System Trials to Demonstrate Mileage-Based Road Use Charges (2010)

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70 6. STRATEGIC CONSIDERATIONS FOR THE TRIALS This chapter begins by summarizing several high level observations that emerged during the series of interviews and workshop. It then introduces and discusses three conceptual frameworks for organizing the trials. During the course of the interviews, certain questions elicited a surprising degree of variation in responses. Based on follow-up questions and further discussion with interview participants, the research team recognized that the appropriate scope and structure for the trials might depend, at least in part, on the envisioned pathway to implementing VMT fees. For example, should VMT fees initially be implemented at the state level or at the federal level, and should the transition to VMT fees involve a period of voluntary adoption? The intent of the frameworks is to represent different possible visions for the transition to VMT fees, which in turn might suggest alternate choices about how to scope and structure the trials. 6.1. OBSERVATIONS FROM THE INTERVIEWS AND WORKSHOP This section begins by summarizing the research team’s understanding of key insights from the interviews and workshop that might be helpful in framing the discussion of potential trials. It then comments upon the considerable degree of variation in the responses to certain interview questions and considers the implications for developing a coherent plan for an expanded set of system trials. 6.1.1. Perspectives Offered by Interview and Workshop Participants Given the potential cost of implementing VMT fees, as well as the likely degree of controversy, several participants expressed skepticism that the nation would move in the direction of VMT fees or that Congress would devote significant resources to support system trials in the next authorization. As one participant put it, voters and elected officials have been generally unwilling to increase fuel taxes to provide sufficient funding, so it is difficult to see where the will to implement VMT fees would come from. Instead, these participants viewed it more likely that Congress would debate fuel tax increases or rely on continued allocations from the general fund to shore up the Highway Trust Fund (HTF). One of the interview participants suggested that the nation would be better served to focus efforts on the expansion of congestion tolling to help mitigate traffic and rely on increased vehicle registration fees for vehicles that pay little or no fuel taxes (e.g., plug-in hybrid or electric vehicles). Such comments did not necessarily indicate a lack of support for VMT fees on the part of participants; more commonly, they were expressed as views about what was most likely to occur given the current state of the political debate. In addition, several respondents were skeptical about the complexity of the required technology within the context of trials and eventual implementation. Several indicated concern that the technologies were not as well-developed as advertised, and that past experience had shown that even technologies considered ready for implementation often proved not to be. One person thought that with more sophisticated systems and greater numbers of users, the potential for security problems would rise considerably—not due to flaws for any particular technology, but simply as a factor of increasing complexity. While most respondents expected that VMT fees

71 would be implemented through some type of in-vehicle device, these dissenting opinions suggest concern among some experts that a heavily technology-dependent solution might be problematic. Yet most of the interview participants were intrigued or enthusiastic about the prospects for VMT fees and focused their commentary on how to structure the trials to be as effective as possible. Among the many comments received, several general themes emerged repeatedly: • The lack of clear policy direction is holding back implementation efforts. Many of the respondents expressed the perception that remaining technical barriers could be readily resolved by the private sector, but only after the government had developed a clear policy framework. To date, there is not yet national agreement or policy direction on such crucial issues as what types of pricing the system should support and what levels of privacy protection should be assured. The implication, also supported by the entries in Table 5.1 in the preceding chapter, is that planning and policy decisions would be at least as important as system trials. • Federal leadership is needed. Many of those interviewed suggested that federal leadership would be important, though they expressed varying views about the form that this leadership should take. Some indicated that the federal government should develop a national system in which states could choose to participate. Others, in contrast, felt that the states should lead implementation efforts, while the federal government should develop and promote standards to ensure that the systems developed in different states could interact with one another. A major concern was that in a vacuum of federal leadership, at least some states would begin to develop their own systems; absent federal guidelines or standards, as illustrated by the current variations in electronic tolling technologies in different regions of the country, the nation might easily end up with incompatible technologies and systems in different states. • Trials should set the stage for implementation. Another recurrent theme was that the trials should not simply result in another interesting set of studies, but rather should be focused on resolving remaining uncertainties to inform policy debate and prepare for implementation. To begin with, revenue challenges are becoming increasingly acute, so it would be helpful to facilitate a potential transition in the near term. Additionally, the trials would likely entail considerable investment, so they should be designed