Certification of Enforcement of the Heavy Vehicle Use Tax, 62518-62521 [E9-27939]

Agencies

• Federal Highway Administration
• DEPARTMENT OF TRANSPORTATION

[Federal Register Volume 74, Number 228 (Monday, November 30, 2009)]
[Proposed Rules]
[Pages 62518-62521]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E9-27939]


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DEPARTMENT OF TRANSPORTATION

Federal Highway Administration

23 CFR Part 669

[FHWA Docket No. FHWA-2009-0098]
RIN 2125-AF32


Certification of Enforcement of the Heavy Vehicle Use Tax

AGENCY: Federal Highway Administration (FHWA), DOT.

ACTION: Notice of proposed rulemaking (NPRM); request for comments.

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SUMMARY: This notice sets forth updated FHWA procedures for enforcement 
of the State registration of vehicles subject to the Heavy Vehicle Use 
Tax (HVUT). The intent of these actions is to bring FHWA's HVUT 
regulations up-to-date to be consistent with many changes that have 
impacted the regulation over the last two decades.

DATES: Comments must be received on or before March 1, 2010.

ADDRESSES: Mail or hand deliver comments to the U.S. Department of 
Transportation, Dockets Management Facility, Room W12-140, 1200 New 
Jersey Avenue, SE., Washington, DC 20590, or submit electronically at 
https://www.regulations.gov. All comments should include the docket 
number that appears in the heading of this document. All comments 
received will be available for examination and copying at the above 
address from 9 a.m. to 5 p.m., e.t., Monday through Friday, except 
Federal Holidays. Those desiring notification of receipt of comments 
must include a self-addressed, stamped postcard or you may print the 
acknowledgment page that appears after submitting comments 
electronically.

FOR FURTHER INFORMATION CONTACT: Ralph Erickson, Highway Funding and 
Motor Fuels Team Leader, Office of Policy, HPPI-10, (202) 366-9235, or 
Raymond W. Cuprill, Office of the Chief Counsel, (202) 366-0791, 
Federal Highway Administration, 1200 New Jersey Avenue, SE., 
Washington, DC 20590. Office hours are from 7:45 a.m. to 4:15 p.m. 
e.t., Monday through Friday, except Federal holidays.

SUPPLEMENTARY INFORMATION:

Electronic Access and Filing

    You may submit or retrieve comments online through the Federal 
Docket Management System at: https://www.regulations.gov. 
Regulations.gov is available 24 hours each day, 365 days each year. 
Electronic submission and retrieval help and guidelines are available 
under the help section of the Web site.
    An electronic copy of this document may also be downloaded from the 
Office of the Federal Register's home page at: https://www.gpoaccess.gov/fr/ and the Government Printing Office's 
Web page at: https://www.gpoaccess.gov.

Background

    In the Surface Transportation Assistance Act of 1982, Congress 
established the HVUT. The purpose of the tax is to impose a road use 
charge that has some relation to the costs occasioned by the vehicle 
(heavier vehicles cause more road damage than light vehicles, and 
therefore should pay a higher highway funding contribution). The FHWA 
Cost Allocation studies \1\ demonstrated that damage to the roadway 
resulting from a doubling of the weight of a vehicle caused an 
exponential increase in the amount of damage to the roadway than would 
have been caused by the lower weight. To compensate for this additional 
damage (costs occasioned), Congress established the HVUT as a way to 
recover from those vehicles the additional costs they impose. Very 
briefly, the HVUT imposes a tax on vehicles with a gross vehicle weight 
of 55,000 pounds and over using a sliding scale up to $550 per year 
payable to the Internal Revenue Service (IRS). When the HVUT has been 
paid the vehicle is eligible to be registered by the State. Provisions 
allow for

[[Page 62519]]

