1. August 12-13San Antonio, Texas 2015 Annual Business Meeting Full -Track Ballot #05-2015 August 12, 2015 San Antonio, TX

2. August 12-13San Antonio, Texas 2015 Annual Business Meeting FT #05-2015 Is not a dual fuel issue – The same problem exists for any interjurisdictional carrier with a pure LNG vehicle – We need a consistent process for LNG reporting and disbursement of taxes between jurisdictions (Like CNG FT#5-2013)

3. August 12-13San Antonio, Texas 2015 Annual Business Meeting FT #05-2015 Is not a dual fuel issue (continued) – There is no impact to sovereignty (a jurisdiction tax rates and units of measure are their responsibility) – Other standards exist to ensure consistent reporting and distribution of taxes between IFTA members (e.g., distances, volumes, and currency) All we are changing is how to report LNG for IFTA purposes

4. August 12-13San Antonio, Texas 2015 Annual Business Meeting FT #5 -2015 Natural gas is sold in two physical states: 1.Compressed Natural Gas (CNG) A high pressure gas (e.g., 3,000 to 3,600 psi) 2. Liquefied Natural Gas (LNG): A super-cooled liquid (e.g., -260°F or -170°C)

5. August 12-13San Antonio, Texas 2015 Annual Business Meeting FT #05-2015 LNG is sold three different units of measure: 1.Gallons (3.5 lb per G) in 24 jurisdictions 2.Diesel Gallon Equivalents (6.06 lb per DGE) in 24 jurisdictions 3.Kilograms in 10 jurisdictions

6. FT #05-2015 CDN Jurisdictions US Jurisdictions DGE - Energy Equivalent (6.06 pounds = 1 DGE) DG - Straight Weight (3.5 lb = 1 gallon) Kilograms Fuel Purchases Two Questions: 1.What does a carrier report regarding LNG purchases to their base jurisdiction? 2.How does the carrier convert their purchases accurately and consistently?

7. FT #05-2015 CDN Jurisdictions US Jurisdictions DGE – Energy Equivalent (6.06 pounds = 1 DGE) DG - Straight Weight (3.5 lb = 1 gallon) DLE - Energy Equivalent (0.73 kg = 1 DLE) Kilograms

8. August 12-13San Antonio, Texas 2015 Annual Business Meeting FT #05-2015 P1320 - FUELS NOT MEASURED IN LITERS OR GALLONS For reporting tax rates, and audit results and for transmittals between IFTA jurisdictions, liquefied natural gas shall be reported in diesel energy equivalent measures, using the following conversion factors: – a diesel gallon equivalent in U.S. jurisdictions weighs 6.06 pounds, and – a diesel liter equivalent in Canadian jurisdictions weighs 0.73 kilograms).

9. FT #05-2015 CDN Jurisdictions US Jurisdictions KilogramsDLE (Energy Equivalent) (0.73 kg = 1 DLE) DGE (Energy Equivalent) (6.06 pounds = 1 DGE) DG (Straight Weight ) (3.5 lb = 1 gallon) Amount Purchased 100136.99 DLE36.19 DGE62.657 gallons Tax Rate$0.25 CDN$0.1825 CDN$0.59 US$0.34 US Total Tax$25.00 CDN $21.50 US Fuel Reporting

10. August 12-13San Antonio, Texas 2015 Annual Business Meeting FT #05-2015 – Jurisdictional changes: Convert and provide to IFTA their LNG tax rates in energy equivalents (if not already) – IFTA converts for volume and currency differences and posts for use by all jurisdictions as they do now Obtain LNG energy equivalent tax rates from IFTA and then: – Share with carriers – Instruct carriers to use and how to convert their purchases: » Kilograms to DLE or DGE » Gallons to DLE or DGE

