Document ID: FMCSA-2009-0271-0020
Agency: fmcsa
Document Type: Notice
Title: Identification of Interstate Motor Vehicles; Petitions for Reconsideration: New York City, Cook County, and New Jersey Tax Identification Requirements
Posted Date: 2012-03-06T05:00Z

[Federal Register Volume 77, Number 44 (Tuesday, March 6, 2012)]
[Notices]
[Pages 13385-13387]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-5319]

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DEPARTMENT OF TRANSPORTATION

Federal Motor Carrier Safety Administration

[Docket No. FMCSA-2009-0271]

Identification of Interstate Motor Vehicles: New York City, Cook 
County, and New Jersey Tax Identification Requirements; Petition for 
Reconsideration.

AGENCY: Federal Motor Carrier Safety Administration (FMCSA), DOT.

ACTION: Notice; Grant of petition for reconsideration.

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SUMMARY: The FMCSA grants a petition for reconsideration submitted by 
the New York City Department of Finance (DOF) requesting 
reconsideration of the Agency's previous determination that the 
credential display requirement of New York City's Commercial Motor 
Vehicle Tax (CMV Tax) is preempted. Federal law prohibits States and 
their political subdivisions from requiring motor carriers to display 
in or on commercial motor vehicles (CMVs) any form of identification 
other than forms required by the Secretary of Transportation, with 
certain exceptions. FMCSA has determined that the CMV Tax qualifies for 
one of the statutory exceptions.

DATES: This decision is effective March 6, 2012.

FOR FURTHER INFORMATION CONTACT: Genevieve D. Sapir, Office of the 
Chief Counsel, Federal Motor Carrier Safety Administration, 1200 New 
Jersey Avenue SE., Washington, DC 20590, (202) 366-7056; email 
Genevieve.Sapir@dot.gov.

SUPPLEMENTARY INFORMATION:

Background

    On February 25, 2008, the American Trucking Associations (ATA) 
petitioned FMCSA to preempt Sec.  11-809 of New York City's 
Administrative Code, which requires CMVs used principally in New

[[Page 13386]]

York City or in connection with a business carried on within New York 
City to display a stamp evidencing payment of the city's CMV Tax. ATA 
alleged that New York City's credential display requirement was 
preempted under 49 U.S.C. 14506(a), which prohibits States from 
requiring motor carriers to display in or on CMVs any form of 
identification other than forms required by the Secretary of 
Transportation. Section 14506(b), however, establishes several 
exceptions to this prohibition [all statutory references are to title 
49, United States Code]:

    (b) Exception.--Notwithstanding subsection (a), a State may 
continue to require display of credentials that are required--
    (1) Under the International Registration Plan under section 
31704;
    (2) Under the International Fuel Tax Agreement under section 
31705 or under an applicable State law if, on October 1, 2006, the 
State has a form of highway use taxation not subject to collection 
through the International Fuel Tax Agreement;
    (3) Under a State law regarding motor vehicle license plates or 
other displays that the Secretary determines are appropriate;
    (4) In connection with Federal requirements for hazardous 
materials transportation under section 5103; or
    (5) In connection with the Federal vehicle inspection standards 
under section 31136.

    In response to this and other petitions ATA submitted seeking 
preemption of credential display requirements in New Jersey and Cook 
County, Illinois, FMCSA published a notice in the Federal Register 
seeking comment on whether the credential display requirements of New 
York City, the State of New Jersey, and Cook County, Illinois should be 
preempted (74 FR 53578, Oct. 19, 2009). FMCSA specifically requested 
comment from the three jurisdictions, but neither New Jersey nor New 
York City responded with comments. After the close of the comment 
period, Cook County sent a letter conceding that its ordinance was 
preempted under Sec.  14506.
    On October 20, 2010, FMCSA issued an order preempting all three 
credential requirements (75 FR 64779). FMCSA's preemption analysis 
focused solely on whether the exception in Sec.  14506(b)(3) applied. 
However, in reaching this determination, FMCSA concluded that all of 
the exceptions at Sec.  14506(b) could apply to political subdivisions 
of States, including municipalities, if they otherwise meet the 
statutory criteria (75 FR at 64780-81).
    On January 3, 2011, New York City's Department of Finance (DOF) 
submitted a petition requesting reconsideration of FMCSA's preemption 
determination. DOF's petition contended that New York City's credential 
display requirement was based on a form of highway use taxation 
excepted from preemption under Sec.  14506(b)(2). For the reasons set 
forth below, FMCSA grants the DOF's petition for reconsideration.

