DAR File No. 43847

Transportation, Program Development

Rule R926-17

Road Usage Charge Program

Notice of Proposed Rule

(New Rule)

DAR File No.: 43847
Filed: 07/01/2019 10:41:46 AM

RULE ANALYSIS

Purpose of the rule or reason for the change:

This new rule is to administer the state's road usage charge program.

Summary of the rule or change:

This new rule establishes procedures the Department of Transportation (Department) will follow when administering the state's road usage charge (RUC) program in accordance with the RUC program established by Section 72-1-213. The RUC program is a mileage-based revenue system intended to function as an alternative to the fuel tax.

Statutory or constitutional authorization for this rule:

• Section 72-1-213.1

Anticipated cost or savings to:

the state budget:

This proposed new rule will lead to a fiscal impact on the state's budget. The fiscal note that accompanied S.B. 72 passed in the 2019 General Session (Utah Laws Ch. 479), estimates establishing the RUC program, of which this new rule is a part, may cost the Department $870,000 from the Transportation Fund in FY 2020, and $115,000 ongoing from the Transportation Fund beginning in FY 2021 to pay a private vendor to manage RUC accounts, and it could cost the Department $120,000 ongoing from federal funds beginning in FY 2021 to operate the RUC program.

local governments:

This new rule will not lead to a fiscal impact on local governments. Local governments are exempt from fuel taxes and RUC fees.

small businesses:

This new rule, employed in conjunction with new Rule R940-8, which establishes procedures the Transportation Commission (Commission) will follow when setting RUC rates, may lead to a fiscal impact on businesses in Utah, which may be a net savings. Businesses that decide to use alternative fuel vehicles for business purposes and participate in the RUC program will have the option of paying a flat fee annually, which is set by the Tax Commission and not set by this rule, or participate in the RUC program and pay 1.5 cents per mile driven up to an amount equal to the amount of the flat fee. If the flat fee is set at $150, a vehicle will need to travel 10,000 miles to be assessed a $150 RUC. RUC participants will not be assessed a RUC for miles traveled in excess of 10,000. RUC participants that travel less than 10,000 miles in a year will realize a net savings compared to paying the flat fee. (EDITOR'S NOTE: The proposed new Rule R940-8 is under Filing No. 43846 in this issue, July 15, 2019, of the Bulletin.)

persons other than small businesses, businesses, or local governmental entities:

This new rule, employed in conjunction with new Rule R940-8, which establishes procedures the Commission will follow when setting RUC rates, may lead to a fiscal impact on individuals in Utah, which may be a net savings. Individuals that decide to use alternative fuel vehicles for business or personal purposes and participate in the RUC program will have the option of paying a flat fee annually, which is set by the Tax Commission and not set by this rule, or participate in the RUC program and pay 1.5 cents per mile driven up to an amount equal to the amount of the flat fee. If the flat fee is set at $150, a vehicle will need to travel 10,000 miles to be assessed a $150 RUC. RUC participants will not be assessed a RUC for miles traveled in excess of 10,000. RUC participants that travel less than 10,000 miles in a year will realize a net savings compared to paying the flat fee.

Compliance costs for affected persons:

No individual or business in Utah will face compliance costs because of this new rule. This new rule establishes procedures the Department will follow when administering the state's RUC program in accordance with the RUC program. It does not require anything from any individual or business.

Comments by the department head on the fiscal impact the rule may have on businesses:

This new rule will not have a fiscal impact on businesses.

Carlos Braceras, Executive Director

The full text of this rule may be inspected, during regular business hours, at the Office of Administrative Rules, or at:

Transportation
Program Development
CALVIN L RAMPTON COMPLEX
4501 S 2700 W
SALT LAKE CITY, UT 84119-5998

Direct questions regarding this rule to:

• Christine Newman at the above address, by phone at 801-965-4026, by FAX at 801-965-4338, or by Internet E-mail at cwnewman@utah.gov
• James Palmer at the above address, by phone at 801-965-4000, by FAX at 801-965-4338, or by Internet E-mail at jimpalmer@utah.gov
• Linda Hull at the above address, by phone at 801-965-4253, by FAX at , or by Internet E-mail at lhull@utah.gov
• Josh Dangel at the above address, by phone at 269-217-7091, by FAX at , or by Internet E-mail at jdangel@utah.gov

Interested persons may present their views on this rule by submitting written comments to the address above no later than 5:00 p.m. on:

08/14/2019

This rule may become effective on:

08/21/2019

Authorized by:

