Distance-Based Fees (DBF)

The Minnesota Distance-Based Fee (DBF) Demonstration – This demonstration project, which started in April 2020 and will end in March 2021,is testing how shared mobility and automated vehicles can levy their existing technologies to report the data necessary to calculate, assess, and collect a per-mile distance-based fee. 

The purpose of this demonstration is to provide (or prove) technical feasibility of reporting, assessing, and collecting a per-mile fee from Shared Mobility providers.  This demonstration may provide findings to support a larger statewide DBF program for individual motorists in the future. 

Two car-sharing companies, with more than 4000 customers, and a automated vehicle technology company are partnering with the Minnesota Department of Transportation (MnDOT) in this demonstration. Why? Because car-sharing, a form of shared mobility, provides a platform to explore a practical and implementable path toward wider deployment of distance-based user fees as a replacement for the motor fuel tax on appropriately equipped vehicles.

MnDOT seeks to develop a user-based fee model using existing embedded vehicle technology. This approach offers the advantage of enhanced fee collection efficiency, data privacy and security, and reduced fee avoidance. This project will prepare Minnesota for the convergence of shared mobility, such as car-sharing, with broad adoption of vehicle electrification and coming vehicle automation.

• Distance-Based Fee (DBF) – The per-mile charge being evaluated by MnDOT to support a more sustainable, flexible, and equitable transportation funding solution. It is also commonly called:  Mileage-Based User Fee (MBUF), Vehicle Mileage Tax (VMT), and Road Usage Charge (RUC).  All terms mean the same.  However, it’s important to understand that no money will change hands as part of this demonstration project.
• Research Team – The Research Team are those individual entities directly involved in the design, planning, deployment, and administration of the Minnesota Distance-Based Fee Demonstration. They include 1)  the demonstration sponsor, the Federal Highway Administration (FHWA), 2)  the demonstration manager, MnDOT, 3) the economic and financial advisor the Minnesota Department of Revenue (“MnDOR” or “Revenue”), 4)  the demonstration outreach and policy analysts the University of Minnesota Hubert H. Humphrey School of Public Affairs, and 5)  the demonstration designer, WSP USA.
• Shared Mobility Providers: Shared mobility refers to the shared use of a mode of transportation, such as a motor vehicle. Under this approach, consumers have the option of accessing motor vehicles on as-needed basis
• Carsharing – This is a subscriber model of car rental where people rent cars for short periods of time, often by the hour. It differs from traditional car rental in that the owners of the cars are often private individuals themselves, and the carsharing facilitator is generally distinct from the car owner. Carsharing is part of a larger trend of shared mobility.
• Taxpayers – Though no taxes are paid as part of this demonstration, the term “taxpayer” will be used to describe the entities that would be responsible for paying the DBF and other taxes if policymakers ever elected to use this approach in the future. For the purposes of the demonstration, the taxpayer is considered the shared mobility provider entity itself as they would be collecting the taxes from each carshare transaction. 
• Telematics – The technology within a vehicle that provides information that is the basis of the DBF collection. This information includes an identifier assigned to each vehicle and the number of miles each vehicle travels.  Other information such as location, fuel consumption, or other values can also be collected but for the purposes of this demonstration, only trip distance and vehicle identification are collected.  As the shared mobility providers are the vehicle owners, they are responsible for collecting, sanitizing, aggregating, and sharing the demonstration data with the research team. MnDOT may exercise the option to collect per-trip location data but that will require a separate notification and no personally identifiable information will be collected.  In newer vehicles, such as the vehicles used by shared mobility companies, telematics are typically installed at the factory, so do not need to be installed or retrofitted by shared mobility organizations or anyone else.  No personally identifiable information (PII) is shared between the shared mobility partners and the demonstration team.
• Automated Vehicle (AV) - A vehicle that is capable of sensing its environment using embedded sensors and computers such as radar, lidar, sonar, GPS, odometry and inertial measurement units, to perceive surroundings and move safely with little or no human input.
• Connected/Automated Vehicle (C/AV) – An automated vehicle that is considered “connected” to other vehicles, data analytics platforms, or other technologies using wireless communications infrastructure to transmit sensor data and receive commands and queries from other systems.
• Automated Vehicle (AV) versus Connected/Automated Vehicle (C/AV) – For the Minnesota Distance-Based Fee Demonstration, one subset of the demonstration includes an examination of how data can be collected using the embedded vehicle technologies within an Automated Vehicle, and then communicating that data for evaluation using connectivity to an existing cellular communications network. Given this, the term Connected/Automated Vehicle (C/AV) is used.
• Fee, Tax, or Charge – Though no money is changing hands as part of this demonstration project, these terms are typically used in the transportation finance world, and have distinct meanings, each with associated policy differences based on their use. For the purposes of the demonstration, “fees” are levied on each participating vehicle. 
• Fee Structures – A variable fee structure is currently being evaluated as part of a larger economic and revenue analysis by the Humphrey School. No actual fees are being assessed; however, the Humphrey School is performing economic modeling of how a variable fee structure could be used.  This information will be made available to policymakers to inform their future decisions about the advisability of adopting various variable fees.
• Privacy and Data Usage – All data collected for this demonstration from each shared mobility provider is sanitized by shared mobility organizations of any personally identifiable information, and aggregated, where individual trips are coalesced into a combined total mileage value, over each month of the demonstration. No individual trip data or individual shared mobility provider customer data is being provided to MnDOT. Other members of the Research Team are analyzing this sanitized and aggregated data for certain applications, such as economic forecasting, but no per-trip or specific location data is being collected.