temporary and partial-year vehicle registrations.
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    \1\ Final Report on the Federal Highway Cost Allocation Study: 
Report of the Secretary of Transportation to the United States 
Congress Pursuant to Section 506 Public Law 95-599, Surface 
Transportation Assistance Act of 1978: U.S. Department of 
Transportation, May, 1982. Federal Highway Cost Allocation Study: 
U.S. Department of Transportation, August, 1997.
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    The FHWA's responsibility in the administration of the HVUT is to 
ensure that the States are obtaining proof of payment of the HVUT 
before registering these vehicles to operate on the roadways. The 
agency has published regulations at 23 CFR part 669 implementing the 
requirements of this program as established by Federal law at 23 U.S.C. 
141(c). In accordance with this Federal law, a State's annual 
apportionment of Interstate Maintenance funds under 23 U.S.C. 104(b)(4) 
may be reduced by up to 25 percent in any fiscal year during which 
heavy vehicles subject to HVUT may be lawfully registered in the State 
without having presented proof of payment of the tax. Part 669 of Title 
23, Code of Federal Regulations, established a certification program to 
ascertain State compliance with these requirements and procedures for 
evaluating State compliance and for any required reduction of funds. 
This rulemaking proposes to modify existing FHWA procedures for 
enforcement of the State registration of vehicles subject to the HVUT. 
The regulation (originally published on July 14, 1986, at 51 FR 25364) 
would be updated to make it consistent with several changes in 
applicable law and technology, and with regulations recently 
promulgated by the IRS. The regulation is also being revised to address 
several issues that were not covered adequately in the original 
rulemaking. The proposed revisions are discussed in the section 
analysis below.

History

    The HVUT tax was imposed by Congress in section 143 of the Surface 
Transportation Assistance Act of 1982, Public Law 97-424. This section 
of law was codified into the United States Code as 23 U.S.C. 141, which 
provides for State certification of enforcement of laws respecting 
maximum vehicle size and weight. The amendment added a provision to 
section 141 that provides that a State's annual apportionment of 
Interstate Maintenance funds may be reduced by up to 25 percent in any 
fiscal year during which heavy vehicles subject to HVUT may be lawfully 
registered in the State without having presented proof of payment of 
the tax.
    On July 14, 1986, the FHWA published in the Federal Register (51 FR 
25363) a final rule implementing the requirements of this statute in 23 
CFR part 669--Enforcement of Heavy Vehicle Use Tax. The notice set 
forth procedures to be followed by each State for certifying that it is 
obtaining evidence of proof of payment of the Federal heavy vehicle use 
tax in accordance with 23 U.S.C. 141 for vehicles subject to the use 
tax imposed by Section 4481 of the Internal Revenue Code of 1954, as 
amended, before such vehicles are lawfully registered in the State. An 
annual certification of compliance is required. Procedures are 
specified for reducing a State's apportionment of highway funds in 
accordance with 23 U.S.C. 141 in the event a State fails to meet the 
requirements of the regulation.
    The FHWA is proposing revisions to its regulation to provide 
compatibility with the revised IRS rules. Over the decades since 1986, 
the IRS has updated its procedures for implementing the HVUT proof of 
payment. The current regulations, found in 26 CFR 41.6001-2 \2\, 
entitled ``proof of payment for State registration purposes,'' sets 
forth circumstances under which a State must require proof of payment 
of the tax imposed by Section 4481(a), and the required manner in which 
such proof of payment is to be received by the State as a condition of 
issuing a registration for a highway motor vehicle. A State must either 
comply with the provisions of this section or comply with such other 
rules regarding the satisfaction of this proof of payment requirement 
as may be prescribed by the Commissioner in order to avoid a reduction 
of Federal-aid highway funds apportioned under 23 U.S.C. 104(b)(4).
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    \2\ 26 CFR 41 subpart A, entitled Introduction, subpart B 
entitled Tax on Use of Certain Highway Motor Vehicles, and Subpart 
C, entitled Administrative Provisions of Special Application to Tax 
on use of Certain Highway Motor Vehicles, Sections 41.0-1, 41.4481 
through 41.4483-7, and 41.600101 through 41.6156-1.
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Section-by-Section Discussion of the Proposals

