Certification of Enforcement of the Heavy Vehicle Use Tax, 43405-43409 [2010-18180]

Agencies

• Federal Highway Administration
• DEPARTMENT OF TRANSPORTATION

[Federal Register Volume 75, Number 142 (Monday, July 26, 2010)]
[Rules and Regulations]
[Pages 43405-43409]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2010-18180]


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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: Final rule.

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SUMMARY: This rule sets forth updated FHWA procedures for enforcement 
of the State registration of vehicles subject to the Heavy Vehicle Use 
Tax (HVUT). This rule will bring FHWA's HVUT regulations up-to-date to 
be consistent with many changes that have impacted the regulation over 
the last 2 decades.

DATES: Effective Date: October 25, 2010.

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 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 caused 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 a 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. 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 
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, Washington, DC, May 1982 and 1997 Federal Highway 
Cost Allocation Study: U.S. Department of Transportation, 
Washington, DC, August 1997. Federal Highway Cost Allocation Study: 
U.S. Department of Transportation, Washington, DC, 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 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 
established a certification program to ascertain State compliance with 
these requirements,

[[Page 43406]]

procedures for evaluating State compliance, and procedures for any 
required reduction of funds. This rule modifies existing FHWA 
procedures for enforcement of the State registration of vehicles 
subject to the HVUT. The regulation is consistent with several changes 
in applicable law and technology, and with regulations recently 
promulgated by the IRS.

History

    The HVUT tax was imposed by section 143 of the Surface 
Transportation Assistance Act of 1982, Public Law 97-424, and is 
codified 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 the 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.
    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 26 U.S.C. 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 provision of 
this section, or comply with other, alternative rules regarding the 
satisfaction of proof-of-payment requirement as may be prescribed by 
the Internal Revenue Service (IRS) Commissioner in order to avoid a 
reduction of Federal-aid highway funds apportioned under 23 U.S.C. 23 
104(b)(4). This FHWA final rule provides compatibility with the revised 
IRS rules.
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    \2\ 26 CFR part 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--
41.4483-7, and 41.600101--41.6156-1.
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Discussion of Comments

    A Notice of Proposed Rulemaking (NPRM) was published in the Federal 
Register on November 30, 2009, at 74 FR 62518. The comment period 
closed on March 1, 2010. The Docket received comments from five 
different organizations: (1) The Office of Congressman Don Young, (2) 
the New York Department of Motor Vehicles, (3) the State of 
Pennsylvania, (4) the Minnesota Office of the Commissioner of the 
Department of Public Safety, and (5) the International Registration 
Plan, jointly representing several unidentified States which concurred 
with their comments.

General Comments

    The first commenting organization, the Office of Congressman Don 
Young; Alaska, indicated that constituents in Alaska are frustrated by 
an Alaskan requirement that individuals register their vehicle in 
person in order to show written documentation of HVUT payment. In 
Alaska, this evidence of documentation is required to complete Alaska 
DMV Form 846, the Heavy Vehicle Use Tax Declaration. Other vehicles can 
be registered online while vehicles subject to HVUT cannot. Alaska 
urges that changes be made in FHWA regulations to allow individuals to 
register vehicles subject to HVUT online.
    This comment is outside the scope of this rulemaking. FHWA's role 
in administering the HVUT is to validate that the States are exercising 
their responsibility to assist in the administration of this tax as 
mandated by Congress and administered by the IRS. The FHWA does support 
the development of procedures by which the HVUT tax can be more 
effectively and efficiently enforced.

Sections 669.1, 669.2, 669.9, and 669.13

    Two commenting organizations, the State of Pennsylvania 
(Pennsylvania) and the International Registration Plan, Inc. (IRP), 
expressed their support of the proposed changes related to sections 
669.1, 669.2, 669.9, and 669.13. Both organizations indicated that 
these proposed changes provide updated references to other laws, 
regulations, and related documents.