to be as productive as possible. One implication of this perspective is that the trials should consider a broad range of issues to develop and adopt a fully functional system of VMT fees—including, for instance, privacy protection, system enforcement, actual (as opposed to simulated) collection of revenue, and payment options for those without credit cards or bank accounts. Another is that the trials might focus specifically on the subset of potential implementation options viewed as offering the greatest prospects for successful implementation. An intriguing variant on this theme expressed by several participants is the idea that trials might evolve directly into full-scale implementation, as with some tolling projects under the Value Pricing Pilot Program. This concept is considered at greater length later in this chapter. • The federal government should be prepared to invest considerably in trials. Many of the interview participants argued that the investment in system trials (and related efforts) should be considerable—in short, whatever it takes to resolve remaining uncertainties and prepare for implementation. As one respondent suggested, a system of VMT fees would provide a platform that could eventually support virtually all other forms of federal, state, and local

72 user fee revenue collection. Additionally, such a system could enable variable fee structures to help reduce recurrent traffic congestion, harmful vehicular emissions, and excessive pavement damage—problems that have been difficult to address through other policy mechanisms. Finally, with the recent increases in corporate average fuel economy (CAFE) standards and the prospects for alternative fuel vehicles, transportation stands to lose billions of dollars in federal and state fuel tax revenues in the near future. This increases the urgency of finding a replacement revenue mechanism, such as VMT fees, sooner rather than later. • A VMT fee system should not focus on revenue alone. A number of respondents stressed that a system of VMT fees should not be designed solely to raise revenue—that is, to charge flat per-mile fees to make up for shortfalls in the Federal HTF or comparable state accounts. Simply stated, such a system would be too expensive to implement and operate, particularly in comparison to the efficiency of fuel tax administration, if restricted to that purpose alone. Yet the same in-vehicle technology used to meter mileage could also support many other valuable services to help offset the cost. Some respondents stressed the potential benefits of developing variable fee structures to support other transportation goals; others focused on the inclusion of PAYD insurance, the ability to automate the payment of parking fees, the collection of accurate traffic information, the provision of real-time traffic alerts coupled with alternate routing suggestions, and the like. Generally speaking, though, most agreed that a system of VMT fees should be designed to serve as many ends as possible. • Principal obstacles include cost and user acceptance. In discussing the greatest potential impediments to the implementation of VMT fees, respondents cited the issues of cost (for in- vehicle equipment, supporting infrastructure, collection, and enforcement) and user acceptance (particularly with respect to privacy and potential fee structures) as the most significant stumbling blocks. The trucking industry has additional concerns over VMT fees: that they might provide an easy way for states and localities to target trucks, since much truck traffic is pass-through, and that they could facilitate weight-distance truck tolls, which the industry generally opposes. Whether or not the system could be effectively enforced was another oft-cited concern. The implication is that the trials should devote ample attention to evaluating strategies for overcoming these potential barriers to adoption. • Building greater trust in the government is another key challenge. A related theme discussed by several participants was the current lack of trust in government, particularly for the federal government, an issue that would surely compound the difficulty in building public acceptance for a sophisticated system of VMT fees. Concepts that might be important in helping to repair public trust include the idea that all vehicles would be paying their “fair share” with VMT fees, demonstrated accuracy of the fees charged, and a much more visible relationship between fees paid and investments made with the revenue (in contrast, for example, to the proliferation of earmarking and current donor/donee relationships in the allocation of federal fuel tax revenue). • Trial development should draw on “lessons learned” from past and existing programs. In the course of discussing potential VMT fee trials, some respondents drew on what they interpreted as lessons learned from experience with similarly large or innovative programs (e.g., Value Pricing Pilot Program, TIGER Grants, and IntelliDrive). Specific suggestions in this vein included having a large coordinated program, since small and scattered pilots might not lead to broader implementation; awarding on a competitive basis rather than on political