    The FHWA is proposing to revise the regulation at 23 CFR part 669--
Certification of Enforcement of Heavy Vehicle Use Tax as follows:
    The authority section and sections 669.1, 669.2, 669.9, and 669.15 
would be amended to replace all references to 23 U.S.C. 141(d) with 23 
U.S.C. 141(c). Public Law 104-59, title II, Sec. 205(d)(1)(A), Nov. 28, 
1995, 109 Stat. 577, re-designated subsection (d) of section 141 as 
(c), and as a result the statutory provisions related to the HVUT 
program now appear at 23 U.S.C. 141(c). The FHWA proposes to revise the 
regulation to reflect this change in the statute.
    Section 669.13 and 669.15 would be amended to revise the statutory 
reference to the funding sanction for non-enforcement of the HVUT 
requirements which currently appears as withholding State 
apportionments under 23 U.S.C. 104(b)(5), and which referred to the 
Interstate Maintenance funding category. Section 104(b)(5) was changed 
to section 104(b)(4) by Public Law 105-178, title I, Sec. 
1103(l)(3)(C), June 9, 1998, 112 Stat. 126, and as a result we are 
proposing to change these sections of the regulation to reference 
section 104(b)(4), the correct reference to the Interstate Maintenance 
funding category.
    The regulation at 23 CFR 669.7 requires the States to submit the 
annual certification by July 1 of every year. The FHWA proposes to move 
this deadline to January 1. A January 1 deadline date would provide 
FHWA with needed time to review the certifications and determine 
whether the State has met its responsibilities prior to the issuance of 
the advance notices of apportionment to the States, which normally 
occurs on July 1. This January 1 deadline for certification submissions 
would also be the same as other certifications that are submitted by 
the States to FHWA for review as part of other certification programs, 
and will simplify these submissions for the States.
    Similarly, the FHWA is proposing to amend sections 669.15 and 
669.17 to adopt a compliance procedure similar to that adopted in other 
certification programs that utilize the notices of apportionments for 
providing notice of non-conformity and opportunity for review. The 
existing procedure in the regulation is cumbersome and requires the 
issuance by the FHWA Administrator of a proposed written determination 
of non-conformity in cases of failure to certify or not adequately 
enforcing the HVUT requirements. The Administrator must also provide 
notification of the determination by certified mail. In addition, the 
written determination provides notice to the State of the opportunity 
to request within 30 days a conference on the record to show cause why 
it should not be found in nonconformity, or provide any information in 
writing. Following the conference the Administrator is to issue a final 
determination of compliance, which is served on the Governor. This 
procedure is somewhat different from other FHWA administered 
certification and compliance programs, in which the compliance 
procedure is tied to the notices of apportionments issued by the FHWA, 
and which indicate the amount of funds to be apportioned for each FHWA 
administered program and the amount of any required funding sanction. 
The FHWA is proposing revised procedures that would parallel

[[Page 62520]]

other FHWA and National Highway Traffic Safety Administration funding 
sanction procedures \3\ that are simpler to administer, are familiar to 
the States, and yet provide States with sufficient notification of a 
preliminary non-compliance determination and the right to request a 
review of FHWA's preliminary non-compliance determination and 
demonstrate State compliance. Pursuant to the proposed procedures the 
preliminary notice of nonconformity would be issued with the advance 
notice of apportionments required under 23 U.S.C. 104(e), together with 
notice of the funds expected to be withheld from apportionment. A State 
would have 30 days to submit documentation to the FHWA showing why it 
is in conformity. The FHWA would then issue a final determination to 
the State and if found in nonconformity, the State will receive notice 
of the funds being withheld from apportionment as part of the 
certification of apportionments, which normally occurs on October 1 of 
each year.
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    \3\ Drug Offender Driver's License Suspension Program, 23 CFR 
192.10; Minimum Drinking Age Program, 23 CFR 1208.6; Zero Tolerance 
Laws, 23 CFR 1210.10; 0.08 BAC Per Se Laws Program, 23 CFR 1225.12; 
Open Container Program, 23 CFR 1270.8; Repeat Intoxicated Driver 
Laws, 23 CFR 1275.8.
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    Section 669.21 makes reference to IRS regulations in 26 CFR 41.600-
2 on what constitutes proof of payment and that States retain proof of 
payment (copy of the receipted 2290) for at least 1 year. The existing 
FHWA regulation makes no provision for proof of payment inspection or 
recordkeeping when a State, local jurisdiction in the State, branch 
offices of a State registration system, or private contractors 
providing these services to any of the above, are administering vehicle 
registrations. However, legislation in several States allows for the 
local registration of vehicles within the State. In a few cases, States 
also have private agencies licensed to provide highway vehicle 
registration services to either the State or to the local 
jurisdictions. The FHWA, therefore, proposes that all these entities be 
required in the regulation to provide proof of payment recordkeeping 
responsibilities. The FHWA regulation also provides for the storage of 
proof of payment records using technologies such as microfilm and 
microfiche, which may now be outdated. The FHWA is proposing to replace 
this language with revised language that would allow for use of 
computerized software for tracking HVUT proof of payments, yet retains 
the requirement that proof of payment meet IRS standards.

Rulemaking Analyses and Notices

    All comments received before the close of business on the comment 
closing date indicated above will be considered and will be available 
for examination in the docket at the above address. Comments received 
after the comment closing date will be filed in the docket and will be 
considered to the extent practicable. In addition to late comments, the 
FHWA will also continue to file relevant information in the docket as 
it becomes available after the comment period closing date and 
interested persons should continue to examine the docket for new 
material. A final rule may be published at any time after close of the 
comment period.

