[Refer to PDF for image: illustration] 

Step 1: Compute mileage fees (I)) and the corresponding retail fuel 
price (P). 
[2010 Highway Statistics Data] 
Calibrate parameters based on literature. 

Step 2: Estimate new vehicle miles traveled (VMT,) based on new retail 
fuel price (P,) as users adjust amount of driving in response to fuel 
price change according to price sensitivity (a). 
[2010 Highway Statistics Data] 
Price sensitivity measures the percentage change in VMT as a result of 
one percent change in fuel price. 

Step 3: Compute new revenue (Ù1) using new VMT, and mileage fee (0). 

Does Ù1 reach the target? 
If no: Loop until the predetermined revenue target is reached. 
If yes: Report the final values for mileage fee (0) and VMT for the 
corresponding initial assumptions; 
Repeat algorithm for other scenarios and sensitivity analysis. 

Source: GAO. 

[End of figure] 

Assumptions and Limitations: 

Because the simulation model focused on what mileage fee rates were 
required to generate different target revenues, we did not account for 
the following factors and conditions, which would significantly affect 
the mileage fees: 

1) There were only two flat mileage fees, one for passenger vehicles 
and one for commercial trucks. We did not account for any 
externalities such as air pollution or congestion costs, nor did we 
model the mileage fees to vary with different types of vehicles or 
income levels to achieve social and environmental goals. 

2) We assumed that vehicles fall in two broad categories marked by two 
average fuel-efficiency levels. In reality, there is substantial 
variation in fuel efficiency of vehicles within each category. 

3) We assumed a uniform elasticity (i.e., response to a price change 
within each category of vehicles) even though owners of different 
types of vehicles have varying degrees of price sensitivities. 

4) We assumed users only change the extent of their driving (VMT) in 
response to changes in fuel price as a result of a change in tax. In 
reality, users' responses could also include behavior changes such as 
switching to public transit or carpooling and this would also have an 
effect on the mileage fees. 

5) We did not account for factors other than fuel taxes that might 
affect VMT. These factors such as the strength of economy or higher 
required fuel economy for vehicles could significantly influence 
people's driving. To the extent that these non-tax factors affect VMT, 
mileage fees for passenger vehicles and commercial trucks would change 
to meet the target revenues in the hypothetical scenarios. 

[End of section] 

Appendix VI: Results of GAO Survey of State Departments of 
Transportation about Mileage Fees: 

To identify states' views on addressing future revenue demands using 
mileage fees, also known as vehicle miles traveled (VMT) user fees, we 
surveyed the departments of transportation in all 50 states and the 
District of Columbia from March 22 through April 24, 2012 and received 
a 100 percent response rate. 

VMT User Fee Evaluation Efforts and Potential Challenges: 

1. Has your state DOT taken or planned to take any of the following 
steps to evaluate VMT user fees? (Check one per row.) 

Question: a. Reviewed existing research; 
Response: 
Yes: 36; 
No, but plan to do so in the next 12 months: 3; 
No, and have no plans in the next 12 months: 11; 
Don't Know: 1; 
Total responses: 51. 

Question: b. Conducted a review of the technologies and systems 
available to administer a VMT user fee program; 
Response: 
Yes: 16; 
No, but plan to do so in the next 12 months: 6; 
No, and have no plans in the next 12 months: 27; 
Don't Know: 2; 
Total responses: 51. 

Question: c. Conducted economic analysis on the viability of a VMT 
system; 
Response: 
Yes: 5; 
No, but plan to do so in the next 12 months: 5; 
No, and have no plans in the next 12 months: 39; 
Don't Know: 2; 
Total responses: 51. 

Question: d. Conducted research (e.g., survey or focus groups) to 
gauge the public's potential acceptance; 
Response: 
Yes: 3; 
No, but plan to do so in the next 12 months: 7; 
No, and have no plans in the next 12 months: 41; 
Don't Know: 0; 
Total responses: 51. 

Question: e. Conducted a pilot project to test a VMT user fee system; 
Response: 
Yes: 3; 
No, but plan to do so in the next 12 months: 4; 
No, and have no plans in the next 12 months: 44; 
Don't Know: 0; 
Total responses: 51. 

Question: f. Conducted specific research to evaluate VMT user fees for 
commercial trucks; 
Response: 
Yes: 7; 
No, but plan to do so in the next 12 months: 3; 
No, and have no plans in the next 12 months: 40; 
Don't Know: 1; 
Total responses: 51. 

Question: g. Participated in research with other states to evaluate 
VMT user fees; 
Response: 
Yes: 14; 
No, but plan to do so in the next 12 months: 5; 
No, and have no plans in the next 12 months: 30; 
Don't Know: 2; 
Total responses: 51. 

Question: h. Shared information with other states related to VMT user 
fees; 
Response: 
Yes: 17; 
No, but plan to do so in the next 12 months: 5; 
No, and have no plans in the next 12 months: 28; 
Don't Know: 1; 
Total responses: 51. 

Question: i. Other; 
Response: 
Yes: 6; 
No, but plan to do so in the next 12 months: 1; 
No, and have no plans in the next 12 months: 6; 
Don't Know: 8; 
Total responses: 21. 

2. Did your state legislature, governor, or transportation commission 
direct your state DOT to evaluate VMT user fees? (Check one per row.) 

Question: a. State legislature directed state DOT; 
Response: 
Yes: 8; 
No: 39; 
Not applicable/Don't know: 3; 
Total responses: 50. 

Question: b. Governor's office directed state DOT; 
Response: 
Yes: 3; 
No: 44; 
Not applicable/Don't know: 3; 
Total responses: 50. 

Question: c. State transportation commission directed state DOT; 
Response: 
Yes: 3; 
No: 43; 
Not applicable/Don't know: 4; 
Total responses: 50. 