73 considerations; conducting a multi-staged proposal process to help interested states refine their proposals; including additional time to build public support in funding programs for controversial projects; and exempting funding recipients from some requirements if they are not applicable to the project. • Authorizing legislation should not be overly prescriptive. While the interview questions did not address the issue of how any authorizing legislation might be structured, a number of participants chose to voice their opinion on this matter, suggesting that legislation should not include detailed instructions. Rather, the program should simply be created and funded, perhaps allowing one to two years for planning, two or three years to operate the trials, and another year to evaluate the results. Beyond that, there would not be “specific instructions” as to what should be tested in terms of technology, location of trials, etc. Rather, the details of the trials would be delegated to those charged with overseeing and managing the program. 6.1.2. Variations in Interview Responses Many of the questions posed during the interviews yielded similar answers from the participants. For certain issues, however, there was considerable divergence in the responses. When asked about the number of participants that should be involved in the trials, for instance, answers ranged from a few thousand to a million. And while some of the respondents indicated that congestion tolls should definitely be included within the trials, others were adamantly against this idea, arguing that transitioning to a VMT fee system would already pose substantial public- acceptance issues even without raising the specter of higher charges for peak-hour driving. As discussed next, the divergence in opinion for certain key issues led the research team to develop a set of alternate conceptual frameworks for scoping and organizing the trials. 6.2. FRAMEWORKS FOR SCOPING AND STRUCTURING TRIALS As the divergence in opinions for certain key questions became apparent, the research team began to ask follow-up questions during the interviews to gain insight into the reasoning behind alternate responses. Based on the ensuing discussions, the research team observed that differing opinions regarding the appropriate scope and structure for the trials often stemmed from disparate views about the manner in which a transition to VMT fees would likely or should ideally unfold. In particular, respondents expressed differing perspectives for such questions as: • Would it be more desirable (or, alternatively, more likely given political considerations) for the initial implementation of VMT fees to occur within states or at the federal level? • Could VMT fees be implemented in just a few years, or would it take a decade or more? • Should the transition rely solely on a mandatory phase-in process (e.g., with the purchase of new automobiles) or should it instead include a period of voluntary adoption for several years prior to the initiation of mandatory adoption? (Note that a period of voluntary adoption would not preclude the possibility of requiring that auto manufacturers begin to provide metering equipment with new vehicles as of a certain model year to reduce the number of vehicles that would need to be retrofitted at a later date.) Different views on these questions suggest different pathways to implementation, and these in turn imply alternate goals and structures for the trials. In other words, the most helpful scope and

74 organization for the trials depends on how one expects that the transition to VMT fees might or should occur. Building on this recognition, we outlined three conceptual “frameworks,” or visions, about how the transition to VMT fees might be pursued (while the three frameworks do not represent all possible pathways to implementation, they appear to encapsulate the alternatives envisioned by most of the interview and workshop participants and therefore serve as a useful construct for delineating alternate approaches to the trials). In essence, the three frameworks provide a lens through which to interpret the varied responses for many of the questions that were posed during the interviews and workshop. Specifically, they prompt consideration of whether certain choices for designing the trial might vary from one framework to the next. The three frameworks can be summarized as follows: • Help states help themselves (state framework) • Carefully plan a national system of VMT fees (federal framework) • Foster a market for in-vehicle travel services (market framework) The remainder of this section describes each of these frameworks in greater detail and considers their relative advantages and potential weaknesses. The discussion also highlights how the different frameworks for the trials might help to address and overcome (or fail to overcome) some of the greatest potential barriers to implementing VMT fees—most notably cost, user concerns, and political viability. 6.2.1. Help States Help Themselves (State Framework) In this framework, VMT fees would first be adopted by willing states or groups of adjacent states (e.g., the I-95 Coalition). The main roles of the federal government would be to provide funding to assist their efforts (i.e., funding for trials) and to support the development of national standards and a certifications process to ensure interoperability among the systems deployed in different states. Additionally, the federal government might encourage states to examine implementation options that could later be extended to support national implementation. At some point in the future, the federal government could then draw upon the lessons from state implementation to develop a national system of VMT fees. Within the state framework, a state might choose to organize the trials to carefully examine the various implementation options under consideration. Subsequent to the trials, and based on the results, the state could then debate whether to implement VMT fees and, if so, plan a VMT-fee system that would be initiated at a later date. It is also conceivable, however, that a state could plan for the trials to evolve directly to implementation; that is, there would be no intervening period for planning and public debate between the trials and system implementation. This might be feasible, from a political perspective, if it were intended that the payment of VMT fees would be optional for some period of time; for example, drivers within a state might be provided with the option of paying a fixed registration fee or paying a per-mile registration fee instead. It might also be feasible for the trials to evolve to implementation if it were intended that VMT fees, though mandated, would only apply to a limited subset of vehicles (e.g., electric and plug-in hybrid vehicles) that would not otherwise pay their share of road use costs.