11. August 12-13San Antonio, Texas 2015 Annual Business Meeting FT #05-2015 – Jurisdictional Changes: Jurisdiction tax systems process tax returns in energy equivalents Transmit via the Clearinghouse (and non- Clearinghouse jurisdictions) in energy equivalents Report audit activities in energy equivalents

12. August 12-13San Antonio, Texas 2015 Annual Business Meeting Questions / Discussion

13. August 12-13San Antonio, Texas 2015 Annual Business Meeting Four new fuel types have been added to the Clearinghouse for dual fuel reporting: – For Diesel / LNG vehicles: DL - The fuel type to report diesel used in a dual fuel vehicle with LNG; DLG - The fuel type to report LNG used in a dual fuel vehicle with diesel – For Diesel / CNG vehicles DC - The fuel type used to report for diesel used in a dual fuel vehicle with CNG; and DCG - The fuel type to used to report CNG used in a dual fuel vehicle with diesel Updates - Duel Fuel

14. August 12-13San Antonio, Texas 2015 Annual Business Meeting DL and DC fuel types are: – Diesel fuel, taxed at the diesel tax rate shown on the tax rate matrix. – Simply used to report diesel fuel used in dual fuel vehicles (where LNG or CNG is the second fuel). DLG and DCG fuel types are : – LNG and CNG respectively, taxed at the applicable rates shown on the tax rate matrix. – Simply used to report LNG and CNG used in dual fuel vehicles (where diesel is the second fuel). Updates - Duel Fuel

15. DL/ DCDLG DCG

16. August 12-13San Antonio, Texas 2015 Annual Business Meeting Questions / Discussion

17. Thanks!

18. August 12-13San Antonio, Texas 2015 Annual Business Meeting FYI - Following slides are for reference purposes in case questions come up, and include and example of a complete IFTA Return reporting process for three fleets: Pure diesel DL / DLG DC / DCG

19. Dual Fuel Vehicles - 101 At a high level: – Pure Diesel Diesel Purchased / Distance – Dual Fuel Diesel Purchased / Distance LNG Purchased / Distance

20. Dual Fuel Vehicles - 101 – Think of the dual fuel vehicle as two different trucks (or fleets) DL Purchased / Prorated Distance DLG Purchased / Prorated Distance

21. Recommended Reporting Process At a high level: – Dual fuel vehicles must be treated and reported separately (e.g., gasoline fleet, diesel fuel fleet, LNG fleet, dual fuel fleet) – Duel fuel vehicles must be treated and reported as two vehicles: Separately reporting the distances travelled and fuel purchased Pro-rating the distances to avoid double counting Fleet TypeFuel Type IFTA Return or Return Line Actual Distance Travelled Distances Reported Pure DieselDiesel “D”Return #1100 Dual Fuel Diesel “DL”Return #2100 (pro-rated) 25 LNG “DLG”Return #3 (pro-rated) 75

22. Recommended Reporting Process AssumptionsTotal Distance * DL (gallons)DLG (gallons)Total Fuel J1 8,000 500 - J2 2,000 - 1,000 Total 10,000 500 1,000 1,500 * No exempt distances were traveled in either jurisdiction. 22 Prorate Distances by Jurisdiction Between Fuel TypesTotal FuelFuel by TypeRatio DL 1,500 5000.3333 DLG 1,0000.6667 Total DistanceRatioProrated Distance J1 8,000 0.3333 DL 0.6667 DLG 2,667 5,333 J2 2,000 0.3333 DL 0.6667 DLG 667 1,333 Total 10,000

23. Recommended Reporting Process Pro-Rating Worksheet These fields auto-populate and then transferred to the appropriate dD and dL form/return for each jurisdiction TOTAL DISTANCE TRAVELLED EXEMPT DISTANCE TRAVELLED Total Distance DL Portion Exempt Distance Txbl Distance DL Portion Total Distance DLG Portion Exempt Distance Txbl Distance DLG Portion J18,00002,6670 5,3330 J22,00006670 1,3330 Total Miles 10,00003,3330 6,6670 Pro-rating more complicated if a carrier has exempt distances Developed and tested worksheet which can be used to accurately prorate the “Total Distance” and “Taxable Distance” between fuel types.

