New Report Calls for Top-Down Mileage Fee Program

My Reason colleagues and I have long argued that per-gallon fuel taxes should be replaced by mileage-based user fees (MBUFs). I served on the Transportation Research Board committee that alerted the transportation community to the looming decline of fuel tax revenues, in 2006. My colleague Adrian Moore served on the National Surface Transportation Infrastructure Financing Commission (NSTIFC) that assessed a range of alternatives and concluded that per-mile charges were the best replacement (2009). Adrian went on to help found the Mileage-Based User Fee Alliance, which has encouraged a growing array of state and multi-state pilot projects to test various ways of recording and reporting miles traveled so that the miles can be charged for.

Now the former chairman of the NSTIFC, Rob Atkinson, has released a new report on this important subject. “A Policymaker’s Guide to Road User Charges” restates the case for charging by the mile, debunks several misconceptions about MBUFs, and then proposes a federal effort to implement per-mile charging, with the idea that states could then piggy-back on the federal system to collect state-specific MBUFs to replace their state fuel taxes.

While I disagree with some of what Rob advocates, this report makes a major contribution by showing that many concerns about MBUFs are not supported by the facts. One of the most important is the idea that a system using GPS would “track” everywhere the vehicle goes. He points out, correctly, that GPS is a one-way system: it enables the car to knowwhere it is at all times, but the GPS satellite and its operators do not know. The basic concept is that an on-board unit on the vehicle would total up the miles driven (and which states those miles occurred in) and transmit the totals to the relevant jurisdictions (e.g., New York and New Jersey) so each can levy per-mile charges.

Another oft-heard concern is that because rural residents drive longer distances, they would be made worse off by a miles-charged system. Drawing on research from Rand Corporation and others, Rob’s report explains that rural residents tend to own older, gas-guzzling vehicles compared with urban residents, so most of them would be better off paying by the mile rather than by the gallon. Detailed TRB research papers bear this out. Similar data call into question the equity argument; Rob reminds us that lower-income households tend to drive older, less fuel-efficient vehicles compared with wealthier people. Like rural residents, most low-income urban-area residents would be better off paying by miles driven than by gallons used.

The above points depend, of course, on MBUFs replacing federal and state fuel taxes, rather than being charged in addition to them. And this is where I start to differ from Rob’s top-down, federal mandate as the best way forward. Specifically, he would like Congress to charge the US Department of Transportation to establish a federal MBUF, starting with imposing this on trucks. The next step would be to impose on auto manufacturers the inclusion of a GPS-based on-board unit for per-mile charging in all new vehicles. As older vehicles are scrapped and replaced by new vehicles (over perhaps 20 years), all vehicles would eventually be paying the federal MBUF. States would be free to opt into the federal system, adding a state MBUF to be collected by the same on-board units required in all trucks and all new personal vehicles.

As a strategy for winning hearts and minds to this huge paradigm shift, I think this is exactly backward. The large majority of the public thinks a GPS system is Big Brother in their cars and will mobilize against a federal mandate of this sort. By contrast, the states remain the laboratories of democracy. Surveys of motorists (and truck drivers) who have participated in the pilot projects find that those people come to understand what MBUF is and is not. Thus far the pilots generally offer people a choice of ways to record their mileage, and the miles are reported to a private-sector service provider, not the state government, with strict privacy protections. I think we need more, and larger, state and multi-state pilot projects to learn more about how to build majority support for the transition from per-gallon to per-mile.

State governments have far more credibility with motorists than Congress does, so the odds of gaining a political majority in favor of replacing fuel taxes with mileage charges are much greater at the state level. Once a number of states have figured out a way to implement this transition, Congress would have a better chance of building on states’ success to develop a federal mileage charge.

A version of this Commentary originally appeared in May’s Surface Transportation Newsletter #187.

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April’s Unemployment Rate Means Good News for Graduates Seeking Jobs

With the U.S. unemployment rate at a nearly 50-year low of 3.6 percent in April, this year’s graduates should have an easier time finding jobs than their predecessors. And even better news is that wages for employees at private nonfarm companies have started rising — they were up 3.2 percent in the nation over the 12 months ending in April.

More than 40,750 jobs were posted on the internet in the Richmond metropolitan area over the past 30 days, based on Chmura’s Real Time Information job postings. Job openings are widespread across most occupations.

Nearly 6,000 jobs are in sales and related occupations, followed by more than 4,500 in health care occupations. Computer and math occupations also were high, with more than 3,400 openings. Among the openings with an education requirement, about half required at least a high school diploma or equivalent, and the other half required an associate’s degree or higher.