75 A decision on the part of one or more states to pursue trials intended to evolve directly to implementation would have important implications for the overall trial program. To ensure that systems developed in different states would ultimately be compatible with one another, for example, it would be important to develop interoperability standards in advance of the trials. In the remainder of this document, such implications are noted where relevant. Advantages. The concept of allowing states to lead the transition to VMT fees has much to recommend it. Potential advantages include: • There would be less need to achieve widespread (i.e., national) public support for VMT fees. States in which the political will exists to raise revenue for the improvement of transportation infrastructure could choose to implement VMT fees; other states could choose not to. • States have more opportunities than the federal government to create conditions that would encourage voluntary adoption or reduce objections to mandatory adoption. States could allow vehicle owners, for example, to pay for registration by the mile instead of as a fixed annual fee (this mirrors the approach in the planned Netherlands system, in which kilometer-based fees were intended to replace vehicle purchase and registration fees; see Dutch Ministry of Transport, Public Works, and Water Management 2009); they could require that drivers either have their odometer read each year or install metering equipment to automate the process (potentially qualifying for lower off-peak rates and avoiding the need to pay for mileage traveled out of state or on private roads, as in the planned Minnesota trial); they could structure insurance regulations to enable or encourage PAYD policies; and they could work directly with cities to allow for automated payment of parking fees. States that currently operate some form of weight-distance fees could also allow or require trucks to adopt metering equipment to automate fee computation and collection. • States control resources—e.g., highway patrol officers and vehicle registration databases— that might more easily be applied to help enforce VMT fees. Additionally, the network of Interstates, highways, arterials, and local roads is collectively owned and operated by states, local governments, and tolling authorities, not by the federal government. • States represent a laboratory for experimentation that might lead to innovative VMT fee concepts not yet considered. If a national system were to be developed instead, great care would need to be taken to ensure that the system provided enough flexibility to allow for continued policy exploration and innovation on the part of states. • States that have a favorable experience with trials could choose to transition directly to full- scale implementation. Potential drawbacks. Though appealing from certain perspectives, the state-led approach is not without potential drawbacks: • Letting the states lead (presumably to levy their own road use fees, not fees for the federal government) would not help to reduce current revenue shortfalls in the HTF in the near term (in effect, this might lead to continued devolution of the responsibility for funding surface transportation from the federal government to states, counties, and cities, an ongoing trend that has provoked much discussion and debate among policymakers).