Question: d. Other; 
Response: 
Yes: 7; 
No: 12; 
Not applicable/Don't know: 6; 
Total responses: 25. 

3. How much of a challenge might the following issues present to 
developing a VMT user fee program in your state? (Check one per row.) 

Question: a. Addressing technological issues; 
Response: 
Very great challenge: 8; 
Great challenge: 13; 
Moderate challenge: 21; 
Some challenge: 4; 
No challenge: 2; 
Don't know: 3; 
Total responses: 51. 

Question: b. Addressing privacy concerns; 
Response: 
Very great challenge: 23; 
Great challenge: 22; 
Moderate challenge: 1; 
Some challenge: 2; 
No challenge: 1; 
Don't know: 2; 
Total responses: 51. 

Question: c. Educating the public about the viability of the current 
gas tax to meet funding demands; 
Response: 
Very great challenge: 18; 
Great challenge: 9; 
Moderate challenge: 15; 
Some challenge: 7; 
No challenge: 2; 
Don't know: 0; 
Total responses: 51. 

Question: d. Obtaining public support for a VMT user fee program; 
Response: 
Very great challenge: 36; 
Great challenge: 11; 
Moderate challenge: 2; 
Some challenge: [Empty]; 
No challenge: [Empty]; 
Don't know: 2; 
Total responses: 51. 

Question: e. Obtaining support from elected officials for a VMT user 
fee program; 
Response: 
Very great challenge: 30; 
Great challenge: 12; 
Moderate challenge: 6; 
Some challenge: 1; 
No challenge: 0; 
Don't know: 2; 
Total responses: 51. 

Question: f. Addressing equity concerns for how different groups 
(e.g., rural, urban, low-income drivers) could be affected; 
Response: 
Very great challenge: 11; 
Great challenge: 19; 
Moderate challenge: 14; 
Some challenge: 3; 
No challenge: 0; 
Don't know: 4; 
Total responses: 51. 

Question: g. Administrative costs of implementing VMT program (e.g., 
collection of fees, enforcement, compliance); 
Response: 
Very great challenge: 14; 
Great challenge: 15; 
Moderate challenge: 13; 
Some challenge: 5; 
No challenge: 0; 
Don't know: 4; 
Total responses: 51. 

Question: h. Developing the technical capacity or expertise to 
implement a VMT program; 
Response: 
Very great challenge: 7; 
Great challenge: 9; 
Moderate challenge: 26; 
Some challenge: 7; 
No challenge: 0; 
Don't know: 2; 
Total responses: 51. 

Question: i. Legal barriers to implementing a VMT program in state 
(e.g., required changes to state's Constitution); 
Response: 
Very great challenge: 9; 
Great challenge: 15; 
Moderate challenge: 9; 
Some challenge: 5; 
No challenge: 2; 
Don't know: 11; 
Total responses: 51. 

Question: j. Obtaining funding necessary to evaluate or test a VMT 
system; 
Response: 
Very great challenge: 9; 
Great challenge: 10; 
Moderate challenge: 17; 
Some challenge: 7; 
No challenge: 2; 
Don't know: 6; 
Total responses: 51. 

Question: k. Other; 
Response: 
Very great challenge: 3; 
Great challenge: 0 
Moderate challenge: 1; 
Some challenge: 0; 
No challenge: 0; 
Don't know: 9; 
Total responses: 13. 

Potential Federal Actions to Develop VMT User Fee Programs: 

4. To what extent would your state DOT support or oppose the federal 
government taking the following actions toward the development of 
future VMT user fee systems? (Check one per row.) 

Question: a. Establishing performance & interoperability standards for 
the development of VMT user fee systems; 
Response: 
Strongly support: 12; 
Support: 21; 
Neither support nor oppose: 9; 
Oppose: 2; 
Strongly oppose: 2; 
Don't know: 5; 
Total responses: 51. 

Question: b. Establishing a process to certify VMT systems developed 
by the private sector; 
Response: 
Strongly support: 12; 
Support: 19; 
Neither support nor oppose: 13; 
Oppose: 1; 
Strongly oppose: 1; 
Don't know: 5; 
Total responses: 51. 

Question: c. Establishing a framework for states to coordinate 
research and testing of VMT user fee systems; 
Response: 
Strongly support: 15; 
Support: 23; 
Neither support nor oppose: 8; 
Oppose: 1; 
Strongly oppose: 1; 
Don't know: 3; 
Total responses: 51. 

Question: d. Providing Information to states on appropriate VMT user 
fee rates; 
Response: 
Strongly support: 9; 
Support: 21; 
Neither support nor oppose: 13; 
Oppose: 3; 
Strongly oppose: 2; 
Don't know: 3; 
Total responses: 51. 

Question: e. Providing incentives to states to pilot or implement VMT 
user fee systems; 
Response: 
Strongly support: 10; 
Support: 21; 
Neither support nor oppose: 15; 
Oppose: 2; 
Strongly oppose: 1; 
Don't know: 2; 
Total responses: 51. 

Question: f. Conducting research on the cost and benefits of VMT 
systems; 
Response: 
Strongly support: 13; 
Support: 27; 
Neither support nor oppose: 7; 
Oppose: 0; 
Strongly oppose: 1; 
Don't know: 3; 
Total responses: 51. 

Question: g. Developing a communication plan to educate the public 
about transportation funding issues; 
Response: 
Strongly support: 19; 
Support: 21; 
Neither support nor oppose: 6; 
Oppose: [Empty]; 
Strongly oppose: 1; 
Don't know: 3; 
Total responses: 50. 