Plenty of opportunities are available for high school, community college and college graduates, based on the top 10 occupations with the most openings. For high school graduates, retail sales jobs (2,528 job postings), food preparation and serving positions (1,231 postings) and customer service representatives (804 postings) are among the top 10 possible occupations.

Retail workers typically earned $18,200 annually in 2018, based on the latest data available for entry-level wages in the Richmond metro area from Chmura’s JobsEQ technology platform. Food workers earned $16,800 in 2018, while customer service representatives earned $23,800, according to the data.

Hundreds of retailers in the region are hiring based on the job postings. Food Lion, Target and Lowe’s combined have more than 500 openings for retail positions, while Taco Bell, Subway and others have more than 200 job openings for food preparation and serving workers.

A wide mix of companies are hiring customer service representatives. In addition to a high school education, most of the employers hiring for these positions are looking for applicants to have soft skills in customer care and communication.

Within the health care sector, registered nurses are the most in-demand occupation by employers in the region, with 1,490 open positions in the past 30 days. These occupations generally required an associate or bachelor’s degree, and the beginning salary averaged about $53,100 in 2018.

HCA, Bon Secours Health System and VCU Health System — the region’s three largest hospital systems — collectively posted more than 800 openings for registered nurses in the area in the past 30 days. 

Demand also is strong for those with an information technology skill set. More than 800 job postings in the region over the past 30 days were for applications software developers, with Capital One posting by far the most openings at 171. The beginning salary for this occupation averaged about $71,100 in 2018. 

This commentary was originally published in the May 12, 2019 edition of the Richmond Times-Dispatch.

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Virginia’s Unaffordable Approach to Affordable Housing

If the public policy debate over affordable dwellings is as impoverished as that described in The Virginia Mercury recently, poor Virginians are doomed to lives of housing misery. Here’s how reporter Ned Oliver sums up the controversy: “Is affordable housing something for the state to tackle, or should it be left to cities and counties to address with local money?

Embedded in this formulation are two assumptions: (1) The paucity of affordable housing might be remedied by more grants and low-interest loans; and (2) it is the responsibility of government, either state or local, to find the money for those grants and loans. In other words, the solution to the affordability crisis is more government, not less. Yet in the same article, Oliver notes that it costs $200,000 per unit to build new apartment complexes!

None of the experts quoted in the Virginia Mercury article give so much as a hint that lawmakers should be asking why that price is so high and what can be done to drive it down. Perhaps that’s because asking the question might yield the conclusion that other government programs and policies are responsible for housing being unaffordable in the first place.

The affordable housing issue is gaining urgency as Northern Virginia localities discuss the impact of 25,000 new Amazon jobs on the regional housing market. Local activists fear, not unreasonably, that highly paid Amazon employees will inflate the demand for housing, drive up prices, and displace poor residents. Indeed, if the demand for more housing is not met by an commensurate increase in the supply, that is exactly what will happen.

Arlington County and the City of Alexandria have pledged to invest $150 million in affordable housing over the next 10 years. Meanwhile, the state is dedicating $5 million more this year to its affordable-housing revolving loan fund. The Northam administration asked for more during budget negotiations, but Republican legislators turned them down. Whether the sum is $5 million or $20 million, the number is pathetically inadequate as long as the task is defined as reducing financing costs rather than reducing the cost of acquiring land and building the dwellings.

In that regard, it is instructive to read the Daily Progress’s account today of an affordable housing session in Charlottesville. A panel of local real estate developers, reports the newspaper, “said the approval process for development is arduous and hinders construction of developments.” Also a representative of the manufactured housing industry asked why modular housing, the quality of which has improved significantly over the years, isn’t being considered as part of the solution.

As I noted in a recent post about converting freight containers into homes, it should be possible to create millions of housing units for roughly $50,000 each. Add another $50,000 for utility hookups, land acquisition, financing costs, and profit, and it should be possible to build 320-square-foot dwellings at half the cost of what housing authorities say it costs to build apartment projects. But no one in local government or the affordable housing-industrial complex is asking how to close the gap between $200,000 and $100,000.

There are many strategies for increasing the supply of affordable housing. Writing recently in the Strong Towns blog, Chuck Marohn touched upon one of the most important. Counties and cities can reduce costs and increase supply by reforming the permitting process. The system in his home-state of Minnesota could serve as a model for the rest of the country, he suggests in “A Permit Process Should Never Take a Year. Here’s a Different Way,”

“Here’s why the months and years of permitting experienced in other places will not happen in Minnesota: it’s literally against the law,” he explains. State statute (here is the text)” prohibits local officials from dragging out the permitting process. Failure to deny a request within 60 days means the request is approved. Here’s why the law works, he says:

First, the 60-day time limit means we must have codes and processes that are reasonably coherent; otherwise we’ll struggle to meet the time limit. There is no forwarding things to thirty different departments for their comment whenever they get to it. It won’t work that way, so we don’t allow it to. If we don’t want to be run over, we must put practices in place to be competent at what we do. 