Section 669.7 Certification Requirement

    Two commenting organizations, IRP and Pennsylvania, expressed their 
support of the proposed changes to section 669.7 as it would provide 
FHWA with time needed to review certifications and determine if States 
met their responsibilities. Both commenting organizations stated that 
the change would not place an undue burden on States. The IRP also 
offered that this change would help match other certifications 
currently submitted by States to FHWA.

Section 669.11 Certification Submittal

    One commenting organization, the State of New York--Department of 
Motor Vehicles (New York), indicated that they have no objection to the 
proposed change in the certification deadline from July 1 to January 1.
    Another commenting organization, Minnesota--Department of Public 
Safety, Office of the Commissioner (Minnesota), requested clarification 
on how FHWA will phase in the new regulation. Specifically, the 
commenter indicated that if this final rule is adopted before July 1, 
2010, it is unclear how or whether States' eligibility for fiscal year 
2011 apportionment would be determined, since they will not be 
certifying compliance until January 1, 2011 (ostensibly for the period 
from October 1, 2009, to September 30, 2010). Additionally, if FHWA 
does not adopt the proposed rules until after October 1, a question 
would arise as to whether States would have to certify compliance for 
the 4-month gap created by the change in certification periods (i.e., 
for the period from June 1 to September 30, 2009).
    Since this final rule will become effective after July 1, 2010, 
States will comply with the existing rule for the certification due on 
July 1, 2010. This final rule will be applicable starting with the 
certification due on January 1, 2011, and that first certification 
would only cover the 4-month period of June 1 through September 30, 
2010. The annual certification due on January 1, 2012, would cover a 
full 12-month period of October 1, 2010 through September 30, 2011. 
Subsequent annual certifications would likewise cover the 12-month 
period ending the previous September 30.

[[Page 43407]]