24. Recommended Reporting Process Dual Fuel Vehicles – Diesel Average MPG 6.67 Fuel Type Jurisdiction Total Distance Txbl Distance Txbl Volume Tax Paid Volume Net Txbl Volume Tax Rate Tax Due DL J12,667 400500-1000.2000-$ 20.00 DL J2667 1000 0.1000 $ 10.00 Sub-total 3,333 500 0 -$ 10.00 Dual Fuel Vehicles – LPG Average MPG 6.67 Fuel Type Jurisdiction Total Distance Txbl Distance Txbl Volume Tax Paid Volume Net Txbl Volume Tax Rate Tax Due DLG J15,333 8000 0.0500$ 40.00 DLG J21,333 2001,000-8000.1000- $ 80.00 Sub-total 6,667 1,000 0 -$ 40.00 TOTAL DUAL-FUEL VEHICLES 10,000 1,500 -$ 50.00

25. Complex Example - IFTA Tax Return Reporting Assumptions: – 1 Carrier with three IFTA fleets: Pure Diesel; DL/DLG; and DC/DCG – No exempt fuel purchases and no exempt distances – All fuel purchases and distances have been converted into the base jurisdiction’s units of measure and currency

26. Pure Diesel Fuel FleetTotal DistanceExempt DistanceDDLDLGDCDCG Diesel Fleet J1 1,600,000 500,000 - J2 400,000 50,000 Total 2,000,000 550,000 MPG 3.64 DL-DLG FleetTotal DistanceExempt DistanceDDLDLGDCDCG DL/DLG Fleet J1 50,000 12,000 J2 40,000 8,000 Total 90,000 12,000 8,000 MPG 4.50 DC-DCG FleetTotal DistanceExempt DistanceDDLDLGDCDCG DC/DCG Fleet J1 16,000 3,000 J2 4,000 1,000 Total 20,000 3,000 1,000 MPG 5.00 Example - IFTA Tax Return Reporting

27. Example – For DL/DLG Fleet Prorate the Miles by Jurisdiction Between Fuel TypesTotal FuelFuel by TypeRatio DL 20,000 12,0000.6000(12,000 / 20,000 = 0.60) DLG 20,000 8,0000.4000(8,000 / 20,000 = 0.40) Pro-Rating Worksheet ENTER BELOW FOR YOUR DL / DLG VEHICLES These Field Auto-populated Transfer these to the DL Form Transfer these to the DLG Form TOTAL DISTANCE TRAVELLED EXEMPT DISTANCE TRAVELLED Total Distance – DL Portion Exempt DL distance Txbl Distance - DL Portion Total Distance – DLG Portion Exempt DLG distance Txbl Distance - DLG Portion J150,000030,0000 20,0000 J240,000024,0000 16,0000 Total miles90,000054,0000 36,0000

28. Example – For DL/DLG Fleet Prorate the Miles by Jurisdiction Between Fuel TypesTotal FuelFuel by TypeRatio DL 20,000 12,0000.6000(12,000 / 20,000 = 0.60) DLG 20,000 8,0000.4000(8,000 / 20,000 = 0.40) Pro-Rating Worksheet ENTER BELOW FOR YOUR DL / DLG VEHICLES These Field Auto-populated Transfer these to the DL Form Transfer these to the DLG Form TOTAL DISTANCE TRAVELLED EXEMPT DISTANCE TRAVELLED Total Distance – DL Portion Exempt DL distance Txbl Distance - DL Portion Total Distance – DLG Portion Exempt DLG distance Txbl Distance - DLG Portion J150,000030,0000 20,0000 J240,000024,0000 16,0000 Total miles90,000054,0000 36,0000