Applicable Law

    New York City's CMV Tax has been in effect since 1960. See 
Administrative Code of the City of New York, Title 11, Chapter 8. 
Subject to several exemptions, the tax applies to both ``commercial 
motor vehicle[s]'' and ``motor vehicle[s] for the transportation of 
passengers'' that operate on a public highway or public street and are 
``propelled by any power other than muscular power.'' Sec. Sec.  11-
801(2)-(4); 11-803. The tax applies to a ``commercial motor vehicle'' 
that is ``used principally in the city or used principally in 
connection with a business carried on within the city.'' Sec.  11-
801(3). According to the DOF Web site, the term ``principally used in 
the city'' means that 50% or more of a CMV's mileage during a year is 
within New York City limits. See http://www.nyc.gov/html/dof/html/business/business_tax_cmvt.shtml. The tax also applies to a ``motor 
vehicle for transportation of passengers'' that is ``used regularly, 
even though not principally, in the city.'' Sec.  11-801(4). The tax 
rate varies based on the class of the vehicle; for example, the annual 
tax on a truck is based on maximum gross weight, in accordance with the 
following classes: 10,000 pounds or less, $40; 10,001-12,500 pounds, 
$200; 12,501-15,000 pounds, $275; and 15,000 pounds or over, $300, but 
the annual tax on passenger vehicles is a flat rate of $400. Sec.  11-
802.a.1.(C). Subject to certain exceptions, the tax is paid to the 
Commissioner of Finance on an annual basis. Sec.  11-808. However, the 
tax on trucks registered in New York with a maximum gross weight not 
exceeding 10,000 pounds and certain passenger vehicles is collected by 
the Commissioner of Motor Vehicles when the vehicle registration is 
renewed. Sec.  11-809.1(a). The Commissioner of Finance is authorized 
to require that a tax decal or other indicia of payment be affixed to a 
vehicle. Sec.  11-809(a); New York City Rules, Tit. 19, Sec.  6-09.
    Section 14506(a) prohibits the States or their political 
subdivisions from requiring a motor carrier to display either in or on 
a CMV any form of identification other than a form required by the 
Secretary of Transportation. However, Sec.  14506(b)(2) provides that:

    Notwithstanding [Sec.  14506(a)], a State may continue to 
require display of credentials that are required--(2) under the 
International Fuel Tax Agreement * * * or under an applicable State 
law if, on October 1, 2006, the State has a form of highway use 
taxation not subject to collection through the International Fuel 
Tax Agreement;

(emphasis added).

FMCSA Decision

    To qualify for the statutory exception at 49 U.S.C. 14506(b)(2), 
the credentials (in this case a decal) required by New York City's CMV 
tax must be part of a highway use tax that was in effect prior to 
October 1, 2006. Because the tax has been in effect since 1960, the 
only question before the Agency is whether it is a highway use tax 
within the meaning of the statutory exception.
    In enacting Sec.  14506(b)(2), Congress did not define a highway 
use tax. Nor is there any other statutory or regulatory definition of 
highway use tax applicable to this statutory provision. In the absence 
of controlling authority, the Agency looks to common usage of the term. 
In the broadest sense, a highway use tax could mean any type of tax to 
support highways or any kind of tax on highway business, vehicles, or 
commerce, or any combination of these. E.M. Cope, Trends in Highway 
Taxation in the United States, 49 American Highways 8, 9 (Oct. 1970). 
Perhaps a better focused definition is any ``lev[y] that appl[ies] to 
motor vehicles because of their highway use.'' Id.
    In the absence of statutory or regulatory guidance, the Agency 
examines the plain language of New York City's CMV Tax. By definition, 
the tax is levied for use of a CMV on the public highways or streets of 
the city. See Sec.  11-801 (definitions of ``commercial motor vehicle'' 
and ``use''). Section 11-802(b) offers alternative interpretations of 
the tax, both of which characterize it as one based on use of highways:

    To the extent that the tax as imposed by subdivision a of this 
section may be invalid solely because it is based on the use in the 
city of the motor vehicles, the tax shall also be deemed to be based 
on the privilege of using the public highways or streets of the city 
by such motor vehicle.

Accordingly, on its face, the CMV Tax is for use of the public 
highways.
    Proceeds from highway use taxes are often dedicated, at least in 
part, to a special fund for highway infrastructure; however the DOF's 
petition does not state how revenue from the CMV Tax is used. 
Nonetheless, a highway use tax may be levied without demonstrating that 
the revenues are earmarked for highway infrastructure. See, e.g., Mid-
States Freight Lines, Inc. v. Bates, 200 Misc. 885, 890 (N.Y. Sup. 
Ct.), aff'd, 279 A.D. 451 (3d Dep't.), aff'd, 304 N.Y. 700

[[Page 13387]]

(1952). Stated otherwise, a highway use tax need not necessarily be 
dedicated to highway purposes. As a result, the DOF's failure to 
demonstrate a connection between the CMV Tax and highway funding is not 
dispositive.
    FMCSA concludes, therefore, that New York City's CMV Tax is a 
highway use tax within the meaning of 49 U.S.C. 14506(b)(2).
    In consideration of the above, FMCSA grants the DOF's petition for 
reconsideration and reverses its decision preempting New York City's 
credential display requirement. Today's decision is limited to the new 
arguments the DOF raised in its petition for reconsideration claiming 
exception from preemption under Sec.  14506(b)(2). Under this analysis, 
New York City's credential display requirement in Sec.  11-809 is not 
preempted and New York City may resume enforcement.
    This decision does not affect the Agency's previous determination 
preempting the credential display requirements in New Jersey and Cook 
County, Illinois.

    Issued on: February 29, 2012.
Anne S. Ferro,
Administrator, Federal Motor Carrier Safety Administration.
[FR Doc. 2012-5319 Filed 3-5-12; 8:45 am]
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