Question: h. Other; 
Response: 
Strongly support: 3; 
Support: 1; 
Neither support nor oppose: 1; 
Oppose: 0; 
Strongly oppose: 1; 
Don't know: 9; 
Total responses: 15. 

5. Would your state DOT support or oppose federally-led field tests to 
evaluate VMT user fees for the following types of vehicles? (Check one 
per row.) 

Question: a. Passenger vehicles; 
Response: 
Strongly support: 5; 
Support: 24; 
Neither support nor oppose: 16; 
Oppose: 0; 
Strongly oppose: 1; 
Don't know: 5; 
Total responses: 51. 

Question: b. Commercial trucks; 
Response: 
Strongly support: 9; 
Support: 21; 
Neither support nor oppose: 15; 
Oppose: 0; 
Strongly oppose: 1; 
Don't know: 5; 
Total responses: 51. 

Question: c. Electric vehicles; 
Response: 
Strongly support: 9; 
Support: 25; 
Neither support nor oppose: 13; 
Oppose: 0; 
Strongly oppose: 0; 
Don't know: 4; 
Total responses: 51. 

[End of table] 

6. How important or unimportant is it that the following options are 
included in future VMT field tests? (Check one per row.) 

Question: a. Low tech options to collect mileage data (e.g., odometer 
readings taken during vehicle registration or inspections); 
Response: 
Very important: 12; 
Important: 27; 
Neither important nor unimportant: 4; 
Unimportant: 3; 
Very unimportant: 1; 
Don't know: 4; 
Total responses: 51. 

Question: b. Systems which provide drivers with multiple options for 
submitting mileage data (e.g., on-board GPS units, odometer readings, 
self-reporting); 
Response: 
Very important: 10; 
Important: 34; 
Neither important nor unimportant: 3; 
Unimportant: 1; 
Very unimportant: 0; 
Don't know: 3; 
Total responses: 51. 

Question: c. Systems with variable VMT fees based on vehicle fuel 
efficiency or weight; 
Response: 
Very important: 10; 
Important: 24; 
Neither important nor unimportant: 9; 
Unimportant: 1; 
Very unimportant: 1; 
Don't know: 6; 
Total responses: 51. 

Question: d. Systems with variable pricing elements based on time-of-
day or congestion levels; 
Response: 
Very important: 12; 
Important: 17; 
Neither important nor unimportant: 11; 
Unimportant: 4; 
Very unimportant: 2; 
Don't know: 5; 
Total responses: 51. 

Question: e. Systems that provide users the option of paying fuel 
taxes in lieu of a VMT fee; 
Response: 
Very important: 8; 
Important: 22; 
Neither important nor unimportant: 12; 
Unimportant: 4; 
Very unimportant: 1; 
Don't know: 4; 
Total responses: 51. 

Question: f. Systems available through the marketplace (e.g., factory-
installed devices in new vehicles, commercially available GPS units, 
or smartphone applications); 
Response: 
Very important: 12; 
Important: 30; 
Neither important nor unimportant: 5; 
Unimportant: 0; 
Very unimportant: 1; 
Don't know: 3; 
Total responses: 51. 

Question: g. Evaluation of equity of VMT fees across different 
populations of drivers (e.g., fairness for rural, urban, low-income 
drivers); 
Response: 
Very important: 20; 
Important: 20; 
Neither important nor unimportant: 7; 
Unimportant: 1; 
Very unimportant: 0; 
Don't know: 2; 
Total responses: 50. 

Question: h. Other; 
Response: 
Very important: 4; 
Important: 2; 
Neither important nor unimportant: 1; 
Unimportant: 0; 
Very unimportant: 0; 
Don't know: 8; 
Total responses: 15. 

Identifying Additional Surface Transportation Revenue Sources: 

7. How important or unimportant is it that an alternative funding 
mechanism be identified by either your state or the federal government 
to meet surface transportation revenue needs in the next ten years? 
(Check one per row.) 

Question: a. State government; 

Response: 
Very important: 32; 
Important: 17; 
Neither important nor unimportant: 0; 
Unimportant: 0; 
Very unimportant: 0; 
Don't know: 2; 
Total responses: 51. 

Question: b. Federal government; 
Response: 
Very important: 37; 
Important: 13; 
Neither important nor unimportant: 0; 
Unimportant: 0; 
Very unimportant: 0; 
Don't know: 1; 
Total responses: 51. 

8. What level of priority should be placed on the following funding 
mechanisms to meet future surface transportation revenue needs? (Check 
one per row.) 

Question: a. Increasing state fuel taxes; 
Response: 
Highest priority: 7; 
High priority: 11; 
Moderate priority: 10; 
Low priority: 8; 
Lowest priority: 8; 
Don't know: 5; 
Total responses: 49. 

Question: b. Introducing state-led VMT user fee; 
Response: 
Highest priority: 1; 
High priority: 9; 
Moderate priority: 15; 
Low priority: 12; 
Lowest priority: 3; 
Don't know: 9; 
Total responses: 49. 

Question: c. Increasing state vehicle fees (e.g., vehicle registration 
or emissions testing fee); 
Response: 
Highest priority: 2; 
High priority: 9; 
Moderate priority: 18; 
Low priority: 6; 
Lowest priority: 8; 
Don't know: 6; 
Total responses: 49. 

Question: d. Increasing the use of tolling (e.g., tolls on particular 
facilities); 
Response: 
Highest priority: 8; 
High priority: 9; 
Moderate priority: 15; 
Low priority: 8; 
Lowest priority: 5; 
Don't know: 4; 
Total responses: 49. 

Question: e. Increasing federal fuel taxes; 
Response: 
Highest priority: 10; 
High priority: 13; 
Moderate priority: 11; 
Low priority: 5; 
Lowest priority: 5; 
Don't know: 5; 
Total responses: 49. 