76 • Arguably this approach would introduce greater risk that systems in different states would not be interoperable. To avoid this potential pitfall, a concerted effort would be needed to (a) develop interoperability standards in advance of the first state deployment, and (b) find ways to encourage states to adopt those standards. • As a corollary to the preceding point, if it were intended that one or more of the state trials might evolve directly to implementation, then it would be necessary to develop at least an initial version of the interoperability standards in advance of the trials. This represents a technically demanding, and potentially contentious, task that could be difficult to complete within just a year or two. • There might be less opportunity to reduce system costs through economies of scale, since there are fewer drivers in any given state than in the nation as a whole. • The implementation of VMT fees in some states but not others would inevitably create many challenges surrounding the collection and allocation of road use fees for interstate travel. • Given the likely difficulty of building public support for VMT fees, it is possible that no states would choose to implement VMT fees following the trials, in which case there would be no progress towards a more sustainable system of transportation finance (on the other hand, the lack of any state-level implementation might also suggest that the concept of VMT fees is simply not yet politically viable in the United States as a whole). 6.2.2. Carefully Plan a National System (Federal Framework) In this framework, the main goal in the trials would be to explore alternate implementation options to prepare for the potential implementation of a national system of VMT fees. Such a system would offer sufficient flexibility to enable states, and potentially local governments, to levy their own VMT fees if interested. It might support a broad range of additional value-added services as well, though this would not be a strict requirement. Following the trials, and pursuant to public debate, policymakers could then determine (a) whether to implement a national system of VMT fees and, if so, (b) what policy goals (e.g., the ability to meter mileage and apportion fees by jurisdiction, or to support local congestion pricing applications, or to offer certain forms of privacy protection) the system should support. Planners could then apply lessons learned during the trials to develop the most cost-effective system capable of meeting the indicated system requirements. The trials results could also assist planners in determining the best strategy for phasing in the system. For example, the decision might be made to initiate the transition process by requiring auto manufacturers to begin equipping new vehicles with metering devices as of a certain year. Alternatively, mixed user response during the trials might suggest that it would be beneficial to institute a period of voluntary adoption (as envisioned in the market framework, discussed next) prior to mandatory adoption. It is also possible that trials aimed at planning a national system might instead lead to initial implementation at the state level. That is, following the trials, federal decision makers might opt not to develop a national system of VMT fees immediately. A state that participated in the national trials, however, might choose to implement its own system based on its experience during the trials. In short, the trials under the federal framework would be aimed at planning and developing a national system, but the intervening period of public debate and planning might lead to alternate outcomes.

77 Advantages. This framework offers a different set of advantages: • It would address HTF revenue shortfalls by exploring a system capable of levying federal VMT fees. • It would provide the greatest opportunity to reduce system costs through economies of scale. • It would result in a consistent national system, thereby avoiding the potential outcome in which different systems in different states would not be interoperable. • It would reduce the barriers for states (or local jurisdictions) that want to implement VMT fees. States would not need to develop their own technical configurations; rather, they could integrate their charges with the federal system. • The system could be structured with sufficient flexibility to ensure that states have maximum latitude to explore innovative pricing policies (rather than innovative technical approaches). In essence, this would require that the system be able to determine both the time and location (by jurisdiction and potentially by route) of travel to provide maximum flexibility. • A set of trials could be carefully coordinated to address all crucial issues required for full- scale national implementation. Trials aimed solely at state level implementation might fail to address issues that become more important at the federal level (e.g., any required state support for levying federal fees). Potential drawbacks. The framework for developing a national system of VMT fees also faces some of the more daunting challenges and risks: • Under the state framework, it is possible that just a few states might initially choose to implement fees, and others might subsequently follow. In other words, public acceptance would only be needed in a small number of states to initiate the transition. In the federal framework, however, it would be necessary to gain the support of elected officials from a majority of states in order to pass the legislation to establish a national system. This would likely prove more difficult to achieve, thus increasing the risk that trials would not lead to actual implementation. • The federal government has fewer opportunities than individual states to create incentives for voluntary adoption. For example, there are no federal registration fees for passenger cars that could be levied on a per-mile basis, the federal government does not control state insurance policies, and the federal government can exert only limited, if any, influence on local parking policies. As a result, the federal government might need to rely on mandatory adoption. This would increase the political challenges associated with VMT fees and also necessitate a mechanism for rebating fuel taxes to early adopters. Alternatively, the federal government might pursue more creative—but still politically difficult—strategies to promote voluntary adoption. For instance, Congress might require that states begin to collect a national registration fee and then provide drivers with the option of paying either a fixed annual fee or installing the metering equipment and paying by the mile.