Executive Order 12866 (Regulatory Planning and Review) and DOT 
Regulatory Policies and Procedures

    The FHWA has determined preliminarily that this action would not be 
a significant regulatory action within the meaning of Executive Order 
12866 or would not be significant within the meaning of Department of 
Transportation regulatory policies and procedures. It is anticipated 
that the economic impact of this rulemaking would be minimal. The 
textual corrections, updates to refer to numerical section changes in 
law, and change in timing of the certification compliance create no 
changes to the economic cost due to the regulation. The record 
retention requirements do pose some additional burden by requiring the 
ability to scan all submitted IRS Form 2290s into a computerized record 
(according to IRS national data, approximately 2.5 million trucks fit 
this criteria) and keep those records for 1 year. The change in 
administrative procedures to remove the FHWA administrator from the 
fund reduction action provides governmental efficiency. Therefore, 
there is little economic impact and the FHWA concludes that this is not 
a significant regulatory action under the definitions provided.
    These proposed changes would not adversely affect, in a material 
way, any sector of the economy. In addition, these changes would not 
interfere with any action taken or planned by another agency and would 
not materially alter the budgetary impact of any entitlements, grants, 
user fees, or loan programs. Consequently, a full regulatory evaluation 
is not required.

Regulatory Flexibility Act

    In compliance with the Regulatory Flexibility Act (Pub. L. 96-354, 
5 U.S.C. 601-612) the FHWA has evaluated the effects of this proposed 
action on small entities and has determined that the proposed action 
would not have a significant economic impact on a substantial number of 
small entities.
    The additional recordkeeping requirements are designed to support 
the verification that will help determine if any evasion is present. 
Smaller States may find this additional burden cumbersome. According to 
FHWA 2007 data, three States and the District of Columbia registered 
less than 3,000 trucks. These jurisdictions may find the additional 
recordkeeping requirements expensive given the number of trucks subject 
to the HVUT tax. These points do not amount to significant impacts and 
the FHWA therefore certifies that this action would not have a 
significant economic impact on a substantial number of small entities.

Unfunded Mandates Reform Act of 1995

    This proposed rule would not impose unfunded mandates as defined by 
the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4, March 22, 
1995, 109 Stat. 48). This proposed rule will not result in the 
expenditure by State, local, and tribal governments, in the aggregate, 
or by the private sector, of $100 million or more in any one year (2 
U.S.C. 1532). The only change in the regulation that impacts costs is 
the recordkeeping provisions. Since the States and other vehicle 
registration entities already keep vehicle registration files, the 
additional burden by requiring the ability to scan all submitted IRS 
Form 2290s into a computerized record (as noted above, approximately 
2.5 million trucks fit this criteria) and keep those records for 1 year 
does have a cost impact, but not enough to exceed the significance 
threshold.

Executive Order 13132 (Federalism Assessment)

    This proposed action has been analyzed in accordance with the 
principles and criteria contained in Executive Order 13132, and the 
FHWA has determined that this proposed action would not have sufficient 
federalism implications to warrant the preparation of a federalism 
assessment. The FHWA has also determined that this proposed action 
would not preempt any State law or State regulation or affect the 
States' ability to discharge traditional State governmental functions.

[[Page 62521]]

Executive Order 12372 (Intergovernmental Review)

    Catalog of Federal Domestic Assistance Program Number 20.205, 
Highway Research, Planning, and Construction. The regulations 
implementing Executive Order 12372 regarding intergovernmental 
consultation on Federal programs and activities apply to this program. 
Accordingly, the FHWA solicits comments on this issue.

Paperwork Reduction Act

    Under the Paperwork Reduction Act of 1995 (PRA) (44 U.S.C. 3501, 
et. seq.), Federal agencies must obtain approval from the Office of 
Management and Budget (OMB) for each collection of information they 
conduct, sponsor, or require through regulations. The FHWA has 
determined that this proposal does contain collection of information 
requirements for the purposes of the PRA. The FHWA believes that the 
information collected under this action is contained in the existing 
information collection under OMB Control Number 2125-0541 granted by 
OMB on February 1, 2008.

National Environmental Policy Act

    The agency has analyzed this proposed action for the purpose of the 
National Environmental Policy Act of 1969 (42 U.S.C. 4321) and has 
determined that this proposed action would not have any effect on the 
quality of the environment.

Regulation Identification Number

    A regulation identification number (RIN) is assigned to each 
regulatory action listed in the Unified Agenda of Federal Regulations. 
The Regulatory Information Service Center publishes the Unified Agenda 
in April and October of each year. The RIN contained in the heading of 
this document can be used to cross reference this action with the 
Unified Agenda.