Question: f. Introducing federally-led VMT user fee; 
Response: 
Highest priority: 10; 
High priority: 11; 
Moderate priority: 13; 
Low priority: 5; 
Lowest priority: 1; 
Don't know: 9; 
Total responses: 49. 

Question: g. Other; 
Response: 
Highest priority: 4; 
High priority: 1; 
Moderate priority: 0; 
Low priority: 0; 
Lowest priority: 0; 
Don't know: 10; 
Total responses: 15. 

9. How likely or unlikely is it that your state will introduce a VMT 
user fee program for the following types of vehicles in the next ten 
years? (Check one per row.) 

Question: a. Passenger vehicles; 
Response: 
Very likely: 1; 
Likely: 3; 
As likely as unlikely: 15; 
Unlikely: 14; 
Very unlikely: 11; 
Don't know: 7; 
Total responses: 51. 

Question: b. Commercial trucks; 
Response: 
Very likely: 1; 
Likely: 2; 
As likely as unlikely: 16; 
Unlikely: 15; 
Very unlikely: 9; 
Don't know: 7; 
Total responses: 50. 

Question: c. Electric vehicles; 
Response: 
Very likely: 3; 
Likely: 4; 
As likely as unlikely: 15; 
Unlikely: 11; 
Very unlikely: 9; 
Don't know: 9; 
Total responses: 51. 

Additional Comments: 

10. What additional comments do you have on VMT user fees? 

[Open-ended] 

Contact Information: 

11. What is the name, title, telephone number, and e-mail address of 
the person who primarily completed this survey? We might contact this 
person if we have follow-up questions. 

a. Name: 

b. Title: 

c. Department: 

d. Telephone: 

e. E-mail: 

Completion: 

12. Please check one of the options below. Clicking on "Completed" 
indicates that your answers are official and final. 

Your answers will not be used unless you have done this; (Check one); 
Completed: 51; 
Not Completed: 0; 
Total responses: 51. 

Source: GAO. 

[End of section] 

Appendix VII: GAO Contact and Staff Acknowledgments: 

Contact: 

Susan Fleming, (202) 512-2834 or flemings@gao.gov: 

Acknowledgments: 

In addition to the contact named above, Steve Cohen, Assistant 
Director; Matt Barranca; Richard Bulman; Colin Fallon; Bert Japikse; 
Terence Lam; Jean McSween; Faye Morrison; Josh Ormond; Namita Bhatia 
Sabharwal; and Chad Williams made key contributions to this report. 

[End of section] 

Footnotes: 

[1] The Highway Trust Fund is an account established by law to hold 
federal highway user tax receipts (e.g., receipts for federal excise 
taxes on fuel and other taxes on commercial trucks) that are dedicated 
for highway and transit related purposes. It is composed of two 
accounts: the highway account and the mass transit account. 

[2] In fiscal year 2008, about $8 billion was transferred from the 
general fund to the highway account (Pub. L. No. 110-318, § 1(a)(4), 
122 Stat. 3532 (Sept. 15, 2008)); in fiscal year 2009 the transfer was 
$7 billion (Pub. L. No. 111-46, §1, 123 Stat 1970 (Aug. 7, 2009)); and 
$14.7 billion was transferred to extend highway programs to December 
31, 2010, and $4.8 billion was transferred to the mass transit account 
(Hiring Incentives to Restore Employment Act, Pub. L. No. 111-147, § 
442, 124 Stat. 71, 94 (Mar. 18, 2010)). For fiscal year 2013, $6.2 
billion is appropriated to the highway account; for fiscal year 2014, 
$10.4 billion is appropriated to the highway account and $2.2 billion 
is appropriated to the mass transit account (Moving Ahead for Progress 
in the 21st Century Act (MAP-21), Pub. L. No. 112-141, § 4025, 126 
Stat. 405, 864 (July 6, 2012)). 

[3] GAO, Highway Trust Fund: All States Received More Funding Than 
They Contributed in Highway Taxes from 2005 to 2009, [hyperlink, 
http://www.gao.gov/products/GAO-11-918] (Washington, D.C.: Sept. 8, 
2011). 

[4] MAP-21. 

[5] GAO, High-Risk Series: An Update, [hyperlink, 
http://www.gao.gov/products/GAO-11-278] (Washington, D.C.: February 
2011). 

[6] Congressional Budget Office, Alternative Approaches to Funding 
Highways, Pub. No. 4090 (Washington, D.C., March 2011). 

[7] GAO, Federal User Fees: A Design Guide, [hyperlink, 
http://www.gao.gov/products/GAO-08-386SP] (Washington, D.C.: May 29, 
2008). 

[8] National Surface Transportation Policy and Revenue Study 
Commission, Transportation for Tomorrow (Washington, D.C., December 
2007); National Surface Transportation Infrastructure Financing 
Commission, Paying Our Way: A New Framework for Transportation Finance 
(Washington, D.C., February 2009). 

[9] Pub. L. No. 109-59, § 1919 (a), (d), 119 Stat. 1144, 1479-1480 
(2005). 

[10] Federal fuel taxes are not directly paid by highway users but are 
reflected in retail fuel prices. Oil companies typically pay a per-
gallon tax on fuels at the point of distribution, and these costs 
become part of the purchase price paid by highway users. 

[11] This includes $24.8 billion and $9.1 billion in federal gasoline 
and diesel taxes, respectively, and $2.8 billion in truck taxes. This 
amount does not include the $19.5 billion in general fund revenues 
deposited into the Highway Trust Fund or the $1.2 billion in 
rescissions and transfers to other funds in 2010. 