Carlos Braceras, Executive Director

Appendix 1: Regulatory Impact Summary Table*

Fiscal Costs	FY 2020	FY 2021	FY 2022
State Government	$870,000	$235,000	$235,000
Local Government	$0	$0	$0
Small Businesses	$0	$0	$0
Non-Small Businesses	$0	$0	$0
Other Person	$0	$0	$0
Total Fiscal Costs:	$870,000	$235,000	$235,000
Fiscal Benefits
State Government	$0	$0	$0
Local Government	$0	$0	$0
Small Businesses	$0	$0	$0
Non-Small Businesses	$0	$0	$0
Other Persons	$0	$0	$0
Total Fiscal Benefits:	$0	$0	$0
Net Fiscal Benefits:	$(870,000)	$(235,000)	$(235,000)

 

*This table only includes fiscal impacts that could be measured. If there are inestimable fiscal impacts, they will not be included in this table. Inestimable impacts for State Government, Local Government, Small Businesses and Other Persons are described in the narrative. Inestimable impacts for Non-Small Businesses are described in Appendix 2.

 

Appendix 2: Regulatory Impact to Non-Small Businesses

1) This is a proposed new rule. It establishes procedures the Utah Department of Transportation (UDOT) will follow when administering the state's road usage charge (RUC) program in accordance with the RUC program established by Section 72-1-213. The RUC program is a mileage-based revenue system intended to function as an alternative to the fuel tax.

 

2) The RUC is a user fee based on the number of miles driven instead of the gallons of fuel consumed. Similar to utilities, drivers pay for what they use. It is a potential replacement for the gas tax. In the 2018 General Session, S.B. 136 was passed by the Legislature which directed UDOT to implement a RUC program for alternative fuel vehicles by January 1, 2020. This new rule is necessary to implement and administer the RUC program.

 

3) The RUC system is a voluntary program that alternative fuel vehicle owners may opt into at the time of their annual registration renewal instead of paying a flat fee. Participants sign up with a third-party account manager that collects data and reports miles driven to the account manager using in-vehicle technology the account manager provides. Participants place a credit card on file and set up a pre-paid wallet from which mileage fees are deducted periodically. Payment of the per-mile fee stops once the accumulated total for the year is equal to the annual flat fee. The account manager provides a phone app or other method for submission of an odometer capture photo at enrollment and a yearly "true-up" photo to make sure that mileage on file corresponds to actual odometer readings. Participation in the program is not mandatory. People with privacy concerns may opt for limited data retention or pay the flat fee.

 

4) UDOT will coordinate with the Division of Motor Vehicles (DMV) and the account manager to notify owners or lessees of alternative fuel vehicles that they are eligible to enroll in the program as an alternative to paying the flat fee applicable to their vehicle. UDOT will provide a means of directing owners/lessees who want to enroll in the program to an account manager under contract with UDOT that will manage all aspects of enrollment in the program.

 

5) This new rule, employed in conjunction with new Rule R940-8, which establishes procedures the Transportation Commission (Commission) will follow when setting RUC rates, may lead to a fiscal impact on businesses and individuals in Utah, which may be a net savings. Businesses and individuals that decide to use alternative fuel vehicles for business or personal purposes and participate in the RUC program will have the option of paying a flat fee annually, which is set by the Legislature administered by the Tax Commission and not affected by this rule, or participate in the RUC program and pay 1.5 cents per mile driven up to an amount equal to the amount of the flat fee. If the flat fee is set at $150, a vehicle will need to travel 10,000 miles to be assessed a $150 RUC. RUC participants will not be assessed a RUC for miles traveled in excess of 10,000. RUC participants that travel less than 10,000 miles in a year will realize a net savings compared to paying the flat fee.

 

6) The executive director of UDOT, Carlos Braceras, has reviewed and approves this analysis.

 

 

R926. Transportation, Program Development.

R926-17. Road Usage Charge Program.

R926-17-1. Purpose and Authority.

(1) Purpose. This rule is to administer the State's Road Usage Charge Program.

(2) Authority. Utah Code Section 72-1-213.1 grants the Department authority to promulgate this rule.

 

R926-17-2. Definitions.

(1) "Account manager" means an entity under contract with the Department to operate and manage the road usage charge program on its behalf.

(2) "Alternative fuel vehicle" means the same as that term is defined in Section 41-1a-102.

(3) "Chargeable miles" means the number of miles for which the RUC participant will be charged under the program parameters in place at the time the miles are driven.

(4) "Department" means the Utah Department of Transportation.

(5) "DMV" means the Utah Division of Motor Vehicles.

(6) "Flat fee" means the additional registration fee applied to alternative fuel vehicles as defined in Utah Code Subsections 41-1a-1206(1)(h) and 1206(2)(b).