Section 669.21 Procedure for Evaluating State Compliance

    Two commenting organizations, Pennsylvania and IRP, expressed 
support for the proposal that all agencies responsible for issuing 
registrations for HVUT class vehicles be required to provide proof-of-
payment responsibilities, including any private agencies which some 
States utilize to perform registration processes. However, three 
commenting organizations, New York, Minnesota, and IRP, expressed some 
concerns.
    Specifically, the three commenting organizations stated their 
objection to the proposed change to require, rather than allow, 
electronic storage of IRS Schedule 1 (Form 2290)--proof-of-payment. One 
commenting organization stated that additional Federal funding would be 
needed to implement the use of electronic images for proof-of-payment. 
This same commenter expressed concern that the proposed rules do not 
specify how States must certify proof-of-payment when the IRS Schedule 
1 (Form 2290) has been filed electronically. The commenter expressed 
that FHWA should address the issue in its rules and not wait for the 
IRS to develop its long-promised electronic verification process. The 
commenter observed that if the electronic verification system (mandated 
by Congress in 2004) were available, there arguably would be no need 
for the States to retain receipted Forms 2290 at all.
    When proof-of-payment has been filed electronically with the IRS, 
the vehicle owner must retain a copy of the proof-of-payment for State 
vehicle registration purposes. Since July of 2009, the IRS has employed 
an electronic filing and payment process, which returns a receipted 
proof-of-payment to the taxpayer. This procedure is required for firms 
owning more than 25 trucks, but optional for smaller trucking 
operations. In either case, a paper copy of the proof-of-payment is 
provided to the taxpayer which may be presented at the time of vehicle 
registration. The State must preserve a copy of this proof-of-payment 
by paper copy or scanning procedures.
    In the future, the State may develop an electronic process for 
vehicle registration, including registration of vehicles subject to 
HVUT, and presumably they would be inspecting an electronic proof-of-
payment from the IRS. This situation offers a prime example of a case 
where a State might want to exercise the option to capture the proof-
of-payment records in a software application format as authorized in 
this final rule, and FHWA would be periodically inspecting an 
electronic file of proof-of-payment images.
    The changes to section 669.21 adopted in this final rule do not 
specify the method by which the State must maintain the proof. The FHWA 
is not requiring States to utilize a scanning procedure. The FHWA's 
responsibility is to administer an established procedure to ensure that 
States check for IRS Schedule 1 (Form 2290) before registering certain 
vehicles. To do this, FHWA needs the States to retain some record that 
they have inspected IRS Schedule 1 (Form 2290). In FHWA's view, the 
current method to ensure that proof-of-payment is valid is 
insufficient, because it does not include provisions for local or 
private recordkeeping, and provides for unverifiable options such as 
making an entry in an automated file or on registration documents 
retained by the State. To properly administer FHWA's responsibilities, 
FHWA staff must review either a paper copy or a scanned image of the 
proof-of-payment. The FHWA staff must be able to view these items to 
check for signs of fraudulent proof-of-payment such as multiple copies 
of copies of originals, obviously invalid IRS receipt stamps, Employee 
Identification Number (EIN) ``applied for'' when they can be easily 
obtained from the IRS, and other suspicious markings or missing 
information.
    Three commenting organizations, Minnesota, Pennsylvania, and IRP 
questioned the factual basis for FHWA's unfunded mandates analysis 
regarding the document retention requirement of IRS Schedule 1 (Form 
2290). One commenting organization, Pennsylvania, also questioned how 
this action would not have significant economic impact. All commenting 
organizations expressed these concerns based on a misunderstanding that 
the proposed rule requires the scanning of IRS Form 2290 into a 
computerized record. Additionally, a commenter indicated that no 
timeline for implementation by States is provided in the rule, and that 
a reasonable timeline should be established to allow for compliance. 
Since FHWA is not requiring States to utilize a scanning procedure, 
these concerns are not being addressed in this final rule.
    Another commenting organization, Minnesota, also stated that the 
proposed ``one-year'' retention schedule of IRS Schedule 1 (Form 2290) 
is misleading. Under the proposed rule, Minnesota suggested that it 
would not certify its compliance as to a vehicle registered in October 
2010 until January 1, 2012, and it would not receive the certification 
of apportionment until October 1, 2012. In effect, then, Minnesota 
would have to retain receipted Forms 2290 for up to 2 years. That is 
not the case. It appears that the commenter has mistakenly combined the 
annual certification process and the requirements concerning periodic 
inspection of records by FHWA, which are two separate processes. It is 
under the inspection requirements that the State is required to collect 
and maintain proof-of-payment records for 1 year.
    One commenting organization, IRP, expressed concern that evaluation 
of States' compliance has been inconsistent. The commenter requested 
that FHWA ensure that evaluations of States are consistent, and all are 
evaluated on the same standards going forward.
    This comment is outside the scope of this rulemaking. However, it 
should be noted that FHWA has recently provided an extensive on-line 
course detailing how HVUT reviews should be conducted by FHWA staff in 
the field offices. This course can be found on our Web site: https://www.fhwa.dot.gov/policyinformation/hvut/module1/index.htm.

Section 669.15 Procedure for the Reduction of Funds

    Two commenting organizations, Pennsylvania and IRP, stated their 
support for the proposed revisions to 23 CFR 669.15.
    One commenting organization, Minnesota, expressed concern regarding 
the proposed deletion of certain procedures from section 669.15. 
Specifically, Minnesota noted three changes of concern: (1) Under the 
current rule, FHWA must notify a State's governor by certified mail, 
while the proposed rule is silent as to how and to whom such notice 
must be given; (2) Under the current rule, States may respond to a 
proposed determination of nonconformity by submitting evidence either 
in writing or, at their request, at a conference with FHWA, while in 
the latter instance, a transcript of the conference must be prepared. 
The commenter believes that States should continue to have the option 
of requesting a hearing; (3) Under the current rule, a State may 
present mitigating evidence to shed light on why a State is unable to 
comply fully or that it will soon be in full compliance, while the 
proposed rule limits the evidence that FHWA will consider to 
``documentation showing why [the State] is in conformity.''
    The FHWA revised procedures at 23 CFR 669.15, being adopted in 
today's final rule, parallel other procedures

