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What: The Federal Highway Administration (FHWA) is initiating a review of its motor-fuel reporting structure (Chapter 2 of Guide to Reporting Highway Statistics). As part of this review, FHWA is seeking information from State data reporters and other experts in this subject matter, including the American Association of State Highway and Transit Officials (AASHTO) and the Federation of Tax Administrators (FTA). FHWA will consider this information and other information as background to make improvements to the current reporting structure, and for inclusion in future instructions to the States for reporting motor-fuel data.
Why: The current motor-fuel reporting structure has served apportionment and information needs very well. However, the more extensive use of motor fuel data for apportionments under Federal legislation suggests that up-dating and improving the current reporting structure is necessary. While improvements in the current structure have been made, a number of reporting issues remain imperfectly resolved.
Who: The participants would include State subject matter experts from both transportation and revenue areas as well as AASHTO, FTA and others. FHWA Headquarters and field staff would also participate.
When: The following is a tentative timetable:
General - The motor-fuel data provided by the States to the Federal Highway Administration (FHWA) is widely considered to be the most complete and accurate information on highway gasoline and diesel fuel available from any source. These statistics are used extensively by FHWA, the Department of Energy (DOE), other Federal agencies, States, and others to monitor the demand for, and distribution of, petroleum products. Fuel use is of interest not only in terms of gallons consumed, but also in terms of revenues generated by taxes on fuels. Taxes on motor-fuel at both the Federal and State level are a primary source of highway funds. In 1997, Federal and State highway user taxes funded more than 60 percent of the national highway program. Motor-fuel taxes account for about three-fourths of that amount. Fuel consumption is also used as a key analytical input for important transportation and economic indicators such as travel, fleet fuel efficiency, etc.
Because the FHWA data is collected monthly, it importance can be magnified in times of crises. Fuel crises can arise quickly and without warning. In these situations, FHWA monitoring of fuel on a monthly basis provides one of the most timely sources of data on motor fuel use changes. Both DOE and FHWA depend on this source of data in times of fuel emergencies.
Since FY 1984, motor-fuel data has also been used in the apportionment of Federal-aid highway funds. Currently, State-reported highway motor-fuel data is used to attribute Highway Trust Fund estimated tax payments of gasoline, gasohol, and special fuel tax payments of highway users, and to attribute estimated payments of truck tire, heavy vehicle use, and truck and trailer sales taxes, in each State (the methodology was published in the Federal Register on June 21, 1985 and described in Highway Information Updates of July 29, 1996 and August 10, 1998 -- a copy of the 1998 Update is attached).
Under the Transportation Equity Act for the 21st Century (Public Law 105-178) (TEA-21), selected items from these data are used in the apportionment of Federal Surface Transportation Program funds, National Highway System funds, Interstate Maintenance funds, and the Minimum Guarantee calculation. The following shows the use of these factors in FY 1998:
The Minimum Guarantee analysis, which ensures that States receive at least 90.5 percent of their Highway Trust Fund percent contribution was funded at almost $5.4 billion in FY 1998. The increased importance of motor fuel data in determining these factors suggests that FHWA continue to re-assess and improve its motor-fuel reporting procedures.
Earlier FHWA Improvements - FHWA continuously seeks to improve its data series to reflect the general state-of-the-art in data collection and analyses, and to meet evolving demands made on the data. In anticipation of Federal re-authorization legislation that would make more extensive use of the motor-fuel legislation, FHWA took a number of steps to ensure the quality and consistency of the data. These include several notices to the FHWA field advising of possible changes, issuance of new guidelines for FHWA field review of State motor-fuel reporting, and sponsorship of three major training sessions which reached more than 100 State data providers and FHWA field staff in 30 locations.
Goals - Based on feedback from the States and FHWA's own analyses, a number of reporting issues have been identified. FHWA, in cooperation with its partners in the States and others, proposed to re-assess its motor-fuel data series with the following objectives in mind:
Data Issues - FHWA, and the States, have identified a number of issues and areas where additional and improved discussion, instructions, and advise to the States may result in improved reporting. Those issues identified by FHWA and the States as most important are listed below. This list may be expanded as needed.
Background
TEA-21 provides that 30 percent of National Highway System funds be apportioned on "total diesel fuel used on highways" (Section 1103 b). Thus, a chief purpose of State motor-fuel reporting and FHWA motor-fuel analyses is to develop data (either reported, or modeled if necessary) on highway use of motor-fuel for attribution of Federal funds and for publication in tables in Highway Statistics. Ideally, FHWA would include actual public (government) use of diesel fuels as part of highway use.
Current Situation
Because most States cannot separately identify public use of diesel motor-fuel, FHWA has chosen to show only private and commercial diesel fuel in its consumption tables. This choice is, in part, dictated by a desire to treat all States equitably.
Possible Improvements
FHWA's reporting structure is not capturing public use of diesel motor-fuel. Some States may be inadvertently including public use of diesel in their reports to FHWA. Is there a way to capture public use of diesel in FHWA reports from all States? Do we need to estimate public use of diesel using statistical modeling techniques?