(7) "Payment period" means the interval during which an owner/lessee is required to report mileage and pay the appropriate RUC fee according to the terms of the program.

(8) "Program" means the RUC program established and described in this section.

(9) "RUC" means "road usage charge".

(10) "RUC fee" means the accrued amount owed to an account manager. It is calculated as the number of chargeable miles driven multiplied by the RUC rate.

(11) "RUC participant" means the owner or lessee of an alternative fuel vehicle that is enrolled in the program.

(12) "RUC rate" means the amount of money per mile driven that RUC participants are required to pay, and which has been approved by the Transportation Commission to be used in the program.

(13) "Value-added services" means amenities that an account manager may want to offer RUC participants, but which are ancillary to the core RUC purpose of collecting and reporting miles driven.

 

R926-17-3. Enrollment, Voluntary Withdrawal and Removal Processes and Terms.

(1) The Department will coordinate with the DMV and the account manager to notify owners or lessees of alternative fuel vehicles that they are eligible to enroll in the program as an alternative to paying the flat fee applicable to their vehicle.

(2) The Department will provide a means of directing owners/lessees who want to enroll in the program to an account manager under contract with the Department that will manage all aspects of enrollment in the program.

(3) Owners/lessees who want to enroll in the program must submit vehicle information that includes the license plate number and vehicle identification number (VIN) to the account manager for verification that the participant's vehicle is eligible for enrollment in the program.

(4) RUC participants may withdraw a vehicle from the program at any time.

(5) RUC participants who withdraw a vehicle prior to full completion of the current annual registration cycle must pay the flat fee amount applicable to that vehicle, less any RUC fees paid to date during that registration cycle.

(6) The process for withdrawing from the program prior to completion of a full registration cycle is as follows:

(a) RUC participant notifies the account manager that they wish to withdraw from the program.

(b) RUC participant fulfills any terms in their user agreement related to return of electronic mileage collection devices.

(7) RUC participants who complete a full registration cycle prior to withdrawing from the program, and have accrued a RUC fee amount less than the applicable annual flat fee, will not be required as a condition of withdrawal to pay the difference between the flat fee amount and the RUC fees they have already accrued.

(8) RUC participants who withdraw after completing their full registration cycle will revert to paying the flat fee to the DMV until such time as they opt into the RUC program again.

(9) Involuntary removal of RUC participants from the program is addressed in Section R926-17-8.

 

R926-17-4. RUC Participant Payment Methods, Periods, and Procedures.

(1) RUC participants must provide electronic payment information and set up a prepaid wallet at enrollment. The wallet value will decrease as the value of miles accrues against the balance. A nominal amount, which will be agreed to by the RUC participant and account manager and stated in the user agreement, will be added by the RUC participant to the wallet once the balance drops below a predetermined minimum threshold.

(2) Only electronic payments will be accepted.

(3) Account managers will send RUC participants a monthly statement showing at a minimum miles driven, RUC fees accrued, and amount of money added to the wallet during the previous month.

(4) Account managers will cease accruing RUC fees against a vehicle once the cumulative amount accrued for the current registration cycle is equal to the flat fee applicable to that vehicle type. Fee accrual will resume at the beginning of the next registration cycle if the RUC participant remains in the program.

(5) Once a RUC Participant's total accrued RUC fee for the year is equal to their flat fee, the RUC Participant will no longer accrue additional RUC fees until the beginning of their new registration cycle if they remain in the program.

(6) Penalties for violation of terms and conditions, if applicable, may still result in accrual of fees against a RUC participant's account even after the annual mileage cap has been reached.

 

R926-17-5. Mileage Reporting Mechanism Standards.

(1) Account managers may offer various reporting mechanisms to RUC participants for collection of their mileage. All mechanisms must be approved by the Department prior to use by account managers.

(2) Such mechanisms may include but are not limited to devices installed in cars, smartphone applications, embedded telematics, and odometer image capture. For mechanisms such as OBD-II devices and embedded telematics that may be able to support mileage collection either through location tracking or a simple report of the odometer reading, the Department may dictate its preferences through account manager contract terms.

(3) Mileage reporting mechanisms will be capable of automatically transmitting mileage data directly to an account manager through wireless means. The program may not provide for any manual reporting of mileage by RUC participants.

(4) The Department may dictate mileage aggregation and reporting frequencies (e.g. hourly, daily, monthly) through account manager contract terms.

 

R926-17-6. Privacy and Data Sharing Processes and Procedures.

(1) All aspects of program operations will comply with the statutes related to privacy found in Utah Code Sections 63G-2-305 and 77-23c-102.

(2) An account manager must explain activities involving collection and storage of location data to RUC participants as part of the enrollment process.

