The Association of Equipment Manufacturers is floating a proposal to supplement the Highway Trust Fund without raising the federal motor-fuels tax. The plan calls for two new user fees: one for those who drive on Interstate highways and the other for commercial trucks on non-Interstate federal-aid highways.

The fate of the AEM proposal is unclear. House and Senate committees are deeply into drafting new multi-year surface transportation bills, as the highway and transit program authorizations are set to expire on Sept. 30. But Senate lawmakers are searching for $12 billion over two years to fully fund a $109-billion, two-year proposal.

Ron DeFeo, Chairman and CEO of Terex Corp., Westport, Conn., called the AEM plan  "forward-looking," and says It "focuses the revenue and the repair on what most everyone will agree is the primary federal role--the Interstate--and would not add a single dime to our federal defi cit."

To develop a proposal, AEM turned to Jack Schenendorf, a former House transportation committee chief of staff, and now of counsel to the Washington law firm Covington and Burling LLP.

In a July 27 conference call with reporters, Schenendorf said that the envisioned new fees would be collected electronically, using an EZ Pass-type system. The "Federal Interstate User Fee,"  he added, "would be set at the level necessary to pay the federal share of the costs of preserving and modernizing the Interstate highway system on a system-wide sustained basis."

It would be a "pay as you build system," he adds, with motorists paying only for Interstate improvements needed by individual states.

At present, states typically "front" the funds for projects to get them under construction and seek reimbursement later for the federal government's share of those projects, which is typically 80% of their total price tags. 
The new fees would reimburse states for the funds they put up to cover the 80% federal share.

The interstate fees would go into a separate fund--not the Highway Trust Fund--and would be adjusted each year by an independent board.

As for AEM's  proposed "Federal Motor Carrier User Fee," would be imposed on commercial-truck usage of all non-Interstate highways. Proceeds would help finance truck-related projects, such as intermodal facilities and roads that provide access to seaports.

AEM says trucks wouldn't be charged twice for the same trip--the motor carrier fee would apply to trucks' non-Interstate trips. The truck fee would  go into a new account of the Highway Trust Fund.

Both fees would free up trust-fund dollars that now go to Interstate and truck-related projects so those funds could go for other types of highway and bridge projects, says Schenendorf, who also was vice-chair of the National Surface Transportation Policy and Revenue Study Commission. That panel released its recommendations in January 2008.


The Interstate fee would have different "tiers," with one rate for cars and another for trucks. It might also have further gradations, with higher rates for those riding on busy, congested urban Interstate sections and lower fees for those using Interstate routes in rural areas.  

Schenendorf developed the proposal for AEM with the help of Beth Bell, an associate at the law firm.

In a follow-up phone call, I asked Schenendorf how much the proposed fees would bring in. He said it's difficult to determine projected revenue, without knowing precisely how the feel would be structured.  

But Schenendorf noted that one possible option would be to base the Interstate fee on Interstate miles traveled. If the charge were a penny per mile, that would bring in $7 billion to $7.5 billion, he said.

That level of revenue would allow a substantial amount of trust fund spending on the Interstate to be shifted to other projects.  In 2008  federal funding obligations for Interstate projects totaled about $11.5 billion, he said.