[12] Federal truck taxes include: (1) truck and trailer sales tax of 
12 percent of retailer's sale price for tractors and trucks over 
33,000 pounds gross vehicle weight and trailers over 26,000 pounds 
gross vehicle weight; (2) a heavy-vehicle use tax for trucks weighing 
55,000 pounds or more that ranges from $100 to a maximum of $550 per 
year based on weight; and (3) a tire tax for the purchase of tires, 
based on tire size and weight, of 9.45 cents for each 10 pounds of the 
maximum rated load capacity over 3,500 pounds. 

[13] GAO, Transportation: Key Issues and Management Challenges, 
[hyperlink, http://www.gao.gov/products/GAO-12-581T] (Washington, 
D.C.: Mar. 29, 2012). 

[14] In addition, drivers also pay an average of 23.3 cents per gallon 
in state gasoline taxes; rates range from 8 cents per gallon in Alaska 
and Georgia to 39.2 cents per gallon in North Carolina. Some states 
also levy additional taxes and fees on the sale of gasoline and diesel 
fuel, which increases the effective tax rate per gallon. 

[15] 49 C.F.R. Parts 531, 533, as amended by Light-Duty Vehicle 
Greenhouse Gas Emission Standards and Corporate Average Fuel Economy 
Standards. 75 Fed. Reg. 25324 (2010). 

[16] 2017 and Later Model Year Light-Duty Vehicle Greenhouse Gas 
Emissions and Corporate Average Fuel Economy Standards, 77 Fed. Reg. 
62624, 62627 (Oct. 15, 2012), errata issued, 77 Fed. Reg. 64051 (Oct. 
18, 2012), 77 Fed. Reg. 68070 (Nov. 15, 2012). 

[17] [hyperlink, http://www.gao.gov/products/GAO-11-918]. 

[18] The National Household Transportation Survey (NHTS) includes 
information on the household-based vehicle fleet, including the fuel 
efficiency of each vehicle, annual miles of vehicle use, the resulting 
amount of gallons of gasoline consumed, and the average cost of 
gasoline at the household location during the interview period. The 
most recent NHTS was collected from April 2008 through April 2009. The 
average cost for a gallon of gasoline during that 13-month period was 
$2.96, although prices reached as high as $4.00 in that period. FHWA, 
2009 National Household Travel Survey (Washington, D.C., June 2011). 

[19] Single-unit trucks have a single frame, two axles, and at least 
six tires or a gross vehicle weight rating exceeding 10,000 pounds. 

[20] From 1958 to 1960, AASHTO conducted road tests to determine the 
relationships between axle weights and pavement wear. The tests 
showed, for example, that an axle weight of 30,000 pounds causes 8 
times more pavement damage than an axle weight of 18,000 pounds. The 
relationships developed from these tests are still used today to 
attribute pavement wear to various vehicle types. 

[21] In 1994, GAO recommended that FHWA conduct an updated highway 
cost allocation study utilizing data on the relationship between axle 
loads and pavement damage to determine whether all highway users were 
paying their fair share of federal highway costs. GAO, Highway User 
Fees: Updated Data Needed to Determine Whether All Users Pay Their 
Fair Share, [hyperlink, http://www.gao.gov/products/GAO/RCED-94-181] 
(Washington, D.C.: June 7, 1994). 

[22] FHWA's 2000 highway cost allocation study estimated costs 
attributable to each vehicle class using a process that considers how 
physical and operational characteristics of each vehicle class affect 
the design of various components of the highway system or the rate at 
which pavements, bridges, and other elements of the highway 
infrastructure wear out and must be repaired or replaced. According to 
FHWA, a vast body of research has demonstrated the relationship 
between axle loads and pavement wear and that heavy axle loadings 
contribute significantly to costs for rehabilitating and 
reconstructing pavements. 

[23] SAFETEA-LU §§ 1919 (a), (d), 1934, 119 Stat.,1479-1480, 1490. 

[24] The final report was prepared for the U.S. DOT in 2011 and 
delivered to Congress in April 2012. 

[25] FHWA's Value Pricing Pilot Program, as authorized under SAFETEA-
LU, § 1604(a), 119 Stat., 1449-1450, encourages the implementation and 
evaluation of value pricing pilot projects to manage congestion on 
highways through tolling and other pricing mechanisms. 

[26] Although these countries refer to their programs by different 
names and may charge their user fees based on kilometers driven, 
rather than miles driven, we refer to these programs generally as 
mileage fee programs in this report. 

[27] [hyperlink, http://www.gao.gov/products/GAO-08-386SP]. 

[28] Recent research by the National Cooperative Highway Research 
Program (NCHRP) suggests that the administrative costs of the 
collection of state fuel taxes are about 1 percent of the revenues 
collected. See NCHRP, Costs of Alternative Revenue-Generation Systems, 
Report 689 (Washington, D.C., 2011). 

[29] CBO, Alternative Approaches to Funding Highways, Pub. No. 4090 
(Washington, D.C., March 2011). 

[30] See appendix IV for information on the Fair Information Practices. 

[31] GAO, Privacy: Alternatives Exist for Enhancing Protection of 
Personally Identifiable Information, [hyperlink, 
http://www.gao.gov/products/GAO-08-536] (Washington, D.C.: May 19, 
2008). 

[32] The five U.S. pilot projects we reviewed were the Iowa study; the 
Oregon Road User Fee Pilot Program; the Puget Sound Regional Council's 
Traffic Choices Study; the Minnesota DOT Road Use Test; and the Nevada 
DOT VMT Fee Study. See appendix II for a brief summary of each. 

[33] The pilot projects using thick-client systems were the Iowa 
study, Minnesota DOT's Road Use Test, and Oregon's Road User Fee Pilot 
Program, which also used pay-at-the pump technology in conjunction 
with a GPS receiver. The Puget Sound Regional Council used a thin-
client GPS system. The Nevada DOT system does not use GPS. 

