RD387 - Permit Equity Study -- An Equitable Approach to Setting Permit Fees for Overweight Motor Vehicles - December 2011


Executive Summary:
This document reports the results of the study undertaken in 2011 in response to the enactment of Delegate Joe May’s House Bill 2022, which called upon the Department of Motor Vehicles (DMV) to:

"develop a uniform system of permitting for overweight and oversize vehicles and a comprehensive, tiered schedule of fees for overweight vehicles, taking into consideration the Virginia Department of Transportation’s research on the cost impact of damage to Virginia’s highways from overweight vehicles, the administrative feasibility of such fee structure, and the impact of such fee structure on the Commonwealth’s economic competitiveness."

Working in close consultation with the Virginia Department of Transportation (VDOT) and the Virginia Port Authority (VPA), and with additional input from the Virginia State Police (VSP), the Virginia Economic Development Partnership, and more than 100 stakeholders from state and local government and from the private sector, DMV examined Virginia’s current programs for issuing permits to overweight vehicles, compared these programs to those in other states, evaluated earlier studies regarding the damage overweight vehicles cause to transportation infrastructure, and developed a new schedule of overweight permit fees that recovers some of the cost of that damage, while preserving Virginia’s competitive position as a business-friendly state.

The Issue

Overweight vehicles are those that exceed the statutory limits either for the weight placed on any axle or axle grouping (axle weight), or for the weight of the vehicle and its load as a whole (gross weight). The purpose of these statutory weight limitations is to protect other motorists from roadway hazards and to preserve the capacity and structural integrity of the Commonwealth’s highways and bridges. A vehicle that exceeds the statutory weight limits may lawfully operate only by permit.

DMV is responsible for Virginia’s overweight permitting programs, and issues two basic types of permits for overweight vehicles:

• Overload permits. These permits are valid for one year (the term of a vehicle’s registration), and are available for any vehicle. They authorize the vehicle to exceed axle and gross weight limits by up to 5%. Currently, permits are offered for 1%, 2%, 3%, 4%, and 5% overloads.

• Hauling permits. These permits authorize the movement of an overweight (or oversize) vehicle either for a one- or two-year period on all unrestricted routes (a multi-trip permit), or for a single trip along a specific route (a single-trip permit).

Although hauling permits can authorize heavier weights than those allowed under overload permits, hauling permits are not issued to any and every vehicle. Rather, DMV generally will only issue the permit if the vehicle’s weight cannot be reduced to within the statutory maximums—i.e., it is an “irreducible load.” However, certain types of vehicles are exempt from this irreducibility requirement. These exempt vehicles—which include coal trucks, tank wagons, and vehicles hauling certain containerized freight, among others—are able to obtain multi-trip hauling permits even if their loads are reducible.

Overweight vehicles have generated considerable legislative interest in recent years. Since 2007, there have been 26 bills in the General Assembly addressing overweight vehicles. Many of these bills have specifically raised the issue of the damage to pavements, bridges, and other structures caused by such vehicles. It should be noted that overweight vehicles operating under a permit are not solely responsible for damage to roadways; all vehicles, including passenger cars, inflict some degree of damage on pavements, though for a passenger vehicle the amount of damage will usually be exceedingly small. In addition, vehicles illegally operating without a permit are also responsible for some damage, as are many heavy vehicles that operate within standard weight limits and thus are not required to obtain a permit (although these vehicles do pay weight-based registration fees). However, there is a nonlinear relationship between increases in axle weight and damage to pavement: the damage to pavement doubles, for example, when axle weight increases from 20,000 pounds to 24,000 pounds. (*1) For this reason, the most heavily loaded vehicles, and the fees they pay to use Virginia’s roadways, have come under particularly close legislative scrutiny.

House Bill 2022 in the 2011 Session of the General Assembly embodied the efforts of the Joint Commission on Transportation Accountability to integrate a number of these legislative initiatives into a single, comprehensive proposal. The bill called upon DMV to develop a uniform system of permitting for all types of overweight vehicles and a fee schedule that at least reflected, even if it did not fully capture, the cost impact of the damage such vehicles cause to infrastructure. Among other things, House Bill 2022 directed DMV to take into consideration VDOT’s recent research into the issue of infrastructure damage. That research, which staff at the Virginia Transportation Research Council (VTRC; now the Virginia Center for Transportation Innovation and Research (VCTIR)) had undertaken in response to legislation enacted in 2007 and 2008, included an analysis of data regarding the damage to infrastructure caused by vehicles’ weight, and the development of a method for measuring the cost of the damage an individual vehicle can be expected to cause to pavements, based on its axle weights and spacings. While this research was expected to serve as one point of reference in DMV’s study, House Bill 2022 also instructed the agency to keep in view two further considerations: the administrative feasibility of the proposed permit fees, and their impact on Virginia’s economic competitiveness.