(3) User agreements between account managers and RUC participants, must be approved by the Department prior to use and must require explicit consent for collection and storage of RUC participants' location data.

(4) RUC participants will be able to view their data being collected and stored by the account manager. They may also dispute mileage charges that they consider to be erroneous.

(5) RUC participants' location data and personal information is protected from public disclosure by the Government Records Access and Management Act (GRAMA).

 

R926-17-7. Security Processes and Procedures.

The account manager will process all card payment data and transactions in accordance with the Payment Card Industry Data Security Standard (PCI DSS), which applies to the electronic payment card industry as a whole. Automated clearing house payment data and transactions will be processed according to the rules published by the National Automated Clearing House Association (NACHA), which apply to the electronic payment card industry as a whole.

 

R926-17-8. User Agreements Between Account Managers and RUC Participants.

(1) The Department must approve user agreements used by account managers to enroll RUC participants prior to usage of those agreements.

(2) The user agreement will clearly explain location tracking, data retention, and privacy protection components of the program. It will also require explicit consent on the part of the participant to accept any terms related to tracking and retention.

(3) The user agreement will include but is not limited to the following components:

(a) Mileage reporting mechanism to be used for the vehicle being enrolled and commitment from the RUC participant to keep the mechanism operable at all times so that no interruptions in data collection and transmission occur.

(b) Electronic payment mechanism chosen by the RUC participant, consent to have a bank account or credit card debited when the wallet balance drops below a defined minimum threshold, and commitment to keep payment information current while enrolled in the program.

(c) Refund procedures for situations where a RUC participant completes a full registration cycle within the program but does not accrue enough mileage charges to consume the entire flat fee, thus leaving a positive wallet balance.

(d) Requirements, if any, for return of mileage reporting devices to the account manager after a RUC participant is no longer enrolled.

(e) Length of time that raw location data will be retained by the account manager.

(f) Information about how data may be aggregated, anonymized, or shared.

(g) Process for RUC participants to view their collected data and lodge a dispute if they believe charges have accrued to their accounts erroneously.

(h) Processes and consequences of withdrawal from the program both prior to and after full completion of the current annual registration cycle applicable to the enrolled vehicle, as detailed in Section R926-17-3.

(4) The user agreement will explain penalties associated with violation of its terms. Failure to comply with terms such as payment of RUC fees, return of devices (or payment for lost devices), or intentional tampering with mileage reporting mechanisms may result in the following enforcement actions:

(a) An initial warning about the violation and steps for becoming compliant.

(b) A penalty fee, which will be agreed to by the RUC participant and account manager and stated in the user agreement, will be assessed to the RUC participant's electronic wallet if a warning doesn't result in compliance.

(c) Billing of the RUC participant's electronic wallet for all outstanding fees owed and removal from the program if compliance is still not achieved after penalty assessment.

(d) Notification by the account manager to the DMV that a former RUC participant has unpaid fees owed to the account manager, and subsequent placement of a registration hold by the DMV on the formerly enrolled vehicle if the RUC participant's electronic payment information is invalid or does not have enough balance to successfully pay the total fees owed. Former RUC participants with registration holds assessed will be required to successfully settle their RUC account with the account manager prior to having the hold released by the DMV and being able to register the vehicle again.

 

R926-17-9. Contractual Terms Between the Department and Account Managers.

(1) The Department will provide account manager oversight through a contractual relationship governing what the account manager is authorized to do on behalf of the Department.

(2) Contracts between the Department and account managers will contain, at a minimum, guidelines for the following:

(a) RUC participant enrollment, withdrawal, and removal processes.

(b) Structure and content of user agreements between account managers and RUC participants.

(c) Descriptions of mileage reporting mechanisms that account managers are authorized to offer to RUC participants.

(d) Payment collection, transaction processing, and revenue remittance protocols.

(e) Stipulation that any value-added services offered by an account manager must be approved by the Department prior to use by RUC participants.

(f) Privacy and security protection processes, including parameters for data collection, retention, destruction, anonymization, aggregation, and sharing.

(g) System testing and certification approach.

(h) Customer service level expectations and performance standards.

(i) Requirements for coordination and interfacing with the DMV.

(j) Reporting of data collected through the program.

(k) Audit procedures for verifying account manager performance in areas such as privacy protection, data destruction, data collection accuracy, and remittance of funds to the State.

(l) Remedies available to the Department if an account manager fails to fulfill contractual terms.

 

KEY: road usage charge (RUC), alternative fuel vehicles, RUC program

Date of Enactment or Last Substantive Amendment: 2019

Authorizing, and Implemented or Interpreted Law: 72-1-213.1