[34] To calculate fees in the vehicle, thick-client units are 
preloaded with map files that may have fee rates for each jurisdiction 
(state, county, city) to allow for different charges based on 
location. The unit determines the total number of miles driven in each 
jurisdiction to calculate the total fee. 

[35] GPS receivers receive signals but do not transmit wide area 
signals whereas GPS navigational units do both, thus enabling third-
party tracking of vehicle movements. The GPS receivers that Oregon DOT 
used in its pilot program did not have the ability to track vehicle 
movements. 

[36] Although the Oregon DOT concluded that this pilot was successful 
and could be implemented at a reasonable cost, the department has 
since revised its technical approach and is working to develop a new 
system that will not mandate the use of a GPS receiver and will focus 
on the collection of user fees from electric-powered vehicles, which 
currently do not pay state or federal fuel taxes. 

[37] Electric vehicles are currently exempt from RUC, but New Zealand 
officials reported that this would change if their numbers became 
significant. 

[38] GAO, Mobile Device Location Data: Additional Federal Actions 
Could Help Protect Consumer Privacy, [hyperlink, 
http://www.gao.gov/products/GAO-12-903] (Washington, D.C.: Sept. 11, 
2012). 

[39] The options include an on-board unit that does not use GPS and 
only collects and reports undifferentiated miles; a unit with a GPS 
receiver that reports miles by location; or a flat annual or biannual 
tax that does not require the collection of any mileage data and 
allows the driver to accumulate unlimited miles. 

[40] H.R. 5972, § 419, 112th Cong. (2012). 

[41] Odometer fraud is an illegal practice that consists of decreasing 
the number of miles reported by a vehicle's odometer by disabling or 
turning back the odometer 's reading to appear that a vehicle has 
lower mileage than what was driven. 

[42] The cost per unit for the U.S. vehicle fleet would likely be 
substantially lower because unit costs would be expected to decrease 
with more units purchased. 

[43] See National Cooperative Highway Research Program, Costs of 
Alternative Revenue-Generation Systems, Report 689 (Washington, D.C., 
2011). 

[44] Switzerland, the Czech Republic, Slovakia, and Austria each have 
also implemented a commercial truck distance-based user fee system. 

[45] Euro to dollar conversions are based an exchange rate of .8198 on 
July 30, 2012. 

[46] Additional charges would apply for trailers, which must also be 
licensed separately from powered trucks towing them and carry their 
own distance recorders. 

[47] New Zealand to U.S. dollar conversions are based on an exchange 
rate of 1.32 on July 30, 2012. The total RUC revenues in New Zealand 
dollars from fiscal years 2007 through 2011 were $4.47 billion in New 
Zealand dollars. New Zealand transportation officials estimate that in 
fiscal year 2011, about 10 percent to 15 percent of all commercial 
truck RUC revenues were generated through the E-RUC devices. 

[48] Federal Highway Administration, Comprehensive Truck Size and 
Weight Study, FHWA-PL-00-029 (Washington, D.C., August 2000). 

[49] The enforcement cameras capture images of each passing truck and 
its license plate so that the toll operator can verify whether 
vehicles without on-board units have booked their travel for the 
appropriate segment of the autobahn. 

[50] The mobile enforcement fleet is equipped with short-range 
communications devices that read a moving truck's on-board unit to 
test for compliance. To determine whether users without on-board units 
have registered for their travel, German mobile transport officers can 
query the toll operator's database of registered users for license 
plate data to check compliance. 

[51] Data on the start-up costs are proprietary to the toll operator 
and were not available for this report. However, those costs, and the 
costs of operating the system are recouped through annual, performance-
based contractual fees paid by the German government to the toll 
operator. 

[52] According to German transportation officials, these programs are 
intended to offset the costs of compliance to German trucking firms to 
upgrade to lower emission vehicles, to train drivers to comply with 
the system, and a small program to enhance vehicle safety and the 
environment. 

[53] These "hubodometers" are removable mechanical mileage tracking 
devices that can be mounted on trailers, which are not equipped with 
odometers, so these vehicles can be licensed and charged. 

[54] Unlike the arrangement that Germany has with its toll operator, 
the New Zealand government pays nothing to the private sector 
companies that implement the E-RUC system as its revenues are 
generated from the sale of subscription services to trucking firms. 

[55] New Zealand government officials reported that the 4 percent 
evasion rate reflects the former RUC rules, which were changed in 
August 2012 in order to reduce noncompliance. The RUC system formerly 
charged on the basis of actual weight as nominated by vehicle 
operators, but this was changed in order to improve compliance and 
simplify administration. As of August 2012, the RUC system charges all 
vehicles based on their maximum gross-laden weight regardless of 
whether the vehicle is fully loaded or empty. 

[56] See appendix IV for information on the Fair Information 
Practices. The German Motorway Toll Act for Heavy Goods Vehicles 
(2002) §§ 4(2) and 7(2) establishes limits on the specific data that 
may be collected, processed, and used for the collection and 
enforcement of tolls in the HGV system. The New Zealand Road Use Act 
of 2012, Schedule 1, § 45(3) establishes the duties of E-RUC system 
providers relating to the collection, use and disclosure, and 
management of RUC data. 

[57] Four states (Oregon, New York, Kentucky, and New Mexico) 
currently levy weight-distance taxes on commercial trucks. Two of 
these states, Oregon and New York, have considered transitioning to an 
electronic collection of these user fees. In Oregon, all trucks over 
26,000 pounds must register their highest operating weight for each 
truck combination and self-report the miles traveled in Oregon by each 
combination. The weight-mile tax rates vary in relation to axle load 
and weight to incentivize the use of truck combinations that do less 
damage to roadways. The taxes are paid on a monthly or quarterly 
basis. New York's ton-mile tax charges trucks different rates based on 
whether they are hauling cargo (laden weight) or are empty (unladen 
weight). 