The Study

Direction and oversight for the study was vested in an Executive Oversight Team, led by the DMV Commissioner and including representatives from the Office of the Secretary of Transportation, VDOT, VPA, and VSP. Staff from DMV and VDOT provided ongoing, day-to-day project management. More than 100 stakeholders from state and local government and from the private sector were brought together in a series of meetings, where they worked collaboratively with project staff to develop a permit fee schedule that, it was hoped, would be acceptable to a majority of those involved.

To facilitate work on the project, the subject matter of the study was broken into five areas:

• Hauling Permits Issued to Superload Vehicles. Superload vehicles are those carrying irreducible loads that, because of their extreme weight or size, require individual review and engineering analysis to determine their potential impact to infrastructure. Both single-trip and multi-trip hauling permits (including a 3-month multi-trip permit) are available for superload vehicles; however, multi-trip permits are generally available only for vehicles that fall within certain weight thresholds, and may authorize travel only over a limited number of specific routes.

• Hauling Permits Issued to Vehicles Hauling Coal, Gravel, Sand, or Crushed Stone. These vehicles are among those exempt from the statutory provisions that limit issuance of hauling permits to vehicles carrying irreducible loads. Vehicles are issued a multi-trip permit to haul coal, over distances of up to 85 miles within Virginia, from a mine or other place of production to a preparation plant, loading dock, or railroad. In addition, vehicles carrying overweight loads of gravel, sand, and crushed stone are authorized to move within those counties that impose a severance tax on coal or gas, provided the trip does not exceed a distance of 50 miles. Because the coal and gas severance taxes provide funds for the maintenance of roads and bridges in localities levying the taxes, the study group believed that coal trucks and vehicles hauling gravel, sand, and crushed stone warranted separate analysis.

• All Other Hauling Permits.

• Overload Permits.

• Permits Issued by Localities. Currently, 12 localities in Virginia issue overweight permits for vehicles operating on locally maintained roads. Permit requirements, issuance processes, and fees vary widely.

Subcommittees consisting of both project staff and stakeholders were formed to analyze the particular issues each of these groups of permits presented. Although DMV staff led each of the subcommittees, stakeholders in each subcommittee elected representatives to a Subcommittee Leadership Team that helped to coordinate work on the project and to ensure collaboration and consensus across subcommittees.

In developing and analyzing proposals for permit fees, project staff and stakeholders considered both the costs of damage as quantified in VDOT’s research, and the permit fees charged in other states, which formed the competitive landscape within which Virginia would have to operate in order to remain “open for business.” In most cases, considerations of economic competitiveness precluded fees that would recover the load-related cost of damage to infrastructure. However, it was generally agreed that fees for most permit types would be increased, that those increases would represent industry’s contribution to the recovery of costs for damage caused to pavements and bridges by overweight vehicles, and that the revenue generated by the fee increases would be dedicated to infrastructure maintenance and repair. It was also agreed that, where administratively feasible, heavier vehicles would be subject to higher permit fees, in accordance with House Bill 2022’s call for a “tiered schedule of fees.”

Along with changes to permit fees, the study produced agreements concerning a number of administrative process improvements, which all parties understood would be undertaken only if the proposed fee increases were enacted. By far the most significant of these agreements resulted from work undertaken in the subcommittee on permits issued by localities, where it was agreed that every county, city, and town that issues permits would be required to enter an agreement authorizing DMV to issue permits on its behalf (although the locality would also be able to continue issuing permits through its own offices). This proposal, like the other process improvements recommended below, would help to improve the efficiency and reduce the costs of doing business in Virginia.

The study concluded with the production of two documents: this report, and a draft of proposed legislation, included as an appendix to this report. Drafts of both the report and the legislation were shared with stakeholders, and each has been revised to address several of the concerns raised in their feedback.

Recommended Fees

For overload permits, it is recommended that permits authorizing 1%, 2%, 3%, and 4% overloads be eliminated, and that the fee for the 5% overload permit be raised from $200 to $250.

The recommended fee schedules for multi-trip and single-trip hauling permits [may be found on pages 5 and 6 of the report] (more detailed tables appear on pages 48-49)/

Other Recommendations

Along with the above fee schedule, the following items requiring legislative approval are also recommended:

• Authorize the issuance of multi-trip hauling permits to certain specialized vehicles used exclusively to haul farm animal feed, subject to the $130 annual fee recommended for other exempt vehicles.