Background
Inventory losses of motor fuel for tax accounting purposes include occurrences such as storage tank leakage, destruction by fire or other means, spillage, meter faults, and measurement differences due to temperature and evaporation (often called shrinkage, but could be a gain in volume). An important objective of FHWA motor-fuel analyses is to show an accurate, consistent picture of highway use of motor-fuel for all States net of losses, because losses are not motor fuel consumption on the highway.
Current Situation
A number of States allow a flat percentage loss for gasoline, and some States allow for actual losses for tax accounting inventory. Currently, for those States that allow a flat percentage for losses, FHWA caps the loss at one percent of gross fuel reported. FHWA does not adjust or modify data for States that do not allow losses. This treatment might allow for minor "advantage" (higher total gallons) to those States that do not allow losses.
Possible Improvements
Two issues exist: should FHWA allow for losses at all? If yes, what percentage should be allowed, an FHWA-set flat percentage, whatever a State allows, or some other option?
Background
Alternative fuels are likely to be a growing segment of the motor fuel industry. Over the long term, alternative fuel growth could significantly skew motor fuel data as it is currently reported. FHWA would like to be able to recognize the highway use of various alternative fuels such as liquefied petroleum gases (LPG), liquefied natural gases (LNG), and compressed natural gas (CNG), in motor fuel reporting.
In the attribution of motor fuel data, gallons have been the traditional unit of measure of motor fuels, but many alternative fuels are compressed gases which must be measured in other units. The energy content of the alternative fuels, and their variance from traditional motor fuel energy content, also causes concern for motor fuel attribution.
Current Situation
Many States provide for the issuance of decals to vehicles that use alternative fuels. While receipts associated with these decals are reported on FHWA-556, no "credit" for highway use is shown in FHWA consumption tables.
Possible Improvements
How can the reporting of highway use of alternative fuels be improved in the near term? How can the reporting of highway use of alternative fuels be improved in the long term?
Background
Since diesel fuel has become a direct legislative apportionment factor, FHWA would like to have more precise diesel motor-fuel data. Historically, FHWA has allowed States to report receipts for diesel fuel together with the receipts for small amounts of "other special fuels, and called the combined total "special fuels." These "other special fuels" include, in order of prevalence (most to least prevalent) LPG, CNG, LNG, 85 percent alcohol mixtures, and still other fuels.
Current Situation
Because the amounts of "other special fuels" are estimated to be very small (about 2 percent), and many States cannot separately identify them, FHWA has administratively determined that "special fuels" means the same thing as "diesel fuel."
Possible Improvements
What type of effort would be needed to dis-aggregate the special fuels
from diesel fuel?
Issue: Accounting for Motor Fuel Sold on Indian Reservations
Background
Several States have problems reporting motor fuel sold on Indian reservations where no treaty exists between the State and the Indian tribe. In these cases, the gallons and associated revenues are not reported to FHWA, and the State attribution is therefore lower than it should be.
Current Situation
FHWA would prefer States to report gasoline motor-fuel sold on Indian reservations along with other motor-fuel sold in the State.
Possible improvements
What remedies exist for attributing motor fuel use for States without treaties and not able to report Indian Reservation use.
Background
The International Fuel Tax Agreement (IFTA) is a motor fuel accounting process now used in all States whereby motor carriers pay motor fuel taxes to their Base State (typically the State where the carrier's business headquarters is located) and report distances traveled in all States in which the motor carrier operates. On a quarterly basis, the States adjust tax revenues among themselves to allocate motor carrier tax revenue to the State in which the travel took place. It is not clear that all States are making appropriate adjustments to report IFTA amounts on a net basis -- that is, adding in credits for gallons (and revenues received) from other States, and subtracting out credits for gallons (and debiting out receipts) sent to other States.
Current Situation
FHWA would like States to correctly report net IFTA motor-fuel gallons and receipts.
Possible Improvements
FHWA needs to do a better job of educating States on the importance of incorporating adjusted IFTA data into their FHWA reports.
Background
Assessments are taxes which the State determines, through audits or other reviews of taxpayer returns, that the taxpayer owes and did not previously report and pay. The fuel volume represented by assessments or late returns should be reported.
Current Situation
The current version of the Guide calls for reporting the fuel volume represented by assessments or late returns in the month in which payment is received, or on the first FHWA-551M submitted following the month in which this information becomes available. Assessments, however, are often delayed several months or years while lengthy appeals procedures are pursued. Some assessments are never fully collected because of non-recovery due to fraud cases, bankruptcy of the liable party, or other situations.
Possible Improvements
Gallons from audit assessments should be reported in the month collected, since it is unrealistic to adjust reports that may be many months or years old. Actual collections should be reported to assure that the appeals procedures are exhausted and the assessment is ultimately sustained before being included in the gallons reported. Assessments that cannot be collected should not be reported.
Other
Other issues not discussed above include timeliness of reporting, uniformity of motor fuel and tax accounting definitions, military use of motor-fuel, estimation procedure, exempt and refunded fuels, and cross border purchases of fuel with the associated potential for tax avoidance.
Conclusion
FHWA recognizes its partnership responsibilities to State data providers with respect to training, soft-ware, and instructions -- and will seek to work with this Committee to advance the quality of the data reported.