[58] Delcan Corporation, Calmar Telematics, and the Greater Buffalo 
Niagara Regional Transportation Council, A Practical Approach to Truck 
VMT Fees, Final Report (April 2011). 

[59] 49 U.S.C. § 31705, referring to and permitting states to require 
fuel use tax reporting requirements conforming to IFTA. 

[60] 49 U.S.C. § 31704, referring to and restricting states not 
participating in IRP. 

[61] IFTA is an interstate agreement for the collection and 
distribution of fuel taxes. IRP is an interstate agreement for the 
apportionment of registration fees. The Intermodal Surface 
Transportation and Efficiency Act of 1991 encouraged states to 
participate in these agreements. Under these agreements, states 
collect data on the miles that truck operators travel in their state 
and on registered truck weights. 

[62] The other federal taxes paid by commercial trucks include the 
federal heavy vehicle use tax and the federal tire, truck, and trailer 
excise taxes, which generated $2.8 billion in fiscal year 2010. 

[63] Federal fuel tax receipts totaled almost $34 billion in fiscal 
year 2010. We attributed the $24.8 billion in federal gasoline tax 
receipts deposited in the Highway Trust Fund to passenger vehicles and 
the $9.1 billion generated through the federal diesel fuel tax to 
commercial trucks. Our model does not consider the small portion of 
the U.S. passenger vehicle fleet powered by diesel fuel. According to 
the Environmental Protection Agency, less than 1 percent of all model 
year 2010 light duty vehicles in the United States ran on diesel fuel 
and, as result, the amount of federal diesel fuel tax receipts 
contributed to the Highway Trust Fund by passenger vehicles is 
minimal. It also does not consider that small portions of federal 
gasoline fuel tax receipts are estimated to be derived from use in 
motorboats and small engines, such as lawnmowers and chain saws, and 
transferred from the Highway Trust Fund to other nonhighway accounts. 

[64] The $53.5 billion revenue target in this scenario represents the 
total budget authority for FHWA and the Federal Transit 
Administration. This amount does not include the $27.5 billion in 
general fund revenues identified through the American Recovery and 
Reinvestment Act of 2009 for federal highway infrastructure projects 
(Pub. L. No. 111-5, Title XII, 123 Stat. 115, 206 (Feb. 17, 2009). 

[65] MAP-21 authorized funding for fiscal years 2013 and 2014. 
According to FHWA and the Federal Transit Administration, the total 
amount of funds authorized for highway and transit programs in these 
years is more than $103 billion. 

[66] In February 2009, the commission reported that annual federal 
highway and transit spending of $59 billion and $19 billion, 
respectively, would be necessary to maintain the existing conditions 
and performance of our nation's surface transportation system. 
National Surface Transportation Infrastructure Financing Commission, 
Paying Our Way: A New Framework for Transportation Finance 
(Washington, D.C., February 2009). After adjusting this figure to 
reflect 2010 dollars and subtracting the $2.8 billion that commercial 
trucks contributed to the Highway Trust Fund in other taxes in fiscal 
year 2010, this target is equal to $78.4 billion in federal fuel tax 
receipts. 

[67] These estimates were based on existing academic literature that 
has attempted to identify the range of costs of implementing a mileage 
fee system. For details on how we modeled mileage fee rates that 
included administrative costs, see appendix I. 

[68] The number of miles traveled varies widely among different types 
of commercial trucks. Our projections are based on the statistics 
compiled using two categories of commercial trucks in FHWA Highway 
Statistics as well as fuel efficiency estimates for different types of 
single-unit and combination trucks. See National Academy of Sciences, 
Technologies and Approaches to Reducing the Fuel Consumption of Medium-
and Heavy-Duty Vehicles (Washington, D.C., 2010). 

[69] These projections simply apply a flat commercial truck rate to 
two truck types. In theory, heavier trucks would need to pay higher 
mileage fees than lighter trucks because they are responsible for 
significantly more road damage than lighter trucks. 

[70] [hyperlink, http://www.gao.gov/products/GAO-08-386SP]. 

[71] GAO, Surface Freight Transportation: A Comparison of the Costs of 
Road, Rail, and Waterways Freight Shipments That Are Not Passed on to 
Consumers, [hyperlink, http://www.gao.gov/products/GAO-11-134] 
(Washington, D.C.: Jan. 26, 2011). 

[72] According to FHWA, passenger vehicles represent the other 96 
percent of the U.S. vehicle fleet and are responsible for 59.7 percent 
of road costs incurred. FHWA's 2000 addendum to its 1997 Highway Cost 
Allocation Study noted that this determination is based on federal 
spending patterns, and FHWA officials said that estimates that 
illustrate different vehicle types' responsibility for highway costs 
irrespective of federal spending are not available. 

[73] In fiscal year 2010, 67.6 percent of Highway Trust Fund user fee 
revenues were generated through the federal gasoline tax. 

[74] [hyperlink, http://www.gao.gov/products/GAO/RCED-94-181]. 

[75] Conversely, individual passenger vehicles cause only very limited 
amounts of wear on the road, and the variation in wear among different 
light vehicles of different weights is also minimal. 

[76] Failing to charge for the additional wear caused by the heaviest 
trucks on the highways can result in a distortion of the competitive 
environment by making it appear that these trucks are a less expensive 
means to transport goods. 

[77] [hyperlink, http://www.gao.gov/products/GAO/RCED-94-181]. 