• Eliminate the sunset date (currently July 1, 2012) for issuance of hauling permits to vehicles carrying gravel, sand, and crushed stone. The annual permit fee for these vehicles will be $70, as indicated in the above schedule of fees.

• Allow all holders of multi-trip hauling permits, whether for an overweight or an oversize vehicle, to transfer the permit to other vehicles, provided (a) that no more than two transfers are authorized in any 12-month period for each permit, and (b) that the vehicle to which the permit is transferred is subject to all the limitations (on weight, size, route, etc.) set forth in the permit as originally issued. An administrative fee of $10 would be charged for each transfer.

• Amend statutory provisions regarding the measurement of coal truck beds to allow interior volume to be determined by measuring the exterior of the bed. This change would greatly improve the safety of DMV staff who take these measurements.

• Amend statutory provisions regarding the maximum travel distance authorized by permit for certain heavy machinery (“unladen equipment”) used in the mining and construction industries. Currently, such permits limit travel to no more than 35 miles; however, VDOT staff believe that it would be reasonable to allow trips of up to 75 miles.

• Require every locality that issues overweight permits to enter into a memorandum of understanding with DMV stipulating the requirements the locality would need to satisfy prior to issuing permits, and authorizing DMV to issue certain permits on the locality’s behalf.

If the fee schedules and other recommendations listed above are enacted, then it is further recommended that DMV, VDOT, and localities begin taking the administrative steps necessary to offer the following process improvements:

• Combining oversize permits for vehicles with 9-, 12-, and 14-feet widths, to improve operational efficiency for industry and for DMV by reducing the paperwork that drivers and administrative staff must deal with.

• Including multiple axle groupings on a multi-trip hauling permit, also to improve operational efficiency.

• Issuing multi-trip hauling permits that are valid for interstate travel only, which would reduce administrative burdens and overall costs for some carriers. (Fees for these permits would be the same as for any other multi-trip permits.)

• Amending DMV’s manual regarding size, weight, and equipment requirements to clarify that a vehicle may carry both an oversize and an overweight permit.

• Allowing carriers to obtain 5% overload permits online for every type of vehicle, not just for vehicles registered under the International Registration Plan (IRP), as is currently the case.

• Reformatting VDOT’s list of restricted structures issued to holders of overweight permits, to include separate sections containing additions to and deletions from the list. In addition, VDOT will offer a hyperlinked map of structure restrictions on its public web site, which would provide drivers with clearer and timelier information to help them plan their routes. DMV and VDOT will work with law enforcement to provide information and education regarding the documents amending the structure restriction list.

• Improving communications about VDOT’s process for issuing permits to unladen equipment, evaluating the possibility of emergency and after-hours issuance of those permits (for an additional fee), examining the feasibility of route-specific multi-trip permits for unladen equipment, and developing a process for pre-permitting these vehicles.

• Offering permits for localities via DMV’s online platform.

• Development of “designated access route permits” for carriers who do not need a permit that covers all city or county roads, but only wish to travel on specific, commercially significant routes within a locality.

Additional recommendations regarding several out-of-scope issues raised in the course of the study are included in section 3.5 of the full report.

Fiscal Impact of Recommendations

DMV worked with the Department of Taxation (TAX) to estimate the revenue impact of the recommended permit fees. Using as a baseline hauling permit data from FY 2010 and overload permit data from June 2010 through May 2011, TAX and DMV estimated that the proposed fees would nearly double the amount of annual revenue generated by overload permits and by hauling permits issued to overweight vehicles, from approximately $5.2 million to approximately $10.1 million. Revenue for VDOT would rise by an estimated $4,797,420, from $3,253,895 to $8,051,315. However, VDOT would redistribute to localities a portion of the approximately $750,000 in new revenue generated by exempt permits (see note 2 on page 5, and the discussion in section 2.2.3 of the report). Revenue for DMV would rise by an estimated $136,870, from $1,917,580 to $2,054,450.

The study team also asked agencies affected by the recommended fees and process improvements to estimate the implementation costs they would incur. Representatives from VPA and VSP indicated that they did not believe the study recommendations would result in any additional costs for their agencies. A preliminary estimate from VDOT indicated a cost of $25,000 to develop a web-based mapping interface on its public website showing restricted structures. DMV’s preliminary estimate indicated a total cost of $235,500 to modify the agency’s systems to accommodate the new permit structure and process improvements. The additional revenue generated for DMV under the recommended fee structure would provide funds needed for these system modifications.
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(*1) Virginia Transportation Research Council, “A Review of the Current Overweight Permit Fee Structure in Virginia (HB 1551),” a report presented to the General Assembly, November 2008, 3.