78 • It would be necessary to either expand the staffing levels and capabilities of current federal enforcement resources (e.g., IRS agents involved in fuel tax enforcement) or to rely on extensive state support in order to enforce federal VMT fees. 6.2.3. Foster a Market for In-Vehicle Travel Services (Market Framework) This last framework, which represents the greatest departure from conventional thinking about how to accomplish a transition to VMT fees, is intended to address several goals in parallel: overcoming public acceptance challenges through voluntary adoption, implementing a fully operational (if initially voluntary) national system of VMT fees as quickly as possible, and reducing the cost to the government of collecting VMT fees. In essence, this framework envisions, and seeks to foster, the emergence of a market for in- vehicle metering devices and billing services that are capable of levying VMT fees and simultaneously supporting numerous value-added services, such as automated payment of parking fees, PAYD insurance, real-time traffic alerts, and routing suggestions based on current traffic conditions. Firms (e.g., device manufacturers, software developers, system integrators, telecommunications providers, toll road operators, and the like) would compete to provide these services, thereby driving down the cost of the required technology. Additionally, because firms would be able to collect payment for some of the additional services (e.g., a small percentage of parking fees or PAYD insurance premiums), the amount that they would need to charge the government for collecting VMT fees would be reduced. The main goal of the trials in this framework, then, would be to support and accelerate the development of this market. To do so, the federal government would let contracts with several firms (the initial “competitors” in the market) to provide metering devices and collection services and help enroll trial participants. In parallel, the federal government would fund or subsidize states that wished to examine VMT fees, cities or counties that wished to explore automated parking payment or local VMT fees, and insurance firms that wished to offer PAYD policies. These parties would then link up with one or more of the technology vendors to conduct the trials. After several years, the trials would evolve to full-scale implementation of an initially voluntary system. Trial participants that valued the additional services would become the initial adopters, and additional drivers would be able to adopt the in-vehicle equipment on a voluntary basis as well. After several more years, once it had been demonstrated that the system was operating successfully (i.e., that it was collecting fees, preventing evasion, and protecting privacy as planned), the government might then mandate the adoption of VMT fees for all vehicles. This approach to trials and implementation is described in greater detail by Grush (2010a). Note that the role of private firms in providing metering devices, billing services, and other value-added offering would be possible in the other frameworks as well, but would not be the only approach that might be contemplated (e.g., a particular state might choose to examine the collection of VMT fees with registration in a publicly-administered system). In this framework, in contrast, the involvement of multiple competing firms in the provision of metering and billing services would be viewed as a critical component in achieving the goals of driving down costs and stimulating the development of value added services to promote voluntary adoption. Advantages. This framework offers several conceptually compelling advantages:

79 • The opt-in period would allow time to demonstrate the effectiveness of privacy protection, fee collection, and enforcement strategies through the participation of voluntary adopters. This should reduce the current degree of public and political skepticism surrounding VMT fees, making it less difficult to mandate the adoption of VMT fees at a later date. • To gain market share, competing firms would be motivated to provide as many valuable add- on services as possible. This would help to maximize the benefits of the considerable social investment in in-vehicle metering technology. • Because the service and technology providers could collect revenue from a broader range of sources, the cost to the government for installing equipment and collecting VMT fees should be reduced. • On a related note, the cost to conduct the trials, on a per-participant basis, might be reduced in this framework. Provided that the government clearly signaled its intention to transition to a national system of VMT fees, firms might choose to cover some of the trial-related costs with their own resources in order to prepare a successful bid to participate in the trials, which would in turn position them as an early market leader. On the other hand, as expressed by one of the workshop participants, many firms have been “burned” by investing their own resources in European trials that did not lead to implementation and might therefore be less willing to do so again. This potential benefit is therefore far from certain. • The cost of installing equipment in vehicles would not be lost; rather, the same equipment would continue to be used when the trials phased directly into implementation and trial participants became early system adopters. Potential Drawbacks. This framework also faces several risks and obstacles: • In a voluntary opt-in framework involving privately provided equipment and services, it is conceivable that drivers would choose to adopt the equipment for PAYD insurance, for the chance to automate the payment of parking fees, and to enjoy other services but then choose not to pay mileage-based fees. Assuming a relatively flat per-mile rate structure, drivers of highly fuel-efficient vehicles, in particular, would be better off paying current fuel taxes than mileage fees. In order to increase voluntary payment of federal road use fees, the government would likely need to create some form of incentives. For example, it might set federal fuel taxes somewhat higher than mileage fees and then rebate fuel taxes to adopters, or it might institute some form of federal registration fee (collected by states and remitted to the federal government) that would be rebated for VMT-fee system adopters. • Under this framework, since it is envisioned that the trials would evolve directly to full-scale implementation, it would be appropriate to develop an initial set of interoperability standards and corresponding certification process in advance of the trials. Though possible, this would be challenging to achieve within just a year or two. • As a corollary to the preceding point, it would be necessary to make certain system design decisions—for example, the decision that fee collection would be handled by multiple private firms operating in parallel, rather than by a single firm or by the public sector—in advance of the trials. There would not, therefore, be the opportunity to inform such decisions based on lessons learned during the trials themselves.