The process also forces us to make decisions that are reasonably defensible. The act of having to write down why a decision has been made—and reference the exact code in doing so—forces a discipline on the entire process that reduces arbitrary decisions. None of this is to suggest that Minnesota cities never make a bad call—of course they do—but simply that there are good mechanisms in place to correct them and to encourage learning from mistakes. 

Finally, this process is how we show respect to each other. If we want people to invest in our communities, we must be clear about what we want and have a discernible and reliable process to accomplish that. If we want people to have faith in our local government, we must be transparent in our actions and predictable in our outcomes. To me, anything else seems like a failure.

Every Virginian shares the goal of ensuring that every family, no matter how poor, has a safe, decent place to live. But taxpayers are totally justified to question an approach that takes $200,000-per-dwelling costs for granted and assumes that taxpayers should be dunned to make up the difference. Until we can reframe the issue as one of excessive cost rather than insufficient tax dollars, housing policy will remain morally, politically and fiscally bankrupt.

A version of this commentary first appeared in the April 22, 2019 edition of the online Bacon’s Rebellion.

A version of this commentary originally appeared in the March 29 edition of the online journal, Bacon’s Rebellion.

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Is Winter Coming for Virginia Pipeline Projects?

The building season is here, but for developers of Virginia’s two hotly-contested natural gas pipelines, activity is back in the government agencies and courthouses. The construction sites remain largely silent, delays running up the ultimate cost of the projects, including the cost of failure.

Here is my (probably flawed) attempt at a status report. And you thought Game of Thrones is a complicated plot.

Dominion Energy’s leadership told stockholders on March 25 that it is hoping to “recommence at least partial construction” on the Atlantic Coast Pipeline (ACP) in the third quarter of this year, and the Mountain Valley Pipeline is still talking about being in service by the end of this year on its website. One national rating agency expressed concerns about the ACP several weeks ago, the Richmond Times-Dispatch reported. A few days later another analyst told Forbes readers about the challenges facing both pipelines.

Just listing all of the permit challenges and lawsuits facing the Mountain Valley Pipeline (MVP) and ACP projects is difficult enough, let alone trying to describe their status. A report back in January by Rob Rains of Washington Analysis LLC, which Bacon’s Rebellion could review but not share, listed battles over seven different kinds of permits for one or both projects, three lawsuits challenging the MVP and seven challenging the ACP.

The ACP at the federal level is still working to re-acquire right of way permits needed to build on U.S. Forest Service land, permits needed to build across waterways, permits needed to build across or under the Blue Ridge Parkway and Appalachian Trail, and permission to build where it might disturb endangered species. It has state-supervised permits under the Clean Water Act for its Virginia sections. It has its main FERC permit intact but is having to defend it in federal court. It is suing Nelson County over local permit denials.

The MVP at the federal level also has its main FERC permit under legal assault, it also needs to regain permission to build across certain waterways, and it has right of way issues involving the Bureau of Land Management as well as the National Forest Service. It also now needs restored permission to cross the Appalachian Trail. It also has its Virginia-regulated Clean Water Act permits for its Virginia sections. It doesn’t seem to have problems with the Fish and Wildlife Service.

Nelson is ground zero, where the ACP (48 percent owned by Dominion Energy) plans to tunnel under the Blue Ridge Parkway. It’s the Civil War Battle of Missionary Ridge all over again, with the pipeline developer desperate to hold high ground it thought safe. The U.S. Fourth Circuit late last year remanded the National Park Service’s permit for a Blue Ridge Parkway crossing, and then in February the court opined that only an act of Congress could approve crossing the Appalachian Trail.

In the investor presentation Dominion discussed the timing of a possible Supreme Court appeal or effort in Congress over the Trail decision. An optimistic schedule would have a Supreme Court decision at least a year away. Analyst Rains is predicting the response instead will be a change in the permit process, a new joint oversight effort involving both the U.S. Forest Service and the Interior Department. That will require a rulemaking but may carry less risk than taking the question straight to Congress.

The Fourth Circuit has also vacated the U.S. Forest Service’s special use permit for the ACP to cross its lands and has stayed U.S. Fish and Wildlife Service approvals because of alleged ACP impact on four endangered species: a bee, a bat, a mussel and a crustacean. It is that endangered species problem along 100 miles of its route that the ACP hopes to solve in time to restart partial construction this year.