[78] Converting the adjusted mileage fee rates to per-gallon charges 
would translate to significantly higher federal diesel fuel tax rates. 
For example, an adjusted federal diesel fuel tax of 45 cents per 
gallon would be needed under the scenario to meet current spending 
levels and a diesel fuel tax of 69.3 cents per gallon would be 
necessary under the scenario to maintain existing conditions and 
performance levels. 

[79] [hyperlink, http://www.gao.gov/products/GAO/RCED-94-181]. 

[80] [hyperlink, http://www.gao.gov/products/GAO-08-386SP]. 

[81] New Jersey was the only state DOT to indicate that it does not 
know whether it is important that an alternative federal funding 
mechanism be identified in the next 10 years in order to meet surface 
transportation revenue needs. 

[82] Department of Energy, One Million Electric Vehicles by 2015: 
February 2011 Status Report (Washington, D.C., 2011). 

[83] Texas Transportation Institute, Exploratory Study: Vehicle 
Mileage Fees in Texas (College Station, Tex., January 2011). 

[84] FHWA, Potential Research and Field Trials Related to Mileage-
Based User Fees, Report to Congress (Washington, D.C., March 2011). 

[85] GAO, Energy Policy: Options to Reduce Environmental and Other 
Costs of Gasoline Consumption, [hyperlink, 
http://www.gao.gov/products/GAO/RCED-92-260] (Washington, D.C.: Sept. 
17, 1992). 

[86] Pub. L. No. 109-59, § 1919 (a), (d), 119 Stat. 1144, 1479-1480 
(2005). 

[87] See appendix II for a summary of U.S.-based pilot projects as of 
June 2012. 

[88] FHWA, Highway Statistics 2010, Table FE -10 (Washington, D.C., 
2012). 

[89] In 2010, FHWA reported that the amounts of average annual 
spending needed to maintain the conditions and performance of the 
nation's surface transportation systems to be $101 billion for 
highways and $18 billion for transit. FHWA, 2010 Status of the 
Nation's Highways, Bridges, and Transit: Conditions & Performance 
Report to Congress (Washington, D.C., 2012). The difference between 
these figures and our scenario 3 revenue target is explained, in part, 
by: (1) the $78.4 billion target consists entirely of federal revenues 
while the $119 billion in the Condition and Performance report 
represents all levels of government and (2) both figures are average 
annual revenues that use different projected timeframes. 

[90] The National Surface Transportation Infrastructure Financing 
Commission's 2009 report stated that annual federal highway and 
transit spending requirements to maintain existing conditions and 
performance were $59 billion and $19 billion (in 2008 dollars), 
respectively, were necessary. Adjusted to reflect 2010 dollars and not 
including the other excise taxes and fees levied on commercial trucks, 
this is equal to $78.4 billion, per FHWA. 

[91] FHWA, Addendum to the 1997 Highway Cost Allocation Study Final 
Report, Table 4, (Washington, D.C., May 2000). 

[92] In computing the cost responsibility ratio for all passenger 
vehicles, FHWA's 2000 update to its 1997 Highway Cost Allocation Study 
included buses. However, in FHWA's Highway Statistics 2010, the all 
light-duty vehicles category did not include buses. We decided that 
the difference is small as VMT by buses on urban and rural roads 
(13,789 million) was only 0.5 percent of that of all light-duty 
vehicles. See FHWA, Addendum to 1997 Highway Cost Allocation Study, 
Table 4; and FHWA, Highway Statistics 2010, Table VM-1. 

[93] Our model does not consider that small portions of federal 
gasoline fuel tax receipts are estimated to be derived from use in 
motorboats and small engines, such as lawnmowers and chain saws, and 
transferred from the Highway Trust Fund to other non-highway accounts. 

[94] U.S. Environmental Protection Agency, Light-Duty Automotive 
Technology, Carbon Dioxide Emissions, and Fuel Economy Trends, 1975-
2010, page viii, EPA-420R-12-001, (Washington, D.C., March 2012). 

[95] A direct comparison with the existing literature is not 
appropriate as these studies used diverse methodologies, assumptions 
or data. For example, our model did not account for external costs 
such as vehicle emissions and mileage fee rates that account for these 
costs would normally be higher than fees designed to only replace 
current revenues. As such, we expected our results to be at lower end 
of the existing estimates. For example, Parry and Small (2005) 
estimated an optimal mileage fee to account for all measurable 
external costs to be 14 cents per mile, which is significantly higher 
than the rates in our simulation. See Parry, Ian and Kenneth Small, 
Does Britain or the United States Have the Right Gasoline Tax?, 
American Economic Review, Vol. 95. No.4, page 1283 (2005); 
Congressional Budget Office, Alternative Approaches to Funding 
Highways, Pub. No. 4090 (Washington, D.C., March 2011); FHWA, Addendum 
to the 1997 Highway Cost Allocation Study, Table 13, (Washington, 
D.C., May 2000); Delcan Corporation, Calmar Telematics, and the 
Greater Buffalo Niagara Regional Transportation Council, A Practical 
Approach to Truck VMT Fees, Final Report (April 2011); Parry, Ian, How 
Should Heavy-Duty Trucks Be Taxed?, Resources for the Future 
Discussion Paper, RFF DP 06-23 (Washington, D.C., 2006). 

[96] National Academy of Sciences, Technologies and Approaches to 
Reducing the Fuel Consumption of Medium-and Heavy-Duty Vehicles 
(Washington, D.C., 2010). 

[97] GAO, Federal User Fees: A Design Guide, [hyperlink, 
http://www.gao.gov/products/GAO-08-386SP] (Washington, D.C.: May 29, 
2008). 

[98] GAO, Privacy: Alternatives Exist for Enhancing Protection of 
Personally Identifiable Information, [hyperlink, 
http://www.gao.gov/products/GAO-08-536] (Washington, D.C.: May 19, 
2008). 

[End of section] 

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