80 • With independently funded technology and service providers, states, cities, MPOs, insurance providers, research institutions, and the like, it could prove more difficult to manage and coordinate the trials under this framework. • The success of an industry-led model would depend largely on voluntary consumer adoption. The assumption is that consumers would be willing to purchase devices to have access to the add-on services. However, it is not certain that a mass market will emerge for these devices. For example, while some drivers would undoubtedly find the prospect of paying for parking via an in-vehicle device appealing, a large share of drivers have free parking for most trips and would not be interested in this application. Moreover, many of the envisioned services, such as routing assistance or stranded driver assistance, are already available on other platforms. If relatively few consumers voluntarily chose to adopt the equipment in order to gain access to the value-added features, greater government subsidies or mandates could be required. Related to this point is the observation, offered by a private sector representative, that from the service provider perspective, the “base” business case has to make sense (i.e., the ability to earn some return on investment by charging for the collection of VMT fees); it cannot be assumed that firms would recoup all of their investment from value-added services. • An industry-led model would create not one but two enforcement challenges: the potential for tax evasion by drivers, as well as the possibility that the firms or consortia collecting the fees would not remit them in an accurate or timely fashion. Firms might be responsible for collecting billions of dollars annually, necessitating sufficient staff on the government side to carefully monitor contracts and audit accounts as well as a plan for penalizing firms found to be in breach of contract. The federal government would also need to either augment its own enforcement resources or rely on state support to help prevent driver attempts to evade fees. 6.3. APPLICATION OF THE FRAMEWORKS The three frameworks described above are offered as a means of conceptualizing alternate pathways for implementing and transitioning to VMT fees, which can in turn be used to help organize a coherent approach to planning and implementing a set of VMT-fee trials. It should be stressed, however, that the frameworks are not absolute; that is, they do not represent all possible pathways to implementing VMT fees, nor need they be viewed as mutually exclusive. For example, decision makers might choose to pursue the market framework for VMT fees applied to passenger vehicles and the federal framework for VMT fees applied to commercial vehicles. Or, they might choose a hybrid of the state and federal frameworks, funding some states to participate in trials for a national system and other states to conduct their own separate trials. Still, the frameworks do have important implications for the appropriate scope and structure for the trials, and it would therefore be helpful for decision makers to choose among the frameworks in order to develop a coherent plan for the trials. Each, as described above, offers a combination of strengths and limitations, and none is inherently superior; rather, the decision requires a policy judgment. Distilled to the most basic level, the selection of a framework rests of two key questions: 1. Is it more likely (or, alternatively, more desirable) that the initial implementation of VMT fees would occur at the state level or at the national level?

81 2. Should the trials be designed to provide information to support subsequent planning efforts and public debate about the implementation of VMT fees, or should the trials be designed to evolve directly to actual implementation (likely involving a preliminary period of voluntary adoption)? Table 6.1 indicates the appropriate selection of frameworks based on these questions. Table 6.1. Selection of a Framework for Organizing the Trials Goal of Trials Initial Implementation State level Federal level Inform planning, debate State framework Federal framework Evolve directly to implementation State framework* Market framework * with required modifications, such as the development of interoperability standards in advance of the trials, to allow state trials to evolve directly to implementation. The next chapter summarizes the responses from interview and workshop participants regarding more detailed questions about how to scope, structure, fund, manage, and conduct the trials and considers whether certain choices might vary depending on the preferred framework.