29. Example – For DC/DCG Fleet Prorate the Miles by Jurisdiction Between Fuel TypesTotal FuelFuel by TypeRatio DC 4,000 3,0000.7500 DCG 4,000 1,0000.2500 Pro-Rating Worksheet ENTER BELOW FOR YOUR DC / DCG VEHICLES These Field Auto-populated Transfer these to the DC Form Transfer these to the DCG Form TOTAL DISTANCE TRAVELLED EXEMPT DISTANCE TRAVELLED Total Distance – DC Portion Exempt DC distance Txbl Distance – DC Portion Total Distance - DCG Portion Exempt DCG distance Txbl Distance - DCG Portion J116,000012,0000 4,0000 J24,00003,0000 1,0000 Total miles20,000015,0000 5,0000

30. Example – For DC/DCG Fleet Prorate the Miles by Jurisdiction Between Fuel TypesTotal FuelFuel by TypeRatio DC 4,000 3,0000.7500 DCG 4,000 1,0000.2500 Pro-Rating Worksheet ENTER BELOW FOR YOUR DC / DCG VEHICLES These Field Auto-populated Transfer these to the DC Form Transfer these to the DCG Form TOTAL DISTANCE TRAVELLED EXEMPT DISTANCE TRAVELLED Total Distance – DC Portion Exempt DC distance Txbl Distance – DC Portion Total Distance - DCG Portion Exempt DCG distance Txbl Distance - DCG Portion J116,000012,0000 4,0000 J24,00003,0000 1,0000 Total miles20,000015,0000 5,0000

31. Result for the 3 Fleets Final Tax Return AB C DEFGH Fuel Type Jurisdiction Total Distance Taxable Distance Taxable Fuel Volume Tax Paid Volume Net Taxable Volume Tax RateTax Due Pure Diesel Fleet DJ1 1,600,000 440,000 500,000(60000)0.2000-$ 12,000.00 DJ2 400,000 110,000 50,000600000.1000 $ 6,000.00 Dual (DL/DLG) Fleet DLJ1 30,000 6,667 12,000(5333)0.2000-$ 1,066.67 DLJ2 24,000 5,333 -53330.1000 $ 533.33 DLGJ1 20,000 4,444 44440.0500 $ 222.22 DLGJ2 16,000 3,556 8,000(4444)0.2000-$ 888.89 Dual (DC/DCG) Fleet DCJ1 12,000 2,400 3,000(600)0.2000-$ 120.00 DCJ2 3,000 600 0.1000 $ 60.00 DCGJ1 4,000 800 0.2500 $ 200.00 DCGJ2 1,000 200 1,000(800)0.1500-$ 120.00 Totals (All Fleets) 2,110,000 574,000 -$ 7,180.00

32. Results for the 3 Fleets (Just a different way to display results) Final Tax ReturnAB C DEFGH Jurisdiction Fuel TypeTotal Distance Taxable Distance Taxable Fuel Volume Tax Paid Volume Net Taxable Volume Tax RateTax Due All Activity in J1 J1D 1,600,000 440,000 500,000(60000)0.2000-$ 12,000.00 DL 30,000 6,667 12,000(5333)0.2000-$ 1,066.60 DLG 20,000 4,444 44440.0500 $ 222.20 DC 12,000 2,400 3,000(600)0.2000-$ 120.00 DCG 4,000 800 0.2500 $ 200.00 All Activity in J2 J2D 400,000 110,000 50,000600000.1000 $ 6,000.00 DL 24,000 5,333 -53330.1000 $ 533.30 DLG 16,000 3,556 8,000(4444)0.2000-$ 888.80 DC 3,000 600 0.1000 $ 60.00 DCG 1,000 200 1,000(800)0.1500-$ 120.00 Total2,110,000 574,000 -$ 7,179.90

33. August 13-14Pittsburgh, Pennsylvania 2014 Annual Business Meeting Questions / Discussion

34. Thanks!