[[Page 43408]]

established by the FHWA and the National Highway Traffic Safety 
Administration for programs that involve funding sanctions.\3\ The 
adoption of similar procedures makes these programs: (1) Easier to 
administer, (2) more familiar to the States, and (3) provides States 
with sufficient notification of a preliminary non-compliance 
determination, the right to request a review of FHWA's preliminary non-
compliance determination, and an opportunity to demonstrate State 
compliance. Under the new procedures, States do not lose the right to 
protest or to show compliance. 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 FHWA showing why it is in conformity. Any State 
submission would be reviewed by the FHWA, including the FHWA 
Administrator. As part of this process, a State would maintain the 
ability to request an informal conference with the FHWA Administrator, 
have a transcript of the conference made, or present any mitigating 
evidence. The FHWA would then issue a final determination to the State 
and if found in nonconformity, the State would 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 669.17 Compliance Finding

    One commenting organization, Minnesota, noted that in the NPRM, 
FHWA proposed to amend 23 CFR 669.17, the rule pertaining to compliance 
findings, but no such amendment appeared in the proposed regulatory 
text. The FHWA proposed removing 23 CFR 669.17 because it referred to 
the issuance of a compliance finding by the FHWA Administrator and due 
to the revised procedures this section was no longer necessary. This 
section is removed by this final rule.
    Two commenting organizations, Pennsylvania and IRP, indicated their 
support of the proposed changes to 23 CFR 669.17, as the changes would 
bring a more consistent and formalized process to the apportionment and 
notification of non-compliance.

Rulemaking Analyses and Notices

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

    The FHWA has determined that this action would not be a significant 
regulatory action within the meaning of Executive Order 12866 and 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 components of this rule create 
no changes to the economic cost of the regulation. A few commenting 
organizations apparently believed that the proposed changes require 
electronic scanning and retention of IRS Form 2290 for 1 year. As 
addressed above, FHWA is not requiring such a system, so there is no 
cost associated with developing new procedures, unless a State must 
implement procedures to maintain proof payment for counties or other 
registering agencies. Additionally, the change in administrative 
procedures to remove the FHWA Administrator from the fund reduction 
action provides governmental efficiency.
    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. 60l-612) 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.

Unfunded Mandates Reform Act of 1995

    This 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 rule will not result in the expenditure by State, 
local, and tribal governments, in the aggregate, or by the private 
sector, of $141.3 million or more in any 1 year (2 U.S.C. 1532). One 
change in the regulation that impacts cost is the record keeping 
provision. Since the States and other vehicles registration entities 
already keep vehicle registration files, no significant additional cost 
should be incurred by the States. A few commenting organizations 
mistakenly believed that the proposed changes required electronic 
scanning and retention of IRS Form 2290 for 1 year. As addressed above, 
FHWA is not requiring such a system.

Executive Order 13132 (Federalism Assessment)

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

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.

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 rule 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 action for the purpose of the National 
Environmental Policy Act of 1969 (42 U.S.C. 4321) and has determined 
that this 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

[[Page 43409]]

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: July 14, 2010.
Victor M. Mendez,
Administrator.

0
In consideration of the foregoing, the FHWA amends part 669 of Title 
23, Code of Federal Regulations, as follows:

PART 669--ENFORCEMENT OF HEAVY VEHICLE USE TAX

0
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).


0
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, except for the certification due 
on January 1, 2011, which shall cover the 4-month period from June 1, 
2010 to September 30, 2010.


Sec.  669.9  [Amended]

0
3. In Sec.  669.9, amend 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)'' in each place it appears.


Sec.  669.11  [Amended]

0
4. Amend Sec.  669.11 by removing the word ``July'' and adding in its 
place the word ``January''.

0
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.

0
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 section 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.

0
7. Amend Sec.  669.19 as follows:
0
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
0
b. Amend paragraph (c) by removing the word ``Secretary's''.

0
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 Part 41 sec. 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. 2010-18180 Filed 7-23-10; 8:45 am]
BILLING CODE 4910-22-P