That restart would involve just the eastern section of the project, from its intersection with the existing Transco pipeline (near that controversial compressor station in Buckingham) down into North Carolina, along with the planned spur into the Hampton Roads region. The north and western section, connecting to the West Virginia gas fields by crossing the mountains, must await a resolution on the Parkway and Appalachian Trail. That raises the possibility that only the eastern section is built, providing additional distribution east and south from that existing trunk line.

Both MVP and ACP are also re-applying for their Corps of Engineers permits to build across various waterways, with the MVP challenging a 72-hour work limit to complete four of the larger projects. Rain’s March 29 status report has both pipelines marked with yellow for caution, but that’s better than several others around the country marked in orange or red to suggest deeper peril.

Rains does not expect either developer will get much help from a new Executive Order signed by President Donald Trump in Texas last week, described in this report from National Public Radio.

Both Virginia pipelines still hold permits from the Federal Energy Regulatory Commission (FERC) and, so far, those have survived challenges. The opponents are now pursuing appeals of those in the DC Court of Appeals, one step below the Supreme Court, with the petition challenging the ACP filed permit April 5. The petition (here) combines a host of opponents, provides a summary of all the arguments being used – environmental, environmental justice and economic – and seeks that the permit be vacated, remanded to FERC, and all eminent domain activity cease.

A version of this commentary first appeared in the April 16, 2019 edition of the online Bacon’s Rebellion.

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Growing Corn Kills People

Jason Hill, a professor at the University of Minnesota, and a team of other scientists issued a study on April 1, 2019, which initially I thought was an April Fool’s joke. It is no joke!

According to one publication and its author, Prachi Patel, wrote on April 4, 2019 “…corn is killing us in unseen, complicated ways in addition to damaging the environment, …” The study is in Nature Sustainability. It finds that “…air pollution from corn production in the U.S. causes 4,300 premature deaths every year.”

In addition to the deaths annually in the U.S., the study estimates growing corn causes annual damages to human health of approximately $39 billion dollars. The study further finds that “…estimate[d] life-cycle greenhouse gas emissions of maize production, [creates] total climate change damages of $4.9 billion (range: $1.5-7.5 billion).”

The Abstract to Dr. Hill’s study allows that agriculture is essential in helping to feed the world’s population. But, the abstract of the study claims that agriculture is generating harmful pollution and human health effects. The study claims it uses county-level data to develop a model. The model in turn develops a life-cycle emission inventory from which Dr. Hill and his colleagues “estimate health damages” of how much air pollution is created from the production of corn. The model, not actual data, suggests the 4,300 premature deaths annually. EPA’s position is that any inhalation of particulate matter at 2.5 microns can cause death.

Others claim particulate matter at 2.5 microns does not kill anyone and that EPA’s studies are fraudulent. To put a micron in perspective, one strand of hair is about 50 microns in size. The eye can see down to about 40 microns. Diesel smoke used to be above 40 microns and is now down to 30 or less.  EPA, according to one author, admits that epidemiologic studies do not generally provide evidence of direct causation. The Dr. Hill study claims the use of fertilizers, pesticides, and fuel used in farm equipment contribute to poor air, water, pollution and climate change.

Dr. Hill is a bioproducts-biosystems engineering professor at the University of Minnesota. His team evaluated pollutants emitted from agriculture practices which help create Particulate Matter known as PM2.5. Dr. Hill’s researchers believe PM2.5 helps to cause cardiovascular and respiratory diseases, diabetes and cancer. The research team, in creating its life-cycle model, attempt to estimate the emissions coming from the burning of diesel fuel, fertilizer production, electricity use, transportation, and in-field corn production and harvesting.

The Minnesota team estimated the increases of emissions of Particulate Matter and then compared them to population exposure of county residents. One report published by Future Earth stated, “Ammonia emissions from fertilizer use account for 71% of pollution-linked deaths.”\

Dr. Hill and his team believe farmers need to change their use of fertilizer types and application methods. His team also suggests that farmers be offered incentives to evaluate other crops not requiring as much fertilizer. A number of groups are attacking the production of corn. One group promotes a movie entitled “King Corn.” It too suggests corn is killing us and of course attacks GMO corn because it is claimed 88% of corn is genetically modified. In fact, one blog claims “…corn is (slowly) killing you.”

Agriculture and corn growers need to recognize there are groups and now a prestigious university attacking corn production practices in the U.S. As usual, opposition groups start by estimating the health damages a certain product creates. In this case, Dr. Hill and his team and apparently the University of Minnesota are claiming that growing corn creates premature deaths. Some would say the attack on another agricultural product – tobacco – started the same way. The study, which evaluates health damages created by growing corn, can be purchased for $8.99. It is worth reading.

This commentary originally appeared in Farm Futures on April 11, 2019.

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