List of Subjects in 23 CFR Part 669

    Grants programs--transportation, Highways and roads, Taxes, Motor 
vehicles.

    Issued on: October 28, 2009.
Victor M. Mendez,
Administrator.
    In consideration of the foregoing, the FHWA proposes to amend title 
23, Code of Federal Regulations part 669 as follows:

PART 669--ENFORCEMENT OF HEAVY VEHICLE USE TAX

    1. The authority citation for part 669 is revised to read as 
follows:

    Authority:  23 U.S.C. 141(c) and 315; 49 CFR 1.48(b).

    2. Revise Sec.  669.7 to read as follows:


Sec.  669.7  Certification requirement.

    The Governor of each State, or his or her designee, shall certify 
to the FHWA before January 1 of each year that it is obtaining proof of 
payment of the heavy vehicle use tax as a condition of registration in 
accordance with 23 U.S.C. 141(c). The certification shall cover the 12-
month period ending September 30.


Sec.  669.9  [Amended]

    3. Amend Sec.  669.9 by amending paragraphs (b) and (c) by removing 
the words ``23 U.S.C. 141(d)'' and adding in its place the words ``23 
U.S.C. 141(c)'' each place it appears.


Sec.  669.11  [Amended]

    4. Amend Sec.  669.11 by removing the word ``July'' and adding in 
its place the word ``January''.
    5. Revise Sec.  669.13 to read as follows:


Sec.  669.13  Effect of failure to certify or to adequately obtain 
proof of payment.

    If a State fails to certify as required by this regulation or if 
the Secretary of Transportation determines that a State is not 
adequately obtaining proof of payment of the heavy vehicle use tax as a 
condition of registration notwithstanding the State's certification, 
Federal-aid highway funds apportioned to the State under 23 U.S.C. 
104(b)(4) for the next fiscal year shall be reduced in an amount up to 
25 percent as determined by the Secretary.
    6. Revise Sec.  669.15 to read as follows:


Sec.  669.15  Procedure for the reduction of funds.

    (a) Each fiscal year, each State determined to be in nonconformity 
with the requirements of this part will be advised of the funds 
expected to be withheld from apportionment in accordance with Sec.  
669.13 and 23 U.S.C. 141(c), as part of the advance notice of 
apportionments required under 23 U.S.C. 104(e), normally not later than 
90 days prior to final apportionment.
    (b) A State that received a notice in accordance with paragraph (a) 
of this section may within 30 days of its receipt of the advance notice 
of apportionments, submit documentation showing why it is in conformity 
with this Part. Documentation shall be submitted to the Federal Highway 
Administration, 1200 New Jersey Avenue, SE., Washington, DC 20590.
    (c) Each fiscal year, each State determined to be in nonconformity 
with the requirements of this part and 23 U.S.C. 141(c), based on 
FHWA's final determination, will receive notice of the funds being 
withheld from apportionment pursuant to Sec.  669.3 and 23 U.S.C. 
141(c), as part of the certification of apportionments required under 
23 U.S.C. 104(e), which normally occurs on October 1 of each fiscal 
year.


Sec.  669.19  [Amended]

    7. Amend Sec.  669.19 as follows:
    a. Amend paragraphs (a) and (b) by removing the words ``23 U.S.C. 
104(b)(5)'' and adding in its place the words ``23 U.S.C. 104(b)(4)'' 
in each place it appears; and
    b. Amend paragraph (c) by removing the word ``Secretary's''.
    8. Revise Sec.  669.21 to read as follows:


Sec.  669.21  Procedure for evaluating State compliance.

    The FHWA shall periodically review the State's procedures for 
complying with 23 U.S.C. 141(c), including an inspection of supporting 
documentation and records. In those States where a branch office of the 
State, a local jurisdiction, or a private entity is providing services 
to register motor vehicles including vehicles subject to HVUT, the 
State shall be responsible for ensuring that these entities comply with 
the requirements of this part concerning the collection and retention 
of evidence of payment of the HVUT as a condition of registration for 
vehicles subject to such tax and develop adequate procedures to 
maintain such compliance. The State or other responsible entity shall 
retain a copy of the receipted IRS Schedule 1 (Form 2290), or an 
acceptable substitute prescribed by 26 CFR 41.6001-2 for a period of 1 
year for purposes of evaluating State compliance with 23 U.S.C. 141(c) 
by the FHWA. The State may develop a software system to maintain copies 
or images of this proof of payment.

[FR Doc. E9-27939 Filed 11-27-09; 8:45 am]
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