Road Usage Charge Legal Analysis (3)

Description:

RUC legal analysis involves determining how introducing a RUC could interact with existing state laws and what the consequences of such interaction are for potential RUC legislation. Known areas of potential legal impacts include determining if RUC would be a tax or fee; the potential need for bonding, privacy legislation, restrictions on how the revenue is used; restrictions on using vendors to collect taxes/fees for the state, local issues (such as the presence of any municipal fuel taxes); whether the RUC complies with the Commerce Clause and Due Process Clause of the United States Constitution; and potential enforcement measures.

Details:

A RUC legal analysis involves a legal review of the state, U.S., and local constitutions, laws, and regulations for any impacts on potential RUC legislation. Research areas include:

  • Should RUC be a tax or fee? This decision may vary by state. New taxes may require a supermajority majority vote in the legislature, but taxes may enable agencies to collect unpaid RUC through administrative levies without requiring legal action. Fees typically require a simple majority vote, but fees may place a greater burden on the state to prove how much is owed, and their usage/spending may be more constrained by law. This determination may also dictate which department or division administers the program.
  • What limitations or provisions for potential RUC enforcement mechanisms exist in state law?
  • Does the state have privacy laws? Will new privacy measures be needed for RUC?
  • Is the fuel tax bonded, and could RUC replace those bonds?
  • Are there, or should there be, any restrictions on RUC revenue usage—e.g., must it be used on transportation, or on roads only?
  • Are there any relevant local issues, such as a local gas tax, that could impact RUC legislation?
  • Are there any restrictions on using vendors to collect taxes/fees for the state?
  • Are there any other existing regulations that could impact RUC?
  • Does the RUC structure and rate unfairly advantage in-state residents over nonresidents?

Primary Uses:

Determine whether any areas need in-depth legal analysis. Prepare to compose RUC legislation.

Best Practices/Lessons Learned:

  • Begin a high-level RUC legal analysis early in the process to identify potential issues and constraints. A more detailed analysis can be conducted later to inform decision-making.
  • Whether RUC is referred to as a “tax” or a “fee” may vary from state to state. In Oregon, RUC is a tax; in Utah, it is a fee. This distinction may determine which agency will administer RUC.
  • Revenue usage and bonding are likely to follow how the gas tax is treated in the state.
  • Ensure that interstate commerce provisions are understood so that motor carriers from all states are given equal consideration during the design of the program.
  • Research commercial vehicle statutes to ensure that the application of RUC does not contradict the collection of motor vehicle fees and taxes, such as those involving the International Fuel Tax Agreement fuel taxes or International Registration Plan fees.

State Government Context and Assumptions:

A lawyer familiar with possible variations of RUC typically performs this task, sometimes in coordination with the state attorney general’s office. The attorney general may need to interpret the law that is eventually passed. The task can also be completed by the state attorney general’s office. Potential collection and enforcement authorities that can be consulted during this building block may include the department of revenue, the division of motor vehicles, or the state patrol.